Document:

Exhibit 10.2

 

1993 DIRECTORS’ STOCK OPTION PLAN OF

INCYTE CORPORATION

(As amended on March 10, 2009)

 

SECTION 1.         INTRODUCTION.

 

The
Plan was adopted on July 28, 1993, amended and restated as of March 30,
2001, and last amended on March 10, 2009. The purpose of the Plan is to
offer the Company’s Nonemployee Directors an opportunity to acquire a
proprietary interest in the success of the Company, or to increase such
interest, by purchasing Shares of the Company’s Stock.  The Plan seeks to achieve this purpose by
providing for the grant of nonstatutory options to purchase Stock.

 

The
Plan is intended to comply in all respects with Rule 16b-3 (or its
successor) under the Exchange Act and shall be construed accordingly.

 

SECTION 2.         DEFINITIONS.

 

(a)           “Board of Directors” shall mean the Board of Directors of the
Company, as constituted from time to time.

 

(b)           “Change in Control” shall mean the occurrence of either of
the following events:

 

(i)            A
change in the composition of the Board of Directors, as a result of which fewer
than one-half of the incumbent directors are directors who either:

 

(A)          Had
been directors of the Company 24 months prior to such change; or

 

(B)           Were
elected, or nominated for election, to the Board of Directors with the
affirmative votes of at least a majority of the directors who had been
directors of the Company 24 months prior to such change and who were still in
office at the time of the election or nomination; or

 

(ii)           Any
“person” (as such term is used in sections 13(d) and 14(d) of the Exchange
Act) by the acquisition or aggregation of securities is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the Company’s then
outstanding securities ordinarily (and apart from rights accruing under special
circumstances) having the right to vote at elections of directors (the “Base
Capital Stock”); except that any change in the relative beneficial ownership of
the Company’s securities by any person resulting solely from a reduction in the
aggregate number of outstanding shares of Base Capital Stock, and any decrease
thereafter in such person’s ownership of securities, shall be disregarded until
such person increases in any manner, directly or indirectly, such person’s
beneficial ownership of any securities of the Company.

 

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

 

(d)           “Company” shall mean Incyte Corporation (formerly Incyte
Genomics, Inc.), a Delaware corporation.

 

(e)           “Employee” shall mean an employee (within the meaning of
section 3401(c) of the Code and the regulations thereunder) of the Company
or of a Subsidiary of the Company.

 

(f)            “Exchange Act” shall mean the Securities Exchange Act of
1934, as amended.

 

(g)           “Exercise Price” shall mean the amount for which one Share
may be purchased upon exercise of an Option, as specified in the applicable
Stock Option Agreement.

 

 

(h)           “Fair Market Value” shall mean the market price of Stock,
determined by the Board of Directors as follows:

 

(i)            If
Stock was traded over-the-counter on the date in question but was not traded on
The Nasdaq Stock Market, then the Fair Market Value shall be equal to the mean
between the last reported representative bid and asked prices quoted for such
date by the principal automated inter-dealer quotation system on which Stock is
quoted or, if the Stock is not quoted on any such system, by the “Pink Sheets”
published by the National Quotation Bureau, Inc.;

 

(ii)           If
Stock was traded over-the-counter on the date in question and was traded on The
Nasdaq Stock Market, then the Fair Market Value shall be equal to the
last-transaction price quoted for such date by The Nasdaq Stock Market;

 

(iii)          If
Stock was traded on a stock exchange on the date in question, then the Fair
Market Value shall be equal to the closing price reported for such date by the
applicable composite-transactions report; and

 

(iv)          If
none of the foregoing provisions is applicable, then the Fair Market Value
shall be determined by the Board of Directors in good faith on such basis as it
deems appropriate.

 

In all cases, the determination of Fair Market Value
by the Board of Directors shall be conclusive and binding on all persons.

 

(i)            “Full Retirement” shall mean the retirement from the Board
of Directors of a member after such member reaches the age of 70.

 

(j)            “Nonemployee Director” shall mean a member of the Board of
Directors who is not an Employee.

 

(k)           “Nonstatutory Option” shall mean a stock option not described
in sections 422(b) or 423(b) of the Code.

 

(l)            “Option” shall mean a Nonstatutory Option granted under the
Plan and entitling the holder to purchase Shares.

 

(m)          “Optionee” shall mean an individual who holds an Option.

 

(n)           “Plan” shall mean this 1993 Directors’ Stock Option Plan of
Incyte Corporation (formerly Incyte Genomics, Inc.), as it may be amended
from time to time.

 

(o)           “Reverse Split” shall mean the one-for-two reverse split of
the Stock authorized by the Board of Directors prior to the initial adoption of
the Plan.

 

(p)           “Service” shall mean service as a member of the Board of
Directors, whether or not as a Nonemployee Director.

 

(q)           “Share” shall mean one share of Stock, as adjusted in
accordance with Section 6 (if applicable). 
All references to numbers of Shares in Section 3 hereof give effect
to the Reverse Split and the 100% stock dividends paid in November 1997
and August 2000.

