As filed with the Securities and Exchange Commission on July 28, 1997
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
----------------
MATRIX PHARMACEUTICAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-2957068
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
34700 Campus Drive
Fremont, California 94555
(Address of principal executive offices) (Zip Code)
----------------
MATRIX PHARMACEUTICAL, INC.
1988 RESTRICTED STOCK PLAN
1991 DIRECTORS STOCK OPTION PLAN
(Full titles of the Plans)
----------------
James R. Glynn
Chief Operating Officer and Chief Financial Officer
Matrix Pharmaceutical, Inc.
34700 Campus Drive, Fremont, CA 94555
(Name and address of agent for service)
(510) 742-9900
(Telephone number, including area code, of agent for service)
----------------
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
Proposed Proposed
Maximum Maximum
Amount to be Offering Price Aggregate Offering Amount of
Title of Securities to be Registered Registered(1) per Share(2) Price(2) Registration Fee
====================================================================================================================================
<S> <C> <C> <C> <C>
1988 Restricted Stock Plan
Common Stock, $0.01 par value 2,000,000 shares $6.28125 $12,562,500.00 $3,806.82
1991 Directors Stock Option Plan
Common Stock, $0.01 par value 250,000 shares $6.28125 $ 1,570,312.50 $ 475.85
====================================================================================================================================
<FN>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1988 Restricted Stock Plan
and/or the 1991 Directors Stock Option 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 outstanding shares of Matrix Pharmaceutical, Inc.
Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, (the "1933 Act") on the basis of the
average of the high and low selling prices per share of Common Stock of
Matrix Pharmaceutical, Inc. on July 23, 1997 as reported by the Nasdaq
National Market.
</FN>
</TABLE>
<PAGE>
PART II
Information Required in the Registration Statement
Item 3. Incorporation of Certain Documents by Reference
Matrix Pharmaceutical, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996, filed with the Commission on March 25,
1997 pursuant to Section 13 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, filed with the Commission on May
12, 1997 pursuant to Section 13 of the Exchange Act;
(c) The Registrant's Registration Statement No. 0-19750 on Form 8-A
filed with the Commission December 19, 1991, together with
Amendments No. 1 and No. 2 on Form 8 filed January 23, 1992 and
January 27, 1992, respectively, 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. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which is also deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Pursuant to the Delaware General Corporation Law, the Registrant has
adopted provisions in its Restated Certificate of Incorporation which eliminate
the personal liability of its directors and officers to the Registrant and its
stockholders for monetary damages for breach of their fiduciary duties in
certain circumstances and which authorize the Registrant to indemnify its
directors, officers and other agents, by bylaw, agreement or otherwise,
<PAGE>
to the fullest extent permitted by law. The Registrant's Bylaws require the
Registrant to indemnify its directors, officers, employees and other agents to
the fullest extent permitted by law.
The Registrant's Restated Certificate of Incorporation and Bylaws expressly
authorize the use of indemnification agreements and, with the approval of its
stockholders, the Registrant has entered into separate Indemnification
Agreements with its directors and certain of its officers. These Indemnification
Agreements may require the Registrant, among other things, to indemnify
directors and officers against certain liabilities that may arise by reason of
their status or service as directors and officers and to advance their expenses
incurred as a result of any proceeding against them as to which they could be
indemnified. The Registrant maintains an insurance policy covering directors and
officers, under which the insurer has agreed to pay, subject to certain
exclusions (including certain violations of securities laws) the amount of
insured claims made against the insured officers and directors of the Registrant
for wrongful acts that such officers or directors may otherwise be required to
pay or for which the Registrant is required to indemnify such officers and
directors.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
Exhibit Number Exhibit
- ---------------- ----------
4.0 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 0-19750 on
Form 8-A which is incorporated herein by reference pursuant
to Item 3(c).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.1.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1988 Restricted Stock Plan (Amended and Restated through
March 19, 1997).
99.2 Form Stock Option Agreement with Notice of Grant -
Installment Option (incorporated by reference to Exhibit
99.2 of Registration Statement No. 33-79908).
99.3 Form of Stock Option Agreement with Notice of Grant -
Immediately Exercisable Option (incorporated by reference
to Exhibit 28.2 of Registration Statement No. 33-65542).
99.4 Form of Stock Purchase Agreement (incorporated by reference
to Exhibit 28.3 of Registration Statement No. 33-65542).
99.5 Form of Restricted Stock Purchase Agreement (incorporated
by reference to Exhibit 28.4 of Registration Statement No.
33-65542).
99.6 Form of Stock Issuance Agreement - Shared Investment
Program.
99.7 1991 Directors Stock Option Plan (Amended and Restated
through March 19, 1997).
99.8 Form of Non-Statutory Stock Option Agreement (Automatic
Option Grant).
99.9 Form of Special 40,000-share Automatic Option Grant
(incorporated by reference to Exhibit 99.2 of Registration
Statement No. 33-93476).
Item 9. Undertakings
A. The undersigned Registrant hereby undertakes: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this Registration Statement (i) to include any prospectus
II-2
<PAGE>
required by Section 10(a)(3) of the 1933 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 1933 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 1988 Restricted Stock Plan and/or 1991 Directors Stock Option Plan.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 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
the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the 1933 Act
may be permitted to directors, officers or controlling persons of the Registrant
pursuant to the indemnity provisions summarized in Item 6 or otherwise, the
Registrant has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the 1933 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 1933 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 Fremont, State of California, on this 25th day of
July, 1997.
MATRIX PHARMACEUTICAL, INC.
By /s/ JAMES R. GLYNN
--------------------------------
James R. Glynn
Chief Operating Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officer and directors of Matrix Pharmaceutical, Inc.,
a Delaware corporation, do hereby constitute and appoint James R. Glynn the
lawful attorney and agent, with full power and authority to do any and all acts
and things and to execute any and all instruments which said attorney and agent
determines 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 officer 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
all that said attorney and agent 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.
<TABLE>
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.
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ JAMES R. GLYNN Chief Operating Officer, Chief Financial July 25, 1997
- -------------------------------- Officer and Director
James R. Glynn (Principal Executive and Financial Officer)
/s/ EDWARD E. LUCK Chairman of the Board July 25, 1997
- --------------------------------
Edward E. Luck
II-4
<PAGE>
Signatures Title Date
- ---------- ----- ----
/s/ J. STEPHAN DOLEZALEK Director July 25, 1997
- --------------------------------
J. Stephan Dolezalek
Director July , 1997
- --------------------------------
John E. Lyons
/s/ JULIUS L. PERICOLA Director July 25, 1997
- --------------------------------
Julius L. Pericola
/s/ ALAN E. SALZMAN Director July 25, 1997
- --------------------------------
Alan E. Salzman
</TABLE>
II-5
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
MATRIX PHARMACEUTICAL, INC.
<PAGE>
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- ---------
4.0 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 0-19750 on
Form 8-A which is incorporated herein by reference pursuant
to Item 3(c).
5.1 Opinion of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.1.
24 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 1988 Restricted Stock Plan (Amended and Restated through
March 19, 1997).
99.2 Form Stock Option Agreement with Notice of Grant -
Installment Option (incorporated by reference to Exhibit
99.2 of Registration Statement No. 33-79908).
99.3 Form of Stock Option Agreement with Notice of Grant -
Immediately Exercisable Option (incorporated by reference
to Exhibit 28.2 of Registration Statement No. 33-65542).
99.4 Form of Stock Purchase Agreement (incorporated by reference
to Exhibit 28.3 of Registration Statement No. 33-65542).
99.5 Form of Restricted Stock Purchase Agreement (incorporated
by reference to Exhibit 28.4 of Registration Statement No.
33-65542).
99.6 Form of Stock Issuance Agreement - Shared Investment
Program.
99.7 1991 Directors Stock Option Plan (Amended and Restated
through March 19, 1997).
99.8 Form of Non-Statutory Stock Option Agreement (Automatic
Option Grant).
99.9 Form of Special 40,000-share Automatic Option Grant
(incorporated by reference to Exhibit 99.2 of Registration
Statement No. 33-93476).
Exhibit 5.1
<PAGE>
Exhibit 5.1
July 25, 1997
Matrix Pharmaceutical, Inc.
34700 Campus Drive
Fremont, California 94555
Re: Matrix Pharmaceutical, Inc.
Registration Statement of an Aggregate of 2,250,000 Shares of
Common Stock
Gentlemen:
We refer to your Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of (i) Two Million
(2,000,000) shares of common stock ("Common Stock") of Matrix Pharmaceutical,
Inc. (the "Company") issuable under the Company's 1988 Restricted Stock Plan, as
amended and restated, (the "Plan") and (ii) Two Hundred Fifty Thousand (250,000)
shares of Common Stock issuable under the Company's 1991 Directors Stock Option
Plan (the "Directors Plan"). We advise you that, in our opinion, when such
shares have been issued and sold pursuant to the applicable provisions of the
Plan and/or the Directors Plan and in accordance with the Registration
Statement, such shares will be 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
BROBECK, PHLEGER & HARRISON LLP
Exhibit 23.1
<PAGE>
Exhibit 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Matrix Pharmaceutical, Inc. 1988 Restricted Stock
Plan and the 1991 Directors Stock Option Plan of our report dated January 28,
1997, with respect to the consolidated financial statements for Matrix
Pharmaceutical, Inc. included in the Annual Report (Form 10-K) for the year
ended December 31, 1996, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Palo Alto, California
July 24, 1997
Exhibit 99.1
<PAGE>
MATRIX PHARMACEUTICAL, INC.
1988 RESTRICTED STOCK PLAN
AS AMENDED AND RESTATED EFFECTIVE MARCH 19, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I.................................................................... 1
GENERAL................................................................... 1
1. PURPOSE OF THE PLAN..................................... 1
2. STRUCTURE OF THE PLAN................................... 2
3. ADMINISTRATION OF THE PLAN.............................. 2
4. OPTION GRANTS AND SHARE ISSUANCES....................... 2
5. STOCK SUBJECT TO THE PLAN............................... 3
ARTICLE II................................................................... 5
OPTION GRANT PROGRAM...................................................... 5
1. TERMS AND CONDITIONS OF OPTIONS......................... 5
2. INCENTIVE OPTIONS....................................... 9
3. STOCK APPRECIATION RIGHTS............................... 10
4. CORPORATE TRANSACTION................................... 11
5. CANCELLATION AND NEW GRANT OF OPTIONS................... 12
6. EXTENSION OF EXERCISE PERIOD............................ 13
ARTICLE III.................................................................. 14
STOCK ISSUANCE PROGRAM.................................................... 14
1. TERMS AND CONDITIONS OF STOCK ISSUANCES................. 14
2. CORPORATE TRANSACTION................................... 16
ARTICLE IV................................................................... 17
MISCELLANEOUS............................................................. 17
1. LOANS OR INSTALLMENT PAYMENTS .......................... 17
2. AMENDMENT OF THE PLAN AND AWARDS........................ 17
3. EFFECTIVE DATE AND TERM OF PLAN......................... 18
4. USE OF PROCEEDS......................................... 20
5. WITHHOLDING............................................. 20
6. REGULATORY APPROVALS.................................... 20
7. NO EMPLOYMENT/SERVICE RIGHTS ........................... 21
SPECIAL ADDENDUM.............................................................A-1
<PAGE>
MATRIX PHARMACEUTICAL, INC.
1988 RESTRICTED STOCK PLAN
(As Amended and Restated Through March 19, 1997)
ARTICLE I
GENERAL
1. PURPOSE OF THE PLAN
(a) This 1988 Restricted Stock Plan (the "Plan") is intended to promote
the interests of Matrix Pharmaceutical, Inc., a Delaware corporation (the
"Corporation"), by providing incentives to eligible individuals to acquire a
proprietary interest, or otherwise increase their proprietary interest, in the
Corporation and to remain in the employ or service of the Corporation (or its
parent or subsidiary corporations).
(b) For purposes of the Plan, the following provisions shall be
applicable in determining the parent and subsidiary corporations of the
Corporation:
(i) Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to be
a parent corporation of the Corporation, provided each such corporation in
the unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
(ii) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered to
be a subsidiary of the Corporation, provided each such corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
<PAGE>
2. STRUCTURE OF THE PLAN
The Plan shall be divided into two separate components: the Option
Grant Program specified in Article II and the Stock Issuance Program specified
in Article III. Under the Option Grant Program, eligible individuals may be
granted options to purchase shares of the Corporation's Common Stock at a
discount of up to 15% of the fair market value of such shares on the grant date.
The Stock Issuance Program will allow eligible individuals to purchase
shares of the Corporation's Common Stock at discounts from the fair market value
of such shares of up to 15%. Such shares may be issued as fully-vested shares or
as shares to vest over time. Issuances may be effected either through direct
purchases or through the exercise of intervening option grants.
Unless the context clearly indicates otherwise, the provisions of
Articles I and IV of the Plan shall apply to both the Option Grant Program and
the Stock Issuance Program and shall accordingly govern the interests of all
individuals in the Plan.
3. ADMINISTRATION OF THE PLAN
(a) The Plan shall be administered by a committee ("Committee") of two
(2) or more members of the Corporation's Board of Directors appointed by the
Board. Members of the Committee shall serve for such period of time as the Board
may determine and shall be subject to removal by the Board at any time.
(b) The Committee as Plan Administrator shall have full power and
authority (subject to the express provisions of the Plan) to establish such
rules and regulations as it may deem appropriate for the proper administration
of the Plan and to make such determinations under the Plan and any outstanding
option grants or share issuances as it may deem necessary or advisable.
Decisions of the Plan Administrator shall be final and binding on all parties
with an interest in the Plan.
(c) Service on the Committee shall constitute service as a Board
member, and members of the Committee shall accordingly be entitled to full
indemnification and reimbursement as Board members for their service on the
Committee. No member of the Committee shall be liable for any act or omission
made in good faith with respect to the Plan or any option granted under the
Plan.
4. OPTION GRANTS AND SHARE ISSUANCES
(a) The persons eligible to receive share issuances under the Stock
Issuance Program ("Participant") and/or option grants pursuant to the Option
Grant Program ("Optionee") are as follows:
2.
