Document:

Exhibit
10.35

 

THERAVANCE, INC.

2008 NEW EMPLOYEE EQUITY
INCENTIVE PLAN

 

(AS ADOPTED EFFECTIVE
JANUARY 29, 2008)

(AS AMENDED JULY 21, 2009)

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1.

  	
  INTRODUCTION

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2.

  	
  ADMINISTRATION

  	
  1

  
	
  2.1

  	
  Committee
  Composition

  	
  1

  
	
  2.2

  	
  Committee
  Responsibilities

  	
  1

  
	
  2.3

  	
  Committee
  for Non-Officer Grants

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3.

  	
  SHARES
  AVAILABLE FOR GRANTS

  	
  2

  
	
  3.1

  	
  Basic
  Limitation

  	
  2

  
	
  3.2

  	
  Shares
  Returned to Reserve

  	
  2

  
	
  3.3

  	
  Dividend
  Equivalents

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4.

  	
  ELIGIBILITY

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5.

  	
  OPTIONS

  	
  2

  
	
  5.1

  	
  Stock
  Option Agreement

  	
  2

  
	
  5.2

  	
  Number
  of Shares

  	
  3

  
	
  5.3

  	
  Exercise
  Price

  	
  3

  
	
  5.4

  	
  Exercisability
  and Term

  	
  3

  
	
  5.5

  	
  Modification
  or Assumption of Options

  	
  3

  
	
  5.6

  	
  Buyout
  Provisions

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6.

  	
  PAYMENT
  FOR OPTION SHARES

  	
  3

  
	
  6.1

  	
  General
  Rule

  	
  3

  
	
  6.2

  	
  Surrender
  of Stock

  	
  3

  
	
  6.3

  	
  Net
  Exercise

  	
  4

  
	
  6.4

  	
  Exercise/Sale

  	
  4

  
	
  6.5

  	
  Other
  Forms of Payment

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7.

  	
  RESTRICTED
  SHARES

  	
  4

  
	
  7.1

  	
  Restricted
  Stock Agreement

  	
  4

  
	
  7.2

  	
  Payment
  for Awards

  	
  4

  
	
  7.3

  	
  Vesting
  Conditions

  	
  4

  
	
  7.4

  	
  Voting
  and Dividend Rights

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8.

  	
  STOCK
  UNITS

  	
  4

  
	
  8.1

  	
  Stock
  Unit Agreement

  	
  4

  
	
  8.2

  	
  Payment
  for Awards

  	
  5

  
	
  8.3

  	
  Vesting
  Conditions

  	
  5

  
	
  8.4

  	
  Voting
  and Dividend Rights

  	
  5

  
	
  8.5

  	
  Form and
  Time of Settlement of Stock Units

  	
  5

  
	
  8.6

  	
  Death
  of Recipient

  	
  5

  
	
  8.7

  	
  Creditors’
  Rights

  	
  5

  

 

i

 

	
  ARTICLE
  9.

  	
  CHANGE
  IN CONTROL

  	
  6

  
	
  9.1

  	
  Effect
  of Change in Control

  	
  6

  
	
  9.2

  	
  Acceleration

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10.

  	
  PROTECTION
  AGAINST DILUTION

  	
  6

  
	
  10.1

  	
  Adjustments

  	
  6

  
	
  10.2

  	
  Dissolution
  or Liquidation

  	
  7

  
	
  10.3

  	
  Reorganizations

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11.

  	
  AWARDS
  UNDER OTHER PLANS

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12.

  	
  LIMITATION
  ON RIGHTS

  	
  8

  
	
  12.1

  	
  Retention
  Rights

  	
  8

  
	
  12.2

  	
  Stockholders’
  Rights

  	
  8

  
	
  12.3

  	
  Regulatory
  Requirements

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  13.

  	
  WITHHOLDING
  TAXES

  	
  8

  
	
  13.1

  	
  General

  	
  8

  
	
  13.2

  	
  Share
  Withholding

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14.

  	
  LIMITATION
  ON PAYMENTS

  	
  9

  
	
  14.1

  	
  Scope
  of Limitation

  	
  9

  
	
  14.2

  	
  Basic
  Rule

  	
  9

  
	
  14.3

  	
  Reduction
  of Payments

  	
  9

  
	
  14.4

  	
  Overpayments
  and Underpayments

  	
  10

  
	
  14.5

  	
  Related
  Corporations

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15.

  	
  FUTURE
  OF THE PLAN

  	
  10

  
	
  15.1

  	
  Term
  of the Plan

  	
  10

  
	
  15.2

  	
  Amendment
  or Termination

  	
  10

  
	
  15.3

  	
  Stockholder
  Approval

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE 16.

  	
  DEFINITIONS

  	
  10

  

 

ii

 

THERAVANCE, INC.

2008 NEW EMPLOYEE EQUITY INCENTIVE PLAN

 

ARTICLE 1.                                       INTRODUCTION.

 

The Plan was adopted by the
Board effective January 29, 2008. 
The purpose of the Plan is to promote the long-term success of the
Corporation and the creation of stockholder value by (a) encouraging
Employees to focus on critical long-range objectives, (b) encouraging the
attraction and retention of Employees with exceptional qualifications and (c) linking
Employees directly to stockholder interests through increased stock
ownership.  The Plan seeks to achieve
this purpose by providing for Awards in the form of Restricted Shares, Stock
Units, or Options (which shall be NSOs).

 

The Plan is designed to
attract new employees and is intended to satisfy the requirements of Nasdaq
Marketplace Rule 5635.

 

The Plan shall be governed
by, and construed in accordance with, the laws of the State of Delaware (except
their choice-of-law provisions).

 

ARTICLE 2.                                       ADMINISTRATION.

 

2.1                               Committee
Composition.  The
Committee shall administer the Plan.  The
Committee shall consist exclusively of two or more directors of the
Corporation, who shall be appointed by the Board.  In addition, each member of the Committee
shall meet the following requirements:

 

(a)                                  Any listing
standards prescribed by the principal securities market on which the
Corporation’s equity securities are traded;

 

(b)                                 Such
requirements as the Securities and Exchange Commission may establish for
administrators acting under plans intended to qualify for exemption under Rule 16b-3
(or its successor) under the Exchange Act; and

 

(c)                                  Any other
requirements imposed by applicable law, regulations or rules.

 

2.2                               Committee
Responsibilities.  The
Committee shall (a) select the Employees who are to receive Awards under
the Plan, (b) determine the type, number, vesting requirements and other
features and conditions of such Awards, (c) interpret the Plan, (d) make
all other decisions relating to the operation of the Plan and (e) carry
out any other duties delegated to it by the Board.  The Committee may adopt such rules or
guidelines as it deems appropriate to implement the Plan.  The Committee’s determinations under the Plan
shall be final and binding on all persons.

 

2.3                               Committee
for Non-Officer Grants.  The
Board may also appoint a secondary committee of the Board, which shall be
composed of one or more directors of the 

 

 

Corporation
who need not satisfy the requirements of Section 2.1.  Such secondary committee may administer the
Plan with respect to Employees who are not considered executive officers of the
Corporation under section 16 of the Exchange Act, may grant Awards under
the Plan to such Employees and may determine all features and conditions of
such Awards.  Within the limitations of
this Section 2.3, any reference in the Plan to the Committee shall include
such secondary committee.

 

ARTICLE 3.                                       SHARES
AVAILABLE FOR GRANTS.

 

3.1                               Basic
Limitation.  Common
Shares issued pursuant to the Plan may be authorized but unissued shares or
treasury shares.  The aggregate number of
Common Shares issued under the Plan shall not exceed (a)         (1) plus
(b) the additional Common Shares described in Section 3.2.  The number of Common Shares that are subject
to Awards outstanding at any time under the Plan shall not exceed the number of
Common Shares that then remain available for issuance under the Plan.  The limitations of this Section 3.1
shall be subject to adjustment pursuant to Article 10.

