Exhibit
99.1
IMMUNOGEN, INC.
2006 EMPLOYEE, DIRECTOR AND
CONSULTANT EQUITY INCENTIVE PLAN
1.
DEFINITIONS
.
Unless otherwise
specified or unless the context otherwise requires, the following terms, as
used in this ImmunoGen, Inc. 2006 Employee, Director and Consultant Equity
Incentive Plan, have the following meanings:
Administrator
means the Board of Directors, unless it has delegated power to act on its
behalf to the Committee, in which case the Administrator means the Committee.
Affiliate
means a corporation which, for purposes of Section 424 of the Code, is a parent
or subsidiary of the Company, direct or indirect.
Agreement
means an agreement between the Company and a Participant delivered pursuant to
the Plan, in such form as the Administrator shall approve.
Board of Directors
means the Board of Directors of the Company.
Cause
shall include (and is not limited to) dishonesty with respect to the Company or
any Affiliate, insubordination, substantial malfeasance or non-feasance
of duty, unauthorized disclosure of confidential information, breach by the
Participant of any provision of any employment, consulting, advisory,
nondisclosure, non-competition or similar agreement between the Participant and
the Company, and conduct substantially prejudicial to the business of the
Company or any Affiliate provided, however that any provision in an agreement
between the Participant and the Company or an Affiliate, which contains a
conflicting definition of “cause” for termination and which is in effect at the
time of such termination, shall supersede the definition in this Plan with
respect to that Participant. The determination of the Administrator as to the
existence of Cause will be conclusive on the Participant and the Company.
Change of Control
means the occurrence of any of the following events:
(i)
Ownership. Any “Person” (as such term is
used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said
Act), directly or indirectly, of securities of the Company representing 50% or
more of the total voting power represented by the Company’s then outstanding
voting securities (excluding for this purpose any such voting securities held
by the Company or its Affiliates or by any employee benefit plan of the
Company) pursuant to a transaction or a series of related transactions which
the Board of Directors does not approve; or
(ii)
Merger/Sale of Assets. (A) A merger or
consolidation of the Company whether or not approved by the Board of Directors,
other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity or the parent of such corporation) at least
50% of the total voting power represented by the voting securities of the
Company or such surviving entity or
parent of such
corporation, as the case may be, outstanding immediately after such merger or
consolidation; or (B) the stockholders of the Company approve an agreement for
the sale or disposition by the Company of all or substantially all of the
Company’s assets; or
(iii)
Change
in Board Composition. A change in the composition of the Board of Directors, as
a result of which fewer than a majority of the directors are Incumbent
Directors. “Incumbent Directors” shall mean directors who either (A) are
directors of the Company as of November 11, 2006, or (B) are elected, or
nominated for election, to the Board of Directors with the affirmative
votes of at least a majority of the Incumbent Directors at the time of such
election or nomination (but shall not include an individual whose election or
nomination is in connection with an actual or threatened proxy contest relating
to the election of directors to the Company).
Code
means the United States Internal Revenue Code of 1986, as amended.
Committee
means the committee of the Board of Directors to which the Board of Directors
has delegated power to act under or pursuant to the provisions of the Plan.
Common Stock
means shares of the Company’s common stock, $.01 par value per share.
Company
means ImmunoGen, Inc., a Massachusetts corporation.
Disability
or
Disabled
means permanent and total disability as defined in Section
22(e)(3) of the Code.
Employee
means any employee of the Company or of an Affiliate (including, without
limitation, an employee who is also serving as an officer or director of the
Company or of an Affiliate), designated by the Administrator to be eligible to
be granted one or more Stock Rights under the Plan.
Fair Market Value
of a Share of Common Stock means:
(1)
If the Common Stock is
listed on a national securities exchange or traded in the over-the-counter
market and sales prices are regularly reported for the Common Stock, the
closing or last price of the Common Stock on the composite tape or other
comparable reporting system for the trading day on the applicable date, which
is the date of grant, and if such applicable date is not a trading day, the
last market trading day prior to such date;
(2)
If the Common Stock is
not traded on a national securities exchange but is traded on the over-the-counter
market, if sales prices are not regularly reported for the Common Stock for the
trading day referred to in clause (1), and if bid and asked prices for the
Common Stock are regularly reported, the mean between the bid and the asked
price for the Common Stock at the close of trading in the over-the-counter
market for the trading day on which Common Stock was traded on the applicable
date, which is the date of grant, and if such applicable date is not a trading
day, the last market trading day prior to such date; and
(3)
If the Common Stock is
neither listed on a national securities exchange nor traded in the over-the-counter
market, such value as the Administrator, in good faith, shall determine.
ISO
means an option meant to qualify as an incentive stock option under
Section 422 of the Code.
Non-Qualified
Option
means an option which is not intended to qualify as an
ISO.
Option
means an ISO or Non-Qualified Option granted under the Plan.
Participant
means an Employee, director or consultant of the Company or an Affiliate to
whom one or more Stock Rights are granted under the Plan.
As used herein, “Participant”
shall include “Participant’s Survivors” where the context requires.
Plan
means this ImmunoGen, Inc. 2006 Employee, Director and Consultant Equity
Incentive Plan.
Shares
means shares of the Common Stock as to which Stock Rights have been or may be
granted under the Plan or any shares of capital stock into which the Shares are
changed or for which they are exchanged within the provisions of
Paragraph 3 of the Plan. The Shares issued under the Plan may be
authorized and unissued shares or shares held by the Company in its treasury,
or both.
