<PAGE> 1
As filed with the Securities and Exchange Commission on February 5, 1998
Registration No. 333-____
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
SEQUUS PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 93-3031834
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
960 HAMILTON COURT, MENLO PARK, CALIFORNIA 94025 (650) 323-9011
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
SEQUUS PHARMACEUTICALS, INC.
EQUITY INCENTIVE PLAN
SEQUUS PHARMACEUTICALS, INC.
EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plan)
I. CRAIG HENDERSON
CHIEF EXECUTIVE OFFICER
960 HAMILTON COURT
MENLO PARK, CALIFORNIA 94025
(Name and address of agent for service)
(650) 323-9011
(Telephone number, including area code, of agent for service)
With copies of all notices and communications to:
RICHARD FRIEDMAN, ESQ.
HELLER EHRMAN WHITE & MCAULIFFE
525 UNIVERSITY AVENUE
PALO ALTO, CALIFORNIA 94301
TELEPHONE: (650) 324-7000
FACSIMILE: (650) 324-0638
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===============================================================================================
Proposed Proposed
Amount maximum maximum Amount of
Title of securities to be offering price aggregate registration
to be registered registered per share(1) offering price(1) fee
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock issuable under the
Equity Incentive Plan, 2,000,000 $8.50 $17,000,000 $5,015
$0.0001 par value
- -----------------------------------------------------------------------------------------------
Common Stock issuable under the
Employee Stock Purchase Plan, 528,000 $8.50 $4,488,000 $1,324
$0.0001 par value
===============================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the registration
fee pursuant to Rule 457(c) under the Securities Act of 1933, as amended.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed by SEQUUS
Pharmaceuticals, Inc. ("SEQUUS") with the Securities and Exchange Commission
(the "Commission"), are hereby incorporated by reference in this Registration
Statement:
(a) SEQUUS's Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31, 1996;
(b) SEQUUS's quarterly report on Form 10-Q for the fiscal quarters ended
March 31, 1997, June 30, 1997 and September 30, 1997; and
(c) The description of the SEQUUS's Common Stock contained in its
registration statement on Form 8-A filed with the Commission under
the Securities and Exchange Act of 1934, as amended ("Exchange
Act"), including any amendment or reports filed for the purpose of
updating such description.
All documents subsequently filed by SEQUUS pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act and prior to the termination of the
offering of the securities offered hereby shall be deemed to be incorporated by
reference into this registration statement and to be a part hereof from the
respective dates of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained herein, or in any other subsequently
filed document that also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this registration statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law, under which the
Registrant is incorporated, permits indemnifications of directors, officers,
employees and agents of a corporation under certain conditions and subject to
certain limitations.
Articles NINTH and TENTH of the Registrant's Restated Certificate of
Incorporation provide as follows:
"NINTH: A director of the corporation shall not be personally liable to
the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any
transaction from which the director derived any improper personal
benefit. If the Delaware General Corporation Law is amended hereafter to
authorize corporate action further eliminating or
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<PAGE> 3
limiting the personal liability of directors, then the liability of a
director of the corporation shall be eliminated or limited to the
fullest extent permitted by the Delaware General Corporation Law, as so
amended.
Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a director of the corporation existing at the time of such
repeal or modification.
TENTH:
A. RIGHT TO INDEMNIFICATION
Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or proceeding,
whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person of
whom he or she is the legal representative, is or was a director or
officer, employee or agent of the corporation or is or was serving at
the request of the corporation as a director or officer, employee or
agent of another corporation, or of a partnership, joint venture, trust
or other enterprise, including service with respect to employee benefit
plans, whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by the corporation to the
fullest extent authorized by the Delaware General Corporation Law, as
the same exists or may hereafter be amended, (but, in the case of any
such amendment, only to the extent that such amendment permits the
corporation to provide broader indemnification rights than said Law
permitted the corporation to provide prior to such amendment) against
all expenses, liability and loss including attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid
in settlement reasonably incurred or suffered by such person in
connection therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the corporation shall indemnify
any such person seeking indemnity in connection with an action, suit or
proceeding (or part thereof) initiated by such person only if such
action, suit or proceeding (or part thereof) was authorized by the
board of directors of the corporation. Such right shall be a contract
right and shall include the right to be paid by the corporation
expenses incurred in defending any such proceeding in advance of its
final disposition; provided, however, that the payment of such expenses
incurred by a director or officer of the corporation in his or her
capacity as a director or officer (and not in any other capacity in
which service was or is rendered by such person while a director or
officer, including, without limitation, service to an employee benefit
plan) in advance of the final disposition of such proceeding, shall be
made only upon delivery to the corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if
it should be determined ultimately that such director or officer is not
entitled to be indemnified under this Section or otherwise.
B. RIGHT OF CLAIMANT TO BRING SUIT
If a claim under Paragraph A of Article TENTH is not paid in full
by the corporation within ninety (90) days after a written claim has
been received by the corporation, the claimant may at any time
thereafter bring suit against the corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the
claimant shall be entitled to be paid also the expenses of prosecuting
such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending
any proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to this corporation) that the
claimant has not met the standards of conduct which make it permissible
under the Delaware General Corporation Law for the corporation to
indemnify the claimant for the amount claimed, and the burden of
proving that such standards were met shall be on the claimant. Neither
the failure of the corporation (including its board of directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because
he or she has met the applicable standard of conduct set forth in the
Delaware General Corporation Law, nor an actual determination by the
corporation (including its board of directors, independent legal
counsel, or its stockholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the action or
create a presumption that claimant has not met the applicable standard
of conduct.
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<PAGE> 4
C. NON-EXCLUSIVITY OF RIGHTS
The rights conferred on any person by Paragraphs A and B of
Article TENTH shall not be exclusive of any other right which such
persons may have or hereafter acquire under any statute, provision of
the Restated Certificate of Incorporation, by-law, agreement, vote of
stockholders or disinterested directors or otherwise.
D. INSURANCE
The corporation may maintain insurance, at its expense, to
protect itself and any such director, officer, employee or agent of the
corporation or another corporation, partnership, joint venture, trust
or other enterprise against any such expense, liability or loss,
whether or not the corporation would have the power to indemnify such
person against such expense, liability or loss under the Delaware
General Corporation Law.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not applicable.
ITEM 8. EXHIBITS
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Heller Ehrman White & McAuliffe (filed as part
of Exhibit 5)
24 Power of Attorney (see page 5)
99.1 SEQUUS Pharmaceuticals, Inc. Equity Incentive Plan
99.2 SEQUUS Pharmaceuticals, Inc. Employee Stock Purchase Plan,
as amended
ITEM 9. UNDERTAKINGS
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended (the "Securities
Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not apply
if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
-4-
<PAGE> 5
by the registrant pursuant to Section 13 or 15(d) of the Exchange
Act that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for purposes of
determining liability under the Securities Act, each filing of the registrant's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 6, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
-5-
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the city of Menlo Park, State of California, on February 5,
1998.
