<PAGE> 1
EXHIBIT 10.1
================================================================================
Array BioPharma Inc.
1998 STOCK OPTION PLAN
Effective July 1, 1998
================================================================================
<PAGE> 2
Array BioPharma Inc.
1998 STOCK OPTION PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - INTRODUCTION........................................................................................-1-
1.1 Establishment...................................................................................-1-
1.2 Purposes........................................................................................-1-
1.3 Effective Date..................................................................................-1-
ARTICLE II - DEFINITIONS........................................................................................-1-
ARTICLE III - PLAN ADMINISTRATION...............................................................................-3-
ARTICLE IV - STOCK SUBJECT TO THE PLAN..........................................................................-3-
4.1 Number of Shares................................................................................-3-
4.2 Adjustments for Stock Split, Stock Dividend, Etc................................................-4-
4.3 Adjustments for Certain Distributions of Property...............................................-4-
4.4 Distributions of Capital Stock and Indebtedness.................................................-4-
4.5 No Rights as Shareholder........................................................................-4-
4.6 Fractional Shares...............................................................................-4-
4.7 Determination by the Committee, Etc.............................................................-5-
ARTICLE V - PARTICIPATION.......................................................................................-5-
ARTICLE VI - STOCK OPTIONS......................................................................................-5-
6.1 Grant of Options to Eligible Employees and Eligible Consultants.................................-5-
6.2 Option Certificates.............................................................................-6-
6.3 Certain Option Terms............................................................................-6-
(a) Number of Shares.......................................................................-6-
(b) Price..................................................................................-6-
(c) Duration and Exercise of Options.......................................................-6-
(d) Termination of Employment or Service, Death, Disability, Etc...........................-6-
(e) Exercise, Payments, Etc................................................................-7-
(f) Withholding............................................................................-8-
6.4 Restrictions on Incentive Stock Options.........................................................-9-
(a) Initial Exercise.......................................................................-9-
(b) Ten Percent Shareholders...............................................................-9-
</TABLE>
-i-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE VII - CORPORATE REORGANIZATION; CHANGE OF CONTROL.......................................................-9-
7.1 Reorganization..................................................................................-9-
7.2 Required Notice.................................................................................-9-
7.3 Acceleration of Exercisability.................................................................-10-
7.4 Change of Control..............................................................................-10-
ARTICLE VIII - EMPLOYMENT; TRANSFERABILITY.....................................................................-10-
8.1 Employment.....................................................................................-10-
8.2 Other Employee Benefits........................................................................-10-
8.3 Transferability................................................................................-11-
ARTICLE IX - SECURITIES LAW RESTRICTIONS.......................................................................-11-
ARTICLE X - WITHHOLDING........................................................................................-11-
10.1 Withholding Requirement........................................................................-11-
10.2 Withholding With Stock.........................................................................-11-
ARTICLE XI - MISCELLANEOUS.....................................................................................-12-
11.1 Expiration.....................................................................................-12-
11.2 Amendments, Etc................................................................................-12-
11.3 Treatment of Proceeds..........................................................................-12-
11.4 Section Headings...............................................................................-12-
11.5 Severability...................................................................................-12-
11.6 Gender and Number..............................................................................-12-
</TABLE>
-ii-
<PAGE> 4
Array BioPharma Inc.
1998 STOCK OPTION PLAN
ARTICLE I
INTRODUCTION
1.1 Establishment. Array BioPharma Inc., a Delaware corporation (the
"Company") hereby establishes the Array BioPharma Inc. 1998 Stock Option Plan
(the "Plan") for certain employees and consultants of the Company.
1.2 Purposes. The purposes of the Plan are to provide those who are
selected for participation in the Plan with added incentive to continue in the
long-term service of the Company and to create in such persons a more direct
interest in the future success of the operations of the Company by relating
incentive compensation to increases in shareholder value, so that the income of
those participating in the Plan is more closely aligned with the income of the
Company's shareholders. The Plan is also designed to provide a financial
incentive that will help the Company attract, retain and motivate the most
qualified employees and consultants.
