COMBIMATRIX CORPORATION STOCK OPTION AGREEMENT R E C I T A L S :
Exhibit
10.4
COMBIMATRIX
CORPORATION
R
E C
I T A L S :
A. The
Board
has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or of the board of directors of
any
Parent or Subsidiary and consultants and other independent advisors who provide
services to the Corporation (or any Parent or Subsidiary).
B. Optionee
is to render valuable services to the Corporation (or a Parent or Subsidiary),
and this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the Corporation's grant of an option
to
Optionee.
C. All
capitalized terms in this Agreement shall have the meaning assigned to them
in
the attached Appendix.
NOW,
THEREFORE, it is hereby agreed as follows:
1. GRANT
OF
OPTION. The Corporation hereby grants to Optionee, as of the Grant Date, an
option to purchase up to the number of Option Shares specified in the Grant
Notice. The Option Shares shall be purchasable from time to time during the
option term specified in Paragraph 2 hereof at the Exercise Price.
2. OPTION
TERM. This option shall have a maximum term of ten (10) years [change
term to 5 years if this option is an ISO and Optionee owns (actually or
constructively) more than 10% of the total combined voting power of all classes
of stock of the Corporation or any parent or subsidiary of the
Corporation]
measured
from the Grant Date and shall accordingly expire at the close of business on
the
Expiration Date, unless sooner terminated in accordance with Paragraph 5 or
6
hereof.
3. LIMITED
TRANSFERABILITY. This option shall be neither transferable nor assignable by
Optionee other than by will or by the laws of descent and distribution following
Optionee's death and may be exercised, during Optionee's lifetime, only by
Optionee. However, if this option is designated a Non-Statutory Option in the
Grant Notice, then this option may be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's Immediate Family
or
to a trust established for the exclusive benefit of Optionee or one or more
members of the Optionee's Immediate Family or to the Optionee's former spouse,
to the extent such assignment is in connection with Optionee's estate plan
or
pursuant to a domestic relations order. The assigned portion shall be
exercisable only by the person or persons who acquire a proprietary interest
in
the option pursuant to such assignment. The terms applicable to the assigned
portion shall be the same as those in effect for this option immediately prior
to such assignment. Notwithstanding the foregoing, the Optionee may also
designate one or more persons as the beneficiary or beneficiaries of this option
and this option shall, in accordance with such designation, automatically be
transferred to such beneficiary or beneficiaries upon the Optionee's death
while
holding this option. Such beneficiary or beneficiaries shall take the
transferred option subject to all the terms and conditions of this Agreement,
including (without limitation) the limited time period during which the option
may be exercised following the Optionee's death.
4. DATES
OF
EXERCISE. This option shall become exercisable for the Option Shares in one
or
more installments as specified in the Grant Notice. As the option becomes
exercisable for such installments, those installments shall accumulate, and
the
option shall remain exercisable for the accumulated installments until the
Expiration Date or sooner termination of the option term under Paragraph 5
or 6
hereof.
5. CESSATION
OF SERVICE. The option term specified in Paragraph 2 hereof shall terminate
(and
this option shall cease to be outstanding) prior to the Expiration Date should
any of the following provisions become applicable:
(a) Should
Optionee cease to remain in Service for any reason (other than death, Permanent
Disability or Misconduct) while this option is outstanding, then Optionee shall
have a period of three (3) months (commencing with the date of such cessation
of
Service) during which to exercise this option, but in no event shall this option
be exercisable at any time after the Expiration Date.
(b) Should
Optionee die while this option is outstanding, then the personal representative
of Optionee's estate or the person or persons to whom the option is transferred
pursuant to Optionee's will or in accordance with the laws of descent and
distribution or any person or trust to whom all or a portion of this option
is
transferred in accordance with Paragraph 3 hereof or the designated beneficiary
or beneficiaries of this option shall have the right to exercise this option.
Such right shall lapse, and this option shall cease to be outstanding, upon
the
earlier of (i) the expiration of the twelve (12)-month period measured from
the
date of Optionee's death or (ii) the Expiration Date.
(c) Should
Optionee cease Service by reason of Permanent Disability while this option
is
outstanding, then Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to exercise this
option. In no event shall this option be exercisable at any time after the
Expiration Date.
