Appendix A
DENDRITE INTERNATIONAL, INC.
1997 STOCK INCENTIVE PLAN
(AS AMENDED THROUGH APRIL, 2001)
1. Purpose. The purpose of the Dendrite International, Inc.
1997 Stock Incentive Plan (the "Plan") is to enhance the ability of Dendrite
International, Inc. (the "Company") and its subsidiaries to attract and retain
employees, directors and consultants of outstanding ability and to provide
employees, directors and consultants with an interest in the Company parallel to
that of the Company's shareholders.
2. Definitions.
(a) "Award" shall mean an award determined in
accordance with the terms of the Plan.
(b) "Board" shall mean the Board of Directors of
the Company.
(c) "Change in Control" shall mean the occurrence
of any one of the following events:
(i) any "person" (as such term
is defined in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
33-1/3% or more of the combined voting power of the Company's then
outstanding securities eligible to vote for the election of the Board
(the "Company Voting Securities"); provided, however, that the event
described in this paragraph (i) shall not be deemed to be a Change in
Control by virtue of any of the following acquisitions: (A) by the
Company or any subsidiary, (B) by any employee benefit plan sponsored
or maintained by the Company or any subsidiary, (C) by any
underwriter temporarily holding securities pursuant to an offering of
such securities, (D) pursuant to a Non-Control Transaction (as
defined in paragraph (iii)), or (E) a transaction (other than one
described in (iii) below) in which Company Voting Securities are
acquired from the Company, if a majority of the Incumbent Board (as
defined below) approves a resolution providing expressly that the
acquisition pursuant to this clause (E) does not constitute a Change
in Control under this paragraph (i);
(ii) individuals who, on the
Effective Date, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority thereof, provided
that any person becoming a director subsequent to the Effective Date,
whose election or nomination for election was approved by a vote of
at least two-thirds of the directors comprising the Incumbent Board
(either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for director,
without objection to such nomination) shall be considered a member of
the Incumbent Board; provided, however, that no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election contest with
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respect to directors or any other actual or threatened solicitation
of proxies or consents by or on behalf of any person other than the
Board shall be deemed to be a member of the Incumbent Board;
(iii) the shareholders of the
Company approve a merger, consolidation, share exchange or similar
form of corporate reorganization of the Company or any such type of
transaction involving the Company or any of its subsidiaries (whether
for such transaction or the issuance of securities in the transaction
or otherwise) (a "Business Combination"), unless immediately
following such Business Combination: (A) more than 50% of the total
voting power of the publicly traded corporation resulting from such
Business Combination (including, without limitation, any corporation
which directly or indirectly has beneficial ownership of 100% of the
Company Voting Securities or all or substantially all of the assets
of the Company and its subsidiaries) eligible to elect directors of
such corporation would be represented by shares that were Company
Voting Securities immediately prior to such Business Combination
(either by remaining outstanding or being converted), and such voting
power would be in substantially the same proportion as the voting
power of such Company Voting Securities immediately prior to the
Business Combination, (B) no person (other than any publicly traded
holding company resulting from such Business Combination, any
employee benefit plan sponsored or maintained by the Company (or the
corporation resulting from such Business Combination), or any person
which beneficially owned, immediately prior to such Business
Combination, directly or indirectly, 33-1/3% or more of the Company
Voting Securities (a "Company 33-1/3% Stockholder")) would become the
beneficial owner, directly or indirectly, of 33-1/3% or more of the
total voting power of the outstanding voting securities eligible to
elect directors of the corporation resulting from such Business
Combination and no Company 33-1/3% Stockholder would increase its
percentage of such total voting power, and (C) at least a majority of
the members of the board of directors of the corporation resulting
from such Business Combination would be members of the Incumbent
Board at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (a
"Non-Control Transaction"); or
(iv) the shareholders of the
Company approve a plan of complete liquidation or dissolution of the
Company or the sale or disposition of all or substantially all of the
Company's assets.
Notwithstanding the foregoing, a Change in Control of the Company
shall not be deemed to occur solely because any person acquires beneficial
ownership of more than 33-1/3% of the Company Voting Securities as a result of
the acquisition of Company Voting Securities by the Company which, by reducing
the number of Company Voting Securities outstanding, increases the percentage of
shares beneficially owned by such person; provided, that if a Change in Control
of the Company would occur as a result of such an acquisition by the Company (if
not for the operation of this sentence), and after the Company's acquisition
such person becomes the beneficial owner of additional Company Voting Securities
that increases the percentage of outstanding Company Voting Securities
beneficially owned by such person, then a Change in Control of the Company shall
occur.
