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EXHIBIT 99.1
GENETRONICS BIOMEDICAL LTD.
2000 STOCK OPTION PLAN
1. INTERPRETATION
1.1 DEFINED TERMS - For the purposes of this Plan, the following terms shall
have the following meanings:
(a) "AFFILIATE" means a Parent Corporation or a Subsidiary
Corporation of a corporation;
(b) "ASSOCIATE" means, where used to indicate a relationship with
any Person,
(i) any relative of that Person,
(ii) any person of the opposite sex to whom that Person is
married or with whom that Person is living in a conjugal
relationship outside marriage,
(iii) any relative of a Person mentioned in clause (ii) who
has the same home as that Person,
(iv) any partner of that Person,
(v) any trust or estate in which such Person has a
substantial beneficial interest or as to which such
Person serves as trustee or in a similar capacity, or
(vi) any corporation of which such Person beneficially owns,
directly or indirectly, voting securities carrying more
than 10 percent of the voting rights attached to all
outstanding voting securities of the corporation;
(c) "BENEFICIAL OWNER" of a security includes any Person who,
directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise has voting power over
the security or the power to dispose or direct the disposition
of the security, and any Person who uses a trust or other
arrangement with the purpose or effect of divesting such Person
of beneficial ownership as part of a plan to evade the reporting
requirements of section 13 of the Exchange Act shall be deemed
to be the Beneficial Owner of the security;
(d) "BOARD" means the Board of Directors of Genetronics Biomedical
Ltd.;
(e) "CODE" means the United States Internal Revenue Code of 1986, as
amended from time to time;
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(f) "COMMITTEE" means a committee of the Board appointed in
accordance with this Plan, or if no such committee is appointed,
the Board itself;
(g) "COMPANY" means GENETRONICS BIOMEDICAL LTD.;
(h) "COVERED EMPLOYEE" means the chief executive officer and the
four (4) other highest compensated officers of the Company for
whom total compensation is required to be reported to
shareholders under the Exchange Act, as determined for purposes
of Section 162(m) of the Code;
(i) "DATE OF GRANT" means the date on which a grant of an Option is
effective;
(j) "DISINTERESTED PERSON" means a director who qualifies as a
"Disinterested Person" as defined in subclause 240.16b-3(c)(2)
(I) of Title 17 of the Code of Federal Regulations of the United
States ("CFR"); meaning a director who has not been granted or
awarded equity securities pursuant to the Plan or any other plan
of the Company or its Affiliates for one year prior to the
initiation of his service as an administrator of the Plan, other
than securities received pursuant to an annual retainer fee;
(k) "DIRECT OR INDIRECT OWNERSHIP" of securities by a Person is
calculated in accordance with the following rules:
(i) the Person shall be deemed to own stock owned, directly
or indirectly, by or for siblings (including half
siblings), spouse, ancestors and lineal descendants, and
(ii) stock owned, directly or indirectly, by or for a
corporation, partnership, estate or trust, shall be
deemed to be owned proportionately by or for its
shareholders, partners or beneficiaries;
(l) "DISABILITY" means a medically determinable physical or mental
impairment which causes an individual to be unable to engage in
any substantial gainful activity, as determined by the
Committee;
(m) "DISPOSITION" includes a sale, exchange, gift, or transfer of
legal title, but does not include a pledge, hypothecation,
transfer from a decedent to an estate, transfer by bequest or
inheritance, or the other excepted circumstances referred to in
section 424(c) of the Code;
(n) "EFFECTIVE DATE" means the Effective Date of the Plan is July
31, 2000;
(o) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended;
(p) "FAIR MARKET VALUE" means:
(i) where the Shares are listed for trading on a stock
exchange or over the counter market, the closing price
of the Shares on the trading day
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immediately prior to the date of grant on such stock
exchange or over the counter market as may be selected
for such purpose by the Committee, or
(ii) where the Shares are not listed for trading on a stock
exchange or over the counter market, the value which is
determined by the Committee to be the fair value of the
Shares at the Date of Grant, taking into consideration
all factors that the Committee deems appropriate,
including, without limitation, recent sale and offer
prices of the Shares in private transactions negotiated
at arm's length, and in any event consistent with
Section 260.140.50 of Title 10 of the California Code of
Regulations;
(q) "GUARDIAN" means the guardian, if any, appointed for an
Optionee;
(r) "ISO" means an Option granted to an employee of the Company or
an Affiliate of the Company that is intended to qualify as an
"incentive stock option" for purposes of section 422 of the Code
and is therefore subject to favourable tax treatment under the
Code;
(s) "ISO OPTIONEE" means an Optionee to whom an ISO has been
granted;
(t) "MODIFICATION" means any change in the terms of an Option which
gives the Optionee additional benefits under the Option within
the meaning of section 424(h) of the Code, but such change shall
not include a change in the terms of an Option:
(i) in the case of an Option not immediately exercisable in
full, to accelerate the time within which the Option may
be exercised, or
(ii) attributable to the issuance or assumption of an Option
by reason of a corporate merger, consolidation,
