Exhibit 10.501
CHIRON 1991 STOCK OPTION PLAN
[AS AMENDED AUGUST 14, 1993, APRIL 11, 1994, FEBRUARY 24, 1995, MARCH 8,
1996, FEBRUARY 28, 1997, AUGUST 7, 1998, AUGUST 20, 1999, FEBRUARY 25, 2000, AND
SEPTEMBER 21, 2000]
I. PURPOSES
This Chiron 1991 Stock Option Plan ("Plan") is intended to enable
Chiron Corporation ("Corporation") to attract and retain the following
individuals by offering them incentives and rewards, in the form of options,
restricted shares, share rights, share units and performance units ("awards")
which will encourage them to acquire a proprietary interest in the Corporation,
to continue in the service of the Corporation or its subsidiaries, and to
provide incentive to build value for stockholders: (a) employees (including
officers and directors) of the Corporation and its subsidiaries, (b)
non-employee members of the Board of Directors of the Corporation ("Board"), and
(c) consultants and independent contractors who perform valuable services for
the Corporation and its subsidiaries.
In addition, the Plan is intended to permit the Corporation to satisfy
its obligations in connection with options it assumed pursuant to the terms of
the Agreement and Plan of Merger dated as of July 21, 1991 by and among the
Corporation, Chiron Acquisition Subsidiary, Inc., and Cetus Corporation
("Agreement"). Upon consummation of the transactions described in the Agreement
("Merger"), the Plan superseded Cetus Corporation's Amended and Restated Common
Stock Option Plan and Cetus Corporation's Non-Employee Directors' Stock Option
Plan ("Cetus Prior Plans"). Upon stockholder approval in December 1991, this
Plan superseded the following Chiron prior plans: the Protos Corporation 1988
Stock Option Plan (upon the merger of Protos into Chiron), the Chiron
Ophthalmics, Inc. 1986 Stock Option Plan (upon the merger of Chiron Ophthalmics
into a wholly owned subsidiary of Chiron), the Corporation's 1982 Stock Option
Plan and the Corporation's 1984 Non-Qualified Stock Option Plan (collectively,
"Chiron Prior Plans").
II. ADMINISTRATION
The Plan will be administered by a committee or committees appointed by
the Board and consisting of one or more members of the Board or a subcommittee
or subcommittees thereof. The Board may delegate the responsibility for
administration of the Plan with respect to designated classes of award holders
to different committees, subject to such limitations as the Board deems
appropriate, and each committee may similarly delegate its responsibilities to
one or more subcommittees. Members of a committee or subcommittee will serve for
such term as the Board or committee may determine, and will be subject to
removal by the Board at any time. With respect to any matter, the term
"Committee," when used in this Plan, will refer to the committee or subcommittee
that has been delegated authority with respect to such matter.
In determining the composition of any committee or subcommittee, the
Board or committee, as the case may be, shall consider the desirability of
compliance with the compositional requirements of (i) Rule 16b-3 of the
Securities and Exchange Commission with respect to award holders who are subject
to the trading restrictions of Section 16(b) of the Securities Exchange Act of
1934 ("1934 Act") with respect to securities of the Corporation and (ii) Section
162(m) of the
Internal Revenue Code ("Code") with respect to performance units, but shall not
be bound by such compliance.
(a) AUTHORITY. Each Committee will have full authority to administer
the Plan within the scope of its delegated responsibilities, including authority
to interpret and construe any relevant provision of the Plan, to adopt such
rules and regulations as it may deem necessary, and to determine the terms and
conditions of awards made under the Plan (which need not be identical).
Decisions of a Committee made within the discretion delegated to it by the Board
will be final and binding on all persons who have an interest in the Plan.
III. ELIGIBILITY FOR AWARDS
(a) DISCRETIONARY AWARDS. From time to time the Committee may, in its
discretion, select individuals from among the following categories to receive
awards under the Plan:
(1) EMPLOYEES. The Committee may select employees of the Corporation or
its parent or subsidiaries (including officers, whether or not they are
also members of the Board).
(2) CONSULTANTS AND INDEPENDENT CONTRACTORS. The Committee may select
consultants and independent contractors whose services tend to
contribute materially to the success of the Corporation or a parent or
subsidiary or whose services may reasonably be anticipated to so
contribute.
(3) DIRECTORS. The Committee may select members of the Board or the
board of directors of a parent or subsidiary that are not employees of
the Corporation, parent or subsidiaries for awards in addition to
awards made in accordance with the Plan's automatic grant provisions.
(b) PERFORMANCE UNITS. Corporate vice-presidents and other executive
officers of the Corporation or a parent or subsidiary ("162(m) executives") will
be eligible to receive performance units in addition to, or in lieu of, other
discretionary awards granted under the Plan.
(c) AUTOMATIC GRANTS. Members of the Board who are not employees of the
Corporation or a subsidiary will receive awards in accordance with the Plan's
automatic grant provisions.
(d) SUBSTITUTE OPTIONS. Upon consummation of the Merger, outstanding
options under the Cetus Prior Plans (including related Limited Stock
Appreciation Rights) were converted, in the manner and at the exchange ratio
specified in the Agreement, into substitute options under this Plan to acquire
Common Stock (as defined below). Upon stockholder approval and, with regard to
the Protos prior plan options and the Chiron Ophthalmics prior plan options,
consummation of the relevant mergers, outstanding options under the Chiron Prior
Plans were converted into options under this Plan. These options preserved the
exercise price of the outstanding options as adjusted, in the case of options
under the Protos Corporation 1988 Stock
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Option Plan and the Chiron Ophthalmics, Inc. 1986 Stock Option Plan, to
reflect the substitution of Common Stock. These options also preserved the
other terms and conditions of the outstanding options; provided, however,
that on the Effective Date of this Plan, outstanding automatic option
grants under the Corporation's 1982 Stock Option Plan were conformed,
other than to extend the term, to the Automatic Option Grants under this
Plan. Collectively, these options are referred to as "Substitute Options."
