<PAGE>
As filed with the Securities and Exchange Commission on August 28, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
DURA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3645543
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
7475 LUSK BLVD., SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip Code)
----------------------
DURA PHARMACEUTICALS, INC.
1992 STOCK OPTION PLAN
(Full title of the plans)
----------------------
Cam L. Garner
Chairman, President and Chief Executive Officer
DURA PHARMACEUTICALS, INC.
7475 LUSK BLVD., SAN DIEGO, CALIFORNIA 92121
(Name and address of agent for service)
(619) 457-2553
(Telephone number, including area code, of agent for service)
----------------------
This Registration Statement shall become effective immediately upon filing
with the Securities and Exchange Commission, and sales of the registered
securities will thereafter be effected upon option exercises or share
issuances effected under the Company's 1992 Stock Option Plan.
----------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered per Share Price Fee
- ---------- ---------- --------- ----- ---
<S> <C> <C> <C> <C>
Common Stock (under 1992
Stock Option Plan) ..... 1,600,000 shares(1) $35.38(2) $56,608,000(2) $17,153.94
</TABLE>
_____________________________
(1) Includes 1,600,000 shares of Common Stock issuable under the Company's 1992
Stock Option Plan (the "Plan") pursuant to an amendment to the Plan
approved by the Company's shareholders on May 28, 1997. This Registration
Statement shall also cover any additional shares of Common Stock which
become issuable under the Plan by reason of any stock dividend, stock
split, recapitalization or other similar transaction effected without the
receipt of consideration which results in an increase in the number of the
Company's outstanding shares of Common Stock.
(2) Estimated solely for the purpose of computing the amount of the
registration fee under Rules 457(h) and 457(c) of the Securities Act of
1933, as amended.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Dura Pharmaceuticals, Inc. (the "Registrant") hereby files this
Registration Statement with the Securities and Exchange Commission (the
"Commission") on Form S-8 to register 1,600,000 shares of the Registrant's
Common Stock for issuance pursuant to options granted under the Registrant's
1992 Stock Option Plan, as amended.
Item 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Registrant hereby incorporates by reference into this
Registration Statement the following documents previously filed with the
Commission:
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, filed with the
Commission pursuant to Section 13(a) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(b) The Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1997.
(c) The Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended June 30, 1997.
(d) The Registrant's Proxy Statement dated April 16,
1997 in connection with the Annual Meeting of
Shareholders held on May 28, 1997.
(e) The Registrant's Current Report on Form 8-K filed May
22, 1997.
(f) The Registrant's Registration Statement on Form 8-A,
filed with the Commission July 22, 1997 pursuant to Section
12 of the Exchange Act, in which there is described the
terms, rights and provisions applicable to the Registrant's
outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date
of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. DESCRIPTION OF SECURITIES
Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The law firm of Brobeck, Phleger & Harrison LLP has provided an
opinion of counsel as to the validity of the issuance of the Common Stock
offered under this Registration Statement.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
II-1.
<PAGE>
(a) Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of the Company under certain
conditions and subject to certain limitations. Section 145 of the Delaware
General Corporation Law also provides that a corporation has the power to
purchase and maintain insurance on behalf of its officers and directors against
any liability asserted against such person and incurred by him or her in such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of Section 145 of the Delaware General Corporation Law.
(b) Article VII, Section (1) of the Bylaws of the Company provides that
the Company shall indemnify its directors and executive officers to the fullest
extent not prohibited by the Delaware General Corporation Law. The rights to
indemnity thereunder continue as to a person who has ceased to be a director,
officer, employee or agent and inure to the benefit of the heirs, executors and
administrators of the person. In addition, expenses incurred by a director or
executive officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of the Company (or was serving at the Company's
request as a director or officer of another corporation) shall be paid by the
Company in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of such director or officer to
repay such amount if it shall ultimately be determined that he or she is not
entitled to be indemnified by the Company as authorized by the relevant section
of the Delaware General Corporation Law.
(c) As permitted by Section 102(b)(7) of the Delaware General Corporation
Law, Article V, Section (A) of the Company's Certificate of Incorporation
provides that a director of the Company shall not be personally liable 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 Company or
its stockholders, (ii) for acts or omissions not in good faith or acts or
omissions that 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.
(d) The Company intends to enter into indemnification agreements with each
of its directors and executive officers, effective upon reincorporation of the
Company in July 1997.
(e) There is directors and officers liability insurance now in effect
which insures directors and officers of the Company.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
Item 8. EXHIBITS
Exhibit Number Exhibits
- -------------- --------
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Independent Auditors' Consent - Deloitte & Touche LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.1 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 Dura Pharmaceuticals, Inc. 1992 Stock Option Plan, as amended.
99.2 Form of Notice of Grant
99.3 Form of Stock Option Agreement
Item 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which
II-2.
<PAGE>
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 this 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 this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; PROVIDED, however, that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference into this 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; and (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 Registrant's 1992 Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference into this 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 in the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been informed that in the opinion of the 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.
II-3.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
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 San Diego, State of California, on
this 28th day of August, 1997.
DURA PHARMACEUTICALS, INC.
