EXHIBIT 10.19
LA JOLLA PHARMACEUTICAL COMPANY
1994 STOCK INCENTIVE PLAN
ARTICLE I
GENERAL PROVISIONS
1.01 PURPOSE OF THE PLAN.
La Jolla Pharmaceutical Company (the "COMPANY"), by action of its
Board of Directors and with the consent of its stockholders, has adopted this La
Jolla Pharmaceutical Company Stock Incentive Plan (the "PLAN") effective as of
June 10, 1994 to advance the interests of the Company and its stockholders by
(a) providing Eligible Persons with financial incentives to promote the success
of the Company's business objectives, and to increase their proprietary interest
in the success of the Company, and (b) giving the Company a means to attract and
retain directors of appropriate experience and stature.
1.02 DEFINITIONS.
Terms used herein and not otherwise defined shall have the
meanings set forth below:
(a) "AWARD" means an Incentive Award or a Nonemployee Director's
Option.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
Where the context so requires, a reference to a particular Code section shall
also refer to any successor provision of the Code to such section.
(d) "COMMISSION" means the Securities and Exchange Commission.
(e) "COMMITTEE" means the committee appointed by the Board to
administer the Plan. The Committee shall be composed entirely of members who
meet the requirements of Section 1.04(a).
(f) "COMMON STOCK" means the common stock of the Company, $0.01
par value.
(g) "DIVIDEND EQUIVALENT" means a right granted by the Company
under Section 2.07 to a holder of a Stock Option, Stock Appreciation Right, or
other Incentive Award denominated in shares of Common Stock to receive from the
Company during the Applicable Dividend Period (as defined in Section 2.07)
payments equivalent to the amount of dividends payable to holders of the number
of shares of Common Stock underlying such Stock Option, Stock Appreciation
Right, or other Incentive Award.
(h) "ELIGIBLE PERSON" means any director, officer or key
employee, consultant, or advisor of the Company (as determined by the Committee)
including Nonemployee Directors and members of the Committee.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended. Where the context so requires, a reference to a particular section of
the Exchange Act or rule thereunder shall also refer to any successor provision
to such section or rule.
(j) "FAIR MARKET VALUE" of capital stock of the Company shall be
determined with reference to the closing price of such stock on the day in
question (or, if such day is not a trading day in the U.S. securities markets,
on the nearest preceding trading day), as reported with respect to the principal
market or trading system on which such stock is then traded; or, if no such
closing prices are reported, the mean between the high bid and low asked prices
that day on the principal market or national quotation system on which such
shares are then quoted; provided, however, that when appropriate, the Committee
in determining Fair Market Value of capital stock of the Company may take into
account such other factors as may be deemed appropriate under the circumstances.
Notwithstanding the foregoing, the Fair Market Value of capital stock for
purposes of grants of Incentive Stock Options shall be determined in compliance
with applicable provisions of the Code. The Fair Market Value of rights or
property other than capital stock of the Company means the fair market value
thereof as determined by the Committee on the basis of such factors as it may
deem appropriate.
(k) "INCENTIVE AWARD" means any Stock Option, Restricted Stock,
Stock Appreciation Right, Stock Payment, Performance Award or Dividend
Equivalent granted or sold to an Eligible Person under this Plan, but not a
Nonemployee Director's Option.
(l) "INCENTIVE STOCK OPTION" means a Stock Option that qualifies
as an incentive stock option under Section 422 (or any successor section) of the
Code and the regulations thereunder.
(m) "JUST CAUSE DISMISSAL" shall mean a termination of a
Recipient's employment for any of the following reasons: (i) the Recipient
violates any reasonable rule or regulation of the Board or the Recipient's
superiors or the Chief Executive Officer or President of the Company that
results in damage to the Company or which, after written notice to do so, the
Recipient fails to correct within a reasonable time; (ii) any willful misconduct
or gross negligence by the Recipient in the responsibilities assigned to him or
her; (iii) any willful failure to perform his or her job as required to meet
Company objectives; (iv) any wrongful conduct of a Recipient which has an
adverse impact on the Company or which constitutes a misappropriation of Company
assets; (v) the Recipient's performing services for any other person or entity
which competes with the Company while he or she is employed by the Company,
without the written approval of the Chief Executive Officer or President of the
Company; or (vi) any other conduct that the Board or Committee determines
constitutes Just Cause for Dismissal.
(n) "NONEMPLOYEE DIRECTOR" means a director of the Company who
qualifies as a "Nonemployee Director" under Rule 16b-3 under the Exchange Act.
(o) "NONEMPLOYEE DIRECTOR'S OPTION" means a Stock Option granted
to a Nonemployee Director pursuant to Article III of the Plan.
(p) "NONQUALIFIED STOCK OPTION" means a Stock Option other than
an Incentive Stock Option.
(q) "OPTION" or "STOCK OPTION" means a right to purchase stock of
the Company granted under this Plan, and can be an Incentive Stock Option or a
Nonqualified Stock Option.
(r) "PAYMENT EVENT" means the event or events giving rise to the
right to payment of a Performance Award.
(s) "PERFORMANCE AWARD" means an award, payable in cash, Common
Stock or a combination thereof, which vests and becomes payable over a period of
time upon attainment of performance criteria established in connection with the
grant of the award.
