Adopted 5/26/94 EXHIBIT 4.2
Amended 2/20/96
Restated as of 9/26/96
(reflecting post-split numbers
resulting from reverse stock
split approved 4/22/96)
Amended 4/24/97
U.S. Bioscience, Inc.
NON-EXECUTIVE STOCK OPTION PLAN
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1. Purpose. U.S. Bioscience, Inc. (the "Company") hereby adopts the
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U.S. Bioscience, Inc. Non-Executive Stock Option Plan (the "Plan"). The Plan is
intended to recognize the contributions made to the Company by employees of the
Company or any Affiliate (as defined below) (including employees who are members
of the Board of Directors of any Affiliate but who are not directors or
Executive Officers (as hereinafter defined) of the Company), and certain
consultants or advisors to the Company or an Affiliate, to provide such persons
with additional incentive to devote themselves to the future success of the
Company or an Affiliate, and to improve the ability of the Company or an
Affiliate to attract, retain, and motivate individuals upon whom the Company's
sustained growth and financial success depend, by providing such persons with an
opportunity to acquire or increase their proprietary interest in the Company
through receipt of rights to acquire the Company's Common Stock, par value $.01
per Share (the "Common Stock"). Options granted pursuant to the Plan shall not
be options intended to qualify as "incentive stock options" within the meaning
of Section 422 of the Code (as hereinafter defined).
Options granted pursuant to the Plan may not be granted to Executive Officers or
non-employee members of the Company's Board of Directors. Notwithstanding the
foregoing, an option may be
granted hereunder for consulting services to a consultant who is also a member
of the Company's Board of Directors.
2. Definitions. Unless the context clearly indicates otherwise, the
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following terms shall have the following meanings:
(a) "Affiliate" means a corporation which is a parent corporation
or a subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code.
(b) "Board of Directors" or "Board" means the Board of Directors
of the Company.
(c) "Change of Control" shall have the meaning as set forth in
Section 10 of the Plan .
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" shall have the meaning set forth in Section 3 of
the Plan.
(f) "Company" means U.S. Bioscience, Inc. a Delaware corporation.
(g) "Disability" shall have the meaning set forth in Section
22(e)(3) of the Code.
(h) "Executive Officers" means persons who are "officers" within
the meaning of Rule 16a-1(f) promulgated under
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the Securities Exchange Act of 1934, as amended, or any successor rule.
(i) "Fair Market Value" shall have the meaning set forth in
Subsection 8(b) of the Plan.
(j) "Non-qualified Stock Option" means an Option granted under the
Plan which is not intended to qualify, or otherwise does not qualify, as an
"incentive stock option" within the meaning of Section 422(b) of the Code.
(k) "Option" means a Non-qualified Stock Option granted under the
Plan.
(l) "Optionee" means a person to whom an Option has been granted
under the Plan, which Option has not been exercised and has not expired or
terminated.
(m) "Option Document" means the document described in Section 8 of
the Plan, as applicable, which sets forth the terms and conditions of each grant
of Options.
(n) "Option Price" means the price at which Shares may be
purchased upon exercise of an Option, as calculated pursuant to Subsection 8(b)
of the Plan, as applicable.
(o) "Shares" means the shares of Common Stock of the Company which
are the subject of Options.
3. Administration of the Plan. The Plan shall be administered by the
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Board of Directors of the Company; however, the Board of Directors may designate
a committee composed of two or more of its directors to operate and administer
the Plan in its stead. Any such committee designated by the Board of
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Directors, and the Board of Directors itself in its administrative capacity with
respect to the Plan, is referred to as the "Committee."
(a) Meetings. The Committee shall hold meetings at such times and
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places as it may determine. Acts approved at a meeting by a majority of the
members of the Committee or acts approved in writing by the unanimous consent of
the members of the Committee shall be the valid acts of the Committee.
(b) Grants. The Committee shall from time to time at its discretion
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direct the Company to grant Options pursuant to the terms of the Plan. The
Committee shall have plenary authority to (i) determine the Optionees to whom,
the times at which, and the price at which Options shall be granted, (ii)
determine the type of Option to be granted and the number of Shares subject
thereto, and (iii) approve the form and terms and conditions of the Option
Documents; all subject, however, to the express provisions of the Plan. In
making such determinations, the Committee may take into account the nature of
the Optionee's services and responsibilities, the Optionee's present and
potential contribution to the Company's success and such other factors as it may
deem relevant. The interpretation and construction by the Committee of any
provisions of the Plan or of any Option granted under it shall be final, binding
and conclusive.
