Exhibit 10.1
BIOCRYST PHARMACEUTICALS, INC.
STOCK INCENTIVE PLAN
(formerly the “BioCryst Pharmaceuticals, Inc. 1991 Stock Option Plan”)
(AS AMENDED AND RESTATED IN MARCH OF 2007)
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSES OF THE PLAN
A. This Stock Incentive Plan (the “Plan”), formerly the “BioCryst
Pharmaceuticals, Inc. 1991 Stock Option Plan,” is intended to promote the
interests of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), by providing a method whereby (i) key employees (including officers
and directors) of the Company (or its parent or subsidiary corporations) who are
responsible for the management, growth and financial success of the Company (or
any parent or subsidiary corporations), (ii) non-employee members of the board
of directors of the Company (the “Board”) (or of any parent or subsidiary
corporations) and (iii) consultants and other independent contractors who
provide valuable services to the Company (or any parent or subsidiary
corporations) 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 any parent or subsidiary
corporations).
B. For purposes of the Plan, the following provisions shall be applicable in
determining the parent and subsidiary corporations of the Company:
- Any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company shall be considered to be a parent corporation 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.
- 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.
C. The Plan, as hereby amended and restated, was approved and adopted by the
Board in March of 2007 in order to increase by 1,200,000 the number of shares of
the Company’s common stock, par value $.01 per share (the “Common Stock”), that
may be issued pursuant to the Plan. The Board’s adoption of the share increase
is subject to approval by the Company’s stockholders at the Company’s 2007
Annual Stockholders Meeting.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into three separate equity programs:
- the Discretionary Option Grant Program specified in Article Two, pursuant to
which eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock,
- the Stock Issuance Program specified in Article Three, pursuant to which
eligible persons may, at the discretion of the Plan Administrator, be issued
shares of Common Stock directly, either through immediate purchase of such
shares or as compensation for services rendered to the Company (or any parent or
subsidiary), and

 

 

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- the Automatic Option Grant Program specified in Article Four, pursuant to
which non-employee members of the Board will automatically receive option grants
to purchase shares of Common Stock.
B. Unless the context clearly indicates otherwise, the provisions of Articles
One and Five of the Plan shall apply to all equity programs under the Plan and
shall accordingly govern the interests of all individuals under the Plan.
III. ADMINISTRATION OF THE PLAN
A. A committee of two (2) or more non-employee Board members appointed by the
Board (the “Primary Committee”) shall have sole and exclusive authority to
administer the Discretionary Option Grant and Stock Issuance Programs with
respect to Section 16 Insiders. For purposes of this Section, a Section 16
Insider shall mean an officer or director of the Company subject to the
short-swing profit liabilities of Section 16 of the Securities Exchange Act of
1934 (the “1934 Act”).
B. Administration of the Discretionary Option Grant and Stock Issuance Programs
with respect to all other persons eligible to participate in the programs may,
at the Board’s discretion, be vested in the Primary Committee, another committee
of one (1) or more Board members appointed by the Board (the “Secondary
Committee”), or the Board may retain the power to administer those programs with
respect to all such persons.
C. Members of the Primary Committee and any Secondary 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.
D. Each Plan Administrator (whether the Primary Committee, the Board or the
Secondary Committee) shall, within the scope of its administrative functions
under the Plan, 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 and Stock
Issuance Programs and to make such determinations under, and issue
interpretations of, the provisions of such programs and any outstanding options
or stock issuances thereunder as it may deem necessary or advisable. Decisions
of the Plan Administrator within the scope of its administrative authority under
the Plan shall be final and binding on all parties.
E. Service on the Primary Committee or the Secondary Committee shall constitute
service as a Board member, and members of each such committee shall accordingly
be entitled to full indemnification and reimbursement as Board members for their
service on such committee. No member of the Primary Committee or Secondary
Committee shall be liable for any act of omission made in good faith with
respect to the Plan or any option grants or stock issuances under the Plan.
F. Administration of the Automatic Option Grant Program shall be self-executing
in accordance with the express terms and conditions of Article Four, and no Plan
Administrator shall exercise any discretionary functions under that program.
IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary Option Grant and
Stock Issuance Programs 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) individuals who are consultants or independent advisors and who provide
valuable services to the Company (or its parent or subsidiary corporations); and
(iii) non-employee members of the Board (or of the board of directors of parent
or subsidiary corporations).