acquisition of property or stock, separation,
reorganization or liquidation if the new Option or
assumption of the old Option does not give the Optionee
additional benefits which he did not have under the old
Option;
(u) "NON-EMPLOYEE DIRECTOR" means a member of the Board who either
(i) is not a current employee or officer (within the meaning of
Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder) of the Company or an Affiliate of the
Company, does not receive compensation (directly or indirectly)
from the Company or an Affiliate of the Company for services
rendered as a consultant or in any capacity other than as a
director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated
pursuant to the Securities Act ("Regulation S-K"), does not
possess an interest in any other transaction as to which
disclosure would be required under Item 404(a) of Regulation
S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation
S-K; or (ii) is otherwise considered a "non-employee director"
for purposes of Rule 16b-3;
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(v) "NON-ISO" means an Option that is not intended to qualify as an
"incentive stock option" for purposes of section 422 of the
Code;
(w) "NON-ISO OPTIONEE" means an Optionee to whom a Non-ISO has been
granted;
(x) "NON-OFFICER EMPLOYEE" means an employee who is not an officer
or director within the meaning of Section 260.140.41 of Title 10
of the California Code of Regulations;
(y) "OPTION" means an option to purchase Shares granted pursuant to
the terms of this Plan;
(z) "OPTION AGREEMENT" means a written agreement between an Optionee
and the Company, specifying the terms of the Option being
granted to the Optionee under the Plan;
(aa) "OPTION PRICE" means the price at which an Option is exercisable
to purchase Shares;
(bb) "OPTIONEE" means a person to whom an Option has been granted;
(cc) "OUTSIDE DIRECTOR" means a director who either (i) is not a
current employee of the Company or an "affiliated corporation"
(within the meaning of the United States Treasury regulations
promulgated under Section 162(m) of the Code), is not a former
employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax
qualified pension plan), was not an officer of the Company or an
"affiliated corporation" at any time, and is not currently
receiving direct or indirect remuneration from the Company or an
"affiliated corporation" for services in any capacity other than
as a director, or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code;
(dd) "PARENT CORPORATION" means any corporation in an unbroken chain
of corporations ending with Genetronics Biomedical Ltd. if, at
the Date of Grant, each corporation other than Genetronics
Biomedical Ltd. owns stock possessing 50 percent or more of the
total combined voting power of all classes of stock in one of
the other corporations in such chain;
(ee) "PERSON" means a natural person, company, government, or
political subdivision or agency of a government; and where two
or more Persons act as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding
or disposing of securities of an issuer, such syndicate or group
shall be deemed to be a Person;
(ff) "PLAN" means this Stock Option Plan of the Company. The Plan was
adopted by the Board on June 20, 1997 and approved by the
shareholders of the Company on July 28, 1997, and amended on
September 14, 1998, and was subsequently reviewed and accepted
by The Toronto Stock Exchange. The Plan was further
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amended(the "Amended Plan") by the Compensation Committee of the
Company on October 20, 1998 and on February 5, 1999 and approved
by the shareholders of the Company on July 26, 1999. The Amended
Plan was amended again (the "2000 Plan") by the Compensation
Committee on February 28, 2000 and May 22, 2000 and approved by
the shareholders of the Company on August 7, 2000;
(gg) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3 as in effect with respect to the Company
at the time discretion is being exercised regarding the Plan;
(hh) "QUALIFIED SUCCESSOR" means a person who is entitled to
ownership of an Option upon the death of an Optionee, pursuant
to a will or the applicable laws of descent and distribution
upon death;
(ii) "SECURITIES ACT" means the Securities Act of 1933, as amended;
(jj) "SHARES" means the common shares without par value in the
capital of Genetronics Biomedical Ltd.;
(kk) "SUBSIDIARY CORPORATION" means any corporation in an unbroken
chain of corporations beginning with Genetronics Biomedical Ltd.
if, at the Date of Grant, each of the corporations other than
the last corporation owns stock possessing 50 percent or more of
the total combined voting power of all classes of stock in one
of the other corporations in such chain;
(ll) "TERM" means the period of time during which an Option is
exercisable; and
(mm) "TERMINATING EVENT" means:
(i) the dissolution or liquidation of the Company,
(ii) a merger or consolidation of the Company with one or
more corporations as a result of which, immediately
following such merger or consolidation, the shareholders
of the Company as a group will hold less than a majority
of the outstanding capital stock of the surviving
corporation,
(iii) the sale or other disposition of all or substantially
all of the assets of the Company,
(iv) the occurrence of an event whereby any Person or entity
becomes the Beneficial Owner of Shares representing 50%
or more of the combined voting power of the voting
securities of the Company, or
(v) a material change in the capital structure of the
Company that is deemed to be a Terminating Event by
virtue of the last sentence of Section 11.1 of this Plan
or by virtue of Section 11.4 of this Plan.
