EXHIBIT 10.11
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 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
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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 8,200,000.
(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 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.
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(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
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.
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