Document:

exv10w2

Exhibit 10.2

CYTOKINETICS, INCORPORATED

2004 EQUITY INCENTIVE PLAN, AS AMENDED

     1. Purposes of the Plan. The purposes of this Plan are:

	 	•	 	to attract and retain the best available personnel for positions of substantial responsibility,
	 
	 	•	 	to provide additional incentive to Employees, Directors and Consultants, and
	 
	 	•	 	to promote the success of the Company’s business.

     The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Stock Appreciation Rights, Performance Units and Performance Shares.

     2. Definitions. As used herein, the following definitions will apply:

     (a) “Administrator” means the Board or any of its Committees as will be
administering the Plan, in accordance with Section 4 of the Plan.

     (b) “Affiliated SAR” means an SAR that is granted in connection with a related
Option, and which automatically will be deemed to be exercised at the same time that the related
Option is exercised.

     (c) “Applicable Laws” means the requirements relating to the administration of
equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the
Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.

     (d) “Approval Authority” means an authority, governmental or otherwise, that
regulates pre-market approval of goods and services.

     (e) “Award” means, individually or collectively, a grant under the Plan of
Options, SARs, Restricted Stock, Performance Units or Performance Shares.

     (f) “Award Agreement” means the written or electronic agreement setting forth the
terms and provisions applicable to each Award granted under the Plan. The Award Agreement is
subject to the terms and conditions of the Plan.

     (g) “Board” means the Board of Directors of the Company.

     (h) “Cash Position” means the Company’s or a business unit’s level of cash, cash
equivalents, and available for sale marketable securities.

     (i) “Change in Control” means the occurrence of any of the following events:

     (i) Any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act)
becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company’s then outstanding voting securities; or

     (ii) The consummation of the sale or disposition by the Company of all or substantially
all of the Company’s assets;

     (iii) A change in the composition of the Board occurring within a two-year period, as a
result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent
Directors” means directors who either (A) are Directors as of the effective date of the Plan, or
(B) are elected, or nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination (but will not
include an individual whose election or nomination is in connection with an actual or threatened
proxy contest relating to the election of directors to the Company); or

     (iv) The consummation of a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting securities of the
Company or such surviving entity or its parent outstanding immediately after such merger or
consolidation.

     (j) “Clinical Progression” means, for any Performance Period, a Product’s entry
into or completion of a phase of clinical development, such as when a Product enters into or
completes a Phase 1, Phase 2, Phase 3 or other clinical study.

     (k) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to
a section of the Code herein will be a reference to any successor or amended section of the Code.

     (l) “Collaboration Arrangement” means, for any Performance Period, entry into an
agreement or arrangement with a third party for the development, commercialization, marketing or
distribution of a Product or for the conducting of a research program to discover or develop a
Product or technologies.

     (m) “Collaboration Progression” means, for any Performance Period, an event that
triggers an obligation or payment right to

 

 

accrue under a Collaboration Agreement.

     (n) “Committee” means a committee of Directors appointed by the Board in
accordance with Section 4 of the Plan.

     (o) “Common Stock” means the common stock of the Company.

     (p) “Company” means Cytokinetics, Incorporated, a Delaware corporation, or any
successor thereto.

     (q) “Consultant” means any person, including an advisor, engaged by the Company
or a Parent or Subsidiary to render services to such entity.

     (r) “Determination Date” means the latest possible date that will not jeopardize
the qualification of an Award granted under the Plan as “performance-based compensation” under
Section 162(m) of the Code.

     (s) “Director” means a member of the Board.

     (t) “Disability” means total and permanent disability as defined in Section
22(e)(3) of the Code, provided that in the case of Awards other than Incentive Stock Options, the
Administrator in its discretion may determine whether a permanent and total disability exists in
accordance with uniform and non-discriminatory standards adopted by the Administrator from time to
time.

     (u) “Earnings Per Share” means as to any Performance Period, the Company’s or a
business unit’s Net Income, divided by a weighted average number of common shares outstanding and
dilutive common equivalent shares deemed outstanding, determined in accordance with generally
accepted accounting principles.

     (v) “Employee” means any person, including Officers and Directors, employed by
the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment
of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

     (w) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (x) “Exchange Program” means a program under which (i) outstanding Awards are
surrendered or cancelled in exchange for Awards of the same type (which may have lower exercise
prices and different terms), Awards of a different type, and/or cash, (ii) Participants would have
the opportunity to transfer any outstanding Awards to a financial institution or other person or
entity selected by the Administrator, and/or (iii) the exercise price of an outstanding Award is
reduced. The Administrator will determine the terms and conditions of any Exchange Program in its
sole discretion, subject to the provisions of Section 4(c).

     (y) “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:

     (i) If the Common Stock is listed on any established stock exchange or a national market
system, including without limitation the Nasdaq Global Market, the Nasdaq Global Select Market or
the Nasdaq Capital Market, its Fair Market Value will be the closing sales price for such stock
(or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of
determination, as reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

     (ii) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common Stock will be the mean
between the high bid and low asked prices for the Common Stock on the day of determination, as
reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

     (iii) In the absence of an established market for the Common Stock, the Fair Market
Value will be determined in good faith by the Administrator.

