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EXHIBIT 10.13
QUINTILES TRANSNATIONAL CORP.
EQUITY COMPENSATION PLAN
(AS AMENDED AND RESTATED NOVEMBER 4, 1999)
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QUINTILES TRANSNATIONAL CORP.
EQUITY COMPENSATION PLAN
(AS AMENDED AND RESTATED NOVEMBER 4, 1999)
TABLE OF CONTENTS
ARTICLE I - GENERAL PROVISIONS................................................1
ARTICLE II - DEFINITIONS......................................................2
ARTICLE III - ADMINISTRATION..................................................8
ARTICLE IV - INCENTIVE STOCK OPTIONS.........................................13
ARTICLE V - NONQUALIFIED STOCK OPTIONS.......................................16
ARTICLE VI - STOCK APPRECIATION RIGHTS.......................................17
ARTICLE VII - INCIDENTS OF STOCK OPTIONS AND STOCK RIGHTS....................19
ARTICLE VIII - RESTRICTED STOCK..............................................21
ARTICLE IX - ACCELERATION EVENTS.............................................24
ARTICLE X - AMENDMENT AND TERMINATION........................................26
ARTICLE XI - MISCELLANEOUS PROVISIONS........................................28
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QUINTILES TRANSNATIONAL CORP.
EQUITY COMPENSATION PLAN
ARTICLE I - GENERAL PROVISIONS
1.1 The Plan is designed for the benefit of the executives, directors and
key employees of the Corporation and its Subsidiaries; to attract and
retain for the Corporation and its subsidiaries personnel of
exceptional ability; to motivate such personnel through added
incentives to make a maximum contribution to greater profitability; to
develop and maintain a highly competent management team; and to be
competitive with other companies with respect to executive
compensation.
1.2 Awards under the Plan may be made to Participants in the form of (i)
Incentive Stock Options; (ii) Nonqualified Stock Options; (iii) Stock
Appreciation Rights; and (iv) Restricted Stock.
1.3 The Plan shall be effective February 21, 1994 (the "Effective Date"),
subject to the approval of the Plan by a vote of a majority of the
Board of Directors and by a majority of the votes cast by the holders
of the Corporation's Common Stock that may be voted at the meetings of
the Board of Directors and shareholders, respectively, scheduled for
February 21, 1994.
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ARTICLE II - DEFINITIONS
DEFINITIONS. Except where the context otherwise indicates, the following
definitions apply:
2.1 "Acceleration Event" means the occurrence of an event defined in
Article IX of the Plan.
2.2 "Act" means the Securities Exchange Act of 1934, as now in effect or as
hereafter amended. (All citations to sections of the Act or rules
thereunder are to such sections or rules as they may from time to time
be amended or renumbered.)
2.3 "Agreement" means the written agreement evidencing each Award granted
to a Participant under the Plan.
2.4 "Award" means an award granted to a Participant in accordance with the
provisions of the Plan, including, but not limited to, a Stock Option,
Stock Right, Restricted Stock, or any combination of the foregoing.
2.5 "Board" means the Board of Directors of the Corporation.
2.6 "Board-Approved Change in Control" shall have the meaning set forth in
Section 9.3 of the Plan.
2.7 "Change in Control" shall have the meaning set forth in Section 9.2 of
the Plan.
2.8 "Change in Control Price" shall have the meaning set forth in Section
9.8 of the Plan.
2.9 "Code" means the Internal Revenue Code of 1986, as now in effect or as
hereafter amended. (All citations to sections of the Code are to such
sections as they may from time to time be amended or renumbered.)
2.10 "Committee" means the Compensation Committee or such other committee
consisting of three (3) or more members as may be appointed by the
Board to administer this Plan pursuant to Article III. To the extent
required by Rule 16b-3 under the Act, the Committee shall consist of
individuals who are members of the Board and Non-Employee Directors.
Committee members may also be appointed for such limited purposes as
may be provided by the Board.
2.11 "Corporation" means Quintiles Transnational Corp., a North Carolina
corporation, and its successors and assigns. "Corporation" also means
Quintiles Transnational Corp. and its Subsidiaries, unless the context
clearly indicates otherwise.
2.12 "Disability" means disability as determined under procedures
established by the Committee or in any Award.
2.13 "Discount Stock Options" means the Nonqualified Stock Options that
provide for an
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exercise price of less than the Fair Market Value of the Stock at the
date of the Award.
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2.14 "Early Retirement" means retirement from active employment with the
Corporation or any Subsidiary, with the express consent of the
Committee, pursuant to the early retirement provisions established by
the Committee or in any Award.
2.15 "Effective Date" shall have the meaning set forth in Section 1.3 of the
Plan.
2.16 "Eligible Participant" means any executive, key employee or director of
the Corporation or its Subsidiaries, as shall be determined by the
Committee, as well as any other person whose participation the
Committee determines is in the best interest of the Corporation,
subject to limitations as may be provided by the Code, the Act or the
Committee.
2.17 "ERISA" means the Employee Retirement Income Security Act of 1974, as
now in effect or as hereafter amended.
2.18 "Fair Market Value" means, with respect to any given day, the closing
price of the Stock reported on the Nasdaq National Market for such day,
or if the Stock is not traded on such day, then on the next day on
which the Stock is traded, all as reported by such source as the
Committee may select. The Committee may establish an alternative method
of determining Fair Market Value.
2.19 "Incentive Stock Option" means a Stock Option granted under Article IV
of the Plan, and as defined in Section 422 of the Code.
2.20 "Limited Stock Appreciation Rights" means a Stock Right that is
exercisable only in the event of a Change in Control and/or a Potential
Change in Control, as described in Section 6.8 of this Plan, that
provides for an amount payable solely in cash, equal to the excess of
the Stock Appreciation Right Fair Market Value of a share of Stock on
the day the Stock Right is surrendered over the price at which a
Participant could exercise a related Stock Option to purchase the share
of Stock.
2.21 "Non-Employee Directors" shall have the meaning set forth under Rule
16b-3(b)(3) of the Act.
2.22 "Nonqualified Stock Option" means a Stock Option granted under Article
V of the Plan.