1.3 Effective Date. The effective date of the Plan shall be July 1,
1998 (the "Effective Date"), subject to approval by the affirmative votes of the
holders of a majority of the shares of the Company present or represented and
entitled to vote at a meeting duly held in accordance with law within one year
following the Effective Date. If the shareholders of the Company do not approve
the Plan as specified above, Options granted under the Plan shall be deemed to
be rescinded without any further action by the Board or the Company, and the
Plan shall automatically terminate.
ARTICLE II
DEFINITIONS
The following terms shall have the meanings set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(c) "Committee" means the committee designated or appointed
pursuant to Article III.
-1-
<PAGE> 5
(d) "Disabled" or "Disability" shall have the meaning given to
such terms in Section 22(e)(3) of the Code.
(e) "Eligible Consultants" means those consultants and other
individuals who provide services to the Company and whose judgment, initiative
and effort are important to the Company for the management and growth of its
business. For purposes of the Plan, Directors of the Company shall be considered
consultants, unless also employees. For purposes of the Plan, Eligible
Consultants include only those individuals who do not receive wages subject to
the withholding of federal income tax under Section 3401 of the Code.
(g) "Eligible Employees" means those employees (including,
without limitation, officers and directors who are also employees) of the
Company, whose judgment, initiative and efforts are important to the Company for
the growth of its business. For purposes of the Plan, an employee is an
individual whose wages are subject to the withholding of federal income tax
under Section 3401 of the Code. A determination by the Committee to grant
Options to an employee shall be controlling.
(h) "Fair Market Value" of a share of Stock shall be the last
reported sale price of the Stock on the NASDAQ National Market on the day the
determination is to be made, or if no sale took place on such day, the average
of the closing bid and asked prices of the Stock on the NASDAQ National Market
on such day, or if the market is closed on such day, the last day prior to the
date of determination on which the market was open for the transaction of
business, as reported by NASDAQ. If, however, the Stock should be listed or
admitted for trading on a national securities exchange, the Fair Market Value of
a share of the Stock shall be the last sales price, or if no sales took place,
the average of the closing bid and asked prices on the day the determination is
to be made, or if the market is closed on such day, the last day prior to the
date of determination on which the market was open for the transaction of
business, as reported in the principal consolidated transaction reporting system
for the principal national securities exchange on which the Stock is listed or
admitted for trading. If the Stock is not listed or traded on NASDAQ or on any
national securities exchange, the Fair Market Value of the Stock for purposes of
the grant of Options under the Plan shall be determined by the Committee in good
faith.
(i) "Incentive Stock Option" means any Option designated as
such and granted in accordance with the requirements of Section 422 of the Code.
(j) "Non-Qualified Option" means any Option other than an
Incentive Stock Option.
(k) "Option" means a right granted under the Plan to purchase
Stock at a stated price for a specified period of time.
(l) "Option Certificate" shall have the meaning given to such
term in Section 6.2.
-2-
<PAGE> 6
(m) "Option Holder" means an Eligible Employee or Eligible
Consultant designated by the Committee from time to time during the term of the
Plan to receive one or more Options under the Plan.
(n) "Option Price" means the price at which shares of Stock
subject to an Option may be purchased, determined in accordance with subsection
6.3(b).
(o) "Share" means a share of Stock.
(p) "Stock" means the common stock of the Company.