(d) During
the limited period of post-Service exercisability, this option may not be
exercised in the aggregate for more than the number of vested Option Shares
for
which the option is exercisable at the time of Optionee's cessation of Service.
Upon the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for
any
vested Option Shares for which the option has not been exercised. However,
this
option shall, immediately upon Optionee's cessation of Service for any reason,
terminate and cease to be outstanding with respect to any Option Shares for
which this option is not otherwise at that time exercisable.
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(e) Should
Optionee's Service be terminated for Misconduct, then this option shall
terminate immediately and cease to remain outstanding.
6. SPECIAL
ACCELERATION OF OPTION. This option may vest on an accelerated basis in
connection with a Change in Control or a Hostile Takeover pursuant to the terms
of the Plan.
7. ADJUSTMENT
IN OPTION SHARES. Should any change be made to the Common Stock by reason of
any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the total number and/or class of securities subject to
this
option and (ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
8. STOCKHOLDER
RIGHTS. The holder of this option shall not have any stockholder rights with
respect to the Option Shares until such person shall have exercised the option,
paid the Exercise Price and become a holder of record of the purchased
shares.
9. MANNER
OF
EXERCISING OPTION.
(a) In
order
to exercise this option with respect to all or any part of the Option Shares
for
which this option is at the time exercisable, Optionee (or any other person
or
persons exercising the option) must take the following actions:
(i) Execute
and deliver to the Corporation a Notice of Exercise for the Option Shares for
which the option is exercised.
(ii) Pay
the
aggregate Exercise Price for the purchased shares in one or more of the
following forms:
(A) cash
or
check made payable to the Corporation;
(B) shares
of
Common Stock held by Optionee (or any other person or persons exercising the
option) for the requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and valued at Fair
Market Value on the Exercise Date; or
(C) to
the
extent the option is exercised for vested Option Shares, through a special
sale
and remittance procedure pursuant to which Optionee (or any other person or
persons exercising the option) shall concurrently provide irrevocable
instructions (I) to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Corporation, out of
the
sale proceeds available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all applicable
Federal, state and local income and employment taxes required to be withheld
by
the Corporation by reason of such exercise and (II) to the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale.
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Except
to
the extent the sale and remittance procedure is utilized in connection with
the
option exercise, payment of the Exercise Price must accompany the Notice of
Exercise delivered to the Corporation in connection with the option
exercise.
(iii) Furnish
to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this
option.
(iv) Make
appropriate arrangements with the Corporation (or Parent or Subsidiary employing
or retaining Optionee) for the satisfaction of all Federal, state and local
income and employment tax withholding requirements applicable to the option
exercise.
(b) As
soon
as practical after the Exercise Date, the Corporation shall issue to or on
behalf of Optionee (or any other person or persons exercising this option)
a
certificate for the purchased Option Shares, with the appropriate legends
affixed thereto. To the extent any such Option Shares are unvested, the
certificates for those Option Shares shall be endorsed with an appropriate
legend evidencing the Corporation's repurchase rights and may be held in escrow
with the Corporation until such shares vest.
(c) In
no
event may this option be exercised for any fractional shares.
10. NO
IMPAIRMENT OF RIGHTS. This Agreement shall not in any way affect the right
of
the Corporation to adjust, reclassify, reorganize or otherwise make changes
in
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets. In addition,
this
Agreement shall not in any way be construed or interpreted so as to affect
adversely or otherwise impair the rights of the Corporation (or any Parent
or
Subsidiary employing or retaining Optionee) or of Optionee, which rights are
hereby expressly reserved by each, to terminate Optionee's Service at any time
for any reason, with or without cause.
11. COMPLIANCE
WITH LAWS AND REGULATIONS.
(a) The
exercise of this option and the issuance of the Option Shares upon such exercise
shall be subject to compliance by the Corporation and Optionee with all
applicable requirements of law relating thereto and with all applicable
regulations of any Stock Exchange (or the Nasdaq National Market, if applicable)
on which the Common Stock may be listed for trading at the time of such exercise
and issuance.