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(c) Exculpation. No member of the Board of Directors shall be
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personally liable for monetary damages for any action taken or any failure to
take any action in connection with the administration of the Plan or the
granting of Options under the Plan, provided that this Subsection 3(c) shall not
apply to (i) any breach of such member's duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or involving intentional
misconduct or a knowing violation of law, (iii) acts or omissions that would
result in liability under Section 174 of the General Corporation Law of the
State of Delaware, as amended, and (iv) any transaction from which the member
derived an improper personal benefit.
(d) Indemnification. Service on the Committee shall constitute
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service as a member of the Board of Directors of the Company. Each member of
the Committee shall be entitled without further act on his or her part to
indemnity from the Company to the fullest extent provided by applicable law and
the Company's Certificate of Incorporation and/or By-laws in connection with or
arising out of any action, suit or proceeding with respect to the administration
of the Plan or the granting of Options thereunder in which he or she may be
involved by reason of his or her being or having been a member of the Committee,
whether or not he or she continues to be such member of the Committee at the
time of the action, suit or proceeding.
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(e) Limitations on Grants of Options to Consultants and Advisors.
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With respect to the grant of Options to consultants or advisors, bona fide
services shall be rendered by consultants or advisors and such services must not
be in connection with the offer or sale of securities in a capital-raising
transaction.
4. Grants under the Plan. Grants under the Plan must be in the form
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of a Non-qualified Stock Option.
5. Eligibility. All employees of the Company or an Affiliate (other
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than Executive Officers), and consultants or advisors to the Company or an
Affiliate who satisfy the requirements set forth in Subsection 3(e), shall be
eligible to receive Options hereunder. The Committee, in its sole discretion,
shall determine whether an individual is eligible to receive Options under the
Plan.
6. Shares Subject to Plan. The aggregate maximum number of Shares
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for which Options may be granted pursuant to the Plan is Two Million Two Hundred
Fifty Thousand (2,250,000), subject to adjustment as provided in Section 11 of
the Plan. The Shares shall be issued from authorized and unissued Common Stock
or Common Stock held in or hereafter acquired for the treasury of the Company.
If an Option terminates or expires without having been fully exercised for any
reason, the Shares for which the Option was not exercised may again be the
subject of one or more Options granted pursuant to the Plan.
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7. Term of the Plan. The Plan is effective as of May 26, 1994, the
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date on which it was adopted by the Board of Directors.
No Option may be granted under the Plan after May 25, 2004.
8. Option Documents and Terms. Each Option granted under the Plan
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shall be a Non-qualified Stock Option. Options granted pursuant to the Plan
shall be evidenced by the Option Documents in such form as the Committee shall
from time to time approve, which Option Documents shall comply with and be
subject to the following terms and conditions and such other terms and
conditions as the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.
(a) Number of Option Shares. Each Option Document shall state
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the number of Shares to which it pertains.
(b) Option Price. Each Option Document shall state the Option
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Price which may be less than, equal to, or greater than the Fair Market Value of
the Shares on the date the Option is granted. If the Common Stock is traded in a
public market, then the Fair Market Value per share shall be, if the Common
Stock is listed on a national securities exchange or included in the NASDAQ
National Market System, the last reported sale price thereof on the relevant
date, or, if the Common Stock is not so listed or included, the mean between the
last reported "bid" and "asked" prices thereof on the relevant date, as reported
on NASDAQ or, if not so reported, as reported by the National Daily Quotation
Bureau, Inc. or as reported in a
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customary financial reporting service, as applicable and as the Committee
determines.
(c) Exercise. No Option shall be deemed to have been exercised prior
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to the receipt by the Company of written notice of such exercise and payment in
full of the Option Price for the Shares to be purchased. Each such notice shall
specify the number of Shares to be purchased and shall (unless the Shares are
covered by a then current registration statement or a Notification under
Regulation A under the Securities Act of 1933, as amended (the "Act")), contain
the Optionee's acknowledgment in form and substance satisfactory to the Company
that (a) such Shares are being purchased for investment and not for distribution
or resale (other than a distribution or resale which, in the opinion of counsel
satisfactory to the Company, may be made without violating the registration
provisions of the Act), (b) the Optionee has been advised and understands that
(i) the Shares have not been registered under the Act and are "restricted
securities" within the meaning of Rule 144 under the Act and are subject to
restrictions on transfer and (ii) the Company is under no obligation to register
the Shares under the Act or to take any action which would make available to the
Optionee any exemption from such registration, (c) such Shares may not be
transferred without compliance with all applicable federal and state securities
laws, and (d) an appropriate legend referring to the foregoing restrictions on
transfer and any other
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restrictions imposed under the Option Documents may be endorsed on the
certificates. Notwithstanding the foregoing, if the Company determines that
issuance of Shares should be delayed pending (A) registration under federal or
state securities laws, (B) the receipt of an opinion of counsel acceptable to
the Company that an appropriate exemption from such registration is available,
(C) the listing or inclusion of the Shares on any securities exchange or an
automated quotation system or (D) the consent or approval of any governmental
regulatory body whose consent or approval is necessary in connection with the
issuance of such Shares, the Company may defer exercise of any Option granted
hereunder until any of the events described in this Subsection 8(c) has
occurred.