By: /s/ Cam L. Garner
---------------------------------------------------
Cam L. Garner
Chairman, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Dura Pharmaceuticals, Inc.,
a Delaware corporation, do hereby constitute and appoint Cam L. Garner and James
W. Newman, and each of them, the lawful attorneys-in-fact and agents with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, and either one of them, determine
may be necessary or advisable or required to enable said corporation to comply
with the Securities Act of 1933, as amended, and any rules or regulations or
requirements of the Securities and Exchange Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration
Statement, and to any and all instruments or documents filed as part of or in
conjunction with this Registration Statement or amendments or supplements
thereof, and each of the undersigned hereby ratifies and confirms that all said
attorneys and agents, or either of them, shall do or cause to be done by virtue
hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
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/ Cam L. Garner Chairman, President and Chief Executive August 28, 1997
- ------------------------------- Officer (Principal Executive Officer)
Cam L. Garner
/s/ James W. Newman Senior Vice President, Finance and August 28, 1997
- ------------------------------- Administration and Chief Financial Officer
James W. Newman (Principal Financial and Accounting Officer)
/s/ James C. Blair Director August 28, 1997
- -------------------------------
James C. Blair
/s/ Joseph C. Cook Director August 28, 1997
- -------------------------------
Joseph C. Cook
/s/ Herbert J. Conrad Director August 28, 1997
- -------------------------------
Herbert J. Conrad
/s/ David F. Hale Director August 28, 1997
- -------------------------------
David F. Hale
/s/ David S. Kabakoff Executive Vice President and Director August 28, 1997
- -------------------------------
David S. Kabakoff
/s/ Gordon V. Ramseier Director August 28, 1997
- -------------------------------
Gordon V. Ramseier
/s/ Charles G. Smith Director August 28, 1997
- -------------------------------
Charles G. Smith
/s/ Walter F. Spath Senior Vice President, Sales and August 28, 1997
- ------------------------------- Marketing and Director
Walter F. Spath
</TABLE>
II-4.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
DURA PHARMACEUTICALS, INC.
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit
------ -------
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Independent Auditors' Consent - Deloitte & Touche LLP.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.1 Power of Attorney. Reference is made to page II-5 of this
Registration Statement.
99.1 Dura Pharmaceuticals, Inc. 1992 Stock Option Plan, as amended.
99.2 Form of Notice of Grant.
99.3 Form of Stock Option Agreement.
<PAGE>
EXHIBIT 5.1
Opinion and consent of Brobeck, Phleger & Harrison LLP
August 27, 1997
Dura Pharmaceuticals, Inc.
7475 Lusk Blvd.
San Diego, California 92121
Re: DURA PHARMACEUTICALS, INC. REGISTRATION STATEMENT ON FORM S-8 FOR
1,600,000 SHARES OF COMMON STOCK
Ladies and Gentlemen:
In connection with your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of 1,600,000 shares of
Common Stock of Dura Pharmaceuticals, Inc. (the "Company") under the Company's
1992 Stock Option Plan, as amended through May 28, 1997 (the "Plan"), we advise
you that, in our opinion, if and when such shares have been issued and sold (and
the consideration therefor received) pursuant to the provisions of the Plan, and
in accordance with the Registration Statement, such shares will be
duly-authorized, validly-issued, fully-paid and non-assessable shares of the
Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
BROBECK, PHLEGER & HARRISON LLP
<PAGE>
EXHIBIT 23.1
Consent of Deloitte & Touche LLP, Independent Auditors
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement of
Dura Pharmaceuticals, Inc. on Form S-8 of our report dated January 20, 1997,
incorporated by reference in the Annual Report on Form 10-K of Dura
Pharmaceuticals, Inc. for the year ended December 31, 1996.
/s/ Deloitte & Touche LLP
San Diego, California
August 26, 1997
<PAGE>
EXHIBIT 99.1
Dura Pharmaceuticals, Inc. 1992 Stock Option Plan
<PAGE>
DURA PHARMACEUTICALS, INC.
1992 STOCK OPTION PLAN
EFFECTIVE DECEMBER 9, 1992; AS AMENDED JUNE 2, 1994; AS
AMENDED MAY 25, 1995; AS AMENDED MAY 29, 1996
AS AMENDED JULY 1, 1996; AS AMENDED FEBRUARY 19, 1997
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
A. IMPLEMENTATION. This 1992 Stock Option Plan ("PLAN") is implemented
as of December 9, 1992 ("EFFECTIVE DATE"), to enable Dura Pharmaceuticals, Inc.
("COMPANY") to grant options to the following eligible individuals ("ELIGIBLE
INDIVIDUALS") in order to attract them and to retain their services: (a) key
employees (including officers and directors) of the Company or its subsidiaries
or any parent corporation who are primarily responsible for the management,
growth and financial success of the Company or its subsidiaries, (b)
non-employee members of the Board of Directors ("BOARD") of the Company or any
of its subsidiaries, and (c) consultants and independent contractors who perform
valuable services for the Company or its subsidiaries.
B. SUCCESSOR PLAN. This Plan is a successor to the Company Stock Option
Plan that was adopted by the Board in 1983 ("1983 PLAN"). No further option
grants (including, but not limited to automatic option grants) will be made
under the 1983 Plan on and after the Effective Date of this Plan. All options
outstanding under the 1983 Plan on the Effective Date are hereby incorporated
into this Plan and will be treated as outstanding options under this Plan. Each
outstanding option so incorporated will continue to be governed solely by the
express terms and conditions of the instruments evidencing such grant. No
provision of this Plan will be deemed to affect or otherwise modify the rights
or obligations of the holders of such incorporated options with respect to their
acquisition of shares of the Company's Common Stock under the terms of the
incorporated options.
II. ADMINISTRATION OF THE PLAN
A. COMMITTEE. The Plan will be administered by the Board of Directors or
by a committee or committees appointed by the Board, and consisting of two or
more members of the Board. The Board may delegate the responsibility for
administration of the Plan with respect to designated classes of optionees to
different committees, subject to such limitations as the Board deems
appropriate. With respect to any matter, the term "COMMITTEE," when used in
this Plan, will refer to the committee that has been delegated authority with
respect to such matter. Members of a committee will serve for such term as the
Board may determine, and will be subject to removal by the Board at any time.