<PAGE>
(i) key employees (including officers) of the Corporation (or its
parent or subsidiary corporations) who render services which contribute to
the success and growth of the Corporation (or its parent or subsidiary
corporations) or which may reasonably be anticipated to contribute to the
future success and growth of the Corporation (or its parent or subsidiary
corporations);
(ii) non-employee members of the Board or the board of directors
of any parent or subsidiary corporation); and
(iii) those consultants or independent contractors who provide
valuable services to the Corporation (or its parent or subsidiary
corporations).
(b) Non-employee members of the Board shall also be eligible to receive
automatic option grants pursuant to the provisions of the Corporation's 1991
Director Stock Option Plan.
(c) The Plan Administrator shall have full authority to determine, (I)
with respect to the option grants made under the Plan, the number of shares to
be covered by each grant, the time or times at which each granted option is to
become exercisable, the option price, and the maximum term for which the option
may remain outstanding and (II) with respect to share issuances under the Stock
Issuance Program, the number of shares to be issued to each Participant, the
vesting schedule (if any) to be applicable to the issued shares, and the
purchase price to be paid by the individual for such shares.
(d) The Plan Administrator shall have the absolute discretion to grant
options in accordance with Article II of the Plan and/or to effect share
issuances in accordance with Article III of the Plan.
5. STOCK SUBJECT TO THE PLAN
(a) The stock issuable under the Plan shall be shares of the
Corporation's authorized but unissued or reacquired common stock ("Common
Stock"). The maximum number of shares issuable over the term of the Plan shall
not exceed 4,869,048 shares*,
- ----------------
*Adjusted to reflect (i) the 2.1-for-1 reverse stock split of the outstanding
Common Stock effected in January 1992, (ii) the 850,000-share increase
authorized for issuance under the Plan approved by the Board on December 14,
1995 and approved by the stockholders at the 1996 Annual Meeting and (iii) an
additional share increase of 2,000,000 shares authorized by the Board on March
19, 1997, subject to stockholder approval at the 1997 Annual Meeting. From and
after March 31, 1997, not more than 4,119,840 shares may be issued under the
Plan.
3.
<PAGE>
subject to adjustment as provided in Section 5(c). Should an outstanding option
under the Plan expire or terminate for any reason prior to exercise in full, the
shares subject to the portion of the option not so exercised will be available
for subsequent option grants and share issuances under the Plan. Any unvested
shares issued under the Plan and subsequently repurchased by the Corporation, at
the option exercise or direct issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan. However, the shares subject to
any option (or portion of an option) surrendered or cancelled in accordance with
Section 3 of Article II of the Plan shall not be available for subsequent option
grants or share issuances under the Plan.
(b) In no event may any one individual participating in the Plan be
granted stock options, separately exercisable stock appreciation rights and
direct stock issuances for more than 750,000 shares of Common Stock in the
aggregate over the remaining term of the Plan, subject to adjustment from time
to time in accordance with paragraph 5(c) of this Article I. For purposes of
such limitation, no stock options, stock appreciation rights or direct stock
issuances granted prior to January 1, 1994 shall be taken into account.
(c) If any change is made to the Common Stock issuable under the Plan
by reason of any stock dividend, stock split, combination of shares,
recapitalization, or other change affecting the outstanding Common Stock as a
class without the Corporation'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 maximum number and/or class of shares for which stock
options, separately exercisable stock appreciation rights and direct stock
issuances may be granted to any one participant in the aggregate after December
31, 1993, and (iii) the number and/or class of shares and the option price per
share in effect under each outstanding option in order to prevent the dilution
or enlargement of rights and benefits under such options. The adjustments
determined by the Plan Administrator will be final, binding and conclusive.
(d) Common Stock issuable under the Plan, whether under the Option
Grant Program or the Stock Issuance Program, may be subject to such restrictions
on transfer, repurchase rights or other restrictions as are determined by the
Plan Administrator.
4.
<PAGE>
ARTICLE II
OPTION GRANT PROGRAM
1. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Plan shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator's discretion, be
either incentive stock options qualified under Internal Revenue Code Section 422
("Incentive Options") or non-statutory options ("Non-Statutory Options") which
do not so qualify. Individuals who are not employees of the Corporation or its
parent or subsidiary corporations may only be granted non-statutory options.
Each granted option shall be evidenced by one or more instruments in the form
approved by the Plan Administrator; provided, however, that each such instrument
shall comply with the terms and conditions specified below. Each instrument
evidencing an Incentive Option shall, in addition, be subject to the applicable
provisions of Section 2 of this Article II.
(a) Option Price.
(1) The option price per share shall be fixed by the Plan
Administrator, but in no event shall the option price per share be less than
eighty-five percent (85%) of the fair market value of a share of Common Stock on
the date of the option grant.
(2) The option price will become immediately due upon exercise of
the option and, subject to the provisions of Article IV, Section 1 and the
instrument evidencing the grant, will be payable in one of the following
alternative forms:
(A) full payment in cash or check payable to the
Corporation;
or
(B) full payment in shares of Common Stock held by the
Optionee for the requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting purposes and
valued at fair market value on the Exercise Date (as such term is
defined below); or
(C) full payment in a combination of shares of Common Stock
held by the Optionee for the requisite period necessary to avoid
a charge to the Corporation's earnings for financial reporting
purposes and valued at fair market value on the Exercise Date and
cash or check payable to the Corporation; or
5.
<PAGE>
(D) full payment through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall
provide irrevocable instructions to a designated brokerage firm
to effect the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate option
price payable for the purchased shares plus all applicable
Federal and State income and employment taxes required to be
withheld by the Corporation in connection with such purchase and
(II) shall provide directives to the Corporation to deliver the
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
For purposes of this subsection (a)(2), the Exercise Date shall be the
date on which written notice of the option exercise is delivered to the
Corporation. Except to the extent the sale and remittance procedure is utilized
in connection with the exercise of the option, payment of the option price for
the purchased shares must accompany such notice.
(3) For purposes of subsection (1) above (and for all other
valuation purposes under the Plan), the fair market value of a share of Common
Stock on any relevant date under the Plan will be determined in accordance with
the following provisions:
(A) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded on the
Nasdaq National Market System, the fair market value will be the
closing selling price of one share of Common Stock on the date in
question, as such price is reported by the National Association
of Securities Dealers through the Nasdaq National Market System
or any successor system. If there is no reported closing selling
price for the Common Stock on the date in question, then the
closing selling price on the last preceding date for which such
quotation exists shall be determinative of fair market value.
(B) If the Common Stock is at the time listed or admitted
to trading on any stock exchange, then the fair market value will
be the closing selling price of one share of Common Stock on the
date in question on the stock exchange determined by the Plan
Administrator to be the primary market for the Common Stock, as
such price is officially quoted 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.
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(b) Term and Exercise of Options. Each option granted under the Plan
will be exercisable at such time or times and during such period as is
determined by the Plan Administrator and set forth in the stock option agreement
evidencing such grant. However, no option granted under this Plan will have a
term in excess of ten (10) years measured from the grant date.
(c) 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, Non-Statutory Options
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. 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.
(d) Effect of Termination of Service.
(1) Should an Optionee cease to remain in Service for any reason
(including death or permanent disability as defined in Section 22(e)(3)
of the Internal Revenue Code) while the holder of one or more
outstanding options under the Plan, then such option or options shall
in no event remain exercisable for more than a twelve (12) month period
(or such shorter period as is determined by the Plan Administrator and
set forth in the option agreement) following the date of such cessation
of Service (and under no circumstances shall any such option be
exercisable after the specified expiration date of the option term).
Each such option shall, during such twelve (12) month or shorter
period, be exercisable only to the extent of the number of shares (if
any) for which the option is exercisable on the date of such cessation
of Service. Upon the expiration of such twelve (12) month or shorter
period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be exercisable.
(2) Any option granted to an Optionee under the Plan and
exercisable in whole or in part on the date of the Optionee's death may
be subsequently exercised, but only to the extent of the number of
shares (if any) for which the option is exercisable on the date of the
Optionee's cessation of Service (less any shares subsequently purchased
by the Optionee thereunder prior to 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, provided and only
if such exercise occurs prior to the earlier of
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(i) the first anniversary of the date of the Optionee's death or (ii)
the specified expiration date of the option term. Upon the occurrence
of the earlier event, the option shall terminate and cease to be
exercisable.
(3) The Plan Administrator shall have complete discretion,
exercisable either at the time the option is granted or at any time the
option remains outstanding, to permit one or more options granted under
this Article II to be exercised, during the applicable exercise period
under subparagraph (1) or (2) above, not only for the number of shares
for which each such option is exercisable at the time of the optionee's
cessation of Service but also for one or more subsequent installments
of purchasable shares for which the option would otherwise have become
exercisable had such cessation of Service not occurred.
(4) For purposes of the foregoing provisions of this Section
1(c), an Optionee shall be deemed to remain in Service for so long as
such individual renders services to the Corporation or any parent or
subsidiary corporation on a periodic basis in the capacity of an
Employee, a non-employee Board member or an independent consultant or
advisor. The Optionee shall be deemed to be an Employee of the
Corporation for so long as the Optionee remains in the employ of the
Corporation or one or more of its parent or subsidiary corporations,
subject to the control and direction of the employer entity not only as
to the work to be performed but also as to the manner and method of
performance.
(e) Stockholder Rights. An Optionee shall have none of the rights of a
stockholder with respect to any shares covered by the option until such Optionee
has exercised the option, paid the option price for the purchased shares and
been issued a stock certificate for the purchased shares.
(f) Repurchase Rights. The shares of Common Stock acquired upon the
exercise of options granted under the Plan may be subject to one or more
repurchase rights of the Corporation in accordance with the following
provisions:
(1) The Plan Administrator may in its discretion subject one or
more shares of Common Stock issued under this Article II to repurchase
by the Corporation. Any such repurchase right shall be exercisable by
the Corporation, at the option price paid per share, for any or all
unvested shares of Common Stock held by the Optionee under this Article
II at the time of his or her cessation of Service. The specific terms
and conditions upon which such repurchase right shall be so exercisable
by the Corporation, including the establishment of the appropriate
vesting schedule and other provision for the expiration of such right
in one or more
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installments over the optionee's period of Service, shall be determined
by the Plan Administrator and set forth in the instrument evidencing
such right.
(2) All of the Corporation's outstanding repurchase rights shall
automatically terminate, and all shares subject to such terminated
rights shall immediately vest in full, upon the occurrence of any
Corporate Transaction under Section 4 of this Article II, except to the
extent: (i) any such repurchase right is, in connection with such
Corporate Transaction, to be assigned to the successor corporation (or
parent thereof) or (ii) such termination is precluded by other
limitations imposed by the Plan Administrator at the time the
repurchase right is granted.
(3) The Plan Administrator shall have the discretionary
authority, exercisable either before or after the optionee's cessation
of Service, to cancel the Company's outstanding repurchase rights with
respect to one or more shares purchased or purchasable by the optionee
under this Article II and thereby accelerate the vesting of such shares
in connection with the optionee's cessation of Service.
2. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable to all
Incentive Options granted under the Plan. Incentive Options may only be granted
to individuals who are Employees of the Corporation. Options which are
specifically designated as Non-Statutory Options when issued under the Plan
shall not be subject to such terms and conditions.
(a) Option Price. The option price per share of the Common Stock
subject to an Incentive Option shall in no event be less than one hundred
percent (100%) of the fair market value of a share of Common Stock on the date
of grant.
(b) 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 under this Plan (or any other option plan
of the Corporation or its parent or subsidiary corporations) may for the first
time become exercisable as Incentive Options during any one calendar year shall
not exceed the sum of One Hundred Thousand Dollars ($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 were granted.
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(c) 10% Stockholder. If any individual to whom an Incentive Option is
granted is at the time of such grant the owner of stock (as determined under
Section 424(d) of the Internal Revenue Code) possessing 10% or more of the total
combined voting power of all outstanding classes of stock of the Corporation or
any parent or subsidiary corporation, then the option price per share shall not
be less than one hundred and ten percent (110%) of the fair market value per
share of the Common Stock on the grant date, and the option term shall not
exceed five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section 2, all
the provisions of the Plan shall be applicable to the Incentive Options granted
hereunder.
3. STOCK APPRECIATION RIGHTS
(a) One or more Optionee may, upon such terms and conditions as the
Plan Administrator 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 (on the surrender date) of the number of shares in which the
Optionee is at the time vested under the surrendered option or portion thereof
over (ii) the aggregate option price payable for such vested shares. No
surrender of an option, however, shall be effective unless it is approved by the
Plan Administrator. If the surrender is so approved, then the distribution to
which the option holder shall accordingly become entitled under this subsection
3(a) may be made in shares of Common Stock valued at fair market value at date
of surrender, in cash, or partly in shares and partly in cash, as the Plan
Administrator shall in its sole discretion deem appropriate.
(b) If the surrender of an option is rejected by the Plan
Administrator, then the option holder shall retain whatever rights the option
holder had under the surrendered option (or surrendered portion thereof) on the
surrender date and may exercise such rights at any time prior to the later of
(i) the expiration of the 5 business-day period following receipt by the option
holder of the rejection notice or (ii) the last day on which the option is
otherwise exercisable in accordance with the terms of the instrument evidencing
such option, but in no event may such rights be exercised at any time after ten
(10) years following the date of the option grant.
(c) Notwithstanding the foregoing provisions of this Section 3, one or
more officers of the Corporation subject to the short-swing profit restrictions
of the Federal securities laws may, in the Plan Administrator's sole discretion,
be granted limited stock appreciation rights in tandem with their outstanding
options under this Article II. Each outstanding option with such a limited stock
appreciation right shall automatically be cancelled, to the extent exercisable
for vested shares of Common Stock, upon the occurrence of a Hostile Take-Over,
and the Optionee shall in return be entitled to a cash distribution from the
Corporation in an amount equal to the excess of (i) the fair market value (on
the cancellation date) of the number of shares in which the Optionee is at the
time vested under
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the cancelled option or cancelled portion over (ii) the aggregate option price
payable for such vested shares. Such cash distribution shall be made within five
(5) days following the consummation of the Hostile Take-Over. The Plan
Administrator shall pre-approve, at the time the limited stock appreciation
right is granted, the subsequent exercise of that right in accordance with the
terms of the grant and the provisions of this subsection 3(c). No additional
approval of the Plan Administrator or the Board shall be required at the time of
the actual option surrender and cash distribution. The balance (if any) of each
such option shall continue in full force and effect in accordance with the terms
and conditions of the instrument evidencing such grant.
