EXHIBIT 10.51
CYTEL CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
EFFECTIVE AS OF MARCH 17, 1995
AMENDED SEPTEMBER 20, 1996
TABLE OF CONTENTS
PAGE
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1. PURPOSE OF THE PLAN ........................................... 1
2. DEFINITIONS ................................................... 1
2.1 Account ................................................ 1
2.2 Beneficiary ............................................ 1
2.3 Benefit ................................................ 1
2.4 Board .................................................. 1
2.5 Code ................................................... 2
2.6 Company ................................................ 2
2.7 Compensation ........................................... 2
2.8 Compensation Reductions ................................ 2
2.9 Deferred Compensation Agreement ........................ 2
2.10 Director ............................................... 2
2.11 Effective Date ......................................... 2
2.12 Eligible Director ...................................... 2
2.13 Fair Market Value ...................................... 2
2.14 Non-Employee Director .................................. 2
2.15 Participant ............................................ 2
2.16 Plan ................................................... 3
2.17 Plan Year .............................................. 3
2.18 Share .................................................. 3
2.19 Valuation Date ......................................... 3
3. PARTICIPATION ................................................. 3
3.1 Participation of Eligible Directors .................... 3
3.3 Suspended Participation ................................ 4
3.4 Termination of Participation ........................... 4
4. Plan Accounts ................................................. 4
4.1 Accounts ............................................... 4
4.2 Investment of Accounts ................................. 4
4.4 Funds Unsecured ........................................ 5
5. BENEFITS ...................................................... 5
5.1 Retirement Benefits .................................... 5
5.2 Death Benefits ......................................... 6
i.
6. SOURCE OF BENEFITS ............................................ 6
7. ADMINISTRATION ................................................ 6
7.1 General ................................................ 6
7.2 Procedures ............................................. 6
7.3 Claims ................................................. 6
8. AMENDMENT AND TERMINATION ..................................... 7
8.1 Amendment or Termination ............................... 7
8.2 Accrued Benefits ....................................... 7
9. SALE OR MERGER OF THE COMPANY ................................. 8
10. MISCELLANEOUS ................................................. 8
10.1 Benefits Fully Vested .................................. 8
10.2 No Right to Continue as Director ....................... 8
10.3 Successors and Assigns ................................. 8
10.4 Assignment or Alienation ............................... 8
10.5 Entire Agreement ....................................... 8
10.6 Headings ............................................... 9
10.7 Gender and Number ...................................... 9
10.8 Governing Law .......................................... 9
ii.
CYTEL CORPORATION
DIRECTORS' DEFERRED COMPENSATION PLAN
(Effective as of March 17, 1995)
Amended September 20, 1996
CYTEL CORPORATION, a Delaware corporation (the "Company"), hereby adopts
the Cytel Corporation Directors' Deferred Compensation Plan (the "Plan") for the
nonemployee directors of the Company upon the terms and conditions set forth
below.
The benefits payable under the Plan are and at all times will be mere
unsecured contractual rights against the Company payable from the Company's
general assets. It is intended that the Plan shall constitute an unfunded
deferred compensation arrangement for purposes of United States federal income
tax laws, and all documents, agreements or instruments made or given pursuant to
the Plan shall be interpreted so as to carry out this intent.
1. PURPOSE OF THE PLAN
The purpose of this Plan is to provide deferred compensation benefits to
nonemployee directors of the Company, payable by the Company. This Plan will
provide benefits derived from contributions by the Company hereunder of a
nonemployee director's compensation as to which he or she has elected to defer
payment under the Plan.
2. DEFINITIONS
The capitalized terms defined in this Section 2 shall have the meanings
set forth below.
2.1 ACCOUNT. A separate Plan account, which is a bookkeeping record,
established for each Participant to which shall be allocated Compensation
Reductions in accordance with Section 4.1.
2.2 BENEFICIARY. The beneficiary or beneficiaries designated by a
Participant to receive any remaining Benefits due under the Plan after his or
her death. If the Participant has not designated a Beneficiary, the Beneficiary
shall be the Participant's surviving spouse or, if none, the Participant's
estate.
2.3 BENEFIT. The benefit or benefits provided under this Plan, which for
a Participant shall be equal to the account balance of such Participant's
Account.