ARTICLE III
PLAN ADMINISTRATION
Initially, the Committee shall consist of the entire Board. The Board
may at any time designate some of its members to constitute the Committee. The
Committee shall be responsible for administration of the Plan and is empowered
hereunder to take actions in administration of the Plan. If the Committee does
not consist of the entire Board, members of the Committee shall be appointed
from time to time by the Board, shall serve at the pleasure of the Board and may
resign at any time upon written notice to the Board. The Committee shall
determine the form or forms of the Option Certificates and other agreements with
Option Holders which shall evidence the particular provisions, terms,
conditions, rights and duties of the Company and the Option Holders with respect
to Options granted pursuant to the Plan, which provisions need not be identical
except as may be provided herein. The Committee may from time to time adopt such
rules and regulations for carrying out the purposes of the Plan as it may deem
proper and in the best interests of the Company. The Committee may correct any
defect, supply any omission or reconcile any inconsistency in the Plan or in any
agreement entered into hereunder in the manner and to the extent it shall deem
expedient and it shall be the sole and final judge of such expediency. No member
of the Committee shall be liable for any action or determination made in good
faith. The determinations, interpretations and other actions of the Committee
pursuant to the provisions of the Plan shall be binding and conclusive for all
purposes and on all persons.
ARTICLE IV
STOCK SUBJECT TO THE PLAN
4.1 Number of Shares. The total number of Shares as to which Options
may be granted pursuant to the Plan shall be 1,107,500 in the aggregate. Such
number shall be adjusted in accordance with the provisions of Section 4.2.
Shares issued upon the exercise of Options shall be applied to reduce the
maximum number of Shares remaining available for use under the Plan. Shares
underlying Options that expire or terminate unexercised are available for grant
of Options under the Plan. Shares used to pay the Option Price, and shares
transferred to or withheld by the Company in satisfaction of withholding tax
obligations, are not available for the grant of Options under the Plan.
-3-
<PAGE> 7
The Company shall at all times during the term of the Plan and while any Options
are outstanding retain as authorized and unissued Stock, or as treasury Stock,
at least the number of Shares from time to time required under the provisions of
the Plan, or otherwise assure itself of its ability to perform its obligations
hereunder.
4.2 Adjustments for Stock Split, Stock Dividend, Etc. If the Company
shall at any time increase or decrease the number of its outstanding Shares by
means of payment of a stock dividend or any other distribution upon such Shares
payable in Stock, or through a stock split, subdivision, consolidation,
combination, reclassification or recapitalization involving the Stock, or change
in any way the rights and privileges of such Shares, then the numbers, rights
and privileges of both (a) the Shares as to which Options may be granted under
the Plan and (b) the Shares then subject to each outstanding Option shall be
increased, decreased or changed in like manner as if the corresponding Shares
had been issued and outstanding, fully paid and nonassessable at the time of
such occurrence. Upon any occurrence described in this Section 4.2, the total
Option Price under each then outstanding Option (i.e., the Option Price per
share multiplied by the number of shares subject to the Option immediately
before such occurrence) shall remain unchanged but shall be apportioned ratably
over the increased or decreased number of Shares subject to the Option.
4.3 Adjustments for Certain Distributions of Property. If the Company
shall at any time distribute with respect to its Stock assets or securities of
other persons (excluding cash dividends or distributions payable out of capital
surplus and dividends or other distributions referred to in Sections 4.2 or
4.4), then either (a) the Option Price of outstanding Options shall be adjusted
to reflect the fair market value of the assets or securities distributed, (b)
the Company shall provide for the delivery upon exercise of such Options of cash
in an amount equal to the fair market value of the assets or securities
distributed or (c) a combination of such actions shall be taken, all as
determined by the Committee in its discretion, which determination need not be
the same for all holders of options granted by the Company. Fair market value of
the assets or securities distributed for this purpose shall be as determined by
the Committee.
4.4 Distributions of Capital Stock and Indebtedness. If the Company
shall at any time distribute with respect to its Stock shares of its capital
stock (other than Stock) or evidences of indebtedness, then a proportionate part
of such capital stock and evidences of indebtedness shall be set aside for each
outstanding Option and, upon the exercise of such Option, delivered to the
Option Holder.
