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IMMUNOGEN, INC.
RESTATED STOCK OPTION PLAN
(as amended through November 9, 1999)
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IMMUNOGEN, INC.
RESTATED STOCK OPTION PLAN
(AS AMENDED THROUGH November 9, 1999)
1. DEFINITIONS AND PURPOSES.
A. Definitions
Unless otherwise specified or unless the context otherwise requires, the
following terms, as used in this Restated Stock Option Plan, have the following
meanings:
1. Administrator means the Board of Directors, unless it has
delegated power to act on its behalf to a committee. (See Article
3)
2. Affiliate means a corporation which, for purposes of Section 424
of the Code, is a parent or subsidiary of the Company, direct or
indirect.
3. Board of Directors means the Board of Directors of the Company.
4. Code means the United States Internal Revenue Code of 1986, as
amended.
5. Committee means the Committee to which the Board of Directors has
delegated power to act under or pursuant to the provisions of the
Plan.
6. Company means ImmunoGen, Inc., a Massachusetts corporation.
7. Disability or Disabled means permanent and total disability as
defined in Section 22(e)(3) of the Code.
8. Fair Market Value of a Share of Common Stock means:
a. If such Shares are then listed on any national securities
exchange, the fair market value shall be the mean between the
high and low sales prices, if any, on the largest such
exchange on the date of the grant of the Option, or, if none,
on the most recent trade date thirty (30) days or
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less prior to the date of the grant of the Option;
b. If the Shares are not then listed on any such exchange, the
fair market value of such Shares shall be the last sale
price, if any, as reported in the National Association of
Securities Dealers Automated Quotation System (NASDAQ) for
the date of the grant of the Options, or if none, for the
most recent trade date thirty (30) days or less prior to the
date of the grant of the Option for which such last sale
price is reported;
c. If the Shares are not then either listed on any such exchange
or quoted in NASDAQ, the fair market value shall be the mean
between the average of the "Bid" and the average of the "Ask"
prices, if any, as reported in the National Daily Quotation
Service for the date of the grant of the option, or, if none,
for the most recent trade date thirty (30) days or less prior
to the date of the grant of the Option for which such
quotations are reported; and
d. If the market value cannot be determined under the preceding
three paragraphs, it shall be determined in good faith by the
Board of Directors.
9. ISO means an option meant to qualify as an incentive stock option
under Code Section 422.
10. Key Employee means an employee of the Company or of an Affiliate
(including, without limitation, an employee who is also serving as
an officer or director of the Company or of an Affiliate),
designated by the Administrator to be eligible to be granted one
or more Options under the Plan.
11. Non-Qualified Option means an option which is not intended to
qualify as an ISO.
12. Option means an ISO or Non-Qualified Option granted under the
Plan.
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13. Option Agreement means an agreement between the Company and a
Participant executed and delivered pursuant to the Plan, in such
form as the Administrator shall approve.
14. Participant means a Key Employee, director or consultant to whom
one or more Options are granted under the Plan.
15. Participant's Survivors means a deceased Participant's legal
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of
descent and distribution.
16. Plan means this Restated Stock Option Plan.
17. Shares means shares of the common stock, $.01 par value, of the
Company ("Common Stock") as to which Options have been or may be
granted under the Plan or any shares of capital stock into which
the Shares are changed or for which they are exchanged within the
provisions of Article 2 of the Plan. The shares issued upon
exercise of Options granted under the Plan may be authorized and
unissued shares or shares held by the Company in its treasury, or
both.
B. Purposes of the Plan
The Plan is intended to encourage ownership of Shares by Key Employees,
non-employee directors and certain consultants of the Company in order to
attract such people, to induce them to work for the benefit of the Company or of
an Affiliate and to provide additional incentive for them to promote the success
of the Company or of an Affiliate. The Plan provides for the issuance of ISOs
and Non-Qualified Options. The Plan shall be treated as an amendment to and
restatement of the Company's 1986 Incentive Stock Option Plan. As amended and
restated the Plan shall apply to ISOs issued by the Company on or after the date
of such amendment of the Plan, but the Plan as so amended shall apply to any ISO
issued prior to such amendment if and only to the extent that the Incentive
Stock Option Agreement pursuant to which such ISO was granted is amended in
writing to adopt the amended terms of the Plan.
