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EXHIBIT 4.2
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ARTICLE I DEFINITIONS..........................................................4
1.01. Acquiring Person......................................................4
1.02. Administrator.........................................................4
1.03. Affiliate.............................................................4
1.04. Agreement.............................................................4
1.05. Associate.............................................................4
1.06. Board.................................................................4
1.07. Change in Control.....................................................5
1.08. Code..................................................................5
1.09. Committee.............................................................5
1.10. Common Stock..........................................................6
1.11. Company...............................................................6
1.12. Continuing Director...................................................6
1.13. Control Affiliate.....................................................6
1.14. Exchange Act..........................................................6
1.15. Fair Market Value.....................................................6
1.16. Option................................................................6
1.17. Participant...........................................................7
1.18. Performance Shares....................................................7
1.19. Person................................................................7
1.20. Plan..................................................................7
1.21. Related Entity........................................................7
1.22. Rule 16b-3............................................................7
1.23. Stock Award...........................................................8
ARTICLE II PURPOSES............................................................8
ARTICLE III ADMINISTRATION.....................................................8
ARTICLE IV ELIGIBILITY.........................................................9
ARTICLE V COMMON STOCK SUBJECT TO PLAN.........................................9
5.01. Common Stock Issued...................................................9
5.02. Aggregate Limit......................................................10
5.03. Reallocation of Shares...............................................10
ARTICLE VI OPTIONS............................................................10
6.01. Award................................................................10
6.02. Option Price.........................................................11
6.03. Maximum Option Period................................................11
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6.04. Nontransferability...................................................11
6.05. Transferable Options.................................................11
6.06. Status as Employee or Service Provider...............................12
6.07. Exercise.............................................................12
6.08. Payment..............................................................12
6.09. Shareholder Rights...................................................12
6.10. Disposition of Shares................................................13
ARTICLE VII PERFORMANCE SHARE AWARDS..........................................13
7.01. Award................................................................13
7.02. Earning the Award....................................................13
7.03. Payment..............................................................14
7.04. Shareholder Rights...................................................14
7.05. Nontransferability...................................................14
7.06. Transferable Performance Shares......................................14
7.07. Status as Employee or Service Provider...............................14
ARTICLE VIII STOCK AWARDS.....................................................15
8.01. Award................................................................15
8.02. Vesting..............................................................15
8.03. Performance Objectives...............................................15
8.04. Status as Employee or Service Provider...............................15
8.05. Shareholder Rights...................................................16
ARTICLE IX ADJUSTMENT UPON CHANGE IN COMMON STOCK.............................16
ARTICLE X COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES...............17
ARTICLE XI GENERAL PROVISIONS.................................................18
11.01. Effect on Employment and Service....................................18
11.02. Unfunded Plan.......................................................18
11.03. Rules of Construction...............................................18
ARTICLE XII AMENDMENT.........................................................18
ARTICLE XIII DURATION OF PLAN.................................................19
ARTICLE XIV EFFECTIVE DATE OF PLAN............................................19
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ARTICLE I
DEFINITIONS
-----------
1.01. Acquiring Person
----------------
Acquiring Person means a Person who, considered alone or together with
all Control Affiliates and Associates of that Person, is or becomes directly or
indirectly the beneficial owner (as defined in Rule 13d-3 under the Exchange
Act) of securities representing at least fifty percent (50%) of the Company's
then outstanding securities entitled to vote generally in the election of the
Board.
1.02. Administrator
-------------
Administrator means the Board, the Committee, or any delegate of the
Committee that is appointed in accordance with Article III.
1.03. Affiliate
---------
Affiliate means any "parent corporation" or "subsidiary corporation"
(within the meaning of Section 424 of the Code) of the Company, including a
corporation that becomes an Affiliate after the adoption of this Plan.
1.04. Agreement
---------
Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the terms
and conditions of a Stock Award, an award of Performance Shares or an Option
granted to such Participant.
1.05. Associate
---------
Associate, with respect to any Person, is defined in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act. An Associate does not
include the Company or a majority-owned subsidiary of the Company.
1.06. Board
-----
Board means the Board of Directors of the Company.