4.5 No Rights as Shareholder. An Option Holder shall have none of the
rights of a shareholder with respect to the Shares subject to an Option until
such Shares are transferred to the Option Holder upon the exercise of such
Option. Except as provided in this Article IV, no adjustment shall be made for
dividends, rights or other property distributed to shareholders (whether
ordinary or extraordinary) for which the record date is prior to the date such
Shares are so transferred.
4.6 Fractional Shares. No adjustment or substitution provided for in
this Article IV shall require the Company to issue a fractional share. The total
substitution or adjustment with respect to each Option shall be limited by
deleting any fractional share.
-4-
<PAGE> 8
4.7 Determination by the Committee, Etc. Adjustments under this Article
IV shall be made by the Committee, whose determinations with regard thereto
shall be final and binding.
ARTICLE V
PARTICIPATION
In accordance with the provisions of the Plan, the Committee shall, in
its sole discretion, select Option Holders from among Eligible Employees and
Eligible Consultants to whom Options will be granted and shall specify the
number of Shares subject to each Option and such other terms and conditions of
each Option as the Committee may deem necessary or desirable and consistent with
the terms of the Plan. Eligible Employees shall be selected from the employees
of the Company who are performing services in the management, operation and
growth of the Company, and contribute, or are expected to contribute, to the
achievement of long-term corporate objectives. Eligible Consultants shall be
selected from the consultants and other individuals who provide services to the
Company with respect to the operation and growth of the Company and who
contribute, or are expected to contribute, to the achievement of long-term
corporate objectives. Generally, it is anticipated that the Company will grant
options only to Eligible Consultants who are Directors of the Company who do not
otherwise own stock in the Company. Eligible Employees and Eligible Consultants
may be granted one or more Options from time-to-time. The grant of each such
Option shall be separately approved by the Committee, and receipt of one such
Option shall not result in automatic receipt of any other Option. Upon
determination by the Committee that an Option is to be granted to an Eligible
Employee or Eligible Consultant, written notice shall be given to such person,
specifying the terms, conditions, rights and duties related thereto.
ARTICLE VI
STOCK OPTIONS
6.1 Grant of Options to Eligible Employees and Eligible Consultants.
Coincident with or following designation for participation in the Plan, Eligible
Employees and Eligible Consultants may be granted one or more Options. The
Committee in its sole discretion shall designate whether an Option is to be
considered an Incentive Stock Option or a Non-Qualified Option. Incentive Stock
Options may be granted only to Eligible Employees. The Committee may grant both
an Incentive Stock Option and a Non-Qualified Option to an Eligible Employee at
the same time or at different times. Incentive Stock Options and Non-Qualified
Options, whether granted at the same or different times, shall be deemed to have
been awarded in separate grants and shall be clearly identified, and in no event
shall the exercise of one Option affect the right to exercise any other Option
or affect the number of Shares for which any other Option may be exercised. An
Option shall be considered as having been granted on the date specified in the
grant resolution of the Committee.
-5-
<PAGE> 9
6.2 Option Certificates. Each Option granted under the Plan shall be
evidenced by a written stock option certificate (an "Option Certificate") issued
in the name of the Option Holder and in such form as may be approved by the
Committee. The Option Certificate shall and shall be deemed to incorporate and
conform to the terms and conditions set forth herein, and may also include such
other terms and conditions, not inconsistent herewith, as the Committee may
consider appropriate in each case.
6.3 Certain Option Terms. Options granted pursuant to the Plan shall
have terms and conditions consistent with the following in addition to the terms
and conditions set forth elsewhere herein:
(a) Number of Shares. Each Option shall relate to a specified
number of Shares determined by the Committee.
(b) Price. Each Option shall have an Option Price that is
determined by the Committee. Incentive Stock Options shall have an Option Price
that is equal to or greater than the Fair Market Value of the Stock on the date
the Option is granted.