(d) "Code" shall mean the Internal Revenue
Code of 1986, as amended.
(e) "Committee" shall mean a committee of
at least two members of the Board appointed by the Board to administer the Plan
and to perform the functions set forth herein and
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who are "non-employee directors" within the meaning of Rule 16b-3 as promulgated
under Section 16 of the Exchange Act and who are also "outside directors" within
the meaning of Section 162(m) of the Code.
(f) "Common Stock" shall mean the common
stock, no par value per share, of the Company.
(g) "Exchange Act" shall mean the
Securities Exchange Act of 1934, as amended.
(h) "Fair Market Value" per share as of a
particular date shall mean the last reported sale price (on the day immediately
preceding such date) of the Common Stock on the Nasdaq National Market List.
(i) "Immediate Family Member" shall mean,
except as otherwise determined by the Committee, a Participant's children,
stepchildren, grandchildren, parents, stepparents, grandparents, spouse,
siblings, in-laws and persons related by reason of legal adoption.
(j) "Incentive Stock Option" shall mean a
stock option which is intended to meet the requirements of Section 422 of the
Code.
(k) "Non-Employee Director" shall mean a
member of the Board who is not an employee of the Company or any Subsidiary.
(l) "Nonqualified Stock Option" shall mean
a stock option which is not intended to be an Incentive Stock Option.
(m) "Option" shall mean either an
Incentive Stock Option or a Nonqualified Stock Option.
(n) "Participant" shall mean an employee,
director or consultant of the Company or its Subsidiaries who is selected to
participate in the Plan in accordance with Section 5.
(o) "Subsidiary" shall mean any subsidiary
of the Company that is a corporation and which at the time qualifies as a
"subsidiary corporation" within the meaning of Section 424(f) of the Code.
3. Shares Subject to the Plan. Subject to adjustment in
accordance with Section 16, the total of the number of shares of Common Stock
which shall be available for issuance pursuant to the grant of Awards under the
Plan shall not exceed 8,500,000 shares, on a post-split adjusted basis;
provided, that for purposes of this limitation, any Option which is canceled or
expires without exercise shall again become available for Awards under the Plan.
Upon forfeiture of Awards in accordance with the provisions of the Plan, and the
terms and conditions of the Award, such shares shall no longer be counted in any
determination of the number of shares available under the Plan and shall be
available for subsequent Awards. To the extent that the exercise price of any
Option granted under the Plan is satisfied by tendering shares of Common Stock
to the Company (either by actual delivery or by attestation), then subject to
the requirements of Section 422 of the Code in connection with any
stock-for-stock exercise of Incentive Stock Options, only the number of shares
of Common Stock issued, net of the shares tendered, shall be deemed delivered
for purposes of determining the total number of shares of Common Stock available
for issuance under the Plan. Subject to adjustment in accordance with Section
16, no employee shall be granted in any calendar year Options to purchase more
than 1,500,000 shares of Common Stock.
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Shares of Common Stock available for issue or distribution under the Plan shall
be authorized and unissued shares or shares reacquired by the Company in any
manner.
4. Administration. (a) The Plan shall be
administered by the Committee.
(b) The Committee shall (i) approve the
selection of Participants, (ii) determine the type of Awards to be made to
Participants, (iii) determine the number of shares of Common Stock subject to
Awards, (iv) determine the terms and conditions of any Award granted hereunder
(including, but not limited to, any restriction and forfeiture conditions on
such Award) and (v) have the authority to interpret the Plan, to establish,
amend, and rescind any rules and regulations relating to the Plan, to determine
the terms and provisions of any agreements entered into hereunder, and to make
all other determinations necessary or advisable for the administration of the
Plan. The Committee may correct any defect, supply any omission or reconcile any
inconsistency in the Plan or in any Award in the manner and to the extent it
shall deem desirable to carry it into effect.
(c) Any action of the Committee shall be
final, conclusive and binding on all persons, including the Company and its
Subsidiaries and shareholders, Participants and persons claiming rights from or
through a Participant.
(d) The Committee may delegate to officers
or employees of the Company or any Subsidiary, and to service providers, the
authority, subject to such terms as the Committee shall determine, to perform
administrative functions with respect to the Plan and Award agreements.
(e) Members of the Committee and any
officer or employee of the Company or any Subsidiary acting at the direction of,
or on behalf of, the Committee shall not be personally liable for any action or
determination taken or made in good faith with respect to the Plan, and shall,
to the extent permitted by law, be fully indemnified by the Company with respect
to any such action or determination.
