MEDICALOGIC, INC.
STOCK INCENTIVE PLAN
1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is to
enable MedicaLogic, Inc. (the "Company") to attract and retain experienced and
able directors, officers, employees and other key contributors and to provide an
additional incentive to these individuals to exert their best efforts for the
Company and its shareholders.
2. Administration. The Plan shall be administered by the board of directors
of the Company (the "Board of Directors"), which shall determine and designate
from time to time the persons to whom grants and awards shall be made and the
amounts, terms and conditions of those grants and awards. Subject to the
provisions of the Plan, the Board of Directors may from time to time adopt or
amend rules and regulations relating to administration of the Plan, and the
interpretation and construction of the provisions of the Plan and any stock
bonus, stock purchase and option agreements under the Plan by the Board of
Directors shall be final and conclusive. Whenever the operation of the Plan
requires that the fair market value of the Company's common stock ("Stock") be
determined, the fair market value shall be determined by, or in a manner
approved by, the Board of Directors.
3. Eligibility. Grants and awards may be made under the Plan to directors,
officers, and key employees of the Company or any parent or subsidiary of the
Company, and other key individuals such as consultants to the Company who the
Board of Directors believes have made or will make an essential contribution to
the Company; provided, however, that only employees of the Company shall be
eligible to receive Incentive Stock Options under the Plan.
4. Shares Subject to the Plan. Except as provided in Section 9, the total
number of shares of Stock that may be issued (i) upon exercise of all options
and stock appreciation rights granted under the Plan, (ii) as bonuses under the
Plan and (iii) pursuant to sales under the Plan, shall not exceed in the
aggregate 4,494,384 shares. If any option under the Plan or stock appreciation
right granted without a related option expires or is cancelled or terminated and
is unexercised in whole or in part, the shares allocable to the unexercised
portion shall again become available for awards under the Plan, except that
shares that are issued on exercise of a stock appreciation right that were
allocable to an option, or portion thereof, surrendered in connection with
exercise of the stock appreciation right shall not again become available for
awards under the Plan. If Stock sold or awarded as a bonus under the Plan is
forfeited to the Company or repurchased by the Company pursuant to applicable
restrictions, the number of shares forfeited or repurchased shall again be
available under the Plan. Stock issued under the Plan may be subject to such
restrictions on transfer, repurchase rights, or other restrictions as are
determined by the Board of Directors. The certificates representing such Stock
shall bear such legends as are determined by the Board of Directors.
5. Effective Date and Duration of Plan.
5.1 Effective Date. The Plan shall become effective when adopted by
the Board of Directors (the "Effective Date"), but no option shall become
exercisable until the Plan is approved by a vote of the shareholders of the
Company entitled to vote thereon. Subject to this limitation, options and stock
appreciation rights may be granted and Stock
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may be awarded as bonuses or sold under the Plan at any time after the Effective
Date and before termination of the Plan.
5.2 Duration of the Plan. The Plan shall continue until, in the
aggregate, options and stock appreciation rights have been granted and exercised
and Stock has been awarded as bonuses or sold and the restrictions on any such
Stock have lapsed with respect to all shares subject to the Plan under Section 4
(subject to any adjustments under Section 9), provided, however, that unless
sooner terminated by the Board of Directors, the Plan shall terminate on, and no
option or stock appreciation right or bonus right shall be granted and no Stock
shall be awarded as a bonus or sold under the Plan on or after, the tenth
anniversary of the Effective Date. The Board of Directors may suspend or
terminate the Plan at any time except with respect to options, stock
appreciation rights and bonus rights, and Stock subject to restrictions then
outstanding under the Plan. Termination shall not affect any right of the
Company to repurchase shares or the forfeitability of shares issued under the
Plan.
6. Grants, Awards and Sales.
6.1 Type of Security. The Board of Directors may, from time to time,
take the following actions, separately or in combination, under the Plan: (i)
grant Incentive Stock Options, as defined in Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"); (ii) grant options other than Incentive
Stock Options (hereinafter "Non-Statutory Stock Options"); (iii) grant stock
appreciation rights or bonus rights; (iv) award bonuses of Stock; and (v) sell
Stock subject to restrictions. The Board of Directors shall specify the action
taken with respect to each
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person granted, awarded, or sold any option or Stock under the Plan and shall
specifically designate each option granted under the Plan as an Incentive Stock
Option or a Non-Statutory Stock Option.