     (z) “Financing Event” means, for any Performance Period, the closing of any
financing event for capital raising purposes.

     (aa) “Fiscal Year” means the fiscal year of the Company.

     (bb) “Freestanding SAR” means an SAR that is granted independently of any Option.

     (cc) “Incentive Stock Option” means an Option intended to qualify as an incentive
stock option within the meaning of Section 422 of the Code and the regulations promulgated
thereunder.

     (dd) “Net Income” means as to any Performance Period, the income after taxes of
the Company or a business unit for the Performance Period determined in accordance with generally
accepted accounting principles.

     (ee) “Nonstatutory Stock Option” means an Option that by its terms does not
qualify or is not intended to qualify as an Incentive Stock Option.

     (ff) “Officer” means a person who is an officer of the Company within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

     (gg) “Operating Cash Flow” means the Company’s or a business unit’s sum of Net
Income plus depreciation and amortization less capital expenditures plus changes in working capital
comprised of accounts receivable, inventories, other current assets, trade accounts payable,
accrued expenses, product warranty, advance payments from customers and long-term accrued expenses,
determined in accordance with generally acceptable accounting principles.

 

 

     (hh) “Operating Expenses” means the sum of the Company’s or a business unit’s
research and development expenses and selling and general and administrative expenses during a
Performance Period.

     (ii) “Operating Income” means the Company’s or a business unit’s income from
operations determined in accordance with generally accepted accounting principles.

     (jj) “Option” means a stock option granted pursuant to the Plan.

     (kk) “Outside Director” means a Director who is not an Employee.

     (ll) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

     (mm) “Participant” means the holder of an outstanding Award.

     (nn) “Performance Period” means any Fiscal Year or such other period as determined by the
Administrator in its sole discretion.

     (oo) “Performance Share” means an Award granted to a Participant pursuant to Section 9.

     (pp) “Performance Unit” means an Award granted to a Participant pursuant to
Section 9.

     (qq) “Period of Restriction” means the period during which the transfer of Shares
of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a
substantial risk of forfeiture. Such restrictions may be based on the passage of time, the
achievement of target levels of performance, or the occurrence of other events as determined by the
Administrator.

     (rr) “Plan” means this 2004 Equity Incentive Plan.

     (ss) “Product” means any drug candidate or product candidate requiring pre-market
approval by an Approval Authority.

     (tt) “Product Approval” means the approval by any Approval Authority of the right
to market or sell a Product.

     (uu) “Product Revenues” means as to any Performance Period, the Company’s or a
business unit’s sales, royalties, license fees, milestones and related-party revenues, determined
in accordance with generally accepted accounting principles.

     (vv) “Profit After Tax” means as to any Performance Period, the Company’s or a
business unit’s income after taxes, determined in accordance with generally accepted accounting
principles.

     (ww) “Projects in Development” refers to one or more projects at any or all
stages of development from conception, discovery, and/or initial research through Product Approval,
including, but not limited to, pre-clinical studies, filing of an investigational new drug
application (IND) or foreign equivalent, Phase 1, Phase 2, and Phase 3 clinical trials and
submission and approval of a new drug application (NDA) or foreign equivalent.

     (xx) “Regulatory Filings” means as to any Performance Period, filings submitted
to an Approval Authority with respect to a Product for which the Company is pursuing Product
Approval.

     (yy) “Restricted Stock” means shares of Common Stock issued pursuant to a
Restricted Stock award under Section 7 of the Plan, or issued pursuant to the early exercise of an
Option.

     (zz) “Return on Assets” means as to any Performance Period, the percentage equal
to the Company’s or a business unit’s Operating Income before incentive compensation, divided by
average net Company or business unit, as applicable, assets, determined in accordance with
generally accepted accounting principles.

     (aaa) “Return on Equity” means as to any Performance Period, the percentage equal
to the Company’s Profit After Tax divided by average stockholder’s equity, determined in accordance
with generally accepted accounting principles.

     (bbb) “Revenue Growth” means as to any Performance Period, the Company’s or a
business unit’s net sales determined in accordance with generally accepted accounting principles,
compared to the net sales of the immediately preceding quarter.

     (ccc) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule
16b-3, as in effect when discretion is being exercised with respect to the Plan.

     (ddd) “Section 16(b)” means Section 16(b) of the Exchange Act.

     (eee) “Service Provider” means an Employee, Director or Consultant.

     (fff) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 13 of the Plan.

     (ggg) “Stock Appreciation Right” or “SAR” means an Award, granted alone
or in connection with an Option, that pursuant to Section 8 is designated as a SAR.

     (hhh) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter
existing, as defined in Section 424(f) of the Code.

     (iii) “Tandem SAR” means an SAR that is granted in connection with a related Option,
the exercise of which will require forfeiture of the right to purchase an equal number of Shares
under the related Option (and when a Share is purchased under the Option, the SAR will be canceled
to the same extent).

 

 

     (jjj) “Total Stockholder Return” means the total return (change in share price
plus reinvestment of any dividends) of a share of Common Stock.

