1998 Stock Option Plan - ICN Pharmaceuticals Inc.
ICN PHARMACEUTICALS, INC.
AMENDED AND RESTATED 1998 STOCK OPTION PLAN
1. PURPOSE.
The purpose of the Plan is to grant to certain key employees, officers,
directors, scientific advisors and consultants of ICN Pharmaceuticals, Inc., a
Delaware corporation (hereinafter called the "Company"), or any Parent or
Subsidiary of the Company, an opportunity to acquire the Shares in order to
increase their proprietary interest in the Company and as an added incentive to
remain in and advance in its employment. It is also the purpose of the Plan to
advance the interests of the Company and its stockholders by strengthening the
Company's ability to attract and retain those persons with training, experience
and ability by encouraging such persons to become owners of its stock.
2. DEFINITIONS.
For purposes of the Plan, unless otherwise specified, capitalized terms
shall have the following meanings:
2.1 "Adjusted Fair Market Value" means, in the event of a Change in
Control, the greater of (i) the highest price per Share paid to holders of
the Shares in any transaction (or series of transactions) constituting or
resulting in a Change in Control or (ii) the highest Fair Market Value of a
Share during the ninety (90) day period ending on the date of a Change in
Control.
2.2 "Agreement" means the written agreement between the Company and an
Optionee evidencing the grant of an Option and setting forth the terms and
conditions thereof.
2.3 "Board" means the Board of Directors of the Company.
2.4 "Cause" means the commission of an act of fraud or intentional
misrepresentation or an act of embezzlement, misappropriation or conversion
of assets of the Company, Parent or any Subsidiary.
2.5 "Change in Capitalization" means any increase or reduction in the
number of Shares, or any change (including, but not limited to, in the case
of a spinoff, dividend or other distribution in respect of shares, a change
in value) in the Shares, or exchange of Shares for a different number or
kind of shares or other securities of the Company or another entity, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash
dividend, property dividend, combination or exchange of shares, repurchase
of shares, change in corporate structure or otherwise.
2.6 A "Change in Control" shall mean the occurrence of:
(i) The "acquisition" by any "Person" (as the term person is used
for purposes of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")) of "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of any securities of the Company which generally entitles the holder
thereof the vote for the election of directors of the Company (the
"Voting Securities") which, when added to the Voting Securities then
"Beneficially Owned" by such person, would result in such Person
"Beneficially Owning" forty percent (40%) or more of the combined
voting power of the Company's then outstanding Voting Securities;
provided, however, that for purposes of this paragraph (i), a Person
shall not be deemed to have made an acquisition of Voting Securities
if such Person: (a) acquires Voting Securities as a result of a stock
split, stock dividend or other corporate restructuring in which all
stockholders of the class of such Voting Securities are treated on a
pro rata basis; (b) acquires the Voting Securities directly from the
Company; (c) becomes the Beneficial Owner of more than the permitted
percentage of Voting Securities solely as a result of the acquisition
of Voting Securities by the Company which, by reducing the number of
Voting Securities outstanding, increases the proportional number of
shares Beneficially Owned by such Person; (d) is the Company or any
corporation or other Person of which a majority of its voting power or
its equity securities or equity interest is owned directly or
indirectly by the Company (a "Controlled Entity") or (e) acquires
Voting Securities in connection with a "Non-Control Transaction" (as
defined in paragraph (iii) below); or
(ii) The individuals who, as of January 29, 1998, are members of
the Board of Directors of the Company (the "Incumbent Board"), cease
for any reason to constitute at least two-thirds of the Board of
Directors of the Company; provided, however, that if either the
election of any new director or the nomination for election of any new
director by the Company's stockholders was approved by a vote of at
least two-thirds of the Incumbent Board, such new director shall be
considered as a member of the Incumbent Board; provided further,
however, that no individual shall be considered a member of the
Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board of Directors (a "Proxy
Contest") including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest; or
(iii)
(a) A merger, consolidation or reorganization involving the
Company (a "Business Combination"), unless
(1) the stockholders of the Company, immediately before
the Business Combination, own, directly or indirectly
immediately following the Business Combination, at least
fifty-one percent (51%) of the combined voting power of the
outstanding voting securities of the corporation resulting
from the Business Combination (the "Surviving Corporation")
in substantially the same proportion as their ownership of
the Voting Securities immediately before the Business
Combination, and
(2) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for the Business Combination constitute at least a
majority of the members of the Board of Directors of the
Surviving Corporation, and
(3) no Person (other than the Company or any Controlled
Entity, a trustee or other fiduciary holding securities
under one or more employee benefit plans or arrangements (or
any trust forming a part thereof) maintained by the Company,
the Surviving Corporation or any Controlled Entity, or any
Person who, immediately prior to the Business Combination,
had Beneficial ownership of forty percent (40%) or more of
the then outstanding Voting Securities) has Beneficial
Ownership of forty percent (40%) or more of the combined
voting power of the Surviving Corporation's then outstanding
voting securities (a transaction described in this
subparagraph (a) shall be referred to as a "Non-Control
Transaction");
(b) A complete liquidation or dissolution of the Company; or
(c) The sale or other disposition of all or substantially all of
the assets of the Company to any Person (other than a transfer to a
Controller Entity).