SEQUUS PHARMACEUTICALS, INC.
By: /s/ I. Craig Henderson
----------------------------------
I. Craig Henderson
Chief Executive Officer and
Chairman of the Board
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints I.
Craig Henderson and Sally A. Davenport his or her true and lawful
attorneys-in-fact and agents, each acting alone, with full power of substitution
and resubstitution, for him or her and in his name, place and stead, in any and
all capacities, to sign any or all amendments (including post-effective
amendments) to the Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) under the Securities Act of
1933, as amended, and all post-effective amendments thereto, and to file the
same, with all exhibits thereto, and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents, each acting alone, or
his or her substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ I. Craig Henderson
- ----------------------------- Chairman of the Board and Chief February 5, 1998
I. Craig Henderson Executive Officer (Principal
Executive and Financial Officer)
/s/ Anthony T. Henkrickson
- ----------------------------- Controller (Principal Accounting Officer) February 5, 1998
Anthony T. Hendrickson
/s/ Robert G. Faris
- ----------------------------- Director February 5, 1998
Robert G. Faris
/s/ E. Donnall Thomas
- ----------------------------- Director February 5, 1998
E. Donnall Thomas
/s/ Richard C.E. Morgan
- ----------------------------- Director February 5, 1998
Richard C.E. Morgan
</TABLE>
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<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit Page
- ----------- ------------------------------------------------------------------ --------
<S> <C> <C>
5 Opinion of Heller Ehrman White & McAuliffe
23.1 Consent of Ernst & Young LLP, Independent Auditors
23.2 Consent of Heller Ehrman White & McAuliffe (filed as part of
Exhibit 5)
24 Power of Attorney (see page 5)
99.1 SEQUUS Pharmaceuticals, Inc. Equity Incentive Plan
99.2 SEQUUS Pharmaceuticals, Inc. Employee Stock Purchase Plan, as
amended
</TABLE>
-7
<PAGE> 1
EXHIBIT 5
February 5, 1998
21921-0003
SEQUUS Pharmaceuticals, Inc.
960 Hamilton Court
Menlo Park, CA 94025
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have acted as counsel to SEQUUS Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), in connection with the Registration Statement on
Form S-8 (the "Registration Statement") which the Company proposes to file with
the Securities and Exchange Commission on February 5, 1998 for the purpose of
registering under the Securities Act of 1933, as amended, 2,528,000 shares of
its Common Stock, par value $.0001 (the "Shares"). 2,000,000 of the Shares are
issuable under the Company's Equity Incentive (the "Incentive Plan") and 528,000
of the Shares are issuable under the Company's Employee Stock Purchase Plan, as
amended (the "Purchase Plan").
We have assumed the authenticity of all records, documents and
instruments submitted to us as originals, the genuineness of all signatures, the
legal capacity of natural persons and the conformity to the originals of all
records, documents and instruments submitted to us as copies.
In rendering our opinion, we have examined the following records,
documents and instruments:
(a) The Certificate of Incorporation of the Company, certified by the
Delaware Secretary of State as of December 29, 1997 and
confirmed telephonically as of February 3, 1998, and certified
to us by an officer of the Company as being complete and in
full force as of the date of this opinion;
(b) The Bylaws of the Company certified to us by an officer of the
Company as being complete and in full force and effect as of the
date of this opinion;
(c) A Certificate of an officer of the Company (i) attaching records
certified to us as constituting all records of proceedings and
actions of the Board of Directors, including any committee
thereof, and stockholders of the Company relating to the Shares,
and the Registration Statement and (ii) certifying as to certain
factual matters;
(d) The Registration Statement;
(e) The Incentive Plan and the Purchase Plan (together, the "Plans");
and
<PAGE> 2
SEQUUS Pharmaceuticals, Inc.
February 5, 1998 Page 2
(f) A letter from ChaseMellon Shareholder Services, LLP, the
Company's transfer agent, dated February 3, 1998, as to the
number of shares of the Company's Common Stock that were
outstanding on February 2, 1998.
This opinion is limited to the federal law of the United States of
America and the General Corporation Law of the State of Delaware, and we
disclaim any opinion as to the laws of any other jurisdiction. We further
disclaim any opinion as to any other statute, rule, regulation, ordinance, order
or other promulgation of any other jurisdiction or any regional or local
governmental body or as to any related judicial or administrative opinion.
Based upon the foregoing and our examination of such questions of law as
we have deemed necessary or appropriate for the purpose of this opinion, and
assuming that (i) the Registration Statement becomes and remains effective
during the period when the Shares are offered and issued, (ii) the full
consideration stated in the Plans is paid for each Share and that such
consideration in respect of each Share includes payment of cash or other lawful
consideration at least equal to the par value thereof, (iii) appropriate
certificates evidencing the Shares are executed and delivered by the Company,
and (iv) all applicable securities laws are complied with, it is our opinion
that when issued and sold by the Company, after payment therefore in the manner
provided in the applicable Plan and the Registration Statement, the Shares will
be legally issued, fully paid and nonassessable.
This opinion is rendered to you in connection with the Registration
Statement and is solely for your benefit. This opinion may not be relied upon by
you for any other purpose, or relied upon by any other person, firm, corporation
or other entity for any purpose, without our prior written consent. We disclaim
any obligation to advise you of any change of law that occurs, or any facts of
which we may become aware, after the date of this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ HELLER EHRMAN WHITE & McAULIFFE
<PAGE> 1
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the SEQUUS Pharmaceuticals, Inc. Equity Incentive Plan and
SEQUUS Pharmaceuticals, Inc. Employee Stock Purchase Plan of our report dated
January 27, 1997, with respect to the consolidated financial statements and
schedule of SEQUUS Pharmaceuticals, Inc. included in its Annual Report (Form
10-K/A) for the year ended December 31, 1996, filed with the Securities and
Exchange Commission.
/s/ ERNST & YOUNG LLP
Palo Alto, California
February 4, 1998
<PAGE> 1
EXHIBIT 99.1
SEQUUS PHARMACEUTICALS, INC.
EQUITY INCENTIVE PLAN
SECTION 1. PURPOSE; DEFINITIONS.
(a) Purpose. The purpose of the Plan is to provide selected eligible
employees and directors of, and consultants to, SEQUUS Pharmaceuticals, Inc., a
Delaware corporation, its subsidiaries and affiliates an opportunity to
participate in the Company's future by offering them an opportunity to acquire
stock in the Company so as to retain, attract and motivate them.
(b) Definitions. For purposes of the Plan, the following terms have the
following meanings:
(i) "Award" means any award under the Plan, including any Option,
Restricted Stock, Stock Purchase Right or Performance Share Award.
(ii) "Award Agreement" means, with respect to each Award, the signed
written agreement between the Company and the Plan participant setting forth the
terms and conditions of the Award.
(iii) "Board" means the Board of Directors of the Company.
(iv) "Change in Control" has the meaning set forth in Section 9(a).
