Document:

Exhibit 10.1

 

 

CONTRACT WORK
AUTHORIZATION (Form 1) RELEASE NO. 7

for

ENGINEERING AND

CONSTRUCTION MANAGEMENT SERVICES

Between

ACUSPHERE, INC. (“ACUSPHERE/OWNER”)

and

PARSONS COMMERCIAL TECHNOLOGY INC. (“PARSONS”)

 

 

All work authorized by Acusphere and performed by Parsons in accordance
with this Contract Work Authorization shall be governed by the “Terms and
Conditions for Engineering, Procurement and Construction Management Services
between Acusphere, Inc. and Parsons Commercial Technology Group Inc.” (the EPCM), effective date July 6, 2004.

 

 

CONTRACT WORK AUTHORIZATION RELEASE 7

(Form 1)

FOR

ENGINEERING AND CONSTRUCTION MANAGEMENT SERVICES

 

THIS
Contract Work Authorization for the continuing performance of engineering,
construction management, procurement services and placement of subcontracts
(where applicable) is executed June 15, 2005 and between ACUSPHERE, INC.,
with principal offices at 500 Arsenal Street, Watertown, Massachusetts 02472 (“Acusphere/Owner”)
and PARSONS COMMERCIAL TECHNOLOGY GROUP INC. (“PARSONS”), with principal
offices for this project located at 150 Federal Street, Boston, Massachusetts
02110.

 

This
Contract Work Authorization, the scope of which is defined below, is intended
to cover engineering, construction management, procurement services and
placement of subcontracts (where applicable) (authorized to date by Acusphere)
to be provided by Parsons for Acusphere from July 6, 2004 through July 15,
2005. This Contract Work Authorization (Form 1) Release 7 extends Parsons performance period from May 15, 2005, as previously
authorized per Contract Work Authorization (Form 1) Release 6, to July 15,
2005.

 

IN
CONSIDERATION of the covenants hereinafter set forth, the parties hereto
mutually agree as follows:

 

ARTICLE I                                                             SCOPE OF SERVICES

 

1.1                                 Description of Services

 

Parsons shall continue to perform engineering
construction management and other services as required (hereinafter referred to
as the “Services”) in connection with Owner’s aseptic pharmaceutical
manufacturing facility located at 890 East Street, Tewksbury, Massachusetts
(the “Facilities”), as previously set forth and described in Exhibit 1,
which is attached to Contract Work Authorization (Form 1) Release Number
1, which was executed by the parties November 11, 2004.

 

ARTICLE II                                                         ESTIMATED COST

 

	
  Previous total estimated cost up through

  	
   

  	
   

  
	
  and including Contract
  Work Authorization

  	
   

  	
   

  
	
  (Form 1) Release
  Number 6

  	
   

  	
  $

  	
  16,800,000.00

  
	
   

  	
   

  	
   

  
	
  Estimated increase based on Contract

  	
   

  	
   

  
	
  Work Authorization (Form 1)
  Release Number 7

  	
   

  	
  $

  	
  2,000,000.00

  
	
   

  	
   

  	
   

  
	
  Revised total estimated cost up through

  	
   

  	
   

  
	
  this Contract Work
  Authorization (Form 1)

  	
   

  	
   

  
	
  Release Number 7

  	
   

  	
  $

  	
  18,800,000.00

  

 

It is anticipated that the revised estimated costs
added herein will be incurred prior to July 15, 2005 and that, in accordance
with the terms of the EPCM and Contract Work Authorization (Form 1)
Release Nos. 1, 2, 3, 4, 5, 6 and 7 if Acusphere were to terminate this
contract during this term or elect to not extend this contract beyond July 15,
2005, Acusphere will be liable for costs which may exceed the amounts stated
above.

 

 

ARTICLE III                                                     TERMS AND CONDITIONS

 

THE PARTIES ACKNOWLEDGE AND
AGREE THE TERMS AND CONDITIONS OF THIS AGREEMENT HAVE BEEN FREELY, FAIRLY AND
THOROUGHLY NEGOTIATED. FURTHER, THE PARTIES ACKNOWLEDGE AND AGREE SUCH TERMS
AND CONDITIONS, INCLUDING BUT NOT LIMITED TO THOSE RELATING TO WAIVERS,
ALLOCATIONS OF, RELEASES FROM, INDEMNITES AGAINST AND LIMITATIONS OF LIABILITY,
WHICH MAY REQUIRE CONSPICUOUS IDENTIFICATION, HAVE NOT BEEN SO IDENTIFIED
BY MUTUAL AGREEMENT AND THE PARTIES HAVE ACTUAL KNOWLEDGE OF THE INTENT AND
EFFECT OF SUCH TERMS AND CONDITIONS. EACH PARTY ACKNOWLEDGES THAT IN EXECUTING
THIS AGREEMENT IT RELIED SOLELY ON ITS OWN JUDGEMENT, BELIEF, AND KNOWLEDGE,
AND SUCH ADVICE AS IT MAY HAVE RECEIVED FROM ITS OWN COUNSEL, AND IT HAS
NOT BEEN INFLUENCED BY ANY REPRESENTATION OR STATEMENTS MADE BY ANY OTHER PARTY
OR SUCH OTHER PARTY’S COUNSEL. NO PROVISION IN THIS AGREEMENT IS TO BE
INTERPRETED FOR OR AGAINST ANY PARTY BECAUSE THAT PARTY OR ITS COUNSEL DRAFTED
SUCH PROVISION.

 

ARTICLE IV                                                     SCHEDULE

 

It is estimated that the
work covered by the Contract Work Authorization shall commence and be completed
as noted below:

 

Work commenced on July 6,
2004 and shall be suspended at the end of the day June 15, 2005 unless a
subsequent authorization to continue is received by Parsons from Acusphere on
or prior to July 15, 2005.

 

All other terms and
conditions for the Contract for Engineering, Procurement and Construction
Management Services, as previously amended by Contract Work Authorization
Numbers 1 through 6 remain unchanged.

 

IN WITNESS WHEREOF, the
parties hereto have executed this contract, document as of the date and year
first above written.