2.4 BOARD. The Board of Directors of the Company.
1.
2.5 CODE. The Internal Revenue Code of 1986, as it may be amended from
time to time.
2.6 COMPANY. Cytel Corporation, a Delaware corporation, or any successor
corporation.
2.7 COMPENSATION. All the fees (paid in cash or by check) received by a
Participant from the Company for a Plan Year for his or her services as a
Director, including but not limited to, the retainer fee and meeting attendance
fees.
2.8 COMPENSATION REDUCTIONS. The amount of Compensation which a
Participant has elected to defer pursuant to a Deferred Compensation Agreement,
and that the Company and the Participant mutually agree shall be deferred in
accordance with the Plan.
2.9 DEFERRED COMPENSATION AGREEMENT. An agreement by which a Participant
elects to reduce all of his or her Compensation for a Plan Year in order for the
Company to make contributions to the Plan on his or her behalf.
2.10 DIRECTOR. A member of the Board.
2.11 EFFECTIVE DATE. March 17, 1995.
2.12 ELIGIBLE DIRECTOR. A Director who is not an employee of the
Company.
2.13 FAIR MARKET VALUE. The fair market value of a share of Common Stock
of the Company is the closing sales price for such stock as quoted on a national
securities exchange or the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation System on the day of determination,
as reported in The Wall Street Journal or such other source as the Company deems
reliable.
2.14 NON-EMPLOYEE DIRECTOR. A Director who either (i) is not a current
employee or officer of the Company or its parent or subsidiary, does not receive
compensation (directly or indirectly) from the Company or its parent or
subsidiary 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
of 1933, as amended ("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
promulgated under the Exchange Act of 1934, as amended.
2.15 PARTICIPANT. Any Eligible Director who has elected to participate
in the Plan by entering into a Deferred Compensation Agreement.
2.
2.16 PLAN. The Cytel Corporation Directors' Deferred Compensation Plan,
as amended from time to time.
2.17 PLAN YEAR. The calendar year.
2.18 SHARE. A participating interest under the Plan, which shall be
equal to the Fair Market Value of a share of Common Stock of the Company.
2.19 VALUATION DATE. The last day of each calendar quarter, or such
other date as shall be established by the Company.
3. PARTICIPATION
3.1 PARTICIPATION OF ELIGIBLE DIRECTORS.
(a) Each Eligible Director may begin to participate in the Plan
on the Effective Date; provided, however, that such Eligible Director completes
and signs a Deferred Compensation Agreement and returns such Deferred
Compensation Agreement to the designated representative of the Company prior to
the Effective Date or such earlier date established by the Company and announced
to the Eligible Director. Such Deferred Compensation Agreement shall be
effective for the period beginning on the Effective Date and ending on December
31, 1995.
(b) Each Director who becomes an Eligible Director after the
Effective Date may begin to participate in the Plan by completing and signing a
Deferred Compensation Agreement and returning such Deferred Compensation
Agreement to the designated representative of the Company; provided, however,
that such completion and return of the Deferred Compensation Agreement to the
Company occurs within thirty (30) days after the date that the Director becomes
an Eligible Director. Such Deferred Compensation Agreement shall be effective
for the period beginning on the date the Eligible Director completes and returns
the Deferred Compensation Agreement to the Company and ending on the last day of
the Plan Year within which such participation begins.
(c) An Eligible Director who did not become a Participant in
accordance with the terms of paragraph (a) or (b) may participate in the Plan
effective as of the beginning of any Plan Year following the Plan Year in which
he or she becomes an Eligible Director by completing and signing a Deferred
Compensation Agreement and returning such Deferred Compensation Agreement to the
designated representative of the Company prior to the beginning of the Plan Year
(or such earlier date established by the Company and announced to the Eligible
Director) for which deferral of Compensation is intended to commence. Such
Deferred Compensation Agreement shall be effective for that Plan Year.
(d) If a Participant wishes to defer Compensation under the terms
of the Plan for any Plan Year subsequent to the first Plan Year in which the
Participant began to participate in the Plan, such Participant must complete and
sign a new Deferred Compensation Agreement
3.
and return such Deferred Compensation Agreement to the designated representative
of the Company prior to the beginning of the Plan Year (or such earlier date
established by the Company and announced to the Participant) for which such
election is to be effective. Such Deferred Compensation Agreement shall be
effective for that Plan Year.
