ARONEX PHARMACEUTICALS, INC.
1998 STOCK OPTION PLAN
ARTICLE I
PLAN
1.1 PURPOSE. This Plan is a plan for employees and consultants of the
Company and its Affiliates and is intended to advance the best interests of the
Company, its Affiliates, and its stockholders by providing those persons who
have substantial responsibility for the management and growth of the Company and
its Affiliates with additional incentives and an opportunity to obtain or
increase their proprietary interest in the Company, thereby encouraging them to
continue in the employ of the Company or any of its Affiliates.
1.2 EFFECTIVE DATE OF PLAN. This Plan shall be effective March 19, 1998
(the "Effective Date"), if within one year of that date it shall have been
approved by at least a majority vote of stockholders voting in person or by
proxy at a duly held stockholders' meeting, or if the provisions of the
corporate charter, by-laws or applicable state law prescribes a greater degree
of stockholder approval for this action, the approval by the holders of that
percentage, at a duly held meeting of stockholders. No Option shall be granted
pursuant to this Plan after March 19, 2008.
ARTICLE II
DEFINITIONS
The words and phrases defined in this Article shall have the meaning set
out in these definitions throughout this Plan, unless the context in which any
such word or phrase appears reasonably requires a broader, narrower, or
different meaning.
2.1 "AFFILIATE" means any parent corporation and any subsidiary
corporation. The term "parent corporation" means any corporation (other than the
Company) in an unbroken chain of corporations ending with the Company if, at the
time of the action or transaction, each of the corporations other than the
Company owns stock possessing 50% or more of the total combined voting power of
all classes of stock in one of the other corporations in the chain. The term
"subsidiary corporation" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if, at the time of the
action or transaction, each of the corporations other than the last corporation
in the unbroken chain owns stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations in the
chain.
2.2 "BOARD OF DIRECTORS" means the board of directors of the Company.
2.3 "CAUSE," when used in connection with the termination of an Employee's
employment or Consultant's engagement by the Company, means (i) any material
failure of the Employee or Consultant to perform his duties under any employment
or consulting agreement with the Company (other than any such failure resulting
from the Employee or Consultant's incapacity due to Disability), subject to any
written notice and opportunity to cure provided for by such employment or
consulting agreement, (ii) the Employee or Consultant's gross negligence or
willful or intentional wrongdoing or misconduct relating to his employment or
engagement by the Company, (iii) a material breach by the Employee or Consultant
of any proprietary information, inventions or non-competition agreement between
the Employee or Consultant and the Company, (iv) a material breach by the
Employee or Consultant of any insider trading, business ethics or similar policy
of the Company, or (iv) conviction of the Employee or Consultant of a felony
offense or a crime involving moral turpitude.
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2.4 "CHANGE OF CONTROL" means:
(i) the acquisition after the Effective Date by any individual, entity
or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended) (a "Person") of beneficial
ownership of 30 percent or more of either (i) the then outstanding shares
of common stock of the Company (the "Outstanding Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Voting Securities"), provided that for purposes of this
subsection (i), the following acquisitions shall not constitute a Change of
Control: (A) any acquisition directly from the Company, (B) any acquisition
by the Company, (C) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any corporation
controlled by the Company, or (D) any acquisition by any corporation
pursuant to a transaction which complies with clauses (A), (B) and (C) of
subsection (iii) hereof; or
(ii) individuals, who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board, provided that any individual becoming a director
subsequent to the Effective Date whose nomination or election, or
nomination for election by the Company's stockholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual was a member of the
Incumbent Board, but excluding, for this purpose, any such individual whose
initial assumption of office occurs as a result of an actual or threatened
election contest with respect to the election or removal of directors or
other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board; or
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(iii) consummation after the Effective Date of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Company (a "Corporate Transaction")
unless, in each case, following such Corporate Transaction, (A) (1) all or
substantially all of the persons who were the beneficial owners of the
Outstanding Common Stock immediately prior to such Corporate Transaction
beneficially own, directly or indirectly, more than 60 percent of the then
outstanding shares of common stock of the corporation resulting from such
Corporate Transaction, and (2) all or substantially all of the persons who
were the beneficial owners of the Outstanding Voting Securities immediately
prior to such Corporate Transaction beneficially own directly or
indirectly, more than 60 percent of the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership of the Outstanding
Common Stock and the outstanding Voting Securities immediately prior to
such Corporate Transaction, as the case may be, (B) no Person (excluding
(1) any corporation resulting from such Corporate Transaction or any
employee benefit plan (or related trust) of the Company or such corporation
resulting from such Corporate Transaction and (2) any Person approved by
the Incumbent Board) beneficially owns, directly or indirectly, 20 percent
or more of the then outstanding shares of common stock of the corporation
resulting from such Corporate Transaction or the combined voting power of
the then outstanding voting securities of such corporation except to the
extent that such ownership existed prior to such Corporate Transaction and
(C) at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction were members of the
Incumbent Board at the time of the execution of the initial agreement or of
the action of the Board providing for such Corporate Transaction.
