|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Shares or
Units of
Stock that
have Not
Vested
|
|
Market Value
of Shares
or Units of
Stock that
have Not
Vested
|
|
|
|
|
|
Number of Securities
Underlying
Unexercised Options
|
|
|
|
|
|
|
|
Vesting
Commencement
Date
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Phillip M. Fernandez
|
|
|
05/01/2013
|
(1)
|
|
700,000
|
(2)
|
|
|
|
$
|
4.56
|
|
|
04/30/2022
|
|
|
|
|
|
|
|
|
|
|
01/25/2012
|
(1)
|
|
128,469
|
(2)
|
|
|
|
|
2.38
|
|
|
01/24/2021
|
|
|
|
|
|
|
|
|
|
|
05/21/2011
|
(1)
|
|
266,666
|
|
|
34,879
|
(3)
|
|
1.50
|
|
|
06/13/2020
|
|
|
|
|
|
|
|
|
|
|
02/21/2009
|
(4)
|
|
67,300
|
(2)
|
|
|
|
|
0.22
|
|
|
01/20/2019
|
|
|
|
|
|
|
|
|
|
|
03/07/2015
|
(5)
|
|
375,000
|
(2)
|
|
|
|
|
7.42
|
|
|
02/06/2023
|
|
|
|
|
|
|
|
Frederick A. Ball
|
|
|
05/02/2012
|
(6)
|
|
310,000
|
(2)
|
|
|
|
|
2.38
|
|
|
05/16/2021
|
|
|
|
|
|
|
|
|
|
|
03/07/2015
|
(7)
|
|
100,000
|
(2)
|
|
|
|
|
7.42
|
|
|
02/06/2023
|
|
|
|
|
|
|
|
Margo M. Smith
|
|
|
10/15/2014
|
(8)
|
|
|
|
|
21,500
|
|
|
32.65
|
|
|
10/14/2023
|
|
|
|
|
|
|
|
|
|
|
10/15/2014
|
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,500
|
|
|
797,005
|
(10)
|
-
(1)
-
One-fourth
of the shares subject to the option vest on the vesting commencement date and one forty-eighth of the shares vest monthly thereafter, subject to
continued service to us.
-
(2)
-
The
option is subject to an early exercise provision and is immediately exercisable. Early-exercised options are subject to repurchase by us at the original
exercise price, which right lapses pursuant to the option's vesting schedule.
-
(3)
-
The
option is subject to an early exercise provision and became exercisable in full on January 1, 2014. Early-exercised options are subject to
repurchase by us at the original exercise price, which right lapses pursuant to the option's vesting schedule.
-
(4)
-
One
forty-eighth of the shares subject to the option vested on the vesting commencement date and one forty-eighth of the shares vest monthly thereafter,
subject to continued service to us.
-
(5)
-
Shares
subject to the option vest in twenty-four equal monthly installments beginning on March 7, 2015.
-
(6)
-
One-fourth
of the shares subject to the option vested on May 2, 2012 and one forty-eighth of the shares vest monthly thereafter.
-
(7)
-
Shares
subject to the option vest in twenty-four equal monthly installments beginning on March 7, 2015.
-
(8)
-
Represents
an equity grant awarded to Ms. Smith in connection with her commencement of service with the Company. One-fourth of the shares subject to
the option vest on October 15, 2014 and one forty-eighth of the shares vest monthly thereafter.
-
(9)
-
Represents
an equity grant awarded to Ms. Smith in connection with her commencement of service with the Company. Shares are represented by restricted
stock units pursuant to which one-quarter of the shares vest on each of October 15, 2014, October 15, 2015, October 15, 2016 and October 15, 2017.
-
(10)
-
This
amount reflects the fair market value of our common stock of $37.07 per share as of December 31, 2013 multiplied by the amount shown in the
column for the Number of Shares or Units of Stock that have Not Vested.
