EXHIBIT 99.1
IDEC PHARMACEUTICALS CORPORATION
1988 STOCK OPTION PLAN
(AMENDED AND RESTATED THROUGH JANUARY 16, 2001)
I. PURPOSES OF THE PLAN
(a) This Stock Option Plan (the "Plan") is intended to promote
the interests of IDEC Pharmaceuticals Corporation, a Delaware corporation (the
"Corporation"), by providing a method whereby key employees (including officers)
of the Corporation (or its parent or subsidiary corporations) responsible for
the management, growth and financial success of the Corporation (or its parent
or subsidiary corporations) may be offered incentives and rewards which will
encourage them to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation and continue to render services to the
Corporation (or its parent or subsidiary corporations).
(b) The following provisions shall be applicable in
determining the parent and subsidiary corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a PARENT corporation of the Corporation, provided each
such corporation in the unbroken chain (other than the Corporation) owns,
at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
(ii) Each corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation shall be
considered to be a SUBSIDIARY of the Corporation, provided each such
corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of
the other corporations in such chain.
(c) All share numbers in this January 16, 2001 restatement
reflect the three-for-one split of the Corporation's Common Stock (the "Common
Stock") effected in the form of a stock dividend on January 17, 2001.
II. ADMINISTRATION OF THE PLAN
(a) The Corporation's Board of Directors (the "Board") shall
appoint a committee ("Committee") of two (2) or more non-employee Board members
to assume full responsibility for the administration of the Plan. Members of the
Committee shall serve for such period of time as the Board may determine and
shall be subject to removal by the Board at any time.
(b) The Committee as Plan Administrator shall have full power
and authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Plan and to make such determinations under, and issue such
interpretations of, the Plan and any outstanding option grants or stock
issuances as it
may deem necessary or advisable. Decisions of the Plan Administrator shall be
final and binding on all parties who have an interest in the Plan or any
outstanding option or stock issuance thereunder.
III. ELIGIBILITY FOR OPTION GRANTS
(a) The persons eligible to receive option grants under the
Plan shall be limited to key employees (including officers) of the Corporation
(or its parent or subsidiary corporations) who render services which contribute
to the success and growth of the Corporation (or its parent or subsidiary
corporations) or which may reasonably be anticipated to contribute to the future
success and growth of the Corporation (or its parent or subsidiary
corporations).
(b) The Plan Administrator shall have full authority to
determine which eligible individuals are to receive option grants under the
Plan, the number of shares to be covered by each such grant, whether the granted
option is to be an incentive stock option ("Incentive Option") which satisfies
the requirements of Section 422 of the Internal Revenue Code or a non-statutory
option not intended to meet such requirements, the time or times at which each
such option is to become exercisable, and the maximum term for which the option
is to be outstanding.
IV. STOCK SUBJECT TO THE PLAN
(a) The stock issuable under the Plan shall be shares of the
authorized but unissued or reacquired Common Stock. The maximum number of shares
which may be issued under the Plan shall not exceed 53,580,000 shares.* The
total number of shares issuable under the Plan shall be subject to adjustment
from time to time in accordance with Section IV.(d) of the Plan.
(b) In no event may the aggregate number of shares of Common
Stock for which any one individual participating in the Plan may be granted
stock options and separately exercisable stock appreciation rights exceed
7,500,000 shares in the aggregate over the remaining term of the Plan, subject
to adjustment from time to time in accordance with Section IV.(d) of the Plan.
For purposes of such limitation, no stock options or stock appreciation rights
granted prior to January 1, 1994 shall be taken into account.
(c) Should an option expire or terminate for any reason prior
to exercise in full, the shares subject to the portion of the option not so
exercised shall be available for subsequent option grants under the Plan.