(v) "Change in Control Price" has the meaning set forth in Section
9(c).
(vi) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor statute.
(vii) "Commission" means the Securities and Exchange Commission and
any successor agency.
(viii) "Committee" means the Committee referred to in Section 2, or
the Board in its capacity as administrator of the Plan in accordance with
Section 2.
(ix) "Company" means SEQUUS Pharmaceuticals, Inc., a Delaware
corporation.
(x) "Disability" means permanent and total disability as determined by
the Committee for purposes of the Plan.
(xi) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
(xii) "Fair Market Value" means as of any given date (a) if the Stock
is listed on any established stock exchange or a national market system, the
closing sales price for the Stock or the closing bid if no sales were reported,
as quoted on
<PAGE> 2
such system or exchange, as reported in the Wall Street Journal; or (b) in the
absence of an established market for the Stock, the fair market value of the
Stock as determined by the Committee in good faith.
(xiii) "Incentive Stock Option" means any Option intended to be and
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.
(xiv) "Nonqualified Stock Option" means any Option that is not an
Incentive Stock Option.
(xv) "Option" means an option granted under Section 5.
(xvi) "Performance Period" means the period determined by the
Committee under Section 8(a).
(xvii) "Performance Share" means the equivalent, as of any time such
assessment is made, of the Fair Market Value of one share of Stock.
(xviii) "Performance Share Award" means an Award under Section 8.
(xix) "Plan" means this SEQUUS Pharmaceuticals, Inc. Equity Incentive
Plan, as amended from time to time.
(xx) "Restricted Stock" means an Award of Stock subject to
restrictions, as more fully described in Section 6.
(xxi) "Restriction Period" means the period determined by the
Committee under Section 6(b).
(xxii) "Rule 16b-3" means Rule 16b-3 under Section 16(b) of the
Exchange Act, as amended from time to time, and any successor rule.
(xxiii) "Stock" means the no par value Common Stock of the Company,
and any successor security.
(xxiv) "Stock Purchase Right" means an Award granted under Section 7.
(xxv) "Subsidiary" has the meaning set forth in Section 424 of the
Code.
(xxvi) "Tax Date" means the date defined in Section 10(f).
(xxvii) "Termination" means, for purposes of the Plan, with respect to
a participant, that the participant has ceased to be, for any reason, employed
by, consulting to, or a director of, the Company, a subsidiary or an affiliate;
provided, that for purposes of this definition, if so determined by the
President of the Company, in his sole discretion, Termination shall not include
a change in status from an employee
2
<PAGE> 3
of, to a consultant to or director of, the Company or any subsidiary or
affiliate, or vice versa.
SECTION 2. ADMINISTRATION.
(a) Committee. The Plan shall be administered by the Board or, upon
delegation by the Board, by a committee of the Board appointed by the Board that
will satisfy Rule 16b-3 and Section 162(m) of the Code, as in effect with
respect to the Company from time to time. In connection with the administration
of the Plan, the Committee shall have the powers possessed by the Board. The
Committee may act only by a majority of its members, except that the Committee
may from time to time select another committee or one or more other persons to
be responsible for any matters so long as such selection comports with the
requirements of Section 162(m) of the Code and Rule 16b-3. The Board at any time
may abolish the Committee and revest in the Board the administration of the
Plan.
(b) Authority. The Committee shall grant Awards to eligible employees and
consultants. In particular and without limitation, the Committee, subject to the
terms of the Plan, shall:
(i) select the directors, officers, other key employees and
consultants to whom Awards may be granted;
(ii) determine whether and to what extent Awards are to be granted
under the Plan;
(iii) determine the number of shares to be covered by each Award
granted under the Plan;
(iv) determine the terms and conditions of any Award granted under the
Plan and any related loans to be made by the Company, based upon factors
determined by the Committee; and
(v) determine to what extent and under what circumstances any Award
payments may be deferred by a participant.
(c) Committee Determinations Binding. The Committee may adopt, alter and
repeal administrative rules, guidelines and practices governing the Plan as it
from time to time shall deem advisable, may interpret the terms and provisions
of the Plan, any Award and any Award Agreement and may otherwise supervise the
administration of the Plan. Any determination made by the Committee pursuant to
the provisions of the Plan with respect to any Award shall be made in its sole
discretion at the time of the grant of the Award or, unless in contravention of
any express term of the Plan or Award, at any later time. All decisions made by
the Committee under the Plan shall be binding on all persons, including the
Company and Plan participants.
3
<PAGE> 4
SECTION 3. STOCK SUBJECT TO PLAN.
(a) Number of Shares. The total number of shares of Stock reserved and
available for issuance pursuant to Awards under this Plan shall be 2,000,000
shares. Such shares may consist, in whole or in part, of authorized and unissued
shares or treasury shares or shares reacquired in private transactions or open
market purchases, but all shares issued under the Plan regardless of source
shall be counted against the 2,000,000 share limitation. If any Option
terminates or expires without being exercised in full or if any shares of Stock
subject to an Award are forfeited, or if an Award otherwise terminates without a
payment being made to the participant in the form of Stock, the shares issuable
under such Option or Award shall again be available for issuance in connection
with Awards. To the extent an Award is paid in cash, the number of shares of
Stock representing, at Fair Market Value on the date of the payment, the value
of the cash payment shall not be available for later grant under the Plan. Any
Award under this Plan shall be governed by the terms of the Plan and any
applicable Award Agreement.
(b) Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, stock split or other change in
corporate structure affecting the Stock, such substitution or adjustments shall
be made in the aggregate number of shares of Stock reserved for issuance under
the Plan, in the number and exercise price of shares subject to outstanding
Options, and in the number of shares subject to other outstanding Awards, as may
be determined to be appropriate by the Committee, in its sole discretion;
provided, however, that the number of shares subject to any Award shall always
be a whole number.
SECTION 4. ELIGIBILITY.
Awards may be granted to directors, officers and other key employees of,
and consultants to, the Company, its subsidiaries and affiliates.
SECTION 5. STOCK OPTIONS.
(a) Types. Any Option granted under the Plan shall be in such form as the
Committee may from time to time approve. The Committee shall have the authority
to grant to any participant Incentive Stock Options, Nonqualified Stock Options
or both types of Options. Incentive Stock Options may be granted only to
employees of the Company, its parent (within the meaning of Section 424(e) of
the Code) or Subsidiaries. Any portion of an Option that is not designated as,
or does not qualify as, an Incentive Stock Option shall constitute a
Nonqualified Stock Option.
(b) Terms and Conditions. Options granted under the Plan shall be subject
to the following terms and conditions:
(i) Option Term. The term of each Option shall be fixed by the
Committee, but no Incentive Stock Option shall be exercisable more than ten (10)
years after the date the Option is granted, and no Nonqualified Stock Option
shall be exercisable more than fifteen (15) years after the date the Option is
granted. If, at
4
<PAGE> 5
the time the Company grants an Incentive Stock Option, the optionee owns
directly or by attribution stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company, or any parent or Subsidiary
of the Company, the Incentive Stock Option shall not be exercisable more than
five (5) years after the date of grant.