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2. STATEMENT OF PURPOSE
2.1 PRINCIPAL PURPOSES - The principal purposes of the Plan are to provide the
Company and its shareholders with the advantages of the incentive inherent in
stock ownership on the part of employees, officers, directors, and consultants
responsible for the continued success of the Company; to create in such
individuals a proprietary interest in, and a greater concern for, the welfare
and success of the Company; to encourage such individuals to remain with the
Company; and to attract new employees, officers, directors and consultants to
the Company.
2.2 ISOs AND NON-ISOs - Under this Plan, the Company may grant either ISOs or
Non-ISOs. Each ISO granted hereunder is intended to constitute an "incentive
stock option," for the purposes of section 422 of the Code, and this Plan and
each such ISO is intended to comply with all of the requirements of Section 422
of the Code and of all other provisions of the Code applicable to incentive
stock options and to plans issuing the same. Each Non-ISO granted hereunder is
intended to constitute an Option that is not an "incentive stock option" for the
purposes of section 422 of the Code, and that does not comply with the
requirements of Section 422 of the Code.
3. ADMINISTRATION
3.1 BOARD OR COMMITTEE - The Plan shall be administered by the Board or by a
committee of the Board appointed in accordance with Section 3.2 or 3.4(b) below.
3.2 APPOINTMENT OF COMMITTEE - The Board may at any time appoint a Committee,
consisting of not less than two of its members, to administer the Plan on behalf
of the Board in accordance with such terms and conditions as the Board may
prescribe, consistent with this Plan. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional members,
remove members (with or without cause) and appoint new members in their place,
fill vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan. In the discretion of the Board, a
Committee may consist solely of two (2) or more Non-Employee Directors, and/or
Outside Directors. Notwithstanding anything in this Section 3 to the contrary,
the Board or the Committee may delegate to a Committee of one or more members of
the Board the authority to grant Options to eligible persons who (a) are not
then subject to Section 16 of the Exchange Act and/or (b) are either (i) not
then Covered Employees and are not expected to be Covered Employees at the time
of recognition of income resulting from such Options, or (ii) not persons with
respect to whom the Company wishes to comply with Section 162(m) of the Code.
3.3 QUORUM AND VOTING - A majority of the members of the Committee shall
constitute a quorum, and, subject to the limitations in this Section 3, all
actions of the Committee shall require the affirmative vote of members who
constitute a majority of such quorum. Members of the Committee who are not
Disinterested Persons may vote on any matters affecting the administration of
the Plan or the grant of Options pursuant to the Plan, except that no such
member shall act upon the granting of an Option to himself (but any such member
may be counted in determining the existence of a quorum at any meeting of the
Committee during which action is taken with respect to the granting of Options
to him).
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3.4 ADMINISTRATION OF PLAN UPON REGISTRATION OF EQUITY SECURITIES
Notwithstanding the foregoing provisions of this Section 3, if the Company
registers any class of any equity security pursuant to section 12 of the
Exchange Act the Plan shall, from the effective date of such registration until
six months after the termination of such registration, be administered as
follows:
(a) the Plan shall be administered by the Board so long as each
member of the Board is a Disinterested Person; and,
(b) if at any time not all members of the Board are Disinterested
Persons, then the Board shall appoint a Committee consisting of
two or more of its members, all of whom are Disinterested
Persons, to administer the Plan on behalf of the Board in
accordance with such terms and conditions as the Board may
prescribe, consistent with this Plan. Once appointed, the
Committee shall continue to serve until otherwise directed by
the Board. From time to time the Board may increase the size of
the Committee and appoint additional members (all of whom shall
be Disinterested Persons), remove members (with or without
cause) and appoint new members in their place, fill vacancies
however caused, or remove all members of the Committee and
thereafter directly administer the Plan so long as all members
of the Board are Disinterested Persons. At no time shall a
person who is not a Disinterested Person serve on the Committee
appointed under this Section 3.4(b), nor shall such Committee at
any time consist of less than two members of the Board.
3.5 POWERS OF COMMITTEE - Any Committee appointed under Section 3.2 or 3.4(b)
above shall have the authority to do the following:
(a) administer the Plan in accordance with its express terms;
(b) determine all questions arising in connection with the
administration, interpretation, and application of the Plan,
including all questions relating to the value of the Shares;
(c) correct any defect, supply any information, or reconcile any
inconsistency in the Plan in such manner and to such extent as
shall be deemed necessary or advisable to carry out the purposes
of the Plan;
(d) prescribe, amend, and rescind rules and regulations relating to
the administration of the Plan;
(e) determine the duration and purposes of leaves of absence from
employment which may be granted to Optionees without
constituting a termination of employment for purposes of the
Plan;
(f) do the following with respect to the granting of Options:
(g) determine the employees, officers, directors, or consultants to
whom Options shall be granted, based on the eligibility criteria
set out in this Plan,
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(h) determine whether such Options shall be ISOs or Non-ISOs,
(i) determine the terms and provisions of the Option
Agreement to be entered into with any Optionee (which
need not be identical with the terms of any other Option
Agreement),
(ii) amend the terms and provisions of Option Agreements,
provided the Committee obtains:
(A) the consent of the Optionee, if the amendment would adversely affect the
rights, or increase the obligations, of the Optionee under the Option;
and
(B) the approval of any stock exchange on which the Company is listed,
(iii) determine when Options shall be granted,
(iv) determine the number of Shares subject to each Option,
and
(v) make all other determinations necessary or advisable for
administration of the Plan.