Notwithstanding the foregoing, (x) a change in Control shall not be
deemed to occur solely because forty percent (40%) or more of the then
outstanding Voting Securities is Beneficially Owned by (A) a trustee or
other fiduciary holding securities under one or more employee benefit plans
or arrangements (or any trust forming a part thereof) maintained by the
Company or any Controlled Entity or (B) any corporation which, immediately
prior to its acquisition of such interest, is owned directly or indirectly
by the stockholders of the Company in the same proportion as their
ownership of stock in the Company immediately prior to such acquisition;
and (y) if an Eligible Employee's employment is terminated and the Eligible
Employee reasonably demonstrates that such termination (A) was at the
request of a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control and who effectuates a
Change in Control or (B) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for all
purposes hereof, the date of a Change in Control with respect to the
Eligible Employee shall mean the date immediately prior to the date of such
termination of employment.
2.7 "Code" means the Internal Revenue Code of 1986, as amended.
2.8 "Committee" means a committee consisting of solely at least two
(2) directors each of whom are Section 16 Directors and Outside Directors
who are appointed by the Board to administer the Plan and to perform the
functions set forth herein.
2.9 "Company" means ICN Pharmaceutics, Inc. or any successor thereto.
2.10 "Director Option" means an Option granted pursuant to Section 5.
2.11 "Disability" means a physical or mental infirmity which impairs
the Optionee's ability to perform substantially his or her duties for a
period of one hundred eighty (180) days during any three hundred and sixty
(360) day period.
2.12 "Section 16 Director" means a director of the Company who is a
"Non-Employee Director" within the meaning of Rule 16b-3 under the Exchange
Act.
2.13 "Division" means any of the operating units or divisions of the
Company designated as a Division by the Committee.
2.14 "Eligible Employee" means any officer or other key employee or
consultant or scientific advisor of the Company or a Parent or Subsidiary
designated by the Committee as eligible to receive Options subject to the
conditions set forth herein.
2.15 "Employee Option" means an Option granted pursuant to Section 6.
2.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
2.17 "Fair Market Value" on any date means (i) the closing price per
share of the Company's stock on the principal exchange on which the stock
is listed, on such date (or if no such price is reported on such date, such
price as reported on the nearest preceding date on which such price is
reported), (ii) if the stock is not listed on an exchange, the bid price
per share of stock at the close of trading on such date, or (iii) if the
stock is not listed on an exchange or otherwise publicly traded on such
date, the fair market value of the Company's stock as of such date as
determined in good faith by the Board.
2.18 "Incentive Stock Option" means an Option satisfying the
requirements of Section 422 of the Code and designated by the Committee as
an Incentive Stock Option.
2.19 "Nonemployee Director" means a director of the Company who is not
an employee of the Company or any Subsidiary.
2.20 "Nonqualified Stock Option" means an Option which is not an
Incentive Stock Option.