(ii) Grant Date. The Company may grant Options under the Plan at any
time and from time to time before the Plan terminates. The Committee shall
specify the date of grant or, if it fails to, the date of grant shall be the
date of action taken by the Committee to grant the Option. However, if an Option
is approved in anticipation of employment, the date of grant shall be the date
the intended optionee is first treated as an employee for payroll purposes.
(iii) Exercise Price. The exercise price per share of Stock
purchasable under an Option shall be equal to at least 85% of the Fair Market
Value on the date of grant, and in the case of Incentive Stock Options shall be
equal to at least the Fair Market Value on the date of grant; provided, however,
that if, at the time the Company grants an Incentive Stock Option, the optionee
owns directly or by attribution stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company, or any parent or
Subsidiary of the Company, then the exercise price shall be not less than 110%
of the Fair Market Value on the date the Incentive Stock Option is granted.
(iv) Exercisability. Subject to the other provisions of the Plan, an
Option shall be exercisable in its entirety at grant or at such times and in
such amounts as are specified in the Award Agreement evidencing the Option. The
Committee, in its absolute discretion, at any time may waive any limitations
respecting the time at which an Option first becomes exercisable in whole or in
part.
(v) Method of Exercise; Payment. To the extent the right to purchase
shares has accrued, Options may be exercised, in whole or in part, from time to
time, by written notice from the optionee to the Company stating the number of
shares being purchased, accompanied by payment of the exercise price for the
shares.
(vi) No Disqualification. Notwithstanding any other provision in the
Plan, no term of the Plan relating to Incentive Stock Options shall be
interpreted, amended or altered nor shall any discretion or authority granted
under the Plan be exercised so as to disqualify the Plan under Section 422 of
the Code or, without the consent of the optionee affected, to disqualify any
Incentive Stock Option under such Section 422.
SECTION 6. RESTRICTED STOCK.
(a) Price. The Committee may grant to a participant Restricted Stock. The
grantee shall pay no consideration therefor.
(b) Restrictions. Subject to the provisions of the Plan and the Award
Agreement, during the Restriction Period set by the Committee, commencing with,
and not exceeding ten (10) years from, the date of such Award, the participant
shall not be
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permitted to sell, assign, transfer, pledge or otherwise encumber shares of
Restricted Stock. Within these limits, the Committee may provide for the lapse
of such restrictions in installments and may accelerate or waive such
restrictions, in whole or in part, based on service, performance or such other
factors or criteria as the Committee may determine.
(c) Dividends. Unless otherwise determined by the Committee, with respect
to dividends on shares of Restricted Stock, dividends payable in cash shall be
automatically reinvested in additional Restricted Stock, and dividends payable
in Stock shall be paid in the form of Restricted Stock.
(d) Termination. Except to the extent otherwise provided in the Award
Agreement and pursuant to Section 6(b), in the event of a Termination during the
Restriction Period, all shares still subject to restriction shall be forfeited
by the participant.
SECTION 7. STOCK PURCHASE RIGHTS.
(a) Price. The Committee may grant Stock Purchase Rights which shall
enable the recipients to purchase Stock at a price equal to not less than 85% of
its Fair Market Value on the date of grant.
(b) Exercisability. Stock Purchase Rights shall be exercisable for a
period determined by the Committee not exceeding 30 days from the date of the
grant.
SECTION 8. PERFORMANCE SHARES.
(a) Awards. The Committee shall determine the nature, length and starting
date of the Performance Period for each Performance Share Award, which period
shall be at least one (1) year (subject to Section 9) and not more than six (6)
years. The consideration payable by a participant with respect to a Performance
Share Award shall be an amount determined by the Committee in the exercise of
the Committee's discretion at the time of the Award; provided, that the amount
of consideration may be zero and may in no event exceed 50% of the Fair Market
Value at the time of grant. The Committee shall determine the performance
objectives to be used in awarding Performance Shares and the extent to which
such Performance Shares have been earned. Performance Periods may overlap and
participants may participate simultaneously with respect to Performance Share
Awards that are subject to different Performance Periods and different
performance factors and criteria. At the beginning of each Performance Period,
the Committee shall determine for each Performance Share Award subject to such
Performance Period the number of shares of Stock (which may consist of
Restricted Stock) to be awarded to the participant at the end of the Performance
Period if and to the extent that the relevant measures of performance for such
Performance Share Award are met. Such number of shares of Stock may be fixed or
may vary in accordance with such performance or other criteria as may be
determined by the Committee. The Committee may provide that (i) amounts
equivalent to interest at such rates as the Committee may determine, or (ii)
amounts
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equivalent to dividends paid by the Company upon outstanding Stock shall be
payable with respect to Performance Share Awards.
(b) Termination. Except as otherwise provided in the Award Agreement or
determined by the Committee, in the event of a Termination during a Performance
Period, the participant shall not be entitled to any payment with respect to the
Performance Shares subject to the Performance Period.
(c) Form of Payment. Payment shall be made in the form of cash or whole
shares of Stock, as the Committee, in its discretion, shall determine.
SECTION 9. CHANGE IN CONTROL.
(a) Definition of "Change in Control". For purposes of Section 9(b), a
"Change in Control" means the occurrence of any one of the following:
(i) Any "person", as such term is used in Sections 13(d) and 14(d) of
the Exchange Act (other than the Company, a subsidiary, an affiliate, or a
Company employee benefit plan, including any trustee of such plan acting as
trustee) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of the Company
representing 30% or more of the combined voting power of the Company's then
outstanding securities;
(ii) the solicitation of proxies (within the meaning of Rule 14a-1(k)
under the Exchange Act and any successor rule) with respect to the election of
any director of the Company where such solicitation is for any candidate who is
not a candidate proposed by a majority of the Board in office prior to the time
of such election; or
(iii) the dissolution or liquidation (partial or total) of the Company
or a sale of assets involving 30% or more of the assets of the Company, any
merger or reorganization of the Company whether or not another entity is the
survivor, a transaction pursuant to which the holders, as a group, of all of the
shares of the Company outstanding prior to the transaction hold, as a group,
less than 70% of the shares of the Company outstanding after the transaction, or
any other event which the Board determines, in its discretion, would materially
alter the structure of the Company or its ownership.
(b) Impact of Event. In the event of a "Change in Control" as defined in
Section 9(a), subject to Section 5(b)(iv), any Options outstanding as the dates
such Change in Control is determined to have occurred and not then exercisable
and vested shall become fully exercisable and vested and any rights of
repurchase with respect to the shares purchasable thereunder shall lapse. In
addition, if and to the extent so specifically determined by the Board in its
discretion, which determination may be amended or reversed only by the
affirmative vote of a majority of the persons who were directors at the time
such determination was made, the following acceleration provisions may apply:
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(i) The restrictions and limitations applicable to any Restricted
Stock and Stock Purchase Rights shall lapse, and such Restricted Stock shall
become fully vested.
