<PAGE> 1
As filed with the Securities and Exchange Commission on July 29, 1997
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________________
LIGAND PHARMACEUTICALS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 77-0160744
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
9393 TOWNE CENTRE DRIVE
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices) (Zip Code)
________________________
1992 STOCK OPTION/STOCK ISSUANCE PLAN
1992 EMPLOYEE STOCK PURCHASE PLAN
(Full title of the plans)
_______________________
DAVID E. ROBINSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
LIGAND PHARMACEUTICALS INCORPORATED
9393 TOWNE CENTRE DRIVE, SAN DIEGO, CALIFORNIA 92121
(Name and address of agent for service)
(619) 535-3900
(Telephone number, including area code, of agent for service)
________________________
This Registration Statement shall become effective immediately upon filing with
the Securities and Exchange Commission, and sales of the registered securities
will thereafter be effected upon option exercises or share issuances effected
under the 1992 Stock Option/Stock Issuance Plan and the 1992 Employee Stock
Purchase Plan.
_________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registration
Registered Registered per Share Price Fee
---------- ---------- --------- --------- ------------
<S> <C> <C> <C> <C>
1992 Stock Option/
Stock Issuance Plan
Options to Purchase
Common Stock N/A N/A N/A N/A
Common Stock, par value $.001 875,000 shares(1) $ 11.97(2) $ 10,473,750(2) $ 3,173.86
1992 Employee Stock
Purchase Plan
Common Stock, par value $.001 40,000 shares(1) $ 11.97(2) $ 478,800(2) $ 145.09
- -----------------------------
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1992 Stock Option/Stock
Issuance Plan and the 1992 Employee Stock Purchase Plan by reason of
any stock dividend, stock split, recapitalization or other similar
transaction effected without the receipt of consideration which
results in an increase in the number of the Company's outstanding
shares of Common Stock.
<PAGE> 2
(2) Calculated solely for purposes of this offering under Rule 457(h) and
457(c) of the Securities Act of 1933, as amended on the basis of the
average of the high and low selling prices per share of Common Stock
of Ligand Pharmaceuticals Incorporated on July 22, 1997, as reported
by the Nasdaq National Market.
2.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE
Ligand Pharmaceuticals Incorporated (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents previously filed with the Securities and Exchange Commission (the
"SEC"):
(a) The Registrant's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996, filed with the
SEC on March 31, 1997;
(b) The Registrant's Quarterly Report on Form 10-Q for
the fiscal quarter ended March 31, 1997, filed with
the SEC on May 15, 1997;
(c) The description of the Registrant's Common Stock, par
value $.001 per share, contained in the Company's
Registration Statement on Form S-3, Registration No.
333-12603 filed with the Securities and Exchange
Commission on September 25, 1996, as amended on
October 22, 1996, and as updated by pertinent
information furnished in subsequent reports filed
pursuant to Section 13 of the Securities Exchange Act
of 1934 (the "1934 Act").
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 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 also is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES
Not Applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
Not Applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS
(a) Section 145 of the Delaware General Corporation Law permits
indemnification of officers and directors of Ligand under certain conditions
and subject to certain limitations. Section 145 of the Delaware General
Corporation Law also provides that a corporation has the power to purchase and
maintain insurance on behalf of its officers and directors against any
liability asserted against such person and incurred by him or her in such
capacity, or arising out of his or her status as such, whether or not the
corporation would have the power to indemnify him or her against such liability
under the provisions of Section 145 of the Delaware General Corporation Law.
II-1.
<PAGE> 4
(b) Article VII, Section 1 of the Bylaws of Ligand provides that
Ligand shall indemnify its officers, directors, employees and agents to the
full extent permitted by the General Corporation Law of Delaware. The rights
to indemnity thereunder continue as to a person who has ceased to be a
director, officer, employee or agent and inure to the benefit of the heirs,
executors and administrators of the person. In addition, expenses incurred by
a director or officer in defending any civil, criminal, administrative or
investigative action, suit or proceeding by reason of the fact that he or she
is or was a director or officer of Ligand (or was serving at Ligand's request
as a director or officer of another corporation) shall be paid by Ligand in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer to repay
such amount if it shall ultimately be determined that he or she is not entitled
to be indemnified by Ligand as authorized by the relevant section of the
Delaware General Corporation Law.
(c) As permitted by Section 102(b)(7) of the Delaware General
Corporation Law, Article VI, Section (A)2 of Ligand's Certificate of
Incorporation provides that a director of Ligand shall not be personally liable
for monetary damages or breach of fiduciary duty as a director, except for
liability (i) for any breach of the director's duty of loyalty to Ligand or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the Delaware General Corporation Law, or (iv) for any transaction from which
the director derived any improper personal benefit.
(d) Article VI, Section (A)1 of Ligand's Certificate of
Incorporation provides that the liability of the directors of Ligand for
monetary damages shall be eliminated to the fullest extent permissible under
California law. Accordingly, to the extent California law applies, a director
will not be liable for monetary damages for breach of duty to Ligand or its
stockholders in any action brought by or in the right of Ligand. However, a
director remains liable to the extent required by law (i) for acts or omissions
that involve intentional misconduct or a knowing and culpable violation of law,
(ii) for acts or omissions that a director believes to be contrary to the best
interests of Ligand or its stockholders or that involve the absence of good
faith on the part of the director, (iii) for any transaction from which a
director derived an improper personal benefit, (iv) for acts or omissions that
show a reckless disregard for the director's duty to Ligand or its stockholders
in circumstances in which the director was aware, or should have been aware, in
the ordinary course of performing a director's duties, of a risk of serious
injury to Ligand or its stockholders, (v) for acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of the
director's duty to Ligand or its stockholders, (vi) for any act or omission
occurring prior to the date when the exculpation provision became effective and
(vii) for any act or omission as an officer, notwithstanding that the officer
is also a director or that his or her actions, if negligent or improper, have
been ratified by the directors. The effect of the provisions in the
Certificate of Incorporation is to eliminate the rights of Ligand and its
stockholders (through stockholders' derivative suits on behalf of Ligand) to
recover monetary damages against a director for breach of duty as a director,
including breaches resulting from negligent behavior in the context of
transactions involving a change of control of Ligand or otherwise, except in
the situations described in clauses (i) through (vii) above. These provisions
will not alter the liability of directors under federal securities laws.
(e) Pursuant to authorization provided under the Certificate of
Incorporation, Ligand has entered into indemnification agreements with each of
its present and certain of its former directors. Ligand has also entered into
similar agreements with certain of Ligand's executive officers who are not
directors. Generally, the indemnification agreements attempt to provide the
maximum protection permitted by Delaware and California law as it may be
amended from time to time. Moreover, the indemnification agreements provide
for certain additional indemnification. Under such additional indemnification
provisions, however, an individual will not receive indemnification for
judgments, settlements or expenses if he or she is found liable to Ligand
(except to the extent the court determines he or she is fairly and reasonably
entitled to indemnity for expenses), for settlements not approved by Ligand or
for settlements and expenses if the settlement is not approved by the court.
The indemnification agreements provide for Ligand to advance to the individual
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding. In order to
receive an advance of expenses, the individual must submit to Ligand copies of
invoices presented to him or her for such expenses. Also, the individual must
repay such advances upon a final judicial
II-2.
<PAGE> 5
decision that he or she is not entitled to indemnification. Ligand's Bylaws
contain a provision of similar effect relating to advancement of expenses to a
director or officer, subject to an undertaking to repay if it is ultimately
determined that indemnification is unavailable.
(f) There is directors and officers liability insurance now in
effect which insures directors and officers of the Company.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED
Not Applicable.
ITEM 8. EXHIBITS
Exhibit Number Exhibit
5.1 Opinion and consent of Brobeck, Phleger & Harrison LLP
23.1 Consent of Brobeck, Phleger & Harrison LLP (contained
in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, independent auditors
24.1 Power of Attorney. Reference is made to the signature
page of this registration statement
99.1 1992 Stock Option/Stock Issuance Plan, as amended
99.2 1992 Employee Stock Purchase Plan, as amended
ITEM 9. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes: (1) to file,
during any period in which offers or sales are being made, a post-effective
amendment to this Registration Statement (i) to include any prospectus required
by Section 10(a)(3) of the 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 1934 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 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
offering.
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
1934 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 foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the SEC, 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
II-3.
<PAGE> 6
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-4.
<PAGE> 7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-8 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of San Diego, State of
California, on this 29th day of July, 1997.
LIGAND PHARMACEUTICALS INCORPORATED
By /s/ David E. Robinson
----------------------------------------
David E. Robinson
President and Chief Executive Officer
II-5.
<PAGE> 8
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of Ligand Pharmaceuticals
Incorporated, a Delaware corporation, do hereby constitute and appoint David E.