Unvested shares issued under the Plan and subsequently repurchased by the
Corporation, at the option exercise price paid per share, pursuant to the
Corporation's
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* Adjusted to reflect (i) the 1-for-2.5 reverse Common Stock split
effected by the Company on August 18, 1991, a 2-for-1 stock split effected by
the Company on December 21, 1999 and a 3-for-1 stock split effected in the form
of a stock dividend on January 17, 2001, (ii) the 4,020,000 share increase
authorized by the Board on March 18, 1992 and approved by the stockholders at
the 1992 Annual Meeting, (iii) the 4,200,000 share increase authorized by the
Board on January 13, 1993 and approved by the stockholders at the 1993 Annual
Meeting, (iv) the 3,900,000 share increase authorized by the Board on February
28, 1994 and approved by the stockholders at the 1994 Annual Meeting, (v) the
3,000,000 share increase authorized by the Board on January 25, 1995, and
approved by the stockholders at the 1995 Annual Meeting, (vi) the 7,200,000
share increase authorized by the Board on January 24, 1996, and approved by the
stockholders at the 1996 Annual Meeting, (vii) the 4,800,000 share increase
authorized by the Board on February 24, 1997, and approved by the stockholders
at the 1997 Annual Meeting, (viii) the 5,130,000 share increase authorized by
the Board on February 20, 1998, and approved by the stockholders at the 1998
Annual Meeting, (ix) the 4,800,000 share increase authorized by the Board on
January 13, 1999, and approved by the stockholders at the 1999 Annual Meeting,
(x) the 5,130,000 share increase authorized by the Board on January 12, 2000,
and approved by the stockholders at the 2000 Annual Meeting, and (xi) the
5,640,000 share increase authorized by the Board on January 16, 2001, and
approved by the stockholder's at the 2001 Annual Meeting. In no event, however,
shall more than 29,682,472 shares of Common Stock be issued under the Plan after
February 28, 2001, subject to adjustment under Section IV, (d) in the event of
changes in the Company's capital structure.
repurchase rights under the Plan, shall be added back to the number of shares
of Common Stock reserved for issuance under the Plan and shall accordingly be
available for reissuance through one or more subsequent option grants under
the Plan. Shares subject to any option cancelled in accordance with Section
VIII of the Plan shall reduce on a share-for-share basis the number of shares
of Common Stock available for subsequent option grants under this Plan. In
addition, should the exercise price of an outstanding option under the Plan
be paid with shares of Common Stock, then the number of shares of Common
Stock available for issuance under the Plan shall be reduced by the gross
number of shares for which the option is exercised, and not by the net number
of shares of Common Stock actually issued to the option holder.
(d) In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, then appropriate adjustments shall be made to (I) the maximum
number and/or class of securities issuable under the Plan, (II) the maximum
number and/or class of securities for which stock options and separately
exercisable stock appreciation rights may be granted to any one participant in
the aggregate after December 31, 1993 and (III) the number and/or class of
securities and exercise price per share in effect under each outstanding option
in order to prevent the dilution or enlargement of benefits thereunder. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
V. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action
of the Plan Administrator and may, at the Plan Administrator's discretion, be
either Incentive Options or non-statutory options. Each granted option shall be
evidenced by one or more instruments in the form approved by the Plan
Administrator; PROVIDED, however, that each such instrument shall comply with
the terms and conditions specified below. Each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section VI.
1. OPTION PRICE.
A. The option price per share shall be fixed by the Plan Administrator, but
in no event shall the option price per share be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the
date of the option grant.
B. The option price shall become immediately due upon exercise of the option
and shall, subject to the provisions of Section IX and the instrument
evidencing the grant, be payable in one of the alternative forms specified
below:
(i) full payment in cash or check payable to the
Corporation; or
(ii) full payment in shares of Common Stock held by the
optionee for the requisite period necessary to avoid a charge to the
Corporation's reported earnings and valued at fair market value on the
Exercise Date (as such term is defined below); or
(iii) full payment through a combination of shares of
Common Stock held by the optionee for the requisite period necessary to
avoid a charge to the Corporation's reported earnings and valued at fair
market value on the Exercise Date and cash or check payable to the
Corporation; or
(iv) full payment effected through a broker-dealer sale
and remittance procedure pursuant to which the optionee shall provide
irrevocable instructions (I) to a Corporation-designated brokerage firm to
(A) effect the immediate sale of a sufficient number of the purchased
shares to enable such firm to remit to the Corporation, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation in connection with such purchase and (B) remit
those funds to the Corporation on the settlement date, and (II) to the
Corporation to deliver the certificates for the purchased shares directly
to such brokerage firm.
