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EXHIBIT 10-K
UNIMED PHARMACEUTICALS, INC.
1991 STOCK OPTION PLAN
(as amended through March 29, 1996)
1. Purpose.
The purpose of the 1991 Stock Option Plan (the "Plan") is to induce
employees and directors (each an "Outside Director") of Unimed Pharmaceuticals,
Inc. (the "Company") who are not employees of the Company or its present and
future subsidiary corporations (each a "Subsidiary"), as defined in Section
425(f) of the Internal Revenue Code of 1986, as amended (the "Code"), to remain
in the employ or service of the Company and its Subsidiaries, to attract new
employees and Outside Directors and to encourage such employees and Outside
Directors to secure or increase on reasonable terms their stock ownership in
the Company. The Board of Directors of the Company (the "Board") believes that
the granting of stock options (the "Options") under the Plan will promote
continuity of management and increased incentive and personal interest in the
welfare of the Company by those who are or may become primarily responsible for
shaping and carrying out the long range plans of the Company and securing its
continued growth and financial success. Options granted hereunder are intended
to be either (a) "incentive stock options" (which term, when used herein, shall
have the meaning ascribed thereto by the provisions of Section 422(b) of the
Code) or (b) options which are not incentive stock options ("non-incentive
stock options") or (c) a combination thereof, as determined by the Committee
(the "Committee") referred to in Section 5 hereof at the time of the grant
thereof.
2. Effective Date of the Plan.
The Plan became effective on November l, 1991, by resolution of the Board,
subject to ratification of the Plan by the vote of the holders of a majority of
all of the outstanding shares of the common stock of the Company (the "Common
Stock") present in person or by proxy at the 1992 Annual Meeting of the
Stockholders of the Company, and the Plan was ratified by the Stockholders at
that meeting.
3. Stock Subject to Plan.
1,800,000 of the authorized but unissued shares of the Common Stock are
hereby reserved for issue upon the exercise of Options granted under the Plan;
Provided, however, that the number of
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shares so reserved may from time to time be reduced to the extent that
a corresponding number of issued and outstanding shares of the Common Stock
are purchased by the Company and set aside for issue upon the exercise of
Options; Provided, further, however, that the number of shares issued upon the
exercise of Options granted under the Plan shall be determined without giving
effect to the use by a Participant of the right set forth in paragraph C of
Section 10 hereof to deliver shares of the Common Stock in payment of up to 50%
of the option price with respect to an Option. If any Options expire or
terminate for any reason without having been exercised in full, the unpurchased
shares subject thereto shall again be available for the purposes of the Plan.
4. Administration.
The Plan shall be administered by the Committee referred to in Section 5
hereof. Subject to the express provisions of the Plan, the Committee shall
have complete authority, in its discretion, to interpret the Plan, to
prescribe, amend and rescind rules and regulations relating to it, to determine
the terms and provisions of the respective option agreements or certificates
(which need not be identical), to determine the individuals (each a
"Participant") to whom and the times and the prices at which Options shall be
granted, the periods during which each Option shall be exercisable, the number
of shares of the Common Stock to be subject to each Option and whether such
Option shall be an incentive stock option or a non-incentive stock option and
to make all other determinations necessary or advisable for the administration
of the Plan. In making such determinations, the Committee may take into
account the nature of the services rendered by the respective employees, their
present and potential contributions to the success of the Company and the
Subsidiaries and such other factors as the Committee in its discretion shall
deem relevant. The Committee's determination on the matters referred to in
this Section 4 shall be conclusive. Any dispute or disagreement which may arise
under or as a result of or with respect to any Option shall be determined by
the Committee, in its sole discretion, and any interpretations by the Committee
of the terms of any Option shall be final, binding and conclusive.
5. Committee.
The Committee shall consist of two or more members of the Board both or
all of whom shall be "disinterested persons" within the meaning of Rule
16b-3(c)(2)(i) promulgated under the Securities Exchange Act of 1934, as
amended. The Committee shall be appointed annually by the Board, which may at
any time and from time to time remove any members of the Committee, with or
without cause, appoint additional members to the Committee and fill vacancies,
however caused, in the Committee. A majority of the members of the Committee
shall constitute a quorum. All determinations of the Committee shall be made
by a majority of its members present at a
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meeting duly called and held except that the Committee may delegate to
any one of its members the authority of the Committee with respect to the grant
of Options to persons who shall not be officers and/or directors of the
Company. Any decision or determination of the Committee reduced to writing and
signed by all of the members of the Committee (or by the member of the
Committee to whom authority has been delegated) shall be fully as effective as
if it had been made at a meeting duly called and held.
