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EXHIBIT 99.2
DURA PHARMACEUTICALS, INC.
1992 STOCK OPTION PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
A. IMPLEMENTATION. This 1992 Stock Option Plan ("Plan") was 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 have been 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 ("Plan Administrator"). 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.
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
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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
Exchange Act of 1934 Act, as amended, 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 10,857,360 shares, subject to adjustment from time to time in
accordance with the provisions of this Section. 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 and 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 stock split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Company's 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, (iii) the maximum
number and/or class of shares for which any one participant may be granted stock
options and separately exercisable stock appreciation rights in any fiscal year
or over the term of the Plan and (iv) 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.
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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 stock options or separately exercisable stock appreciation
rights for more than 400,000 shares in the aggregate in any fiscal year or for
more than 1,500,000 shares in the aggregate 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 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
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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. STOCKHOLDER RIGHTS. An option holder will have no stockholder 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 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% STOCKHOLDER. 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%
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Stockholder"), 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 on the Nasdaq National Market. 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 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
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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 excess
of (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 over (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.
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,
(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.
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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 stockholders
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 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
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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 and subject to stockholder
approval, 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 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 Stockholders Meeting,
beginning with the Annual Meeting in calendar year 2000, each continuing
non-employee member of the Board will receive an Automatic Option Grant to
purchase 6,000 shares of
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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 first elected or appointed
as a non-employee member of the Board on or after May 20, 1999 will receive, on
the effective date of such initial election or appointment, an Automatic Option
Grant to purchase 15,000 shares of Common Stock.
D. SPECIAL OPTION GRANT. Each individual serving as a non-employee Board
member on May 20, 1999 shall receive at that time a one-time Automatic Option
Grant for 15,000 shares. Such grant shall be in substitution for the Automatic
Option Grant which would otherwise be made to such individual at the 1999 Annual
Stockholders Meeting pursuant to the provisions of Section I(B) of this Article
Three.
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 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.
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(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
following optionee's death. 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 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.
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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 and employment withholding taxes
("Withholding 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 Withholding 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, became 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. The Plan was amended on April 5, 2000 to increase the number of shares of
Common Stock available for issuance by an additional 750,000 shares (the
"Additional Shares Amendment"), and to revise Section V of Article II to require
stockholder approval of all future cancellations and regrants of options. The
Additional Shares Amendment is subject to stockholder approval at the 2000
Annual Meeting, and no option grants made on the basis of the share increase
authorized by that amendment shall become exercisable in whole or in part unless
and until the Additional Shares Amendment is approved by the stockholders.
Should such stockholder approval not be obtained at the 2000 Annual Meeting,
then the 750,000-share increase shall not be implemented. Subject to the
foregoing limitations, options may be granted under the Plan at any time before
the date fixed herein for the 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) December 8,
2002, or (ii) the 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 stockholder approval is obtained for a
sufficient increase in the number of shares available for issuance under
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the Plan. If such stockholder 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.
IV. 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.
V. 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.
VI. 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.
12