Robinson and Paul V. Maier, and each of them, the lawful attorneys-in-fact and
agents with full power and authority to do any and all acts and things and to
execute any and all instruments which said attorneys and agents, and either one
of them, determine may be necessary or advisable or required to enable said
corporation to comply with the Securities Act of 1933, as amended, and any
rules or regulations or requirements of the Securities and Exchange Commission
in connection with this registration statement. Without limiting the
generality of the foregoing power and authority, the powers granted include the
power and authority to sign the names of the undersigned officers and directors
in the capacities indicated below to this registration statement, to any and
all amendments, both pre-effective and post-effective, and supplements to this
registration statement, and to any and all instruments or documents filed as
part of or in conjunction with this registration statement or amendments or
supplements thereof, and each of the undersigned hereby ratifies and confirms
that all said attorneys and agents, or either of them, shall do or cause to be
done by virtue hereof. This Power of Attorney may be signed in several
counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed below by the following
persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ David E. Robinson President, Chief Executive July 29, 1997
- --------------------------------- Officer and Director (Principal
David E. Robinson Executive Officer)
/s/ Paul V. Maier Senior Vice President and Chief July 29, 1997
- --------------------------------- Financial Officer (Principal
Paul V. Maier Financial and Accounting Officer)
/s/ Henry F. Blissenbach Director July 29, 1997
- ---------------------------------
Henry F. Blissenbach
/s/ Alexander D. Cross Director July 29, 1997
- ---------------------------------
Alexander D. Cross
Director
- ---------------------------------
John Groom
/s/ Irving S. Johnson Director July 29, 1997
- ---------------------------------
Irving S. Johnson
/s/ Carl C. Peck Director July 29, 1997
- ---------------------------------
Carl C. Peck
/s/ William C. Shepard Director July 29, 1997
- ---------------------------------
William C. Shepherd
</TABLE>
II-6.
<PAGE> 9
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
LIGAND PHARMACEUTICALS INCORPORATED
<PAGE> 10
EXHIBIT INDEX
Exhibit
Number Document
- ------ --------
5.1 Opinion and consent of Brobeck, Phleger & Harrison LLP
23.1 Consent of Brobeck, Phleger & Harrison LLP (contained in
Exhibit 5.1)
23.2 Consent of Ernst & Young LLP, independent auditors
24.1 Power of Attorney. Reference is made to the
signature page of this registration statement
99.1 1992 Stock Option/Stock Issuance Plan, as amended
99.2 1992 Employee Stock Purchase Plan, as amended
<PAGE> 1
Exhibit 5.1
Opinion and consent of Brobeck, Phleger & Harrison LLP
<PAGE> 2
July 29 1997
Ligand Pharmaceuticals Incorporated
9393 Towne Centre Drive
San Diego, California 92121
Re: Ligand Pharmaceuticals Incorporated Registration Statement on
Form S-8 for (i) 875,000 Shares of Common Stock Issuable Under
Its 1992 Stock Option/Stock Issuance Plan and (ii) 40,000
Shares of Common Stock Issuable Under Its Employee Stock
Purchase Plan
Ladies and Gentlemen:
In connection with your registration on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of (i) 875,000 shares
of Common Stock of Ligand Pharmaceuticals Incorporated (the "Company") under
the Company's 1992 Stock Option/Stock Issuance Plan, as amended, and (ii)
40,000 shares of Common Stock under the Company's 1992 Employee Stock Purchase
Plan, as amended, we advise you that, in our opinion, if and when such shares
have been issued and sold (and the consideration therefor received) pursuant to
the provisions of the Company's 1992 Stock Option/Stock Issuance Plan, as
amended, or the Company's 1992 Employee Stock Purchase Plan, as amended, as the
case may be, and in accordance with the Registration Statement, such shares
will be duly-authorized, validly-issued, fully-paid and non-assessable shares
of the Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 23.1
Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.1
<PAGE> 1
EXHIBIT 23.2
Consent of Ernst & Young LLP, Independent Auditors
<PAGE> 2
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8) pertaining to the Amendments to the 1992 Ligand Stock Option/Stock
Issuance Plan and the 1992 Ligand Employees' Stock Purchase Plan of our report
dated January 29, 1997, with respect to the consolidated financial statements
included in the Annual Report (Form 10-K) of Ligand Pharmaceuticals
Incorporated for the year ended December 31, 1996, filed with the Securities
and Exchange Commission.
ERNST & YOUNG LLP
San Diego, California
July 24, 1997
<PAGE> 1
EXHIBIT 24.1
Power of Attorney. Reference is made to page II-6 of this Registration
Statement
<PAGE> 1
EXHIBIT 99.1
1992 Stock Option/Stock Issuance Plan, as Amended
<PAGE> 2
LIGAND PHARMACEUTICALS INCORPORATED
1992 STOCK OPTION/STOCK ISSUANCE PLAN
AS AMENDED THROUGH APRIL 24, 1997
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1992 Stock Option/Stock Issuance Plan ("Plan")
is intended to promote the interests of Ligand Pharmaceuticals Incorporated, a
Delaware corporation (the "Corporation"), by providing (i) key employees
(including officers) of the Corporation (or its parent or subsidiary
corporations) who are responsible for the management, growth and financial
success of the Corporation (or its parent or subsidiary corporations) and (ii)
consultants and other independent contractors who provide valuable services to
the Corporation (or its parent or subsidiary corporations) with the opportunity
to acquire a proprietary interest, or otherwise increase their proprietary
interest, in the Corporation as an incentive for them to remain in the service
of the Corporation (or its parent or subsidiary corporations).
B. The Plan shall become effective on the first date on
which shares of the Corporation's common stock are registered under Section
12(g) of the Securities Exchange Act of 1934, as amended (the "1934 Act").
Such date is hereby designated as the "Effective Date" of this Plan.
C. This Plan shall serve as the successor to the
Corporation's Restricted Stock Purchase Plan (the "Stock Plan") and 1988 Stock
Option Plan (the "Option Plan") (such Plans are hereinafter referred to as the
"Predecessor Plans"), and no further option grants or share issuances shall be
made under the Predecessor Plans from and after the Effective Date. Each
outstanding option or share issuance under the Predecessor Plans immediately
prior to the Effective Date are hereby incorporated into this Plan and shall
accordingly be treated as outstanding options or share issuance under this
Plan. However, each such option or share issuance shall continue to be
governed solely by the terms and conditions of the instrument evidencing such
grant or issuance, and, except as otherwise expressly provided herein, no
provision of this Plan shall affect or otherwise modify the rights or
obligations of the holders of such incorporated options or shares with respect
to their acquisition of shares of the Corporation's common stock or otherwise
modify the rights or obligations of the holders of such options or shares.
D. For purposes of this Plan, the following provisions
shall be applicable in determining the parent and subsidiary corporations of
the Corporation:
Any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation shall be
considered to be a PARENT 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.
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> 3
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into three separate
components: the Discretionary Option Grant Program specified in Article Two,
the Automatic Option Grant Program specified in Article Three and the Stock
Issuance Program specified in Article Four. Under the Discretionary Option
Grant Program, eligible individuals may be granted options to purchase shares
of the Corporation's common stock at not less than 85% of the Fair Market Value
(as defined below) of such shares on the grant date. Under the Automatic
Option Grant Program and subject to the limitations contained in this Plan,
non-employee members of the Board of Directors will be granted options to
purchase shares of the Corporation's common stock at not less than 100% of the
Fair Market Value of such shares on the grant date. Subject to the limitations
contained in this Plan, the Stock Issuance Program shall 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.
B. The provisions of Articles One and Five of the Plan
shall apply to both the Discretionary Option Grant Program and the Stock
Issuance Program and shall accordingly govern the interests of all individuals
in the Plan.
C. With respect to persons subject to Section 16 of the
Securities Exchange Act of 1934 ("1934 Act"), transactions under the Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the 1934 Act. To the extent any provision of the Plan or
action by the Committee (as defined below) fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by
the Committee.
III. ADMINISTRATION OF THE PLAN
A. The Board shall appoint a committee ("Committee") of
two (2) or more non-employee Board members to assume full responsibility for
the administration of the Discretionary Option Grant and Stock Issuance
Programs under the Plan. No Board member shall be eligible to serve on the
Committee if such individual has, within the relevant period designated below,
received an option grant or stock issuance under this Plan or any other stock
plan of the Corporation (or any parent or subsidiary corporation), other than
option grants made in accordance with the Automatic Option Grant Program:
(i) for each of the initial members of the
Committee, the period commencing with the Effective Date of the Plan
and ending with the date of his or her appointment to the Committee,
or
(ii) for any successor or substitute member, the
twelve (12) month period immediately preceding the date of his or her
appointment to the Committee.
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, and issue
such interpretations of, the Plan and any outstanding option grants or stock
issuances as it may deem necessary or advisable. Decisions of the Plan
Administrator shall be final and binding on all parties who have an interest in
the Plan or any outstanding option or stock issuance.
IV. OPTION GRANTS AND STOCK ISSUANCES
A. The persons eligible to receive stock issuances under
the Stock Issuance Program ("Participant") and/or option grants pursuant to the
Discretionary Option Grant Program ("Optionee") are as follows:
<PAGE> 4
(i) officers and other key employees of the
Corporation (or its parent or subsidiary corporations) who render
services which contribute to the management, growth and financial
success of the Corporation (or its parent or subsidiary corporations);
(ii) those consultants or other independent
contractors who provide valuable services to the Corporation (or its
parent or subsidiary corporations).
B. Only non-employee members of the Board shall be
eligible to participate in the Automatic Option Grant Program. Except for the
option grants to be made pursuant to the provisions of the Automatic Option
Grant Program, non-employee Board members shall not be eligible to receive any
additional option grants or stock issuances under this Plan or any other stock
plan of the Corporation (or its parent or subsidiary corporations).