For purposes of this subparagraph B, the Exercise Date shall be the
date on which written or electronic notice of the option exercise is received by
the Corporation. Except to the extent the sale and remittance procedure is
utilized in connection with the exercise of the option, payment of the option
price for the purchased shares must accompany such notice.
C. The fair market value per share of Common Stock on any relevant date under
subparagraph A or B (and for all other valuation purposes under the Plan)
shall be determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any national stock exchange but is traded on The
Nasdaq Stock Market, the fair market value shall be the closing selling
price per share of Common Stock on the date in question, as reported by
the National Association of Securities Dealers on The Nasdaq Stock Market
and published in THE WALL STREET JOURNAL. If there is no reported closing
selling price for the Common Stock on the date in question, then the
closing selling price on the last preceding date for which such quotation
exists shall be determinative of fair market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair market
value shall be the closing selling price per share of Common Stock on the
date in question on the stock exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as such price
is officially quoted in the composite tape of transactions on such
exchange and published in THE WALL STREET JOURNAL. If there is no reported
sale of Common Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
2. TERM AND EXERCISE OF OPTIONS. Each option granted under the Plan
shall be exercisable at such time or times, during such period, and for such
number of shares as shall be determined by the Plan Administrator and set forth
in the instrument evidencing such option; PROVIDED, however, that no such option
shall have a term in excess of ten (10) years from the grant date.
3. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
optionee, Incentive Options shall be exercisable only by the optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the optionee's death. However, non-statutory options
may, in connection with the optionee's estate plan, be assigned in whole or in
part during the optionee's lifetime to one or more members of the optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for
the option immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate.
4. EFFECT OF TERMINATION OF SERVICE.
A. Should an optionee cease to remain in Service (as
defined in subparagraph D below) for any reason (including death or
permanent disability as defined in Section 22(e)(3) of the Internal
Revenue Code) while the holder of one or more outstanding options
granted to such optionee under the Plan, then such option or options
shall not (except to the extent otherwise provided pursuant to Section
X below) remain exercisable for more than a thirty-six (36)-month
period (or such shorter period determined by the Plan Administrator and
specified in the instrument evidencing the grant) following the date of
such cessation of Service. Under no circumstances, however, shall any
such option be exercisable after the specified expiration date of the
option term. Each such option shall, during such thirty-six (36)-month
or shorter period, be exercisable only to the extent of the number of
shares (if any) for which the option is exercisable on the date of the
optionee's cessation of Service. Upon the expiration of such thirty-six
(36)-month or shorter period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be exercisable.
However, the option shall, immediately upon the optionee's cessation of
Service for any reason, terminate and cease to be outstanding for any
option shares for which the option is not otherwise at that time
exercisable.
B. Any outstanding option held by the optionee and
exercisable in whole or in part on the date of his or her death may be
subsequently exercised, but only to the extent of the number of shares
(if any) for which the option is exercisable on the date of the
optionee's cessation of Service (less any option shares subsequently
purchased by the optionee prior to death), by the personal
representative of the optionee's estate or by the person or persons to
whom the option is transferred pursuant to the optionee's will or in
accordance with the laws of descent and distribution. The right to
exercise the option for those shares shall terminate upon the EARLIER
of (i) the third anniversary of the date of the optionee's cessation of
Service or (ii) the specified expiration date of the option term.