3.6 ADMINISTRATION BY COMMITTEE - The Committee's exercise of the authority set
out in Section 3.4 shall be consistent with the intent that ISOs issued under
the Plan be qualified under the terms of Section 422 of the Code, and that
Non-ISOs shall not be so qualified. All determinations made by the Committee in
good faith on matters referred to in Section 3.4 shall be final, conclusive, and
binding upon all Persons. The Committee shall have all powers necessary or
appropriate to accomplish its duties under this Plan. In addition, the
Committee's administration of the Plan shall in all respects be consistent with
the policies and rules of any stock exchange or over the counter market on which
the Shares are listed.
4. ELIGIBILITY
4.1 ELIGIBILITY FOR ISOs - An ISO may only granted to a person who is an
employee of the Company or an Affiliate of the Company, including directors or
officers who are employees of the Company or an Affiliate of the Company.
4.2 ELIGIBILITY FOR NON-ISOs - Non-ISOs may be granted to any employee, officer,
director or consultant of the Company or an Affiliate of the Company.
4.3 NO VIOLATION OF SECURITIES LAWS - No Option shall be granted to any Optionee
unless the Committee has determined that the grant of such Option and the
exercise thereof by the Optionee will not violate the securities law of the
jurisdiction where the Optionee resides at the time of grant.
4.4 LIMIT ON MAXIMUM GRANT TO ANY OPTIONEE - Notwithstanding anything in this
Plan to the contrary, no officer or employee of the Company or an Affiliate of
the Company shall receive Options exercisable for more than two million one
hundred thousand (2,100,000) Shares over
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any three year period, nine hundred thirty-five thousand (935,000) Shares over
any one year period or 5% of the outstanding Shares.
5. SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES - The Committee, from time to time, may grant Options to
purchase an aggregate of up to seven million four hundred thousand (7,400,000)
Shares, subject to regulatory approval, to be made available from authorized,
but unissued or reacquired, Shares. In calculating the foregoing seven million
four hundred thousand (7,400,000) Shares, the Committee shall include the
4,467,275 Shares subject to options outstanding as of the Effective Date of the
Plan. The foregoing number of Shares shall be adjusted, where necessary, to take
account of the events referred to in Section 11 hereof.
5.2 DECREASE IN NUMBER OF SHARES SUBJECT TO PLAN - Upon exercise of an Option,
the number of Shares thereafter available under the Plan and under the Option
shall decrease by the number of Shares as to which the Option was exercised.
5.3 EXPIRY OF OPTION - If an Option expires or terminates for any reason without
having been exercised in full, the unpurchased Shares subject thereto shall
again be available for the purposes of the Plan.
5.4 RESERVATION OF SHARES - The Company will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Plan.
6. OPTION TERMS
6.1 OPTION AGREEMENT - With respect to each Option to be granted to an Optionee,
the Committee shall specify the following terms in the Option Agreement between
the Company and the Optionee:
(a) whether such Option is an ISO or a Non-ISO;
(b) the number of Shares subject to purchase pursuant to such
Option, provided that the number of Shares reserved for issuance
to any one person pursuant to Options does not exceed 5% of the
outstanding Shares;
(c) the Date of Grant;
(d) the Term, provided that:
(i) the Term shall in no event be more than ten (10) years
following the Date of Grant; and
(ii) if an ISO Option is granted to an Optionee who on the
Date of Grant has Direct or Indirect Ownership of more
than 10% of the total combined voting power of all
classes of stock of the Company, the Term of the Option
shall not exceed five (5) years;
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(e) the Option Price, provided that:
(i) the Option Price shall not be less than the Fair Market
Value of the Shares on the trading day preceding the
Date of Grant; and
(ii) if an Option is granted to an Optionee who on the Date
of Grant has Direct or Indirect Ownership of more than
10% of the total combined voting power of all classes of
stock of the Company or an Affiliate of the Company,
then the Option Price shall be at least 110% of the Fair
Market Value of the Shares on the Date of Grant, with
the proviso that, with respect to a non-ISO, this
pricing limitation shall not be applicable if the shares
are listed on a national stock exchange;
(f) any vesting schedule upon which the exercise of an Option is
contingent, including discretion to;
(i) allow full and immediate vesting upon the grant of such
Option,
(ii) permit partial vesting in stated percentage amounts
based on the length of the Term of such Option;
provided, however, that an Option granted to a
non-officer employee must provide for the right to
exercise at the rate of at least twenty percent (20%)
per year over five (5) years from the date of the Option
is granted,
(iii) permit full vesting after a stated period of time has