<PAGE>
B. SECTION 16(b) COMMITTEE. Notwithstanding any other provision of this
Agreement, each grant of an option or other transaction between the Company and
any Section 16 Insider shall be valid and enforceable only if approved by the
Board of Directors or by a committee composed exclusively of two or more
Non-Employee Directors. For this purpose, a "Section 16 Insider" shall mean an
officer or director of the Corporation subject to the short-swing profit
liabilities of Section 16 of the 1934 Act, and a Non-Employee Director shall
have the meaning set forth in Rule 16b-3(b)(3).
C. AUTHORITY. Any Committee will have full authority to administer the
Plan within the scope of its delegated responsibilities, including authority to
interpret and construe any relevant provision of the Plan, to adopt such rules
and regulations as it may deem necessary, and to determine the terms of grants
made under the Plan (which need not be identical). Decisions of a Committee
made within the discretion delegated to it by the Board will be final and
binding on all persons.
III. STOCK SUBJECT TO THE PLAN
A. NUMBER OF SHARES. Shares of the Company's Common Stock available for
issuance under the Plan shall be drawn from either the Company's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Company on the open market. The maximum
number of shares of Common Stock that may be issued over the term of the Plan
shall not exceed 7,607,360 shares, subject to adjustment from time to time in
accordance with the provisions of this Section. This authorized share reserve
is comprised of (i) the number of shares remaining available for issuance under
the 1983 Plan as of the Effective Date, including the shares subject to the
outstanding options incorporated into this Plan and any other shares that would
have been available for future option grant under the 1983 Plan, plus (ii) an
additional 416,040 shares of Common Stock, plus (iii) an additional increase of
750,000 shares of Common Stock, plus (iv) an additional increase of 1,000,000
shares of Common Stock, plus (v) an additional increase of 1,500,000 shares of
Common Stock, plus (vi) an additional increase of 1,600,000 shares of Common
Stock. Accordingly, to the extent one or more outstanding options under the
1983 Plan that have been incorporated into this Plan are subsequently exercised,
the number of shares issued with respect to each such option will reduce, on a
share-for-share basis, the number of shares available for issuance under this
Plan.
B. EXPIRED OPTIONS. Should an outstanding option under this Plan
(including any outstanding option under the 1983 Plan incorporated into this
Plan) expire or terminate for any reason prior to exercise in full (including
any option cancelled in accordance with the cancellation-regrant provisions of
this Plan), the shares subject to the portion of the option not so exercised
will be available for subsequent option grant under this Plan. Shares subject
to any option or portion thereof cancelled in accordance with the stock
appreciation (or limited stock appreciation) rights provisions of this Plan will
NOT be available for subsequent option grant under the Plan.
C. ADJUSTMENTS. If any change is made to the Common Stock issuable under
the Plan (including Common Stock issuable under an Automatic Option Grant) by
reason of any
-2-
<PAGE>
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without receipt of consideration, then appropriate adjustments will be made to
(i) the number and/or class of shares issuable under the Plan, (ii) the number
and/or class of shares and price per share in effect under each outstanding
option under the Plan, and (iii) the number and/or class of shares and price per
share in effect under each outstanding option incorporated into this Plan from
the 1983 Plan. The purpose of these adjustments will be to preclude the
enlargement or dilution of rights and benefits under the options.
ARTICLE TWO
STANDARD OPTION PROVISIONS
I. TERMS AND CONDITIONS OF OPTIONS
A. COMMITTEE DISCRETION.
(1) Except as provided under the Automatic Option Grant provisions of
this Plan, the Committee will have full authority to determine which Eligible
Individuals are to receive option grants under the Plan, the number of shares to
be governed by each such grant, whether the option is to be an incentive stock
option ("INCENTIVE OPTION") that satisfies the requirements of Section 422 of
the Internal Revenue Code or a non-qualified option not intended to satisfy such
requirements ("NON-QUALIFIED OPTION"), the time or times at which each such
option is to become exercisable, and the maximum term for which the option is to
remain outstanding.
(2) Notwithstanding any other provision of this Plan, no individual
shall be granted options to acquire more than 400,000 shares in any fiscal year
or 1,500,000 shares over the lifetime of the Plan.
B. TERM. No option granted under the Plan will be exercisable after the
expiration of 10 years from the date the option was granted.
C. PRICE. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than 100% percent of the Fair Market Value
per share of Common Stock on the option grant date, provided that the Plan
Administrator may fix the exercise price at less than 100% if the optionee, at
the time of the option grant, shall have made a payment to the Company
(including payment made by means of an agreed salary reduction) equal to the
excess of the Fair Market Value of the Common Stock on the option grant date
over such exercise price.
D. EXERCISE AND PAYMENT. After any option granted under the Plan becomes
exercisable, it may be exercised by notice to the Company at any time prior to
the termination of such option. The option price will be payable in full in
cash or check made payable to the Company; provided, however, that the Committee
may, either at the time the option is granted or at the time it is exercised and
subject to such limitations as it may determine, authorize
-3-
<PAGE>
payment of all or a portion of the option price in one or more of the following
alternative forms:
(1) a promissory note authorized pursuant to Section IV of this
Article; or
(2) full payment in shares of Common Stock valued as of the exercise
date and held for the requisite period to avoid a charge to the Company's
earnings; or
(3) full payment through a sale and remittance procedure under which
the option holder delivers a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale proceeds to pay the option prices.
For purposes of Subparagraphs (1) and (3) immediately above, the Exercise Date
shall be the date on which written notice of the exercise of the option is
delivered to the Company. In all other cases, the Exercise Date will be the
date on which written notice and actual payment is received by the Company.
The sale and remittance procedure authorized for the exercise of
outstanding options under this Plan shall be available for all options granted
under this Plan on or after the Effective Date and for all non-qualified options
outstanding under the 1983 Plan and incorporated into this Plan. The Plan
Administrator may also allow such procedure to be utilized in connection with
one or more disqualifying dispositions of Incentive Option shares effected after
the Effective Date, whether such Incentive Options were granted under this Plan
or the 1983 Stock Option Plan.