IV. STOCK SUBJECT TO THE PLAN
(a) CLASS. The stock subject to awards under the Plan is
(i) the Corporation's authorized but unissued or reacquired Common
Stock ("Common Stock"), or (ii) shares of one or more series of the
Corporation's authorized but unissued or reacquired Restricted Common
Stock, in the aggregate, "Company Stock." In connection with the grant of
awards under the Plan, the Corporation may repurchase shares in the open
market or otherwise.
(b) AGGREGATE AMOUNT
(1) SHARES. Subject to adjustment under Sections IV (c) and
IV(b)(3), the aggregate maximum number of shares of Company Stock that
may be subject to awards under the Plan is 50,262,347 (comprised of the
original number of shares authorized under the Plan, including the
number of shares of Company Stock remaining for issuance on the
Effective Date of this Plan under the Corporation's 1982 Stock Option
Plan and the Corporation's 1984 Non-Qualified Stock Option Plan, plus
all annual increases thereto through January 1, 1997, plus an increase
of 13,000,000 shares by amendment effective February 28, 1997).
Notwithstanding the foregoing, as of the first day of each fiscal year
beginning after January 1, 1997 the aggregate number of shares of
Company Stock that may be subject to awards under the Plan will be
increased by 1.50% of the number of Chiron Common Equivalent Shares
outstanding as of last day of the preceding fiscal year. Subject to
adjustment under Section IV(c), the maximum number of shares of Company
Stock with respect to which awards may be granted to any employee
during the term of the Plan is 4,000,000 shares. Subject to adjustment
under Sections IV(c) and IV(b)(3), not more than 50,262,347 shares of
Company Stock, increased, as of the first day of each fiscal year
beginning after January 1, 1997, by 1.50% of the number of Chiron
Common Equivalent Shares outstanding as of December 31, 1996, may be
subject to Incentive Options (as defined below) granted under the Plan
after the Effective Date. "Chiron Common Equivalent Shares" are the
total number of outstanding shares of Common Stock plus the total
number of shares of Common Stock issuable upon conversion or exercise
of outstanding warrants, options and convertible securities. In no
event will more than 2,000,000 shares of Restricted Common Stock,
whether in a single series or in multiple series, be subject to awards
under the Plan.
(2) RESTRICTED COMMON STOCK. Shares of Restricted Common Stock
may be issued under the Plan in one or more separate series. The
rights, preferences and privileges, together with the restrictions and
limitations and the number of shares, of each series of Restricted
Common Stock issuable under the Plan will be set forth in the
Corporation's Certificate of Determination of Preferences of Common
Stock ("Certificate")
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as in effect from time to time during the term of the Plan. Shares of each
series of Restricted Common Stock will be convertible or exchangeable into
shares of Common Stock in accordance with the terms and provisions of the
Certificate applicable to that series.
(3) REUSE OF SHARES. If any outstanding option under the
Chiron Prior Plans, the Cetus Prior Plans or this Plan (including the
Substitute Options) expires or is terminated or canceled for any reason
(including pursuant to Section X of the Plan but other than pursuant to
surrender of the option for a cash payment in accordance with Section
XIII of the Plan) before being exercised for the full number of shares
to which it applies, then the shares allocable to the unexercised
portion of such option will not be charged against the limitations of
Section IV(b)(1) and will become available for subsequent grants under
the Plan. To the extent that a share right or share unit expires or is
terminated, or is canceled or forfeited for any reason without being
paid in cash or shares of Company Stock, any remaining shares allocable
to the unpaid portion of such share right or share unit shall not be
charged against the limitations of Section IV(b)(1) and will become
available again for subsequent grants under the Plan. Unvested shares
issued under the Plan and subsequently cancelled, forfeited or
repurchased by the Corporation at the original exercise or issue price
paid per share pursuant to the Corporation's repurchase rights under
the Plan shall be added back to the number of shares of Common Stock
reserved for issuance under Section IV(b)(1). Shares subject to any
option or portion of an option surrendered in accordance with the
"Surrender of Options for Cash or Stock" provisions of this Plan and
shares for which a cash payment is made in lieu thereof under a
restricted share, share unit or share right will not be available for
subsequent awards under the Plan. If the exercise price of an option
under the Plan is paid with shares of Common Stock or if shares of
Common Stock otherwise issuable under the Plan are withheld by the
Corporation in satisfaction of the withholding taxes incurred in
connection with the exercise of an option or the vesting of a stock
issuance under the Plan, then the number of shares of Common Stock
available for issuance under Section IV(b)(1) shall be reduced by the
gross number of shares for which the option is exercised or which vest
under the stock issuance, and not by the net number of shares of Common
Stock issued to the holder of such option or stock issuance.
(c) ADJUSTMENTS. In the event any change is made to the Company Stock
subject to the Plan (whether by reason of merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination of shares, exchange
of shares, or other change in corporate or capital structure of the Corporation
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration) then, unless such change results in the termination of
all awards, the Committee will make appropriate adjustments to (i) the number
and/or class of securities available under the Plan, (ii) the number and/or
class of securities for which any one person may be granted awards under the
Plan, (iii) the number and/or class of securities to be made under automatic
grants to non-employee directors, and (iv) the number and/or class of securities
and, where applicable, price per share of securities subject to outstanding
awards. Such adjustments are to be effected in a manner which shall preclude the
enlargement or dilution of rights and benefits of awards and shall be final,
binding and conclusive.