 

(r)            “Stock” shall mean the Common Stock ($.001 par value) of the
Company.

 

(s)           “Stock Option Agreement” shall mean the agreement between the
Company and an Optionee that contains the terms, conditions and restrictions
pertaining to his or her Option.

 

2

 

(t)            “Subsidiary” shall mean any corporation, if the Company
and/or one or more other Subsidiaries own not less than 50 percent of the
total combined voting power of all classes of outstanding stock of such
corporation.  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.

 

(u)           “Total and Permanent Disability” shall mean that the Optionee
is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to
result in death or which has lasted, or can be expected to last, for a
continuous period of not less than one year.

 

SECTION 3.         STOCK SUBJECT TO
PLAN.

 

(a)           Basic
Limitation.  Shares offered under the
Plan shall be authorized but unissued Shares or treasury Shares.  The aggregate number of Shares which may be
issued under the Plan shall not exceed 1,575,000 Shares, subject to adjustment
pursuant to Section 6. The number of
Shares that are subject to Options at any time shall not exceed the number of
Shares that then remain available for issuance under the Plan.  The Company, during the term of the Plan,
shall at all times reserve and keep available sufficient Shares to satisfy the
requirements of the Plan.

 

(b)           Additional
Shares.  In the event that any
outstanding Option for any reason expires or is canceled or otherwise
terminated, the Shares allocable to the unexercised portion of such Option
shall again be available for the purposes of the Plan.

 

SECTION 4.         TERMS AND CONDITIONS
OF OPTIONS.

 

(a)           Stock
Option Agreement.  Each grant of an
Option under the Plan shall be evidenced by a Stock Option Agreement between
the Optionee and the Company.  Such
Option shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions that are not inconsistent with
the Plan and that the Board of Directors deems appropriate for inclusion in a
Stock Option Agreement.

 

(b)           Initial
Grants.  Each new Nonemployee
Director who first joins the Board of Directors after June 1, 2005 shall
receive an Option covering 35,000 Shares within one business day after his or
her initial election to the Board of Directors. 
The number of Shares included in an Option shall be subject to
adjustment under Section 6.

 

(c)           Annual
Grants.  On the first business day
following the conclusion of each regular annual meeting of the Company’s
stockholders, each Nonemployee Director who will continue serving as a member
of the Board of Directors thereafter shall receive an Option covering 20,000
Shares, subject to adjustment under Section 6.  Each Nonemployee Director who is not
initially elected at a regular annual meeting of the Company’s stockholders
shall receive an Option to purchase a pro rata portion of 20,000 Shares within
ten business days of such Director’s election based on the number of full
months remaining from date of election until the next regular annual meeting of
the Company’s stockholders divided by twelve. 
Any fractional shares resulting from such calculation shall be rounded
up to the nearest whole number.

 

(d)           Exercise
Price.  The Exercise Price under each
Option shall be equal to 100 percent of the Fair Market Value of the Stock
subject to such Option on the date when such Option is granted.  The entire Exercise Price of Shares issued
under the Plan shall be payable in cash when such Shares are purchased, except
as follows:

 

(i)            Payment
may be made all or in part with Shares that have already been owned by the
Optionee or the Optionee’s representative for more than six months and that are
surrendered to the Company in good form for transfer.  Such Shares shall be valued at their Fair
Market Value on the date when the new Shares are purchased under the Plan.

 

(ii)           Payment
may be made all or in part by the delivery (on a form prescribed by the
Company) of an irrevocable direction to a securities broker approved by the
Company to sell Shares and

 

3

 

to deliver all or
part of the sales proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.

 

(iii)          Payment
may be made all or in part by the delivery (on a form prescribed by the
Company) of an irrevocable direction to pledge Shares to a securities broker or
lender approved by the Company, as security for a loan, and to deliver all or
part of the loan proceeds to the Company in payment of all or part of the
Exercise Price and any withholding taxes.

 

(e)           Vesting.  Each Option granted under Subsection (b) above
shall become exercisable (i) as to one-fourth (1/4) of the total number of
shares covered by such Option on the first anniversary of the date of grant and
(ii) as to one-forty-eighth (1/48) of the total number of shares covered
by such Option on each of a series of thirty-six (36) monthly installments
thereafter.  Except as set forth in the
next succeeding sentence and in the last sentence of this Subsection (e), each
Option granted under Subsection (c) above shall become exercisable in
full on the first anniversary of the date of grant; provided, however, that
each such Option shall become exercisable in full immediately prior to the next
regular annual meeting of the Company’s stockholders following such date of
grant in the event such meeting occurs prior to such first anniversary date.  Except as set forth in the last sentence of
this Subsection (e), each Option granted under Subsection (c) to
Nonemployee Directors who were not initially elected at a regular annual
meeting of the Company’s stockholders shall become exercisable in full
immediately prior to the next regular annual meeting of the Company’s
stockholders following the date of grant. 
Notwithstanding the foregoing, each Option granted under Subsection (c) above
that is outstanding shall become exercisable in full in the event that a Change
in Control occurs with respect to the Company.