(d) Medium of Payment. An Optionee shall pay for Shares (i) in cash,
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(ii) by certified or cashier's check payable to the order of the Company, or
(iii) by such other mode of payment as the Committee may approve, including
payment through a broker in accordance with procedures permitted by Regulation T
of the Federal Reserve Board. Without limiting the foregoing, the Committee may
provide in an Option Document that payment may be made in whole or in part in
shares of the Company's Common Stock. If payment is made in whole or in part in
shares of the Company's Common Stock, then the Optionee shall deliver to the
Company certificates registered in the name of such Optionee representing the
shares owned by such Optionee, free of all liens, claims and
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encumbrances of every kind and having an aggregate Fair Market Value on the date
of delivery that is at least as great as the Option Price of the Shares (or
relevant portion thereof) with respect to which such Option is to be exercised
by the payment in shares of Common Stock, accompanied by stock powers duly
endorsed in blank by the Optionee. In the event that certificates for shares of
the Company's Common Stock delivered to the Company represent a number of shares
in excess of the number of shares required to make payment for the Option Price
of the Shares (or relevant portion thereof) with respect to which such Option is
to be exercised by payment in shares of Common Stock, the stock certificate
issued to the Optionee shall represent (i) the Shares in respect of which
payment is made, and (ii) such excess number of shares. Notwithstanding the
foregoing, the Committee may impose from time to time such limitations and
prohibitions on the use of shares of the Common Stock to exercise an Option as
it deems appropriate.
(e) Termination of Options.
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(i) No Option shall be exercisable after the first to occur of
the following:
(A) Expiration of the Option term specified in the Option
Document, which shall not occur after ten years from the date of grant.
(B) Expiration of three months from the date the Optionee's
employment or service with the Company or its
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Affiliates terminates for any reason other than Disability or death or as
otherwise specified in Subsection 8(e)(i)(D) or 8(e)(i)(E) below;
(C) Expiration of one year from the date such employment or
service with the Company or its Affiliates terminates due to the Optionee's
Disability or death;
(D) A finding by the Committee, after full consideration of
the facts presented on behalf of both the Company and the Optionee, that the
Optionee has breached his or her employment or service contract with the Company
or an Affiliate, or has been engaged in disloyalty to the Company or an
Affiliate, including, without limitation, fraud, embezzlement, theft, commission
of a felony or proven dishonesty in the course of his employment or service, or
has disclosed trade secrets or confidential information of the Company or an
Affiliate. In such event, in addition to immediate termination of the Option,
the Optionee shall automatically forfeit all Shares for which the Company has
not yet delivered the share certificates upon refund by the Company of the
Option Price. Notwithstanding anything herein to the contrary, the Company may
withhold delivery of share certificates pending the resolution of any inquiry
that could lead to a finding resulting in a forfeiture; or
(E) The date, if any, set by the Board of Directors as an
accelerated expiration date in the event of the liquidation or dissolution of
the Company.
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With respect to Subsections 8(e)(i)(B) and (C) above, the only
Options which may be exercised during the three-month or one-year period, as the
case may be, following the date of Optionee's termination of employment or
service with the Company or its Affiliates are Options which were exercisable on
the last date of such employment or service and not Options which, if the
Optionee were still employed or rendering service during such three-month or
one-year period, would become exercisable, unless the Option Document
specifically provides to the contrary.
(ii) Notwithstanding the foregoing, the Committee may extend the
period during which all or any portion of an Option may be exercised to a date
no later than the Option term specified in the Option Document pursuant to
Subsection 8(e)(i)(A). The terms of an executive severance agreement or other
agreement between the Company and an Optionee, approved by the Committee,
whether entered into prior or subsequent to the grant of an Option, which
provide for Option exercise dates later than those set forth in Subsection
8(e)(i) but permitted by this Subsection 8(e)(ii) shall be deemed to be Option
terms approved by the Committee and consented to by the Optionee.