2.23 "Normal Retirement" means retirement from active employment with the
Corporation or any Subsidiary on or after age 65, or pursuant to such
other requirements as may be established by the Committee or in any
Award.
2.24 "Option Grant Date" means, as to any Stock Option, the latest of:
(a) the date on which the Committee grants the Stock Option by
entering into an Award Agreement with the Participant;
(b) the date the Participant receiving the Stock Option becomes an
employee of the Corporation or its Subsidiaries, to the extent
employment status is a condition of the
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grant or a requirement of the Code or the Act; or
(c) such other date (later than the dates described in (i) and
(ii) above) as the Committee may designate.
2.25 "Participant" means an Eligible Participant to whom an Award of
equity-based compensation has been granted and who has entered into an
Agreement evidencing the Award.
2.26 "Potential Change in Control" shall have the meaning set forth in
Section 9.4 of the Plan.
2.27 "Plan" means the Quintiles Transnational Corp. Equity Compensation
Plan, as amended from time to time.
2.28 "Restricted Stock" means an Award of Stock under Article VIII of the
Plan, which Stock is issued with the restriction that the holder may
not sell, transfer, pledge, or assign such Stock and with such other
restrictions as the Committee, in its sole discretion, may impose
(including, without limitation, any restriction on the right to vote
such Stock, and the right to receive any cash dividends), which
restrictions may lapse separately or in combination at such time or
times, in installments or otherwise, as the Committee may deem
appropriate.
2.29 "Restriction Period" means the period commencing on the date an Award
of Restricted Stock is granted and ending on such date as the Committee
shall determine.
2.30 "Retirement" means Normal or Early Retirement.
2.31 "Stock" means shares of Common Stock of the Corporation, as may be
adjusted pursuant to the provisions of Section 3.11.
2.32 "Stock Appreciation Right" means a Stock Right, as described in Article
VI of this Plan, that provides for an amount payable in Stock and/or
cash, as determined by the Committee, equal to the excess of the Fair
Market Value of a share of Stock on the day the Stock Right is
exercised over the price at which the Participant could exercise a
related Stock Option to purchase the share of Stock.
2.33 "Stock Appreciation Right Fair Market Value" means a value established
by the Committee for the exercise of a Stock Appreciation Right or a
Limited Stock Appreciation Right.
2.34 "Stock Option" means an Award under Article IV or V of the Plan of an
option to purchase Stock. A Stock Option may be either an Incentive
Stock Option or a Nonqualified Stock Option.
2.35 "Stock Right" means an Award under Article VI of the Plan. A Stock
Right may be either a Stock Appreciation Right or a Limited Stock
Appreciation Right.
2.36 "Subsidiary" or "Subsidiaries" means:
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(a) for the purpose of an Incentive Stock Option, any corporation
(other than the Corporation) in an unbroken chain of
corporations beginning with the Corporation if, at the time of
the granting of the Option, each of the corporations other
than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%)
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or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain; and
(b) for the purposes of all other types of equity-based
compensation provided for under the Plan, any corporation (or
partnership, joint venture, limited liability company, or
other enterprise) of which the Corporation owns or controls,
directly or indirectly, fifty percent (50%) or more of the
outstanding shares of stock normally entitled to vote for the
election of directors (or comparable equity participation and
voting power).
2.37 "Termination of Employment" means the discontinuance of employment of a
Participant with the Corporation or its Subsidiaries for any reason
other than a Transfer. The determination of whether a Participant has
discontinued employment shall be made by the Committee in its
discretion. In determining whether a Termination of Employment has
occurred, the Committee may provide that service as a consultant or
service with a business enterprise in which the Corporation has a
significant ownership interest shall be treated as employment with the
Corporation. The Committee shall have the discretion, exercisable
either at the time the Award is granted or at the time the Participant
terminates employment, to establish as a provision applicable to the
exercise of one or more Awards that during the limited period of
exercisability following Termination of Employment, the Award may be
exercised not only with respect to the number of shares of Stock for
which it is exercisable at the time of the Termination of Employment
but also with respect to one or more subsequent installments for which
the Award would have become exercisable had the Termination of
Employment not occurred.
2.38 "Transfer" means a change of employment of a Participant within the
group consisting of the Corporation and its Subsidiaries.
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ARTICLE III - ADMINISTRATION
3.1 This Plan shall be administered by the Committee. The Committee, in its
discretion, may delegate to one or more of its members, or to one or
more officers of the Corporation, all or part of the Committee's
authority and duties with respect to grants and awards to individuals
who are not subject to the reporting and other provisions of Section 16
of the Act; provided, however, that such persons must exercise any
authority so delegated to them within any guidelines established by the
Committee. The Committee may revoke or amend the terms of a delegation
at any time but such action shall not invalidate any prior actions of
the Committee's delegate or delegates that were consistent with the
terms of the Plan. Members of the Committee shall be appointed
originally, and as vacancies occur, by the Board, to serve at the
pleasure of the Board. The Board may serve as the Committee, if by the
terms of the Plan all Board members are otherwise eligible to serve on
the Committee.
3.2 The Committee shall meet at such times and places as it determines. A
majority of its members shall constitute a quorum, and the decision of
a majority of those present at any meeting at which a quorum is present
shall constitute the decision of the Committee. A memorandum signed by
all of its members shall constitute the decision of the Committee
without necessity, in such event, for holding an actual meeting.
3.3 The Committee shall have the exclusive right to interpret, construe and
administer the Plan, to select the persons who are eligible to receive
an Award, and to act in all matters pertaining to the granting of an
Award and the contents of the Agreement evidencing the Award,
including, without limitation, the determination of the number of Stock
Options, Stock Rights, and shares of Restricted Stock subject to an
Award and the form, terms, conditions and duration of each Award, and
any amendment thereof consistent with the provisions of the Plan. All
acts, determinations and decisions of the Committee made or taken
pursuant to grants of authority under the Plan or with respect to any
questions arising in connection with the administration and
interpretation of the Plan, including the severability of any and all
of the provisions thereof, shall be conclusive, final and binding upon
all Participants, Eligible Participants and their beneficiaries.