(d) For purposes of Section 3(c) above, a Hostile Take-Over shall be
deemed to occur in the event 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) acquires ownership of
securities possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities pursuant to a tender or
exchange offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept.
(e) The shares of Common Stock subject to any option surrendered or
cancelled for an appreciation distribution pursuant to this Section V shall not
be available for subsequent option grants or share issuances under the Plan.
4. CORPORATE TRANSACTION
(a) In the event of one or more of the following stockholder-approved
transactions ("Corporate Transaction"):
(i) a merger or acquisition in which the Corporation is not the
surviving entity, except for a transaction the principal purpose of which
is to change the State of incorporation;
(ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Corporation in liquidation or
dissolution of the Corporation; or
(iii) any reverse merger in which the Corporation is acquired
but continues in existence as a separate entity,
each outstanding option under the Plan shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for such 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. However,
an outstanding option shall not so accelerate if and to the
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extent: (i) such option is, in connection with the Corporate Transaction, either
to be assumed by the successor corporation or parent thereof or to be replaced
with a comparable option to purchase shares of the capital stock of the
successor corporation or parent thereof or (ii) the acceleration of such option
is subject to other applicable limitations imposed by the Plan Administrator in
the relevant option agreement. The determination of comparability under clause
(i) or clause (ii) above shall be made by the Plan Administrator, and its
determination shall be final and conclusive.
(b) Upon the consummation of the Corporate Transaction, all outstanding
options under the Plan shall immediately terminate and cease to be exercisable,
except to the extent assumed by the successor corporation or parent thereof.
(c) The exercisability as incentive stock options under the Federal tax
laws of any options accelerated in connection with the Corporate Transaction
shall remain subject to the applicable dollar limitation of Section 2(b).
(d) If the outstanding options under the Plan are assumed by the
successor corporation (or parent thereof) in the Corporate Transaction or are
otherwise to continue in effect following such Corporate Transaction, then each
such assumed or continuing option shall, immediately after such Corporate
Transaction, be appropriately adjusted to apply and pertain to the number and
class of securities or other property which would have been issued to the option
holder, in consummation of the Corporate Transaction, had the option been
exercised immediately prior to such Corporate Transaction. Appropriate
adjustments shall also be made to the option price payable per share, provided
the aggregate option price payable for such securities or other property shall
remain the same. In addition, the number and class of securities or other
property available for issuance under the Plan following the consummation of
such Corporate Transaction shall be appropriately adjusted.
(e) The grant of options under this Plan shall in no way affect the
right of the Corporation 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.
5. CANCELLATION AND NEW GRANT OF OPTIONS
The Plan Administrator 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 the Plan and to grant in
substitution therefor 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 (i) eighty-five percent (85%) of the fair market value of the Common Stock
on such grant date or (ii) one hundred percent (100%) of such fair market value
in the case of an Incentive Option.
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6. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority, exercisable
in its sole discretion, to extend, either at the time the option is granted or
at any time while the option remains outstanding, the period of time for which
the option is to remain exercisable following the Optionee's cessation of
Service from the twelve (12) month or shorter period set forth in the option
agreement to such greater period of time as the Plan Administrator shall deem
appropriate; provided, however, that in no event shall such option be
exercisable at any time after the specified expiration date of the option term.
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ARTICLE III
STOCK ISSUANCE PROGRAM
1. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares may be issued under the Stock Issuance Program either through
direct and immediate purchases without any intervening option grant under the
Option Grant Program or upon the subsequent exercise of outstanding options
under the Option Grant Program. The issued shares will be evidenced by a
Restricted Stock Purchase Agreement ("Purchase Agreement") that complies with
each of the terms and conditions of this Article III.
(a) Share Price
(1) The purchase price per share will be fixed by the Plan
Administrator, but in no event will it be less than eighty-five percent (85%) of
the fair market value of the shares at the time of issuance. Such fair market
value shall be determined in accordance with Article II, Section (1)(a)(3).
(2) Shares shall be issued under this Article III for such
consideration as the Plan Administrator shall from time to time determine,
provided that in no event shall shares be issued for consideration other than:
(A) cash or check payable to the Corporation; or
(B) promissory note payable to the Corporation's order,
which may be subject to cancellation by the Corporation
in whole or in part upon such terms and conditions as
the Plan Administrator shall specify.
(b) Vesting Schedule
(1) The interest of a Participant in the shares of Common Stock
issued to him or her under this Article III may, in the absolute discretion of
the Plan Administrator, be fully and immediately vested upon issuance or may
vest in one or more installments in accordance with the vesting provisions of
subsection (b)(4). Except as otherwise provided in subsection (b)(2), the
Participant may not transfer any of the Common Stock in which he or she does not
have a vested interest; accordingly, all unvested shares issued to the
Participant under this Article III Plan shall bear the restrictive legend
specified in subsection (c)(1), until such legend is removed in accordance with
subsection (c)(2). The Participant, however, shall have all the rights of a
stockholder with respect to the issued shares of Common Stock, whether or not
such shares are vested. Accordingly, the Participant shall have the right to
vote such shares and to receive any regular cash
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dividends or other distributions paid or made with respect to such shares. Any
new, substituted or additional securities or other property (including money
paid other than as a regular cash dividend) which the holder of unvested Common
Stock may have the right to receive by reason of a stock dividend, stock split,
stock combination, recapitalization or similar transaction affecting the
Corporation's outstanding securities without receipt of consideration, or in the
event of the conversion of the Corporation's outstanding Common Stock into cash
or other shares or securities of the Corporation or any other corporation as a
result of a merger, consolidation, liquidation or other reorganization involving
the Corporation shall be issued to such holder, subject to (i) the same vesting
requirements under subsection (b)(4) applicable to his or her unvested Common
Stock and (ii) such escrow arrangements as the Plan Administrator shall deem
appropriate.
(2) As used in this Article III, the term "transfer" shall
include (without limitation) any sale, pledge, encumbrance, gift or other
disposition of any unvested shares acquired under the Stock Issuance Program.
However, the Participant shall have the right to make a gift of one or more of
such unvested shares to his or her spouse, parents or children or to a trust
established for such spouse, parents or children, provided the donee of such
shares delivers to the Corporation a written agreement to be bound by all the
provisions of the Plan and other instruments executed by the Participant to
evidence his or her prior acquisition of such shares. Any gift made in
accordance with the foregoing limitations shall not trigger the exercise of the
Corporation's repurchase rights under subsection (b)(3).
(3) In the event a Participant should, while his or her interest
in the acquired shares remains unvested, (i) attempt to transfer (other than by
way of a permissible gift under subsection (b)(2)) any of the unvested shares or
any interest therein or (ii) cease to remain in Service (as defined in Section
1(c)(4) of Article II) for any reason whatsoever, then the Corporation shall
have the right to repurchase the unvested shares at the original purchase price
paid by the Participant and the Participant shall thereafter have no further
stockholder rights with respect to the repurchased shares.
(4) Any shares of Common Stock issued under the Stock Issuance
Program which are not vested at the time of such issuance shall vest in one or
more installments thereafter. The elements of the vesting schedule, namely the
number of installments in which the shares are to vest, the interval or
intervals (if any) which are to lapse between installments and the effect which
death, disability or other event designated by the Plan Administrator is to have
upon the vesting schedule, shall be determined by the Plan Administrator and
shall be specified in the Purchase Agreement executed by the Corporation and the
Participant at the time of issuance of the unvested shares.
(5) The Plan Administrator may in its discretion elect not to
exercise, in whole or in part, its repurchase rights with respect to any
unvested Common Stock or other assets which would otherwise at the time be
subject to repurchase pursuant to the provisions of subsection (b)(3). Such an
election may be made at any time the
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repurchase right is outstanding and shall result in the immediate vesting of the
Participant's interest in the shares of Common Stock as to which the election
applies.
(c) Stock Legends
(1) Each certificate representing unvested shares of Common Stock
(or other securities) issued under the Plan shall bear a restrictive legend
substantially as follows:
"The securities represented by this certificate are unvested
and subject to repurchase by the Corporation pursuant to the provisions
of the Restricted Stock Purchase Agreement between the Corporation and
the registered holder of the securities (or his predecessor in
interest). Such agreement grants certain repurchase rights to the
Corporation in the event the registered holder (or his predecessor in
interest) terminates his employment or service with the Corporation
prior to vesting in the securities. A copy of such agreement is on file
at the principal office of the Corporation."
(2) As the interest of the Participant vests with respect to any
stock certificate representing shares acquired under the Stock Issuance Program,
the Corporation shall, upon the Participant's delivery of such certificate
during the period or periods designated each year by the Plan Administrator,
issue a new certificate for the vested shares without the restrictive legend of
subsection (c)(1) and a second certificate for the balance of the shares with
such legend. If the Participant's shares are held in escrow at the time of
vesting, then the stock certificates for the vested shares shall be released
from escrow (without the restrictive legend of subsection (c)(1)) and delivered
to the Participant during the period or periods designated by the Plan
Administrator at least semi-annually for such purpose and promptly upon
Participant's cessation of Service. If the Corporation repurchases any unvested
shares of the Participant pursuant to the provisions of subsection (b)(3), the
Corporation shall at the time the repurchase is effected deliver a new
certificate, without the restrictive legend of subsection (c)(1), representing
the number of shares (if any) in which the Participant is vested and which are
accordingly no longer subject to repurchase by the Corporation pursuant to the
provisions of subsection (b)(3).
2. CORPORATE TRANSACTION
All of the Corporation's outstanding repurchase rights under this
Article III shall automatically terminate, and all shares of Common Stock
subject to such repurchase rights shall immediately vest in full, upon the
occurrence of a Corporate Transaction, except to the extent: (i) the
Corporation's outstanding repurchase rights are to be assigned to the successor
corporation (or parent thereof) in connection with the Corporate Transaction or
(ii) the termination of such repurchase rights and the acceleration of vesting
are precluded by other limitations imposed by the Plan Administrator under the
terms of the applicable Purchase Agreements.
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ARTICLE IV
MISCELLANEOUS
1. LOANS OR INSTALLMENT PAYMENTS
(a) The Plan Administrator may, in its discretion, assist any Optionee
or Participant (including an Optionee or Participant who is an officer of the
Corporation) in the exercise of one or more options granted to such Optionee
under the Article II Option Grant Program or the purchase of one or more shares
issued to such Participant under the Article III Stock Issuance Program by (i)
authorizing the extension of a loan from the Corporation to such Optionee or
Participant or (ii) permitting the Optionee or Participant to pay the option
price or purchase price for the purchased Common Stock in installments over a
period of years. The terms of any such loan or installment method of payment
(including the interest rate and terms of repayment) shall be upon such terms as
the Plan Administrator shall specify in the stock option agreement or restricted
stock purchase agreement. Such loans and installment payments may be made or
permitted with or without security or collateral. However, the maximum credit
available to the Optionee or Participant may not exceed the sum of (i) the
aggregate option price or purchase price payable for the purchased shares (less
the par value) plus (ii) any federal and state income and employment tax
liability incurred by the Optionee or Participant in connection with such
exercise or purchase.
(b) The Plan Administrator may, in its absolute discretion, determine
that one or more loans extended under subsection (a) above shall be subject to
forgiveness by the Corporation in whole or in part upon such terms and
conditions as the Plan Administrator in its discretion deems appropriate.
2. AMENDMENT OF THE PLAN AND AWARDS
(a) The Board has the power and authority to amend or modify the Plan
in any or all respects whatsoever; provided, however, that no such amendment or
modification may adversely affect the rights and obligations of the option
holders with respect to their outstanding options under the Plan, nor adversely
affect the rights of any Participant with respect to any unvested shares of
Common Stock issued under the Plan prior to such Board action, unless the
Optionee or Participant consents to such amendment. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.
(b) (i) Options to purchase shares of Common Stock may be granted under
the Option Grant Program and (ii) shares of Common Stock may be issued under the
Stock Issuance Program, which are in excess of the number of shares then
available for issuance under the Plan, provided (A) an amendment to increase the
maximum number of shares issuable under the Plan is adopted by the Board prior
to the initial grant of any such option
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or the issuance of any such shares and is thereafter submitted to the
Corporation's shareholders for approval and (B) any excess shares actually
issued under the Option Grant Program or the Stock Issuance Program are held in
escrow until such stockholder approval is obtained. If such stockholder approval
is not obtained within twelve (12) months from the date the share-increase
amendment is adopted by the Board, then (i) any unexercised options granted on
the basis of such increase shall terminate and cease to be exercisable and (ii)
the Corporation shall promptly refund to the Participants the purchase price
paid for any excess shares issued under the Plan and held in escrow, together
with interest (at the interest rate necessary to avoid the imputation of
interest income under the Federal tax laws) for the period the shares were held
in escrow.
