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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-12477
AMGEN INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3540776
- ------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1840 Dehavilland Drive, Thousand Oaks, California 91320-1789
- ---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (805) 447-1000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of September 30, 1995, the registrant had 265,998,635(A)
shares of Common Stock, $.0001 par value, outstanding.
- ---------------
(A)All share numbers have been adjusted retroactively to reflect a
two-for-one split of the common stock effected in the form of a
100 percent stock dividend distributed on August 15, 1995 to
stockholders of record on August 1, 1995.
AMGEN INC.
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements.......................3
Condensed Consolidated Statements of
Operations - three and nine months
ended September 30, 1995 and 1994 ...............4
Condensed Consolidated Balance Sheets -
September 30, 1995 and December 31, 1994 ........5
Condensed Consolidated Statements of
Cash Flows - nine months
ended September 30, 1995 and 1994 ...........6 - 7
Notes to Condensed Consolidated Financial
Statements ......................................8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations................................13
PART II OTHER INFORMATION
Item 1.Legal Proceedings .........................18
Item 6.Exhibits and Reports on Form 8-K ..........19
Signatures........................................20
Index to Exhibits.................................21
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The information in this report for the three and nine months
ended September 30, 1995 and 1994, is unaudited but includes all
adjustments (consisting only of normal recurring accruals) which
Amgen Inc. ("Amgen" or the "Company") considers necessary for a fair
presentation of the results of operations for those periods.
The condensed financial statements should be read in conjunction
with the Company's financial statements and the notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994.
Interim results are not necessarily indicative of results for
the full fiscal year.
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- --------
Revenues:
Product sales .............. $460.6 $401.7 $1,334.4 $1,136.0
Corporate partner revenues . 23.8 16.9 65.1 49.7
Royalty income ............. 8.9 7.7 26.9 19.3
------ ------ -------- --------
Total revenues ............ 493.3 426.3 1,426.4 1,205.0
------ ------ -------- --------
Operating expenses:
Cost of sales .............. 64.1 59.1 207.1 176.8
Research and development ... 105.5 81.7 327.7 235.6
Marketing and selling ...... 69.1 61.9 197.8 174.7
General and administrative . 37.6 31.9 106.8 90.4
Loss of affiliates, net .... 15.2 9.8 41.2 25.6
------ ------ -------- --------
Total operating expenses .. 291.5 244.4 880.6 703.1
------ ------ -------- --------
Operating Income............. 201.8 181.9 545.8 501.9
------ ------ -------- --------
Other income (expense):
Interest and other income .. 15.4 6.8 46.7 16.0
Interest expense, net ...... (3.6) (3.3) (11.2) (8.7)
------ ------ -------- --------
Total other income
(expense) ................ 11.8 3.5 35.5 7.3
------ ------ -------- --------
Income before income taxes... 213.6 185.4 581.3 509.2
Provision for income taxes... 67.8 71.4 189.2 194.3
------ ------ -------- --------
Net income................... $145.8 $114.0 $ 392.1 $ 314.9
====== ====== ======== ========
Earnings per share:
Primary .................... $0.52 $0.41 $1.40 $1.12
Fully diluted .............. $0.51 $0.41 $1.38 $1.12
Shares used in calculation of:
Primary earnings per share . 281.8 278.5 280.2 280.0
Fully diluted earnings per
share ..................... 283.2 279.1 283.8 281.9
See accompanying notes.
AMGEN INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions, except per share data)
(Unaudited)
September 30, December 31,
1995 1994
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents ................ $ 145.0 $ 211.3
Marketable securities .................... 846.7 485.4
Trade receivables, net ................... 205.3 194.7
Inventories .............................. 85.8 98.0
Deferred tax assets, net ................. 70.2 70.2
Other current assets ..................... 67.0 56.0
-------- --------
Total current assets ................... 1,420.0 1,115.6
Property, plant and equipment at cost, net 707.9 665.3
Investments in affiliated companies....... 76.4 82.3
Other assets.............................. 143.9 130.9
-------- --------
$2,348.2 $1,994.1
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................... $ 47.2 $ 30.5
Commercial paper ......................... 99.5 99.7
Other accrued liabilities ................ 449.5 406.2
-------- --------
Total current liabilities .............. 596.2 536.4
Long-term debt............................ 177.2 183.4
Contingencies
Stockholders' equity:
Common stock, $.0001 par value; 750.0
shares authorized; outstanding - 266.0
shares in 1995 and 264.7 shares in 1994 . - -
Additional paid-in capital ............... 827.6 719.3
Retained earnings ........................ 747.2 555.0
-------- --------
Total stockholders' equity ............. 1,574.8 1,274.3
-------- --------
$2,348.2 $1,994.1
======== ========
See accompanying notes.
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
---------- ----------
Cash flows from operating activities:
Net income .......................... $ 392.1 $ 314.9
Depreciation and amortization ....... 64.3 57.9
Deferred income taxes ............... - 3.0
Loss of affiliates, net ............. 41.2 25.6
Cash provided by (used in):
Trade receivables, net ............ (10.6) (21.8)
Inventories ....................... 12.2 (12.5)
Other current assets .............. (11.0) (3.8)
Accounts payable .................. 16.7 (1.2)
Accrued liabilities ............... 43.3 (14.4)
--------- ---------
Net cash provided by operating
activities ...................... 548.2 347.7
--------- ---------
Cash flows from investing activities:
Purchases of property, plant and
equipment ......................... (106.8) (93.7)
Proceeds from maturities of
marketable securities ............. 79.8 82.7
Proceeds from sales of marketable
securities ........................ 894.1 1,174.9
Purchases of marketable securities .. (1,335.2) (1,115.0)
Increase in investments in
affiliated companies .............. (0.4) (18.8)
Increase in other assets ............ (13.0) (9.6)
--------- ---------
Net cash (used in) provided by
investing activities ............ $ (481.5) $ 20.5
--------- ---------
See accompanying notes.
(Continued on next page)
AMGEN INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(In millions)
(Unaudited)
Nine Months Ended
September 30,
1995 1994
---------- ----------
Cash flows from financing activities:
Decrease in commercial paper ........ $ (0.2) $ (10.2)
Proceeds from issuance of long-term
debt .............................. - 12.5
Repayment of long-term debt ......... (6.2) (9.3)
Net proceeds from issuance of common
stock upon the exercise of stock
options ........................... 84.6 30.7
Tax benefit related to stock options 23.6 14.5
Net proceeds from issuance of common
stock upon the exercise of warrants - 15.3
Repurchases of common stock ......... (199.9) (226.0)
Other ............................... (34.9) (22.7)
--------- ---------
Net cash used in financing
activities ...................... (133.0) (195.2)
--------- ---------
(Decrease) increase in cash and cash
equivalents ......................... (66.3) 173.0
Cash and cash equivalents at
beginning of period ................. 211.3 128.5
--------- ---------
Cash and cash equivalents at end of
period .............................. $ 145.0 $ 301.5
========= =========
See accompanying notes.
AMGEN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1995
1. Summary of significant accounting policies
Business
Amgen Inc. ("Amgen" or the "Company") is a global biotechnology
company that develops, manufactures and markets human therapeutics
based on advanced cellular and molecular biology.
Principles of consolidation
The consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries as well as affiliated
companies for which the Company has a controlling financial interest
and exercises control over their operations ("majority controlled
affiliates"). All material intercompany transactions and balances
have been eliminated in consolidation. Investments in affiliated
companies which are 50% owned and/or where the Company exercises
significant influence over operations are accounted for using the
equity method. All other equity investments are accounted for under
the cost method. The caption "Loss of affiliates, net" includes
Amgen's equity in the operating results of affiliated companies and
the minority interest others hold in the operating results of Amgen's
majority controlled affiliates.
Inventories
Inventories are stated at the lower of cost or market. Cost is
determined in a manner which approximates the first-in, first-out
(FIFO) method. Inventories are shown net of applicable reserves and
allowances. Inventories consist of the following (in millions):
September 30, December 31,
1995 1994
------ ------
Raw materials ......... $10.5 $11.0
Work in process ....... 43.8 54.0
Finished goods ........ 31.5 33.0
----- -----
$85.8 $98.0
===== =====
Product sales
Product sales consist of two products, EPOGEN(R) (Epoetin alfa)
and NEUPOGEN(R) (Filgrastim).
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonality of cancer chemotherapy administration and wholesaler
inventory management practices. Wholesaler inventory reductions tend
to reduce domestic NEUPOGEN(R) sales in the first quarter each year.
NEUPOGEN(R) sales in the European Union ("EU") have experienced a
decline in the third quarter in prior years due to seasonality.
As a result of an agreement between Amgen and Ortho
Pharmaceutical Corporation, a subsidiary of Johnson & Johnson
("Johnson & Johnson") covering the U.S. market for the Company's
Epoetin alfa product, Amgen does not recognize product sales it makes
into the contractual market of Johnson & Johnson and does recognize
the product sales made by Johnson & Johnson into Amgen's contractual
market. These sales amounts, and adjustments thereto, are derived
from third-party data on shipments to end users and their usage (see
Note 4, "Contingencies - Johnson & Johnson arbitrations").
Income taxes
Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 109 (Note 3).
Earnings per share
Earnings per share are computed in accordance with the treasury
stock method. Primary and fully diluted earnings per share are based
upon the weighted average number of common shares and dilutive common
stock equivalents during the period in which they were outstanding.
Common stock equivalents include outstanding options under the
Company's stock option plans and warrants to purchase shares of the
Company's common stock. The warrants expired on June 30, 1994.
Basis of presentation
The financial information for the three and nine months ended
September 30, 1995 and 1994 is unaudited but includes all adjustments
(consisting only of normal recurring accruals) which the Company
considers necessary for a fair presentation of the results of
operations for these periods. Interim results are not necessarily
indicative of results for the full fiscal year.
Reclassification
Certain prior period amounts have been reclassified to conform
to the current period presentation.
2. Debt
As of September 30, 1995, $99.5 million of commercial paper was
outstanding. These borrowings generally had maturities of three
months or less and had effective interest rates averaging 5.9%.
In June 1995, the Company replaced its existing unsecured credit
facility with a new unsecured credit facility (the "credit facility").
The credit facility includes a commitment expiring on June 23, 2000
for up to $150.0 million of borrowings under a revolving line of
credit (the "revolving line commitment") and a commitment expiring on
December 5, 1997 for up to an additional $73.0 million of letters of
credit (the "letters of credit commitment"). As of September 30,
1995, $150.0 million was available under the revolving line
commitment for borrowing and to support the Company's commercial
paper program. Also, as of September 30, 1995, letters of credit
totaling $72.4 million were issued and outstanding to secure the
Company's promissory notes and accrued interest thereon. Borrowings
under the revolving line commitment bear interest at various rates
which are a function of, at the Company's option, either the prime
rate of a major bank, the federal funds rate or a Eurodollar base
rate. Under the terms of the credit facility, the Company is
required to meet a minimum interest coverage ratio and maintain a
minimum level of tangible net worth. In addition, the credit
facility contains limitations on investments, liens and
sale/leaseback transactions.
Long-term debt consists of the following (in millions):
September 30, December 31,
1995 1994
------ ------
Medium Term Notes .......... $109.0 $113.0
Promissory notes ........... 68.2 68.2
Other obligations .......... - 2.2
------ ------
$177.2 $183.4
====== ======
The Company has registered $200.0 million of unsecured medium
term debt securities ("Medium Term Notes") of which $109.0 million
were outstanding at September 30, 1995. These Medium Term Notes bear
interest at fixed rates averaging 5.8% and mature in approximately
two to eight years.
3. Income taxes
The provision for income taxes consists of the following (in
millions):
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
----- ----- ------ ------
Federal ............ $63.6 $60.9 $173.8 $166.8
State .............. 4.2 10.5 15.4 27.5
----- ----- ------ ------
Total ............ $67.8 $71.4 $189.2 $194.3
===== ===== ====== ======
The decrease in the current year tax rate is due to tax benefits
from the sale of products manufactured in the Puerto Rico fill-and-
finish facility which began in the first quarter of 1995.
4. Contingencies
Johnson & Johnson arbitrations
In September 1985, the Company granted Johnson & Johnson a
license relating to certain patented technology and know-how of the
Company to sell a genetically engineered form of recombinant human
erythropoietin, called Epoetin alfa, throughout the United States for
all human uses except dialysis and diagnostics. Johnson & Johnson
sells Epoetin alfa under the brand name PROCRIT(R).
A number of disputes have arisen between Amgen and Johnson &
Johnson as to their respective rights and obligations under the
various agreements between them, including the agreement granting the
license (the "License Agreement"). These disputes have been the
subject of arbitration proceedings before Judicial Arbitration and
Mediation Services, Inc. ("JAMS") in Chicago, Illinois commencing in
January 1989. A dispute that has not yet been resolved and is the
subject of the current arbitration proceeding relates to the
accounting methodology currently employed by the Company for Epoetin
alfa sales. The Company and Johnson & Johnson are required to
compensate each other for Epoetin alfa sales which either party makes
into the other party's contractual market. The Company has
established and is employing an accounting methodology to assign the
proceeds of sales of EPOGEN(R) and PROCRIT(R) in Amgen's and Johnson &
Johnson's respective contractual markets. Johnson & Johnson has
disputed this methodology and is proposing an alternative methodology
for adoption by the arbitrator. If, as a result of the arbitration
proceeding, a methodology different from that currently employed by
the Company is instituted to assign the proceeds of sales between the
parties, it may yield results that are different from the results of
the accounting methodology currently employed by the Company. As a
result of the arbitration, it is possible that the Company would
recognize a different level of EPOGENR sales than are currently being
recognized. As a result of the arbitration, the Company may be
required to pay additional compensation to Johnson & Johnson for
sales during prior periods, or Johnson & Johnson may be required to
pay compensation to the Company for such prior period sales. Due to
the uncertainties of any arbitrated result, the Company has
established net liabilities that exceed the amounts paid to Johnson &
Johnson.
