2000 Stock Option Plan for Non-Employee Directors - Applied Analytical Industries Inc.
APPLIED ANALYTICAL INDUSTRIES, INC.
2000 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
I. PURPOSE
The purpose of the Applied Analytical Industries, Inc. 2000 Stock
Option Plan for Non-Employee Directors (the "Plan") is to provide for
stock-based compensation to directors who are not employees of the Company or
any of its subsidiaries ("Directors") of the Company. This purpose will be
achieved through the grant of stock options ("Options") to purchase shares of
the Company's common stock, $.001 par value ("Common Stock"), subject to
restrictions on transfer or such other restrictions as the administrators of the
Plan may determine.
2. ADMINISTRATION
The Plan will be administered by the Company's Board of Directors (the
"Board").
The Board shall have complete authority to: (i) interpret all terms and
provisions of the Plan consistent with law; (ii) select from the group of
Directors eligible to participate in the Plan the Directors to whom Options
shall be granted; (iii) within the limits established herein, determine the
number of shares to be subject to, and the exercise price of, each Option; (iv)
prescribe the form of instrument(s) evidencing Options granted under the Plan;
(v) determine the time or times at which Options shall be granted to Directors;
(vi) provide, if appropriate, for the exercisability of Options in installments
or subject to specified conditions; (vii) determine the method of exercise of
Options; (viii) adopt, amend and rescind general and special rules and
regulations for the Plan's administration; and (ix) make all other
determinations necessary or advisable for the administration of the Plan.
Any action which the Board is authorized to take may be taken without a
meeting if all the members of the Board sign a written document authorizing such
action to be taken, unless different provision is made by the By-Laws of the
Company or by resolution of the Board.
The Board may designate selected Board members or certain employees of
the Company to assist the Board in the administration of the Plan and may grant
authority to such persons to execute documents, including Options, on behalf of
the Board.
No member of the Board or employee of the Company assisting the Board
pursuant to the preceding paragraph shall be liable for any action taken or
determination made in good faith.
3. STOCK SUBJECT TO PLAN
The stock to be offered under the Plan shall be authorized but unissued
shares of the Company's Common Stock. An aggregate of 410,000 shares of Common
Stock are reserved for
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issuance upon exercise of Options. The number of shares reserved under the Plan
may be adjusted to reflect any change in the capitalization of the Company as
contemplated by Section 9 hereof and occurring after the adoption of the Plan.
The Board will maintain records showing the cumulative total of all shares
subject to Options outstanding under the Plan.
None of the Options granted under Section 4 hereof are intended to
qualify as, or shall be deemed to be, incentive stock options under Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
4. OPTION AWARDS
(A) ELIGIBILITY AND FACTORS CONSIDERED IN GRANTING OPTIONS
The grant of Options under this Section 4 shall be limited to those
Directors of the Company or any of its Subsidiaries who are not employees
thereof and who have are selected by the Board. In making any determination as
to the Director(s) to whom Options shall be granted under this Section 4 and as
to the number of shares to be subject thereto, the Board shall take into
account, in each case, such factors as the Board shall deem relevant to the
accomplishment of the purposes of the Plan.
(B) TIME OF GRANTING OPTIONS
The date of grant of an Option under this Section 4 shall be, for all
purposes, the date on which the Board makes the determination of granting such
Option (each such date, a "Grant Date"). Notice of the determination shall be
given to each Director to whom an Option is so granted under this Section 4
within a reasonable time after the Grant Date.
(C) EXERCISE PRICE FOR OPTIONS
The price per share at which each Option granted under this Section 4
may be exercised shall be such price as shall be determined by the Board at the
time of grant based on such criteria as may be adopted by the Board at the time
of grant in good faith, taking into account, in each case, the fair market value
of the common stock and such additional factors as the Board shall deem relevant
to the accomplishment of the purposes of the Plan; provided, however, that in no
event shall the exercise price per share of an Option be less than 100% of the
fair market value of the Company's shares of common stock on the Grant Date for
such Option. Fair market value shall be the average of the high and low sales
prices per share as reported by the exchange on which the Common Stock is
trading, including without limitation the NASDAQ National Market, on any Grant
Date.
(E) TERM OF OPTIONS
The term of each Option granted under this Section 4 shall be
established by the Board, but shall not exceed 10 years from the Grant Date for
such Option.
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(F) CANCELLATION AND REPLACEMENT OF OPTIONS
The Board may at any time or from time to time permit the voluntary
surrender by the holder of any outstanding Option granted under this Section 4
where such surrender is conditioned upon the granting under this Section 4 to
such holder of new Option(s) for such number of shares as the Board shall
determine, or may require such a voluntary surrender as a condition precedent to
the grant under this Section 4 of new Option(s) to such holder.
The Board shall determine the terms and conditions of any such new
Option(s), including their exercise price and the periods during which they may
be exercised, subject to and in accordance with the provisions of the Plan, all
or any of which may differ from the terms and conditions of the Option(s)
surrendered. Any such new Option(s) shall be subject to all the relevant
provisions of the Plan.