E. SHAREHOLDER RIGHTS. An option holder will have no shareholder rights
with respect to any shares covered by an option (including an Automatic Option
Grant) prior to the Exercise Date of the option, as defined in the immediately
preceding Paragraph and in the Automatic Option Grant provisions of Section II
of Article Three of this Plan.
F. SEPARATION FROM SERVICE. The Committee will determine whether options
will continue to be exercisable, and the terms of such exercise, on and after
the date that an optionee ceases to be employed by, or to provide services to,
the Company or its subsidiaries PROVIDED, however, that in no event will an
option be exercisable after the specified expiration date of the option term.
The date of termination of an optionee's employment or services will be
determined by the Committee, which determination will be final.
G. INCENTIVE OPTIONS. Options granted under the Plan that are intended
to be Incentive Options will be subject to the following additional terms:
(1) DOLLAR LIMITATION. The aggregate fair market value (determined
as of the respective date or dates of grant) of the Common Stock for which one
or more options granted to any Employee after December 31, 1986 under this Plan
(or any other option plan of the Company or its parent or subsidiary
corporations) may for the first time become exercisable as incentive stock
options under the Federal tax laws during any one calendar year
-4-
<PAGE>
shall not exceed the sum of $100,000. To the extent the Employee holds two or
more such options which become exercisable for the first time in the same
calendar year, the foregoing limitation on the exercisability of such options as
incentive stock options under the Federal tax laws shall be applied on the basis
of the order in which such options are granted.
(2) 10% SHAREHOLDER. If any employee to whom an Incentive Option is
to be granted pursuant to the provisions of the Plan is, on the date of grant,
the owner of stock (determined with application of the ownership attribution
rules of Section 424(d) of the Internal Revenue Code) possessing more than 10%
of the total combined voting power of all classes of stock of his or her
employer corporation or of its parent or subsidiary corporation ("10%
SHAREHOLDER"), then the following special provisions will apply to the option
granted to such individual:
(i) The option price per share of the stock subject to such
Incentive Option will not be less than 110% of the Fair Market Value of the
option shares on the date of grant; and
(ii) The option will not have a term in excess of 5 years from
the date of grant.
(3) PARENT AND SUBSIDIARY. For purposes of this Section, "PARENT
CORPORATION" and "SUBSIDIARY CORPORATION" will have the meaning attributed to
those terms, as they are used in Section 422(b) of the Internal Revenue Code.
(4) EMPLOYEES. Incentive Options may only be granted to employees of
the Company or its subsidiaries.
H. FAIR MARKET VALUE. For all purposes under this Plan (including, but
not limited to Automatic Option Grants) the fair market value per share of
Common Stock on any relevant date under the Plan ("FAIR MARKET VALUE") will be
determined as follows:
(1) If the Common Stock is not at the time listed or admitted to
trading on any national stock exchange but is traded in the over-the-counter
market, the fair market value will be the mean between the highest bid and
lowest asked prices (or, if such information is available, the closing selling
price) per share of Common Stock on the date in question in the over-the-counter
market, as such prices are reported by the National Association of Securities
Dealers through its NASDAQ system or any successor system. If there are no
reported bid and asked prices (or closing selling price) for the Common Stock on
the date in question, then the mean between the highest bid price and lowest
asked price (or the closing selling price) on the last preceding date for which
such quotations exist will be determinative of fair market value.
(2) If the Common Stock is at the time listed or admitted to trading
on any national stock exchange, then the fair market value will be the closing
selling price per share of Common Stock on the date in question on the stock
exchange determined by the Committee to be the primary market for the Common
Stock, as such price is officially quoted
-5-
<PAGE>
in the composite tape of transactions on such exchange. If there is no reported
sale of Common Stock on such exchange on the date in question, then the fair
market value will be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(3) If the Common Stock is at the time neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter market, then
the fair market value will be determined by the Committee after taking into
account such factors as the Committee shall deem appropriate.
I. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Qualified
Option may be assigned in whole or in part during the Optionee's lifetime. The
assigned portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem appropriate.
II. STOCK APPRECIATION RIGHTS
If, and only if the Committee, in its discretion, elects to implement an
option surrender program under the Plan, one or more option holders may, upon
such terms as the Committee may establish at the time of the option grant or at
any time thereafter, be granted the right to surrender all or part of an
unexercised option in exchange for a distribution equal in amount to the
difference between (i) the Fair Market Value (at date of surrender) of the
shares for which the surrendered option or portion thereof is at the time
exercisable and (ii) the aggregate option price payable for such shares. The
distribution to which an option holder becomes entitled under this Section may
be made in shares of Common Stock, valued at Fair Market Value at the date of
surrender, in cash, or partly in shares and partly in cash, as the Committee, in
its sole discretion, deems appropriate. The option surrender provisions of this
Section will not apply to options granted pursuant to the Automatic Option Grant
provisions of this Plan.
III. CORPORATE TRANSACTION/CHANGE OF CONTROL/HOSTILE TAKEOVER
A. CORPORATE TRANSACTION. In the event of any of the following
transactions ("CORPORATE TRANSACTION"):
(1) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of which is to
change the state of the Company's incorporation,
(2) the sale, transfer or other disposition of all or substantially
all of the assets of the Company in liquidation or dissolution of the Company,
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(3) any reverse merger in which the Company is the surviving entity
but in which fifty percent (50%) or more of the Company's outstanding voting
stock is transferred to holders different from those who held such securities
immediately prior to such merger, or
(4) an acquisition by any person or related group of persons (other
than the Company or a person that directly or indirectly controls, is controlled
by or is under common control with, the Company) of ownership of more than fifty
percent (50%) of the Company's outstanding Common Stock, pursuant to a tender or
exchange offer,
the exercisability of each option at the time outstanding under this Article Two
shall automatically accelerate so that each such option shall, immediately prior
to the specified effective date for the Corporate Transaction, become fully
exercisable with respect to the total number of shares of Common Stock at the
time subject to such option and may be exercised for all or any portion of such
shares. Upon the consummation of the Corporate Transaction, all outstanding
options under this Article Two shall terminate and cease to be outstanding.
