EXHIBIT 10.1
VERTEX PHARMACEUTICALS INCORPORATED
1991 STOCK OPTION PLAN
As amended and restated as of September 14, 1999
1. PURPOSE OF PLAN.
The purpose of this 1991 Stock Option Plan (the "Plan") is to promote
the interests of Vertex Pharmaceuticals Incorporated, a Massachusetts
corporation (the "Company," including for the purposes of this paragraph any
affiliated companies), by providing a method whereby employees of the Company,
and others providing material assistance to the Company, may be given
compensation or additional compensation for their efforts on behalf of or
assistance to the Company, and to aid the Company in attracting and retaining
capable personnel.
2. SCOPE AND DURATION OF THE PLAN.
Options granted under this Plan may contain such terms as will qualify
the options as incentive stock options ("ISOs") within the meaning of Section
422(b) of the Internal Revenue Code of 1986, as amended (the "Code"), or in the
form of non-statutory stock options ("NSOs"). Unless otherwise indicated,
references in this Plan to "options" include ISOs and NSOs. Subject to
adjustment as provided in Section 11 hereof, the maximum number and kind of
shares of the Company's capital stock with respect to which options may be
granted under this Plan shall be 2,000,000 shares of Common Stock, $.01 par
value per share ("Common Stock"). Until termination of this Plan, the Company
shall at all times reserve a sufficient number of shares to meet the
requirements of the Plan. Such shares may be authorized and unissued shares or
shares held in the Company's treasury.
There shall become available for subsequent grants under this Plan any
shares of Common Stock underlying an option which cease for any reason to be
subject to purchase under such option. No ISO shall be granted under this Plan
more than 10 years after adoption of the Plan by the Board of Directors.
3. ADMINISTRATION OF PLAN.
The Compensation Committee or any successor thereto (the "Committee")
appointed by the Company's Board of Directors shall administer this Plan. The
Committee shall have full power and authority to: (i) designate the employees
and other persons to whom options shall be granted; (ii) designate options or
any portion thereof as ISOs; (iii) determine the number of shares of Common
Stock for which options may be granted and the option price or prices; (iv)
determine the other terms and provisions of option agreements (which need not be
identical) including, but not limited to, provisions concerning the time or
times when and the extent to which the options may be exercised and the nature
and duration of restrictions as to transferability or constituting substantial
risks of forfeiture, provided that with respect to ISOs such time or times shall
not occur before approval of this Plan by the stockholders of the Company in the
manner provided under Section 15 below; (v) amend or modify any option, with the
consent of the holder thereof; (vi) accelerate the right of an optionee to
exercise in whole or in part any previously granted option; and (vii) interpret
the provisions and supervise the administration of this Plan.
Options may be granted singly or in combination. The Committee shall
have the authority to grant in its discretion to the holder of an outstanding
option in exchange for the surrender and
cancellation of such option, a new option in the same or a different form and
containing such terms as the Committee may deem appropriate, including without
limitation a price which is different (either higher or lower) than any price
provided in the option so surrendered and cancelled.
In connection with the grant of an NSO, the Committee may in its
discretion, concurrently or after grant of the NSO, grant or agree to grant a
tax offset bonus to the optionee to offset in whole or in part the tax liability
of the optionee realized upon exercise of the NSO.
All decisions and selections made by the Committee pursuant to the
provisions of this Plan shall be made by a majority of its members. Any decision
reduced to writing and signed by all of the members of the Committee who are
authorized to make such decision shall be as fully effective as if it had been
made by a majority at a duly held meeting of the Committee.
The Committee may employ attorneys, consultants, accountants or other
persons, and the Committee, the Company and its officers and directors shall be
entitled to rely upon the advice, opinions or valuations of such persons. All
actions taken and all interpretations and determinations made by the Committee
in good faith shall be final and binding upon the Company, all persons who
receive grants of options, and all other interested persons. No member or agent
of the Committee shall be personally liable for any action, determination, or
interpretation made in good faith with respect to this Plan or grants hereunder.
Each member of the Committee shall be indemnified and held harmless by the
Company against any cost or expense (including counsel fees) reasonably incurred
by such member or liability (including any sum paid in settlement of a claim
with the approval of the Company) arising out of any act or omission to act in
connection with this Plan unless arising out of such member's own fraud or bad
faith. Such indemnification shall be in addition to any rights of
indemnification the members of the Committee may have as directors or otherwise
under the by-laws of the Company, or any agreement, vote of stockholders or
disinterested directors, or otherwise.