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2. SHARES SUBJECT TO THE PLAN.
The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 4,850,000, or the equivalent of such number
of Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction effected after such date.
If an Option ceases to be "outstanding," in whole or in part, the Shares
which were subject to such Option shall be available for the granting of other
Options under the Plan. Any Option shall be treated as "outstanding" until such
Option is exercised in full, or terminates or expires under the provisions of
the Plan, or by agreement of the parties to the pertinent Option Agreement.
3. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to the
extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. The Plan is intended to comply with Rule 16b-3 or its
successors, promulgated pursuant to Section 16 of the Securities Exchange Act of
1934, as amended (the "1934 Act"), with respect to Participants who are subject
to Section 16 of the 1934 Act, and any provision in this Plan with respect to
such persons contrary to Rule 16b-3 shall be deemed null and void to the extent
permissible by law and deemed appropriate by the Administrator. Subject to the
provisions of the Plan, the Administrator is authorized to:
a. interpret the provisions of the Plan or of any Option or
Option Agreement and to make all rules and determinations
which it deems necessary or advisable for the administration
of the Plan;
b. determine which employees of the Company or of an Affiliate
shall be designated as Key Employees and which of the Key
Employees, directors and consultants shall be granted
Options;
c. determine the number of Shares for which an Option or Options
shall be granted; and
d. specify the terms and conditions upon which an
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Option or Options may be granted; provided, however, that all
such interpretations, rules, determinations, terms and
conditions shall be made and prescribed in the context of
preserving the tax status under Code Section 422 of those
Options which are designated as ISOs. Subject to the
foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option
granted under it shall be final, unless otherwise determined
by the Board of Directors, if the Administrator is other than
the Board of Directors.
4. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants in
the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the Administrator
may authorize the grant of an Option to a person not then an employee, director
or consultant of the Company or of an Affiliate. The actual grant of such
Option, however, shall be conditioned upon such person becoming eligible to
become a Participant at or prior to the time of the execution of the Option
Agreement evidencing such Option. ISOs may be granted only to Key Employees.
Non-Qualified Options may be granted to any Key Employee, director or consultant
of the Company or an Affiliate. Granting of any Option to any individual shall
neither entitle that individual to, nor disqualify him or her from,
participation in any other grant of Options.
5. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in an Option Agreement, duly executed by the
Company and by the Participant. The Option Agreements, which may be changed in
the Administrator's discretion for any particular Participant (provided that any
change in the Incentive Stock Option Agreement is not inconsistent with Code
Section 422), shall be subject to the following terms and conditions:
Non-Qualified Options: Each Option intended to be a Non-Qualified Option
shall be subject to the terms and conditions which the Administrator determines
to be appropriate and in the best interest of the Company, subject to the
following minimum
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standards for any such Non-Qualified Option:
a. The Option Agreement shall be in writing in the form approved
by the Administrator, with such modifications to such form as
the Administrator shall approve;
b. Option Price: The option price (per share) of the Shares
covered by each Option shall be determined by the
Administrator but shall not be less than the par value per
share of the Shares on the date of the grant of the Option.
c. Each Option Agreement shall state the number of Shares to
which it pertains; and
d. Each Option Agreement shall state the date on which it first
is exercisable and the date after which it may no longer be
exercised. Except as otherwise determined by the
Administrator, each Option granted hereunder shall become
cumulatively exercisable in four (4) equal annual
installments of twenty-five percent (25%) each, commencing on
the first anniversary date of the Option Agreement executed
by the Company and the Participant with respect to such
Option, and continuing on each of the next three (3)
anniversary dates.
e. Each Option shall terminate not more than 10 (ten) years from
the date of grant thereof or at such earlier time as the
Option Agreement may provide.