(c) Duration and Exercise of Options. Each Option shall relate
to a specified period of time, as determined by the Committee, within which the
Option may be exercised by the Option Holder (the "Option Period"). The Option
Period must end, in all cases, not more than ten years from the date the Option
is granted. In the absence of specific provisions in the Option Certificate,
each Option shall have an Option Period ending ten years from the date the
Option is granted. Each Option shall become exercisable (vest) over such period
of time, if any, as is determined by the Committee. In the absence of specific
provisions in the Option Certificate, each Option shall vest as to one-quarter
of the underlying Shares one year from the grant date, then, as to the remaining
underlying Shares, 1/36th of those Shares monthly for the next three years.
(d) Termination of Employment or Service, Death, Disability,
Etc. The Committee may specify the period after which an Option may be exercised
following termination of the employment of an Eligible Employee or termination
of relationship with an Eligible Consultant. The effect of this subsection
6.3(d) shall be limited to determining the consequences of a termination and
nothing in this subsection 6.3(d) shall restrict or otherwise interfere with the
Company's discretion with respect to the termination of any person's employment
or other relationship. If the Committee does not so specify, or in the absence
of specific provisions in the Option Certificate, the following shall apply:
(i) If the employment or consulting relationship of
an Option Holder by or with the Company terminates by action
of the Option Holder for any reason other than death or
Disability within six months after the date the Option is
granted or if the employment or consulting relationship of the
Option Holder by or with the Company is terminated within the
Option Period for cause, as determined by the Company, the
Option shall be void for all purposes. As used in this
subsection 6.3(d), "cause" shall include without limitation a
gross violation, as determined by the Company, of the
Company's established policies and procedures,
-6-
<PAGE> 10
any event permitting termination for cause under any
applicable employment agreement, any act of dishonesty, fraud
or wilful misconduct toward the Company.
(ii) If the employment or consulting relationship of
the Option Holder terminates because the Option Holder becomes
Disabled within the Option Period, the Option may be exercised
by the Option Holder (or, in the case of his death after
becoming disabled, by those entitled to do so under his will
or by the laws of descent and distribution) within 30 days
following such termination (if otherwise within the Option
Period), but not thereafter. In any such case, the Option may
be exercised only as to the Shares as to which the Option had
become exercisable on or before the date of termination
because of Disability.
(iii) If the Option Holder dies within the Option
Period, while employed by the Company, while a consultant to
the Company or within the three-month period referred to in
(iv) below, the Option may be exercised by those entitled to
do so under his will or by the laws of descent and
distribution within 30 days following his death (if otherwise
within the Option Period), but not thereafter. In any such
case the Option may be exercised only as to the Shares as to
which the Option had become exercisable on or before the date
of the Option Holder's death.
(iv) If the employment or relationship of the Option
Holder by or with the Company terminates within the Option
Period for any reason other than for cause, Disability or
death(and, in the case of a termination by action of the
Option Holder, such termination occurs more than six months
after the Option is granted), the Option may be exercised by
the Option Holder within 30 days following the date of such
termination (if otherwise within the Option Period), but not
thereafter. In any such case, the Option may be exercised only
as to the Shares as to which the Option had become exercisable
on or before the date of termination.
(e) Exercise, Payments, Etc.