2.5 "CODE" means the internal Revenue Code of 1986, as amended.
2.6 "COMMITTEE" means the Compensation Committee of the Board of Directors
or such other committee designated by the Board of Directors. The Committee
shall be comprised solely of at least two members who are Non-Employee Directors
and Outside Directors.
2.7 "COMPANY" means Aronex Pharmaceuticals, Inc., a Delaware corporation.
2.8 "CONSULTANT" means a person who is engaged by the Company or any
Affiliate to render consulting services and to whom an Option is granted.
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2.9 "DISABILITY" means a physical or mental infirmity which, in the opinion
of a physician selected by the Committee, shall prevent the Employee or
Consultant from earning a reasonable livelihood with the Company or any
Affiliate and which can be expected to result in death or which has lasted or
can be expected to last for a continuous period of not less than 12 months and
which: (a) was not contracted, suffered or incurred while the Employee or
Consultant was engaged in, or did not result from having engaged in, a felonious
criminal enterprise; (b) did not result from alcoholism or addiction to
narcotics; and (c) did not result from an injury incurred while a member of the
Armed Forces of the United States for which the Employee or Consultant receives
a military pension.
2.10 "EMPLOYEE" means a person employed by the Company or any Affiliate to
whom an Option is granted.
2.11 "FAIR MARKET VALUE" of the Stock as of any date means (a) the last
sale price of the Stock on that date (or, if there was no sale on such date, the
next preceding date on which there was such a sale) as reported on the principal
securities exchange on which the Stock is listed; or (b) if the Stock is not
listed on a securities exchange, the last sale price of the Stock on that date
(or, if there was no sale on such date, the next preceding date on which there
was such a sale) as reported on the Nasdaq Stock Market; or (c) if the Stock is
not listed on the Nasdaq Stock Market, the average of the high and low bid
quotations for the Stock on that date as reported by the National Quotation
Bureau Incorporated; or (d) if none of the foregoing is applicable, an amount at
the election of the Committee equal to (x) the average between the closing bid
and ask prices per share of Stock on the last preceding date on which those
prices were reported or (y) an amount as determined by the Committee in its sole
discretion.
2.12 "INCENTIVE OPTION" means an Option granted under this Plan which is
designated as an "Incentive Option" and satisfies the requirements of Section
422 of the Code.
2.13 "NON-EMPLOYEE DIRECTOR" means a "non-employee director" as that term
is defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended.
2.14 "NONQUALIFIED OPTION" means an Option granted under this Plan other
than an Incentive Option.
2.15 "OPTION" means either an Incentive Option or a Nonqualified Option
granted under this Plan to purchase shares of Stock.
2.16 "OPTION AGREEMENT" means the written agreement which sets out the
terms of an Option.
2.17 "OPTIONEE" means a person who is granted an Option under this Plan.
2.18 "OUTSIDE DIRECTOR" means a member of the Board of Directors serving on
the Committee who satisfies the criteria of Section 162(m) of the Code.
2.19 "PLAN" means the Aronex Pharmaceuticals, Inc. 1998 Stock Option Plan,
as set out in this document and as it may be amended from time to time.
2.20 "STOCK" means the common stock of the Company, par value $.001 per
share, or, in the event that the outstanding shares of common stock are later
changed into or exchanged for a different class of stock or securities of the
Company or another corporation, that other stock or security.