C. The Plan Administrator shall have full authority to
determine, (I) with respect to the option grants made under the Discretionary
Option Grant Program, which eligible individuals are to receive option grants,
the number of shares to be covered by each such grant, whether the granted
option is to be an incentive stock option ("Incentive Option") which satisfies
the requirements of Section 422 of the Internal Revenue Code or a non-statutory
option not intended to meet such requirements ("Non-Statutory Option"), the
time or times at which each granted option is to become exercisable and the
maximum term for which the option may remain outstanding and (II), with respect
to stock 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 consideration to be paid by the individual for such
shares.
D. The Plan Administrator shall have the absolute
discretion either to grant options in accordance with Article Two of the Plan
or to effect stock issuances in accordance with Article Four of the Plan. The
Plan Administrator will have no discretion with respect to the grant of options
under the Automatic Option Grant Program.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Corporation's Common Stock (hereinafter
referred to as the "Common Stock") shall be available for issuance under the
Plan and shall be drawn from either the Corporation's authorized but unissued
shares of Common Stock or from reacquired shares of Common Stock, including
shares repurchased by the Corporation on the open market. The maximum number
of shares issuable under the Plan is 7,303,457 shares of Common Stock. Such
total number of shares includes the total number of shares issued under this
and the Predecessor Plans.
B. Should one or more outstanding options under this
Plan (including outstanding options under the Predecessor Plans incorporated
into this Plan) expire or terminate for any reason prior to exercise in full
(including any option cancelled in accordance with the cancellation-regrant
provisions of Section IV of Article Two of the Plan), then the shares subject
to the portion of each option not so exercised shall be available for
subsequent option grant or share issuance under this Plan. Shares subject to
any option or portion thereof surrendered or cancelled in accordance with
Section V of Article Two and all share issuances under the Plan, whether or not
such shares are subsequently repurchased by the Corporation pursuant to its
repurchase rights under the Plan or surrendered for cancellation under Section
I.B.3 of Article Four, shall reduce on a share-for-share basis the number of
shares of the same class of Common Stock available for subsequent option grant
or stock issuance under the Plan. In addition, should the exercise price of an
outstanding option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection
with the exercise of an outstanding option under the Plan, then the number of
shares of Common Stock of the same class available for issuance under the Plan
shall be reduced by the gross number of shares for which the option is
exercised, and not by the net number of shares of Common Stock actually issued
to the option holder.
C. In the event any change is made to either class of
the Common Stock issuable under the Plan by reason of any stock split, stock
dividend, recapitalization, combination of shares, exchange of shares,
conversion or other change affecting the outstanding Common Stock, or any class
of Common Stock as a class, without the Corporation's receipt of consideration,
then appropriate adjustments shall be made to (i) the number
<PAGE> 5
and/or class of shares issuable under the Plan, (ii) the number and/or class of
shares and price per share in effect under each outstanding option under this
Plan (including outstanding options incorporated into this Plan from the
Predecessor Plans). Such adjustments to the outstanding options are to be
effected in a manner which shall preclude the enlargement or dilution of rights
and benefits under such options. The adjustments determined by the Plan
Administrator shall be final, binding and conclusive.
D. Common Stock issuable under the Discretionary Option
Grant Program or the Stock Issuance Program may be subject to such restrictions
on transfer, repurchase rights or other restrictions as determined by the Plan
Administrator.
VI. DETERMINATION OF FAIR MARKET VALUE
The "Fair Market Value" of a share of Common Stock shall be determined
in accordance with the following provisions:
- If shares of Common Stock to be valued are
not at the time listed or admitted to trading on any national stock
exchange but is traded on the NASDAQ National Market System, the Fair
Market Value shall be the closing selling price per share of a share
of that class 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 series 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.
- If shares of the class of common stock to be
valued are at the time listed or admitted to trading on any national
stock exchange, then the Fair Market Value of a share of that class
shall be the closing selling price per share 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 in the composite tape of transactions on such exchange. If
there is no reported sale of a share of the class 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.
- If shares of the series of common stock to be
valued at the time are neither listed nor admitted to trading on any
stock exchange nor traded in the over-the-counter market, then the
Fair Market Value shall be determined by the Plan Administrator after
taking into account such factors as the Plan Administrator shall deem
appropriate, including one or more independent professional
appraisals, in a manner consistent with the provisions of Section
260.140.50 of the Rules of the California Corporations Commissioner.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Article Two shall be
authorized by action of the Plan Administrator and, at the Plan Administrator's
discretion, may be either Incentive Options or Non-Statutory Options.
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 II of this Article Two.
A. Option Price.
(1) The option price per share shall be fixed by
the Plan Administrator. In no event, however, shall the price for any share be
less than eighty-five percent (85%) of the Fair Market Value of that share on
the date of the option grant.
<PAGE> 6
(2) 10% Stockholder. If any individual to whom
an option is granted is 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 classes of stock of the Corporation or any one of its
parent or subsidiary corporations, 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 Common Stock on the grant date.
(3) The option price shall become immediately due
upon exercise of the option and, subject to the provisions of Article Four,
Section II and the instrument evidencing the grant, shall be payable in one of
the following alternative forms specified below:
- full payment in cash or check drawn
to the Corporation's order;
- full payment in shares of Common
Stock held for at least six (6) months and valued at Fair Market Value
on the Exercise Date;
- full payment in a combination of
shares of Common Stock held for at least six (6) months and valued at
Fair Market Value on the Exercise Date and cash or check; or
- full payment through a broker-dealer
sale and remittance procedure pursuant to which the Optionee (I) shall
provide irrevocable written 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 written
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 subparagraph (3), 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.
B. Term and Exercise of Options. Each option granted
under this Article Two shall 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 the grant; provided that options granted
under this Plan must become exercisable at a rate of at least 20% per year over
no more than five (5) years from the date such option is granted. No such
option, however, shall have a maximum term in excess of ten (10) years from the
grant date and no option granted to a 10% shareholder shall have a maximum term
in excess of five (5) years from the grant date. During the lifetime of the
Optionee, the option (together with any related stock appreciation right) shall
be exercisable only by the Optionee and shall not be assignable or transferable
by the Optionee otherwise than by will or by the laws of descent and
distribution following the Optionee's death.
C. Termination of Service.
(1) Except to the extent otherwise provided
pursuant to Section VI of this Article Two, the following provisions shall
govern the exercise period applicable to any outstanding options under this
Article Two which are held by the Optionee at the time of his or her cessation
of Service or death.
- Should an Optionee's Service
terminate 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 none of
those options shall (except to the extent otherwise provided pursuant
to Section VI of this Article Two) remain exercisable beyond the later
of (i) the limited post-Service period designated by the Plan
Administrator at the time of the option grant and set forth in the
option agreement; or (ii) (A) 30 days from the date of termination if
termination was caused by other than the death or disability (as
defined in Section 22(e)(3) of the Internal Revenue Code) of such
Optionee or (B) six (6) months from the date of termination if
termination was caused by death or disability of Optionee.
<PAGE> 7
- Any option granted to an Optionee
under this Article Two and exercisable in whole or in part on the date
of the Optionee's death may be subsequently exercised, 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 (i) the third
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.
- Under no circumstances, however,
shall any such option be exercisable after the specified expiration
date of the option term.
- During the limited post-Service
period of exercisability, the option may not be exercised for more
than the number of shares for which the option is exercisable on the
date the Optionee's Service terminates. Upon the expiration of such
limited exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be exercisable.
(2) The Plan Administrator shall have complete
discretion, exercisable either at the time the option is granted or at any time
while the option remains outstanding, to permit one or more options held by the
Optionee under this Article Two to be exercised, during the limited period of
exercisability provided under subparagraph (1) above, not only with respect to
the number of shares for which each such option is exercisable at the time of
the Optionee's cessation of Service but also with respect to one or more
subsequent installments of purchasable shares for which the option would
otherwise have become exercisable had such cessation of Service not occurred.
(3) For purposes of the foregoing provisions of
this Section I.C (and for all other purposes under the Plan):
- The Optionee shall (except to the
extent otherwise specifically provided in the applicable option or
issuance agreement) be deemed to remain in the SERVICE of the
Corporation for so long as such individual renders services on a
periodic basis to the Corporation (or any parent or subsidiary
corporation) in the capacity of an Employee, a non-employee member of
the Board or an independent consultant or advisor.
- The Optionee shall be considered to
be an EMPLOYEE for so long as he or she remains in the employ of the
Corporation or one or more 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.
D. Stockholder Rights.
An Optionee shall have no stockholder rights with
respect to any shares covered by the option 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.
II. INCENTIVE OPTIONS
The terms and conditions specified below shall be applicable
to all Incentive Options granted under this Article Two. 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 any
share of Common Stock subject to an Incentive Option shall in no event be less
than one hundred percent (100%) of the Fair Market Value of such share of
Common Stock on the grant date.
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 after
<PAGE> 8
December 31, 1986 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 stock options under the Federal tax laws 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 Options under the
Federal tax laws shall be applied on the basis of the order in which such
options are granted.
Except as modified by the preceding provisions of this Section
II, the provisions of Articles One, Two and Four of the Plan shall apply to all
Incentive Options granted hereunder.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. For purposes of this Section III, a "Corporate
Transaction" shall be one or more of the following stockholder-approved
transactions:
(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,
(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 the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to holders
different from those who held such securities immediately prior to
such merger.
B. Each outstanding option which is assumed in
connection with a Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would be
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction, and appropriate adjustments
shall also be made to the option price payable per share, provided the
aggregate option price payable for such securities shall remain the same.