6.2 General Rules Relating to Options.
6.2.1 Time of Exercise. Except as provided in Section 8, options
granted under the Plan may be exercised over the period stated in each option in
amounts and at times prescribed by the Board of Directors and stated in the
option, provided that options shall not be exercised for fractional shares. If
the optionee does not exercise an option in any period with respect to the full
number of shares to which the optionee is entitled in that period, the
optionee's rights shall be cumulative and the optionee may purchase those shares
in any subsequent period during the term of the option.
6.2.2 Purchase of Shares. Shares may be purchased or acquired
pursuant to an option granted under the Plan only on receipt by the Company of
notice in writing from the optionee of the optionee's intention to exercise,
specifying the number of shares the optionee desires to purchase and the date on
which the optionee desires to complete the transaction, which may not be more
than 30 days after receipt of the notice, and, unless in the opinion of counsel
for the Company such a representation is not required to comply with the
Securities Act of 1933, as amended, containing a representation that the
optionee intends to acquire the shares for investment and not with a view to
distribution. On or before the date specified for completion of the purchase,
the optionee must have paid the Company the full purchase price in cash,
including cash that may be the proceeds of a loan from the Company, in shares of
Stock
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previously acquired by the optionee valued at fair market value, or in any
combination of cash and shares of Stock. No shares shall be issued until full
payment therefor has been made. Each optionee who has exercised an option shall,
on notification of the amount due, if any, and prior to or concurrently with
delivery of the certificates representing the shares for which the option was
exercised, pay to the Company amounts necessary to satisfy any applicable
federal, state, and local withholding tax requirements. If additional
withholding becomes required beyond any amount deposited before delivery of the
certificates, the optionee shall pay such amount to the Company on demand. If
the employee fails to pay the amount demanded, the Company shall have the right
to withhold that amount from other amounts payable by the Company to the
optionee, including salary, subject to applicable law.
6.3 Incentive Stock Options. Incentive Stock Options shall be subject
to the following additional terms and conditions:
6.3.1 Limitation on Amount of Grants. No employee may be granted
Incentive Stock Options under the Plan such that the aggregate fair market
value, on the date of grant, of the Stock with respect to which Incentive Stock
Options are exercisable for the first time by that employee during any calendar
year, under the Plan and under any other incentive stock option plan (within the
meaning of Section 422 of the Code) of the Company or any parent or subsidiary
of the Company, exceeds $100,000.
6.3.2 Exercise Price. The exercise price per share under each
option granted under the Plan shall be determined by the Board of Directors, but
the exercise price with respect to an Incentive Stock
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Option shall be not less than 100 percent of the fair market value of the shares
covered by the option on the date the option is granted.
6.3.3 Duration of Options. Subject to Sections 6.3.4 and 8, each
option granted under the Plan shall continue in effect for the period fixed by
the Board of Directors, except that no Incentive Stock Option shall be
exercisable after the expiration of 10 years from the date it is granted.
6.3.4 Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an employee possessing
more than 10 percent of the total combined voting power of all classes of stock
of the Company, or of any parent or subsidiary of the Company, only if the
exercise price is at least 110 percent of the fair market value of the Stock
subject to the option on the date it is granted, and the option by its terms is
not exercisable after the expiration of five years from the date it is granted.
6.4 Non-Statutory Stock Options. Non-Statutory Stock Options shall be
subject to the following additional terms and conditions:
6.4.1 Exercise Price. The exercise price per share under each
option granted under the Plan shall be determined by the Board of Directors, but
the exercise price shall be not less than 85 percent of the fair market value of
the shares covered by the option on the date the option is granted.
6.4.2 Duration of Options. Non-Statutory Stock Options granted
under the Plan shall continue in effect for the period fixed by the Board of
Directors.
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6.5 Stock Bonuses. Stock awarded as a bonus shall be subject to
the terms, conditions, and restrictions determined by the Board of Directors at
the time the Stock is awarded as a bonus. The Board of Directors may require the
recipient to sign an agreement as a condition of the award, but may not require
the recipient to pay any money consideration except as provided in the last
sentence of this Section 6.5. The agreement may contain such terms, conditions,
representations, and warranties as the Board of Directors may require. The
Company may require any recipient of a Stock bonus to pay to the Company amounts
necessary to satisfy any applicable federal, state, or local tax withholding
requirements prior to delivery of certificates. If additional withholding
becomes required beyond any amount deposited before delivery of the
certificates, the employee shall pay such amount to the Company on demand. If
the employee fails to pay the amount demanded, the Company shall have the right
to withhold that amount from other amounts payable by the Company to the
employee, including salary, subject to applicable law.
