Exhibit 4.1
MOLECULAR BIOSYSTEMS, INC.
1997 OUTSIDE DIRECTORS STOCK OPTION PLAN
Article 1
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The purpose of the Plan is to permit the Company to grant
stock options to its outside directors to reward them for their efforts on the
Company's behalf and to provide an additional incentive to contribute to the
attainment of the Company's long-term plans and objectives.
1.2 Effective Date. The Plan shall become effective if and when approved
by the Company's shareholders at the 1997 Annual Meeting of Shareholders.
1.3 Term. The Plan shall have a term of 10 years expiring on the tenth
anniversary of its effective date. No Option may be granted under the Plan after
its expiration.
Article 2
DEFINITIONS
2.1 Annual Meeting means the annual meeting of the Company's
shareholders.
2.2 Board means the Company's Board of Directors. If the Board delegates
its authority to administer the Plan to a committee of the Board in accordance
with Article 4, references to the "Board" shall be construed as references to
the committee.
2.3 Common Stock means shares of the Company's common stock, $.01 par
value.
2.4 Company means Molecular Biosystems, Inc., a Delaware corporation.
2.5 Director means a director of the Company.
2.6 Expiration Date is defined in Paragraph 5.3.
2.7 Grant Date is defined in Paragraph 5.1.
2.8 Officer means: (i) the Company's Chairman of the Board and Chief
Executive Officer; (ii) the Company's President and Chief Operating Officer;
(iii) any Vice President of the Company; and (iv) any other person who is
considered an "officer" of the Company for purposes of Rule 16a-1(f) under the
Securities Exchange Act of 1934.
2.9 Option is defined in Paragraph 5.1.
2.10 Option Agreement is defined in Paragraph 5.6.
2.11 Outside Director means a Director who is neither an Officer nor an
employee of the Company or any corporation in which the Company owns stock
possessing at least 50% of the total combined voting power of all classes of
stock.
2.12 Plan means this stock option plan, as it may be amended. The
name of the Plan is the "Molecular Biosystems, Inc. 1997 Outside Directors
Stock Option Plan."
Article 3
TYPE AND NUMBER OF OPTIONS
3.1 Type of Options. The Options granted under this Plan are
nonstatutory stock options.
3.2 Maximum Number of Options. The maximum number of shares of Common
Stock for which Options may be granted is 300,000 (subject to adjustment as
provided in Paragraph 7.1). If any Option expires unexercised or is surrendered
prior to the Plan's expiration, the number of Underlying Shares in respect of
the Option shall be added back to the number of shares of Common Stock for which
Options may be granted under the Plan. The Underlying Shares to be delivered
upon the exercise of an Option may be either authorized but unissued shares or
issued shares reacquired by the Company (or any combination of the two).
Article 4
ADMINISTRATION
The Plan shall be administered by the Board. Subject to the express
provisions of the Plan, the Board may interpret the Plan, adopt and revise
policies and procedures to administer the Plan, and make all determinations
required for the Plan's administration. The actions of the Board shall be final
and binding. The Board may delegate its authority to its Executive Committee or
to another committee appointed by the Board consisting of at least two
Directors.
Article 5
STOCK OPTIONS
5.1 Option Grants.
(a) Annual Grant. On the last business day in March of each year
(beginning with March 1997) (the "Grant Date"), the Company shall
grant each incumbent Outside Director who was elected at the
preceding Annual Meeting an option for 6,500 shares of Common
Stock (an "Option"). No Option shall be granted to an incumbent
Outside Director who was not elected at the preceding Annual
Meeting but was subsequently elected or appointed by the Board to
fill a vacancy.
(b) Discretionary Grant. The Board shall have the authority to grant
options to an Outside Director in amounts greater than the annual
grant to that Outside Director set forth in the preceding
subparagraph, provided that no Outside Director shall be entitled
to receive Options for more than 21,500 shares of Common Stock in
any fiscal year. The date on which the Board acts to grant any
such options shall be the Grant Date.
5.2 Exercise Price. The exercise price of each Option shall be the
closing price of the Company's Common Stock on the New York Stock Exchange on
the Grant Date (or on the last trading day preceding the Grant Date if it is not
a trading day).
5.3 Term. Each Option shall have a 10-year term expiring on the tenth
anniversary of the Grant Date (the "Expiration Date") (subject to early
expiration as provided in Paragraph 5.4). The Board shall determine (i) whether
each Option shall be exercisable in full at one time or in installments at
different times and (ii) the time or times at which the Option or installments
shall become exercisable. No Option or installment shall be exercisable prior to
the first anniversary of the Grant Date, except as its exercisability is
accelerated by the Board. The Board may accelerate the exercisability of any
Option or installment at any time.
5.4 Death of Outside Director. The failure of the Outside Director to
whom an Option was granted to remain an Outside Director shall not cause the
Option to expire or otherwise terminate; but in the event of the death of the
Outside Director (whether or not he or she is then an incumbent Director), the
Option shall expire on the earlier of (i) the first anniversary of the Outside
Director's death or (ii) the Option's Expiration Date.