 

 

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B. Only Board members who are not employees of the Company (or any parent or
subsidiary) shall be eligible to receive automatic option grants pursuant to the
Automatic Option Grant Program specified in Article Four.
C. The Plan Administrator shall, within the scope of its administrative
jurisdiction under the Plan, have full power and authority to determine
(i) whether to grant options in accordance with the Discretionary Option Grant
Program or to effect stock issuances in accordance with the Stock Issuance
Program, (ii) which eligible persons are to receive option grants under the
Discretionary Option Grant Program, the time or times when such option grants
are to be made, 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 of 1986, as amended (the “Code”) or a non-statutory option not intended to
meet such requirements, the time or times when each such option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which such option is to remain outstanding, and (iii) which
eligible persons are to receive stock issuances under the Stock Issuance
Program, the time or times when such issuances are to be made, the number of
shares to be issued to each participant, the vesting schedule (if any)
applicable to the shares and the consideration for such shares.
V. STOCK SUBJECT TO THE PLAN
A. Shares of the Company’s 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, as amended
and restated, shall not exceed 5,944,274 shares, subject to adjustment from time
to time in accordance with the provisions of this Section V. Such authorized
share reserve includes (i) the 4,744,274 shares of Common Stock reserved and
available for issuance under the Plan as of March 20, 2007; and (ii) the
increase of 1,200,000 shares of Common Stock authorized by the Board subject to
shareholder approval at the 2007 Annual Stockholders Meeting.
B. In no event shall the number of shares of Common Stock for which any one
individual participating in the Plan may receive options, separately exercisable
stock appreciation rights and direct stock issuances exceed 1,500,000 shares of
Common Stock in the aggregate. For purposes of such limitation, however, no
stock options granted prior to the date the Common Stock was first registered
under Section 12 of the 1934 Act (the “Section 12(g) Registration Date”) shall
be taken into account.
C. Should an outstanding option under this Plan expire or terminate for any
reason prior to exercise in full, the shares subject to the portion of the
option not so exercised shall be available for subsequent option grant or direct
stock issuances under the Plan. Unvested shares issued under the Plan and
subsequently repurchased by the Corporation, at the original issue price paid
per share, pursuant to the Corporation’s repurchase rights under the Plan, or
shares underlying terminated share right awards, shall be added back to the
number of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan. However, should the exercise
price of an outstanding option under the Plan be paid with shares of Common
Stock or should shares of Common Stock otherwise issuable under the Plan be
withheld by the Company in satisfaction of the withholding taxes incurred in
connection with the exercise of an outstanding option or the vesting of a direct
stock issuance 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 or which vest under the direct stock
issuance, and not by the net number of shares of Common Stock actually issued to
the holder of such option or stock issuance. Shares of Common Stock subject to
any option surrendered for an appreciation distribution under Section IV of
Article Two or Section III of Article Four shall not be available for subsequent
issuance under the Plan.
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 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,
separately exercisable stock appreciation rights, and direct stock issuances
under the Plan from and after the Section 12(g) Registration Date, (iii) the
number and/or class of securities and price per share in effect under each
outstanding option under the Plan, (iv) the number and/or class of securities in
effect under each outstanding direct stock issuance under the Plan, and (v) the
number and/or class of securities for which automatic option grants are
subsequently to be made per non-employee Board member under the Automatic Option
Grant Program. The purpose of such adjustments shall be to preclude the
enlargement or dilution of rights and benefits under the Plan.