6.6 Restricted Stock. The Board of Directors may issue shares of
Stock under the Plan for such consideration (including promissory notes and
services) as determined by the Board of Directors in accordance with the law and
with such restrictions concerning transferability, repurchase by the Company, or
forfeiture as determined by the Board of Directors. All shares of Stock issued
pursuant to this Section 6.6 shall be subject to a purchase agreement, which
shall be executed by the Company and the prospective recipient of the Stock
prior to the delivery of certificates representing such shares to the recipient.
The purchase agreement shall contain such terms and conditions and
representations and
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warranties as the Board of Directors shall require. Each employee to whom shares
of stock are issued pursuant to this paragraph 6.6 shall, on notification of the
amount due, if any, and before or concurrently with delivery of the certificates
representing the shares, pay to the Company amounts necessary to satisfy any
applicable federal, state, and local withholding tax requirements. If additional
withholding becomes required beyond any amount deposited before delivery of the
certificates, the employee shall pay such amount to the Company on demand. If
the employee fails to pay the amount demanded, the Company shall have the right
to withhold that amount from other amounts payable by the Company to the
employee, including salary, subject to applicable law.
6.7 Stock Appreciation Rights.
6.7.1 Description. Each stock appreciation right shall entitle
the holder, on exercise, to receive from the Company in exchange therefor an
amount equal in value to the excess of the fair market value on the date of
exercise of one share of Stock over its fair market value on the date of grant
(or, in the case of a stock appreciation right granted in connection with an
option, the exercise price per share under the option to which the stock
appreciation right relates), multiplied by the number of shares covered by the
stock appreciation right or the option, or portion thereof, that is surrendered.
6.7.2 Exercise. A stock appreciation right shall be exercisable
only at the time or times established by the Board of Directors. If a stock
appreciation right is granted in connection with an option, then it shall be
exercisable only to the extent and on the same conditions that the related
option is exercisable. Upon exercise of a
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stock appreciation right, any option or portion thereof to which the stock
appreciation right relates must be surrendered unexercised.
6.7.3 Payment. Payment by the Company upon exercise of a stock
appreciation right may be made in shares of Stock valued at fair market value,
or in cash, or partly in Stock and partly in cash, as determined by the Board of
Directors. No fractional shares shall be issued upon exercise of a stock
appreciation right. In lieu thereof, cash may be paid in an amount equal to the
value of the fraction or, in the discretion of the Board of Directors, the
number of shares may be rounded to the next whole share.
6.7.4 Withholding. If payment by the Company of the stock
appreciation right is in cash, or partly in cash, the Company shall have the
right to withhold the amount of cash necessary to satisfy any applicable
federal, state or local withholding tax requirements. If payment by the Company
of the stock appreciation right is solely in shares of Stock or if the amount of
the payment in cash is insufficient to satisfy the withholding requirements, the
employee shall, on notification of the amount due, and before or concurrently
with delivery of the certificates representing the shares, pay to the Company
the amounts necessary to satisfy the withholding requirements. If additional
withholding becomes required beyond any amount deposited before delivery of the
certificates, the employee shall pay such amount to the Company on demand. If
the employee fails to pay the amount demanded, the Company shall have the right
to withhold that amount from other amounts payable by the Company to the
employee, including salary, subject to applicable law.
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6.7.5 Adjustment. In the event of any adjustment pursuant to
Section 9 in the number of shares of Stock subject to an option granted under
the Plan, any stock appreciation right granted hereunder in connection with such
option shall be proportionately adjusted.
6.8 Cash Bonus Rights.
6.8.1 Grant. The Board of Directors may grant bonus rights under
the Plan in connection with (i) an option or stock appreciation right granted or
previously granted, (ii) Stock awarded, or previously awarded, as a bonus, and
(iii) Stock sold, or previously sold, under the Plan. Bonus rights will be
subject to rules, terms, and conditions as the Board of Directors may prescribe.
6.8.2 Bonus Rights in Connection with Options and Stock
Appreciation Rights. A bonus right granted in connection with an option will
entitle an optionee to a cash bonus when the related option is exercised (or is
surrendered in connection with exercise of a stock appreciation right related to
the option) in whole or in part. A bonus right granted in connection with a
stock appreciation right will entitle the holder to a cash bonus when the stock
appreciation right is exercised. Upon exercise of an option, the amount of the
bonus shall be determined by multiplying the excess of the total fair market
value of the shares to be acquired upon the exercise over the total exercise
price for the shares by the applicable bonus percentage. Upon exercise of a
stock appreciation right, the bonus shall be determined by multiplying the total
fair market value of the shares or cash received pursuant to the exercise of the
stock appreciation right by the applicable bonus percentage. The bonus
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percentage applicable to a bonus right shall be determined from time to time by
the Board of Directors but shall in no event exceed 100 percent.