3. EFFECTIVE DATE AND TERM OF PLAN
(a) The Plan was initially adopted by the Board on September 2, 1988
and approved by the Corporation's stockholders on February 28, 1989. On May 30,
1991, the Board approved a 523,809-share increase** in the number of shares of
Common Stock issuable under the Plan, and the Plan was restated in its entirety
on September 6, 1991. Both the 523,809-share increase and the September 1991
restatement of the Plan were approved by the stockholders in January 1992. On
April 8, 1992, the Board adopted a new restatement of the Plan to (i) conform
the Plan to the requirements of Rule 16b-3 under the Federal securities laws,
(ii) revise the events in which an acceleration of options would occur and (iii)
provide that the non-employee members of the Board would no longer be eligible
to participate in the Plan. The stockholders approved the amendment and
restatement on May 11, 1993. On March 15, 1994, the Board amended the Plan to
(i) increase the number of shares issuable thereunder by 450,000 shares and (ii)
limit the number of shares of Common Stock for which any one individual may be
granted stock options, stock appreciation rights and direct stock issuances in
the aggregate under the Plan after December 31, 1993 to a maximum of twenty five
percent (25%) of the number of shares from time to time authorized for issuance
under the Plan (the "25% Limit"). The stockholders approved the amendment on May
24, 1994. The Board amended the Plan on December 14, 1995 to (i) increase the
maximum number of shares of Common Stock issuable thereunder by an additional
850,000 shares and (ii) replace the 25% Limit on the maximum number of shares
for which any one individual may be granted stock options, stock appreciation
rights and direct stock issuances in the aggregate after December 31, 1993 with
a specific limit of 750,000 shares. The 850,000-share increase became effective
when adopted by the Board. The new 750,000 share limit on the maximum number of
shares for which any one individual may be granted stock options, stock
appreciation rights and direct stock issuances in the aggregate under the Plan
became effective when adopted by the Board on December 14, 1995. The
stockholders approved the amendment on May 16, 1996.
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**Adjusted to reflect the 2.1-for-1 reverse stock split to the outstanding
Common Stock effected in January 1992.
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(b) The Plan was amended and restated by the Board on March 19, 1997
(the "1997 Restatement") to effect the following changes: (i) increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Plan from 2,869,048 shares to 4,869,048 shares, (ii) extend the term of
the Plan from September 2, 1998 to December 31, 2002, (iii) render the
non-employee Board members eligible to receive option grants and direct stock
issuances under the Discretionary Option Grant and Stock Issuance Programs in
effect under the Plan, (iii) allow unvested shares issued under the Plan and
subsequently repurchased by the Corporation at the option exercise price or
direct issue price paid per share to be reissued under the Plan, (iv) remove
certain restrictions on the eligibility of non-employee Board members to serve
as Plan Administrator, and (v) effect a series of additional changes to the
provisions of the Plan (including the stockholder approval requirements) in
order to take advantage of the recent amendments to Rule 16b-3 of the Securities
and Exchange Commission which exempts certain officer and director transactions
under the Plan from the short-swing liability provisions of the federal
securities laws. The 1997 Restatement is subject to stockholder approval at the
1997 Annual Meeting, and no option grants made on the basis of the
2,000,000-share increase shall become exercisable in whole or in part unless and
until the 1997 Restatement is approved by the stockholders. Should such
stockholder approval not be obtained, then any options granted on the basis of
the 2,000,000-share increase shall terminate without ever becoming exercisable
for those shares, and no further option grants or direct stock issuances shall
be made on the basis of such share increase. However, option grants and direct
stock issuances may continue to be made pursuant to the provisions of the Plan
as in effect immediately prior to the 1997 Restatement until the September 2,
1998 termination date of the Plan. Subject to the foregoing limitations, the
Plan Administrator may make option grants and direct stock issuances under the
Plan at any time before the date fixed herein for the termination of the Plan.
(c) The provisions of each restatement of the Plan shall apply only to
options granted under the Plan from and after the effective date of that
restatement. All options issued and outstanding under the Plan immediately prior
to each such restatement shall continue to be governed by the terms and
conditions of the Plan (and the instrument evidencing each such option) as in
effect on the date each such option was previously granted, and nothing in that
restatement shall be deemed to affect or otherwise modify the rights or
obligations of the holders of such options with respect to the acquisition of
shares of Common Stock thereunder.
(d) The sale and remittance procedure authorized for the exercise of
outstanding options under the Plan shall be available for all options granted
under the Plan on or after the effective date of the September 1991 restatement
and all non-statutory options outstanding under the Plan on such effective date.
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 of the September 1991 restatement.
19.
<PAGE>
(e) Unless sooner terminated in accordance with a Corporate
Transaction, the Plan shall terminate upon the earlier of (i) December 31,
2002*** or (ii) the date on which all shares available for issuance under the
Plan shall have been issued or cancelled pursuant to the exercise, surrender or
cash-out of the options granted under the Option Grant Program and the issuance
or repurchase of shares under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then no options outstanding on
such date under Article II and no unvested shares issued and outstanding on such
date under Article III shall be affected by the termination of the Plan, and
each such outstanding option and unvested share issuance will thereafter
continue to have force and effect in accordance with the provisions of the stock
option agreement evidencing each such Article II option and the purchase
agreement evidencing each such unvested share issuance under Article III.
4. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the issuance of
shares of Common Stock hereunder will be used for general corporate purposes.
5. WITHHOLDING
The Corporation's obligation to deliver shares upon the exercise or
surrender of any options granted under Article II or upon the purchase of any
shares issued under Article III shall be subject to the satisfaction of all
applicable federal, state and local income and employment tax withholding
requirements.
6. REGULATORY APPROVALS
(a) The implementation of the Plan, the granting of any stock option or
stock appreciation right under the Option Grant Program, the issuance of any
shares under the Stock Issuance Program, and the issuance of Common Stock upon
the exercise or surrender of the stock options or stock appreciation rights
granted hereunder shall be subject to the Corporation's procurement of all
approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options and stock appreciation rights granted under it, and
the Common Stock issued pursuant to it.
(b) No shares of Common Stock or other assets shall be issued or
delivered under the Plan, unless and until, in the opinion of counsel for the
Corporation (or its successor in the event of any Corporate Transaction), there
shall have been compliance with all applicable requirements of the Federal and
state securities exchange on which stock of
- ----------
***The extension of the term of the Plan from September 2, 1998 to December 31,
2002 is subject to stockholder approval at the 1997 Annual Meeting.
20.
<PAGE>
the same class is then listed, and all other requirements of law or of any
regulatory bodies having jurisdiction over such issuance and delivery.
7. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing this Plan, nor
any action taken by the Board of the Plan Administrator hereunder, 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 Corporation (or any parent or
subsidiary corporation) for any period of specific duration, and the Corporation
(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.
21.
<PAGE>
SPECIAL ADDENDUM
SHARED INVESTMENT PROGRAM
1. PURPOSE
The Shared Investment Program (the "Program") is hereby implemented
under the 1988 Restated Stock Plan, effective March 19, 1997. The purpose of the
Program is to provide the Corporation's officers and other key employees with
the opportunity to acquire shares of Common Stock as a long-term investment and
thereby more closely align the interests of those individuals with those of the
Corporation's stockholders. Specifically, the Program is intended to achieve the
following purposes:
a. more closely align the financial rewards of participants in the
Program with the financial rewards realized by all other holders
of the Common Stock;
b. increase the motivation of such participants to manage the
Company as owners; and
c. increase the ownership of Common Stock among the officers and
other key employees of the Company.
All capitalized terms used in this Special Addendum shall, to the
extent not specifically defined herein, have the meanings assigned to those
terms in the Plan.
2. PARTICIPATION
The individuals eligible to participate in the Program shall be limited
to the officers and other key employees of the Corporation listed in attached
Schedule I. Each such listed individual shall become a participant in the
Program to the extent he or she purchases all or any portion of the number of
shares of Common Stock allotted to such individual in attached Schedule I. Any
such purchase must be effected in accordance with the provisions of Section 3
below.
3. PARTICIPATION
To become an actual participant in the Program ("Participant"), an
individual listed in attached Schedule I must effect the purchase of all or any
portion of his or her Common Stock allotment under Schedule I as follows:
<PAGE>
a. submit a completed and executed Stock Purchase Agreement, in the
form approved by the Plan Administrator, which incorporates the
provisions of the Program applicable to the purchased shares,
including (without limitation) the gain/loss sharing provisions
of Section 6;
b. execute and deliver a full-recourse promissory note, in
accordance with Section 4 below, in payment of the purchase price
for the purchased shares;
c. execute and deliver a stock pledge agreement, in accordance with
Section 4 below, as collateral for the promissory note; and
d. satisfy all other conditions of participation specified in the
Plan.
All such agreements must be in such form and submitted at such time as
specified by the Plan Administrator. No officer or other key employee listed in
attached Schedule I is required to purchase any of his or her Common Stock
allotment or otherwise to participate in the Program.
The purchases shall be effected in accordance with the provisions of
the Stock Issuance Program under the Plan, and the purchased shares shall
reduce, on a one-for-one basis, the number of shares of Common Stock reserved
for issuance under the Plan. The purchased shares shall be fully-vested upon
issuance and shall not be subject to the Corporation's repurchase rights under
Article III of the Plan.
4. PAYMENT OF PURCHASE PRICE
The purchase price for all shares of Common Stock issued under the
Program shall be equal to one hundred percent (100%) of their Fair Market Value
at the time of purchase. The purchase price shall be paid through the
Participant's delivery of a full-recourse promissory note, substantially in the
form of attached Exhibit A (the "Promissory Note"), payable to the order of the
Corporation. The Promissory Note shall bear interest at the minimum per annum
rate, compounded semi-annually, required under the federal tax laws to avoid the
imputation of compensation income to the Participant. The Promissory Note shall
have a maximum term of nine (9) years, subject to acceleration in accordance
with the provisions of this Program. The Promissory Note shall be secured by the
Participant's pledge of the purchased shares with the Corporation. Accordingly,
the Participant shall, at the time of the purchase of those shares, execute and
deliver to the Corporation a Stock Pledge Agreement in the form of attached
Exhibit B, together with the certificate for the purchased shares accompanied by
a duly-executed assignment of stock powers.
A-2.
<PAGE>
5. SALE OF PURCHASED SHARES
Each Participant shall be permitted to sell all or any portion of the
shares of Common Stock he or she purchases under the Program (the "Purchased
Shares"), subject, however, to the following restrictions:
a. except in the event of the Participant's death, permanent
disability (as defined in Internal Revenue Code Section 22(e)(3))
or other cessation of Service or the occurrence of a Change in
Control of the Corporation, the Participant may not sell any
portion of the Purchased Shares before the first anniversary of
the date on which he or she purchased those shares (the "Purchase
Date");
b. the Participant may not sell any portion of the Purchased Shares
while there is any outstanding unpaid balance (principal and
accrued interest) under his or her Promissory Note, unless the
sale proceeds are simultaneously applied first to the payment of
the principal portion of the Promissory Note attributable to
those shares plus the accrued and unpaid interest on that
principal portion; and
c. the Participant must notify the Finance Department of his or her
intention to sell the Purchased Shares before such sale is
effected.
The Plan Administrator shall have the right to impose restrictions on
the timing, amount and form of sale of the Purchased Shares with respect to any
Participant, to the extent the Plan Administrator determines that such
restrictions are in the best interests of the Corporation.
6. SHARING OF GAIN OR LOSS
If the Participant remains in Service until the first anniversary of
the Purchase Date, then the Corporation shall share the loss (if any) which the
Participant may incur upon the subsequent sale of the Purchased Shares. The loss
will be measured by the excess of (i) the purchase price paid for the Purchased
Shares over (ii) the price at which those shares are sold. The risk of loss on
the Purchased Shares shall be allocated as follows:
a. to the extent any portion of the Purchased Shares is sold before
the third anniversary of the Purchase Date, the Participant shall
be responsible for one hundred percent (100%) of the loss on that
portion of the Purchased Shares; and
A-3.
<PAGE>
b. to the extent any portion of the Purchased Shares is sold on or
after the third anniversary of the Purchase Date, the Participant
shall be responsible for only fifty percent (50%) of the loss on
that portion of the Purchased Shares.
The Corporation shall also be entitled under certain circumstances to
share in the gain (if any) which the Participant may incur upon the subsequent
sale of the Purchased Shares. The gain will be measured by the excess of (i) the
price at which the Purchased Shares are sold over (ii) the purchase price paid
for those shares. The sharing of such gain on the Purchased Shares shall be
allocated as follows:
a. to the extent any portion of the Purchased Shares is sold before
the second anniversary of the Purchase Date, the Participant
shall only be entitled to receive fifty percent (50%) of the gain
on that portion of the Purchased Shares, and the remaining fifty
percent (50%) of the gain shall be paid over to the Corporation;
b. to the extent any portion of the Purchased Shares is sold on or
after the second anniversary of the Purchase Date but before the
third anniversary of such Purchase Date, the Participant shall
only be entitled to receive seventy-five percent (75%) of the
gain on that portion of the Purchased Shares, and the remaining
twenty-five percent (25%) of the gain shall be paid over to the
Corporation; and
c. to the extent any portion of the Purchased Shares is sold on or
after the third anniversary of the Purchase Date, the Participant
shall be entitled to receive one hundred percent (100%) of the
gain on that portion of the Purchased Shares.
The gain/loss sharing provisions of this Section 6 shall apply only to
the extent the Purchased Shares are sold by the Participant and the sale
proceeds are applied to payment of his or her Promissory Note in accordance with
subsection 5.b.
7. DEATH OR PERMANENT DISABILITY
Should the Participant cease Service by reason of his or her death or
permanent disability at any time while there is an outstanding unpaid balance
under his or her Promissory Note, then the Participant (or the representative of
his or her estate) may sell all or any portion of the Purchased Shares, subject
only to the restrictions specified in subsections 5.b and 5.c. Upon the death of
a Participant, her or his Promissory Note shall become immediately due and
payable.
A-4.
<PAGE>
With respect to any Purchased Shares sold after the Participant's death
or permanent disability and while there is an unpaid balance outstanding under
his or her Promissory Note, the Participant shall be not responsible for any
loss incurred on the sale of those Purchased Shares and shall be entitled to
receive one hundred percent (100%) of any gain realized on the sale of the
Purchased Shares.
This Section 7 shall not be applicable to any sale of the Purchased
Shares effected (i) before the Participant's death or permanent disability or
(ii) after the payment of the entire balance owed under his or her Promissory
Note.
8. OTHER CESSATION OF SERVICE
Should the Participant's Service terminate for any reason other than
death or permanent disability, then the following provisions shall apply:
- If the Participant's Service terminates after the first
anniversary of the Purchase Date, then he or she shall remain subject to
all of the terms and conditions of the Program, as if his or her Service
had not terminated, including specifically the transfer restrictions of
subsections 5.b. and 5.c. and the gain/loss sharing provisions of Section
6.
