<PAGE> 1
As filed with the Securities and Exchange Commission on June 30, 1997
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_______________________
SHAMAN PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-3095806
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
213 EAST GRAND AVENUE
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(Address of principal executive offices) (Zip Code)
________________________
1992 STOCK OPTION PLAN
(Full title of the Plan)
_______________________
LISA A. CONTE
PRESIDENT, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
SHAMAN PHARMACEUTICALS, INC.
213 EAST GRAND AVENUE, SOUTH SAN FRANCISCO, CA 94080
(Name and address of agent for service)
(415) 952-7070
(Telephone number, including area code, of agent for service)
________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Securities to be Amount to be Offering Price Offering Registration
Registered Registered(1) per Share(2) Price(2) Fee
===========================================================================================================
<S> <C> <C> <C> <C>
Options to Purchase Common 700,000 N/A N/A N/A
Stock
Common Stock, $0.001 par 700,000 shares $5.64 $3,948,000 $1,196.36
value
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the 1992 Stock Option Plan by
reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which
results in an increase in the number of the outstanding shares of Shaman
Pharmaceuticals, Inc. Common Stock.
(2) Calculated solely for purposes of this offering under Rule 457(h) 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 Shaman
Pharmaceuticals, Inc. on June 26, 1997 as reported by the Nasdaq National
Market.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
Shaman Pharmaceuticals, Inc. (the "Registrant") hereby incorporates by
reference into this Registration Statement the following documents previously
filed with the Securities and Exchange Commission (the "Commission"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal
year ended December 31, 1996, as filed with the Commission on
March 12, 1997, and as amended on March 13, 1997, pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act");
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1997, filed with the Commission on May
8, 1997 pursuant to Section 13 of the Exchange Act; and
(c) The Registrant's Registration Statement No. 0-21022 on Form
8-A filed with the Commission on December 18, 1992, as amended
by Amendment Nos. 1, 2 and 3 filed on January 19, January 21,
and January 26, 1993, respectively, in which there is
described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Registration Statement
to the extent that a statement contained herein or in any subsequently filed
document which is also deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Registration Statement.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Pursuant to the General Corporation Law of Delaware ("Delaware Law"),
the Registrant has adopted provisions in its Amended and Restated Certificate
of Incorporation which eliminate the personal liability of each member of the
Registrant's Board of Directors to the Registrant and its stockholders for
monetary damages for breach of such Board member's fiduciary duties in certain
circumstances and authorize the Registrant to indemnify its Board members,
officers and other agents, by bylaw, agreement or otherwise, to the fullest
extent permitted by law. The Registrant's Bylaws require the Registrant to
indemnify its Board members and permit the Registrant to indemnify its
officers, employees and other agents to the fullest extent permitted by
Delaware Law.
<PAGE> 3
The Registrant's Amended and Restated Certificate of Incorporation
expressly authorizes the use of indemnification agreements. The Registrant has
entered into such indemnification agreements with all of its officers and Board
members. The form of such agreements was approved by the Registrant's
stockholders in January 1993.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4.1 Instruments Defining Rights of Stockholders. Reference
is made to Registrant's Registration Statement No. 0-21022 on Form
8-A and Amendments Nos. 1, 2 and 3 thereto, which are incorporated
herein by reference pursuant to Item 3(c) of this Registration Statement.
5.1 Opinion and consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4 of this Registration
Statement.
99.1 Shaman Pharmaceuticals, Inc. 1992 Stock Option Plan (as Amended and Restated on
February 14, 1997).
99.2* Form of Notice of Grant with Stock Option Agreement.
99.3* Form of Addendum to Stock Option Agreement (Special Tax Elections).
99.4* Form of Addendum to Stock Option Agreement (Limited Stock Appreciation Rights).
99.5 Form of Non-Employee Director Automatic Stock Option Agreement.
----------------------
</TABLE>
* Exhibits 99.2, 99.3 and 99.4 are incorporated herein by reference to
Exhibits 99.2, 99.3 and 99.4, respectively, to Registrant's
Registration Statement No. 33-66450 filed with the Commission on July
23, 1993.
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 Securities Act of 1933, as amended (the "1933 Act"),
(ii) to reflect in the prospectus any facts or events arising after the
effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement, and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii)
shall not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
Registrant's 1992 Stock Option Plan.
II-2
<PAGE> 4
B. The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference into this Registration Statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Insofar as indemnification for liabilities arising under the
1933 Act may be permitted to directors, officers or controlling persons of the
Registrant pursuant to the indemnity provisions summarized in Item 6 or
otherwise, the Registrant has been informed that in the opinion of the
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the 1933
Act and will be governed by the final adjudication of such issue.
II-3
<PAGE> 5
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 South San Francisco,
State of California, on this 27th of June, 1997.
SHAMAN PHARMACEUTICALS, INC.
By: /s/ LISA A. CONTE
-------------------------------------
Lisa A. Conte
President, Chief Executive Officer and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS:
That the undersigned officers and directors of Shaman Pharmaceuticals,
Inc., a Delaware corporation, do hereby constitute and appoint Lisa A. Conte,
the lawful attorney-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
attorney and agent determines may be necessary or advisable or required to
enable said corporation to comply with the Securities Act of 1933, as amended,
and any rules or regulations or requirements of the Securities and Exchange
Commission in connection with this Registration Statement. Without limiting
the generality of the foregoing power and authority, the powers granted include
the power and authority to sign the names of the undersigned 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 all that said attorney and agent shall do or cause to be done by
virtue hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
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>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ LISA A. CONTE President, Chief Executive June 27, 1997
- ---------------------------------- Officer, Chief Financial Officer
Lisa A. Conte and Director (Principal Executive
and Financial Officer)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ G. KIRK RAAB Chairman of the Board June 27, 1997
- ----------------------------------
G. Kirk Raab
/s/ HERBERT H. MCDADE Director June 27, 1997
- --------------------------
Herbert H. McDade, Jr.
/s/ M. DAVID TITUS Director June 27, 1997
- ----------------------------------
M. David Titus
/s/ JOHN A. YOUNG Director June 27, 1997
- ----------------------------------
John A. Young
</TABLE>
II-5
<PAGE> 7
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
SHAMAN PHARMACEUTICALS, INC.
<PAGE> 8
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
4.1 Instruments Defining Rights of Stockholders. Reference
is made to Registrant's Registration Statement No. 0-21022
on Form 8-A and Amendments No. 1, 2 and 3 thereto, which are
incorporated herein by reference pursuant to Item 3(c) of this
Registration Statement.
5.1 Opinion and Consent of Brobeck, Phleger & Harrison LLP.
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in Exhibit 5.1.
24.1 Power of Attorney. Reference is made to page II-4 of this Registration
Statement.
99.1 Shaman Pharmaceuticals, Inc. 1992 Stock Option Plan (as Amended and
Restated on February 14, 1997).
99.2* Form of Notice of Grant with Stock Option Agreement.
99.3* Form of Addendum to Stock Option Agreement (Special Tax Elections).
99.4* Form of Addendum to Stock Option Agreement (Limited Stock Appreciation Rights).
99.5 Form of Non-Employee Director Automatic Stock Option Agreement.
----------------------
</TABLE>
* Exhibits 99.2, 99.3 and 99.4 are incorporated herein by
reference to Exhibits 99.2, 99.3 and 99.4, respectively, to
Registrant's Registration Statement No. 33-66450 filed with
the Commission on July 23, 1993.
<PAGE> 1
EXHIBIT 5.1
Opinion and consent of Brobeck, Phleger & Harrison LLP
June 27, 1997
SHAMAN PHARMACEUTICALS, INC.