Stock-Based Award
means a grant by the Company under the Plan of an equity award or an equity
based award which is not an Option or a Stock Grant.
Stock Grant
means a grant by the Company of Shares under the Plan.
Stock Right
means a right to Shares or the value of Shares of the Company granted pursuant
to the Plan — an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based
Award.
Survivor
means a deceased Participant’s legal representatives and/or any person or
persons who acquired the Participant’s rights to a Stock Right by will or by
the laws of descent and distribution.
2.
PURPOSES
OF THE PLAN
.
The Plan is intended to encourage ownership of Shares
by Employees and directors of and certain consultants to the Company in order
to attract and retain such people, to induce them to work for the benefit of
the Company or of an Affiliate and to provide additional incentive for them to
promote the success of the Company or of an Affiliate. The Plan provides for
the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based
Awards.
3.
SHARES
SUBJECT TO THE PLAN
.
(a)
The
number of Shares which may be issued from time to time pursuant to this Plan
shall be the sum of: (i) 2,500,000 shares of Common Stock and (ii) any shares
of Common Stock that are represented by awards granted under the Company’s
Restated Stock Option Plan that are forfeited, expire or are cancelled without
delivery of shares of Common Stock or which result in the forfeiture of shares
of Common Stock back to the Company on or after November 11, 2006, or the
equivalent of such number of Shares after the Administrator, in its sole
discretion, has interpreted the effect of any stock split, stock dividend,
combination, recapitalization or similar transaction in accordance with
Paragraph 24 of this Plan; provided, however, that no more than 5,900,000
Shares shall be added to the Plan pursuant to this provision.
(b)
If an
Option ceases to be “outstanding”, in whole or in part (other than by
exercise), or if the Company shall reacquire (at not more than its original
issuance price) any Shares issued pursuant to a Stock Grant or Stock-Based
Award, or if any Stock Right expires or is forfeited, cancelled, or otherwise
terminated or results in any Shares not being issued, the unissued Shares which
were subject to such Stock Right shall again be available for issuance from
time to time pursuant to this Plan. Notwithstanding the
foregoing, if a Stock Right is exercised, in whole or
in part, by tender of Shares or if the Company’s tax withholding obligation is
satisfied by withholding Shares, the number of Shares deemed to have been
issued under the Plan for purposes of the limitations set forth in Paragraph
3(a) above shall be the number of Shares that were subject to the Stock Right
or portion thereof, and not the net number of Shares actually issued.
4.
ADMINISTRATION
OF THE PLAN
.
The Administrator of the Plan will be the Board of
Directors, except to the extent the Board of Directors delegates its authority
to the Committee, in which case the Committee shall be the Administrator.
Subject to the provisions of the Plan, the Administrator is authorized to:
a.
Interpret
the provisions of the Plan and all Stock Rights and to make all rules and determinations
which it deems necessary or advisable for the administration of the Plan;
b.
Determine
which Employees, directors and consultants shall be granted Stock Rights;
c.
Determine
the number of Shares for which a Stock Right or Stock Rights shall be granted
,
provided, however, that in no event shall Stock Rights
with respect to more than 500,000 Shares be granted to any Participant in any
fiscal year;
d.
Specify
the terms and conditions upon which a Stock Right or Stock Rights may be
granted; and
e.
Adopt
any sub-plans applicable to residents of any specified jurisdiction as it deems
necessary or appropriate in order to comply with or take advantage of any tax
or other laws applicable to the Company or to Plan Participants or to otherwise
facilitate the administration of the Plan, which sub-plans may include
additional restrictions or conditions applicable to Stock Rights or Shares
issuable pursuant to a Stock Right;
provided, however, that all such interpretations,
rules, determinations, terms and conditions shall be made and prescribed in the
context of preserving the tax status under Section 422 of the Code of those
Options which are designated as ISOs. Subject to the foregoing, the
interpretation and construction by the Administrator of any provisions of the
Plan or of any Stock Right granted under it shall be final, unless otherwise
determined by the Board of Directors, if the Administrator is the Committee. In
addition, if the Administrator is the Committee, the Board of Directors may
take any action under the Plan that would otherwise be the responsibility of
the Committee.
To the extent permitted under applicable law, the
Board of Directors or the Committee may allocate all or any portion of its
responsibilities and powers to any one or more of its members and may delegate
all or any portion of its responsibilities and powers to any other person
selected by it. The Board of Directors or the Committee may revoke any such
allocation or delegation at any time.
5.
ELIGIBILITY
FOR PARTICIPATION
.
The Administrator will, in its sole discretion, name
the Participants in the Plan, provided, however, that each Participant must be
an Employee, director or consultant of the Company or of an Affiliate at the
time a Stock Right is granted. Notwithstanding the foregoing, the Administrator
may authorize the grant of a Stock Right to a person not then an Employee,
director or consultant of the Company or of an Affiliate; provided, however,
that the actual grant of such Stock Right shall be conditioned upon such person
becoming eligible to become a Participant at or prior to the time of the
execution of the Agreement evidencing such Stock Right. ISOs may be granted
only to Employees. Non-Qualified Options, Stock Grants and Stock-Based
Awards may be granted to any Employee, director or consultant of the Company or
an Affiliate. The granting of any Stock Right to any individual shall neither
entitle that individual to, nor disqualify him or her from, participation in
any other grant of Stock Rights.