(t) "PERFORMANCE-BASED COMPENSATION" means performance-based
compensation as described in Section 162(m) of the Code and the regulations
thereunder. If the amount of compensation an Eligible Person will receive under
any Incentive Award is not based solely on an increase in the value of Common
Stock after the date of grant or award, the Committee, in order to qualify
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an Incentive Award as performance-based compensation under Section 162(m) of the
Code and the regulations thereunder, can condition the grant, award, vesting, or
exercisability of such an award on the attainment of a preestablished, objective
performance goal. For this purpose, a preestablished, objective performance goal
may include one or more of the following performance criteria: (i) cash flow,
(ii) earnings per share (including earnings before interest, taxes, and
amortization), (iii) return on equity, (iv) total stockholder return, (v) return
on capital, (vi) return on assets or net assets, (vii) income or net income,
(viii) operating margin, (ix) return on operating revenue, (x) attainment of
stated goals related to the Company's research and development or clinical
trials programs, (xi) attainment of stated goals related to the Company's
capitalization, costs, financial condition, or results of operations, and (xii)
any other similar performance criteria contemplated by the regulations under
Section 162(m).
(u) "PERMANENT DISABILITY" shall mean that the Recipient becomes
physically or mentally incapacitated or disabled so that he or she is unable to
perform substantially the same services as he or she performed prior to
incurring such incapacity or disability (the Company, at its option and expense,
being entitled to retain a physician to confirm the existence of such incapacity
or disability, and the determination of such physician to be binding upon the
Company and the Recipient), and such incapacity or disability continues for a
period of three consecutive months or six months in any twelve-month period or
such other period(s) as may be determined by the Committee with respect to any
Option.
(v) "PURCHASE PRICE" means the purchase price (if any) to be paid
by a Recipient for Restricted Stock as determined by the Committee (which price
shall be at least equal to the minimum price required under applicable laws and
regulations for the issuance of Common Stock which is nontransferable and
subject to a substantial risk of forfeiture until specific conditions are met).
(w) "RECIPIENT" means a person who has received an Award
hereunder.
(x) "RESTRICTED STOCK" means Common Stock that is the subject of
an award made under Section 2.04 and which is nontransferable and subject to a
substantial risk of forfeiture until specific conditions are met as set forth in
this Plan and in any statement evidencing the grant of such Incentive Award.
(y) "SECURITIES ACT" means the Securities Act of 1933, as
amended.
(z) "STOCK APPRECIATION RIGHT" or "SAR" means a right granted
under Section 2.05 to receive a payment that is measured with reference to the
amount by which the Fair Market Value of a specified number of shares of Common
Stock appreciates from a specified date, such as the date of grant of the SAR,
to the date of exercise.
(aa) "STOCK PAYMENT" means a payment in shares of the Company's
Common Stock to replace all or any portion of the compensation (other than base
salary) that would otherwise become payable to a Recipient.
1.03 COMMON STOCK SUBJECT TO THE PLAN.
(a) Number of Shares. Subject to Section 1.05(b), the maximum
number of shares of Common Stock that may be issued pursuant to Awards under the
Plan shall be 7,100,000.
(b) Source of Shares. The Common Stock to be issued under this
Plan will be made available, at the discretion of the Board or the Committee,
either from authorized but unissued shares of Common Stock or from previously
issued shares of Common Stock reacquired by the Company, including shares
purchased on the open market.
(c) Availability of Unused Shares. Shares of Common Stock subject
to unexercised portions of any Award granted under this Plan that expire,
terminate or are cancelled, and shares of Common Stock issued pursuant to an
Award under this Plan that are reacquired by the Company
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pursuant to the terms of the Award under which such shares were issued, will
again become available for the grant of further Awards under this Plan.
(d) Grant Limits. Notwithstanding any other provision of this
Plan, no Eligible Person shall be granted Awards with respect to more than
600,000 shares of Common Stock in any one calendar year; provided, however, that
this limitation shall not apply if it is not required in order for the
compensation attributable to Incentive Awards hereunder to qualify as
Performance-Based Compensation. The limitation set forth in this Section 1.03(d)
shall be subject to adjustment as provided in Section 1.05(b), but only to the
extent such adjustment would not affect the status of compensation attributable
to Awards hereunder as Performance-Based Compensation.
1.04 ADMINISTRATION OF THE PLAN.
(a) The Committee. The Plan will be administered by the
Committee, which will consist of two or more members of the Board each of whom
must be a Nonemployee Director; provided, however, that the number of members of
the Committee may be reduced or increased from time to time by the Board. In
addition, if Awards are to be made to persons subject to Section 162(m) of the
Code and such awards are intended to constitute Performance-Based Compensation,
then each of the Committee's members must also be an "outside director," as such
term is defined in the regulations under Section 162(m) of the Code.
Notwithstanding the foregoing or any provision of the Plan to the contrary, the
Board may, in lieu of the Committee, exercise any authority granted to the
Committee pursuant to the provisions of the Plan.
(b) Authority of the Committee. The Committee has authority in
its discretion to select the Eligible Persons to whom, and the time or times at
which, Incentive Awards shall be granted or sold, the nature of each Incentive
Award, the number of shares of Common Stock or the number of rights that make up
or underlie each Incentive Award, the period for the exercise of each Incentive
Award, the performance criteria (which need not be identical) utilized to
measure the value of Performance Awards, and such other terms and conditions
applicable to each individual Incentive Award as the Committee shall determine.
The Committee may grant at any time new Incentive Awards to an Eligible Person
who has previously received Incentive Awards or other grants (including other
stock options) whether such prior Incentive Awards or such other grants are
still outstanding, have previously been exercised in whole or in part, or are
cancelled in connection with the issuance of new Incentive Awards. The Committee
may grant Incentive Awards singly or in combination or in tandem with other
Incentive Awards as it determines in its discretion. The purchase price or
initial value and any and all other terms and conditions of the Incentive Awards
may be established by the Committee without regard to existing Incentive Awards
or other grants. Further, the Committee may, with the consent of an Eligible
Person, amend in a manner not inconsistent with the Plan the terms of any
existing Incentive Award previously granted to such Eligible Person, provided
that neither the Board nor the Committee shall reduce the Exercise Price of any
outstanding Option without stockholder approval.
