1991 Stock Option Plan - Gilead Sciences Inc.
GILEAD SCIENCES, INC.
1991 STOCK OPTION PLAN
ADOPTED NOVEMBER 15, 1991
AMENDED APRIL 8, 1992
AMENDED APRIL 21, 1993
AMENDED OCTOBER 17, 1995
AMENDED AND RESTATED JANUARY 22, 1998
AMENDED MARCH 30, 1999
TERMINATION DATE: OCTOBER 31, 2001
(a) The Plan initially was adopted on November 15, 1991 and amended
through October 17, 1995 (the 'Initial Plan'). The Initial Plan hereby is
amended and restated in its entirety effective as of January 22, 1998. The
terms of the Plan (excluding the amended provision relating to the exercise
price of Nonstatutory Stock Options) shall apply to all options granted
pursuant to the Initial Plan.
(b) The purpose of the Plan is to provide a means by which selected
Employees and Directors of, and Consultants to, the Company and its
Affiliates may be given an opportunity to purchase stock of the Company.
(c) The Company, by means of the Plan, seeks to retain the services of
persons who are now Employees of or Consultants to the Company, to secure and
retain the services of new Employees and Consultants, and to provide
incentives for such persons to exert maximum efforts for the success of the
(d) The Company intends that the Options issued under the Plan shall,
in the discretion of the Board or any Committee to which responsibility for
administration of the Plan has been delegated pursuant to subsection 3(c), be
either Incentive Stock Options or Nonstatutory Stock Options. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to Section
6, and a separate certificate or certificates will be issued for shares
purchased on exercise of each type of Option.
(a) 'AFFILIATE' means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined
in Sections 424(e) and (f) respectively, of the Code.
(b) 'BOARD' means the Board of Directors of the Company.
(c) 'CODE' means the Internal Revenue Code of 1986, as amended.
(d) 'COMMITTEE' means a Committee appointed by the Board in accordance
with subsection 3(c) of the Plan.
(e) 'COMPANY' means Gilead Sciences, Inc., a Delaware corporation.
(f) 'CONSULTANT' means any person, including an advisor, engaged by the
Company or an Affiliate to render services and who is compensated for such
services, provided that the term 'Consultant' shall not include Directors who
are paid only a director's fee by the Company or who are not otherwise
compensated by the Company for their services as Directors. The term
'Consultant' shall include a member of the Board of Directors of an Affiliate.
(g) 'CONTINUOUS SERVICE' (formerly designated as 'CONTINUOUS STATUS AS
AN EMPLOYEE OR CONSULTANT') means that the Optionee's service with the
Company or its Affiliates is not interrupted or terminated. The Optionee's
Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Optionee renders service to the Company
or its Affiliates or a change in the entity for which the Optionee renders
such service, provided that there is no interruption or termination of the
Optionee's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant or Director of the Company or a
member of the Board of Directors of an Affiliate will not constitute an
interruption of Continuous Service. The Board or the chief executive officer
of the Company, in that party's sole discretion, may determine whether
Continuous Service shall be considered interrupted in the case of any leave
of absence approved by the Board or the chief executive officer of the
Company, including sick leave, military leave, or any other personal leave.
(h) 'COVERED EMPLOYEE' means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange
Act, as determined for purposes of Section 162(m) of the Code.
(i) 'DIRECTOR' means a member of the Board.
(j) 'DISABILITY' means total and permanent disability as defined in
Section 22(e)(3) of the Code.
(k) 'EMPLOYEE' means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as
a Director nor payment of a director's fee by the Company shall be sufficient
to constitute 'employment' by the Company.
(l) 'EXCHANGE ACT' means the Securities Exchange Act of 1934, as
(m) 'FAIR MARKET VALUE' means, as of any date, the value of the common
stock of the Company determined as follows:
(i) If the common stock is listed on any established stock
exchange or a national market system, including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ('NASDAQ') System, the Fair Market Value of a share
of common stock shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such system or exchange
(or the exchange with the greatest volume of trading in common stock) on the
last market trading day prior to the day of determination, as reported in the
Wall Street Journal or such other source as the Board deems reliable;
(ii) If the common stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value
of a share of common stock shall be the mean between the high bid and high
asked prices for the common stock on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(iii) In the absence of an established market for the common stock,
the Fair Market Value shall be determined in good faith by the Board.