 

 

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E. The fair market value per share of Common Stock on any relevant date under
the Plan 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 securities exchange but is traded in the over-the-counter market, the
fair market value shall be the mean between the highest bid and lowest asked
prices (or, if such information is available, the closing selling price) per
share of Common Stock on the date in question in the over-the-counter market, as
such prices are reported by the National Association of Securities Dealers
through the Nasdaq National Market or any successor system. If there are no
reported bid and asked prices (or closing selling price) for the Common Stock on
the date in question, then the mean between the highest bid price and lowest
asked price (or the closing selling price) on the last preceding date for which
such quotations exist shall be determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted to trading on any
national securities exchange, then the fair market value shall be the closing
selling price per share of Common Stock on the date in question on the
securities 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 the 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.
(iii) If the Common Stock is at the time neither listed nor admitted to trading
on any securities exchange nor traded in the over-the-counter market, then the
fair market value shall be determined by the Plan Administrator after taking
into account such factors as the Plan Administrator shall deem appropriate.
ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. TERMS AND CONDITIONS OF OPTIONS
Options granted pursuant to this Article Two shall be authorized by action of
the Plan Administrator and may, at the Plan Administrator’s discretion, be
either Incentive Options or non-statutory options. Individuals who are not
Employees may only be granted non-statutory options under this Article Two. Each
option granted shall be evidenced by one or more instruments in the form
approved by the Plan Administrator. Each such instrument shall, however, comply
with the terms and conditions specified below, and each instrument evidencing an
Incentive Option shall, in addition, be subject to the applicable provisions of
Section II of this Article Two.
A. Option Price.
1. The option price per share shall be fixed by the Plan Administrator. In no
event, however, shall the option price per share be less than one hundred
percent (100%) of the fair market value per share of Common Stock on the date of
the option grant.
2. The option price shall become immediately due upon exercise of the option and
shall, subject to the provisions of Section V of this Article Two and the
instrument evidencing the grant, be payable as follows:
- 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);

 

 

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- full payment through a combination of 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 and cash or cash equivalent; or
- full payment through a broker-dealer sale and remittance procedure pursuant to
which the optionee (I) shall provide irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the purchased shares
and remit to the 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 written 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 Corporation.
Except to the extent the sale and remittance procedure is utilized in connection
with the exercise of the option, payment of the option price for the purchased
shares must accompany such notice.
B. Term and Exercise of Options.
Each option granted under this Article Two shall be exercisable at such time or
times, during such period, and for such number of shares as shall be determined
by the Plan Administrator and set forth in the instrument evidencing the option
grant. No such option, however, shall have a maximum term in excess of ten
(10) years from the grant date. During the lifetime of the optionee, the option,
together with any stock appreciation rights pertaining to such option, shall be
exercisable only by the optionee and shall not be assignable or transferable by
the optionee except for a transfer of the option by will or by the laws of
descent and distribution following the optionee’s death. However, the Plan
Administrator shall have the discretion to provide that a non-statutory option
may, in connection with the optionee’s estate plan, be assigned in whole or in
part during the optionee’s lifetime either as (i) as a gift to one or more
members of optionee’s immediate family, to a trust in which optionee and/or one
or more such family members hold more than fifty percent (50%) of the beneficial
interest or an entity in which more than fifty percent (50%) of the voting
interests are owned by optionee and/or one or more such family members, or
(ii) pursuant to a domestic relations order. The assigned portion shall be
exercisable only by the person or persons who acquire a proprietary interest in
the option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this 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.
C. Termination of Service.
1. Except to the extent otherwise provided pursuant to Section V of this
Article Two, the following provisions shall govern the exercise period
applicable to any options held by the optionee at the time of cessation of
Service or death.
- Should the optionee cease to remain in Service for any reason other than death
or permanent disability, then the period for which each outstanding option held
by such optionee is to remain exercisable shall be limited to the three
(3)-month period following the date of such cessation of Service. However,
should optionee die during the three (3)-month period following his or her
cessation of service, 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 a twelve (12)-month period following the date of the optionee’s death
during which to exercise such option.
- In the event such Service terminates by reason of permanent disability (as
defined in Section 22(e)(3) of the Internal Revenue Code), then the period for
which each outstanding option held by the optionee is to remain exercisable
shall be limited to the twelve (12)-month period following the date of such
cessation of Service.