2.21 "10% STOCKHOLDER" means an individual who, at the time the Option is
granted, owns stock possessing more than 10% of the total combined voting power
of all classes of stock of the Company or of any Affiliate. An individual shall
be considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and stock owned, directly or indirectly,
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by or for a corporation, partnership, estate, or trust, shall be considered as
being owned proportionately by or for its stockholders, partners or
beneficiaries.
ARTICLE III
ELIGIBILITY
The individuals who shall be eligible to receive Incentive Options shall be
those key employees of the Company or any of its Affiliates as the Committee
shall determine from time to time. The individuals who shall be eligible to
receive Nonqualified Options shall be those key employees and consultants of the
Company or any of its Affiliates as the Committee shall determine from time to
time. No member of the Committee shall be eligible to receive any Option or to
receive stock, stock options, or stock appreciation rights under any other plan
of the Company or any of its Affiliates, if to do so would cause the individual
not to be a Non-Employee Director or an Outside Director. The Board of Directors
may designate one or more individuals who shall not be eligible to receive any
Option under this Plan or under other similar plans of the Company.
ARTICLE IV
GENERAL PROVISIONS RELATING TO OPTIONS
4.1 AUTHORITY TO GRANT OPTIONS. The Committee may grant to those
individuals, as it shall from time to time determine, Options under the terms
and conditions of this Plan. Subject only to any applicable limitations set out
in this Plan, the number of shares of Stock to be covered by any Option to be
granted to an Employee or Consultant of the Company or any of its Affiliates
shall be as determined by the Committee.
4.2 DEDICATED SHARES. The total number of shares of Stock with respect to
which Options may be granted under the Plan shall be 750,000 shares of Stock.
The shares may be treasury shares or authorized but unissued shares. The total
number of shares of Stock with respect to which Incentive Options may be granted
under the Plan shall be 750,000 shares. The maximum number of shares subject to
Options which may be issued to any Optionee under the Plan during any period of
three consecutive years is 250,000 shares. The number of shares stated in this
Section 4.2 shall be subject to adjustment in accordance with the provisions of
Section 4.5.
In the event that any outstanding Option shall expire or terminate for any
reason or any Option is surrendered, the shares of Stock allocable to the
unexercised portion of that Option may again be subject to an Option under the
Plan.
4.3 NON-TRANSFERABILITY. Options shall not be transferable by the Optionee
otherwise than (i) by will or under the laws of descent and distribution or (ii)
pursuant to a qualified domestic relations order as defined in the Code, in
Title I of the Employee Retirement Income Security Act, or in the rules and
regulations as may be in effect from time to time thereunder, and shall be
exercisable, during the Optionee's lifetime, only by him.
4.4 REQUIREMENTS OF LAW. The Company shall not be required to sell or issue
any Stock under any Option if issuing that Stock would constitute or result in a
violation by the Optionee or the Company of any provision of any law, statute,
or regulation of any governmental authority. Specifically, in connection with
any applicable statute or regulation relating to the registration of securities,
upon exercise of any Option, the Company shall not be required to issue any
Stock unless the Committee has received evidence satisfactory to it to the
effect that the holder of that Option will not transfer the Stock except in
accordance with applicable law, including receipt of an opinion of counsel
satisfactory to the Company to the effect that any proposed transfer complies
with applicable law. The determination by the Committee on this matter shall be
final, binding and conclusive. The Company may, but shall in no event be
obligated to, register any Stock covered by this Plan pursuant to applicable
securities laws of any country or any political subdivision. In the event the
Stock issuable on exercise of an Option is not registered, the Company
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may imprint on the certificate evidencing the Stock any legend that counsel for
the Company considers necessary or advisable to comply with applicable law. The
Company shall not be obligated to take any other affirmative action in order to
cause the exercise of an Option and the issuance of shares thereunder, to comply
with any law or regulation of any governmental authority.