(n) 'INCENTIVE STOCK OPTION' means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) 'NON-EMPLOYEE DIRECTOR' means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or subsidiary, does
not receive compensation (directly or indirectly) from the Company or its
parent or subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would
not be required under Item 404(a) of Regulation S-K promulgated pursuant to
the Securities Act), does not possess an interest in any other transaction as
to which disclosure would be required under Item 404(a) of Regulation S-K,
and is not engaged in a business relationship as to which disclosure would be
required under Item 404(b) of Regulation S-K; or (ii) is otherwise considered
a 'non-employee director' for purposes of Rule 16b-3.
(p) 'NONSTATUTORY STOCK OPTION' means an Option not intended to qualify
as an Incentive Stock Option.
(q) 'OFFICER' means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
(r) 'OPTION' means a stock option granted pursuant to the Plan.
(s) 'OPTION AGREEMENT' means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the
(t) 'OPTIONED STOCK' means the common stock of the Company subject to
(u) 'OPTIONEE' means a person who holds an outstanding Option.
(v) 'OUTSIDE DIRECTOR' means a Director who either (i) is not a current
employee of the Company or an 'affiliated corporation' (within the meaning of
the Treasury regulations promulgated under Section 162(m) of the Code), is
not a former employee of the Company or an 'affiliated corporation' receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an 'affiliated
corporation' at any time, and is not currently receiving direct or indirect
remuneration from the Company or an 'affiliated corporation' for services in
any capacity other than as a Director, or (ii) is otherwise considered an
'outside director' for purposes of Section 162(m) of the Code.
(w) 'PLAN' means this 1991 Stock Option Plan.
(x) 'RULE 16b-3' means Rule 16b-3 of the Exchange Act or any successor
to Rule 16b-3, as in effect when discretion is being exercised with respect
to the Plan.
(a) The Board shall administer the Plan unless and until the Board
delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how the Option shall be
granted; whether the Option will be an Incentive Stock Option or a
Nonstatutory Stock Option; the provisions of each Option granted (which need
not be identical), including the time or times such Option may be exercised
in whole or in part; and the number of shares for which an Option shall be
granted to each such person.
(ii) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in
a manner and to the extent it shall deem necessary or expedient to make the
Plan fully effective.
(iii) To amend the Plan as provided in Section 11.
(iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of
(c) The Board may delegate administration of the Plan to a Committee or
Committees of one or more members of the Board. In the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Code Section 162(m), or solely of two or more Non-Employee
Directors, in accordance with Rule 16b-3 of the Exchange Act. If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore
possessed by the Board (and references in this Plan to the Board shall
thereafter be to the Committee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and
revest in the Board the administration of the Plan. Within the scope of this
authority, the Board or the Committee may delegate to a committee of one or
more members of the Board the authority to grant Options to eligible persons
who (1) are not then subject to Section 16 of the Exchange Act and/or (2) are
either (i) not then Covered Employees and are not expected to be Covered
Employees at the time of recognition of income resulting from such Option, or
(ii) not persons with respect to whom the Company wishes to comply with
Section 162(m) of the Code.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to Options shall
not exceed in the aggregate Ten Million (10,000,000) shares of the Company's
common stock. If any Option shall for any reason expire or otherwise
terminate, in whole or in part, without having been exercised in full, the
stock not purchased under such Option shall revert to again become available
for issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
(a) Incentive Stock Options may be granted only to Employees.
Nonstatutory Stock Options may be granted to Employees, Directors and
(b) No person shall be eligible for the grant of an Incentive Stock
Option if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of
the Company or of any of its Affiliates unless the exercise price of such
Option is at least one hundred ten percent (110%) of the Fair Market Value of
such stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.
(c) Subject to the provisions of Section 10 relating to adjustments
upon changes in stock, no person shall be eligible to be granted Options
covering more than Five Hundred Thousand (500,000) shares of the Company's
common stock in any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise)
the substance of each of the following provisions:
(a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.
(i) EXERCISE PRICE. The exercise price of each Incentive Stock
Option and each Nonstatutory Stock Option shall be not less than one hundred
percent (100%) of the fair market value of the stock subject to the Option on
the date the Option is granted.
(ii) NO AUTHORITY TO REPRICE. Without the consent of the
stockholders of the Company, the Board shall have no authority to effect (a)
the repricing of any outstanding Options under the Plan and/or (b) the
cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of Common Stock.