(c) Plan Interpretation. Subject to the express provisions of the
Plan, the Committee has the authority to interpret the Plan and any agreements
defining the rights and obligations of the Company and Recipients, to determine
the terms and conditions of Incentive Awards and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee has authority to prescribe, amend and rescind rules and regulations
relating to the Plan. All interpretations, determinations and actions by the
Committee shall be final, conclusive and binding upon all parties. Any action of
the Committee with respect to the administration of the Plan shall be taken
pursuant to a majority vote or by the unanimous written consent of its members.
(d) Special Rules Regarding Article III. Notwithstanding anything
herein to the contrary, the Committee shall have no authority or discretion as
to the selection of persons eligible to receive Nonemployee Directors' Options
granted under the Plan, the number of shares covered by Nonemployee Directors'
Options granted under the Plan, the timing of such grants, or the exercise price
of Nonemployee Directors' Options granted under the Plan, which matters are
specifically governed by the provisions of the Plan.
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(e) No Liability. No member of the Board or the Committee or any
designee thereof will be liable for any action or determination made in good
faith by the Board or the Committee with respect to the Plan or any transaction
arising under the Plan.
1.05 OTHER PROVISIONS.
(a) Documentation. Each Award granted under the Plan shall be
evidenced by an award agreement duly executed on behalf of the Company and by
the Recipient or, in the Committee's discretion, a confirming memorandum issued
by the Company to the Recipient (in either case an "AWARD DOCUMENT") evidencing
the Award and setting forth such terms and conditions applicable to the Award as
the Committee may in its discretion determine consistent with the Plan, provided
that the Committee shall exercise no discretion with respect to Nonemployee
Directors' Options, which shall reflect only the terms of the Award as set forth
in Article III and certain administrative matters dictated by the Plan. Award
Documents shall comply with and be subject to the terms and conditions of the
Plan. A copy of the Plan shall be delivered to each Award Recipient together
with the Award Document, and shall constitute a part thereof. In case of any
conflict between the Plan and any Award Document, the Plan shall control.
Various Award Documents covering the same types of Awards may but need not be
identical.
(b) Adjustment Provisions.
If (1) the outstanding shares of Common Stock of the Company are
increased, decreased or exchanged for a different number or kind of shares or
other securities, or if additional shares or new or different shares or other
securities are distributed in respect of such shares of Common Stock (or any
stock or securities received with respect to such Common Stock), through merger,
consolidation, sale or exchange of all or substantially all of the properties of
the Company, reorganization, recapitalization, reclassification, stock dividend,
stock split, reverse stock split, spin-off or other distribution with respect to
such shares of Common Stock (or any stock or securities received with respect to
such Common Stock), or (2) the value of the outstanding shares of Common Stock
of the Company is reduced by reason of an extraordinary cash dividend, an
appropriate and proportionate adjustment may be made in (x) the maximum number
and kind of shares subject to the Plan as provided in Section 1.03, (y) the
number and kind of shares or other securities subject to then outstanding
Awards, and (z) the price for each share or other unit of any other securities
subject to then outstanding Awards. No fractional interests will be issued under
the Plan resulting from any such adjustments.
(c) Continuation of Employment.
(i) Nothing contained in this Plan (or in Award Documents
or in any other documents related to this Plan or to Awards granted hereunder)
shall confer upon any Eligible Person or Recipient any right to continue in the
employ of the Company or constitute any contract or agreement of employment or
engagement, or interfere in any way with the right of the Company to reduce such
person's compensation or other benefits or to terminate the employment of such
Eligible Person or Recipient, with or without cause. Except as expressly
provided in the Plan or in any statement evidencing the grant of an Award
pursuant to the Plan, the Company shall have the right to deal with each
Recipient in the same manner as if the Plan and any such statement evidencing
the grant of an Award pursuant to the Plan did not exist, including, without
limitation, with respect to all matters related to the hiring, discharge,
compensation and conditions of the employment or engagement of the Recipient.
(ii) Any question(s) as to whether and when there has been
a termination of a Recipient's employment, the reason (if any) for such
termination, and/or the consequences thereof under the terms of the Plan or any
statement evidencing the grant of an Award pursuant to the Plan shall be
determined by the Committee and the Committee's determination thereof shall be
final and binding.
(d) Restrictions. All Awards granted under the Plan shall be
subject to the requirement that, if at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of the shares
subject to Awards granted under the Plan upon any securities exchange or under
any state or federal law, or the consent or approval of any government
regulatory body, is
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necessary or desirable as a condition of, or in connection with, the granting of
such an Award or the issuance, if any, or purchase of shares in connection
therewith, such Award may not be exercised in whole or in part unless such
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Company.
Unless the shares of stock to be issued upon exercise of an Award granted under
the Plan have been effectively registered under the Securities Act, the Company
shall be under no obligation to issue any shares of stock covered by any Award
unless the person who exercises such Award, in whole or in part, shall give a
written representation and undertaking to the Company satisfactory in form and
scope to counsel to the Company and upon which, in the opinion of such counsel,
the Company may reasonably rely, that he or she is acquiring the shares of stock
issued to him or her pursuant to such exercise of the Award for his or her own
account as an investment and not with a view to, or for sale in connection with,
the distribution of any such shares of stock, and that he or she will make no
transfer of the same except in compliance with any rules and regulations in
force at the time of such transfer under the Securities Act, or any other
applicable law, and that if shares of stock are issued without such
registration, a legend to this effect may be endorsed upon the securities so
issued.