 

3.2                               Shares
Returned to Reserve.  If Options
or Stock Units are forfeited or terminate for any other reason before being
exercised or settled, then the Common Shares subject to such Options or Stock
Units shall again become available for issuance under the Plan.  If Stock Units are settled, then only the
number of Common Shares (if any) actually issued in settlement of such Stock
Units shall reduce the number available under Section 3.1 and the balance
shall again become available for issuance under the Plan.  If Restricted Shares or Common Shares issued
upon the exercise of Options are reacquired by the Corporation pursuant to a
forfeiture provision or for any other reason, then such Common Shares shall
again become available for issuance under the Plan.  Shares not issued or delivered as a result of
the net exercise of an Option shall again become available for issuance under
the Plan.

 

3.3                               Dividend
Equivalents.  Any
dividend equivalents paid or credited under the Plan shall not be applied
against the number of Common Shares that may be issued under the Plan, whether
or not such dividend equivalents are converted into Stock Units.

 

ARTICLE 4.                                       ELIGIBILITY.

 

Only Employees shall be
eligible for the grant of Restricted Shares, Stock Units, or NSOs.

 

ARTICLE 5.                                       OPTIONS.

 

5.1                               Stock
Option Agreement.  Each grant
of an Option under the Plan shall be evidenced by a Stock Option Agreement
between the Optionee and the Corporation. 
Such Option shall be subject to all applicable terms of the Plan and may
be subject to any other terms that are not inconsistent with the Plan.  The provisions of the various Stock Option
Agreements entered into under the Plan need not be identical.  Options may be granted in consideration of a
reduction in the Optionee’s other compensation. 
A Stock Option Agreement may provide that a 

 

(1) Exhibit A
includes a schedule of the initial share reserve and any subsequent increases
in the reserve.

 

2

 

new
Option will be granted automatically to the Optionee when he or she exercises a
prior Option and pays the Exercise Price in the form described in Section 6.2.

 

5.2                               Number
of Shares.  Each Stock
Option Agreement shall specify the number of Common Shares subject to the
Option and shall provide for the adjustment of such number in accordance with Article 10.

 

5.3                               Exercise
Price.  Each Stock Option Agreement
shall specify the Exercise Price; provided that the Exercise Price shall in no
event be less than 100% of the Fair Market Value of a Common Share on the date
of grant.

 

5.4                               Exercisability
and Term.  Each Stock
Option Agreement shall specify the date or event when all or any installment of
the Option is to become exercisable.  The
Stock Option Agreement shall also specify the term of the Option.  A Stock Option Agreement may provide for
accelerated exercisability in the event of the Optionee’s death, disability or
retirement or other events and may provide for expiration prior to the end of
its term in the event of the termination of the Optionee’s Service.

 

5.5                               Modification
or Assumption of Options.   Within the limitations of the Plan, the
Committee may modify, extend, or assume outstanding options.  The foregoing notwithstanding, no
modification of an Option shall, without the consent of the Optionee, alter or
impair his or her rights or obligations under such Option. Notwithstanding
anything in this Plan to the contrary, and except for the adjustments provided
in Articles 9 and 10, neither the Committee nor any other person may decrease
the exercise price for any outstanding Option after the date of grant nor
cancel or allow an optionee to surrender an outstanding Option to the
Corporation as consideration for the grant of a new Option with a lower
exercise price or the grant of another type of Award the effect of which is to
reduce the exercise price of any outstanding Option.

 

5.6                               Buyout
Provisions.  The
Committee may at any time (a) offer to buy out for a payment in cash or
cash equivalents an Option previously granted or (b) authorize an Optionee
to elect to cash out an Option previously granted, in either case at such time
and based upon such terms and conditions as the Committee shall establish.

 

ARTICLE 6.                                       PAYMENT
FOR OPTION SHARES.

 

6.1                               General
Rule.  The entire Exercise Price of
Common Shares issued upon exercise of Options shall be payable in cash or cash
equivalents at the time when such Common Shares are purchased, except that the
Committee at its sole discretion may accept payment of the Exercise Price in any
other form(s) described in this Article 6.  However, if the Optionee is an executive
officer of the Corporation, he or she may pay the Exercise Price in a form
other than cash or cash equivalents only to the extent permitted by
section 13(k) of the Exchange Act.

 

6.2                               Surrender
of Stock.   With the Committee’s consent, all or any part
of the Exercise Price may be paid by surrendering, or attesting to the
ownership of, Common Shares that are already owned by the Optionee.  Such Common Shares shall be valued at their
Fair Market Value on the date when the new Common Shares are purchased under
the Plan.

 

3

 

6.3                               Net
Exercise.  With the
Committee’s consent, all or any part of the Exercise Price may be paid by
requesting that the Corporation withhold Common Shares that otherwise would be
issued in connection with the Option exercise. 
Such Common Shares shall be valued at their Fair Market Value on the
date when the Option is exercised.

 

6.4                               Exercise/Sale.  With the Committee’s consent, all or any part
of the Exercise Price and any withholding taxes may be paid by delivering (on a
form prescribed by the Corporation) an irrevocable direction to a securities
broker approved by the Corporation to sell all or part of the Common Shares
being purchased under the Plan and to deliver all or part of the sales proceeds
to the Corporation.

 

6.5                               Other
Forms of Payment.  With the
Committee’s consent, all or any part of the Exercise Price and any withholding
taxes may be paid in any other form that is consistent with applicable laws,
regulations and rules.

 

ARTICLE 7.                                       RESTRICTED
SHARES.

 

7.1                               Restricted
Stock Agreement.   Each grant of Restricted Shares under the Plan
shall be evidenced by a Restricted Stock Agreement between the recipient and
the Corporation.  Such Restricted Shares
shall be subject to all applicable terms of the Plan and may be subject to any
other terms that are not inconsistent with the Plan.  The provisions of the various Restricted
Stock Agreements entered into under the Plan need not be identical.

 

7.2                               Payment
for Awards.  Restricted
Shares may be sold or awarded under the Plan for such consideration as the
Committee may determine, including (without limitation) cash, cash equivalents,
property, full-recourse promissory notes, past services and future
services.  If the Participant is an
executive officer of the Corporation, he or she may pay for Restricted Shares
with a promissory note only to the extent permitted by section 13(k) of
the Exchange Act.  Within the limitations
of the Plan, the Committee may accept the cancellation of outstanding options
in return for the grant of Restricted Shares.

 

7.3                               Vesting
Conditions.  Each Award
of Restricted Shares may or may not be subject to vesting.  Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Restricted
Stock Agreement.  A Restricted Stock
Agreement may provide for accelerated vesting in the event of the Participant’s
death, disability or retirement or other events.

 

7.4                               Voting
and Dividend Rights.  The holders
of Restricted Shares awarded under the Plan shall have the same voting,
dividend and other rights as the Corporation’s other stockholders.  A Restricted Stock Agreement, however, may
require that the holders of Restricted Shares invest any cash dividends
received in additional Restricted Shares. 
Such additional Restricted Shares shall be subject to the same
conditions and restrictions as the Award with respect to which the dividends
were paid.

 

ARTICLE 8.                                       STOCK
UNITS.

 

8.1                               Stock
Unit Agreement.  Each grant
of Stock Units under the Plan shall be evidenced by a Stock Unit Agreement
between the recipient and the Corporation. 
Such Stock 

 

4

 

Units
shall be subject to all applicable terms of the Plan and may be subject to any
other terms that are not inconsistent with the Plan.  The provisions of the various Stock Unit
Agreements entered into under the Plan need not be identical.  Stock Units may be granted in consideration
of a reduction in the recipient’s other compensation.

 

8.2                               Payment
for Awards.  To the
extent that an Award is granted in the form of Stock Units, no cash
consideration shall be required of the Award recipients.

 

8.3                               Vesting
Conditions.  Each Award
of Stock Units may or may not be subject to vesting.  Vesting shall occur, in full or in
installments, upon satisfaction of the conditions specified in the Stock Unit
Agreement.  A Stock Unit Agreement may
provide for accelerated vesting in the event of the Participant’s death,
disability or retirement or other events.