3.4 The Committee may adopt such rules, regulations and procedures of
general application for the administration of this Plan, as it deems
appropriate.
3.5 Without limiting the foregoing Sections 3.1, 3.2, 3.3 and 3.4, and
notwithstanding any other provisions of the Plan, the Committee is
authorized to take such action as it determines to be necessary or
advisable, and fair and equitable to Participants, with respect to an
Award in the event of an Acceleration Event as defined in Article IX.
Such action may include, but shall not be limited to, establishing,
amending or waiving the forms, terms, conditions and duration of an
Award and the Award Agreement, so as to provide for earlier, later,
extended or additional times for exercise or payments, differing
methods for calculating payments, alternate forms and amounts of
payment, an accelerated release of restrictions or other modifications.
The Committee may take such actions pursuant to this Section 3.5 by
adopting rules and regulations of general applicability to all
Participants or to certain
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categories of Participants, by including, amending or waiving terms and
conditions in an Award and the Award Agreement, or by taking action
with respect to individual Participants.
3.6 The maximum aggregate number of shares of Stock subject to Awards under
the Plan shall be five million eight hundred forty-one thousand three
hundred and nineteen (5,841,319) shares, plus an annual increase to be
added as of January 1 of each year, beginning January 1, 2000, equal to
the lesser of (i) five hundred thousand (500,000) shares, (ii) five
percent (5%) of any increase, other than any increase due to Awards
under this Plan or any other similar plan of the Corporation, in the
number of authorized and issued shares (on a fully diluted basis) above
the number of authorized and outstanding shares as of the preceding
January 1, or (iii) a lesser number determined by the Board.
(a) If, for any reason, any shares of Stock awarded or subject to
purchase under the Plan are not delivered or purchased, or are
reacquired by the Corporation, for reasons including, but not
limited to, a forfeiture of Restricted Stock or termination,
expiration or cancellation of a Stock Option or Stock Right,
or any other termination of an Award without payment being
made in the form of Stock (whether or not Restricted Stock),
such shares of Stock shall not be charged against the
aggregate number of shares of Stock available for Award under
the Plan, and shall again be available for Award under the
Plan.
(b) To the extent a Stock Right granted in connection with a Stock
Option is exercised without payment being made in the form of
Stock (whether or not Restricted Stock), the shares of Stock
that otherwise would have been issued upon the exercise of
such related Stock Option shall not be charged against the
aggregate number of shares of Stock subject to an Award under
the Plan, and shall again be available for Award under the
Plan.
3.7 Each Award granted under the Plan shall be evidenced by a written Award
Agreement. Each Award Agreement shall be subject to and incorporate (by
reference or otherwise) the applicable terms and conditions of the
Plan, and any other terms and conditions (not inconsistent with the
Plan) required by the Committee.
3.8 The Corporation shall not be required to issue or deliver any
certificates for shares of Stock prior to:
(a) the listing of such shares on any stock exchange or the
national market system on which the Stock may then be listed;
and
(b) the completion of any registration or qualification of such
shares of Stock under any federal or state law, or any ruling
or regulation of any government body that the Corporation
shall, in its discretion, determine to be necessary or
advisable.
3.9 All certificates for shares of Stock delivered under the Plan shall
also be subject to such
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stop-transfer orders and other restrictions as the Committee may deem
advisable under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange or the national
market system upon which the Stock is then listed and any applicable
federal or state laws, and the Committee may cause a legend or legends
to be placed on any such certificates to make appropriate reference to
such restrictions. In making such determination, the Committee may rely
upon an opinion of counsel for the Corporation.
3.10 Subject to the restrictions on Restricted Stock, as provided in Article
VIII of the Plan and in the Restricted Stock Award Agreement, each
Participant who receives an Award of Restricted Stock shall have all of
the rights of a shareholder with respect to such shares of Stock,
including the right to vote the shares to the extent, if any, such
shares possess voting rights and receive dividends and other
distributions. Except as provided otherwise in the Plan or in an Award
Agreement, no Participant awarded a Stock Option or Stock Right shall
have any right as a shareholder with respect to any shares of Stock
covered by his or her Stock Option or Stock Right prior to the date of
issuance to him or her of a certificate or certificates for such shares
of Stock.
3.11 If any reorganization, recapitalization, reclassification, stock
split-up, stock dividend, or consolidation of shares of Stock, merger
or consolidation of the Corporation or its subsidiaries or sale or
other disposition by the Corporation or its Subsidiaries of all or a
portion of its assets, any other change in the Corporation's or its
Subsidiaries' corporate structure, or any distribution to shareholders
other than a cash dividend results in the outstanding shares of Stock,
or any securities exchanged therefor or received in their place, being
exchanged for a different number or class of shares of Stock or other
securities of the Corporation, or for shares of Stock or other
securities of any other corporation; or new, different or additional
shares or other securities of the Corporation or of any other
corporation being received by the holders of outstanding shares of
Stock, then equitable adjustments shall be made by the Committee in:
(a) the limitation of the aggregate number of shares of Stock that
may be awarded as set forth in Section 3.6 of the Plan;
(b) the number and class of Stock that may be subject to an Award
and that have not been issued or transferred under an
outstanding Award;
(c) the purchase price to be paid per share of Stock under
outstanding Stock Options and the number of shares of Stock to
be transferred in settlement of outstanding Stock Rights; and
(d) the terms, conditions or restrictions of any Award and Award
Agreement, including the price payable for the acquisition of
Stock; provided, however, that all adjustments made as the
result of the foregoing in respect of each Incentive Stock
Option shall be made so that such Stock Option shall continue
to be an Incentive Stock Option, as defined in Section 422 of
the Code.
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3.12 In addition to such other rights of indemnification as they may have as
directors or as members of the Committee, the members of the Committee
shall be indemnified by the Corporation against reasonable expenses,
including attorney's 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 Award granted thereunder, and against
all amounts paid by them in settlement thereof (provided such
settlement is approved by independent legal counsel selected by the
Corporation) or paid by them in satisfaction of a judgment or
settlement in any such action, suit or proceeding, except as to matters
as to which the Committee member has been negligent or engaged in
misconduct in the performance of his duties; provided, that within
sixty (60) days after institution of any such action, suit or
proceeding, a Committee member shall in writing offer the Corporation
the opportunity, at its own expense, to handle and defend the same.