Appropriate adjustments shall also be made to the class and number of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction.
C. The grant of options under this Article Two 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.
IV. CANCELLATION AND REGRANT 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 this Article Two
(including outstanding options under the Predecessor Plans incorporated into
this Plan) and to grant in substitution new options under this Article Two
covering the same or different numbers of shares of Common Stock but having an
option price for each share which is not less than (i) eighty-five percent
(85%) of the Fair Market Value of such share on the new grant date or (ii) one
hundred percent (100%) of such Fair Market Value in the case of an Incentive
Option.
V. STOCK APPRECIATION RIGHTS
A. Provided and only if the Plan Administrator
determines in its discretion to implement the stock appreciation right
provisions of this Section V, one or more Optionees may be granted the right,
exercisable upon such terms and conditions as the Plan Administrator may
establish, to surrender all or part of an unexercised option under this Article
Two in exchange for a distribution from the Corporation in an amount equal to
the excess of (i) the Fair Market Value (on the option surrender date) of the
number of shares in which
<PAGE> 9
the Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate option price payable for such vested
shares.
B. No surrender of an option shall be effective
hereunder unless it is approved by the Plan Administrator. If the surrender is
so approved, then the distribution to which the Optionee shall accordingly
become entitled under this Section V may be made in shares of any class of
Common Stock valued at Fair Market Value on the option surrender date, in cash,
or partly in shares and partly in cash, as the Plan Administrator shall in its
sole discretion deem appropriate.
C. If the surrender of an option is rejected by the Plan
Administrator, then the Optionee shall retain whatever rights the Optionee had
under the surrendered option (or surrendered portion thereof) on the option
surrender date and may exercise such rights at any time prior to the later of
(i) five (5) business days after the receipt 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 more than ten (10) years after the date of the option
grant.
D. 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 Two. Upon
the occurrence of a Hostile Take-Over effected at any time when the
Corporation's outstanding Common Stock is registered under Section 12(g) of the
1934 Act, each outstanding option with such a limited stock appreciation right
in effect for at least six (6) months shall automatically be cancelled, to the
extent such option is at the time exercisable for fully-vested shares of Common
Stock. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the vested shares of Common Stock at the time subject to the cancelled option
(or cancelled portion of such option) over (ii) the aggregate exercise price
payable for such shares. The cash distribution payable upon such cancellation
shall be made within five (5) days following the consummation of the Hostile
Take-Over. Neither the approval of the Plan Administrator nor the consent of
the Board shall be required in connection with such option cancellation and
cash distribution. The balance of the option (if any) shall continue to remain
outstanding and exercisable in accordance with the terms of the instrument
evidencing such grant.
E. For purposes of Section V.D, the following
definitions 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
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 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 which the Board
does not recommend such stockholders to accept and (ii) more than
fifty percent (50%) of the securities so acquired in such tender or
exchange offer are accepted from holders other than Corporation
officers and directors participating in the Plan.
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 cancellation, as determined pursuant to the valuation
provisions of Section I.A.(3) of this Article Two, or (b) the highest
reported price per share paid in effecting such Hostile Take-Over.
However, if the cancelled option is an Incentive Option, the Take-Over
Price shall not exceed the clause (a) price per share.
F. 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 grant under the Plan.
<PAGE> 10
VI. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority to
extend the period of time for which any option granted under this Article Two
is to remain exercisable following the Optionee's cessation of Service or death
from the limited period in effect under Section I.C.(1) of this Article Two to
such greater period of time as the Plan Administrator shall deem appropriate;
provided, however, that in no event shall such option be exercisable after the
specified expiration date of the option term.
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants will be made under this
Article Three on the dates specified below:
(1) Each individual who first becomes a
non-employee Board member on or after May 20, 1993, whether through
election by the Corporation's stockholders or appointment by the
Board, and who has not otherwise been in the prior employ of the
Corporation shall automatically be granted, at the time of such
initial election or appointment, a Non-Statutory Option to purchase
16,237 shares of Common Stock, each upon the terms and conditions of
this Article Three.
(2) On the date of each stockholder
meeting held after the initial grant of options pursuant to this
Article Three, each individual re-elected as a non-employee Board
member at such stockholder meeting shall automatically be granted, at
each such meeting at which he or she is so re-elected, a Non-Statutory
Option to purchase 8,118 shares of Common Stock upon the terms and
conditions of this Article Three. There shall be no limit on the
number of 8,118-share option grants any one non-employee Board member
may receive over the period of Board service.
B. Exercise Price. The exercise price per share of each
automatic option grant made under this Article Three shall be equal to one
hundred percent (100%) of the Fair Market Value per share of the Common Stock
on the date of grant under this Automatic Option Grant Program.
C. Payment.
The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check drawn
to the Corporation's order;
(ii) full payment in shares of Common
Stock held for at least six (6) months and valued at Fair Market Value
on the Exercise Date (as such term is defined below);
(iii) full payment in a combination of
shares of Common Stock held for at least six (6) months and valued at
Fair Market Value on the Exercise Date and cash or check; or
(iv) full payment through a broker-dealer
sale and remittance procedure pursuant to which the non-employee Board
member (A) shall provide irrevocable written 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
<PAGE> 11
shares plus all applicable Federal and state income taxes required to
be withheld by the Corporation in connection with such purchase and
(B) shall provide written 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 paragraph C, 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.
D. Option Term. Each automatic grant under this Article
Three shall have a term of ten (10) years measured from the automatic grant
date.
E. Exercisability. Each automatic grant shall become
exercisable in full one (1) year after the automatic grant date. The option
shall not become exercisable for any additional option shares after the
optionee has ceased for any reason to be a member of the Board.
F. Non-Transferability. During the lifetime of the
optionee, each automatic option grant shall be exercisable only by the optionee
and shall not be assignable or transferable by the optionee other than a
transfer of the option effected by will or by the laws of descent and
distribution following optionee's death.
G. Effect of Termination of Board Membership.
(1) Should the optionee cease to serve as a Board
member for any reason (other than death) while holding one or more automatic
option grants under this Article Three, then such optionee shall have a three
(3) month period following the date of such cessation of Board membership in
which to exercise each such option for any or all of the shares of Common Stock
for which the option was exercisable at the time of such cessation of Board
membership. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board membership, with respect to
any shares for which the option is not otherwise at that time exercisable.
(2) Should the optionee die while serving as a
member of the Board or within three (3) months after cessation of Board
service, then each outstanding automatic option grant held by the optionee at
the time of death may subsequently be exercised, for any or all of the shares
of Common Stock for which the option was exercisable at the time of the
optionee's cessation of Board membership (less any option shares subsequently
purchased by the optionee 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. Any such exercise must occur within thirty-six (36)
months after the date of the optionee's death. However, each such automatic
option grant shall immediately terminate and cease to be outstanding, at the
time of the optionee's cessation of Board membership, with respect to any
option shares for which it is not otherwise at such time exercisable.
(3) In no event shall any automatic grant under
this Article Three remain exercisable after the specified expiration date of
the ten (10)-year option term. Upon the expiration of the applicable exercise
period in accordance with subparagraphs (1) and (2) above or (if earlier) upon
the expiration of the ten (10)-year option term, the automatic grant shall
terminate and cease to be outstanding for any unexercised shares for which the
option was exercisable at the time of the optionee's cessation of Board
service.
H. Stockholder Rights. The holder of an automatic
option grant under this Article Three shall have none of the rights of a
stockholder with respect to any shares subject to such option until such
individual shall have exercised the option, paid the exercise price for the
purchased shares and been issued a stock certificate for such shares.
I. 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.
<PAGE> 12
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. For purposes of this Section II, a "Corporate
Transaction" shall be one or more of the following stockholder-approved
transactions:
(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,
(ii) the sale, transfer or 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 the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Corporation's outstanding securities are transferred to holders
different from those who held such securities immediately prior to
such merger
B. Each outstanding option which is assumed in
connection with a Corporate Transaction or is otherwise to continue in effect
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply and pertain to the number and class of securities which would be
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction, and appropriate adjustments
shall also be made to the option price payable per share, provided the
aggregate option price payable for such securities shall remain the same.
Appropriate adjustments shall also be made to the class and number of
securities available for issuance under the Plan following the consummation of
such Corporate Transaction.
C. The grant of options under this Article Three 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.
D. The automatic option grants outstanding under this
Article Three 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.
III. LIMITED AMENDMENT OF THE AUTOMATIC OPTION GRANT PROVISIONS
The provisions of this Automatic Option Grant Program,
together with the automatic option grants outstanding under this Article Three,
may not be amended more than once every six (6) months, other than to comport
with changes in the Internal Revenue Code, the Employee Retirement Income
Security Act, or the rules thereunder.
ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. TERMS AND CONDITIONS OF STOCK ISSUANCES
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate purchases without any intervening stock
option grants. The issued shares shall be evidenced by a Stock Issuance
Agreement ("Issuance Agreement") that complies with the terms and conditions of
this Article Four.
A. CONSIDERATION
(1) Shares of Common Stock drawn from the
Corporation's authorized but unissued shares of Common Stock ("Newly Issued
Shares") shall be issued under the Plan for one or more of
<PAGE> 13
the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
(i) cash or cash equivalents
(such as a personal check or bank draft) paid the Corporation;
(ii) a promissory note payable to
the Corporation's order in one or more installments, which may be
subject to cancellation in whole or in part upon terms and conditions
established by the Plan Administrator; or
(iii) past services rendered to
the Corporation or any parent or subsidiary corporation.