 

8.4                               Voting
and Dividend Rights.  The holders
of Stock Units shall have no voting rights. 
Prior to settlement or forfeiture, any Stock Unit awarded under the Plan
may, at the Committee’s discretion, carry with it a right to dividend
equivalents.  Such right entitles the
holder to be credited with an amount equal to all cash dividends paid on one
Common Share while the Stock Unit is outstanding.  Dividend equivalents may be converted into
additional Stock Units.  Settlement of
dividend equivalents may be made in the form of cash, in the form of Common
Shares, or in a combination of both. 
Prior to distribution, any dividend equivalents that are not paid shall
be subject to the same conditions and restrictions as the Stock Units to which
they attach.

 

8.5                               Form and
Time of Settlement of Stock Units.  Settlement of vested Stock Units may be made
in the form of (a) cash, (b) Common Shares or (c) any
combination of both, as determined by the Committee.  The actual number of Stock Units eligible for
settlement may be larger or smaller than the number included in the original
Award, based on predetermined performance factors.  Methods of converting Stock Units into cash
may include (without limitation) a method based on the average Fair Market
Value of Common Shares over a series of trading days.  Vested Stock Units may be settled in a lump
sum or in installments.  The distribution
may occur or commence when all vesting conditions applicable to the Stock Units
have been satisfied or have lapsed, or it may be deferred to any later
date.  The amount of a deferred
distribution may be increased by an interest factor or by dividend
equivalents.  Until an Award of Stock
Units is settled, the number of such Stock Units shall be subject to adjustment
pursuant to Article 10.

 

8.6                               Death
of Recipient.  Any Stock
Units Award that becomes payable after the recipient’s death shall be
distributed to the recipient’s beneficiary or beneficiaries.  Each recipient of a Stock Units Award under
the Plan shall designate one or more beneficiaries for this purpose by filing
the prescribed form with the Corporation. 
A beneficiary designation may be changed by filing the prescribed form
with the Corporation at any time before the Award recipient’s death.  If no beneficiary was designated or if no
designated beneficiary survives the Award recipient, then any Stock Units Award
that becomes payable after the recipient’s death shall be distributed to the
recipient’s estate.

 

8.7                               Creditors’
Rights.  A holder of Stock Units shall
have no rights other than those of a general creditor of the Corporation.  Stock Units represent an unfunded and 

 

5

 

unsecured
obligation of the Corporation, subject to the terms and conditions of the
applicable Stock Unit Agreement.

 

ARTICLE 9.                                       CHANGE IN CONTROL

 

9.1                               Effect
of Change in Control.  In the
event of any Change in Control, each outstanding Award shall automatically
accelerate so that each such Award shall, immediately prior to the effective
date of the Change in Control, become fully exercisable for all of the Common
Shares at the time subject to such Award and may be exercised for any or all of
those shares as fully-vested Common Shares. 
However, an outstanding Award shall not so
accelerate if and to the extent such Award is, in connection with the Change in
Control, either to be assumed by the successor corporation (or parent thereof)
or to be replaced with a comparable Award for shares of the capital stock of
the successor corporation (or parent thereof). 
The determination of Award comparability shall be made by the Committee,
and its determination shall be final, binding and conclusive.

 

9.2                               Acceleration.  The Committee shall have the discretion,
exercisable either at the time the Award is granted or at any time while the
Award remains outstanding, to provide for the automatic acceleration of vesting
upon the occurrence of a Change in Control, whether or not the Award is to be
assumed or replaced in the Change in Control.

 

ARTICLE 10.                                PROTECTION
AGAINST DILUTION.

 

10.1                        Adjustments.  In the event of a subdivision of the
outstanding Common Shares, a declaration of a dividend payable in Common Shares
or a combination or consolidation of the outstanding Common Shares (by
reclassification or otherwise) into a lesser number of Common Shares,
corresponding adjustments shall automatically be made in each of the following:

 

(a)                                  The number of
Options, Restricted Shares and Stock Units available for future Awards under Article 3;

 

(b)                                 The number of
Common Shares covered by each outstanding Option;

 

(c)                                  The Exercise
Price under each outstanding Option; or

 

(d)                                 The number of
Stock Units included in any prior Award that has not yet been settled.

 

In the event of a declaration
of an extraordinary dividend payable in a form other than Common Shares in an
amount that has a material effect on the price of Common Shares, a
recapitalization, a spin-off or a similar occurrence, the Committee shall make
such adjustments as it, in its sole discretion, deems appropriate in one or
more of the foregoing.  Except as
provided in this Article 10, a Participant shall have no rights by reason
of any issuance by the Corporation of stock of any class or securities
convertible into stock of any class, any subdivision or consolidation of shares
of stock of any class, the payment of any stock dividend or any other increase
or decrease in the number of shares of stock of any class.

 

6

 

10.2                        Dissolution
or Liquidation.  To the
extent not previously exercised or settled, Options, and Stock Units shall
terminate immediately prior to the dissolution or liquidation of the
Corporation.

 

10.3                        Reorganizations.  In the event that the Corporation is a party
to a merger or consolidation, all outstanding Awards shall be subject to the
agreement of merger or consolidation. 
Such agreement shall provide for one or more of the following:

 

(a)                                  The
continuation of such outstanding Awards by the Corporation (if the Corporation
is the surviving corporation).

 

(b)                                 The assumption
of such outstanding Awards by the surviving corporation or its parent (in a
manner that complies with section 424(a) of the Code with respect to
Options).

 

(c)                                  The
substitution by the surviving corporation or its parent of new awards for such
outstanding Awards (in a manner that complies with section 424(a) of
the Code with respect to Options).

 

(d)                                 Full
exercisability of such outstanding Awards and full vesting of the Common Shares
subject to such Awards, followed by the cancellation of such Awards.  The full exercisability of such Awards and
full vesting of the Common Shares subject to such Awards may be contingent on
the closing of such merger or consolidation. 
The Participants shall be able to exercise such Awards during a period
of not less than five full business days preceding the closing date of such
merger or consolidation, unless (i) a shorter period is required to permit
a timely closing of such merger or consolidation and (ii) such shorter
period still offers the Participants a reasonable opportunity to exercise such
Awards.  Any exercise of such Awards
during such period may be contingent on the closing of such merger or
consolidation.

 

(e)                                  The
cancellation of such outstanding Awards and a payment to the Participants equal
to the excess of (i) the Fair Market Value of the Common Shares subject to
such Awards (whether or not such Awards are then exercisable or such Common
Shares are then vested) as of the closing date of such merger or consolidation
over (ii) their Exercise Price. 
Such payment shall be made in the form of cash, cash equivalents, or
securities of the surviving corporation or its parent with a Fair Market Value
equal to the required amount.  Such
payment may be made in installments and may be deferred until the date or dates
when such Awards would have become exercisable or such Common Shares would have
vested.  Such payment may be subject to
vesting based on the Participant’s continuing service, provided that the
vesting schedule shall not be less favorable to the Participant than the
schedule under which such Award would have become exercisable or such Common
Shares would have vested.  If the
Exercise Price of the Common Shares subject to such Awards exceeds the Fair
Market Value of such Common Shares, then such Awards may be cancelled without
making a payment to the Participants. 
For purposes of this Subsection (e), the Fair Market Value of any
security shall be determined without regard to any vesting conditions that may
apply to such security.

 

7

 

ARTICLE 11.                                AWARDS
UNDER OTHER PLANS.

 

The Corporation may grant
awards under other plans or programs. 
Such awards may be settled in the form of Common Shares issued under
this Plan.  Such Common Shares shall be
treated for all purposes under the Plan like Common Shares issued in settlement
of Stock Units and shall, when issued, reduce the number of Common Shares
available under Article 3.

 

ARTICLE 12.                                LIMITATION
ON RIGHTS.

 

12.1                        Retention
Rights.  Neither the Plan nor any Award
granted under the Plan shall be deemed to give any individual a right to remain
an Employee.  The Corporation and its
Parents, Subsidiaries and Affiliates reserve the right to terminate the Service
of any Employee at any time, with or without cause, subject to applicable laws
and a written employment agreement (if any).