32
Table of Contents
Employee Benefit and Stock Plans
The following table sets forth information regarding our equity compensation plans as of December 31, 2013:
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants,
and Rights
|
|
Weighted-average
Exercise Price of
Outstanding
Options,
Warrants, and
Rights(1)
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
|
|
Equity compensation plans approved by stockholders(2)
|
|
|
6,925,043
|
(3)
|
$
|
5.33
|
|
|
4,223,938
|
(4)
|
Equity compensation plans not approved by stockholders
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
6,925,043
|
|
$
|
5.33
|
|
|
4,223,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
(1)
-
The
weighted average exercise price is calculated based solely on the exercise prices of the outstanding options and does not reflect the shares that will
be issued upon the vesting of outstanding awards of RSUs, which have no exercise price.
-
(2)
-
These
plans consist of our 2006 Stock Plan (terminated in May 2013), our 2013 Equity Incentive Plan, and our 2013 Employee Stock Purchase Plan.
-
(3)
-
This
number includes 6,381,528 shares subject to outstanding awards granted under our 2006 Stock Plan, of which 6,217,668 shares were subject to outstanding
options and 163,860 shares were subject to outstanding RSU awards, and 543,515 shares subject to outstanding awards granted under our 2013 Equity Incentive Plan, of which 125,250 shares were subject
to outstanding options and 418,265 shares were subject to outstanding RSU awards. This number excludes shares that were issued at the end of the most recent 2013 Employee Stock Purchase Plan purchase
period, which began on August 15, 2013 and ended on February 15, 2014, after the end of our 2013 fiscal year.
-
(4)
-
This
number includes 3,485,906 shares available for issuance under our 2013 Equity Incentive Plan, including 1,077,291 shares reserved but unissued under
our 2006 Stock Plan that are available for issuance under our 2013 Equity Incentive Plan (as described below), and 738,032 shares reserved for issuance under our 2013 Employee Stock Purchase Plan. The
number of shares available for issuance under the 2013 Equity Incentive Plan is subject to increase on the first day of each fiscal year, as described below under "2013 Equity Incentive
Plan." The number of shares available for issuance under the 2013 Employee Stock Purchase Plan is subject to an annual increase to be added on the first day of each fiscal year, as described below
under "2013 Employee Stock Purchase Plan."
Our Board of Directors adopted, and our stockholders approved, a 2013 Equity Incentive Plan (the "2013 Plan"). Our 2013 Plan provides
for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to our employees and any parent and subsidiary corporations' employees, and for the
grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to our employees, directors and consultants and our
parent and subsidiary corporations' employees and consultants.
Authorized Shares.
A total of 2,952,130 shares of our common stock were initially reserved for issuance pursuant to the 2013 Plan. In
addition, the
shares reserved for issuance under our 2013 Plan also include (a) those shares reserved but unissued under our 2006 Stock Plan (the "2006 Plan"), and (b) shares
33
Table of Contents
returned
to our 2006 Plan as the result of expiration or termination of awards (provided that the maximum number of shares that may be added to the 2013 Plan pursuant to (a) and (b) is
9,119,341 shares). The number of shares available for issuance under the 2013 Plan will also include an annual increase on the first day of each fiscal year beginning in 2014, equal to the least
of:
-
-
3,250,000 shares;
-
-
5% of the outstanding shares of common stock as of the last day of our immediately preceding fiscal year; or
-
-
such other amount as our Board of Directors may determine.
The
amount reserved for issuance under the 2013 Plan was increased by 1,962,498 shares in connection with the annual increase described above for fiscal year 2014.
If
an award expires or becomes unexercisable without having been exercised in full, is surrendered pursuant to an exchange program, or, with respect to restricted stock, restricted stock
units, performance units or performance shares, is forfeited to or repurchased due to failure to vest, the unpurchased shares (or for awards other than stock options or stock appreciation rights, the
forfeited or repurchased shares) will become available for future grant or sale under the 2013 Plan. With respect to stock appreciation rights, the net shares issued will cease to be available under
the 2013 Plan and all remaining shares will remain available for future grant or sale under the 2013 Plan. Shares used to pay the exercise price of an award or satisfy the tax withholding obligations
related to an award will become available for future grant or sale under the 2013 Plan. To the extent an award is paid out in cash rather than shares, such cash payment will not result in reducing the
number of shares available for issuance under the 2013 Plan.
Plan Administration.