(e) Additional Conditions. Any Incentive Award may also be
subject to such other provisions (whether or not applicable to any other Award
or Recipient) as the Committee determines appropriate including, without
limitation, provisions to assist the Recipient in financing the purchase of
Common Stock through the exercise of Stock Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of Common
Stock acquired under any form of benefit, provisions giving the Company the
right to repurchase shares of Common Stock acquired under any form of benefit in
the event the Recipient elects to dispose of such shares, and provisions to
comply with federal and state securities laws and federal and state income tax
withholding requirements.
(f) Privileges of Stock Ownership. Except as otherwise set forth
herein, a Recipient or a permitted transferee of an Award shall have no rights
as a shareholder with respect to any shares issuable or issued in connection
with the Award until the date of the receipt by the Company of all amounts
payable in connection with exercise of the Award and performance by the
Recipient of all obligations thereunder. Status as an Eligible Person shall not
be construed as a commitment that any Award will be granted under this Plan to
an Eligible Person or to Eligible Persons generally. No person shall have any
right, title or interest in any fund or in any specific asset (including shares
of capital stock) of the Company by reason of any Award granted hereunder.
Neither this Plan (or any documents related hereto) nor any action taken
pursuant hereto shall be construed to create a trust of any kind or a fiduciary
relationship between the Company and any person. To the extent that any person
acquires a right to receive an Award hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Company.
(g) Amendment and Termination of Plan: Amendment of Incentive
Awards.
(i) The Board or the Committee may, insofar as permitted
by law, from time to time suspend or discontinue the Plan or revise or amend it
in any respect except that no such amendment shall alter or impair or diminish
any rights or obligations under any Award theretofore granted under the Plan
without the consent of the person to whom such Award was granted , and except
that such amendments shall be subject to stockholder approval to the extent (A)
required to comply with the listing requirements imposed by any exchange or
trading system upon which the Company's securities trade or applicable
provisions of or rules under the Code, or (B) the Board determines in good faith
that such amendments are material to stockholders.
(ii) The Committee may from time to time, with the consent
of a Recipient, make such modifications in the terms and conditions of an
Incentive Award as it deems advisable, including to accelerate or extend the
vesting or exercise period of any Incentive Award, provided that performance
conditions to vesting of Restricted Stock shall not be waived, and provided
further that neither the Board nor the Committee shall reduce the Exercise Price
of any outstanding Option without stockholder approval.
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(iii) Except as otherwise provided in this Plan or in the
applicable Award Document, no amendment, suspension or termination of the Plan
will, without the consent of the Recipient, alter, terminate, impair or
adversely affect any right or obligation under any Award previously granted
under the Plan.
(h) Nonassignability. No Award granted under the Plan shall be
assignable or transferable except (i) by will or by the laws of descent and
distribution, or (ii) subject to the final sentence of this subsection (h), upon
dissolution of marriage pursuant to a qualified domestic relations order or, in
the discretion of the Committee and under circumstances that would not adversely
affect the interests of the Company. During the lifetime of a Recipient, an
Award granted to him or her shall be exercisable only by the Recipient (or the
Recipient's permitted transferee) or his or her guardian or legal
representative. Notwithstanding the foregoing, Incentive Stock Options (or other
Awards subject to transfer restrictions under the Code) may not be assigned or
transferred in violation of Section 422(b)(5) of the Code (or any comparable or
successor provision) or the Treasury Regulations thereunder, and nothing herein
is intended to allow such assignment or transfer.
(i) Other Compensation Plans. The adoption of the Plan shall not
affect any other stock option, incentive or other compensation plans in effect
for the Company, and the Plan shall not preclude the Company from establishing
any other forms of incentive or other compensation for employees, directors, or
advisors of the Company.
(j) Plan Binding on Successors. The Plan shall be binding upon
the successors and assigns of the Company.
(k) Participation By Foreign Employees. Notwithstanding anything
to the contrary herein, the Committee may, in order to fulfill the purposes of
the Plan, modify grants of Incentive Awards to Recipients who are foreign
nationals or employed outside of the United States to recognize differences in
applicable law, tax policy or local custom.
(l) Effective Date And Duration of Plan. Awards may be granted
under the Plan until the tenth anniversary of the effective date of the Plan,
whereupon the Plan shall terminate. No Awards may be granted during any
suspension of this Plan or after its termination. Notwithstanding the foregoing,
each Award properly granted under the Plan shall remain in effect until such
Award has been exercised or terminated in accordance with its terms and the
terms of the Plan.
ARTICLE II
INCENTIVE AWARDS
2.01 GRANTS OF INCENTIVE AWARDS. Subject to the express provisions of
this Plan, the Committee may from time to time in its discretion select from the
class of Eligible Persons those individuals to whom Incentive Awards may be
granted pursuant to its authority as set forth in Section 1.04(b). Each
Incentive Award shall be subject to the terms and conditions of the Plan and
such other terms and conditions established by the Committee as are not
inconsistent with the purpose and provisions of the Plan. One or more Incentive
Awards may be granted to any Eligible Person.
2.02 STOCK OPTIONS.
(a) Nature of Stock Options. Stock Options may be Incentive Stock
Options or Nonqualified Stock Options.