(f) Transfers. An Option granted under the Plan may not be transferred,
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except by will or by the laws of descent and distribution, except as follows: If
the terms of the Option specifically so permit, an Option may be transferred by
the
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Optionee by bona fide gift, with no consideration for the transfer, to a lineal
descendent, sibling, lineal descendent of a sibling, in each case whether by
blood or adoption, a spouse or former spouse (collectively "family members"), to
a trust for the benefit of one or more family members or to a partnership in
which family members are the only partners. Notwithstanding the foregoing, an
Option may be transferred pursuant to the terms of a "qualified domestic
relations order," within the meaning of Sections 401(a)(13) and 414(p) of the
Code or within the meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended.
(g) Other Provisions. Subject to the provisions of the Plan, the
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Option Documents shall contain such other provisions including, without
limitation, provisions authorizing the Committee to accelerate the
exercisability of all or any portion of an Option granted pursuant to the Plan,
additional restrictions upon the exercise of the Option or additional
limitations upon the term of the Option, as the Committee shall deem advisable.
9. Amendment of Option Documents. Subject to the provisions of the
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Plan, the Committee shall have the right to amend Option Documents issued to an
Optionee, subject to the Optionee's consent if such amendment is not favorable
to the Optionee, except that the consent of the Optionee shall not be
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required for any amendment made under Subsection 8(e)(i)(E) or Section 10 of the
Plan, as applicable.
10. Change in Control. Notwithstanding anything to the contrary in
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any Option Document, upon a Change in Control, the exercise date of all Options
then outstanding under the Plan and held by Optionees who are then employees of
the Company or an Affiliate, or members of the Board of Directors of an
Affiliate, shall, and in the case of consultants and advisors to the Company or
an Affiliate shall (unless the exercisability of the Options held by such an
Optionee is subject to some condition other than the lapse of time (including
within the term "lapse of time" the provisions of Section 8(e) of the Plan)),
automatically accelerate to the date of the Change of Control. Any amendment of
this Section 10 which diminishes the rights of Optionees shall not be effective
with respect to Options outstanding at the time of adoption of such amendment,
whether or not such outstanding Options are then exercisable.
A "Change in Control" shall be deemed to have occurred if: (i) there
has been a change in control of a nature that would be required, if the Company
would be subject to reporting requirements under the Securities Exchange Act of
1934 (the "Exchange Act"), to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Exchange Act or Item 1 of Form 8-K
promulgated under the Exchange Act; or (ii) any person, entity or group (within
the meaning of
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Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), other than any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any subsidiary of the Company, is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing 30% or more of the
combined voting power in the election of directors; or (iii) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to have authority to cast at least a
majority of the votes which all directors on the Board are entitled to cast,
unless the election, or the nomination for election by the Company's
stockholders, of each new director was approved by a vote of at least two-thirds
of the votes entitled to be cast by the directors then still in office who were
directors at the beginning of the period.
11. Adjustments on Changes in Capitalization. The aggregate number
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of Shares and class of shares as to which Options may be granted hereunder, the
number and class or classes of shares covered by each outstanding Option and the
Option Price thereof shall be appropriately adjusted in the event of a stock
dividend, stock split, recapitalization or other change in the number or class
of issued and outstanding equity securities of the Company resulting from a
subdivision or consolidation of the Common Stock and/or, if appropriate, other
outstanding equity securities or a recapitalization or other capital adjustment
(not
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including the issuance of Common Stock on the conversion of other securities of
the Company which are convertible into Common Stock) affecting the Common Stock
which is effected without receipt of consideration by the Company. The
Committee shall have authority to determine the adjustments to be made under
this Section, and any such determination by the Committee shall be final,
binding and conclusive; provided, however, that no adjustment shall be made
which will cause an ISO to lose its status as such without the consent of the
Optionee, except for adjustments made pursuant to Section 10 hereof.
12. Amendment of the Plan. The Board of Directors of the Company may
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amend the Plan from time to time in such manner as it may deem advisable. No
amendment to the Plan shall adversely affect any outstanding Option, however,
without the consent of the Optionee that holds such Option.
13. No Commitment to Retain. The grant of an Option pursuant to the
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Plan shall not be construed to imply or to constitute evidence of any agreement,
express or implied, on the part of the Company or any Affiliate to retain the
Optionee in the employ of the Company or an Affiliate and/or as a member of the
Company's Board of Directors or in any other capacity.
14. Withholding of Taxes. Whenever the Company proposes or is
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required to deliver or transfer Shares in connection with the exercise of an
Option, the Company shall have the right to (a) require the recipient to remit
or otherwise
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make available to the Company an amount sufficient to satisfy any federal, state
and/or local withholding tax requirements prior to the delivery or transfer of
any certificate or certificates for such Shares or (b) take whatever other
action it deems necessary to protect its interests with respect to tax
liabilities. The Company's obligation to make any delivery or transfer of
Shares shall be conditioned on the Optionee's compliance, to the Company's
satisfaction, with any withholding requirement.
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