(ii) The value (net of any exercise price) of all outstanding
Restricted Stock and Stock Purchase Rights, unless otherwise determined by the
Committee at or after grant and subject to Rule 16b-3, shall be cashed out on
the basis of the "Change in Control Price", as defined in Section 9(c), as of
the date such Change in Control is determined to have occurred or such other
date as the Board may determine prior to the Change in Control.
(iii) Any outstanding Performance Share Awards shall be vested and
paid in full as if all performance criteria had been met.
(c) Change in Control Price. For purposes of this Section 9, "Change in
Control Price" means the highest price per share paid in any transaction
reported on the National Market System of the National Association of Securities
Dealers, Inc. Automated Quotation System or paid or offered in any bona fide
transaction related to a potential or actual Change in Control of the Company at
any time during the preceding 60-day period as determined by the Board, except
that, in the case of Incentive Stock Options, such price shall be based only on
transactions reported for the date on which the Board decides to cash out such
Options.
SECTION 10. GENERAL PROVISIONS.
(a) Award Grants. Any Award may be granted either alone or in addition to
other Awards granted under the Plan. Subject to the terms and restrictions set
forth elsewhere in the Plan, the Committee shall determine the consideration, if
any, payable by the participant for any Award and, in addition to those set
forth in the Plan, any other terms and conditions of the Awards. The Committee
may condition the grant or payment of any Award upon the attainment of specified
performance goals or such other factors or criteria, including vesting based on
continued employment or consulting, as the Committee shall determine.
Performance objectives may vary from participant to participant and among groups
of participants and shall be based upon such Company, subsidiary, group or
division factors or criteria as the Committee may deem appropriate, including,
but not limited to, earnings per share or return on equity. The other provisions
of Awards also need not be the same with respect to each recipient. Unless
specified otherwise in the Plan or by the Committee, the date of grant of an
Award shall be the date of action by the Committee to grant the Award. The
Committee may also substitute new Options for previously granted Options,
including previously granted Options having higher exercise prices.
(b) Award Agreement. As soon as practicable after the date of an Award
grant, the Company and the participant shall enter into a written Award
Agreement identifying the date of grant, and specifying the terms and conditions
of the Award. Options are not exercisable until after execution of the Award
agreement by the Company and the Plan participant, but a delay in execution of
the agreement shall not affect the validity of the Option grant.
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(c) Certificates. All certificates for shares of Stock or other securities
delivered under the Plan shall be subject to such stock transfer orders, legends
and other restrictions as the Committee may deem advisable under the rules,
regulations and other requirements of the Commission, any market in which the
Stock is then traded and any applicable federal, state or foreign securities
law.
(d) Termination. Unless otherwise provided in the applicable Award
Agreement or by the Committee, in the event of Termination for any reason other
than death, retirement or Disability, Awards held at the date of Termination
(and only to the extent then exercisable or payable, as the case may be) may be
exercised in whole or in part at any time within three (3) months after the date
of Termination, or such lesser period specified in the Award Agreement (but in
no event after the expiration date of the Award), but not thereafter. If
Termination is due to retirement or to death or Disability, Awards held at the
date of Termination (and only to the extent then exercisable or payable, as the
case may be) may be exercised in whole or in part by the participant in the case
of retirement or Disability, by the participant's guardian or legal
representative or by the person to whom the Award is transferred by will or the
laws of descent and distribution, at any time within two (2) years from the date
of Termination or any lesser period specified in the Award Agreement (but in no
event after the expiration of the Award).
(e) Delivery of Purchase Price. If and only to the extent authorized by
the Committee, participants may make all or any portion of any payment due to
the Company
(i) with respect to the consideration payable for an Award,
(ii) upon exercise of an Award, or
(iii) with respect to federal, state, local or foreign tax payable in
connection with an Award, by delivery of (x) cash, (y) check, or (z) any
property other than cash (including a promissory note of the participant or
shares of Stock or securities) so long as, if applicable, such property
constitutes valid consideration for the Stock under, and otherwise complies
with, applicable law. No promissory note under the Plan shall have a term
(including extensions) of more than five years or shall be of a principal amount
exceeding 90% of the purchase price paid by the borrower. In addition, with
respect payment due to the Company upon to the exercise of an Award, a
participant may, at the participant's election, surrender or direct the Company
to withhold such number of shares issuable upon exercise of the Award with a
Fair Market Value equal to some or all of the exercise price of the shares being
acquired, together with such documentation as the Committee may require.
(f) Tax Withholding. Any shares or other securities so withheld or
tendered will be valued by the Committee as of the date they are withheld or
tendered; provided, however, that Stock shall be valued at Fair Market Value on
such date. The value of the shares withheld or tendered may not exceed the
required federal, state, local and foreign withholding tax obligations as
computed by the Company. Unless the Committee permits otherwise, the participant
shall pay to the Company in cash,
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promptly when the amount of such obligations becomes determinable (the "Tax
Date"), all applicable federal, state, local and foreign withholding taxes that
the Committee in its discretion determines to result, (i) from the lapse of
restrictions imposed upon an Award, (ii) upon exercise of an Award, or (iii)
from a transfer or other disposition of shares acquired upon exercise or payment
of an Award, or otherwise related to the Award or the shares acquired in
connection with an Award.
A participant who has received an Award or payment under an Award may,
to the extent, if any, authorized by the Committee in its discretion, make an
election to (x) deliver to the Company a promissory note of the participant on
the terms set forth in Section 10(e), or (y) tender any such securities to the
Company to pay the amount of tax that the Committee in its discretion determines
to be required to be withheld by the Company; provided, however, that such
election shall be subject to the disapproval of the Committee.
(g) No Transferability. No Award shall be assignable or otherwise
transferable by the participant other than by will or by the laws of descent and
distribution. During the life of a participant, an Award shall be exercisable,
and any elections with respect to an Award may be made, only by the participant
or participant's guardian or legal representative.
(h) Adjustment of Awards; Waivers. Subject to Section 5(b)(vi), the
Committee may adjust the performance goals and measurements applicable to Awards
(i) to take into account changes in law and accounting and tax rules, (ii) to
make such adjustments as the Committee deems necessary or appropriate to reflect
the inclusion or exclusion of the impact of extraordinary or unusual items,
events or circumstances in order to avoid windfalls or hardships, and (iii) to
make such adjustments as the Committee deems necessary or appropriate to reflect
any material changes in business conditions. In the event of hardship or other
special circumstances of a participant and otherwise in its discretion, the
Committee may waive in whole or in part any or all restrictions, conditions,
vesting, or forfeiture with respect to any Award granted to such participant.