 

 

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- Should the optionee, after completing five (5) full years of service, die
while in Service, then the exercisability of each of his or her outstanding
options shall automatically accelerate so that each such option shall 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. 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 a twelve
(12)-month period following the date of the optionee’s death during which to
exercise such option.
- In the event such service terminates by reason of death prior to the optionee
obtaining five (5) full years of service, then the period for which each
outstanding vested option held by the optionee at the time of death shall be
exercisable by the optionee’s estate or the person or persons to whom the option
is transferred pursuant to the optionee’s will shall be limited to the twelve
(12)-month period following the date of the optionee’s death.
- Under no circumstances, however, shall any such option be exercisable after
the specified expiration date of the option term.
- Each such option shall, during such limited exercise period, be exercisable
for any or all of the shares for which the option is exercisable on the date of
the optionee’s cessation of Service. Upon the expiration of such limited
exercise period or (if earlier) upon the expiration of the option term, the
option shall terminate and cease to be exercisable. However, each outstanding
option shall immediately terminate and cease to remain 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
exercisable.
2. The Plan Administrator shall have complete discretion, exercisable either at
the time the option is granted or at any time while the option remains
outstanding, to permit one or more options held by the optionee under this
Article Two to be exercised, during the limited period of exercisability
provided under subparagraph 1 above, not only with respect to the number of
shares for which each such option is exercisable at the time of the optionee’s
cessation of Service but also with respect to one or more subsequent
installments of purchasable shares for which the option would otherwise have
become exercisable had such cessation of Service not occurred.
3. For purposes of the foregoing provisions of this Section I.C (and for all
other purposes under the Plan):
- The optionee shall 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 of directors or an independent consultant or
advisor, unless the agreement evidencing the applicable option grant
specifically states otherwise.
- The optionee shall be considered to be an Employee for so long as such
individual remains in the employ of the Company or one or more of its parent or
subsidiary corporations, subject to the control and direction of the employer
entity not only as to the work to be performed but also as to the manner and
method of performance.
D. Stockholder Rights.
An optionee shall have no stockholder rights with respect to any shares covered
by the option until such individual shall have exercised the option and paid the
option price for the purchased shares.

 

 

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E. Repurchase Rights.
The shares of Common Stock acquired upon the exercise of options granted under
this Article Two may be subject to repurchase by the Company in accordance with
the following provisions:
(a) The Plan Administrator shall have the discretion to grant options which are
exercisable for 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 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 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 termination is precluded
by other limitations imposed by the Plan Administrator at the time the
repurchase right is issued.
(c) The Plan Administrator shall have the discretionary authority, exercisable
either before or after the optionee’s cessation of Service, to cancel the
Corporation’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 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 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 such 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 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.
C. Termination of Employment. Any portion of an Incentive Option that remains
outstanding (by reason of the optionee remaining in the Service of the Company,
pursuant to the Plan Administrator’s exercise of discretion under Section V of
this Article Two, or otherwise) more than 3 months following the date an
optionee ceases to be an Employee of the Company shall thereafter be exercisable
as a non-statutory option under federal tax laws.
Except as modified by the preceding provisions of this Section II, the
provisions of Articles One, Two and Five of the Plan shall apply to all
Incentive Options granted hereunder.

 

 

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III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of any of the following stockholder-approved transactions (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 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 a person
or persons different from the persons holding those securities immediately prior
to such merger,
then the exercisability of each option 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 the acceleration of such option is subject to
other limitations imposed by the Plan Administrator at the time of grant, unless
the Plan Administrator, in its discretion, later determines to waive such
limitations.
B. Immediately after 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. The Plan Administrator shall have complete discretion to
provide, on such terms and conditions as it sees fit, for a cash payment to be
made to any optionee on account of any option terminated in accordance with this
paragraph, in an amount equal to the excess (if any) of (A) the fair market
value of the shares subject to the option as of the date of the Corporate
Transaction, over (B) the aggregate exercise price of the option.
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 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 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 exercisability of each outstanding option under this Article Two shall
automatically accelerate, and the Company’s outstanding repurchase rights under
this Article Two shall immediately terminate upon the occurrence of a Change in
Control.
F. For purposes of this Section III (and for all other purposes under the Plan),
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

 

 