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V. TERMS AND CONDITIONS OF DISCRETIONARY OPTIONS
Discretionary stock options granted under the Plan may, in the
Committee's discretion, be either incentive stock options ("Incentive Options")
qualifying under Section 422 of the Internal Revenue Code of 1986, as amended
("Internal Revenue Code"), or nonstatutory options. Individuals who are not
employees of the Corporation or its subsidiaries may only be granted
nonstatutory options. Options will be evidenced by instruments in such form as
the Committee may from time to time approve. These instruments will conform to
the following terms and conditions and, in the discretion of the Committee, may
contain such other terms, conditions and restrictions as are not inconsistent
with the following:
(a) OPTION PRICE. The option price per share will be fixed by
the Committee, but in no event will the option price per share be
less than eighty-five percent (85%) of the Fair Market Value of the option
shares on the date of the option grant; provided, however, that in no
event will the option price per share of an Incentive Option be less than
one hundred percent (100%) of the Fair Market Value of the option shares on
the date of the option grant. However, the Committee may grant options
with an option price per share less than eighty-five percent (85%) of the
Fair Market Value of the option shares on the date of the option grant in
substitution for the outstanding options of the acquired company in a
merger, if such options are granted with an option price per share which
preserves the option price of the outstanding options, as adjusted for
the merger. Notwithstanding the foregoing, Substitute Options will have an
option price per share determined pursuant to Section III(d) of this Plan.
(b) NUMBER OF SHARES, TERM AND EXERCISE
(1) TERM AND NUMBER. Each option granted under the Plan will
be exercisable on such date or dates, during such period, and
for such number of shares of Company Stock as the Committee
determines and sets forth in the instrument evidencing the
option. No option granted under the Plan will have an
expiration date that is more than 10 years after the date of
the option grant.
(2) EXERCISE. After any option granted under the Plan becomes
exercisable, it may be exercised by delivering notice in such
form to such person as the Corporation may designate at any
time prior to the termination of such option. Except as
authorized by the Committee in accordance with Section VIII,
the option price for the number of shares for which the option
is exercised will become due and payable upon exercise.
(3) PAYMENT. The option price will be payable in full in cash
(including cash equivalents); provided, however, that the
Committee may, either at the time the option is granted or at
the time it is exercised and subject to such limitations as it
may determine, authorize payment of all or a portion of the
option price in one or a combination of the following
alternative forms
(i) a promissory note authorized pursuant to Section VIII;
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(ii) full payment in shares of Common Stock valued as of the
exercise date and held for the requisite period to avoid a
charge to the Corporation's earnings; or
(iii) to the extent the option is exercised for vested shares,
through a special sale and remittance procedure pursuant to
which the optionee shall provide irrevocable instructions, in
such form and pursuant to such procedures as the Corporation
shall specify, to (a) a Corporation-approved brokerage firm to
effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all
applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason of
such exercise, and (b) the Corporation to deliver the
certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
(c) TERMINATION OF SERVICES. The Committee will determine and set
forth in each option whether the option will continue to be exercisable,
and the terms and conditions of such exercise, on and after the date that an
optionee ceases to be employed by, or to provide services to, the Corporation
or its subsidiaries. The date of termination of an optionee's employment or
services will be determined by the Committee, which determination will be
final.
(d) INCENTIVE OPTIONS. Options granted under the Plan that are intended
to be Incentive Options will be subject to the following additional terms and
conditions:
(1) DOLLAR LIMITATION. To the extent that the
aggregate Fair Market Value (determined as of the respective
date or dates of grant) of shares with respect to which
options that are granted after 1986 and that would otherwise
be Incentive Options are exercisable for the first time by any
individual during any calendar year under the Plan (or any
other plan of the Corporation, a parent or subsidiary
corporation or predecessor thereof) exceeds the sum of
$100,000 (or such greater amount as may be permitted under the
Internal Revenue Code), whether by reason of acceleration or
otherwise, such options will not be treated as Incentive
Options. In making such a determination, options will be taken
into account in the order in which they were granted.
(2) 10% STOCKHOLDER. If any employee to whom an
Incentive Option is to be granted pursuant to the provisions
of the Plan is, on the date of grant, the owner of stock
(determined with application of the ownership attribution
rules of Section 424(d) of the Internal Revenue Code)
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of his or her employer
corporation or of its parent or subsidiary corporation ("10%
Stockholder"), then the following special provisions will
apply to the option granted to such individual:
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(i) The option price per share of the stock subject
to such Incentive Option will not be less than one
hundred ten percent (110%) of the Fair Market Value
of the option shares on the date of grant; and
(ii) The option will not have a term in excess of
five (5) years from the date of grant.
(3) PARENT AND SUBSIDIARY. For purposes of this
Section V(d), "parent corporation" and "subsidiary
corporation" will have the meaning attributed to those terms,
as they are used in Section 422(b) of the Internal Revenue
Code.
(e) WITHHOLDING
(1) OBLIGATION. The Corporation's obligation to
deliver stock certificates upon the exercise of an option will
be subject to the option holder's satisfaction of all
applicable federal, state and local income and employment tax
withholding requirements.