6.8.3 Bonus Rights in Connection with Stock Bonus. A bonus right
granted in connection with Stock awarded as a bonus will entitle the person
awarded such Stock to a cash bonus either at the time the Stock is awarded or at
such time as restrictions, if any, to which the Stock is subject lapse. If Stock
awarded is subject to restrictions and is repurchased by the Company or
forfeited by the holder, the bonus right granted in connection with such Stock
shall terminate and may not be exercised. The amount of any cash bonus to be
awarded and the time such cash bonus is to be paid shall be determined from time
to time by the Board of Directors.
6.8.4 Bonus Rights in Connection with Stock Purchase. A bonus
right granted in connection with Stock purchased hereunder (excluding Stock
purchased pursuant to an option) shall terminate and may not be exercised in the
event the Stock is repurchased by the Company or forfeited by the holder
pursuant to restrictions applicable to the Stock. The amount of any cash bonus
to be awarded and the time such cash bonus is to be paid shall be determined
from time to time by the Board of Directors.
6.8.5 Withholding. The Company shall have the right to withhold
from the bonus the amount of cash necessary to satisfy any applicable federal,
state and local withholding tax requirements. If the amount of the payment in
cash is insufficient to satisfy the withholding requirements, the employee
shall, on notification of the amount due, and before or concurrently with
delivery of any stock certificates, pay to the Company the amounts necessary to
satisfy the withholding requirements. If
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additional withholding becomes required beyond any amount deposited before
delivery of the certificates, the employee shall pay such amount to the Company
on demand. If the employee fails to pay the amount demanded, the Company shall
have the right to withhold that amount from other amounts payable by the Company
to the employee, including salary, subject to applicable law.
7. Nontransferability. Each option, stock appreciation right, or cash bonus
right granted under the Plan by its terms shall be nonassignable and
nontransferable by the holder except by will or by the laws of descent and
distribution of the state or country of the holder's domicile at the time of
death, and each option, stock appreciation right, or cash bonus right by
its terms shall be exercisable during the holder's lifetime
only by the holder.
8. Termination of Employment.
8.1 Retirement or General Termination. If an employee's employment by
the Company or any parent or subsidiary of the Company is terminated by
retirement or for any reason other than in the circumstances specified in
Section 8.2 below, any option, stock appreciation right or cash bonus right held
by the employee may be exercised at any time prior to its expiration date or the
expiration of three months after the date of the termination, whichever is the
shorter period, but only if and to the extent the employee was entitled to
exercise the option, stock appreciation right or cash bonus right on the date of
termination. Transfer of an employee by the Company or any parent or subsidiary
of the Company to the Company or any parent or subsidiary of the Company shall
not be considered a termination for purposes of the Plan.
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8.2 Death or Disability. If an employee's employment by the Company or
any parent or subsidiary of the Company is terminated because of death or
physical disability (within the meaning of Section 22(e)(3) of the Code), any
option, stock appreciation right or cash bonus right held by the employee may be
exercised at any time prior to its expiration date or the expiration of one year
after the date of termination, whichever is the shorter period, for the greater
of (a) the number of remaining shares for which the employee was entitled to
exercise the option, stock appreciation right or cash bonus right on the date of
termination or (b) the number of remaining shares for which the employee would
have been entitled to exercise the option, stock appreciation right or cash
bonus right if such option or right had been 50 percent exercisable on the date
of termination. If an employee's employment is terminated by death, any option,
stock appreciation right or cash bonus right held by the employee shall be
exercisable only by the person or persons to whom the employee's rights under
the option, stock appreciation right or cash bonus right pass by the employee's
will or by the laws of descent and distribution of the state or country of the
employee's domicile at the time of death.
8.3 Termination of Unexercised Rights. To the extent an option, stock
appreciation right or cash bonus right held by any deceased employee or by any
employee whose employment is terminated is not exercised within the limited
periods provided above, all further rights to exercise the option, stock
appreciation right or cash bonus right shall terminate at the expiration of such
periods.
8.4 Termination of Non-Employees. With respect to options, stock
appreciation rights and cash bonus rights granted to persons who are
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not employees of the Company, the Board of Directors may establish provisions
relating to the termination of those persons' status with the Company.