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1.07. Change in Control
-----------------
Change in Control means (i) a Person is or becomes an Acquiring Person;
(ii) holders of the securities of the Company entitled to vote thereon approve
any agreement with a Person (or, if such approval is not required by applicable
law and is not solicited by the Company, the closing of such an agreement) that
involves the transfer of all or substantially all of the Company's total assets
on a consolidated basis, as last reported in the Company's consolidated
financial statements filed with the Securities and Exchange Commission; (iii)
holders of the securities of the Company entitled to vote thereon approve a
transaction (or, if such approval is not required by applicable law and is not
solicited by the Company, the closing of such a transaction) pursuant to which
the Company will undergo a merger, consolidation, or statutory share exchange
with a Person, regardless of whether the Company is intended to be the surviving
or resulting entity after the merger, consolidation, or statutory share
exchange, other than a transaction that results in the voting securities of the
----------
Company carrying the right to vote in elections of persons to the Board
outstanding immediately prior to the closing of the transaction continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least fifty percent (50%) of the
Company's voting securities carrying the right to vote in elections of persons
to the Company's Board, or such securities of such surviving entity, outstanding
immediately after the closing of such transaction; (iv) the Continuing Directors
cease for any reason to constitute a majority of the Board; or (v) holders of
the securities of the Company entitled to vote thereon approve a plan of
complete liquidation of the Company or an agreement for the sale or liquidation
by the Company of substantially all of the Company's assets (or, if such
approval is not required by applicable law and is not solicited by the Company,
the commencement of actions constituting such a plan or the closing of such an
agreement).
1.08. Code
----
Code means the Internal Revenue Code of 1986, and any amendments
thereto.
1.09. Committee
---------
Committee means the Compensation Committee of the Board or, if the
Compensation Committee is not composed solely of two or more persons who satisfy
the "non-employee director" and "outside director" requirements of Rule 16b-3
and Section 162(m) of the Code, respectively, Committee means such other
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committee of the Board composed solely of two or more individuals who satisfy
such criteria.
1.10. Common Stock
------------
Common Stock means the common stock of the Company.
1.11. Company
-------
Company means Insmed Incorporated.
1.12. Continuing Director
-------------------
Continuing Director means any member of the Board, while a member of
the Board and (i) who was a member of the Board immediately following the
closing of the transactions contemplated by the Form S-4 filed by the Company
with the Securities and Exchange Commission in 2000, or (ii) whose nomination
for or election to the Board was recommended or approved by a majority of the
Continuing Directors.
1.13. Control Affiliate
-----------------
Control Affiliate with respect to any Person, means an affiliate as
defined in Rule 12b-2 of the General Rules and Regulations under the Exchange
Act.
1.14. Exchange Act
------------
Exchange Act means the Securities Exchange Act of 1934, as amended.
1.15. Fair Market Value
-----------------
Fair Market Value means, on any given date, the reported "closing"
price of a share of Common Stock on the primary exchange on which shares of
Common Stock are listed. If, on any given date, no share of Common Stock is
traded on an established stock exchange, then Fair Market Value shall be
determined with reference to the next preceding day that the Common Stock was so
traded.
1.16. Option
------
Option means a stock option granted under this Plan that entitles the
holder to purchase from the Company a stated number of shares of Common Stock at
the price set forth in an Agreement. Where capitalized, the word "Option" is not
intended to
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include any option granted by an Affiliate as to which the Company has assumed
the Affiliate's obligation to deliver Common Stock.
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1.17. Participant
-----------
Participant means an employee of the Company or an Affiliate, a member
of the Board (whether or not such Board member is employed by the Company or an
Affiliate), or any non-employee advisor or service provider of the Company or an
Affiliate, who satisfies the requirements of Article IV and is selected by the
Administrator to receive, a Stock Award, an Option, a Performance Share, or a
combination thereof.
1.18. Performance Shares
------------------
Performance Shares means an award, in the amount determined by the
Administrator, stated with reference to a specified number of shares of Common
Stock, that in accordance with the terms of an Agreement entitles the holder to
receive a cash payment or shares of Common Stock or a combination thereof.