(b) The
inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance
and
sale of any Common Stock pursuant to this option shall relieve the Corporation
of any liability with respect to the non-issuance or sale of the Common Stock
as
to which such approval shall not have been obtained. The Corporation, however,
shall use its best efforts to obtain all such approvals.
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12. SUCCESSORS
AND ASSIGNS. Except to the extent otherwise provided in Paragraphs 3 and 6
hereof, the provisions of this Agreement shall inure to the benefit of, and
be
binding upon, the Corporation and its successors and assigns and Optionee,
Optionee's assigns and the legal representatives, heirs and legatees of
Optionee's estate.
13. NOTICES.
Any notice required to be given or delivered to the Corporation under the terms
of this Agreement shall be in writing and addressed to the Corporation at its
principal corporate offices. Any notice required to be given or delivered to
Optionee shall be in writing and addressed to Optionee at the address indicated
below Optionee's signature line on the Grant Notice. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
14. CONSTRUCTION.
This Agreement and the option evidenced hereby are made and granted pursuant
to
the Plan and are in all respects limited by and subject to the terms of the
Plan. All decisions of the Plan Administrator with respect to any question
or
issue arising under the Plan or this Agreement shall be conclusive and binding
on all persons having an interest in this option.
15. GOVERNING
LAW. The interpretation, performance and enforcement of this Agreement shall
be
governed by the laws of the State of Delaware without resort to that State's
conflict-of-laws rules.
16. EXCESS
SHARES. If the Option Shares covered by this Agreement exceed, as of the Grant
Date, the number of shares of Common Stock which may without stockholder
approval be issued under the Plan, then this option shall be void with respect
to those excess shares, unless stockholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of the Plan.
17. ADDITIONAL
TERMS APPLICABLE TO AN INCENTIVE OPTION. In the event this option is designated
an Incentive Option in the Grant Notice, the option is intended to be an
incentive stock option as described in Code Section 422, but the
Corporation does not represent or warrant that the option qualifies as such.
The
Optionee should consult with the Optionee's own tax advisors regarding the
tax
effects of this option and the requirements necessary to obtain favorable income
tax treatment under Code Section 422, including, but not limited to,
holding period requirements with respect to the Option Shares after exercise
of
this option. In addition, the following terms and conditions shall also apply
to
the grant:
(a) This
option shall cease to qualify for favorable tax treatment as an Incentive Option
if (and to the extent) this option is exercised for one or more Option Shares:
(A) more than three (3) months after the date Optionee ceases to be an Employee
for any reason other than death or Permanent Disability or (B) more than twelve
(12) months after the date Optionee ceases to be an Employee by reason of
Permanent Disability.
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(b) No
installment under this option shall qualify for favorable tax treatment as
an
Incentive Option if (and to the extent) the aggregate Fair Market Value
(determined at the Grant Date) of the Common Stock for which such installment
first becomes exercisable hereunder would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the Common Stock
or
other securities for which this option or any other Incentive Options granted
to
Optionee prior to the Grant Date (whether under the Plan or any other option
plan of the Corporation or any Parent or Subsidiary) first become exercisable
during the same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in
the aggregate. Should such One Hundred Thousand Dollar ($100,000) limitation
be
exceeded in any calendar year, this option shall nevertheless become exercisable
for the excess shares in such calendar year as a Non-Statutory
Option.
(c) Should
the exercisability of this option be accelerated upon a Change in Control,
then
this option shall qualify for favorable tax treatment as an Incentive Option
only to the extent the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which this option first becomes exercisable in
the
calendar year in which the Change in Control occurs does not, when added to
the
aggregate value (determined as of the respective date or dates of grant) of
the
Common Stock or other securities for which this option or one or more other
Incentive Options granted to Optionee prior to the Grant Date (whether under
the
Plan or any other option plan of the Corporation or any Parent or Subsidiary)
first become exercisable during the same calendar year, exceed One Hundred
Thousand Dollars ($100,000) in the aggregate. Should the applicable One Hundred
Thousand Dollar ($100,000) limitation be exceeded in the calendar year of such
Change in Control, the option may nevertheless be exercised for the excess
shares in such calendar year as a Non-Statutory Option.
