ENZON, INC.
NON-QUALIFIED STOCK OPTION PLAN, AS AMENDED*/
A. Purpose and Scope
The purpose of this Plan is to encourage stock ownership by employees
and directors of, and independent consultants to, Enzon, Inc., a Delaware
corporation, and its subsidiaries (herein called the "Company"), to provide
an incentive to such persons to develop, expand and improve the profits and
prosperity of the Company, and to assist the Company in attracting key
personnel and consultants through the grant of Options to purchase shares
of the Company's Common Stock.
B. Definitions
Unless otherwise required by the context:
1. "Board" shall mean the Board of Directors of the Company.
2. "Committee" shall mean the Compensation Committee, which is appointed by
the Board, and which shall be composed of at least two Non-Employee Directors.
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*/ The Plan was amended by vote of the Board of Directors on each of January 10,
1990, February 6, 1990, April 25, 1990, February 23, 1991, May 30, 1991,
November 21, 1991, approved by vote of the Stockholders on January 22, 1992,
amended by vote of the Board of Directors on December 28, 1992 with such
amendment ratified by vote of the Stockholders on February 8, 1993, amended by
vote of the Board of Directors on September 13, 1993 with such amendment
ratified by vote of the Stockholders on December 7, 1993, amended by the Board
of Directors on July 17, 1995 with such amendment ratified by vote of the
Stockholders on December 5, 1995.
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3. "Company" shall mean Enzon, Inc. and its subsidiaries.
4. "Code" shall mean the Internal Revenue Code of 1986, as amended.
5. "Independent Director" shall mean a director who is not an employee of
the Company.
6. "Non-Employee Director" shall have the meaning ascribed in Rule 16b-3
("Rule 16b-3") promulgated under the Securities Exchange Act of 1934, as
amended.
7. "Option" shall mean a right to purchase Stock, granted pursuant to the
Plan.
8. "Option Price" shall mean the purchase price for Stock under an Option,
as determined in Section F below.
9. "Participant" shall mean an employee of the Company, a director of the
Company, a consultant to the Company, or any person to whom an Option is granted
under the Plan.
10. "Plan" shall mean this Enzon, Inc. Non-Qualified Stock Option Plan, as
amended.
11. "Stock" shall mean the Common Stock of the Company, par value $.01.
C. Stock to be Optioned
Subject to the provisions of Section L of the Plan, the maximum number of
shares of Stock that may be optioned or sold under the Plan is 6,200,000 shares.
Such
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shares may be treasury, or authorized but unissued shares of, the Stock of the
Company.
D. Administration
The Plan shall be administered by the Committee or the Board. Two
members of the Committee shall constitute a quorum for the transaction of
business. Except as provided in Section Q hereof, the Committee or the Board
shall make all decisions with respect to the operation of the Plan, the
participation in the Plan by employees or directors of, or consultants to the
Company, and with respect to the extent of that participation. The
interpretation and construction of any provision of the Plan by the Board or the
Committee shall be final. No member of the Board or the Committee shall be
liable for any action or determination made by him in good faith.
E. Eligibility
The Board or the Committee may grant Options to any employee (including an
employee who is a director or an officer), or any person who is not an employee
who is a director or an officer, or any person who is not an employee and serves
as a director of the Company, or any consultant to the Company. Options may be
awarded by the Board or the Committee at any time and from time to time to new
Participants, or to then current Participants, or to a greater or lesser number
of Participants, and may include or exclude previous Participants, as the Board,
or the
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Committee shall determine. Options granted at different times need not
contain similar provisions.