(i) Non-Competition. The Committee may condition its discretionary waiver
of a forfeiture, the acceleration of vesting at the time of Termination of a
participant holding any unexercised or unearned Award, the waiver of
restrictions on any Award, or the extension of the expiration period to a period
not longer than that provided by the Plan upon such participant's agreement (and
compliance with such agreement) to (i) not engage in any business or activity
competitive with any business or activity conducted by the Company and (ii) be
available for consultations at the request of the Company's management, all on
such terms and conditions (including conditions in addition to (i) and (ii)) as
the Committee may determine.
(j) Dividends. The reinvestment of dividends in additional Stock or
Restricted Stock at the time of any dividend payment pursuant to Section 6(c)
shall only be permissible if sufficient shares of Stock are available under
Section 3 for such reinvestment (taking into account then outstanding Awards).
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(k) Regulatory Compliance. Each Award under the Plan shall be subject to
the condition that, if at any time the Committee shall determine that (i) the
listing, registration or qualification of the shares of Stock upon any
securities exchange or for trading in any securities market or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the participant with respect thereto, is necessary
or desirable, then such Award shall not be consummated in whole or in part
unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
(l) Rights as Stockholder. Unless the Plan or the Committee expressly
specifies otherwise, an optionee shall have no rights as a stockholder with
respect to any shares covered by an Award until the stock certificates
representing the shares are actually delivered to the optionee. Subject to
Sections 3(b) and 6(c), no adjustment shall be made for dividends or other
rights for which the record date is prior to the date the certificates are
delivered.
(m) Beneficiary Designation. The Committee, in its discretion, may
establish procedures for a participant to designate a beneficiary to whom any
amounts payable in the event of the participant's death are to be paid.
(n) Additional Plans. Nothing contained in the Plan shall prevent the
Company, a subsidiary or an affiliate from adopting other or additional
compensation arrangements for its employees and consultants.
(o) No Employment Rights. The adoption of the Plan shall not confer upon
any employee any right to continued employment nor shall it interfere in any way
with the right of the Company, a subsidiary or an affiliate to terminate the
employment of any employee at any time.
(p) Rule 16b-3. Notwithstanding any provision of the Plan, the Plan shall
always be administered, and Awards shall always be granted and exercised, in
such a manner as to conform to the provisions of Rule 16b-3.
(q) Governing Law. The Plan and all Awards shall be governed by and
construed in accordance with the laws of the State of California.
(r) Use of Proceeds. All cash proceeds to the Company under the Plan shall
constitute general funds of the Company.
(s) Unfunded Status of Plan. The Plan shall constitute an "unfunded" plan
for incentive and deferred compensation. The Committee may authorize the
creation of trusts or arrangements to meet the obligations created under the
Plan to deliver Stock or make payments; provided, however, that unless the
Committee otherwise determines, the existence of such trusts or other
arrangements shall be consistent with the "unfunded" status of the Plan.
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(t) Assumption by Successor. The obligations of the Company under the Plan
and under any outstanding Award may be assumed by any successor corporation,
which for purposes of the Plan shall be included within the meaning of
"Company".
(u) Limitation on Award Grants to Certain Executive Officers. The Company
may not grant Awards under the Plan for more than 750,000 shares to any
executive officer whose compensation is required to be disclosed under Item 402
of Regulation S-K.
SECTION 11. AMENDMENTS AND TERMINATION.
The Board may amend, alter or discontinue the Plan or any Award, but no
amendment, alteration or discontinuance shall be made which would impair the
rights of a participant under an outstanding Award without the participant's
consent. No amendment, alteration or discontinuance shall require stockholder
approval except (a) an increase in the total number of shares reserved for
issuance pursuant to Awards under the Plan, (b) with respect to provisions
solely as they relate to Incentive Stock Options, to the extent required for the
Plan to comply with Section 422 of the Code, (c) to the extent required by other
applicable laws, rules or regulations or (d) to the extent that the Board
otherwise concludes that stockholder approval is advisable.
SECTION 12. EFFECTIVE DATE OF PLAN.
The Plan shall be effective on the date it is adopted by the Board but all
Awards shall be conditioned upon approval of the Plan (a) at a duly held
stockholders' meeting by the affirmative vote of the holders of a majority of
the voting power of the shares of the Company entitled to vote and represented
in person or by proxy at the meeting, or (b) by an action by written consent of
the holders of a majority of the voting power of the shares of the Company
entitled to vote.
SECTION 13. TERM OF PLAN.
No Award shall be granted on or after April 17, 2007, but Awards granted
prior to April 17, 2007 may extend beyond that date.
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EXHIBIT 99.2
SEQUUS PHARMACEUTICALS, INC.
EMPLOYEE STOCK PURCHASE PLAN
1. Purpose
The Employee Stock Purchase Plan (the "Plan") is designed to
encourage and assist employees of SEQUUS Pharmaceuticals, Inc., its parent and
participating subsidiaries, if any (collectively, the "Company") to acquire an
equity interest in the Company through the purchase of shares of Common Stock.
2. Administration
The Plan shall be administered by the Board of Directors (or a
committee of two or more "disinterested" directors, which in either case is
referred to as the "Board") in accordance with Rule 16b-3 of the Securities and
Exchange Commission, as in effect from time to time. Any committee or persons as
the Board may from time to time select (the "Administrator") shall be
responsible for any matters for which a "disinterested administrator" is not
required by Rule 16b-3. Subject to the express provisions of the Plan, to the
overall supervision of the Board, and to the limitations of Section 423 or any
successor provision of the Internal Revenue Code of 1986, as amended (the
"Code"), the Administrator may administer and interpret the Plan in any manner
it believes to be desirable, and any such interpretation shall be conclusive and
binding on the Company and all participants.
3. Number of Shares
The Company has reserved for sale under the Plan 778,000 shares
of Common Stock. Shares sold under the Plan may be newly issued shares or shares
reacquired in private transactions or open market purchases, but all shares sold
under the Plan regardless of source shall be counted against the 778,000-share
limitation.
In the event of any reorganization, recapitalization, stock
split, reverse stock split, stock dividend, combination of shares, merger,
consolidation, offering of rights, or other similar change in the capital
structure of the Company, the Administrator may make such adjustment, if any, as
it deems appropriate in the number, kind, and purchase price of the shares
available for purchase under the Plan and in the maximum number of shares
subject to any option under the Plan.
4. Eligibility Requirements
Each employee, except those described in the next paragraph,
shall become eligible to participate in the Plan in accordance with Section 5 on
the first Enrollment Date following employment by the Company. Participation in
the Plan is entirely voluntary.
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The following employees are not eligible to participate in the
Plan:
(i) employees who would, immediately upon enrollment in the Plan,
own directly or indirectly (including options or rights to acquire), an
aggregate of more than five percent of the total combined voting power or value
of all outstanding shares of all classes of the Company or any subsidiary; and
(ii) employees who are customarily employed by the Company less
than 20 hours per week or less than five months in any calendar year.