213 East Grand Avenue
South San Francisco, CA 94080
Re: SHAMAN PHARMACEUTICALS, INC. (THE "COMPANY")
REGISTRATION STATEMENT FOR OFFERING OF 700,000 SHARES OF
COMMON STOCK
Ladies and Gentlemen:
We refer to your Registration Statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended, of Seven Hundred
Thousand (700,000) shares of Common Stock under the Company's 1992 Stock Option
Plan, as amended and restated, (the "Plan"). We advise you that, in our
opinion, when such shares have been issued and sold pursuant to the applicable
provisions of the Plan and in accordance with the Registration Statement, such
shares will be validly issued, fully paid and nonassessable shares of the
Company's Common Stock.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
on Form S-8 pertaining to the 1992 Stock Option Plan of Shaman Pharmaceuticals,
Inc. of our report dated January 20, 1997 with respect to the financial
statements of Shaman Pharmaceuticals, Inc. included in its Annual Report on
Form 10-K for the year ended December 31, 1996 filed with the Securities and
Exchange Commission.
Ernst & Young LLP
Palo Alto, California
June 25, 1997
<PAGE> 1
EXHIBIT 99.1
SHAMAN PHARMACEUTICALS, INC.
1992 STOCK OPTION PLAN
(AS RESTATED AND AMENDED THROUGH FEBRUARY 14, 1997)
ARTICLE ONE
GENERAL
I. PURPOSE OF THE PLAN
A. This 1992 Stock Option Plan ("Plan") is intended to
promote the interests of Shaman Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), by providing a method whereby eligible individuals may be
offered the opportunity to acquire a proprietary interest, or otherwise
increase their proprietary interest, in the Company as an incentive for them to
remain in the service of the Company (or its parent or subsidiary
corporations).
B. The Plan became effective on the date on which shares
of the Company's common stock were first 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 the Plan.
C. This Plan shall serve as the successor to the
Company's 1990 Stock Option Plan (the "1990 Plan"), and no further option
grants shall be made under the 1990 Plan from and after the Effective Date of
this Plan. All options outstanding under the 1990 Plan on such Effective Date
are hereby incorporated into this Plan and shall accordingly be treated as
outstanding options under this Plan. However, each outstanding option so
incorporated shall continue to be governed solely by the express terms and
conditions of the instrument evidencing such grant, and no provision of this
Plan shall be deemed to affect or otherwise modify the rights or obligations of
the holders of such incorporated options with respect to their acquisition of
shares of the Company's common stock thereunder or their exercise of any
outstanding stock appreciation rights thereunder.
D. For purposes of the Plan, the following provisions
shall be applicable in determining the parent and subsidiary corporations of
the Company:
Any corporation (other than the Company) in an unbroken chain
of corporations ending with the Company shall be considered to be a
PARENT of the Company, provided each such corporation in the unbroken
chain (other than the Company) owns, at the time of the determination,
stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.
<PAGE> 2
Each corporation (other than the Company) in an unbroken chain
of corporations beginning with the Company shall be considered to be a
SUBSIDIARY of the Company, 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.
II. STRUCTURE OF THE PLAN
A. Stock Programs. The Plan shall be divided into two
separate components: the Discretionary Option Grant Program specified in
Article Two and the Automatic Option Grant Program specified in Article Three.
Under the Discretionary Option Grant Program, eligible individuals may, at the
discretion of the Plan Administrator, be granted options to purchase shares of
Common Stock in accordance with the provisions of Article Two. Under the
Automatic Option Grant Program, certain non-employee members of the Company's
Board of Directors (the "Board") will at periodic intervals automatically
receive special option grants to purchase shares of Common Stock in accordance
with the provisions of Article Three.
B. General Provisions. Unless the context clearly
indicates otherwise, the provisions of Articles One and Four of the Plan shall
apply to both the Discretionary Option Grant Program and the Automatic Option
Grant Program and shall accordingly govern the interests of all individuals
under the Plan.
III. ADMINISTRATION OF THE PLAN
A. The Discretionary Option Grant Program shall be
administered by a committee ("Committee") of two (2) or more non- employee
Board members appointed by the Board. Members of the Committee shall serve for
such period of time as the Board may determine and shall be subject to removal
by the Board at any time.
B. The Committee as Plan Administrator shall have full
power and authority (subject to the express provisions of the Plan) to
establish such rules and regulations as it may deem appropriate for the proper
administration of the Discretionary Option Grant Program and to make such
determinations under, and issue such interpretations of, the provisions of such
program and any outstanding option grants 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 Discretionary Option Grant Program or
any outstanding option thereunder.
2.
<PAGE> 3
C. Administration of the Automatic Option Grant Program
shall be self-executing in accordance with the express terms and conditions of
Article Three, and the Committee as Plan Administrator shall exercise no
discretionary functions with respect to option grants made pursuant to that
program.
IV. OPTION GRANTS
A. The persons eligible to participate in the
Discretionary Option Grant Program under Article Two of the Plan shall be
limited to the following:
(i) officers and other key employees of the
Company (or its parent or subsidiary corporations) who render services
which contribute to the management, growth and financial success of
the Company (or its parent or subsidiary corporations);
(ii) non-employee members of the Board;
(iii) non-employee members of the board of
directors of any parent or subsidiary corporation; and
(iv) those consultants or other independent
advisors who provide valuable services to the Company (or its parent
or subsidiary corporations).
B. The Plan Administrator shall have full authority to
determine the eligible individuals who are to receive option grants under the
Discretionary Option Grant Program, the number of shares to be covered by each
such grant, the status of the granted option as either 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, the time or times at which each granted option is to become
exercisable and the maximum term for which the option may remain outstanding.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Company's common stock (the "Common
Stock") shall be available for issuance under the Plan and shall be drawn from
either the Company's authorized but unissued shares of Common Stock or from
reacquired shares of Common Stock, including shares repurchased by the Company
on the open market. The maximum number of shares of Common Stock which may be
issued over the term of the Plan shall
3.
<PAGE> 4
not exceed 3,716,660(1) shares, subject to adjustment from time to time in
accordance with the provisions of this Section V. Such authorized share
reserve includes the number of shares which remained available for issuance
under the 1990 Plan as of the Effective Date, including the shares subject to
the outstanding options incorporated into this Plan and any other shares
available for future option grant under the 1990 Plan as of such Effective
Date. Such share reserve also includes (i) the increase of 107,166 shares
authorized by the Board in May 1992 and subsequently approved by the
stockholders in August 1992, (ii) the increases of 250,000 shares and 176,166
shares authorized by the Board in November 1992 and December 1992,
respectively, and subsequently approved in the aggregate by the stockholders in
December 1992, (iii) the increase of 1,000,000 shares authorized by the Board
in May 1993 and subsequently approved by the stockholders at the 1994 Annual
Stockholders Meeting, (iv) the increase of 545,000 shares authorized by the
Board in February 1995 and approved by the stockholders at the 1995 Annual
Stockholders Meeting, (v) the increase of 450,000 shares authorized by the
Board in January 1996 and subsequently approved by the stockholders at the 1996
Annual Stockholders Meeting, and (vi) the increase of 700,000 shares authorized
by the Board on February 14, 1997, subject to stockholder approval at the 1997
Annual Meeting.
B. To the extent one or more outstanding options under
the 1990 Plan which have been incorporated into this Plan are subsequently
exercised, the number of shares issued with respect to each such option shall
reduce, on a share-for-share basis, the number of shares available for issuance
under this Plan. In no event may any one individual participating in the Plan
be granted stock options and separately exercisable stock appreciation rights
for more than 750,000 shares of Common Stock under the Plan (including the
250,000-share increase authorized by the Board in January 1996 and subsequently
approved by the stockholders at the 1996 Annual Meeting and the additional
250,000-share increase authorized by the Board in February 1997, subject to
stockholder approval at the 1997 Annual Meeting). For purposes of this
limitation, any stock options or stock appreciation rights granted prior to
December 31, 1993 shall not be taken into account.
C. Should one or more outstanding options under this
Plan (including outstanding options under the 1990 Plan incorporated into this
Plan) expire or terminate for any reason prior to exercise in full (including
any option cancelled in accordance with the cancellation-regrant provisions of
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
under the Plan. In addition, any unvested shares issued under the Plan and
subsequently repurchased by the Company at the original exercise price per
share pursuant
____________________
(1) Such share reserve gives effect to the 1-for-3 reverse stock split of
the Common Stock effected in connection with the reincorporation of the
Company in Delaware and the associated exchange of three (3) shares of the
California corporation's common stock for one (1) share of the Delaware
corporation's common stock on January 25, 1993.