     3. Stock Subject to the Plan.

     (a) Stock Subject to the Plan. Subject to the provisions of Section 13 of the
Plan, the maximum aggregate number of Shares that may be optioned and sold under the Plan is (A)
12,735,948 Shares plus (B) any Shares returned on or after
February 28, 2010 to the 1997 Stock
Option/Stock Issuance Plan as a result of termination of options or repurchase of Shares issued
under such plan up to a maximum of 644,066 Shares. The Shares may be authorized, but unissued, or
reacquired Common Stock.

     (b) Full Value Awards. Any Shares subject to Awards granted with an exercise
price less than the Fair Market Value on the date of grant of such Awards will be counted against
the numerical limits of this Section 3 as two Shares for every one Share subject thereto. Further,
if Shares acquired pursuant to any such Award are forfeited or repurchased by the Company and would
otherwise return to the Plan pursuant to Section 3(c), two times the number of Shares so forfeited
or repurchased will return to the Plan and will again become available for issuance.

     (c) Lapsed Awards. If an Award expires or becomes unexercisable without having
been exercised in full, or, with respect to Restricted Stock, Performance Shares or Performance
Units, is forfeited to or repurchased by the Company, the unpurchased Shares (or for Awards other
than Options and Stock Appreciation Rights, the forfeited or repurchased Shares) which were subject
thereto will become available for future grant or sale under the Plan (unless the Plan has
terminated). Upon exercise of a Stock Appreciation Right settled in Shares, the gross number of
Shares covered by the portion of the Award so exercised will cease to be available under the Plan.
If the exercise price of an Option is paid by tender to the Company, or by attestation to the
ownership of Shares owned by the Participant, the number of Shares available for issuance under the
Plan will be reduced by the gross number of Shares for which the Option is exercised. Shares that
have actually been issued under the Plan under any Award will not be returned to the Plan and will
not become available for future distribution under the Plan; provided, however, that if unvested
Shares of Restricted Stock, Performance Shares or Performance Units are repurchased by the Company
or are forfeited to the Company, such Shares will become available for future grant under the Plan.
Shares used to pay the tax and exercise price of an Award will not become available for future
grant or sale under the Plan. To the extent an Award under the Plan is paid out in cash rather than
Shares, such cash payment will not result in reducing the number of Shares available for issuance
under the Plan. Notwithstanding the foregoing provisions of this Section 3(c), subject to
adjustment provided in Section 13, the maximum number of Shares that may be issued upon the
exercise of Incentive Stock Options will equal the aggregate Share number stated in Section 3(a),
plus, to the extent allowable under Section 422 of the Code, any Shares that become available for
issuance under the Plan under this Section 3(c).

     (d) Share Reserve. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as will be sufficient to satisfy the requirements
of the Plan.

     4. Administration of the Plan.

     (a) Procedure.

     (i) Multiple Administrative Bodies. Different Committees with respect to
different groups of Service Providers may administer the Plan.

     (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Awards granted hereunder as “performance-based compensation” within the
meaning of Section 162(m) of the Code, the Plan will be administered by a Committee of two or more
“outside directors” within the meaning of Section 162(m) of the Code.

     (iii)Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the
requirements for exemption under Rule 16b-3.

     (iv) Other Administration. Other than as provided above, the Plan will be
administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy
Applicable Laws.

     (b) Powers of the Administrator. Subject to the provisions of the Plan, and in
the case of a Committee, subject to the specific duties delegated by the Board to such Committee,
the Administrator will have the authority, in its discretion:

     (i) to determine the Fair Market Value;

     (ii) to select the Service Providers to whom Awards may be granted hereunder;

     (iii) to determine the number of Shares to be covered by each Award granted hereunder;

     (iv) to approve forms of agreement for use under the Plan;

     (v) to determine the terms and conditions of any, and with the approval of the Company’s
stockholders, to institute an Exchange Program;

     (vi) to determine the terms and conditions, not inconsistent with the terms of the Plan,
of any Award granted hereunder. Such terms and conditions include, but are not limited to, the
exercise price, the time or times when Awards may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Award or the Shares relating thereto, based in each case on such factors
as the Administrator will determine;

 

 

     (vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the
Plan;

     (viii) to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the purpose of satisfying
applicable foreign laws;

     (ix) to modify or amend each Award (subject to Section 18(c) of the Plan), including the
discretionary authority to extend the post-termination exercisability period of Awards longer than
is otherwise provided for in the Plan;

     (x) to allow Participants to satisfy withholding tax obligations by electing to have the
Company withhold from the Shares to be issued upon exercise of an Award that number of Shares
having a Fair Market Value equal to the minimum amount required to be withheld (the Fair Market
Value of the Shares to be withheld will be determined on the date that the amount of tax to be
withheld is to be determined and all elections by a Participant to have Shares withheld for this
purpose will be made in such form and under such conditions as the Administrator may deem necessary
or advisable);

     (xi) to authorize any person to execute on behalf of the Company any instrument required
to effect the grant of an Award previously granted by the Administrator;

     (xii) to allow a Participant to defer the receipt of the payment of cash or the delivery
of Shares that would otherwise be due to such Participant under an Award

     (xiii) to make all other determinations deemed necessary or advisable for administering
the Plan.