passed from the Date of Grant; subject to the
limitations described in the preceding sub-subparagraph;
(iv) permit exercise of an Option for unvested Shares,
provided however, that generally any unvested Shares so
purchased shall be subject to a repurchase right in
favor of the Company, with the repurchase price to be
equal to the original purchase price of the stock, or to
any other restriction the Board determines to be
appropriate, but that (A) in the case of the unvested
Shares received by a non-officer employee, the right to
repurchase at the original purchase price shall lapse at
a minimum rate of 20% per year over five (5) years from
the date the Option was granted, and (B) such repurchase
right shall be exercisable only within (I) the ninety
(90) day period following the termination of employment
or the relationship as a director or Consultant, or (II)
such longer period as may be agreed to by the Company
and the Optionee (for example, for purposes of
satisfying the requirements of Section 1202(c)(3) of the
Code (regarding "qualified small business stock")), and
(C) such right shall be exercisable only for cash or
cancellation of purchase money indebtedness for the
shares; but unvested Shares received on exercise of an
Option by an officer, director or consultant (within the
meaning of Section 260.140.41 of Title 10 of the
California Code of Regulations) may be subject to
additional or greater restrictions; and
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(g) such other terms and conditions as the Committee deems advisable
and are consistent with the purposes of this Plan.
6.2 NO GRANT AFTER TEN YEARS FROM EFFECTIVE DATE - No Option shall be granted
under the Plan later than ten (10) years from the Effective Date of the Plan.
Except as expressly provided herein, nothing contained in this Plan shall
require that the terms and conditions of Options granted under the Plan be
uniform.
6.3 NO DISPOSITION FOR SIX MONTHS - An Optionee who is subject to Section 16 of
the Exchange Act and whose Option grant is not exempt from Section 16 under Rule
16b-3 shall not make a Disposition of any Shares issued upon exercise of an
Option unless at least six (6) months has elapsed between the Date of Grant of
the Option and the date of Disposition of the Shares issued upon exercise of
such Option.
7. LIMITATION ON GRANTS OF OPTIONS
7.1 US$100,000 LIMIT ON ISOs - If the aggregate Fair Market Value (valued as of
the Date of Grant of each ISO) of:
(a) Shares underlying ISOs which have been granted to an Optionee
under this Plan and which are exercisable for the first time
during a calendar year, and
(b) Shares underlying incentive stock options which have been
granted to such Optionee under any other plan of the Company or
its Affiliates and which are exercisable for the first time
during that calendar year, exceeds US$100,000, as such amount
may be adjusted from time to time under Section 422(d) of the
Code, then to the extent of such excess such options shall be
treated as options that are not "incentive stock options" for
purposes of the Code.
8. EXERCISE OF OPTION
8.1 METHOD OF EXERCISE - Subject to any limitations or conditions imposed upon
an Optionee pursuant to the Option Agreement or Section 6 above, an Optionee may
exercise an Option by giving written notice thereof to the Company at its
principal place of business, provided that any Options granted after the 2000
Plan is approved by The Toronto Stock Exchange and the American Stock Exchange
but prior to the date on which shareholder approval to the 2000 Plan is given,
may not be exercised unless and until the 2000 Plan and any such Options receive
shareholder approval.
8.2 PAYMENT OF OPTION PRICE - The notice described in Section 8.1 shall be
accompanied by full payment of the aggregate Option Price to the extent the
Option is so exercised, and full payment of any amounts the Company determines
must be withheld for tax purposes from the Optionee pursuant to the Option
Agreement. Such payment shall be:
(a) in lawful money (United States funds) by cheque;
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(b) at the discretion of the Committee and if such form of payment
is permitted under the corporate laws then governing the Company
and if the Company has disclosed to its shareholders that it
will accept such payment for the exercise of Options, by
delivery of the Optionee's personal recourse note bearing
interest at a rate deemed appropriate by the Committee;
(c) at the discretion of the Committee, and subject to all
applicable securities laws, through delivery by the Optionee
and/or withholding by the Company, of Shares having a market
value as of the date of exercise equal to the cash exercise
price of the Option plus any amounts that the Company determines
must be withheld from the Optionee for U.S. or Canadian tax
purposes. The market value of each of the Shares on the date of
delivery shall be determined in good faith by the Committee,
which determination shall be binding for all purposes hereunder;
or
(d) at the discretion of the Committee, by any combination of
Sections 8.2(a) to 8.2(c) above.