"Employee" shall mean any individual who performs services for SEQUUS
Pharmaceuticals, Inc. or any participating subsidiary pursuant to an employment
relationship described in Treasury Regulations Section 31.3401(c)-l or any
successor provision. "Subsidiary" shall mean any corporation in an unbroken
chain of corporations beginning with SEQUUS Pharmaceuticals, Inc. if, as of the
applicable Enrollment Date, each of the corporations other than the last
corporation in the chain owns stock possessing 50% or more of the combined
voting power of all classes of stock in one of the other corporations in the
chain. A "participating subsidiary" shall mean a subsidiary which has been
designated by the Administrator as covered by the Plan.
5. Enrollment
Any eligible employee may enroll or re-enroll in the Plan as of
the first trading day of any January, April, July, and October, or such other
specific trading days established by the Administrator from time to time
("Enrollment Dates"). In order to enroll an eligible employee must complete,
sign, and submit to the Company an enrollment form. Any enrollment form received
by the Company before the 15th day of the month preceding an Enrollment Date, or
such other date established by the Administrator from time to time ("Cut-Off
Date"), will be effective on that Enrollment Date. As a condition to
participation, each enrollee agrees to inform the Company promptly of the sale
or other disposition of shares acquired under the Plan within either of the
periods specified in Section 423(a)(1) of the Code (currently, two years from
the date of grant of the option pursuant to which such shares were acquired and
one year after the Purchase Date for such shares).
6. Grant of Options on Enrollment
Enrollment by a participant in the Plan on an Enrollment Date
will constitute the grant by the Company to the participant of options to
purchase shares of Common Stock from the Company under the Plan. The number of
options granted will equal the number of percentage points of salary that the
participant elects to have withheld. An increase (but not a decrease) in the
level of payroll withholding also constitutes the grant of new options for the
incremental change in the percentage withheld but does not cancel outstanding
options. Any participant whose options expire and who has not withdrawn from the
Plan will automatically be re-enrolled in the Plan and granted new options
(equal in number to the number of expiring options) on the Enrollment Date
immediately following the Purchase Date on which his then-current
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options expire. Any date on which a participant is granted options under the
Plan is referred to as a "Grant Date."
Each option granted under the Plan shall have the following
terms:
(i) whether or not all shares have been purchased thereunder, the
option will expire on the earlier to occur of (A) the completion of the purchase
of shares on the last Purchase Date occurring within 27 months of the Grant Date
for such option, or such shorter option period as may be established by the
Board from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date, or (B) the date on which participation of such
participant in the Plan terminates for any reason;
(ii) payment for shares purchased under the option will be made
only through payroll withholding in accordance with Section 7;
(iii) purchase of shares upon exercise of the option will be
accomplished only in installments in accordance with Section 8;
(iv) the price per share under the option will be determined as
provided in Section 8;
(v) unless otherwise established by the Board from time to time
prior to an Enrollment Date, the number of shares available for purchase under
each option will be the quotient of (a) 75,000, divided by (b) the then fair
market value of the Common Stock subject to option for all options to be granted
on such Enrollment Date; provided, however, that in no event shall an option
give the participant the right to purchase shares at a rate which accrues in
excess of $75,000 of fair market value of such shares (determined at the Grant
Date of such option) in any calendar year during which the option is
outstanding;
(vi) notwithstanding clause (v), the option (taken together with
all other options then outstanding under this Plan and under all other similar
stock purchase plans of SEQUUS Pharmaceuticals, Inc. or any parent or
subsidiary) will in no event give the participant the right to purchase shares
at a rate which accrues in excess of $25,000 of fair market value of such shares
(determined in accordance with Section 423(b)(8) of the Code at the applicable
grant dates) in any calendar year during which such participant is enrolled in
the Plan at any time; and
(vii) the option will in all respects be subject to the terms and
conditions of the Plan, as interpreted by the Administrator from time to time.
7. Payroll Withholding
Each participant may elect to make contributions at a rate equal
to any whole percentage up to a maximum of 10%, or such other maximum percentage
as the Board may establish from time to time before an Enrollment Date for all
options to be
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granted on such Enrollment Date, of his or her monthly earnings from the
Company. The rate of contribution shall be designated by the participant in the
enrollment form. A participant may change the contribution rate effective as of
any Enrollment Date by delivery to the Company not later than the related
Cut-Off Date of a new enrollment form indicating the revised rate. An increase
(but not a decrease) in the contribution rate constitutes the grant of new
options. If the rate is decreased and there is more than one option outstanding,
the participant may specify the option to which such decrease should apply.
Contributions shall be credited to a participant's account as
soon as administratively feasible after payroll withholding. The Company shall
be entitled to use of the contributions immediately after payroll withholding
and shall have no obligation to pay interest on the contributions to any
participant.
8. Purchase of Shares
On the last trading day of each March, June, September, and
December, or on such other specific trading days as may be established by the
Board from time to time prior to an Enrollment Date for all options to be
granted on such Enrollment Date ("Purchase Dates"), the Company shall apply the
funds then credited to each participant's account to the purchase of whole and
fractional shares of Common Stock. The cost to the participant for the shares
purchased under any option shall be 85% of the lower of:
(i) the closing price of Common Stock on the NASDAQ National
Market System on the Grant Date for such option;
(ii) the closing price of Common Stock on the NASDAQ National
Market System on that Purchase Date; or
(iii) if no closing price is reported on either of such dates,
the closing price of the Common Stock on the NASDAQ National Market System on
the date next preceding such Grant Date or such Purchase Date, as the case may
be, on which a closing price is reported.
Certificates evidencing shares purchased on any Purchase Date shall be delivered
as soon as administratively feasible, but participants shall be treated as the
owners of their shares effective as of the Purchase Date. Any cash equal to less
than the price of the smallest fractional share of Common Stock which may be
purchased under the Plan left in a participant's payroll deduction account on a
Purchase Date shall be carried forward in such participant's account for
application on the next Purchase Date.
9. Transfer of Shares
A participant purchasing shares pursuant to the Plan on any
Purchase Date on or after July 1, 1997 may not transfer, assign or otherwise
sell or dispose of any of such shares for a period of six months commencing on
the Purchase Date for such shares, other than by will or by the laws of descent
and distribution.
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10. Withdrawal From the Plan
A participant may withdraw from the Plan in full (but not in
part) at any time. All funds credited to a participant's payroll deduction
account shall be distributed to the participant without interest as soon as
administratively feasible after the Company receives the withdrawal notice. An
employee who has withdrawn may not return funds to the Company and require the
Company to apply those funds to the purchase of shares. Any eligible employee
who has withdrawn from the Plan may, however, enroll in the Plan again on any
subsequent Enrollment Date in accordance with Section 5.
11. Termination of Employment
Participation in the Plan terminates immediately when a
participant ceases to be employed by the Company for any reason whatsoever
(including death or disability) or otherwise becomes ineligible to participate
in the Plan. As soon as administratively feasible after termination, the Company
shall pay to the participant or his or her beneficiary or legal representative
all amounts credited to the participant's payroll deduction account.