(2) Newly Issued Shares may, in the absolute
discretion of the Plan Administrator, be issued for consideration with a value
less than one-hundred percent (100%) of the Fair Market Value of such shares,
but in no event less than eighty-five percent (85%) of such Fair Market Value.
Notwithstanding the foregoing, in the case of 10% shareholders, Newly Issued
Shares must be issued at one hundred percent (100%) of Fair Market Value of
such shares.
(3) Shares of Common Stock reacquired by the
Corporation and held as treasury shares ("Treasury Shares") may be issued under
this Article Four for such consideration (in whatever form) as the Plan
Administrator may deem appropriate. Accordingly, such Treasury Shares may, in
lieu of any cash consideration, be issued subject to such vesting requirements
tied to the Participant's period of future Service or the Corporation's
attainment of specified performance objectives as the Plan Administrator may
establish at the time of issuance.
B. VESTING PROVISIONS
(1) Shares of Common Stock issued under this
Article Four may, in the absolute discretion of the Plan Administrator, be
fully and immediately vested upon issuance or may vest in one or more
installments over the Participant's period of Service (as such term is defined
in Section I.C.(3) of Article Two); provided, that such vesting must be at a
rate of at least 20% per year over no more than five years from the date such
shares are issued. The elements of the vesting schedule applicable to any
unvested shares of Common Stock issued under the Plan, namely:
(i) the Service period to be
completed by the Participant or the performance objectives to be
achieved by the Corporation,
(ii) the number of installments
in which the shares are to vest,
(iii) the interval or intervals
(if any) which are to lapse between installments, and
(iv) 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 incorporated into the
Issuance Agreement executed by the Corporation and the Participant at the time
such unvested shares are issued.
(2) The Participant shall have full stockholder
rights with respect to any shares of Common Stock issued to him or her under
this Article Four, whether or not his or her interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares. Any new,
additional or different shares of stock or other property (including money paid
other than as a regular cash dividend) which the Participant may have the right
to receive with respect to his or her unvested shares by reason of any stock
dividend, stock split, reclassification of Common Stock or other similar change
in the Corporation's capital structure or by reason of any Corporate
Transaction
<PAGE> 14
under Section II of this Article Four shall be issued, subject to (i) the same
vesting requirements applicable to his or her unvested shares and (ii) such
escrow arrangements as the Plan Administrator shall deem appropriate.
(3) Should the Participant cease to remain in
Service while holding one or more unvested shares of Common Stock under this
Article Four, then those shares shall be immediately surrendered to the
Corporation for cancellation, and the Participant shall have no further
stockholder rights with respect to those shares. To the extent the surrendered
shares were previously issued to the Participant for consideration paid in cash
or cash equivalent (including the Participant's purchase-money promissory
note), the Corporation shall repay to the Participant the cash consideration
paid for the surrendered shares and shall cancel the principal balance of any
outstanding purchase-money note of the Participant to the extent attributable
to such surrendered shares. The surrendered shares may, at the Plan
Administrator's discretion, be retained by the Corporation as Treasury Shares
or may be retired to authorized but unissued share status.
(4) The Plan Administrator may in its discretion
elect to waive the surrender and cancellation of one or more unvested shares of
Common Stock (or other assets attributable thereto) which would otherwise occur
upon the non-completion of the vesting schedule applicable to such shares.
Such waiver shall result in the immediate vesting of the Participant's interest
in the shares of Common Stock as to which the waiver applies. Such waiver may
be effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. TRANSFER RESTRICTIONS/SHARE ESCROW
A. Unvested shares under this Article Four may, in the
Plan Administrator's discretion, be held in escrow by the Corporation until the
Participant's interest in such shares vests or may be issued directly to the
Participant with restrictive legends on the certificates evidencing such
unvested shares. To the extent an escrow arrangement is utilized, the unvested
shares and any securities or other assets issued with respect to such shares
(other than regular cash dividends) shall be delivered in escrow to the
Corporation to be held until the Participant's interest in such shares (or
other securities or assets) vests. Alternatively, if the unvested shares are
issued directly to the Participant, the restrictive legend on the certificates
for such shares shall read substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE UNVESTED AND
ARE ACCORDINGLY SUBJECT TO (I) CERTAIN TRANSFER RESTRICTIONS
AND TO (II) CANCELLATION OR REPURCHASE IN THE EVENT THE
REGISTERED HOLDER (OR HIS/HER PREDECESSOR IN INTEREST)
CEASES TO REMAIN IN THE CORPORATION'S SERVICE. SUCH TRANSFER
RESTRICTIONS AND THE TERMS AND CONDITIONS OF SUCH
CANCELLATION OR REPURCHASE ARE SET FORTH IN A STOCK ISSUANCE
AGREEMENT BETWEEN THE CORPORATION AND THE REGISTERED HOLDER
(OR HIS/HER PREDECESSOR IN INTEREST) DATED JULY 25, 1997, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE
CORPORATION."
B. The Participant shall have no right to transfer any
unvested shares of Common Stock issued to him or her under this Article Four.
For purposes of this restriction, the term "transfer" shall include (without
limitation) any sale, pledge, assignment, encumbrance, gift, or other
disposition of such shares, whether voluntary or involuntary. Upon any such
attempted transfer, the unvested shares shall immediately be cancelled, and
neither the Participant nor the proposed transferee shall have any rights with
respect to those shares. However, the Participant shall have the right to make
a gift of unvested shares acquired under the Plan to his or her spouse or
issue, including adopted children, or to a trust established for such spouse or
issue, provided the donee of such shares delivers to the Corporation a written
agreement to be bound by all the provisions of the Plan and the Issuance
Agreement applicable to the gifted shares.
<PAGE> 15
ARTICLE FIVE
MISCELLANEOUS
I. EFFECT OF RECENT TRANSACTIONS ON OUTSTANDING OPTIONS
A. Prior to the Effective Date of the Plan, the
Company's outstanding common stock was reclassified as Series B Common Stock
and subjected to a 3 for 4 reverse stock split. As part of the same
transaction, one-third of a share of newly authorized Series A Common Stock was
distributed with respect to each outstanding share of Series B Common Stock.
Under the Company's 1988 Stock Option Plan and each of the options outstanding
as of the record date for such dividend ("Affected Option"), which options are
incorporated under this Plan, appropriate adjustment must be made to the
outstanding options to reflect such reverse stock split and stock dividend.
Such appropriate adjustments were as follows:
1. The aggregate number of shares of Common
Stock available under any Affected Option shall be unchanged by the reverse
stock split and stock dividend, but 75% of such total number shares of Common
Stock available under such options shall be Class B Common Stock and 25% of
such total number shall be Class A Common Stock.
2. The option price per share for each share of
stock available under an Affected Option will remain unchanged, and the
aggregate option price for all shares available under the option will remain
unchanged.
3. Any vesting schedule imposed under an
Affected Option will be applied separately to the total Class A and Class B
Common Stock so that on each vesting date the holder will vest in one Class A
share for every three shares of Class B Common Stock vesting on such date.
4. Option holders may separately exercise all or
any portion of the vested options of either Class of Common Stock.
B. As a result of a Conversion pursuant to the terms of
the Company's Certificate of Incorporation, all outstanding shares of Class A
Common Stock of the Corporation were converted into 1.33 shares of Class B
Common Stock (which became the only outstanding class of Common Stock of the
Corporation). Under this Plan, each outstanding option to purchase shares of
Class A Common Stock must be adjusted to reflect such conversion. Such
adjustments are as follows:
1. Each option to purchase a share of Class A
Common Stock (a "Converted Option") is automatically converted into an option
to purchase 1.33 shares of Common Stock.
2. The aggregate option price per share for each
Converted Option will remain unchanged, but the price per share for each share
of Common Stock under a Converted Option will equal the purchase price payable
for a share of Class A Common Stock divided by 1.33.
3. Any remaining vesting schedule imposed under
a Converted Option will apply to the Common Stock available under such Option.
II. LOANS OR GUARANTEE OF LOANS
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 Two Discretionary Option Grant Program or the
purchase of one or more shares issued to such Participant under the Article
Four Stock Issuance Program, including the satisfaction of any Federal and
State income and employment tax obligations arising therefrom 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 loan or installment method of payment
(including the interest rate and terms of repayment) will be upon such terms as
the Plan Administrator specifies in the applicable option or issuance agreement
or otherwise deems appropriate under the circumstances. Loans and installment
payments
<PAGE> 16
may be granted with or without security or collateral (other than to
individuals who are consultants or independent contractors, in which event the
loan must be adequately secured by collateral other than the purchased shares).
However, the maximum credit available to the Optionee or Participant may not
exceed the option or purchase price of the acquired shares (less the par value
of such shares) plus any Federal and State income and employment tax liability
incurred by the Optionee or Participant in connection with the acquisition of
such shares.
B. The Plan Administrator may, in its absolute
discretion, determine that one or more loans extended under this financial
assistance program shall be subject to forgiveness by the Corporation in whole
or in part upon such terms and conditions as the Plan Administrator may deem
appropriate.