3.13 The Committee may require each person purchasing shares of Stock
pursuant to a Stock Option or other Award under the Plan to represent
to and agree with the Corporation in writing that he is acquiring the
shares of Stock without a view to distribution thereof. The
certificates for such shares of Stock may include any legend that the
Committee deems appropriate to reflect any restrictions on transfer.
3.14 The Committee shall be authorized to make adjustments in the terms and
conditions of Awards in recognition of unusual or nonrecurring events
affecting the Corporation (or any Subsidiary, if applicable) or its
financial statements or changes in applicable laws, regulations or
accounting principles. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or any Award
Agreement in the manner and to the extent it shall deem desirable to
carry it into effect. If the Corporation (or any Subsidiary, if
applicable) shall assume outstanding employee benefit awards or the
right or obligation to make future such awards in connection with the
acquisition of another corporation or business entity, the Committee
may, in its discretion, make such adjustments in the terms of Awards
under the Plan as it shall deem appropriate.
3.15 The Committee shall have full power and authority to determine whether,
to what extent and under what circumstances, any Award shall be
canceled or suspended. In particular, but without limitation, all
outstanding Awards to any Participant shall be canceled if (a) the
Participant, without the consent of the Committee, while employed by
the Corporation or any Subsidiary or after termination of such
employment, becomes associated with, employed by, renders services to,
or owns any interest in (other than any nonsubstantial interest, as
determined by the Committee), any business that is in competition with
the Corporation or with any business in which the Corporation and/or
its Subsidiaries have a substantial interest as determined by the
Committee; or (b) is terminated for cause as determined by the
Committee.
3.16 The following limitations shall apply to grants of Options:
(a) No Eligible Participant shall be granted, in any fiscal year
of the Company, Options to purchase more than 500,000 shares
of Stock.
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(b) In connection with his or her initial service, an Eligible
Participant may be granted Options to purchase up to an
additional 200,000 shares that shall not count against the
limit set forth in subsection (a) above.
(c) The foregoing limitations shall be adjusted proportionately in
connection with any change in the Company's capitalization as
described in Section 3.11.
(d) If an Option is cancelled in the same fiscal year of the
Company in which it was granted (other than in connection with
a transaction described in Article IX of the Plan), the
cancelled Option will be counted against the limits set forth
in subsections (a) and (b) above. For this purpose, if the
exercise price of an Option is reduced, the transaction will
be treated as a cancellation of the Option and the grant of a
new Option.
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ARTICLE IV - INCENTIVE STOCK OPTIONS
4.1 Each provision of this Article IV and of each Incentive Stock Option
granted hereunder shall be construed in accordance with the provisions
of Section 422 of the Code, and any provision hereof that cannot be so
construed shall be disregarded. Incentive Stock Options shall be
granted only to Eligible Participants, each of whom may be granted one
or more such Incentive Stock Options at such time or times determined
by the Committee following the Effective Date until February 21, 2004,
subject to the following conditions:
(a) The Incentive Stock Option price per share of Stock shall be
set in the Award Agreement, but shall not be less than one
hundred percent (100%) of the Fair Market Value of the Stock
at the time of the Option Grant Date.
(b) The Incentive Stock Option and its related Stock Right, if
any, may be exercised in full or in part from time to time
within ten (10) years from the Option Grant Date, or such
shorter period as may be specified by the Committee in the
Award; provided, that in any event, the Incentive Stock Option
and related Stock Right shall lapse and cease to be
exercisable upon, or within such period following, a
Termination of Employment as shall have been determined by the
Committee and as specified in the Incentive Stock Option Award
Agreement or its related Stock Right Award Agreement;
provided, however, that such period following a Termination of
Employment shall not exceed three (3) months unless employment
shall have terminated:
(i) as a result of death or Disability, in which event
such period shall not exceed one year after the date
of death or Disability; and
(ii) as a result of death, if death shall have occurred
following a Termination of Employment and while the
Incentive Stock Option or Stock Right was still
exercisable, in which event such period shall not
exceed one year after the date of death;
provided further, that such period following a Termination of
Employment shall in no event extend the original exercise
period of the Incentive Stock Option or any related Stock
Right.
(c) The aggregate Fair Market Value, determined as of the Option
Grant Date, of the shares of Stock with respect to which
Incentive Stock Options are first exercisable during any
calendar year by any Eligible Participant shall not exceed one
hundred thousand dollars (100,000); provided, however, to the
extent permitted under Section 422 of the Code:
(i) if a Participant's employment is terminated by reason
of death, Disability or Retirement and the portion of
any Incentive Stock Option that is otherwise
exercisable during the post-termination period
applied without regard to the
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one hundred thousand dollar (100,000) limitation
contained in Section 422 of the Code is greater than
the portion of such option that is immediately
exercisable as an Incentive Stock Option during such
post-termination
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period under Section 422, such excess shall be
treated as a Nonqualified Stock Option; and
(ii) if the exercise of an Incentive Stock Option is
accelerated by reason of an Acceleration Event, any
portion of such Award that is not exercisable as an
Incentive Stock Option by reason of the one hundred
thousand dollar ($100,000) limitation contained in
Section 422 of the Code shall be treated as a
Nonqualified Stock Option.
(d) Incentive Stock Options shall be granted only to Eligible
Participants who, at the time of the Option Grant Date, do not
own stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the
Corporation, unless the Incentive Stock Option Price per share
of Stock shall not be less than one hundred and ten percent
(110%) of the Fair Market Value of the Stock at the time of
the Option Grant Date and the Incentive Stock Options by their
terms are not exercisable after the expiration of five (5)
years from the Option Grant Date.
(e) The Committee may adopt any other terms and conditions that it
determines should be imposed for Incentive Stock Options to
qualify under Section 422 of the Code, as well as any other
terms and conditions not inconsistent with this Article IV, as
determined by the Committee.