 

	
  ACUSPHERE, INC. (“ACUSPHERE”)

  	
   

  	
  PARSONS COMMERCIAL
  TECHNOLOGY GROUP

  
	
   

  	
   

  	
  INC. (“PARSONS”)

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Sherri Oberg

  	
   

  	
   

  	
  By:

  	
  /s/ Daniel Mariani

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title      President and CEO

  	
   

  	
   

  	
  Title Sr. Vice PresidentExhibit 10.1

 

ACUSPHERE, INC.

 

2005 STOCK
OPTION AND INCENTIVE PLAN, AS AMENDED

 

SECTION 1.                                GENERAL PURPOSE OF THE
PLAN; DEFINITIONS

 

The name of the plan is the Acusphere, Inc.
2005 Stock Option and Incentive Plan (the “Plan”).
The purpose of the Plan is to encourage and enable the officers, employees,
directors and other key persons (including consultants and prospective
employees) of Acusphere, Inc. (the “Company”)
and its Subsidiaries upon whose judgment, initiative and efforts the Company
largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company’s welfare will assure a closer
identification of their interests with those of the Company and its
stockholders, thereby stimulating their efforts on the Company’s behalf and
strengthening their desire to remain with the Company.

 

The following terms shall be defined as set forth
below:

 

“Act” means the Securities Act of 1933, as amended,
and the rules and regulations thereunder.

 

“Administrator” is defined in Section 2(a).

 

“Award” or “Awards,”
except where referring to a particular category of grant under the Plan, shall
include Incentive Stock Options, Non-Qualified Stock Options, Stock
Appreciation Rights, Deferred Stock Awards, Restricted Stock Awards and
Unrestricted Stock Awards.

 

“Board” means the Board of Directors of the Company.

 

“Code” means the Internal Revenue Code of 1986, as
amended, and any successor Code, and related rules, regulations and
interpretations.

 

“Committee” means a committee or subcommittee of the
Board.

 

“Covered Employee” means an employee who is a “Covered Employee”
within the meaning of Section 162(m) of the Code.

 

“Deferred Stock Award” means an Award of phantom stock units to a
grantee, subject to restrictions and conditions as the Administrator may
determine at the time of grant.

 

“Effective Date” means the date on which the Plan is approved
by stockholders as set forth in Section 19.

 

“Exchange Act” means the Securities Exchange Act of 1934,
as amended, and the rules and regulations thereunder.

 

“Fair Value” of the Stock on any given date means the
fair value of the Stock determined in good faith by the Administrator;
provided, however, that if the Stock is admitted to quotation on the National
Association of Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ National System or a
national securities exchange, the determination shall be made by

 

 

reference to market
quotations. If there are no market quotations for such date, the determination
shall be made by reference to the last date preceding such date for which there
are market quotations.

 

“Incentive Stock Option” means any Stock Option designated and
qualified as an “incentive stock option” as defined in Section 422 of the
Code.

 

“Non-Qualified Stock Option” means any Stock Option that is not an
Incentive Stock Option.

 

“Option” or “Stock
Option” means any option to purchase shares of Stock granted
pursuant to Section 5.

 

“Performance Cycle” means one or more periods of time, which may
be of varying and overlapping durations, as the Administrator may select, over
which the attainment of one or more performance criteria will be measured for
the purpose of determining a grantee’s right to and the payment of a Restricted
Stock Award or Deferred Stock Award.

 

“Restricted Stock Award” means an Award entitling the recipient to
acquire shares of Stock subject to such restrictions and conditions as the
Administrator may determine at the time of grant.

 

“Section 409A” means Section 409A of the Code and the
regulations and other guidance promulgated thereunder.

 

“Stock” means the Common Stock, par value $0.01 per
share, of the Company, subject to adjustments pursuant to Section 3.

 

“Stock Appreciation Right” means an Award entitling the recipient to
receive shares of Stock having a value equal to the excess of the Fair Value of
the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right (except as otherwise provided for in Section 6).

 

“Subsidiary” means any corporation or other entity (other
than the Company) in which the Company has a controlling interest, either
directly or indirectly.

 

“Ten Percent Owner” means an employee who owns or is deemed to
own (by reason of the attribution rules of Section 424(d) of the
Code) more than 10 percent of the combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation.

 

“Unrestricted Stock Award” means any Award pursuant to which a grantee
may receive shares of Stock free of any restrictions.

 

SECTION 2.                                ADMINISTRATION OF PLAN;
ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

 

(a)                                  Committee.  The Plan shall be administered by
either the Board or one or more Committees of the Board (the “Administrator”).

 

2

 

(b)                                 Powers of Administrator.  The Administrator shall have the
power and authority to grant Awards consistent with the terms of the Plan,
including the power and authority:

 

(i)                                     to select the individuals to whom Awards may
from time to time be granted;

 

(ii)                                  to determine the time or times of grant, and
the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options,
Stock Appreciation Rights, Restricted Stock Awards, Deferred Stock Awards and
Unrestricted Stock Awards, or any combination of the foregoing, granted to any
one or more grantees;

 

(iii)                               to determine the number of shares of Stock to
be covered by any Award;

 

(iv)                              to determine and modify from time to time the
terms and conditions, including restrictions, not inconsistent with the terms
of the Plan, of any Award, which terms and conditions may differ among
individual Awards and grantees, and to approve the form of written instruments
evidencing the Awards;

 

(v)                                 to accelerate at any time the exercisability
or vesting of all or any portion of any Award;

 

(vi)                              subject to the provisions of Section 5(a)(ii),
to extend at any time the period in which Stock Options may be exercised; and

 

(vii)                           at any time to adopt, alter and repeal such
rules, guidelines and practices for administration of the Plan and for its own
acts and proceedings as it shall deem advisable; to interpret the terms and
provisions of the Plan and any Award (including related written instruments);
to make all determinations it deems advisable for the administration of the
Plan; to decide all disputes arising in connection with the Plan; and to
otherwise supervise the administration of the Plan.