4.5 CHANGES IN THE COMPANY'S CAPITAL STRUCTURE. The existence of
outstanding Options shall not affect in any way the right or power of the
Company or its stockholders to make or authorize any adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stock ahead of or
affecting the Stock or its rights, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its assets or business,
or any other corporate act or proceeding, whether of a similar character or
otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Stock outstanding, without receiving
compensation for it in money, services or property then (a) the number, class,
and per share price of shares of Stock subject to outstanding Options under this
Plan shall be appropriately adjusted in such a manner as to entitle an Optionee
to receive upon exercise of an Option, for the same aggregate cash
consideration, the equivalent total number and class of shares he would have
received had he exercised his Option in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares of Stock then
reserved to be issued under the Plan shall be adjusted by substituting for the
total number and class of shares of Stock then reserved, that number and class
of shares of Stock that would have been received by the owner of an equal number
of outstanding shares of such class of Stock as the result of the event
requiring the adjustment.
If the Company is merged or consolidated with another corporation and the
Company is not the surviving corporation, or if the Company is liquidated or
sells or otherwise disposes of substantially all its assets while unexercised
Options remain outstanding under this Plan, (a) subject to the provisions of
clause (c) below, after the effective date of the merger, consolidation,
liquidation, sale or other disposition, as the case may be, each holder of an
outstanding Option shall be entitled, upon exercise of the Option, to receive,
in lieu of shares of Stock, the number and class or classes of shares of stock
or other securities or property to which the holder would have been entitled if,
immediately prior to the merger, consolidation, liquidation, sale or other
disposition, the holder had been the holder of record of a number of shares of
Stock equal to the number of shares as to which the Option shall be so
exercised; (b) the Committee shall waive any limitations set out in or imposed
under this Plan so that all Options, from and after a date prior to the
effective date of the merger, consolidation, liquidation, sale or other
disposition, as the case may be, specified by the Committee, shall be
exercisable in full; and (c) all outstanding Options may be canceled by the
Committee as of the effective date of any merger, consolidation, liquidation,
sale or other disposition, if (i) notice of cancellation shall be given to each
holder of an Option and (ii) each holder of an Option shall have the right to
exercise that Option in full (without regard to any limitations set out in or
imposed under this Plan or the Option Agreement granting that Option) during a
period set by the Committee preceding the effective date of the merger,
consolidation, liquidation, sale or other disposition and, if in the event all
outstanding Options may not be exercised in full under applicable securities
laws without registration of the shares of Stock issuable on exercise of the
Options, the Committee may limit the exercise of the Options to the number of
shares of Stock, if any, as may be issued without registration. The method of
choosing which Options may be exercised, and the number of shares of Stock for
which Options may be exercised, shall be solely within the discretion of the
Committee.
The issue by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, for cash or property, or for
labor or services either upon direct sale or upon the exercise of rights or
warrants to subscribe for them, or upon conversion of shares or obligations of
the Company convertible into shares or other securities, shall not affect, and
no adjustment by reason of such issuance shall be made with respect to, the
number, class, or price of shares of Stock then subject to outstanding Options.
4.6 CHANGES OF CONTROL. In the event of a Change of Control, the Committee
may, in its discretion, at the time an Option is granted or any time thereafter:
(i) provide for the acceleration of any time period
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relating to the exercise of the Option, (ii) provide for the purchase of the
Option upon the Optionee's request for an amount of cash or other property that
could have been received upon the exercise of the Option had the Option been
then currently exercisable, (iii) adjust the terms of the Option in a manner
determined by the Committee to reflect the Change of Control, (iv) cause the
Option to be assumed, or new rights substituted therefore, by another entity, or
(v) make such other provisions as the Committee may consider equitable and in
the best interest of the Company.
ARTICLE V
OPTIONS
5.1 TYPE OF OPTION. The Committee shall specify whether a given Option
shall constitute an Incentive Option or a Nonqualified Option.
5.2 OPTION PRICE. The price at which Stock may be purchased under an Option
shall not be less than the greater of: (a) 100% of the Fair Market Value of the
shares of Stock on the date the Option is granted or (b) the aggregate par value
of the shares of Stock on the date the Option is granted. In the case of any 10%
Stockholder, the price at which shares of Stock may be purchased under an
Incentive Option shall not be less than 110% of the Fair Market Value of the
Stock on the date the Incentive Option is granted.