4.2 The Committee may at any time offer to buy out for a payment in cash,
Stock, or Restricted Stock an Incentive Stock Option previously
granted, based on such terms and conditions as the Committee shall
establish and communicate to the Participant at the time that such
offer is made.
4.3 If the Incentive Stock Option Award Agreement so provides, the
Committee may require that all or part of the shares of Stock to be
issued upon the exercise of an Incentive Stock Option shall take the
form of Restricted Stock, which shall be valued on the date of
exercise, as determined by the Committee, on the basis of the Fair
Market Value of such Restricted Stock determined without regard to the
forfeiture restrictions involved.
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ARTICLE V - NONQUALIFIED STOCK OPTIONS
5.1 One or more Stock Options may be granted as Nonqualified Stock Options
to Eligible Participants to purchase shares of Stock at such time or
times determined by the Committee, following the Effective Date,
subject to the terms and conditions set forth in this Article V.
5.2 The Nonqualified Stock Option price per share of Stock shall be
established in the Award Agreement and may be less than one hundred
percent (100%) of the Fair Market Value at the time of the grant.
5.3 The times and conditions upon which a Nonqualified Stock Option and its
related Stock Right, if any, will terminate where a Participant to whom
such an option and related right has been granted under the Plan
terminates, or the Corporation terminates, his or her employment,
consultant, or service relationship with the Corporation shall be
determined by the Committee when the option and any related right are
granted; provided, however, that in no event shall an option or related
right be exercisable more than ten (10) years from the date it was
granted. Nothing in the Plan or in any option or related right granted
pursuant to the Plan shall (a) confer on any individual any right to
continue in the employ of the Corporation or to continue any consultant
or service relationship with the Corporation or (b) interfere in any
way with the Corporation's right to terminate such individual's
employment, consultant or service relationship at any time.
5.4 The Nonqualified Stock Option Award Agreement may include any other
terms and conditions not inconsistent with this Article V or Article
VII below, as determined by the Committee.
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ARTICLE VI - STOCK APPRECIATION RIGHTS
6.1 A Stock Appreciation Right may be granted to an Eligible Participant in
connection with an Incentive Stock Option or a Nonqualified Stock
Option granted under Article IV or Article V of this Plan, or may be
granted independent of any related Stock Option.
6.2 A related Stock Appreciation Right shall entitle a holder of a Stock
Option, within the period specified for the exercise of the Stock
Option, to surrender the unexercised Stock Option (or a portion
thereof) and to receive in exchange therefor a payment in cash or
shares of Stock having an aggregate value equal to the amount by which
the Fair Market Value of each share of Stock exceeds the Stock Option
price per share of Stock, times the number of shares of Stock under the
Stock Option, or portion thereof, that is surrendered.
6.3 Each related Stock Appreciation Right granted hereunder shall be
subject to the same terms and conditions as the related Stock Option,
including limitations on transferability, and shall be exercisable only
to the extent such Stock Option is exercisable and shall terminate or
lapse and cease to be exercisable when the related Stock Option
terminates or lapses. The grant of Stock Appreciation Rights related to
Incentive Stock Options must be concurrent with the grant of the
Incentive Stock Options. With respect to Nonqualified Stock Options,
the grant either may be concurrent with the grant of the Nonqualified
Stock Options or in connection with Nonqualified Stock Options
previously granted under Article V, which are unexercised and have not
terminated or lapsed.
6.4 The Committee shall have sole discretion to determine in each case
whether the payment with respect to the exercise of a Stock
Appreciation Right will be in the form of all cash, all Stock, or any
combination thereof. If payment is to be made in Stock, the number of
shares of Stock shall be determined based on the Fair Market Value of
the Stock on the date of exercise. If the Committee elects to make full
payment in Stock, no fractional shares of Stock shall be issued and
cash payments shall be made in lieu of fractional shares.
6.5 The Committee shall have sole discretion as to the timing of any
payment made in cash, Stock, or a combination thereof, upon exercise of
Stock Appreciation Rights. Payment may be made in a lump sum, in annual
installments or may be otherwise deferred; and the Committee shall have
sole discretion to determine whether any deferred payments may bear
amounts equivalent to interest or cash dividends.
6.6 Upon exercise of a Stock Appreciation Right, the number of shares of
Stock subject to exercise under any related Stock Option shall
automatically be reduced by the number of shares of Stock represented
by the Stock Option or portion thereof that is surrendered.
6.7 The Committee, in its sole discretion, may also provide that, in the
event of a Change in Control and/or a Potential Change in Control, the
amount to be paid upon the exercise of a Stock Appreciation Right or
Limited Stock Appreciation Right shall be based on the Change in
Control Price, subject to such terms and conditions as the Committee
may specify at grant.
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6.8 In its sole discretion, the Committee may grant Limited Stock
Appreciation Rights under this Article VI. Limited Stock Appreciation
Rights become exercisable only in the event of a Change in Control
and/or a Potential Change in Control, subject to such terms and
conditions as the Committee, in its sole discretion, may specify at
grant. Such Limited Stock Appreciation Rights shall be settled solely
in cash. A Limited Stock Appreciation Right shall entitle the holder of
the related Stock Option to surrender such Stock Option, or any portion
thereof, to the extent unexercised in respect of the number of shares
of Stock as to which such Limited Stock Appreciation Right is
exercised, and to receive a cash payment equal to the difference
between (a) the Stock Appreciation Right Fair Market Value (at the date
of surrender) of a share of Stock for which the surrendered Stock
Option or portion thereof is then exercisable, and (b) the price at
which a Participant could exercise a related Stock Option to purchase
the share of Stock. Such Stock Option shall, to the extent so
surrendered, thereupon cease to be exercisable.
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ARTICLE VII - INCIDENTS OF STOCK OPTIONS AND STOCK RIGHTS
7.1 Each Stock Option and Stock Right shall be granted subject to such
terms and conditions, if any, not inconsistent with this Plan, as shall
be determined by the Committee, including any provisions as to
continued employment as consideration for the grant or exercise of such
Stock Option or Stock Right and any provisions that may be advisable to
comply with applicable laws, regulations or rulings of any governmental
authority.