4.
<PAGE> 5
to the Company's repurchase rights under the Plan shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants under the Plan. However, shares subject to any option or portion
thereof surrendered or cancelled in accordance with Section V of Article Two or
Section III of Article Three shall reduce on a share-for-share basis the number
of shares of Common Stock available for subsequent option grants under the
Plan. In addition, should the exercise price of an outstanding option under
the Plan (including any option incorporated from the 1990 Plan) be paid with
shares of Common Stock or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Company 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 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.
D. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, then appropriate adjustments shall be made to (i) the maximum
number and/or class of securities issuable under the Plan, (ii) the maximum
number and/or class of securities for which any one individual participating in
the Plan may be granted stock options and separately exercisable stock
appreciation rights after December 31, 1993, (iii) the number and/or class of
securities for which automatic option grants are to be subsequently made to
each newly-elected or continuing Board member under the Automatic Option Grant
Program, (iv) the number and/or class of securities and price per share in
effect under each option outstanding under either the Discretionary Option
Grant or Automatic Option Grant Program under the Plan and (v) the number
and/or class of securities and price per share in effect under each outstanding
option incorporated into this Plan from the 1990 Plan. 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.
5.
<PAGE> 6
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to the Discretionary Option Grant
Program shall be authorized by action of the Plan Administrator and may, at the
Plan Administrator's discretion, be either Incentive Options or non-statutory
options. Individuals who are not Employees of the Company 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 accordance with the following provisions:
(i) The option price per share of the
Common Stock subject to an Incentive Option shall in no event be less
than one hundred percent (100%) of the fair market value of such
Common Stock on the grant date.
(ii) The option price per share of the
Common Stock subject to a non-statutory stock option shall be
determined by the Plan Administrator in its sole discretion and may
be less than, equal to or greater than the fair market value of such
Common Stock on the grant date.
(2) The option price shall become immediately due
upon exercise of the option and, subject to the provisions of Section VI of
this Article Two 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 Company's order;
- full payment in shares of Common
Stock held by the optionee for the requisite period necessary to avoid
a charge to the Company's earnings for financial reporting purposes
and valued at fair market value on the Exercise Date (as such term is
defined below);
6.
<PAGE> 7
- full payment in a combination of
shares of Common Stock of the Company held by the optionee for the
requisite period necessary to avoid a charge to the Company's earnings
for financial reporting purposes and valued at fair market value on
the Exercise Date and cash or check drawn to the Company's order; or
- full payment through a broker-dealer
sale and remittance procedure pursuant to which the optionee (I) shall
provide irrevocable instructions to a Company-designated brokerage
firm to effect the immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on the settlement
date, sufficient funds to cover the aggregate option price payable for
the purchased shares plus all applicable Federal and State income and
employment taxes required to be withheld by the Company in connection
with such purchase and (II) shall provide directives to the Company 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 (2), the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company. Except to the extent the sale and remittance procedure is utilized in
connection with the exercise of the option, payment of the option price for the
purchased shares must accompany such notice.
(3) The fair market value per share of Common
Stock shall be determined in accordance with the following provisions:
- If the Common Stock is not at the time listed
or admitted to trading on any national stock exchange but is traded on
the Nasdaq National Market, the fair market value shall be the closing
selling price per share on the date in question, as such price is
reported by the National Association of Securities Dealers on the
Nasdaq National Market or any successor system. If there is no
reported closing selling price for the Common Stock on the date in
question, then the closing selling price on the last preceding date
for which such quotation exists shall be determinative of fair market
value.
- If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then the fair
market value shall be the closing selling price per share on the date
in question on the 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 Common Stock on such exchange on the date
in question, then the fair market value shall be the closing selling
price on the exchange on the last preceding date for which such
quotation exists.
7.
<PAGE> 8
B. Term and Exercise of Options. Each option granted
under this Discretionary Option Grant Program shall be exercisable at such time
or times and during such period as is determined by the Plan Administrator and
set forth in the instrument evidencing the grant. No such option, however,
shall have a maximum term in excess of ten (10) years from the grant date.
C. Limited Transferability of Options. During the
lifetime of the optionee, Incentive Options shall be exercisable only by the
optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following the optionee's death. However,
non-statutory options may, in connection with the optionee's estate plan, be
assigned in whole or in part during the optionee's lifetime to one or more
members of the optionee's immediate family or to a trust established
exclusively for one or more such family members. The assigned portion may only
be exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned
portion shall be the same as those in effect for the option immediately prior
to such assignment and shall be set forth in such documents issued to the
assignee as the Plan Administrator may deem appropriate.
D. Termination of Service.
(1) The following provisions shall govern the
exercise period applicable to any outstanding options held by the optionee at
the time of cessation of Service or death.
- Should an optionee cease Service for any
reason (including death or permanent disability as defined in Section
22(e)(3) of the Internal Revenue Code) while holding one or more
outstanding options under this Article Two, then none of those options
shall (except to the extent otherwise provided pursuant to
subparagraph D.(3) below) remain exercisable for more than a
thirty-six (36)-month period (or such shorter period determined by the
Plan Administrator and set forth in the instrument evidencing the
grant) measured from the date of such cessation of Service.
- Any option held by the optionee under this
Article Two and exercisable in whole or in part on the date of his/her
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. Any exercise, however, must
occur 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 outstanding.
8.
<PAGE> 9
- Under no circumstances, however, shall any
such option be exercisable after the specified expiration date of the
option term.
- During the applicable post-Service exercise
period, the option may not be exercised in the aggregate for more than
the number of shares (if any) in which the optionee is vested at the
time of his/her cessation of Service. Upon the expiration of the
limited post-Service exercise period or (if earlier) upon the
specified expiration date of the option term, each such option shall
terminate and cease to be outstanding with respect to any vested
shares for which the option has not otherwise been exercised.
However, each outstanding option shall immediately terminate and cease
to be outstanding, at the time of the optionee's cessation of Service,
with respect to any shares for which the option is not otherwise at
that time exercisable or in which the optionee is not otherwise
vested.
- Should (i) the optionee's Service be
terminated for misconduct (including, but not limited to, any act of
dishonesty, willful misconduct, fraud or embezzlement) or (ii) the
optionee make any unauthorized use or disclosure of confidential
information or trade secrets of the Company or its parent or
subsidiary corporations, then in any such event all outstanding
options held by the optionee under this Article Two shall terminate
immediately and cease to be outstanding.
(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
post-Service exercise period applicable under subparagraph (1) above, not only
with respect to the number of vested shares of Common Stock 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 in which the optionee
would otherwise have vested had he/she continued in Service.
(3) The Plan Administrator shall also have full power and
authority to extend the period of time for which the option is to remain
exercisable following the optionee's cessation of Service or death from the
limited period in effect under subparagraph (1) above to such greater period of
time as the Plan Administrator shall deem appropriate. In no event, however,
shall such option be exercisable after the specified expiration date of the
option term.
(4) For purposes of the foregoing provisions of this
Section I.D (and for all other purposes under the Discretionary Option Grant
Program):
9.
<PAGE> 10
- The optionee shall (except to the extent
otherwise specifically provided in the applicable stock option or
stock purchase agreement) be deemed to remain in the SERVICE of the
Company for so long as such individual renders services on a periodic
basis to the Company (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 Company
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.
E. 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 and paid the option price for the purchased shares.
F. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of any
Article Two option grant may be subject to repurchase by the Company in
accordance with the following provisions:
(a) The Plan Administrator shall have the
discretion to authorize the issuance of unvested shares of Common
Stock under this Article Two. Should the optionee cease Service while
holding such unvested shares, the Company shall have the right to
repurchase any or all of those unvested shares at the option price
paid per share. The terms and conditions upon which such repurchase
right shall be exercisable (including the period and procedure for
exercise and the appropriate vesting schedule for the purchased
shares) shall be established by the Plan Administrator and set forth
in the instrument evidencing such repurchase right.