(c) CONSIDERATION. The purchase price of stock acquired pursuant to
an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, or (ii)
at the discretion of the Board or the Committee, at the time of the grant of
the Option, (A) by delivery to the Company of other common stock of the
Company, (B) according to a deferred payment arrangement, except that payment
of the common stock's 'par value' (as defined in the Delaware General
Corporation Law) shall not be made by deferred payment or other arrangement
(which may include, without limiting the generality of the foregoing, the use
of other common stock of the Company) with the person to whom the Option is
granted or to whom the Option is transferred pursuant to subsection 6(d), or
(C) in any other form of legal consideration that may be acceptable to the
In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be
interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and distribution, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person. A Nonstatutory Stock Option but not an Incentive
Stock Option, may be transferred to the extent provided in the Option
Agreement; provided that if the Option Agreement does not expressly permit
the transfer of a Nonstatutory Stock Option, the Nonstatutory Stock Option
shall not be transferable except by will, by the laws of descent and
distribution and shall be exercisable during the lifetime of the person to
whom the Option is granted only by such person. The person to whom the Option
is granted may, by
delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionee, shall thereafter be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to an Option
may, but need not, be allotted in periodic installments (which may, but need
not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
('vest') with respect to some or all of the shares allotted to that period,
and may be exercised with respect to some or all of the shares allotted to
such period and/or any prior period as to which the Option became vested but
was not fully exercised. During the remainder of the term of the Option (if
its term extends beyond the end of the installment periods), the option may
be exercised from time to time with respect to any shares then remaining
subject to the Option. The Option may be subject to such other terms and
conditions on the time or times when it may be exercised (which may be based
on performance or other criteria) as the Board may deem appropriate. The
provisions of this subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be
(f) SECURITIES LAW COMPLIANCE. The Company may require any Optionee,
or any person to whom an Option is transferred under subsection 6(d), as a
condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced
in financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits
and risks of exercising the Option; and (2) to give written assurances
satisfactory to the Company stating that such person is acquiring the stock
subject to the Option for such person's own account and not with any present
intention of selling or otherwise distributing the stock. These
requirements, and any assurances given pursuant to such requirements, shall
be inoperative if (i) the issuance of the shares upon the exercise of the
Option has been registered under a then currently effective registration
statement under the Securities Act of 1933, as amended (the 'Securities
Act'), or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may
require the Optionee to provide such other representations, written
assurances, or information which the Company shall determine is necessary,
desirable or appropriate to comply with applicable securities and other laws
as a condition of granting an Option to such Optionee or permitting the
Optionee to exercise such Option. The Company may, upon advice of counsel to
the Company, place legends on stock certificates issued under the Plan as
such counsel deems necessary or appropriate in order to comply with
applicable securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(g) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP. In the event
an Optionee's Continuous Service terminates (other than upon the Optionee's
death or Disability), the Optionee may exercise his or her Option, but only
within such period of time as is determined by the Board, and only to the
extent that the Optionee was entitled to exercise it at
the date of termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement). In the case of an
Incentive Stock Option, the Board shall determine such period of time (in no
event to exceed ninety (90) days from the date of termination) when the
Option is granted. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time
specified in the Option Agreement, the Option shall terminate, and the shares
covered by such Option shall revert to the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's Continuous
Service terminates as a result of the Optionee's Disability, the Optionee may
exercise his or her Option, but only within twelve (12) months from the date
of such termination (or such shorter period specified in the Option
Agreement), and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration
of the term of such Option as set forth in the Option Agreement). If, at the
date of termination, the Optionee is not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within twelve (12) months following the
date of death (or such shorter period specified in the Option Agreement) (but
in no event later than the expiration of the term of such Option as set forth
in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only
to the extent the Optionee was entitled to exercise the Option at the date of
death. If, at the time of death, the Optionee was not entitled to exercise
his or her entire Option, the shares covered by the unexercisable portion of
the Option shall revert to the Plan. If, after death, the Optionee's estate
or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein,
the Option shall terminate, and the shares covered by such Option shall
revert to the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionee may elect at any time while an Employee or Consultant to
exercise the Option as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested shares so purchased
may be subject to a repurchase right in favor of the Company or to any other
restriction the Board determines to be appropriate.
(k) WITHHOLDING. To the extent provided by the terms of an Option
Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash
payment; (2) authorizing the Company to withhold shares from the shares of
the common stock otherwise issuable to the Optionee as a result of the
exercise of the Option; or (3) delivering to the Company owned and
unencumbered shares of the common stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep available
at all times the number of shares of stock required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the Options; provided,
however, that this undertaking shall not require the Company to register
under the Securities Act either the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful
issuance and sale of stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon exercise of such
Options unless and until such authority is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
(a) The Board shall have the power to accelerate the time at which an
Option may first be exercised or the time during which an Option or any part
thereof will vest pursuant to subsection 6(e), notwithstanding the provisions
in the Option stating the time at which it may first be exercised or the time
during which it will vest.