 

(f)            Term
of Options.  Subject to Subsections (g) and
(h) below, each Option shall expire on the 10th anniversary of the date
when such Option was granted.

 

(g)           Termination
of Service (Except by Death).  If an
Optionee’s Service terminates for any reason other than death, then his or her
Options shall expire on the earliest of the following occasions (provided,
however, that clause (iii) below shall be applicable only to Options
granted after March 29, 2005):

 

(i)            The
expiration date determined pursuant to Subsection (f) above;

 

(ii)           The
date 24 months after the termination of the Optionee’s Service, if the
termination occurs because of his or her Total and Permanent Disability;

 

(iii)          The
date 12 months after the termination of the Optionee’s Service, if the
termination occurs because of his or her Full Retirement; or

 

(iv)          The
date six months after the termination of the Optionee’s Service for any
reason other than Total and Permanent Disability or, if clause (iii) above
is applicable, Full Retirement.

 

The Optionee may exercise all or part of his or her
Options at any time before the expiration of such Options under the preceding
sentence, but only to the extent that such Options had become exercisable
before his or her Service terminated. 
The balance of such Options shall lapse when the Optionee’s Service
terminates.  In the event that the
Optionee dies after the termination of his or her Service but before the
expiration of his or her Options, all or part of such Options may be exercised
at any time prior to their expiration by the executors or administrators of the
Optionee’s estate or by any person who has acquired such Options directly from
him or her by bequest, inheritance or beneficiary designation under the Plan,
but only to the extent that such Options had become exercisable before his or
her Service terminated.

 

(h)           Death
of Optionee.  If an Optionee dies
while he or she is in Service, then his or her Options shall expire on the
earlier of the following dates:

 

(i)            The
expiration date determined pursuant to Subsection (f) above; or

 

(ii)           The
date 24 months after his or her death.

 

4

 

All or part of the Optionee’s Options may be exercised
at any time before the expiration of such Options under the preceding sentence
by the executors or administrators of his or her estate or by any person who
has acquired such Options directly from him or her by bequest, inheritance or
beneficiary designation under the Plan.

 

(i)            Nontransferability.  No Option shall be transferable by the
Optionee other than by will, by written beneficiary designation or by the laws
of descent and distribution.  An Option
may be exercised during the lifetime of the Optionee only by the Optionee or by
the Optionee’s guardian or legal representative.  No Option or interest therein may be
transferred, assigned, pledged or hypothecated by the Optionee during his or
her lifetime, whether by operation of law or otherwise, or be made subject to
execution, attachment or similar process.

 

(j)            Stockholder
Approval.  Subsection (e) above
notwithstanding, no Option shall be exercisable under any circumstances unless
and until the Company’s stockholders have approved the Plan.

 

(k)           Notwithstanding the foregoing, the
Board of Directors may from time to time increase the number of Shares subject
to an initial or annual grant of Options under Subsection (b) or (c) above
to any Nonemployee Director to the extent the Board of Directors determines
necessary to induce a Nonemployee Director to become or remain a Nonemployee
Director or to reflect an increase in the duties or responsibilities of the
Nonemployee Director, subject to all terms and conditions of the Plan otherwise
applicable to grants of Options, except that the Exercise Price under each such
Option may be equal to or greater than one hundred percent (100%) of the Fair
Market Value of the Stock subject to the Option on the date when such Option is
granted and each such Option may become exercisable on the same schedule as set
forth in Subsection (e) or on a different schedule, as the Board of
Directors in each case shall determine.

 

SECTION 5.         MISCELLANEOUS
PROVISIONS.

 

(a)           No
Rights as a Stockholder.  An
Optionee, or a transferee of an Optionee, shall have no rights as a stockholder
with respect to any Shares covered by his or her Option until he or she becomes
entitled, pursuant to the terms of such Option, to receive such Shares.  No adjustment shall be made, except as
provided in Section 6.

 

(b)          Modification,
Extension and Assumption of Options. 
Within the limitations of the Plan, the Board of Directors may modify,
extend or assume outstanding Options or may accept the cancellation of
outstanding Options (whether granted by the Company or another issuer) in
return for the grant of new Options for the same or a different number of
Shares and at the same or a different Exercise Price; provided, however, that
the Board of Directors may not modify outstanding Options to lower the Exercise
Price nor may the Board of Directors assume or accept the cancellation of
outstanding Options in return for the grant of new Options with a lower
Exercise Price, unless such action has been approved by the Company’s
stockholders.  The foregoing
notwithstanding, no modification of an Option shall, without the consent of the
Optionee, impair such Optionee’s rights or increase his or her obligations
under such Option.

 

(c)           Restrictions
on Issuance of Shares.  Shares shall
not be issued under the Plan unless the issuance and delivery of such Shares
comply with (or are exempt from) all applicable requirements of law, including
(without limitation) the Securities Act of 1933, as amended, the rules and
regulations promulgated thereunder, state securities laws and regulations, and
the regulations of any stock exchange on which the Company’s securities may
then be listed.  The Company may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates) if, in the judgment
of the Company and its counsel, such restrictions are necessary or desirable in
order to achieve compliance with the provisions of the Securities Act of 1933,
as amended, the securities laws of any state or any other law.