(b) All of the Company's outstanding repurchase
rights under this Article Two shall automatically terminate, and all
shares subject to such terminated rights shall immediately vest in
full, upon the occurrence of any Corporate Transaction under Section
III of this Article Two, except to the extent: (i) any such
repurchase right is expressly assigned to the successor corporation
(or parent thereof) in connection with the Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is
issued.
10.
<PAGE> 11
(c) The Plan Administrator shall have the
discretionary authority, exercisable either before or after the
optionee's cessation of Service, to cancel the Company's outstanding
repurchase rights with respect to one or more shares purchased or
purchasable by the optionee under this Discretionary Option Grant
Program and thereby accelerate the vesting of such shares in whole or
in part at any time.
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 Company. Options which
are specifically designated as "non- statutory" options when issued under the
Plan shall not be subject to such terms and conditions.
A. Dollar Limitation. The aggregate fair market value
(determined as of the respective date or dates of grant) of the Common Stock
for which one or more options granted to any Employee after December 31, 1986
under this Plan (or any other option plan of the Company or its parent or
subsidiary corporations) may for the first time become exercisable as incentive
stock options under the Federal tax laws during any one calendar year shall not
exceed the sum of One Hundred Thousand Dollars ($100,000). To the extent the
Employee holds two (2) or more such options which become exercisable for the
first time in the same calendar year, the foregoing limitation on the
exercisability of such options as incentive stock options under the Federal tax
laws shall be applied on the basis of the order in which such options are
granted. Should the number of shares of Common Stock for which any Incentive
Option first becomes exercisable in any calendar year exceed the applicable One
Hundred Thousand Dollar ($100,000) limitation, then that option may
nevertheless be exercised in that calendar year for the excess number of shares
as a non-statutory option under the Federal tax laws.
B. 10% Stockholder. If any individual to whom an
Incentive Option is granted is the owner of stock (as determined under Section
424(d) of the Internal Revenue Code) possessing ten percent (10%) or more of
the total combined voting power of all classes of stock of the Company 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, and the option term shall
not exceed five (5) years, measured from the grant date.
Except as modified by the preceding provisions of this Section
II, the provisions of Articles One, Two and Four of the Plan shall apply to all
Incentive Options granted hereunder.
11.
<PAGE> 12
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following
stockholder-approved transactions (a "Corporate Transaction") to which the
Company is a party:
(i) a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Company's
incorporation,
(ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company
in complete liquidation or dissolution of the Company, or
(iii) any reverse merger in which the
Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are transferred to person or
persons different from those who held such securities immediately
prior to such merger,
then each option which is at the time outstanding under this
Article Two shall automatically accelerate so that each such option shall,
immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to such option and may be exercised
for all or any portion of such shares. However, an outstanding option under
this Article Two shall not so accelerate if and to the extent: (i) such option
is, in connection with the Corporate Transaction, either to be assumed by the
successor corporation or parent thereof or to be replaced with a comparable
option to purchase shares of the capital stock of the successor corporation or
parent thereof, (ii) such option is to be replaced with a cash incentive
program of the successor corporation which preserves the option spread existing
at the time of the Corporate Transaction and provides for subsequent payout in
accordance with the same vesting schedule applicable to such option, or (iii)
the acceleration of such option is subject to other limitations imposed by the
Plan Administrator at the time of the option grant. The determination of
option comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.
B. Immediately following the consummation of the
Corporate Transaction, all outstanding options under this Article Two shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation or its parent company.
C. Each outstanding option under this Article Two which
is assumed in connection with the 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 have been issued to the option holder, in consummation
of such Corporate Transaction, had such person exercised the option
12.
<PAGE> 13
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided the aggregate
option price payable for such securities shall remain the same. In addition,
the class and number of securities available for issuance under the Plan on
both an aggregate and per participant basis following the consummation of the
Corporate Transaction shall be appropriately adjusted.
D. The grant of options under this Article Two shall in
no way affect the right of the Company to adjust, reclassify, reorganize or
otherwise change its capital or business structure or to merge, consolidate,
dissolve, liquidate or sell or transfer all or any part of its business or
assets.
E. The Plan Administrator shall have the discretionary
authority, exercisable either at the time the option is granted or at any time
while the option is outstanding, to provide for the automatic acceleration of
one or more outstanding options under this Article Two (and the termination of
one or more of the Company's outstanding repurchase rights under this Article
Two) upon the occurrence of the Change in Control. The Plan Administrator
shall also have full power and authority to condition any such option
acceleration (and the termination of any outstanding repurchase rights) upon
the subsequent termination of the optionee's Service within a specified period
following the Change in Control.
F. For purposes of this Section III, a Change in Control
shall be deemed to occur in the event:
(i) any person or related group of
persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities pursuant
to a tender or exchange offer made directly to the Company's
stockholders; or
(ii) there is a change in the composition
of the Board over a period of twenty-four (24) consecutive months or
less such that a majority of the Board members ceases, by reason of
one or more proxy contests for the election of Board members, to be
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A)
who were still in office at the time such election or nomination was
approved by the Board.
G. Any options accelerated in connection with the Change
in Control shall remain fully exercisable until the expiration or sooner
termination of the option term.
13.
<PAGE> 14
H. The exercisability as incentive stock options under
the Federal tax laws of any options accelerated under this Section III in
connection with a Corporate Transaction or Change in Control shall remain
subject to the dollar limitation of Section II of this Article Two.
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 1990 Plan incorporated into this Plan)
and to grant in substitution new options under the Plan covering the same or
different numbers of shares of Common Stock but with an option price per share
based on the fair market value of the Common Stock on the date of the new
grant.
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 Company 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 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 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.
14.
<PAGE> 15
D. One or more officers of the Company 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 the Plan. Upon the occurrence
of a Hostile Take-Over effected at any time when the Company's outstanding
Common Stock is registered under Section 12(g) of the 1934 Act, each
outstanding option with such a limited stock appreciation right 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 Company 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 shall be made within five (5) days following the consummation
of the Hostile Take-Over. The Plan Administrator shall pre-approve, at the time
the limited right is granted, the subsequent exercise of that right in
accordance with the terms of the grant and the provisions of this Section V.D.
No additional approval of the Plan Administrator or the Board shall be required
at the time of the actual option cancellation and cash distribution. The
balance of the option (if any) shall continue to remain outstanding and become
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 any person or related group of persons (other than the Company
or a person that directly or indirectly controls, is controlled by,
or is under common control with, the Company) acquires directly or
indirectly 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 Company's outstanding
securities pursuant to a tender or exchange offer made directly to
the Company's stockholders which the Board does not recommend such
stockholders to accept.
The Take-Over Price per share shall be deemed to be
equal to the greater of (a) the fair market value per share of Common
Stock on the option cancellation date, as determined pursuant to the
valuation provisions of Section I.A.(3) of this Article Two, or (b)
the highest reported price per share of Common Stock 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.
15.
<PAGE> 16
VI. LOANS OR INSTALLMENT PAYMENTS
The Plan Administrator may, in its discretion, assist any
optionee (including an optionee who is an officer or director of the Company)
in the exercise of one or more options granted to such optionee under this
Article Two, 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 Company to such optionee or (ii) permitting the optionee to
pay the option 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 agreement or
otherwise deems appropriate under the circumstances. Loans and installment
payments may be granted with or without security or collateral. However, the
maximum credit available to the optionee shall not exceed the sum of (i) the
aggregate option price of the purchased shares plus (ii) any Federal and State
income and employment tax liability incurred by the optionee in connection with
the exercise of the option.
16.