(b) Neither an Optionee nor any person to whom an Option is transferred
under subsection 6(d) shall be deemed to be the holder of, or to have any of
the rights of a holder with respect to, any shares subject to such Option
unless and until such person has satisfied all requirements for exercise of
the Option pursuant to its terms.
(c) Nothing in the Plan or any instrument executed or Option granted
pursuant thereto shall confer upon any Employee, Consultant or Optionee any
right to continue in the employ of the Company or any Affiliate (or to
continue acting as a Consultant) or shall affect the right of the Company or
any Affiliate to terminate the employment or relationship as a Consultant of
any Employee, Consultant or Optionee with or without cause.
(d) To the extent that the aggregate Fair Market Value (determined at
the time of grant) of stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee during any calendar year under
all plans of the Company and its Affiliates exceeds one hundred thousand
dollars ($100,000), the Options or portions thereof which exceed such limit
(according to the order in which they were granted) shall be treated as
Nonstatutory Stock Options.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or subject
to any Option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares,
change in corporate structure or otherwise), the Plan will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan
pursuant to subsection 4(a) and the maximum number of shares subject to award
to any person during any calendar year period pursuant to subsection 5(d),
and the outstanding Options will be appropriately adjusted in the class(es)
and number of shares and price per share of stock subject to such outstanding
(b) In the event of: (1) a dissolution or liquidation of the Company;
(2) a merger or consolidation in which the Company is not the surviving
corporation; (3) a reverse merger in which the Company is the surviving
corporation but the shares of the Company's common stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; or (4)
any other capital reorganization in which more than fifty percent (50%) of
the shares of the Company entitled to vote are exchanged, then, at the sole
discretion of the Board and to the extent permitted by applicable law: (i)
any surviving corporation shall assume any Options outstanding under the Plan
or shall substitute similar Options for those outstanding under the Plan,
(ii) the time during which such Options may be exercised shall be accelerated
and the Options terminated if not exercised prior to such event, or (iii)
such Options shall continue in full force and effect.
(c) Notwithstanding any other provisions of this Plan to the contrary,
if an event occurs as specified in subsection 10(b) (a 'Change in Control')
and if within one (1) month before or thirteen (13) months after the date of
such Change in Control the Continuous Service of an Optionee terminates due
to an involuntary termination (not including death or Disability) without
Cause (as such term is defined below) or a voluntary termination by the
Optionee due to a Constructive Termination (as such term is defined below),
then the vesting and exercisability of all Options held by such Optionee
shall be accelerated, or any reacquisition or repurchase rights held by the
Company with respect to an option shall lapse, as follows. With respect to
those Options held by an Optionee at the time of such termination, one
hundred percent (100%) of the unvested shares covered by such Options shall
vest and become exercisable (or reacquisition or repurchase rights held by
the Company shall lapse with respect to one hundred percent (100%) of the
shares still subject to such rights, as appropriate) as of the date of such
termination. Notwithstanding the foregoing, however, if such potential
acceleration of the vesting and exercisability of Options (or lapse of
reacquisition or repurchase rights held by the Company with respect to
Options) would cause a contemplated Change in Control transaction that would
otherwise be eligible to be accounted for as a 'pooling-of-interests'
transaction to become ineligible for such accounting treatment under
generally accepted accounting principles as determined by the Company's
independent public accountants (the 'Accountants') prior to the Change of
Control, such acceleration shall not occur.
For the purposes of this subsection 10(c) only, 'Cause' means (i)
conviction of, a guilty plea with respect to, or a plea of NOLO CONTENDERE to
a charge that an Optionee has committed a
felony under the laws of the United States or of any state or a crime
involving moral turpitude, including, but not limited to, fraud, theft,
embezzlement or any crime that results in or is intended to result in
personal enrichment at the expense of the Company or an Affiliate; (ii)
material breach of any agreement entered into between the Optionee and the
Company or an Affiliate that impairs the Company's or the Affiliate's
interest therein; (iii) willful misconduct, significant failure of the
Optionee to perform the Optionee's duties, or gross neglect by the Optionee
of the Optionee's duties; or (iv) engagement in any activity that constitutes
a material conflict of interest with the Company or any Affiliate.