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(ii) there is a change in the composition of the Board over a period of
twenty-four (24) consecutive months or less such that a majority of the Board
members (rounded up to the next whole number) ceases, by reason of one or more
contested elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of such
period or (B) have been elected or nominated for election as Board members
during such period by at least two-thirds of the Board members described in
clause (A) who were still in office at the time such election or nomination was
approved by the Board.
G. All options accelerated in connection with the Change in Control shall remain
fully exercisable until the expiration or sooner termination of the option term.
H. The portion of any Incentive Option accelerated under this Section III in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an incentive stock option under the Federal tax laws only to the
extent the dollar limitation of Section II of this Article Two is not exceeded.
To the extent such dollar limitation is exceeded, the accelerated portion of
such option shall be exercisable as a non-statutory option under the Federal tax
laws.
IV. 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 IV, 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 granted 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. The distribution 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 determine in its sole
discretion.
B. The shares of Common Stock subject to any option surrendered for an
appreciation distribution pursuant to this Section IV shall not be available for
subsequent option grant under the Plan.
V. EXTENSION OF EXERCISE PERIOD
The Plan Administrator shall have full power and authority, exercisable either
at the time the option is granted or at any time while the option remains
outstanding, to extend the period of time for which any option granted under
this Article Two is to remain exercisable following the optionee’s cessation of
Service or death from the limited period in effect under Section I.C.1 of
Article Two to such greater period of time as the Plan Administrator shall deem
appropriate; provided, however, that in no event shall such option be
exercisable after the specified expiration date of the option term.
ARTICLE THREE
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance Program through
direct and immediate issuances without any intervening option grants. Each such
stock issuance shall be evidenced by a Stock Issuance Agreement which complies
with the terms specified below. Shares of Common Stock may also be issued under
the Stock Issuance Program pursuant to share right awards which entitle the
recipients to receive shares upon the attainment of designated Service and/or
performance goals.

 

 

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A. Purchase Price.
1. The purchase price per share shall be fixed by the Plan Administrator, but
shall not be less than one hundred percent (100%) of the fair market value per
share of Common Stock on the issuance date.
2. Shares of Common Stock may be issued under the Stock Issuance Program for any
of the following items of consideration which the Plan Administrator may deem
appropriate in each individual instance:
• cash or check made payable to the Company, or
• services rendered to the Company (or any parent or subsidiary).
B. Vesting Provisions.
1. The Plan Administrator may issue shares of Common Stock under the Stock
Issuance Program which are fully and immediately vested upon issuance or which
are to vest in one or more installments over the participant’s period of Service
or upon attainment of specified performance objectives. Alternatively, the Plan
Administrator may issue share right awards under the Stock Issuance Program
which shall entitle the recipient to receive a specified number of shares of
Common Stock upon the attainment of one or more Service and/or performance goals
established by the Plan Administrator. Upon the attainment of such Service
and/or performance goals, fully-vested shares of Common Stock shall be issued in
satisfaction of those share right awards.
2. Any new, substituted or additional securities or other property (including
money paid other than as a regular cash dividend) issued by reason of any stock
dividend, stock split, 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, shall be issued or set aside with
respect to the shares of unvested Common Stock granted to a participant or
subject to a participant’s share right award, subject to (i) the same vesting
requirements applicable to the participant’s unvested shares of Common Stock or
share rights award, and (ii) such escrow arrangements as the Plan Administrator
shall deem appropriate.
3. The participant shall have full stockholder rights with respect to any shares
of Common Stock issued to the participant under the Stock Issuance Program,
whether or not the participant’s interest in those shares is vested.
Accordingly, the participant shall have the right to vote such shares and to
receive any regular cash dividends paid on such shares.
4. The participant shall not have any stockholders rights with respect to any
shares of Common Stock subject to a share right award. However, the Plan
Administrator may provide for a participant to receive one or more dividend
equivalents with respect to such shares, entitling the participant to all
regular cash dividends payable on the shares of Common Stock underlying the
share right award, which amounts shall be (i) subject to the same vesting
requirements applicable to the shares of Common Stock underlying the share
rights award, and (ii) payable upon issuance of the shares to which such
dividend equivalents relate.
5. Should the participant cease to remain in Service while holding one or more
unvested shares of Common Stock issued under the Stock Issuance Program or
should the performance objectives not be attained with respect to one or more
such unvested shares of Common Stock, then those shares shall be immediately
surrendered to the Company for cancellation, and the participant shall have no
further stockholder rights with respect to those shares. To the extent the
surrendered shares were previously issued to the participant for consideration
paid in cash, the Company shall repay to the participant the cash consideration
paid for the surrendered shares.
6. The Plan Administrator may in its discretion waive the surrender and
cancellation of one or more unvested shares of Common Stock which would
otherwise occur upon the cessation of the Participant’s Service or the
non-attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the participant’s interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.