12.2                        Stockholders’
Rights.  A Participant shall have no
dividend rights, voting rights or other rights as a stockholder with respect to
any Common Shares covered by his or her Award prior to the time when a stock
certificate for such Common Shares is issued or, if applicable, the time when
he or she becomes entitled to receive such Common Shares by filing any required
notice of exercise and paying any required Exercise Price.  No adjustment shall be made for cash
dividends or other rights for which the record date is prior to such time,
except as expressly provided in the Plan.

 

12.3                        Regulatory
Requirements.  Any other
provision of the Plan notwithstanding, the obligation of the Corporation to
issue Common Shares under the Plan shall be subject to all applicable laws, rules and
regulations and such approval by any regulatory body as may be required.  The Corporation reserves the right to
restrict, in whole or in part, the delivery of Common Shares pursuant to any
Award prior to the satisfaction of all legal requirements relating to the
issuance of such Common Shares, to their registration, qualification or listing
or to an exemption from registration, qualification or listing.

 

ARTICLE 13.                                WITHHOLDING
TAXES.

 

13.1                        General.  To the extent required by applicable federal,
state, local or foreign law, a Participant or his or her successor shall make
arrangements satisfactory to the Corporation for the satisfaction of any
withholding tax obligations that arise in connection with the Plan.  The Corporation shall not be required to
issue any Common Shares or make any cash payment under the Plan until such
obligations are satisfied.

 

13.2                        Share
Withholding.  To the
extent that applicable law subjects a Participant to tax withholding
obligations, the Committee may permit such Participant to satisfy all or part
of such obligations by having the Corporation withhold all or a portion of any
Common Shares that otherwise would be issued to him or her or by surrendering
all or a portion of any Common Shares that he or she previously acquired.  Such Common Shares shall be valued at their
Fair Market Value on the date when they are withheld or surrendered.

 

8

 

ARTICLE 14.                                LIMITATION
ON PAYMENTS.

 

14.1                        Scope
of Limitation.  This Article 14
shall apply to an Award only if:

 

(a)                                  The independent
auditors selected for this purpose by the Committee (the “Auditors”) determine
that the after-tax value of such Award to the Participant, taking into account
the effect of all federal, state and local income taxes, employment taxes and
excise taxes applicable to the Participant (including the excise tax under
section 4999 of the Code), will be greater after the application of this Article 14
than it was before the application of this Article 14; or

 

(b)                                 The Committee,
at the time of making an Award under the Plan or at any time thereafter,
specifies in writing that such Award shall be subject to this Article 14
(regardless of the after-tax value of such Award to the Participant).

 

If this Article 14
applies to an Award, it shall supersede any contrary provision of the Plan or
of any Award granted under the Plan.

 

14.2                        Basic
Rule.  In the event that the Auditors
determine that any payment or transfer by the Corporation under the Plan to or
for the benefit of a Participant (a “Payment”) would be nondeductible by the
Corporation for federal income tax purposes because of the provisions
concerning “excess parachute payments” in section 280G of the Code, then
the aggregate present value of all Payments shall be reduced (but not below
zero) to the Reduced Amount.  For
purposes of this Article 14, the “Reduced Amount” shall be the amount,
expressed as a present value, which maximizes the aggregate present value of
the Payments without causing any Payment to be nondeductible by the Corporation
because of section 280G of the Code.

 

14.3                        Reduction
of Payments.  If the
Auditors determine that any Payment would be nondeductible by the Corporation
because of section 280G of the Code, then the Corporation shall promptly
give the Participant notice to that effect and a copy of the detailed
calculation thereof and of the Reduced Amount, and the Participant may then
elect, in his or her sole discretion, which and how much of the Payments shall
be eliminated or reduced (as long as after such election the aggregate present
value of the Payments equals the Reduced Amount) and shall advise the Corporation
in writing of his or her election within 10 days of receipt of
notice.  If no such election is made by
the Participant within such 10-day period, then the Corporation may elect which
and how much of the Payments shall be eliminated or reduced (as long as after
such election the aggregate present value of the Payments equals the Reduced
Amount) and shall notify the Participant promptly of such election.  For purposes of this Article 14, present
value shall be determined in accordance with section 280G(d)(4) of
the Code.  All determinations made by the
Auditors under this Article 14 shall be binding upon the Corporation and
the Participant and shall be made within 60 days of the date when a
Payment becomes payable or transferable. 
As promptly as practicable following such determination and the
elections hereunder, the Corporation shall pay or transfer to or for the
benefit of the Participant such amounts as are then due to him or her under the
Plan and shall promptly pay or transfer to or for the benefit of the
Participant in the future such amounts as become due to him or her under the
Plan.

 

9

 

14.4                        Overpayments
and Underpayments.  As a result
of uncertainty in the application of section 280G of the Code at the time
of an initial determination by the Auditors hereunder, it is possible that
Payments will have been made by the Corporation which should not have been made
(an “Overpayment”) or that additional Payments which will not have been made by
the Corporation could have been made (an “Underpayment”), consistent in each
case with the calculation of the Reduced Amount hereunder.  In the event that the Auditors, based upon
the assertion of a deficiency by the Internal Revenue Service against the
Corporation or the Participant that the Auditors believe has a high probability
of success, determine that an Overpayment has been made, such Overpayment shall
be treated for all purposes as a loan to the Participant that he or she shall
repay to the Corporation, together with interest at the applicable federal rate
provided in section 7872(f)(2) of the Code; provided, however, that
no amount shall be payable by the Participant to the Corporation if and to the
extent that such payment would not reduce the amount that is subject to
taxation under section 4999 of the Code. 
In the event that the Auditors determine that an Underpayment has
occurred, such Underpayment shall promptly be paid or transferred by the
Corporation to or for the benefit of the Participant, together with interest at
the applicable federal rate provided in section 7872(f)(2) of the
Code.

 

14.5                        Related
Corporations.  For
purposes of this Article 14, the term “Corporation” shall include
affiliated corporations to the extent determined by the Auditors in accordance
with section 280G(d)(5) of the Code.

 

ARTICLE 15.                                FUTURE
OF THE PLAN.

 

15.1                        Term of
the Plan.  The Plan, as
set forth herein, shall become effective on the date of adoption.  The Plan shall remain in effect until the
earlier of (a) the date the Plan is terminated under Section 15.2 or (b) the
10th anniversary of the date the Board adopted the
Plan.

 

15.2                        Amendment
or Termination.  The Board
may, at any time and for any reason, amend or terminate the Plan.  No Awards shall be granted under the Plan
after the termination thereof.  The
termination of the Plan, or any amendment thereof, shall not affect any Award
previously granted under the Plan.

 

15.3                        Stockholder
Approval.  Approval of
the Corporation’s stockholders shall be required only to the extent required by
applicable laws, regulations or rules.

 

ARTICLE 16.                                DEFINITIONS.

 

16.1                        “Affiliate” means any entity other than a Subsidiary, if the
Corporation and/or one or more Subsidiaries own not less than 50% of such
entity.

 

16.2                        “Award” means any award of an Option, a Restricted Share or a
Stock Unit under the Plan.

 

16.3                        “Board” means the Corporation’s Board of Directors, as
constituted from time to time.