(d) Should
Optionee hold, in addition to this option, one or more other options to purchase
Common Stock which become exercisable for the first time in the same calendar
year as this option, then the foregoing limitations on the exercisability of
such options as Incentive Options shall be applied on the basis of the order
in
which such options are granted.
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APPENDIX
The
following definitions shall be in effect under the Agreement:
A. AGREEMENT
shall mean this Stock Option Agreement.
B. BOARD
shall mean the Corporation's Board of Directors.
C. CERTIFICATE
OF INCORPORATION shall mean the Certificate of Incorporation of CombiMatrix
Corporation as filed with the Delaware Secretary of State and all subsequent
amendments, supplements, modifications and replacements thereof.
D. CHANGE
IN
CONTROL shall mean a change in ownership or control of the Corporation effected
through any of the following transactions:
(i) a
stockholder-approved merger or consolidation in which securities possessing
more
than fifty percent (50%) of the total combined voting power of the Corporation's
outstanding securities are transferred to a person or persons different from
the
persons holding those securities immediately prior to such transaction,
or
(ii) a
sale,
transfer or other disposition of all or substantially all of the Corporation's
assets to an entity which is not a Subsidiary of the Corporation,
or
(iii) the
acquisition, directly or indirectly by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation), of beneficial
ownership (within the meaning of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders.
E. CODE
shall mean the Internal Revenue Code of 1986, as amended.
F. COMMON
STOCK shall mean shares of the Corporation's Common Stock (as defined in the
Certificate of Incorporation).
G. CORPORATION
shall mean CombiMatrix Corporation, a Delaware corporation and any corporate
successor to all or substantially all of the assets or the voting stock of
CombiMatrix Corporation that has by appropriate action assumed this
option.
H. EMPLOYEE
shall mean an individual who is in the employ of the Corporation (or any Parent
or Subsidiary), subject to the control and direction of the employer entity
as
to both the work to be performed and the manner and method of
performance.
I. EXERCISE
DATE shall mean the date on which the option shall have been exercised in
accordance with Paragraph 9 hereof.
APPENDIX
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J. EXERCISE
PRICE shall mean the exercise price per Option Share as specified in the Grant
Notice.
K. EXPIRATION
DATE shall mean the date on which the option expires as specified in the Grant
Notice.
L. FAIR
MARKET VALUE per share of Common Stock on any relevant date shall be determined
in accordance with the following provisions:
(i) If
the
Common Stock is at the time traded on the Nasdaq National Market, then the
Fair
Market Value shall be the closing selling price per share of Common Stock on
the
date in question, as the price is reported on the Nasdaq National Market. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If
the
Common Stock is at the time listed on any Stock Exchange, then the Fair Market
Value shall be the closing selling price per share of Common Stock on the date
in question on the Stock Exchange determined by the Plan Administrator to be
the
primary market for the Common Stock, as such price is officially quoted in
the
composite tape of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.
(iii)
If
the Common Stock is at the time not traded on the Nasdaq National Market or
listed on any Stock Exchange, but is regularly traded in any over-the-counter
market, then the Fair Market Value shall be the average of the bid and asked
prices per share of Common Stock in such over-the-counter market on the date
in
question. If there are no bid and asked prices on the date in question, then
the
Fair Market Value shall be the average of the bid and asked prices in such
over-the-counter market on the last preceding date for which such prices exist.
(iv) If
the
Common Stock is at the time not traded as described in (i), (ii) or (iii) above,
then the Fair Market Value of a share of Common Stock shall be determined by
the
Plan Administrator, after taking into account such factors as it deems
appropriate.
▇.
▇▇▇▇▇
DATE shall mean the date of grant of the option as specified in the Grant
Notice.
▇. ▇▇▇▇▇
NOTICE shall mean the Notice of Grant of Stock Option accompanying the
Agreement, pursuant to which Optionee has been informed of the basic terms
of
the option evidenced hereby.