(2) PAYMENT. In the event that an option holder is
required to pay to the Corporation an amount with respect to
income and employment tax withholding obligations in
connection with exercise of an option, the Committee may, in
its discretion and subject to such limitations and rules as it
may adopt, permit the option holder to satisfy the obligation,
in whole or in part, by delivering shares of Common Stock
already held by the option holder or by making an irrevocable
election that a portion of the total value of the shares
subject to the option be paid in the form of cash in lieu of
the issuance of Company Stock, and that such cash payment be
applied to the satisfaction of the withholding obligations.
VI. DISCRETIONARY RESTRICTED SHARES, SHARE RIGHTS, SHARE UNITS AND PERFORMANCE
UNITS
(a) NATURE OF AWARDS
(1) RESTRICTED SHARES. A restricted share granted
under the Plan shall consist of shares of Company Stock, the
retention and transfer of which is subject to such terms,
conditions and restrictions (whether based on performance
standards or periods of service or otherwise and including
repurchase and/or forfeiture rights in favor of the
Corporation) as the Committee shall determine. The terms,
conditions and restrictions to which restricted shares are
subject shall be evidenced by instruments in such form as the
Committee may from time to time approve and may vary from
grant to grant. The Committee shall have the absolute
discretion to determine whether any consideration (other than
the services of the potential award holder) is to be received
by the Corporation or its subsidiaries as a condition
precedent to the issuance of restricted shares.
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(2) SHARE RIGHTS. A share right granted under the
Plan shall consist of the right, subject to such terms,
conditions and restrictions (whether based on performance
standards or periods of service or otherwise), to receive a
share of Company Stock (together with cash dividend
equivalents if so determined by the Committee) as the
Committee shall determine and shall be evidenced by
instruments in such form as the Committee may from time to
time approve. The Committee shall have the absolute discretion
to determine whether any consideration (other than the
services of the potential award holder) is to be received by
the Corporation or its subsidiaries as a condition precedent
to the issuance of shares pursuant to share rights. The terms,
conditions and restrictions to which share rights are subject
may vary from grant to grant.
(3) SHARE UNITS. A share unit granted under the Plan
shall consist of the right to receive an amount in cash equal
to the Fair Market Value of one share of Company Stock on the
date of valuation of the unit (together with cash dividend
equivalents if so determined by the Committee) less such
amount, if any, as the Committee shall specify. The date of
valuation and payment of cash under a share unit and the
conditions, if any, to which such payment will be subject
(whether based on performance standards or periods of service
or otherwise) shall be determined by the Committee. The terms,
conditions and restrictions to which share units are subject
may vary from grant to grant.
(b) WITHHOLDING. The Committee may require, or permit an award holder
to elect, that a portion of the total value of the shares of Common Stock
subject to restricted shares or share rights held by one or more award holders
be paid in the form of cash in lieu of the issuance of Company Stock and that
such cash payment be applied to the satisfaction of the federal, state and local
income and employment tax withholding obligations that arise at the time the
restricted shares and share rights become free of all restrictions under the
Plan.
(c) CASH PAYMENTS. The Committee may provide award holders with an
election to receive a percentage of the total value of the Company Stock subject
to restricted shares or share rights in the form of a cash payment, subject to
such terms, conditions and restrictions as the Committee shall specify.
(d) ELECTIVE AND TANDEM AWARDS. The Committee may award restricted
shares, share rights, and share units independently of other compensation or in
lieu of compensation that would otherwise be paid in cash or stock options,
whether at the election of the potential award holder or otherwise. The number
of restricted shares, share rights or share units to be awarded in lieu of any
cash compensation amount or number of stock options shall be determined by the
Committee in its sole discretion and need not be equal to such foregone
compensation in Fair Market Value. In addition, restricted shares, share rights,
and share units may be awarded in tandem with stock options, so that a portion
of such award becomes payable or becomes free of restrictions only if and to the
extent that the tandem options are not exercised or are forfeited, subject to
such terms and conditions as the Committee may specify.
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(e) MODIFICATION OF AWARDS. Except to the extent an award is granted as
a performance unit, the Committee may, in its sole discretion, modify or waive
any or all of the terms, conditions or restrictions applicable to any
outstanding restricted share, share right or share unit; provided, however, that
no such modification or waiver shall, without the consent of the holder of an
outstanding award, adversely affect the holder's rights thereunder.
(f) PERFORMANCE UNITS. Effective March 8, 1996, the Committee may grant
restricted shares, share rights and share units to 162(m) executives that comply
with the requirements of Code Section 162(m).
Performance units will become payable or vest upon attainment of specified
performance goals over a specified performance period.
(1) PERFORMANCE GOALS. The Committee will determine
the Corporation performance goal or goals that must be met to
achieve the maximum payout within the shorter of the first 90
days of the specified performance period over which the
performance goal or goals will be measured, or 25% of such
performance period. The Committee may establish a goal based
on more than one performance criteria, or may establish
multiple goals, but any payout must be based on the
satisfaction of at least one goal. The Committee may provide
for different levels of payouts based on relative performance
toward a performance goal.
