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Exhibit 10.3
ARNO THERAPEUTICS, INC.
2005 Stock Option Plan
1.
Purpose .
The purpose of the 2005 Stock Option Plan (the “
Plan ”)
of Arno Therapeutics, Inc. (the “
Company ”)
is to increase shareholder value and to advance the interests of
the Company by furnishing a variety of economic incentives
(“
Incentives ”)
designed to attract, retain and motivate employees, directors and
consultants. Incentives may consist of opportunities to purchase or
receive shares of Common Stock, $0.001 par value, of the Company
(“
Common Stock ”),
monetary payments or both on terms determined under this
Plan.
2.
Administration .
2.1
The
Plan shall be administered by a committee of the Board of
Directors of the Company (the “
Committee ”).
The Committee shall consist of not less than two directors of the
Company who shall be appointed from time to time by the board of
directors of the Company. Each member of the Committee shall be a
“non-employee director” within the meaning of Rule
16b-3 of the Exchange Act of 1934, as amended (together with the
rules and regulations promulgated thereunder, the “
Exchange Act ”),
and an “outside director” as defined in Section 162(m)
of the Internal Revenue Code of 1986, as amended (the
“
Code ”).
The Committee shall have complete authority to determine all
provisions of all Incentives awarded under the Plan (as consistent
with the terms of the Plan), to interpret the Plan, and to make any
other determination which it believes necessary and advisable for
the proper administration of the Plan. The Committee’s
decisions and matters relating to the Plan shall be final and
conclusive on the Company and its participants. No member of the
Committee will be liable for any action or determination made in
good faith with respect to the Plan or any Incentives granted under
the Plan. The Committee will also have the authority under the Plan
to amend or modify the terms of any outstanding Incentives in any
manner; provided, however, that the amended or modified terms are
permitted by the Plan as then in effect and that any recipient on
an Incentive adversely affected by such amended or modified terms
has consented to such amendment or modification. No amendment or
modification to an Incentive, however, whether pursuant to this
Section 2 or any other provisions of the Plan, will be deemed to be
a re-grant of such Incentive for purposes of this Plan. If at any
time there is no Committee, then for purposes of the Plan the term
“Committee” shall mean the Company’s Board of
Directors.
2.2
In
the event of (i) any reorganization, merger,
consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of
shares, rights offering, extraordinary dividend or divestiture
(including a spin-off) or any other similar change in
corporate structure or shares, (ii) any purchase,
acquisition, sale or disposition of a significant amount of
assets or a significant business, (iii) any change in
accounting principles or practices, or (iv) any other
similar change, in each case with respect to the Company or
any other entity whose performance is relevant to the grant or
vesting of an Incentive, the Committee (or, if the Company is
not the surviving corporation in any such transaction, the
board of directors of the surviving corporation) may, without
the consent of any affected participant, amend or modify the
vesting criteria of any outstanding Incentive that is based in
whole or in part on the financial performance of the Company
(or any subsidiary or division thereof) or such other entity
so as equitably to reflect such event, with the desired result
that the criteria for evaluating such financial performance of
the Company or such other entity will be substantially the
same (in the sole discretion of the Committee or the board of
directors of the surviving corporation) following such event
as prior to such event; provided, however, that the amended or
modified terms are permitted by the Plan as then in
effect.
3.
Eligible Participants .
Employees of the Company or its subsidiaries (including officers
and employees of the Company or its subsidiaries), directors and
consultants, advisors or other independent contractors who provide
services to the Company or its subsidiaries (including members of
the Company’s scientific advisory board) shall become
eligible to receive Incentives under the Plan when designated by
the Committee. Participants may be designated individually or by
groups or categories (for example, by pay grade) as the Committee
deems appropriate. Participation by officers of the Company or its
subsidiaries and any performance objectives relating to such
officers must be approved by the Committee. Participation by others
and any performance objectives relating to others may be approved
by groups or categories (for example, by pay grade) and authority
to designate participants who are not officers and to set or modify
such targets may be delegated.
4.
Types of Incentives .
Incentives under the Plan may be granted in any one or a
combination of the following forms: (a) incentive stock options and
non-statutory stock options (Section 6); (b) stock appreciation
rights (“
SARs ”)
(Section 7); (c) stock awards (Section 8); (d) restricted stock
(Section 8); and (e) performance shares (Section 9).
5.
Shares Subject to the Plan .
5.1.
Number of Shares .
Subject to adjustment as provided in Section 11.6, the number of
shares of Common Stock which may be issued under the Plan shall not
exceed 1,500,000 shares of Common Stock. Shares of Common Stock
that are issued under the Plan or that are subject to outstanding
Incentives will be applied to reduce the maximum number of shares
of Common Stock remaining available for issuance under the
Plan.
5.2.
Cancellation .