Our compensation and leadership development committee administers our 2013 Plan. In the case of awards intended to
qualify as
"performance-based compensation" within the meaning of Section 162(m) of the Internal Revenue Code, the committee will consist of two or more "outside directors" within the meaning of
Section 162(m). In addition, if we determine it is desirable to qualify transactions under the 2013 Plan as exempt under Rule 16b-3 of the Securities Exchange Act of 1934, as amended
("Rule 16b-3"), such transactions will be structured to satisfy the requirements for exemption under Rule 16b-3. Subject to the provisions of our 2013 Plan, the administrator has the
power to administer the plan, including but not limited to, the power to interpret the terms of the 2013 Plan and awards granted under it, to create, amend and revoke rules relating to the 2013 Plan,
including creating sub-plans, and to determine the terms of the awards, including the exercise price, the number of shares subject to each such award, the exercisability of the awards, and the form of
consideration, if any, payable upon exercise. The administrator also has the authority to amend existing awards to reduce or increase their exercise price, to allow participants the opportunity to
transfer outstanding awards to a financial institution or other person or entity selected by the administrator, and to institute an exchange program by which outstanding awards may be surrendered in
exchange for awards of the same type which may have a higher or lower exercise price or different terms, awards of a different type and/or cash.
Stock Options.
Stock options may be granted under the 2013 Plan. The exercise price of options granted under our 2013 Plan must at
least be equal to
the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10%
of the voting power of all classes of our outstanding stock, the term must not exceed 5 years and the exercise price must equal at least 110% of the fair market value on the grant date. The
administrator will determine the methods of payment of the exercise price of an option, which may include cash, shares or other property acceptable to the administrator, as well as other types of
consideration permitted by applicable law. After the termination of service of an employee, director or consultant, he or she may exercise his or her option for the period of time stated in his or her
option agreement. Generally, if termination is due to death or disability, the option will remain exercisable for 12 months. In all other cases, the option will generally remain exercisable for
three months following
34
Table of Contents
the
termination of service. However, in no event may an option be exercised later than the expiration of its term. Subject to the provisions of our 2013 Plan, the administrator determines the other
terms of options.
Stock Appreciation Rights.
Stock appreciation rights may be granted under our 2013 Plan. Stock appreciation rights allow the recipient
to receive the
appreciation in the fair market value of our common stock between the exercise date and the date of grant. Stock appreciation rights may not have a term exceeding 10 years. After the
termination of service of an employee, director or consultant, he or she may exercise his or her stock appreciation right for the period of time stated in his or her option agreement. However, in no
event may a stock appreciation right be exercised later than the expiration of its term. Subject to the provisions of our 2013 Plan, the administrator determines the other terms of stock appreciation
rights, including when such rights become exercisable and whether to pay any increased appreciation in cash or with shares of our common stock, or a combination thereof, except that the per share
exercise price for the shares to be issued pursuant to the exercise of a stock appreciation right will be no less than 100% of the fair market value per share on the date of grant.
Restricted Stock.
Restricted stock may be granted under our 2013 Plan. Restricted stock awards are grants of shares of our common stock
that vest in
accordance with terms and conditions established by the administrator. The administrator will determine the number of shares of restricted stock granted to any employee, director or consultant and,
subject to the provisions of our 2013 Plan, will determine the terms and conditions of such awards. The administrator may impose whatever conditions to vesting it determines to be appropriate (for
example, the administrator may set restrictions based on the achievement of specific performance goals or continued service to us); provided, however, that the
administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed. Recipients of restricted stock awards generally will have voting and dividend rights
with respect to such shares upon grant without regard to vesting, unless the administrator provides otherwise. Shares of restricted stock that do not vest are subject to our right of repurchase or
forfeiture.
Restricted Stock Units.
Restricted stock units may be granted under our 2013 Plan. Restricted stock units are bookkeeping entries
representing an
amount equal to the fair market value of one share of our common stock. Subject to the provisions of our 2013 Plan, the administrator determines the terms and conditions of restricted stock units,
including the vesting criteria (which may include accomplishing specified performance criteria or continued service to us) and the form and timing of payment. Notwithstanding the foregoing, the
administrator, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Performance Units and Performance Shares.