<PAGE> 17
ARTICLE THREE
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY
The individuals eligible to receive automatic option grants
pursuant to the provisions of this Article Three program shall be limited to
(i) those individuals who are first elected or appointed as non-employee Board
members on or after the Effective Date of this Plan, whether through
appointment by the Board or election by the Company's stockholders, provided
they have not otherwise been in the prior employ of the Company (or any parent
or subsidiary corporation), and (ii) those individuals who are re-elected as
non-employee Board members at one or more Annual Stockholder Meetings held
after the Effective Date, whether or not such individuals are otherwise serving
as non-employee Board members on the Effective Date.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grant Dates. Option grants shall be made under this
Article Three on the dates specified below. Stockholder approval of this
February 14, 1997 restatement at the 1997 Annual Meeting shall constitute
pre-approval of each option granted under this Article Three on or after the
date of that Annual Meeting and the subsequent exercise of each such option in
accordance with the provisions of this Article Three.
(i) Each individual who first becomes a
non-employee Board member on or after the Effective Date of this Plan,
whether through election by the Company's stockholders or appointment
by the Board shall automatically be granted, at the time of such
initial election or appointment, a non-statutory stock option to
purchase 20,000 shares of Common Stock upon the terms and conditions
of this Article Three, provided such individual has not otherwise been
in the prior employ of the Company or any parent or subsidiary
corporation.
(ii) On the date of each Annual
Stockholders Meeting held after February 24, 1995, each individual who
is to continue to serve as a non-employee Board member and who has
served in such capacity for at least six (6) months shall
automatically be granted, whether or not such individual is standing
for re-election as a Board member at that Annual Meeting, a
non-statutory stock option to purchase, upon the terms and conditions
of this Article Three, that number of shares of Common Stock
determined by dividing $50,000 by the average closing selling price
per share of the Common Stock for the thirty (30) trading days
immediately preceding the date of such Annual Meeting. In no event,
however, shall the number of shares subject to such option be greater
than 7,500 or less than 5,000. There shall be no limit on the number
of such annual automatic option grants any
17.
<PAGE> 18
one non-employee Board member may receive over his/her continued
period of Board service.
The number of shares subject to the automatic option grants to
be made to each newly-elected or continuing non-employee Board member shall be
subject to periodic adjustment pursuant to the applicable provisions of Section
V.D of Article One.
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 Common Stock on
the automatic grant date.
C. Payment.
The exercise price shall be payable in one of the
alternative forms specified below:
(i) full payment in cash or check made
payable to the Company's order; or
(ii) full payment in shares of Common
Stock held for the requisite period necessary to avoid a charge to the
Company's reported earnings and valued at fair market value on the
Exercise Date (as such term is defined below); or
(iii) full payment in a combination of
shares of Common Stock held for the requisite period necessary to
avoid a charge to the Company's reported earnings and valued at fair
market value on the Exercise Date and cash or check payable to the
Company's order; or
(iv) full payment through a sale and
remittance procedure pursuant to which the non-employee Board member
(I) shall provide irrevocable instructions to a Company-designated
brokerage firm to effect the immediate sale of the purchased shares
and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise
price payable for the purchased shares and shall (II) concurrently
provide directives to the Company 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 C, the Exercise Date shall
be the date on which written notice of the option exercise is delivered to the
Company, and the fair market value per share of Common Stock on any relevant
date shall be determined in accordance with the provisions of Section I.A.(3)
of Article Two. Except to the extent the sale and
18.
<PAGE> 19
remittance procedure specified above is utilized for the exercise of the
option, payment of the option price for the purchased shares must accompany the
exercise notice.
D. Option Term. Each automatic grant under this Article
Three shall have a maximum term of ten (10) years measured from the automatic
grant date.
E. Exercisability. Each automatic grant shall become
exercisable for the option shares in a series of twenty-four (24) equal and
successive monthly installments over the optionee's period of service on the
Board, with the first such installment to become exercisable one (1) month
after the automatic grant date. The option shall not become exercisable for
any additional option shares following the optionee's cessation of Board
service for any reason.
F. Limited Transferability of Options. Options granted
under the Automatic Option Grant Program may, in connection with the optionee's
estate plan, be assigned in whole or in part during the optionee's lifetime to
one or more members of the optionee's immediate family or to a trust
established exclusively for one or more such family members. The assigned
portion may only be exercised by the person or persons who acquire a
proprietary interest in the option pursuant to the assignment. The terms
applicable to the assigned portion shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Plan Administrator may deem
appropriate.
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 six
(6)-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 is exercisable at the time of such cessation of Board
service. Each such option shall immediately terminate and cease to be
outstanding, at the time of such cessation of Board service, 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 six (6) 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 is exercisable at the time of the optionee's
cessation of Board service (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 twelve (12) 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
19.
<PAGE> 20
of the optionee's cessation of Board service, with respect to any option shares
for which it was not otherwise exercisable at that time.
3. In no event shall any automatic option 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
post-service exercise under subparagraph 1 or 2 above or (if earlier) upon the
expiration of the ten (10)-year option term, the automatic option 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 and paid the exercise price for the
purchased 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.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-
OVER
A. In the event of any of the following
stockholder-approved transactions to which the Company is a party (a "Corporate
Transaction"):
(i) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Company's
incorporation,
(ii) the sale, transfer or disposition of
all or substantially all of the assets of the Company in liquidation or
dissolution of the Company, or
(iii) any reverse merger in which the
Company is the surviving entity but in which securities possessing more
than fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to person or persons
different from those who held such securities immediately prior to
such merger,
the exercisability of each automatic option grant at the time
outstanding under this Article Three shall automatically accelerate so that
each such option shall, immediately prior to the specified effective date for
the Corporate Transaction, become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares. Immediately
20.
<PAGE> 21
following the consummation of the Corporate Transaction, all automatic option
grants under this Article Three shall terminate and cease to be outstanding,
except to the extent assumed by the successor corporation or its parent
company.
B. In connection with any Change in Control of the
Company, the exercisability of each automatic option grant at the time
outstanding under this Article Three shall automatically accelerate so that
each such option shall, immediately prior to the specified effective date for
the Change in Control, become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to such option and may be
exercised for all or any portion of such shares at any time prior to the
expiration or sooner termination of the option term. For purposes of this
Article Three, a Change in Control shall be deemed to occur in the event:
(i) any person or related group of
persons (other than the Company or a person that directly or
indirectly controls, is controlled by, or is under common control
with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange
Act of 1934, as amended) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made
directly to the Company's stockholders; or
(ii) there is a change in the composition
of the Board over a period of twenty-four (24) consecutive months or
less such that a majority of the Board members ceases, by reason of
one or more proxy contests for the election of Board members, to be
comprised of individuals who either (A) have been Board members
continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period
by at least a majority of the Board members described in clause (A)
who were still in office at the time such election or nomination was
approved by the Board.
C. Upon the occurrence of a Hostile Take-Over, each
option granted under this Article Three shall automatically be cancelled, and
the optionee shall in return be entitled to a cash distribution from the
Company in an amount equal to the excess of (i) the Take-Over Price of the
shares of Common Stock at the time subject to the cancelled option (whether or
not the option is otherwise at the time exercisable for such shares) over (ii)
the aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the consummation of the Hostile
Take-Over. Stockholder approval of the February 14, 1997 restatement of the
Plan at the 1997 Annual Meeting shall constitute pre-approval of each option
granted on or after the date of that Annual Meeting with such an automatic
cancellation provision and the subsequent cancellation of that option
21.
<PAGE> 22
in accordance with such provision. No additional approval of the Plan
Administrator or the Board shall be required at the time of the actual option
cancellation and cash distribution.
D. For purposes of this Section III, the following
definitions shall be in effect:
A HOSTILE TAKE-OVER shall be deemed to occur in the
event any person or related group of persons (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) directly or indirectly acquires beneficial
ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which
the Board does not recommend such stockholders to accept.
The TAKE-OVER PRICE per share shall be deemed to be
equal to the greater of (a) the fair market value per share of Common Stock on
the option cancellation date, as determined pursuant to the valuation
provisions of Section I.A.(3) of Article Two, or (b) the highest reported price
per share paid by the tender offeror in effecting such Hostile Take-Over.