8.3 ISSUANCE OF STOCK CERTIFICATE - As soon as practicable after exercise of an
Option in accordance with Sections 8.1 and 8.2 above, the Company shall issue a
stock certificate evidencing the Shares with respect to which the Option has
been exercised. Until the issuance of such stock certificate, no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to such Shares, notwithstanding the exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date the stock certificate is issued, except as provided in
Section 11 below.
9. TRANSFERABILITY OF OPTIONS
9.1 NON-TRANSFERABLE - Except as provided otherwise in this Section 9, Options
are non-assignable and non-transferable.
9.2 DEATH OF OPTIONEE - If the employment of an Optionee as an employee or
consultant of the Company or an Affiliate of the Company, or the position of an
Optionee as a director of the Company or an Affiliate of the Company, terminates
as a result of Optionee's death, any Options held by such Optionee shall pass to
the Qualified Successor of the Optionee, and shall be exercisable by the
Qualified Successor on or before the date which is the earlier of twelve (12)
months following the date of death and ten (10) years following the Date of
Grant.
9.3 DISABILITY OF OPTIONEE - If the employment of an Optionee as an employee or
consultant of the Company or an Affiliate of the Company, or the position of an
Optionee as a director of the Company or an Affiliate of the Company, is
terminated by the Company or its Affiliate by reason of such Optionee's
Disability, any Option held by such Optionee that could have been exercised
immediately prior to such termination of service shall be exercisable by such
Optionee, or by such Optionee's Guardian, on or before the date which is the
earlier of twelve (12) months following the termination of service of such
Optionee, and the last day of the Term.
9.4 DISABILITY AND DEATH OF OPTIONEE - If an Optionee who has ceased to be
employed by the Company or an Affiliate of the Company by reason of such
Optionee's Disability dies within
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six (6) months after the termination of such employment, any Option held by such
Optionee that could have been exercised immediately prior to such Optionee's
death shall pass to the Qualified Successor of such Optionee, and shall be
exercisable by the Qualified Successor:
(a) in the case of an ISO, on or before a date which is the earlier
of six (6) months following the death of such Optionee, and ten
years following the Date of Grant, and
(b) in the case of a Non-ISO, on or before a date which is the
earlier of twelve (12) months following the death of such
Optionee, and ten (10) years following the Date of Grant.
9.5 UNANIMOUS AGREEMENT - If two or more persons constitute the Qualified
Successor or the Guardian of an Optionee, the rights of such Qualified Successor
or such Guardian shall be exercisable only upon the unanimous agreement of such
persons.
9.6 DEEMED NON-INTERRUPTION OF EMPLOYMENT - Employment shall be deemed to
continue intact during any military or sick leave or other bona fide leave of
absence if the period of such leave does not exceed ninety (90) days or, if
longer, for so long as the Optionee's right to re-employment with the Company or
an Affiliate of the Company is guaranteed either by statute or by contract. If
the period of such leave exceeds ninety (90) days and the Optionee's
re-employment is not so guaranteed, then such Optionee's employment shall be
deemed to have terminated ninety-one (91) days from the date such leave
commenced.
10. TERMINATION OF OPTIONS
10.1 TERMINATION OF OPTIONS - To the extent not earlier exercised or terminated
in accordance with section 9 above, an Option shall terminate at the earliest of
the following dates:
(a) the termination date specified for such Option in the Option
Agreement;
(b) if the Optionee's position as an employee, officer, consultant
or director of the Company or an Affiliate of the Company is
terminated for just cause, (as determined by the Company), and
the Optionee has no continuing business relationship with the
Company or an Affiliate of the Company as an employee, officer,
consultant, or director, then thirty (30) days after the date of
such termination for just cause, subject to the proviso that an
Optionee who is subject to restricted trading periods due to his
or her status as an insider, as determined by the Company, then
(30) days after the date the next trading window, immediately
following the date of termination for just cause, opens;
(c) if the Optionee's position as an employee, officer, consultant
or director of the Company or an Affiliate of the Company
terminates for a reason other than the Optionee's Disability,
death, or termination for just cause, (as determined by the
Company), and the Optionee has no continuing business
relationship with the Compnay or an Affiliate of the Company as
an employee, officer, consultant, or director, then sixty (60)
days after such date of termination, subject to the proviso
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that an Optionee who is subject to restricted trading periods
due to his or her status as an insider, as determined by the
Company, then (60) days after the date the next trading window,
immediately following the date of termination for just cause,
opens:
(d) the date of any sale, transfer, assignment or hypothecation, or
any attempted sale, transfer, assignment or hypothecation, of
such Option in violation of Section 9.1 above; and
(e) the date specified in Section 11.2 below for such termination in
the event of a Terminating Event.
10.2 VESTING - In the event that an Optionee's position as an employee, officer,
consultant or director of the Company or of an Affiliate of the Company is
terminated, and the Optionee has no continuing business relationship with the
Company or an Affiliate of the Company as an employee, officer, consultant, or
director, the Option held by such Optionee shall cease to vest as at the date of
termination, regardless of whether the Optionee is subject to restricted trading
periods due to his or her status as an insider, as determined by the Company.