 

10

 

16.4                        “Change in Control” shall mean:

 

(a)                                  The
consummation of a merger or consolidation of the Corporation with or into
another entity or any other corporate reorganization, if persons who were not
stockholders of the Corporation immediately prior to such merger, consolidation
or other reorganization own immediately after such merger, consolidation or
other reorganization 50% or more of the voting power of the outstanding
securities of each of (i) the continuing or surviving entity and (ii) any
direct or indirect parent corporation of such continuing or surviving entity;

 

(b)                                 The sale,
transfer or other disposition of all or substantially all of the Corporation’s
assets;

 

(c)                                  A change in the
composition of the Board, as a result of which fewer than 50% of the incumbent
directors are directors who either:

 

(i)                                     Had been
directors of the Corporation on the date 24 months prior to the date of such
change in the composition of the Board (the “Original Directors”) or

 

(ii)                                  Were appointed
to the Board, or nominated for election to the Board, with the affirmative
votes of at least a majority of the aggregate of (A) the Original
Directors who were in office at the time of their appointment or nomination and
(B) the directors whose appointment or nomination was previously approved
in a manner consistent with this Paragraph (ii); or

 

(d)                                 Any transaction
as a result of which any person is the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the
Corporation representing at least 50% of the total voting power represented by
the Corporation’s then outstanding voting securities.  For purposes of this Paragraph (d), the term “person”
shall have the same meaning as when used in sections 13(d) and 14(d) of
the Exchange Act but shall exclude (i) a trustee or other fiduciary
holding securities under an employee benefit plan of the Corporation or of a
Parent or Subsidiary and (ii) a corporation owned directly or indirectly
by the stockholders of the Corporation in substantially the same proportions as
their ownership of the common stock of the Corporation.

 

Except with respect to a GSK Change In
Control (defined below), (i) any stock purchase by SmithKline Beecham
Corporation, a Pennsylvania corporation (“GSK”), pursuant to the Class A
Common Stock Purchase Agreement dated as of March 30, 2004 or (ii) the
exercise by GSK of any of its rights under the Amended and Restated Governance
Agreement dated as of June 4, 2004 among
the Corporation, GSK, GlaxoSmithKline plc and Glaxo Group Limited (the “Governance
Agreement”) to representation on the Board (and its committees) or (iii) any
acquisition by GSK of securities of the Corporation (whether by merger, tender
offer, private or market purchases or otherwise) not prohibited by the
Governance Agreement shall not constitute a Change in Control.  A transaction shall not constitute a Change
in Control if its sole purpose is to change the state of the Corporation’s
incorporation or to create a holding company that will be owned in
substantially the same proportions by the persons who held the Corporation’s
securities immediately before such transaction. A “GSK Change In Control” shall
mean the acquisition by GSK of the Corporation’s Voting Stock (as defined in
the Governance Agreement) that would 

 

11

 

bring GSK’s Percentage Interest (as defined
in the Governance Agreement) to 100% in compliance with the provisions of the
Governance Agreement.

 

16.5                        “Code” means the Internal Revenue Code of 1986, as amended.

 

16.6                        “Committee” means a committee of the Board, as described in Article 2.

 

16.7                        “Common Share” means one share of the common stock of the
Corporation.

 

16.8                        “Corporation” means Theravance, Inc., a Delaware
corporation.

 

16.9                        “Consultant” means a consultant or adviser who provides bona
fide services to the Corporation, a Parent, a Subsidiary or an Affiliate as an
independent contractor.

 

16.10                 “Employee”
means a common-law employee of the Corporation, a Parent, a Subsidiary or an
Affiliate who is newly hired as a employee by the Corporation, or who is rehired
following a bona fide period of interruption of employment, including persons
who become new employees of the Corporation, a Parent, a Subsidiary or an
Affiliate in connection with a merger or acquisition.

 

16.11                 “Exchange Act”
means the Securities Exchange Act of 1934, as amended.

 

16.12                 “Exercise
Price,” in the case of an Option, means the amount for which one
Common Share may be purchased upon exercise of such Option, as specified in the
applicable Stock Option Agreement.

 

16.13                 “Fair Market
Value” means the closing selling price of one Common Share as
reported on Nasdaq, and if not available, then it shall be determined by the
Committee in good faith on such basis as it deems appropriate.  Whenever possible, the determination of Fair
Market Value by the Committee shall be based on the prices reported in The
Wall Street Journal.  Such
determination shall be conclusive and binding on all persons.

 

16.14                 “NSO”
means a stock option not described in sections 422 or 423 of the Code.

 

16.15                 “Option”
means an NSO granted under the Plan and entitling the holder to purchase Common
Shares.

 

16.16                 “Optionee”
means an individual or estate who holds an Option.

 

16.17                 “Parent”
means any corporation (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, if each of the corporations other
than the Corporation owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in such
chain.  A corporation that attains the
status of a Parent on a date after the adoption of the Plan shall be considered
a Parent commencing as of such date.

 

16.18                 “Participant”
means an individual or estate who holds an Award.

 

12

 

16.19                 “Plan”
means this Theravance, Inc. 2008 New Employee Equity Incentive Plan, as
amended from time to time.

 

16.20                 “Restricted
Share” means a Common Share awarded under the Plan.

 

16.21                 “Restricted
Stock Agreement” means the agreement between the Corporation and the
recipient of a Restricted Share that contains the terms, conditions and
restrictions pertaining to such Restricted Share.

 

16.22                  “Service”
means service as an Employee or Consultant.

 

16.23                 “Stock Option
Agreement” means the agreement between the Corporation and an
Optionee that contains the terms, conditions and restrictions pertaining to his
or her Option.

 

16.24                 “Stock Unit”
means a bookkeeping entry representing the equivalent of one Common Share, as
awarded under the Plan.

 

16.25                 “Stock Unit
Agreement” means the agreement between the Corporation and the
recipient of a Stock Unit that contains the terms, conditions and restrictions
pertaining to such Stock Unit.

 

16.26                 “Subsidiary”
means any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation, if each of the corporations other
than the last corporation in the unbroken chain owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.  A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

 

13

 

EXHIBIT A

 

SCHEDULE OF SHARES RESERVED FOR ISSUANCE UNDER THE PLAN

 

	
  Date of Board/Committee

  Approval

  	
   

  	
  Number of Shares Added

  	
   

  	
  Cumulative Number of

  Shares

  	
   

  
	
  January 29, 2008

  	
   

  	
  Not
  Applicable

  	
   

  	
  500,000

  	
   

  
	
  July 21, 2009

  	
   

  	
  200,000

  	
   

  	
  700,000Exhibit
10.2

 

OMNICELL, INC.

AMENDED
AND RESTATED

 1997 EMPLOYEE STOCK PURCHASE PLAN

 

ADOPTED
BY THE BOARD OF DIRECTORS MARCH 18, 1997

APPROVED
BY STOCKHOLDERS MARCH 6, 1998

AMENDED
BY THE BOARD OF DIRECTORS APRIL 19, 2000

AMENDMENT
APPROVED BY STOCKHOLDERS APRIL 16, 2001

AMENDED
BY THE BOARD OF DIRECTORS MARCH 5, 2009

AMENDMENT
APPROVED BY STOCKHOLDERS MAY 19, 2009

 

1.                                      PURPOSE.

 

(a)           The purpose of the Plan is to provide a means by which
Employees of the Company and certain designated Affiliates may be given an
opportunity to purchase shares of the Common Stock of the Company.

 

(b)           The Company, by means of the Plan, seeks to retain the
services of such Employees, to secure and retain the services of new Employees
and to provide incentives for such persons to exert maximum efforts for the
success of the Company and its Affiliates.

 

(c)           The Company intends that the Rights to purchase shares
of the Common Stock granted under the Plan be considered options issued under
an “employee stock purchase plan,” as that term is defined in Section 423(b) of
the Code.

 

2.                                      DEFINITIONS.

 

(a)           “Affiliate”  means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

 

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

 

(c)           “Code”  means the Internal Revenue Code of 1986, as amended.

 

(d)           “Committee”  means a Committee appointed by the Board in accordance
with subparagraph 3(c) of the Plan.

 

(e)           “Common Stock” means the Common Stock of Omnicell, Inc.

 

(f)            “Company”
means Omnicell, Inc., a Delaware corporation.

 

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

 

(h)           “Eligible
Employee” means an Employee who meets the requirements set forth in the Offering
for eligibility to participate in the Offering.

 

1

 

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

 

(j)            “Employee Stock Purchase
Plan”  means a
plan that grants rights intended to be options issued under an “employee stock
purchase plan,” as that term is defined in Section 423(b) of the
Code.