5.5 Transferability. No Option may be transferred, assigned or pledged
(whether by operation of law or otherwise), except as provided by will or the
applicable intestacy laws, and no Option shall be subject to execution,
attachment or similar process. An Option or Installment may be exercised only by
Outside Director to whom it was granted, except in the case of his or her death,
when it may be exercised by the person or persons to whom it passes by will or
inheritance.
5.6 Option Agreements. Each Option shall be evidenced by a written
agreement (an "Option Agreement"), in a form approved by the Board, entered into
by the Company and the Outside Director to whom the Option is granted.
Article 6
EXERCISE OF OPTIONS
6.1 Manner of Exercise. An exercisable Option may be exercised in full
or in part (but only in respect of a whole number of shares) by (i) written
notice to the Board (or its designee) stating the number of shares of Common
Stock in respect of which the Option is being exercised and (ii) full payment of
the exercise price of those shares.
6.2 Payment of Exercise Price. Payment of the exercise price of an
Option shall be made by certified or bank cashier's check or by wire transfer of
immediately available funds or, if permitted by the Board (either in the
applicable Option Agreement or at the time of exercise): (i) by delivering
shares of Common Stock having a fair market value on the date of exercise equal
to the exercise price; (ii) by directing the Company to withhold, from the
shares of Common Stock otherwise issuable upon exercise of the Option, shares of
Common Stock having a fair market value on the date of exercise equal to the
exercise price; (iii) by surrendering exercisable Options which have a fair
market value on the date of exercise equal to the exercise price (measuring the
fair market value of the Options surrendered by the excess of (y) the aggregate
fair market value on the date of exercise of the shares of Common Stock issuable
upon exercise of the Option over (z) the aggregate exercise price); (iv) by any
combination of the preceding methods of payment; or (v) by any other method of
payment authorized by the Board. For purposes of this Paragraph and Paragraph
6.3), "fair market value" shall be determined by the closing price of shares of
the Company's Common Stock on the date in question (or on the last trading day
preceding the date in question if it is not a trading day).
6.3 Withholding. Each Outside Director exercising an Option shall remit
to the Company an amount sufficient to satisfy the Company's federal, state and
local withholding tax obligation in connection with the exercise. Payment shall
be made by certified or bank cashier's check or by wire transfer of immediately
available funds or, if permitted by the Board (either in the applicable Option
Agreement or at the time of exercise), by either one or both of the following
methods: (i) by delivering shares of Common Stock having a fair market value on
the date of exercise equal to the Company's withholding obligation; or (ii) by
directing the Company to withhold, from the shares of Common Stock otherwise
issuable upon exercise of the Option, shares of Common Stock having a fair
market value on the date of exercise equal to the Company's withholding
obligation.
Article 7
MISCELLANEOUS PROVISIONS
7.1 Capitalization Adjustments. The aggregate number of shares of
Common Stock for which Options may be granted under the Plan, the aggregate
number of Underlying Shares in respect of each outstanding Option, and the
exercise price of each such Option may be adjusted by the Board as it considers
appropriate in the event of changes in the number of outstanding shares of
Common Stock by reason of stock dividends, stock splits, recapitalizations,
reorganizations and the like. Adjustments under this Paragraph 7.1 shall be made
in the Board's discretion, and its decisions shall be final and binding.
7.2 Amendment and Termination. The Board may amend, suspend or
terminate the Plan at any time; but except to comply with changes in the
Internal Revenue Code of 1986 and the related regulation, the Board may not
amend the Plan more once every six months to change: (i) the number of shares of
Common Stock for which Options may be granted under the Plan; (ii) the benefits
under the Plan; or (iii) the eligibility requirements of the Plan. The Company's
shareholders shall be required to approve any such amendment (other than an
amendment authorized under Paragraph 7.1) that would materially increase the
number of shares, materially increase the benefits or materially change the
eligibility requirements. If the Plan is terminated, the provisions of the Plan
shall continue to apply to Options granted prior to termination, and no
amendment, suspension or termination of the Plan shall adversely affect the
rights of an Outside Director in respect of any Option held without his or her
consent.
7.3 Compliance with Section 16(b). The Plan shall be interpreted and
administered in a manner that satisfies the applicable requirements of Rule
16b-3 under the Securities Exchange Act so that Outside Directors will be
entitled to the benefits of Rule 16b-3.
7.4 No Right To Nomination. Nothing in the Plan or in any Option
Agreement shall confer on any Outside Director the right to continue to be
nominated for election as a Director.
7.5 Notices. Notices required or permitted under the Plan shall be
considered to have been duly given if sent by certified or registered mail
addressed to the Board at the Company's principal office or to any Outside
Director at his or her address as it appears on the Company's records.
7.6 Severability. If any provision of the Plan is held illegal or
invalid for any reason, the illegality or invalidity shall not affect the
remaining provisions, and the Plan shall be construed and administered as if the
illegal or invalid provision had not been included.
7.7 Governing Law. The Plan and all Option Agreements shall be governed
in accordance with the laws of the State of California.