11. ADJUSTMENTS TO OPTIONS
11.1 ALTERATION IN CAPITAL STRUCTURE - If there is a material alteration in the
capital structure of the Company resulting from a recapitalization, stock split,
reverse stock split, stock dividend, or otherwise, the Committee shall make such
adjustments to this Plan (and to the Options then outstanding under this Plan)
as the Committee determines to be appropriate and equitable under the
circumstances, so that the proportionate interest of each holder of any such
Option shall, to the extent practicable, be maintained as before the occurrence
of such event. Such adjustments may include, without limitation (a) a change in
the number or kind of shares of stock of the Company covered by such Options, or
other property for which Shares are exchanged as part of such adjustment, and
(b) a change in the Option Price payable per share; provided, however, that the
aggregate Option Price applicable to the unexercised portion of existing Options
shall not be altered, it being intended that any adjustments made with respect
to such Options shall apply only to the price per share and the number of shares
subject thereto. For purposes of this Section 11.1, neither (i) the issuance of
additional shares of stock of the Company in exchange for adequate consideration
(including services), nor (ii) the conversion of outstanding preferred shares of
the Company into Shares shall be deemed to be material alterations of the
capital structure of the Company. If the Committee determines that the nature of
a material alteration in the capital structure of the Company is such that it is
not practical or feasible to make appropriate adjustments to this Plan or to the
Options granted hereunder, such event shall be deemed a Terminating Event for
the purposes of this Plan.
11.2 TERMINATING EVENTS - Subject to Section 11.3, all Options granted under the
Plan shall terminate upon the occurrence of a Terminating Event.
11.3 NOTICE OF TERMINATING EVENT - The Committee shall give notice of the
imminent consummation of a Terminating Event to Optionees and persons whose
Shares are subject to a repurchasing right under the Plan, not less than thirty
days prior to the consummation of a
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Terminating Event. Upon the giving of such notice, all repurchase rights of the
Company under the Plan shall terminate, and all Options, shall become
immediately exercisable, notwithstanding any contingent vesting provisions to
which such Options may have otherwise been subject.
11.4 CORPORATE REORGANIZATION - In the event of a reorganization as defined in
this Section 11.4 in which the Company is not the surviving or acquiring
corporation, or in which the Company is or becomes a wholly-owned subsidiary of
another corporation after the effective date of the reorganization, then unless
provision is made by the acquiring corporation for the assumption of each Option
granted under this Plan, or the substitution of an option therefor, such that no
Modification of any such Option occurs, all Options granted under this Plan
shall terminate and such event shall be deemed a Terminating Event. For purposes
of this Section 11.4, "reorganization" shall mean any statutory merger,
statutory consolidation, sale of all or substantially all of the assets of the
Company, or sale, pursuant to an agreement with the Company, of securities of
the Company pursuant to which the Company is or becomes a wholly-owned
subsidiary of another corporation after the effective date of the
reorganization.
11.5 DETERMINATIONS TO BE MADE BY COMMITTEE - Adjustments and determinations
under this Section 11 shall be made by the Committee, whose decisions as to what
adjustments or determination shall be made, and the extent thereof, shall be
final, binding, and CONCLUSIVE.
12. TERMINATION AND AMENDMENT OF PLAN
12.1 TERMINATION OF PLAN - Unless earlier terminated as provided in Section 11
above or in Section 12.2 below, the Plan shall terminate on, and no Option shall
be granted under the Plan, after the end of the day prior to the tenth
anniversary of the Effective Date.
12.2 POWER OF COMMITTEE TO TERMINATE OR AMEND PLAN - Subject to the approval of
any stock exchange on which the Company is listed, the Committee may terminate,
suspend or amend the terms of the Plan; provided, however, that, except as
provided in Section 11 above no amendment shall be effective unless approved by
the shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will: (a) increase the number of
shares reserved for Options under the Plan; (b) modify the requirements as to
eligibility for participation in the Plan (to the extent such modification
requires shareholder approval in order for the Plan to satisfy the requirements
of Section 422 of the Code); or (c) modify the Plan in any other way if such
modification requires shareholder approval in order for the Plan to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.
12.3 NO GRANT DURING SUSPENSION OF PLAN - No Option may be granted during any
suspension, or after termination, of the Plan. Amendment, suspension, or
termination of the Plan shall not, without the consent of the Optionee, impair
any rights or increase any obligations of the Optionee under any Option
previously granted prior to such amendment, suspension or termination.