(b) Option Price. The exercise price per share for each Option
(other than a Nonemployee Director's Option) (the "EXERCISE PRICE") shall be
determined by the Committee at the date such Option is granted and shall not be
less than the Fair Market Value of a share of Common Stock (or other securities,
as applicable) at the time of grant, except that the Exercise Price for a
Nonqualified Stock Option may reflect a discount of up to 15% of the Fair Market
Value at the time of grant if the
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amount of such discount is expressly in lieu of a reasonable amount of salary or
cash bonus. Notwithstanding the foregoing, however, in no event shall the
exercise price be less than the par value of the shares of Common Stock subject
to the Option, and the exercise price of an Incentive Stock Option shall be not
less than such amount as is necessary to enable such Option to be treated as an
"incentive stock option" within the meaning of Section 422 of the Code.
(c) Option Period and Vesting. Options (other than Nonemployee
Directors' Options) hereunder shall vest and may be exercised as determined by
the Committee, except that exercise of such Options after termination of the
Recipient's employment shall be subject to Section 2.02(g). Each Option granted
hereunder (other than a Nonemployee Directors Option) and all rights or
obligations thereunder shall expire on such date as shall be determined by the
Committee, but not later than ten years after the date the Option is granted and
shall be subject to earlier termination as herein provided. The Committee may in
its discretion at any time and from time to time after the grant of an Option
(other than a Nonemployee Director's Option) accelerate vesting of such Option
in whole or part by increasing the number of shares then purchasable, provided
that the total number of shares subject to such Option may not be increased.
(d) Exercise of Options. Except as otherwise provided herein, an
Option may become exercisable, in whole or in part, on the date or dates
specified by the Committee (or, in the case of Nonemployee Directors' Options,
the Plan) at the time the Option is granted and thereafter shall remain
exercisable until the expiration or earlier termination of the Option. No Option
shall be exercisable except in respect of whole shares, and fractional share
interests shall be disregarded. Not less than 100 shares of stock (or such other
amount as is set forth in the applicable option agreement) may be purchased at
one time unless the number purchased is the total number at the time available
for purchase under the terms of the Option. An Option shall be deemed to be
exercised when the Secretary of the Company receives written notice of such
exercise from the Recipient, together with payment of the exercise price made in
accordance with Section 2.02(e). Upon proper exercise, the Company shall deliver
to the person entitled to exercise the Option or his or her designee a
certificate or certificates for the shares of stock for which the Option is
exercised. Notwithstanding any other provision of this Plan, the Committee may
impose, by rule and in option agreements, such conditions upon the exercise of
Options (including, without limitation, conditions limiting the time of exercise
to specified periods) as may be required to satisfy applicable regulatory
requirements, including without limitation Rule 16b-3 (or any successor rule)
under the Exchange Act and any applicable section of or rule under the Internal
Revenue Code.
(e) Exercise Price. The Exercise Price shall be payable upon the
exercise of an Option by delivery of legal tender of the United States or
payment of such other consideration as the Committee may from time to time deem
acceptable in any particular instance, including without limitation delivery of
capital stock of the Company (delivered by or on behalf of the person exercising
the Option or retained by the Company from the Common Stock otherwise issuable
upon exercise and valued at Fair Market Value as of the exercise date) or
surrender of other Awards previously granted to the Recipient exercising the
Option; provided, however, that the Committee may, in the exercise of its
discretion, (i) allow exercise of an Option in a broker-assisted or similar
transaction in which the Exercise Price is not received by the Company until
immediately after exercise, and/or (ii) allow the Company to loan the Exercise
Price to the person entitled to exercise the Option, if the exercise will be
followed by an immediate sale of some or all of the underlying shares and a
portion of the sales proceeds is dedicated to full payment of the Exercise
Price. Any shares of Company stock or other non-cash consideration assigned and
delivered to the Company in payment or partial payment of the Exercise Price
will be valued at Fair Market Value on the exercise date. No fractional shares
will be issued pursuant to the exercise of an Option.
(f) Limitation on Exercise of Incentive Stock Options. The
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Common Stock for which one or more options granted to any
Recipient under the Plan (or any other option plan of the Company or any of its
subsidiaries or affiliates) may for the first time become exercisable as
Incentive Stock Options under the federal tax laws during any one calendar year
shall not exceed $100,000. Any Options granted as
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Incentive Stock Options pursuant to the Plan in excess of such limitation shall
be treated as Nonqualified Stock Options.
(g) Termination of Employment.
(i) Termination for Cause. Except as otherwise provided in
a written agreement between the Company and the Recipient, which may be entered
into at any time before or after termination, in the event of a Just Cause
Dismissal of a Recipient all of the Recipient's unexercised Options, whether or
not vested, shall expire and become unexercisable as of the date of such Just
Cause Dismissal.
(ii) Termination other than for Cause. Subject to
subsection (i) above and subsection (iii) below, and except as otherwise
provided in a written agreement between the Company and the Recipient, which may
be entered into at any time before or after termination, in the event of a
Recipient's termination of employment for:
(A) any reason other than for Just Cause Dismissal,
death, or Permanent Disability, or normal retirement, the Recipient's
Options shall, whether or not vested, expire and become unexercisable as
of the earlier of (1) the date such Options would expire in accordance
with their terms if the Recipient remained employed or (2) three
calendar months after the date of termination in the case of Incentive
Stock Options, or six months after the date of termination, in the case
of Nonqualified Stock Options.
(B) death or Permanent Disability, the Recipient's
unexercised Options shall, whether or not vested, expire and become
unexercisable as of the earlier of (1) the date such Options would
expire in accordance with their terms if the Recipient remained employed
or (2) twelve (12) months after the date of termination.