f. Directors' Options: Each director of the Company who is not
an employee of the Company or any Affiliate, upon first being
elected or appointed to the Board of Directors after July 9,
1992, and upon every fourth anniversary thereof provided that
on such dates such director has been in the continued and
uninterrupted service of the Company as a director since his
or her election or appointment and is a director and is not
an employee of the Company at such times, shall be granted a
Non-Qualified Option to purchase 10,000 Shares. Any
non-employee director serving in office on July 9, 1992, who
has been a member of
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the Board of Directors prior to such date shall be granted on
such date and upon every fourth anniversary thereof, a
Non-Qualified Option to purchase 10,000 Shares, provided that
on such date such director has been in the continued and
uninterrupted service of the Company as a director since July
9, 1992, and is a director and is not an employee of the
Company at such time. Each such Option shall (i) have an
exercise price equal to the Fair Market Value (per share) of
the Shares on the date of grant of the Option, (ii) have a
term of ten (10) years, and (iii) shall become cumulatively
exercisable in four (4) equal annual installments of
twenty-five percent (25%) each, upon completion of one full
year of service on the Board of Directors after the date of
grant, and continuing on each of the next three (3) full
years of service thereafter. Each director of the Company who
is not an employee of the Company or any Affiliate, upon
first being elected or appointed to the Board of Directors
after July 29, 1998, shall be granted, in addition to the
Non-Qualified Option to purchase 10,000 Shares as previously
described in this subparagraph (f), a Non-Qualified Option to
purchase 50,000 Shares. Such Option shall (i) have an
exercise price equal to the Fair Market Value (per share) of
the Shares on the date of grant of the Option, (ii) have a
term of ten (10) years, and (iii) shall become cumulatively
exercisable in three (3) equal annual installments of
one-third each, upon completion of one full year of service
on the Board of Directors after the date of grant, and
continuing on each of the next two (2) full years of service
thereafter. Any director entitled to receive an Option grant
under this subparagraph (f) may elect to decline the Option.
Notwithstanding the provisions of Paragraph 23 concerning
amendment of the Plan, the provisions of this subparagraph
(f) shall not be amended more than once every six months,
other than to comport with changes in the Code, the Employee
Retirement Income Security Act, or the rules thereunder. The
provisions of Articles 9, 10, 11 and 12 below shall not apply
to Options granted pursuant to this subparagraph (f).
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ISOs: Each Option intended to be an ISO shall be issued only to a Key
Employee and be subject to at least the following terms and conditions, with
such additional restrictions or changes as the Administrator determines are
appropriate but not in conflict with Code Section 422 and relevant regulations
and rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum standards
for Non-Qualified Options, as described above, except clauses
(a), (b) and (e) thereunder.
b. Option Agreement: The Option Agreement for an ISO shall be in
writing in substantially the form as approved by the
Administrator, with such changes to such form as the
Administrator shall approve, provided any changes are not
inconsistent with Code Section 422.
c. Option Price: Immediately before the Option is granted, if
the Participant owns, directly or by reason of the applicable
attribution rules in Code Section 424(d):
i. Ten percent (10%) or less of the total combined voting
power of all classes of share capital of the Company or
an Affiliate, the Option price per share of the Shares
covered by each Option shall not be less than one
hundred percent (100%) of the Fair Market Value per
share of the Shares on the date of the grant of the
Option;
ii. More than ten percent (10%) of the total combined voting
power of all classes of share capital of the Company or
an Affiliate, the Option price per share of the Shares
covered by each Option shall be not less than one
hundred ten percent (110%) of the said Fair Market Value
on the date of grant.
d. Term of Option: For Participants who own:
i. Ten percent (10%) or less of the
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total combined voting power of all classes of share
capital of the Company or an Affiliate, each Option
shall terminate not more than ten (10) years from the
date of the grant or at such earlier time as the Option
Agreement may provide;
ii. More than ten percent (10%) of the total combined voting
power of all classes of share capital of the Company or
an Affiliate, each Option shall terminate not more than
five (5) years from the date of the grant or at such
earlier time as the Option Agreement may provide.