(i) Manner of Exercise. The method for exercising
each Option granted hereunder shall be by delivery to the
Company of written notice specifying the number of Shares with
respect to which such Option is exercised. The purchase of
such Shares shall take place at the principal offices of the
Company within thirty days following delivery of such notice,
at which time the Option Price of the Shares shall be paid in
full by any of the methods set forth below or a combination
thereof. If the purchase price is paid by means of a broker's
loan transaction described in clause (C) of Section
6.3(f)(ii), in whole or in part, the closing of the purchase
of the Stock under the Option shall take place on the date on
which, and only if, the sale of Stock upon which the broker's
loan was based has been closed and settled, unless the Option
Holder makes an irrevocable written election, at the time of
exercise of the Option, to have the exercise treated as fully
effective for all purposes upon receipt of the purchase price
by the Company regardless of whether or not the sale of the
Stock by the broker is closed and settled. The Company may
require, as a condition to the exercise of the
-7-
<PAGE> 11
Option and delivery of the Shares, that the Option Holder
execute a Shareholders' Agreement in the form then being used
for the Company's Shareholders, which may or may not be
substantially in the form of the Shareholders Agreement
attached as Exhibit A to this Plan. A properly executed
certificate or certificates representing the Shares shall be
delivered to or at the direction of the Option Holder upon
payment therefor. If Options on less than all shares evidenced
by an Option Certificate are exercised, the Company shall
deliver a new Option Certificate evidencing the Option on the
remaining shares upon delivery of the Option Certificate for
the Option being exercised.
(ii) Manner of Payment. The Option Price shall be
paid by any of the following methods or any combination of the
following methods at the option of the Option Holder, or by
any other method approved by the Committee upon the request of
the Option Holder: (A) cash; (B) certified, cashier's or other
check acceptable to the Company, payable to the order of the
Company; (C) delivery to the Company of irrevocable
instructions to a broker to deliver promptly to the Company
the amount of sale or loan proceeds required to pay the Option
Price; (D) delivery to the Company of certificates
representing the number of Shares then owned by the Option
Holder, the Fair Market Value of which (determined as of the
date the notice of exercise is delivered to the Company)
equals the Option Price of the Stock to be purchased pursuant
to the Option, properly endorsed for transfer to the Company.
No Option may be exercised by delivery to the Company of
certificates representing Stock that has been held by the
Option Holder for less than six months or such other period as
is specified by the Committee.
(f) Withholding.
(i) Non-Qualified Options. Upon exercise of an
Option, the Option Holder shall make appropriate arrangements
with the Company to provide for the amount of additional
withholding required by Sections 3102 and 3402 of the Code and
applicable state income tax laws, including payment of such
taxes through delivery of shares of Stock or by withholding
Stock to be issued under the Option, as provided in Section
10.
(ii) Incentive Options. If an Option Holder makes a
disposition (as defined in Section 424(c) of the Code) of any
Stock acquired pursuant to the exercise of an Incentive Stock
Option prior to the expiration of two years from the date on
which the Incentive Stock Option was granted or prior to the
expiration of one year from the date on which the Option was
exercised, the Option Holder shall send written notice to the
Company at its principal executive office (Attention:
Corporate Secretary) of the date of such disposition, the
number of shares disposed of, the amount of proceeds received
from such disposition and any other information relating to
such disposition as the Company may reasonably request. The
Option Holder shall, in the event of such a disposition, make
appropriate arrangements with the Company
-8-
<PAGE> 12
to provide for the amount of additional withholding, if any,
required by Sections 3102 and 3402 of the Code and applicable
state income tax laws.
6.4 Restrictions on Incentive Stock Options.
(a) Initial Exercise. The aggregate Fair Market Value
of the Shares with respect to which Incentive Stock Options are exercisable for
the first time by an Option Holder in any calendar year, under the Plan or
otherwise, shall not exceed $100,000. For this purpose, the Fair Market Value of
the Shares shall be determined as of the date of grant of the Option.
(b) Ten Percent Shareholders. Incentive Stock Options
granted to an Option Holder who is the holder of record of 10% or more of the
outstanding Stock of the Company shall have an Option Price equal to 110% of the
Fair Market Value of the Shares on the date of grant of the Option and the
Option Period for any such Option shall not exceed five years.