(C) normal retirement, the Recipient's unexercised
Options shall, whether or not vested, expire and become unexercisable as
of the earlier of (A) the date such Options expire in accordance with
their terms or (B) twenty-four (24) months after the date of retirement.
(iii) Alteration of Exercise Periods. Notwithstanding
anything to the contrary in subsections (i) or (ii) above, the Committee may in
its discretion designate such shorter or longer periods to exercise Options
(other than Nonemployee Directors' Options) following a Recipient's termination
of employment; provided, however, that any shorter periods determined by the
Committee shall be effective only if provided for in the instrument that
evidences the grant to the Recipient of such Options or if such shorter period
is agreed to in writing by the Recipient. Notwithstanding anything to the
contrary herein, Options shall be exercisable by a Recipient (or his successor
in interest) following such Recipient's termination of employment only to the
extent that installments thereof had become exercisable on or prior to the date
of such termination; provided, however, that the Committee, in its discretion,
may elect to accelerate the vesting of all or any portion of any Options that
had not become exercisable on or prior to the date of such termination.
2.03 PERFORMANCE AWARDS.
(a) Grant of Performance Award. The Committee shall determine the
performance criteria (which need not be identical and may be established on an
individual or group basis) governing Performance Awards, the terms thereof, and
the form and time of payment of Performance Awards.
(b) Payment of Award; Limitation. Upon satisfaction of the
conditions applicable to a Performance Award, payment will be made to the
Recipient in cash or in shares of Common Stock valued at Fair Market Value or a
combination of Common Stock and cash, as the Committee in its discretion may
determine. Notwithstanding any other provision of this Plan, no Eligible Person
shall be
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paid a Performance Award in excess of $1,000,000 in any one calendar year;
provided, however, that this limitation shall not apply if it is not required in
order for the compensation attributable to the Performance Award hereunder to
qualify as Performance-Based Compensation.
(c) Expiration of Performance Award. If any Recipient's
employment with the Company is terminated for any reason other than normal
retirement, death, or Permanent Disability prior to the time a Performance Award
or any portion thereof becomes payable, all of the Recipient's rights under the
unpaid portion of the Performance Award shall expire and terminate unless
otherwise determined by the Committee. In the event of termination of employment
by reason of death, Permanent Disability or normal retirement, the Committee, in
its discretion, may determine what portions, if any, of the Performance Award
should be paid to the Recipient.
2.04 RESTRICTED STOCK.
(a) Award of Restricted Stock. The Committee may grant awards of
Restricted Stock to Eligible Participants. The Committee shall determine the
Purchase Price (if any), the terms of payment of the Purchase Price, the
restrictions upon the Restricted Stock, and when such restrictions shall lapse,
provided that the restriction period shall be at least one year for
performance-based grants and three years for non-performance-based grants.
(b) Requirements of Restricted Stock. All shares of Restricted
Stock granted or sold pursuant to the Plan will be subject to the following
conditions:
(i) No Transfer. The shares may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, alienated or
encumbered until the restrictions are removed or expire;
(ii) Certificates. The Committee may require that the
certificates representing Restricted Stock granted or sold to a Recipient
pursuant to the Plan remain in the physical custody of an escrow holder or the
Company until all restrictions are removed or expire;
(iii) Restrictive Legends. Each certificate representing
Restricted Stock granted or sold to a Recipient pursuant to the Plan will bear
such legend or legends making reference to the restrictions imposed upon such
Restricted Stock as the Committee in its discretion deems necessary or
appropriate to enforce such restrictions; and
(iv) Other Restrictions. The Committee may impose such
other conditions on Restricted Stock as the Committee may deem advisable
including, without limitation, restrictions under the Securities Act, under the
Exchange Act, under the requirements of any stock exchange upon which such
Restricted Stock or shares of the same class are then listed and under any blue
sky or other securities laws applicable to such shares.
(c) Rights of Recipient. Subject to the provisions of Section
2.04(b) and any restrictions imposed upon the Restricted Stock, the Recipient
will have all rights of a stockholder with respect to the Restricted Stock
granted or sold to such Recipient under the Plan, including the right to vote
the shares and receive all dividends and other distributions paid or made with
respect thereto.
(d) Termination of Employment. Unless the Committee in its
discretion determines otherwise, upon a Recipient's termination of employment
for any reason, all of the Recipient's Restricted Stock remaining subject to
restrictions imposed pursuant to the Plan on the date of such termination of
employment shall be repurchased by the Company at the Purchase Price (if any).
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2.05 STOCK APPRECIATION RIGHTS.
(a) Granting of Stock Appreciation Rights. The Committee may
approve the grant to Eligible Persons of Stock Appreciation Rights, related or
unrelated to Options, at any time.
(b) SARs Related to Options.
(i) A Stock Appreciation Right granted in connection with
an Option granted under this Plan will entitle the holder of the related Option,
upon exercise of the Stock Appreciation Right, to surrender such Option, or any
portion thereof to the extent unexercised, with respect to the number of shares
as to which such Stock Appreciation Right is exercised, and to receive payment
of an amount computed pursuant to Section 2.05(b)(iii). Such Option will, to the
extent surrendered, then cease to be exercisable.
(ii) A Stock Appreciation Right granted in connection with
an Option hereunder will be exercisable at such time or times, and only to the
extent that, the related Option is exercisable, and will not be transferable
except to the extent that such related Option may be transferable.