     (c) Prohibition Against Repricing. Subject to adjustments made pursuant to
Section 13, in no event shall the Administrator have the right to amend the terms of any Award to
reduce the exercise price of such outstanding Award or cancel an outstanding Award in exchange for
cash or other Awards with an exercise price that is less than the exercise price of the original
Award without stockholder approval.

     (d) Effect of Administrator’s Decision. The Administrator’s decisions,
determinations and interpretations will be final and binding on all Participants and any other
holders of Awards.

     5.Eligibility. Nonstatutory Stock Options, Restricted Stock, Stock Appreciation
Rights, Performance Units and Performance Shares may be granted to Service Providers. Incentive
Stock Options may be granted only to Employees.

     6. Stock Options.

     (a) Limitations.

     (i) Each Option will be designated in the Award Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent
that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Participant during any calendar year (under all plans of
the Company and any Parent or Subsidiary) exceeds $100,000, such Options will be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be
taken into account in the order in which they were granted. The Fair Market Value of the Shares
will be determined as of the time the Option with respect to such Shares is granted.

     (ii) The following limitations will apply to grants of Options:

     (1) No Service Provider will be granted, in any Fiscal Year, Options to purchase more
than 1,500,000 Shares.

     (2) In connection with his or her initial service, a Service Provider may be granted
Options to purchase up to an additional 1,500,000 Shares, which will not count against the limit
set forth in Section 6(a)(ii)(1) above.

     (3) The foregoing limitations will be adjusted proportionately in connection with any
change in the Company’s capitalization as described in Section 13.

     (4) If an Option is cancelled in the same Fiscal Year in which it was granted (other than
in connection with a transaction described in Section 13), the cancelled Option will be counted
against the limits set forth in subsections (1) and (2) above.

     (b) Term of Option. The term of each Option will be stated in the Award
Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date
of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of
an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option will be five (5) years from the date of grant or such shorter term as may be provided in the
Award Agreement.

     (c) Option Exercise Price and Consideration.

     (i) Exercise Price. The per share exercise price for the Shares to be issued
pursuant to exercise of an Option will be determined by the Administrator, subject to the
following:

     (1) In the case of an Incentive Stock Option

     a) granted to an Employee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the per Share exercise price will be no

 

 

less than 110% of the Fair Market Value per Share on the date of grant.

     b) granted to any Employee other than an Employee described in paragraph (A) immediately
above, the per Share exercise price will be no less than 100% of the Fair Market Value per Share on
the date of grant.

     c) Notwithstanding the foregoing, Incentive Stock Options may be granted with a per Share
exercise price of less than 100% of the Fair Market Value per Share on the date of grant pursuant
to a transaction described in, and in a manner consistent with, Section 424(a) of the Code.

     (2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be
determined by the Administrator. In the case of a Nonstatutory Stock Option intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, the per Share
exercise price will be no less than 100% of the Fair Market Value per Share on the date of grant.

     (ii) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator will fix the period within which the Option may be exercised and will determine any
conditions that must be satisfied before the Option may be exercised.

     (iii) Form of Consideration. The Administrator will determine the acceptable
form of consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator will determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of: (1) cash; (2) check; (3) promissory
note; (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which said Option will be exercised and
provided that accepting such Shares, in the sole discretion of the Administrator, shall not result
in any adverse accounting consequences to the Company; (5) consideration received by the Company
under a cashless exercise program implemented by the Company in connection with the Plan; (6) a
reduction in the amount of any Company liability to the Participant, including any liability
attributable to the Participant’s participation in any Company-sponsored deferred compensation
program or arrangement; (7) such other consideration and method of payment for the issuance of
Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods
of payment.

     (d) Exercise of Option.

     (i) Procedure for Exercise; Rights as a Stockholder. Any Option granted
hereunder will be exercisable according to the terms of the Plan and at such times and under such
conditions as determined by the Administrator and set forth in the Award Agreement. An Option may
not be exercised for a fraction of a Share.

     An Option will be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator
and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be
issued in the name of the Participant or, if requested by the Participant, in the name of the
Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a stockholder will exist with respect to the
Shares, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued)
such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.

     Exercising an Option in any manner will decrease the number of Shares thereafter
available, both for purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

     (ii) Termination of Relationship as a Service Provider. If a Participant ceases
to be a Service Provider, other than upon the Participant’s death or Disability, the Participant
may exercise his or her Option within such period of time as is specified in the Award Agreement to
the extent that the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In the absence of a
specified time in the Award Agreement, the Option will remain exercisable for three (3) months
following the Participant’s termination. Unless otherwise provided by the Administrator, if on the
date of termination the Participant is not vested as to his or her entire Option, the Shares
covered by the unvested portion of the Option will revert to the Plan. If after termination the
Participant does not exercise his or her Option within the time specified by the Administrator, the
Option will terminate, and the Shares covered by such Option will revert to the Plan.