C. Notwithstanding subparagraphs A and B above, the Plan
Administrator shall have complete discretion, exercisable either at the
time the option is granted or at any time while the option remains
outstanding, to permit one or more options held by the optionee under
the Plan to be exercised, during the limited period of exercisability
provided under Section V.4.A above, not only with respect to the number
of shares for which each such option is exercisable at the time of the
optionee's cessation of Service but also with respect to one or more
subsequent installments for which the option would otherwise have
become exercisable had such cessation of Service not occurred.
D. For purposes of the foregoing provisions of this
Section V.4 (and all other provisions of the Plan), the optionee shall
be deemed to remain in the Service of the Corporation for so long as
such individual renders services on a periodic basis to the Corporation
or any parent or subsidiary corporation in the capacity of an Employee,
a non-employee member of the board of directors or an independent
consultant or advisor, unless the option agreement evidencing the
option grant and/or the purchase agreement evidencing the purchased
option shares specifically provides otherwise. The optionee shall be
considered to be an Employee for so long as such individual remains in
the employ of the Corporation or one or more of its parent or
subsidiary corporations, subject to the control
and direction of the employer entity as to the work to be performed and
as to the manner and method of performance.
5. STOCKHOLDER RIGHTS. An optionee shall have none of the rights
of a stockholder with respect to any shares covered by the option until such
individual shall have exercised the option and paid the option price for the
purchased shares.
6. REPURCHASE RIGHTS. Unvested shares of Common Stock may be
issued under the Plan which are subject to repurchase by the Corporation in
accordance with the following provisions:
(a) Upon the optionee's cessation of Service while
holding unvested shares under the Plan, the Corporation shall have the
right to repurchase any or all of those unvested shares at the option
price paid per share. The terms and conditions upon which such repurchase
right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased shares)
shall be established by the Plan Administrator and set forth in the
instrument evidencing such repurchase right.
(b) All of the Corporation's outstanding repurchase
rights shall automatically terminate, and all shares subject to such
terminated rights shall immediately vest in full, upon the occurrence of
any Corporate Transaction under Section VII of this Plan, except to the
extent: (i) any such repurchase right is to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate
Transaction or (ii) such accelerated vesting is precluded by other
limitations imposed by the Plan Administrator at the time the repurchase
right is issued.
(c) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the optionee's cessation of
Service, to cancel the Corporation's outstanding repurchase rights with
respect to any or all unvested shares purchased or purchasable by the
optionee under the Plan and thereby accelerate the vesting of those shares
in whole or in part at any time.
VI. INCENTIVE OPTIONS.
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees. Options which are specifically designated as
"non-statutory" options when issued under the Plan shall NOT be subject to such
terms and conditions.
(a) DOLLAR LIMITATION. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock for
which one or more options granted to any Employee under this Plan (or any other
option plan of the Corporation or its parent or subsidiary corporations) may for
the first time become exercisable as incentive stock options under the Federal
tax laws during any one calendar year shall not exceed the sum of One Hundred
Thousand Dollars ($100,000). To the extent the Employee holds two or more such
options which become exercisable for the first time in the same calendar year,
the foregoing limitation on the exercisability of such options as incentive
stock options under the Federal tax laws shall be applied on the basis of the
order in which such options are granted. Should the number of shares of Common
Stock for which an Incentive Option first becomes exercisable in any calendar
year exceed the applicable One Hundred Thousand Dollar ($100,000) limitation,
the option may nevertheless be exercised for those excess shares in such
calendar year as a non-statutory option.
(b) 10% STOCKHOLDER. If any individual to whom the Incentive
Option is granted is the owner of stock (as determined under Section 424(d) of
the Internal Revenue Code) possessing ten percent (10%) or more of the total
combined voting power of all classes of stock of the Corporation or any one of
its parent or subsidiary corporations, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of Common Stock on the grant date, and the option term shall not exceed
five (5) years, measured from such grant date.