6.
TERMS
AND CONDITIONS OF OPTIONS
.
Each Option shall be set forth in writing in an Option
Agreement, duly executed by the Company and, to the extent required by law or
requested by the Company, by the Participant. The Administrator may provide
that Options be granted subject to such terms and conditions, consistent with
the terms and conditions specifically required under this Plan, as the
Administrator may deem appropriate including, without limitation, subsequent
approval by the shareholders of the Company of this Plan or any amendments
thereto. The Option Agreements shall be subject to at least the following terms
and conditions:
a.
Non-Qualified
Options
: Each Option intended to be
a Non-Qualified Option shall be subject to the terms and conditions which
the Administrator determines to be appropriate and in the best interest of the
Company, subject to the following minimum standards for any such Non-Qualified
Option:
i.
Option
Price
: Each Option Agreement shall state the option price (per share) of
the Shares covered by each Option, which option price shall be determined by
the Administrator but shall not be less than the Fair Market Value per
share of Common Stock.
ii.
Number
of Shares
: Each Option Agreement shall state the number of Shares to which
it pertains.
iii.
Option
Periods
: Each Option Agreement shall
state the date or dates on which it first is exercisable and the date after
which it may no longer be exercised, provided that each Non Qualified Option
shall terminate not more than ten years from the date of the grant. Each Option Agreement may provide that the
Option rights accrue or become exercisable in installments over a period of
months or years, or upon the occurrence of certain conditions or the attainment
of stated goals or events.
iv.
Option
Conditions
: Exercise of any Option
may be conditioned upon the Participant’s execution of a Share purchase
agreement in form satisfactory to the Administrator providing for certain
protections for the Company and its other shareholders, including requirements
that:
A.
The
Participant’s or the Participant’s Survivors’ right to sell or transfer the
Shares may be restricted; and
B.
The
Participant or the Participant’s Survivors may be required to execute letters
of investment intent and must also acknowledge that the Shares will bear
legends noting any applicable restrictions.
b.
ISOs
: Each Option intended to be an ISO shall be
issued only to an Employee and be subject to the following terms and
conditions, with such additional restrictions or changes as the Administrator
determines are appropriate but not in conflict with Section 422 of the Code and
relevant regulations and rulings of the Internal Revenue Service:
i.
Minimum
standards
: The ISO shall meet the
minimum standards required of Non-Qualified Options, as described in
Paragraph 6(a) above.
ii.
Option
Price
: Immediately before the ISO is
granted, if the Participant owns, directly or by reason of the applicable
attribution rules in Section 424(d) of the Code:
A.
10%
or less
of the total combined voting power of all classes of stock of
the Company or an Affiliate, the Option price per share of the Shares covered
by each ISO shall not be less than 100% of the Fair Market Value per share of
the Shares on the date of the grant of the Option; or
B.
More
than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, the Option price per share of the Shares covered by
each ISO shall not be less than 110% of the Fair Market Value on the date of
grant.
iii.
Term
of Option
: For Participants who own:
A.
10%
or less
of the total combined voting power of all classes of stock of
the Company or an Affiliate, each ISO shall terminate not more than ten years
from the date of the grant or at such earlier time as the Option Agreement may
provide; or
B.
More
than 10% of the total combined voting power of all classes of stock of the
Company or an Affiliate, each ISO shall terminate not more than five years from
the date of the grant or at such earlier time as the Option Agreement may
provide.
iv.
Limitation
on Yearly Exercise
: The Option
Agreements shall restrict the amount of ISOs which may become exercisable in
any calendar year (under this or any other ISO plan of the Company or an
Affiliate) so that the aggregate Fair Market Value (determined at the time each
ISO is granted) of the stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does not exceed $100,000.
7.
TERMS
AND CONDITIONS OF STOCK GRANTS
.
Each offer of a
Stock Grant to a Participant shall state the date prior to which the Stock
Grant must be accepted by the Participant, and the principal terms of each
Stock Grant shall be set forth in an Agreement, duly executed by the Company
and, to the extent required by law or requested by the Company, by the
Participant. The Agreement shall be in a form approved by the Administrator and
shall contain terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject to the following
minimum standards:
(a)
Each
Agreement shall state the purchase price (per share), if any, of the Shares
covered by each Stock Grant, which purchase price shall be determined by the
Administrator but shall not be less than the minimum consideration required by
the Massachusetts General Corporation Law on the date of the grant of the Stock
Grant;
(b)
Each
Agreement shall state the number of Shares to which the Stock Grant pertains;
and
(c)
Each
Agreement shall include the terms of any right of the Company to restrict or reacquire
the Shares subject to the Stock Grant, including the time and events upon which
such rights shall accrue and the purchase price therefor, if any.
8.
TERMS
AND CONDITIONS OF OTHER STOCK-BASED AWARDS
.
The Administrator shall have the right to grant other
Stock-Based Awards based upon the Common Stock having such terms and conditions
as the Administrator may determine, including, without limitation, the grant of
Shares based upon certain conditions, the grant of securities convertible into
Shares and the grant of stock appreciation rights, phantom stock awards, stock
units deferred or otherwise. The principal terms of each Stock-Based Award
shall be set forth in an Agreement, duly executed by the Company and, to the
extent required by law or requested by the Company, by the Participant. The
Agreement shall be in a form approved by the Administrator and shall contain
terms and conditions which the Administrator determines to be appropriate and
in the best interest of the Company.