B. HOSTILE TAKEOVER. One or more officers of the Company subject to the
short-swing profit restrictions of the Federal securities laws may, in the
Committee's sole discretion, be granted, in tandem with their outstanding
options, limited stock appreciation rights as described below. In addition all
Automatic Option Grants under this Plan will be made in tandem with limited
stock appreciation rights as described below.
(1) Upon the occurrence of a Hostile Takeover, each outstanding
option with such a limited stock appreciation right in effect for at least six
(6) months will automatically be cancelled in return for a cash distribution
from the Company in an amount equal to the excess of (i) the Takeover Price
(defined below) of the shares of Common Stock at the time subject to the
cancelled option (whether or not the option is otherwise at the time exercisable
for such shares) over (ii) the aggregate exercise price payable for such shares.
The cash distribution payable upon such cancellation shall be made within five
(5) days following the consummation of the Hostile Takeover. Neither the
approval of the Committee nor the consent of the Board shall be required in
connection with such option cancellation and cash distribution.
(2) For purposes of the limited stock appreciation rights described
above, the following definitions shall be in effect:
(i) A Hostile Takeover shall be deemed to occur upon the
acquisition by any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of ownership of more than 50% of the Company's
outstanding Common Stock (excluding the Common Stock holdings of officers and
directors of the Company who participate in this Plan) pursuant to a tender or
exchange offer which the Board does not recommend the Company's shareholders
accept.
(ii) The Takeover Price per share shall be deemed to be equal to
the GREATER of (a) the Fair Market Value per share on the date of cancellation,
or (b) the highest reported
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price per share paid in effecting the Hostile Takeover. However, if the
cancelled option is an Incentive Option, the Takeover Price shall not exceed the
clause (a) price per share.
C. COMPANY RIGHTS. The grant of options (including Automatic Option
Grants) under this Plan shall in no way affect the right of the Company to
adjust, reclassify, reorganize or otherwise change its capital or business
structure or to merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
IV. LOANS OR GUARANTEE OF LOANS
The Committee may assist any optionee (including any officer) in the
exercise of one or more outstanding options under this Article by (a)
authorizing the extension of a loan to such optionee from the Company, (b)
permitting the optionee to pay the option price for the purchased Common Stock
in installments over a period of years or (c) authorizing a guarantee by the
Company of a third-party loan to the optionee. The terms of any loan,
installment method of payment or guarantee (including the interest rate and
terms of repayment) will be established by the Committee in its sole discretion.
Loans, installment payments and guarantees may be granted without security or
collateral (other than to optionees who are consultants or independent
contractors, in which event the loan must be adequately secured by collateral
other than the purchased shares), but the maximum credit available to the
optionee shall not exceed the SUM of (i) the aggregate option price (less par
value) of the purchased shares plus (ii) any federal and state income and
employment tax liability incurred by the optionee in connection with the
exercise of the option. Automatic Option Grants will not be subject to these
loan and loan guarantee provisions.
V. CANCELLATION AND REGRANT OF OPTIONS
The Committee shall have the authority to effect, at any time and from time
to time, with the consent of the affected optionees, the cancellation of any or
all outstanding options under this Article (including outstanding options under
the 1983 Plan incorporated into this Plan) and to grant in substitution new
options under the Plan covering the same or different numbers of shares of
Common Stock but having an option price per share not less than 100% of the fair
market value of the Common Stock on the new grant date. Automatic Option Grants
will not be subject to these cancellation and regrant provisions.
VI. REPURCHASE RIGHTS
The Committee may in its discretion determine that it shall be a term and
condition of one or more options exercised under the Plan that the Company (or
its assigns) shall have the right, exercisable upon the optionee's separation
from service with the Company and its subsidiaries, to repurchase any or all of
the shares of Common Stock previously acquired by the optionee upon the exercise
of such option. Any such repurchase right shall be exercisable upon such terms
and conditions (including the establishment of the appropriate vesting schedule
and other provisions for the expiration of such right in one or more
installments) as the Committee may specify in the instrument evidencing such
right. The Committee shall also have full power and authority to provide for
the automatic termination of these
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repurchase rights, in whole or in part, and thereby accelerate the vesting of
any or all of the purchased shares.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. GRANTS
A. AUTOMATIC OPTION GRANTS. Non-employee members of the Board will
automatically be granted Non-Qualified Options to purchase the number of shares
of Common Stock set forth below (subject to adjustment under Section III(C) of
Article One of this Plan) on the dates and pursuant to the terms set forth below
("AUTOMATIC OPTION GRANTS").
B. CONTINUING DIRECTORS. On the date of each Annual Shareholders Meeting
of the Company held after the Effective Date of this Plan, each continuing
non-employee member of the Board will receive an Automatic Option Grant to
purchase 8,000 shares of Common Stock; provided, however, that an individual who
has not served as a non-employee member of the Board for the immediately
preceding 180 days will not receive such a grant.
C. NEW DIRECTORS. Each individual person who is newly elected or
appointed as a non-employee member of the Board on or after the Effective Date
of this Plan will receive, on the effective date of such election or
appointment, an Automatic Option Grant to purchase 30,000 shares of Common
Stock.