 

 

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7. Outstanding share right awards under the Stock Issuance Program shall
automatically terminate, and no shares of Common Stock shall actually be issued
in satisfaction of those awards, if the Service and/or performance goals
established for such awards are not attained. The Plan Administrator, however,
shall have the discretionary authority to issue shares of Common Stock in
satisfaction of one or more outstanding share right awards as to which the
designated Service and/or performance goals are not attained. Such authority may
be exercised at any time, whether before or after the participant’s cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the Company’s outstanding repurchase rights under the Stock Issuance
Program shall terminate automatically, and all the shares of Common Stock
subject to those terminated rights shall immediately vest in full, in the event
of any Corporate Transaction, except to the extent (i) those repurchase rights
are to be assigned to the successor corporation (or parent thereof) in
connection with the such Corporate Transaction, or (ii) such accelerated vesting
is precluded by other limitations imposed in the Stock Issuance Agreement,
unless the Plan Administrator determines to waive such limitations.
B. Each repurchase right which is assigned in connection with (or is otherwise
to continue in effect after) a Corporate Transaction shall be appropriately
adjusted such that it shall apply and pertain to the number and class of
securities issued to the participant in consummation of the Corporate
Transaction with respect to the shares granted to participant under this
Article III.
C. All of the Company’s outstanding repurchase rights under the Stock Issuance
Program shall automatically terminate, and all shares of Common Stock subject to
those terminated rights shall immediately vest, in the event of any Change in
Control.
D. All shares of Common Stock underlying outstanding share right awards issued
under the Stock Issuance Program shall vest, and all of the shares of Common
Stock subject to such share right awards shall be issued to participants,
immediately prior to the consummation of any Corporate Transaction or Change in
Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator’s discretion, be held in escrow
by the Company until the participant’s interest in such shares vests or may be
issued directly to the participant with restrictive legends on the certificates
evidencing those unvested shares.
ARTICLE FOUR
AUTOMATIC OPTION GRANT PROGRAM
I. ELIGIBILITY.
The individuals eligible to receive automatic option grants pursuant to the
provisions of this Article Four shall be (i) those individuals who, after the
effective date of this amendment and restatement, first become non-employee
Board members, whether through appointment by the Board, election by the
Company’s stockholders, or by continuing to serve as a Board member after
ceasing to be employed by the Company, and (ii) those individuals already
serving as non-employee Board members on the effective date of this amendment
and restatement. As used herein, a “non-employee” Board member is any Board
member who is not employed by the Company on the date in question.
II. TERMS AND CONDITIONS OF AUTOMATIC OPTION GRANTS
A. Grants. Option grants shall be made under this Article Three as follows:
1. Each individual who first becomes a non-employee Board member on or after the
effective date of this amendment and restatement shall automatically be granted
at such time a non-statutory stock option under the terms and conditions of this
Article Four, to purchase a number shares of Common Stock equal to the product
of (i) 20,000, and (ii) a fraction, the numerator of which is the number of
months (rounded to the nearest whole number) remaining between the date such
Board member first became a non-employee Board member and the Company’s next
scheduled Annual Stockholders Meeting, and the denominator of which is 12.

 

 