9.
EXERCISE
OF OPTIONS AND ISSUE OF SHARES
.
An Option (or any part or installment thereof) shall
be exercised by giving written notice to the Company or its designee, together
with provision for payment of the full purchase price in accordance with this
Paragraph for the Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
notice shall be signed by the person exercising the Option, shall state the
number of Shares with respect to which the Option is being exercised and shall
contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check,
or (b) at the discretion of the Administrator, through delivery of shares
of Common Stock having a Fair Market Value equal as of the date of the exercise
to the cash exercise price of the Option and held for at least six months, or (c) at the discretion of
the Administrator, by having the Company retain from the shares otherwise
issuable upon exercise of the Option, a number of shares having a Fair Market
Value equal as of the date of exercise to the exercise price of the Option, or
(d) at the discretion of the Administrator, in accordance with a cashless
exercise program established with a securities brokerage firm, and approved by
the Administrator, or (e) at the discretion of the Administrator, by any
combination of (a), (b), (c) and (d) above or (f) at the discretion of the
Administrator, payment of such other lawful consideration as the Administrator
may determine. Notwithstanding the foregoing, the Administrator shall accept
only such payment on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the
Shares as to which such Option was exercised to the Participant (or to the
Participant’s Survivors, as the case may be). In determining what constitutes “reasonably
promptly,” it is expressly understood that the issuance and delivery of the
Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or “blue sky” laws)
which requires the Company to take any action with respect to the Shares prior
to their issuance. The Shares shall, upon delivery, be fully paid,
non-assessable Shares.
The Administrator shall have the right to accelerate
the date of exercise of any installment of any Option; provided that the
Administrator shall not accelerate the exercise date of any installment of any
Option granted to an Employee as an ISO (and not previously converted into a
Non-Qualified Option pursuant to Paragraph 27) without the prior approval of
the Employee, if such acceleration would violate the annual vesting limitation
contained in Section 422(d) of the Code, as described in Paragraph 6(b)(iv).
The Administrator may, in its discretion, amend any
term or condition of an outstanding Option provided (i) such term or condition
as amended is permitted by the Plan, (ii) any such amendment shall be made only
with the consent of the Participant to whom the Option was granted, or in the
event of the death of the Participant, the Participant’s Survivors, if the amendment is adverse to the Participant,
and (iii) any such amendment of any Option shall be made only after the
Administrator determines whether such amendment would constitute a “modification”
of any Option which is an ISO (as that term is defined in
Section 424(h) of the Code) or would cause any adverse
tax consequences for the holder of such Option including, but not limited to,
pursuant to Section 409A of the Code.
10.
ACCEPTANCE
OF STOCK GRANTS AND STOCK-BASED AWARDS AND ISSUE OF SHARES
.
A Stock Grant or Stock-Based Award (or any part or
installment thereof) shall be accepted by executing the applicable Agreement
and delivering it to the Company or its designee, together with provision for
payment of the full purchase price, if any, in accordance with this Paragraph
for the Shares as to which such Stock Grant or Stock-Based Award is being
accepted, and upon compliance with any other conditions set forth in the
applicable Agreement. Payment of the purchase price for the Shares as to which
such Stock Grant or Stock-Based Award is being accepted shall be made (a) in
United States dollars in cash or by check, or (b) at the discretion of the
Administrator, through delivery of shares of Common Stock held for at least six months and
having a Fair Market Value equal as of the date of acceptance of the Stock
Grant or Stock Based-Award to the purchase price of the Stock Grant or
Stock-Based Award, or (c) at the discretion of the Administrator, by any
combination of (a) and (b) above; or (d) at the discretion of the
Administrator, payment of such other lawful consideration as the Administrator
may determine.
The Company shall then, if required by the applicable
Agreement, reasonably promptly deliver the Shares as to which such Stock Grant
or Stock-Based Award was accepted to the Participant (or to the Participant’s
Survivors, as the case may be), subject to any escrow provision set forth in
the applicable Agreement. In determining what constitutes “reasonably promptly,”
it is expressly understood that the issuance and delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation
(including, without limitation, state securities or “blue sky” laws) which
requires the Company to take any action with respect to the Shares prior to
their issuance.
The Administrator may, in its discretion, amend any
term or condition of an outstanding Stock Grant, Stock-Based Award or
applicable Agreement provided (i) such term or condition as amended is
permitted by the Plan, and (ii) any such amendment shall be made only with the
consent of the Participant to whom the Stock Grant or Stock-Based Award was
made, if the amendment is adverse to
the Participant.
11.
RIGHTS
AS A SHAREHOLDER
.
No Participant to whom a Stock Right has been granted
shall have rights as a shareholder with respect to any Shares covered by such
Stock Right, except after due exercise of the Option or acceptance of the Stock
Grant or as set forth in any Agreement, and tender of the full purchase price,
if any, for the Shares being purchased pursuant to such exercise or acceptance
and registration of the Shares in the Company’s share register in the name of
the Participant.
12.
ASSIGNABILITY
AND TRANSFERABILITY OF STOCK RIGHTS
.