Except as modified by the preceding provisions of this Section VI,
all the provisions of the Plan shall be applicable to the Incentive Options
granted hereunder.
VII. CORPORATE TRANSACTION/CHANGE IN CONTROL
(a) In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or consolidation in which the Corporation
is not the surviving entity, except for a transaction the principal
purpose of which is to change the State of the Corporation's
incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Corporation in
liquidation or dissolution of the Corporation, or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which fifty percent (50%) or more of the
Corporation's outstanding voting stock is transferred to persons different
from those who held the stock immediately prior to such merger,
each outstanding option under the Plan shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become exercisable for the total
number of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of those shares as fully-vested shares of
Common Stock. However, an outstanding option under the Plan shall not so
accelerate if and to the extent: (i) such option is, in connection with the
Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or be replaced with a comparable option to purchase shares of the
capital stock of the successor corporation or parent thereof or (ii) the
acceleration of such option is subject to other applicable limitations imposed
by the Plan Administrator at the time of grant. The determination of
comparability under clause (i) above shall be made by the Plan Administrator and
its determination shall be final, binding and conclusive.
(b) Each outstanding option under the Plan which is assumed in
connection with the Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would have been
issued, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, PROVIDED the aggregate
option price payable for such securities shall remain the same. In addition, the
class and number of securities available for issuance under the Plan on both an
aggregate and per participant basis shall be appropriately adjusted to reflect
the effect of the Corporate Transaction upon the Corporation's capital
structure.
(c) In connection with any Change in Control (as defined
below), the Plan Administrator shall have full power and authority, exercisable
either at the time the option is granted or at any time while the option remains
outstanding, to provide for the automatic acceleration of each outstanding
option under the Plan so that each such option shall, immediately prior to the
effective date of the Change in Control, become exercisable for the total number
of shares at the time subject to such option and may be exercised for all or any
portion of those shares as fully-vested shares of Common Stock. The Plan
Administrator shall also have full power and authority to condition such option
acceleration, and the termination of any of the Corporation's repurchase rights
with respect to any unvested shares purchased or purchasable under the Plan,
upon the subsequent termination of the optionee's Service within a designated
period following the Change in Control.
A CHANGE IN CONTROL shall be deemed to occur in the event:
(i) twenty-five percent (25%) or more of the
Corporation's outstanding voting stock is acquired pursuant to a tender or
exchange offer (A) which is made directly to the Corporation's
stockholders by any person or related group of persons (other than the
Corporation or a person that directly or indirectly controls, is
controlled by or is under common control with, the Corporation) and (B)
which the Board does not recommend the stockholders to accept; or
(ii) there is a change in the composition of the Board
over a period of twenty-four (24) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more proxy
contests for the election of Board members, to be comprised of individuals
who either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such election
or nomination was approved by the Board. Immediately following the
consummation of a Corporate Transaction, all outstanding options under the
Plan shall terminate and cease to be outstanding, except to the extent
assumed by the successor corporation or its parent company. Upon a Change
in Control, each outstanding option accelerated pursuant to subsection
VII.(c) above shall remain fully exercisable until the expiration or
sooner termination of the option term specified in the agreement
evidencing such grant.
(d) The exercisability as incentive stock options under the
Federal tax laws of any options accelerated in connection with a Corporate
Transaction or Change in Control shall remain subject to the dollar limitation
of Section VI.(a) of the Plan. To the extent such dollar limitation is exceeded,
the accelerated option shall be exercisable as a non-statutory option under the
Federal tax laws.
(e) The grant of options under this Plan shall 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.
VIII. STOCK APPRECIATION RIGHTS
(a) Provided and only if the Plan Administrator determines in
its discretion to implement the stock appreciation right provisions of this
Section VIII, one or more optionees may be granted the right, exercisable upon
such terms and conditions as the Plan Administrator may establish, to surrender
all or part of an unexercised option under the Plan in exchange for a
distribution from the Corporation in an amount equal to the excess of (i) the
fair market value (on the option surrender date) of the number of shares in
which the optionee is at the time vested under the surrendered option (or
surrendered portion thereof) over (ii) the aggregate option price payable for
such vested shares.