III. TAX WITHHOLDING
A. The Company's obligation to deliver shares or cash
upon the exercise of stock options or stock appreciation rights granted under
the Discretionary Option Grant Program or upon direct issuance under the Stock
Issuance Program shall be subject to the satisfaction of all applicable
Federal, State and local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion and
upon such terms and conditions as it may deem appropriate (including the
applicable safe-harbor provisions of SEC Rule 16b-3) provide any or all holders
of outstanding option grants under the Discretionary Option Grant Program with
the election to have the Company withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such options, a portion of such shares
with an aggregate Fair Market Value equal to the designated percentage (up to
100% as specified by the optionee) of the Federal and State income taxes
("Taxes") incurred in connection with the acquisition of such shares. In lieu
of such direct withholding, one or more option holders may also be granted the
right to deliver shares of Common Stock to the Company in satisfaction of such
Taxes. The withheld or delivered shares shall be valued at the Fair Market
Value on the applicable determination date for such Taxes or such other date
required by the applicable safe-harbor provisions of SEC Rule 16b-3.
IV. AMENDMENT OF THE PLAN AND AWARDS
A. Subject to Article Three, III., the Board has
complete and exclusive power and authority to amend or modify the Plan (or any
component thereof) in any or all respects whatsoever. No amendment or
modification may adversely affect the rights and obligations of an Optionee
with respect to options at the time outstanding under the Plan, nor adversely
affect the rights of any Participant with respect to Common Stock issued under
the Plan prior to such action, unless the Optionee or Participant consents to
such amendment. In addition, the Board may not, without the approval of the
Corporation's stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan (except for permissible
adjustments under Article One, Section IV.B.) or (ii) materially modify the
eligibility requirements for participation in the Plan or materially increase
the benefits accruing to Optionees or Participants under the Plan.
B. (i) Options to purchase shares of Common Stock may
be granted under the Discretionary Option Grant Program or the Automatic Option
Grant Program and (ii) shares of Common Stock may be issued under the Stock
Issuance Program, which are in both instances in excess of the number of shares
then available for issuance under the Plan, provided any excess shares actually
issued under the Option Grant Program, the Automatic Option Grant Program or
the Stock Issuance Program are held in escrow until stockholder approval is
obtained for a sufficient increase in the number of shares available for
issuance under the Plan. If such stockholder approval is not obtained within
twelve (12) months after the date the first such excess option grants or excess
share issuances are made, then (I) any unexercised excess options shall
terminate and cease to be exercisable and (II) the Corporation shall promptly
refund the purchase price paid for any excess shares actually issued under the
Plan and held in escrow, together with interest (at the applicable Short Term
Federal Rate) for the period the shares were held in escrow.
V. EFFECTIVE DATE AND TERM OF PLAN
A. This Plan, as successor to the Company's Predecessor
Plans, shall become effective as of the Effective Date, and no further option
grants shall be made under the Option Plan nor shall any further
<PAGE> 17
shares be issued under the Stock Plan from and after such Effective Date. If
stockholder approval of this Plan is not obtained within twelve months after
the date this Plan is adopted by the Board, then each option granted under this
Plan from and after the Effective Date shall terminate without ever becoming
exercisable for the option shares and all shares issued hereunder shall be
repurchased by the Corporation at the purchase price paid, together with
interest (at the applicable Short Term Federal Rate). However, in the event
such stockholder approval is not obtained, the Predecessor Plans shall continue
in effect in accordance with the terms and provisions last approved by the
Corporation's stockholders, and all outstanding options and unvested stock
issuances under the Predecessor Plans shall remain in full force and effect in
accordance with the instruments evidencing such options and issuances.
B. Each outstanding option and share issuance under the
Predecessor Plans immediately prior to the Effective Date of this Plan are
hereby incorporated into this Plan and shall accordingly be treated as an
outstanding option or share issuance under this Plan. However, each such
option or share issuance shall continue to be governed solely by the terms and
conditions of the instrument evidencing such grant or issuance, and except as
otherwise expressly provided in this Plan, no provision of this Plan shall
affect or otherwise modify the rights or obligations of the holders of such
options or shares with respect to their acquisition of shares of Common Stock,
or otherwise modify the rights or obligations of the holders of such options or
shares.
C. The sale and remittance procedure authorized for the
exercise of outstanding options under this Plan shall be available for all
options granted under this Plan on or after the Effective Date and for all
Non-Statutory Options outstanding under the Option Plan and incorporated into
this Plan. The Plan Administrator may also allow such procedure to be utilized
in connection with one or more disqualifying dispositions of Incentive Option
shares effected after the Effective Date, whether such Incentive Options were
granted under this Plan or the Option Plan.
D. The Plan shall terminate upon the earlier of (i) the
tenth anniversary of the Effective Date 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 Discretionary Option Grant Program or the issuance of shares (whether
vested or unvested) under the Stock Issuance Program. If the date of
termination is determined under clause (i) above, then all option grants and
unvested stock issuances outstanding on such date shall thereafter continue to
have force and effect in accordance with the provisions of the instruments
evidencing such grants or issuances.
VI. USE OF PROCEEDS
Cash proceeds received by the Company from the sale of shares
under the Plan shall be used for general corporate purposes.
VII. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any
option under the Discretionary 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 option grants made 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 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 this Plan unless and until there shall have been
compliance with all applicable requirements of Federal and State securities
laws, including the filing and effectiveness of the Form S-8 registration
statement for the shares of Common Stock issuable under the Plan, and all
applicable listing requirements of any securities exchange on which stock of
the same class is then listed.
VIII. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Corporation in establishing the
Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the 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
<PAGE> 18
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.
IX. MISCELLANEOUS PROVISIONS
A. The right to acquire Common Stock or other assets
under the Plan may not be assigned, encumbered or otherwise transferred by any
Optionee or Participant.
B. The provisions of the Plan shall inure to the benefit
of, and be binding upon, the Corporation and its successors or assigns, whether
by Corporate Transaction or otherwise, and the Participants and Optionees, the
legal representatives of their respective estates, their respective heirs or
legatees and their permitted assignees.
X. FINANCIAL REPORTS
The Corporation shall deliver financial and other information
regarding the Corporation, on an annual or more frequent basis, to each
individual holding an outstanding option under the Plan, as required pursuant
to Section 260.140.46 of the Rules of the California Corporations Commissioner.
<PAGE> 19
EXHIBIT "A"
AUTOMATIC GRANT OPTION PROGRAM
NON-STATUTORY OPTION AGREEMENT
NON-EMPLOYEE DIRECTORS
A-1
<PAGE> 1
EXHIBIT 99.2
1992 Employee Stock Purchase Plan, as Amended
<PAGE> 2
LIGAND PHARMACEUTICALS INCORPORATED
1992 EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED THROUGH APRIL 24, 1997
I. PURPOSE
The Ligand Pharmaceuticals Incorporated 1992 Employee Stock
Purchase Plan (the "Plan") is intended to provide eligible employees of the
Company and one or more of its Corporate Affiliates with the opportunity to
acquire a proprietary interest in the Company through the periodic application
of their payroll deductions to the purchase of shares of the Company's common
stock.
II. DEFINITIONS
For purposes of plan administration, the following terms shall
have the meanings indicated:
Base Salary means the regular basic earnings paid to a
Participant by one or more Participating Companies plus any pre-tax
contributions made by the Participant to any Code Section 401(k) salary
deferral plan or any Code Section 125 cafeteria benefit program now or
hereafter established by the Company or any Corporate Affiliate. There shall
be excluded from the calculation of Base Salary (I) all overtime payments,
bonuses, commissions, profit-sharing distributions and other incentive-type
payments and (II) all contributions (other than Code Section 401(k) or Code
Section 125 contributions) made on the Participant's behalf by the Company or
one or more Corporate Affiliates under any employee benefit or welfare plan now
or hereafter established.
Board means the Company's Board of Directors.
Code means the Internal Revenue Code of 1986, as amended from
time to time.
Company means Ligand Pharmaceuticals Incorporated, a Delaware
corporation, and any corporate successor to all or substantially all of the
assets or voting stock of Ligand Pharmaceuticals Incorporated which shall by
appropriate action adopt the Plan.
Common Stock means shares of the Company's Common Stock.
Corporate Affiliate means any company which is a parent or
subsidiary corporation of the Company (as determined in accordance with Code
Section 424), including any parent or subsidiary corporation which becomes such
after the Effective Date.
Effective Date means the first day of the initial offering
period scheduled to commence upon the later of (i) October 1, 1992 or (ii) the
effective date of the S-8 Registration Statement covering the shares of Common
Stock issuable under the Plan. However, for any Corporate Affiliate which
becomes a Participating Company in the Plan after the first day of the initial
offering period, a subsequent Effective Date shall be designated with respect
to participation by its Eligible Employees.
Eligible Employee means any person who is engaged, on a
regularly-scheduled basis of more than twenty (20) hours per week and more than
five (5) months per calendar year, in the rendition of personal services to the
Company or any other Participating Company for earnings considered wages under
Section 3121(a) of the Code.
Entry Date means the date an Eligible Employee first joins the
offering period in effect under the Plan. The earliest Entry Date under the
Plan shall be the Effective Date.
<PAGE> 3
Participant means any Eligible Employee of a Participating
Company who is actively participating in the Plan.
Participating Company means the Company and such Corporate
Affiliate or Affiliates as may be designated from time to time by the Board.