9. Changes in Capital Structure. If the outstanding shares of Stock are
increased or decreased or changed into or exchanged for a different number or
kind of shares or other securities of the Company or of another corporation, by
reason of any reorganization, merger, consolidation, plan of exchange,
recapitalization, reclassification, stock split, combination of shares, or
dividend payable in shares, appropriate adjustment shall be made by the Board of
Directors in the number and kind of shares for the purchase of which options or
stock appreciation rights may be granted and for which Stock may be awarded as
bonuses or sold subject to restrictions under the Plan. In addition, the Board
of Directors shall make appropriate adjustments in the number and kind of shares
as to which outstanding options, or portions thereof then unexercised, shall be
exercisable, and the number and kind of shares covered by outstanding stock
appreciation rights. Adjustments in outstanding options shall be made without
change in the total price applicable to the unexercised portion of any option
and with a corresponding adjustment in the exercise price per share; provided,
however, that with respect to Incentive Stock Options, (i) the excess of the
aggregate fair market value of the shares subject to the option immediately
after the adjustment over the aggregate exercise price of those shares shall not
be more than the excess of the aggregate fair market value of the shares subject
to the option immediately before the adjustment over the aggregate exercise
price of those shares, (ii) the adjusted option
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shall not give the optionee additional benefits that the optionee did not have
before the adjustment, and (iii) on a share-by-share comparison, the ratio of
the exercise price to the fair market value of the shares subject to the option
immediately after the adjustment shall be no more favorable to the optionee than
the ratio of the exercise price to the fair market value of the shares subject
to the option immediately before the adjustment. Adjustments in outstanding
stock appreciation rights shall be made without change in their total value. Any
such adjustment made by the Board of Directors shall be conclusive. In the event
of dissolution or liquidation of the Company or a merger, consolidation, or plan
of exchange affecting the Company, in lieu of making adjustments as provided for
above in this Section 9, the Board of Directors may, in its sole discretion,
provide a 30-day period prior to such event during which optionees shall have
the right to exercise options or stock appreciation rights.
10. Corporate Mergers, Acquisitions, Etc. The Board of Directors may also
grant options and stock appreciation rights having terms and provisions which
vary from those specified in this Plan provided that any options and stock
appreciation rights granted pursuant to this section are granted in substitution
for, or in connection with assumption of, existing options and stock
appreciation rights granted by another corporation and assumed or otherwise
agreed to be provided for by the Company pursuant to or by reason of a
transaction involving a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to which the Company or a
subsidiary is a party.
11. Amendment of Plan. The Board of Directors may at any time and from time
to time modify or amend the Plan in such respects as it deems
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advisable because of changes in the law while the Plan is in effect or for any
other reason. After the Plan has been approved by the shareholders and except as
provided in Section 9, however, no change in an option or stock appreciation
right already granted to any person shall be made without the written consent of
such person. Furthermore, unless approved at an annual meeting or a special
meeting by the shareholders of the Company entitled to vote thereon, no
amendment or change shall be made in the Plan (a) increasing the total number of
shares that may be issued under the Plan, or (b) changing the class of persons
eligible to receive options under the Plan.
12. Approvals. The Company's obligations under the Plan are subject to the
approval of state and federal authorities or agencies with jurisdiction in the
matter. The Company will use its best efforts to take steps required by state or
federal law or applicable regulations, including rules and regulations of the
Securities and Exchange Commission in connection with the granting of any option
or the issuance or sale of any shares under the Plan. The foregoing
notwithstanding, the Company shall not be obligated to issue or deliver shares
of Stock under the Plan if the Company is advised by its legal counsel that such
issuance or delivery would violate applicable state or federal laws.
13. Employment Rights. Nothing in the Plan or any grant pursuant to the
Plan shall confer on any employee any right to be continued in the employment of
the Company or any parent or subsidiary of the Company or shall interfere in any
way with the right of the Company or any parent or subsidiary of the Company by
whom such employee is employed to terminate such employee's employment at any
time, with or without cause.
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14. Rights as a Shareholder. A holder of an option or a stock appreciation
right, a recipient of Stock awarded as a bonus, or a purchaser of Stock shall
have no rights as a shareholder with respect to any shares covered by any
option, stock appreciation right, bonus award, or stock purchase agreement until
the date of issue of a stock certificate to him or her for such shares. Except
as otherwise provided in the Plan, no adjustment shall be made for dividends or
other rights for which the record date is prior to the date such stock
certificate is issued.
Effective Date: February 9, 1993.
Shareholder Approval: February 9, 1993.
October 19, 1993.
February 1, 1994.
June 30, 1994.
October 13, 1994.
May 22, 1995.
January 23, 1996.
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