F. Option Price
The purchase price for Stock under each Option shall be at least 100
percent of the fair market value of the Stock at the time the Option is granted,
but in no event less than the par value of the Stock. The fair market value of
the Company's Stock shall be determined as follows:
a. If the Common Stock continues to be traded on the over-the-counter
market as a National Market System Security or is traded on a national
securities exchange, the fair market value of the Stock shall be the
closing sale price on such day that the Option is granted as reported by
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") or the national securities exchange on which the Stock is
trading, as the case may be; or
b. If the Common Stock ceases to be traded as a National Market System
Security but continues to be traded on the over-the-counter market, the
fair market value of the Stock shall be the closing bid price on such day
that the Option is granted as reported by NASDAQ; or
c. If the Common Stock ceases to be traded on the over-the-counter market
and is not traded on a national securities exchange, the current market
value shall be determined by a reputable investment banking firm
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retained by the Board.
G. Terms and Conditions of Options
Except as provided in Section Q hereof, Options granted pursuant to the
Plan shall be authorized by the Board or the Committee and shall be evidenced by
agreements ("Option Agreements") in such form as the Board or the Committee,
shall from time to time approve. Such Agreements shall comply with and be
subject to the following terms and conditions:
1. Employment Agreement - The Board or the Committee may, in its
discretion, include in any Option granted under the Plan to a Participant who is
an employee of the Company a condition that the Participant shall agree to
remain in the employ of, and/or to render services to, the Company for a period
of time (specified in the Option Agreement) following the date the Option is
granted. No such agreement shall impose upon the Company, however, any
obligation to employ the Participant for any period of time, except as otherwise
agreed to by the Company.
2. Time and Method of Payment - The Option Price shall be paid in full in
cash, by certified check or official bank check, at the time an Option is
exercised under the Plan. If the Board or the Committee in its sole discretion
so authorizes, payment may be made by exchange of shares of the Company's Common
Stock previously owned by the optionee, having the same fair market value as
determined in the manner set forth in Section F. Without payment by one of the
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methods described above, an exercise of any Option granted under the Plan shall
be invalid and of no effect. Promptly after the exercise of an Option and the
payment of the full Option Price, the Participant shall be entitled to the
issuance of a stock certificate evidencing his or her ownership of the Stock
issuable under such Option. A Participant shall have none of the rights of a
stockholder until the Option is duly exercised, and no adjustment will be made
for dividends or other rights for which the record date is prior to the date
such Option is duly exercised.
3. Number of Shares - Each Option shall state the total number of shares of
Stock to which it pertains.
4. Option Period and Limitations on Exercise of Options - Except for
Options granted pursuant to Section Q hereof, the Board or Committee shall
determine the period of time during which an Option may be exercised, provided,
however, that no Option may be exercised after the expiration of ten years from
the date it is granted. Except for Options granted pursuant to Section Q hereof,
the Board or the Committee may, in its discretion, provide that an Option may
not be exercised in whole or in part for any period or periods of time specified
in the Option Agreement; provided, however, that no Option granted subsequent to
November 21, 1991 may be exercisable for a minimum of six months from the date
of grant. Options granted pursuant to Section Q hereof will be exercisable in
accordance with Section R hereof. Except as provided in the Option Agreement and
in this Section G(4), an Option may be exercised in whole or in part at any time
during its term. No Option may be exercised for a fractional share of Stock.
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H. Termination of Employment
Except as provided in Section I below, if an employee who is a Participant
ceases to be employed by the Company, his or her Options unless otherwise
exercised, shall terminate as of the close of business on the one hundred and
ninetieth (190th) day following the termination of the Participant's employment
with the Company; provided, however, that such Participant may exercise his or
her Options during such one hundred and ninety (190) day period following such
termination of employment only to the extent that he or she would otherwise be
entitled to exercise such Options during such period; provided, further,
however, that in no event shall any Option be exercisable more than ten (10)
years from the date it was granted. Notwithstanding the foregoing, the Board or
the Committee may cancel an Option during the one hundred and ninety (190) day
period referred to in this section, if the Participant engages in employment or
activities contrary, in the opinion of the Board or the Committee, to the best
interests of the Company. The Board or the Committee shall determine in each
case whether a termination of employment shall be considered a retirement with
the consent of the Company, and, subject to applicable law, whether a leave of
absence shall constitute a termination of employment. Any such determination of
the Board or the Committee shall be final and conclusive. The foregoing
provisions may be modified or waived by the Board or the Committee and do not,
in any case, apply to any Participant who is not an employee of the Company.