12. Leave of Absence
Unless a participant has voluntarily withdrawn from the Plan,
shares will be purchased for his or her account on the Purchase Date next
following commencement of a leave of absence of such participant. Participation
in the Plan will terminate immediately after the purchase of shares on such
Purchase Date, however, unless:
(i) the leave of absence is of less than 90 days' duration and is
due to illness, injury, or other cause approved by the Administrator; or
(ii) the participant's right to reemployment after such leave is
guaranteed by contract or statute.
13. Designation of Beneficiary
Each participant may designate one or more beneficiaries in the
event of death and may, in his or her sole discretion, change such designation
at any time. Any such designation shall be effective upon receipt by the Company
and shall control over any disposition by will or otherwise.
As soon as administratively feasible after the death of a
participant, amounts credited to the participant's payroll deduction account
shall be paid in cash to the designated beneficiaries or, in the absence of a
designation, to the executor, administrator, or other legal representative of
his or her estate. Such payment shall relieve the Company of further liability
with respect to the Plan on account of the deceased participant. If more than
one beneficiary is designated, each beneficiary shall receive an equal portion
of the account unless the participant has given express contrary instructions.
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14. Assignment
No participant may assign his or her rights under the Plan by
operation of law or otherwise. No participant may create a lien on any funds,
securities, rights, or other property held by the Company for the account of the
participant under the Plan, except to the extent that there has been a
designation of beneficiaries in accordance with the Plan, and except to the
extent permitted by the laws of descent and distribution if beneficiaries have
not been designated.
A participant's right to purchase shares under the Plan shall be
exercisable only during the participant's lifetime and only by him or her,
except that a participant may direct the Company in the enrollment form to issue
share certificates to the participant jointly with one or more other persons
with right of survivorship, in spousal community property, or to certain forms
of trusts approved by the Administrator.
15. Administrative Assistance
If the Administrator in its discretion so elects, it may retain a
brokerage firm, bank, or other financial institution to assist in the purchase
of shares, delivery of reports, or other administrative aspects of the Plan. If
the Administrator so elects, each participant shall be deemed upon enrollment in
the Plan to have authorized the establishment of an account on his or her behalf
at such institution. Shares purchased by a participant under the Plan shall be
held in the account in the participant's name, or if the participant so
indicates in the enrollment form, in the participant's name together with the
name of one or more other persons, in joint tenancy with right of survivorship,
in spousal community property, or in certain forms of trusts approved by the
Administrator.
16. Costs
The Company shall pay all costs and expenses incurred in
administering the Plan excepting stamp duties or transfer taxes applicable to
participation in the Plan, which it may charge to the participant's account. The
Company shall pay brokerage fees for the purchase of shares by a participant,
but brokerage fees for the resale of shares by a participant shall be borne by
the participant.
17. Reports
The Company shall provide or cause to be provided to each
participant a report of his or her contributions and the shares purchased by the
participant on each Purchase Date.
18. Equal Rights and Privileges
All eligible employees shall have equal rights and privileges
with respect to the Plan so that the Plan qualifies as an "employee stock
purchase plan" within the meaning of Section 423 of the Code and the Treasury
Regulations thereunder. Any
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provision of the Plan which is inconsistent with Section 423 of the Code shall
without further act or amendment by the Company or the Board be reformed to
comply with the requirements of Section 423 of the Code. This Section 18 shall
take precedence over all other provisions in the Plan.
19. Applicable Law
The Plan shall be governed by the substantive laws (excluding the
conflict of laws rules) of the State of California.
20. No Right of Employment
Neither the grant nor the exercise of any right to purchase
shares under this Plan nor anything in this Plan shall impose upon the Company
or any subsidiary any obligation to employ or continue to employ any
participant. The right of the Company and any subsidiary to terminate any
employee shall not be diminished or affected because any right to purchase
shares has been granted to such employee.
21. Requirements of Law
(a) The Company shall not be required to sell, issue or deliver
any shares of Common Stock under this Plan if such sale, issuance or delivery
might constitute a violation by the Company or the participant of any provision
of law. Unless a registration statement under the Securities Act of 1933 (the
"Act") is in effect with respect to the shares of Common Stock proposed to be
delivered under the Plan, the Company shall not be required to issue such shares
if, in the opinion of the Company or its counsel, such issuance would violate
the Act. Regardless of whether such shares of Common Stock have been registered
under the Act or registered or qualified under the securities laws of any state,
the Company may impose restrictions upon the hypothecation or further sale or
transfer of such shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Company or its counsel, such
restrictions are necessary or desirable to achieve compliance with the
provisions of the Act, the securities laws of any state, or any other law,
including the Internal Revenue Code. As a condition precedent to the issuance of
any shares of Common Stock under the plan, the Company may require evidence
satisfactory to it or its counsel to the effect that the purchase of such shares
is acquiring the shares for investment and not with a view to their
distribution. Any determination by the Company or its counsel in connection with
any of the foregoing shall be final and binding on all parties.
(b) If, in the opinion of the Company and its counsel, any legend
placed on a stock certificate representing shares of Common Stock issued under
the plan is no longer required or desirable in order to comply with applicable
securities or other laws,
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the holder of such certificate shall be entitled to exchange such certificate
for a certificate representing a like number of shares lacking such legend.
(c) The Company may, but shall not be obligated to, register or
qualify any securities covered by the Plan. The Company shall not be obligated
to take any other affirmative action in order to cause the grant or exercise of
any right or the issuance, sale, or delivery of shares pursuant to the exercise
of any right to comply with any law.
22. Corporate Transactions
New option rights may be substituted for the option rights under
the Plan, or the Company's outstanding obligations under the Plan may be
assumed, by an employer corporation other than the Company, or by a parent or
subsidiary corporation of such employer corporation, in connection with any
merger, consolidation, acquisition, separation, reorganization or liquidation,
or like occurrence in which the Company is involved.
23. Modification, Term, and Termination
The Board may amend, alter, or terminate the Plan or any option
at any time. No amendment shall be effective unless within 12 months after it is
adopted by the Board it is approved by the holders of a majority of the voting
power of the Company's outstanding shares, if such amendment would:
(i) increase the number of shares reserved for purchase under
the Plan;
(ii) materially increase the benefits to participants; or
(iii) modify the requirements for participation.
In the event the Plan is terminated, the Board may elect to
terminate all outstanding options immediately or upon completion of the purchase
of shares on the next Purchase Date, or may elect to permit options to expire in
accordance with their terms (and participation to continue through such
expiration dates). If the options are terminated prior to expiration, all funds
contributed to the Plan that have not been used to purchase shares shall be
returned to the participants as soon as administratively feasible.
24. Board and Stockholder Approval
This Plan was approved by the Board of Directors on March 20,
1990. This Plan shall be subject to and conditioned upon approval of the Plan by
the affirmative vote of the holders of a majority of the outstanding shares of
Common stock of the Company within 12 months of the date the Plan is approved by
the Board. No right to purchase shares may be exercised in whole or in part
unless and until such stockholder approval is obtained.
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