(b) No surrender of an option shall be effective hereunder
unless it is approved by the Plan Administrator. If the surrender is so
approved, then the distribution to which the optionee shall accordingly become
entitled under this Section VIII may be made in shares of Common Stock valued at
fair market value on the option surrender date, in cash, or partly in shares and
partly in cash, as the Plan Administrator shall in its sole discretion deem
appropriate.
(c) If the surrender of an option is rejected by the Plan
Administrator, then the optionee shall retain whatever rights the optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the LATER of
(i) five (5) business days after the receipt of the rejection notice or (ii) the
last day on which the option is otherwise exercisable in accordance with the
terms of the instrument evidencing such option, but in no event may such rights
be exercised more than ten (10) years after the date of the option grant.
(d) One or more officers of the Corporation subject to the
short-swing profit restrictions of the Federal securities laws may, in the Plan
Administrator's sole discretion, be granted limited stock appreciation rights in
tandem with their outstanding options under the Plan. Upon the occurrence of a
Hostile Take-Over, each outstanding option with such a limited stock
appreciation right shall automatically be cancelled, to the extent such option
is at the time exercisable for fully-vested shares of Common Stock (including
any shares which may vest in connection with such Hostile Take-Over). The
optionee shall in return be entitled to a cash distribution from the Corporation
in an amount equal to the excess of (i) the Take-Over Price of the vested shares
of Common Stock at the time subject to the cancelled option (or cancelled
portion of such option) over (ii) the aggregate exercise price payable for such
shares. The cash distribution payable upon such cancellation shall be made
within five (5) days following the consummation of the Hostile Take-Over. The
Plan Administrator shall pre-approve, at the time the limited stock appreciation
right is granted, the subsequent exercise of that right in accordance with the
terms of the grant and the provisions of this Section VIII.(d). No additional
approval of the Plan Administrator or the Board shall be required at the time of
the actual option cancellation and cash distribution. The balance of the option
(if any) shall continue to remain outstanding and exercisable in accordance with
the terms and conditions of the instrument evidencing such grant.
(e) For purposes of Section VIII.(d), the following
definitions shall be in effect:
A HOSTILE TAKE-OVER shall be deemed to occur in the event any
person or related group of persons (other than the Corporation or a person
that directly or indirectly controls, is controlled by, or is under common
control with, the Corporation) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act
of 1934) of securities possessing more than twenty-five percent (25%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept.
The TAKE-OVER PRICE per share shall be deemed to be equal to
the GREATER of (a) the fair market value per share on the date of
cancellation, as
determined pursuant to the valuation provisions of Section V.1.C, or (b)
the highest reported price per share paid by the acquiring entity in
effecting such Hostile Take-Over. However, to the extent the cancelled
option is an Incentive Option, the Take-Over Price shall not exceed the
clause (a) price per share.
(f) The shares of Common Stock subject to any option
surrendered or cancelled for an appreciation distribution pursuant to this
Section VIII shall NOT be available for subsequent option grant under the Plan.
IX. LOANS OR INSTALLMENT PAYMENTS
The Plan Administrator may, in its discretion, assist any optionee
(including any officer or director of the Corporation) in the exercise of one or
more options granted to such individual under the Plan, including the
satisfaction of any Federal and State income and employment tax obligations
arising therefrom, by (i) authorizing the extension of a loan from the
Corporation to such optionee or (ii) permitting the optionee to pay the option
price for the purchased Common Stock in installments over a period of years. The
terms of any such loan or installment method of payment (including the interest
rate and terms of repayment) will be upon such terms as the Plan Administrator
specifies in the applicable option agreement or otherwise deems appropriate
under the circumstances. Loans or installment payments may be granted with or
without security or collateral (other than to individuals who are independent
consultants or advisors, in which event the loan must be adequately secured by
collateral other than the purchased shares). However, the maximum credit
available to the optionee may not exceed the option price of the acquired shares
(less the par value of those shares) plus any Federal and State income and
employment withholding taxes to which the optionee may become subject in
connection with the exercise of the option.
X. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority, to
extend the period of time for which the option is to remain exercisable
following the optionee's cessation of Service from the thirty-six (36) month or
shorter period set forth in the option agreement to such greater period of time
as the Plan Administrator shall deem appropriate. In no event, however, shall
such option be exercisable after the specified expiration date of the option
term.
XI. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to
amend or modify the Plan in any or all respects whatsoever; PROVIDED, however,
that no such amendment or modification shall, without the consent of the
stockholders, adversely affect rights and obligations with respect to options at
the time outstanding under the Plan. In addition, certain amendments may require
stockholder approval pursuant to applicable laws or regulations.
XII. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan was initially adopted by the Board on July 19,
1988 and approved by the Corporation's stockholders on March 29, 1989. The Plan
was subsequently amended by the Board on July 18, 1990, and such amendment was
approved by the Corporation's stockholders in October, 1990. In January 1991,
the Plan was again amended to increase by 2,880,000 shares the number of shares
of Common Stock issuable under the Plan, and such share increase was approved by
the Corporation's stockholders on March 20, 1991. The Board further amended the
Plan on May 22, 1991, with such amendments to become effective as of the date
the Corporation's Common Stock first became traded on The Nasdaq Stock Market,
in order to revise
certain provisions previously required when the Plan was subject to the
permit requirements of the California Corporations Department. On March 18,
1992, the Plan was amended and restated in its entirety, including an
increase of 4,020,000 shares to the number of shares of Common Stock issuable
thereunder. The 1992 restatement, including the 4,020,000 share increase, was
approved by the stockholders at the 1992 Annual Meeting. On January 13, 1993,
the Board amended the Plan to increase by an additional 4,200,000 shares the
number of shares of Common Stock issuable under the Plan, and such share
increase was approved by the stockholders at the 1993 Annual Meeting. On
February 28, 1994, the Board amended the Plan to increase by an additional
3,900,000 shares the number of shares of Common Stock issuable under the
Plan, and such increase was approved by the stockholders at the 1994 Annual
Meeting. On January 25, 1995, the Board amended the Plan to increase by an
additional 3,000,000 shares the number of shares of Common Stock issuable
under the Plan, and such increase was approved by the stockholders at the
1995 Annual Meeting. On January 24, 1996, the Board adopted an amendment
which increased the number of shares of Common Stock issuable under the Plan
by an additional 7,200,000 shares, and such increase was approved by the
stockholders at the 1996 Annual Meeting.
On February 24, 1997, the Board adopted a series of amendments to
the Plan (the "1997 Amendments") which (i) increased the number of shares of
Common Stock reserved for issuance over the term of the Plan by an additional
4,800,000 shares, (ii) rendered non-employee Board members serving as Plan
Administrator eligible to receive option grants under the Plan, (iii) allowed
unvested shares issued under the Plan and subsequently repurchased by the
Corporation at the option exercise price paid per share to be reissued under the
Plan, (iv) removed certain restrictions on the eligibility of non-employee Board
members to serve as Plan Administrator, (v) extended the term of the Option Plan
from July 19, 1998 to December 31, 2002 and (vi) effected a series of additional
changes to the provisions of the Plan (including the stockholder approval
requirements, the transferability of non-statutory stock options and the
elimination of the six (6)-month holding period requirement as a condition to
the exercise of stock appreciation rights) in order to take advantage of the
recent amendments to Rule 16b-3 of the 1934 Act which exempts certain officer
and director transactions under the Plan from the short-swing liability
provisions of the Federal securities laws. The 1997 Amendments were approved by
the Corporation's stockholders at the 1997 Annual Meeting.