5. Eligibility. Individuals eligible to receive
Awards under the Plan shall be the directors, officers, other key employees and
selected consultants of the Company and its Subsidiaries selected by the
Committee. In addition, all Non-Employee Directors shall be eligible to receive
Options as provided in Section 9 hereof.
6. Awards. Awards under the Plan may consist of
Options, stock awards or other awards based on the value of the Common Stock.
Awards shall be subject to the terms and conditions of the Plan and shall be
evidenced by an agreement containing such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall deem
desirable.
7. Options. Options may be granted under the Plan
in such form as the Committee may from time to time approve pursuant to terms
set forth in an Option agreement. The Committee may alter or waive, at any time,
any term or condition of an Option that is not mandatory under the Plan.
(a) Types of Options. Each Option
agreement shall state whether or not the Option will be treated as an Incentive
Stock Option or Nonqualified Stock Option. Incentive Stock Options shall only be
granted to employees of the Company and its Subsidiaries.
(b) Option Price. The purchase price per
share of the Common Stock purchasable under an Option shall be determined by the
Committee, but in no event will be less than 100% of the Fair Market Value of
the Common Stock on the date of the grant of the Option and in the case of
Incentive Stock Options granted to an employee
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owning stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company and its Subsidiaries (a "10% Shareholder") the
price per share specified in the agreement relating to such Option shall not be
less than 110% of the Fair Market Value per share of the Common Stock on the
date of grant.
(c) Option Period. The term of each
Option shall be fixed by the Committee, but no Option shall be exercisable after
the expiration of 10 years from the date the Option is granted, provided,
however, that in the case of Incentive Stock Options granted to 10%
Shareholders, the term of such Option shall not exceed 5 years from the date of
grant.
(d) Exercisability. Each Option shall vest
and become exercisable at a rate determined by the Committee at or subsequent to
grant.
(e) Method of Exercise. Options may be
exercised, in whole or in part, by giving written notice of exercise to the
Company specifying the number of shares of Common Stock to be purchased. Such
notice shall be accompanied by the payment in full of the Option purchase price.
Such payment shall be made: (a) in cash, or (b) to the extent authorized by the
Committee, by surrender of shares of Common Stock owned by the holder of the
Option, or (c) through simultaneous sale through a broker of shares acquired on
exercise, as permitted under Regulation T of the Federal Reserve Board, or (d)
through additional methods prescribed by the Committee, or (e) by a combination
of any such methods.
8. Stock Awards. Subject to such performance and
employment conditions as the Committee may determine, awards of Common Stock or
awards based on the value of the Common Stock may be granted either alone or in
addition to Options granted under the Plan. Any Awards under this Section 8 and
any Common Stock covered by any such Award may be forfeited to the extent so
provided in the Award agreement, as determined by the Committee.
9. Non-Employee Director Stock Options.
(a) Initial Grant. Nonqualified Stock
Options to purchase 30,000 shares of Common Stock shall be granted automatically
to each Non-Employee Director who is a Non-Employee Director on the day the
Board approves the adoption of the Plan. With respect to each person who becomes
a Non-Employee Director after such date, Nonqualified Stock Options shall be
granted to each such Non-Employee Director on the day he or she first becomes a
Non-Employee Director. The number of shares of Common Stock to be subject to
such Options granted under this Section 9(a), the exercise price, and all other
terms (not inconsistent with the Plan) of such Options, shall be determined by
the Committee or the Board in their discretion.
(b) Subsequent Options. In addition to
the Nonqualified Stock Options granted to Non-Employee Directors under Section
9(a), Nonqualified Stock Options may be granted from time to time to each
Non-Employee Director. The number of shares of Common Stock to be subject to
such Options granted under this Section 9(b), the exercise price, and all other
terms (not inconsistent with the Plan) of such Options, shall be determined by
the Committee or the Board in their discretion.
(c) Option Price. The purchase price for
each Option granted under this Section 9 to a Non-Employee Director shall be the
Fair Market Value of the Common Stock on the date of grant of the Option.
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(d) Exercisability. Each Initial Option
and Subsequent Option granted under this Section 9 shall become exercisable and
vest on the first anniversary of the date of grant of such Option.
(e) Method of Exercise. Each Option
granted under this Section 9 may be exercised in the same manner as provided in
Section 7(e).
(f) Option Period. Each Option granted
under this Section 9 shall terminate 10 years from the date of grant unless
sooner terminated by reason of termination of service as a director of the
Company and its Subsidiaries.
(g) Termination of Director Status.
