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EXHIBIT 4.2
NASTECH PHARMACUTICAL COMPANY, INC.
1990 STOCK OPTION PLAN
1. Purpose of the Plan.
The purpose of this 1990 Stock Option Plan (the "Plan") is to further
the growth and development of Nastech Pharmaceutical Company, Inc. (the
"Company") by encouraging and enabling employees, including officers and
directors of the Company to obtain a proprietary interest in the Company
through the ownership of stock, thereby providing such persons with an added
incentive to continue in the employ or service of the Company and to stimulate
their efforts in promoting the growth, efficiency and profitability of the
Company, and affording the Company a means of attracting to its service persons
of outstanding quality.
The Plan is also intended to encourage ownership of the Company's
stock, by non-employee directors and advisors (either full-time or part-time)
of the Company, and to provide additional incentive for them to promote the
success of the Company's business.
2. Shares of Stock Subject to the Plan.
Subject to the provisions of Section 12 hereof, an aggregate of
375,000 shares of the Common Stock, par value $.002 per share, of the Company
(the "Common Stock") shall be reserved for issuance upon the exercise of
options which may be granted from time to time in accordance with the Plan.
Such shares may be, in whole or in part, as the Board of Directors of the
Company (the "Board of Directors") shall from time to time determine,
authorized but unissued shares or issued shares which have been reacquired by
the Company. If, for any reason, an option shall lapse, expire or terminate
without having been exercised in full, the unpurchased shares underlying these
options shall (unless the Plan shall have terminated) again be available for
the purpose of the Plan.
3. Administration of the Plan.
(a) The Board of Directors shall administer the Plan and, subject
to the provisions of the Plan, shall have authority in its discretion to
determine and designate from time to time, those persons eligible for a grant
of options under the Plan, those persons to whom options are to be granted, and
the manner in which said options are exercisable. In making such determination,
the Board of Directors may take into account the nature of the services
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rendered by the respective persons, their present and potential contributions
to the Company's success and such other factors as the Board of Directors in
its sole discretion shall deem relevant. Subject to the express provisions of
the Plan, the Board of Directors shall also have the authority to interpret the
Plan, to prescribe, amend and rescind rules and regulations relating to it, to
determine the terms and provisions of the instruments by which options shall be
evidenced, which shall not be inconsistent with the terms of the Plan, and to
make all other determinations necessary or advisable for the administration of
the Plan, all of which determinations shall be final, binding and conclusive.
(b) The Board of Directors may, at its discretion appoint from
among its members a Stock Option Plan Committee (the "Committee"). Such
Committee shall be composed of three or more directors and shall have and may
exercise any and all of the powers relating to the administration of the Plan
and the grant of options hereunder as are set forth above in Section 3(a), as
the Board of Directors shall confer and delegate. The Board of Directors shall
have the power at any time to fill vacancies in, to change the membership of,
or to discharge, such committee. The Committee shall select one of its members
as its Chairman and shall hold its meetings at such times and at such places as
it shall deem advisable. A majority of such committee shall constitute a quorum
and such majority shall determine its action. The Committee shall keep minutes
of its proceedings and shall report same to the Board of Directors at the
meeting next succeeding. No director or member of the Committee shall be liable
for any action or determination made in good faith with respect to the Plan or
any option granted thereunder.
4. Persons To Whom Shares May Be Granted.
Subject to the provisions hereinafter set forth, options granted under
the Plan shall be designated either (i) "Incentive Stock Options" (which term,
as used herein, shall mean options intended to be "incentive stock options"
within the meaning of Section 422A of the Code) or (ii) "Non-Incentive Stock
Options" (which term, as used herein, shall mean options not intended to be
"incentive stock options" within the meaning of Section 422A of the Code).
Incentive Stock Options may be granted to persons who are, at the time of the
grant, employees, including officers, or directors of the Company or any
subsidiary corporation (as defined in Section 425 of the Internal Revenue Code,
as amended (the "Code"), and herein referred to as "Subsidiary"), including
part-time employees, as the Board of Directors (or Committee) shall select,
from time to time, from among those nominated by the Board of Directors (or
Committee). Each option granted to a person who is not an "employee" (within
the meaning of Section 422A of the Code)
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of the Company or a Subsidiary on the date of the grant shall be designated a
Non-Incentive Stock Option.
The Board of Directors (or Committee) may grant, at any time, new
options to a person who has previously received options whether such prior
options are still outstanding, have previously been exercised in whole or in
part, have expired, or are cancelled in connection with the issuance of new
options. The purchase price of the new options may be established by the Board
of Directors (or Committee) without regard to the existing option price.