 

(d)           Withholding
Taxes.  The Company’s obligation to
deliver Stock upon the exercise of an Option shall be subject to any applicable
tax withholding requirements.

 

(e)           No
Retention Rights.  No provision of
the Plan, nor any Option granted under the Plan, shall be construed as giving
any person the right to be elected as, or to be nominated for election as, a
Nonemployee Director or to remain a Nonemployee Director.

 

5

 

SECTION 6.         ADJUSTMENT OF SHARES.

 

(a)           General.  In the event of a subdivision of the
outstanding Stock, a declaration of a dividend payable in Shares, a declaration
of a dividend payable in a form other than Shares in an amount that has a
material effect on the value of Shares, a combination or consolidation of the
outstanding Stock into a lesser number of Shares, a recapitalization, a
spin-off, a reclassification or a similar occurrence, the Board of Directors
shall make appropriate adjustments in one or more of (i) the number of
Shares available for future grants under Section 3, (ii) the number
of Shares to be covered by each new Option under Section 4, (iii) the
number of Shares covered by each outstanding Option or (iv) the Exercise
Price under each outstanding Option.

 

(b)           Reorganizations.  In the event that the Company is a party to a
merger or other reorganization, outstanding Options shall be subject to the
agreement of merger or reorganization. 
Such agreement shall provide (i) for the assumption of outstanding
Options by the surviving corporation or its parent, (ii) for their continuation
by the Company, if the Company is a surviving corporation, (iii) for
payment of a cash settlement equal to the difference between the amount to be
paid for one Share pursuant to such agreement and the Exercise Price or (iv) for
the acceleration of their exercisability followed by the cancellation of
Options not exercised, in all cases without the Optionees’ consent.  Any cancellation shall not occur until after
such acceleration is effective and Optionees have been notified of such
acceleration.

 

(c)           Reservation
of Rights.  Except as provided in
this Section 6, an Optionee shall have no rights by reason of (i) any
subdivision or consolidation of shares of stock of any class, (ii) the
payment of any dividend or (iii) any other increase or decrease in the
number of shares of stock of any class. 
Any issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or
Exercise Price of Shares subject to an Option. 
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure, to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.

 

SECTION 7.         DURATION AND
AMENDMENTS.

 

(a)           Term
of the Plan.  The Plan shall become
effective on the date of its adoption by the Board of Directors, subject to
approval of the Company’s stockholders. 
The Plan shall remain in effect until it is terminated under Subsection (b) below.

 

(b)           Right
to Amend or Terminate the Plan.  The
Board of Directors may amend, suspend or terminate the Plan at any time and for
any reason, except that the provisions of the Plan relating to the amount,
price and timing of Option grants shall not be amended more than once in any
six-month period.  Any amendment of the
Plan shall be subject to the approval of the Company’s stockholders to the
extent required by applicable laws, regulations, rules, listing standards or
other requirements, including (without limitation) Rule 16b-3 under the
Exchange Act.  Stockholder approval shall
not be required for any other amendment of the Plan.

 

(c)           Effect
of Amendment or Termination.  No
Shares shall be issued or sold under the Plan after the termination thereof,
except upon exercise of an Option granted prior to such termination.  The termination of the Plan, or any amendment
thereof, shall not affect any Option previously granted under the Plan.

 

6Exhibit 10.3

 

1997
EMPLOYEE STOCK PURCHASE PLAN OF

INCYTE
CORPORATION

(As amended on March 10,
2009)

 

The following constitute the provisions of the 1997
Employee Stock Purchase Plan of Incyte Corporation, as amended and restated September 15,
2006, and last amended on March 10, 2009.

 

1.             Purpose.  The purpose of the Plan is to provide
employees of the Company and its Designated Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll
deductions.  It is the intention of the Company to have the Plan qualify
as an “Employee Stock Purchase Plan” under Section 423 of the Internal
Revenue Code of 1986, as amended.  The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a manner
consistent with the requirements of that section of the Code.

 

2.             Definitions.

 

(a)           “Administrator” shall mean the
Board or a committee consisting exclusively of members of the Board that has
been appointed by the Board and authorized to administer the Plan.

 

(b)           “Board” shall mean the Board of
Directors of the Company.

 

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

 

(d)           “Common Stock” shall mean the
Common Stock, $.001 par value, of the Company.

 

(e)           “Company” shall mean Incyte
Corporation.

 

(f)            “Compensation” shall mean all cash
salary, wages, commissions and bonuses, but shall not include any imputed
income or income arising from the exercise or disposition of equity
compensation.

 

(g)           “Effective Date” shall mean September 15,
2006.

 

(h)           “Designated Subsidiary” shall mean
any Subsidiary which has been designated by the Board from time to time in its
sole discretion as eligible to participate in the Plan.