3.2 IRREVOCABILITY OF PARTICIPATION DURING THE PLAN YEAR. A Participant
may not terminate his or her Deferred Compensation Agreement with respect to a
Plan Year on or after the first day of such Plan Year.
3.3 SUSPENDED PARTICIPATION. A Participant who ceases to be an Eligible
Director, but who continues to be a Director, shall become a suspended
Participant in the Plan as of the date on which the Participant ceases to be an
Eligible Director. During the period of suspension, no Compensation Reductions
shall be allocated to such suspended Participant's Account in accordance with
Section 4. However, the Participant shall be entitled to benefit in accordance
with the other provisions of the Plan throughout the period during which he or
she is a suspended Participant. A suspended Participant shall cease to be a
suspended Participant as of the date he or she again becomes an Eligible
Director. If such suspended Participant again becomes an Eligible Director in
the same Plan Year in which a Deferred Compensation Agreement was previously in
effect, such Deferred Compensation Agreement shall automatically once again
become effective for the remainder of such Plan Year. If such suspended
Participant again becomes an Eligible Director in a Plan Year following the last
Plan Year for which a Deferred Compensation Agreement was in effect, such
suspended Participant may elect to participate in the Plan by following the
procedures specified in Section 3.1(b).
3.4 TERMINATION OF PARTICIPATION. A Participant shall cease to be a
Participant as of the date he or she ceases serving as a Director.
4. PLAN ACCOUNTS
4.1 ACCOUNTS. The Company shall maintain or cause to be maintained for
each Participant an Account with respect to which the Company shall allocate
amounts equal to the Participant's Compensation Reductions for each Plan Year,
effective as of the date such Compensation Reductions would have been paid to
the Participant as Compensation in the absence of a Deferred Compensation
Agreement.
4.2 INVESTMENT OF ACCOUNTS.
(a) Each Compensation Reduction allocated to a Participant's
Account shall be converted into that number of Shares that equal the amount of
such Compensation Reduction divided by the Fair Market Value of the Common Stock
of the Company as of the date such Compensation Reduction would have been paid
to the Participant as Compensation in the absence of a Deferred Compensation
Agreement. The calculation of the number of Shares need not be rounded to the
nearest whole Share, so that a fraction of a Share (calculated to the nearest
one-hundredth of a Share) may be allocated to a Participant's Account.
4.
(b) In the event any dividends or distributions are made with
respect to the Common Stock of the Company, the Company shall allocate an amount
to the Participant's Account that is equal to the amount of such dividends or
distributions that would have been made with respect to the Shares allocated to
a Participant's Account if they were shares of the Common Stock of the Company.
Such dividend/distribution allocations shall be converted into that number of
whole and/or fractional Shares that equal the amount of such allocation divided
by the Fair Market Value of the Common Stock of the Company as of the date such
dividends or distributions are made with respect to the Common Stock of the
Company to the Company's stockholders of record.
4.3 VALUE OF ACCOUNTS. The value of a Participant's Account as of any
Valuation Date shall be equal to the number of Shares allocated to a
Participant's Account multiplied by the Fair Market Value of one share of the
Common Stock of the Company.
4.4 FUNDS UNSECURED. Notwithstanding any other provisions of this Plan,
all Benefits payable under the Plan are subject to the claims of the general
creditors of the Company. No trust shall be established to hold any assets which
may be set aside by the Company to pay the Benefits under the Plan and the
Company shall be under no obligation to set aside any amounts to pay Benefits.
The maintenance of separate Accounts by the Company as provided herein shall
neither require nor be considered a segregation of any funds or property from
the Company's general assets. Participants shall have no preferred claim on or
beneficial ownership interest in any assets of the Company prior to the time
actual payments of Benefits are received, and all rights of the Participants to
Benefits are mere unsecured contractual rights against the Company.
5. BENEFITS
5.1 RETIREMENT BENEFITS.
(a) When a Participant ceases serving as a Director, the
Participant shall be entitled to receive the value of his or her Account
determined as of the Valuation Date coinciding with or next preceding the date
of the distribution, which shall be paid out by the Company in cash (or by
check) [or in the form of the Company's Common Stock] either in a single lump
sum payment or in equal annual installments (in terms of the number of Shares
allocated to a Participant's Account), as determined by the Company in its sole
discretion.