 

All decisions and interpretations of the
Administrator shall be binding on all persons, including the Company and Plan
grantees.

 

(c)                                  Delegation of Authority to
Grant Awards.  The
Administrator, in its discretion, may delegate to an executive officer or
officers of the Company all or part of the Administrator’s authority and duties
with respect to the granting of Awards, to individuals who are not subject to
the reporting and other provisions of Section 16 of the Exchange Act or “covered
employees” within the meaning of Section 162(m) of the Code. Any such delegation
by the Administrator shall include a limitation as to the amount of Awards that
may be granted during the period of the delegation and shall contain guidelines
as to the determination of the exercise price of any Stock Option or Stock
Appreciation Right, the conversion ratio or price of other Awards and the
vesting criteria. The Administrator may revoke or amend the terms of a
delegation at any time but such action shall not invalidate any prior actions
of the Administrator’s delegate or delegates that were consistent with the
terms of the Plan.

 

(d)                                 Indemnification.  Neither the Board nor the
Committee, nor any member of either or any delegate thereof, shall be liable
for any act, omission, interpretation, construction or determination made in
good faith in connection with the Plan, and the members of the Board and the
Committee (and any delegate thereof) shall be entitled in all cases to
indemnification and 

 

3

 

reimbursement
by the Company in respect of any claim, loss, damage or expense (including,
without limitation, reasonable attorneys’ fees) arising or resulting therefrom
to the fullest extent permitted by law and/or under any directors’ and officers’
liability insurance coverage which may be in effect from time to time and/or
any indemnification agreement between such individual and the Company.

 

SECTION 3.                                STOCK ISSUABLE UNDER THE
PLAN; MERGERS; SUBSTITUTION

 

(a)                                  Stock Issuable.  The maximum number of shares of
Stock reserved and available for issuance under the Plan shall be 1,700,000
shares, subject to adjustment as provided in Section 3(b); provided that
not more than 800,000 shares shall be issued in the form of Unrestricted Stock
Awards, Restricted Stock Awards or Deferred Stock Awards (excluding for
purposes of such 800,000 share limitation, the shares of Stock underlying any
Awards granted in lieu of cash compensation or fees); and, provided further,
not more than 1,700,000 shares shall be issued in the form of Incentive Stock
Options. For purposes of this limitation, the shares of Stock underlying any
Awards that are expired, terminated, forfeited or canceled shall be added back
to the shares of Stock available for issuance under the Plan. Notwithstanding
the foregoing, shares of Stock that are exchanged or withheld as full or
partial payment in connection with any Award under the Plan, as well as any
shares exchanged or withheld to satisfy all or a portion of the tax withholding
obligations related to an Award, shall not be available for subsequent awards
under the Plan.  Subject to such overall limitations, shares
of Stock may be issued up to such maximum number pursuant to any type or types
of Award; provided, however, that Stock Options or Stock Appreciation Rights
with respect to no more than 1,000,000 shares of Stock may be granted to any
one individual grantee during any one calendar year period. The shares
available for issuance under the Plan may be authorized but unissued shares of
Stock or shares of Stock reacquired by the Company.

 

(b)                                 Changes in Stock.  Subject to Section 3(c) hereof,
if, as a result of any reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split or other similar change in the
Company’s capital stock, the outstanding shares of Stock are increased or
decreased or are exchanged for a different number or kind of shares or other
securities of the Company, or additional shares or new or different shares or
other securities of the Company or other non-cash assets are distributed with
respect to such shares of Stock or other securities, or, if, as a result of any
merger or consolidation, sale of all or substantially all of the assets of the
Company, the outstanding shares of Stock are converted into or exchanged for a
different number or kind of securities of the Company or any successor entity
(or a parent or subsidiary thereof), the Administrator shall make an
appropriate or proportionate adjustment in (i) the maximum number of
shares reserved for issuance under the Plan, including the maximum number of
shares that may be issued in the form of Unrestricted Stock Awards, Restricted
Stock Awards or Deferred Stock Awards, (ii) the maximum number of
Incentive Stock Options that may be issued under the Plan, (iii) the
number of Stock Options or Stock Appreciation Rights that can be granted to any
one individual grantee and the maximum number of shares that may be granted
under a Performance-based Award, (iv) the number and kind of shares or
other securities subject to any then outstanding Awards under the Plan, (v) the
repurchase price, if any, per share subject to each outstanding Restricted
Stock Award, and (vi) the price for each share subject to any then
outstanding Stock Options and Stock Appreciation Rights under the Plan, without
changing the aggregate exercise price (i.e., the exercise price multiplied by
the number

 

4

 

of
Stock Options and Stock Appreciation Rights) as to which such Stock Options and
Stock Appreciation Rights remain exercisable. The adjustment by the
Administrator shall be final, binding and conclusive. No fractional shares of
Stock shall be issued under the Plan resulting from any such adjustment, but
the Administrator in its discretion may make a cash payment in lieu of
fractional shares.

 

The Administrator may also adjust the number of
shares subject to outstanding Awards and the exercise price and the terms of
outstanding Awards to take into consideration material changes in accounting
practices or principles, extraordinary dividends, acquisitions or dispositions
of stock or property or any other event if it is determined by the
Administrator that such adjustment is appropriate to avoid distortion in the
operation of the Plan, provided that no such adjustment shall be made in the
case of a Stock Option or Stock Appreciation Right, without the consent of the
grantee, if it would constitute a modification, extension or renewal of the
Option within the meaning of Section 424(h) of the Code.

 

(c)                                  Acquisition of the Company.

