Company Stock Options (a) At the Effective Time, Parent shall assume, by virtue of this Agreement and without any further action on the part of the Company, all of the Company's obligations with respect to each outstanding Company Stock Option, whether vested or unvested. Unless otherwise elected by Parent prior to the Effective Time, Parent shall make such assumption in such manner that Parent (i) is a corporation "assuming a stock option in a transaction to which Section 424(a) applies" within the meaning of Section 424 of the Code or (ii) to the extent that Section 424 of the Code does not apply to such Company Stock Option, would be such a corporation were Section 424 of the Code applicable to such Company Stock Option; and, if not so otherwise elected, after the Effective Time, all references to the Company in the Company Stock Plans and the applicable Company Stock Option agreements shall be deemed to refer to Parent, which shall have assumed the Company Stock Plans as of the Effective Time by virtue of this Agreement and without any further action on the part of the Company or Parent. Each Company Stock Option so assumed by Parent under this Agreement shall continue to have, and be subject to, the same terms and conditions set forth in the applicable Company Stock Plan and the applicable Company Stock Option as in effect immediately prior to the Effective Time, except as otherwise provided in Section 3.05. Parent shall use all reasonable efforts to ensure that Company Stock Options intended to qualify as incentive stock options under Section 422 of the Code prior to the Effective Time continue to so qualify after the Effective Time.
(b) With respect to the Company Stock Plans, Parent shall take all corporate action necessary or appropriate to, as soon as practicable after the Effective Time, file a registration statement on Form S-8 (or any successor or other appropriate form) with respect to the shares of Parent Common Stock subject to such plan to the extent such registration statement is required under applicable law in order for such shares of Parent Common Stock to be sold without restriction, and Parent shall use its best efforts to maintain the effectiveness of such registration statements (and maintain the current status of the prospectuses contained therein) for so long as such benefits and grants remain payable and such options under such plans remain outstanding.
Stock Options (i) As of the close of business on October 19, 2007: (i) 3,359,430 shares of Company Common Stock were subject to issuance pursuant to outstanding options to purchase Company Common Stock under the Company Stock Plans (the “Company Options”) and (ii) 920,296 shares of Company Common Stock were reserved for future issuance pursuant to Company Options or other equity-based awards available for grant under the Company Stock Plans. Since the close of business on October 19, 2007 through the execution of this Agreement, no Company Options have been granted and no shares of Company Common Stock have been reserved for future issuance pursuant to Company Options or other equity-based awards available for grant under the Company Stock Plans. There are no outstanding or authorized stock appreciation, phantom stock or other similar rights (whether payable in stock, cash or other property) with respect to the Company.
(ii) Section 2.2(a) of the Company Disclosure Letter sets forth a list of each outstanding Company Option issued and (a) the particular Company Stock Plan (if any) pursuant to which such Company Option was granted, (b) the name and last known state of domicile of the holder of such Company Option (provided, however, that the Company may redact names of employees (other than with respect to officers of the Company) from such list), (c) the number of shares of Company Common Stock subject to such Company Option, (d) the exercise price of such Company Option (and whether such option is subject to Section 409A of the Code), (e) the date on which such Company Option was granted, (e) the applicable vesting schedule (including any acceleration provisions with respect thereto), and the extent to which such Company Option is vested and exercisable as of the date hereof, (f) the date on which such Company Option expires, and (g) whether such Company Option is intended to qualify as an incentive stock option as defined in Section 422 of the Code. All shares of Company Common Stock subject to issuance under the Company Stock Plans, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, would be duly authorized, validly issued, fully paid and nonassessable. True and complete copies of the forms of all agreements relating to Company Options issued under the Company Stock Plans have been provided to Parent, such forms of agreements are not materially different from the agreements evidencing such Company Options (other than with respect to the name of the holder, the per share exercise price, the number of shares subject to such Company Options and the applicable vesting schedule), and such agreements and instruments have not been amended, modified or supplemented, and the Company has no obligations under any Contract to amend, modify or supplement such agreements in any case from the forms provided to Parent (or the actual agreements evidencing such Company Options).
Employee Stock Options Except as provided in this Agreement or pursuant to the provisions of any Plan or employee or director stock option agreement as in effect on the date hereof, from the date hereof Company will not accelerate the vesting or exercisability of or otherwise modify the terms and conditions applicable to the Employee Stock Options. At the Effective Time, each of the Employee Stock Options which is outstanding and unexercised at the Effective Time shall be converted automatically into an option to purchase Parent Shares in an amount and at an exercise price determined as provided below (and otherwise subject to the terms of the stock option plans of Company governing the Employee Stock Options (the "Company Stock Option Plans")):
(1) The number of Parent Shares to be subject to the new option shall be equal to the product of the number of Shares subject to the original option and the Exchange Ratio, PROVIDED that any fractional Parent Shares resulting from such multiplication shall be rounded down to the nearest share and, except with respect to any options which are intended to qualify as "incentive stock options" (as defined in section 422 of the Code ("ISOs")), Parent shall pay an amount in cash to the holder of such Employee Stock Option equal to the fair market value immediately prior to the Effective Time of such fractional Parent Shares calculated based on the average closing price on the New York Stock Exchange for the last five trading days immediately preceding the day prior to the Effective Time; and
(2) The exercise price per Parent Share under the new option shall be equal to the aggregate exercise price of the original option divided by the total number of full Parent Shares subject to the new option (as determined under (1) immediately above), PROVIDED that such exercise price shall be rounded up to the nearest cent. The adjustment provided herein with respect to any ISOs shall be and is intended to be effected in a manner that is consistent with section 424(a) of the Code. The duration and other terms of the new option shall be the same as that of the original option, except that all references to Company shall be deemed to be references to Parent. Parent shall file with the SEC a registration statement on Form S-8 (or other appropriate form) or a post-effective amendment to the Registration Statement as promptly as practicable after the Effective Time for purposes of registering all Parent Shares issuable after the Effective Time upon exercise of the Employee Stock Options, and shall have such registration statement or post-effective amendment become effective and comply, to the extent applicable, with state securities or blue sky laws with respect thereto at the Effective Time.