6. Eligibility.
An Option may be granted only to an employee of the Company or a
Subsidiary or an Outside Director of the Company. The term "employee" as used
herein shall include consultants to the Company, provided bona fide services
are rendered by such consultants to the Company, and such services are not in
connection with the offer or sale of securities in a capital-raising
transaction.
7. Option Prices.
A. The initial per share option price of any Option which is an incentive
stock option shall not be less than the fair market value of a share of the
Common Stock on the date of grant; provided, however, that, in the case of a
Participant who owns more than 10% of the total combined voting power of the
Common Stock at the time an Option which is an incentive stock option is
granted to him, the initial per share option price shall not be less than 110%
of the fair market value of a share of the Common Stock on the date of grant.
B. The initial per share option price of any Option which is a
non-incentive stock option shall not be less than 85% of the fair market value
of a share of the Common Stock on the date of grant; provided, however, that, in
the case of a Participant who is an Outside Director, the initial per share
option price shall be 100% of the fair market value of a share of the Common
Stock on the date of the grant.
C. For all purposes of the Plan, the fair market value of share of the
Common Stock on any date shall be equal to (i) the closing price, as reported by
NASDAQ, of the Common Stock on such date or (ii) if the Common Stock shall be
listed on a national securities exchange other than the NASDAQ national market
list, or any other exchange maintained by or as a part of NASDAQ, the mean
between the high and low sales prices of the Common Stock on such exchange on
such date. If a date is a date for which no trading is so reported, the fair
market value of a share of the Common Stock on such date shall be determined as
of the next preceding date for which trading is so reported.
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8. Option Term.
A. Except as otherwise provided in paragraph A of this Section 8,
Participants shall be granted options for such term as the Committee shall
determine, not in excess of ten years from the date of the granting thereof;
provided, however, that, in the case of a Participant who owns more than 10% of
the total combined voting power of the Common Stock at the time an Option which
is an incentive stock option is granted to him, the term with respect to such
Option shall not be in excess of five years from the date of the granting
thereof.
B. The term of each Option granted to an Outside Director shall be ten
years from the date of the granting thereof.
C. On the date of the first meeting of the Board on or after the date on
which an Outside Director has been elected to the Board for the first time,
such Outside Director shall be granted an Option to purchase 10,000 shares of
the Common Stock.
D. Each Outside Director also shall be granted an Option to purchase 7,500
shares of Common Stock on August 6, 1992, and shall be granted, on the date of
the meeting of the Board of Directors next following the Annual Meeting of
Stockholders each year commencing in 1993 and until the expiration date of the
Plan, an Option to purchase an additional 7,500 shares of Common Stock.
9. Limitation on Amount of Incentive Stock Options Granted.
The aggregate fair market value of the shares of the Common Stock for
which any Participant may be granted Options which are incentive stock options
which are exercisable for the first time in any calendar year (whether under
the terms of the Plan or any other stock option plan of the Company) shall not
exceed $100,000.
10. Exercise of Options.
A. Unless otherwise determined by the Committee at the time of the grant of
any Option or subsequent to the date of any grant, a Participant may not
exercise an Option during the period commencing on the date of the granting of
such Option to him and ending on the day next preceding the first anniversary
of such date, except as otherwise provided in Sections 10D, 10E and 12C.