E. The shares of Common Stock subject to each option
cancelled in connection with the Hostile Take-Over shall NOT be available for
subsequent option grant under this Plan.
F. The automatic option grants outstanding under this
Article Three shall in no way affect the right of the Company to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
22.
<PAGE> 23
ARTICLE FOUR
MISCELLANEOUS
I. AMENDMENT OF THE PLAN AND AWARDS
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. However, no such amendment or modification shall, without the
consent of the Company's stockholders, adversely affect rights and obligations
with respect to options at the time outstanding under the Plan. In addition,
certain amendments may require stockholder approval pursuant to applicable laws
or regulations.
II. TAX WITHHOLDING
The Company's obligation to deliver shares or cash upon the
exercise of stock options or stock appreciation rights granted under the Plan
shall be subject to the satisfaction of all applicable Federal, State and local
income tax and employment tax withholding requirements.
The Plan Administrator may, in its discretion and in
accordance with the provisions of this Section II of Article Four and such
supplemental rules as the Plan Administrator may from time to time adopt
(including the applicable safe-harbor provisions of SEC Rule 16b- 3), provide
any or all holders of non-statutory options under the Plan (other than the
automatic grants made pursuant to Article Three of the Plan) with the right to
use shares of the Company's Common Stock in satisfaction of all or part of the
Federal, State and local income tax and employment tax liabilities incurred by
such holders in connection with the exercise of their options (the "Taxes").
Such right may be provided to any such option holder in either or both of the
following formats:
1. Stock Withholding: The holder of the non-statutory
option may be provided with the election to have the Company withhold,
from the shares of Common Stock otherwise issuable upon the exercise
of such non-statutory option, a portion of such shares with an
aggregate fair market value equal to the percentage of the applicable
Taxes (not to exceed one hundred percent (100%)) designated by the
option holder.
2. Stock Delivery: The Plan Administrator may, in its
discretion, provide the holder of the non-statutory option with the
election to deliver, at the time the non-statutory option is
exercised, one or more shares of Common Stock already held by such
individual with an aggregate fair market value equal to the percentage
of the Taxes incurred in connection with such option exercise (not to
exceed one hundred percent (100%)) designated by the option holder.
23.
<PAGE> 24
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan first became effective on the Effective Date
and serves as the successor to the Company's 1990 Stock Option Plan. No
further option grants shall be made under the 1990 Plan from and after the
Effective Date.
B. On May 26, 1993, the Board amended the Plan to
increase the number of shares issuable thereunder by 1,000,000 shares. The
1,000,000-share increase was approved by the Company's stockholders at the 1994
Annual Stockholders Meeting. On March 28, 1994, the Board further amended the
Plan to impose a limitation on the maximum number of shares for which any one
individual participating in the Plan may be granted stock options and
separately exercisable stock appreciation rights.
C. On February 24, 1995, the Board amended the Plan to
increase the number of shares of Common Stock issuable thereunder by 545,000
shares. The 545,000-share increase was approved by the Company's stockholders
at the 1995 Annual Stockholders Meeting.
D. On February 24, 1995, the Board further amended the
Plan to increase the number of shares of Common Stock for which automatic
option grants are to be made to continuing non-employee Board members on the
date of each Annual Stockholders Meeting held after February 24, 1995. The
amendment was approved by the Company's stockholders at the 1995 Annual
Stockholders Meeting.
E. On August 21, 1995, the Board amended the Plan to
extend the eligibility provisions of the Discretionary Option Grant Program to
all non-employee Board members other than those at the time serving on the
Committee acting as the Plan Administrator. The amendment was approved by the
Company's stockholders at the 1996 Annual Stockholders Meeting.
F. In January 1996, the Board adopted an amendment to
the Plan which (i) increased the number of shares of Common Stock available for
issuance under the Plan by an additional 450,000 shares and (ii) increased the
maximum number of shares for which any one individual may be granted stock
options and separately exercisable stock appreciation rights over the remaining
term of the Plan by an additional 250,000 shares of Common Stock. The
amendment was approved by the Company's stockholders at the 1996 Annual
Stockholders Meeting.
G. On February 14, 1997, the Board adopted a series of
amendments to the Plan (the "1997 Amendments") which (i) increased the number
of shares of Common Stock available for issuance under the Plan by an
additional 700,000 shares, (ii) increased the limit on the maximum number of
shares of the Company's common stock for which any one individual may be
granted stock options and separately exercisable stock appreciation rights
under the Plan from 500,000 shares to 750,000 shares, (iii) rendered the
non-employee
24.
<PAGE> 25
Board members who serve as Plan Administrator eligible to receive option grants
under the Discretionary Option Grant Program, (iv) allowed unvested shares
issued under the Plan and subsequently repurchased by the Company at the option
exercise price paid per share to be reissued under the Plan, (v) removed
certain restrictions on the eligibility of non-employee Board members to serve
as Plan Administrator, and (vi) effected a series of additional changes to the
provisions of the Plan (including the stockholder approval requirements, the
transferability of non-statutory stock options and the elimination of the six
(6)-month holding period requirement as a condition to the exercise of stock
appreciation rights) in order to take advantage of the recent amendments to
Rule 16b-3 of the Securities and Exchange Commission which exempts certain
officer and director transactions under the Plan from the short-swing liability
provisions of the federal securities laws. The 1997 Amendments are subject to
stockholder approval at the 1997 Annual Meeting. If such stockholder approval
is not obtained, then any options granted on the basis of the 700,000-share
increase which forms part of the 1997 Amendments will terminate without
becoming exercisable for any of the shares of Common Stock subject to those
options, and no further option grants or stock issuances will be made on the
basis of such share increase. The 250,00-share increase to the limitation on
the maximum number of shares for which any one participant may be granted stock
options and separately exercisable stock appreciation rights under the Plan
after December 31, 1993 will not be implemented, and any options granted on the
basis of that increase will terminate without becoming exercisable for any of
the shares of Common Stock subject to those options. In addition, non-employee
Board members will not be eligible to participate in the Discretionary Option
Grant Program while serving as the Plan Administrator, and any unvested shares
repurchased by the Company at the option exercise price paid per share will not
be added back to the share reserve for reissuance. However, the Plan will
continue to remain in effect, and option grants may continue to be made
pursuant to the provisions of the Plan in effect prior to the 1997 Amendments,
until the available reserve of Common Stock as last approved by the
stockholders has been issued.
H. Each option issued and outstanding under the 1990
Plan immediately prior to the Effective Date shall be incorporated into this
Plan and treated as an outstanding option under this Plan, but each such option
shall continue to be governed solely by the terms and conditions of the
instrument evidencing such grant, and nothing in this Plan shall be deemed to
affect or otherwise modify the rights or obligations of the holders of such
options with respect to their acquisition of shares of Common Stock thereunder.
I. 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 1990 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 1990 Plan.
25.
<PAGE> 26
J. The option acceleration provisions of Section III of
Article Two relating to Corporate Transactions and Changes in Control may, in
the Plan Administrator's discretion, be extended to one or more stock options
which are outstanding under the 1990 Plan on the Effective Date of this Plan
but which do not otherwise provide for such acceleration.
K. The Plan shall terminate upon the earlier of (i)
December 31, 2002 or (ii) the date on which all shares available for issuance
under the Plan shall have been issued or cancelled pursuant to the exercise,
surrender or cash-out of the options granted under the Plan. If the date of
termination is determined under clause (i) above, then all option grants
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the instruments evidencing such grants.
L. Options to purchase shares of Common Stock may be
granted under the Plan which are in excess of the number of shares then
available for issuance under the Plan, provided each option granted is not to
become exercisable, in whole or in part, at any time prior to stockholder
approval of an amendment authorizing a sufficient increase in the number of
shares available for issuance under the Plan.
IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of
shares pursuant to options granted under the Plan shall be used for general
corporate purposes.