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2. Immediately following each Annual Stockholders Meeting of the Company, each
individual who is then serving as a non-employee Board member (except for those
individuals first elected to serve as non-employee Board members at such
meeting), shall automatically be granted a non-statutory stock option under this
Article Four to acquire 15,000 shares of Common Stock.
B. Exercise Price. The exercise price per share of each automatic option grant
made under this Article Four 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 written 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 exercise price payable for the
purchased shares and shall (II) concurrently provide written 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. Except
to the extent the sale and 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 Four shall have a term
of ten (10) years measured from the automatic grant date.
E. Exercisability.
1. Each initial automatic grant made pursuant to Section II.A.1 of this
Article Four shall vest and become exercisable over the period extending from
the date of grant to the scheduled date of the next Annual Stockholders Meeting
following the grant. A pro rata portion of such automatic grant shall vest on
the last day of each calendar month following the date of grant, with the final
portion vesting on the scheduled date of such Annual Stockholders Meeting.
2. Each 15,000 share automatic grant made pursuant to Section II.A.2 of this
Article Four shall vest and become exercisable for 1/12th of the option shares
upon the optionee’s completion of each month of Board service over the twelve
(12)-month period measured from the automatic grant date.
F. Non-Transferability. During the lifetime of the optionee, each automatic
option, together with the limited stock appreciation right pertaining to such
option, shall be exercisable only by the optionee, except to the extent such
option or the limited stock appreciation right is assigned or transferred (i) by
will or by the laws of descent and distribution following the optionee’s death,
or (ii) during optionee’s lifetime either (A) as a gift in connection with the
optionee’s estate plan to one or more members of optionee’s immediate family, to
a trust in which optionee and/or one or more such family members hold more than
fifty percent (50%) of the beneficial interest or to an entity in which more
than fifty percent (50%) of the voting interests are owned by optionee and/or
one or more such family members, or (B) pursuant to a domestic relations order.
The portion of any option assigned or transferred during optionee’s lifetime
shall be exercisable only by the person or persons who acquire a proprietary
interest in the option pursuant to such assignment. The terms applicable to the
assigned portion shall be the same as those in effect for this 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.

 

 

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G. Cessation of Board Service.
1. Should the optionee cease to serve as a Board member for any reason while
holding one or more automatic option grants under this Article Four, then such
optionee shall have the remainder of the ten (10) year term of each such option
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. Upon the
expiration of the ten (10)-year option term, the automatic grant shall terminate
and cease to be outstanding in its entirety. Upon the death of the optionee,
whether before or after cessation of Board service, any option held by optionee
at the time of optionee’s death may be exercised, for any or all of the shares
of Common Stock for which the option was exercisable at the time of cessation of
Board service by the optionee and which have not been theretofore exercised by
the optionee, 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 during the reminder of the ten (10) year term of such
option.
H. Stockholder Rights. The holder of an automatic option grant under this
Article Four 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.
III. CORPORATE TRANSACTIONS/CHANGES IN CONTROL
A. In the event of a Corporate Transaction, the exercisability of each option
outstanding under this Article Four 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.
B. Immediately after the consummation of the Corporate Transaction, all
outstanding options under this Article Four shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation or its
parent company. If so provided by the terms of the Corporate Transaction, the
optionee shall receive a cash payment on account of any option terminated in
accordance with this paragraph, in an amount equal to the excess (if any) of
(A) the fair market value of the shares subject to the option as valued pursuant
to the Corporate Transaction over (B) the aggregate exercise price of the
option.
C. Each outstanding option under this Article Four 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 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.
D. In connection with any Change in Control, the exercisability of each option
grant outstanding at the time under this Article Four 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.

 

 

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E. The automatic grant of options under this Article Four shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
IV. STOCK APPRECIATION RIGHTS
A. With respect to options granted under the Automatic Option Grant Program
prior to March 7, 2006:
1. Upon the occurrence of a Hostile Take-Over, the optionee shall have a thirty
(30)-day period in which to surrender to the Company each option held by him or
her under this Article Four. 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 each
surrendered option (whether or not the option is then exercisable for those
shares) over (ii) the aggregate exercise price payable for such shares. The cash
distribution shall be made within five (5) days following the date the option is
surrendered to the Company, and neither the approval of the Plan Administrator
nor the consent of the Board shall be required in connection with the option
surrender and cash distribution. Any unsurrendered portion of the option shall
continue to remain outstanding and become exercisable in accordance with the
terms of the instrument evidencing such grant. This limited stock appreciation
right shall in all events terminate upon the expiration or sooner termination of
the option term and may not be assigned or transferred by the optionee.
2. For purposes of Article Four, 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, 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 fair market
value per share on the option surrender date.
B. With respect to each option granted under the Automatic Option Grant Program
on and after March 7, 2006, each optionee shall have the right to surrender all
or part of the option (to the extent not then exercised) 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. The distribution shall be made in shares of Common Stock valued at fair
market value on the option surrender date.
C. The shares of Common Stock subject to any option surrendered for an
appreciation distribution pursuant to this Section IV shall not be available for
subsequent option grant under the Plan.
ARTICLE FIVE
MISCELLANEOUS
I. AMENDMENT OF THE PLAN
The Board shall have complete and exclusive power and authority to amend or
modify the Plan in any or all respects whatsoever. However, no such amendment or
modification shall, without the consent of the holders, 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
A. The Company’s obligation to deliver shares or cash upon the exercise of stock
options or stock appreciation rights or upon the grant or vesting of direct
stock issuances under the Plan shall be subject to the satisfaction of all
applicable Federal, State and local income and employment tax withholding
requirements.