     (iii) Disability of Participant. If a Participant ceases to be a Service
Provider as a result of the Participant’s Disability, the Participant may exercise his or her
Option within such period of time as is specified in the Award Agreement to the extent the Option
is vested on the date of termination (but in no event later than the expiration of the term of such
Option as set forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s
termination. Unless otherwise provided by the Administrator, if on the date of termination the
Participant is not vested as to his or her entire Option, the Shares covered by the unvested
portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein,
the Option will terminate, and the Shares covered by such Option will revert to the Plan.

     (iv) Death of Participant. If a Participant dies while a Service Provider, the
Option may be exercised following the Participant’s death within such period of time as is
specified in the Award Agreement to the extent that the Option is vested on the date of death (but
in no event may the option be exercised later than the expiration of the term of such Option as set
forth in the Award Agreement), by the Participant’s designated beneficiary, provided such
beneficiary has been designated prior to Participant’s death in a form

 

 

acceptable to the Administrator. If no such beneficiary has been designated by the
Participant, then such Option may be exercised by the personal representative of the Participant’s
estate or by the person(s) to whom the Option is transferred pursuant to the Participant’s will or
in accordance with the laws of descent and distribution. In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months following Participant’s
death. Unless otherwise provided by the Administrator, if at the time of death Participant is not
vested as to his or her entire Option, the Shares covered by the unvested portion of the Option
will immediately revert to the Plan. If the Option is not so exercised within the time specified
herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

     7. Restricted Stock.

     (a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan,
the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to
Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

     (b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced
by an Award Agreement that will specify the Period of Restriction, the number of Shares granted,
and such other terms and conditions as the Administrator, in its sole discretion, will determine.
Notwithstanding the foregoing sentence, for Restricted Stock intended to qualify as
“performance-based compensation” within the meaning of Section 162(m) of the Code, during any
Fiscal Year no Participant will receive more than an aggregate of 1,000,000 Shares of Restricted
Stock. Notwithstanding the foregoing limitation, in connection with his or her initial service as
an Employee, for Restricted Stock intended to qualify as “performance-based compensation” within
the meaning of Section 162(m) of the Code, an Employee may be granted an aggregate of up to an
additional 1,000,000 Shares of Restricted Stock. Unless the Administrator determines otherwise,
Shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on
such Shares have lapsed.

     (c) Transferability. Except as provided in this Section 7, Shares of Restricted
Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until
the end of the applicable Period of Restriction.

     (d) Other Restrictions. The Administrator, in its sole discretion, may impose
such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

     (e) Removal of Restrictions. Except as otherwise provided in this Section 7,
Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be
released from escrow as soon as practicable after the last day of the Period of Restriction. The
Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or
be removed.

     (f) Voting Rights. During the Period of Restriction, Service Providers holding
Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those
Shares, unless the Administrator determines otherwise.

     (g) Dividends and Other Distributions. During the Period of Restriction, Service
Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other
distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If
any such dividends or distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect
to which they were paid.

     (h) Return of Restricted Stock to Company. On the date set forth in the Award
Agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company
and again will become available for grant under the Plan.

     (i) Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Restricted Stock as “performance-based compensation” under Section 162(m) of the Code, the
Administrator, in its discretion, may set restrictions based upon the achievement of Performance
Goals. The Performance Goals will be set by the Administrator on or before the Determination Date.
In granting Restricted Stock which is intended to qualify under Section 162(m) of the Code, the
Administrator will follow any procedures determined by it from time to time to be necessary or
appropriate to ensure qualification of the Award under Section 162(m) of the Code (e.g., in
determining the Performance Goals).

     8. Stock Appreciation Rights.

     (a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be
granted to Service Providers at any time and from time to time as will be determined by the
Administrator, in its sole discretion. The Administrator may grant Affiliated SARs, Freestanding
SARs, Tandem SARs, or any combination thereof.

     (b)Number of Shares. The Administrator will have complete discretion to
determine the number of SARs granted to any Service Provider; provided, however, no Service
Provider will be granted, in any Fiscal Year, SARs covering more than 1,500,000 Shares.
Notwithstanding the limitation in the previous sentence, in connection with his or her initial
service a Service Provider may be granted SARs covering up to an additional 1,500,000 Shares. The
foregoing limitations will be adjusted proportionately in connection with any change in the
Company’s capitalization as described in Section 13. In addition, if a SAR is cancelled in the same
Fiscal Year in which it was granted (other than in connection with a transaction described in
Section 13), the cancelled SAR will be counted against the numerical share limits set forth above.

     (c) Exercise Price and Other Terms. The Administrator, subject to the provisions
of the Plan, will have complete discretion to determine the terms and conditions of SARs granted
under the Plan; provided, however, that the per Share exercise price of a SAR will be no less than
100% of the Fair Market Value per Share on the date of grant. However, the exercise price of Tandem
or Affiliated SARs will equal the exercise price of the related Option.