By its terms, a Stock Right granted to a Participant
shall not be transferable by the Participant other than (i) by will or by the
laws of descent and distribution, or (ii) as approved by the Administrator in
its discretion and set forth in the applicable Agreement. Notwithstanding the
foregoing, an ISO transferred except in compliance with clause (i) above shall
no longer qualify as an ISO. The designation of a beneficiary of a Stock Right
by a Participant, with the prior approval of the Administrator and in such form
as the Administrator shall prescribe, shall not be deemed a transfer prohibited
by this Paragraph. Except as provided above, a Stock Right shall only be
exercisable or may only be accepted, during the Participant’s lifetime, by such
Participant (or by his or her legal representative) and shall not be assigned,
pledged or hypothecated in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Any
attempted transfer, assignment, pledge, hypothecation or other disposition of
any Stock Right or of any rights granted thereunder contrary to the provisions
of this Plan, or the levy of any attachment or similar process upon a Stock
Right, shall be null and void.
13.
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY
.
Except as otherwise provided in a Participant’s Option
Agreement, in the event of a termination of service (whether as an employee,
director or consultant) with the Company or an Affiliate before the Participant
has exercised an Option, the following rules apply:
a.
A
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate (for any reason other than termination for Cause,
Disability, or death for which events there are special rules in Paragraphs 14,
15, and 16, respectively), may exercise any Option granted to him or her to the
extent that the Option is exercisable on the date of such termination of
service, but only within such term as the Administrator has designated in a
Participant’s Option Agreement.
b.
Except
as provided in Subparagraph (c) below, or Paragraph 15 or 16, in no event may
an Option intended to be an ISO, be exercised later than three months after the
Participant’s termination of employment.
c.
The
provisions of this Paragraph, and not the provisions of Paragraph 15 or 16, shall
apply to a Participant who subsequently becomes Disabled or dies after the
termination of employment, director status or consultancy; provided, however,
in the case of a Participant’s Disability or death within three months after
the termination of employment, director status or consultancy, the Participant
or the Participant’s Survivors may exercise the Option within one year after
the date of the Participant’s termination of service, but in no event after the
date of expiration of the term of the Option.
d.
Notwithstanding
anything herein to the contrary, if subsequent to a Participant’s termination
of employment, termination of director status or termination of consultancy,
but prior to the exercise of an Option, the Board of Directors determines that,
either prior or subsequent to the Participant’s termination, the Participant
engaged in conduct which would constitute Cause, then such Participant shall
forthwith cease to have any right to exercise any Option.
e.
A
Participant to whom an Option has been granted under the Plan who is absent
from the Company or an Affiliate because of temporary disability (any
disability other than a Disability as defined in Paragraph 1 hereof), or who is
on leave of absence for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have terminated such
Participant’s employment, director status or consultancy with the Company or
with an Affiliate, except as the Administrator may otherwise expressly provide.
f.
Except
as required by law or as set forth in a Participant’s Option Agreement, Options
granted under the Plan shall not be affected by any change of a Participant’s
status within or among the Company and any Affiliates, so long as the
Participant continues to be an employee, director or consultant of the Company
or any Affiliate.
14.
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE
.
Except as otherwise provided in a Participant’s Option
Agreement, the following rules apply if the Participant’s service (whether as
an employee, director or consultant) with the Company or an Affiliate is
terminated for Cause prior to the time that all his or her outstanding Options
have been exercised:
a.
All
outstanding and unexercised Options as of the time the Participant is notified
his or her service is terminated for Cause will immediately be forfeited.
b.
Cause
is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
Cause occur prior to termination. If the Administrator determines, subsequent
to a Participant’s termination of service but prior to the exercise of an
Option, that either prior or subsequent to the Participant’s termination the
Participant engaged in conduct which would constitute Cause, then the right to
exercise any Option is forfeited.
15.
EFFECT
ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY
.
Except as otherwise provided in a Participant’s Option
Agreement:
a.
A
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
(i)
To
the extent that the Option has become exercisable but has not been exercised on
the date of Disability; and
(ii)
In
the event rights to exercise the Option accrue periodically, to the extent of a
pro rata portion through the date of Disability of any additional vesting
rights that would have accrued on the next vesting date had the Participant not
become Disabled. The proration shall be based upon the number of days accrued
in the current vesting period prior to the date of Disability.
b.
A
Disabled Participant may exercise such rights only within the period ending one
year after the date of the Participant’s Disability, notwithstanding that the
Participant might have been able to exercise the Option as to some or all of
the Shares on a later date if the Participant had not become Disabled and had
continued to be an employee, director or consultant or, if earlier, within the
originally prescribed term of the Option.
c.
The
Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
16.
EFFECT
ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT
.
Except as otherwise provided in a Participant’s Option
Agreement:
a.
In
the event of the death of a Participant while the Participant is an employee,
director or consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant’s Survivors:
(i)
To
the extent that the Option has become exercisable but has not been exercised on
the date of death; and
(ii)
In
the event rights to exercise the Option accrue periodically, to the extent of a
pro rata portion through the date of death of any additional vesting rights
that would have accrued on the next vesting date had the Participant not died.
The proration shall be based upon the number of days accrued in the current
vesting period prior to the Participant’s date of death.
b.
If
the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death
of such Participant, notwithstanding that the decedent might have been able to
exercise the Option as to some or all of the Shares on a later date if he or
she had not died and had continued to be an employee, director or consultant
or, if earlier, within the originally prescribed term of the Option.
17.
EFFECT
OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS
.
In the event of a termination of service (whether as
an employee, director or consultant) with the Company or an Affiliate for any
reason before the Participant has accepted a Stock Grant, such offer shall
terminate.