1.19. Person
------
Person means any human being, firm, corporation, partnership, or other
entity. "Person" also includes any human being, firm, corporation, partnership,
or other entity as defined in sections 13(d)(3) and 14(d)(2) of the Exchange
Act. The term "Person" does not include the Company or any Related Entity, and
the term Person does not include any employee-benefit plan maintained by the
Company or any Related Entity, and any person or entity organized, appointed, or
established by the Company or any Related Entity for or pursuant to the terms of
any such employee-benefit plan, unless the Board determines that such an
employee-benefit plan or such person or entity is a "Person".
1.20. Plan
----
Plan means the Insmed Incorporated 2000 Stock Incentive Plan.
1.21. Related Entity
--------------
Related Entity means any entity that is part of a controlled group of
corporations or is under common control with the Company within the meaning of
Sections 1563(a), 414(b) or 414(c) of the Code.
1.22. Rule 16b-3
----------
Rule 16b-3 means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act.
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1.23. Stock Award
-----------
Stock Award means shares of Common Stock awarded to a Participant under
Article VIII.
ARTICLE II
PURPOSES
--------
The Plan is intended to assist the Company and its Affiliates in
recruiting and retaining individuals or entities with ability and initiative by
enabling such persons to participate in the future success of the Company and
its Affiliates and to associate their interests with those of the Company and
its shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying, and the grant of Stock Awards and Performance Shares, and to
permit issuance of shares of Common Stock on exercise of options granted by an
Affiliate if the Company has assumed the obligations of the Affiliate under
those options, all in accordance with the Plan and procedures that may be
established by the Administrator. No Option that is intended to be an incentive
stock option shall be invalid for failure to qualify as an incentive stock
option. The proceeds received by the Company from the sale of shares of Common
Stock pursuant to this Plan shall be used for general corporate purposes.
ARTICLE III
ADMINISTRATION
--------------
The Plan shall be administered by the Administrator. The Administrator
shall have authority to grant Stock Awards, Performance Shares, and Options upon
such terms (not inconsistent with the provisions of this Plan), as the
Administrator may consider appropriate. Such terms may include conditions (in
addition to those contained in this Plan), on the exercisability of all or any
part of an Option or on the transferability or forfeitability of a Stock Award
or an award of Performance Shares. Notwithstanding any such conditions, the
Administrator may, in its discretion, (i) accelerate the time at which any
Option may be exercised, or the time at which a Stock Award may become
transferable or nonforfeitable, or the time at which an award of Performance
Shares may be settled, including without limitation, providing for any of the
foregoing upon a Change in Control, or (ii) suspend the forfeiture of
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any award made under this Plan. In addition, the Administrator shall have
complete authority to interpret all provisions of this Plan; to prescribe the
form of Agreements; to adopt, amend, and rescind rules and regulations
pertaining to the administration of the Plan; and to make all other
determinations necessary or advisable for the administration of this Plan. The
express grant in the Plan of any specific power to the Administrator shall not
be construed as limiting any power or authority of the Administrator. Any
decision made, or action taken, by the Administrator or in connection with the
administration of this Plan shall be final and conclusive. Neither the
Administrator nor any member of the Committee shall be liable for any act done
in good faith with respect to this Plan or any Agreement, Option, Stock Award or
award of Performance Shares. All expenses of administering this Plan shall be
borne by the Company.
The Committee, in its discretion, may delegate to one or more officers
of the Company all or part of the Committee's authority and duties with respect
to grants and awards to individuals who are not subject to the reporting and
other provisions of Section 16 of the Exchange Act. The Committee may revoke or
amend the terms of a delegation at any time but such action shall not invalidate
any prior actions of the Committee's delegate or delegates that were consistent
with the terms of the Plan.
ARTICLE IV
ELIGIBILITY
-----------
Any employee of the Company or an Affiliate, any member of the Board
(whether or not such Board member is employed by the Company or an Affiliate),
and any other Person who provides services to the Company or an Affiliate is
eligible to participate in this Plan if the Administrator, in its sole
discretion, determines that such Person has contributed significantly or can be
expected to contribute significantly to the profits or growth of the Company or
an Affiliate.
ARTICLE V
COMMON STOCK SUBJECT TO PLAN
----------------------------
5.01. Common Stock Issued
-------------------
Upon the award of Common Stock pursuant to a Stock Award or in
settlement of a Performance Share award, the Company may issue Common Stock
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from its authorized but unissued Common Stock. Upon the exercise of any Option
or an option granted by an Affiliate of the Company if the Company has assumed
the obligations of the Affiliate under those options, the Company may deliver to
the Participant (or the Participant's broker if the Participant so directs),
shares of Common Stock from its authorized but unissued Common Stock.