 

(i)            “Employee” shall mean any
individual who is an Employee of the Company or its Designated Subsidiaries for
tax purposes whose customary employment is at least twenty (20) hours per week
and more than five (5) months in any calendar year.  For purposes of
the Plan, the employment relationship shall be treated as continuing intact
while the individual is on sick leave or other leave of absence approved by the
Company or its Designated Subsidiaries, as applicable.  Where the period
of leave exceeds 90 days and the individual’s right to reemployment is not
guaranteed either by statute or by contract, the employment relationship shall
be deemed to have terminated on the 91st day of such leave.

 

(j)            “Enrollment Date” shall mean the
first day of each Offering Period.

 

(k)           “Exercise Date” shall mean the
last Trading Day of each Purchase Period.

 

(l)            “Fair Market Value” shall mean, as
of any date, the value of Common Stock determined as follows:

 

(1)           If the Common Stock is listed on any
established stock exchange other than The NASDAQ Stock Market, its Fair Market
Value shall be the last reported sale price for the Common Stock reported by
the applicable composite transactions report for such exchange on the date of
determination, as reported on such

 

 

stock exchange’s website or such other source,
including The Wall Street Journal,
as the Administrator deems reliable; or

 

(2)           If the Common Stock is listed on The
NASDAQ Stock Market, its Fair Market Value shall be the last reported sale
price for the Common Stock quoted on The NASDAQ Stock Market on the date of
determination, as reported on www.nasdaq.com or such other source, including The Wall Street Journal, as the
Administrator deems reliable;

 

(3)           If the Common Stock is traded
over-the-counter and is quoted on the OTC Bulletin Board, its Fair Market Value
shall be the last transaction price for the Common Stock quoted by the OTC
Bulletin Board on the date of determination, as reported on www.otcbb.com or
such other source as the Administrator deems reliable;

 

(4)           If the Common Stock is traded
over-the-counter but is not quoted on the OTC Bulletin Board, its Fair Market
Value shall be the mean of the closing bid and asked prices for the Common
Stock on the date of determination, as reported on www.pinksheets.com or such
other source as the Administrator deems reliable; or

 

(5)           In the absence of an established market
for the Common Stock, the Fair Market Value thereof shall be determined in good
faith by the Board.

 

(m)          “Offering Periods” shall mean the
periods of approximately twenty-four (24) months during which an option granted
pursuant to the Plan may be exercised, commencing on the first Trading Day on
or after May 1 and November 1 of each year and terminating on the
last Trading Day in the periods ending twenty-four months later.  The
duration and timing of Offering Periods may be changed pursuant to Section 4
of this Plan.

 

(n)           “Plan” shall mean this Employee
Stock Purchase Plan.

 

(o)           “Purchase Price” shall mean an
amount equal to 85% of the Fair Market Value of a share of Common Stock on the
Enrollment Date or on the Exercise Date, whichever is lower.

 

(p)           “Purchase Period” shall mean the
approximately six-month period commencing after one Exercise Date and ending
with the next Exercise Date, except that the first Purchase Period of any
Offering Period shall commence on the Enrollment Date and end with the next
Exercise Date.  The duration and timing of Purchase Periods may be changed
pursuant to Section 4 of this Plan.

 

(q)           “Reserves” shall mean the number
of shares of Common Stock covered by each option under the Plan which have not
yet been exercised and the number of shares of Common Stock which have been
authorized for issuance under the Plan but not yet placed under option.

 

(r)            “Subsidiary” shall mean a
corporation (as defined in Treasury Regulation section 1.421-1(i)), domestic or
foreign, of which not less than 50% of the voting shares are held by the
Company or a Subsidiary, whether or not such corporation now exists or is
hereafter organized or acquired by the Company or a Subsidiary.

 

(s)           “Trading Day” shall mean a day on which
the national securities exchange or stock market on which the Common Stock is
principally traded, or, if the Common Stock is not listed or quoted on any
securities exchange or stock market, the New York Stock Exchange, is open for
trading.

 

3.             Eligibility.

 

(a)           Any Employee who has been employed for
one month or more on a given Enrollment Date shall be eligible to participate
in the Plan.

 

(b)           Any provisions of the Plan to the
contrary notwithstanding, no Employee shall be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Employee (or any
other person whose stock would be attributed to such Employee pursuant to Section 424(d) of
the Code) would own stock

 

C-2

 

and/or hold outstanding options to purchase such stock
possessing five percent (5%) or more of the total combined voting power or
value of all classes of stock of the Company, its parent or any Subsidiary, or (ii) to
the extent that his or her rights to purchase stock under all employee stock
purchase plans of the Company, its parent and Subsidiaries accrues at a rate
which exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined
at the fair market value of the shares at the time such option is granted) for
each calendar year in which such option is outstanding at any time.