The shares subject to any Option so surrendered or terminated shall no
longer be charged against the limitation or limitations provided in Section 3 of
the Plan and may thereafter become the subject of new Option grants under the
Plan.
The granting of new Option(s) in connection with the surrender of
outstanding Option(s) under the Plan shall be considered for the purposes of the
Plan as the grant of new Option(s) and not an alteration, amendment or
modification of the Plan or of the Option(s) being surrendered.
(G) VESTING
Except as otherwise determined by the Board, Options shall vest as
follows:
<TABLE>
<CAPTION>
Aggregate Percentage of
Shares under Options Vested
Date on such Date
---- ---------------------------
<S> <C>
Twelve months after Grant Date 33%
Twenty-four months after Grant Date 66%
Thirty-six months after Grant Date 100%
</TABLE>
Notwithstanding the foregoing, any Option granted pursuant to this Plan shall be
deemed fully vested immediately prior to an Acquisition Transaction. For the
purposes of the Plan, an "Acquisition Transaction" shall mean and include the
following:
(i) The consummation of a tender offer or exchange offer
for the ownership of securities of the Company
representing 51% or more of the combined voting
powers of the Company's then outstanding voting
securities;
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(ii) The adoption by the Company's stockholders of a plan
of merger or consolidation providing for the merger
or consolidation of the Company with another
corporation (other than an affiliate of the Company
within the meaning of the Securities Exchange Act of
1934, as amended) and as a result of such merger or
consolidation less than 75% of the outstanding voting
securities of the surviving or resulting corporation
would then be owned in the aggregate by the former
stockholders of the Company; or
(iii) The transfer by the Company of substantially all of
its assets to another corporation or entity which is
not a wholly owned subsidiary of the Company.
5. NON-TRANSFERABILITY
An Option granted to a participant under the Plan shall not be
transferable by him or her except: (i) by will; (ii) by the laws of descent and
distribution; (iii) pursuant to a qualified domestic relations order as defined
by the Code or in Title I of the Employee Retirement Income Security Act, or the
rules thereunder; or (iv) as otherwise determined by the Board.
6. EXERCISABILITY OF OPTIONS
Subject to the provisions of the Plan, Options granted under Section 4
hereof shall be exercisable at such time or times after the Grant Date to the
extent such Options are vested.
Any Option shall terminate in full (whether or not previously
exercisable) prior to the expiration of its term on the date thirty (30) days
after the date the optionee ceases to be a director of the Company or any
Subsidiary of the Company, unless (i) the optionee shall (a) die while a
director of the Company or such Subsidiary, in which case the participant's
legatee(s) under his or her last will or the participant's personal
representative or representatives may exercise all or part of the previously
unexercised portion of such Option at any time within one year, but not beyond
the expiration of its term, after the participant's death to the extent the
optionee could have exercised the Option immediately prior to his or her death,
(b) become permanently or totally disabled within the meaning of section
22(e)(3) of the Code (or any successor provision) while a director of the
Company or such Subsidiary, in which case the participant or his or her personal
representative may exercise the previously unexercised portion of such Option at
any time within one year, but not beyond the expiration of its term, after
termination of his or her directorship to the extent the optionee could have
exercised the Option immediately prior to such termination, or (c) resign or not
be a candidate for reelection as a director of the Company or any Subsidiary
after age 62, in which case the participant may exercise the previously
unexercised portion of such Option at any time within six months, but not beyond
the expiration of its term, after the participant's resignation or cessation of
being a director of the Company or any Subsidiary to the extent the optionee
could have exercised the
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Option immediately prior to such resignation or retirement, or (ii) the Board
shall determine otherwise.
In no event may an Option be exercised after the expiration of its
fixed term.
7. METHOD OF EXERCISE
Each Option granted under the Plan shall be deemed exercised when the
holder (a) shall indicate the decision to do so in writing delivered to the
Company, (b) shall at the same time tender to the Company payment in full of the
exercise price for the shares for which the Option is exercised, which payment
may be made in cash, and (c) shall comply with such other reasonable
requirements as the Board may establish; provided that in order to enable an
optionee to exercise options granted under the Plan, the Board may determine, in
the exercise of its discretion, to (i) cause the Company to lend money or other
property to such optionee upon such terms and conditions and in such amounts as
the Board may determine, (ii) grant such optionee permission to pay the exercise
price in installments, or to accept such optionee's note as whole or partial
payment, (iii) permit such optionee to repay loans made by the Company to such
optionee for the exercise of options with issued and outstanding shares of
common stock, (iv) grant such optionee permission to pay the exercise price by
delivering for cancellation Options having an aggregate value (calculated by
subtracting the exercise price per share from the fair market value of a share
of Common Stock) equal to the total amount of the exercise price, or (v) provide
such financial assistance to such optionee as the Board determines to be
desirable. The exercise of any option granted under the Plan may be made subject
to the condition that, if at any time the Board shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any state or federal law is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery or purchase
of shares pursuant thereto, then in such event, the exercise of the option shall
not be effective unless such withholding tax or other withholding liabilities
shall have been satisfied in a manner acceptable to the Company, which may
include the withholding by the Company of shares of Common Stock to be issued
upon exercise of an Option having a fair market value equal to the required
withholding amount. With respect to the foregoing sentences, the value of the
shares of Common Stock shall be the fair market value determined in accordance
with Section 4(c) of the Plan as of the day of such payment or withholding.