Nonstatutory Stock Option If the Grant Notice so designates, this Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning of Section 422(b) of the Code.
Vesting of Stock Options All unvested stock options held by Executive, if any, shall vest immediately upon a Change of Control Termination as defined in Section 6.1.
Stock Option Plans Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
Stock Option Subject to approval by the Board, the Company will grant Executive, during the fourth calendar quarter of 2015 (and subject to Executive’s continued employment with the Company through the grant date), under the Company’s 2015 Equity Incentive Plan (the “Plan”), an incentive stock option to purchase 130,444 shares of Company common stock (an “Option”), with an exercise price equal to $1.12 per share, which is equal to the fair market value of the shares of Company common stock underlying the Option on the grant date. Subject to Executive’s continued employment with the Company through the applicable vesting date, the Option will vest and become exercisable with respect to one-forty-eighth (1/48th) of the shares subject thereto on each monthly anniversary of January 1, 2016. Notwithstanding the foregoing, if the Company experiences a Change in Control (as defined in the Plan) prior to the full vesting (or forfeiture) of the Option and Executive’s employment is terminated by the Company without Cause (as defined below) within three (3) months prior to the consummation of such Change in Control, then, subject to Section 6(b) below, one hundred percent (100%) of any then-unvested portion of the Option will vest and become exercisable immediately prior to such Change in Control. In addition, (i) if the Company experiences a Change in Control (as defined in the Plan) prior to the full vesting (or forfeiture) of the Option and Executive remains employed by the Company through at least immediately prior to such Change in Control, fifty percent (50%) of any then-unvested portion of the Option shall vest immediately prior to such Change in Control, and (ii) if the Company experiences a Change in Control (as defined in the Plan) prior to the full vesting (or forfeiture) of the Option and Executive’s employment is terminated by the Company without Cause within two (2) years following the consummation of such Change in Control, subject to and conditioned upon Executive’s timely execution and non-revocation of a Release (as defined below), one hundred percent (100%) of any then-unvested portion of the Option will vest in full and become exercisable upon the effectiveness of the Release. Each Option will be subject in all respects to the terms and conditions set forth in the Plan and in an award agreement to be entered into between the Company and Executive, which will evidence the grant of the Option (each, an “Option Agreement”).
Grant of Stock Options This non-qualified Stock Option is granted under and pursuant to the Plan and is subject to each and all of the provisions thereof.
Incentive Stock Options If the Shares are held for more than twelve (12) months after the date of the transfer of the Shares pursuant to the exercise of an ISO and are disposed of more than two (2) years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for federal and California income tax purposes. If Shares purchased under an ISO are disposed of within the applicable one (1) year or two (2) year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.
Treatment of Stock Options At the Effective Time, with respect to each outstanding option to purchase Shares (a “Company Option”) under the Company Stock Plans, whether vested or unvested, (x) if the exercise price of such Company Option is equal to or greater than the Cash Election Consideration, such Company Option shall terminate and be cancelled as of immediately prior to the Effective Time, without any consideration being payable in respect thereof, and have no further force or effect, and (y) if the exercise price of such Company Option is less than the Cash Election Consideration, thirty percent (30%) of such Company Options held by each holder thereof (rounded to the nearest whole share), other than any Company Option that is not held by a Company Employee and any Company Option held by a non-employee Director, shall be deemed to be “Rollover Options” and the remaining Company Options (other than Company Options cancelled pursuant to clause (x) above) shall be deemed to be “Cash-Out Options”. At the Effective Time, automatically and without any required action on the part of the holder thereof:
(i) each such Cash-Out Option shall terminate and be cancelled as of immediately prior to the Effective Time in exchange for the right to receive, in accordance with this Section 4.6(a), a lump sum cash payment in the amount equal to (i) the number of Shares subject to the Company Option immediately prior to the Effective Time, multiplied by (ii) the excess, if any, of the dollar value of the Cash Election Consideration (the “Cash Award Consideration”), over the applicable exercise price (the “Option Payment”). The Option Payment (if any) payable under this Section 4.6(a) to each former holder of a Company Option that was outstanding immediately prior to the Effective Time shall be paid through the Surviving Company’s payroll to such former holder as soon as practicable following the Effective Time (but in any event not later than ten (10) Business Days thereafter), net of any Taxes withheld pursuant to Section 4.2(h); and
(ii) each Rollover Option shall be assumed and converted automatically into a fully-vested option (an “Adjusted Stock Option”) to purchase, on substantially the same terms and conditions (other than vesting) as were applicable under such Rollover Option immediately prior to the Effective Time, the number of shares of Series C Common Stock (rounded down to the nearest whole number of shares) equal to the product of (A) the number of Shares subject to such Rollover Option immediately prior to the Effective Time, multiplied by (B) the Option Exchange Ratio, which Adjusted Stock Option shall have an exercise price per share of Series C Common Stock equal to the quotient (rounded up to the nearest whole cent) obtained by dividing (x) the exercise price per Share subject to such Rollover Option immediately prior to the Effective Time, by (y) the Option Exchange Ratio. The “Option Exchange Ratio” shall equal the quotient (rounded to four decimal places) obtained by dividing (i) the weighted average price of the Class A Shares on the NASDAQ on the Trading Day immediately prior to the date of the Effective Time by (ii) the Average Parent Stock Price.