5. Option Price.
(a) The purchase price of the Common Stock underlying each option
shall be determined by the Board of Directors (or Committee), which
determination shall be final, binding and conclusive; provided, however, that
in no event shall the purchase price for an Incentive Stock Option be less than
100% (110% in the case of optionees who own more than 10% of the voting power
of all classes of stock of the Company) of the fair market value of the Common
Stock on the date the option is granted. The purchase price for a Non-Incentive
Stock Option may be less than 100% of the fair market value of the Common Stock
on the date the option is granted. In determining such fair market value, the
Board of Directors (or Committee) shall consider (i) the average between the
highest and lowest selling prices of the Common Stock on the date on which the
option is granted (if such Common Stock is listed on a national securities
exchange); (ii) the closing bid prices as quoted by the National Quotation
Bureau Incorporated or a recognized dealer in the Common Stock on the date of
grant (if such Common Stock is not listed on such an exchange); and (iii) such
other factors as the Board of Directors (or Committee) shall deem appropriate
or which may be relevant under applicable federal tax laws and Internal Revenue
rules and regulations. For purposes of the Plan, the date of grant of an option
shall be the date on which the Board of Directors (or Committee) shall by
resolution duly authorize such option.
(b) Notwithstanding any other provisions herein contained, the
aggregate fair market value (as defined above) determined at the time the
Incentive Stock Options are granted, of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an employee
during any calendar year shall not exceed $100,000. Non-Incentive Stock Options
shall not be subject to the limitations of this paragraph 5(b).
6. Exercise of Options.
(a) Subject to the provisions set forth in Sections 9, 10 and 11
hereof, no Incentive Stock Option shall be
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exercisable unless the holder thereof shall have been an employee, including
officer, or director of the Company and/or a Subsidiary from the date of the
granting of the option until the date of exercise.
(b) The number of shares which are issued pursuant to the exercise
of an option shall be charged against the maximum limitations on shares set
forth in Section 2 hereof.
(c) The exercise of an option shall be made contingent upon
receipt by the Company from the holder thereof of (i) a written representation
and acknowledgement that at the time of such exercise it is the holder's
present intention to acquire the option shares for investment and not with a
view to distribution or resale thereof, that the holder knows that the Company
is not obligated to register the shares and that the shares may have to be held
indefinitely unless an exemption from the registration requirement of the
Securities Act of 1933, as amended, is available or the Company has registered
the shares underlying the options, that the Company may place a legend on the
certificate(s) evidencing the shares reflecting the fact that they were
acquired for investment and cannot be sold or transferred unless registered
under the Securities Act of 1933, as amended, or unless counsel for the Company
is satisfied that the circumstances of the proposed transfer do not require
such registration and (ii) cash, or a check to its order, for the purchase
price of such shares.
(d) The holder of an option shall have none of the rights of a
stockholder with respect to shares subject to the option until a certificate
for such shares has been issued to the holder upon the due exercise of the
option.
7. Term of Options.
The period during which each option granted hereunder shall be
exercisable shall be determined by the Board of Directors (or Committee);
provided, however, that no option shall be exercisable for a period exceeding
ten (10) years (five (5) years in the case of optionees who own more than 10%
of the voting power of all classes of the stock of the Company) from the date
the options are granted.
8. Non-Transferability of Options.
No option granted pursuant to this Plan shall be subject to
anticipation, sale, assignment, pledge, encumbrance, or charge or otherwise
transferable except by will or the laws of descent and distribution, and an
option shall be exercisable during the lifetime of the holder thereof only by
such holder.
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9. Termination of Services.
In the event that an employee or any other person to whom an
Incentive Stock Option has been granted under the Plan shall cease to be an
employee, officer or director of the Company or a Subsidiary, by reason of a
termination of such relationship other than by reason of death, disability or
retirement at age 65, such holder may exercise such options prior to the
expiration date of such options or within three months after the date of
termination, whichever is earlier, but only to the extent the holder had the
right to exercise such options on the date of termination. In the event
employment is terminated for cause, any options held by such person shall
terminate immediately. So long as the holder of an option shall continue to be
in the employ, or continue to be a director, of the Company or one or more of
its Subsidiaries, such holder's option shall not be affected by any changes of
duties or position. Absence on leave approved by the employing corporation
shall not be considered an interruption of employment for any purpose under the
Plan. The granting of an option in any year shall not give the holder of the
option any rights to similar grants in future years or any right to be retained
in the employ or service of the Company or any of its Subsidiaries or interfere
in any way with the right of the Company or any such Subsidiary to terminate
such holder's employment or services at any time.
If the holder of a Non-Incentive Stock Option granted hereunder ceases
to be a director or advisor of the Company, any option held by such person may
be exercised, to the extent exercisable on the termination date, within three
months thereafter (but in no event after the option expires by its terms). Any
termination of such an option pursuant to this section shall be without
prejudice to any right or remedies which the Company or any of its subsidiaries
may have against the holder of the option under the stock option agreement or
otherwise.
10. Retirement or Disability of Option Holder.
If any person to whom an option has been granted under the Plan shall
cease to be an employee, officer, director or advisor of the Company or a
Subsidiary, by reason of disability or retirement at age 65, such holder may
exercise such option at any time prior to the expiration date of the option or
within three months (one year in the case of termination by reason of
disability) after the date of termination for such cause, whichever is earlier,
but only to the extent the holder had the right to exercise such option on the
date of termination.
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11. Death of Option Holder.