V. REGULATORY APPROVALS
The implementation of the Plan, the granting of any option
thereunder and the issuance of stock upon the exercise or surrender of the
option grants made hereunder shall be subject to the Company's procurement of
all approvals and permits required by regulatory authorities having
jurisdiction over the Plan, the options granted under it, and the stock issued
pursuant to it.
VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company 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 Company (or any parent or subsidiary
corporation) for any period of specific duration, and the Company (or any
parent or subsidiary corporation retaining the services of such individual) may
terminate such individual's employment or service at any time and for any
reason, with or without cause.
26.
<PAGE> 27
VIII. 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.
B. The provisions of the Plan relating to the vesting
and termination of outstanding options shall be governed by the laws of the
State of California, as such laws are applied to contracts entered into and
performed in such State.
C. The provisions of the Plan shall inure to the benefit
of, and be binding upon, the Company and its successors or assigns, whether by
Corporate Transaction or otherwise, and the optionees, the legal
representatives of their respective estates, their respective heirs or legatees
and their permitted assignees.
27.
<PAGE> 28
EXHIBIT A
NON-STATUTORY STOCK OPTION AGREEMENT
AUTOMATIC OPTION GRANT PROGRAM
<PAGE> 1
EXHIBIT 99.5
SHAMAN PHARMACEUTICALS, INC.
NON-EMPLOYEE DIRECTOR STOCK OPTION AGREEMENT
AGREEMENT made the ____ day of __________, 199_ by and between
Shaman Pharmaceuticals, Inc., a corporation (the "Company") organized and
existing under the laws of the State of California, and ____________________, a
member of the Company's Board of Directors to whom the option grant evidenced
by this Agreement is hereby made (the "Optionee").
WHEREAS the Company's Board of Directors (the "Board") has
adopted, and the stockholders have approved, the Company's 1992 Stock Option
Plan, as amended (the "Plan"), for the purpose of attracting and retaining the
services of key employees (including officers and directors), and non-employee
members of the Board and consultants and other independent contractors of the
Company and its parent or subsidiary organizations.
WHEREAS Optionee is a non-employee Board member who is
entitled to receive an option to acquire shares of the Company's common stock
pursuant to the automatic option grant program in effect for non-employee Board
members under the Plan. This Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
automatic option grant made to such Optionee thereunder.
WHEREAS the granted option is not intended to be an incentive
stock option ("Incentive Option") within the meaning of Section 422 of the
Internal Revenue Code.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, Company hereby grants to Optionee, as
of the date of this Agreement (the "Grant Date"), a stock option to purchase up
to ____________________ (_______) shares of the Company's common stock (the
"Option Shares"). The Option Shares shall be purchasable from time to time
during the option term at the price of $_____ per share (the "Option Price").
2. OPTION TERM. This option shall have a maximum term
of ten (10) years measured from the Grant Date and shall accordingly expire at
the close of business on the last day of such ten (10)-year period (the
"Expiration Date"), unless sooner terminated in accordance with Paragraph 5 or
Paragraph 7.A or sooner cancelled in accordance with Paragraph 8.
<PAGE> 2
3. LIMITED TRANSFERABILITY. This option may, in
connection with the Optionee's estate plan, be assigned in whole or in part
during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall
be set forth in such documents issued to the assignee as the Plan Administrator
may deem appropriate.
4. EXERCISABILITY. This option shall become exercisable
in a series of twenty-four (24) successive equal monthly installments over
Optionee's period of Board service, with the first such installment to become
exercisable one (1) month after the automatic grant date.
Once this option becomes exercisable for one or more
installments of the Option Shares, those installments shall accumulate, and
this option shall remain exercisable for the accumulated installments until the
Expiration Date or sooner termination of the option term under Paragraph 5 or
Paragraph 7.A or the cancellation of this option under Paragraph 8.
5. CESSATION OF BOARD MEMBERSHIP. Should Optionee's
service as a Board member cease for any reason while this option remains
outstanding, then the option term specified in Paragraph 2 shall terminate (and
this option shall cease to be outstanding) prior to the Expiration Date in
accordance with the following provisions:
(i) This option shall immediately
terminate and cease to be outstanding for any Option Shares for which
it is not otherwise exercisable at the time of the Optionee's
cessation of Board service.
(ii) Should Optionee cease for any reason
other than death to serve as a member of the Board, then Optionee
shall have a six (6)-month period measured from the date of such
cessation of Board service in which to exercise this option for up to
that number of Option Shares (if any) for which this option is, in
accordance with the provisions of this Agreement, exercisable at the
time of such cessation of Board service. In no event, however, may
this option be exercised at any time after the expiration of the
maximum ten (10)-year term in effect for such option.
(iii) Should Optionee die while serving as
a Board member or within six (6) months after cessation of Board
service, then the personal representative of the Optionee's estate (or
the person or persons to whom the Option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and
distribution) shall have the right to exercise this option for any or
all of the Option Shares for which this option is, in accordance with
the provisions of this Agreement, exercisable at the time of the
Optionee's cessation of Board service, less any Option Shares
subsequently purchased by Optionee
2.
<PAGE> 3
prior to death. Such right shall cease to be exercisable, and this
option shall accordingly terminate with respect to those Option
Shares, upon the earlier of (i) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or (ii)
the expiration of the ten (10)-year maximum term in effect for this
option.
6. ADJUSTMENT IN OPTION SHARES. In the event any change
is made to the common stock issuable under the Plan by reason of any stock
split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding common stock as a class
effected without the Company's receipt of consideration, appropriate
adjustments shall automatically be made to (i) the class and/or number of
securities subject to this option and (ii) the Option Price payable per share
in order to prevent any dilution or enlargement of benefits hereunder. The
adjustments determined by the Plan Administrator shall be final, binding and
conclusive.
7. CORPORATE TRANSACTION/CHANGE IN CONTROL.
A. In the event of any of the following
stockholder-approved transactions to which the Company is a party (a "Corporate
Transaction"):
(i) a merger or consolidation in which the
Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Company's
incorporation,
(ii) the sale, transfer or other disposition of
all or substantially all of the assets of the Company in complete
liquidation or dissolution of the Company; or
(iii) any reverse merger in which the Company is
the surviving entity but in which the securities possessing more than
fifty percent (50%) of the total combined voting power of the
Company's outstanding securities are transferred to a person or
persons different from than those who held those securities
immediately prior to such merger,
this option, to the extent outstanding at such time
but not otherwise fully exercisable, shall automatically accelerate so that the
option shall, immediately prior to the specified effective date for the
Corporate Transaction, become fully exercisable for all the Option Shares at
the time subject to this option and may be exercised for any or all of such
Option Shares. Upon the consummation of the Corporate Transaction, this option
shall terminate and cease to be outstanding, except to the extent assumed by
the successor corporation or its parent company.
3.
<PAGE> 4
B. This option, to the extent outstanding but not
otherwise at the time fully exercisable, shall automatically accelerate in
connection with a Change in Control so that this option shall, immediately
prior to the effective date of such Change in Control, become fully exercisable
for all of the Option Shares at the time subject to this option and may be
exercised for any or all of such Option Shares. The option shall remain so
exercisable until the earliest to occur of (i) the expiration of the maximum
ten (10)-year term in effect for this option, (ii) the sooner termination of
the option in accordance with Paragraph 5 or 7.A of this Agreement or (iii) the
cancellation of this option in accordance with Paragraph 8. For purposes of
this Agreement, a Change in Control shall be deemed to occur in the event:
(i) any person or related group of persons (other
than the Company or a person that directly or indirectly controls, is
controlled by, or is under common control with, the Company) directly
or indirectly acquires beneficial ownership (within the meaning of
Rule 13d-3 of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) of securities possessing more than fifty percent (50%) of
the total combined voting power of the Company's outstanding
securities pursuant to a tender or exchange offer made directly to the
Company's stockholders; or
(ii) there is a change in the composition of the
Board over a period of twenty-four (24) consecutive months or less
such that a majority of the Board members ceases, by reason of one or
more proxy contests for the election of Board members, to be comprised
of individuals who either (A) have been Board members continuously
since the beginning of such period or (B) have been elected or
nominated for election as Board members during such period by at least
a majority of the Board members described in clause (A) who were still
in office at the time such election or nomination was approved by the
Board.