e. Limitation on Yearly Exercise: The Option Agreements shall
restrict the amount of Options which may be exercisable in
any calendar year (under this or any other ISO plan of the
Company or an Affiliate) so that the aggregate Fair Market
Value (determined at the time each ISO is granted) of the
stock with respect to which ISOs are exercisable for the
first time by the Participant in any calendar year does not
exceed one hundred thousand dollars ($100,000), provided that
this subparagraph (e) shall have no force or effect if its
inclusion in the Plan is not necessary for Options issued as
ISOs to qualify as ISOs pursuant to Section 422(d) of the
Code.
f. Limitation on Grant of ISOs: No ISOs shall be granted after
the expiration of the earlier of ten (10) years from the date
of the adoption of the Plan by the Company or the approval of
the Plan by the shareholders of the Company.
6. EXERCISE OF OPTION AND ISSUANCE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by giving
written notice to the Company at its principal office address, together with
provision for payment of the full purchase price in accordance with this
paragraph for the shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
written notice shall be signed by the person
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exercising the Option, shall state the number of Shares with respect to which
the Option is being exercised and shall contain any representation required by
the Plan or the Option Agreement. Payment of the purchase price for the shares
as to which such Option is being exercised shall be made (a) in United States
dollars in cash or by check, or (b) at the discretion of the Administrator,
through delivery of shares of Common Stock having a fair market value equal as
of the date of the exercise to the cash exercise price of the Option, determined
in good faith by the Board of Directors of the Company, (c) at the discretion of
the Administrator, by delivery of the grantee's personal recourse note bearing
interest payable not less than annually at no less than 100% of the applicable
Federal rate, as defined in Section 1274(d) of the Code, (d) at the discretion
of the Administrator, in accordance with a cashless exercise program established
with a securities brokerage firm, and approved by the Administrator, or (e) at
the discretion of the Administrator, by any combination of (a), (b), (c) and (d)
above. Notwithstanding the foregoing, the Administrator shall accept only such
payment on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to which
such Option was exercised to the Participant (or to the Participant's Survivors,
as the case may be). In determining what constitutes "reasonably promptly," it
is expressly understood that the delivery of the Shares may be delayed by the
Company in order to comply with any law or regulation which requires the Company
to take any action with respect to the Shares prior to their issuance. The
Shares shall, upon delivery, be evidenced by an appropriate certificate or
certificates for paid-up, non-assessable Shares.
The Administrator shall have the right to accelerate the date of exercise
of any installment of any Option, provided that the Administrator shall not
accelerate the exercise date of any installment of any Option granted to any Key
Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Article 18) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(e).
7. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as a
shareholder with respect to any Shares covered by such Option, except after due
exercise of the Option and
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provision for payment of the full purchase price for the Shares being purchased
pursuant to such exercise.
8. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be transferable
by the Participant other than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by the Code or
Title I of the Employee Retirement Income Security Act or the rules thereunder,
and shall be exercisable, during the Participant's lifetime, only by such
Participant (or by his or her legal representative). Such Option shall not be
assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
Any attempted transfer, assignment, pledge, hypothecation or other disposition
of any Option or of any rights granted thereunder contrary to the provisions of
this Plan, or the levy of any attachment or similar process upon an Option,
shall be null and void.
9. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee or consultant) before
the Participant has exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee or consultant of
the Company or of an Affiliate (for any reason other than
termination "for cause," Disability, or death for which
events there are special rules in Articles 10, 11, and 12,
respectively), may exercise any Option granted to him or her
to the extent that the right to purchase Shares has accrued
on the date of such termination of service, but only within
such term as the Administrator has designated in the
pertinent Option Agreement.
b. In no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later
than three (3) months after the Participant's termination of
employment.
c. The provisions of this paragraph, and not the
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provisions of Article 11 or 12, shall apply to a Participant
who subsequently becomes disabled or dies after the
termination of employment or consultancy, provided, however,
in the case of a Participant's death, the Participant's
survivors may exercise the Option within six (6) months after
the date of the Participant's death, but in no event after
the date of expiration of the term of the Option.