ARTICLE VII
CORPORATE REORGANIZATION; CHANGE OF CONTROL
7.1 Reorganization. Upon the occurrence of any of the
following events, if the notice required by Section 7.2 shall have first been
given, the Plan and (to the extent not exercised before the event occurs) all
Options then outstanding hereunder shall automatically terminate and be of no
further force and effect whatsoever, without the necessity for any additional
notice or other action by the Board or the Company: (a) the merger or
consolidation of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the continuing corporation and
which does not result in any reclassification or change of outstanding shares of
Common Stock); or (b) the sale or conveyance of the property of the Company as
an entirety or substantially as an entirety (other than a sale or conveyance in
which the Company continues as holding company of an entity or entities that
conduct the business or businesses formerly conducted by the Company); or (c)
the dissolution or liquidation of the Company.
7.2 Required Notice. The Company shall give each Option Holder
at least 30 days' prior written notice of any event described in Section 7.1,
except as otherwise provided in this Section 7.2. No notice shall be required in
the case of the events described in clauses (a) or (b) of Section 7.1 if the
Company, or the successor or purchaser, as the case may be, shall make adequate
provision for the assumption of the outstanding Options or the substitution of
new options for the outstanding Options on terms comparable to the outstanding
Options. Any such assumption or substitution shall give the Option Holder the
right thereafter to purchase the kind and amount of securities or property or
cash receivable upon such merger, consolidation, sale or conveyance by a holder
of the number of Shares that would have been receivable upon exercise of the
Option immediately prior to such merger, consolidation, sale or conveyance
(assuming such holder of Stock failed to exercise any rights of election and
received per share the kind and amount received per share by a majority of the
non-electing shares). The provisions of this Article VII shall similarly apply
to successive mergers, consolidations, sales or conveyances. Notice under this
Section 7.2
-9-
<PAGE> 13
shall be deemed to have been given when delivered personally to an Option Holder
or when mailed to an Option Holder by registered or certified mail, postage
prepaid, at such Option Holder's address last known to the Company.
7.3 Acceleration of Exercisability. Option Holders notified in
accordance with Section 7.2 may exercise their Options at any time before the
occurrence of the event requiring the giving of notice (but subject to
occurrence of such event), regardless of whether all conditions of exercise
relating to length of service have been satisfied.
7.4 Change of Control. The Committee shall have the authority
to provide that, as to any Option, if a Change in Control (as defined below)
occurs, such Option shall become exercisable in full, regardless of whether all
conditions of exercise relating to length of service have been satisfied. In the
absence of such a specific provision in the Option Certificate, such Option
shall become exercisable in full on a Change of Control. A "Change in Control"
shall mean each of (i) the acquisition from the Company and/or shareholders of
the Company, by one or more persons in one or more related transactions over a
period of up to 24 months, of stock that, upon completion of those transactions
and exercise of any associated option or conversion rights, represents or would
represent more than 50 percent of the outstanding common stock of the Company,
(ii) the closing of the sale of all or substantially all of the assets of the
Company, or (iii) any consolidation or merger involving the Company (other than
a consolidation or merger in which the Company is the surviving entity and no
change in the capital stock or ownership or control of the Company occurs).
Notwithstanding anything to the contrary in this Section 7.4, no Option will
become exercisable by virtue of the occurrence of a Change in Control if the
Option Holder of that Option or any group of which that Option Holder is a
member is the person whose acquisition constituted the Change in Control.
ARTICLE VIII
EMPLOYMENT; TRANSFERABILITY
8.1 Employment. Nothing contained in the Plan or in any Option
granted under the Plan shall confer upon any Option Holder any right with
respect to the continuation of his or her employment by or service with the
Company, or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement or other contract to the contrary, at
any time to terminate the employment or service of such Option Holder or to
increase or decrease the compensation of the Option Holder from the rate in
existence at the time of the grant of an Option. The Committee shall determine
whether an authorized leave of absence, or absence in military or government
service, shall constitute a termination of employment.
8.2 Other Employee Benefits. The amount of any compensation
deemed to be received by an Option Holder as a result of the exercise of an
Option shall not constitute "earnings" with respect to which any other employee
benefits of such person are determined, including without limitation benefits
under any pension, profit sharing, life insurance or salary continuation plan.