4. DESIGNATION OF PARTICIPANTS.
Options may be granted only to employees, including officers who are
employees, of the Company or any parent or subsidiary of the Company, and other
individuals, including consultants, who are determined by the Committee to
contribute, or have the potential to contribute, materially to the success of
the Company or any parent or subsidiary, provided that ISOs shall be granted
only to persons who are employees of the Company or any parent or subsidiary of
the Company.
5. OPTION PRICE.
(a) The purchase price of each share of Common Stock subject to an
option or any portion thereof which has been designated as an ISO shall not be
less than 100% (or 110%, if at the time of grant the optionee owns or under
Section 424(d) of the Code is deemed to own more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation) of the fair market value of such share on the date the option is
granted, determined without regard to any restriction other than a restriction
which, by its terms, will never lapse. The purchase price of each share of
Common Stock subject to an NSO shall be such price as the Committee shall
determine in its sole discretion.
(b) The fair market value of a share of Common Stock on a particular
date shall be the mean between the highest and lowest quoted selling prices on
such date (the "valuation date") on the securities market where the Common Stock
of the Company is traded, or if there were no sales on the valuation date, on
the next preceding date within a reasonable period (as determined in the sole
discretion of the Committee) on which there were sales. In the event that there
were no sales
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in such a market within a reasonable period, the fair market value shall be as
determined in good faith by the Board of Directors in its sole discretion.
6. TERM AND EXERCISE OF OPTIONS.
(a) The term of each ISO granted under this Plan shall be not more than
ten years from the date of grant, or five years from the date of grant if at the
time of grant the optionee owns (or under Section 424(d) of the Code is deemed
to own) more than 10% of the total combined voting power of all classes of stock
of the Company or any parent or subsidiary corporation. The term of each NSO
granted under this Plan shall be such period of time as the Committee shall
determine in its sole discretion.
(b) An option shall be exercisable at such time or times as shall be
determined by the Committee. An option may be exercised only by written notice
of intent to exercise such option with respect to a specified number of shares
of Common Stock and payment to the Company of the amount of the option price for
the number of shares of Common Stock as to which such notice applies. Payment
for such shares shall be paid at the time of purchase (i) in cash, (ii) with
shares of Common Stock that have been held for at least six months, to be valued
at the fair market value thereof on the date of such exercise, determined as
provided in Section 5(b), (iii) by any other means, including the promissory
note of the holder of the option, which the Committee determines to be
consistent with the purpose of this Plan and applicable law, or (iv) a
combination of the foregoing. Upon receipt of payment, the Company shall deliver
to the person exercising such option a certificate or certificates for such
shares. It shall be a condition of the Company's obligation to issue Common
Stock upon exercise of an option that the person exercising the option pay, or
make provision satisfactory to the Company for the payment of, any taxes which
the Company is obligated to collect with respect to the transfer of Common Stock
upon such exercise or (in the case of an ISO) with respect to the disposition of
such Common Stock.
The Committee may establish a program through which optionees can
borrow funds with which to purchase Common Stock pursuant to exercise of an
option.
(c) The proceeds of the sale of Common Stock subject to options are to
be added to the general funds of the Company and used for its general corporate
purposes.
7. INCENTIVE STOCK OPTIONS. [Intentionally omitted.]
8. TRANSFER OF OPTIONS.
An option or portion thereof designated as an ISO shall not be
transferable by an optionee otherwise than by will or the laws of descent and
distribution, and shall be exercisable during his lifetime only by him. An NSO
shall not be transferable by an optionee otherwise than by will or the laws of
descent and distribution, or pursuant to a qualified domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act or
the rules thereunder, except as otherwise provided by the Committee.
Notwithstanding the foregoing, the designation of a beneficiary of an option by
an optionee shall not be deemed a transfer prohibited by this Section.
9. TERMINATION OF EMPLOYMENT.
(a) If the employment of an optionee terminates for any reason other
than for cause or by reason of death, or disability (as may be determined by the
Committee under Section 9(c) below), the optionee may for a period of three
months after the date of termination of employment (unless a longer period is
allowed by the Committee) exercise options held by the optionee to the extent he
or she was entitled to exercise such options on the date when his or her
employment
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terminated. In no event, however, may such optionee exercise an option at a time
when the option would not be exercisable had the optionee remained an employee.