 

(i)                                     Consequences of an
Acquisition.  Upon
the consummation of an Acquisition, the Board or the board of directors of the
surviving or acquiring entity (as used in this Section 3(c), also the “Board”), shall, as to outstanding Awards
(on the same basis or on different bases as the Board shall specify), make
appropriate provision for the continuation of such Awards by the Company or the
assumption of such Awards by the surviving or acquiring entity and by
substituting on an equitable basis for the shares then subject to such Awards
either (a) the consideration payable with respect to the outstanding
shares of Common Stock in connection with the Acquisition, (b) shares of
stock of the surviving or acquiring corporation or (c) such other
securities or other consideration as the Board deems appropriate, the fair
value of which (as determined by the Board in its sole discretion) shall not
materially differ from the fair value of the shares of Common Stock subject to
such Awards immediately preceding the Acquisition. In addition to or in lieu of
the foregoing, with respect to outstanding Options or Stock Appreciation Right,
the Board may, on the same basis or on different bases as the Board shall
specify, upon written notice to the affected optionees, provide that one or
more Options or Stock Appreciation Rights then outstanding must be exercised,
in whole or in part, within a specified number of days of the date of such
notice, at the end of which period such Options or Stock Appreciation Rights
shall terminate, or provide that one or more Options or Stock Appreciation
Rights then outstanding, in whole or in part, shall be terminated in exchange
for a cash payment equal to the excess of the fair value (as determined by the
Board in its sole discretion) for the shares subject to such Options or Stock
Appreciation Rights over the exercise price thereof; provided, however, that before terminating any portion of an
Option or Stock Appreciation Right that is not vested or exercisable (other
than in exchange for a cash payment), the Board must first accelerate in full
the exercisability of the portion that is to be terminated. Unless otherwise
determined by the Board (on the same basis or on different bases as the Board
shall specify), any repurchase rights or other rights of the Company that
relate to an Option or other Award shall continue to apply to consideration,
including cash, that has been substituted, assumed or amended for an Option or
other Award pursuant to this

 

5

 

paragraph. The Company may hold in escrow all or any
portion of any such consideration in order to effectuate any continuing
restrictions.

 

(ii)                                  Acquisition Defined.  An “Acquisition” shall mean:
(x) the sale of the Company by merger in which the shareholders of the
Company in their capacity as such no longer own a majority of the outstanding
equity securities of the Company (or its successor); or (y) any sale of
all or substantially all of the assets or capital stock of the Company (other
than in a spin-off or similar transaction) or (z) any other acquisition of
the business of the Company, as determined by the Board.

 

(iii)                               Parachute Awards.  Except as otherwise provided in
another agreement between the Company and the Participant, if, in connection with
an Acquisition described therein, a tax under Section 4999 of the Code
would be imposed on the Participant (after taking into account the exceptions
set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code), then
the number of Awards which shall become exercisable, realizable or vested shall
be reduced (or delayed), to the minimum extent necessary, so that no such tax
would be imposed on the Participant (the Awards not becoming so accelerated,
realizable or vested, the “Parachute Awards”);
provided, however, that if the “aggregate present value” of the
Parachute Awards would exceed the tax that, but for this sentence, would be
imposed on the Participant under Section 4999 of the Code in connection
with the Acquisition, then the Awards shall become immediately exercisable,
realizable and vested without regard to the provisions of this sentence. For
purposes of the preceding sentence, the “aggregate present value” of an Award
shall be calculated on an after-tax basis (other than taxes imposed by Section 4999
of the Code) and shall be based on economic principles rather than the
principles set forth under Section 280G of the Code and the regulations
promulgated thereunder. All determinations required to be made under this Section 7(e)(iv) shall
be made by the Company.

 

(d)                                 Substitute Awards.  The Administrator may grant
Awards under the Plan in substitution for stock and stock based awards held by
employees, directors or other key persons of another corporation in connection
with the merger or consolidation of the employing corporation or affiliate
thereof with the Company or a Subsidiary or the acquisition by the Company or a
Subsidiary of property or stock of the employing corporation or affiliate
thereof. The Administrator may direct that the substitute awards be granted on
such terms and conditions as the Administrator considers appropriate in the
circumstances. Any substitute Awards granted under the Plan shall not count
against the share limitation set forth in Section 3(a).

 

SECTION 4.                                ELIGIBILITY

 

Grantees under the Plan will be such full or
part-time officers and other employees, directors and key persons (including
consultants and prospective employees) of the Company and its Subsidiaries as
are selected from time to time by the Administrator in its sole discretion.

 

SECTION 5.                                STOCK OPTIONS

 

Any Stock Option granted under the Plan shall be in
such form as the Administrator may from time to time approve.

 

6

 

Stock Options granted under the Plan may be either
Incentive Stock Options or Non-Qualified Stock Options. Incentive Stock Options
may be granted only to employees of the Company or any Subsidiary that is a “subsidiary
corporation” within the meaning of Section 424(f) of the Code. To the
extent that any Option does not qualify as an Incentive Stock Option, it shall
be deemed a Non-Qualified Stock Option.

 

(a)                                  Stock Options Granted to
Employees and Key Persons.  Administrator
in its discretion may grant Stock Options to eligible employees and key persons
of the Company or any Subsidiary. Stock Options granted pursuant to this Section 5(a) shall
be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan,
as the Administrator shall deem desirable. If the Administrator so determines,
Stock Options may be granted in lieu of cash compensation at the optionee’s
election, subject to such terms and conditions as the Administrator may
establish.

 

(i)                                     Exercise Price.  The exercise price per share for
the Stock covered by a Stock Option granted pursuant to this Section 5(a) shall
be determined by the Administrator at the time of grant but shall not be less
than 100 percent (100%) of the Fair Value on the date of grant. In the case
of an Incentive Stock Option that is granted to a Ten Percent Owner, the option
price of such Incentive Stock Option shall be not less than 110 percent
(110%) of the Fair Value on the grant date.

 

(ii)                                  Option Term.  The term of each Stock Option
shall be fixed by the Administrator, but no Stock Option shall be exercisable
more than ten years after the date the Stock Option is granted. In the case of
an Incentive Stock Option that is granted to a Ten Percent Owner, the term of
such Stock Option shall be no more than five years from the date of grant.

 

(iii)                               Exercisability; Rights
of a Stockholder.    Stock
Options shall become exercisable at such time or times, whether or not in
installments, as shall be determined by the Administrator at or after the grant
date. The Administrator may at any time accelerate the exercisability of all or
any portion of any Stock Option. An optionee shall have the rights of a
stockholder only as to shares acquired upon the exercise of a Stock Option and
not as to unexercised Stock Options.