- If the Participant's Service terminates before the first
anniversary of the Purchase Date, then he or she shall be:
a. permitted to sell the Purchased Shares, subject to the
restrictions specified in subsections 5.b. and 5.c.;
b. responsible for one hundred (100%) of the loss on the sale of the
Purchased Shares, whether the sale is effected before or after
his or her Promissory Note is paid; and
c. entitled to receive only fifty percent (50%) of the gain on any
sale of the Purchased Shares, and the remaining fifty percent
(50%) of that gain shall be paid to the Corporation
simultaneously with the sale.
- If the Participant's Service is involuntarily terminated by the
Corporation for any reason or if the Participant voluntarily resigns from
Service, then he or she will have six (6) months to repay the entire
outstanding balance on his or her Promissory Note.
A-5.
<PAGE>
9. CHANGE IN CONTROL
Immediately prior to the consummation of a Change in Control, the
restrictions on the sale of the Purchased Shares specified in Section 5.a shall
lapse. In addition, the following special provisions shall be in effect for each
Participant who continues in Service through the effective date of such Change
in Control:
- each such Participant shall be deemed to have continued in
Service until the first anniversary of the Purchase Date (should the Change
in Control occur before the first anniversary of the Purchase Date), and
- each such Participant shall be deemed to have sold the Purchased
Shares after the third anniversary of the Purchase Date for purposes of
Section 6 (should the sale of the Purchased Shares occur before the third
anniversary of the Purchase Date).
For purposes of the Program, a Change in Control shall be deemed to
occur upon a change in ownership or control of the Corporation effected through
any of the following transactions:
a. the acquisition, directly or indirectly, 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 beneficial ownership (within the meaning
of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly
to the Corporation's stockholders,
b. a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time such election or nomination was approved
by the Board, or
c. the consummation of a Corporate Transaction.
A-6.
<PAGE>
10. LOSS SHARING IMPLEMENTATION
Should the Participant sell any portion of the Purchased Shares at a
loss (as determined by the provisions of Section 6) while his or her Promissory
Note is outstanding, then the Corporation shall assume the portion (if any) of
that loss for which the Participant is not responsible pursuant to the loss
sharing provisions of Section 6. The Corporation shall satisfy such obligation
by delivering a check payable to the Participant in an amount equal to that
portion ("Risk Sharing Payment") simultaneously with the Participant's payment
of the outstanding unpaid balance of his or her Promissory Note.
The Corporation anticipates that the Risk Sharing Payment will
constitute compensation income to the Participant, subject to the Corporation's
collection of all applicable income and employment withholding taxes. The
Corporation also anticipates that the Risk Sharing Payment will be deductible
for federal income tax purposes as compensation in the taxable year in which
such payment is made. If the Corporation determines that it is not entitled to a
current income tax deduction for the Risk Sharing Payment by reason of the
limitations imposed under Internal Revenue Code Section 162(m) and the related
Treasury Regulations, the Corporation will not make the Risk Sharing Payment to
the Participant in connection with the repayment of his or her Promissory Note.
Instead the Participant shall be entitled to receive deferred compensation equal
to the Risk Sharing Payment at a time and in a form which will allow the
Corporation to obtain an income tax deduction for such payment. The Plan
Administrator shall have the sole discretion to implement a deferred
compensation arrangement to the extent necessary or desirable to achieve the
intent of the preceding sentence.
11. EFFECT OF PROGRAM
The Program shall be governed by the provisions of the Plan, except as
otherwise expressly stated in this Special Addendum.
12. DISCRETIONARY AUTHORITY
The Plan Administrator shall have the discretionary authority to waive
any and all transfer restrictions, Service requirements or holding period
requirements otherwise applicable to the Program under such circumstances as the
Plan Administrator may deem appropriate.
A-7.
Exhibit 99.6
<PAGE>
MATRIX PHARMACEUTICAL, INC.
STOCK ISSUANCE AGREEMENT
AGREEMENT made this _____ day of June 1997, by and between Matrix
Pharmaceutical, Inc., a Delaware corporation, and _____________________, a
Participant in the Corporation's 1988 Restricted Stock Plan.
All capitalized terms in this Agreement shall have the meaning assigned
to them in this Agreement or in the attached Appendix.
A. PURCHASE OF SHARES
1. Purchase. Participant hereby purchases __________ shares of Common
Stock (the "Purchased Shares") pursuant to the provisions of the Shared
Investment Program of the Plan at the purchase price of $_______________________
per share (the "Purchase Price").
2. Payment. Concurrently with the delivery of this Agreement to the
Corporation, Participant shall pay the Purchase Price for the Purchased Shares
by delivering (i) a full-recourse Promissory Note (the "Note") payable to the
Corporation (in the form attached hereto as Exhibit I) and (ii) a Stock Pledge
Agreement (in the form attached hereto as Exhibit II) pursuant to which the
Purchased Shares shall serve as collateral for the payment of the Note.
3. Stockholder Rights. Participant shall have all the rights of a
stockholder (including voting, dividend and liquidation rights) with respect to
the Purchased Shares, subject, however, to the transfer restrictions of this
Agreement. The certificates for the Purchased Shares shall be held by the
Corporation under the Stock Pledge Agreement, and the Participant shall
accordingly deliver to the Corporation a duly-executed Assignment Separate from
Certificate for each certificate representing the Purchased Shares pledged with
the Corporation.
B. TRANSFER RESTRICTIONS
1. Restrictions on Sale. The Participant shall be permitted to sell all
or any portion of Purchased Shares, subject to the following restrictions:
a. The Participant may not sell any portion of the Purchased
Shares before the first anniversary of Purchase Date, except in the event
of the Participant's death, Permanent Disability or other cessation of
Service or the occurrence of a Change in Control. Such restriction shall be
applicable whether or not there is an outstanding balance under the
Participant's Note.
b. The Participant may not sell any portion of the Purchased
Shares while there is any outstanding unpaid balance (principal and accrued
interest) under his or her Note, unless the proceeds realized from the sale
of the Purchased Shares are simultaneously applied first to the payment of
the principal portion of the Note attributable to those shares plus the
accrued and unpaid interest on that principal portion.
<PAGE>
c. The Participant shall notify the Corporation's Finance
Department prior to any sale of the Purchased Shares while there is an
unpaid balance outstanding on his or her Note.
2. Restrictive Legend. The stock certificate for the Purchased Shares
shall be endorsed with the following restrictive legend:
"The shares represented by this certificate are
subject to certain transfer restrictions imposed pursuant to that certain
Stock Issuance Agreement between the Corporation and the registered holder
of the shares (or the predecessor in interest to the shares) dated June ,
1997 and may not be sold, assigned, transferred, encumbered or made the
subject of any disposition except in conformity with the terms of that
Stock Issuance Agreement. A copy of such agreement is maintained at the
Corporation's principal corporate offices."
C. SHARED INVESTMENT
To the extent the Purchased Shares are sold by the Participant and the sale
proceeds are to be applied to the payment of his or her Note pursuant to the
requirements of Subsection B.1.b, the following provisions shall apply:
1. Loss on Sale. If the Participant remains in Service until the first
anniversary of the Purchase Date, then the Corporation shall share the Loss (if
any) which the Participant may incur upon the subsequent sale of the Purchased
Shares. The risk of the Loss on the Purchased Shares shall be allocated as
follows:
a. To the extent any portion of the Purchased Shares is sold
before the third anniversary of the Purchase Date, the Participant shall be
responsible for one hundred percent (100%) of the Loss incurred on that
portion of the Purchased Shares.
b. To the extent any portion of the Purchased Shares is sold on
or after the third anniversary of the Purchase Date, the Participant shall
be responsible for only fifty percent (50%) of the Loss on that portion of
the Purchased Shares.
2. Gain on Sale. The Corporation shall be entitled under certain
circumstances to share in the Gain (if any) which the Participant may realize
upon the subsequent sale of the Purchased Shares. The sharing of such Gain on
the Purchased Shares shall be allocated a follows:
a. To the extent any portion of the Purchased Shares is sold
before the second anniversary of the Purchase Date, the Participant shall
only be entitled to receive fifty percent (50%) of the Gain on that portion
of the Purchased Shares, and the remaining fifty percent (50%) of the Gain
shall immediately be paid over to the Corporation.
b. To the extent any portion of the Purchased Shares is sold on
or after the second anniversary of the Purchase Date but before the third
anniversary of such Purchase Date, the Participant shall only be entitled
to receive seventy-five percent (75%) of the Gain on that portion of the
Purchased Shares, and the remaining twenty-five percent (25%) of the Gain
shall immediately be paid over to the Corporation.
c. To the extent any portion of the Purchased Shares is sold on
or after the third anniversary of the Purchase Date, the Participant shall
be entitled to receive one hundred percent (100%) of the Gain on that
portion of the Purchased Shares.
2.
<PAGE>
3. Death or Permanent Disability. Should the Participant cease Service
by reason of his or her death or Permanent Disability at any time while there is
an outstanding unpaid balance under his or her Note, then the Participant (or
the representative of his or her estate) may sell all or any portion of the
Purchased Shares, subject only to the restrictions specified in Subsections
B.1.b and B.1.c. Upon the Participant's death, her or his Note shall become
immediately due and payable.
With respect to any Purchased Shares sold after the Participant's
death or Permanent Disability while there is an unpaid balance outstanding under
his or her Note, the Participant shall be not responsible for any Loss incurred
on the sale of those Purchased Shares and shall be entitled to receive one
hundred percent (100%) of any Gain realized on the sale of the Purchased Shares.
This Section 3 shall not be applicable to any sale of the Purchased
Shares effected (i) before the Participant's death or Permanent Disability or
(ii) after the payment of the entire balance owed under his or her Note.
4. Other Cessation of Service. Should the Participant cease Service for
any reason other than death or Permanent Disability, then the following
provisions shall apply:
a. Should such cessation of Service occur before the first
anniversary of the Purchase Date, then (i) all sales of the Purchased
Shares shall remain subject to the restrictions specified in Subsections
B.1.b. and B.1.c. of this Agreement, (ii) the Participant shall be
responsible for one hundred percent (100%) of any Loss incurred on the sale
of the Purchased Shares, whether the sale is effected before or after his
or her Note is paid, and (iii) the Participant shall be entitled to receive
only fifty percent (50%) of any Gain realized on any sale of the Purchased
Shares, and the remaining fifty percent (50%) of that Gain shall be paid to
the Corporation simultaneously with the sale.
b. Should such cessation of Service occur on or after the first
anniversary of the Purchase Date, all terms and conditions of this
Agreement shall apply to the sale of the Purchased Shares, including the
transfer restrictions of Subsections B.1.b and B.1.c and the Gain/Loss
sharing provisions of Subsections C.1. and C.2. of this Agreement.
5. Change in Control
Immediately prior to the consummation of a Change in Control, the
restriction on the sale of the Purchased Shares specified in Subsections B.1.a
of this Agreement shall lapse. In addition, if the Participant remains in
Service through the effective date of such Change in Control, then the following
special provisions shall be in effect:
a. The Participant shall be deemed to have continued in Service
until the first anniversary of the Purchase Date (should the Change in
Control occur before the first anniversary of the Purchase Date).
b. The Participant shall be deemed to have sold the Purchased
Shares after the third anniversary of the Purchase Date for purposes of
Subsections C.1. and C.2. of this Agreement (should the sale of the
Purchased Shares occur before the third anniversary of the Purchase Date).
6. Risk Sharing Payment. Should the Participant sell any portion of the
Purchased Shares at a Loss while the balance of his or her Note attributable to
those shares remains unpaid and
3.
<PAGE>
outstanding, then the Corporation shall assume the portion (if any) of that Loss
for which the Participant is not responsible pursuant to the loss sharing
provisions of Subsection C.1. or C.3. The Corporation shall satisfy such
obligation by delivering a check payable to the Participant in an amount equal
to that portion ("Risk Sharing Payment") simultaneously with the Participant's
payment of the portion of the unpaid balance of his or her Note attributable to
the Purchased Shares which are the subject of that sale. The Corporation
anticipates that the Risk Sharing Payment will constitute compensation income to
the Participant, subject to the Corporation's collection of all applicable
income and employment withholding taxes. The Corporation also anticipates that
the Risk Sharing Payment will be deductible for federal income tax purposes as
compensation in the taxable year in which such payment is made. However, should
the Corporation determine that it will be not entitled to a current income tax
deduction for the Risk Sharing Payment by reason of the limitations imposed
under Code Section 162(m) and the related Treasury Regulations, then the
Corporation shall not make the Risk Sharing Payment to the Participant in
connection with the repayment of his or her Note. Instead the Participant shall
be entitled to receive deferred compensation equal to the Risk Sharing Payment
at a time and in a form which will allow the Corporation to obtain an income tax
deduction for that payment. The Plan Administrator shall have the sole
discretion to set the terms and conditions on which such a deferred compensation
arrangement is to be implemented.
D. GENERAL PROVISIONS
1. No Employment or Service Contract. Nothing in this Agreement or in
the Plan shall confer upon Participant any right to continue in Service for any
period of specific duration or interfere with or otherwise restrict in any way
the rights of the Corporation (or any Parent or Subsidiary employing or
retaining Participant) or of Participant, which rights are hereby expressly
reserved by each, to terminate Participant's Service at any time for any reason,
with or without cause.
2. Notices. Any notice required to be given under this Agreement shall
be in writing and shall be deemed effective upon personal delivery or upon
deposit in the U.S. mail, registered or certified, postage prepaid and properly
addressed to the party entitled to such notice at the address indicated below
such party's signature line on this Agreement or at such other address as such
party may designate by ten (10) days advance written notice under this paragraph
to all other parties to this Agreement.
3. No Waiver. A waiver of any breach or condition of this Agreement
shall not be deemed to be a waiver of any other or subsequent breach or
condition, whether of like or different nature.
4. Participant Undertaking. Participant hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on either Participant or the Purchased
Shares pursuant to the provisions of this Agreement.
5. Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
This Agreement is made pursuant to the provisions of the Plan and shall in all
respects be construed in conformity with the terms of the Plan. This Agreement
may be executed in counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same
instrument.
6. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without resort to that
State's conflict-of-laws rules.
7. Successors and Assigns. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the Corporation and its successors and
assigns and upon Participant, Participant's assigns and the legal
representatives, heirs and legatees of Participant's estate, whether or not
4.
<PAGE>
any such person shall have become a party to this Agreement and have agreed in
writing to join herein and be bound by the terms hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first indicated above.
MATRIX PHARMACEUTICAL, INC.
By:____________________________________
Title:_________________________________
Address:_______________________________
_______________________________________
_______________________________________
PARTICIPANT
Address:_______________________________
_______________________________________
5.
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APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Issuance Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Change in Control shall be deemed to occur upon a change in ownership or
control of the Corporation effected through any of the following transactions:
(i) a merger or consolidation in which securities possessing more than
fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different
from the persons holding those securities immediately prior to such
transaction,
(ii) the sale, transfer or other disposition of all or substantially
all of the Corporation's assets in complete liquidation or dissolution of
the Corporation,
(iii) the acquisition, directly or indirectly, 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 beneficial ownership (within the meaning of Rule 13d-3 of
the 1934 Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the Corporation's
stockholders, or
(iv) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of the
Board members ceases, by reason of one or more contested elections for
Board membership, to be comprised of individuals who either (A) have been
Board members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A) who
were still in office at the time such election or nomination was approved
by the Board.
D. Code shall mean the Internal Revenue Code of 1986, as amended.
E. Common Stock shall mean the Corporation's common stock.
F. Corporation shall mean Matrix Pharmaceutical, Inc., a Delaware
corporation.
G. Gain shall mean the excess of (i) the aggregate pre-tax sale proceeds
realized upon the sale of one or more Purchased Shares over (ii) the aggregate
Purchase Price paid for those Purchased Shares.
H. Loss shall mean the excess of (i) the aggregate Purchase Price paid for
one or more Purchased Shares which are subsequently sold by the Participant over
(ii) the aggregate pre-tax sale proceeds realized upon the sale of those
Purchased Shares.
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I. Note shall mean the purchase-money promissory note of the Participant
payable to Corporation in connection with the acquisition of the Purchased
Shares.
J. Parent shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
K. Participant shall mean the person to whom the Purchased Shares are
issued under the Shared Investment Program.
L. Permanent Disability shall mean the inability of the Participant to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment expected to result in death or to
have a continuous duration of twelve (12) consecutive months or more.
M. Plan shall mean the Corporation's 1988 Restricted Stock Plan.
N. Plan Administrator shall mean the Compensation Committee of the Board
acting in its capacity as administrator of the Plan.
O. Purchase Date shall mean the date on which the Participant purchases the
Purchased Shares.
P. Purchase Price shall have the meaning assigned to such term in Paragraph
A.1.
Q. Purchased Shares shall have the meaning assigned to such term in
Paragraph A.1.
R. Service shall mean the Participant's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an employee,
subject to the control and direction of the employer entity as to both the work
to be performed and the manner and method of performance, a non-employee member
of the board of directors or a consultant.
S. Shared Investment Program shall mean the Shared Investment Program in
effect under the Plan.
T. Stock Pledge Agreement shall mean the agreement between the Corporation
and the Participant pursuant to which the Purchased Shares have been pledged as
security for the Note.
U. Subsidiary shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations beginning with the Corporation, provided each
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
2.
Exhibit 99.7
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MATRIX PHARMACEUTICAL, INC.
1991 DIRECTORS STOCK OPTION PLAN
AS AMENDED AND RESTATED MARCH 19, 1997
<PAGE>
ARTICLE I
GENERAL PROVISIONS
PURPOSES OF THE PLAN
This 1991 Directors Stock Option Plan (the "Plan") is intended to promote
the interests of Matrix Pharmaceutical, Inc., a Delaware corporation (the
"Corporation"), by offering non-employee members of the Board of Directors the
opportunity to participate in a special stock option program designed to provide
them with significant incentives to remain in the service of the Corporation.
ELIGIBILITY
A. Each non-employee member of the Corporation's Board of Directors (the
"Board") shall be eligible to receive automatic option grants pursuant to the
provisions of Article II below.
B. In addition to the automatic option grants to be made pursuant to the
provisions of Article II below, non-employee Board members shall also be
eligible to receive option grants or stock issuances under the Corporation's
1988 Restricted Stock Plan or any other stock plan of the Corporation or its
Parent or Subsidiary corporations.
STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of the Corporation's
common stock ("Common Stock"). Such shares may be made available from authorized
but unissued shares of Common Stock or shares of Common Stock reacquired by the
Corporation. The aggregate number of issuable shares of Common Stock shall not
exceed 592,858(1) shares, subject to adjustment from time to time in accordance
with subparagraph D below. Such share reserve reflects the 2.1-for-1 reverse
stock split of the outstanding Common Stock effected in January 1992.
B. Should an option expire or terminate for any reason prior to exercise in
full, the shares subject to the portion of the option not so exercised shall be
available for subsequent option grants under this Plan. Shares subject to any
option cancelled in accordance with the automatic cancellation provisions of the
Plan shall not be available for reissuance under the Plan.
- -------------
(1) Includes (i) the 200,000-share increase authorized by the Board on May 24,
1994 and approved by the stockholders at the 1995 Annual Meeting and (ii) the
250,000-share increase authorized by the Board on March 19, 1997, subject to
stockholder approval at the 1997 Annual Meeting.
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C. Should the total number of shares at the time available for grant under
the Plan not be sufficient for the automatic grants to be made at that
particular time to the non-employee Board members, then the available shares
shall be allocated proportionately among all the automatic grants to be made at
that time.
D. In the event any change is made to the Common Stock issuable under the
Plan by reason of any stock split, stock dividend, combination of shares,
exchange of shares or other change affecting the outstanding Common Stock as a
class without the Corporation's receipt of consideration, appropriate
adjustments will be made to (i) the aggregate number and/or class of shares of
securities available for issuance under the Plan, (ii) the number and/or class
of securities to be made the subject of each subsequent automatic grant and
(iii) the number and/or class of securities purchasable under each outstanding
option and the exercise price payable per share in order to prevent the dilution
or enlargement of benefits thereunder.
VALUATION
For purposes of establishing the option price and for all other valuation
purposes under the Plan, the Fair Market Value per share of Common Stock on any
relevant date shall be determined in accordance with the following rules:
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq National
Market, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers, Inc. on
the Nasdaq National Market or any successor system. If there is no
reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of Fair Market
Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question on the stock exchange serving as the primary market for the
Common Stock, as such price is officially quoted 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 shall be the closing selling
price on the exchange on the last preceding date for which such
quotation exists.
2.
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PARENT AND SUBSIDIARY CORPORATIONS
A. A corporation shall be deemed to be a Parent of the Corporation if it is
one of the corporations (other than the Corporation) in an unbroken chain of
corporations ending with the Corporation, provided each such corporation (other
than the Corporation) owns, at the time of determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
B. A corporation shall be deemed to be a Subsidiary of the Corporation if
it is one of the corporations (other than the Corporation) in an unbroken chain
of corporations beginning with the Corporation, provided each such corporation
(other than the last corporation in the unbroken chain) owns, at the time of
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain. For purposes of the Corporate Transaction provisions of the Plan,
the term "Subsidiary" shall also include any partnership, joint venture or other
business entity of which the Corporation owns, directly or indirectly through
another subsidiary corporation, more than a fifty percent (50%) interest in
voting power, capital or profits.
3.
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ARTICLE II
AUTOMATIC GRANT PROGRAM
GRANT DATES
A. Initial Grant. Each individual who initially becomes a non-employee
Board member at any time on or after the May 24, 1994 effective date of this
plan restatement, whether through election at an Annual Stockholders Meeting or
through appointment by the Board, shall automatically be granted, at the time of
such initial election or appointment, a non-statutory stock option to purchase
40,000 shares of Common Stock upon the terms and conditions of this Article II,
provided such individual has not previously served as an employee of the
Corporation or any Parent or Subsidiary of the Corporation.
B. Annual Grant. On the date of each Annual Stockholders Meeting beginning
with the first Annual Stockholders Meeting held after the May 24, 1994 effective
date of this plan restatement, each individual who is re-elected as a
non-employee member of the Board at such Annual Stockholders Meeting (including
individuals who were initially elected as non-employee Board members prior to
May 24, 1994) shall receive an automatic option grant under the Plan for 3,000
shares of Common Stock, provided such individual has been a member of the Board
for at least six (6) months.
C. Special Grants. The following special option grants shall be made under
the Plan:
1. Each individual who was not eligible to receive an
initial option grant under the Plan for 23,810 shares of Common Stock
when the Plan originally became effective on January 28, 1992 shall,
in connection with the subsequent cessation of his affiliation with
the venture capital fund or other investment entity or corporate
partner with which he was affiliated on such earlier effective date,
receive a special stock option grant for 40,000 shares of Common Stock
on the later of (i) the May 24, 1994 effective date of this plan
restatement or (ii) the date upon which such affiliation ceases. Such
individual, however, shall not be eligible to receive his or her next
3,000- share annual option grant until the first Annual Stockholders
Meeting held more than six (6) months after the date of his or her
special 40,000-share grant hereunder.
2. Each individual who receives his or her initial automatic
option grant under Paragraph A of this Grant Dates section at a time
when such individual is otherwise contractually committed to transfer
the economic benefit of that grant and each subsequent grant to the
venture capital fund or other investment entity or corporate partner
with which he or she is affiliated, whether as partner, principal,
stockholder or employee, and who subsequently
4.
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ceases to be affiliated with the venture capital fund or other
investment entity or corporate partner shall, immediately upon such
cessation of affiliated status, receive a second stock option grant
for 40,000 shares of Common Stock. Such individual, however, shall not
be eligible to receive his or her next 3,000-share annual option grant
until the first Annual Stockholders Meeting held more than six (6)
months after the date of his or her special 40,000-share grant
hereunder.
All non-employee Board members will be eligible for a special option grant
in accordance with the foregoing criteria, whether they first joined the Board
before or after the May 24, 1994 effective date of this plan restatement.
D. The 40,000-share limitation on the initial and special automatic option
grants and the 3,000-share limitation on the automatic option grants to be made
annually to each non-employee Board member shall be subject to periodic
adjustment pursuant to the applicable provisions of Article I.
TERMS AND CONDITIONS OF GRANT
Each option granted in accordance with the automatic grant provisions of
this Plan shall be evidenced by an instrument in the form of the prototype
non-statutory stock option agreement attached to the Plan as Exhibit A.
Accordingly, each such automatic grant shall be subject to the following terms
and conditions:
1. Option Price.
The option price per share shall be one hundred percent (100%) of the
Fair Market Value per share of Common Stock on the automatic grant date.
2. Term and Exercisability of Options.
a. Initial Grant. Provided the optionee continues as a Board Member,
each initial automatic option grant under Paragraph A of the Grant Dates section
shall become exercisable for one or more of the option shares in three (3)
successive annual installments as follows:
(i) The first installment equal to one-third of the total
option shares shall become exercisable on the first anniversary of the
grant date, provided optionee attends all of the regularly-scheduled
Board meetings held during the one-year period measured from the grant
date. To the extent that optionee attends less than all of such
meetings, the option shall lapse as to the number of shares determined
by multiplying one-third of the total option shares by a fraction, the
numerator of which is the number of such meetings which the optionee
did not attend during such one-year period and
5.
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the denominator of which is the total number of such meetings held
during that period. Any option shares as to which the option lapses
shall no longer be subject to such option or otherwise available for
purchase by the optionee.
(ii) The second installment equal to an additional one-
third of the total option shares shall become exercisable on the
second anniversary of the grant date, provided optionee attends all of
the regularly-scheduled Board meetings held during the one-year period
measured from the first anniversary of the grant date. To the extent
that optionee attends less than all of such meetings, the option shall
lapse as to the number of shares determined by multiplying one-third
of the total option shares by a fraction, the numerator of which is
the number of such meetings which the optionee did not attend during
the applicable one-year period and the denominator of which is the
total number of such meetings held during such period. Any option
shares as to which the option lapses shall no longer be subject to
such option or otherwise available for purchase by the optionee.
(iii) The third installment equal to the final one-third of
the total option shares shall become exercisable on the third
anniversary of the grant date, provided optionee attends all of the
regularly-scheduled Board meetings held during the one-year period
measured from the second anniversary of the grant date. To the extent
that optionee attends less than all of such meetings, the option shall
lapse as to the number of shares determined by multiplying one-third
of the total option shares by a fraction, the numerator of which is
the number of such meetings which the optionee did not attend during
the applicable one-year period and the denominator of which is the
total number of such meetings held during such period. Any option
shares as to which the option lapses shall no longer be subject to
such option or otherwise available for purchase by the optionee.
As the option becomes exercisable for one or more installments of the
option shares, the installments shall accumulate, and the option shall remain
exercisable for the accumulated installments until the expiration or sooner
termination of the option term.
b. Annual Grant. Each annual option grant under Paragraph B of the
Grant Dates section shall become exercisable in its entirety one (1) year after
the grant date, provided optionee attends all of the regularly-scheduled Board
meetings held during that one-year period. To the extent that optionee attends
less than all of such meetings, the option shall lapse as to the number of
shares determined by multiplying the number of total option shares by a
fraction, the numerator of which is the number of such meetings which the
optionee did not attend during the applicable one-year period and the
denominator of which is the total number of such meetings held during such
period. Any option shares as to which the option lapses shall no longer be
subject to such option or otherwise available for purchase by the optionee. To
the extent the option becomes exercisable for one or more
6.
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option shares, such option shall remain exercisable for such shares until the
expiration or sooner termination of the option term.
c. Special Grant. Provided the optionee continues as a Board Member,
any special automatic option grant made to that individual under Paragraph C of
the Grant Dates section (the "Special Option") shall become exercisable for the
option shares in accordance with the following provisions:
- One-third of the total option shares shall become
exercisable upon the later of (i) the first anniversary of the grant
date of his or her initial automatic option grant under Paragraph A of
the Grant Dates section ("the Initial Grant Date") or (ii) the grant
date of the Special Option, provided that in either event the optionee
attended all of the regularly-scheduled Board meetings held during the
one-year period measured from the Initial Grant Date. To the extent
that optionee attended less than all of such meetings, the option
shall immediately lapse as to the number of shares determined by
multiplying one-third of the total option shares by a fraction, the
numerator of which is the number of such meetings which the optionee
did not attend during such one-year period and the denominator of
which is the total number of such meetings held during that period.