2.21 "Option" means a Employee Option, a Director Option, or either or
both of them.
2.22 "Optionee" means a person to whom an Option has been granted
under the Plan.
2.23 "Outside Director" means a director of the Company who is an
"outside director" within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.
2.24 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the
Company.
2.25 "Plan" means the Amended and Restated ICN Pharmaceuticals, Inc.
1998 Stock Option Plan, at it may be amended from time to time.
2.26 "Pooling Transaction" means an acquisition of or by the Company
in a transaction which is intended to be treated as a "pooling of
interests" under generally accepted accounting principles.
2.27 "Shares" means the common stock, par value $.01 per share, of the
Company.
2.28 "Subsidiary" means any corporation which is a subsidiary
corporation (within the meaning of Section 424(f) of the Code) with respect
to the Company.
2.29 "Successor Corporation" means a corporation, or a parent or
subsidiary thereof within the meaning of Section 424(a) of the Code, which
issues or assumes a stock option in a transaction to which Section 424(a)
of the Code applies.
2.30 "Ten-Percent Stockholder" means an Eligible Employee, who, at the
time an Incentive Stock Option is to be granted to him or her, owns (within
the meaning of Section 422(b)(6) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of
stock of the Company, or of a Parent or a Subsidiary.
3. ADMINISTRATION.
3.1 The Plan shall be administered by the Committee which shall hold
meetings at such times as may be necessary for the proper administration of
the Plan. The Committee shall keep minutes of its meetings. A quorum shall
consist of not less than two members of the Committee and a majority of a
quorum may authorize any action. Any decision or determination reduced to
writing and signed by a majority of all of the members of the Committee
shall be as fully effective as if made by a majority vote at a meeting duly
called and held. Each member of the Committee shall be a Disinterested
Director and an Outside Director. No member of the Committee shall be
liable for any action, failure to act, determination or interpretation made
in good faith with respect to this Plan or any transaction hereunder,
except for liability arising from his or her own willful misfeasance, gross
negligence or reckless disregard of his or her duties. The Company hereby
agrees to indemnify each member of the Committee for all costs and expenses
and, to the extent permitted by applicable law, any liability incurred in
connection with defending against, responding to, negotiation for the
settlement of or otherwise dealing with any claim, cause of action or
dispute of any kind arising in connection with any actions in administering
this Plan or in authorizing or denying authorization to any transaction
hereunder.
3.2 Subject to the express terms and conditions set forth herein, the
Committee shall have the power from time to time to:
(a) determine those individuals to whom Employee Options shall be
granted under the Plan and the number of Incentive Stock Options
and/or Nonqualified Stock Options to be granted to each Eligible
Employee and to prescribe the terms and conditions (which need not be
identical) of each Employee Option, including the purchase price per
Share subject to each Employee Option, and make any amendment or
modification to any Agreement consistent with the terms of the Plan;
(b) to construe and interpret the Plan and the Options granted
thereunder and to establish, amend and revoke rules and regulations
for the administration of the Plan, including, but not limited to,
correcting any defect or supplying any omission, or reconciling any
inconsistency in the Plan or in any Agreement, in the manner and to
the extent it shall deem necessary or advisable so that the Plan
complies with applicable law, including Rule 16b-3 under the Exchange
Act and the Code to the extent applicable, and otherwise to make the
Plan fully effective, and all decisions and determinations by the
Committee in the exercise of this power shall be final, binding and
conclusive upon the Company, the Parent, its Subsidiaries, the
Optionees and all other persons having any interest therein;
(c) to determine the duration and purposes for leaves of absence
which may be granted to an Optionee on an individual basis without
constituting a termination of employment or service for purposes of
the Plan;
(d) to exercise its discretion with respect to the powers and
rights granted to it as set forth in the Plan; and
(e) generally, to exercise such powers and to perform such acts
as are deemed necessary or advisable to promote the best interests of
the Company with respect to the Plan.