(2) PERFORMANCE CRITERIA. Performance units may be
based on one or more of the following performance criteria:
total shareholder return; the achievement of a specified
closing or average closing price of Common Stock; the absolute
or percentage increase in the closing or average closing price
of Common Stock and/or one or more of the following measures
of the Corporation's net income for the specified performance
period determined in accordance with generally accepted
accounting principles as consistently applied by the
Corporation: absolute net income or a percentage or absolute
dollar increase in net income, earnings per share or a
percentage or absolute dollar increase in earnings per share,
or return on assets employed or equity or a percentage or
absolute dollar increase in return on assets employed or
equity; or the Corporation's absolute gross revenues or a
percentage or absolute dollar increase in gross revenues for
the specified performance period determined in accordance with
generally accepted accounting principles as consistently
applied by the Corporation. The awards may based on the
Corporation's performance alone, or the Corporation's
performance may be measured against variously weighted
published benchmark indices that the Committee determines are
representative of the Corporation's peer group, which indices
may include the Standard & Poor's Health Care Composite Index,
the Standard & Poor's Health Care Diversified Index, and the
AMEX Biotechnology Index, among others.
For purposes of this Plan, net income and gross revenues shall be net income and
gross revenues of the Corporation and its consolidated subsidiaries as reported
by the Corporation and certified by its independent public accountants, but the
Committee in fixing any goal may exclude any or all of the
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following if they have a material effect on annual net income or gross revenues:
events or transactions that are either unusual in nature or infrequent in
occurrence (such as restructuring/reorganization charges, the purchase or sale
of in process technology, the sale or discontinuance of a business segment, the
sale of investment securities, losses from litigation, the cumulative effect of
changes in accounting principles and natural disasters), depreciation, interest
or taxes.
(3) REDUCTION OR CANCELLATION OF PERFORMANCE UNITS. Final
payouts are subject to the approval of the Committee, which may reserve
the absolute discretion to reduce or cancel any payout thereunder.
VII. AUTOMATIC AWARDS TO DIRECTORS
(a) OPTIONS. Effective March 8, 1996, non-employee members of the Board
("Eligible Directors") will automatically be granted nonstatutory options
("Automatic Options") to purchase the number of shares of Common Stock
determined as set forth below (subject to adjustment under Section IV(c) hereof)
on the dates and terms set forth below:
(1) OPTION GRANTS. On the last business day of the second quarter of
each fiscal year of the Corporation ("Automatic Grant Date"), each
continuing Eligible Director (including each Eligible Director who is
newly elected or appointed on the Automatic Grant Date) will receive an
Automatic Option to purchase that number of whole shares of Common
Stock determined by dividing $100,000 by the Average Stock Price on the
Automatic Grant Date.
(2) PRO-RATA OPTION GRANTS. Each person who is newly elected or
appointed as an Eligible Director on a date other than an Automatic
Grant Date, will receive, on the date of such election or appointment,
an Automatic Option to purchase a pro-rata number of whole shares of
Common Stock determined by multiplying $8,333.33 by the number of whole
calendar months between the date of the Eligible Director's election or
appointment and the next Automatic Grant Date, and dividing that number
by the Average Stock Price of a share of Common Stock on the grant
date.
(3) ADVISORY COUNSELLORS. Advisory Counsellors of Cetus will not
qualify for Automatic Option Grants.
(4) TERMS AND CONDITIONS. The terms and conditions applicable to each
Automatic Option Grant will be as follows:
(i) PRICE. The option price per share will be equal to one
hundred percent (100%) of the Fair Market Value of one share of Common
Stock on the date of grant;
(ii) TERM. Each Automatic Option will have a term of ten (10)
years, measured from the date of grant, and will be exercisable at any
time during the term for all or any part of the covered shares;
provided, however, that no Automatic Options may be exercised prior to
approval of the Plan by the Corporation's stockholders.
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(iii) REPURCHASE. The shares purchased under the Automatic
Options will be subject to repurchase by the Corporation at the
original exercise price in the event an optionee ceases to provide
services to the Corporation or its subsidiaries as a director, an
employee, a consultant or an independent contractor. The Corporation's
repurchase rights will lapse, and the optionee's interest in the
purchased shares will vest, in a series of equal annual installments
over the five-year period measured from the grant date, provided the
optionee continues to provide such services. In addition, the
Corporation's repurchase right will lapse in its entirety, and the
Automatic Options will become fully vested, should one or more of the
following events occur while the optionee is providing such services:
(A) the optionee's death, or (B) the optionee's permanent disability.
(iv) PAYMENT. Upon exercise of the Automatic Option, the
option price for the purchased shares will become payable immediately
in cash or in shares of Common Stock that the optionee has held for at
least six (6) months. Payment may also be made by delivery of a
properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Corporation the
amount of sale or loan proceeds to pay the option price.
(v) CESSATION. In the event the optionee ceases to provide
services to the Corporation or its subsidiaries as a director, an
employee, a consultant or an independent contractor, the Automatic
Option may be exercised, within the term of the Automatic Option, for a
period of three (3) months after the date of such cessation (twelve
(12) months in the case of cessation by reason of disability or death).
In the case of death, the Automatic Option may be exercised within such
period by the estate or heirs of the optionee.
(b) SHARE RIGHTS. Effective March 8, 1996, Eligible Directors
will automatically be granted share rights ("Automatic Share Rights")
to receive the number of shares of Common Stock determined as set forth
below (subject to adjustment under Section IV(c) hereof) on the dates
and terms set forth below:
(1) NEW DIRECTORS. Each newly elected or appointed Eligible
Director will be granted, on the date of such election or appointment,
an Automatic Share Right to purchase that number of whole shares
determined by dividing $40,000 by the Average Stock Price on the grant
date.
(2) CONTINUING DIRECTORS.