To the extent that cash in lieu of shares of Common Stock is
delivered upon the exercise of an SAR pursuant to Section 7.4, the
Company shall be deemed, for purposes of applying the limitation on
the number of shares, to have issued the greater of the number of
shares of Common Stock which it was entitled to issue upon such
exercise or on the exercise of any related option. In the event
that a stock option or SAR granted hereunder expires or is
terminated or canceled unexercised or unvested as to any shares of
Common Stock, such shares may again be issued under the Plan either
pursuant to stock options, SARs or otherwise. In the event that
shares of Common Stock are issued as restricted stock or pursuant
to a stock award and thereafter are forfeited or reacquired by the
Company pursuant to rights reserved upon issuance thereof, such
forfeited and reacquired shares may again be issued under the Plan,
either as restricted stock, pursuant to stock awards or otherwise.
The Committee may also determine to cancel, and agree to the
cancellation of, stock options in order to make a participant
eligible for the grant of a stock option at a lower price than the
option to be canceled.
6.
Stock Options .
A stock option is a right to purchase shares of Common Stock from
the Company. The Committee may designate whether an option is to be
considered an incentive stock option or a non-statutory stock
option. To the extent that any incentive stock option granted under
the Plan ceases for any reason to qualify as an “incentive
stock option” for purposes of Section 422 of the Code, such
incentive stock option will continue to be outstanding for purposes
of the Plan but will thereafter be deemed to be a non-statutory
stock option. Each stock option granted by the Committee under this
Plan shall be subject to the following terms and
conditions:
6.1.
Price .
The option price per share shall be determined by the Committee,
subject to adjustment under Section 11.6.
6.2.
Number .
The number of shares of Common Stock subject to the option shall be
determined by the Committee, subject to adjustment as provided in
Section 11.6. The number of shares of Common Stock subject to a
stock option shall be reduced in the same proportion that the
holder thereof exercises a SAR if any SAR is granted in conjunction
with or related to the stock option. No individual may receive
options to purchase more than 1,000,000 shares in any
year.
6.3.
Duration and Time for Exercise .
Subject to earlier termination as provided in Section 11.4, the
term of each stock option shall be determined by the Committee but
shall not exceed ten years and one day from the date of grant. Each
stock option shall become exercisable at such time or times during
its term as shall be determined by the Committee at the time of
grant. The Committee may accelerate the exercisability of any stock
option. Subject to the foregoing and with the approval of the
Committee, all or any part of the shares of Common Stock with
respect to which the right to purchase has accrued may be purchased
by the Company at the time of such accrual or at any time or times
thereafter during the term of the option.
6.4.
Manner of Exercise .
Subject to the conditions contained in this Plan and in the
agreement with the recipient evidencing such option, a stock option
may be exercised, in whole or in part, by giving written notice to
the Company, specifying the number of shares of Common Stock to be
purchased and accompanied by the full purchase price for such
shares. The exercise price shall be payable (a) in United States
dollars upon exercise of the option and may be paid by cash;
uncertified or certified check; bank draft; (b) at the discretion
of the Committee, by delivery of shares of Common Stock that are
already owned by the participant in payment of all or any part of
the exercise price, which shares shall be valued for this purpose
at the Fair Market Value on the date such option is exercised; or
(c) at the discretion of the Committee, by instructing the Company
to withhold from the shares of Common Stock issuable upon exercise
of the stock option shares of Common Stock in payment of all or any
part of the exercise price and/or any related withholding tax
obligations, which shares shall be valued for this purpose at the
Fair Market Value or in such other manner as may be authorized from
time to time by the Committee. The shares of Common Stock delivered
by the participant pursuant to Section 6.4(b) must have been held
by the participant for a period of not less than six months prior
to the exercise of the option, unless otherwise determined by the
Committee. Prior to the issuance of shares of Common Stock upon the
exercise of a stock option, a participant shall have no rights as a
shareholder. Except as otherwise provided in the Plan, no
adjustment will be made for dividends or distributions with respect
to such stock options as to which there is a record date preceding
the date the participant becomes the holder of record of such
shares, except as the Committee may determine in its
discretion.
6.5.
Incentive Stock Options .
Notwithstanding anything in the Plan to the contrary, the following
additional provisions shall apply to the grant of stock options
which are intended to qualify as Incentive Stock Options (as such
term is defined in Section 422 of the Code):
(a)
The
aggregate Fair Market Value (determined as of the time the
option is granted) of the shares of Common Stock with respect
to which Incentive Stock Options are exercisable for the first
time by any participant during any calendar year (under the
Plan and any other incentive stock option plans of the Company
or any subsidiary or parent corporation of the Company) shall
not exceed $100,000. The determination will be made by taking
incentive stock options into account in the order in which
they were granted.
(b)
Any
Incentive Stock Option certificate authorized under the Plan
shall contain such other provisions as the Committee shall
deem advisable, but shall in all events be consistent with and
contain all provisions required in order to qualify the
options as Incentive Stock Options.