5.02. Aggregate Limit
---------------
The maximum aggregate number of shares of Common Stock that may be
issued under this Plan as of the date it is adopted by the Board is 12,000,000
shares. That maximum number of shares will be increased each January 1 during
the term of the Plan by a number of shares equal to 1.0% of the number of shares
of Common Stock outstanding on the preceding December 31. In no event, however,
may the annual increases cause the maximum number of shares that may be issued
under the Plan to exceed 25,000,000 shares of Common Stock. The maximum
aggregate number of shares of Common Stock that may be issued under this Plan
shall be subject to adjustment as provided in Article IX.
5.03. Reallocation of Shares
----------------------
If an Option or an option granted by an Affiliate as to which the
Company has assumed the Affiliate's obligation to deliver Common Stock is
terminated, in whole or in part, for any reason other than its exercise the
number of shares allocated to the Option, option, or portion thereof may be
reallocated to other Options, Performance Shares, and Stock Awards to be granted
under this Plan. If an award of Performance Shares is terminated, in whole or in
part, for any reason other than its settlement with shares of Common Stock, the
number of shares allocated to the Performance Share award or portion thereof may
be reallocated to other Options, Performance Shares and Stock Awards to be
granted under this Plan. If a Stock Award is forfeited, in whole or in part, for
any reason, the number of shares of Common Stock allocated to the Stock Award or
portion thereof may be reallocated to other Options, Performance Shares, and
Stock Awards to be granted under this Plan.
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ARTICLE VI
OPTIONS
-------
6.01. Award
-----
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an Option is to be granted and will specify
the number of shares of Common Stock covered by such awards; provided, however,
that no Participant may be granted Options in any calendar year covering more
than 1,000,000 shares of Common Stock.
6.02. Option Price
------------
The price per share for shares of Common Stock purchased on the
exercise of an Option shall be determined by the Administrator on the date of
grant, but shall not be less than the Fair Market Value on the date the Option
is granted in the case of an Option intended to qualify as an incentive stock
option.
6.03. Maximum Option Period
---------------------
The maximum period in which an Option may be exercised shall be
determined by the Administrator on the date of grant, except that no Option that
is an incentive stock option shall be exercisable after the expiration of ten
years from the date such Option was granted. The terms of any Option that is an
incentive stock option may provide that it is exercisable for a period less than
such maximum period.
6.04. Nontransferability
------------------
Except as provided in Section 6.05, each Option granted under this Plan
shall be nontransferable except by will or by the laws of descent and
distribution. In the event of any transfer of an Option (by the Participant or
his transferee), the Option must be transferred to the same person or persons or
entity or entities. Except as provided in Section 6.05, during the lifetime of
the Participant to whom the Option is granted, the Option may be exercised only
by the Participant. No right or interest of a Participant in any Option shall be
liable for, or subject to, any lien, obligation, or liability of such
Participant.
6.05. Transferable Options
--------------------
Section 6.04 to the contrary notwithstanding, if the Agreement
provides, an Option that is not an incentive stock option may be transferred by
a Participant to the Participant's spouse, children or grandchildren, to trusts
for the benefit of such persons, or to a partnership in which those persons are
the only partners, or to such other persons or entities permitted under Rule
16b-3 as in effect from time to time on such terms and conditions as may be
permitted under Rule 16b-3, as in effect from time to time. The holder of an
Option transferred pursuant to this Section shall be
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bound by the same terms and conditions that governed the Option during the
period that it was held by the Participant; provided, however, that such
transferee may not transfer the Option except by will or the laws of descent and
distribution.
6.06. Status as Employee or Service Provider
--------------------------------------
For purposes of determining the applicability of Section 422 of the
Code (relating to incentive stock options), or in the event that the terms of
any Option provide that it may be exercised only during employment or service or
within a specified period of time after termination of employment or service,
the Administrator may decide to what extent leaves of absence for governmental
or military service, illness, temporary disability, or other reasons shall not
be deemed interruptions of continuous employment or service.