Subject to the foregoing, a Participant may (i) during the period commencing on
the first anniversary of the date of the granting of an Option to him and
ending on the day next preceding the second anniversary of such date, exercise
such Option with respect to one-quarter of the shares granted thereby minus the
number of shares with respect to which such Option shall have theretofore been
exercised, (ii) during the period commencing on such second anniversary and
ending on the day next preceding the third anniversary of the date of the
granting of such Option, exercise
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such Option with respect to one-half of the shares granted thereby minus the
number of shares with respect to which such Option shall have theretofore been
exercised, (iii) during the period commencing on such third anniversary and
ending on the day next preceding the fourth anniversary of the date of the
granting of such Option, exercise such Option with respect to three quarters of
the shares granted thereby minus the number of shares with respect to which
such Option shall have theretofore been exercised, and (iv) during the period
commencing on such fourth anniversary, exercise such Option with respect to all
of the shares granted thereby minus the number of shares with respect to which
such Option shall have theretofore been exercised. The foregoing
notwithstanding, each Outside Director may exercise in full the Options granted
pursuant to paragraph D of Section 8 hereof commencing on the anniversary date
of the date of grant.
B. Except as hereinbefore otherwise set forth, an Option may be exercised
either in whole at any time or in part from time to time.
C. An Option may be exercised only by a written notice of intent to
exercise such Option with respect to a specific number of shares of the Common
Stock and payment to the Company of the amount of the option price for the
number of shares of the Common Stock so specified; provided, however, that up
to 50% of such payment may be made in kind by the delivery of shares of
the Common Stock having a fair market value equal to the portion of the option
price so paid; provided, further, however, that, subject to the requirements of
Regulation T (as in effect from time to time) promulgated under the Securities
Exchange Act of 1934, as amended, the Committee may implement procedures to
allow a broker chosen by a Participant to make payment of all or any portion of
the option price payable upon the exercise of an Option and receive, on behalf
of such Participant, all or any portion of the shares of the Common Stock
issuable upon such exercise.
D. Except in the case of an Option granted to an Outside Director, the
Board may, in its discretion, permit any Option to be exercised, in whole or in
part, prior to the time when it would otherwise be exercisable and to extend
the period during which an Option is exercisable.
E. I. Notwithstanding the provisions of paragraph A of this Section 10, in
the event that a Change in Control shall occur, then, each Option theretofore
granted to any Participant which shall not have theretofore expired or
otherwise been cancelled or become unexercisable shall become immediately
exercisable in full. For the purposes of this paragraph E, a "Change in
Control" shall be deemed to occur upon (a) the election of one or more
individuals to the Board which election results in a majority of the directors
of the Company consisting of individuals who have not been directors of the
Company for at least two years, unless such
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individuals have been nominated as directors by three-fourths of the
directors of the Company who have been directors of the Company for at least
two years; (b) the execution of a definitive agreement for the sale by the
Company of all or substantially all of its assets to any Person, the
consolidation of the Company with any Person, the merger of the Company with
any Person as a result of which the Company is not the surviving entity as a
publicly held corporation; (c) the Company and/or any Person acquires, sells or
transfers, in one or more transactions, related or unrelated, under
circumstances whereby any Person and its Affiliates shall own, after such
acquisition, sale or transfer, at least 20%, but less than 40%, of the shares
of the Company having voting power for the election of directors, unless such
acquisition, sale or transfer has been approved in advance by three-fourths of
the directors of the Company who have been directors of the Company for at
least two years; or (d) the Company and/or any Person acquires, sells or
transfers, in one or more transactions, related or unrelated, under
circumstances whereby any Person and its Affiliates shall own, after such
acquisition, sale or transfer, at least 40% of the shares of the Company having
voting power for the election of directors; or (e) a "tender offer" (as defined
in Section 14(d)(1) of the Securities Exchange Act of 1934, as amended), other
than a self tender by the Company, for a portion of the shares of the
Company having voting power for the election of directors, which, taken
together with shares owned by such acquirer, and giving effect to all rights to
acquire shares, will represent ownership of at least 20% of the shares of the
Company having voting power for the election of directors, unless such "tender
offer" has been approved in advance by three-fourths of the directors of the
Company who have been directors of the Company for at least two years. For the
purposes of this division I, (A) the term "Affiliate" shall mean any Person
that directly, or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, any other Person, (B) the
term "Person" shall mean any individual, partnership, firm, trust, corporation
or other similar entity, and (C) when two or more Persons act as a partnership,
limited partnership, syndicate or other group for the purpose of acquiring,
holding or disposing of securities of the Company, such partnership, limited
partnership, syndicate or group shall be deemed a "Person".
II. In the event that a Change of Control shall occur, then, from
and after the time of such event, neither the provisions of this paragraph E
nor any of the rights of any Participant thereunder shall be modified or
amended in any way.