d. Notwithstanding anything herein to the contrary, if
subsequent to a Participant's termination of employment or
consultancy, but prior to the exercise of an Option, the
Board of Directors determines that, either prior or
subsequent to the Participant's termination, the Participant
engaged in conduct which would constitute "cause," then such
Participant shall forthwith cease to have any right to
exercise any Option.
e. A Participant to whom an Option has been granted under the
Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any disability
other than a permanent and total Disability as defined in
Article 1 hereof), or who is on leave of absence for any
purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated
such Participant's employment or consultancy with the Company
or with an Affiliate, except as the Administrator may
otherwise expressly provide.
f. Options granted under the Plan shall not be affected by any
change of employment or other service within or among the
Company and any Affiliates so long as the Participant
continues to be an employee or consultant of the Company or
any Affiliate, provided, however, if a Participant's
employment by either the Company or an Affiliate should cease
(other than to become an employee of an Affiliate or the
Company), such termination shall affect the Participant's
rights under any Option granted to such Participant in
accordance with the terms of the Plan and the pertinent
Option Agreement.
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10. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee or
consultant) is terminated "for cause" prior to the time that all of his or her
outstanding Options have been exercised:
a. All outstanding and unexercised Options as of the date the
Participant is notified his or her service is terminated "for
cause" will immediately be forfeited, unless the Option
Agreement provides otherwise.
b. For purposes of this Article, "cause" shall include (and is
not limited to) dishonesty with respect to the employer,
insubordination, substantial malfeasance or nonfeasance of
duty, unauthorized disclosure of confidential information,
and conduct substantially prejudicial to the business of the
Company or any Affiliate. The determination of the
Administrator as to the existence of cause will be conclusive
on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to
a Participant's termination of service, nor is it necessary
that the Administrator's finding of "cause" occur prior to
termination. If the Administrator determines, subsequent to a
Participant's termination of service but prior to the
exercise of an Option, that either prior or subsequent to the
Participant's termination the Participant engaged in conduct
which would constitute "cause," then the right to exercise
any Option is forfeited.
d. Any definition in an agreement between the Participant and
the Company or an Affiliate which contains a conflicting
definition of "cause" for termination and which is in effect
at the time of such termination shall supersede the
definition in this Plan with respect to such Participant.
11. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option
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Agreement, a Participant who ceases to be an employee of or consultant to the
Company or of an Affiliate by reason of Disability may exercise any Option
granted to such Participant:
a. to the extent that the right to purchase Shares has accrued
on the date of his Disability; and
b. in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights as would have accrued had the Participant
not become Disabled prior to the end of the accrual period
which next ends following the date of Disability. The
proration shall be based upon the number of days of such
accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of not
more than one (1) year after the date that the Participant became Disabled or,
if earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether Disability
has occurred and the date of its occurrence (unless a procedure for such
determination is set forth in another agreement between the Company and such
Participant, in which case such procedure shall be used for such determination).
If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for
by the Company.
12. EFFECT OF DEATH WHILE AN EMPLOYEE OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee or consultant of the Company or of an Affiliate, such
Option may be exercised by the Participant's Survivors:
a. to the extent exercisable but not exercised on the date of
death; and
b. in the case of an Option, in the event rights to exercise the
Option accrue periodically, to the extent of a pro rata
portion of such rights based upon the number of days prior to
the Participant's death and during the accrual period which
next ends following the date of death.
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If the Participant's Survivors wish to exercise the Option, they must take
all necessary steps to exercise the Option within one (1) year after the date of
death of such Participant, notwithstanding that the decedent might have been
able to exercise the Option as to some or all of the Shares on a later date if
he or she had not died and had continued to be an employee or consultant or, if
earlier, within the originally prescribed term of the Option.