 

4.             Offering Periods.  The Plan shall be implemented by
consecutive, overlapping Offering Periods with a new Offering Period commencing
on the first Trading Day on or after May 1 and November 1 each year,
or on such other dates as the Board shall determine, and continuing thereafter
until terminated in accordance with Section 19 hereof.  The Board or
a committee thereof shall have the power to change the duration of Offering
Periods (including the commencement dates thereof) and Purchase Periods
thereunder with respect to future offerings without stockholder approval if
such change is announced at least five (5) days prior to the scheduled
beginning of the first Offering Period to be affected thereafter.

 

5.             Participation.

 

(a)           An eligible Employee may become a
participant in the Plan by completing a subscription agreement authorizing
payroll deductions substantially in the form of Exhibit A to this Plan and
filing it with the Company’s stock administrator not later than ten (10) business
days prior to the applicable Enrollment Date.

 

(b)           Payroll deductions for a participant
shall commence on the first payroll following the Enrollment Date and shall end
on the last payroll in the Offering Period to which such authorization is
applicable, unless sooner terminated by the participant as provided in Section 10
hereof.

 

6.             Payroll Deductions.

 

(a)           At the time a participant files his or
her subscription agreement, he or she shall elect to have payroll deductions
made on each pay day during the Offering Period in an amount not less than one
percent (1%) and not more than ten percent (10%) of the participant’s
Compensation, with such amount designated in integral multiples of one percent
(1%); provided, however, that the aggregate of such payroll deductions during
any Offering Period shall not exceed ten percent (10%) of the participant’s
aggregate Compensation during such Offering Period.

 

(b)           All payroll deductions made for a
participant shall be credited to his or her account under the Plan and shall be
withheld in whole percentages only.  A participant may not make any
additional payments into such account.

 

(c)           A participant may discontinue his or her
participation in the Plan as provided in Section 10, or may increase or
decrease the rate of his or her payroll deductions as provided in this Section 6(c). 
A participant may increase the rate of his or her payroll deductions only as of
the beginning of a Purchase Period.  Such increase shall take effect with
the first payroll following the beginning of the new Purchase Period provided
the participant has completed and delivered to the Company’s stock
administrator a new subscription agreement authorizing the increase in the
payroll deduction rate at least ten (10) business days prior to the
beginning of the new Purchase Period.  A participant may decrease the rate
of his or her payroll deductions each month.  Any decrease shall become
effective as of the first payroll of the next calendar month following the date
that the participant completes and delivers to the Company’s stock
administrator a new subscription agreement authorizing the decrease in the
payroll deduction rate.  However, if the subscription agreement is not
received at least five (5) business days prior to such payroll, the
decrease shall become effective as of the first payroll of the second
succeeding calendar month.  The Administrator may, in its discretion,
limit the number of participation rate changes during any Offering
Period.  Subject to the foregoing, a participant’s subscription agreement
shall remain in effect for successive Offering Periods unless terminated as
provided in Section 10 hereof.

 

(d)           Notwithstanding the foregoing, to the
extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof,
a participant’s payroll deductions may be decreased to zero percent (0%) at any
time during a Purchase Period.  Such a decrease shall not be treated as a
withdrawal from the

 

C-3

 

Plan subject to Section 10, unless the
participant elects to withdraw pursuant to Section 10.  Payroll
deductions shall recommence at the rate provided in such participant’s
subscription agreement at the beginning of the first Purchase Period which is
scheduled to end in the following calendar year, unless the participant elects
to withdraw from the Plan as provided in Section 10 hereof.

 

(e)           At the time the option is exercised, in
whole or in part, or at the time some or all of the Common Stock issued under
the Plan is disposed of, the participant must make adequate provision for the
federal, state, or other tax withholding obligations, if any, which arise upon
the exercise of the option or the disposition of the Common Stock.  At any
time, the Company or a Designated Subsidiary, as applicable, may, but shall not
be obligated to, withhold from the participant’s compensation the amount
necessary to meet applicable withholding obligations, including any withholding
required to make available any tax deductions or benefits attributable to sale
or early disposition of Common Stock by the Employee.

 

7.             Grant of Option.  On the Enrollment Date of each
Offering Period, each eligible Employee participating in such Offering Period
shall be granted an option to purchase on each Exercise Date during such
Offering Period (at the applicable Purchase Price) up to a number of shares of
Common Stock determined by dividing such Employee’s payroll deductions
accumulated prior to such Exercise Date and retained in the Participant’s
account as of the Exercise Date by the applicable Purchase Price; provided that
in no event shall an Employee be permitted to purchase during each Purchase
Period more than eight thousand (8,000) shares of Common Stock (subject to any
adjustment pursuant to Section 18) on the Enrollment Date, and provided
further that such purchase shall be subject to the limitations set forth in
Sections 3(b) and 13 hereof.  Exercise of the option shall occur
as provided in Section 8 hereof, unless the participant has withdrawn
pursuant to Section 10 hereof.  The option shall expire on the last
day of the Offering Period.