II. TERMS
The terms applicable to each Automatic Option Grant will be as follows:
A. PRICE. The option price per share will be equal to 100% of the Fair
Market Value of a share of Common Stock on the date of grant.
B. OPTION TERM. Each Automatic Option Grant will have a maximum term of
10 years measured from the automatic grant date.
C. EXERCISABILITY. Each Automatic Option Grant will become exercisable
for all Automatic Option Grant shares one (1) year after the automatic grant
date, provided the optionee continues to serve as a Board member throughout that
one (1)-year period.
D. PAYMENT. Upon exercise of the option, the option price for the
purchased shares will become payable immediately in one or more of the following
alternative forms: cash, shares of Common Stock held for the requisite period
to avoid a charge to the Company's reported earnings and valued at Fair Market
Value on the Exercise Date (as defined below), or pursuant to a sale and
remittance procedure under which the option holder delivers a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company the amount of sale proceeds to pay the option price. For
these purposes, the Exercise Date shall be the date on which written notice of
the exercise of
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the option is delivered to the Company. Except to the extent the sale and
remittance procedure specified above is utilized for the exercise of the option,
payment of the exercise price for the purchased shares must accompany the
notice.
E. EFFECT OF TERMINATION OF BOARD MEMBERSHIP.
(1) Should the optionee cease to be a Board member for any reason
(other than death) while holding one or more Automatic Option Grants, then the
optionee will have 6 months following the date of such cessation of Board
membership in which to exercise each such option for any or all of the shares of
Common Stock for which the option is exercisable at the time Board membership
ceases; provided however, that in no event may such an option be exercised after
the expiration of its 10-year term.
(2) Should the optionee die while holding one or more Automatic
Option Grants, then each such option may subsequently be exercised, for any or
all of the shares of Common Stock for which the option is exercisable at the
time of the optionee's death, by the personal representative of the optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the optionee's Will or in accordance with the laws of descent and distribution.
Any such exercise must, however, occur before the earlier of (i) the expiration
of the option's 10-year term, or (ii) 12 months after the date of the
optionee's death.
F. ACCELERATION. Automatic Option Grants will be subject to acceleration
and termination in the event of a Corporate Transaction as described in Article
Two, Section III.A. of this Plan.
G. HOSTILE TAKEOVER. Automatic Option Grants will be granted in tandem
with limited stock appreciation rights, as described in the Hostile Takeover
provisions contained in Article Two, Section III.B. of this Plan.
ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
A. GENERAL RULES. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects whatsoever.
However, no such amendment or modification shall, without the consent of the
option holders, adversely affect rights and obligations with respect to options
at the time outstanding under the Plan. In addition, certain amendments may be
made conditional on first having obtained stockholder approval if required by
the Board or pursuant to any applicable laws or regulations.
B. AUTOMATIC OPTION GRANTS. Amendment of the Automatic Option Grant
provisions of this Plan is subject to the requirements outlined above. In
addition, the Automatic Option Grant provisions of this Plan may not be amended
more than once every 6
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months, other than to comport with changes in the Internal Revenue Code or rules
thereunder.
C. AMENDMENT OF OPTIONS. The Committee shall have full power and
authority to modify or waive any or all of the terms, conditions or restrictions
applicable to any outstanding option, to the extent not inconsistent with the
Plan; provided, however, that no such modification or waiver shall (1) without
the consent of the option holder, adversely affect the holder's rights
thereunder or (2) affect any outstanding option granted pursuant to the
Automatic Option Grant provisions of this Plan except to the extent necessary to
conform to any amendment to this Plan.
II. TAX WITHHOLDING
A. OBLIGATION. The Company's obligation to deliver shares or cash upon
the exercise of stock options or stock appreciation rights granted under the
Plan is subject to the satisfaction of all applicable Federal, State and local
income and employment tax withholding requirements.
B. STOCK WITHHOLDING. The Plan Administrator may, in its discretion and
upon such terms and conditions as it may deem appropriate (including the
applicable safe-harbor provisions of SEC Rule 16b-3) provide any or all holders
of outstanding option grants under the Plan with the election to have the
Company withhold, from the shares of Common Stock otherwise issuable upon the
exercise of such options, one or more of such shares with an aggregate fair
market value equal to the designated percentage (any multiple of 5% specified by
the optionee) of the Federal and State income taxes ("Taxes") incurred in
connection with the acquisition of such shares. In lieu of such direct
withholding, one or more optionees may also be granted the right to deliver
shares of Common Stock to the Company in satisfaction of such Taxes. The
withheld or delivered shares shall be valued at the Fair Market Value on the
applicable determination date for such Taxes or such other date required by the
applicable safe-harbor provisions of SEC Rule 16b-3.
III. EFFECTIVE DATE AND TERM OF PLAN
A. IMPLEMENTATION. This Plan, as successor to the Company's 1983 Stock
Option Plan, shall become effective as of the Effective Date, and no further
option grants shall be made under the 1983 Plan on or after the Effective Date
of this Plan. If shareholder approval of the 1,600,000-share increase is not
obtained by February 19, 1998, then each option granted under this Plan subject
to this share increase shall terminate without ever becoming exercisable for the
option shares and all shares issued hereunder shall be repurchased by the
Corporation at the purchase price paid, together with interest (at the
applicable Short Term Federal Rate). Subject to the foregoing limitations,
options may be granted under this Plan at any time from and after the Effective
Date of the Plan and before the date fixed herein for termination of the Plan.
B. TERMINATION. Unless sooner terminated due to a Corporate Transaction
or a Change in Control, the Plan will terminate upon the EARLIER of (i) October
8, 2003, or (ii) the
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date on which all shares available for issuance under the Plan have been issued
or cancelled pursuant to exercise, surrender or cash-out of options. If the date
of termination is determined under clause (i) above, then options outstanding on
such date shall thereafter continue to have force and effect in accordance with
the provisions of the instruments evidencing those options.
