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2004 Stock Option Plan

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Exhibit 10.27

ANGIOTECH PHARMACEUTICALS, INC.

2004 STOCK OPTION PLAN


1.

PURPOSE OF THE PLAN

Angiotech Pharmaceuticals, Inc. (the " Company" ) hereby establishes a stock option plan for directors, officers and Service Providers (as defined below) of the Company and its subsidiaries, to be known as the " Angiotech Stock Option Plan" (the " Plan" ). The purpose of the Plan is to give to directors, officers and Service Providers the opportunity to participate in the profitability of the Company by granting to such individuals options, exercisable over periods of up to five years as determined by the Board, to buy shares of the Company at a price at least equal to the market price prevailing on the date the option is granted.

2.

DEFINITIONS

In this Plan, the following terms shall have the following meanings:

2.1

" Associate" means an associate as defined in the Securities Act.

2.2

" Board" means the board of directors of the Company and any committees of the board of directors to which any or all authority, rights, powers, and discretion with respect to the Plan has been delegated.

2.3

" Change of Control" means the acquisition by any person or by any person and a Joint Actor, whether directly or indirectly, of voting securities of the Company, which, when added to all other voting securities of the Company at the time held by such person or by such person and a Joint Actor, totals for the first time not less than twenty percent (20%) of the outstanding voting securities of the Company.

2.4

" Code" means the U.S. Internal Revenue Code of 1986, as amended.

2.5

" Company" means Angiotech Pharmaceuticals, Inc. and its successors.

2.6

" Disability" means any disability with respect to an Optionee which the Board, in its sole and unfettered discretion, considers likely to prevent permanently the Optionee from:

(a)

being employed or engaged by the Company, its subsidiaries or another employer, in a position the same as or similar to that in which he was last employed or engaged by the Company or its subsidiaries; or

(b)

acting as a director or officer of the Company or its subsidiaries, or

(c)

engaging in any substantial gainful activity by reason of any medically determinable mental or physical impairment that can be expected to result in death or which has lasted or can be expected to last a continual period of not less than 12 months.


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2.7

" Employee" means any person, including officers and directors, who is or is deemed to be an employee of the Company or any parent or subsidiary corporation of the Company.

2.8

" Exchange" means The Toronto Stock Exchange or, if the Shares are not listed on The Toronto Stock Exchange, on such other stock exchange on which the Shares are listed.

2.9

" Expiry Date" means the date set by the Board under Section 3.1 of the Plan, as the last date on which an Option may be exercised.

2.10

" Good Reason" means a situation where a Service Provider:

(a)

has incurred a material reduction in his or her authority or responsibility;

(b)

has incurred one or more reductions in his or her base compensation in the cumulative amount of five percent (5%) or more; or

(c)

has been notified that his principal place of work will be relocated by a distance of 80 kilometers or more, unless such new principal place of work is within 80 kilometers from his or her then current residence.


2.11

" Grant Date" means the date specified in an Option Agreement as the date on which an Option is granted.

2.12

" Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

2.13

" Insider" means:

(a)

an insider as defined in the Securities Act, other than a person who is an insider solely by virtue of being a director or senior officer of a subsidiary of the Company; and

(b)

an Associate of any person who is an insider under Subsection 2.13(a).


2.14

" Involuntary Termination" means:

(a)

the termination of a Service Provider' s employment or engagement by the Company, for any reason other than Cause or Disability, within the first 12 month period following a Change of Control; or

(b)

the voluntary resignation of a Service Provider for Good Reason within the first 12 month period following a Change of Control.


2.15

" Joint Actor" means a person acting jointly or in concert with an offeror, as defined in Section 91 of the Securities Act.

2.16

" Market Price" of Shares at any Grant Date means (i) the closing price per Share on The Toronto Stock Exchange for the last day Shares were traded prior to the Grant Date; or (ii) if the Shares are not listed on The Toronto Stock Exchange, the closing price per Share on such stock exchange on which the Shares are listed for the last day Shares were traded prior to the Grant Date, or (iii) if the Shares are not listed on any stock exchange, the price per Share on the over-the-counter market determined by dividing the aggregate sale price of the Shares sold by the total number of such Shares so sold on the applicable market for the last day prior to the Grant Date.


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2.17

" Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option.

2.18

" Option" means an option to purchase Shares granted pursuant to this Plan.

2.19

" Option Agreement" means an agreement, in the form attached hereto as Schedule " A" , whereby the Company grants to an Optionee an Option.

2.20

" Option Price" means the price per Share specified in an Option Agreement, adjusted from time to time in accordance with the provisions of Section 5.

2.21

" Option Shares" means the aggregate number of Shares which an Optionee may purchase under an Option.

2.22

" Optionee" means each of the directors, officers and Service Providers granted an Option pursuant to this Plan and their heirs, executors and administrators and, subject to the policies of the Exchange, an Optionee may also be a corporation wholly-owned by an individual eligible for an Option grant pursuant to this Plan.

2.23

" Plan" means this Angiotech 2004 Stock Option Plan.

2.24

" Securities Act" means the Securities Act, R.S.O. 1990, c.S.5, as amended, as at the date hereof.