For purposes of this subsection 10(c) only, 'Constructive Termination'
means the occurrence of any of the following events or conditions: (i) (A) a
change in the Optionee's status, title, position or responsibilities
(including reporting responsibilities) which represents an adverse change
from the Optionee's status, title, position or responsibilities as in effect
at any time within ninety (90) days preceding the date of a Change in Control
or at any time thereafter; (B) the assignment to the Optionee of any duties
or responsibilities which are inconsistent with the Optionee's status, title,
position or responsibilities as in effect at any time within ninety (90) days
preceding the date of a Change in Control or at any time thereafter; or (C)
any removal of the Optionee from or failure to reappoint or reelect the
Optionee to any of such offices or positions, except in connection with the
termination of the Optionee's Continuous Service for Cause, as a result of
the Optionee's Disability or death or by the Optionee other than as a result
of Constructive Termination; (ii) a reduction in the Optionee's annual base
compensation or any failure to pay the Optionee any compensation or benefits
to which the Optionee is entitled within five (5) days of the date due;
(iii) the Company's requiring the Optionee to relocate to any place outside a
fifty (50) mile radius of the Optionee's current work site, except for
reasonably required travel on the business of the Company or its Affiliates
which is not materially greater than such travel requirements prior to the
Change in Control; (iv) the failure by the Company to (A) continue in effect
(without reduction in benefit level and/or reward opportunities) any material
compensation or employee benefit plan in which the Optionee was participating
at any time within ninety (90) days preceding the date of a Change in Control
or at any time thereafter, unless such plan is replaced with a plan that
provides substantially equivalent compensation or benefits to the Optionee,
or (B) provide the Optionee with compensation and benefits, in the aggregate,
at least equal (in terms of benefit levels and/or reward opportunities) to
those provided for under each other employee benefit plan, program and
practice in which the Optionee was participating at any time within ninety
(90) days preceding the date of a Change in Control or at any time
thereafter; (v) any material breach by the Company of any provision of an
agreement between the Company and the Optionee, whether pursuant to this Plan
or otherwise, other than a breach which is cured by the Company within
fifteen (15) days following notice by the Optionee of such breach; or (vi)
the failure of the Company to obtain an agreement, satisfactory to the
Optionee, from any successors and assigns to assume and agree to perform the
obligations created under this Plan.
(d) In the event that the acceleration of the vesting and
exercisability of the Options or lapse of reacquisition or repurchase rights
held by the Company with respect to Options provided for in subsection 10(c)
and benefits otherwise payable to an Optionee (i) constitute 'parachute
payments' within the meaning of Section 280G (as it may be amended or
of the Code, and (ii) but for this subsection 10(d) would be subject to the
excise tax imposed by Section 4999 (as it may be amended or replaced) of the
Code (the 'Excise Tax'), then such Optionee's benefits hereunder shall be
delivered to such lesser extent which would result in no portion of such
benefits being subject to the Excise Tax; PROVIDED, HOWEVER, that the
benefits hereunder shall be reduced only to the extent necessary after all
cash amounts otherwise payable to such Optionee and which constitute
'parachute payments' have been returned. Unless the Company and such
Optionee otherwise agree in writing, any determination required under this
subsection 10(d) shall be made in writing in good faith by the Accountants.
For purposes of making the calculations required by this subsection 10(d),
the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of the Code. The Company and such Optionees shall
furnish to the Accountants such information and documents as the Accountants
may reasonably request in order to make a determination under this subsection
10(d). The Company shall bear all costs the Accountants may reasonably incur
in connection with any calculations contemplated by this subsection 10(d).
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the Plan.
However, except as provided in Section 10 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for options under the
(ii) Effect (a) the repricing of any outstanding Options under the
Plan and/or (b) the cancellation of any outstanding Options under the Plan
and the grant in substitution therefor of new Options under the Plan covering
the same or different numbers of shares of Common Stock;
(iii) Modify the requirements as to eligibility for participation
in the Plan (to the extent such modification requires stockholder approval in
order for the Plan to satisfy the requirements of Section 422 of the Code);
(iv) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan to satisfy the
requirements of Section 422 of the Code or to comply with the requirements of
Rule 16b-3 or any Nasdaq or securities exchange listing requirements.
(b) The Board may in its sole discretion submit any other amendment to
the Plan for stockholder approval, including, but not limited to, amendments
to the Plan intended to satisfy the requirements of Section 162(m) of the
Code and the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the Plan in
any respect the Board deems necessary or advisable to provide Optionees with
the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under
it into compliance therewith.
(d) Rights and obligations under any Option granted before amendment of
the Plan shall not be altered or impaired by any amendment of the Plan unless
(i) the Company requests the consent of the person to whom the Option was
granted and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on October 31, 2001. No Options
may be granted under the Plan while the Plan is suspended or after it is
(b) Rights and obligations under any Option granted while the Plan is
in effect shall not be altered or impaired by suspension or termination of
the Plan, except with the consent of the person to whom the Option was
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until the
stockholders of the Company have approved the Plan.