 

(iv)                              Method of Exercise.  Stock Options may be exercised in
whole or in part, by giving written notice of exercise to the Company,
specifying the number of shares to be purchased. Payment of the purchase price
may be made by one or more of the following methods to the extent provided in
the Option Award agreement:

 

(A)                              In cash, by certified or bank check or other
instrument acceptable to the Administrator;

 

(B)                                Subject
to the approval of the Administrator, through the delivery (or attestation to
the ownership) of shares of Stock that have been purchased by the optionee on
the open market or that are beneficially owned by the optionee and are not then
subject to restrictions under any Company plan. Such surrendered shares shall
be valued at Fair Value on the exercise date; or

 

7

 

(C)                                By the optionee delivering to the Company a
properly executed exercise notice together with irrevocable instructions to a
broker to promptly deliver to
the Company cash or a check payable and acceptable to the Company for the
purchase price; provided that in the event the optionee chooses to pay the
purchase price as so provided, the optionee and the broker shall comply with
such procedures and enter into such agreements of indemnity and other
agreements as the Administrator shall prescribe as a condition of such payment
procedure.

 

Payment
instruments will be received subject to collection. The transfer to the
optionee on the records of the Company or the transfer agent of the shares of
Stock to be purchased pursuant to the exercise of a Stock Option will be
contingent upon receipt from the optionee (or a purchaser acting in his stead
in accordance with the provisions of the Stock Option) by the Company of the
full purchase price for such shares and the fulfillment of any other
requirements contained in the Option Award agreement or applicable provisions
of laws (including the satisfaction of any withholding taxes that the Company
is obligated to withhold with respect to the optionee). In the event an
optionee chooses to pay the purchase price by previously-owned shares of Stock
through the attestation method, the number of shares of Stock transferred to
the optionee upon the exercise of the Stock Option shall be net of the number
of shares attested to.

 

(v)                                 Annual Limit on Incentive
Stock Options.  To
the extent required for “incentive stock option” treatment under Section 422
of the Code, the aggregate Fair Value (determined as of the time of grant) of
the shares of Stock with respect to which Incentive Stock Options granted under
this Plan and any other plan of the Company or its parent and subsidiary
corporations become exercisable for the first time by an optionee during any
calendar year shall not exceed the aggregate threshold for incentive stock
options established by the Code ($100,000 as of January 1, 2005). To the
extent that any Stock Option exceeds this limit, it shall constitute a
Non-Qualified Stock Option.

 

SECTION 6.                                STOCK APPRECIATION RIGHTS

 

(a)                                  Grant of Stock Appreciation
Rights.  Stock
Appreciation Rights may be granted by the Administrator in tandem with, or
independently of, any Stock Option granted pursuant to Section 5 of the
Plan. In the case of a Stock Appreciation Right granted in tandem with a Non-Qualified
Stock Option, such Stock Appreciation Right may be granted either at or after
the time of the grant of such Option. In the case of a Stock Appreciation Right
granted in tandem with an Incentive Stock Option, such Stock Appreciation Right
may be granted only at the time of the grant of the Option.

 

(b)                                 Exercise Price.  Stock Appreciation Rights shall
have an exercise price of not less than 100 percent (100%) of the Fair
Value of the Stock on the date of grant (or more than the option exercise price
per share, if the Stock Appreciation Right was granted in tandem with a Stock
Option).

 

(c)                                  Terms and Conditions of
Stock Appreciation Rights.  Stock
Appreciation Rights shall be subject to such terms and conditions as shall be
determined from time to time by the Administrator, subject to the following:

 

8

 

(i)                                     Stock Appreciation Rights granted in tandem
with Options shall be exercisable at such time or times and to the extent that
the related Stock Options shall be exercisable.

 

(ii)                                  Upon exercise of a Stock Appreciation Right,
the applicable portion of any related Option shall be surrendered.

 

(iii)                               A Stock Appreciation Right or applicable
portion thereof granted in tandem with a Stock Option shall terminate and no
longer be exercisable upon the termination or exercise of the related Option.

 

SECTION 7.                                RESTRICTED STOCK AWARDS

 

(a)                                  Purchase Price; Terms.  Shares of Restricted Stock shall
be issued under the Plan at such purchase price (which may be zero) as determined
by the Administrator. The grant of a Restricted Stock Award is contingent on
the grantee executing the Restricted Stock agreement. The terms and conditions
of each such agreement shall be determined by the Administrator, and such terms
and conditions may differ among individual Awards and grantees. Conditions may
be based on continuing employment (or other service relationship) and/or
achievement of pre-established performance goals and objectives.

 

(b)                                 Rights as a Stockholder.  Upon execution of a Restricted
Stock agreement and payment of any applicable purchase price, a grantee shall
have the rights of a stockholder with respect to the voting of the Restricted
Stock, subject to such conditions contained in the Restricted Stock agreement.
Unless the Administrator shall otherwise determine, (i) uncertificated
Restricted Stock shall be accompanied by a notation on the records of the
Company or the transfer agent to the effect that they are subject to forfeiture
until such Restricted Stock are vested as provided in Section 7(d) below,
and (ii) certificated Restricted Stock shall remain in the possession of
the Company until such Restricted Stock is vested as provided in Section 7(d) below,
and the grantee shall be required, as a condition of the grant, to deliver to
the Company such instruments of transfer as the Administrator may prescribe.

 

(c)                                  Restrictions.  Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement. Except
as may otherwise be provided by the Administrator either in the Award agreement
or, subject to Section 15 below, in writing after the Award agreement is
issued, if any, if a grantee’s employment (or other service relationship) with
the Company and its Subsidiaries terminates for any reason, any Restricted
Stock that has not vested at the time of termination shall automatically and
without any requirement of notice to such grantee from or other action by or on
behalf of, the Company be deemed to have been reacquired by the Company at its
original purchase price from such grantee or such grantee’s legal
representative simultaneously with such termination of employment (or other
service relationship), and thereafter shall cease to represent any ownership of
the Company by the grantee or rights of the grantee as a stockholder. Following
such deemed reacquisition of unvested Restricted Stock that are represented by
physical certificates, a grantee shall surrender such certificates to the
Company upon request without consideration.