Performance units and performance shares may be granted under our 2013 Plan. Performance
units and
performance shares are awards that will result in a payment to a participant only if performance goals established by the administrator are achieved or the awards otherwise vest. The administrator
will establish organizational or individual performance goals or other vesting criteria in its discretion, which, depending on the extent to which they are met, will determine the number and/or the
value of performance units and performance shares to be paid out to participants. After the grant of a performance unit or performance share, the administrator, in its sole discretion, may reduce or
waive any performance criteria or other vesting provisions for such performance units or performance shares. Performance units shall have an initial dollar value established by the administrator prior
to the grant date. Performance shares shall have an initial value equal to the fair market value of our common stock on the grant date. The administrator, in its sole discretion, may pay earned
performance units or performance shares in the form of cash, in shares or in some combination thereof.
Outside Directors.
Our 2013 Plan provides that all non-employee directors will be eligible to receive all types of awards (except for
incentive stock
options) under the 2013 Plan. In connection with our initial public offering, we adopted a formal policy pursuant to which our non-employee directors will be eligible to receive equity awards under
the 2013 Plan. Our 2013 Plan provides that in any given year, a non-employee director will not receive (i) cash-settled awards having a grant date fair value greater than
35
Table of Contents
$500,000,
increased to $1,000,000 in connection with her or her initial service; and (ii) stock-settled awards having a grant date fair value greater than $500,000, increased to $1,000,000 in
connection with her or her initial service, in each case, as determined under generally accepted accounting procedures.
Non-Transferability of Awards.
Unless the administrator provides otherwise, our 2013 Plan generally does not allow for the transfer of
awards and
only the recipient of an award may exercise an award during his or her lifetime.
Certain Adjustments.
In the event of certain changes in our capitalization, to prevent diminution or enlargement of the benefits or
potential
benefits available under the 2013 Plan, the administrator will adjust the number and class of shares that may be delivered under the Plan and/or the number, class, and price of shares covered by each
outstanding award, and the numerical share limits set forth in the 2013 Plan. In the event of our proposed liquidation or dissolution, the administrator will notify participants as soon as practicable
and all awards will terminate immediately prior to the consummation of such proposed transaction.
Merger or Change in Control.
Our 2013 Plan provides that in the event of a merger or change in control, as defined under the 2013 Plan,
each
outstanding award will be treated as the administrator determines, except that if a successor corporation or its parent or subsidiary does not assume or substitute an equivalent award for any
outstanding award, then such award will fully vest, all restrictions on such award will lapse, all performance goals or other vesting criteria applicable to such award will be deemed achieved at 100%
of target levels and such award will become fully exercisable, if applicable, for a specified period prior to the transaction. The award will then terminate upon the expiration of the specified period
of time. If the service of an outside director is terminated on or following a change of control, other than pursuant to a voluntary resignation, his or her options, restricted stock units and stock
appreciation rights, if any, will vest fully and become immediately exercisable, all restrictions on his or her restricted stock will lapse, and all performance goals or other vesting requirements for
his or her performance shares and units will be deemed achieved at 100% of target levels, and all other terms and conditions met.
Amendment, Termination.
The administrator has the authority to amend, suspend or terminate the 2013 Plan provided such action does not
impair the
existing rights of any participant. Our 2013 Plan will automatically terminate in 2023, unless we terminate it sooner.
2006 Stock Plan, as amended
Our Board of Directors and our stockholders adopted our 2006 Plan in October 2006. Our 2006 Plan was most recently amended in May 2013.
Authorized Shares.
Our 2006 Plan has been terminated in connection with our initial public offering in May 2013, and accordingly, no
shares are
available for issuance under this plan. Our 2006 Plan continues to govern outstanding awards granted thereunder. Our 2006 Plan provided for the grant of incentive stock options and nonqualified stock
options.
Plan Administration.
Our compensation and leadership development committee administers the 2006 Plan. Subject to the provisions of our
2006 Plan, the
administrator has the full authority and discretion to take any actions it deems necessary or advisable for the administration of the 2006 Plan. All decisions, interpretations and other actions of the
administrator will be final and binding on all participants. The administrator will have the full authority to institute and determine the terms and conditions of an exchange program.
36
Table of Contents
Options.