On February 20, 1998, the Board authorized an increase of 5,130,000
shares of Common Stock to the share reserve under the Plan, and the stockholders
approved such increase at the 1998 Annual Meeting.
On January 13, 1999, the Board authorized an increase of 4,800,000
shares of Common Stock to the share reserve under the Plan, and the stockholders
approved such increase at the 1999 Annual Meeting (the "1999 Amendment").
On January 12, 2000, the Board adopted a series of amendments to the
Plan (the "2000 Amendments") which (i) increased the number of shares of Common
Stock reserved for issuance over the term of the Plan by an additional 5,130,000
shares; (ii) extended the term of the Plan from December 31, 2002 to December
31, 2005; (iii) required the option price per share of Common Stock subject to
each option granted under the Plan to be not less than 100% of the fair market
value per share of Common Stock on the date of grant; (iv) removed the
non-employee Board members and all independent consultants from the class of
persons eligible to receive option grants under the Plan; and (v) required the
Plan Administrator to be a committee comprised only of non-employee Board
members. The 2000 Amendments were approved by the Corporation's stockholders at
the 2000 Annual Meeting.
On May 17, 2000, the Board further amended the Plan to eliminate the
Plan Administrator's authority to effect the cancellation and regrant of options
under the Plan.
On January 16, 2001, the Board authorized an increase of 5,640,000
shares of Common Stock to the share reserve under the Plan and the stockholders
approved such share increase at the 2001 Annual Meeting.
(b) The provisions of the 1992 restatement and of each
subsequent amendment to the Plan shall apply only to stock options and stock
appreciation rights granted under the Plan from and after the applicable
effective date of such restatement or amendment. All stock options and stock
appreciation rights issued and outstanding under the Plan immediately prior to
each such effective date shall continue to be governed by the terms and
conditions of the Plan (and the respective agreements evidencing each such
option or stock appreciation right) as in effect on the date each such option or
stock appreciation right was previously granted, and nothing in the 1992
restatement or in any subsequent amendment shall be deemed to affect or
otherwise modify the rights or obligations of the holders of such prior options
or stock appreciation rights with respect to their acquisition of shares of
Common Stock under such options or their exercise of such stock appreciation
rights. However, the Plan Administrator may, in its discretion, modify stock
option or stock appreciation right issued and outstanding immediately prior to
the effective date of the 1992 restatement or any subsequent amendment to
include one or more provisions to the Plan added by such restatement or
amendment.
(c) Unless sooner terminated in accordance with Section VII,
the Plan shall terminate upon the EARLIER of (i) December 31, 2005 or (ii) the
date on which all shares available for issuance under the Plan shall have been
issued or cancelled pursuant to the exercise, surrender of cash-out of the stock
options and stock appreciation rights granted hereunder. If the date of
termination is determined under clause (i) above, then each stock option or
stock appreciation right outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grant.
(d) Options may be granted under this Plan to purchase shares
of Common Stock in excess of the number of shares then available for issuance
under the Plan, provided any excess shares actually issued under the Plan are
held in escrow until stockholder approval is obtained for a sufficient increase
in the number of shares available for issuance under the Plan. If such
stockholder approval is not obtained within twelve (12) months after the date
the first such excess option grants are made, then (I) any unexercised excess
options shall terminate and cease to be exercisable and (II) the Corporation
shall promptly refund the purchase price paid for any excess shares actually
issued under the Plan and held in escrow, together with interest (at the
applicable Short Term Federal Rate) for the period the shares were held in
escrow.
XIII. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
XIV. REGULATORY APPROVALS
The implementation of the Plan, the granting of any stock option or
stock appreciation right hereunder, and the issuance of stock upon the exercise
of any such option or stock appreciation right shall be subject to the
procurement by the Corporation of all approvals and permits required by
regulatory authorities having jurisdiction over the Plan, the options and stock
appreciation rights granted under it and the stock issued pursuant to it.