 

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

 

(l)            “Fair Market Value”  means the value of a security, as determined in good
faith by the Board.  If the security is
listed on any established stock exchange or traded on the Nasdaq National
Market or the Nasdaq SmallCap Market, then, except as otherwise provided in the
Offering, the Fair Market Value of the security shall be the closing sales
price (rounded up where necessary to the nearest whole cent) for such security
(or the closing bid, if no sales were reported) as quoted on such exchange or
market (or the exchange or market with the greatest volume of trading in the
relevant security of the Company) on the relevant determination date, as
reported in The Wall Street Journal or such other
source as the Board deems reliable, or if such date is not a trading day, then
on the next preceding trading day.

 

(m)          “Non-Employee Director”  means a Director who either (i) is not a current
Employee or Officer of the Company or its parent or subsidiary, does not
receive compensation (directly or indirectly) from the Company or its parent or
subsidiary for services rendered as a consultant or in any capacity other than
as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act (“Regulation S-K”)), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a “non-employee director” for purposes of Rule 16b-3.

 

(n)           “Offering”  means the grant of Rights to purchase shares of the
Common Stock under the Plan to Eligible Employees.

 

(o)           “Offering Date” means a date selected by the Board for
an Offering to commence.

 

(p)           “Outside Director”  means a Director who either (i) is not a current
employee of the Company or an “affiliated corporation” (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the
Code), is not a former employee of the Company or an “affiliated corporation”
receiving compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an “affiliated
corporation” at any time, and is not currently receiving direct or indirect
remuneration from the Company or an “affiliated corporation” for services in
any capacity other than as a Director, or (ii) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.

 

(q)           “Participant”  means an Eligible Employee who holds an outstanding
Right granted pursuant to the Plan or, if applicable, such other person who
holds an outstanding Right granted under the Plan.

 

2

 

(r)           “Plan”  means this 
Omnicell, Inc. Amended and Restated 1997 Employee Stock Purchase
Plan.

 

(s)           “Purchase Date”  means one or more dates established by the Board
during an Offering on which Rights granted under the Plan shall be exercised
and purchases of shares of the Common Stock carried out in accordance with such
Offering.

 

(t)            “Right”  means an option to purchase shares of the Common Stock
granted pursuant to the Plan.

 

(u)           “Rule 16b-3”  means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 as in effect with respect to the Company at the
time discretion is being exercised regarding the Plan.

 

(v)            “Securities Act”  means the Securities Act of 1933, as amended.

 

3.                                      ADMINISTRATION.

 

(a)           The Board shall administer the Plan unless and until
the Board delegates administration to a Committee, as provided in subparagraph
3(c).  Whether or not the Board has
delegated administration, the Board shall have the final power to determine all
questions of policy and expediency that may arise in the administration of the
Plan.

 

(b)           The Board (or the Committee) shall have the power,
subject to, and within the limitations of, the express provisions of the Plan:

 

(i)            To determine when and how Rights to purchase shares of
the Common Stock shall be granted and the provisions of each Offering of such
Rights (which need not be identical).

 

(ii)           To designate from time to time which Affiliates of the
Company shall be eligible to participate in the Plan.

 

(iii)         To construe and interpret the Plan and Rights granted
under it, and to establish, amend and revoke rules and regulations for its
administration.  The Board, in the
exercise of this power, may correct any defect, omission or inconsistency in
the Plan, in a manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective.

 

(iv)          To amend the Plan as provided in paragraph 14.

 

(v)            To terminate or suspend the Plan as provided in
paragraph 16.

 

(vi)          Generally, to exercise such powers and to perform such
acts as it deems necessary or expedient to promote the best interests of the
Company and its Affiliates and to carry out the intent that the Plan be treated
as an Employee Stock Purchase Plan.

 

3

 

(c)           The Board may delegate administration of the Plan to a
Committee of the Board composed of two (2) or more members, all of the
members of which Committee may be, in the discretion of the Board, Non-Employee
Directors and/or Outside Directors.  If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee of
two (2) or more Outside Directors any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to the Board
shall thereafter be to the Committee or such a subcommittee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board. 
The Board may abolish the Committee at any time and revest in the Board
the administration of the Plan.

 

4.                                      SHARES SUBJECT TO THE PLAN.

 

(a)           Subject to the provisions of paragraph 13 relating to
adjustments upon changes in securities, the shares of the Common Stock that may
be sold pursuant to Rights granted under the Plan shall not exceed in the
aggregate three million (3,000,000) shares of the Common Stock (the “Reserved
Shares”).  If any Right granted under the
Plan shall for any reason terminate without having been exercised, the shares
of the Common Stock not purchased under such Right shall again become available
for the Plan.

 

(b)           The shares of the Common Stock subject to the Plan may
be unissued shares of the Common Stock or shares of the Common Stock that have
been bought on the open market at prevailing market prices or otherwise.

 

5.                                      GRANT OF RIGHTS; OFFERING.

 

The Board may from time to time grant or provide for
the grant of Rights to purchase shares of the Common Stock under the Plan to
Eligible Employees in an Offering on an Offering Date or Dates selected by the
Board.  Each Offering shall be in such
form and shall contain such terms and conditions as the Board shall deem
appropriate, which shall comply with the requirements of Section 423(b)(5) of
the Code that all Employees granted Rights to purchase shares of the Common
Stock under the Plan shall have the same rights and privileges.  The terms and conditions of an Offering shall
be incorporated by reference into the Plan and treated as part of the
Plan.  The provisions of separate Offerings
need not be identical, but each Offering shall include (through incorporation
of the provisions of this Plan by reference in the document comprising the
Offering or otherwise) the period during which the Offering shall be effective,
which period shall not exceed twenty-seven (27) months beginning with the
Offering Date, and the substance of the provisions contained in paragraphs 6
through 9, inclusive.

 

6.                                      ELIGIBILITY.

 

(a)           Rights may be granted only to Employees of the Company
or, as the Board may designate as provided in subparagraph 3(b), to Employees
of an Affiliate.  Except as provided in
subparagraph 6(b), an Employee shall not be eligible to be granted Rights under
the Plan unless, on the Offering Date, such Employee has been in the employ of
the Company or the Affiliate, as the case may be, for such continuous period
preceding such grant as the Board may require, but in no event shall the
required period of continuous employment be greater than two (2) years;
provided, however, that Employees who are employed by the Company as of the
Effective Date 

 

4

 

of this Plan, as amended
and restated, who would otherwise be Eligible Employees if not for the required
period of continuous employment with the Company shall be eligible to
participate in the Plan with respect to the first Offering Period beginning
with or immediately following the Effective Date of this Plan, as amended and
restated, without regard to their period of prior continuous employment with
the Company provided that they remain in continuous employment through the end
of the first Offering Period.

 

(b)           The Board may provide that each person who, during the
course of an Offering, first becomes an Eligible Employee will, on a date or
dates specified in the Offering which coincides with the day on which such
person becomes an Eligible Employee or which occurs thereafter, receive a Right
under that Offering, which Right shall thereafter be deemed to be a part of
that Offering.  Such Right shall have the
same characteristics as any Rights originally granted under that Offering, as
described herein, except that:

 

(i)            the date on which such Right is granted shall be the “Offering
Date” of such Right for all purposes, including determination of the exercise
price of such Right;

 

(ii)           the period of the Offering with respect to such Right
shall begin on its Offering Date and end coincident with the end of such
Offering; and

 

(iii)         the Board may provide that if such person first
becomes an Eligible Employee within a specified period of time before the end
of the Offering, he or she will not receive any Right under that Offering.

 

(c)           No Employee shall be eligible for the grant of any
Rights under the Plan if, immediately after any such Rights are granted, such
Employee owns stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of stock of the Company or of any
Affiliate.  For purposes of this
subparagraph 6(c), the rules of Section 424(d) of the Code shall
apply in determining the stock ownership of any Employee, and stock which such
Employee may purchase under all outstanding rights and options shall be treated
as stock owned by such Employee.