 

9

 

(d)                                 Vesting of Restricted
Stock.  The
Administrator at the time of grant shall specify the date or dates and/or the
attainment of pre-established performance goals, objectives and other
conditions on which the non-transferability of the Restricted Stock and the
Company’s right of repurchase or forfeiture shall lapse. Subsequent to such
date or dates and/or the attainment of such pre-established performance goals,
objectives and other conditions, the shares on which all restrictions have
lapsed shall no longer be Restricted Stock and shall be deemed “vested.” Except
as may otherwise be provided by the Administrator either in the Award agreement
or, subject to Section 15 below, in writing after the Award agreement is
issued, a grantee’s rights in any shares of Restricted Stock that have not
vested shall automatically terminate upon the grantee’s termination of
employment (or other service relationship) with the Company and its
Subsidiaries and such shares shall be subject to the provisions of Section 7(c) above.

 

SECTION 8.                                DEFERRED STOCK AWARDS

 

(a)                                  Terms of Deferred Stock
Awards.  The grant
of a Deferred Stock Award is contingent on the grantee executing the Deferred
Stock Award agreement. The terms and conditions of each such agreement shall be
determined by the Administrator, and such terms and conditions may differ among
individual Awards and grantees. Conditions may be based on continuing employment
(or other service relationship) and/or achievement of pre-established
performance goals and objectives. At the end of the deferral period, the
Deferred Stock Award, to the extent vested, shall be paid to the grantee in the
form of shares of Stock.

 

(b)                                 Election to Receive
Deferred Stock Awards in Lieu of Compensation.  The Administrator may, in its
sole discretion, permit a grantee to elect to receive a portion of the cash
compensation or Restricted Stock Award otherwise due to such grantee in the
form of a Deferred Stock Award. Any such election shall be made in writing and
shall be delivered to the Company no later than the date specified by the
Administrator and in accordance with Section 409A and such other rules and
procedures established by the Administrator. The Administrator shall have the
sole right to determine whether and under what circumstances to permit such
elections and to impose such limitations and other terms and conditions thereon
as the Administrator deems appropriate.

 

(c)                                  Rights as a Stockholder.  During the deferral period, a
grantee shall have no rights as a stockholder.

 

(d)                                 Termination.  Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to Section 15
below, in writing after the Award agreement is issued, a grantee’s right in all
Deferred Stock Awards that have not vested shall automatically terminate upon
the grantee’s termination of employment (or cessation of service relationship)
with the Company and its Subsidiaries for any reason.

 

SECTION 9.                                UNRESTRICTED STOCK AWARDS

 

Grant or Sale of Unrestricted
Stock.  The
Administrator may, in its sole discretion, grant (or sell at par value or such
higher purchase price determined by the Administrator) an Unrestricted Stock
Award to any grantee under the Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.

 

10

 

SECTION 10.                          PERFORMANCE-BASED AWARDS TO
COVERED EMPLOYEES

 

Notwithstanding anything to the contrary contained
herein, if any Restricted Stock Award or Deferred Stock Award granted to a
Covered Employee is intended to qualify as “Performance-based Compensation”
under Section 162(m) of the Code and the regulations promulgated
thereunder (a “Performance-based Award”), such Award shall comply with the
provisions set forth below:

 

(a)                                  Performance Criteria.  The performance criteria used in
performance goals governing Performance-based Awards granted to Covered
Employees may include any or all of the following: (i) the Company’s
return on equity, assets, capital or investment: (ii) pre-tax or after-tax
profit levels of the Company or any Subsidiary, a division, an operating unit
or a business segment of the Company, or any combination of the foregoing; (iii) cash
flow, funds from operations or similar measure; (iv) total stockholder
return; (v) changes in the market price of the Stock; (vi) sales or
market share; (vii) earnings per share; (viii) clinical enrollment
rates; (ix) manufacturing developments and/or progress; (x) strategic
alliances; (xi) financing of the Company; (xii) clinical objectives;
(xiii) development of the Company’s products and procedures; and
(xiv) other operational objectives of the Company.

 

(b)                                 Grant of Performance-based
Awards.  With
respect to each Performance-based Award granted to a Covered Employee, the
Committee shall select, within the first 90 days of a Performance Cycle
(or, if shorter, within the maximum period allowed under Section 162(m) of
the Code) the performance criteria for such grant, and the achievement targets
with respect to each performance criterion (including a threshold level of
performance below which no amount will become payable with respect to such
Award). Each Performance-based Award will specify the amount payable, or the
formula for determining the amount payable, upon achievement of the various
applicable performance targets. The performance criteria established by the
Committee may be (but need not be) different for each Performance Cycle and
different goals may be applicable to Performance-based Awards to different
Covered Employees.

 

(c)                                  Payment of
Performance-based Awards.  Following
the completion of a Performance Cycle, the Committee shall meet to review and
certify in writing whether, and to what extent, the performance criteria for
the Performance Cycle have been achieved and, if so, to also calculate and
certify in writing the amount of the Performance-based Awards earned for the
Performance Cycle. The Committee shall then determine the actual size of each
Covered Employee’s Performance-based Award, and, in doing so, may reduce or
eliminate the amount of the Performance-based Award for a Covered Employee if,
in its sole judgment, such reduction or elimination is appropriate.

 

(d)                                 Maximum Award Payable.  The maximum Performance-based
Award payable to any one Covered Employee under the Plan for a Performance
Cycle is 1,000,000 Shares (subject to adjustment as provided in Section 3(b) hereof).

 

SECTION 11.                          TRANSFERABILITY OF AWARDS

 

(a)                                  Transferability.  Except as provided in Section 11(b) below,
during a grantee’s lifetime, his or her Awards shall be exercisable only by the
grantee, or by the grantee’s legal representative or guardian in the event of
the grantee’s incapacity. No Awards shall be sold,

 

11

 

assigned,
transferred or otherwise encumbered or disposed of by a grantee other than by
will or by the laws of descent and distribution. No Awards shall be subject, in
whole or in part, to attachment, execution, or levy of any kind, and any
purported transfer in violation hereof shall be null and void.