Quarterly Entry Date means the first business day of January,
the first business day of April, the first business day of July and the first
business day of October during each offering period in effect under the Plan.
The earliest Quarterly Entry Date for an individual who is not otherwise
eligible to join the Plan on the Effective Date shall be January 1, 1993.
Quarterly Period of Participation means each quarterly period
for which the Participant actually participates in an offering period in effect
under the Plan. Except as otherwise designated by the Plan Administrator, each
quarterly period shall begin on the first business day of each calendar quarter
and shall end on the last business day of such quarter.
Quarterly Purchase Date means the last business day of March,
June, September and December each year on which shares of Common Stock are
automatically purchased for Participants under the Plan.
Service means the period during which an individual remains in
the employ of the Company or any Corporate Affiliate, whether or not in
Eligible Employee status, and shall be measured from such individual's most
recent date of hire by the Company or such Corporate Affiliate.
III. ADMINISTRATION
The Plan shall be administered by a committee (the "Plan
Administrator") comprised of two or more non-employee Board members appointed
from time to time by the Board. The Plan Administrator shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan. Decisions of the Plan Administrator shall be final
and binding on all parties who have an interest in the Plan.
IV. OFFERING PERIODS
A. Shares of Common Stock shall be offered for purchase
under the Plan through a series of successive offering periods until such time
as (i) the maximum number of shares of Common Stock available for issuance
under the Plan shall have been purchased or (ii) the Plan shall have been
sooner terminated in accordance with Article X.
B. The initial offering period will begin upon the later
of (i) October 1, 1992 or (ii) the effective date of the S-8 Registration
Statement covering the shares of Common Stock issuable under the Plan and will
end on the last business day in December 1993. Subsequent offering periods (if
any) shall be coincidental with the calendar year and shall accordingly
commence on the first business day in January of the relevant year.
C. Under no circumstances shall any offering period
commence under the Plan, nor shall any shares of Common Stock be issued
hereunder, until such time as (i) the Plan shall have been approved by the
Company's stockholders and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933 (as amended), all
applicable listing requirements of any securities exchange on which shares of
the Common Stock are listed and all other applicable statutory and regulatory
requirements.
D. The Participant shall be granted a separate purchase
right for each offering period in which he/she participates. The purchase
right shall be granted on the Entry Date on which such
<PAGE> 4
individual first joins the offering period in effect under the Plan and shall
be automatically exercised in successive installments on each Quarterly
Purchase Date within the offering period.
E. The acquisition of Common Stock through participation
in the Plan for any offering period shall neither limit nor require the
acquisition of Common Stock by the Participant in any subsequent offering
period.
V. ELIGIBILITY AND PARTICIPATION
A. Each Eligible Employee of a Participating Company
shall be eligible to participate in the Plan in accordance with the following
provisions:
- An Eligible Employee with at least five (5) months of
Service on the start date of the offering period may enter that offering
period on such start date, provided such individual enrolls in the
offering period on or before such date in accordance with Section V.B
below. That start date shall then become such individual's Entry Date for
the offering period, and on that date such individual shall be granted
his/her purchase right for the offering period. Should such Eligible
Employee not enter the offering period on the start date, then he/she may
not subsequently join that particular offering period on any later date.
- An individual who is not an Eligible Employee with at
least five (5) months of Service on the start date of the offering period
may subsequently enter that offering period on the first Quarterly Entry
Date on which he/she is an Eligible Employee with at least five (5)
months of Service, provided he/she enrolls in the offering period on or
before such date in accordance with Section V.B below. That Quarterly
Entry Date shall then become such individual's Entry Date for the
offering period, and on that date such individual shall be granted
his/her purchase right for the offering period. Should such Eligible
Employee not enter the offering period on the first Quarterly Entry Date
on which he/she is first eligible to join the offering period, then
he/she may not subsequently join that particular offering period on any
later date.
B. To participate for a particular offering period, the
Eligible Employee must complete the enrollment forms prescribed by the Plan
Administrator (including the purchase agreement and payroll deduction
authorization) and file such forms with the Plan Administrator on or before
his/her scheduled Entry Date.
C. The payroll deduction authorized by the Participant
for purposes of acquiring shares of Common Stock under the Plan may be any
multiple of one percent (1%) of the Base Salary paid to the Participant during
each Quarterly Period of Participation within the offering period, up to a
maximum of ten percent (10%). The deduction rate so authorized shall continue
in effect for the remainder of the offering period, except to the extent such
rate is changed in accordance with the following guidelines:
- The Participant may, at any time during the Quarterly
Period of Participation, reduce his/her rate of payroll deduction. Such
reduction shall become effective as soon as possible after filing of the
requisite reduction form with the Plan Administrator (or its designate),
but the Participant may not effect more than one such reduction during
the same Quarterly Period of Participation.
- The Participant may, prior to the commencement of any
new Quarterly Period of Participation within the offering period,
increase or decrease the rate of his/her payroll deduction by filing the
appropriate form with the Plan Administrator (or its designate). The new
rate (which may not exceed the ten percent (10%) maximum) shall become
effective as of the first date of the first Quarterly Period of
Participation following the filing of such form.
<PAGE> 5
Payroll deductions will automatically cease upon the
termination of the Participant's purchase right in accordance with the
applicable provisions of Section VII below.
VI. STOCK SUBJECT TO PLAN
A. The Common Stock purchasable by Participants under
the Plan shall, solely in the discretion of the Plan Administrator, be made
available from either authorized but unissued shares of Common Stock or from
shares of Common Stock reacquired by the Company, including shares of Common
Stock purchased on the open market. The total number of shares which may be
issued under the Plan shall not exceed 206,500 shares of Common Stock (provided
that, for this purpose, each issuance of Class A Common Stock occurring prior
to November 24, 1994 shall be treated as if it were an issuance of 1.33 shares
of Common Stock). The number of shares of Common Stock issuable under the Plan
shall be adjusted from time to time in accordance with Section VI.B hereof.
B. In the event any change is made to the Company's
outstanding Common Stock by reason of any stock dividend, stock split,
combination of shares or other change affecting such outstanding Common Stock
as a class without receipt of consideration, then appropriate adjustments shall
be made by the Plan Administrator to (i) the class and maximum number of shares
issuable over the term of the Plan, (ii) the class and maximum number of shares
purchasable per Participant during any one offering period and (iii) the class
and number of shares and the price per share in effect under each purchase
right at the time outstanding under the Plan. Such adjustments shall be
designed to preclude the dilution or enlargement of rights and benefits under
the Plan.
VII. PURCHASE RIGHTS
An Employee who participates in the Plan for a particular
offering period shall have the right to purchase shares of Common Stock, in a
series of successive quarterly installments during such offering period, upon
the terms and conditions set forth below and shall execute a purchase agreement
embodying such terms and conditions and such other provisions (not inconsistent
with the Plan) as the Plan Administrator may deem advisable.
Purchase Price. Common Stock shall be issuable at the end of
each Quarterly Period of Participation at a purchase price equal to eighty-five
percent (85%) of the lower of (i) the fair market value per share on the
Participant's Entry Date into the offering period or (ii) the fair market value
per share on the Quarterly Purchase Date on which such Quarterly Period of
Participation ends. However, for each Participant whose Entry Date is other
than the start date of the offering period in effect under the Plan, the clause
(i) amount shall in no event be less than the fair market value of the Common
Stock on the start date of such offering period.
Valuation. For purposes of determining the fair market value
per share of Common Stock on any relevant date, the following procedures shall
be in effect:
- If such fair market value is to be determined on any
date on or after the date the Common Stock is first registered
under Section 12(g) of the Securities Exchange Act of 1934,
then the fair market value shall be the closing selling price
on that date, as officially quoted on the NASDAQ National
Market System. If there is no quoted selling price for such
date, then the closing selling price on the next preceding day
for which there does exist such a quotation shall be
determinative of fair market value.
- If such fair market value is to be determined on any
date prior to the time of such Section 12(g) registration of
the Common Stock, then the fair market value of the Common
Stock on such date shall be determined by the Plan
Administrator, after taking into account such factors as the
Plan Administrator deems appropriate.
<PAGE> 6
Number of Purchasable Shares. The number of shares
purchasable per Participant for each Quarterly Period of Participation shall be
the number of whole shares obtained by dividing the amount collected from the
Participant through payroll deductions during such Quarterly Period of
Participation by the purchase price in effect for the Quarterly Purchase Date
on which such Quarterly Period of Participation ends. However, no Participant
may, during any one offering period, purchase more than 1,330 shares of Common
Stock, subject to periodic adjustment under Section VI.B.
Under no circumstances shall purchase rights be granted under
the Plan to any Eligible Employee if such individual would, immediately after
the grant, own (within the meaning of Code Section 424(d)) or hold outstanding
options or other rights to purchase, stock possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or any of its Corporate Affiliates.
Payment. Payment for the Common Stock purchased under the
Plan shall be effected by means of the Participant's authorized payroll
deductions. Such deductions shall begin on the first pay day coincident with
or immediately following the Participant's Entry Date into the offering period
and shall (unless sooner terminated by the Participant) continue through the
pay day ending with or immediately prior to the last day of the offering
period. The amounts so collected shall be credited to the Participant's book
account under the Plan, but no interest shall be paid on the balance from time
to time outstanding in such account. The amounts collected from a Participant
may be commingled with the general assets of the Company and may be used for
general corporate purposes.