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13. CONVERSION OF ISOs INTO NON-ISOs
13.1 CONVERSION OF ISOs INTO NON-ISOs - At the written request of any ISO
Optionee, the Committee may in its discretion take such actions as may be
necessary to convert such Optionee's ISOs (or any installments or portions of
installments thereof) that have not been exercised on the date of conversion
into Non-ISOs at any time prior to the expiration of such ISOs, regardless of
whether the Optionee is an employee of the Company or an Affiliate of the
Company at the time of such conversion. Such actions include, but shall not be
limited to, extending the exercise period of such ISOs. At the time of such
conversion, the Committee, with the consent of the Optionee, may impose such
conditions on the exercise of the resulting Non-ISOs as the Committee in its
discretion may determine, provided that such conditions are consistent with this
Plan. Nothing in the Plan shall be deemed to give any Optionee the right to have
such Optionee's ISOs converted into Non-ISOs, and no such conversion shall occur
until and unless the Committee takes appropriate action. The Committee, with the
consent of the Optionee, may also terminate any portion of any ISO that has not
been exercised at the time of such conversion.
14. CONDITIONS PRECEDENT TO ISSUANCE OF SHARES
14.1 COMPLIANCE WITH SECURITIES LAWS - Options shall not be granted and Shares
shall not be issued pursuant to the exercise of any Option unless the grant and
exercise of such Option and the issuance and delivery of such Shares comply with
all relevant provisions of law, including, without limitation, the Securities
Act, the Exchange Act, any applicable state or provincial securities law, the
rules and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed or otherwise traded.
14.2 REPRESENTATIONS BY OPTIONEE - As a condition precedent to the exercise of
any Option, the Company may require the Optionee to represent and warrant, at
the time of exercise, that the Shares are being purchased only for investment
and without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such representations and warranties are
required by any applicable law.
14.3 REGULATORY APPROVAL TO ISSUANCE OF SHARES - The Company shall seek to
obtain from regulatory commission or agency having jurisdiction over the Plan
such authority as may be required to issue and sell Shares upon the exercise of
any Option; provided, however, that this undertaking shall not require the
Company to register under the Securities Act (or any other applicable law for
the registration and sale of securities) either the Plan, any Option or any
Shares issued or issuable pursuant to any such Option. If, after reasonable
efforts, the Company is unable to obtain from any such regulatory commission or
agency the authority which counsel for the Company deems necessary for the
lawful issuance and sale of stock under the Plan, the Company shall be relieved
from any liability for failure to issue and sell stock upon exercise of any such
Options unless and until such authority is obtained.
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15. USE OF PROCEEDS
15.1 USE OF PROCEEDS - Proceeds from the sale of Shares made pursuant to the
exercise of an Option shall constitute general funds of the Company and shall be
used for general corporate purposes.
16. NOTICES
16.1 NOTICES - All notices, requests, demands and other communications required
or permitted to be given under this Plan and the Options granted under this Plan
shall be in writing and shall be either served personally on the party to whom
notice is to be given, in which case notice shall be deemed to have been duly
given on the date of such service; telefaxed, in which case notice shall be
deemed to have been duly given on the date the telefax is sent; or mailed to the
party to whom notice is to be given, by registered or certified first class
mail, return receipt requested, postage prepaid, and addressed to the party at
his, her or its most recent known address, in which case such notice shall be
deemed to have been duly given on the tenth postal delivery day following the
date of such mailing.
17. MISCELLANEOUS PROVISIONS
17.1 NO OBLIGATION TO EXERCISE - An Optionee shall be under no obligation to
exercise such Optionee's Option.
17.2 NO OBLIGATION TO RETAIN OPTIONEE - Nothing contained in this Plan shall
obligate the Company or an Affiliate of the Company to retain an Optionee as an
employee, officer, director, or consultant for any period, nor shall this Plan
interfere in any way with the right of the Company or an Affiliate of the
Company to reduce such Optionee's compensation.
17.3 BINDING AGREEMENT - The provisions of this Plan and each Option Agreement
with an Optionee shall be binding upon such Optionee and any Qualified Successor
or Guardian of such Optionee.
17.4 USE OF TERMS - Where the context so requires, references herein to the
singular shall include the plural, and vice versa.
17.5 DELIVERY OF FINANCIAL STATEMENTS - Throughout the term of any Option, the
Company shall deliver to the holder of such Option, not later than one hundred
twenty (120) days after the close of each of the Company's fiscal years during
the Option term, a balance sheet and an income statement. This section shall not
apply when the Company's granting of Options is limited to key employees whose
duties in connection with the Company or an Affiliate of the Company assure them
access to equivalent information.
17.6 HEADINGS - The headings used in this Plan are for convenience of reference
only and shall not in any way affect or be used in interpreting any of the
provisions of this Plan.
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18. SHAREHOLDER APPROVAL OF PLAN
18.1 SHAREHOLDER APPROVAL OF PLAN - This Plan must be approved by a majority of
the votes cast at a meeting of the shareholders of the Company, other than votes
attaching to securities beneficially owned by:
(a) insiders of the Company, meaning directors, officers and greater
than 10% shareholders; and
(b) Associates of persons referred to in subparagraph 18.1(a) above.
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