(c)
All
Incentive Stock Options must be granted within ten years from
the earlier of the date on which this Plan was adopted by
board of directors or the date this Plan was approved by the
Company’s shareholders.
(d)
Unless
sooner exercised, all Incentive Stock Options shall expire no
later than 10 years after the date of grant. No Incentive
Stock Option may be exercisable after ten (10) years from its
date of grant (five (5) years from its date of grant if, at
the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the
total combined voting power of all classes of stock of the
Company or any parent or subsidiary corporation of the
Company).
(e)
The
exercise price for Incentive Stock Options shall be not less
than 100% of the Fair Market Value of one share of Common
Stock on the date of grant with respect to an Incentive Stock
Option; provided that the exercise price shall be 110% of the
Fair Market Value if, at the time the Incentive Stock Option
is granted, the participant owns, directly or indirectly, more
than 10% of the total combined voting power of all classes of
stock of the Company or any parent or subsidiary corporation
of the Company.
7.
Stock Appreciation Rights .
An SAR is a right to receive, without payment to the Company, a
number of shares of Common Stock, cash or any combination thereof,
the amount of which is determined pursuant to the formula set forth
in Section 7.4. An SAR may be granted (a) with respect to any stock
option granted under this Plan, either concurrently with the grant
of such stock option or at such later time as determined by the
Committee (as to all or any portion of the shares of Common Stock
subject to the stock option), or (b) alone, without reference to
any related stock option. Each SAR granted by the Committee under
this Plan shall be subject to the following terms and
conditions:
7.1.
Number; Exercise Price .
Each SAR granted to any participant shall relate to such number of
shares of Common Stock as shall be determined by the Committee,
subject to adjustment as provided in Section 11.6. In the case of
an SAR granted with respect to a stock option, the number of shares
of Common Stock to which the SAR pertains shall be reduced in the
same proportion that the holder of the option exercises the related
stock option. The exercise price of an SAR will be determined by
the Committee, in its discretion, at the date of grant but may not
be less than 100% of the Fair Market Value of one share of Common
Stock on the date of grant.
7.2.
Duration .
Subject to earlier termination as provided in Section 11.4, the
term of each SAR shall be determined by the Committee but shall not
exceed ten years and one day from the date of grant. Unless
otherwise provided by the Committee, each SAR shall become
exercisable at such time or times, to such extent and upon such
conditions as the stock option, if any, to which it relates is
exercisable. The Committee may in its discretion accelerate the
exercisability of any SAR.
7.3.
Exercise .
An SAR may be exercised, in whole or in part, by giving written
notice to the Company, specifying the number of SARs which the
holder wishes to exercise. Upon receipt of such written notice, the
Company shall, within 90 days thereafter, deliver to the exercising
holder certificates for the shares of Common Stock or cash or both,
as determined by the Committee, to which the holder is entitled
pursuant to Section 7.4.
Exhibit 10.3
7.4.
Payment .
Subject to the right of the Committee to deliver cash in lieu of
shares of Common Stock (which, as it pertains to officers and
directors of the Company, shall comply with all requirements of the
Exchange Act), the number of shares of Common Stock which shall be
issuable upon the exercise of an SAR shall be determined by
dividing:
(a)
the
number of shares of Common Stock as to which the SAR is
exercised multiplied by the amount of the appreciation in such
shares (for this purpose, the “appreciation” shall
be the amount by which the Fair Market Value of the shares of
Common Stock subject to the SAR on the exercise date exceeds
(1) in the case of an SAR related to a stock option, the
exercise price of the shares of Common Stock under the stock
option or (2) in the case of an SAR granted alone, without
reference to a related stock option, an amount which shall be
determined by the Committee at the time of grant, subject to
adjustment under Section 11.6); by
(b)
the
Fair Market Value of a share of Common Stock on the exercise
date.
In
lieu of issuing shares of Common Stock upon the exercise of a
SAR, the Committee may elect to pay the holder of the SAR cash
equal to the Fair Market Value on the exercise date of any or
all of the shares which would otherwise be issuable. No
fractional shares of Common Stock shall be issued upon the
exercise of an SAR; instead, the holder of the SAR shall be
entitled to receive a cash adjustment equal to the same
fraction of the Fair Market Value of a share of Common Stock
on the exercise date or to purchase the portion necessary to
make a whole share at its Fair Market Value on the date of
exercise.
8.
Stock Awards and Restricted Stock .
A stock award consists of the transfer by the Company to a
participant of shares of Common Stock, without other payment
therefor, as additional compensation for services to the Company.
The participant receiving a stock award will have all voting,
dividend, liquidation and other rights with respect to the shares
of Common Stock issued to a participant as a stock award under this
Section 8 upon the participant becoming the holder of record of
such shares. A share of restricted stock consists of shares of
Common Stock which are sold or transferred by the Company to a
participant at a price determined by the Committee (which price
shall be at least equal to the minimum price required by applicable
law for the issuance of a share of Common Stock) and
subject
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