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EXHIBIT 10.26
NANOGEN, INC.
PERFORMANCE STOCK OPTION AGREEMENT
AGREEMENT made as of this ____ day of ______, 199_, by and among
Nanogen, Inc. (the "Corporation"), _____________________, an individual and an
employee of Corporation (the "Optionee") and _________________, the Optionee's
spouse.
RECITALS
A. The Board of Directors of the Corporation has determined that it is
in the best interests of the Corporation to award certain options to certain key
employees for the purpose of creating incentives for such persons to achieve
certain milestones in the development of the business of the Corporation.
B. Optionee is an employee who the Board of Directors believe is
critical to the future success of the business and to the achievement by the
Corporation of its business goals.
AGREEMENT
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set
forth in this Agreement, the Corporation hereby grants to Optionee, as of
____________, the date on which this option was granted to Optionee (the "Grant
Date"), a stock option to purchase up to ________ shares of the Corporation's
Common Stock (the "Option Shares"). The Option Shares shall be purchasable at
the option price per share (the "Option Price") of $______. This option is not
intended to qualify as an incentive stock option.
2. Option Term. This option shall have a maximum term of ten years
measured from the Grant Date and shall expire at the close of business on
____________ (the "Expiration Date"), unless sooner terminated in accordance
with Paragraph 5 or 6 (the "Option Term").
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, provided that this option may be assigned to a
revocable inter vivos trust established for the benefit of Optionee.
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4. Dates of Exercise. This option may be exercised in whole or in part
at any time or from time to time during the Option Term.
5. Accelerated Termination of Option Term. The Option Term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraph (ii) or (iii)
below, should Optionee cease to remain in Service while this option is
outstanding, then the period for exercising this option shall be reduced
to a three (3)-month period commencing with the date of such cessation
of Service, but in no event shall this option be exercisable at any time
after the Expiration Date. Upon the expiration of such three (3)-month
period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the law of descent and distribution shall
have the right to exercise this option. Such right shall lapse and this
option shall cease to be exercisable upon the earlier of (A) the
expiration of the twelve (12) month period measured from the date of
Optionee's death or (B) the Expiration Date. Upon the expiration of such
twelve (12) month period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iii) Should Optionee become permanently disabled and cease by
reason thereof to remain in Service while this option is outstanding,
then the Optionee shall have a period of twelve (12) 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. Optionee shall be deemed to be
permanently disabled if Optionee is unable to engage in any substantial
gainful activity for the Corporation or the parent or subsidiary
corporation retaining his/her services by reason of any medically
determinable physical or mental impairment, which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. Upon the
expiration of such limited period of exercisability or (if earlier) upon
the Expiration Date, this option shall terminate and cease to be
outstanding.
(iv) For purposes of this Paragraph 5 and for all other purposes
under this Agreement:
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A. The Optionee shall be deemed to remain in Service for so long
as the Optionee continues to render periodic services to the Corporation
or any parent or subsidiary corporation, whether as an Employee, a
non-employee member of the board of directors, or an independent
contractor or consultant.
B. The Optionee shall be deemed to be an Employee of the
Corporation and to continue in the Corporation's employ for so long as
the Optionee remains in the employ of the Corporation or one or more of
its parent or subsidiary corporations, 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.
C. A corporation shall be considered to be a subsidiary
corporation of the Corporation if it is a member of an unbroken chain of
corporations beginning with the Corporation, provided each such
corporation in the chain (other than the last corporation) owns, at the
time of determination, stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
D. A corporation shall be considered to be a parent corporation
of the Corporation if it is a member of an unbroken chain ending with
the Corporation, provided each such corporation in the chain (other than
the Corporation) owns, at the time of determination, stock possessing
50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
6. Special Termination of Option.
A. This Option, to the extent not previously exercised, shall terminate
and cease to be exercisable upon the consummation of one or more of the
following shareholder-approved transactions (a "Corporate Transaction") unless
this Option is expressly assumed by the successor corporation or parent thereof:
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) any transaction (other than an issuance of shares by the
Corporation for cash) in or by means of which one or more persons acting
in concert acquire, in the aggregate, more than 50% of the outstanding
shares of the stock of the Corporation.
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B. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the option on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.
C. 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.
7. Adjustment in Option Shares. In the event any change is made to the
Corporation's outstanding Common Stock by reason of any stock split, stock
dividend, combination of shares, exchange of shares, or other change affecting
the outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the total number of Option Shares
subject to this option, and (ii) the Option Price payable per share in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.