F. Notwithstanding any other provision of the Plan to the contrary, if a
Participant has effected a "hardship withdrawal" from a "401(k) Plan"
maintained by the Company and/or any of the Subsidiaries, he may not exercise
any Option for a period of twelve months after the date of such "hardship
withdrawal". For the purposes of this paragraph F, (1) a Participant shall be
deemed to
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have effected a "hardship withdrawal" from a "401(k) Plan" if he has
received a distribution from such "401(k) Plan" on account of his "hardship"
within the meaning of Reg. 1.401(k)-l(d)(2) promulgated under Section 401(k) of
the Code and (2) a "401(k) Plan" is a profit-sharing or stock bonus plan which
satisfies the requirements of Section 401(a) of the Code and includes a
"qualified cash or deferred arrangement" within the meaning of Section
401(k)(2) of the Code.
11. Transferability.
No Option shall be assignable or transferable except by will and/or by the
laws of descent and distribution and, during the life of any Participant, each
Option granted to him may be exercised only by him.
12. Termination of Employment or Service.
A. In the event an employee who is a Participant leaves the employ of the
Company and its Subsidiaries, whether voluntarily or otherwise but other than
by reason of his death or discharge for cause, each Option theretofore granted
to him which shall not have theretofore expired or otherwise been cancelled
shall be exercisable to the extent it was exercisable on the date on which he
shall cease to be an employee and shall, to the extent not theretofore
exercised, terminate upon the earlier to occur of the expiration of three
months after the date on which he shall cease to be an employee and the date
specified in such Option.
B. In the event an Outside Director ceases to be an Outside Director,
whether voluntarily or otherwise but other than by reason of his death or
discharge for cause, each Option theretofore granted to him which shall not
have theretofore expired or otherwise been cancelled shall be
exercisable to the extent it was exercisable on the date on which he shall
cease to be an Outside Director and shall, to the extent not theretofore
exercised, terminate upon the earlier to occur of the expiration of three
months after the date on which he shall cease to be an Outside Director and the
date specified in such Option.
C. In the event a Participant's employment or service with the Company and
its Subsidiaries terminates by reason of his death, each Option theretofore
granted to him which shall not have theretofore expired or otherwise been
cancelled shall become immediately exercisable in full by the person or persons
to whom his rights under such Option shall pass by will or the laws of descent
and distribution. Each Option which is an incentive stock option will remain
in full force and effect for a period of one year from the date of death, and
each Option which is a non-incentive stock option shall remain in full force
and effect and exercisable by such person or persons, to the extent not
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theretofore exercised, until the date originally specified in such Option as
the date on which such Option is no longer exercisable.
D. In the event a Participant's employment or service with the Company and
its Subsidiaries terminates by reason of his discharge for cause, each Option
theretofore granted to him which shall not have theretofore expired or
otherwise been cancelled shall terminate immediately. For the purposes of this
Section 12, a "discharge for cause" shall be deemed to occur only after a good
faith determination by the Board that the termination of the employment or
service by the Company and/or a Subsidiary of the Participant is necessary or
desirable by reason of (i) the commission by the Participant of any act which,
if successfully prosecuted by the appropriate authorities, would constitute a
felony under state or federal law, (ii) the improper disclosure by the
Participant of material secrets of the Company and/or a Subsidiary or (iii) the
knowing violation by the Participant of the Company's and/or a Subsidiary's
conflicts of interest policy, unless, in any case, the Participant performed
such act, made such disclosure or violated said policy in good faith and in a
manner the Participant reasonably believed to be in or not opposed to the best
interests of the Company and its Subsidiaries.