7.2 Unless determined otherwise by the Committee (or a designee of the
Committee, as applicable), a Stock Option or Stock Right shall not be
transferable by the Participant other than by will or by the laws of
descent and distribution, or, to the extent allowed by applicable law,
pursuant to a qualified domestic relations order as defined by the Code
or ERISA and the rules thereunder, and shall be exercisable during the
lifetime of the Participant only by him or by his guardian or legal
representative. If the Committee (or its designee) in its sole
discretion permits an option or Stock Right to be transferable, it
shall be transferable only by gift or by domestic relations order to or
for the benefit of a "family member" of the Participant, as such term
is defined in the General Instructions to Form S-8 under the Securities
Act of 1933, as amended.
7.3 Shares of Stock purchased upon exercise of a Stock Option shall be paid
for in such amounts, at such times and upon such terms as shall be
determined by the Committee, subject to limitations set forth in the
Stock Option Award Agreement. Without limiting the foregoing, the
Committee may establish payment terms for the exercise of Stock Options
that permit the Participant to deliver shares of Stock (or other
evidence of ownership of Stock satisfactory to the Corporation) with a
Fair Market Value equal to the Stock Option price as payment.
7.4 No cash dividends shall be paid on shares of Stock subject to
unexercised Stock Options. The Committee may provide, however, that a
Participant to whom a Stock Option has been granted that is exercisable
in whole or in part at a future time for shares of Stock shall be
entitled to receive an amount per share equal in value to the cash
dividends, if any, paid per share on issued and outstanding Stock, as
of the dividend record dates occurring during the period between the
date of the grant and the time each such share of Stock is delivered
pursuant to exercise of such Stock Option or the related Stock Right.
Such amounts (herein called "dividend equivalents") may, in the
discretion of the Committee, be:
(a) paid in cash or Stock either from time to time prior to, or at
the time of the delivery of, such Stock, or upon expiration of
the Stock Option if it shall not have been fully exercised; or
(b) converted into contingently credited shares of Stock (with
respect to which dividend equivalents may accrue) in such
manner, at such value, and deliverable at such time or times,
as may be determined by the Committee.
Such Stock (whether delivered or contingently credited) shall be
charged against the
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limitations set forth in Section 3.6.
7.5 The Committee, in its sole discretion, may authorize payment of
interest equivalents on dividend equivalents that are payable in cash
at a future time.
7.6 In the event of death or Disability, the Committee, with the consent of
the Participant or his legal representative, may authorize payment, in
cash or in Stock, or partly in cash and partly in Stock, as the
Committee may direct, of an amount equal to the difference at the time
between the Fair Market Value of the Stock subject to a Stock Option
and the Option price in consideration of the surrender of the Stock
Option.
7.7 If a Participant is required to pay to the Corporation an amount with
respect to income and employment tax withholding obligations in
connection with exercise of a Nonqualified Stock Option, and/or with
respect to certain dispositions of Stock acquired upon the exercise of
an Incentive Stock Option, the Committee, in its discretion and subject
to such rules as it may adopt, may permit the Participant to satisfy
the obligation, in whole or in part, by making an irrevocable election
that a portion of the total Fair Market Value of the shares of Stock
subject to the Nonqualified Stock Option and/or with respect to certain
dispositions of Stock acquired upon the exercise of an Incentive Stock
Option, be paid in the form of cash in lieu of the issuance of Stock
and that such cash payment be applied to the satisfaction of the
withholding obligations. The amount to be withheld shall not exceed the
statutory minimum federal and state income and employment tax liability
arising from the Stock Option exercise transaction.
7.8 The Committee may permit the voluntary surrender of all or a portion of
any Stock Option granted under the Plan to be conditioned upon the
granting to the Participant of a new Stock Option for the same or a
different number of shares of Stock as the Stock Option surrendered, or
may require such voluntary surrender as a condition precedent to a
grant of a new Stock Option to such Participant. Subject to the
provisions of the Plan, such new Stock Option shall be exercisable at
the same price, during such period and on such other terms and
conditions as are specified by the Committee at the time the new Stock
Option is granted. Upon surrender, the Stock Option surrendered shall
be canceled and the shares of Stock previously subject to it shall be
available for the grant of other Stock Options.
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ARTICLE VIII - RESTRICTED STOCK
8.1 Restricted Stock Awards may be made to certain Participants as
incentives for the performance of future services that will contribute
materially to the successful operation of the Corporation and its
Subsidiaries. Awards of Restricted Stock may be made either alone, in
addition to or in tandem with other Awards granted under the Plan
and/or cash payments made outside of the Plan.
8.2 With respect to Awards of Restricted Stock, the Committee shall:
(a) determine the purchase price, if any, to be paid for such
Restricted Stock, which may be equal to or less than par value
and may be zero, subject to such minimum consideration as may
be required by applicable law;
(b) determine the length of the Restriction Period;
(c) determine any restrictions applicable to the Restricted Stock
such as service or performance, other than those set forth in
this Article VIII;
(d) determine if the restrictions shall lapse as to all shares of
Restricted Stock at the end of the Restriction Period or as to
a portion of the shares of Restricted Stock in installments
during the Restriction Period; and
(e) determine if dividends and other distributions on the
Restricted Stock are to be paid currently to the Participant
or withheld by the Corporation for the account of the
Participant.
8.3 Awards of Restricted Stock must be accepted within a period of sixty
(60) days (or such shorter periods as the Committee may specify at
grant) after the Award date, by executing a Restricted Stock Award
Agreement and paying whatever price (if any) is required.
The prospective recipient of a Restricted Stock Award shall not have
any rights with respect to such Award, unless such recipient has
executed a Restricted Stock Award Agreement and has delivered a fully
executed copy thereof to the Committee, and has otherwise complied with
the applicable terms and conditions of such Award.