 

 

     (d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to exercise the equivalent
portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for
which its related Option is then exercisable. With respect to a Tandem SAR granted in connection
with an Incentive Stock Option: (a) the Tandem SAR will expire no later than the expiration of the
underlying Incentive Stock Option; (b) the value of the payout with respect to the Tandem SAR will
be for no more than one hundred percent (100%) of the difference between the exercise price of the
underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying
Incentive Stock Option at the time the Tandem SAR is exercised; and (c) the Tandem SAR will be
exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option
exceeds the Exercise Price of the Incentive Stock Option.

     (e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be
exercised upon the exercise of the related Option. The deemed exercise of an Affiliated SAR will
not necessitate a reduction in the number of Shares subject to the related Option.

     (f) Exercise of Freestanding SARs. Freestanding SARs will be exercisable on such
terms and conditions as the Administrator, in its sole discretion, will determine.

     (g) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that
will specify the exercise price, the term of the SAR, the conditions of exercise, and such other
terms and conditions as the Administrator, in its sole discretion, will determine.

     (h) Maximum Term/Expiration of SARs. An SAR granted under the Plan will expire
upon the date determined by the Administrator, in its sole discretion, and set forth in the Award
Agreement. Notwithstanding the foregoing, the rules of Section 6(b) relating to the maximum term and Section 6(d) relating to
exercise also will apply to SARs.

     (i) Payment of SAR Amount. Upon exercise of an SAR, a Participant will be
entitled to receive payment from the Company in an amount determined by multiplying:

     (i) The difference between the Fair Market Value of a Share on the date of exercise over
the exercise price; times

     (ii) The number of Shares with respect to which the SAR is exercised.

     At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in
Shares of equivalent value, or in some combination thereof.

     9. Performance Units and Performance Shares.

     (a) Grant of Performance Units/Shares. Performance Units and Performance Shares
may be granted to Service Providers at any time and from time to time, as will be determined by the
Administrator, in its sole discretion. The Administrator will have complete discretion in
determining the number of Performance Units and Performance Shares granted to each Participant
provided that during any Fiscal Year, for Performance Units or Performance Shares intended to
qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code, (i)
no Participant will receive Performance Units having an initial value greater than $4,000,000, and
(ii) no Participant will receive more than 1,000,000 Performance Shares. Notwithstanding the
foregoing limitation, for Performance Shares intended to qualify as “performance-based
compensation” within the meaning of Section 162(m) of the Code, in connection with his or her
initial service, a Service Provider may be granted up to an additional 1,000,000 Performance
Shares.

     (b)Value of Performance Units/Shares. Each Performance Unit will have an initial
value that is established by the Administrator on or before the date of grant. Each Performance
Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

     (c) Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions in its discretion which, depending on the extent
to which they are met, will determine the number or value of Performance Units/Shares that will be
paid out to the Service Providers. Each Award of Performance Units/Shares will be evidenced by an
Award Agreement that will specify the Performance Period, and such other terms and conditions as
the Administrator, in its sole discretion, will determine. The Administrator may set performance
objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable
federal or state securities laws, or any other basis determined by the Administrator in its
discretion.

     (d) Earning of Performance Units/Shares. After the applicable Performance Period
has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the
number of Performance Units/Shares earned by the Participant over the Performance Period, to be
determined as a function of the extent to which the corresponding performance objectives or other
vesting provisions have been achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance objectives or other
vesting provisions for such Performance Unit/Share.

     (e) Form and Timing of Payment of Performance Units/Shares. Payment of earned
Performance Units/Shares will be made as soon as practicable after the expiration of the applicable
Performance Period. The Administrator, in its sole discretion, may pay earned Performance
Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the
value of the earned Performance Units/Shares at the close of the applicable Performance Period) or
in a combination thereof.

     (f) Cancellation of Performance Units/Shares. On the date set forth in the Award
Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and
again will be available for grant under the Plan.

     (g) Section 162(m) Performance Restrictions. For purposes of qualifying grants
of Performance Units/Shares as “performance-based compensation” under Section 162(m) of the Code,
the Administrator, in its discretion, may set restrictions based upon the

 

 

achievement of Performance Goals. The Performance Goals will be set by the Administrator on or before the Determination Date. In granting Performance
Units/Shares which are intended to qualify under Section 162(m) of the Code, the Administrator will
follow any procedures determined by it from time to time to be necessary or appropriate to ensure
qualification of the Award under Section 162(m) of the Code (e.g., in determining the Performance
Goals).