6.07. Exercise
--------
Subject to the provisions of this Plan and the applicable Agreement, an
Option may be exercised in whole at any time or in part from time to time at
such times and in compliance with such requirements as the Administrator shall
determine; provided, however, that incentive stock options (granted under the
Plan and all plans of the Company and its Affiliates) may not be first
exercisable in a calendar year for shares of Common Stock having a Fair Market
Value (determined as of the date an Option is granted) exceeding $100,000. An
Option granted under this Plan may be exercised with respect to any number of
whole shares less than the full number for which the Option could be exercised.
A partial exercise of an Option shall not affect the right to exercise the
Option from time to time in accordance with this Plan and the applicable
Agreement with respect to the remaining shares subject to the Option.
6.08. Payment
-------
Subject to rules established by the Administrator and unless otherwise
provided in an Agreement, payment of all or part of the Option price may be made
in cash (including cash paid by a broker pursuant to a Participant's
instructions to sell shares subject to the Option and deliver the exercise
price), a cash equivalent acceptable to the Administrator, or with shares of
Common Stock. If shares of Common Stock are used to pay all or part of the
Option price, the sum of the cash and cash equivalent and the Fair Market Value
(determined as of the day preceding the date of exercise) of the shares
surrendered must not be less than the Option price of the shares for which the
Option is being exercised.
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6.09. Shareholder Rights
------------------
No Participant shall have any rights as a shareholder with respect to
shares subject to his Option until the date of exercise of such Option.
6.10. Disposition of Shares
---------------------
A Participant shall notify the Company of any sale or other disposition
of shares acquired pursuant to an Option that was an incentive stock option if
such sale or disposition occurs (i) within two years of the grant of an Option
or (ii) within one year of the issuance of shares to the Participant. Such
notice shall be in writing and directed to the Secretary of the Company.
ARTICLE VII
PERFORMANCE SHARE AWARDS
------------------------
7.01. Award
-----
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom an award of Performance Shares is to be made
and will specify the number of shares covered by such awards; provided, however,
that no Participant may receive an award of Performance Shares in any calendar
year for more than 500,000 shares of Common Stock.
7.02. Earning the Award
-----------------
The Administrator, on the date of the grant of an award, shall
prescribe that the Performance Shares, or portion thereof, will be earned, and
the Participant will be entitled to receive payment pursuant to the award of
Performance Shares, only upon the satisfaction by the Company, an Affiliate or
the Participant of performance objectives and such other criteria as may be
prescribed by the Administrator for the performance measurement period. The
performance objectives may be based on Fair Market Value, Common Stock price
appreciation, gross revenues, operating profit, or net earnings before or after
taxes, return on equity, earnings per share, total earnings, earnings growth,
return on capital, return on assets, return on sales, cash flow per share, book
value per share, market share, economic value added, market value added,
productivity, level of expenses, new product development, peer group comparisons
of any of the foregoing, or other measures as the Administrator may select. No
payments will be made with respect to Performance Shares unless, and then only
to the extent that, the Administrator certifies that such objectives have been
achieved.
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7.03. Payment
-------
In the discretion of the Administrator, the amount payable when an
award of Performance Shares is earned may be settled in cash, by the issuance of
shares of Common Stock, or a combination thereof.
7.04. Shareholder Rights
------------------
No Participant shall, as a result of receiving an award of Performance
Shares, have any rights as a shareholder until (and then only to the extent
that) the award of Performance Shares is earned and settled in shares of Common
Stock. After an award of Performance Shares is earned and settled in shares, a
Participant will have all the rights of a shareholder as described in Section
8.05.
7.05. Nontransferability
------------------
Except as provided in Section 7.06, Performance Shares granted under
this Plan shall be nontransferable except by will or by the laws of descent and
distribution. No right or interest of a Participant in any Performance Shares
shall be liable for, or subject to, any lien, obligation, or liability of such
Participant.
7.06. Transferable Performance Shares
-------------------------------
Section 7.05 to the contrary notwithstanding, if the Agreement
provides, an award of Performance Shares may be transferred by a Participant to
the Participant's spouse, children or grandchildren, to trusts for the benefit
of such persons, to a partnership in which such persons are the only partners,
or to such other persons or entities permitted under Rule 16b-3 as in effect
from time to time on such terms and conditions as may be permitted under Rule
16b-3 as in effect from time to time. The holder of Performance Shares
transferred pursuant to this Section shall be bound by the same terms and
conditions that governed the Performance Shares during the period that they were
held by the Participant; provided, however that such transferee may not transfer
Performance Shares except by will or the laws of descent and distribution.