8.4 Except when the Committee determines otherwise, or as otherwise
provided in the Restricted Stock Award Agreement, if a Participant
terminates employment with the Corporation or its Subsidiaries for any
reason before the expiration of the Restriction Period, all shares of
Restricted Stock still subject to restriction shall be forfeited by the
Participant and shall be reacquired by the Corporation.
8.5 Except as otherwise provided in this Article VIII, no shares of
Restricted Stock received by a Participant shall be sold, exchanged,
transferred, pledged, hypothecated or otherwise disposed of during the
Restriction Period.
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8.6 To the extent not otherwise provided in a Restricted Stock Award
Agreement, in cases of death, Disability or Retirement or in cases of
special circumstances, the Committee, if it
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finds that a waiver would be appropriate, may elect to waive any or all
remaining restrictions with respect to such Participant's Restricted
Stock.
8.7 In the event of hardship or other special circumstances of a
Participant whose employment with the Corporation or any Subsidiary is
involuntarily terminated (other than for cause), the Committee may
waive in whole or in part any or all remaining restrictions with
respect to any or all of the Participant's Restricted Stock, based on
such factors and criteria as the Committee may deem appropriate.
8.8 The certificates representing shares of Restricted Stock may either:
(a) be held in custody by the Corporation until the Restriction
Period expires or until restrictions thereon otherwise lapse,
and the Participant shall deliver to the Corporation a stock
power endorsed in blank relating to the Restricted Stock;
and/or
(b) be issued to the Participant and registered in the name of the
Participant, and shall bear an appropriate restrictive legend
and shall be subject to appropriate stop-transfer orders.
8.9 Except as provided in this Article VIII, a Participant receiving a
Restricted Stock Award shall have, with respect to the shares of
Restricted Stock covered by any Award, all of the rights of a
shareholder of the Corporation, including the right to vote the shares
to the extent, if any, such shares possess voting rights, and the right
to receive any dividends; provided, however, the Committee may require
that any dividends on such shares of Restricted Stock shall be
automatically deferred and reinvested in additional Restricted Stock
subject to the same restrictions as the underlying Award, or may
require that dividends and other distributions on Restricted Stock
shall be withheld by the corporation for the account of the
Participant. The Committee shall determine whether interest shall be
paid on amounts withheld, the rate of any such interest, and the other
terms applicable to such withheld amounts.
8.10 If and when the Restriction Period expires without a prior forfeiture
of the Restricted Stock subject to such Restriction Period,
unrestricted certificates for such shares shall be delivered to the
Participant.
8.11 In order to better ensure that Award payments actually reflect the
performance of the Corporation and its Subsidiaries and the service of
the Participant, the Committee may provide, in its sole discretion, for
a tandem performance-based or other Award designed to guarantee a
minimum value, payable in cash or Stock to the recipient of a
Restricted Stock Award, subject to such performance, future service,
deferral and other terms and conditions as may be specified by the
Committee.
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ARTICLE IX - ACCELERATION EVENTS
9.1 For the purposes of the Plan, an Acceleration Event shall occur in the
event of a "Potential Change in Control," or "Change in Control" or a
"Board-Approved Change in Control", as those terms are defined below.
9.2 A "Change in Control" shall be deemed to have occurred if:
(a) Any "Person" as defined in Section 3(a)(9) of the Act,
including a "group" (as that term is used in Sections 3(d)(3)
and 14(d)(2) of the Act), but excluding the Corporation and
any Subsidiary and any employee benefit plan sponsored or
maintained by the Corporation and any Subsidiary (including
any trustee of such plan acting as trustee) or Dennis B.
Gillings, Ph.D. individually, who:
(i) makes a tender or exchange offer for any shares of
the Corporation's Stock (as defined below) pursuant
to which any shares of the Corporation's Stock are
purchased (an "Offer"); or
(ii) together with its "affiliates" and "associates" (as
those terms are defined in Rule 12b-2 under the Act)
becomes the "Beneficial Owner" (within the meaning of
Rule 13d-3 under the Act) of at least twenty percent
(20%) of the Corporation's Stock (an "Acquisition");
(b) The shareholders of the Corporation approve a definitive
agreement or plan to merge or consolidate the Corporation with
or into another corporation, to sell or otherwise dispose of
all or substantially all of its assets, or to liquidate the
Corporation (individually, a "Transaction"); or
(c) When, during any period of twenty-four (24) consecutive months
during the existence of the Plan, the individuals who, at the
beginning of such period, constitute the Board (the "Incumbent
Directors") cease for any reason other than death to
constitute at least a majority thereof; provided, however,
that a director who was not a director at the beginning of
such twenty-four (24) month period shall be deemed to have
satisfied such twenty-four (24) month requirement (and be an
Incumbent Director) if such director was elected by, or on the
recommendation of or with the approval of, at least two-thirds
of the directors who then qualified as Incumbent Directors
either actually (because they were directors at the beginning
of such twenty-four (24) month period) or by prior operation
of this Section 9.2(c).
9.3 A "Board-Approved Change in Control" shall be deemed to have occurred
if the Offer, Acquisition or Transaction, as the case may be, is
approved by a two-thirds (2/3) majority of the Directors serving as
members of the Board at the time of the Potential Change in Control or
Change in Control.
9.4 A "Potential Change in Control" means the happening of any one of the
following:
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(a) The approval by shareholders of an agreement by the
Corporation, the consummation of which would result in a
Change in Control of the Corporation, as defined in Section
9.2; or
(b) The acquisition of Beneficial Ownership, directly or
indirectly, by any entity, person or group (other than the
Corporation or any Subsidiary or any Corporation or Subsidiary
employee benefit plan (including any trustee of such plan
acting as such trustee) or Dennis B. Gillings, Ph.D.
individually), of securities of the Corporation representing
ten percent (10%) or more of the combined voting power of the
Corporation's outstanding securities and the adoption by the
Board of a resolution to the effect that a Potential Change in
Control of the Corporation has occurred for the purposes of
this Plan.
9.5 Upon the occurrence of an Acceleration Event, subject to the approval
of the Committee if the Acceleration Event results from a
Board-Approved Change in Control, the Committee in its discretion may
declare any or all then outstanding Stock Options (and any or all
related Stock Rights outstanding for at least six (6) months) not
previously exercisable and vested as immediately exercisable and fully
vested, in whole or in part.