Any option shares as to which the option lapses shall no longer be
subject to such option or otherwise available for purchase by the
optionee.
- An additional one-third of the total option shares shall
become exercisable upon the later of (ii) the second anniversary of
the Initial Grant Date or (ii) the grant date of the Special Option,
provided optionee attended all of the regularly-scheduled Board
meetings held during the one-year period measured from the first
anniversary of the Initial Grant Date. To the extent that optionee
attended less than all of such meetings, the option shall immediately
lapse as to the number of shares determined by multiplying one-third
of the total option shares by a fraction, the numerator of which is
the number of such meetings which the optionee did not attend during
the applicable one-year period and the denominator of which is the
total number of such meetings held during such period. Any option
shares as to which the option lapses shall no longer be subject to
such option or otherwise available for purchase by the optionee.
- The final one-third of the total option shares shall
become exercisable upon the later of (i) the third anniversary of the
Initial Grant Date or (ii) the grant date of the Special Grant,
provided optionee attended all of the regularly-scheduled Board
meetings held during the one-year period measured from the second
anniversary of the Initial Grant Date. To the extent that optionee
attended less than all of such meetings, the option shall immediately
lapse as to the number of shares determined by multiplying
7.
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one-third of the total option shares by a fraction, the numerator of
which is the number of such meetings which the optionee did not attend
during the applicable one-year period and the denominator of which is
the total number of such meetings held during such period. Any option
shares as to which the option lapses shall no longer be subject to
such option or otherwise available for purchase by the optionee.
For any special option grant made under Paragraph C.1 of the Grant
Dates section to an individual who did not in fact receive an initial automatic
option grant on the original effective date of the Plan, the foregoing schedule
shall be adjusted so that the term "Initial Grant Date" shall mean the original
January 28, 1992 effective date of the Plan, even though such individual did not
receive an initial automatic option grant at that time.
As the Special Option becomes exercisable for one or more installments
of the option shares, the installments shall accumulate, and the Special Option
shall remain exercisable for the accumulated installments until the expiration
or sooner termination of the option term.
d. Term. Each outstanding option under the Plan held by an individual
serving as a non-employee Board Member on January 1, 1997 and each option
granted under the Plan on or after January 1, 1997 shall have a term of ten (10)
years measured from the automatic grant date, whether or not the optionee
continues to serve as a Board Member, subject to earlier termination in
connection with a Corporate Transaction or Hostile Take- Over as hereinafter
provided.
3. Exercise of Option.
Upon exercise of the option, the option price for the purchased shares
shall become immediately payable in one of the alternative forms specified
below:
(i) cash or check payable to the Corporation's order; or
(ii) shares of Common Stock held by the optionee for the
requisite period necessary to avoid a charge to the Corporation's
reported earnings and valued at Fair Market Value on the date of
exercise; or
(iii) any combination of the foregoing so long as the total
payment equals the aggregate option price for the purchased shares; or
(iv) payment effected through a broker-dealer sale and
remittance procedure pursuant to which the Optionee (I) shall provide
irrevocable instructions to a Corporation-designated broker-dealer to
effect the immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the settlement
date, an amount equal to the
8.
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aggregate option price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to
be withheld by the Corporation by reason of such purchase and (II)
shall provide directives to the Corporation to deliver the
certificates for the purchased shares directly to such broker-dealer.
4. Limited-Transferability.
The option may, in connection with the optionee's estate plan, be
assigned in whole or in part during the optionee's lifetime to one or more
members of the optionee's immediate family or to a trust established exclusively
for one or more such family members. 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 Corporation may deem appropriate. Should the optionee die while holding the
option, then that option shall be transferred in accordance with the optionee's
will or the laws of descent and distribution.
5. Effect of Termination of Board Membership.
a. Should the optionee cease to serve as a Board Member for any reason
(other than death) while holding an automatic option grant under this Article
II, then such optionee shall have until the expiration of the ten (10)-year
option term in which to exercise such option for any or all of the shares of
Common Stock for which the option is exercisable at the time of such optionee's
cessation of Board service. However, the option shall, immediately upon the
optionee's cessation of service as a Board Member, terminate and cease to be
outstanding for any and all shares of Common Stock for which the option is not
otherwise at that time exercisable.
b. Should an optionee die while serving as a Board Member, then any
outstanding automatic grant held by the optionee at the time of death may be
subsequently exercised, for any or all of the shares at the time subject to that
option, 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. The option shall remain
so exercisable until the expiration of the ten (10)-year option term.
c. Each automatic option grant shall terminate and cease to remain
exercisable for any of the option shares upon the expiration of the ten
(10)-year option term, subject to earlier termination upon a Corporate
Transaction or Hostile Take-Over as hereinafter provided.
9.
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d. For purposes of the Plan, the optionee shall be deemed to serve as a
Board Member for so long as he or she continues to serve as a member of the
Board or Directors or as a member of the board of directors of any Parent or
Subsidiary of the Corporation.
6. Stockholder Rights.
An option holder shall have none of the rights of a stockholder with
respect to any shares covered by the automatic grant until such individual shall
have exercised the option, paid the option price and been issued a stock
certificate for the purchased shares.
7. Remaining Terms. The remaining terms and conditions of each automatic
option grant shall be as set forth in the prototype Non-Statutory Stock Option
Agreement attached as Exhibit A to the Plan.
CORPORATE TRANSACTION
A. In the event of any of the following transactions ("Corporate
Transaction"):
(i) 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; or
(ii) a sale of all or substantially all of the Corporation's
assets in complete liquidation or dissolution of the Corporation; or
(iii) any reverse merger in which the Corporation is the
surviving entity but in which all of the Corporation's outstanding
voting stock is transferred to the acquiring entity or its
wholly-owned subsidiary;
then each automatic option grant at the time outstanding under
the Plan and not otherwise at the time fully exercisable 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.
Immediately following the consummation of such Corporate Transaction, all
outstanding options under this Plan shall terminate and cease to be exercisable,
except to the extent assumed by the successor corporation or its parent company.
B. To the extent one or more options understanding under the
Plan at the time of the Corporate Transaction are assumed by the successor
corporation or its parent company, then each of those options shall, immediately
after such Corporate Transaction, be appropriately adjusted to apply and pertain
to the number and class of securities which would have been issued to the option
holder in the consummation of such Corporate
10.
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Transaction had that option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to the option price
payable per share, provided the aggregate option price shall remain the same.
C. The automatic grants in effect under this Plan shall in no
way affect the right of the Corporation 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.
CHANGE IN CONTROL/HOSTILE TAKEOVER
A. Each automatic option grant outstanding under the Plan at
the time of a Change in Control of the Corporation shall automatically
accelerate so that each such option shall, immediately prior to the specified
effective date for the Change in Control, 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 at any time prior to
the expiration or sooner termination of the option term.
B. Upon the occurrence of a Hostile Take-Over, each automatic
option grant at the time outstanding under the Plan shall automatically be
cancelled in return for a cash distribution from the Corporation in an amount
equal to the excess of (i) the Take-Over Price 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 to the option holder within five (5) days following the
consummation of the Hostile Take-Over. Stockholder approval of this 1997
restatement of the Plan shall constitute pre-approval of each option
subsequently granted with such a automatic cancellation provision and the
subsequent cancellation of that option in accordance with the provisions of this
Paragraph B. No additional approval of the Board shall be required at the time
of the actual option cancellation and cash distribution.
C. For purposes of this Article II, the following definitions
shall be in effect:
A Change in Control shall be deemed to occur if:
(i) 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) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange
Act of 1934) of securities possessing more than forty percent (40%) of
the total combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation's stockholders; or
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(ii) there is a change in the
composition of the Board over a period of twenty-four (24) consecutive
months or less such that a majority of the Board members ceases, by
reason of one or more proxy contests for the election of Board
members, to be comprised of individuals who either (A) have been Board
members continuously since the beginning of such period or (B) have
been elected or nominated for election as Board members during such
period by at least two-thirds of the Board members described in clause
(A) who were still in office at the time such election or nomination
was approved by the Board.
A Hostile Take-Over shall be deemed to occur in
the event 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)
directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 of the Securities Exchange Act of 1934) of
securities possessing more than forty percent (40%) of the total
combined voting power of the Corporation's outstanding securities
pursuant to a tender or exchange offer made directly to the
Corporation's stockholders which the Board does not recommend such
stockholders to accept.
The Take-Over Price per share shall be deemed to
be equal to the greater of (a) the Fair Market Value per share on the
date of the option cancellation or (b) the highest reported price per
share paid in effecting such Hostile Take-Over.
D. The shares of Common Stock subject to each option cancelled
in connection with the Hostile Take-Over shall not be available for subsequent
issuance under this Plan.
12.
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ARTICLE III
MISCELLANEOUS PROVISIONS
AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect any rights and obligations with
respect to any stock options at the time outstanding under the Plan unless the
optionee consents to such amendment or modification. In addition, certain
amendments may require stockholder approval pursuant to applicable laws or
regulations.
EFFECTIVE DATE AND TERM OF PLAN
A. The Plan was adopted by the Board in December 1991 and
approved by the Corporation's stockholders in January 1992. The Plan became
effective on January 28, 1992, the date when the Common Stock first became
subject to the registration requirements of Section 12 of the Securities
Exchange Act of 1934. The Plan was subsequently amended on March 31, 1992. On
May 24, 1994, the Plan was restated, subject to stockholder approval at the 1995
Annual Meeting, to (i) increase the maximum number of shares of Common Stock
authorized for issuance under the Plan by an additional 200,000 shares, (ii)
increase the number of shares for which an initial automatic option grant is to
be made under Paragraph A of the Grant Dates section from 23,810 shares to
40,000 shares and the number of shares for which the annual automatic option
grants are to made under Paragraph B of the Grant Dates section from 2,858
shares to 3,000 shares each, (iii) provide for a special 40,000-share option
grant to each non-employee Board member upon his or her subsequent cessation of
affiliate status with any venture capital fund or other investment entity or
corporate partner with which he or she was affiliated at the time the Plan
originally became effective on January 28, 1992 or which required him or her to
transfer to such entity the economic benefit of any previous option grants to
such individual and (iv) effect certain additional changes to the Plan to
clarify the benefits available to participants. Nothing in the May 24, 1994
restatement shall have any effect or impact upon any prior option grants made
under the Plan, and those prior option grants shall continue to be governed by
the terms and provisions of the option agreements evidencing those grants.
B. The Plan was amended and restated by the Board on March 19,
1997 (the "1997 Restatement") to effect the following changes: (i) increase the
maximum number of shares of Common Stock authorized for issuance over the term
of the Plan from 342 858 shares to 592,858 shares, (ii) allow each outstanding
option under the Plan held by an individual serving as a non-employee Board
Member on January 1, 1997 and each option granted under the Plan on or after
January 1, 1997 to remain outstanding as to any otherwise exercisable option
shares for the full ten (10)-year option term, whether or not the optionee
continues to serve as a Board Member, and (iii) effect a series of changes to
13.
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the provisions of the Plan (including the stockholder approval requirements) in
order to take advantage of the recent amendments to Rule 16b-3 of the Securities
and Exchange Commission which exempts certain officer and director transactions
under the Plan from the short-swing liability provisions of the federal
securities laws. The 1997 Restatement is subject to stockholder approval at the
1997 Annual Meeting, and no option grants made on the basis of the 250,000-share
increase shall become exercisable in whole or in part unless and until the 1997
Restatement is approved by the stockholders. Should such stockholder approval
not be obtained, then any options granted on the basis of the 250,000-share
increase shall terminate without ever becoming exercisable for those shares, and
no further option grants shall be made on the basis of such share increase. In
addition, all options outstanding under the Plan on or after January 1, 1997
will remain subject to a maximum twelve (12)-month exercise period following the
optionee's cessation of Board service. In the absence of such stockholder
approval, option grants shall, however, continue to be made pursuant to the
provisions of the Automatic Option Grant Program in effect under the Plan
immediately prior to the 1997 Restatement. All option grants made prior to the
1997 Restatement shall remain outstanding in accordance with the terms and
conditions of the respective instruments evidencing those options, and nothing
in the 1997 Restatement (other than the extension of the post-service exercise
period) shall be deemed to modify or in any way affect those outstanding options
or issuances.
C. The Plan shall terminate upon the earliest to occur of (i)
December 2, 2001 unless sooner terminated by the Board, (ii) the date on which
all shares available for issuance under the Plan shall have been issued pursuant
to the exercise of the automatic grants made hereunder or (iii) the date on
which all outstanding options are cashed-out in connection with the Hostile
Takeover provisions of the Plan. If the date of termination is determined under
clause (i) above, then any option grants outstanding on such date shall not be
affected by the termination of the Plan and shall continue to have force and
effect in accordance with the provisions of the instruments evidencing such
grants.
CASH PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares pursuant to the automatic grants made under the Plan shall be used for
general corporate purposes.
REGULATORY APPROVALS
The implementation of the Plan, the granting of any option
hereunder, and the issuance of Common Stock upon the exercise of any such option
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the Common Stock issued pursuant to it.
14.
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NO IMPAIRMENT OF RIGHTS
Nothing in this Plan or any automatic grant made pursuant to
the Plan shall be construed or interpreted so as to affect adversely or
otherwise impair the right of the Corporation or its stockholders to remove any
optionee from service on the Board at any time in accordance with the provisions
of applicable law.
15.
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EXHIBIT A
Exhibit 99.8
<PAGE>
AUTOMATIC OPTION GRANT
MATRIX PHARMACEUTICAL, INC.
NON-STATUTORY STOCK OPTION AGREEMENT
AGREEMENT made this ________ day of ____________, 199_ by and
between Matrix Pharmaceutical, Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Company"), and _________________________
(the "Optionee").