(i) FULL GRANTS. Subject to Subsection VII(b)(2)(ii)
below, on each Automatic Grant Date, each incumbent,
continuing Eligible Director will be granted an Automatic
Share Right to receive that number of whole shares of Common
Stock determined by dividing $25,000 by the Average Stock
Price on the Automatic Grant Date. Notwithstanding the
foregoing, on the Automatic Grant Date occurring in June 1996,
each continuing Eligible Director elected or appointed before
March 8, 1996, will be granted an Automatic Share Right to
receive that number of whole shares determined by using the
$40,000 in lieu of the $25,000 figure.
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(ii) PRO-RATA GRANTS. If an Eligible Director is
newly elected or appointed on a date other than an Automatic
Grant Date, on the immediately succeeding Automatic Grant
Date, such Eligible Director will be granted a pro-rata
Automatic Share Right to receive the number of whole shares of
Common Stock determined by multiplying the number of whole
calendar months since the Eligible Director's election or
appointment by $2,083.33 and dividing the product by the
Average Stock Price on the Automatic Grant Date.
(3) ADVISORY COUNSELLORS. Advisory Counsellors of Cetus will
not qualify for Automatic Share Rights.
(4) TERMS AND CONDITIONS. The terms and conditions applicable
to each Automatic Share Right will be as follows:
(i) TERM. Each Automatic Share Right will have a term
of five (5) years, measured from the grant date.
(ii) VESTING. The Automatic Share Right will vest in
a series of equal annual installments over the five-year
period measured from the grant date, provided the Eligible
Director continues to provide services to the Corporation or
its subsidiaries as a director, an employee, a consultant or
an independent contractor. Shares of Common Stock will be
issued in satisfaction of the Automatic Share Right as the
Automatic Share Right vests. In addition, full vesting will
occur should one or more of the following events occur while
the Eligible Director is providing such services: (A) the
Eligible Director's death, or (B) the Eligible Director's
permanent disability.
(iii) CESSATION. In the event the Eligible Director
ceases to provide services to the Corporation or its
subsidiaries as a director, an employee, a consultant or an
independent contractor, the Automatic Share Right shall
terminate with respect to the unvested portion of the Award.
(c) COST-OF-LIVING INCREASES. Each dollar value used in this Article
VII will be subject to annual cost-of-living increases. The increases will be
based on the Consumer Price Index, and will occur automatically beginning with
the 1997 Automatic Grant Date.
(d) AVERAGE STOCK PRICE. Average Stock Price means the average closing
price of one share of Common Stock as reported on the Nasdaq National Market
System for the previous twelve month period ending on the last day of the month
before the grant date of the award.
VIII. LOANS AND INSTALLMENT PAYMENTS
In order to assist an award holder (including an employee who is an
officer or director of the Corporation) in the acquisition of shares of Company
Stock pursuant to an award granted under the Plan (other than pursuant to the
Automatic Option Grant provisions of this Plan), the
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Committee may authorize, at either the time of the grant of an award or the time
of the acquisition of Company Stock pursuant to the award (i) the extension of a
loan to the award holder by the Corporation, (ii) the payment by the award
holder of the purchase price, if any, of the Company Stock in installments, or
(iii) the guarantee by the Corporation of a loan obtained by the award holder
from a third party. The terms of any loans, guarantees or installment payments,
including the interest rate and terms of repayment, will be subject to the
discretion of the Committee. Loans, installment payments and guarantees may be
granted without security, the maximum credit available being the purchase price,
if any, of the Company Stock acquired plus the maximum federal and state income
and employment tax liability that may be incurred in connection with the
acquisition.
IX. ASSIGNABILITY
No award granted under the Plan is assignable or transferable by the
award holder other than by Will or by the laws of descent and distribution, and
during the lifetime of the award holder, only the award holder may exercise
options or exercise the rights provided under awards granted under the Plan.
However, if and to the extent that the Committee so authorizes at the time an
award is granted or amended, an option (other than an option designated as an
Incentive Option) or other award may be assigned in whole or in part during the
grantee's lifetime to one or more of the grantee's family members or an entity
substantially owned, benefiting or controlled by the grantee or one or more of
grantee's family members if and to the extent that the Securities and Exchange
Commission Form S-8 Registration Statement would continue to be available for
the exercise of the award and resale of the underlying securities following such
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the award immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Committee may deem
appropriate.
X. CANCELLATION AND NEW GRANT OF OPTIONS
The Committee will have the authority to effect, at any time and from
time to time, with the consent of the affected option holders, the cancellation
of any or all outstanding options under the Plan, a Cetus Prior Plan or a Chiron
Prior Plan (other than options granted under automatic option grant provisions
of these plans) and to grant in substitution therefor new options under the Plan
covering the same or different numbers of shares, but having an option price per
share not less than eighty-five percent (85%) of the Fair Market Value on the
new grant date or, in the case of an Incentive Option, one hundred percent
(100%) of the Fair Market Value on the new grant date (or, in the case of an
Incentive Option granted to a 10% Stockholder, one hundred ten percent (110%) of
such Fair Market Value).
XI. ACCELERATION AND TERMINATION OF AWARDS
(a) ACCELERATION. In the event of an agreement to dispose of all or
substantially all of the assets or outstanding capital stock of the Corporation
by means of a sale, merger, reorganization, or liquidation, each award will be
automatically accelerated so that (1) options become fully exercisable with
respect to the total number of shares purchasable under the options; (2)
restrictions on restricted shares will be eliminated, and the shares will
immediately vest; and (3)
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share rights and share units will immediately vest and become payable. The
Committee may also provide for the automatic termination of repurchase rights
upon the occurrence of such an event.