7.07. Status as Employee or Service Provider
--------------------------------------
In the event that the terms of any Performance Share award provide that
no payment will be made unless the Participant completes a stated period of
employment or service, the Administrator may decide to what extent leaves of
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absence for government or military service, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous employment or
service.
ARTICLE VIII
STOCK AWARDS
------------
8.01. Award
-----
In accordance with the provisions of Article IV, the Administrator will
designate each individual to whom a Stock Award is to be made and will specify
the number of shares covered by such awards; provided, however, that no
Participant may receive Stock Awards in any calendar year for more than 500,000
shares.
8.02. Vesting
-------
The Administrator, on the date of the award, may prescribe that a
Participant's rights in a Stock Award shall be forfeitable or otherwise
restricted for a period of time or subject to such conditions as may be set
forth in the Agreement.
8.03. Performance Objectives
----------------------
In accordance with Section 8.02, the Administrator may prescribe that
Stock Awards will become vested or transferable or both based on objectives
stated with respect to the Participant's continued employment or service with
the Company or an Affiliate for a specified period, or the Company's, an
Affiliate's, or the Participant's achievement of performance related objectives
such as those measured by Fair Market Value, Common Stock stock price
appreciation, gross, operating, or net earnings before or after taxes, return on
equity, earnings per share, total earnings, earnings growth, return on capital,
return on assets, return on sales, cash flow per share, book value per share,
market share, economic value added, market value added, productivity, level of
expenses, new product development, peer group comparisons of any of the
foregoing, or other measures the Administrator may select. If the Administrator,
on the date of award, prescribes that a Stock Award shall become nonforfeitable
and transferable only upon the attainment of performance objectives, the shares
subject to such Stock Award shall become nonforfeitable and transferable only to
the extent that the Administrator certifies that such objectives have been
achieved.
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8.04. Status as Employee or Service Provider
--------------------------------------
In the event that the terms of any Stock Award provide that shares may
become transferable and nonforfeitable thereunder only after completion of a
specified period of employment or service, the Administrator may decide in each
case to what extent leaves of absence for governmental or military service,
illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment or service.
8.05. Shareholder Rights
------------------
Prior to their forfeiture (in accordance with the applicable Agreement
and while the shares of Common Stock granted pursuant to the Stock Award may be
forfeited or are nontransferable), a Participant will have all rights of a
shareholder with respect to a Stock Award, including the right to receive
dividends and vote the shares; provided, however, that during such period (i) a
Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise
dispose of shares granted pursuant to a Stock Award, (ii) the Company shall
retain custody of the certificates evidencing shares granted pursuant to a Stock
Award, and (iii) the Participant will deliver to the Company a stock power,
endorsed in blank, with respect to each Stock Award. The limitations set forth
in the preceding sentence shall not apply after the shares granted under the
Stock Award are transferable and are no longer forfeitable.
ARTICLE IX
ADJUSTMENT UPON CHANGE IN COMMON STOCK
--------------------------------------
The maximum number of shares as to which Options, Performance Shares,
and Stock Awards may be granted pursuant to this Plan; the terms of outstanding
Stock Awards, Options, and Performance Shares; and the per individual
limitations on the number of shares of Common Stock for which Options,
Performance Shares, and Stock Awards may be granted shall be adjusted as the
Committee shall determine to be equitably required in the event that (i) the
Company (a) effects one or more stock dividends, stock split-ups, subdivisions
or consolidations of shares or (b) engages in a transaction to which Section 424
of the Code applies or, (ii) there occurs any other event which, in the judgment
of the Committee necessitates such action. Any determination made under this
Article IX by the Committee shall be final and conclusive.