(iii) Upon the exercise of a Stock Appreciation Right
related to an Option, the Holder will be entitled to receive payment of an
amount determined by multiplying: (i) the difference obtained by subtracting the
Exercise Price of a share of Common Stock specified in the related Option from
the Fair Market Value of a share of Common Stock on the date of exercise of such
Stock Appreciation Right (or as of such other date or as of the occurrence of
such event as may have been specified in the instrument evidencing the grant of
the Stock Appreciation Right), by (ii) the number of shares as to which such
Stock Appreciation Right is exercised.
(c) SARs Unrelated to Options. The Committee may grant Stock
Appreciation Rights unrelated to Options to Eligible Persons. Section
2.05(b)(iii) shall be used to determine the amount payable at exercise under
such Stock Appreciation Right, except that in lieu of the Option Exercise Price
specified in the related Option the initial base amount specified in the
Incentive Award shall be used.
(d) Limits. Notwithstanding the foregoing, the Committee, in its
discretion, may place a dollar limitation on the maximum amount that will be
payable upon the exercise of a Stock Appreciation Right under the Plan.
(e) Payments. Payment of the amount determined under the
foregoing provisions may be made solely in whole shares of Common Stock valued
at their Fair Market Value on the date of exercise of the Stock Appreciation
Right or, alternatively, at the sole discretion of the Committee, in cash or in
a combination of cash and shares of Common Stock as the Committee deems
advisable. The Committee has full discretion to determine the form in which
payment of a Stock Appreciation Right will be made and to consent to or
disapprove the election of a Recipient to receive cash in full or partial
settlement of a Stock Appreciation Right. If the Committee decides to make full
payment in shares of Common Stock, and the amount payable results in a
fractional share, payment for the fractional share will be made in cash.
(f) Rule 16b-3. The Committee may, at the time a Stock
Appreciation Right is granted, impose such conditions on the exercise of the
Stock Appreciation Right as may be required to satisfy the requirements of Rule
16b-3 under the Exchange Act (or any other comparable provisions in effect at
the time or times in question).
(g) Termination of Employment. Section 2.02(g) will govern the
treatment of Stock Appreciation Rights upon the termination of a Recipient's
employment with the Company.
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2.06 STOCK PAYMENTS.
The Committee may approve Stock Payments of the Company's Common
Stock to any Eligible Person for all or any portion of the compensation (other
than base salary) or other payment that would otherwise become payable by the
Company to the Eligible Person in cash.
2.07 DIVIDEND EQUIVALENTS.
The Committee may grant Dividend Equivalents to any Recipient who
has received a Stock Option, SAR, or other Incentive Award denominated in shares
of Common Stock. Such Dividend Equivalents shall be effective and shall entitle
the recipients thereof to payments during the "APPLICABLE DIVIDEND PERIOD,"
which shall be (i) the period between the date the Dividend Equivalent is
granted and the date the related Stock Option, SAR, or other Incentive Award is
exercised, terminates, or is converted to Common Stock, or (ii) such other time
as the Committee may specify in the written instrument evidencing the grant of
the Dividend Equivalent. Dividend Equivalents may be paid in cash, Common Stock,
or other Incentive Awards; the amount of Dividend Equivalents paid other than in
cash shall be determined by the Committee by application of such formula as the
Committee may deem appropriate to translate the cash value of dividends paid to
the alternative form of payment of the Dividend Equivalent. Dividend Equivalents
shall be computed as of each dividend record date and shall be payable to
recipients thereof at such time as the Committee may determine. Notwithstanding
the foregoing, if it is intended that an Incentive Award qualify as
Performance-Based Compensation and the amount of the compensation the Eligible
Person could receive under the award is based solely on an increase in value of
the underlying stock after the date of grant or award (i.e., the grant, vesting,
or exercisability of the award is not conditioned upon the attainment of a
preestablished, objective performance goal described in Section 1.02(t)), then
the payment of any Dividend Equivalents related to the award shall not be made
contingent on the exercise of the award.
ARTICLE III
NONEMPLOYEE DIRECTOR'S OPTIONS
3.01 GRANTS OF INITIAL OPTIONS.
Each Nonemployee Director shall, upon first becoming a
Nonemployee Director, receive a one-time grant of a Nonemployee Director's
Option to purchase up to 40,000 shares of the Company's Common Stock at an
exercise price per share equal to the Fair Market Value of the Company's Common
Stock on the date of grant, subject to (i) vesting as set forth in Section 3.04,
and (ii) adjustment as set forth in Section 1.05(b). Options granted under this
Section 3.01 are "INITIAL OPTIONS" for purposes hereof.
3.02 GRANTS OF ADDITIONAL OPTIONS.
Immediately following the annual meeting of stockholders of the
Company next following a Nonemployee Director becoming such, and immediately
following each subsequent annual meeting of stockholders of the Company, in each
case if the Nonemployee Director has served as a director since his or her
election or appointment and has been re-elected as a director at such annual
meeting or is continuing as a director without being re-elected due to the
classification of the Board, such Nonemployee Director shall automatically
receive an option to purchase up to 10,000 shares of the Company's Common Stock
at an exercise price per share equal to the Fair Market Value of the Company's
Common Stock on the date of grant, subject to (a) vesting as set forth in
Section 3.04, and (b) adjustment as set forth in Section 1.05(b). Options
granted under this Section 3.02 are "ADDITIONAL OPTIONS" for purposes hereof.
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3.03 EXERCISE PRICE.
The exercise price for Nonemployee Directors' Options shall be
payable as set forth in Section 2.02(e). Neither the Board nor the Committee
shall reduce the exercise price of any outstanding Initial Option or Additional
Option without stockholder approval.