5.3 DURATION OF OPTIONS; TERMINATION. No Option shall be exercisable after
the expiration of 10 years from the date the Option is granted. In the case of a
10% Stockholder, no Incentive Option shall be exercisable after the expiration
of five years from the date the Incentive Option is granted. Unless otherwise
provided in the Option Agreement or by the Committee:
(a) If the employment or engagement of an Optionee by the Company
shall terminate for any reason other than Cause, Disability, the
voluntary retirement of the Optionee in accordance with the Company's
retirement policy as then in effect or the death of the Optionee: (i)
Options granted to such Optionee, to the extent that they were
exercisable at the time of such termination, shall remain exercisable
until the expiration of 90 days after such termination, on which date
they shall expire, and (ii) Options granted to such Optionee, to the
extent that they were not exercisable at the time of such termination,
shall expire at the close of business on the date of such termination;
provided, however, that no Option shall be exercisable after the
expiration of its term.
(b) If the employment or engagement of an Optionee by the Company
shall terminate on account of the Disability, the voluntary retirement
of the Optionee in accordance with the Company's retirement policy as
then in effect or the death of the Optionee: (i) Options granted to
such Optionee, to the extent that they were exercisable at the time of
such termination, shall remain exercisable until the expiration of one
year after such termination, on which date they shall expire, and (ii)
Options granted to such Optionee, to the extent that they were not
exercisable at the time of such termination, shall expire at the close
of business on the date of such termination; provided, however, that
no Option shall be exercisable after the expiration of its term.
(c) In the event of the termination of an Optionee's employment
or engagement for Cause, all outstanding Options granted to such
Optionee shall expire at the commencement of business on the date of
such termination.
5.4 AMOUNT EXERCISABLE. Each Option may be exercised from time to time, in
whole or in part, in the manner and subject to the conditions the Committee, in
its sole discretion, may provide in the Option Agreement, as long as the Option
is valid and outstanding. To the extent that the aggregate Fair Market Value
(determined as of the time an Incentive Option is granted) of the Stock with
respect to which Incentive Options first become exercisable by the Optionee
during any calendar year (under this Plan and any other incentive stock option
plan(s) of the Company or any Affiliate) exceeds $100,000, the Incentive Options
shall be treated as Nonqualified Options. In making this determination,
Incentive Options shall be taken into account in the order in which they were
granted.
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5.5 EXERCISE OF OPTIONS. Each Option shall be exercised by the delivery of
written notice to the Company, to the attention of its Secretary, setting forth
the number of shares of Stock with respect to which the Option is to be
exercised, together with: (a) cash, wire transfer, certified check, bank draft,
or postal or express money order payable to the order of the Company for an
amount equal to the option price of the shares, or (b) if approved by the
Committee, Stock at its Fair Market Value on the date of exercise, and/or any
other form of payment which is acceptable to the Committee, and specifying the
address to which the certificates for the shares are to be mailed. Subject to
Sections 4.4 and 8.3, as promptly as practicable after receipt of written
notification and payment, the Company shall deliver to the Optionee certificates
for the number of shares with respect to which the Option has been exercised,
issued in the Optionee's name. If shares of Stock are used in payment of the
exercise price, the aggregate Fair Market Value of the shares of Stock tendered
must be equal to or less than the aggregate exercise price of the shares being
purchased upon exercise of the Option, and any difference must be paid by cash,
certified check, bank draft, or postal or express money order payable to the
Company. Delivery of the shares shall be deemed effected for all purposes when a
stock transfer agent of the Company shall have deposited the certificates in the
United States mail, addressed to the Optionee, at the address specified by the
Optionee.
Whenever an Option is exercised by exchanging shares of Stock owned by the
Optionee, the Optionee shall deliver to the Company certificates registered in
the name of the Optionee representing a number of shares of Stock legally and
beneficially owned by the Optionee, free of all liens, claims, and encumbrances
of every kind, accompanied by stock powers duly endorsed in blank by the record
holder of the shares represented by the certificates (with signature guaranteed
by a commercial bank or trust company or by a brokerage firm having a membership
on a registered national stock exchange). The delivery of certificates upon the
exercise of Options is subject to the condition that the person exercising the
Option provide the Company with the information the Company might reasonably
request pertaining to exercise, sale or other disposition of an Option.
5.6 SUBSTITUTION OPTIONS. Options may be granted under this Plan from time
to time in substitution for stock options held by employees of other
corporations who are about to become employees of or affiliated with the Company
or any Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or any Affiliate, or the acquisition by the Company
or any Affiliate of the assets of the employing corporation, or the acquisition
by the Company or any Affiliate of stock of the employing corporation as the
result of which it becomes an Affiliate of the Company. The terms and conditions
of the substitute Options granted may vary from the terms and conditions set out
in this Plan (including, without limitation, the terms and conditions with
respect to the price at which Stock may be purchased under an Option) to the
extent the Committee, at the time of grant, may deem appropriate to conform, in
whole or in part, to the provisions of the stock options in substitution for
which they are granted.
5.7 NO RIGHTS AS STOCKHOLDER. No Optionee shall have any rights as a
stockholder with respect to Stock covered by his Option until the date a stock
certificate is issued for the Stock.
ARTICLE VI
ADMINISTRATION
This Plan shall be administered by the Committee. All questions of
interpretation and application of this Plan and Options shall be subject to the
determination of the Committee. A majority of the members of the Committee shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by a majority of the members shall be as effective as if it had been made
by a majority vote at a meeting properly called and held. This Plan shall be
administered in such a manner as to permit the Options granted under it which
are designated to be Incentive Options to qualify as Incentive Options. In
carrying out its authority under this Plan, the Committee shall have full and
final authority and discretion, including but not limited to the following
rights, powers and authorities, to:
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(a) determine the persons to whom and the time or times at which
Options will be made,
(b) determine the number of shares and the purchase price of
Stock covered in each Option, subject to the terms of the Plan,
(c) determine the terms, provisions and conditions of each
Option, which need not be identical,
(d) accelerate the time at which any outstanding Option may be
exercised,
(e) define the effect, if any, on an Option of the death,
disability, retirement, or termination of employment of the Optionee,
(f) prescribe, amend and rescind rules and regulations relating
to administration of this Plan, and
(g) make all other determinations and take all other actions
deemed necessary, appropriate, or advisable for the proper
administration of this Plan.
The actions of the Committee in exercising all of the rights, powers, and
authorities set out in this Article and all other Articles of this Plan, when
performed in good faith and in its sole judgment, shall be final, conclusive and
binding on all parties.
ARTICLE VII
AMENDMENT OR TERMINATION OF PLAN
The Board of Directors of the Company may amend, terminate or suspend this
Plan at any time, in its sole and absolute discretion; provided, however, that
to the extent required to maintain the status of any Incentive Option under the
Code, no amendment that would (a) change the aggregate number of shares of Stock
which may be issued under Incentive Options, (b) change the class of employees
eligible to receive Incentive Options, or (c) decrease the exercise price for
Incentive Options below the Fair Market Value of the Stock at the time it is
granted, shall be made without the approval of the Company's stockholders.
Subject to the preceding sentence, the Board shall have the power to make any
changes in this Plan and in the regulations and administrative provisions under
it or in any outstanding Incentive Option as in the opinion of counsel for the
Company may be necessary or appropriate from time to time to enable any
Incentive Option granted under this Plan to continue to qualify as an incentive
stock option or such other stock option as may be defined under the Code so as
to receive preferential Federal income tax treatment.
ARTICLE VIII
MISCELLANEOUS
8.1 NO ESTABLISHMENT OF A TRUST FUND. No property shall be set aside nor
shall a trust fund of any kind be established to secure the rights of any
Optionee under this Plan. All Optionees shall at all times rely solely upon the
general credit of the Company for the payment of any benefit which becomes
payable under this Plan.
8.2 NO EMPLOYMENT OBLIGATION. The granting of any Option shall not
constitute an employment contract, express or implied, nor impose upon the
Company or any Affiliate any obligation to employ or continue to employ any
Optionee. The right of the Company or any Affiliate to terminate the employment
of any person shall not be diminished or affected by reason of the fact that an
Option has been granted to him.