9.6 Upon the occurrence of an Acceleration Event, subject to the approval
of the Committee if the Acceleration Event results from a
Board-Approved Change in Control, the Committee in its discretion, may
declare the restrictions applicable to Awards of Restricted Stock to
have lapsed, in which case the Corporation shall remove all restrictive
legends and stop-transfer orders applicable to the certificates for
such shares of Stock, and deliver such certificates to the Participants
in whose names they are registered.
9.7 The value of all outstanding Stock Options, Stock Rights, and
Restricted Stock, in each case to the extent vested, shall, unless
otherwise determined by the Committee in its sole discretion at or
after grant but prior to any Change in Control, be cashed out on the
basis of the "Change in Control Price," as defined in Section 9.8 as of
the date such Change in Control or such Potential Change in Control is
determined to have occurred or such other date as the Committee may
determine prior to the Change in Control.
9.8 For purposes of Section 9.7, "Change in Control Price" means the
highest price per share of Stock paid in any transaction reported on
the Nasdaq National Market or paid or offered in any bona fide
transaction related to a Potential or actual Change in Control of the
Corporation at any time during the sixty (60) day period immediately
preceding the occurrence of the Change in Control (or, where
applicable, the occurrence of the Potential Change in Control event),
in each case as determined by the Committee except that, in the case of
Incentive Stock Options and Stock Appreciation Rights (or Limited Stock
Appreciation Rights) relating to such Incentive Stock Options, such
price shall be based only on transactions reported for the date on
which the optionee exercises such Stock Appreciation Rights (or Limited
Stock Appreciation Rights).
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ARTICLE X - AMENDMENT AND TERMINATION
10.1 The Board, upon recommendation of the Committee, or otherwise, at any
time and from time to time (subject to the provisions of Section 9.7),
may amend or terminate the Plan as may be necessary or desirable to
implement or discontinue this Plan or any provision thereof. To the
extent required by Rule 16b-3 under the Act, no amendment, without
approval by the Corporation's shareholders, shall:
(a) alter the group of persons eligible to participate in the
Plan;
(b) except as provided in Section 3.6, increase the maximum number
of shares of Stock or Stock Options or Stock Rights that are
available for Awards under the Plan;
(c) extend the period during which Incentive Stock Option Awards
may granted beyond February 21, 2004;
(d) limit or restrict the powers of the Committee with respect to
the administration of this Plan;
(e) change the definition of an Eligible Participant for the
purpose of an Incentive Stock Option or increase the limit or
the value of shares of Stock for which an Eligible Participant
may be granted an Incentive Stock Option;
(f) materially increase the benefits accruing to Participants
under this Plan;
(g) materially modify the requirements as to eligibility for
participation in this Plan; or
(h) change any of the provisions of this Article X.
10.2 No amendment to or discontinuance of this Plan or any provision thereof
by the Board or the shareholders of the Corporation shall, without the
written consent of the Participant, adversely affect, as shall be
determined by the Committee, any Award theretofore granted to such
Participant under this Plan; provided, however, the Committee retains
the right and power to:
(a) annul any Award if the Participant is terminated for cause as
determined by the Committee;
(b) provide for the forfeiture of shares of Stock or other gain
under an Award as determined by the Committee for competing
against the Corporation or any Subsidiary; and
(c) convert any outstanding Incentive Stock Option to a
Nonqualified Stock Option.
10.3 If an Acceleration Event has occurred, no amendment or termination
shall impair the rights
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of any person with respect to an outstanding Award as provided in
Article IX.
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ARTICLE XI - MISCELLANEOUS PROVISIONS
11.1 Nothing in the Plan or any Award granted hereunder shall confer upon
any Participant any right to continue in the employ of the Corporation
or its Subsidiaries (or to serve as a director thereof) or interfere in
any way with the right of the Corporation or its subsidiaries to
terminate his or her employment at any time. Unless specifically
provided otherwise, no Award granted under the Plan shall be deemed
salary or compensation for the purpose of computing benefits under any
employee benefit plan or other arrangement of the Corporation or its
Subsidiaries for the benefit of its employees unless the Corporation
shall determine otherwise. No Participant shall have any claim to an
Award until it is actually granted under the Plan. To the extent that
any person acquires a right to receive payments from the Corporation
under the Plan, such right shall, except as otherwise provided by the
Committee, be no greater than the right of an unsecured general
creditor of the Corporation. All payments to be made hereunder shall be
paid from the general funds of the Corporation, and no special or
separate fund shall be established and no segregation of assets shall
be made to assure payment of such amounts, except as provided in
Article VIII with respect to Restricted Stock and except as otherwise
provided by the Committee.
11.2 The Corporation may make such provisions and take such steps as it may
deem necessary or appropriate for the withholding of any taxes that the
Corporation or any Subsidiary is required by any law or regulation of
any governmental authority, whether federal, state or local, domestic
or foreign, to withhold in connection with any Stock Option or the
exercise thereof, any Stock Right or the exercise thereof, or in
connection with any Restricted Stock, including, but not limited to,
the withholding of payment of all or any portion of such Award or
another Award under this Plan until the Participant reimburses the
Corporation or its Subsidiaries for the amount the Corporation or its
Subsidiaries is required to withhold with respect to such taxes, or
canceling any portion of such Award or another Award under this Plan in
an amount sufficient to reimburse itself for the amount it is required
to so withhold, or selling any property contingently credited by the
Corporation for the purpose of paying such Award or another Award under
this Plan, in order to withhold or reimburse itself for the amount it
is required to so withhold.
11.3 The Plan and the grant of Awards shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by
any government or regulatory agency as may be required.
11.4 The terms of the Plan shall be binding upon the Corporation, its
Subsidiaries, and their successors and assigns.
11.5 Neither a Stock Option, Stock Right, nor any Restricted Stock shall be
transferable except as provided for herein or in an Award Agreement. If
any Participant makes such a transfer in violation hereof, any
obligation of the Corporation shall forthwith terminate.
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