(b) If the Company determines that the distribution of a
Participant's Account shall be in installment payments, the number of
installment payments shall be the lesser of (i) ten (10) or (ii) two (2) times
the number of Plan Years the Participant entered into a Deferred Compensation
Agreement with the Company under the Plan.
(c) If a Participant ceases serving as a Director on or before
June 30 of any Plan Year, the lump sum payment or the first installment payment
shall be paid by the Company no later than the last day of such Plan Year. If
the Participant ceases serving as a Director on or after July 1 of any Plan
Year, the lump sum payment or the first installment payment shall
5.
be paid by the Company no later than January 31 of the following Plan Year. If
the payment of a Participant's Account is made in installment payments, the
second installment payment shall be paid during January of the Plan Year
following the Plan Year in which the first installment payment was paid and all
remaining installment payments shall be paid annually in the month of January.
The value of an installment shall be determined by multiplying the number of
Shares to be paid out in such installment by the Fair Market Value of one share
of the Company's Common Stock on the last trading day immediately preceding such
installment payment.
5.2 DEATH BENEFITS. In the event the Participant dies prior to receiving
all of his or her Benefits, his or her remaining Benefits shall be paid by the
Company in cash (or by check) [or in the form of the Company's Common Stock, as
determined by the Company in its sole discretion,] to the Participant's
Beneficiary in a lump sum payment as soon as administratively feasible after the
Participant's death.
6. SOURCE OF BENEFITS
Benefits payable under this Plan shall be paid out of the Company's
general assets and allocated as payments out of the appropriate Participant's
Account under the Plan.
7. ADMINISTRATION
7.1 GENERAL. This Plan shall be administered by the Board of Directors
of the Company, unless and until the Board delegates administration to a
committee composed of not fewer than two members of the Board. All members of
such committee shall be Non-Employee Directors, unless the Board expressly
declares otherwise. The Board or, if applicable, such committee (the
"Administrator") shall exercise all administrative powers and duties under the
Plan in accordance with the terms and purposes of the Plan. The Administrator
shall determine the amount of the Benefits due to each Participant or
Beneficiary from this Plan and shall cause them to be paid accordingly in
accordance with the Plan.
7.2 PROCEDURES. The Administrator may adopt such rules and regulations
not inconsistent with the provisions of the Plan as deemed necessary or
appropriate for the proper administration of the Plan and shall have the
authority, in the Administrator's sole discretion, to interpret and construe any
provision of the Plan. To the extent permitted by law, (i) all such rules,
regulations, interpretations and constructions shall be final and binding on the
Company and all Participants and their legal representatives, beneficiaries,
successors, and assigns, subject to review as provided in Section 7.3, (ii) the
Administrator shall not be subject to any individual liability with respect to
the Plan and (iii) the Administrator shall be indemnified by the Company for any
action or omission made with respect to the Plan which does not demonstrate bad
faith, willful misconduct, criminal act, or gross negligence.
7.3 CLAIMS. Any denial by the Administrator of a claim for benefits
under the Plan by a Participant or Beneficiary shall be stated in writing by the
Administrator and delivered or
6.
mailed to the Participant or Beneficiary. Such notice shall set forth the
specific reasons for the denial, written to the best of the Administrator's
ability in a manner that may be understood without legal counsel. In addition,
the Administrator shall afford a reasonable opportunity to any Participant or
Beneficiary whose claim for benefits has been denied for a review of the
decision denying the claim. In the event of further disagreement following any
further decision of the Administrator after such a review, either the
Participant or the Administrator may appeal to the full Board, which decision
shall be final.
8. AMENDMENT AND TERMINATION
8.1 AMENDMENT OR TERMINATION.
(a) The Company shall have the absolute right to amend the Plan
in any respect to the extent necessary to obtain favorable rulings from the
Internal Revenue Service as to the status of the Plan as an unfunded deferred
compensation arrangement for United States federal income tax purposes, provided
that an application seeking such rulings is submitted to the Internal Revenue
Service within one year after the Effective Date. If such rulings are sought
within one year after the Effective Date but not obtained ultimately, the
Company may elect to terminate the Plan within thirty (30) days after it becomes
apparent that favorable rulings will not be obtained. In this event, the Company
shall notify all Participants of its election to terminate the Plan, and
Participants shall be entitled to receive the amounts in their respective
Accounts, if any.