C. This Agreement shall in no way affect the right of
the Company to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
8. LIMITED STOCK APPRECIATION RIGHT
Optionee is hereby granted a limited stock appreciation right
in tandem with this option, exercisable upon the terms and conditions set forth
below:
(a) Should a Hostile Take-Over occur, then this
option shall automatically be cancelled with respect to all the Option
Shares at the time subject to such option. The optionee shall in
return be entitled to a cash distribution from the Company in an
amount equal to the excess of (i) the Take-Over Price of the shares of
the Company's common stock at the time subject to the cancelled option
(whether or not the option is otherwise at the time exercisable for
those shares) over (ii) the aggregate option price payable for such
shares.
4.
<PAGE> 5
(b) The cash distribution shall be paid to the
Optionee within five (5) days following the consummation of the
Hostile Take-Over, and 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. Upon receipt of such cash
distribution, this option shall be cancelled and the Optionee shall
cease to have any further right to acquire any Option Shares under
this Agreement.
(c) For purposes of this limited stock appreciation right,
the following definitions shall be in effect:
- A HOSTILE TAKE-OVER shall be deemed to occur in the event
any person or related group of persons (other than the Company or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Company) directly or indirectly acquires beneficial ownership (within
the meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than
fifty percent (50%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made directly to
the Company's stockholders which the Board does not recommend such stockholders
to accept.
- The TAKE-OVER PRICE per share shall be deemed to be equal
to the greater of (a) the Fair Market Value per share of the Company's common
stock on the date of the option cancellation, as determined in accordance with
the valuation provisions of paragraph 10.B of the Agreement, or (b) the highest
reported price paid per share of such common stock by the tender offeror in
effecting the Hostile Take-Over.
9. PRIVILEGE OF STOCK OWNERSHIP. The holder of this
option shall not have any of the rights of a stockholder with respect to the
Option Shares until such individual shall have exercised the option and paid
the Option Price for the purchased shares.
10. MANNER OF EXERCISING OPTION.
A. In order to exercise this option with respect to any
or all Option Shares for which this option is at the time exercisable, Optionee
(or in the case of exercise after Optionee's death, Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
action:
(i) Execute and deliver to the Secretary of the
Company a written notice of exercise (the "Exercise Notice") in
substantially the form of attached Exhibit I.
(ii) Pay the aggregate Option Price for the
purchased shares in one or more of the following alternative forms:
5.
<PAGE> 6
- full payment in cash or check made payable
to the Company's order;
- full payment in shares of the Company's
common stock held by the Optionee for the requisite period necessary
to avoid a charge to the Company's reported earnings and valued at
Fair Market Value on the Exercise Date (as such terms are defined
below);
- full payment in a combination of shares of
the Company's common stock held for the requisite period necessary to
avoid a charge to the Company's reported earnings and valued at Fair
Market Value on the Exercise Date and cash or check made payable to
the Company's order; or
- full payment through a sale and remittance
procedure pursuant to which the Optionee (I) shall provide irrevocable
instructions to a designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover
the aggregate option price payable for the purchased shares and (II)
shall concurrently provide directives to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm
in order to complete the sale transaction.
(iii) Furnish appropriate documentation
that the person or persons exercising the option (if not the Optionee)
have the right to exercise this option.
B. For purposes of this Agreement, the Exercise Date
shall be the date on which the executed Exercise Notice shall have been
delivered to the Company. Except to the extent the sale and remittance
procedure specified above is utilized in connection with the option exercise,
payment of the Option Price for the purchased shares must accompany such
Exercise Notice. For all valuation purposes under this Agreement, the Fair
Market Value of a share of common stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the common stock is not at the time listed
or admitted to trading on any national stock exchange but is traded on
the Nasdaq National Market, then the fair market value shall be the
closing selling price per share of common stock on the date in
question, as reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If
there is no reported closing selling price for the common stock on the
date in question, then the closing selling price on the last preceding
date for which such quotation exists on the Nasdaq National Market
shall be determinative of fair market value.
6.
<PAGE> 7
(ii) If the common stock is at the time listed or
admitted to trading on any national stock exchange, then the fair
market value shall be the closing selling price per share of common
stock on the date in question on the stock exchange 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 such reported price for 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.
(c) As soon after the Exercise Date as practical, the
Company shall mail or deliver to or on behalf of the Optionee (or any other
person or persons exercising this option in accordance herewith) a certificate
or certificates representing the shares for which the option has been exercised
in accordance with the provisions of this Agreement.
(d) In no event may this option be exercised for any
fractional shares.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of
Option Shares upon the exercise of this option shall be subject to compliance
by the Company and the Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock exchange on
which the Company's common stock may be listed at the time of such exercise and
issuance.
(b) In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such representations in
writing as may be requested by the Company in order for it to comply with the
applicable requirements of Federal and State securities laws.
12. NOTICES. Any notice required to be given to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company in care of its Chief Financial Officer at the Corporate Offices at
213 East Grand Avenue, South San Francisco, California CA 94080. Any notice to
be given to Optionee shall be in writing and addressed to him at the address
indicated below his signature line in this Agreement. Any such notice shall be
deemed effectively given upon personal delivery or upon deposit in the United
States Post Office, by registered or certified mail, postage prepaid and
properly addressed to the party to be notified.
13. SUCCESSORS AND ASSIGNS. Except as otherwise
expressly set forth in this Agreement, the provisions of this Agreement shall
inure to the benefit of, and be binding upon, the administrators, heirs, legal
representatives and assigns of the Optionee and of the Company.
7.
<PAGE> 8
14. INTERPRETATION OF THIS AGREEMENT. This Agreement and
the option evidenced hereby are made and granted pursuant to the automatic
grant provisions in effect under the Plan for non-employee Board members and
are in all respects limited by and subject to the express provisions of the
Plan applicable to such automatic grants.
15. LIABILITY OF COMPANY. The inability of Company to
obtain approval from any regulatory body having authority deemed by the Company
to be necessary to the lawful issuance and sale of any common stock pursuant to
this option shall relieve the Company of any liability with respect to the
non-issuance or sale of the common stock as to which approval shall not have
been obtained. The Company however, shall use its best efforts to obtain all
such approvals.
16. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts entered into and wholly to be performed within the State of
California by California residents.
17. NO IMPAIRMENT OF RIGHTS. Nothing in this Agreement
or in the Plan shall be deemed to impair or otherwise restrict the rights of
the Company or the stockholders to remove the Optionee from the Board at any
time pursuant to the provisions of applicable law.
IN WITNESS WHEREOF, Shaman Pharmaceuticals, Inc. has caused
this Agreement to be executed on its behalf by its duly-authorized officer, and
the Optionee has executed this Agreement, all as of the day and year indicated
above.
SHAMAN PHARMACEUTICALS, INC.
By:
--------------------------------
Title:
----------------------------
-----------------------------------
OPTIONEE
Address
-----------------------------------
-----------------------------------
8.
<PAGE> 9
EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Shaman Pharmaceuticals, Inc. (the "Company")
that I elect to purchase ________________________________________ shares of
common stock of the Company (the "Purchased Shares") at the option price of
$_____ per share (the "Option Price") pursuant to that certain option (the
"Option") granted me on _______________, 199_.
Concurrently with the delivery of this Exercise Notice to the
Chief Financial Officer of the Company, I shall hereby pay to the Company the
Option Price for the Purchased Shares in accordance with the provisions of my
agreement with the Company evidencing the Option and shall deliver whatever
additional documents may be required by such agreement as a condition for
exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect the payment of the
Option Price for the Purchased Shares.
- -------------------------- ------------------------------
Date OPTIONEE
Address:
------------------------------
------------------------------
Print name in exact manner
it is to appear on the
stock certificate:
------------------------------
Address to which certificate
is to be sent, if different
from address above:
------------------------------
------------------------------
------------------------------
Social Security Number:
------------------------------