For purposes of this Paragraph 17 and Paragraph 18
below, a Participant to whom a Stock Grant has been offered and accepted under
the Plan who is absent from work with the Company or with an Affiliate because
of temporary disability (any disability other than a Disability as defined in
Paragraph 1 hereof), or who is on leave of absence for any purpose, shall not,
during the period of any such absence, be deemed, by virtue of such absence
alone, to have terminated such Participant’s employment, director status or
consultancy with the Company or with an Affiliate, except as the Administrator
may otherwise expressly provide.
In addition, for purposes of this Paragraph 17 and
Paragraph 18 below, any change of employment or other service within or among
the Company and any Affiliates shall not be treated as a termination of
employment, director status or consultancy so long as the Participant continues
to be an employee, director or consultant of the Company or any Affiliate.
18.
EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE OTHER THAN FOR CAUSE OR DEATH OR
DISABILITY
.
Except as otherwise provided in a Participant’s Stock
Grant Agreement, in the event of a termination of service (whether as an
employee, director or consultant), other than termination for Cause,
Disability, or death for which events there are special rules in Paragraphs 19,
20, and 21, respectively, before all forfeiture provisions or Company rights of
repurchase shall have lapsed, then the Company shall have the right to cancel
or repurchase that number of Shares subject to a Stock Grant as to which the
Company’s forfeiture or repurchase rights have not lapsed.
19.
EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE FOR CAUSE
.
Except as otherwise provided in a Participant’s Stock
Grant Agreement, the following rules apply if the Participant’s service
(whether as an employee, director or consultant) with the Company or an
Affiliate is terminated for Cause:
a.
All
Shares subject to any Stock Grant that remain subject to forfeiture provisions
or as to which the Company shall have a repurchase right shall be immediately
forfeited to the Company as of the time the Participant is notified his or her
service is terminated for Cause.
b.
Cause
is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of
Cause occur prior to termination. If the Administrator determines, subsequent
to a Participant’s termination of service, that either prior or subsequent to
the Participant’s termination the Participant engaged in conduct which would
constitute Cause, then the Company’s right to repurchase all of such
Participant’s Shares shall apply.
20.
EFFECT
ON STOCK GRANTS OF TERMINATION OF SERVICE FOR DISABILITY
.
Except as otherwise provided in a Participant’s Stock
Grant Agreement, the following rules apply if a Participant ceases to be an
employee, director or consultant of the Company or of an Affiliate by reason of
Disability: to the extent the forfeiture
provisions or the Company’s rights of repurchase have not lapsed on the date of
Disability, they shall be exercisable; provided, however, that in the event
such forfeiture provisions or rights of repurchase lapse periodically, such
provisions or rights shall lapse to the extent of a pro rata portion of the
Shares subject to such Stock Grant through the date of Disability as would have
lapsed had the Participant not become Disabled. The proration shall be based
upon the number of days accrued prior to the date of Disability.
The Administrator shall make the determination both of
whether Disability has occurred and the date of its occurrence (unless a
procedure for such determination is set forth in another agreement between the
Company and such Participant, in which case such procedure shall be used for
such determination). If requested, the Participant shall be examined by a
physician selected or approved by the Administrator, the cost of which examination
shall be paid for by the Company.
21.
EFFECT
ON STOCK GRANTS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT
.
Except as otherwise provided in a Participant’s Stock
Grant Agreement, the following rules apply in the event of the death of a Participant
while the Participant is an employee, director or consultant of the Company or
of an Affiliate: to the extent the
forfeiture provisions or the Company’s rights of repurchase have not lapsed on
the date of death, they shall be exercisable; provided, however, that in the
event such forfeiture provisions or rights of repurchase lapse periodically,
such provisions or rights shall lapse to the extent of a pro rata portion of
the Shares subject to such Stock Grant through the date of death as would have
lapsed had the Participant not died. The proration shall be based upon the
number of days accrued prior to the Participant’s death.
22.
PURCHASE
FOR INVESTMENT
.
Unless the offering and sale of the Shares to be
issued upon the particular exercise or acceptance of a Stock Right shall have
been effectively registered under the Securities Act of 1933, as now in force
or hereafter amended (the “1933 Act”), the Company shall be under no obligation
to issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
a.
The
person(s) who exercise(s) or accept(s) such Stock Right shall warrant to the
Company, prior to the receipt of such Shares, that such person(s) are acquiring
such Shares for their own respective accounts, for investment, and not with a
view to, or for sale in connection with, the distribution of any such Shares,
in which event the person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed upon the certificate(s)
evidencing their Shares issued pursuant to such exercise or such grant:
“The shares represented by this certificate have been taken for
investment and they may not be sold or otherwise transferred by any person,
including a pledgee, unless (1) either (a) a Registration Statement with
respect to such shares shall be effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an opinion of counsel
satisfactory to it that an exemption from registration under such Act is then
available, and (2) there shall have been compliance with all applicable state
securities laws.”
b.
At
the discretion of the Administrator, the Company shall have received an opinion
of its
counsel that the
Shares may be issued upon such particular exercise or acceptance in compliance
with the 1933 Act without registration thereunder.
23.
DISSOLUTION
OR LIQUIDATION OF THE COMPANY
.