2.25

" Service Provider" means:

(a)

an employee or Insider of the Company or any of its subsidiaries;

(b)

any other person or company engaged to provide ongoing management or consulting services for the Company, or for any entity controlled by the Company; and

(c)

any person who is providing ongoing management or consulting services to the Company or to any entity controlled by the Company indirectly through a company that is a Service Provider under Subsection 2.25(b); and


" Service Providers" means more than one (1) Service Provider.

2.26

" Shares" means the Common shares in the capital stock of the Company as constituted on the date of this Plan provided that, in the event of any adjustment pursuant to Section 5, " Shares" shall thereafter mean the shares or other property resulting from the events giving rise to the adjustment.


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2.27

" Unissued Option Shares" means the number of Shares, at a particular time, which have been allotted for issuance upon the exercise of an Option but which have not been issued, as adjusted from time to time in accordance with the provisions of Section 5, such adjustments to be cumulative.

2.28

" Vested" means that an Option has become exercisable in respect of a number of Option Shares by the Optionee pursuant to the terms of the Option Agreement.

2.29

" 2001 Plan" means the Company' s 2001 Stock Option Plan adopted by the shareholders of the Company on March 6, 2001.

3.

GRANT OF OPTIONS


3.1

Option Terms

The Board may from time to time authorize the issue of Options to directors, officers and Service Providers of the Company and its subsidiaries on the terms and subject to the conditions set out in this Plan and any additional terms and conditions imposed by the Company and set out in the Option Agreement. Notwithstanding any terms imposed by the Company, the Option Price under each Option shall be not less than the Market Price on the Grant Date, the Expiry Date for each Option shall be set by the Board at the time of issue of the Option and shall not be more than five years after the Grant Date, and Options shall not be assignable (or transferable) by the Optionee. For greater clarity, the Board shall not be permitted to amend the Option Price except as set out in Section 5 of this Plan.

3.2

Limits on Shares Issuable on Exercise of Options

The maximum number of Shares which may be issuable pursuant to options granted under the Plan and the 2001 Plan shall be 4,980,135, subject to section 5.1, or such additional amount as may be approved from time to time by the shareholders of the Company. The number of shares issuable to any one Optionee under the Plan, together with all of the Company's other previously established or proposed share compensation arrangements, shall not exceed 5% of the total number of issued and outstanding shares on a non-diluted basis. The number of Shares which may be reserved for issue pursuant to options granted to Insiders under the Plan, together with all of the Company's other previously established and outstanding or proposed share compensation arrangements, in aggregate, shall not exceed 20% of the total number of issued and outstanding Shares on a non-diluted basis. The number of Shares which may b e issuable under the Plan, together with all of the Company's other previously established and outstanding or proposed share compensation arrangements, within a one-year period:

(a)

in aggregate shall not exceed 20% of the outstanding issue; and

(b)

to any one Optionee who is an Insider and any Associates of such Insider, shall not exceed 5% of the outstanding issue.


For the purposes of this section, Shares issued pursuant to an entitlement granted prior to the grantee becoming an Insider may be excluded in determining the number of Shares issuable to Insiders. For the purposes of Subsections 3.2(a) and 3.2(b) above, " outstanding issue" is determined on the basis of the number of Shares that are outstanding immediately prior to the Share issuance in question, excluding Shares issued pursuant to Share compensation arrangements over the preceding one-year period.


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3.3

Option Agreements

Each Option shall be confirmed by the execution of an Option Agreement. Each Optionee shall have the option to purchase from the Company the Option Shares at the time and in the manner set out in the Plan and in the Option Agreement applicable to that Optionee. The execution of an Option Agreement shall constitute conclusive evidence that it has been completed in compliance with this Plan.

3.4

Accelerated Vesting

If at any time there is an Involuntary Termination of a Service Provider, the terms of Vesting applicable to any Options granted to the Service Provider shall be deemed to be satisfied and the Options shall be deemed to have been Vested. The Company may, by resolution of the Board, reduce or eliminate the terms of Vesting on any existing Options.

3.5

Certain Limitations Regarding Incentive Stock Options.

Incentive Stock Options shall be granted only to an individual who is an Employee and shall be subject to the following special limitations:

(a)

Limitation on Amount of Grants. As to all Incentive Stock Options granted under the terms of this Plan, to the extent that the aggregate fair market value of the stock (determined at the time the Incentive Stock Option is granted) with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under this Plan and all other incentive stock option plans of the Company, a related corporation or a predecessor corporation) exceeds $100,000, such options shall be treated as Nonstatutory Stock Options. The previous sentence shall not apply if the US Internal Revenue Service issues a public rule, issues a private ruling to the Company, any Optionee or any legatee, personal representative or distributee of an Optionee or issues regulations changing or eliminating such annual limit. No such limitation shall apply to Nonstatutory Stock Options.


(b)

Grants to Ten Percent Shareholders. Incentive Stock Options may be granted a person owning more than 10% of the total combined voting power of all classes of stock of the Company and any parent or subsidiary corporation only if (i) the exercise price is at
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