(b) NO ACCELERATION. No acceleration of awards will occur if the terms
of the agreement require as a prerequisite to the consummation of any such sale,
merger, reorganization or liquidation that each such award will be either
assumed by the successor corporation or parent thereof or be replaced with a
comparable award subject to shares of the successor corporation or parent
thereof. The determination of such comparability will be made by the Committee,
and its determination will be final, binding and conclusive. Upon consummation
of the sale, merger, reorganization or liquidation contemplated by the
agreement, all awards, whether or not accelerated, will terminate unless assumed
pursuant to a written agreement by the successor corporation or parent thereof.
(c) CORPORATE STRUCTURE. The grant of awards under this Plan will in no
way affect the right of the Corporation to adjust, reclassify, reorganize, or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
XII. VALUATION
With regard to all Substitute Options, Fair Market Value will be
determined in accordance with the relevant option plan documents on the date
that the outstanding options were granted. With regard to awards granted under
this Plan, for all valuation purposes under the Plan, the Fair Market Value of a
share of Common Stock or Restricted Common Stock (as the case may be) on any
relevant date will be determined in accordance with the following provisions:
(a) If the Common Stock or Restricted Common Stock is not at the time
listed or admitted to trading on any stock exchange, but is traded in the
over-the-counter market, the Fair Market Value will be the average between the
reported high price and the reported low price of one share of Common Stock or
Restricted Common Stock (as the case may be) on the date in question in the
over-the-counter market, as such prices are reported by the National Association
of Securities Dealers through its NASDAQ system or any successor system.
(b) If the Common Stock or Restricted Common Stock is at the time
listed or admitted to trading on any stock exchange, then the Fair Market Value
will be the average between the reported high price and the reported low price
of one share of Common Stock or Restricted Common Stock (as the case may be) on
the date in question on the stock exchange that is the primary market for the
stock, as such prices are officially quoted on such exchange.
(c) If the Common Stock or Restricted Common Stock (as the case may be)
is at the time neither listed nor admitted to trading on any stock exchange nor
traded in the over-the-counter market, or if the Committee determines that
neither subparagraph (a) nor subparagraph (b) above reflects Fair Market Value
of the stock and the award was not granted pursuant to the Plan's Automatic
Award provisions, then the Fair Market Value will be determined by the Committee
after taking into account such factors as the Committee deems appropriate, or in
the case of Automatic Awards, by an independent third party valuation.
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XIII. SURRENDER OF OPTIONS FOR CASH OR STOCK
(a) STOCK APPRECIATION RIGHTS. If, and only if the Committee, in its
discretion, elects to implement an option surrender program under the Plan, one
or more option holders may, upon such terms and conditions as the Committee may
establish at the time of the option grant or at any time thereafter, be granted
the right to surrender all or part of an unexercised option in exchange for a
distribution equal in amount to the difference between (i) the Fair Market Value
(at date of surrender) of the shares for which the surrendered option or portion
thereof is at the time exercisable and (ii) the aggregate option price payable
for such shares. The distribution to which an option holder becomes entitled
under this Section may be made in shares of Common Stock or Restricted Common
Stock, valued at Fair Market Value at the date of surrender, in cash, or partly
in shares and partly in cash, as the Committee, in its sole discretion, deems
appropriate. The option surrender provisions of this Section will not apply to
options granted pursuant to the Automatic Option Grant provisions of this Plan.
(b) LIMITED STOCK APPRECIATION RIGHTS. If outstanding options of Cetus
for which Substitute Options are issued pursuant to Section III(d) have Limited
Stock Appreciation Rights ("LSARs") attached thereto, then each such LSAR shall
be honored by the Corporation in accordance with its terms and remain
exercisable for a period of 60 days following the date that stockholders of
Cetus approve the Merger; provided, however, that if the LSAR was originally
granted within 6 months of the date that Cetus stockholders approve the Merger,
then the LSAR will be exercisable for a period of 60 days following expiration
of such six-month period. Upon expiration of the applicable 60-day period, each
such LSAR not previously exercised shall expire. Upon exercise of an LSAR, the
related option will be cancelled, and Chiron will pay to the LSAR holder an
amount in cash for each share with respect to which the LSAR is exercised
determined in accordance with the terms of the Cetus Prior Plans.
XIV. REPURCHASE RIGHTS
The Committee may, in its discretion, establish as a term of one or
more awards granted under the Plan that the Corporation (or its assigns) will
have the right, exercisable upon the award holder's termination of employment
with, or cessation of services for, the Corporation and its subsidiaries, to
repurchase at the original price paid, if any, for such shares of (1) Company
Stock acquired by the award holder pursuant to the granted award, or (2) Common
Stock into which acquired Restricted Common Stock may have been converted or for
which Restricted Common Stock may have been exchanged. Any such repurchase right
will be exercisable by the Corporation (or its assigns) upon such terms and
conditions (including provisions for the expiration of such right in one or more
installments) as the Committee may specify in the instrument evidencing such
right. The Committee will also have full power and authority to provide for the
automatic termination of the Corporation's repurchase rights, in whole or in
part, thereby accelerating the vesting of any or all of the purchased shares
(other than purchased shares obtained pursuant to the Automatic Award provisions
of this Plan) upon the occurrence of any change in control specified in Article
XI.
XV. RIGHT OF FIRST REFUSAL
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The Committee may, in its discretion, establish as a term of one or
more awards granted under the Plan that the Corporation has a right of first
refusal with respect to the proposed disposition by the award holder (or any
successor in interest by reason of purchase, gift or other mode of transfer) of
any shares of (1) Company Stock acquired by the award holder pursuant to the
granted award, or (2) Common Stock into which purchased Restricted Common Stock
may have been converted or for which acquired Restricted Common Stock may have
been exchanged. Any such right of first refusal will be exercisable by the
Corporation or its assigns in accordance with the terms and conditions specified
in the instrument evidencing such right.