     10. Performance Goals. The granting and/or vesting of Awards of Restricted
Stock, Performance Shares and Performance Units and other incentives under the Plan may be made
subject to the attainment of performance goals relating to one or more business criteria within the
meaning of Section 162(m) of the Code and may provide for a targeted level or levels of achievement
(“Performance Goals” ) including: (i) Cash Position, (ii) Clinical Progression, (iii) Collaboration
Arrangement, (iv) Collaboration Progression, (v) Earnings Per Share, (vi) Financing Event, (vii)
Net Income, (viii) Operating Cash Flow, (ix) Operating Expenses, (x) Operating Income, (xi) Product
Approval, (xii) Product Revenues, (xiii) Profit After Tax, (xiv) Projects in Development, (xv)
Regulatory Filings, (xvi) Return on Assets, (xvii) Return on Equity, (xviii) Revenue Growth, and
(xix) Total Stockholder Return. Prior to the Determination Date, the Administrator will determine
whether any significant element(s) will be included in or excluded from the calculation of any
Performance Goal with respect to any Participant. Any Performance Goals may be used to measure the
performance of the Company as a whole or a business unit of the Company and may be measured
relative to a peer group or index. With respect to any Award, Performance Goals may be used alone
or in combination. The Performance Goals may differ from Participant to Participant and from Award
to Award. Prior to the Determination Date, the Administrator will determine whether any significant
element(s) will be included in or excluded from the calculation of any Performance Goal with
respect to any Participant. In all other respects, Performance Goals will be calculated in
accordance with the Company’s financial statements, generally accepted accounting principles, or
under a methodology established by the Administrator prior to the issuance of an Award, which is
consistently applied and identified in the financial statements, including footnotes, or the
management discussion and analysis section of the Company’s annual report. In determining the
amounts earned by a Participant pursuant to an Award intended to qualified as “performance-based
compensation” under Section 162(m) of the Code, the Administrator will have the right to reduce or
eliminate (but not to increase) the amount payable at a given level of performance to take into
account additional factors that the Administrator may deem relevant to the assessment of individual
or corporate performance for the Performance Period. A Participant will be eligible to receive
payment pursuant to an Award intended to qualify as “performance-based compensation” under Section
162(m) of the Code for a Performance Period only if the Performance Goals for such period are
achieved.

     11. Leaves of Absence. Unless the Administrator provides otherwise, vesting of
Awards granted hereunder will be suspended during any unpaid leave of absence. A Service Provider
will not cease to be an Employee in the case of (i) any leave of absence approved by the Company or
(ii) transfers between locations of the Company or between the Company, its Parent, or any
Subsidiary. For purposes of Incentive Stock Options, no such leave may exceed ninety (90) days,
unless reemployment upon expiration of such leave is guaranteed by statute or contract. If
reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed,
then six months and a day following the 1st day of such leave any Incentive Stock Option held by
the Participant will cease to be treated as an Incentive Stock Option and will be treated for tax
purposes as a Nonstatutory Stock Option.

     12. Transferability of Awards. Unless determined otherwise by the Administrator,
an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be exercised, during
the lifetime of the Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as the Administrator
deems appropriate; provided, however, that the Administrator may only make an Award transferable to
one or more of the following: (i) the Participant’s spouse, children or grandchildren (including
any adopted and step children or grandchildren), parents, grandparents, siblings or any “Family
Member” (as defined pursuant to Rule 701 of the Securities Act of 1933, as amended) of the
Participant; (ii) a trust for the benefit of one or more of the Participant or the persons referred
to in clause (i); (iii) a partnership, limited liability company or corporation in which the
Participant or the persons referred to in clause (i) are the only partners, members or
stockholders; or (iv) charitable donations.

     13. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

     (a) Adjustments. In the event that any dividend or other distribution (whether
in the form of cash, Shares, other securities, or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination,
repurchase, or exchange of Shares or other securities of the Company, or other change in the
corporate structure of the Company affecting the Shares occurs, the Administrator, in order to
prevent diminution or enlargement of the benefits or potential benefits intended to be made
available under the Plan, shall appropriately adjust the number and class of Shares that may be
delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding
Award, the numerical Share limits in Sections 3, 6, 7, 8, and 9 of the Plan.

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator will notify each Participant as soon as practicable
prior to the effective date of such proposed transaction. To the extent it has not been previously
exercised, an Award will terminate immediately prior to the consummation of such proposed action.

     (c) Change in Control. In the event of a Change in Control, each outstanding
Award will be assumed or an equivalent option or right substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation. In the event that the successor corporation
refuses to assume or substitute for the Award, the Participant will fully vest in and have the
right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including
Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on
Restricted Stock shall lapse, and, with respect to Performance Shares and Performance Units, all
performance goals or other vesting criteria will be deemed achieved at target levels and all other
terms and conditions met. In addition, if an Option or Stock Appreciation Right is not assumed or
substituted for in the event of a Change in Control, the Administrator will notify the Participant
in writing or electronically that the Option or Stock Appreciation Right will be fully vested and
exercisable for a

 

 

period of time determined by the Administrator in its sole discretion, and the Option or Stock
Appreciation Right will terminate upon the expiration of such period.

     With respect to Awards granted to an Outside Director that are assumed or substituted
for, if on the date of or following such assumption or substitution the Participant’s status as a
Director or a director of the successor corporation, as applicable, is terminated other than upon a
voluntary resignation by the Participant not at the request of the successor, then the Participant
will fully vest in and have the right to exercise Options and/or Stock Appreciation Rights as to
all of the Shares subject to the Award, including Shares as to which such Awards would not
otherwise be vested or exercisable, all restrictions on Restricted Stock shall lapse, and, with
respect to Performance Shares and Performance Units, all performance goals or other vesting
criteria will be deemed achieved at target levels and all other terms and conditions met.