4. STOCK SUBJECT TO THE PLAN
4.1 The maximum number of Shares that may be made the subject of
Options granted under the Plan is 6,000,000; provided, however, that the
maximum number of Shares that any Eligible Employee may receive pursuant to
the Plan in respect of Options may not exceed 1,000,000 Shares. Upon a
Change in Capitalization, the maximum number of Shares referred to above
shall be adjusted in number and kind pursuant to Section 9. The Company
shall reserve for the purposes of the Plan, out of its authorized but
unissued Shares or out of Shares held in the Company's treasury, or partly
out of each, such number of Shares as shall be determined by the Board.
4.2 Whenever any outstanding Option or portion thereof expires, is
canceled or is otherwise terminated for any reason without having been
exercised or payment having been made in respect of the entire Option, the
Shares allocable to the canceled or otherwise terminated portion of the
Option may again be the subject of Options granted hereunder.
5. OPTIONS GRANTS FOR NONEMPLOYEE DIRECTORS.
5.1 GRANT. Subject to the availability of an adequate number of Shares
designated under the Plan, each Nonemployee Director shall be granted
Director Options under the Plan automatically on a non- discretionary basis
according to the following provisions of this Section 5 and in accordance
with the other provisions of the Plan. Nonemployee Directors shall not be
granted options under the Plan except pursuant to this Section 5. Director
Options shall be granted automatically to Nonemployee Directors as follows:
each person who is a Nonemployee Director on the first business day
following the day of an annual meeting of stockholders of the Company shall
be granted on such first business day an option to purchase 15,000 Shares.
5.2 PURCHASE PRICE. The purchase price for Shares under each Director
Option shall be the Fair Market Value of such Shares on the date of grant.
5.3 VESTING. Subject to Sections 5.4 and 7.4, each Director Option
shall become exercisable with respect to 25% of the Shares subject thereto
on each of the first four anniversaries of the grant date; provided, that
the Optionee is a director as of the relevant anniversary. If an Optionee
ceases to serve as a director for any reason, the Optionee shall have no
rights with respect to that portion of a Director Option which has not then
vested pursuant to the preceding sentence and the Optionee shall
automatically forfeit that portion of the Director Option which remains
unvested.
5.4 DURATION. Each Director Option shall terminate on the date which
is the tenth anniversary of the grant date, unless terminated earlier as
follows:
(a) If an Optionee's service as a director terminates for any
reason other than Disability, death or Cause, the Optionee may for a
period of three (3) months after such termination exercise his or her
Option to the extent, and only to the extent, that such Option or
portion thereof was vested and exercisable as of the date the
Optionee's service as a director terminated, after which time the
Option shall automatically terminate in full.
(b) If an Optionee's service as a director terminates by reason
of Disability, the Optionee may, for a period of one (1) year after
such termination, exercise his or her Option to the extent, and only
to the extent, that such Option or portion thereof was vested and
exercisable as of the date the Optionee's service as director
terminated, after which one year period the Option shall automatically
terminate in full.
(c) If an Optionee's service as a director terminates for Cause,
the Option granted to the Optionee hereunder shall immediately
terminate in full and no rights thereunder may be exercised.
(d) If an Optionee dies while a director or within three (3)
months after termination of service as a director as described in
clause (a) or (b) of this Section 5.4, the Option granted to the
Optionee may be exercised at any time within twelve (12) months after
the Optionee's death by the person or persons to whom such rights
under the Option shall pass by will, or by the laws of descent or
distribution, after which time the Option shall terminate in full;
provided, however, that an Option may be exercised to the extent, and
only to the extent, that the Option or portion thereof was exercisable
on the date of termination of the Optionee's services as a director.
6. OPTION GRANTS FOR ELIGIBLE EMPLOYEES.
6.1 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan and
to Section 4.1 above, the Committee shall have full and final authority to
select those Eligible Employees who will receive Options (each, an
"Employee Option"), which may be Incentive Stock Options or Nonqualified
Stock Options, the terms and conditions of which shall be set forth in an
Agreement; provided, however, that no person shall receive any Incentive
Stock Option unless he or she is any employee of the Company, a Parent or a
Subsidiary at the time the Incentive Stock Option is granted.