Upon the
dissolution or liquidation of the Company, all Options granted under this Plan
which as of such date shall not have been exercised and all Stock Grants and
Stock-Based Awards which have not been accepted will terminate and become null
and void; provided, however, that if the rights of a Participant or a
Participant’s Survivors have not otherwise terminated and expired, the
Participant or the Participant’s Survivors will have the right immediately
prior to such dissolution or liquidation to exercise or accept any Stock Right
to the extent that the Stock Right is exercisable or subject to acceptance as
of the date immediately prior to such dissolution or liquidation. Upon the
dissolution or liquidation of the Company, any outstanding Stock-Based Awards
shall immediately terminate unless otherwise determined by the Administrator or
specifically provided in the applicable Agreement.
24.
ADJUSTMENTS
.
Upon the occurrence of any of the following events, a
Participant’s rights with respect to any Stock Right granted to him or her
hereunder shall be adjusted as hereinafter provided, unless otherwise
specifically provided in a Participant’s Agreement:
a.
Stock
Dividends and Stock Splits
. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its outstanding
Common Stock, or (ii) 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 Common Stock, the number of shares of Common Stock
deliverable upon the exercise of an Option or acceptance of a Stock Grant shall
be appropriately increased or decreased proportionately, and appropriate
adjustments shall be made including, in the purchase price per share, to
reflect such events. The number of Shares subject to the limitations in
Paragraph 3(a)
and 4(c) shall also be
proportionately adjusted upon the occurrence of such events.
b.
Corporate
Transactions
. If the Company is to be consolidated with or acquired by
another entity in a merger, sale of all or substantially all of the Company’s
assets other than a transaction to merely change the state of incorporation (a “Corporate
Transaction”), the Administrator or the board of directors of any entity
assuming the obligations of the Company hereunder (the “Successor Board”),
shall, as to outstanding Options, either (i) make appropriate provision for the
continuation of such Options by substituting on an equitable basis for the
Shares then subject to such Options either the consideration payable with
respect to the outstanding shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or
(ii) upon written notice to the Participants, provide that all Options must be
exercised (all Options being made fully exercisable for purposes of this
Subparagraph), within a specified number of days of the date of such notice, at
the end of which period the Options shall terminate; or (iii) terminate all
Options in exchange for a cash payment equal to the excess of the Fair Market
Value of the Shares subject to such Options (all Options being made fully
exercisable for purposes of this Subparagraph), over the exercise price
thereof.
With respect to outstanding Stock Grants, the
Administrator or the Successor Board, shall either (i) make appropriate
provisions for the continuation of such Stock Grants on the same terms and
conditions by substituting on an equitable basis for the Shares then subject to
such Stock Grants either the consideration payable with respect to the outstanding
Shares of Common Stock in connection with the Corporate Transaction or
securities of any successor or acquiring entity; or (ii) terminate all Stock
Grants in exchange for a cash payment equal to the excess of the Fair Market
Value of the Shares subject to such Stock Grants over the purchase price
thereof, if any. In addition, in the event of a Corporate Transaction, the
Administrator may waive any or all Company forfeiture or repurchase rights with
respect to outstanding Stock Grants.
c.
Recapitalization
or Reorganization
. In the event of a recapitalization or reorganization of
the Company other than a Corporate Transaction pursuant to which securities of
the Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, a Participant upon exercising an Option or
accepting a Stock Grant after the recapitalization or reorganization shall be
entitled to receive for the purchase price paid upon such exercise or
acceptance of the number of replacement securities which would have been
received if such Option had been exercised or Stock Grant accepted prior to
such recapitalization or reorganization.
d.
Adjustments
to Stock-Based Awards
. Upon the happening of any of the events described in
Subparagraphs a, b or c above, any outstanding Stock-Based Award shall be
appropriately adjusted to reflect the events described in such Subparagraphs.
The Administrator or the Successor Board shall determine the specific
adjustments to be made under this Paragraph 24, including, but not limited to
the effect if any, of a Change of Control and, subject to Paragraph 4, its
determination shall be conclusive.
e.
Modification
of ISOs
. Notwithstanding the foregoing, any adjustments made pursuant to
Subparagraph a, b or c above with respect to ISOs shall be made only after the
Administrator determines whether such adjustments would constitute a “modification”
of such ISOs (as that term is defined in Section 424(h) of the Code) or
would cause any adverse tax consequences for the holders of such ISOs. If the
Administrator determines that such adjustments made with respect to ISOs would
constitute a modification of such ISOs, it may refrain from making such
adjustments, unless the holder of an ISO specifically requests in writing that
such adjustment be made and such writing indicates that the holder has full
knowledge of the consequences of such “modification” on his or her income tax
treatment with respect to the ISO. This paragraph shall not apply to the
acceleration of the vesting of any ISO that would cause any portion of the ISO
to violate the annual vesting limitation contained in Section 422(d) of the
Code, as described in Paragraph 6b(iv).
25.
ISSUANCES
OF SECURITIES
.
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 subject to Stock
Rights. Except as expressly provided herein, no adjustments shall be made for
dividends paid in cash or in property (including without limitation,
securities) of the Company prior to any issuance of Shares pursuant to a Stock
Right.
26.
FRACTIONAL
SHARES
.
No fractional shares shall be issued under the Plan
and the person exercising a Stock Right shall receive from the Company cash in
lieu of such fractional shares equal to the Fair Market Value thereof.
27.
CONVERSION
OF ISOs INTO NON-QUALIFIED OPTIONS; TERMINATION OF ISOs
.