Except for Options granted
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pursuant to Section Q hereof, the Board or the Committee will determine what, if
any, provisions for earlier termination of the Option will be included in the
Option Agreement issued to any person who is not an employee. The Board or the
Committee will determine who shall be deemed to be an employee of the Company
for the purposes of this Section H and Section I below at the time the Option is
granted.
I. Rights in Event of Death
If an employee who is a Participant dies while employed by the Company, or
within three months after having retired with the consent of the Company, and
without having fully exercised his or her Options, the executors or
administrators, or legatees or heirs, of his or her estate shall have the right
to exercise such Options to the extent that such deceased Participant was
entitled to exercise the Options on the date of his or her death; provided,
however, that in no event shall the Options be exercisable more than ten years
from the date they were granted. The foregoing provisions may be modified or
waived by the Board or the Committee and do not, in any case, apply to any
Participant who is not an employee of the Company. Except for Options granted
pursuant to Section Q hereof, the Board or the Committee will
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determine what, if any, provisions concerning exercise of the Option upon the
death of the holder will be included in the Option Agreement issued to any
person who is not an employee.
J. No Obligations to Exercise Option
The granting of an Option shall impose no obligation upon the Participant
to exercise such Option.
K. Nonassignability
Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a Participant's lifetime an Option shall be
exercisable only by such Participant.
L. Effect of Chance in Stock Subject to the Plan
The aggregate number of shares of Stock available for Options under the
Plan, the shares subject to any Option, and the price per share, shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Stock subsequent to the effective date of the Plan resulting from (1)
a subdivision or consolidation of shares or any other capital adjustment, (2)
the payment of a stock dividend on the Company's Common Stock, or (3) other
increase or decrease in such shares effected without receipt of consideration by
the Company. If the Company shall be the surviving corporation in any merger or
consolidation, any
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Option shall pertain, apply, and relate to the securities to which a holder of
the number of shares of Stock subject to the Option would have been entitled
after the merger or consolidation. Upon dissolution or liquidation of the
Company, or upon a merger or consolidation in which the Company is not the
surviving corporation, all Options outstanding under the Plan shall terminate;
provided, however, that each Participant (and each other person entitled under
Section I to exercise an Option) shall have the right, immediately prior to such
dissolution or liquidation, or such merger or consolidation, to exercise such
Participant's Options in whole or in part, notwithstanding any provisions
contained in the Plan or the Option Agreement to the contrary.
M. Amendment and Termination
Subject to the last paragraph of this Section M, the Board or the
Committee, by resolution, may terminate, amend, or revise the Plan with respect
to any shares as to which Options have not been granted. Neither the Board nor
the Committee may, without the consent of the holder of an Option, alter or
impair any Option previously granted under the Plan, except as authorized
herein. Unless sooner terminated, the Plan shall remain in effect for a period
of twenty years from the date of the Plan's initial adoption by the Board.
Termination of the Plan shall not affect any Option previously granted.
No such amendment will require stockholder approval, unless stockholder
approval is required by either the rules of Nasdaq or any other stock exchange
upon
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which the Company's securities shall be listed or any applicable law.
N. Agreement and Representation of Participants
As a condition to the exercise of any portion of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of such exercise that any shares of Stock acquired at exercise are not
registered under the Securities Act of 1933 (the "Act"), are "restricted
securities" as that term is defined in Rule 144 under the Act and are being
acquired only for investment and without any present intention to sell or
distribute such shares, if, in the opinion of counsel for the Company, such a
representation is required under the Act or any other applicable law,
regulation, or rule of any governmental agency.