 

(d)           An Eligible Employee may be granted Rights under the
Plan only if such Rights, together with any other Rights granted under all
Employee Stock Purchase Plans of the Company and any Affiliates, as specified
by Section 423(b)(8) of the Code, do not permit such Eligible
Employee’s rights to purchase shares of the Common Stock or any Affiliate to
accrue at a rate which exceeds twenty five thousand dollars ($25,000) of the
fair market value of such shares of the Common Stock (determined at the time
such Rights are granted) for each calendar year in which such Rights are
outstanding at any time.

 

(e)           The Board may provide in an Offering that Employees
who are highly compensated Employees within the meaning of Section 423(b)(4)(D) of
the Code shall not be eligible to participate.

 

5

 

7.                                      RIGHTS; PURCHASE PRICE.

 

(a)           On each Offering Date, each Eligible Employee,
pursuant to an Offering made under the Plan, shall be granted the Right to
purchase up to the number of shares of the Common Stock purchasable either:

 

(i)            with a percentage designated by the Board not
exceeding fifteen percent (15%) of such Employee’s Earnings (as defined by the
Board in each Offering) during the period which begins on the Offering Date (or
such later date as the Board determines for a particular Offering) and ends on
the date stated in the Offering, which date shall be no later than the end of
the Offering; or

 

(ii)           with a maximum dollar amount designated by the Board
that, as the Board determines for a particular Offering, (1) shall be
withheld, in whole or in part, from such Employee’s Earnings (as defined by the
Board in each Offering) during the period which begins on the Offering Date (or
such later date as the Board determines for a particular Offering) and ends on
the date stated in the Offering, which date shall be no later than the end of
the Offering and/or (2) shall be contributed, in whole or in part, by such
Employee during such period.

 

(b)           The Board shall establish one or more Purchase Dates
during an Offering on which Rights granted under the Plan shall be exercised
and purchases of shares of the Common Stock carried out in accordance with such
Offering.

 

(c)           In connection with each Offering made under the Plan,
the Board may specify a maximum number of shares of the Common Stock that may
be purchased by any Participant as well as a maximum aggregate number of shares
of the Common Stock that may be purchased by all Participants pursuant to such
Offering.  In addition, in connection
with each Offering that contains more than one Purchase Date, the Board may
specify a maximum aggregate number of shares of the Common Stock which may be
purchased by all Participants on any given Purchase Date under the
Offering.  If the aggregate purchase of
shares of the Common Stock upon exercise of Rights granted under the Offering
would exceed any such maximum aggregate amount, the Board shall make a pro rata
allocation of the shares of the Common Stock available in as nearly a uniform
manner as shall be practicable and as it shall deem to be equitable.

 

(d)           The purchase price of shares of the Common Stock
acquired pursuant to Rights granted under the Plan shall be not less than the
lesser of:

 

(i)            an amount equal to eighty-five percent (85%) of the
fair market value of the shares of the Common Stock on the Offering Date; or

 

(ii)           an amount equal to eighty-five percent (85%) of the
fair market value of the shares of the Common Stock on the Purchase Date.

 

8.                                      PARTICIPATION; WITHDRAWAL;
TERMINATION.

 

(a)           An Eligible Employee may become a Participant in the
Plan pursuant to an Offering by delivering a participation agreement to the
Company within the time specified in the Offering, in such form as the Company
provides.  Each such agreement shall
authorize payroll 

 

6

 

deductions of up to the
maximum percentage specified by the Board of such Employee’s Earnings during
the Offering (as defined in each Offering). 
The payroll deductions made for each Participant shall be credited to a
bookkeeping account for such Participant under the Plan and either may be
deposited with the general funds of the Company or may be deposited in a
separate account in the name of, and for the benefit of, such Participant with
a financial institution designated by the Company.  To the extent provided in the Offering, a
Participant may reduce (including to zero) or increase such payroll
deductions.  To the extent provided in
the Offering, a Participant may begin such payroll deductions after the
beginning of the Offering.  A Participant
may make additional payments into his or her account only if specifically
provided for in the Offering and only if the Participant has not already had
the maximum permitted amount withheld during the Offering.

 

(b)           At any time during an Offering, a Participant may
terminate his or her payroll deductions under the Plan and withdraw from the
Offering by delivering to the Company a notice of withdrawal in such form as
the Company provides.  Such withdrawal
may be elected at any time prior to the end of the Offering except as provided
by the Board in the Offering.  Upon such
withdrawal from the Offering by a Participant, the Company shall distribute to
such Participant all of his or her accumulated payroll deductions (reduced to
the extent, if any, such deductions have been used to acquire shares of the
Common Stock for the Participant) under the Offering, without interest unless
otherwise specified in the Offering, and such Participant’s interest in that
Offering shall be automatically terminated. 
A Participant’s withdrawal from an Offering will have no effect upon
such Participant’s eligibility to participate in any other Offerings under the
Plan but such Participant will be required to deliver a new participation
agreement in order to participate in subsequent Offerings under the Plan.

 

(c)           Rights granted pursuant to any Offering under the Plan
shall terminate immediately upon cessation of any participating Employee’s
employment with the Company or a designated Affiliate for any reason (subject
to any post-employment participation period required by law) or other lack of
eligibility. The Company shall distribute to such terminated Employee all of
his or her accumulated payroll deductions (reduced to the extent, if any, such
deductions have been used to acquire shares of the Common Stock for the
terminated Employee) under the Offering, without interest unless otherwise
specified in the Offering. If the accumulated payroll deductions have been
deposited with the Company’s general funds, then the distribution shall be made
from the general funds of the Company, without interest.  If the accumulated payroll deductions have
been deposited in a separate account with a financial institution as provided
in subparagraph 8(a), then the distribution shall be made from the separate
account, without interest unless otherwise specified in the Offering.

 

(d)           Rights granted under the Plan shall not be
transferable by a Participant otherwise than by will or the laws of descent and
distribution, or by a beneficiary designation as provided in paragraph 15 and,
otherwise during his or her lifetime, shall be exercisable only by the person
to whom such Rights are granted.

 

7

 

9.                                      EXERCISE.

 

(a)           On each Purchase Date specified therefor in the
relevant Offering, each Participant’s accumulated payroll deductions and other
additional payments specifically provided for in the Offering (without any
increase for interest) will be applied to the purchase of shares of the Common
Stock up to the maximum number of shares of the Common Stock permitted pursuant
to the terms of the Plan and the applicable Offering, at the purchase price
specified in the Offering.  No fractional
shares of the Common Stock shall be issued upon the exercise of Rights granted
under the Plan unless specifically provided for in the Offering.

 

(b)           Unless otherwise specifically provided in the
Offering, the amount, if any, of accumulated payroll deductions remaining in
any Participant’s account after the purchase of shares of the Common Stock that
is equal to the amount required to purchase one or more whole shares of the
Common Stock on the final Purchase Date of the Offering shall be distributed in
full to the Participant at the end of the Offering, without interest. If the
accumulated payroll deductions have been deposited with the Company’s general
funds, then the distribution shall be made from the general funds of the
Company, without interest. If the accumulated payroll deductions have been
deposited in a separate account with a financial institution as provided in
subparagraph 8(a), then the distribution shall be made from the separate
account, without interest unless otherwise specified in the Offering.  The amount of accumulated payroll deductions
remaining in any Participant’s account that is less than the amount required to
purchase one whole share of Common Stock on the final Purchase Date of the
Offering shall be carried over to the next Offering or shall, if the
Participant requests or does not participate in the next Offering, be refunded.