The Administrator, at the written request of any
Participant, may in its discretion take such actions as may be necessary to
convert such Participant’s ISOs (or any portions thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any
time prior to the expiration of such ISOs, regardless of whether the
Participant is an employee of the Company or an Affiliate at the time of such
conversion. At the time of such conversion, the Administrator (with the consent
of the Participant) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may
determine, provided that such conditions shall not be inconsistent with this
Plan. Nothing in the Plan shall be deemed to give any Participant the right to
have such Participant’s ISOs converted into Non-Qualified Options, and no
such conversion shall occur until and unless the Administrator takes
appropriate action. The Administrator, with the consent of the Participant, may
also terminate any portion of any ISO that has not been exercised at the time
of such conversion.
28.
WITHHOLDING
.
In the event that
any federal, state, or local income taxes, employment taxes, Federal Insurance
Contributions Act (“F.I.C.A.”) withholdings or other amounts are required by
applicable law or governmental regulation to be withheld from the Participant’s
salary, wages or other remuneration in connection with the exercise or
acceptance of a Stock Right or in connection with a Disqualifying Disposition
(as defined in Paragraph 29) or upon the lapsing of any forfeiture provision or
right of repurchase or for any other reason required by law, the Company may
withhold from the Participant’s compensation, if any, or may require that the
Participant advance in cash to the Company, or to any Affiliate of the Company
which employs or employed the Participant, the statutory minimum amount of such
withholdings unless a different withholding arrangement, including the use of
shares of the Company’s Common Stock is authorized by the Administrator (and
permitted by law). For purposes hereof, the fair market value of the shares
withheld for purposes of payroll withholding shall be determined in the manner
provided in Paragraph 1 above, as of the most recent practicable date prior to
the date of exercise. If the fair market value of the shares withheld is less
than the amount of payroll withholdings required, the Participant may be
required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant’s payment of
such additional withholding.
29.
NOTICE
TO COMPANY OF DISQUALIFYING DISPOSITION
.
Each Employee who receives an ISO must agree to notify
the Company in writing immediately after the Employee makes a Disqualifying
Disposition of any shares acquired pursuant to the exercise of an ISO. A
Disqualifying Disposition is defined in Section 424(c) of the Code and includes
any disposition (including any sale or gift) of such shares before the later of
(a) two years after the date the Employee was granted the ISO, or (b) one year
after the date the Employee acquired Shares by exercising the ISO, except as
otherwise provided in Section 424(c) of the Code. If the Employee has died
before such stock is sold, these holding period requirements do not apply and
no Disqualifying Disposition can occur thereafter.
30.
TERMINATION
OF THE PLAN
.
The Plan will terminate on September 4, 2016, 10 years
from the date of the adoption of the Plan by the Board, the date which is ten
years from the
earlier
of the date of its adoption by the Board of
Directors and the date of its approval by the shareholders of the Company. The
Plan may be terminated at an earlier date by vote of the shareholders or the
Board of Directors of the Company; provided, however, that any such earlier
termination shall not affect any Agreements executed prior to the effective
date of such termination.
31.
AMENDMENT
OF THE PLAN AND AGREEMENTS
.
The Plan may be amended by the shareholders of the
Company. The Plan may also be amended by the Administrator, including, without
limitation, to the extent necessary to qualify any or all outstanding Stock
Rights granted under the Plan or Stock Rights to be granted under the Plan for
favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code, and to the extent necessary to qualify the shares issuable upon exercise
or acceptance of any outstanding Stock Rights granted, or Stock Rights to be
granted, under the Plan for listing on any national securities exchange or
quotation in any national automated quotation system of securities dealers. In
addition, if Nasdaq amends its corporate governance rules so that such rules no
longer require stockholder approval of “material amendments” of equity
compensation plans, then, from and after the effective date of such an
amendment to the Nasdaq rules, no amendment of the Plan which (i) materially
increases the number of shares to be issued under the Plan (other than to
reflect a reorganization, stock split, merger, spinoff or similar transaction);
(ii) materially increases the benefits to Participants, including any material
change to: (a) permit a repricing (or decrease in exercise price) of
outstanding
Options, (b) reduce the price at which Shares or
Options may be offered, or (c) extend the duration of the Plan; (iii)
materially expands the class of Participants eligible to participate in the
Plan; or (iv) expands the types of awards provided under the Plan shall become
effective unless stockholder approval is obtained. Any amendment approved by
the Administrator which the Administrator determines is of a scope that
requires shareholder approval shall be subject to obtaining such shareholder
approval. Any modification or amendment of the Plan shall not, without the
consent of a Participant, adversely affect
his or her rights under a Stock Right previously granted to him or her. With
the consent of the Participant affected, the Administrator may amend
outstanding Agreements in a manner which may be adverse to the Participant but
which is not inconsistent with the Plan. In the discretion of the
Administrator, outstanding Agreements may be amended by the Administrator in a
manner which is not adverse to the Participant.
32.
EMPLOYMENT
OR OTHER RELATIONSHIP
.
Nothing in this Plan or any Agreement shall be deemed
to prevent the Company or an Affiliate from terminating the employment, consultancy
or director status of a Participant, nor to prevent a Participant from
terminating his or her own employment, consultancy or director status or to
give any Participant a right to be retained in employment or other service by
the Company or any Affiliate for any period of time.
33.
GOVERNING
LAW
.
This Plan shall be construed and enforced in
accordance with the law of The Commonwealth of Massachusetts.