6.2 PURCHASE PRICE. The purchase price or the manner in which the
purchase price is to be determined for Shares under each Employee Option
shall be determined by the Committee and set forth in the Agreement,
provided that the purchase price per Share under each Employee Option shall
not be less than 85% of the Fair Market Value of a Share on the date the
Employee Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder). The purchase price for Shares under
an Employee Option shall not be decreased after the date of grant of such
Option.
6.3 MAXIMUM DURATION. Employee Options granted hereunder shall be for
such term as the Committee shall determine, provided that an Incentive
Stock Option shall not be exercisable after the expiration of ten (10)
years from the date it is granted (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder) and a
Nonqualified Stock Option shall not be exercisable after the expiration of
ten (10) years from the date it is granted. The Committee may, subsequent
to the granting of any Employee Option, extend the term thereof but in no
event shall the term as so extended exceed the maximum term provided for in
the preceding sentence.
6.4 VESTING. Subject to Section 7.4 hereof, each Employee Option shall
become exercisable in such installments (which need not be equal) and at
such times as may be designated by the Committee and set forth in the
Agreement. To the extent not exercised, installments shall accumulate and
be exercisable, in whole or in part, at any time after becoming exercisable
but not later than the date the Employee Option expires. The Committee may
accelerate the exercisability of any Employee Option or portion thereof at
any time.
6.5 MODIFICATION OR SUBSTITUTION. The Committee may, in its
discretion, modify outstanding Employee Options or accept the surrender of
outstanding Employee Options (to the extent not exercised) and grant new
Options in substitution for them. Notwithstanding the foregoing, no
modification of an Employee Option shall adversely alter or impair any
rights or obligations under the Employee Option without the Optionee's
consent.
7. TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.
7.1 NON-TRANSFERABILITY. No Option granted hereunder shall be
transferable by the Optionee to whom granted otherwise than by will or the
laws of descent and distribution, or pursuant to a domestic relations order
(within the meaning of Rule 16a-12 promulgated under the Exchange Act), and
an Option may be exercised during the lifetime of such Optionee only the
Optionee or his or her guardian or legal representative. Notwithstanding
the foregoing, the Committee may set forth in the Agreement evidencing the
Option (other than an Incentive Stock Option) at the time of grant or
thereafter, that the Option may be transferred to members of the Optionee's
immediate family, to trusts solely for the benefit of such immediate family
members and to partnerships in which such family members and/or trusts are
the only partners. For this purpose, immediate family means the Optionee's
spouse, parents, children, stepchildren and grandchildren and the spouses
of such parents, children, stepchildren and grandchildren. The terms of
such Option shall be final, binding and conclusive upon the beneficiaries,
executors, administrators, heirs and successors of the Optionee.
7.2 METHOD OF EXERCISE. The exercise of an Option shall be made only
by a written notice delivered in person or by mail to the Secretary of the
Company at the Company's principal executive office, specifying the number
of Shares to be purchased and accompanied by payment therefor and
Withholding Taxes and otherwise in accordance with the Agreement pursuant
to which the Option was granted. The purchase price for any Shares
purchased pursuant to the exercise of an Option shall be paid in full upon
such exercise by any one or a combination of the following: (i) cash or
(ii) pursuant to such rules as may be determined by the Committee,
transferring Shares to the Company, or (iii) any combination of the
foregoing as may be determined by the Committee. Until such person has been
issued the Shares subject to such exercise, he or she shall possess no
rights as a stockholder with respect to such Shares. Notwithstanding the
foregoing, the Committee shall have discretion to determine at the time of
grant of each Employee Option or at any later date (up to and including the
date of exercise) the form of payment acceptable in respect of the exercise
of such Employee Option and may establish cashless exercise procedures
which provide for the exercise of the Option and sale of the Underlying
Share by a designated broker or dealer. In that connection, the written
notice pursuant to this Section 7.2 may also provide instructions from the
Optionee to the Company that upon receipt of appropriate instructions from
the Optionee's broker or dealer, designated as such on the written notice,
the Company shall issue such Shares directly to the designated broker or
dealer. Any Shares transferred to the Company (or withheld upon exercise)
as payment of the purchase price under an Option shall be valued at their
Fair Market Value on the day preceding the date of exercise of such Option.