 

8.             Exercise of Option.  Unless a participant withdraws
from the Plan as provided in Section 10 hereof, his or her option for the
purchase of shares of Common Stock shall be exercised automatically on the
Exercise Date, and the maximum number of full shares of Common Stock subject to
option shall be purchased for such participant at the applicable Purchase Price
with the accumulated payroll deductions in his or her account.  No
fractional shares shall be purchased; any payroll deductions accumulated in a
participant’s account which are not sufficient to purchase a full share shall
be retained in the participant’s account for the subsequent Purchase Period or
Offering Period, subject to earlier withdrawal by the participant as provided
in Section 10 hereof.  Any other monies left over in a participant’s
account after the Exercise Date shall be returned to the participant.  During
a participant’s lifetime, a participant’s option to purchase shares hereunder
is exercisable only by him or her.

 

9.             Delivery.  As promptly as practicable after each Exercise
Date on which a purchase of shares occurs, a share certificate or certificates
representing the number of shares of Common Stock so purchased shall be
delivered to a brokerage account designated by the Company and kept in such
account pursuant to a subscription agreement between each participant and the
Company and subject to the conditions described therein which may include a
requirement that shares be held and not sold for certain time periods, or the
Company shall establish some other means for such participants to receive
ownership of the shares.

 

10.           Discontinuation; Withdrawal.

 

(a)           A participant may discontinue his or her
participation in the Plan only by withdrawing from the Plan as provided in this
Section 10.  A participant may withdraw all but not less than all the
payroll deductions credited to his or her account and not yet used to exercise
his or her option under the Plan by giving written notice to the Company
substantially in the form of Exhibit B to this Plan.  Such notice
must be received by the Company no later than 2:00 p.m. Pacific Standard
Time on the second Trading Day preceding the Exercise Date.  All of the
participant’s payroll deductions credited to his or her account shall be paid
to such participant promptly after receipt of notice of withdrawal and such
participant’s option for the Offering Period shall be automatically terminated,
and no further payroll deductions for the purchase of shares shall be made for
such Offering Period.  If a participant withdraws from an Offering Period,
payroll deductions shall not resume at the beginning of the succeeding Offering
Period unless the participant delivers to the Company a new subscription
agreement in accordance with Section 5(a).

 

C-4

 

(b)           A participant’s withdrawal from an
Offering Period shall not have any effect upon his or her eligibility to
participate in any similar plan which may hereafter be adopted by the Company
or in succeeding Offering Periods which commence after the participant
withdraws from the Plan, subject to compliance with Section 5(a).

 

11.           Termination of Employment.

 

Upon a participant’s ceasing to be an Employee, for
any reason, he or she shall be deemed to have elected to withdraw from the Plan
and the payroll deductions credited to such participant’s account during the
Offering Period but not yet used to exercise the option shall be returned to
such participant or, in the case of his or her death, to the person or persons
entitled thereto under Section 15 hereof, and such participant’s option
shall be automatically terminated.

 

12.           Interest.  No interest shall accrue on the payroll
deductions of a participant in the Plan.

 

13.           Stock.

 

(a)           The maximum number of shares of Common
Stock which shall be made available for sale under the Plan shall be five
million three hundred fifty thousand (5,350,000) shares, subject to adjustment
upon changes in capitalization of the Company as provided in Section 18
hereof.  If, on a given Exercise Date, the number of shares with respect
to which options are to be exercised exceeds the number of shares then available
under the Plan, the Company shall make a pro rata allocation of the shares
remaining available for purchase in as uniform a manner as shall be practicable
and as it shall determine to be equitable.

 

(b)           The participant shall have no interest or
voting right in shares covered by his option until such option has been
exercised.

 

(c)           Shares purchased by a participant under
the Plan shall be registered in the name of the participant or in the name of
the participant and his or her spouse.

 

14.           Administration.  The Plan shall be administered by
the Administrator.  The Administrator shall have full and exclusive
discretionary authority to adopt such rules, guidelines and forms as it deems
appropriate to implement the Plan, to construe, interpret and apply the terms
of the Plan, to determine eligibility and to adjudicate all disputed claims
filed under the Plan.  Every finding, decision and determination made by
the Administrator shall, to the full extent permitted by law, be final and
binding upon all parties.

 

15.           Designation of Beneficiary.

 

(a)           A participant may file a written
designation of a beneficiary who is to receive any shares and cash, if any,
from the participant’s account under the Plan in the event of such participant’s
death subsequent to an Exercise Date on which the option is exercised but prior
to delivery to such participant of such shares 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 prior to exercise of the option.  If a participant is
married and the designated beneficiary is not the spouse, spousal consent shall
be required for such designation to be effective.

 

(b)           Such designation of beneficiary may be
changed by the participant 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 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 discretion, may deliver such shares 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.           Transferability.  Neither payroll deductions
credited to a participant’s account nor any rights with regard to the exercise
of an option or to receive shares under the Plan may be assigned, transferred,
pledged or 

 

C-5

 

otherwise disposed of in any way (other than by will,
the laws of descent and distribution or as provided in Section 15 hereof)
by the participant.  Any such attempt at assignment, transfer, pledge or
other disposition shall be without effect, except that the Company may treat
such act as an election to withdraw funds from an Offering Period in accordance
with Section 10 hereof.