A trial date is scheduled for March 1, 1996 regarding the
accounting methodologies and compensation for sales by Johnson &
Johnson into Amgen's contractual market and sales by Amgen into
Johnson & Johnson's contractual market. Discovery as to these issues
is in progress.
The Company also filed a demand in the arbitration seeking
termination of the License Agreement and damages. A hearing on this
demand will be scheduled following the adjudication of the accounting
methodologies for Epoetin alfa sales. On October 30, 1995 Johnson &
Johnson filed a complaint in the United States District Court for the
District of Delaware seeking to enjoin the arbitrator from hearing
the termination claims and a judgment declaring that JAMS does not have
jurisdiction over the claims. The Company is unable to predict at
this time the outcome of this demand or when it will be resolved.
On October 2, 1995, Johnson & Johnson filed a demand for a
separate arbitration proceeding against the Company before the
American Arbitration Association ("AAA") in Chicago, Illinois.
Johnson & Johnson alleges in this demand that the Company has
breached the License Agreement. The demand also includes allegations
of various antitrust violations. In this demand, Johnson & Johnson
seeks an injunction, declaratory relief, unspecified compensatory
damages, punitive damages and costs. The Company has filed a motion
to stay the arbitration pending the outcome of the existing
arbitration proceedings before JAMS discussed above. The Company has
also filed an answer and counterclaim denying that AAA has
jurisdiction to hear or decide the claims stated in the demand,
denying the allegations in the demand and counterclaiming for certain
unpaid invoices.
Synergen litigation
Acquisition litigation
The Company and its wholly owned subsidiary, Amgen Boulder Inc.
(formerly Synergen, Inc.), have been named as defendants in several
lawsuits filed in connection with the Company's December 1994
acquisition of Synergen (the ``Acquisition''). One suit, brought by
plaintiffs seeking to represent a class of Synergen warrant holders
who claim to have been deprived of the benefit of their warrants,
includes a request for an injunction, declaratory relief and general
damages in the sum of $34.3 million and also names Amgen Boulder
Development Corporation as a defendant. The balance of the suits
have been brought by plaintiffs who seek to represent a class of
stockholders of Synergen common stock. These plaintiffs seek an
unspecified amount of compensatory damages, an order rescinding the
Acquisition and related equitable relief based upon allegations that
the defendants breached their fiduciary duties by failing to maximize
stockholder value and defrauded the plaintiffs by omitting to
disclose allegedly material information concerning Synergen's future
prospects.
ANTRIL(TM) litigation
Several lawsuits have been filed against Synergen alleging
misrepresentations in connection with its research and development of
ANTRIL(TM) for the treatment of sepsis. One suit brought by three
Synergen stockholders alleges violations of state securities laws,
fraud and misrepresentation and seeks an unspecified amount of
compensatory damages and punitive damages. Another suit, proposed as
a class action, filed by a limited partner of a partnership with
which Synergen is affiliated, seeks rescission of certain payments
made to one of the defendants (or unspecified damages not less than
$50.0 million) and treble damages based on a variety of allegations.
Broker-dealers who acted as market makers in Synergen options have
also filed a suit claiming in excess of $3.2 million in trading
losses.
While it is not possible to predict accurately or determine the
eventual outcome of the Johnson & Johnson arbitration proceedings,
the Synergen litigation or various other legal proceedings (including
patent disputes) involving Amgen, the Company believes that the
outcome of these proceedings will not have a material adverse effect
on its financial statements.
5. Capital stock
During the nine months ended September 30, 1995, the Company
acquired 5.6 million shares of its common stock at a total cost of
$199.9 million under its common stock repurchase program. At
September 30, 1995, $131.3 million of the amount approved by the
Board of Directors remained available for repurchase through December
31, 1995.
In July 1995, the Board of Directors approved a two-for-one
split of the Company's common stock effected in the form of a 100
percent stock dividend. The dividend was distributed on August 15,
1995, to stockholders of record on August 1, 1995. Accordingly, the
condensed consolidated financial statements and the accompanying
notes have been retroactively adjusted to give recognition to this
stock split.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Liquidity and Capital Resources
Cash provided by operating activities has been and is expected
to continue to be the Company's primary source of funds. During the
nine months ended September 30, 1995, operations provided $548.2
million of cash compared with $347.7 million during the same period
last year. The Company had cash, cash equivalents and marketable
securities of $991.7 million at September 30, 1995, compared with
$696.7 million at December 31, 1994.
Capital expenditures totaled $106.8 million for the nine months
ended September 30, 1995, compared with $93.7 million for the same
period a year ago. Over the next few years, the Company expects to
spend approximately $150.0 million to $300.0 million per year on
capital projects to expand the Company's global operations.
The Company receives cash from the exercise of employee stock
options. During the nine months ended September 30, 1995, stock
options and their related tax benefits provided $108.2 million of
cash compared with $45.2 million for the same period last year.
Proceeds from the exercise of stock options and their related tax
benefits will vary from period to period based upon fluctuations in
the market value of the Company's stock relative to the exercise price
of such options, among other factors.
The Company has a common stock repurchase program to
offset the dilutive effect of its employee benefit stock option and
stock purchase plans. Since its inception in 1992 through September
30, 1995, the Company has repurchased $793.7 million of its common
stock and is authorized to purchase up to an additional $131.3
million through December 31, 1995. During the nine months ended
September 30, 1995, the Company purchased 5.6 million shares of
common stock at a cost of $199.9 million compared with 10.2 million
shares purchased at a cost of $226.0 million during the same period
last year.
To provide for financial flexibility and increased liquidity,
the Company has established several sources of debt financing. The
Company has a shelf registration statement with the Securities and
Exchange Commission under which it could issue up to $200.0 million
of Medium Term Notes. At September 30, 1995, $109.0 million of
Medium Term Notes were outstanding which mature in approximately two
to eight years. The Company has a commercial paper program which
provides for short-term borrowings up to an aggregate face amount of
$200.0 million. At September 30, 1995, $99.5 million of commercial
paper was outstanding, generally with maturities of three months or
less. The Company also has a $150.0 million revolving line of
credit, principally to support the Company's commercial paper
program. No borrowings on this line of credit were outstanding at
September 30, 1995.
The Company invests its cash in accordance with a policy that
seeks to maximize returns while ensuring both liquidity and minimal
risk of principal loss. The policy limits investments to certain
types of instruments issued by institutions with investment grade
credit ratings, and places restrictions on maturities and
concentration by type and issuer. The Company's fixed income
investments are subject to the risk of market interest rate
fluctuations, and all of the Company's investments are subject to
risks associated with the ability of the issuers to perform their
obligations under the instruments.
The Company has a program to manage certain portions of its
exposure to fluctuations in foreign currency exchange rates. These
exposures primarily result from European sales, partially offset by
costs incurred in Europe. The Company generally hedges the related
receivables with foreign currency forward contracts, which typically
mature within six months. The Company uses foreign currency option
and forward contracts which generally expire within 12 months to
hedge certain anticipated future sales. At September 30, 1995,
outstanding option and forward contracts totaled $25.7 million and
$63.2 million, respectively.
The Company believes that existing funds, cash generated from
operations, and existing sources of debt financing will be adequate
to satisfy its working capital and capital expenditure requirements
and to support its common stock repurchase program for the
foreseeable future. However, the Company may raise additional
capital from time to time to take advantage of favorable conditions in
the markets or in connection with the Company's corporate development
activities.
Results of Operations
Product sales
Product sales increased 14.7% and 17.5% for the three and nine
months ended September 30, 1995, respectively, compared with the same
periods last year.
NEUPOGEN(R) (Filgrastim)
The Company's worldwide NEUPOGEN(R) sales were $230.3 million
and $689.6 million for the three and nine months ended September 30,
1995, respectively. These amounts represent increases of 7.3% and
13.3%, respectively, over the same periods last year.
Domestic sales of NEUPOGEN(R) were $163.7 million and $486.8
million for the three and nine months ended September 30, 1995,
respectively. These amounts represent increases of $3.6 million and
$36.3 million, or 2.2% and 8.1%, respectively, over the same periods
last year. These increases are primarily due to increased usage of
NEUPOGEN(R) and to price increases. Current quarter results were
influenced by accelerated wholesaler purchasing just before the
extended July 4 holiday period, which created artificially high
inventory levels at the end of the second quarter, suppressing the
increase in third quarter sales of NEUPOGEN(R). Current quarter
results also reflect the ongoing and intensifying cost reduction
pressure in the health care marketplace, including the growing
influence of managed care organizations and the use of guidelines in
patient care. This pressure has contributed to the slowing of growth
in domestic NEUPOGEN(R) usage over the past several years and is
expected to continue to influence such growth for the forseeable
future.
International sales of NEUPOGEN(R), primarily in Europe, were
$66.6 million and $202.8 million for the three and nine months ended
September 30, 1995, respectively. These amounts represent increases
of $12.0 million and $44.8 million, or 22.0% and 28.4%, respectively,
over the same periods last year. Three factors account for these
increases: (1) the inclusion of sales from three additional
countries as the result of Austria, Sweden, and Finland joining the
EU on January 1, 1995, (2) increased market penetration, and (3) the
favorable effects of strengthened foreign currencies. Prior to the
entry of these countries into the EU, F. Hoffmann La Roche paid the
Company royalties on sales in these countries under a license
agreement. The Company's overall share of the colony-stimulating
factor market in the EU has decreased slightly since the introduction
in 1994 of competing colony stimulating factor products.
Quarterly NEUPOGEN(R) sales volume in the United States is
influenced by a number of factors including underlying demand,
seasonality of cancer chemotherapy administration and wholesaler
inventory management practices. Wholesaler inventory reductions tend
to reduce domestic NEUPOGEN(R) sales in the first quarter each year.
In prior years, NEUPOGEN(R) sales in the EU have experienced a
decline to varying degrees in the third quarter due to seasonality.
EPOGEN(R) (Epoetin alfa)
EPOGEN(R) sales were $230.3 million and $644.8 million for the
three and nine months ended September 30, 1995, respectively. These
amounts represent increases of $43.3 million or 23.2% and $117.3
million or 22.2% over the same periods last year. These increases
were primarily due to an increase in the U.S. dialysis patient
population, the administration of higher doses of EPOGEN(R) per
patient, and, to a lesser extent, increased penetration of the
dialysis market.
Cost of sales
Cost of sales as a percentage of product sales was 13.9% and
15.5% for the three and nine months ended September 30, 1995,
respectively, compared with 14.7% and 15.6% for the same periods last
year. Cost of sales as a percentage of product sales declined
slightly in the current quarter as benefits of the Puerto Rico fill-
and-finish facility were realized. The fourth quarter margin is
expected to be similar to the third quarter margin. In 1996, cost of
sales as a percentage of product sales is expected to range from 14%
to 16%.
Research and development
Research and development expenses increased $23.8 million or
29.1% and $92.1 million or 39.1% for the three and nine months ended
September 30, 1995, respectively, compared with the same periods last
year. These increases are primarily due to an expansion of the
Company's internal research and development staff, partially as a
result of the acquisition of Synergen in December 1994. In addition,
the current year nine month period includes a $20.0 million signing
payment made in the first quarter to The Rockefeller University for
an exclusive license to certain technologies. Annual research and
development expenses in 1996 are expected to increase at an annual
rate exceeding the anticipated 1996 product sales growth rate.
Marketing and selling
Marketing and selling expenses increased $7.2 million or 11.6%
and $23.1 million or 13.2%, for the three and nine months ended
September 30, 1995, respectively, compared with the same periods last
year. These increases primarily reflect marketing efforts to
increase the number of patients receiving NEUPOGEN(R) and to bring
more patients receiving EPOGEN(R) within the target hematocrit
range. In 1996, marketing and selling expenses combined with general
and administrative expenses are expected to have an aggregate annual
growth rate lower than the anticipated 1996 annual growth in product
sales.
General and administrative
General and administrative expenses increased $5.7 million or
17.9% and $16.4 million or 18.1%, for the three and nine months ended
September 30, 1995, respectively, compared with the same periods last
year. These increases are primarily due to staff-related and legal
expenses. In 1996, general and administrative expenses combined with
marketing and selling expenses are expected to have an aggregate
annual growth rate lower than the anticipated 1996 annual growth in
product sales.
Interest and other income
Interest and other income increased $8.6 million or 126.5% and
$30.7 million or 191.9% during the three and nine months ended
September 30, 1995, respectively, compared with the same periods last
year. These increases are primarily due to: (1) higher current year
cash balances, (2) capital gains realized in the Company's investment
portfolio during the current year periods while capital losses were
incurred in the prior year periods, (3) higher interest rates earned
by the Company's investment portfolio during the current year
periods, and (4) gains on foreign currency transactions. Interest and
other income is expected to fluctuate from period to period primarily
due to changes in interest rates and cash balances.
Income taxes
The Company's effective tax rate for the three and nine months
ended September 30, 1995 was 31.7% and 32.5% compared to 38.5% and
38.2%, respectively, for the same periods last year. These decreases
in the tax rate were due to tax benefits from the sale of products
manufactured in the Puerto Rico fill-and-finish facility which began
in the first quarter of 1995. These tax benefits are expected to
result in an annualized effective tax rate of 31-33% in 1995.
Financial Outlook
Worldwide NEUPOGEN(R) sales for 1995 are expected to grow at a
double digit rate but lower than the 1994 growth rate. Future
NEUPOGEN(R) sales increases are dependent primarily upon further
penetration of existing markets, the timing and nature of additional
indications for which the product may be approved and the effects of
competitive products. NEUPOGEN(R) usage is expected to continue to be
affected by cost containment pressures on health care providers, which
are intensifying because of managed care and guidelines. In addition,
international NEUPOGEN(R) sales will continue to be subject to
changes in foreign currency exchange rates and increased competition.
EPOGEN(R) sales for 1995 are anticipated to grow at an annual
rate of more than 20%. The Company anticipates that increases in
both the U.S. dialysis patient population and dosing will continue to
drive EPOGEN(R) sales. EPOGEN(R) sales may also be affected by
future changes in reimbursement rates or the basis for reimbursement
by the federal government.
The Company expects double digit earnings growth in 1995
primarily as a result of the anticipated increases in product sales,
increases realized in interest and other income, and the decrease in
the 1995 tax rate. The Company currently anticipates that total
product sales and earnings will grow at double digit rates in 1996,
but these growth rates are expected to be lower than 1995 growth
rates. Estimates of future product sales and earnings, however,
are necessarily speculative in nature and are difficult to predict
with accuracy.
Legal Matters
The Company is engaged in arbitration proceedings with one of
its licensees and various legal proceedings relating to Synergen.
For a discussion of these matters see Note 4 to the Condensed
Consolidated Financial Statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is engaged in arbitration proceedings with one of
its licensees. For a complete discussion of these matters see Note 4
to the Condensed Consolidated Financial Statements - "Johnson &
Johnson arbitrations". Other legal proceedings are also reported in
Note 4 to the Condensed Consolidated Financial Statements and in the
Company's Form 10-K for the year ended December 31, 1994, with
material developments since that report described below except to the
extent otherwise reported in the Company's Form 10-Qs for the periods
ended March 31, 1995 and June 30, 1995. While it is not possible to
predict accurately or to determine the eventual outcome of these
matters, the Company believes that the outcome of these legal
proceedings will not have a material adverse effect on the financial
statements of the Company.
Synergen litigation
Acquisition litigation
In Livergood v. Synergen, Inc., et al., Weld, et al. v. Amgen
Inc., et al., and Reineke v. Synergen, Inc., et al., purported class
action suits previously filed on behalf of former Synergen
stockholders challenging the acquisition price, all three suits were
consolidated in United States District Court, County of Boulder,
State of Colorado, and the court has stayed the proceedings pending
the outcome of the Stanley, et al. v. Soll, et al. suit involving
similar claims previously filed in the Delaware Chancery Court. In
Glick v. Synergen, Inc., et al., a lawsuit previously brought by a
class of Synergen warrant holders who claim to have been deprived of
the benefit of their warrants, the court has dismissed the third
amended complaint but granted leave to amend the complaint. The
plaintiffs have amended the complaint to seek declaratory relief
and an injunction.
ANTRIL(TM) litigation
In Temple, et al. v. Synergen, Inc., et al., a suit previously
filed in the District Court for the City and County of Denver, State
of Colorado, alleging misrepresentations in connection with
Synergen's research and development of ANTRIL(TM) for the treatment
of sepsis, the court has stayed the proceedings pending an appeal
filed by the plaintiffs in the United States District Court for the
Tenth Circuit. The appeal seeks to reverse a Federal court ruling
which denied the plaintiffs' exclusion from a prior class action
settlement. If the Tenth Circuit affirms the ruling, the plaintiffs
will be foreclosed from proceeding in the above mentioned state court
action.
Erythropoietin patent litigation
This lawsuit was terminated on October 2, 1995 when the United
States Supreme Court denied Johnson & Johnson's petition for
certiorari which sought review of an April 5, 1995 decision by the
United States Court of Appeals for the Federal Circuit.
Item 6. Exhibits and Reports on Form 8-K
(a) Reference is made to the Index to Exhibits included herein.
(b) Reports on Form 8-K
The Company filed a report on Form 8-K dated August 31, 1995
reporting a demand filed in an arbitration proceeding with Johnson &
Johnson seeking: (1) termination of the product license agreement
between the Company and Johnson & Johnson, (2) an accounting of
Johnson & Johnson's spillover sales and (3) damages.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Amgen Inc.
(Registrant)
Date: 11/13/95 By:/s/ Robert S. Attiyeh
- ------------------ ------------------------------------
Robert S. Attiyeh
Senior Vice President Finance
and Corporate Development, and
Chief Financial Officer
Date: 11/13/95 By:/s/ Larry A. May
- ------------------ ------------------------------------
Larry A. May
Vice President, Corporate
Controller and Chief
Accounting Officer
AMGEN INC.
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Restated Certificate of Incorporation. (7)
3.2 Certificate of Amendment to Restated Certificate of
Incorporation, effective as of July 24, 1991. (14)
3.3 Bylaws, as amended to date. (19)
4.1 Indenture dated January 1, 1992 between the Company and
Citibank N.A., as trustee. (15)
4.2 Forms of Commercial Paper Master Note Certificates. (18)
10.1* Company's Amended and Restated 1991 Equity Incentive
Plan.
10.2* Company's Amended and Restated 1984 Stock Option Plan.
10.3 Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984, between the Company and Kirin Brewery Company,
Limited (with certain confidential information deleted
therefrom). (1)
10.4 Amendment Nos. 1, 2, and 3, dated March 19, 1985, July
29, 1985 and December 19, 1985, respectively, to the
Shareholder's Agreement of Kirin-Amgen, Inc., dated May
11, 1984 (with certain confidential information deleted
therefrom). (3)
10.5 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated, September 30, 1985
between the Company and Ortho Pharmaceutical Corporation
(with certain confidential information deleted
therefrom). (2)
10.6 Product License Agreement, dated September 30, 1985, and
Technology License Agreement, dated September 30, 1985
between Kirin-Amgen, Inc. and Ortho Pharmaceutical
Corporation (with certain confidential information
deleted therefrom). (3)
10.7* Company's Employee Stock Purchase Plan, amended April 1,
1992. (16)
10.8 Agreement, dated February 12, 1986, between the Company
and Sloan-Kettering Institute for Cancer Research (with
certain confidential information deleted therefrom). (4)
10.9 Amendment No. 2, dated November 13, 1990, to Agreement,
dated February 12, 1986, between the Company and Sloan-
Kettering Institute for Cancer Research (with certain
confidential information deleted therefrom). (13)
10.10 Research, Development Technology Disclosure and License
Agreement PPO, dated January 20, 1986, by and between
the Company and Kirin Brewery Co., Ltd. (4)
10.11 Research Collaboration Agreement, dated August 31, 1990,
between Amgen Inc. and Regeneron Pharmaceuticals, Inc.
(with certain confidential information deleted
therefrom). (13)
10.12 Amendment Nos. 4 and 5, dated October 16, 1986
(effective July 1, 1986) and December 6, 1986 (effective
July 1, 1986), respectively, to the Shareholders
Agreement of Kirin-Amgen, Inc. dated May 11, 1984 (with
certain confidential information deleted therefrom). (5)
10.13 Assignment and License Agreement, dated October 16,
1986, between the Company and Kirin-Amgen, Inc. (with
certain confidential information deleted therefrom). (5)
10.14 G-CSF European License Agreement, dated December 30,
1986, between Kirin-Amgen, Inc. and the Company (with
certain confidential information deleted therefrom). (5)
10.15 Research and Development Technology Disclosure and
License Agreement: GM-CSF, dated March 31, 1987, between
Kirin Brewery Company, Limited and the Company (with
certain confidential information deleted therefrom). (5)
10.16* Company's Amended and Restated 1987 Directors' Stock
Option Plan.
10.17 Cross License Agreement, dated June 1, 1987, between
Amgen Inc. and Amgen Clinical Partners, L.P. (6)
10.18 Development Agreement, dated June 1, 1987, between Amgen
Inc. and Amgen Clinical Partners, L.P. (6)
10.19 Joint Venture Agreement, dated June 1, 1987, between
Amgen Inc. and Amgen Clinical Partners, L.P. (6)
10.20 Partnership Purchase Option Agreement, dated June 1,
1987, between Amgen Inc. and Amgen Clinical Partners,
L.P. (6)
10.21* Company's Amended and Restated 1988 Stock Option Plan.
10.22* Company's Retirement and Savings Plan, amended and
restated as of January 1, 1993. (16)
10.23 Amendment, dated June 30, 1988, to Research,
Development, Technology Disclosure and License
Agreement: GM-CSF dated March 31, 1987, between Kirin
Brewery Company, Limited and the Company. (7)
10.24 Amending Agreement, dated June 30, 1988, to Development
Agreement, Partner Purchase Option Agreement, Cross
License Agreement and Joint Venture Agreement, dated
June 1, 1987, between the Company and Amgen Clinical
Partners, L.P. (7)
10.25 Agreement on G-CSF in the EU, dated September 26, 1988,
between Amgen Inc. and F. Hoffmann-La Roche & Co.
Limited Company (with certain confidential information
deleted therefrom). (9)
10.26 Supplementary Agreement to Agreement dated January 4,
1989 to Agreement on G-CSF in the EU, dated September
26, 1988, between the Company and F. Hoffmann-La Roche &
Co. Limited Company, (with certain confidential
information deleted therefrom). (9)
10.27 Agreement on G-CSF in Certain European Countries, dated
January 1, 1989, between Amgen Inc. and F. Hoffmann-La
Roche & Co. Limited Company (with certain confidential
information deleted therefrom). (9)
10.28 Rights Agreement, dated January 24, 1989, between Amgen
Inc. and American Stock Transfer and Trust Company,
Rights Agent. (8)
10.29 First Amendment to Rights Agreement, dated January 22,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (11)
10.30 Second Amendment to Rights Agreement, dated April 2,
1991, between Amgen Inc. and American Stock Transfer and
Trust Company, Rights Agent. (12)
10.31 Deed of Trust and Security Agreement, dated June 1,
1989, between the Company and UNUM Life Insurance
Company of America. (10)
10.32 Note, dated June 1, 1989, between the Company and UNUM
Life Insurance Company of America. (10)
10.33 Agency Agreement, dated November 21, 1991, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (16)
10.34 Agency Agreement, dated May 21, 1992, between Amgen
Manufacturing, Inc. and Citicorp Financial Services
Corporation. (16)
10.35 Guaranty, dated July 29, 1992, by the Company in favor
of Merck Sharp & Dohme Quimica de Puerto Rico, Inc. (17)
10.36 936 Promissory Note No. 01, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (16)
10.37 936 Promissory Note No. 02, dated December 11, 1991,
issued by Amgen Manufacturing, Inc. (16)
10.38 936 Promissory Note No. 001, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (16)
10.39 936 Promissory Note No. 002, dated July 29, 1992, issued
by Amgen Manufacturing, Inc. (16)
10.40 Guaranty, dated November 21, 1991, by the Company in
favor of Citicorp Financial Services Corporation. (16)
10.41 Lease and Agreement relating to Lease, dated March 27,
1986 and April 1, 1986, respectively, for 2003 Oak
Terrace Lane between 2001 Hillcrest Partnership and the
Company. (19)
10.42 Partnership Purchase Agreement, dated March 12, 1993,
between the Company, Amgen Clinical Partners, L.P.,
Amgen Development Corporation, the Class A limited
partners and the Class B limited partner. (17)
10.43* Amgen Supplemental Retirement Plan dated June 1, 1993.
(20)
10.44 Promissory Note of Mr. Kevin W. Sharer, dated June 4,
1993. (20)
10.45 Promissory Note of Mr. Larry A. May, dated February 24,
1993. (21)
10.46* First Amendment dated October 26, 1993 to the Company's
Retirement and Savings Plan. (21)
10.47* Amgen Performance Based Management Incentive Plan. (21)
10.48 Agreement and Plan of Merger, dated as of November 17,
1994, among Amgen Inc., Amgen Acquisition Subsidiary,
Inc. and Synergen, Inc. (22)
10.49 Third Amendment to Rights Agreement, dated as of
February 21, 1995, between Amgen Inc. and American Stock
Transfer Trust and Trust Company (23)
10.50 Credit Agreement, dated as of June 23, 1995, among Amgen
Inc., the Borrowing Subsidiaries named therein, the
Banks named therein, Swiss Bank Corporation and ABN AMRO
Bank N.V., as Issuing Banks, and Swiss Bank Corporation,
as Administrative Agent.(24)
11 Computation of per share earnings.
27 Financial Data Schedule.
- ----------------
* Management contract or compensatory plan or arrangement.
(1) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1984 on June 26, 1984 and incorporated
herein by reference.
(2) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended September 30, 1985 on November 14, 1985 and
incorporated herein by reference.
(3) Filed as an exhibit to Quarterly Report on Form 10-Q for the
quarter ended December 31, 1985 on February 3, 1986 and
incorporated herein by reference.
(4) Filed as an exhibit to Amendment No. 1 to Form S-1 Registration
Statement (Registration No. 33-3069) on March 11, 1986 and
incorporated herein by reference.
(5) Filed as an exhibit to the Form 10-K Annual Report for the year
ended March 31, 1987 on May 18, 1987 and incorporated herein by
reference.
(6) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1987 on August 12, 1987 and incorporated
herein by reference.
(7) Filed as an exhibit to Form 8 amending the Quarterly Report on
Form 10-Q for the quarter ended June 30, 1988 on August 25, 1988
and incorporated herein by reference.
(8) Filed as an exhibit to the Form 8-K Current Report dated January
24, 1989 and incorporated herein by reference.
(9) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1989 on June 28, 1989 and incorporated
herein by reference.
(10) Filed as an exhibit to the Quarterly Report on Form 10-Q for the
quarter ended June 30, 1989 on August 14, 1989 and incorporated
herein by reference.
(11) Filed as an exhibit to the Form 8-K Current Report dated January
22, 1991 and incorporated herein by reference.
(12) Filed as an exhibit to the Form 8-K Current Report dated April
12, 1991 and incorporated herein by reference.
(13) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended March 31, 1991 on July 1, 1991 and incorporated
herein by reference.
(14) Filed as an exhibit to the Form 8-K Current Report dated July
24, 1991 and incorporated herein by reference.
(15) Filed as an exhibit to Form S-3 Registration Statement dated
December 19, 1991 and incorporated herein by reference.
(16) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1992 on March 30, 1993 and incorporated
herein by reference.
(17) Filed as an exhibit to the Form 8-A dated March 31, 1993 and
incorporated herein by reference.
(18) Filed as an exhibit to the Form 10-Q for the quarter ended March
31, 1993 on May 17, 1993 and incorporated herein by reference.
(19) Filed as an exhibit to the Form 10-Q for the quarter ended June
30, 1993 on August 16, 1993 and incorporated herein by
reference.
(20) Filed as an exhibit to the Form 10-Q for the quarter ended
September 30, 1993 on November 12, 1993 and incorporated herein
by reference.
(21) Filed as an exhibit to the Annual Report on Form 10-K for the
year ended December 31, 1993 on March 25, 1994 and incorporated
herein by reference.
(22) Filed as an exhibit to the Form 8-K Current Report dated
November 18, 1994 on December 2, 1994 and incorporated herein by
reference.
(23) Filed as an exhibit to the Form 8-K Current Report dated
February 21, 1995 on March 7, 1995 and incorporated herein by
reference.
(24) Filed as an exhibit to the Form 10-Q for the quarter ended
June 30, 1995 on August 11, 1995 and incorporated herein by
reference.
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
PRIMARY COMPUTATION
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- --------
Net income ............. $145.8 $114.0 $392.1 $314.9
======== ======== ======== ========
Applicable common and
common stock equivalent
shares:
Weighted average shares
of common stock
outstanding during the
period ................ 265.1 265.8 264.8 266.6
Incremental number of
shares outstanding
during the period
resulting from the
assumed exercises of
stock options and
warrants .............. 16.7 12.7 15.4 13.4
-------- -------- -------- --------
Weighted average shares
of common stock and
common stock
equivalents outstanding
during the period ..... 281.8 278.5 280.2 280.0
======== ======== ======== ========
Earnings per common
share primary ......... $ .52 $ .41 $ 1.40 $ 1.12
======== ======== ======== ========
EXHIBIT 11
AMGEN INC.
COMPUTATION OF PER SHARE EARNINGS
FULLY DILUTED COMPUTATION
(In millions, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
-------- -------- -------- --------
Net income ............. $145.8 $114.0 $392.1 $314.9
======== ======== ======== ========
Applicable common and
common stock equivalent
shares:
Weighted average shares
of common stock
outstanding during the
period ................ 265.1 265.8 264.8 266.6
Incremental number of
shares outstanding
during the period
resulting from the
assumed exercises of
stock options and
warrants .............. 18.1 13.3 19.0 15.3
-------- -------- -------- --------
Weighted average shares
of common stock and
common stock
equivalents outstanding
during the period ..... 283.2 279.1 283.8 281.9
======== ======== ======== ========
Earnings per common
share fully diluted ... $ .51 $ .41 $ 1.38 $ 1.12
======== ======== ======== ========
EXHIBIT 10.1
AMGEN INC.
AMENDED AND RESTATED 1991 EQUITY INCENTIVE PLAN
1. PURPOSE.
(a) The purpose of the Amended and Restated 1991 Equity
Incentive Plan (the "Plan") is to provide a means by which employees
of and consultants to Amgen Inc., a Delaware corporation (the
"Company"), and its Affiliates, as defined in subparagraph 1(b),
directly or indirectly through trusts created for the benefit of
their families, may be given an opportunity to benefit from increases
in value of the stock of the Company through the granting of (i)
incentive stock options, (ii) nonqualified stock options, (iii) stock
bonuses, and (iv) rights to purchase restricted stock, all as defined
below.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now employed by or serving as consultants to the
Company, to secure and retain the services of persons capable of
filling such positions, and to provide incentives for such persons to
exert maximum efforts for the success of the Company.
(d) The Company intends that the rights issued under the
Plan ("Stock Awards") shall, in the discretion of the Board of
Directors of the Company (the "Board") or any committee to which
responsibility for administration of the Plan has been delegated
pursuant to subparagraph 2(c), be either (i) stock options granted
pursuant to paragraph 5 hereof, including incentive stock options as
that term is used in Section 422 of the Code ("Incentive Stock
Options"), or options which do not qualify as Incentive Stock Options
("Nonqualified Stock Options") (together hereinafter referred to as
"Options"), or (ii) stock bonuses or rights to purchase restricted
stock granted pursuant to paragraph 6 hereof.
(e) The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee or consultant, his or
her spouse, or members of their immediate family. The word optionee
shall mean the person to whom the option is granted or the employee
or consultant for whose benefit the option is granted to a Trust, as
the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided
in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when
and how Stock Awards shall be granted; whether a Stock Award will be
an Incentive Stock Option, a Nonqualified Stock Option, a stock
bonus, a right to purchase restricted stock, or a combination of the
foregoing; the provisions of each Stock Award granted (which need not
be identical), including the time or times when a person shall be
permitted to purchase or receive stock pursuant to a Stock Award; and
the number of shares with respect to which Stock Awards shall be
granted to each such person.
(2) To construe and interpret the Plan and Stock
Awards 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 Stock Award, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
(3) To amend the Plan as provided in paragraph 13.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the
best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members of the Board
(the "Committee"), all of the members of which Committee shall be
disinterested persons and outside directors, if required and as
defined by the provisions of subparagraphs 2(d) and 2(e). 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, subject, however, to such
resolutions, not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board.
(d) The term "disinterested person", as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subparagraph 2(c): (i)
who is not at the time he or she exercises discretion in
administering the Plan eligible and has not at any time within one
(1) year prior thereto been eligible for selection as a person to
whom Stock Awards may be granted pursuant to the Plan or any other
plan of the Company or any of its affiliates entitling the
participants therein to acquire equity securities of the Company or
any of its affiliates; or (ii) who is otherwise considered to be a
"disinterested person" in accordance with the rules, regulations or
interpretations of the Securities and Exchange Commission. Any such
person shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as from time to time in effect.
(e) The term "outside director," as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subparagraph 2(c), who is
considered to be an "outside director" in accordance with the rules,
regulations or interpretations of Section 162(m) of the Code.
(f) Any requirement that an administrator of the Plan be a
"disinterested person" or "outside director" shall not apply if the
Board or the Committee expressly declares that such requirement shall
not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 11 relating to
adjustments upon changes in stock, the stock that may be issued
pursuant to Stock Awards granted under the Plan shall not exceed in
the aggregate Forty Eight Million (48,000,000) shares of the
Company's $.0001 par value common stock (the "Common Stock"). If any
Stock Award granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the Common
Stock not purchased under such Stock Award shall again become
available for the Plan. Shares repurchased by the Company pursuant
to any repurchase rights reserved by the Company pursuant to the Plan
shall not be available for subsequent issuance under the Plan.
(b) The Common St ock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined at the time the Incentive Stock Option is granted)
of the Common Stock with respect to which incentive stock options (as
defined by the Code) are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company
and its Affiliates does not exceed one hundred thousand dollars
($100,000). If it is determined that an entire Option or any portion
thereof does not qualify for treatment as an Incentive Stock Option
by reason of exceeding such maximum, such Option or the applicable
portion shall be considered a Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees (including officers) of the Company or its Affiliates. A
director of the Company shall not be eligible to receive Incentive
Stock Options unless such director is also an employee of the Company
or any Affiliate. Stock Awards other than Incentive Stock Options may
be granted only to employees (including officers) of or consultants
to the Company or any Affiliate or to Trusts of any such employee or
consultant. A director of the Company shall not be eligible to
receive such Stock Awards unless such director is also an employee of
or a consultant to the Company or any Affiliate.
(b) A director shall in no event be el igible for the
benefits of the Plan unless and until such director is expressly
declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised by
the Board or the Committee in the selection of a director as a person
to whom Stock Awards may be granted, or in the determination of the
number of shares which may be covered by Stock Awards granted to a
director: (i) a majority of the Board and a majority of the
directors acting in such matter are disinterested persons, as defined
in subparagraph 2(d); (ii) the Committee consists solely of
"disinterested persons" as defined in subparagraph 2(d); or (iii) the
Plan otherwise complies with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
The Board shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
Notwithstanding the foregoing, the restrictions set forth in this
subparagraph 4(b) shall not apply if the Board or Committee expressly
declares that such restrictions shall not apply.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
persons 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 Incentive
Stock Option is at least one hundred and ten percent (110%) of the
fair market value of the Common Stock at the date of grant and the
Incentive Stock Option is not exercisable after the expiration of
five (5) years from the date of grant.
(d) Stock Awards shall be limited to a maximum of 250,000
shares of Common Stock per person per calendar year.
5. TERMS OF STOCK OPTIONS.
Each Option shall be in such form and shall contain such
terms and conditions as the Board or the Committee 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) No Option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option and
each Nonqualified Stock Option shall be not less than one hundred
percent (100%) of the fair market value of the Common Stock subject
to the Option on the date the Option is granted.
(c) The purchase price of Common 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, either at the time of grant or exercise of the Option (A)
by delivery to the Company of shares of Common Stock of the Company
that have been held for the period required to avoid a charge to the
Company's reported earnings and valued at the fair market value on
the date of exercise, (B) according to a deferred payment or other
arrangement with the person to whom the Option is granted or to whom
the Option is transferred pursuant to subparagraph 5(d), or (C) in
any other form of legal consideration that may be acceptable to the
Board or the Committee in their discretion.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
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) An Option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may designate
a Trust to be such person's beneficiary with respect to any Incentive
Stock Options granted after February 25, 1992 and with respect to any
Nonqualified Stock Options, and such beneficiary shall, after the
death of the person to whom the Option was granted, have all the
rights that such person has while living, including the right to
exercise the Option. In the absence of such designation, after the
death of the person to whom the Option is granted, the Option shall
be exercisable by the person or persons to whom the optionee's rights
under such Option pass by will or by the laws of descent and
distribution.
(e) The total number of shares of Common Stock subject to
an Option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). 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 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 provisions
of this subparagraph 5(e) are subject to any Option provisions
governing the minimum number of shares as to which an Option may be
exercised.
(f) The Company may require any optionee, or any person to
whom an Option is transferred under subparagraph 5(d), as a condition
of exercising any such Option: (i) 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 who has such knowledge and experience in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser's representative,
the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that such
person is acquiring the Common Stock subject to the Option for such
person's own account and not with any present intention of selling or
otherwise distributing the Common Stock. These requirements, and any
assurances given pursuant to such requirements, shall be inoperative
if: (x) 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 (y) 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 law.
(g) An Option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
consultant or director with the Company or an Affiliate, unless: (i)
such termination is due to such person's permanent and total dis-
ability, within the meaning of Section 422(c)(6) of the Code, in
which case the Option may, but need not, provide that it may be
exercised at any time within one (1) year following such termination
of employment or relationship as a consultant or director; (ii) the
optionee dies while in the employ of or while serving as a consultant
or director to the Company or an Affiliate, or within not more than
three (3) months after termination of such employment or relationship
as a consultant or director, in which case the Option may, but need
not, provide that it may be exercised at any time within eighteen
(18) months following the death of the optionee by the person or
persons to whom the optionee's rights under such Option pass by will
or by the laws of descent and distribution; or (iii) the Option by
its term specifies either (A) that it shall terminate sooner than
three (3) months after termination of the optionee's employment or
relationship as a consultant or director with the Company or an
Affiliate; or (B) that it may be exercised more than three (3) months
after termination of the optionee's employment or relationship as a
consultant or director with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any
Option or to permit anyone to exercise the Option after expiration of
its term, nor shall it be construed to increase the number of shares
as to which any Option is exercisable from the amount exercisable on
the date of termination of the optionee's employment or relationship
as a consultant or director.
(h) The Option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a consultant or director with the
Company or any Affiliate to exercise the Option as to any part or all
of the shares subject to the Option prior to the stated vesting dates
of the Option. Any shares so purchased from any unvested installment
or Option may be subject to a repurchase right in favor of the
Company or to any other restriction the Board or the Committee
determines to be appropriate.
(i) To the extent provided by the terms of an Option, each
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: (i) tendering a
cash payment; (ii) authorizing the Company to withhold from the
shares of the Common Stock otherwise issuable to the optionee as a
result of the exercise of the Option a number of shares having a fair
market value less than or equal to the amount of the withholding tax
obligation; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock having a fair market value less than or
equal to the amount of the withholding tax obligation.
(j) Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation)
to include as part of any Option agreement a provision entitling the
optionee to a further Option (a "Re-Load Option") in the event the
optionee exercises the Option evidenced by the Option agreement, in
whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option; (ii) shall have an expiration date
which is the same as the expiration date of the Option the exercise
of which gave rise to such Re-Load Option; and (iii) shall have an
exercise price which is equal to one hundred percent (100%) of the
fair market value of the Common Stock subject to the Re-Load Option
on the date of exercise of the original Option or, in the case of a
Re-Load Option which is an Incentive Stock Option and which is
granted to a 10% stockholder (as defined in subparagraph 4(c)), shall
have an exercise price which is equal to one hundred and ten percent
(110%) of the fair market value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at
the time of the grant of the original Option, provided, however, that
the designation of any Re-Load Option as an Incentive Stock Option
shall be subject to the one hundred thousand dollars ($100,000)
annual limitation on exercisability of Incentive Stock Options
described in subparagraph 3(c) of the Plan and in Section 422(d) of
the Code. There shall be no Re-Load Options on a Re-Load Option.
Any such Re-Load Option shall be subject to the availability of
sufficient shares under subparagraph 3(a) and shall be subject to
such other terms and conditions as the Board or Committee may
determine.
6. TERMS OF STOCK BONUSES AND PURCHASES OF
RESTRICTED STOCK
Each stock bonus or restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as
the Board or the Committee shall deem appropriate. The terms and
conditions of stock bonus or restricted stock purchase agreements may
change from time to time, and the terms and conditions of separate
agreements need not be identical, but each stock bonus or restricted
stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the
substance of each of the following provisions as appropriate:
(a) The purchase price under each stock purchase agreement
shall be such amount as the Board or Committee shall determine and
designate in such agreement. Notwithstanding the foregoing, the
Board or the Committee may determine that eligible participants in
the Plan may be awarded stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or
for its benefit.
(b) No rights under a stock bonus or restricted stock
purchase agreement shall be assignable by any participant under the
Plan, either voluntarily or by operation of law, except where such
assignment is required by law or expressly authorized by the terms of
the applicable stock bonus or restricted stock purchase agreement.
(c) The purchase price of stock acquired pursuant to a
stock purchase agreement shall be paid either: (i) in cash at the
time of purchase; (ii) at the discretion of the Board or the
Committee, according to a deferred payment or other arrangement with
the person to whom the Common Stock is sold; or (iii) in any other
form of legal consideration that may be acceptable to the Board or
the Committee in their discretion. Notwithstanding the foregoing,
the Board or the Committee to which administration of the Plan has
been delegated may award Common Stock pursuant to a stock bonus
agreement in consideration for past services actually rendered to the
Company or for its benefit.
(d) Shares of Common Stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the
Board or the Committee.
(e) In the event a person ceases to be an employee of or
ceases to serve as a consultant to the Company or an Affiliate, the
Company may repurchase or otherwise reacquire any or all of the
shares of Common Stock held by that person which have not vested as
of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such
person.
7. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the
affected holders of Options, (i) the repricing of any outstanding
Options under the Plan and/or (ii) 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, but having an exercise price per
share not less than one hundred percent (100%) of the fair market value
per share of Common Stock on the new grant date or, in the case of a 10%
stockholder (as defined in subparagraph 4(c)), not less than one
hundred and ten percent (110%) of the fair market value per share of
Common Stock on the new grant date.
8. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards granted under the
Plan, the Company shall keep available at all times the number of
shares of Common Stock required to satisfy such Stock Awards up to
the number of shares of Common Stock authorized under the Plan.
(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 Common Stock under the
Stock Awards granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any Stock Award granted under the
Plan or any Common Stock issued or issuable pursuant to any such
Stock Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority
that counsel for the Company deems necessary for the lawful issuance
and sale of Common Stock under the Plan, the Company shall be
relieved from any liability for failure to issue and sell Common
Stock upon exercise of such Stock Awards unless and until such
authority is obtained.
9. USE OF PROCEEDS FROM COMMON STOCK.
Proceeds from the sale of Common Stock pursuant to Stock
Awards granted under the Plan shall constitute general funds of the
Company.
10. MISCELLANEOUS.
(a) The Board or Committee shall have the power to
accelerate the time during which a Stock Award may be exercised or
the time during which a Stock Award or any part thereof will vest,
notwithstanding the provisions in the Stock Award stating the time
during which it may be exercised or the time during which it will
vest. Each Option providing for vesting pursuant to subparagraph
5(e) shall also provide that if the employee or consultant should die
during the term of his or her employment with the Company or his or
her affiliation with the Company as a consultant, the vesting
schedule of Options granted to such employee or consultant or to the
Trusts of such employee or consultant shall be accelerated by twelve
months for each full year the employee has been employed by or the
consultant has been affiliated with the Company. Options granted
under the Plan that are outstanding on February 25, 1992, shall be
amended to include the accelerated vesting provided for in the
preceding sentence of this Paragraph 10(a).
(b) Neither an optionee nor any person to whom an Option
is transferred under the provisions of the Plan 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
Stock Award granted pursuant thereto shall confer upon any eligible
employee, consultant, director, optionee or holder of Stock Awards
under the Plan any right to continue in the employ of the Company or
any Affiliate or to continue acting as a consultant or director or
shall affect the right of the Company or any Affiliate to terminate
the employment or consulting relationship or directorship of any
eligible employee, consultant, director, optionee or holder of Stock
Awards under the Plan with or without cause. In the event that a
holder of Stock Awards under the Plan is permitted or otherwise
entitled to take a leave of absence, the Company shall have the
unilateral right to (i) determine whether such leave of absence will
be treated as a termination of employment or relationship as
consultant or director for purposes hereof, and (ii) suspend or
otherwise delay the time or times at which exercisability or vesting
would otherwise occur with respect to any outstanding Stock Awards
under the Plan.
11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
If any change is made in the Common Stock subject to the
Plan, or subject to any Stock Award granted under the Plan (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 and outstanding
Stock Awards will be appropriately adjusted in the class(es) and
maximum number of shares subject to the Plan, the maximum number of
shares which may be granted to a participant in a calendar year, and
the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards.
12. CHANGE OF CONTROL.
(a) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during
which Stock Awards become vested shall automatically be accelerated
so that the unvested portions of all Stock Awards shall be vested
prior to the Change in Control and (ii) the time during which the
Options may be exercised shall automatically be accelerated to prior
to the Change in Control. Following the acceleration of the vesting
and exercise periods, at the election of the holder of the Stock
Award, the Stock Award may be: (x) exercised (with respect to
Options) or, if the surviving or acquiring corporation agrees to
assume the Stock Awards or substitute similar stock awards, (y)
assumed; or (z) replaced with substitute stock awards. Options not
exercised, substituted or assumed prior to or upon the Change in
Control shall be terminated.
(b) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (excluding, for this
purpose, the Company or its affiliates, or any employee benefit plan
of the Company or its affiliates which acquires beneficial ownership
of voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) At the time individuals who, as of April 2,
1991, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to April 2, 1991, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occu rrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
13. QUALIFIED DOMESTIC RELATIONS ORDERS
(a) Anything in the Plan to the contrary notwithstanding,
rights under Stock Awards may be assigned to an Alternate Payee to
the extent that a QDRO so provides. (The terms "Alternate Payee" and
"QDRO" are defined in Subsection (c) below.) The assignment of a
Stock Award to an Alternate Payee pursuant to a QDRO shall not be
treated as having caused a new grant. The transfer of an Incentive
Stock Option to an Alternate Payee may, however, cause it to fail to
qualify as an Incentive Stock Option. If a Stock Award is assigned
to an Alternate Payee, the Alternate Payee generally has the same
rights as the grantee under the terms of the Plan; provided however, that
(1) the Stock Award shall be subject to the same vesting terms and
exercise period as if the Stock Award were still held by the grantee,
(2) an Alternate Payee may not transfer a Stock Award and (3) an
Alternate Payee is ineligible for Re-Load Options.
(b) In the event of the Plan administrator's receipt of a
domestic relations order or other notice of adverse claim by an
Alternate Payee of a grantee of a Stock Award, transfer of the
proceeds of the exercise of such Stock Award, whether in the form of
cash, stock or other property, may be suspended. Such proceeds shall
thereafter be transferred pursuant to the terms of a QDRO or other
agreement between the grantee and Alternate Payee. A grantee's
ability to exercise a Stock Award may be barred if the Plan
administrator receives a court order directing the Plan administrator
not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court
order (1) that creates or recognizes the right of the spouse, former
spouse or child (an "Alternate Payee") of an individual who is
granted a Stock Award to an interest in such Stock Award relating to
marital property rights or support obligations and (2) that the
administrator of the Plan determines would be a "qualified domestic
relations order," as that term is defined in section 414(p) of the
Code and section 206(d) of the Employee Retirement Income Security
Act ("ERISA"), but for the fact that the Plan is not a plan described
in section 3(3) of ERISA.
14. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 11 relating
to adjustments upon changes in the Common 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 Stock
Awards under the Plan;
(ii) 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(b) of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act; or
(iii) 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(b) of the Code or to comply
with the requirements of Rule 16b-3 promulgated under the Exchange
Act.
(b) 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 employee Incentive Stock Options and/or to
bring the Plan and/or Options granted under it into compliance
therewith.
(c) Rights and obligations under any Stock Award 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 Stock Award was granted; and (ii) such
person consents in writing.
15. 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 December
31, 2000. No Stock Awards may be granted under the Plan while the
Plan is suspended or after it is terminated.
(b) Rights and obligations under any Stock Awards 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 Stock Award was granted.
16. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board,
but no Stock Awards granted under the Plan shall be exercisable
unless and until the Plan has been approved by the stockholders of
the Company and, if required, an appropriate permit has been issued
by the Commissioner of Corporations of the State of California.
EXHIBIT 10.16
AMGEN INC.
AMENDED AND RESTATED 1987 DIRECTORS' STOCK OPTION PLAN
1. PURPOSE
(a) The purpose of the 1987 Directors' Stock Option Plan (the
"Plan") is to provide a means by which each director of AMGEN INC.
(the "Company") and its Affiliates, as defined in subparagraph 1(b),
who is not otherwise an employee of the Company or any Affiliate
(each such person being hereafter referred to as a "Non-Employee
Director") may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms
are defined in Sections 424(e) and (f), respectively, of the Internal
Revenue Code of 1986, as amended (the "Code").
(c) The Compan y, by means of the Plan, seeks to retain the
services of persons now serving as Non-Employee Directors of the
Company, to secure and retain the services of persons capable of
serving in such capacity, and to provide incentives for such persons
to exert maximum efforts for the success of the Company.
(d) The Company intends that the options issued under the Plan
not be incentive stock options as that term is used in Section 422 of
the Code.
2. ADMINISTRATION
(a) The Plan shall be administered by the Board of Directors
(the "Board") of the Company unless and until the Board delegates
administration to a committee, as provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(1) 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.
(2) To amend the Plan as provided in paragraph 11.
(3) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best
interests of the Company. (c) The Board may delegate
administration of the Plan to a committee composed of not fewer than
three (3) members of the Board (the "Committee"), all of the members
of which Committee shall be persons who in the opinion of counsel to
the Company are "disinterested persons" within the meaning of Rule
16b-3 under the Securities Exchange Act of 1934. 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, 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.
3. SHARES SUBJECT TO THE PLAN
(a) Subject to the provisions of paragraph 10 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate one million eight hundred thousand (1,800,000) shares of
the Company's common stock. If any option granted under the Plan
shall for any reason expire or otherwise terminate without having
been exercised in full, the stock not purchased under such option
shall again become available for the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
4. ELIGIBILITY
Options shall be granted only to Non-Employee Directors of the
Company, or an affiliate of such Non-Employee Directors.
5. NON-DISCRETIONARY GRANTS
(a) On January 27 of each year commencing January 27, 1992,
each person who is at that time a Non-Employee Director of the
Company, or an affiliate of such Non-Employee Director, shall
automatically be granted under the Plan, without further action by
the Company, the Board, or the Company's stockholders, an option to
purchase three thousand five hundred (3,500) shares of common stock
of the Company on the terms and conditions set forth herein. The
number of shares to be granted hereunder shall not be adjusted as
provided for in subparagraph 10(a), but, however, shall be adjusted
by multiplying by a fraction, the numerator of which is forty dollars
($40.00) per share and the denominator of which is the fair market
value of the common stock of the Company on the date of grant. The
number of shares granted pursuant to this subparagraph 5(a) shall be
rounded to the nearest one hundred (100) shares (rounding up if 50
shares); notwithstanding the foregoing, the number of shares that
shall be granted pursuant to this subparagraph 5(a) shall not be less
than two thousand (2,000) nor shall it exceed five thousand (5,000)
shares. The option shall be on the terms and conditions set forth
herein and should the date of grant set forth above be a Saturday,
Sunday or legal holiday, such grant shall be made on the next business
day.
(b) Each person who, after January 27 of any year commencing
January 27, 1991 and prior to November 1 of any year, becomes a Non-
Employee Director, or an affiliate of such Non-Employee Director,
shall, upon the date he or such affiliate becomes a Non-Employee
Director, automatically be granted under the Plan, without further
action by the Company, the Board, or the Company's stockholders, an
option to purchase three thousand five hundred (3,500) shares of
common stock of the Company on the terms and conditions set forth
herein. The number of shares to be granted hereunder shall not be
adjusted as provided for in subparagraph 10(a), but, however, shall
be adjusted by multiplying by a fraction, the numerator of which is
forty dollars ($40.00) per share and the denominator of which is the
fair market value of the common stock of the Company on the date of
grant.
The number of shares granted pursuant to this subparagraph 5(b) shall
be rounded to the nearest one hundred (100) shares (rounding up if 50
shares); notwithstanding the foregoing, the number of shares that
shall be granted pursuant to this subparagraph 5(b) shall not be less
than two thousand (2,000) nor shall it exceed five thousand (5,000)
shares. The option shall be on the terms and conditions set forth
herein and should the date of grant set forth above be a Saturday,
Sunday or legal holiday, such grant shall be made on the next
business day.
6. OPTION PROVISIONS
Each option shall be in such form and shall contain such terms
and conditions as the Board or the Committee 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) The term of each option shall be ten (10) years from the
date it was granted.
(b) The exercise price of each option shall be one hundred
percent (100%) of the fair market value of the stock subject to such
option on the date such option is granted.
(c) 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) by delivery to the
Company of shares of common stock that have been held for the period
required to avoid a charge to the Company's reported earnings and
valued at their fair market value on the date of exercise. Options
granted under the Plan that are outstanding on April 2, 1991, shall
be amended to include the right to exercise with common stock of the
Company as provided for in this subparagraph 6(c).
(d) An option granted to a natural person shall be exercisable
during the lifetime of such person only by such person, provided that
such person during such person's lifetime may designate an affiliate
of such person to be such person's beneficiary with respect to the
Option, and such beneficiary shall, after the death of the person to
whom the Option was granted, have all of the rights that such person
had while living, including the right to exercise the Option. In the
absence of such designation, after the death of the person to whom
the Option is granted, the Option shall be exercisable by the person
or persons to whom the optionee's rights under such Option pass by
will or by the laws of descent and distribution.
(e) An option shall not vest with respect to each optionee (i)
unless the optionee, or the affiliate of such optionee, as the case
may be, has, at the date of grant, provided three (3) years of prior
continuous service as a Non-Employee Director, or (ii) until the date
upon which such optionee or the affiliate of such optionee, as the
case may be, has provided one year of continuous service as a Non-
Employee Director following the date of grant of such option,
whereupon such option shall become fully exercisable in accordance
with its terms, provided that, if the optionee, or the affiliate of such
optionee, as the case may be, has, at the date of grant, provided
three (3) years of prior continuous service as a Non-Employee
Director, such option shall not become exercisable for six (6) months
after the date of grant (even though such option shall be fully
vested as of the date of grant).
(f) The Company may require any optionee, or any person to whom
an option is transferred under subparagraph 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 (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.
(g) Subject to the last sentence of this subparagraph 6(g),
each option granted after April 2, 1991, under the Plan shall include
and all outstanding options under the Plan on April 2, 1991 shall be
amended to include a provision entitling the optionee to a further
option (a "Reload Option") in the event the optionee exercises the
option evidenced by the option grant, in whole or in part, by
surrendering other shares of common stock of the Company in
accordance with the Plan and the terms of the option grant. Any such
Reload Option (i) shall be for a number of shares equal to the number
of shares surrendered as part or all of the exercise price of the
original option; (ii) shall have an expiration date which is the same
as the expiration date of the original option; and (iii) shall have
an exercise price which is equal to one hundred percent (100%) of the
fair market value of the common stock subject to the Reload Option on
the date of exercise of the original option. Any such Reload Option
shall be subject to the availability of sufficient shares under
subparagraph 3(a). There shall be no Reload Option on a Reload
Option. The provisions of this subparagraph 6(g) shall not become
effective and shall be void unless and until receipt by the Company
of an interpretive letter from the Securities and Exchange Commission
or an opinion of counsel reasonably acceptable to the Company to the
effect that the Plan will be a "formula plan" as defined in Rule 16b-
3(c)(2)(ii) if Reload Options are granted pursuant to this
subparagraph 6(g).
7. COVENANTS OF THE COMPANY
(a) During the terms of the options granted under the Plan, 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 granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any option granted under the Plan, or
any stock issued or issuable pursuant to any such option. If 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 granted
under the Plan shall constitute general funds of the Company.
9. MISCELLANEOUS
(a) Neither an optionee nor any person to whom an option is
transferred under subparagraph 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.
(b) Throughout the te rm of any option granted pursuant to the
Plan, the Company shall make available to the holder of such option,
not later than one hundred twenty (120) days after the close of each
of the Company's fiscal years during the option term, upon request,
such financial and other information regarding the Company as
comprises the annual report to the stockholders of the Company
provided for in the by-laws of the Company and such other information
regarding the Company as the holder of such option may reasonably
request.
10. ADJUSTMENTS UPON CHANGES IN STOCK
(a) If any change is made in the stock subject to the Plan, or
subject to any option granted under the Plan (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 and outstanding options
will be appropriately adjusted in the class(es) and maximum number of
shares subject to the Plan and the class(es) and number of shares and
price per share of stock subject to outstanding options; provided,
that the minimum and maximum number of shares of common stock to be
granted as provided for in subparagraphs 5(a) and 5(b) shall not be
adjusted for any stock split, combination of shares or common stock
dividend.
(b) Notwithstanding anything to the contrary in this Plan, in
the event of a Change in Control (as hereinafter defined), then, to
the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and
exercise periods, at the election of the holders of the options, the
options may be: (x) exercised or, if the surviving or acquiring
corporation agrees to assume the options or substitute similar
options, (y) assumed; or (z) replace with substitute options. Options
not exercised, substituted or assumed prior to or upon the Change in
Control shall be terminated.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Securities Exchange Act of 1934
as amended (the "Exchange Act") (excluding, for this purpose, the
Company or its affiliates, or any employee benefit plan of the
Company or its affiliates which acquires beneficial ownership of
voting securities of the Company), of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of
fifty percent (50%) or more of either the then outstanding shares of
Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the
election of directors; or
(ii) At the time individuals who, as of October 23,
1995, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a majority of the
Board, provided that any person becoming a director subsequent to
October 23, 1995, whose election, or nomination for election by the
Company's stockholders, was approved by a vote of at least a majority
of the directors then comprising the Incumbent Board (other than an
election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest
relating to the election of the Directors of the Company, as such
terms are used in Rule 14A-11 of Regulation 14A promulgated under the
Exchange Act) shall be, for purposes of the Plan, considered as
though such person were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company.
11. AMENDMENT OF THE PLAN
(a) The Board at any time, and from time to time, may amend the
Plan; provided, however, that the Board shall not amend the Plan more
than once every six months with respect to the provisions of the Plan
relating to the amount, price, and timing of grants, other than to
comply with changes in the Code, the Employee Retirement Income
Security Act of 1974, as amended, or the regulations thereunder.
(b) Rights and obligations under any option granted before
amendment of the Plan shall not be altered or impaired by any
amendment of the Plan, except with the consent of the person to whom
the option was granted.
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 ten (10) years from
the date the Plan is adopted by the Board. No options may be granted
under the Plan while the Plan is suspended or after it is terminated.
(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 granted.
13. EFFECTIVE DATE OF PLAN
The Plan became effective as of January 27, 1987. No options
granted under the Plan as the result of the amendments on July 24,
1990 and April 2, 1991 shall be exercisable unless and until said
amendment is approved by the stockholders of the Company, and to the
extent required or necessary under applicable law, amendments made on
April 2, 1991 shall not be effective until approved by the
stockholders of the Company.
EXHIBIT 10.2
AMGEN INC.
AMENDED AND RESTATED 1984 STOCK OPTION PLAN
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by
which selected employees, directors (if declared eligible under
paragraph 4) and consultants to Amgen Inc., a Delaware corporation
(the "Company"), and its Affiliates, as defined in subparagraph
1(b), directly or indirectly through trusts for the benefit of their
families, may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as
those terms are defined in Sections 424(e) and (f), respectively, of
the Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain
the services of persons now holding positions, to secure and retain
the services of persons capable of filling such positions, and to
provide incentives for such persons to exert maximum efforts for the
success of the Company.
(d) The Company intends that the options issued under the
Plan shall, in the discretion of the Board of Directors of the
Company (the "Board") or any committee to which responsibility for
administration of the Plan has been delegated pursuant to
subparagraph 2(c), be either incentive stock options as that term is
used in Section 422 of the Code ("Incentive Stock Options"), or
options which do not qualify as Incentive Stock Options
("Nonincentive Stock Options"). All options shall be separately
designated Incentive Stock Options or Nonincentive Stock Options at
the time of grant, and in such form as issued pursuant to paragraph
5, and a separate certificate or certificates shall be issued for
shares purchased on exercise of each type of option.
(e) The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee or consultant, his or
her spouse, or members of their immediate family. The word optionee
shall mean the person to whom the option is granted or the employee
or consultant for whose benefit the option is granted to a Trust, as
the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless
and until the Board delegates administration to a committee, as
provided in subparagraph 2(c).
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(1) 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 Nonincentive Stock Option; the
provisions of each option granted (which need not be identical),
including the time or times during the term of each option within
which all or portions of such option may be exercised; and the
number of shares for which an option shall be granted to each such
person.
(2) 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.
(3) To amend the Plan as provided in paragraph 10.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to
promote the best interests of the Company.
(c) The Board may delegate administration of the Plan to
a committee composed of not fewer than three (3) members of the
Board (the "Committee"), all of the members of which Committee shall
be disinterested persons, if required and as defined by the
provisions of subparagraph 2(d). 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, 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.
(d) The term "disinterested person", as used in this
Plan, shall mean an administrator of the Plan, whether a member of
the Board or of any Committee to which responsibility for
administration of the Plan has been delegated pursuant to
subparagraph 2(c): (i) who is not at the time he or she exercises
discretion in administering the Plan eligible and has not at any
time within one (1) year prior thereto been eligible for selection
as a person to whom stock may be allocated or to whom stock options
or stock appreciation rights may be granted pursuant to the Plan or
any other plan of the Company or any of its Affiliates entitling the
participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its Affiliates; or (ii)
who is otherwise considered to be a "disinterested person" in
accordance with the rules, regulations or interpreters of the
Securities and Exchange Commission. Any such person shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
from time to time in effect.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate twenty million four hundred thousand (20,400,000) shares
of the Company's $.0001 par value common stock (the "Common Stock").
If any option granted under the Plan shall for any reason expire or
otherwise terminate without having been exercised in full, the
Common Stock not purchased under such option shall again become
available for the Plan.
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined as of the times the respective Incentive Stock
Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by such
optionee during any calendar year under all such plans of the
Company and its Affiliates does not exceed one hundred thousand
dollars ($100,000). Should it be determined that any portion of an
Incentive Stock Option granted under the Plan does not qualify for
treatment as an Incentive Stock Option by reason of exceeding such
maximum, such option shall be considered a Nonincentive Stock Option
to the extent, but only to the extent, of such excess. Should it be
determined that an entire option does not qualify for treatment as
an Incentive Stock Option, such option shall, in its entirety, be
considered a Nonincentive Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees of the Company or its Affiliates, and a director or
officer of the Company shall not be eligible to receive Incentive
Stock Options unless such director or officer is also an employee of
the Company or any Affiliate. Nonincentive Stock Options may be
granted only to employees of, or consultants to, the Company or its
Affiliates (including directors or officers who so qualify) or to
Trusts of any such employee or consultant.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised
by the Board in the selection of a director as a person to whom
options may be granted, or in the determination of the number of
shares which may be covered by options granted to a director: (i) a
majority of the Board and a majority of the directors acting in such
matter are disinterested persons, as defined in subparagraph 2(d);
(ii) the Committee consists solely of "disinterested persons" as
defined in subparagraph 2(d); or (iii) the Plan otherwise complies
with the requirements of Rule 16b-3 promulgated under the Exchange Act.
The Board shall otherwise comply with the requirements of Rule 16b-3
promulgated under the Exchange Act, as from time to time in effect.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan if, at the time of grant, such
person owns (or is deemed to own pursuant to Section 425(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 Incentive
Stock Option is at least one hundred ten percent (110%) of the fair
market value of the Common Stock at the date of grant and the term
of the Incentive Stock Option does not exceed five (5) years from
the date of grant.
5. OPTION PROVISIONS.
Each option shall be in such form and shall contain such
terms and conditions as the Board or the Committee 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) The term of any option shall not be greater than ten
(10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the fair market
value of the Common Stock subject to the option on the date the
option is granted. The exercise price of each Nonincentive Stock
Option shall be not less than eighty-five percent (85%) of the fair
market value of the Common Stock subject to the option on the date
the option is granted.
(c) The purchase price of Common 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, either at the time of grant or exercise of the option (A)
by delivery to the Company of other Common Stock of the Company, (B)
according to a 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
subparagraph 5(d), or (C) in any other form of legal consideration
that may be acceptable to the Board or the Committee in their
discretion.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
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) An option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may
designate a Trust to be such person's beneficiary with respect to
any Incentive Stock Options granted after February 25, 1992 and with
respect to any Nonincentive Stock Options, and such beneficiary
shall, after the death of the person to whom the option was granted,
have all the rights that such person has while living, including the
right to exercise the option. In the absence of such designation,
after the death of the person to whom the option is granted, the
option shall be exercisable by the person or persons to whom the
optionee's rights under such option pass by will or by the laws of
descent and distribution.
(e) The total number of shares of Common Stock subject to
an option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the option may be exercised with
respect to some or all of the shares allotted to that period, and/or
with respect to some or all of the shares allotted to any prior
period as to which the option 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 provisions of this subparagraph 5(e) are subject to
any option provisions governing the minimum number of shares as to
which an option may be exercised.
(f) The Company may require any optionee, or any person
to whom an option is transferred under subparagraph 5(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 who has such knowledge and
experience in financial and business matters, and that he or she is
capable of evaluating, alone or together with the purchaser's
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 Common Stock subject to the option
for such person's own account and not with any present intention of
selling or otherwise distributing the Common 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 federal securities laws.
(g) An option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
consultant with the Company or an Affiliate, unless (i) such
termination is due to such person's permanent and total disability,
within the meaning of Section 422(c)(6) of the Code, in which case
the option may, but need not, provide that it may be exercised at
any time within one (1) year following such termination of
employment or relationship as a consultant; or (ii) the optionee
dies while in the employ of or while serving as a consultant to the
Company or an Affiliate, or within not more than three (3) months
after termination of such employment or relationship as a
consultant, in which case the option may, but need not, provide that
it may be exercised at any time within eighteen (18) months
following the death of the optionee by the person or persons to whom
the optionee's rights under such option pass by will or by the laws
of descent and distribution; (iii) the option by its terms specifies
that it shall terminate sooner than three (3) months after
termination of the optionee's employment or relationship as a
consultant; or (iv) that it may be exercised more than three (3)
months after termination of the optionee's employment or
relationship as a consultant with the Company or an Affiliate. This
subparagraph 5(g) shall not be construed to extend the term of any
option or to permit anyone to exercise the option after expiration
of its term, nor shall it be construed to increase the number of
shares as to which any option is exercisable from the amount
exercisable on the date of termination of the optionee's employment
or relationship as a consultant.
(h) The option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a consultant with the Company or
any Affiliate to exercise the option as to any part or all of the
shares subject to the option prior to the stated vesting date of the
option or of any installment or installments specified in the
option. Any shares so purchased from any unvested installment or
option may be subject to a repurchase right in favor of the Company
or to any other restriction the Board or the Committee determines to
be appropriate.
(i) To the extent provided by the terms of an option, 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 from the
shares of the Common Stock otherwise issuable to the participant as
a result of the exercise of the stock option a number of shares
having a fair market value less than or equal to the amount of the
withholding tax obligation; or (3) delivering to the Company owned
and unencumbered shares of the Common Stock having a fair market
value less than or equal to the amount of the withholding tax
obligation.
(j) Without in any way limiting the authority of the
Board or Committee to make or not to make grants of Options
hereunder, the Board or Committee shall have the authority (but not
an obligation) to include as part of any Option agreement, and all
outstanding Nonincentive Stock Options, to the extent there are unvested
options on June 30, 1991, shall be amended to include, a provision
entitling the optionee to a further Option (a "Re-Load Option") in the
event the optionee exercises the Option evidenced by the Option agreement,
in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option (or surrendered for shares which
were unvested on June 30, 1991 in the case of an amended
Nonincentive Stock Option); (ii) shall have an expiration date which
is the same as the expiration date of the Option the exercise of
which gave rise to such Re-Load Option; (iii) shall have an exercise
price which is equal to one hundred percent (100%) of the fair
market value of the Common Stock subject to the Re-Load Option on
the date of exercise of the original Option or, in the case of a Re-
Load Option which is an Incentive Stock Option and which is granted
to a 10% stockholder (as defined in subparagraph 4(c)), shall have
an exercise price which is equal to one hundred and ten percent
(110%) of the fair market value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option; and
(iv) shall be granted under the 1988 Stock Option Plan, if
sufficient shares are available under subparagraph 3(a) of that
Plan, and if sufficient shares of Common Stock are not so available,
shall be granted under the 1991 Equity Incentive Plan to the extent
shares of Common Stock are available under that Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonincentive Stock Option, as the Board or Committee may designate
at the time of the grant of the original Option, except that all Re-
Load Options on unvested shares (as of June 30, 1991) of
Nonincentive Stock Options shall be Nonincentive Stock Options,
provided, however, that the designation of any Re-Load Option as an
Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive
Stock Options described in subparagraph 3(c) of the Plan and in
Section 422(d) of the Code. There shall be no Re-Load Options on a
Re-Load Option. Any such Re-Load Option shall be subject to the
availability of sufficient shares under the Amgen Inc. 1988 Stock
Option Plan or under the Amgen Inc. 1991 Equity Incentive Plan and
shall be subject to such other terms and conditions as the Board or
Committee may determine.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the
Plan, the Company shall keep available at all times the number of
shares of Common 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 granted under the Plan; provided, however,
that this undertaking shall not require the Company to register
under the Securities Act either the Plan, any option granted under
the Plan or any Common 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 that 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 Common Stock upon exercise
of such options unless and until such authority is obtained.
7. USE OF PROCEEDS FROM COMMON STOCK.
Proceeds from the sale of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the
Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to
accelerate the time during which an option may be exercised or the
time during which an option or any part thereof will vest pursuant to
subparagraph 5(e), notwithstanding the provisions in the option
stating the time during which it may be exercised or the time during
which it will vest. Each option providing for vesting pursuant to
subparagraph 5(e) shall also provide that if the employee or
consultant should die during the term of his or her employment with
the Company or his or her affiliation with the Company as a
consultant, the vesting schedule of options granted to such employee
or consultant or to the Trusts of such employee or consultant shall
be accelerated by twelve months for each full year the employee has
been employed by or the consultant has been affiliated with the
Company. Options granted under the Plan that are outstanding on
February 25, 1992, shall be amended to include the accelerated
vesting provided for in the preceding sentence of this Paragraph
8(a).
(b) Neither an optionee nor any person to whom an option
is transferred under subparagraph 5(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) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such
option, not later than one hundred twenty (120) days after the close
of each of the Company's fiscal years during the option term, upon
request, such financial and other information regarding the Company
as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or
option granted pursuant thereto shall confer upon any eligible
participant or optionee any right to continue in the employ of the
Company or any Affiliate or shall affect the right of the Company or
any Affiliate to terminate the employment of any eligible
participant or optionee with or without cause.
9. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) If any change is made in the Common Stock subject to
the Plan, or subject to any option granted under the Plan (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 and
outstanding options will be appropriately adjusted in the class(es)
and the maximum number of shares subject to the Plan and the
class(es) and the number of shares and price per share of Common
Stock subject to outstanding options.
(b) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and
exercise periods, at the election of the holders of the options, the
options may be: (x) exercised or, if the surviving or acquiring
corporation agrees to assume the options or substitute similar
options, (y) assumed; or (z) replaced with substitute options.
Options not exercised, substituted or assumed prior to or upon the
Change in Control shall be terminated.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Exchange Act (excluding, for
this purpose, the Company or its affiliates, or any employee benefit
plan of the Company or its affiliates which acquires beneficial
ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of either the then
outstanding shares of Common Stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) At the time individuals who, as of October 23,
1995, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to October 23, 1995, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14A-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
10. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 9 relating
to adjustments upon changes in the Common 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 reser ved for
options under the Plan;
(ii) Materially modify the requirements as to
eligibility for participation in the Plan; or
(iii) Materially increase the benefits accruing to
participants under the Plan.
(b) 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 employee incentive stock options
and/or to bring the Plan and/or options granted under it into
compliance therewith.
(c) 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.
11. 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 March
16, 1994. No options may be granted under the Plan while the Plan
is suspended or after it is terminated.
(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 granted.
12. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the
Board.
EXHIBIT 10.21
AMGEN INC.
AMENDED AND RESTATED 1988 STOCK OPTION PLAN
1. PURPOSE.
(a) The purpose of the Plan is to provide a means by which
selected employees and directors (if declared eligible under
paragraph 4) of and consultants to Amgen Inc., a Delaware corporation
(the "Company"), and its Affiliates, as defined in subparagraph 1(b),
directly or indirectly through trusts for the benefit of their
families, may be given an opportunity to purchase stock of the
Company.
(b) The word "Affiliate" as used in the Plan means any
parent corporation or subsidiary corporation of the Company, as those
terms are defined in Sections 424(e) and (f), respectively, of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) The Company, by means of the Plan, seeks to retain the
services of persons now holding positions, to secure and retain the
services of persons capable of filling such positions, and to provide
incentives for such persons to exert maximum efforts for the success
of the Company.
(d) The Company intends that the options issued under the
Plan shall, in the discretion of the Board of Directors of the
Company (the "Board") or any committee to which responsibility for
administration of the Plan has been delegated pursuant to subparagraph
2(c), be either incentive stock options as that term is used in Section
422 of the Code ("Incentive Stock Options"), or options which do not
qualify as Incentive Stock Options ("Nonqualified Stock Options"). All
options shall be separately designated Incentive Stock Options or
Nonqualified Stock Options at the time of grant, and in such form as
issued pursuant to paragraph 5, and a separate certificate or
certificates shall be issued for shares purchased on exercise of each
type of option. An option designated as a Nonqualified Stock Option
shall not be treated as an Incentive Stock Option.
The word "Trust" as used in the Plan shall mean a
trust created for the benefit of the employee or consultant, his or
her spouse, or members of their immediate family. The word optionee
shall mean the person to whom the option is granted or the employee
or consultant for whose benefit the option is granted to a Trust, as
the context shall require.
2. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a committee, as provided
in subparagraph 2(c).
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) 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 Nonqualified Stock Option; the provisions of each
option granted (which need not be identical), including the time or
times during the term of each option within which all or portions of
such option may be exercised; and the number of shares for which an
option shall be granted to each such person.
(2) 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.
(3) To amend the Plan as provided in paragraph 11.
(4) Generally, to exercise such powers and to perform
such acts as the Board deems necessary or expedient to promote the
best interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than three (3) members of the Board
(the "Committee"), all of the members of which Committee shall be
disinterested persons, if required and as defined by the provisions
of subparagraph 2(d). 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, 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.
(d) The term "disinterested person", as used in this Plan,
shall mean an administrator of the Plan, whether a member of the
Board or of any Committee to which responsibility for administration
of the Plan has been delegated pursuant to subparagraph 2(c): (i)
who is not at the time he or she exercises discretion in
administering the Plan eligible and has not at any time within one
(1) year prior thereto been eligible for selection as a person to
whom stock may be allocated or to whom stock options or stock
appreciation rights may be granted pursuant to the Plan or any other
plan of the Company or any of its Affiliates entitling the
participants therein to acquire stock, stock options or stock
appreciation rights of the Company or any of its Affiliates; or (ii)
who is otherwise considered to be a "disinterested person" in
accordance with the rules, regulations or interpretations of the
Securities and Exchange Commission. Any such person shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
from time to time in effect.
(e) Any requirement that an administrator of the Plan be a
"disinterested person" shall not apply if the Board or the Committee
expressly declares that such requirement shall not apply.
3. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of paragraph 9 relating to
adjustments upon changes in stock, the stock that may be sold
pursuant to options granted under the Plan shall not exceed in the
aggregate Thirty Six Million (36,000,000) shares of the Company's $.0001
par value common stock (the "Common Stock"). If any option granted
under the Plan shall for any reason expire or otherwise terminate without
having been exercised in full, the Common Stock not purchased under
such option shall again become available for the Plan.
(b) The Common Stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
(c) An Incentive Stock Option may be granted to an
eligible person under the Plan only if the aggregate fair market
value (determined as of the times the respective Incentive Stock
Options are granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by such
optionee during any calendar year under all such plans of the Company
and its Affiliates does not exceed one hundred thousand dollars
($100,000). Should it be determined that any portion of an Incentive
Stock Option granted under the Plan does not qualify for treatment as
an Incentive Stock Option by reason of exceeding such maximum, such
option shall be considered a Nonqualified Stock Option to the extent,
but only to the extent, of such excess. Should it be determined that
an entire option does not qualify for treatment as an Incentive Stock
Option, such option shall, in its entirety, be considered a
Nonqualified Stock Option.
4. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
employees of the Company or its Affiliates, and a director or officer
of the Company shall not be eligible to receive Incentive Stock
Options unless such director or officer is also an employee of the
Company or any Affiliate. Nonqualified Stock Options may be granted
only to employees of, or consultants to, the Company or its
Affiliates (including directors or officers who so qualify) or to
Trusts of any such employee or consultant.
(b) A director shall in no event be eligible for the
benefits of the Plan unless and until such director is expressly
declared eligible to participate in the Plan by action of the Board
or the Committee, and only if, at any time discretion is exercised by
the Board or the Committee in the selection of a director as a person
to whom options may be granted, or in the determination of the number
of shares which may be covered by options granted to a director: (i)
a majority of the Board and a majority of the directors acting in
such matter are disinterested persons, as defined in subparagraph
2(d); (ii) the Committee consists solely of "disinterested persons"
as defined in subparagraph 2(d); or (iii) the Plan otherwise complies
with the requirements of Rule 16b-3 promulgated under the Exchange
Act, as from time to time in effect. The Board shall otherwise
comply with the requirements of Rule 16b-3 promulgated under the
Exchange Act, as from time to time in effect.
(c) No person shall be eligible for the grant of an
Incentive Stock Option under the Plan 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 Incentive
Stock Option is at least one hundred and ten percent (110%) of the
fair market value of the Common Stock at the date of grant and the
term of the Incentive Stock Option does not exceed five (5) years
from the date of grant.
5. OPTION PROVISIONS.
Each option shall be in suc h form and shall contain such
terms and conditions as the Board or the Committee 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) No option shall be exercisable after the expiration of
ten (10) years from the date it was granted.
(b) The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the fair market
value of the Common Stock subject to the option on the date the
option is granted. The exercise price of each Nonqualified Stock
Option shall be not less than eighty-five percent (85%) of the fair
market value of the Common Stock subject to the option on the date
the option is granted.
(c) The purchase price of Common 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, either at the time of grant or exercise of the option (A)
by delivery to the Company of other Common Stock of the Company, (B)
according to a 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
subparagraph 5(d), or (C) in any other form of legal consideration
that may be acceptable to the Board or the Committee in their
discretion.
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at not less than
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) An option granted to a natural person shall be
exercisable during the lifetime of such person only by such person,
provided that such person during such person's lifetime may designate
a Trust to be such person's beneficiary with respect to any Incentive
Stock Options granted after February 25, 1992 and with respect to any
Nonqualified Stock Options, and such beneficiary shall, after the
death of the person to whom the option was granted, have all the
rights that such person has while living, including the right to
exercise the option. In the absence of such designation, after the
death of the person to whom the option is granted, the option shall
be exercisable by the person or persons to whom the optionee's rights
under such option pass by will or by the laws of descent and
distribution.
(e) The total number of shares of Common Stock subject to
an option may, but need not, be allotted in periodic installments
(which may, but need not, be equal). From time to time during each
of such installment periods, the option may be exercised with respect
to some or all of the shares allotted to that period, and/or with
respect to some or all of the shares allotted to any prior period as
to which the option 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 provisions
of this subparagraph 5(e) are subject to any option provisions
governing the minimum number of shares as to which an option may be
exercised.
(f) The Company may require any optionee, or any person to
whom an option is transferred under subparagraph 5(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 who has such knowledge and experience in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser's 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 Common Stock subject to the option for such
person's own account and not with any present intention of selling or
otherwise distributing the Common 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 law.
(g) An option shall terminate three (3) months after
termination of the optionee's employment or relationship as a
consultant with the Company or an Affiliate, unless: (i) such
termination is due to such person's permanent and total disability,
within the meaning of Section 422(c)(6) of the Code, in which case
the option may, but need not, provide that it may be exercised at any
time within one (1) year following such termination of employment or
relationship as a consultant; (ii) the optionee dies while in the
employ of or while serving as a consultant to the Company or an
Affiliate, or within not more than three (3) months after termination
of such employment or relationship as a consultant, in which case the
option may, but need not, provide that it may be exercised at any
time within eighteen (18) months following the death of the optionee
by the person or persons to whom the optionee's rights under such
option pass by will or by the laws of descent and distribution; or
(iii) the option by its terms specifies either (A) that it shall
terminate sooner than three (3) months after termination of the
optionee's employment or relationship as a consultant, or (B) that it
may be exercised more than three (3) months after termination of the
optionee's employment or relationship as a consultant with the
Company or an Affiliate. This subparagraph 5(g) shall not be
construed to extend the term of any option or to permit anyone to
exercise the option after expiration of its term, nor shall it be
construed to increase the number of shares as to which any option is
exercisable from the amount exercisable on the date of termination of
the optionee's employment or relationship as a consultant.
(h) The option may, but need not, include a provision
whereby the optionee may elect at any time during the term of his or
her employment or relationship as a consultant with the Company or
any Affiliate to exercise the option as to any part or all of the shares
subject to the option prior to the stated vesting date of the option
or of any installment or installments specified in the option. Any
shares so purchased from any unvested installment or option may be
subject to a repurchase right in favor of the Company or to any other
restriction the Board or the Committee determines to be appropriate.
(i) To the extent provided by the terms of an option, 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 from the shares
of the Common Stock otherwise issuable to the participant as a result
of the exercise of the stock option a number of shares having a fair
market value less than or equal to the amount of the withholding tax
obligation; or (3) delivering to the Company owned and unencumbered
shares of the Common Stock having a fair market value less than or
equal to the amount of the withholding tax obligation.
(j) Without in any way limiting the authority of the Board
or Committee to make or not to make grants of Options hereunder, the
Board or Committee shall have the authority (but not an obligation)
to include as part of any Option agreement, and all outstanding
Nonqualified Stock Options, to the extent there are unvested options
on June 30, 1991, shall be amended to include, a provision entitling
the optionee to a further Option (a "Re-Load Option") in the event
the optionee exercises the Option evidenced by the Option agreement,
in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option
agreement. Any such Re-Load Option (i) shall be for a number of
shares equal to the number of shares surrendered as part or all of
the exercise price of such Option (or surrendered for shares which
were unvested on June 30, 1991 in the case of an amended Nonqualified
Stock Option); (ii) shall have an expiration date which is the same
as the expiration date of the Option the exercise of which gave rise
to such Re-Load Option; (iii) shall have an exercise price which is
equal to one hundred percent (100%) of the fair market value of the
Common Stock subject to the Re-Load Option on the date of exercise of
the original Option or, in the case of a Re-Load Option which is an
Incentive Stock Option and which is granted to a 10% stockholder (as
defined in subparagraph 4(c)), shall have an exercise price which is
equal to one hundred and ten percent (110%) of the fair market value
of the Common Stock subject to the Re-Load Option on the date of
exercise of the original Option; and (iv) shall be granted under this
Plan, if sufficient shares are available under subparagraph 3(a) of
the Plan, and if sufficient shares of Common Stock are not so
available, shall be granted under the 1991 Equity Incentive Plan to
the extent shares of Common Stock are available under that Plan.
Any such Re-Load Option may be an Incentive Stock Option or a
Nonqualified Stock Option, as the Board or Committee may designate at
the time of the grant of the original Option, except that all Re-Load
Options on unvested shares (as of June 30, 1991) of Non-Qualified
Stock Options shall be Nonqualified Stock Options, provided, however,
that the designation of any Re-Load Option as an Incentive Stock
Option shall be subject to the one hundred thousand dollars
($100,000) annual limitation on exercisability of Incentive Stock
Options described in subparagraph 3(c) of the Plan and in Section 422(d)
of the Code. There shall be no Re-Load Options on a Re-Load Option.
Any such Re-Load Option shall be subject to the availability of
sufficient shares under subparagraph 3(a) of this Plan or under the
1991 Equity Incentive Plan and shall be subject to such other terms
and conditions as the Board or Committee may determine.
6. COVENANTS OF THE COMPANY.
(a) During the terms of the options granted under the
Plan, 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 granted under the Plan; provided, however, that this
undertaking shall not require the Company to register under the
Securities Act either the Plan, any option granted under the Plan or
any Common 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.
7. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of Common Stock pursuant to options
granted under the Plan shall constitute general funds of the Company.
8. MISCELLANEOUS.
(a) The Board or the Committee shall have the power to
accelerate the time during which an option may be exercised or the
time during which an option or any part thereof will vest pursuant to
subparagraph 5(e), notwithstanding the provisions in the option
stating the time during which it may be exercised or the time during
which it will vest. Each option providing for vesting pursuant to
subparagraph 5(e) shall also provide that if the employee or
consultant should die during the term of his or her employment with
the Company or his or her affiliation with the Company as a
consultant, the vesting schedule of options granted to such employee
or consultant or to the Trusts of such employee or consultant shall
be accelerated by twelve months for each full year the employee has
been employed by or the consultant has been affiliated with the
Company. Options granted under the Plan that are outstanding on
February 25, 1992, shall be amended to include the accelerated
vesting provided for in the preceding sentence of this Paragraph
8(a).
(b) Neither an optionee nor any person to whom an option
is transferred under subparagraph 5(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) Throughout the term of any option granted pursuant to
the Plan, the Company shall make available to the holder of such
option, not later than one hundred twenty (120) days after the close
of each of the Company's fiscal years during the option term, upon
request, such financial and other information regarding the Company
as comprises the annual report to the shareholders of the Company
provided for in the bylaws of the Company.
(d) Nothing in the Plan or any instrument executed or
option granted pursuant thereto shall confer upon any eligible
participant 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 consulting relationship of any eligible participant
or optionee with or without cause. In the event that an optionee is
permitted or otherwise entitled to take a leave of absence, the
Company shall have the unilateral right to (i) determine whether such
leave of absence will be treated as a termination of employment or
relationship as consultant for purposes of paragraph 5(g) hereof and
corresponding provisions of any outstanding options, and (ii) suspend
or otherwise delay the time or times at which the shares subject to
the option would otherwise vest.
9. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to
effect, at any time and from time to time, with the consent of the
affected option holders, (i) the repricing of any or all outstanding
options under the Plan and/or (ii) the cancellation of any or all
outstanding options under the Plan and the grant in substitution
therefor new options under the Plan covering the same or different
numbers of shares of Common Stock but having an option price per
share not less than eighty-five percent (85%) of the fair market
value in the case of a Nonqualified Stock Option, one hundred percent
(100%) of the fair market value in the case of an Incentive Stock
Option or, in the case of a 10% stockholder (as defined in
subparagraph 4(c)), not less than one hundred and ten percent (110%)
of the fair market value per share of Common Stock on the new grant
date.
10. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.
(a) If any chang e is made in the Common Stock subject to
the Plan, or subject to any option granted under the Plan (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 and outstanding
options will be appropriately adjusted in the class(es) and the
maximum number of shares subject to the Plan and the class(es) and
the number of shares and price per share of Common Stock subject to
outstanding options.
(b) Notwithstanding anything to the contrary in this Plan,
in the event of a Change in Control (as hereinafter defined), then,
to the extent permitted by applicable law: (i) the time during which
options become vested shall automatically be accelerated so that the
unvested portions of all options shall be vested prior to the Change
in Control and (ii) the time during which the options may be
exercised shall automatically be accelerated to prior to the Change
of Control. Upon or after the acceleration of the vesting and exercise
periods, at the election of the holders of the options, the options may
be: (x) exercised or, if the surviving or acquiring corporation agrees
to assume the options or substitute similar options, (y) assumed; or (z)
replaced with substitute options. Options not exercised, substituted
or assumed prior to or upon the Change in Control shall be
terminated.
(c) For purposes of the Plan, a "Change of Control" shall
be deemed to have occurred at any of the following times:
(i) Upon the acquisition (other than from the
Company) by any person, entity or "group," within the meaning of
Section 13(d) (3) or 14(d) (2) of the Exchange Act (excluding, for
this purpose, the Company or its affiliates, or any employee benefit
plan of the Company or its affiliates which acquires beneficial
ownership of voting securities of the Company), of beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of fifty percent (50%) or more of either the then
outstanding shares of Common Stock or the combined voting power of
the Company's then outstanding voting securities entitled to vote
generally in the election of directors; or
(ii) At the time individuals who, as ofOctober 23,
1995, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to October 23, 1995, whose
election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then
comprising the Incumbent Board (other than an election or nomination
of an individual whose initial assumption of office is in connection
with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in
Rule 14A-11 of Regulation 14A promulgated under the Exchange Act)
shall be, for purposes of the Plan, considered as though such person
were a member of the Incumbent Board; or
(iii) Immediately prior to the consummation by the
Company of a reorganization, merger, consolidation, (in each case,
with respect to which persons who were the stockholders of the
Company immediately prior to such reorganization, merger or
consolidation do not, immediately thereafter, own more than fifty
percent (50%) of the combined voting power entitled to vote generally
in the election of directors of the reorganized, merged or
consolidated company's then outstanding voting securities) or a
liquidation or dissolution of the Company or of the sale of all or
substantially all of the assets of the Company; or
(iv) The occurrence of any other event which the
Incumbent Board in its sole discretion determines constitutes a
Change of Control.
11. QUALIFIED DOMESTIC RELATIONS ORDERS
(a) Anything in the Plan to the contrary notwithstanding,
rights under options may be assigned to an Alternate Payee to the
extent that a QDRO so provides. (The terms "Alternate Payee" and
"QDRO" are defined in Subsection (c) below.) The assignment of an
option to an Alternate Payee pursuant to a QDRO shall not be treated
as having caused a new grant. The transfer of an Incentive Stock
Option to an Alternate Payee may, however, cause it to fail to
qualify as an Incentive Stock Option. If an option is assigned to an
Alternate Payee, the Alternate Payee generally has the same rights as
the grantee under the terms of the Plan; provided however, that (1)
the option shall be subject to the same vesting terms and exercise
period as if the option were still held by the grantee, (2) an
Alternate Payee may not transfer an option and (3) an Alternate Payee
is ineligible for Re-Load Options.
(b) In the event of the Plan administrator's receipt of a
domestic relations order or other notice of adverse claim by an
Alternate Payee of a grantee of an option, transfer of the proceeds
of the exercise of such option, whether in the form of cash, stock or
other property, may be suspended. Such proceeds shall thereafter be
transferred pursuant to the terms of a QDRO or other agreement
between the grantee and Alternate Payee. A grantee's ability to
exercise an option may be barred if the Plan administrator receives a
court order directing the Plan administrator not to permit exercise.
(c) The word "QDRO" as used in the Plan shall mean a court
order (1) that creates or recognizes the right of the spouse, former
spouse or child (an "Alternate Payee") of an individual who is
granted an option to an interest in such option relating to marital
property rights or support obligations and (2) that the administrator
of the Plan determines would be a "qualified domestic relations
order," as that term is defined in section 414(p) of the Code and
section 206(d) of the Employee Retirement Income Security Act
("ERISA"), but for the fact that the Plan is not a plan described in
section 3(3) of ERISA.
12. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may
amend the Plan. However, except as provided in paragraph 10 relating
to adjustments upon changes in the Common 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 Plan;
(ii) 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(b) of the Code or to comply with the
requirements of Rule 16b-3 promulgated under the Exchange Act); or
(iii) 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(b) of the Code or to comply
with the requirements of Rule 16b-3 promulgated under the Exchange
Act.
(b) 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 employee incentive stock options
and/or to bring the Plan and/or options granted under it into
compliance therewith.
(c) 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.
13. 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 March
14, 1998. No options may be granted under the Plan while the Plan is
suspended or after it is terminated.
(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 granted.
14. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board.
No option granted as the result of the amendment on April 2, 1991
shall be exercisable unless and until said amendment is approved by
the stockholders of the Company, and to the extent required or
necessary under applicable law, amendments made on April 2, 1991
shall not be effective until approved by the stockholders of the
Company.