Termination of Purchase Right. The following provisions shall
govern the termination of outstanding purchase rights:
(i) A Participant may, at any time prior
to the last five (5) business days of the Quarterly Period of
Participation, terminate his/her outstanding purchase right under the
Plan by filing the prescribed notification form with the Plan
Administrator (or its designate). No further payroll deductions shall
be collected from the Participant with respect to the terminated
purchase right, and any payroll deductions collected for the Quarterly
Period of Participation in which such termination occurs shall, at the
Participant's election, be immediately refunded or held for the
purchase of shares on the next Quarterly Purchase Date. If no such
election is made, then such funds shall be refunded as soon as
possible after the close of such Quarterly Period of Participation.
(ii) The termination of such purchase
right shall be irrevocable, and the Participant may not subsequently
rejoin the offering period for which such terminated purchase right
was granted. In order to resume participation in any subsequent
offering period, such individual must re-enroll in the Plan (by making
a timely filing of a new purchase agreement and payroll deduction
authorization) during the applicable enrollment period for the new
offering.
(iii) If the Participant ceases to remain
an Eligible Employee while his/her purchase right remains outstanding,
then such individual (or the personal representative of the estate of
a deceased Participant) shall have the following election, exercisable
up until the end of the Quarterly Period of Participation in which the
Participant ceases Eligible Employee status:
- to withdraw all of the
Participant's payroll deductions for such Quarterly Period of
Participation, or
- to have such funds held for the
purchase of shares on the Quarterly Purchase Date immediately
following such cessation of Eligible Employee status.
If no such election is made, then
such funds shall be refunded as soon as possible after the close of
such Quarterly Period of Participation. In no
<PAGE> 7
event, however, may any payroll deductions be made on the Participant's
behalf following his/her cessation of Eligible Employee status.
Stock Purchase. Shares of Common Stock shall automatically be
purchased on behalf of each Participant (other than Participants whose payroll
deductions have previously been refunded in accordance with the Termination of
Purchase Right provisions above) on each Quarterly Purchase Date. The purchase
shall be effected by applying each Participant's payroll deductions for the
Quarterly Period of Participation ending on such Quarterly Purchase Date
(together with any carryover deductions from the preceding Quarterly Period of
Participation) to the purchase of whole shares of Common Stock (subject to the
limitation on the maximum number of purchasable shares set forth above) at the
purchase price in effect for such Quarterly Period of Participation. Any
payroll deductions not applied to such purchase because they are not sufficient
to purchase a whole share shall be held for the purchase of Common Stock in the
next Quarterly Period of Participation. However, any payroll deductions not
applied to the purchase of Common Stock by reason of the limitation on the
maximum number of shares purchasable by the Participant for that offering
period shall be promptly refunded to the Participant.
Proration of Purchase Rights. Should the total number of
shares of Common Stock which are to be purchased pursuant to outstanding
purchase rights on any particular date exceed the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a
pro-rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of the aggregate purchase price payable for the Common Stock pro-rated to such
individual, shall be refunded to such Participant.
Rights as Stockholder. A Participant shall have no
stockholder rights with respect to the shares subject to his/her outstanding
purchase right until the shares are actually purchased on the Participant's
behalf in accordance with the applicable provisions of the Plan. No
adjustments shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such purchase.
A Participant shall be entitled to receive, as soon as
practicable after each Quarterly Purchase Date, a stock certificate for the
number of shares purchased on the Participant's behalf. Such certificate may,
upon the Participant's request, be issued in the names of the Participant and
his/her spouse as community property or as joint tenants with right of
survivorship.
Assignability. No purchase right granted under the Plan shall
be assignable or transferable by the Participant other than by will or by the
laws of descent and distribution following the Participant's death, and during
the Participant's lifetime the purchase right shall be exercisable only by the
Participant.
Change in Ownership. Should the Company or its stockholders
enter into an agreement to dispose of all or substantially all of the assets or
outstanding capital stock of the Company by means of:
(i) a sale, merger or other reorganization in
which the Company will not be the surviving corporation (other than a
reorganization effected primarily to change the State in which the
Company is incorporated), or
(ii) a reverse merger in which the Company is the
surviving corporation but in which more than 50% of the Company's
outstanding voting stock is transferred to holders different from
those who held the stock immediately prior to the reverse merger,
then all outstanding purchase rights under the Plan shall
automatically be exercised immediately prior to the consummation of such sale,
merger, reorganization or reverse merger by applying the payroll deductions of
each Participant for the Quarterly Period of Participation in which such
transaction occurs to the purchase of whole shares of Common Stock at
eighty-five percent (85%) of the lower of (i) the fair market value of the
Common Stock on the Participant's Entry Date into the offering period in which
such transaction occurs or (ii) the fair market value of the Common Stock
immediately prior to the consummation of such transaction. However, the
applicable share limitations of Articles VII and VIII shall continue to apply
to any such purchase, and the clause (i) amount above shall not, for any
Participant whose
<PAGE> 8
Entry Date for the offering period is other than the start date of such
offering period, be less than the fair market value of the Common Stock on such
start date.
The Company shall use its best efforts to provide at least ten
(10)-days advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights
in accordance with the applicable provisions of this Article VII.
VIII. ACCRUAL LIMITATIONS
A. No Participant shall be entitled to accrue rights to
acquire Common Stock pursuant to any purchase right outstanding under this Plan
if and to the extent such accrual, when aggregated with (I) rights to purchase
Common Stock accrued under any other purchase right outstanding under this Plan
and (II) similar rights accrued under other employee stock purchase plans
(within the meaning of Section 423 of the Code) of the Company or its Corporate
Affiliates, would otherwise permit such Participant to purchase more than
$25,000 worth of stock of the Company or any Corporate Affiliate (determined on
the basis of the fair market value of such stock on the date or dates such
rights are granted to the Participant) for each calendar year such rights are
at any time outstanding.
B. For purposes of applying such accrual limitations,
the right to acquire Common Stock pursuant to each purchase right outstanding
under the Plan shall accrue as follows:
(i) The right to acquire Common Stock
under each such purchase right shall accrue in a series of successive
quarterly installments as and when the purchase right first becomes
exercisable for each quarterly installment on the last business day of
each Quarterly Period of Participation for which the right remains
outstanding.
(ii) No right to acquire Common Stock
under any outstanding purchase right shall accrue to the extent the
Participant has already accrued in the same calendar year the right to
acquire $25,000 worth of Common Stock (determined on the basis of the
fair market value on the date or dates of grant) pursuant to one or
more purchase rights held by the Participant during such calendar
year.
(iii) If by reason of such accrual
limitations, any purchase right of a Participant does not accrue for a
particular Quarterly Period of Participation, then the payroll
deductions which the Participant made during that Quarterly Period of
Participation with respect to such purchase right shall be promptly
refunded.
C. In the event there is any conflict between the
provisions of this Article VIII and one or more provisions of the Plan or any
instrument issued thereunder, the provisions of this Article VIII shall be
controlling.
IX. STATUS OF PLAN UNDER FEDERAL TAX LAWS
The Plan is designed to qualify as an employee stock purchase
plan under Code Section 423. Accordingly, the Participant will not recognize
any taxable income at the time one or more shares of Common Stock are purchased
on his/her behalf on any Quarterly Purchase Date under the Plan.
X. AMENDMENT AND TERMINATION
A. The Board may alter, amend, suspend or discontinue
the Plan following the close of any Quarterly Period of Participation.
However, the Board may not, without the approval of the Company's stockholders:
<PAGE> 9
(i) materially increase the number of shares
issuable under the Plan or the maximum number of shares which may be
purchased per Participant during any one offering period under the
Plan, except that the Plan Administrator shall have the authority,
exercisable without such stockholder approval, to effect adjustments
to the extent necessary to reflect changes in the Company's capital
structure pursuant to Section VI.B;
(ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares issuable under the
Plan; or
(iii) materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility to participate in the Plan.
B. The Company shall have the right, exercisable in the
sole discretion of the Plan Administrator, to terminate all outstanding
purchase rights under the Plan immediately following the close of any Quarterly
Period of Participation. Should the Company elect to exercise such right, then
the Plan shall terminate in its entirety. No further purchase rights shall
thereafter be granted or exercised, and no further payroll deductions shall
thereafter be collected, under the Plan.
XI. GENERAL PROVISIONS
A. The Plan shall become effective on the designated
Effective Date, provided that no offering period shall commence, and no shares
of Common Stock shall be issued hereunder, until (i) the Plan shall have been
approved by the stockholders and (ii) the Company shall have complied with all
applicable requirements of the Securities Act of 1933 (as amended), all
applicable listing requirements of any securities exchange on which shares of
the Common Stock are listed and all other applicable requirements established
by law or regulation. In the event such stockholder approval is not obtained,
or such Company compliance is not effected, within twelve (12) months after the
date on which the Plan is adopted by the Board, the Plan shall terminate and
have no further force or effect.
B. 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 sold pursuant to purchase rights exercised under
the Plan.
C. All costs and expenses incurred in the administration
of the Plan shall be paid by the Company.
D. Neither the action of the Company in establishing the
Plan, nor any action taken under the Plan by the Board or the Plan
Administrator, nor any provision of the Plan itself shall be construed so as to
grant any person the right to remain in the employ of the Company or any of its
Corporate Affiliates for any period of specific duration, and such person's
employment may be terminated at any time, with or without cause.