XVI. EFFECTIVE DATE AND TERM OF PLAN
(a) EFFECTIVE DATE. The Plan became effective on December 10, 1991, the
date that it was approved by the Corporation's stockholders. The Plan was
subsequently amended on several occasions and, as amended through March 8, 1996,
was approved by the Corporation's stockholders on May 16, 1996. The Plan was
further amended on February 28, 1997, and as amended through February 28, 1997
was approved by the Corporation's stockholders on May 15, 1997. The Plan was
further amended on September 21, 2000, to allow the Corporation to grant options
in connection with a merger with an option price per share less than eighty-five
percent (85%) of the Fair Market Value of the option shares on the grant date,
in substitution for the outstanding options of the acquired company, if such
price is intended to preserve the option price of the outstanding options, as
adjusted for the merger.
(b) TERM. Incentive Options may be granted under the Plan until May 14,
2007, and may not be issued under the Plan after that date. Subject to this
limitation, the Committee may grant awards under the Plan at any time after the
Effective Date of the Plan and before the Plan is terminated by the Board.
XVII. AMENDMENT OR DISCONTINUANCE
(a) BOARD. The Board may amend, suspend or discontinue the Plan in
whole or in part at any time; provided, however, that (a) except to the extent
necessary to qualify as Incentive Options any or all options granted under the
Plan that are intended to so qualify, such action may not, without the consent
of the award holder, adversely affect rights and obligations with respect to
awards outstanding under the Plan; (b) certain amendments may, as determined by
the Board in its sole discretion, require stockholder approval pursuant to
applicable laws or regulations.
(b) COMMITTEE. The Committee will have full power and authority to
modify or waive any or all of the terms, conditions or restrictions applicable
to any outstanding award (other than Automatic Option Grants), to the extent not
inconsistent with the Plan.
(c) SUBSTITUTE OPTIONS. Substitute Options will be subject to amendment
in accordance with the terms of this Plan.
XVIII. NO OBLIGATION
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Nothing contained in the Plan (or in any award granted under this Plan,
a Chiron Prior Plan or a Cetus Prior Plan) shall confer upon any employee,
consultant, or independent contractor any right to continue in the employ of, or
to provide services to, the Corporation or any affiliate or constitute a
contract or agreement of employment or for the provision of services, or
interfere in any way with the right of the Corporation or an affiliate to reduce
such employee's, consultant's or independent contractor's compensation from the
rate in existence at the time of the granting of an award or to terminate such
employee's, consultant's or independent contractor's employment or services at
any time, with or without cause; but nothing contained in the Plan or in any
award granted under this Plan shall affect any contractual rights of an employee
pursuant to a written employment agreement.
XIX. USE OF PROCEEDS
The cash proceeds received by the Corporation pursuant to awards
granted under the Plan will be used for general corporate purposes.
XX. COMPLIANCE
(a) FEDERAL AND STATE LAWS. No option may be exercised, and the
Corporation will not be obligated to issue stock under any award unless, in the
opinion of counsel for the Corporation, such exercise and issuance is in
compliance with all applicable federal and state securities laws. As a condition
to the grant of any award, or to the issuance of stock under any award, the
Committee may require that the award holder agree to comply with such provisions
of federal and state securities laws as may be applicable to such grant, or to
the sale of stock acquired pursuant to the Plan, and that the award holder
deliver to the Corporation a written agreement, in form and substance
satisfactory to the Corporation and its counsel, implementing such agreement.
(b) INFORMATION. The Corporation will furnish to each award holder
participating in the Plan (other than a key employee or a director) a copy of
the Corporation's Annual Report to Stockholders for the most recent fiscal year,
and additional copies will be furnished, without charge, to such award holders
upon request to the Secretary of the Corporation.
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APPENDIX A
SPECIAL PROVISIONS RELATED TO 1995 CIBA-GEIGY TRANSACTION
Those persons holding options to acquire shares of Common Stock under
the Corporation's 1991 Stock Option Plan on November 20, 1994 are granted the
following rights ("Rights") with respect to each such option:
(i) the right to receive upon the closing of the tender offer
contemplated under the Investment Agreement entered into on such date
among the Corporation and Ciba-Geigy Limited, Ciba-Geigy Corporation
and Ciba Biotech Partnership, Inc. (the "Closing") a cash payment equal
to (A) 37.33% of the number of shares of Common Stock with respect to
which each such option would first become exercisable in calendar year
1995 multiplied by (B) the difference between $117 per share and the
exercise price per share of such option with respect to such shares and
(ii) with respect to the remaining shares of Common Stock
subject to each such option, the right, exercisable at any time after
the later of the Closing or the date that such an option first becomes
exercisable with respect to such shares, to surrender that portion of
such option relating to 37.33% of such shares in return for a cash
payment equal (A) to the difference between $117 per share and the
exercise price per share of such option multiplied by (B) the number of
shares with respect to which such option is so surrendered. However,
the grant and exercise of any such right with respect to any officer or
director subject to Section 16 of the Securities Exchange Act of 1934
shall be subject to stockholder approval of the grant of such rights at
the Corporation's 1995 stockholder meeting. The grant of such rights,
which are made with respect to 1,858,776 optioned shares shall be in
addition to, and shall not count against, the aggregate and annual
limits on the number of shares with respect to which other awards under
the Plan may be made to all individuals and/or a single individual.