 

17.           Use of Funds.  All payroll deductions received
or held by the Company under the Plan may be used by the Company for any
corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

 

18.           Adjustments Upon Changes in Capitalization,
Dissolution, Liquidation, Merger or Asset Sale.

 

(a)           Changes in Capitalization.  Subject to any required action by
the stockholders of the Company, the Reserves, the maximum number of shares
each participant may purchase each Purchase Period (pursuant to Section 7),
as well as the Purchase Price per share and the number of shares of Common
Stock covered by each option under the Plan which has not yet been exercised
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Common Stock, or
any other increase or decrease in the number of outstanding shares of Common
Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been “effected without receipt of consideration”.  Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive.  Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an option.

 

(b)           Dissolution or Liquidation.  In the event of the proposed
dissolution or liquidation of the Company, the Offering Periods shall terminate
immediately prior to the consummation of such proposed action, unless otherwise
provided by the Board.

 

(c)           Merger or Asset Sale.  In the event of a proposed sale
of all or substantially all of the assets of the Company, or the merger of the
Company with or into another corporation, limited liability company or other
entity, the Plan shall terminate upon the date of the consummation of such
transaction and any Purchase Periods then in progress shall be shortened by
setting a new Exercise Date (the “New Exercise Date”) and any Offering Periods
then in progress shall end on the New Exercise Date, unless the plan of merger,
consolidation or reorganization provides otherwise.  The New Exercise Date
shall be determined by the Board in its sole discretion; provided, that the New
Exercise Date shall be before the date of the Company’s proposed sale or
merger.  The Administrator shall notify each participant in writing, at
least ten (10) business days prior to the New Exercise Date, that the
Exercise Date for the participant’s option has been changed to the New Exercise
Date and that the participant’s option shall be exercised automatically on the
New Exercise Date, unless prior to such date the participant has withdrawn from
the Offering Period as provided in Section 10 hereof.  The Plan shall
in no event be construed to restrict the Company’s right to undertake any
liquidation, dissolution, merger, consolidation or other reorganization.

 

19.           Amendment or Termination.

 

(a)           The Board may at any time and for any
reason terminate or amend the Plan.  Except as provided in Section 18
hereof, no such termination can affect options previously granted, provided
that an Offering Period may be terminated by the Board on any Exercise Date if
the Board determines that the termination of the Plan is in the best interests
of the Company and its stockholders.  Except as provided in Section 18
hereof, no amendment may make any change in any option theretofore granted
which adversely affects the rights of any participant.  To the extent
necessary to comply with Section 423 of the Code (or any successor rule or
provision or any other applicable law, regulation or stock exchange rule), the
Company shall obtain stockholder approval in such a manner and to such a degree
as required.

 

(b)           Without stockholder consent and without
regard to whether any participant rights may be considered to have been “adversely
affected,” the Administrator shall be entitled to change the Offering Periods
or Purchase Periods, limit the frequency and/or number of changes in the amount
withheld during an Offering Period, 

 

C-6

 

establish the exchange ratio applicable to amounts
withheld in a currency other than U.S. dollars, permit payroll withholding in
excess of the amount designated by a participant in order to adjust for delays
or mistakes in the Company’s processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods and/or
accounting and crediting procedures to ensure that amounts applied toward the
purchase of Common Stock for each participant properly correspond with amounts
withheld from the participant’s Compensation, and establish such other
limitations or procedures as the Administrator determines in its sole
discretion advisable which are consistent with the Plan.

 

20.           Notices.  All notices or other communications by a
participant to the Company under or in connection with the Plan shall be deemed
to have been duly given when received in the form specified by the Company at
the location, or by the person, designated by the Company for the receipt
thereof.

 

21.           Conditions Upon Issuance of Shares.  Shares shall not be issued with
respect to an option unless the exercise of such option and the issuance and
delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange or stock market upon which the shares may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

 

As a condition to the exercise of an option, the
Company may require the person exercising such option to represent and warrant
at the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is
required by any of the aforementioned applicable provisions of law.

 

22.           No Rights As An Employee.  Nothing in the Plan or in any
right granted under the Plan shall confer upon a participant any right to
continue in the employ of the Company or any Designated Subsidiary for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Company or any Designated Subsidiary or of a participant,
which rights are hereby expressly reserved by each, to terminate his or her
employment at any time and for any reason, with or without cause.

 

23.           Term of Plan.  The Plan, as amended and
restated, shall become effective upon the Effective Date.  It shall
continue until terminated under Section 19 hereof.

 

24.           Automatic Transfer to Low Price Offering
Period.  To
the extent permitted by any applicable laws, regulations, or stock exchange
rules, if the Fair Market Value of the Common Stock on any Exercise Date in an
Offering Period is lower than the Fair Market Value of the Common Stock on the
Enrollment Date of such Offering Period, then all participants in such Offering
Period shall be automatically withdrawn from such Offering Period immediately
after the exercise of their option on such Exercise Date and automatically
re-enrolled in the immediately following Offering Period as of the first day
thereof.

 

C-7

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