For purposes of this Section 9, an optionee's employment will not be considered
terminated (i) if the Committee in the exercise of its discretion shall so
determine in the case of sick leave or other bona fide leave of absence approved
by the Company or any parent or subsidiary company or (ii) in the case of a
transfer by such optionee to the employment of an affiliated company of the
employing company.
(b) If an optionee dies at a time when he or she is entitled to
exercise an option, then at any time or times within one year after death,
such option may be exercised, as to all or any of the shares which the
optionee was entitled to purchase immediately prior to his death, by the
optionee's executor or administrator or the person or persons to whom the
option is transferred by will or the applicable laws of descent and
distribution. In no event, however, may any option be exercised after the
expiration of such option by its terms, except as the Committee may otherwise
allow for a period up to one year after such optionee's death.
(c) If an optionee becomes disabled at a time when he or she is
entitled to exercise an option, then at any time or times within one year after
the date of such disability, he or she may exercise such option as to all or any
of the shares which he or she was entitled to purchase under such option
immediately prior to his or her disability. In no event, however, may any option
be exercised after the expiration of such option by its terms. The Committee
shall have authority to determine whether or not an optionee has become disabled
(as such term may be used in the Code); and its determination shall be binding
on all concerned.
(d) If termination of employment of an optionee shall be for cause or
in violation of an agreement by the optionee to remain in the employ of the
Company or any parent or subsidiary company, the options held by such optionee
shall terminate forthwith. If an optionee shall breach in a material respect an
agreement to refrain from competition with the Company or any parent or
subsidiary company, or to refrain from solicitation of the Company's customers,
suppliers or employees of the Company or any parent or subsidiary company, the
options, and any shares of Common Stock issued pursuant to the exercise of
options, held by such optionee shall at the option of the Company be forfeited
by the optionee and deemed not to be outstanding.
10. RIGHTS OF STOCKHOLDERS.
The holders of options shall not be or have any of the rights or
privileges of stockholders of the Company in respect of any shares of Common
Stock purchasable upon the exercise of any option until such option shall have
been validly exercised.
11. ADJUSTMENTS.
Notwithstanding any other provision of this Plan, the Committee may at
any time make or provide for such adjustments to this Plan, to the number and
class of shares available hereunder or to any outstanding options, as it shall
deem appropriate to prevent dilution or enlargement of rights, including
adjustments in the event of distributions to holders of Common Stock of other
than a normal cash dividend, changes in the outstanding Common Stock by reason
of stock dividends, split-ups, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, separations, reorganizations, liquidations
and the like. In the event of any general offer to holders of Common Stock
relating to the acquisition of their shares, the Committee may make such
adjustment as it deems equitable in respect of outstanding options, including in
the Committee's discretion revision of outstanding options, so that they may be
exercisable for the consideration payable in the acquisition transaction. Any
such determination by the Committee shall be conclusive.
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12. AMENDMENTS OR TERMINATION.
The Company's Board of Directors or the Committee may amend, alter, or
discontinue this Plan, except that no amendment or alteration requiring
stockholder approval pursuant to the Code's provisions with respect to ISOs
shall be made without the approval of the Company's stockholders.
13. FOREIGN NATIONALS.
The Committee may in order to fulfill the purposes of this Plan modify
grants to participants who are foreign nationals or employed outside the United
States to accommodate differences in applicable law, tax policy, or custom.
14. GOVERNING LAW.
This Plan shall be governed by and construed and enforced in accordance
with the laws of the Commonwealth of Massachusetts to the extent that such laws,
as applicable to the Plan, are not superseded by or inconsistent with Federal
law.
15. EFFECTIVE DATE.
This Plan is effective as of May 24, 1991, the date of its adoption by
the Company's Board of Directors and Shareholders.
16. CONSOLIDATIONS OR MERGERS. In the event of a consolidation or
merger in which the Company is not the surviving corporation or which results in
the acquisition of substantially all the Company's outstanding stock by a single
person or entity or by a group of persons and/or entities acting in concert, or
in the event of the sale or transfer of substantially all the Company's assets
(any of the foregoing, an "Acquisition"), all then outstanding Options shall
terminate unless assumed pursuant to clause (i) below; provided, that either (i)
the Committee shall provide for the surviving or acquiring entity or an
affiliate thereof to assume the outstanding Options or grant replacement options
in lieu thereof, any such replacement to be upon an equitable basis as
determined by the Committee, or (ii) if there is no such assumption or
substitution, all outstanding Options shall become immediately and fully
exercisable immediately prior to the Acquisition, notwithstanding any
restrictions or vesting conditions set forth therein.
rev.11/18/99/SPC
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