Stock options were available for grant under our 2006 Plan. The exercise price per share of all options must equal at least
100% of the fair
market value per share of our common stock on the date of grant. The term of an option may not exceed 10 years. The administrator will determine the methods of payment of the exercise price of
an option, which may include cash or cash equivalents or other consideration acceptable to the administrator in its discretion. After the termination of service of an employee, director, or
consultant, the participant may generally exercise his or her options, to the extent vested as of such date of termination, for generally three months after termination. If termination is due to
disability, the option will generally remain exercisable, to the extent vested as of such date of termination, for at least six months. If termination is due to death, the option will generally remain
exercisable, to the extent vested as of such date of termination, for at least 12 months. However, in no event may an option be exercised later than the expiration of its term.
Restricted Stock and Restricted Stock Units.
Restricted stock and restricted stock units were available for
grant under our 2006 Plan. Restricted stock awards are grants of shares of our common stock that are subject to various restrictions, including restrictions on transferability and forfeiture
provisions. Restricted stock units are phantom stock units that may be settled in cash or shares upon vesting. Shares of restricted stock and restricted stock units will vest in accordance with terms
and conditions established by the administrator.
Adjustments.
In the event of certain changes in our capitalization, the number of shares covered by outstanding options or restricted
stock units,
and the exercise price of outstanding options will be proportionately adjusted.
Merger or Change in Control.
Our 2006 Plan provides that, in the event of a merger or consolidation, each award will be subject to the
agreement of
merger or consolidation. Such agreement will provide for one or more of the following: the continuation, assumption or substitution of awards, full acceleration of awards, or the cancellation of
outstanding awards in exchange for a cash payment.
Amendment; Termination.
Our Board of Directors may amend our 2006 Plan at any time, provided that such amendment does not impair the
rights under
outstanding awards without the award holder's written consent. Upon the effective date of the registration statement of which this prospectus forms a part, our 2006 Plan will be terminated and
no further awards will be granted thereunder. All outstanding awards will continue to be governed by their existing terms.
Our Board of Directors adopted, and our stockholders approved, a 2013 Employee Stock Purchase Plan (the "ESPP"). The ESPP became
effective upon adoption.
Authorized Shares.
A total of 738,032 shares of our common stock were initially available for issuance under our ESPP. In addition, our
ESPP provides
for annual increases in the number of shares available for issuance under the ESPP on the first day of each fiscal year beginning in fiscal 2014, equal to the lesser
of:
-
-
1% of the outstanding shares of our common stock on the first day of such fiscal year;
-
-
650,000 shares; or
-
-
such other amount as may be determined by our Board of Directors.
The
amount available for issuance under the ESPP was increased by 392,499 shares in connection with the annual increase described above for fiscal year 2014.
Plan Administration.
Our compensation and leadership development committee administers the ESPP. The administrator has authority to
administer the
plan, including but not limited to, full and exclusive authority to interpret the terms of the ESPP, determining eligibility to participate subject to the
37
Table of Contents
conditions
of our ESPP as described below, and to establish procedures for plan administration necessary for the administration of the Plan, including creating sub-plans.
Eligibility.
Generally, all of our employees are eligible to participate if they are employed by us, or any participating subsidiary,
for at least
20 hours per week and more than five months in any calendar year. However, an employee may not be granted an option to purchase stock under the ESPP if such
employee:
-
-
immediately after the grant would own stock possessing 5% or more of the total combined voting power or value of all
classes of our capital stock; or
-
-
hold rights to purchase stock under all of our employee stock purchase plans that accrue at a rate that exceeds $25,000
worth of stock for each calendar year in which the option is outstanding.
Offering Periods.
Our ESPP is intended to qualify under Section 423 of the Code, and provides for six-month offering periods. The
offering
periods generally start on the first trading day on or after February 15th and August 15th of each year, except that the first offering period commenced on the first
trading day following the effective date of the registration statement in connection our initial public offering. The administrator may, in its discretion, modify the terms of future offering periods.
Payroll Deductions.
Our ESPP permits participants to purchase common stock through payroll deductions of up to 15% of their eligible
compensation,
which includes a participant's base straight time gross earnings, commissions, overtime and shift premium, payments for incentive compensation, bonuses and other compensation. A participant may
purchase a maximum of 1,250 shares during an offering period.
Exercise of Option.