     For the purposes of this subsection (c), an Award will be considered assumed if,
following the Change in Control, the Award confers the right to purchase or receive, for each Share
subject to the Award immediately prior to the Change in Control, the consideration (whether stock,
cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the
exercise of which the Administrator determines to pay cash or a Performance Share or Performance
Unit which the Administrator can determine to pay in cash, the fair market value of the
consideration received in the merger or Change in Control by holders of Common Stock for each Share
held on the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of the outstanding
Shares); provided, however, that if such consideration received in the Change in Control is not
solely common stock of the successor corporation or its Parent, the Administrator may, with the
consent of the successor corporation, provide for the consideration to be received upon the
exercise of an Option or Stock Appreciation Right or upon the payout of a Performance Share or
Performance Unit, for each Share subject to such Award (or in the case of Performance Units, the
number of implied shares determined by dividing the value of the Performance Units by the per share
consideration received by holders of Common Stock in the Change in Control), to be solely common
stock of the successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

     Notwithstanding anything in this Section 13(c) to the contrary, an Award that vests, is
earned or paid-out upon the satisfaction of one or more performance goals will not be considered
assumed if the Company or its successor modifies any of such performance goals without the Participant’s consent; provided, however, a
modification to such performance goals only to reflect the successor corporation’s post-Change in
Control corporate structure will not be deemed to invalidate an otherwise valid Award assumption.

     14. Tax Withholding

     (a) Withholding Requirements. Prior to the delivery of any Shares or cash
pursuant to an Award (or exercise thereof), the Company will have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy
federal, state, local, foreign or other taxes (including the Participant’s FICA obligation)
required to be withheld with respect to such Award (or exercise thereof).

     (b) Withholding Arrangements. The Administrator, in its sole discretion and
pursuant to such procedures as it may specify from time to time, may permit a Participant to
satisfy such tax withholding obligation, in whole or in part by (without limitation) (i) paying
cash, (ii) electing to have the Company withhold otherwise deliverable cash or Shares having a Fair
Market Value equal to the amount required to be withheld, (iii) delivering to the Company
already-owned Shares having a Fair Market Value equal to the amount required to be withheld, or
(iv) selling a sufficient number of Shares otherwise deliverable to the Participant through such
means as the Administrator may determine in its sole discretion (whether through a broker or
otherwise) equal to the amount required to be withheld. The amount of the withholding requirement
will be deemed to include any amount which the Administrator agrees may be withheld at the time the
election is made, not to exceed the amount determined by using the maximum federal, state or local
marginal income tax rates applicable to the Participant with respect to the Award on the date that
the amount of tax to be withheld is to be determined. The Fair Market Value of the Shares to be
withheld or delivered will be determined as of the date that the taxes are required to be withheld.

     15. No Effect on Employment or Service. Neither the Plan nor any Award will
confer upon a Participant any right with respect to continuing the Participant’s relationship as a
Service Provider with the Company, nor will they interfere in any way with the Participant’s right
or the Company’s right to terminate such relationship at any time, with or without cause, to the
extent permitted by Applicable Laws.

     16. Date of Grant. The date of grant of an Award will be, for all purposes, the
date on which the Administrator makes the determination granting such Award, or such later date as
is determined by the Administrator. Notice of the determination will be provided to each
Participant within a reasonable time after the date of such grant.

     17. Term of Plan. Subject to Section 21 of the Plan, the Plan will become
effective upon its adoption by the Board. It will continue in effect for a term of ten (10) years
unless terminated earlier under Section 18 of the Plan.

     18. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Administrator may at any time amend, alter,
suspend or terminate the Plan.

     (b) Stockholder Approval. The Company will obtain stockholder approval of any
Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

 

 

     (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan will impair the rights of any Participant, unless mutually agreed otherwise
between the Participant and the Administrator, which agreement must be in writing and signed by the
Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to
the date of such termination.

     19.Conditions Upon Issuance of Shares.

     (a) Legal Compliance. Shares will not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such Shares will comply
with Applicable Laws and will be further subject to the approval of counsel for the Company with
respect to such compliance.

     (b) Investment Representations. As a condition to the exercise of an Award, the
Company may require the person exercising such Award to represent and warrant at the time of any
such exercise that the Shares are being
purchased only for investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is required.

     20. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s
counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the
Company of any liability in respect of the failure to issue or sell such Shares as to which such
requisite authority will not have been obtained.

     21. Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such
stockholder approval will be obtained in the manner and to the degree required under Applicable
Laws.exv10w1

Exhibit 10.1

Resolutions of the Compensation Committee

of

CARBO Ceramics Inc.

May 18, 2010

RESOLVED, that pursuant to Section 7(c)(iii) of the Company’s Omnibus Incentive Plan, an
annual grant of 200 shares of the Company’s Common Stock be made each year on the first
business day after the date of the Company’s Annual Meeting of Stockholders to each
non-employee Director of the Company serving as such on such date; and be it

FURTHER RESOLVED, that such share grants shall not be subject to a vesting period, and be it

FURTHER RESOLVED, that the Committee recommends to the Board of Directors that, upon each
delivery of shares pursuant to the foregoing resolutions, the share ownership guidelines
applicable to each Director during their tenure on the Board be increased by the number of
such shares he or she then receives.

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