 

(c)           No Rights granted under the Plan may be exercised to
any extent unless the shares of the Common Stock to be issued upon such
exercise under the Plan (including Rights granted thereunder) are covered by an
effective registration statement pursuant to the Securities Act and the Plan is
in material compliance with all applicable state, foreign and other securities
and other laws applicable to the Plan. 
If on a Purchase Date in any Offering hereunder the Plan is not so
registered or in such compliance, no Rights granted under the Plan or any
Offering shall be exercised on such Purchase Date, and the Purchase Date shall
be delayed until the Plan is subject to such an effective registration
statement and such compliance, except that the Purchase Date shall not be
delayed more than twelve (12) months and the Purchase Date shall in no event be
more than twenty-seven (27) months from the Offering Date.  If, on the Purchase Date of any Offering
hereunder, as delayed to the maximum extent permissible, the Plan is not
registered and in such compliance, no Rights granted under the Plan or any
Offering shall be exercised and all payroll deductions accumulated during the
Offering (reduced to the extent, if any, such deductions have been used to
acquire Shares) shall be distributed to the Participants, without interest
unless otherwise specified in the Offering. If the accumulated payroll
deductions have been deposited with the Company’s general funds, then the
distribution shall be made from the general funds of the Company, without
interest. If the accumulated payroll deductions have been deposited in a
separate account with a financial institution as provided in subparagraph 8(a),
then the distribution shall be made from the separate account, without interest
unless otherwise specified in the Offering.

 

10.                               COVENANTS OF THE COMPANY.

 

(a)           During the terms of the Rights granted under the Plan,
the Company shall ensure that the number of shares of the Common Stock required
to satisfy such Rights are available.

 

8

 

(b)           The Company shall seek to obtain from each federal,
state, foreign or other regulatory commission or agency having jurisdiction
over the Plan such authority as may be required to issue and sell shares of the
Common Stock upon exercise of the Rights granted under the Plan.  If, after reasonable efforts, the Company is
unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of shares of the Common Stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell shares of the Common Stock
upon exercise of such Rights unless and until such authority is obtained.

 

11.                               USE OF PROCEEDS FROM SHARES.

 

Proceeds from the sale of shares of the Common Stock
pursuant to Rights granted under the Plan shall constitute general funds of the
Company.

 

12.                               RIGHTS AS A STOCKHOLDER.

 

A Participant shall not be deemed to be the holder of,
or to have any of the rights of a holder with respect to, shares of the Common
Stock subject to Rights granted under the Plan unless and until the Participant’s
shares of the Common Stock acquired upon exercise of Rights under the Plan are
recorded in the books of the Company.

 

13.                               ADJUSTMENTS UPON CHANGES IN
SECURITIES.

 

(a)           If any change is made in the shares of the Common
Stock subject to the Plan, or subject to any Right, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange
of shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of shares of the Common Stock
subject to the Plan pursuant to subparagraph 4(a), and the outstanding Rights
will be appropriately adjusted in the class(es), number of shares of the Common
Stock and purchase limits of such outstanding Rights.  The Board shall make such adjustments, and
its determination shall be final, binding and conclusive.  (The conversion of any convertible securities
of the Company shall not be treated as a transaction that does not involve the
receipt of consideration by the Company.)

 

(b)           In the event of: 
(i) a dissolution, liquidation, or sale of all or substantially all
of the assets of the Company; (ii) a merger or consolidation in which the
Company is not the surviving corporation; or (iii) a reverse merger in
which the Company is the surviving corporation but the shares of the Common
Stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then: (1) any surviving or acquiring corporation may assume
Rights outstanding under the Plan or may substitute similar rights (including a
right to acquire the same consideration paid to the Company’s stockholders in
the transaction described in this subparagraph 13(b)) for those outstanding
under the Plan, or (2) in the event any surviving or acquiring corporation
does not assume such Rights or substitute similar rights for those outstanding
under the Plan, then, as determined by the Board in its sole discretion, such
Rights 

 

9

 

may continue in full
force and effect or the Participants’ accumulated payroll deductions (exclusive
of any accumulated interest which cannot be applied toward the purchase of
shares of the Common Stock under the terms of the Offering) may be used to
purchase shares of the Common Stock immediately prior to the transaction
described above under the ongoing Offering and the Participants’ Rights under
the ongoing Offering thereafter terminated.

 

14.                               AMENDMENT OF THE PLAN.

 

(a)           The Board at any time, and from time to time, may
amend the Plan.  However, except as
provided in paragraph 13 relating to adjustments upon changes in securities and
except as to minor amendments to benefit the administration of the Plan, to
take account of a change in legislation or to obtain or maintain favorable tax,
exchange control or regulatory treatment for Participants or the Company or any
Affiliate, no amendment shall be effective unless approved by the stockholders
of the Company to the extent stockholder approval is necessary for the Plan to
satisfy the requirements of Section 423 of the Code, Rule 16b-3 under
the Exchange Act and any Nasdaq or other securities exchange listing
requirements.  Currently under the Code,
stockholder approval within twelve (12) months before or after the adoption of
the amendment is required where the amendment will:

 

(i)            Increase the number of shares of the Common Stock
reserved for Rights under the Plan;

 

(ii)           Modify the provisions as to eligibility for
participation in the Plan to the extent such modification requires stockholder
approval in order for the Plan to obtain employee stock purchase plan treatment
under Section 423 of the Code or to comply with the requirements of Rule 16b-3;
or

 

(iii)         Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to obtain employee stock
purchase plan treatment under Section 423 of the Code or to comply with
the requirements of Rule 16b-3.

 

(b)           It is expressly contemplated that the Board may amend
the Plan in any respect the Board deems necessary or advisable to provide
Employees with the maximum benefits provided or to be provided under the
provisions of the Code and the regulations promulgated thereunder relating to
Employee Stock Purchase Plans and/or to bring the Plan and/or Rights granted
under it into compliance therewith.

 

(c)           Rights and obligations under any Rights granted before
amendment of the Plan shall not be impaired by any amendment of the Plan,
except with the consent of the person to whom such Rights were granted, or
except as necessary to comply with any laws or governmental regulations, or
except as necessary to ensure that the Plan and/or Rights granted under the
Plan comply with the requirements of Section 423 of the Code.

 

10

 

15.                               DESIGNATION OF BENEFICIARY.

 

(a)           A Participant may file a written designation of a
beneficiary who is to receive any shares of the Common Stock and/or cash, if
any, from the Participant’s account under the Plan in the event of such
Participant’s death subsequent to the end of an Offering but prior to delivery
to the Participant of such shares of the Common Stock and cash.  In addition, a Participant may file a written
designation of a beneficiary who is to receive any cash from the Participant’s
account under the Plan in the event of such Participant’s death during an
Offering.

 

(b)           The Participant may change such designation of
beneficiary at any time by written notice. 
In the event of the death of a Participant and in the absence of a
beneficiary validly designated under the Plan who is living at the time of such
Participant’s death, the Company shall deliver such shares of the Common Stock
and/or cash to the executor or administrator of the estate of the Participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its sole discretion, may deliver such shares of
the Common Stock and/or cash to the spouse or to any one or more dependents or
relatives of the Participant, or if no spouse, dependent or relative is known
to the Company, then to such other person as the Company may designate.

 

16.                               TERMINATION OR SUSPENSION OF THE
PLAN.

 

(a)           The Board in its discretion may suspend or terminate
the Plan at any time.  Unless sooner
terminated, the Plan shall terminate at the time that all of the shares of the
Common Stock subject to the Plan’s reserve, as increased and/or adjusted from
time to time, have been issued under the terms of the Plan.  No Rights may be granted under the Plan while
the Plan is suspended or after it is terminated.

 

(b)           Rights and obligations under any Rights granted while
the Plan is in effect shall not be impaired by suspension or termination of the
Plan, except as expressly provided in the Plan or with the consent of the
person to whom such Rights were granted, or except as necessary to comply with
any laws or governmental regulation, or except as necessary to ensure that the
Plan and/or Rights granted under the Plan comply with the requirements of Section 423
of the Code.

 

17.                               EFFECTIVE DATE OF PLAN.

 

The Plan shall become effective simultaneously with
the effectiveness of the Company’s registration statement under the Securities
Act with respect to the initial public offering of shares of the Company’s
Common Stock (the “Effective Date”), but no Rights granted under the Plan shall
be exercised unless and until the Plan has been approved by the stockholders of
the Company within twelve (12) months before or after the date the Plan, as
amended and restated, is adopted by the Board, which date may be prior to the
Effective Date.

 

11

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