C. ADDITIONAL SHARES. Options to purchase shares of Common Stock may be
granted under the Plan which are in excess of the number of shares then
available for issuance under the Plan, provided any excess shares actually
issued are held in escrow until shareholder approval is obtained for a
sufficient increase in the number of shares available for issuance under the
Plan. If such shareholder approval is not obtained within twelve (12) months
after the date the first such excess option grants are made, then (I) any
unexercised excess options shall terminate and cease to be exercisable and (II)
the Corporation shall promptly refund the purchase price paid for any excess
shares actually issued under the Plan and held in escrow, together with interest
(at the applicable Short Term Federal Rate) for the period the shares were held
in escrow.
III. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares pursuant
to options granted under the Plan shall be used for general corporate purposes.
IV. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option under the Plan,
and the issuance of stock upon the exercise or surrender of any such option
shall be subject to the procurement by the Company of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the stock issued pursuant to it.
V. NO EMPLOYMENT/SERVICE RIGHTS
Neither the establishment of this Plan, nor any action taken under the
terms of this Plan, nor any provision of this Plan shall be construed so as to
grant any individual the right to remain in the employ or service of the Company
(or any parent or subsidiary corporation) for any period of specific duration,
and the Company (or any parent or subsidiary corporation retaining the services
of such individual) may terminate such individual's employment or service at any
time and for any reason, with or without cause.
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EXHIBIT 99.2
Form of Notice of Grant
<PAGE>
DURA PHARMACEUTICALS, INC.
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following stock option grant (the "Option")
to purchase shares of Common Stock of Dura Pharmaceuticals, Inc. (the
"Company"):
OPTIONEE: __________________________
GRANT DATE: ___________
OPTION PRICE: $_____ per share
NUMBER OF OPTION SHARES: ______ shares
TYPE OF OPTION: ______________________
EXPIRATION DATE: _____________
EXERCISE SCHEDULE. The Option shall become exercisable for the Option
Shares in a series of installments as follows: (i) if Optionee has been
employed by the Company for more than one year as of the Grant Date, the Option
will become exercisable in equal daily installments over a period of four years
beginning on the Grant Date, or (ii) if Optionee has been employed for less than
one year as of the Grant Date and this is Optionee's first stock option grant,
the Option will become exercisable for twenty-five percent (25%) of the Option
Shares upon completion of one year of service measured from the Grant Date, and
the balance of the Option Shares shall become exercisable in equal daily
installments over a period of three years measured from the first anniversary of
the Grant Date, or (iii) if Optionee has been employed for less than one year as
of the Grant Date and Optionee currently holds one or more options, the Option
will become exercisable for twenty-five (25%) of the Option Shares on the first
anniversary of the Grant Date; provided, however, that upon completion of one
year of service measured from Optionee's hire date, this Option will
retroactively vest on a daily basis over a period of four years measured from
the Optionee's hire date. In no event shall any additional Option Shares vest
after Optionee ceases to be employed by the Company.
OTHER PROVISIONS. Optionee understands and agrees that the Option is
granted subject to and in accordance with the express terms and conditions of
the Dura Pharmaceuticals, Inc. 1992 Stock Option Plan, as amended (the "Plan").
Optionee further agrees to be bound by the terms and conditions of the Plan and
the terms and conditions of the Option as set forth in the Stock Option
Agreement attached hereto as EXHIBIT A. If this is Optionee's first stock
option grant under the Plan, a copy of the official prospectus for the Plan is
attached hereto as EXHIBIT B and Optionee acknowledges receipt of same.
NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Notice of Grant or in
the attached Stock Option Agreement or in the Plan shall confer upon Optionee
any right to continued employment for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any parent or subsidiary employing Optionee) or Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's employment at any
time for any reason whatsoever, with or without cause.
DURA PHARMACEUTICALS, INC.
By:
-------------------------------- ---------------------------------------
Cam L. Garner OPTIONEE
Chairman, President & CEO
<PAGE>
EXHIBIT 99.3
Form of Stock Option Agreement
<PAGE>
EXHIBIT A
STOCK OPTION AGREEMENT
PURSUANT TO THE
DURA PHARMACEUTICALS, INC. 1992 STOCK OPTION PLAN
RECITALS
A. The Board of Directors of Dura Pharmaceuticals, Inc. (the
"Corporation") has adopted the 1992 Stock Option Plan (the "Plan") for the
purpose of attracting and retaining the services of persons who contribute to
the growth and financial success of the Corporation.
B. Optionee is a person who the Corporation believes has and will
contribute to the growth and financial success of the Corporation, and this
Agreement is executed pursuant to and is intended to carry out the purposes of
the Plan.
AGREEMENT
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT. Corporation hereby grants Optionee an option ("Option") to
purchase shares of Common Stock of the Corporation ("Option shares") as
specified in the attached Notice of Grant of Stock Option (the "Grant Notice")
at an exercise price specified in the Grant Notice (the "Exercise Price")
subject to the terms and conditions of this Agreement and the Plan, the
provisions of which are incorporated into this Agreement by reference.
2. VESTING OR EXERCISE PERIOD. Subject to the terms and conditions of the
Plan and this Agreement, this Option will vest as set forth in the Grant Notice.
Provided, however, that this Option will expire at midnight on the expiration
date shown in the Grant Notice, which date is 10 years after the Grant Date set
in the Grant Notice (the "Expiration Date"), and this Option must be exercised,
if at all, on or before the Expiration Date.