(i) In the event of termination
of service as a director of the Company and its Subsidiaries for any
reason other than cause, death or permanent disability (as determined
by the Committee), an Option granted under this Section 9 (to the
extent exercisable as of the date of termination) shall be
exercisable for the remaining term of the Option and shall thereafter
terminate.
(ii) In the event of the death of
a Non-Employee Director while a director of the Company or any
Subsidiaries, the Option (to the extent exercisable as of the date of
death), shall be exercisable by any prior transferee or by the
Non-Employee Director's designated beneficiary, or if none, the
person(s) to whom such Non-Employee Director's rights under the
Option are transferred by will or the laws of descent and
distribution for 180 days following the date of death (but in no
event beyond the term of the Option), and shall thereafter terminate.
(iii) In the event of the
termination of service as a director of the Company and its
Subsidiaries due to permanent disability (as determined by the
Committee), the Option (to the extent exercisable as of the date of
termination), shall be exercisable for 180 days following such
termination of service (but in no event beyond the term of the
Option), and shall thereafter terminate.
(iv) In the event of the
termination of service as a director of the Company and its
Subsidiaries for cause (as determined by the Committee in its sole
discretion), the Option shall terminate upon such termination of
status as director, regardless of whether the Option was then
exercisable.
(h) Except as expressly provided in this
Section 9, any Option granted to a Non-Employee Director hereunder shall be
subject to the terms and conditions of the Plan.
10. Change in Control. Upon the occurrence of a
Change in Control, all Options shall automatically become vested and exercisable
in full and all restrictions or conditions, if any, on any stock awards granted
hereunder shall automatically lapse. The Committee may, in its discretion,
include such further provisions and limitations in any agreement documenting
such Options as it may deem equitable and in the best interests of the Company.
11. Forfeiture. Notwithstanding anything in the Plan
to the contrary, the Committee may provide in any Award agreement that in the
event of a serious breach of conduct by the person granted such Award
(including, without limitation, any conduct prejudicial to or in conflict with
the Company or its Subsidiaries), or any activity of any such person in
competition with any of the businesses
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of the Company or any Subsidiary, (a) cancel any outstanding Award granted to
such person, in whole or in part, whether or not vested, and/or (b) if such
conduct or activity occurs within 1 year following the exercise or payment of an
Award, require such person to repay to the Company any gain realized or payment
received upon the exercise or payment of such Award (with such gain or payment
valued as of the date of exercise or payment). Such cancellation or repayment
obligation shall be effective as of the date specified by the Committee. Any
repayment obligation may be satisfied in Common Stock or cash or a combination
thereof (based upon the Fair Market Value of Common Stock on the day prior to
the date of payment), and the Committee may provide for an offset to any future
payments owed by the Company or any Subsidiary to such person if necessary to
satisfy the repayment obligation. The determination of whether any such person
has engaged in a serious breach of conduct or any activity in competition with
any of the businesses of the Company or any Subsidiary shall be determined by
the Committee in good faith and in its sole discretion. This Section 11 shall
have no application following a Change in Control.
12. Withholding. The Company shall have the right to
deduct from any payment to be made pursuant to the Plan the amount of any taxes
required by law to be withheld therefrom, or to require a Participant to pay to
the Company in cash such amount required to be withheld prior to the issuance or
delivery of any shares of Common Stock or the payment of cash under the Plan.
Such taxes may be paid by (a) delivering previously owned shares of Common Stock
or (b) having the Company retain shares of Common Stock which would otherwise be
delivered upon exercise or payment of Awards or (c) any combination of a cash
payment or the methods set forth in (a) and (b) above. For purposes of (a) and
(b) above, shares of Common Stock shall be valued at Fair Market Value
determined as of the day immediately prior to exercise or payment. If and to the
extent authorized by the Committee, the Company may, upon election by a
Participant, withhold from any distribution of Common Stock hereunder shares of
Common Stock with a Fair Market Value in excess of the Participant's required
withholding obligation.
13. Nontransferability, Beneficiaries. Unless
otherwise determined by the Committee with respect to the transferability of
Nonqualified Stock Options by a Participant to his Immediate Family Members (or
to trusts or partnerships or limited liability companies established for such
family members), no Award shall be assignable or transferable by the
Participant, otherwise than by will or the laws of descent and distribution or
pursuant to a beneficiary designation, and Options shall be exercisable, during
the Participant's lifetime, only by the Participant (or by the Participant's
legal representatives in the event of the Participant's incapacity). Each
Participant may designate a beneficiary to exercise any Option held by the
Participant at the time of the Participant's death or to be assigned any other
Award outstanding at the time of the Participant's death. If no beneficiary has
been named by a deceased Participant, any Award held by the Participant at the
time of death shall be transferred as provided in his will or by the laws of
descent and distribution. Except in the case of the holder's incapacity, an
Option may only be exercised by the holder thereof.