(b) While the Company intends and expects the Plan to continue to
fulfill its purposes and serve the best interests of the Company in its present
form, the Company reserves the right to amend or terminate the Plan at any time,
subject, except where Section 8.1 (a) applies, to the provisions of Section 8.2
and Section 9.
8.2 ACCRUED BENEFITS.
(a) Except where Section 8.1(a) applies, no termination of the
Plan or any amendments thereto which affect Benefits under the Plan shall,
without the written consent of a Participant, eliminate or reduce any Benefit of
the Participant under the Plan to which, as of the date of such termination or
amendment, such Participant would be entitled under the provisions of Section 5
had he or she ceased serving as a Director immediately prior to such date.
(b) In the event of any amendment of the Plan which affects the
amount of Benefits payable under the Plan, Participants shall be entitled to
receive the greater of (i) the Benefit provided under the Plan as amended, or
(ii) the Benefit described above in Section 8.2(a).
(c) Upon termination of the Plan, all Deferred Compensation
Agreements shall terminate immediately and all Participants' full Compensation
on a non-deferred basis will be
7.
restored. Each and every Participant shall receive payment of the value of his
or her Account in accordance with the provisions of Section 5 as if the
Participants had ceased serving as Directors on the date of the Plan's
termination.
9. SALE OR MERGER OF THE COMPANY
In the event of a sale, merger, reorganization, consolidation or other
similar transaction (a "Change of Ownership Transaction") involving the Company,
no Participant in the Plan will be considered to have ceased serving as a
Director for purposes of the Plan, nor will any such Participant be entitled to
receive Benefits pursuant to Section 5, until such Participant actually ceases
serving as Director of the Company or any acquiring or successor company or
entity, unless payment of Benefits is otherwise directed by the Administrator of
the Plan. In any event, no Change of Ownership Transaction involving the Company
shall, without the written consent of a Participant, eliminate or reduce any
Benefit of the Participant under the Plan to which, as of the date of such
Change of Ownership Transaction, such Participant would be entitled under the
provisions of Section 5 had he or she ceased serving as a Director immediately
prior to such date.
10. MISCELLANEOUS
10.1 BENEFITS FULLY VESTED. All Benefits under the Plan, to the extent
accrued, shall be fully vested at ail times hereunder.
10.2 NO RIGHT TO CONTINUE AS DIRECTOR. Nothing contained in this Plan or
in any agreement or instrument executed pursuant to the Plan shall be construed
as conferring upon any Participant the right to continue serving as a Director.
10.3 SUCCESSORS AND ASSIGNS. This Plan shall be binding upon the Company
and its successors and assigns as well as each Participant and his or her
representatives, successors, heirs, assigns, and Beneficiary.
10.4 ASSIGNMENT OR ALIENATION. To the extent permitted by law, benefits
of Participants under this Plan may not be anticipated, assigned (either by law
or in equity), transferred, alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process.
10.5 ENTIRE AGREEMENT. The Plan and a Participant's Deferred
Compensation Agreement, and any subsequently adopted amendment to either of
these documents, shall constitute the total agreement or contract between the
Company and such Participant regarding the Plan. No oral statement regarding the
Plan may be relied upon by the Participant. If there are any conflicts between
the terms of the Plan and a Participant's Deferred Compensation Agreement, the
terms of the Plan shall control.
8.
10.6 HEADINGS. The headings herein are for reference only. In the event
of a conflict between a heading and content of a Section of this Plan, the
content of the Section shall control.
10.7 GENDER AND NUMBER. Whenever used herein, the masculine shall be
interpreted to include the feminine and neuter, the neuter to include the
masculine and feminine, the singular to include the plural and the plural to
include the singular, unless the context requires otherwise.
10.8 GOVERNING LAW. The place of administration of this Plan shall
conclusively be deemed to be within the State of California, and the Plan shall
be governed by and in all respects construed in accordance with the substantive
laws of the State of California, except where such laws are superseded by
federal laws.
IN WITNESS WHEREOF, the Company has executed this Plan as of
this____________ day of January, 1995.
CYTEL CORPORATION
By:
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Title:
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9.