If requested by the Committee, the Optionee shall deliver the Agreement
evidencing the Option to the Secretary of the Company who shall endorse
thereon a notation of such exercise and return such Agreement to the
Optionee. No fractional Shares (or cash in lieu thereof) shall be issued
upon exercise of an Option and the number of Shares that may be purchased
upon exercise shall be rounded to the nearest number of whole Shares.
7.3 RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose
to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been exercised pursuant to the terms thereof, (ii)
the Company shall have issued and delivered the Shares to the Optionee and
(iii) the Optionee's name shall have been entered as a stockholder of
record on the books of the Company. Thereupon, the Optionee shall have full
voting, dividend, and other ownership rights with respect to such Shares,
subject to such terms and conditions as may be set forth in the applicable
Agreement.
7.4 EFFECT OF CHANGE IN CONTROL. Notwithstanding anything contained in
the Plan or an Agreement to the contrary (other than the last sentence of
this Section 7.4), in the event of a Change in Control, (i) all Options
outstanding on the date of such Change in Control shall become immediately
and fully exercisable, (ii) upon termination of an Optionee's employment
following a Change in Control, Options held by the Optionee shall remain
exercisable until the later of (x) one year after termination and (y) sixty
(60) days following the expiration of the Pooling Period (in the event the
Change in Control constitutes a Pooling Transaction), but in no event
beyond the stated term of the Option, and (iii) an Optionee will be
permitted to surrender for cancellation within sixty (60) days after such
Change in Control any Option or portion of an Option to the extent not yet
exercised and the Optionee will be entitled to receive a cash payment in an
amount equal to the excess, if any, of (x)(A) in the case of a Nonqualified
Stock Option, the greater of (1) the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or
portion thereof surrendered or (2) the Adjusted Fair Market Value of the
Shares subject to the Option or portion thereof surrendered or (B) in the
case of an Incentive Stock Option, the Fair Market Value, on the date
preceding the date of surrender, of the Shares subject to the Option or
portion thereof surrendered, over (y) the aggregate purchase price for such
Shares under the Option or portion thereof surrendered. Notwithstanding
anything contained in the Plan or any Agreement to the contrary, in the
event of a Change in Control which is also intended to constitute a Pooling
Transaction, the Committee shall take such actions, if any, as are
specifically recommended by an independent accounting firm retained by the
Company to the extent reasonably necessary in order to assure that the
Pooling Transaction will qualify as such, including but not limited to (a)
deferring the vesting, exercise, payment, settlement or lapsing of
restrictions with respect to any Option, (b) providing that the payment or
settlement in respect of any Option be made in the form of cash, Shares or
securities of a successor or acquiror of the Company, or a combination of
the foregoing, and (c) providing for the extension of the term of any
Option to the extent necessary to accommodate the foregoing, but not beyond
the maximum term permitted for any Option.
8. EFFECT OF A TERMINATION OF EMPLOYMENT.
The Agreement evidencing the grant of each Employee Option shall set forth
the terms and conditions applicable to such Employee Option upon a termination
or change in the status of the employment of the Optionee by the Company,
Parent, a Subsidiary or a Division (including a termination or change by reason
of the sale of a Subsidiary or a Division), which, except for Director Options,
shall be as the Committee may, in its discretion, determine at the time the
Option is granted or thereafter.
9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION.
(a) In the event of a Change in Capitalization, the Committee shall
conclusively determine the appropriate adjustments, if any, to (i) the
maximum number and class of Shares or other stock or securities with
respect to which Options may be granted under the Plan, (ii) the maximum
number of Shares or other stock or securities with respect to which Options
may be granted to any Eligible Employee during the term of the Plan, (iii)
the number and class of Shares or other stock or securities which are
subject to Director Options issuable under Section 5, and (iv) the number
and class of Shares or other stock or securities which are subject to
outstanding Options granted under the Plan, and the purchase price
therefor, if applicable.