WITNESSETH:
RECITALS
A. The Company's Board of Directors (the "Board") has adopted
the Company's 1991 Director Stock Option Plan (the "Plan") for the purpose of
providing an equity incentive for individuals to serve as non-employee members
of the Board.
B. Optionee is a non-employee Board member who is entitled to
receive an option to acquire shares of the Company's common stock, par value
$0.01 per share (the "Common Stock"), pursuant to the automatic option grant
program implemented for non-employee Board members under the Plan. This
Agreement is executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the automatic option grant made to such Optionee
thereunder.
C. The granted option is intended to be a non-statutory stock
option which does not satisfy the requirements of Section 422 of the Internal
Revenue Code.
D. For purposes of this Agreement, the following definitions
shall be in effect:
Board Member: The Optionee shall be deemed to be a Board Member
for so long as such individual continues to serve as a member of the
Company's Board of Directors (the "Board") or as a member of the board
of directors of any Parent or Subsidiary Corporation.
Fair Market Value: The Fair Market Value per share of Common Stock
on any date in question shall be determined in accordance with the
following provisions:
<PAGE>
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question, as such price is reported by the
National Association of Securities Dealers, Inc. on the Nasdaq National
Market or any successor system. If there is no reported closing selling
price for the Common Stock on the date in question, then the closing
selling price on the last preceding date for which such quotation exists
shall be determinative of Fair Market Value.
(ii) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in question on
the stock exchange serving as the primary market for the Common Stock, as
such price is officially quoted 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 shall be the closing selling price on the exchange on the
last preceding date for which such quotation exists.
Parent Corporation: A corporation shall be deemed to be a Parent
Corporation if it is one of the corporations (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each such
corporation (other than the Company) owns, at the time of determination,
stock possessing fifty percent (50%) or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.
Subsidiary Corporation: A corporation shall be deemed to be a
Subsidiary Corporation if it is one of the corporations (other than the
Company) in an unbroken chain of corporations beginning with the Company,
provided each such corporation (other than the last corporation in the
unbroken chain) owns, at the time of determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.
TERMS
1. Grant of Option. On ____________, 199_ (the "Grant Date"),
there is hereby automatically granted to Optionee, pursuant to the provisions of
the Plan, a stock option to purchase up to 3,000 shares of Common Stock (the
"Option Shares") upon the terms and conditions set forth in this Agreement and
in the Plan, and such terms and conditions of the Plan are hereby incorporated
into this Agreement by reference and made a part hereof as if expressly included
in this Agreement. The Option Shares shall be purchasable in accordance with
such terms and conditions at the option exercise price of $__________ per share
(the "Option Price").
2.
<PAGE>
2. Option Term. This option shall have a term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on _______________________, 200_ (the "Expiration Date"), unless sooner
terminated in accordance with Paragraph 7A or 7C of this Agreement.
3. Limited Transferability. This option, together with the
special stock appreciation right under Paragraph 7C, may, in connection with
Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's immediate family or to a trust
established exclusively for one or more such family members. 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. Any other attempt to assign, pledge, transfer,
hypothecate or otherwise dispose of this option or the special stock
appreciation right during Optionee's lifetime, and any levy of execution,
attachment or similar process on this option or such stock appreciation right
shall be null and void. Should the Optionee die while holding this option, then
this option shall be transferred in accordance with Optionee's will or the laws
of inheritance and distribution.
4. Exercisability. This option shall become exercisable in
accordance with the terms of attached Exhibit I. Once this option becomes
exercisable for one or more Option Shares in accordance with Exhibit I, those
Option Shares shall accumulate, and this option shall remain exercisable for the
accumulated Option Shares until the Expiration Date or sooner termination of the
option term under Paragraph 7A or 7C.
5. Cessation of Board Membership. Should the Optionee cease to
serve as a Board Member while this option is outstanding, then the following
provisions shall become applicable:
(i) Should the Optionee's service as a Board
Member terminate for any reason other than death while this option is
outstanding, then Optionee shall have until the Expiration Date of the
option term to exercise this option for any Option Shares for which
this option is exercisable on the date of such cessation of Board
service. However, this option shall, immediately upon the Optionee's
cessation of service as a Board Member, terminate and cease to be
outstanding with respect to any Option Shares for which this option is
not otherwise at that time exercisable in accordance with the
provisions of this Agreement.
(ii) Should the Optionee die while serving as a
Board Member, then the personal representative of the Optionee's
estate (or the person or persons to whom the option is transferred
pursuant to the Optionee's will or in accordance with the laws of
inheritance) shall have the
3.
<PAGE>
right to exercise this option for any or all of the Option Shares at
the time subject to such option. Such right shall lapse, and this
option shall cease to be exercisable, upon the Expiration Date of the
option term.
(iii) In no event may this option be exercised for
any Option Shares after the specified Expiration Date of the option
term or the sooner termination of this option under Paragraph 7A or
7C.
6. Adjustment in Option Shares.
A. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without receipt of consideration,
appropriate adjustments shall automatically be made to the number and/or class
of securities subject to this option and the Option Price payable per share in
order to reflect such transaction and thereby preclude the dilution or
enlargement of benefits hereunder.
B. If this option is assumed in connection with a Corporate
Transaction under Paragraph 7, then this option shall, immediately after such
Corporate Transaction, be appropriately adjusted to apply and pertain to the
number and class of securities which would have been issued to Optionee in the
consummation of such Corporate Transaction had this option been exercised
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the Option Price payable per share, provided the aggregate
Option Price shall remain the same.
7. Corporate Transaction/Change in Control/Hostile
Take-Over.
A. In the event of any of the following transactions (a
"Corporate Transaction"):
(i) a merger or acquisition 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, or
(ii) a sale of all or substantially all of the
Corporation's assets in complete liquidation or dissolution of the
Corporation; or
(iii) any reverse merger in which the Company is
the surviving entity but in which all of the Company's outstanding
voting stock is transferred to the acquiring entity or its
wholly-owned subsidiary;
4.
<PAGE>
the exercisability of this option shall automatically
accelerate so that such option shall, immediately prior to the specified
effective date for the Corporate Transaction, become fully exercisable with
respect to all the Option Shares at the time subject to this option and may be
exercised for all or any portion of such shares. Immediately following the
consummation of the Corporate Transaction, this option shall terminate and cease
to be outstanding, except to the extent assumed by the successor corporation or
its parent company.
B. In connection with any Change in Control of the Company,
the exercisability of this option shall automatically accelerate so that such
option shall, immediately prior to the specified effective date for the Change
in Control, become fully exercisable with respect to all the Option Shares at
the time subject to this option and may be exercised for all or any portion of
such shares. The option as so accelerated shall remain exercisable until the
expiration or sooner termination of the option term. For purposes of this
Agreement, a Change in Control shall be deemed to occur in the event:
(i) 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) directly
or indirectly acquires beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended) of
securities possessing more than forty percent (40%) of the total
combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders; or
(ii) there is a change in the composition of the
Board over a period of twenty-four (24) consecutive months or less
such that a majority of the Board members ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised
of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least
two-thirds of the Board members described in clause (A) who were still
in office at the time such election or nomination was approved by the
Board.
C. Should a Hostile Take-Over of the Company occur at any time
while this option is outstanding, then this option shall automatically be
cancelled upon the effective date of such Hostile Take-Over in exchange for a
cash distribution from the Company. Such distribution shall be in an amount
equal to the excess of (i) the Take-Over Price of the shares of Common Stock at
the time subject to this option (whether or not the option is at the time
otherwise exercisable for such shares) over the aggregate Option Price payable
for such shares. The cash distribution shall be made within five (5) days
following the effective date of the Hostile Take-Over, and no approval of the
Board shall be required
5.
<PAGE>
in connection with such cancellation and distribution. For purposes of this
Paragraph 7C, the following definitional provisions shall be in effect:
A Hostile Take-Over shall be deemed to occur in the event
(i) 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) acquires ownership of
securities possessing more than forty percent (40%) of the total
combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders which the Board does not recommend such stockholders to
accept.
The Take-Over Price per share shall be deemed to be equal
to the greater of (a) the Fair Market Value per share of Common Stock
on the date of the option cancellation or (b) the highest reported
price per share paid by the acquiring entity in effecting the Hostile
Take-Over.
D. This Agreement shall not in any way affect the right of the
Company to adjust, reclassify, reorganize or otherwise make changes in its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
8. Privilege of Stock Ownership. Optionee shall not have any
stockholder rights with respect to the Option Shares until such individual shall
have exercised the option, paid the Option Price for the purchased shares and
been issued a stock certificate for such shares.
9. Manner of Exercising Option.
A. In order to exercise this option for one or more Option
Shares for which this option is at the time exercisable, Optionee (or in the
case of exercise after Optionee's death, the Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the
Company a written notice of exercise (the "Exercise Notice") in
substantially the form of Exhibit II attached hereto.
(ii) Pay the aggregate Option Price for the
purchased shares in one or more of the following alternative forms:
- full payment in cash or check made
payable to the Company's order;
6.
<PAGE>
- full payment in shares of Common Stock
held by the Optionee for the requisite period necessary to avoid
a charge to the Company's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date;
- full payment in a combination of
shares of Common Stock held for the requisite period necessary to
avoid a charge to the Company's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise Date and
cash or check; or
- full payment through a sale and
remittance procedure pursuant to which the Optionee (a) shall
provide irrevocable instructions to a Company-designated
brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the purchased shares and (b)
shall concurrently provide directives to the Company to deliver
certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.
(iii) Furnish to the Company appropriate
documentation that the person or persons exercising the option (if
other than Optionee) have the right to exercise this option.
B. For purposes of this Agreement, the Exercise Date shall be
the date on which the Exercise Notice shall have been delivered to the Company.
Except to the extent the sale and remittance procedure specified above may be
utilized in connection with the exercise of this option, payment of the Option
Price for the purchased shares must accompany such notice.
C. As soon as practical after the exercise of this option in
accordance with the provisions of this Agreement, the Company shall mail or
deliver to or on behalf of the Optionee (or any other person or persons
exercising this option) a stock certificate representing the purchased shares.
D. In no event may this option be exercised for any fractional
shares.
10. Legality of Issuance. The Company shall not be obligated
to sell or issue any Option Shares pursuant to this Agreement if such sale or
issuance might, in the opinion of the Company and the Company's counsel,
constitute a violation by the Company of any applicable law or regulation.
7.
<PAGE>
11. Binding Effect. Subject to the limitations set forth in
Paragraph 3 of this Agreement, this Agreement shall be binding upon and inure to
the benefit of the executors, administrators, heirs, legal representatives, and
successors and assigns of the parties hereto; provided, however, that Optionee
may not assign any of Optionee's rights under this Agreement other than as
permitted under Paragraph 3.
12. No Impairment of Rights. Nothing in this Agreement or in
the Plan shall be deemed to impair or otherwise restrict the rights of the
Company or its stockholders to remove the Optionee from the Board at any time
pursuant to the provisions of applicable law.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of California
by California residents.
14. Notices. All notices and other communications under this
Agreement shall be in writing. Unless and until the Optionee is notified in
writing to the contrary, all notices, communications and documents directed to
the Company shall, if not personally delivered, be mailed to the Company at the
following address:
Matrix Pharmaceutical, Inc.
34700 Campus Drive
Fremont, CA 94555
Unless and until the Company is notified in writing to the
contrary, all notices, communications and documents intended for the Optionee
shall, if not personally delivered, be mailed to Optionee's last known address
as shown on the Company's books. Notices and communications shall be mailed by
registered mail, return receipt requested, postage prepaid. All mailings and
deliveries related to this Agreement shall be deemed received only when actually
received, unless properly mailed by registered mail, return receipt requested,
in which event they shall be deemed received two days after the date of mailing.
15. Construction. This Agreement and the option evidenced
hereby are issued pursuant to the automatic grant program for non-employee Board
Members in effect under the Plan and shall be subject to the express terms and
provisions of the Plan applicable to such automatic grants.
8.
<PAGE>
IN WITNESS WHEREOF, Matrix Pharmaceutical, Inc. has caused
this Agreement to be executed on its behalf by its duly-authorized officer and
the Optionee has executed this Agreement, all on the day and year first above
written.
MATRIX PHARMACEUTICAL, INC.
By:____________________________________
Title:_________________________________
_______________________________________
OPTIONEE
Address:_______________________________
_______________________________________
9.
<PAGE>
EXHIBIT I
EXERCISE SCHEDULE
The option shall become exercisable in accordance with the
following terms and conditions, provided the Optionee continues in service as a
Board Member.
The option shall become exercisable for all of the Option
Shares one (1) year after the Grant Date, provided the Optionee
attends all of the regularly-scheduled Board meetings held during that
one-year period. To the extent that the Optionee attends less than all
of such meetings, this option shall lapse as to the number of Option
Shares determined by multiplying the total number of Option Shares by
a fraction, the numerator of which is the number of such meetings not
attended by the Optionee during the applicable one-year period and the
denominator of which is the total number of such meetings held during
that period. Any Option Shares as to which this option so lapses shall
no longer be subject to such option or otherwise available for
purchase by the Optionee.
In no event shall this option become exercisable for any
additional Option Shares following the date the Optionee ceases to serve as a
Board Member.
<PAGE>
EXHIBIT II
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Matrix Pharmaceutical, Inc. (the "Company")
that I elect to purchase _______________ shares of the Company's Common Stock
(the "Purchased Shares") pursuant to that certain option (the "Option") granted
to me on to purchase up to 3,000 shares of such Common Stock at an option price
of $ _________________ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Company, I shall hereby pay to the Company the Option Price for
the Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise. Alternatively, I
may utilize the special broker-dealer sale and remittance procedure specified in
my agreement to effect the payment of the Option Price for the Purchased Shares.
_________________________ ________________________________
Date Optionee
Address: ________________________________
________________________________
Print name in exact manner
it is to appear on the
stock certificate: ________________________________
________________________________
Address to which certificate
is to be sent, if different
from address above: ________________________________
________________________________
Social Security Number: ________________________________