O. HOSTILE
TAKE-OVER shall mean either of the following events effecting a change in
control or ownership of the Corporation:
APPENDIX
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(i) the
acquisition, directly or indirectly, by any person or related group of persons
(other than the Corporation or a person that directly or indirectly controls,
is
controlled by, or is under common control with, the Corporation) of beneficial
ownership (within the meaning of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities
possessing more than fifty percent (50%) of the total combined voting power
of
the Corporation's outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation's stockholders which the Board does not
recommend such stockholders to accept, or
(ii) a
change
in the composition of the Board over a period of thirty-six (36) consecutive
months or less such that a majority of the Board members ceases, by reason
of
one or more contested elections for Board membership, to be comprised of
individuals who either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for election
as
Board members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the Board approved
such election or nomination.
P. IMMEDIATE
FAMILY shall mean any child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, sibling, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law and shall include adoptive
relationships.
Q. INCENTIVE
OPTION shall mean an option which satisfies the requirements of Code Section
422.
R. MISCONDUCT
shall mean the commission of any act of fraud, embezzlement or dishonesty by
Optionee, any unauthorized use or disclosure by Optionee of confidential
information or trade secrets of the Corporation (or any Parent or Subsidiary),
or any other intentional misconduct by Optionee adversely affecting the business
or affairs of the Corporation (or any Parent or Subsidiary) in a material
manner. The foregoing definition shall not be deemed to be inclusive of all
the
acts or omissions which the Corporation (or any Parent or Subsidiary) may
consider as grounds for the dismissal or discharge of Optionee or any other
person in the Service of the Corporation (or any Parent or
Subsidiary).
S. NON-STATUTORY
OPTION shall mean an option not intended to satisfy the requirements of Code
Section 422.
T. NOTICE
OF
EXERCISE shall mean the notice of exercise in the form attached hereto as
Exhibit I.
U. OPTION
SHARES shall mean the number of shares of Common Stock subject to the option
as
specified in the Grant Notice.
V. OPTIONEE
shall mean the person to whom the option is granted as specified in the Grant
Notice.
W. PARENT
shall mean any corporation (other than the Corporation) in an unbroken chain
of
corporations ending with the Corporation, provided each corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
APPENDIX
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X. PERMANENT
DISABILITY shall mean the inability of Optionee to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or has lasted or can be
expected to last for a continuous period of twelve (12) months or
more.
Y. PLAN
shall mean the Corporation's 2006 CombiMatrix Stock Incentive Plan.
Z. PLAN
ADMINISTRATOR shall mean either the Board or a committee of the Board acting
in
its capacity as administrator of the Plan.
AA. SERVICE
shall mean the Optionee's performance of services for the Corporation (or any
Parent or Subsidiary) in the capacity of an Employee, a non-employee member
of
the board of directors or a consultant or independent advisor.
BB. STOCK
EXCHANGE shall mean the American Stock Exchange or the New York Stock
Exchange.
CC. SUBSIDIARY
shall mean any corporation (other than the Corporation) in an unbroken chain
of
corporations beginning with the Corporation, provided each corporation (other
than the last corporation) in the unbroken chain owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
APPENDIX
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EXHIBIT
I
NOTICE
OF EXERCISE
I
hereby
notify CombiMatrix Corporation (the "Corporation") that I elect to purchase
_____________________ shares (the "Purchased Shares") of the Corporation's
Common Stock ("Common Stock") at the option exercise price of _____________
per
share (the "Exercise Price") pursuant to that certain option granted to me
under
the Corporation’s 2006 CombiMatrix Stock Incentive Plan on
_____________________, 200_ (the "Option").
Type
of Option
_____ Incentive
Option _____ Non-Statutory
Option
Concurrently
with the delivery of this Notice of Exercise to the Corporation, I shall pay
to
the Corporation the Exercise Price for the Purchased Shares in accordance with
the provisions of my agreement with the Corporation (or other documents)
evidencing the Option and shall deliver whatever additional documents may be
required by such agreement as a condition for exercise.
|
_______________________________________,
200_
Date
|
|
|
_______________________________
Signature
of Optionee
Print
Name:___________________________
|
|
|
Address:
____________________________
_______________________________
|
|
|
Print
name in exact manner it is to appear on the stock
certificate:
|
_______________________________ |
|
Address
to which certificate is to be sent, if different from address
above:
|
_______________________________
_______________________________
|
|
Social
Security Number:
|
_______________________________ |
EXHIBIT
I
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