13. TERMINATION OF DIRECTORS' OPTION RIGHTS.
Except as otherwise provided in the pertinent Option Agreement, if a
director who receives Options pursuant to Article 5, subparagraph (f):
a. ceases to be a member of the Board of Directors of the
Company for any reason other than death or Disability, any
then unexercised Options granted to such Director may be
exercised by the director within a period of ninety (90) days
after the date the director ceases to be a member of the
Board of Directors, but only to the extent of the number of
shares with respect to which the Options are exercisable on
the date the director ceases to be a member of the Board of
Directors, and in no event later than the expiration date of
the Option; or
b. ceases to be a member of the Board of Directors of the
Company by reason of his or her death or Disability, any then
unexercised Options granted to such Director may be exercised
by the director (or by the director's personal
representative, heir or legatee, in the event of death)
within a period of one hundred eighty (180) days after the
date the director ceases to be a member of the Board of
Directors, but only to the extent of the number of Shares
with respect to which the Options are exercisable on the date
the director ceases to be a member of the Board of Directors,
and in no event later than the expiration date of the Option.
14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued
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upon the particular exercise of an Option shall have been effectively registered
under the Securities Act of 1933, as now in force or hereafter amended (the
"Act"), the Company shall be under no obligation to issue the Shares covered by
such exercise unless and until the following conditions have been fulfilled:
a. The person(s) who exercise such Option shall warrant to the
Company, prior to receipt of the Shares, that such person(s)
are acquiring such Shares for their own respective accounts,
for investment, and not with a view to, or for sale in
connection with, the distribution of any such Shares, in
which event the person(s) acquiring such Shares shall be
bound by the provisions of the following legend which shall
be endorsed upon the certificate(s) evidencing their Shares
issued pursuant to such exercise or such grant:
"The shares represented by this certificate have been taken
for investment and they may not be sold or otherwise
transferred by any person, including a pledgee, in the
absence of an effective registration statement of the shares
under the Securities Act of 1933 or an opinion of counsel
satisfactory to the Company that an exemption from
registration is then available."
b. The Company shall have received an opinion of its counsel
that the Shares may be issued upon such particular exercise
in compliance with the Act without registration thereunder.
The Company may delay issuance of the Shares until completion of any action
or obtaining of any consent which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue
sky"laws).
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the right
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to purchase Shares has accrued under the Plan as of the date immediately prior
to such dissolution or liquidation.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's rights
with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
optionee and the Company relating to such Option:
a. Stock Dividends and Stock Splits. If the shares of Common
Stock shall be subdivided or combined into a greater or
smaller number of shares or if the Company shall issue any
shares of Common Stock as a stock dividend on its outstanding
Common Stock, the number of shares of Common Stock
deliverable upon the exercise of such Option shall be
appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock
dividend.
b. Consolidations or Mergers. If the Company is to be
consolidated with or acquired by another entity in a merger,
sale of all or substantially all of the Company's assets or
any similar transaction or transaction having the same effect
(an "Acquisition"), the Compensation Committee of the Board
of Directors of the Company, prior to consummation of such
Acquisition shall, as to outstanding Options, either (i) make
appropriate provisions, if necessary, for the continuation of
such Options by substituting on an equitable basis for the
shares then subject to such Options (A) the securities of any
successor or acquiring entity, or (B) other consideration
payable with respect to the outstanding shares of Common
Stock in connection with the Acquisition; or (ii) upon
written notice to the optionees, provide that all Options
must be exercised (all Options being made fully exercisable
for purposes of this subsection) within one year of the date
of such notice, at the end of which period the Options shall
terminate; or (iii) terminate all Options
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in exchange for a cash payment equal to the excess of the
fair market value of the shares subject to such Options (all
Options being made fully exercisable for purposes of this
subsection) over the exercise price thereof.
c. Recapitalization or Reorganization. In the event of a
recapitalization or reorganization of the Company (other than
a transaction described in subparagraph B above) pursuant to
which securities of the Company or of another corporation are
issued with respect to the outstanding shares of Common
Stock, an optionee upon exercising an Option shall be
entitled to receive for the purchase price paid upon such
exercise the securities he or she would have received if he
or she had exercised such Option prior to such
recapitalization or reorganization.
d. Modification of ISOs. Notwithstanding the foregoing, any
adjustments made pursuant to subparagraphs A, B or C with
respect to ISOs shall be made only after the Administrator,
after consulting with counsel for the Company, determines
whether such adjustment would constitute a "modification" of
such ISOs (as that term is defined in Section 424(h) of the
Code) or would cause any adverse tax consequences for the
holders of such ISOs. If the Administrator determines that
such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such
adjustments, unless the holder of an ISO specifically
requests in writing that such adjustment be made and such
writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax
treatment with respect to the ISO.