(b) Any such adjustment in the Shares or other stock or securities
subject to outstanding Incentive Stock Options (including any adjustments
in the purchase price) shall be made in such manner as not to constitute a
modification as defined by Section 424(h)(3) of the Code and only to the
extent otherwise permitted by Sections 422 and 424 of the Code.
(c) Any such adjustment in the Shares or other stock or securities
subject to outstanding Director Options (including any adjustments in the
purchase price) shall be made only to the extent necessary to maintain the
proportionate interest of the Optionee and preserve, without exceeding, the
value of such Director Options.
(d) If, by reason of a Change in Capitalization, an Optionee shall be
entitled to exercise an Option with respect to new, additional or different
shares of stock or securities, such new, additional or different shares
shall thereupon be subject to all of the conditions and restrictions which
were applicable to the Shares subject to the Option prior to such Change in
Capitalization.
10. EFFECT OF CERTAIN TRANSACTIONS.
Subject to Section 7.4 or as otherwise provided in an Agreement, in the
event of (i) the liquidation or dissolution of the Company or (ii) a merger or
consolidation of the Company (a "Transaction"), the Plan and the Options issued
hereunder shall continue in effect in accordance with their respective terms and
each Optionee shall be entitled to receive in respect of each Share subject to
any outstanding Options, upon exercise of such Options, the same number and kind
of stock, securities, cash, property, or other consideration that each holder of
a Share was entitled to receive in the Transaction in respect of a Share;
PROVIDED, HOWEVER, that such stock, securities, cash, property, or other
consideration shall remain subject to all of the conditions and restrictions
which were applicable to the Options prior to such Transaction.
11. TERMINATION AND AMENDMENT OF THE PLAN.
The Plan shall terminate on the day preceding the tenth anniversary of the
date of its adoption by the Board and no Options may be granted thereafter. The
Board may sooner terminate the Plan and the Board may at any time and from time
to time amend, modify or suspend the Plan; provided, however, that:
(a) No such amendment, modification, suspension or termination shall
impair or adversely alter any Options theretofore granted under the Plan,
except with the consent of the Optionee, nor shall any amendment,
modification, suspension or termination deprive any Optionee of any Shares
which he or she may have acquired through or as a result of the Plan; and
(b) To the extent necessary under any applicable law, regulation or
exchange requirement, no amendment shall be effective unless approved by
the stockholders of the Company in accordance with applicable law, and
regulation or exchange requirement.
12. NON-EXCLUSIVITY OF THE PLAN.
The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
13. LIMITATION OF LIABILITY.
As illustrative of the limitations of liability of the Company, but not
intended to be exhaustive thereof, nothing in the Plan shall be construed to:
(i) give any person any right to be granted an Option other than at
the sole discretion of the Committee;
(ii) give any person any rights whatsoever with respect to Shares except
as specifically provided in the Plan;
(iii) limit in any way the right of the Company or any Subsidiary to
terminate the employment of any person at any time; or
(iv) be evidence of any agreement or understanding, expressed or
implied, that the Company will employ any person at any particular rate of
compensation or for any particular period of time.
14. REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.
14.1 Except as to matters of federal law, this Plan and the rights of
all persons claiming hereunder shall be construed and determined in
accordance with the laws of the State of Delaware without giving effect to
conflicts of laws principles thereof.
14.2 The obligation of the Company to sell or deliver Shares with
respect to Options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal
and state securities laws, and the obtaining of all such approvals by
governmental agencies as may be deemed necessary or appropriate by the
Committee.
14.3 The Committee may make such changes as may be necessary or
appropriate to comply with the rules and regulations of any government
authority, or to obtain for Eligible Employees granted Incentive Stock
Options the tax benefits under the applicable provisions of the Code and
regulations promulgated thereunder.
14.4 Each Option is subject to the requirement that, if at any time
the Committee determines, in its discretion, that the listing, registration
or qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance
of Shares, no Options shall be granted or payment made or Shares issued in
whole or in part, unless listing, registration, qualification, consent or
approval has been effected or obtained free of any conditions as acceptable
to the Committee.