 

(b)                                 Committee Action.  Notwithstanding Section 11(a),
the Administrator, in its discretion, may provide either in the Award agreement
regarding a given Award or by subsequent written approval that the grantee (who
is an employee or director) may transfer his or her Awards (other than any
Incentive Stock Options) to his or her immediate family members, to trusts for
the benefit of such family members, or to partnerships in which such family
members are the only partners, provided that the transferee agrees in writing
with the Company to be bound by all of the terms and conditions of this Plan
and the applicable Award.

 

(c)                                  Family Member.  For purposes of Section 11(b),
“family member” shall mean a grantee’s child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the grantee’s
household (other than a tenant of the grantee), a trust in which these persons
(or the grantee) have more than 50 percent of the beneficial interest, a
foundation in which these persons (or the grantee) control the management of
assets, and any other entity in which these persons (or the grantee) own more
than 50 percent of the voting interests.

 

(d)                                 Designation of Beneficiary.  Each grantee to whom an Award has
been made under the Plan may designate a beneficiary or beneficiaries to
exercise any Award or receive any payment under any Award payable on or after
the grantee’s death. Any such designation shall be on a form provided for that
purpose by the Administrator and shall not be effective until received by the
Administrator. If no beneficiary has been designated by a deceased grantee, or
if the designated beneficiaries have predeceased the grantee, the beneficiary
shall be the grantee’s estate.

 

SECTION 12.                          TAX WITHHOLDING

 

Payment by Grantee.  Each grantee shall, no later than
the date as of which the value of an Award or of any Stock or other amounts
received thereunder first becomes includable in the gross income of the grantee
for Federal income tax purposes, pay to the Company, or make arrangements
satisfactory to the Administrator regarding payment of, any Federal, state, or
local taxes of any kind required by law to be withheld with respect to such
income. The Company and its Subsidiaries shall, to the extent permitted by law,
have the right to deduct any such taxes from any payment of any kind otherwise
due to the grantee. The Company’s obligation to deliver evidence of book entry
(or stock certificates) to any grantee is subject to and conditioned on tax
obligations being satisfied by the grantee.

 

SECTION 13.                          ADDITIONAL CONDITIONS
APPLICABLE TO NONQUALIFIED DEFERRED COMPENSATION UNDER SECTION 409A.

 

In the event any Stock Option or Stock Appreciation
Right under the Plan is granted with an exercise price of less than
100 percent of the Fair Value on the date of grant (regardless of whether
or not such exercise price is intentionally or unintentionally priced at less
than Fair

 

12

 

Value),
or such grant is materially modified and deemed a new grant at a time when the
Fair Value exceeds the exercise price, or any other Award is otherwise
determined to constitute “nonqualified deferred compensation” within the
meaning of Section 409A (a “409A Award”), the following additional
conditions shall apply and shall supersede any contrary provisions of this Plan
or the terms of any agreement relating to such 409A Award.

 

(a)                                  Exercise and Distribution.  Except as provided in Section 13(b) hereof,
no 409A Award shall be exercisable or distributable earlier than upon one of
the following:

 

(i)                                     Specified Time.  A specified time or a fixed schedule set
forth in the written instrument evidencing the 409A Award, but not later than
after the expiration of ten years from the date such Award was granted.

 

(ii)                                  Separation from Service.  Separation from service (within
the meaning of Section 409A) by the 409A Award recipient; provided
however, if the 409A Award recipient is a “key employee” (as defined in Section 416(i) of
the Code without regard to paragraph (5) thereof) and any of the
Company’s Stock is publicly traded on an established securities market or
otherwise, exercise or distribution under this Section 13(a)(ii) may
not be made before the date that is six months after the date of separation
from service; and provided further, that if necessary, the period of
exercisability of the 409A Award shall be extended to comply herewith.

 

(iii)                               Death.  The date of death of the 409A
Award recipient.

 

(iv)                              Disability.  The date the 409A Award recipient
becomes disabled (within the meaning of Section 14(c)(ii) hereof).

 

(v)                                 Unforeseeable Emergency.  The occurrence of an
unforeseeable emergency (within the meaning of Section 13(c)(iii) hereof),
but only if the net value (after payment of the exercise price) of the number
of shares of Stock that become issuable does not exceed the amounts necessary
to satisfy such emergency plus amounts necessary to pay taxes reasonably
anticipated as a result of the exercise, after taking into account the extent
to which the emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the participant’s
other assets (to the extent such liquidation would not itself cause severe
financial hardship).

 

(vi)                              Change in Control Event.  The occurrence of a Change in
Control Event (within the meaning of Section 13(c)(i) hereof),
including the Company’s discretionary exercise of the right to accelerate
vesting of such grant upon a Change in Control Event or to terminate the Plan
or any 409A Award granted hereunder within 12 months of the Change in
Control Event.

 

(b)                                 No Acceleration.  A 409A Award may not be
accelerated or exercised prior to the time specified in Section 13(a) hereof,
except in the case of one of the following events:

 

(i)                                     Domestic Relations Order.  The 409A Award may permit the
acceleration of the exercise or distribution time or schedule to an
individual other than the Participant as may be necessary to comply with the
terms of a domestic relations order (as defined in Section 414(p)(1)(B) of
the Code).

 

13

 

(ii)                                  Conflicts of Interest.  The 409A Award may permit the
acceleration of the exercise or distribution time or schedule as may be
necessary to comply with the terms of a certificate of divestiture (as defined
in Section 1043(b)(2) of the Code).

 

(iii)                               Change in Control Event.  The Administrator may exercise
the discretionary right to accelerate the vesting of such 409A Award upon a
Change in Control Event or to terminate the Plan or any 409A Award granted
thereunder within 12 months of the Change in Control Event and cancel the
409A Award for compensation.