The issuance by the Company of stock of any class, or securities
convertible into stock of any class, for cash or property, or for labor or
services, either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon
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conversion of stock or obligations of the Company convertible into such stock or
other securities, shall not affect, and no adjustment by reason thereof shall be
made with respect to, the maximum number of shares as to which Options,
Performance Shares, and Stock Awards may be granted; the per individual
limitations on the number of shares for which Options, Performance Shares, and
Stock Awards may be granted; or the terms of outstanding Stock Awards, Options,
or Performance Shares.
The Board or Committee may make Stock Awards and may grant Options and
Performance Shares in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar awards held by an
individual who becomes an employee or service provider of the Company or an
Affiliate in connection with a transaction described in the first paragraph of
this Article IX. Notwithstanding any provision of the Plan (other than the
limitation of Section 5.02), the terms of such substituted Stock Awards, Option
or Performance Shares shall be as the Board or Committee, in its discretion,
determines is appropriate.
ARTICLE X
COMPLIANCE WITH LAW AND APPROVAL OF
REGULATORY BODIES
-----------------
No Option shall be exercisable, no shares of Common Stock shall be
issued, no certificates for shares of Common Stock shall be delivered, and no
payment shall be made under this Plan except in compliance with all applicable
federal and state laws and regulations (including, without limitation,
withholding tax requirements), any listing agreement to which the Company is a
party, and the rules of all domestic stock exchanges on which the Company's
shares may be listed. The Company shall have the right to rely on an opinion of
its counsel as to such compliance. Any stock certificate issued to evidence
shares of Common Stock when a Stock Award is granted, Performance Share is
settled or for which an Option is exercised may bear such legends and statements
as the Administrator may deem advisable to assure compliance with federal and
state laws and regulations. No Option shall be exercisable, no Stock Award or
Performance Share shall be granted, no shares of Common Stock shall be issued,
no certificate for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan until the Company has obtained such consent or
approval as the Administrator may deem advisable from regulatory bodies having
jurisdiction over such matters.
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INSMED INCORPORATED
2000 STOCK INCENTIVE PLAN
ARTICLE XI
GENERAL PROVISIONS
------------------
11.01. Effect on Employment and Service
--------------------------------
Neither the adoption of this Plan, its operation, nor any documents
describing or referring to this Plan (or any part thereof), shall confer upon
any individual any right to continue in the employ or service of the Company or
an Affiliate or in any way affect any right and power of the Company or an
Affiliate to terminate the employment or service of any individual at any time
with or without assigning a reason therefor.
11.02. Unfunded Plan
-------------
The Plan, insofar as it provides for grants, shall be unfunded, and the
Company shall not be required to segregate any assets that may at any time be
represented by grants under this Plan. Any liability of the Company to any
person with respect to any grant under this Plan shall be based solely upon any
contractual obligations that may be created pursuant to this Plan. No such
obligation of the Company shall be deemed to be secured by any pledge of, or
other encumbrance on, any property of the Company.
11.03. Rules of Construction
---------------------
Headings are given to the articles and sections of this Plan solely as
a convenience to facilitate reference. The reference to any statute, regulation,
or other provision of law shall be construed to refer to any amendment to or
successor of such provision of law.
ARTICLE XII
AMENDMENT
---------
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment increases the aggregate number of shares of Common
Stock that may be issued under the Plan. No amendment shall, without a
Participant's consent, adversely affect any rights of such Participant under any
Stock
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<PAGE>
INSMED INCORPORATED
2000 STOCK INCENTIVE PLAN
Award, Option, or Performance Share outstanding at the time such amendment is
made.
ARTICLE XIII
DURATION OF PLAN
----------------
No Stock Award, Option or Performance Share, may be granted under this
Plan more than ten years after the earlier of the date that this Plan is adopted
by the Board or approved by the shareholders in accordance with Article XIV.
Stock Awards, Options, and Performance Shares granted before that date shall
remain valid in accordance with their terms.
ARTICLE XIV
EFFECTIVE DATE OF PLAN
----------------------
Options, Stock Awards and Performance Shares may be granted under this
Plan upon its adoption by the Board; provided that, unless this Plan is approved
by a majority of the votes cast by the Company's shareholders, voting either in
person or by proxy, at a duly held shareholders' meeting at which a quorum is
present or by the written unanimous consent of the shareholders within twelve
months before or after this Plan is adopted by the Board, no Option shall be
exercisable, no Performance Share shall be settled, and no Stock Award shall be
effective.
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