14.5 Notwithstanding anything contained in the Plan or any Agreement
to the contrary, in the event that the disposition of Shares acquired
pursuant to the Plan is not covered by a then current registration
statement under the Securities Act of 1933, as amended, and is not
otherwise exempt from such registration, such Shares shall be restricted
against transfer to the extent required by the Securities Act of 1933, as
amended, and Rule 144 or other regulations thereunder. The Committee may
require any individual receiving Shares pursuant to an Option granted under
the Plan, as a condition precedent to receipt of such Shares, to represent
and warrant to the Company in writing that the Shares acquired by such
individual are acquired without a view to any distribution thereof and will
not be sold or transferred other than pursuant to an effective registration
thereof under said Act or pursuant to an exemption applicable under the
Securities Act of 1933, as amended, or the rules and regulations
promulgated thereunder. The certificates evidencing any of such Shares
shall be appropriately legended to reflect their status as restricted
securities as aforesaid.
15. MISCELLANEOUS.
15.1 MULTIPLE AGREEMENTS. The terms of each Option may differ from
other Options granted under the Plan at the same time, or at some other
time. The Committee may also grant more than one Option to a given Eligible
Employee during the term of the Plan, either in addition to, or in
substitution for, one or more Options previously granted to that Eligible
Employee.
15.2 WITHHOLDING OF TAXES.
(a) The Company shall have the right to deduct from any
distribution or payment of cash to any Optionee an amount equal to the
federal, state and local income taxes and other amounts as may be
required by law to be withheld (the "Withholding Taxes") with respect
to any Option. If an Optionee realizes a taxable event in connection
with the receipt of Shares pursuant to an Option exercise (a "Taxable
Event"), the Optionee shall pay the Withholding Taxes to the Company
prior to the issuance of such Shares. In satisfaction of the
obligation to pay Withholding Taxes to the Company, the Optionee may
make a written election (the "Tax Election"), which may be accepted or
rejected in the discretion of the Committee, to have withheld a
portion of the Shares then issuable to him or her having an aggregate
Fair Market Value, on the date preceding the date of such issuance,
equal to the Withholding Taxes.
(b) If an Optionee makes a disposition, within the meaning of
Section 424(c) of the Code and regulations promulgated thereunder, of
any Share or Shares issued to such Optionee pursuant to the exercise
of an Incentive Stock Option within the two-year period commencing on
the day after the date of the grant or within the one-year period
commencing on the day after the date of transfer of such Share or
Shares to the Optionees pursuant to such exercise, the Optionee shall,
within ten (10) days of such disposition, notify the Company thereof,
by delivery of written notice to the Company at its principal
executive office.
(c) The Committee shall have the authority, at the time of grant
of an Employee Option under the Plan or at any time thereafter, to
award tax bonuses to designated Optionees, to be paid upon their
exercise of Employee Options granted hereunder. The amount of any such
payments shall be determined by the Committee. The Committee shall
have full authority in its absolute discretion to determine the amount
of any such tax bonus and the terms and conditions affecting the
vesting and payment thereof.
15.3 INTERPRETATION. The Plan is intended to comply with Rule
16b-3 promulgated under the Exchange Act and the Committee shall
interpret and administer the provisions of the Plan or any Agreement
in a manner consistent therewith. Any provisions inconsistent with
such Rule shall be inoperative and shall not affect the validity of
the Plan. Unless otherwise expressly stated in the relevant Agreement,
any grant of Options is intended to be performance-based compensation
within the meaning of Section 162(m)(4)(C) of the Code. The Committee
shall not be entitled to exercise any discretion otherwise authorized
hereunder with respect to such Options if the ability to exercise such
discretion or the exercise of such discretion itself would cause the
compensation attributable to such Options to fail to qualify as
performance-based compensation.
16. EFFECTIVE DATE/SHAREHOLDER APPROVAL. The effective date of the Plan
shall be the date of its adoption by the Board, subject only to the approval by
the affirmative vote of the holders of a majority of the securities of the
Company present, or represented, and entitled to vote at the first meeting of
stockholders duly held in accordance with the applicable laws of the State of
Delaware after such date of adoption.