No person, estate or other entity shall have any of the rights of a
shareholder with reference to shares subject to an Option until a certificate
for such shares has been issued by the Company.
An Option granted under the Plan may be exercised for any lesser number
of shares than the full amount for which it could be exercised. Such a partial
exercise of an Option shall not affect the right to exercise the Option from
time to time in accordance with the Plan for the remaining shares subject to the
Option.
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8. TERMINATION OF OPTIONS
An Option granted under the Plan shall be considered terminated in
whole or in part, to the extent that, in accordance with the provisions of the
Plan and such Option, it can no longer be exercised for any shares originally
subject to the Option.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION
In the event of any change in the outstanding Common Stock of the
Company by reason of a stock dividend, stock split, stock consolidation,
recapitalization, reorganization, merger, split up or the like, the shares
available for purposes of the Plan or under option in outstanding option
agreements pursuant to the Plan (and the option price under such agreements)
shall be appropriately adjusted so as to preserve, but not increase, the
benefits of the Plan to the Company and the benefits to the holders of such
Options.
Adjustments under this Section shall be made by the Board, whose
determination as to what adjustments shall be made and the extent thereof, shall
be final, binding and conclusive.
10. COMPLIANCE WITH SECURITIES LAWS AND OTHER REQUIREMENTS
No certificate(s) for shares shall be issued upon exercise of an Option
until the Company shall have taken such action, if any, as is then required to
comply with the provisions of the Securities Act of 1933, as amended, the North
Carolina Uniform Securities Act, as amended, any other applicable state
securities law(s) and the requirements of any exchange (including the NASDAQ
National Market) on which the Common Stock may, at the time, be listed.
In the case of the exercise of an Option by a person or estate
acquiring the right to exercise the Option by bequest or inheritance, the Board
may require reasonable evidence as to the ownership of the Option and may
require such consents and releases of taxing authorities as it may deem
advisable.
11. NO RIGHT TO DIRECTORSHIP
Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, shall confer upon any
Director participant under the Plan any right to continue as a director of the
Company, or shall in any way affect the right and power of the Company or its
stockholders to terminate the directorship, or not to reelect as a director,
with the Company of any participant under the Plan at any time with or without
assigning a reason therefor, to the same extent as the Company might have done
if the Plan had not been adopted.
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12. EFFECTIVE DATE OF THE PLAN
The Plan was adopted by the Board on June 16, 2000, and shall be
effective until June 16, 2010, after which time no Option shall be granted, but
such termination shall not affect any Option previously granted under the Plan.
13. CONDITION PRECEDENT FOR PLAN
The Plan is expressly conditioned upon the approval, following its
adoption by the Board, of the Plan by the stockholders of the Company at the
annual meeting of the stockholders of the Company occurring in 2001 or at any
special meeting of the stockholders occurring prior to such annual meeting at
which the Plan is considered. In the event that the stockholders reject the Plan
or fail to approve the Plan at such meeting, then the Plan and all grants made
under it by the Board shall automatically cease to exist and be of no further
effect.
FORM OF OPTION GRANT LETTER
Dear
In accordance with the 2000 Directors Stock Option Plan (the "Plan") of Applied
Analytical Industries, Inc. (the "Company"), you, as a non-employee director of
the Company, were granted on __________________, _____, an option to purchase
_____ shares of the common stock of the Company upon the following terms and
conditions:
(1) The exercise price shall be $_________ (__% of the fair market
value of a share as determined in accordance with Section 4(c)
of the Plan on the date of grant - _______, __)
(2) This Option will vest and become exercisable according to the
schedule set forth in the Plan;
(3) Once exercisable, this Option may be exercised until
__________, ___ subject to the terms and conditions of the
Plan, a copy of which is attached hereto and incorporated
herein by reference. This Option is granted subject to the
Plan and shall be construed in accordance with the Plan.
(4) To exercise this Option, the holder must deliver written
notice of the decision to do so and at the same time tender to
the Company payment in full of the exercise price for the
shares for which the Option is exercised, which payment may be
made in cash or as otherwise provided for in accordance with
Section 7 of the Plan.
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(5) The exercise of this Option shall be subject to the condition
that, if at any time the Board (as defined in the Plan) shall
determine, in its discretion, that the satisfaction of
withholding tax or other withholding liabilities under any
state or federal law is necessary or desirable as a condition
of, or in connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then in such event, the
exercise of the option shall not be effective unless such
withholding tax or other withholding liabilities shall have
been satisfied in a manner acceptable to the Company, which
may include the withholding by the Company of shares of Common
Stock to be issued upon exercise of an Option having a fair
market value equal to the required withholding amount.
This Option is not transferable except pursuant to the terms and conditions of
the Plan.
Very truly yours,
APPLIED ANALYTICAL INDUSTRIES, INC.
By:
Title: