(a) The purpose of
the GTx, Inc. 2001 Stock Option Plan (the “Plan”) is to
provide a means by which selected key employees and directors (if
declared eligible under paragraph 4) of and consultants to GTx,
Inc. (the “Company”), and its Affiliates, as defined in
subparagraph 1(b), may be given an opportunity to benefit from
increases in value of the stock of the Company. It is intended that
this purpose will be effected through the granting of
(i) incentive stock options and/or, (ii) nonstatutory
stock options.
(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 from
time to time (the “Code”).
(c) The Company,
by means of the Plan, seeks to retain the services of persons now
employed by or serving as consultants or directors 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 rights granted under the Plan (“Option
Awards”) shall, in the discretion of the Committee or Board
of Directors of the Company (the “Board”), as
applicable, be either (i) incentive stock options as that term
is used in Section 422 of the Code (“Incentive Stock
Options”), or (ii) stock options which do not qualify as
Incentive Stock Options (“Supplemental Stock
Options”).
(a) The Plan shall
be administered by a Committee appointed by the Board of Directors
of the Company composed of not fewer than three (3) Directors
(the “Committee”).
(b) The Committee
shall have the power, subject to, and within the limitations of,
the express provisions of the Plan and to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board of Directors:
(i) To determine
from time to time which of the persons eligible under the Plan
shall be granted Option Awards; when and how Option Awards shall be
granted; whether a Option Award will be an Incentive Stock Option,
a Supplemental Stock Option, or a combination of the foregoing; and
the provisions of each Option Award granted (which need not be
identical).
(ii) To construe
and interpret the Plan and Option Awards granted under it, and to
establish, amend and revoke rules and regulations for its
administration. The Committee, in the exercise of this power, may
correct any
defect,
omission or inconsistency in the Plan or in any Option Award, in a
manner and to the extent it shall deem necessary or expedient to
make the Plan fully effective, consistent with its
terms.
(iii) To amend the
Plan as provided in paragraph 10.
(iv) Generally, to
exercise such powers and to perform such acts as the Committee
deems necessary or expedient to promote the best interests of the
Company.
(c) The Board of
Directors may abolish the Committee at any time and revest in the
Board of Directors the administration of the Plan.
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 issued pursuant to Option Awards
granted under the Plan shall not exceed in the aggregate thirty
five thousand one hundred fifty (35,150) shares of the
Company’s common stock issued and outstanding as of the date
of shareholder approval of the Plan. If any option or right granted
under the Plan shall for any reason expire or otherwise terminate
without having been exercised in full, the stock not issued under
such option or right 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.
(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 (including an officer) of the Company
or any Affiliate. Option Awards other than Incentive Stock Options
may be granted only to directors, officers or employees of or
consultants to the Company or its Affiliates.
(b) 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 option is at least one hundred
ten percent (110%) of the fair market value of such stock at the
date of grant and the term of the option does not exceed five (5)
years from the date of grant.
5. TERMS
OF STOCK OPTIONS .
Each stock option
shall be in such form and shall contain such terms and conditions
as the Board or the Committee shall deem appropriate. All options
shall be separately designated Incentive Stock Options or
Supplemental Stock Options at the time of grant, and in such form
as
2
issued pursuant
to this paragraph, and a separate certificate or certificates shall
be issued for shares purchased on exercise of each type of option.
An option designated as a Supplemental Stock Option shall not be
treated as an Incentive Stock Option. 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 or, in the case of any option contemplated by
paragraph 4(b), five (5) years from the date of
grant.
(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 stock
subject to the option on the date the option is granted or, in the
case of any option contemplated by paragraph 4(b), one hundred ten
percent (110%) of the fair market value of the stock subject to the
option on the date of grant of the option.
(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) at the discretion of the Committee either at the time of
the 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 Committee.
(i) Unless
otherwise expressly stated in the option, an option shall not be
transferable except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person, nor shall
an option holder have the right or power to anticipate, accelerate,
convey, assign or otherwise alienate, hypothecate, pledge or
otherwise encumber any option award or the shares subject to an
option award.
(ii) Except with
respect to Incentive Stock Options, the Committee may, in its
discretion, establish forms and procedures for the transfer of all
or any portion of such Option Award by the optionee to
(i) Immediate Family Members (as defined hereinafter),
(ii) a trust or trusts for the exclusive benefit of the
optionee and such Immediate Family Members, or (iii) a
partnership or limited liability company in which the optionee and
such Immediate Family Members are the only partners or members
(collectively such optionee’s “Permitted
Transferees”), provided that subsequent transfers shall be
prohibited except in accordance with the laws of descent and
distribution, or by will. Notification and approval of all such
transfers shall be in the form specified by the Committee.
Following transfer, any such Option Award shall continue to be
subject to the same terms and conditions as were applicable
immediately prior to transfer,
3
provided that
for purposes of this Plan, wherever appropriate, the term
“optionee” shall be deemed to refer to the Permitted
Transferee. Notwithstanding the foregoing, the Plan Committee and
the Company shall have no obligation to inform any Permitted
Transferee of any expiration, termination, lapse or acceleration of
any such Option Award and may give notices required hereunder, if
any, to the optionee. The events of termination of employment
hereof shall continue to be applied with respect to the original
optionee, following which the Option Award shall be exercisable by
the Permitted Transferee only to the extent, and for the periods
specified herein. As used herein “Immediate Family
Member” shall mean, with respect to the optionee, his or her
spouse, child, stepchild, grandchildren or other descendants, and
shall include relationships arising from legal adoption.
(e) The total
number of shares of stock subject to an option may, but need not,
be allotted in periodic installments (which may, but need not, be
equal). 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. In the absence of a
specific provision to the contrary in a particular option grant, an
option award shall vest one-third (1/3) on the third anniversary of
the date of grant of such option award, an additional one-third on
the fourth anniversary of the date of grant of such option award,
and the final one-third (1/3) shall vest on the fifth anniversary
of the date of grant of such option award. 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) An option
shall terminate three (3) months after termination of the
optionee’s employment or relationship as a director of or
consultant to 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 director or
consultant; or (ii) the optionee dies while in the employ of
or while serving as a director of or consultant to the Company or
an Affiliate, or within not more than three (3) months after
termination of such relationship, 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 passes by will or by the laws of descent and
distribution; or (iii) such termination is due to such
person’s voluntary retirement in accordance with subparagraph
(h) below, in which case the option may be exercised at any
time within the earlier of five (5) years from the date of
termination of such employment or relationship, as the case may be,
or the term of the option; or (iv) 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 director or consultant, or
(b) that it may be exercised more than three (3) months
after
4
termination of
the optionee’s employment or relationship with the Company or
an Affiliate. This subparagraph 5(f) 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.
(g) Prior to such
time as the Company’s shares of common stock are first sold
to the public in an offering registered pursuant to Section 5
of the Securities Act of 1933, as amended (“Initial Public
Offering”), any shares of stock acquired through the exercise
of an option shall be subject to a thirty (30) day right of
first refusal by the Company at the same price and terms as offered
by any third party pursuant to a bona fide offer, and may not be
sold prior to an offer to sell to the Company on such terms.
Further, shares acquired through exercise of an option award shall
be subject to the terms and conditions of the Amended and Restated
Voting and Shareholder Agreement dated October
, 2001, between the Company
and its stockholders, as amended from time to time (the
“Stockholders Agreement”).
(h) In the event
of a participant’s termination of employment or service as a
director, as applicable, by reason of voluntary retirement (at or
after age sixty-five (65) or after age fifty-five with no
fewer than five (5) years of service), death, permanent and
total disability, involuntary termination (other than a termination
for cause but including any involuntary termination as the result
of a Change in Control, as addressed below), with respect to such
participant’s Option Award(s), the Committee may in its sole,
absolute and final discretion elect to vest any or all shares not
otherwise vested under the terms of the Plan.
For purposes of
this section, a permanent and total disability shall mean the
occurrence of the following conditions: (i) the Option Award
holder’s physical or mental incapacity (excluding infrequent
and temporary absences due to ordinary illness) of properly
performing the principal functions which had been typically
assigned to him by the Company, (ii) such incapacity shall
exist or be expected to exist with a reasonable degree of medical
certainty for more than ninety (90) days in the aggregate during
any consecutive twelve (12) month period, and
(iii) either the Option Award holder or the Company shall have
given the other thirty (30) days written notice of intent to
terminate employment or service as a director because of
disability. In the event the Company and Option Award holder are in
material disagreement regarding the Participant’s physical or
mental condition, the Company shall authorize a panel of three
(3) physicians selected by the Company to examine the
Participant to determine conclusively, by a majority, whether the
Participant is disabled for purposes of the Plan.
For purposes of
this section, a termination for cause shall mean the termination of
an individual’s status as an employee or director of the
Company, as applicable, as the result of (i) fraud or dishonesty in
connection with the business of the Company; (ii) gross
negligence in the performance of duties for the Company;
(iii) willful failure in carrying out duties as an employee,
director or consultant; or (iv) arrest and conviction of a
felony involving moral turpitude, whether or not in connection with
the business of the Company; provided that (iii) above shall
not apply if the Option Award holder has been assigned by the
Company to duties
5
which are not
comparable to such holder’s function and compensation at the
Company, or which are non-executive or demeaning assignments, or if
the Company has given such participant demeaning and unreasonable
pay cuts.
(i) In the event
of a Change in Control of the Company, all shares subject to all
Option Awards shall become one hundred percent (100%) vested and
shall be converted to cash, options or stock of equivalent value in
the surviving organization under terms and condition which
substantially preserve the economic status of the Participants, as
determined by the Committee. For purposes of this paragraph, a
Change in Control shall mean:
(i) a sale or
other disposition of more than fifty percent (50%) of the issued
and outstanding voting stock of the Company, in a single
transaction or in a series of transactions. For such purposes,
“Voting Stock” shall mean capital stock of the Company
of any class or classes, the holders of which are ordinarily, in
the absence of contingencies, entitled to vote for the election of
members of the Board of Directors (or Persons performing similar
functions) of the Company.
(ii) a merger or
consolidation of the Company with or into any other entity, if
immediately after giving effect to such transaction more than fifty
percent (50%) of the issued and outstanding Voting Stock of the
surviving entity of such transaction is held by persons who are not
holders of the Voting Stock immediately prior to giving effect to
such transaction;
(iii) a sale or
other disposition of all or substantially all of the
Company’s assets in a single transaction or in a series of
transactions (including, without limitation, any liquidation or
dissolution of the Company
A Change of
Control shall not include any of the following events:
(i) any transfer
or issuance of stock of the Company to one or more of the
Company’s lenders (or to any agents or representatives
thereof) in exchange for debt of the Company owed to any such
lenders;
(ii) any transfer
of stock of the Company to or by any person or entity, including
but not limited to one or more of the Company’s lenders (or
to any agents or representatives thereof), pursuant to the terms of
any pledge of said stock as collateral for any loans or financial
accommodations to the Company and/or its subsidiaries;
or
(iii) any transfer
or issuance to any person or entity, including but not limited to
one or more of the Company’s lenders (or to any agents or
representatives thereof), in connection with the workout or
restructuring of the Company’s debts to any one of the
Company’s lenders, including but not limited to the issuance
of new stock in exchange for any equity contribution to the Company
in connection with the workout or restructuring of such
debt.
6
(iv) any transfer
of stock by a stockholder of the Company which is a partnership or
corporation to the partners or stockholders in such
stockholder.
(j) In the event
of an Initial Public Offering of the Company, Option Awards shall
be convertible to options in shares of the newly public company,
under terms and conditions which substantially preserve the rights
and options of the participant. Any resulting registration of
options or shares shall be effected at Company expense.
(k) If provided in
the Option Award, each Option Award shall carry the right to
receive any dividend or dividend equivalent on vested shares, under
such terms and conditions as may be specified in the Option
Award.
(l)
Notwithstanding any other provisions of the Plan, any vested but
unexercised Option Award shares shall be forfeited upon the Option
Award holder’s “Competition” with the Company.
For this purpose, Competition shall be determined by the Committee,
and shall exist if the Option Award holder while employed by or
consulting for the Company and for a period of two (2) years
thereafter directly or indirectly (i) engages or has a
financial interest in, (ii) becomes an officer, employee,
director, partner, advisor or consultant of or to, (iii) has
an equity interest in, or (iv) in any way materially assists
any person, corporation, entity or business whose existing or
planned products or activities compete in whole or in part with the
existing or planned products or activities of the Company. The sole
fact of ownership by an Option Award holder of less than two
percent (2%) of the stock of a publicly traded company which may
have product lines which compete with product lines of this Company
shall not be treated as Competition. Any determination by the
Committee under this section shall be final and conclusive, unless
overruled by the Board.
(m)
Notwithstanding any other provision of the Plan or any Option Award
to the contrary, any and all sales of shares to the Company or any
Affiliate are contingent upon and subject to the terms and
conditions of any bank loan covenants by the Company or any
Affiliate.
6.
COVENANTS OF THE COMPANY .
(a) During the
terms of any Option Awards granted under the Plan, the Company
shall keep available at all times the number of shares of stock
required to satisfy such Option Awards.
(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 grant or exercise of Option
Awards under the Plan; provided, however, that this undertaking
shall not require the Company to register under the Securities Act
of 1933, as amended (the “Securities Act”), either the
Plan, any Option Award granted under the Plan or any stock issued
or issuable pursuant to any such Option Awards. 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
7
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 Option Awards unless and until such
authority is obtained.
7. USE OF
PROCEEDS FROM STOCK .
Proceeds from the
sale of stock pursuant to Option Awards granted under the Plan
shall constitute general funds of the Company.
(a) The Committee
shall have the power to accelerate the time during which a Option
Award may be exercised or the time during which an option or stock
acquired pursuant to a Option Award will vest, notwithstanding the
provisions in the Option Award stating the time during which it may
be exercised or the time during which stock acquired pursuant
thereto will vest.
(b) Neither a
recipient of a Option Award nor any person to whom a Option Award
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 Award unless and until such
person has satisfied all requirements for exercise of the Option
Award pursuant to its terms and is thereby entitled to receive
shares of stock.
(c) Throughout the
term of any Option Award granted pursuant to the Plan, the Company
shall make available to the holder of such Option Award, 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 Award granted pursuant
thereto shall confer upon any recipient any right to continue in
the employ of the Company or any Affiliate or to limit the
Company’s right to terminate the employment or consulting
relationship or directorship of any eligible employee or recipient
with or without cause. In the event that an Option Award recipient
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 for purposes of his or her Option Award, or
(ii) suspend or otherwise delay the time or times at which the
shares subject to the Option Award would otherwise vest.
(e) To the extent
provided by the terms of any Option Award, the recipient may
satisfy any federal, state or local tax withholding obligation
relating to the exercise or receipt of such Option Award 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 receipt of the
Option Award cash or a number of shares having a fair market value
less than or equal to the amount of the withholding tax obligation;
or (3)
8
delivering to
the Company owned and unencumbered shares of common stock of the
Company having a fair market value less than or equal to the amount
of the withholding tax obligation.
(f) In connection
with each Option Award made pursuant to the Plan, the Company may
require as a condition precedent to its obligation to issue or
transfer shares to an eligible participant, or to evidence the
removal of any restrictions on transfers or lapse of any repurchase
right, that such participant make arrangements satisfactory to the
Company to insure that the amount of any federal or other
withholding tax required to be withheld with respect to such sale
or transfer, or such removal or lapse, is made available to the
Company for timely payment of such tax.
(g) The Company
may, as a condition of transferring any stock pursuant to the Plan,
require any person who is to acquire such stock (1) to give
written assurances satisfactory to the Company as to the
optionee’s knowledge and experience in financial and business
matters and/or to employ a purchaser representative reasonably
satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of
evaluating, alone or together with the purchaser representative,
the merits and risks of acquiring the stock; and (2) to give
written assurances satisfactory to the Company stating that such
person is acquiring the stock 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 has been registered under a
then currently effective registration statement under 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.
9.
ADJUSTMENTS UPON CHANGES IN STOCK .
(a) If any change
is made in the stock subject to the Plan, or subject to any Option
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 Option Awards
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 Option
Awards.
(b) In the event
of: (1) a merger or consolidation in which the Company is not
the surviving corporation, or (2) a reverse merger in which
the Company is the surviving corporation but the shares of the
Company’s common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then to the
extent permitted by applicable law: (i) any surviving
corporation shall assume any Option Awards outstanding under the
Plan or shall substitute similar rights for those outstanding under
the Plan, or (ii) such Option Awards shall continue in full
force and effect. In the event
9
any surviving
corporation refuses to assume or continue such Option Awards, or to
substitute similar Option Awards for those outstanding under the
Plan, then, with respect to Option Awards held by persons then
performing services as employees or as consultants or directors for
the Company, as the case may be, the time during which such Option
Awards shall vest shall be accelerated and the Option Awards
terminated if not exercised prior to such event. In the event of a
dissolution or liquidation of the Company, any options outstanding
under the Plan shall terminate if not exercised prior to such
event.
10.
AMENDMENT OF THE PLAN .
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