O. Reservation of Shares of Stock
The Company, during the term of this Plan, will at all times reserve and
keep available, and will seek or obtain from any regulatory body having
jurisdiction any requisite authority necessary to issue and to sell, the number
of shares of Stock that shall be sufficient to satisfy the requirements of this
Plan. The inability of the Company to obtain from any regulatory body having
jurisdiction the authority deemed necessary by counsel for the Company for the
lawful issuance and sale of its Stock hereunder shall relieve the Company of any
liability in respect of the failure to issue or sell Stock as to which the
requisite authority has not been obtained.
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P. Effective Date of Plan
The Plan shall be effective as of the date it is initially adopted by the
Board, provided that Section Q shall not become effective until it has been
ratified by the stockholders.
Q. Grant of Options to Independent Directors
(a) On each of January 2, 1994, January 2, 1997, January 2, 2000 and
January 2, 2003, each Independent Director shall automatically receive an Option
to purchase 60,000 shares of Stock (the "Regular Independent Director Grant").
Notwithstanding the foregoing, should the date on which a Regular Independent
Director Grant is scheduled to be awarded pursuant to the preceding sentence
fall on a Saturday, Sunday or holiday, the Regular Independent Director Grant
shall be awarded on the first business day immediately following such scheduled
date.
(b) On the date of each Independent Director's initial election to the
Board, pursuant to a vote of the Company's stockholders or the Board, such
newly-elected Independent Director shall automatically receive (i) an Option to
purchase a pro rata share of the shares of Stock underlying an Option granted
pursuant to a Regular Independent Director Grant, which shall be equal to the
product of 1,666 multiplied by the number of whole months remaining in the
relevant three year period until the next Regular Independent Director Grant
(the "Pro Rata Independent Director Grant"); and (ii) an Option to purchase
10,000 shares of Common Stock (the "Initial Independent Director Election
Grant").
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R. Exercise Period of Options Granted to Independent Directors
Subject to the last paragraph of this Section R, each Option granted
pursuant to the Plan shall vest and become exercisable as follows:
(1) Those Options granted pursuant to a Regular Independent Director Grant
shall vest and become exercisable as to 20,000 shares on the first anniversary
of the date of grant; as to 20,000 shares on the second anniversary of the date
of grant; and as to the remaining 20,000 shares on the third anniversary of the
date of grant.
(2) Those Options granted pursuant to a Pro Rata Independent Director Grant
shall vest and become exercisable as to that number of shares equal to the
product of 1,666 multiplied by the number of whole months remaining in the first
calendar year in which the Independent Director is elected initially to the
Board on the January 1st following such Independent Director's initial election
to the Board; and as to any remaining shares in accordance with the schedule for
Options granted pursuant to a Regular Independent Director Grant as provided in
Section R(1) hereof.
(3) Those Options granted pursuant to an Initial Independent Director
Election Grant shall become exercisable as to 5,000 shares on the first
anniversary of the date of grant; and as to 5,000 shares on the second
anniversary of the date of grant.
Notwithstanding the foregoing, an Option shall not vest and become
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exercisable as to the relevant shares unless such Independent Director has
served continuously on the Board during the year preceding the date on which
such Options are scheduled to vest and become exercisable, or from the date such
Independent Director joined the board should such Independent Director have
joined the board during such preceding year; provided, however, that if an
Independent Director does not fulfill such continuous service requirement due to
such Independent Director's death or disability all Options granted to such
Independent Director pursuant to Section Q hereof shall nonetheless vest and
become exercisable as provided in this Section R. For purposes of this Section R
"disability" shall mean a physical or mental condition which prevents an
Independent Director from performing his duties as an Independent Director of
the Company for a continuous six month period or for a total of six months
during any 18 month period. Any Option which does not vest and become
exercisable in accordance with this Section R shall terminate and be of no
further force or effect.
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