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8.3 TAX WITHHOLDING. The Company or any Affiliate shall be entitled to
deduct from other compensation payable to each Optionee any sums required by
federal, state, or local tax law to be withheld with respect to the grant or
exercise of an Option. In the alternative, the Company may require the Optionee
(or other person exercising the Option) to pay the sum directly to the employer
corporation. If the Optionee (or other person exercising the Option) is required
to pay the sum directly, payment in cash or by check of such sums for taxes
shall be delivered within ten days after the date of exercise or lapse of
restrictions. The Company shall have no obligation upon exercise of any Option
until payment has been received, unless withholding (or offset against a cash
payment) as of or prior to the date of exercise is sufficient to cover all sums
due with respect to that exercise. The Company and its Affiliates shall not be
obligated to advise an Optionee of the existence of the tax or the amount which
the employer corporation will be required to withhold.
8.4 WRITTEN AGREEMENT. Each Option shall be embodied in a written Option
Agreement which shall be subject to the terms and conditions of this Plan and
shall be signed by the Optionee and by a member of the Committee and an officer
of the Company on behalf of the Committee and the Company. The Option Agreement
may contain any other provisions that the Committee in its discretion shall deem
advisable which are not inconsistent with the terms of this Plan.
8.5 INDEMNIFICATION OF THE COMMITTEE AND THE BOARD OF DIRECTORS. With
respect to administration of this Plan, the Company shall indemnify each present
and future member of the Committee and the Board of Directors against, and each
member of the Committee and the Board of Directors shall be entitled without
further action his part to indemnity from the Company for, all expenses
(including attorneys' fees, the amount of judgments and the amount of approved
settlements made with a view to the curtailment of costs of litigation, other
than amounts paid to the Company itself) reasonably incurred by him in
connection with or arising out of any action, suit, or proceeding in which he
may be involved by reason of his being or having been a member of the Committee
and/or the Board of Directors, whether or not he continues to be a member of the
Committee and/or the Board of Directors at the time of incurring the
expenses--including, without limitation, matters as to which he shall be finally
adjudged in any action, suit or proceeding to have been found to have been
negligent in the performance of his duty as a member of the Committee or of the
Board of Directors. However, this indemnity shall not include any expenses
incurred by any member of the Committee and/or the Board of Directors in respect
of matters as to which he shall be finally adjudged in any action, suit or
proceeding to have been guilty of gross negligence or willful misconduct in the
performance of his duty as a member of the Committee or the Board of Directors.
In addition, no right of indemnification under this Plan shall be available to
or enforceable by any member of the Committee or the Board of Directors unless,
within 60 days after institution of any action, suit or proceeding, he shall
have offered the Company, in writing, the opportunity to handle and defend same
at its own expense. This right of indemnification shall inure to the benefit of
the heirs, executors or administrators of each member of the Committee and the
Board of Directors and shall be in addition to all other rights to which a
member of the Committee and the Board of Directors may be entitled as a matter
of law, contract, or otherwise.
8.6 GENDER. If the context requires, words of one gender when used in this
Plan shall include the others and words used in the singular or plural shall
include the other.
8.7 HEADINGS. Headings of Articles and Sections are included for
convenience of reference only and do not constitute part of this Plan and shall
not be used in construing the terms of this Plan.
8.8 OTHER COMPENSATION PLANS. The adoption of this Plan shall not affect
any other stock option, incentive or other compensation or benefit plans in
effect for the Company or any Affiliate, nor shall this Plan preclude the
Company from establishing any other forms of incentive or other compensation for
employees of the Company or any Affiliate.
8.9 OTHER OPTIONS. The grant of an Option shall not confer upon an Optionee
the right to receive any future or other Options under this Plan, whether or not
Options may be granted to similarly situated Optionees, or the right to receive
future Options upon the same terms or conditions as previously granted.
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8.10 ARBITRATION OF DISPUTES. Any controversy arising out of or relating to
the Plan or an Option Agreement shall be resolved by arbitration conducted
pursuant to the arbitration rules of the American Arbitration Association. The
arbitration shall be final and binding on the parties.
8.11 GOVERNING LAW. The provisions of this Plan shall be construed,
administered, and governed under the laws of the State of Delaware.
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