14. No Right to Employment. Nothing contained in the
Plan or in any Award under the Plan shall confer upon any employee any right
with respect to the continuation of employment with the Company or any of its
Subsidiaries, or interfere in any way with the right of the Company to terminate
his or her employment at any time. Nothing contained in the Plan shall confer
upon any employee or other person any claim or right to any Award under the
Plan.
15. Governmental Compliance. Each Award under the
Plan shall be subject to the requirement that if at any time the Committee shall
determine that the listing, registration or qualification of any shares issuable
or deliverable thereunder upon any securities exchange or under any Federal or
state law, or the consent or approval of any governmental regulatory body, is
necessary or desirable as a condition thereof, or in connection therewith, no
such grant or award may be exercised or shares issued or
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delivered unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
16. Adjustments. In the event of any change in the
outstanding shares of Common Stock by reason of any stock dividend or split,
recapitalization, merger, consolidation, spinoff, combination or exchange of
shares or other corporate change, or any distribution to holders of Common Stock
other than regular cash dividends, the number or kind of shares available for
Options and Awards under the Plan may be adjusted by the Committee as it shall
in its sole discretion deem equitable and the number and kind of shares subject
to any outstanding Awards granted under the Plan and the purchase price thereof
may be adjusted by the Committee as it shall in its sole discretion deem
equitable to preserve the value of such Awards.
17. Award Agreement. Each Award under the Plan shall
be evidenced by an agreement setting forth the terms and conditions, as
determined by the Committee, which shall apply to such Award, in addition to the
terms and conditions specified in the Plan.
18. Amendment. The Board may amend, suspend or
terminate the Plan or any portion thereof at any time, provided that (a) except
as provided in Section 16, no amendment shall be made that would adversely
affect the rights of a Participant under an Award theretofore granted, without
such Participant's written consent and (b) if and when the Plan is approved by
the shareholders of the Company, no amendment made after such approval shall be
made without shareholder approval if such approval is necessary to comply with
any applicable law, regulation or stock exchange rule.
19. General Provisions.
(a) The Committee may require each
Participant purchasing or acquiring shares pursuant to an Award under the Plan
to represent to and agree with the Company in writing that such Participant is
acquiring the shares for investment and without a view to distribution thereof.
(b) All certificates for shares of Common
Stock delivered under the Plan pursuant to any Award shall be subject to such
stock-transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the Securities and
Exchange Commission, any stock exchange upon which the Common Stock is then
listed, and any applicable Federal or state securities law, and the Committee
may cause a legend or legends to be put on any such certificates to make
appropriate reference to such restrictions. If the Committee determines that the
issuance of shares of Common Stock hereunder is not in compliance with, or
subject to an exemption from, any applicable Federal or state securities laws,
such shares shall not be issued until such time as the Committee determines that
the issuance is permissible.
(c) It is the intent of the Company that
the Plan satisfy, and be interpreted in a manner that satisfies, the applicable
requirements of Rule 16b-3 as promulgated under Section 16 of the Exchange Act
so that Participants will be entitled to the benefit of Rule 16b-3, or any other
rule promulgated under Section 16 of the Exchange Act, and will not be subject
to short-swing liability under Section 16. Accordingly, if the operation of any
provision of the Plan would conflict with the intent expressed in this Section
19(c), such provision to the extent possible shall be interpreted and/or deemed
amended so as to avoid such conflict.
(d) Except as otherwise provided by the
Committee in the applicable grant or Award agreement, a Participant shall have
no rights as a shareholder with respect to any shares of Common Stock subject to
Options until a certificate or certificates evidencing shares of Common Stock
shall have been issued to the Participant and, subject to Section 16, no
adjustment shall be made for
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dividends or distributions or other rights in respect of any share for which the
record date is prior to the date on which Participant shall become the holder of
record thereof.
(e) The law of the State of New Jersey
shall apply to all Awards and interpretations under the Plan regardless of the
effect of such state's conflict of laws principles.
(f) Where the context requires, words in
any gender shall include any other gender.
20. Term of Plan. Subject to earlier termination
pursuant to Section 18, the Plan shall have a term of 10 years from its
Effective Date.
21. Effective Date. The Plan is effective as of July
24, 1997.
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