3. INCENTIVE STOCK OPTION LIMIT. Optionee understands that, to the extent
that the aggregate fair market value (determined at the time of grant) of the
Corporation's Common Stock for which options that otherwise qualify as incentive
stock options are exercisable for the first time by an individual during any
calendar year (whether under the Plan or any other option plan of the
Corporation or any parent or subsidiary corporation) exceeds $100,000, such
options will be treated as options that are not incentive stock options. For
purposes of applying this limit, options are taken into account in the order in
which they were granted. The Option is subject to designation as an "Incentive"
or "Non-Statutory" option as reflected on the Grant Notice.
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<PAGE>
4. TERMINATION.
(a) If Optionee ceases to be an employee of the Corporation or a
subsidiary or parent of the Corporation for any reason except death or
disability, this Option may be exercised (for shares vested on the date Optionee
ceased to be an employee) within THREE (3) MONTHS after the date Optionee ceased
to be an employee, but in no event later than the Expiration Date.
(b) If Optionee ceases to be an employee of the Corporation or a
subsidiary or parent of the Corporation because of disability or death, this
Option may be exercised (for shares vested on the date Optionee ceased to be an
employee) within TWELVE (12) MONTHS after Optionee ceased to be an employee, but
in no event later than the Expiration Date.
For purposes of this section, Optionee will be deemed an "employee" if Optionee
is providing services as an independent contractor or consultant to the
Corporation or a subsidiary or parent of the Corporation.
5. EXERCISE.
(a) This Option is exercisable by delivery of an executed Notice of
Exercise, in a form satisfactory to the Committee that administers the Plan (the
"Committee"). The Notice of Exercise will set forth the Optionee's election to
exercise this Option and the number of Option Shares being purchased.
(b) Full payment of the Exercise Price must be made in one or more of
the following forms:
(1) check made payable to the Corporation;
(2) promissory note;
(3) shares of Common Stock of the Corporation held for the
requisite period to avoid a charge to the Corporation's earnings and valued as
of the Exercise Date; or
(4) delivery of a properly executed Notice of Exercise, together
with irrevocable instructions to a broker to promptly deliver to the Corporation
the amount of sale or loan proceeds to pay the Exercise Price.
For purposes of subparagraphs (2) and (4) immediately above, the Exercise Date
will be the date the Notice of Exercise is delivered to the Corporation. In all
other cases, the
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Exercise Date will be the date on which the Notice of Exercise and actual
payment are received by the Corporation.
6. LIMITED TRANSFERABILITY. This Option may not be transferred during
Optionee's lifetime and may be exercised during the lifetime of Optionee only by
Optionee. This Option may, after Optionee's death, be transferred by Will or
state law of descent and distribution. The terms of this Option are binding
upon the executors, administrators, successors and assigns of Optionee.
7. WITHHOLDING. Optionee agrees, as a condition to the exercise of this
Option, to make appropriate arrangements with the Committee and the Corporation
or a subsidiary or parent of the Corporation employing Optionee for the
satisfaction of any federal, state or local income or employment tax
requirements applicable to the exercise of this Option or to the sale of shares
acquired under this Option.
8. ADJUSTMENTS. If any change is made to the Option Shares (whether by
reason of merger, consolidation, reorganization, recapitalization, stock
dividend, stock split, combination of shares, exchange of shares or other change
in corporate or capital structure of the Corporation) then the Committee will
make appropriate adjustments to the kind, price per share and maximum number of
shares subject to this Option. Adjustments made by the Committee will be final,
binding and conclusive. No adjustment will be made if such change results in
the acceleration and termination of all outstanding options in accordance with
the Acceleration and Termination of Options provisions of the following
paragraph.
9. ACCELERATION AND TERMINATION OF OPTIONS. In the event of one or more
of the following transactions ("Corporate Transactions"):
(a) a merger or consolidation in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which is to
change the State of the Corporation's incorporation,
(b) the sale, transfer or other disposition of all or substantially
all of the assets of the Corporation,
(c) any reverse merger in which the corporation is the surviving
entity but in which 50% or more of the Corporation's outstanding voting stock is
transferred to holders different from those who held such securities immediately
before the merger, or,
(d) an acquisition by any person or related group of persons (other
than the Corporation or a person that directly or indirectly controls, is
controlled by or is under common control with, the Corporation) of ownership of
more than 50% of the Corporation's outstanding Common Stock, pursuant to a
tender or exchange offer then
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the Option holder may exercise this Option for all of the Option Shares,
including shares previously unvested, provided the Option is exercised
immediately before the consummation of the Corporate Transaction and before the
Expiration Date. Upon consummation of the Corporate Transaction, this Option,
to the extent not previously exercised, will terminate and cease to be
exercisable.
10. NOTICES. Any notice required to be given to the Corporation under
this Agreement will be in writing and addressed to the Corporation and its
corporate offices. Any notice required to be given to Optionee under this
Agreement will be in writing and addressed to Optionee at the address specified
in Optionee's employment file maintained by the Corporation. All notices will
be deemed to have been given or delivered upon personal delivery or upon deposit
in the United State mail, postage prepaid and properly addressed to the party to
be notified.
11. NO EMPLOYMENT CONTRACT. This Option shall not confer upon Optionee
any right to continue in the employ of or to provide services to the Corporation
or a subsidiary or parent of the Corporation or constitute any contract or
agreement of employment or services or interfere in any way with the right of
the Corporation or a subsidiary or parent of the Corporation to reduce such
Optionee's compensation or to terminate Optionee's employment or services at any
time, with or without cause.
12. COMPLIANCE. This Option may not be exercised unless the exercise is
in compliance with all applicable requirements of federal and state law and with
the requirements of any stock exchange on which the Corporation's Common Stock
may be listed at the time of exercise.
13. RECEIPT OF PLAN DOCUMENTS. Optionee acknowledges that the Corporation
has delivered to Optionee, and Optionee has received, the Plan Summary and
Prospectus related to the Plan, together with any Special Supplements and/or
amendments related thereto currently in effect.
4