Amounts deducted and accumulated by the participant are used to purchase shares of our common stock at the end of
each six-month
offering period. The purchase price of the shares will be 85% of the lower of the fair market value of our common stock on the first trading day of each offering period or on the exercise date.
Participants may end their participation at any time during an offering period, and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock.
Participation ends automatically upon termination of employment with us.
Non-Transferability.
A participant may not transfer rights granted under the ESPP other than by will, the laws of descent and
distribution, or as
otherwise provided under the ESPP.
Merger or Change in Control.
In the event of our merger or change in control, as defined under the ESPP, a successor corporation may
assume or
substitute for each outstanding option. If the successor corporation refuses to assume or substitute for the option, the offering period then in progress will be shortened, and a new exercise date
will be set. The administrator will notify each participant that the exercise date has been changed and that the participant's option will be exercised automatically on the new exercise date unless
prior to such date the participant has withdrawn from the offering period.
Amendment, Termination.
Our ESPP will automatically terminate in 2033, unless we terminate it sooner. The administrator has the
authority to amend,
suspend or terminate our ESPP, except that, subject to certain exceptions described in the ESPP, no such action may adversely affect any outstanding rights to purchase stock under our ESPP.
We maintain a tax-qualified retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a tax
advantaged basis. Eligible employees are able to defer eligible compensation subject to applicable annual Code limits. We have the ability to make discretionary contributions to the 401(k) plan but
have not done so to date. Employees' pre-tax contributions are allocated to each participant's individual account and are then invested in selected investment alternatives according to the
participants' directions. Employees are immediately and fully vested in their
38
Table of Contents
contributions.
The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan's related trust intended to be tax exempt under Section 501(a) of the
Code. As a tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.
Limitation on Liability and Indemnification Matters
Our amended and restated certificate of incorporation and amended and restated bylaws provide that we will indemnify our directors and
officers, and may indemnify our employees and other agents, to the fullest extent permitted by Delaware law. Delaware law prohibits our amended and restated certificate of incorporation from limiting
the liability of our directors for the following:
-
-
any breach of the director's duty of loyalty to us or to our stockholders;
-
-
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
-
-
unlawful payment of dividends or unlawful stock repurchases or redemptions; and
-
-
any transaction from which the director derived an improper personal benefit.
If
Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director, then the liability of our directors will be eliminated or
limited to the fullest extent permitted by Delaware law, as so amended. Our amended and restated certificate of incorporation does not eliminate a director's duty of care and, in appropriate
circumstances, equitable remedies, such as injunctive or other forms of non-monetary relief, remain available under Delaware law. This provision also does not affect a director's responsibilities
under any other laws, such as the federal securities laws or other state or federal laws. Under our amended and restated bylaws, we are empowered to purchase insurance on behalf of any person whom we
are required or permitted to indemnify.
In
addition to the indemnification required in our amended and restated certificate of incorporation and amended and restated bylaws, we have entered into an indemnification agreement
with each
member of our Board of Directors and each of our executive officers. These agreements provide for the indemnification of our directors, executive officers and some employees for certain expenses and
liabilities incurred in connection with any action, suit, proceeding or alternative dispute resolution mechanism, or hearing, inquiry or investigation that may lead to the foregoing, to which they are
a party, or are threatened to be made a party, by reason of the fact that they are or were a director, officer, employee, agent or fiduciary of our company, or any of our subsidiaries, by reason of
any action or inaction by them while serving as an officer, director, agent or fiduciary, or by reason of the fact that they were serving at our request as a director, officer, employee, agent or
fiduciary of another entity. In the case of an action or proceeding by or in the right of our company or any of our subsidiaries, no indemnification will be provided for any claim where a court
determines that the indemnified party is prohibited from receiving indemnification. We believe that these charter and bylaw provisions and indemnification agreements are necessary to attract and
retain qualified persons as directors and officers.
The
limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from
bringing a lawsuit against directors for breach of their fiduciary duties. They may also reduce the likelihood of derivative litigation against directors and officers, even though an action, if
successful, might benefit us and our stockholders. Moreover, a stockholder's investment may be harmed to the extent we pay the costs of settlement and damage awards against directors and officers
pursuant to these indemnification provisions. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened
litigation that may result in claims for indemnification by any director or officer.
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