17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for
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dividends paid in cash or in property (including without limitation, securities)
of the Company.
18. FRACTIONAL SHARES.
No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.
19. CONVERSION OF ISOS INTO NON-QUALIFIED OPTIONS:
TERMINATION OF ISOS.
The Administrator, at the written request of any optionee, may in its
discretion take such actions as may be necessary to convert such optionee's ISOs
(or any installments or portions of installments thereof) that have not been
exercised on the date of conversion into Non-Qualified Options at any time prior
to the expiration of such ISOs, regardless of whether the optionee is an
employee of the Company or an Affiliate at the time of such conversion. Such
actions may include, but not be limited to, extending the exercise period or
reducing the exercise price of the appropriate installments of such Options. At
the time of such conversion, the Administrator (with the consent of the
optionee) may impose such conditions on the exercise of the resulting
Non-Qualified Options as the Administrator in its discretion may determine,
provided that such conditions shall not be inconsistent with this Plan. Nothing
in the Plan shall be deemed to give any optionee the right to have such
optionee's ISO's converted into Non-Qualified Options, and no such conversion
shall occur until and unless the Administrator takes appropriate action. The
Administrator, with the consent of the optionee, may also terminate any portion
of any ISO that has not been exercised at the time of such termination.
20. WITHHOLDING.
Upon the exercise of a Non-Qualified Option for less than its fair market
value, the making of a Disqualifying Disposition (as defined in paragraph 21) or
the vesting of restricted Common Stock acquired on the exercise of an Option
hereunder, the Company may withhold from the optionee's wages, if any, or other
remuneration, or may require the optionee to pay additional federal, state, and
local income tax withholding and employee contributions to employment taxes in
respect of the amount that is considered compensation includible in such
person's gross income. The Administrator in its discretion may condition
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the exercise of an Option for less than its fair market value or the vesting of
restricted Common Stock acquired by exercising an Option on the grantee's
payment of such additional income tax withholding and employee contributions to
employment taxes.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company in
writing immediately after the Key Employee makes a Disqualifying Disposition of
any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
22. TERMINATION OF THE PLAN.
Except as provided in the following sentence, the Plan will terminate on
November 12, 2007. The Plan may be terminated at an earlier date by vote of the
stockholders of the Company provided, however, that any such earlier termination
will not affect any Options granted or Option Agreements executed prior to the
effective date of such termination.
23. AMENDMENT OF THE PLAN.
The Plan may be amended by the stockholders of the Company. The Plan may
also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding ISOs granted under the Plan
or ISOs to be granted under the Plan for favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code, to the extent necessary to ensure
the compliance of the Plan with Rule 16b-3 under the 1934 Act, and to the extent
necessary to qualify the shares issuable upon exercise of any outstanding
options granted, or options to be granted, under the Plan for listing on any
national securities exchange or quotation in any national automated quotation
system of securities dealers. Any amendment approved by the Administrator which
is of a scope that requires stockholder approval in order to ensure favorable
federal income tax treatment for any incentive stock options or requires
stockholder approval in order to ensure the qualification of the Plan under Rule
16b-3
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shall be subject to obtaining such stockholder approval. Any modification or
amendment of the Plan shall not, without the consent of an optionee, adversely
affect his or her rights under an option previously granted to him or her. With
the consent of the optionee affected, the Administrator may amend outstanding
option agreements in a manner not inconsistent with the Plan.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this plan or any Option Agreement shall be deemed to prevent the
Company or an Affiliate from terminating the employment, consultancy or director
status of a Participant, nor to prevent a Participant from terminating his or
her own employment, consultancy or director status or to give any Participant a
right to be retained in employment or other service by the Company or any
Affiliate for any period of time.
25. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with the laws
of The Commonwealth of Massachusetts.
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