 

 

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B. The Plan Administrator may, in its discretion and upon such terms and
conditions as it may deem appropriate, provide any or all holders of outstanding
options or stock issuances under the Plan (other than the automatic option
grants under Article Four) with the election to have the Company withhold, from
the shares of Common Stock otherwise issuable upon the exercise or vesting of
such awards, a whole number of such shares with an aggregate fair market value
equal to the minimum amount necessary to satisfy the Federal, State and local
income and employment tax withholdings (the “Taxes”) incurred in connection with
the acquisition or vesting of such shares. In lieu of such direct withholding,
one or more participants may also be granted the right to deliver whole shares
of Common Stock to the Company in satisfaction of such Taxes. Any withheld or
delivered shares shall be valued at their fair market value on the applicable
determination date for such Taxes.
III. EFFECTIVE DATE AND TERM OF PLAN
A. The Plan, as amended and restated, shall be effective on the date specified
in the Board of Directors resolution adopting the Plan. Except as provided
below, each option issued and outstanding under the Plan immediately prior to
such effective date shall continue to be governed solely by the terms and
conditions of the agreement evidencing such grant, and nothing in this
restatement of the 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. The Plan Administrator shall, however,
have full power and authority, under such circumstances as the Plan
Administrator may deem appropriate (but in accordance with Article I of this
Section Five), to extend one or more features of this amendment and restatement
to any options outstanding on the effective date.
B. Unless sooner terminated in accordance with the other provisions of this
Plan, the Plan shall terminate upon the earlier of (i) March 6, 2016 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 hereunder. If the date of termination is determined under clause
(i) above, then any options or stock issuances outstanding on such date shall
continue to have force and effect in accordance with the provisions of the
agreements evidencing those awards.
C. Options may be granted with respect to a number of shares of Common Stock in
excess of the number of shares at the time available for issuance under the
Plan, provided each granted option 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 issuable under the Plan.
IV. USE OF PROCEEDS
Any cash proceeds received by the Company from the sale of shares pursuant to
options or stock issuances granted under the Plan shall be used for general
corporate purposes.
V. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any option hereunder, and the
issuance of stock (i) upon the exercise or surrender of any option or (ii) under
the Stock Issuance Program shall be subject to the procurement by the Company of
all approvals and permits required by regulatory authorities having jurisdiction
over the Plan, the options granted under it and the stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or delivered under
the Plan unless and until there shall have been compliance with all applicable
requirements of Federal and state securities laws, including (to the extent
required) the filing and effectiveness of the Form S-8 registration statement
for the shares of Common Stock issuable under the Plan, and all applicable
listing requirements of any stock exchange (or the Nasdaq National Market, if
applicable) on which Common Stock is then trading.

 

 

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VI. NO EMPLOYMENT/SERVICE RIGHTS
Neither the action of the Company in establishing or restating 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.
VII. MISCELLANEOUS PROVISIONS
A. Except to the extent otherwise expressly provided in the Plan, the right to
acquire Common Stock or other assets under the Plan may not be assigned,
encumbered or otherwise transferred by any participant.
B. The provisions of the Plan relating to the exercise of options and the
issuance and/or vesting of shares shall be governed by the laws of the State of
Alabama without resort to that state’s conflict-of-laws provisions, as such laws
are applied to contracts entered into and performed in such State.