If any person to whom an option has been granted under the Plan shall
cease to be an employee, officer, director or advisor of the Company or a
Subsidiary, by reason of death, or a holder of an option shall die within three
months after termination by reason of retirement at age 65, the option may be
exercised by the person or persons to whom the optionee's rights under the
option are transferred by will or by laws of descent and distribution at any
time prior to the expiration date of the option or within one year from the
date of death, whichever is earlier, but only to the extent the holder of the
option had the right to exercise such option on the date of such termination.
Notwithstanding the foregoing, no option may be exercised after ten years from
the date of its grant.
12. Adjustments Upon Changes in Capitalization.
If the shares of Common Stock outstanding are changed in number, kind
or class by reason of a stock split, combination, merger, consolidation,
reorganization, reclassification, exchange or any capital adjustment, including
a stock dividend, or if any distribution is made to shareholders other than a
cash dividend, then the Board of Directors (or Committee) shall, in its sole
judgment, determine for adjustment (i) the aggregate number and class of shares
that may be issued or transferred pursuant to Section 2, (ii) the number and
class of shares which are issuable under outstanding options, and (iii) the
purchase price to be paid per share under outstanding options. Adjustments
under this Section 12 shall be made in a proportionate and equitable manner by
the Board of Directors (or Committee), whose determination as to what
adjustments shall be made, and the extent thereof, shall be final, binding and
conclusive. In the event that a fraction of a share results from the foregoing
adjustment, said fraction shall be eliminated and the price per share of the
remaining shares subject to the option adjusted accordingly.
In the event of a liquidation of the Company, or a merger,
reorganization, or consolidation of the Company with any other corporation in
which the Company is not the surviving corporation or the Company becomes a
wholly owned subsidiary of another corporation, any unexercised options
theretofore granted under the Plan shall be deemed cancelled unless the
surviving corporation in any such merger, reorganization or consolidation
elected to assume the options under the Plan or to issue substitute options in
place thereof; provided, however, that, notwithstanding the foregoing, if such
options would otherwise be cancelled in accordance with the foregoing, the
optionee shall have the right, exercisable during a ten-day period ending on
the fifth day prior to such liquidation, merger or
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consolidation, to exercise the option in whole or in part.
The granting of an option pursuant to this Plan shall not affect in
any way the right or power of the Company to make adjustments, reorganizations,
reclassifications, or changes of its capital or business structure or to merge,
consolidate, dissolve, liquidate, or sell or transfer all or any part of its
business or assets.
13. Vesting of Rights Under Options.
Nothing contained in this Plan or in any resolution adopted or to be
adopted by the Board of Directors (or Committee) or the stockholders of the
Company shall constitute the vesting of any rights under any option. The
vesting of such rights shall take place only when a written agreement shall be
duly executed and delivered by and on behalf of the Company to the person to
whom the option shall be granted. Each option granted under this Plan shall be
evidenced by a stock option agreement in such form and containing such
provisions (subject to and limited by the terms of this Plan) as the Board of
Directors (or Committee) shall from time to time approve. Agreements evidencing
the options need not be identical.
14. Rights as a Shareholder.
A holder of an option shall have no rights of a shareholder with
respect to any shares covered by an option until the date of issuance of a
stock certificate representing such shares.
15. Termination and Amendment.
The Board of Directors may, at any time, terminate or suspend this
Plan or make such modifications or amendments thereto as it shall deem
advisable; provided, however, that no termination, modification or amendment
shall adversely affect the rights of a holder of an option previously granted
under the Plan.
16. Modification, Extension and Renewal of Options.
Subject to the terms and conditions and within the limitations of the
Plan, the Board of Directors may modify, extend or renew outstanding options
granted under the Plan, or accept the surrender of outstanding options (to the
extent not theretofore exercised) and authorize the granting of new options in
substitution therefor. Notwithstanding the foregoing, no modification of an
option shall, without the consent of the holder thereof, alter or impair any
rights or obligations under any option theretofore granted under the plan.
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17. Indemnification.
In addition to such other rights of indemnification as they may have
as members of the Board of Directors, the members of the Board of Directors
(or Committee) administering the Plan shall be indemnified by the Company
against reasonable expenses, including attorneys' fees, actually and
necessarily incurred in connection with the defense of any action, suit, or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereof, provided that within 60
days after institution of any such action, suit or proceeding, the member
shall, in writing, offer the Company the opportunity, at its own expense, to
handle and defend same.
18. Effectiveness of the Plan.
The Plan shall become effective upon adoption by the Board of
Directors provided, however, that the Plan shall be submitted for approval by
the stockholders of the Company no later than 12 months after the date of
adoption of the Plan by the Board of Directors. Should the stockholders fail to
approve the Plan, all options granted thereunder shall be and become null and
void. The Plan will terminate ten years from the date of adoption by the Board
of Directors, unless the Board of Directors elects to terminate the Plan prior
to that date.
19. Governmental and Other Regulations.
The Plan, and the grant and exercise of an option to purchase shares
hereunder, and the Company's obligation to sell and deliver shares upon the
exercise of rights to purchase shares shall be subject to all applicable
federal and state laws, rules and regulations, and to such approvals by any
regulatory or governmental agency which may, in the opinion of legal counsel
for the Company, be required.
20. Severability.
If any provision of the Plan is invalid, illegal or unenforceable, the
balance of the Plan shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.