-10-
<PAGE> 14
8.3 Transferability. No right or interest of any Option Holder
in an Option granted pursuant to the Plan shall be assignable or transferable
during the lifetime of the Option Holder, either voluntarily or involuntarily,
or be subjected to any lien, directly or indirectly, by operation of law, or
otherwise, including execution, levy, garnishment, attachment, pledge or
bankruptcy. In the event of an Option Holder's death, an Option Holder's rights
and interests in Options shall be transferable by will or pursuant to the laws
of descent and distribution. Each Option granted under the Plan shall be
exercisable during the Holder's lifetime only by the Option Holder or, in the
event of Disability or incapacity, by the Option Holder's guardian or legal
representative.
ARTICLE IX
SECURITIES LAW RESTRICTIONS
Each Option shall be subject to the requirement that if at any
time counsel to the Company shall determine that the listing, registration or
qualification of the Shares subject to such Option upon any securities exchange
or under any state or federal law, or the consent or approval of any
governmental or regulatory body, is necessary as a condition of, or in
connection with, the issuance or purchase of Shares thereunder, such Option may
not be exercised in whole or in part unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to the Committee. Nothing herein shall be deemed to
require the Company to apply for or obtain such listing, registration or
qualification.
ARTICLE X
WITHHOLDING
10.1 Withholding Requirement. The Company's obligations to
deliver Shares upon the exercise of an Option shall be subject to the Option
Holder's satisfaction of all applicable federal, state and local income and
other tax withholding requirements.
10.2 Withholding With Stock. The Committee may from time to
time, in its sole discretion, grant Option Holders the right to pay all such
amounts of tax withholding, or any part thereof, by electing to transfer to the
Company, or to have the Company withhold from Shares otherwise issuable to the
Option Holder, Shares having a value equal to the amount required to be withheld
or such lesser amount as may be specified by the Option Holder. The value of
Shares to be withheld shall be based on the Fair Market Value of the Stock on
the date that the amount of tax to be withheld is to be determined (the "Tax
Date"). Any such election by Option Holders to have Shares withheld for this
purpose will be subject to the following restrictions and any additional
restrictions imposed by the Committee: (a) all elections must be made prior to
the Tax Date; and (b) all elections shall be irrevocable.
-11-
<PAGE> 15
ARTICLE XI
MISCELLANEOUS
11.1 Expiration. The Plan shall terminate whenever the Board
adopts a resolution to that effect. If not sooner terminated by the Board, the
Plan shall terminate and expire on June 1, 2008. After termination, no
additional Options shall be granted under the Plan, but the Company shall
continue to recognize Options previously granted.
11.2 Amendments, Etc. The Board may from time to time amend,
modify, suspend or terminate the Plan. Nevertheless, no such amendment,
modification, suspension or termination shall, without the consent of the Option
Holder, impair any Option previously granted under the Plan or deprive any
Option Holder of any Shares that he may have acquired through or as a result of
the Plan.
11.3 Treatment of Proceeds. Proceeds from the sale of Stock
pursuant to Options granted under the Plan shall constitute general funds of the
Company.
11.4 Section Headings. The section headings are included
herein only for convenience, and they shall have no effect on the interpretation
of the Plan.
11.5 Severability. If any article, section, subsection or
specific provision is found to be illegal or invalid for any reason, such
illegality or invalidity shall not affect the remaining provisions of the Plan,
and the Plan shall be construed and enforced as if such illegal and invalid
provision had never been set forth in the Plan.
11.6 Gender and Number. Except when otherwise indicated by the
context, the masculine gender shall include the feminine gender, and the
definition of any term herein in the singular shall also include the plural.
Adopted August 8, 1998 to be effective as of July 1, 1998.
Array BioPharma Inc.,
a Delaware corporation
By: /s/ KEVIN KOCH
----------------------
Kevin Koch, President
-12-