 

(c)                                  Definitions.  Solely for purposes of this Section 13
and not for other purposes of the Plan, the following terms shall be defined as
set forth below:

 

(i)                                     “Change in Control Event” means the
occurrence of a change in the ownership of the Company, a change in effective
control of the Company, or a change in the ownership of a substantial portion
of the assets of the Company (as defined in IRS Notice 2005-1, Q&A-11,
Q&A-12, Q&A-13 and Q&A-14).

 

(ii)                                  “Disabled” means a grantee (i) is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than
12 months, or (ii) is, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months,
receiving income replacement benefits for a period of not less than three
months under an accident and health plan covering employees of the Company or
its Subsidiaries.

 

(iii)                               “Unforeseeable Emergency” means a severe
financial hardship to the grantee resulting from an illness or accident of the
grantee, the grantee’s spouse, or a dependent (as defined in Section 152(a) of
the Code) of the grantee, loss of the grantee’s property due to casualty, or
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the grantee.

 

SECTION 14.                          TRANSFER, LEAVE OF ABSENCE,
ETC.

 

For purposes of the Plan, the following events shall
not be deemed a termination of employment:

 

(a)                                  a transfer to the employment of the Company
from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary
to another; or

 

(b)                                 an approved leave of absence for military
service or sickness, or for any other purpose approved by the Company, if the
employee’s right to re-employment is guaranteed either by a statute or by
contract or under the policy pursuant to which the leave of absence was granted
or if the Administrator otherwise so provides in writing.

 

SECTION 15.                          AMENDMENTS AND TERMINATION

 

The Board may, at any time, amend or discontinue the
Plan and the Administrator may, at any time, amend or cancel any outstanding
Award for the purpose of satisfying changes in law or

 

14

 

for
any other lawful purpose, but no such action shall adversely affect rights
under any outstanding Award without the holder’s consent. Except as provided in
Section 3(b) or 3(c), in no event may the Administrator exercise its
discretion to reduce the exercise price of outstanding Stock Options or Stock
Appreciation Rights or effect repricing through cancellation and re-grants
without shareholder approval. Any material Plan amendments (other than amendments
that curtail the scope of the Plan), including any Plan amendments that (i) increase
the number of shares reserved for issuance under the Plan, (ii) expand the
type of Awards available under, materially expand the eligibility to
participate in, or materially extend the term of, the Plan, or (iii) materially
change the method of determining Fair Value, shall be subject to approval by
the Company stockholders entitled to vote at a meeting of stockholders. In
addition, to the extent determined by the Administrator to be required by the
Code to ensure that Incentive Stock Options granted under the Plan are
qualified under Section 422 of the Code or to ensure that compensation
earned under Awards qualifies as performance-based compensation under Section 162(m)
of the Code, Plan amendments shall be subject to approval by the Company
stockholders entitled to vote at a meeting of stockholders. Nothing in this Section 15
shall limit the Administrator’s authority to take any action permitted pursuant
to Section 3(c).

 

SECTION 16.                          STATUS OF PLAN

 

With respect to the portion of any Award that has
not been exercised and any payments in cash, Stock or other consideration not
received by a grantee, a grantee shall have no rights greater than those of a
general creditor of the Company unless the Administrator shall otherwise
expressly determine in connection with any Award or Awards. In its sole
discretion, the Administrator may authorize the creation of trusts or other
arrangements to meet the Company’s obligations to deliver Stock or make
payments with respect to Awards hereunder, provided that the existence of such
trusts or other arrangements is consistent with the foregoing sentence.

 

SECTION 17.                          GENERAL PROVISIONS

 

(a)                                  No Distribution; Compliance
with Legal Requirements.  The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof. No shares of Stock
shall be issued pursuant to an Award until all applicable securities law and
other legal and stock exchange or similar requirements have been satisfied. The
Administrator may require the placing of such stop-orders and restrictive
legends on certificates for Stock and Awards as it deems appropriate.

 

(b)                                 Delivery of Stock
Certificates.  Stock
certificates to grantees under this Plan shall be deemed delivered for all
purposes when the Company or a stock transfer agent of the Company shall have
mailed such certificates in the United States mail, addressed to the grantee,
at the grantee’s last known address on file with the Company. Uncertificated
Stock shall be deemed delivered for all purposes when the Company or a Stock
transfer agent of the Company shall have given to the grantee by electronic
mail (with proof of receipt) or by United States mail, addressed to the
grantee, at the grantee’s last known address on file with the Company, notice
of issuance and recorded the issuance in its records (which may include
electronic “book entry” records).

 

15

 

(c)                                  Other Compensation
Arrangements; No Employment Rights.  Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, including trusts, and
such arrangements may be either generally applicable or applicable only in
specific cases. The adoption of this Plan and the grant of Awards do not confer
upon any employee any right to continued employment with the Company or any
Subsidiary.

 

(d)                                 Trading Policy
Restrictions.  Option
exercises and other Awards under the Plan shall be subject to such Company’s
insider trading policy and procedures, as in effect from time to time.

 

SECTION 18.                          EFFECTIVE DATE OF PLAN

 

This Plan shall become effective upon approval by
the holders of a majority of the votes cast at a meeting of stockholders at
which a quorum is present. Subject to such approval by the stockholders and to
the requirement that no Stock may be issued hereunder prior to such approval, Stock
Options and other Awards may be granted hereunder on and after adoption of this
Plan by the Board. No grants of Stock Options and other Awards may be made
hereunder after the tenth (10th) anniversary of the Effective Date
and no grants of Incentive Stock Options may be made hereunder after the tenth
(10th) anniversary of the date the Plan is approved by the Board.

 

SECTION 19.                          GOVERNING LAW

 

This Plan and all Awards and actions taken
thereunder shall be governed by, and construed in accordance with, the laws of
the State of Delaware, applied without regard to conflict of law principles.

 

 

DATE
APPROVED BY BOARD OF DIRECTORS: APRIL 25, 2005

DATE
AMENDED BY BOARD OF DIRECTORS: JUNE 3, 2005

DATE
APPROVED BY STOCKHOLDERS, AS AMENDED: JUNE 16, 2005

 

16

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