13. Adjustment of Number of Shares.
In the event that a dividend shall be declared upon the Common Stock
payable in shares of the Common Stock, the number of shares of the Common Stock
then subject to any Option, the number of shares of the Common Stock reserved
for issuance in accordance with the provisions of the Plan but not yet covered
by an Option and the number of shares of the Common Stock to be subject to an
Option to be issued to an Outside Director shall be adjusted by adding to each
share the number of shares which would be distributable thereon if such shares
had been outstanding on the date fixed for determining the stockholders
entitled to receive such stock dividend. In the event that the outstanding
shares of the Common Stock shall be changed into or exchanged for a different
number or kind of shares of stock or other securities of the Company or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, sale of assets, merger or consolidation in
which the Company is the surviving corporation, then, there shall be
substituted for each share of the Common Stock then subject to any Option and
for each share of the Common Stock reserved for issuance in accordance with the
provisions of the Plan but not yet covered by an Option, the number and kind of
shares of stock or other securities into which each outstanding share of the
Common Stock shall be so changed or for which each such share shall be
exchanged. In the case of any substitution or adjustment in accordance with
the provisions of this Section 13, the option price in each stock option
agreement or certificate for each share covered thereby prior to such
substitution or adjustment shall be the option price for all shares
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of stock or other securities which shall have been substituted for such
share or to which such share shall have been adjusted in accordance with the
provisions of this Section 13. No adjustment or substitution provided for in
this Section 13 shall require the Company to sell a fractional share under any
stock option agreement or certificate. In the event of the dissolution or
liquidation of the Company, or a merger, reorganization or consolidation in
which the Company is not the surviving corporation, then, except as otherwise
Provided in the second sentence of this Section 13, each Option, to the extent
not theretofore exercised, shall terminate on fifteen days notice from the
Company.
14. Purchase for Investment, Withholding and Waivers.
A. Unless the shares to be issued upon the exercise of an Option by a
Participant shall be registered prior to the issuance thereof under the
Securities Act of 1933, as amended, such Participant will, as a condition of
the Company's obligation to issue such shares, be required to give a
representation in writing that he is acquiring such shares for his own account
as an investment and not with a view to, or for sale in connection with, the
distribution of any thereof.
B. In the event of the death of a Participant, a condition of exercising
any Option shall be the delivery to the Company of such tax waivers and other
documents as the Committee shall determine.
C. In the case of each non-incentive stock option, a condition of
exercising the same shall be the entry by the Participant exercising the same
into such arrangements with the Company with respect to income tax withholding
as the Committee may determine.
15. No Stockholder Status.
Neither any Participant nor his legal representatives, legatees or
distributees shall be or be deemed to be the holder of any share of the Common
Stock covered by an Option unless and until a certificate for such share has
been issued. Upon payment of the purchase price thereof, a share issued upon
exercise of an Option shall be fully paid and non-assessable.
16. No Restrictions on Corporate Acts.
Neither the existence of the Plan nor any Option shall in any way affect
the right or power of the Company or its stockholders to make or authorize any
or all adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock ahead of or affecting the Common Stock or the rights thereof, or
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dissolution or liquidation of the Company, or any sale or transfer of all or
any part of its assets or business, or any other corporate act or proceeding
whether of a similar character or otherwise.
17. No Employment or Service Right.
Neither the existence of the Plan nor the grant of any Option shall
require the Company or any Subsidiary to continue any Participant in the employ
or service of the Company or such Subsidiary.
18. Termination and Amendment of the Plan.
A. The Board may at any time terminate the Plan or make such modifications
of the Plan as it shall deem advisable; provided, however, that the Board may
not without further approval of the holders of a majority of the shares of the
Common Stock present in person or by proxy at any special or annual meeting of
the stockholders increase the number of shares as to which Options may be
granted under the Plan (as adjusted in accordance with the provisions of Section
13 hereof) or change the manner of determining the initial option prices.
Except as otherwise provided in Section 13 hereof, no termination or amendment
of the Plan may, without the consent of the Participant to whom any Option shall
theretofore have been granted, adversely affect the rights of such Participant
under such Option.
B. The provisions of this Section 18 may not be amended except by the vote
of the majority of the members of the Board and by the vote of the majority of
the members of the Board who are not Outside Directors, and the provisions of
the Plan shall not be amended more than once every six months, other than to
comport with changes in the Code, the Employee Retirement Income Security Act of
1974 or the Rules and Regulations thereunder.
19. Expiration and Termination of the Plan.
The Plan shall terminate on October 31, 2001 or at such earlier time as
the Board may determine. Options may be granted under the Plan at any time and
from time to time prior to its termination. Any Option outstanding under the
Plan at the time of the termination of the Plan shall remain in effect until
such Option shall have been exercised or shall have expired in accordance with
its terms.
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