3.04 VESTING AND EXERCISE.
Initial Options shall vest and become exercisable with respect to
25% of the underlying shares on the grant date and with respect to an additional
25% of the underlying shares on the dates of each of the first three annual
meetings of the Company's stockholders following the grant date, but only if on
the date of each such annual meeting, the Recipient is continuing as a director
of the Company for the ensuing year, provided, however, that if the grant date
is within six months of the ensuing annual meeting of the Company's
stockholders, then after vesting of the Option with respect to 25% of the
underlying shares on the grant date, the Option will vest with respect to an
additional 25% of the underlying shares on the dates of each of the second,
third, and fourth annual meetings of the Company's stockholders following the
grant date, but only if, on the date of each such annual meeting, the Recipient
is continuing as a director for the ensuing year. Additional Options shall vest
and become exercisable upon the earlier of (a) the first anniversary of the
grant date or (b) immediately prior to the annual meeting of stockholders of the
Company next following the grant date, if the optionee has remained a director
for the entire period from the date of grant to such earlier date.
Notwithstanding the foregoing, however, Initial Options and Additional Options
that have not vested and become exercisable at the time the optionee ceases to
be a director shall terminate.
3.05 TERM OF OPTIONS AND EFFECT OF TERMINATION.
No Nonemployee Directors' Option shall be exercisable after the
expiration of ten years from the effective date of its grant. In the event that
the Recipient of a Nonemployee Director's Option shall cease to be a director of
the Company, all Nonemployee Directors' Options granted to such Recipient shall
be exercisable, to the extent already exercisable at the date such Recipient
ceases to be a director and regardless of the reason the Recipient ceases to be
a director, for a period of five (5) years after that date (or, if sooner, until
the expiration of the option according to its terms). In the event of the death
of a Recipient of a Nonemployee Director's Option while such Recipient is a
director of the Company or within the period after termination of such status
during which he or she is permitted to exercise such Option, such Option may be
exercised by any person or persons designated by the Recipient on a Beneficiary
Designation Form adopted by the Company for such purpose or, if there is no
effective Beneficiary Designation Form on file with the Company, by the
executors or administrators of the Recipient's estate or by any person or
persons who shall have acquired the option directly from the Recipient by his or
her will or the applicable laws of descent and distribution.
ARTICLE IV
RECAPITALIZATIONS AND REORGANIZATIONS
4.01 CORPORATE TRANSACTIONS.
If the Company shall be the surviving corporation in any merger
or consolidation, each outstanding Option shall pertain and apply to the
securities to which a holder of the same number of shares of Common Stock that
are subject to that Option would have been entitled. In the event of a Change in
Control (as defined below), all Nonemployee Directors' Options and any Incentive
Awards specified by the Committee or the Board shall immediately vest and become
exercisable, and all conditions thereto shall be deemed to have been met. For
purposes hereof, a "Change in Control" means the following and shall be deemed
to occur if any of the following events occur:
(i) Except as provided by subsection (iii) hereof, the
acquisition (other than from the Company) by any person, entity
or "group," within the meaning of
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Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for
this purpose, the Company or its subsidiaries, or any employee
benefit plan of the Company or its subsidiaries which acquires
beneficial ownership of voting securities of the Company), of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of forty percent (40%) or
more of either the then outstanding shares of Common Stock or the
combined voting power of the Company's then outstanding voting
securities entitled to vote generally in the election of
directors; or
(ii) Individuals who, as of the effective date of the
Plan, constitute the Board of Directors of the Company (the
"INCUMBENT BOARD") cease for any reason to constitute at least a
majority of the Board of Directors of the Company, provided that
any person becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company's
shareholders, is or was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than
an election or nomination of an individual whose initial
assumption of office is in connection with an actual or
threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A promulgated under the Exchange Act) shall be,
for purposes of this Agreement, considered as though such person
were a member of the Incumbent Board; or
(iii) Approval by the stockholders of the Company of a
reorganization, merger or consolidation with any other person,
entity or corporation, other than
(A) a merger or consolidation which would result in
the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting
securities of another entity) more than fifty percent
(50%) of the combined voting power of the voting
securities of the Company and such other entity
outstanding immediately after such merger or
consolidation, or
(B) a merger or consolidation effected to implement
a recapitalization of the Company (or similar transaction)
in which no person acquires forty percent (40%) or more of
the combined voting power of the Company's then
outstanding voting securities; or
(iv) Approval by the stockholders of the Company of a plan
of complete liquidation of the Company or an agreement for the
sale or other disposition by the Company of all or substantially
all of the Company's assets.
Notwithstanding the preceding provisions of this Section 4.01, a Change in
Control shall not be deemed to have occurred (l) if the "person" described in
the preceding provisions of this Section 4.01 is an underwriter or underwriting
syndicate that has acquired the ownership of 50% or more of the combined voting
power of the Company's then outstanding voting securities solely in connection
with a public offering of the Company's securities, or (2) if the "person"
described in the preceding provisions of this Paragraph is an employee stock
ownership plan or other employee benefit plan maintained by the Company that is
qualified under the provisions of the Employee Retirement Income Security Act of
1974, as amended.
4.02 DETERMINATION BY THE COMMITTEE.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Committee,
whose determination in that respect shall be final, binding and conclusive. The
grant of an Option pursuant to the Plan shall not affect in any way the right
14
or power of the Company to make adjustments, reclassifications, reorganizations
or changes of its capital or business structure or to merge or to consolidate or
to dissolve, liquidate or sell, or transfer all of any part of its business or
assets.
15