8. Privilege of Stock Ownership. The holder of this option shall not
have any of the rights of a shareholder with respect to the Option Shares until
such individual shall have exercised the option and paid the Option Price.
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
in the case of exercise after Optionee's death, the Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions: (i) Execute and deliver to the Secretary of the Corporation a stock
purchase agreement (the "Purchase Agreement") in substantially the form attached
hereto as Exhibit A; (ii) pay the aggregate Option Price for the purchased
shares in one or more forms approved hereunder; and (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.
B. Except as provided in subparagraph C. below, the Option Price payable
hereunder may be paid in cash.
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C. Should the Corporation's outstanding Common Stock be registered under
Section 12(g) of the 1934 Act at the time the option is exercised, then the
Option Price may also be paid as follows:
(i) in shares of Common Stock held by the Optionee 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
(ii) through a special sale and remittance procedure pursuant to
which the Optionee is to provide irrevocable written instructions (a) to
a 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 Option Price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation by reason of such purchase and (b) to the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to effect the sale transaction.
D. For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Purchase Agreement shall have been delivered to the
Corporation, and the fair market value of a share of Common Stock on any
relevant date shall be determined in accordance with subparagraphs (i) through
(iii) below:
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq Stock Market
or the Nasdaq National Market, the fair market value shall be the
closing selling price of one share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers through the Nasdaq Stock Market or the Nasdaq
National Market. If there is no closing selling price for the Common
Stock on the date in question, then the closing selling price on the
last preceding date for which such quotation exists shall be
determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted to
trading 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 Corporation 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 reported
sale of Common Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
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(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the
over-the-counter market, or if the Board of Directors of the Corporation
determines that the value determined pursuant to subparagraphs (i) and
(ii) above does not accurately reflect the fair market value of the
Common Stock, then such fair market value shall be determined by the
Board of Directors of the Corporation after taking into account such
factors as the Board of Directors of the Corporation shall deem
appropriate.
E. As soon after the Exercise Date as practical, the Corporation shall
mail or deliver to Optionee, or to the other person or persons entitled thereto
in accordance with the terms of this Option or the Purchase Agreement, a
certificate or certificates representing the shares so purchased and paid for,
with the appropriate legends affixed thereto.
F. In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of Option Shares upon
such exercise shall be subject to compliance by the Corporation and the Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Corporation's Common
Stock may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall
execute and deliver to the Corporation such representations in writing as may be
requested by the Corporation in order for it to comply with the applicable
requirements of Federal and State securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, 5 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Corporation.
12. REPURCHASE RIGHTS. THE OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO REPURCHASE RIGHTS
AND RIGHTS OF FIRST REFUSAL AS SET FORTH IN THE PURCHASE AGREEMENT TO BE
EXECUTED BY OPTIONEE UPON EXERCISE THIS OPTION.
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 in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in
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writing and addressed to Optionee at the address indicated below Optionee's
signature line. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.
14. No Employment or Service Contract. Nothing in this Agreement shall
confer upon the Optionee any right to continue in the Service of the Corporation
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation or the Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason whatsoever, with or without cause.
15. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
16. Withholding. Optionee hereby agrees to make appropriate arrangements
with the Corporation or parent or subsidiary corporation employing Optionee for
the satisfaction of all Federal, State or local income tax withholding
requirements and Federal social security employee tax requirements applicable to
the exercise of this option.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
NANOGEN, INC.
By:
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Title:
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Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Optionee
Address:
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The undersigned spouse of Optionee has read and hereby approves the
foregoing Performance Stock Option Agreement. In consideration of the
Corporation's granting the Optionee the right to acquire the Option Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
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irrevocably bound by all the terms and provisions of such Agreement.
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Address:
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EXHIBIT A
STOCK PURCHASE AGREEMENT
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NANOGEN, INC.
STOCK PURCHASE AGREEMENT
UNDER PERFORMANCE STOCK OPTION AGREEMENT
AGREEMENT made as of this _____ day of _____________, 199_, by and among
Nanogen, Inc. (the "Corporation"), _______________ (the "Optionee") and
_____________, the Optionee's spouse.
1. EXERCISE OF OPTION.
1.1 Exercise. Optionee hereby purchases _______ shares ("Purchased
Shares") of the Corporation's common stock ("Common Stock") pursuant to that
certain option ("Option") granted Optionee on ______________ ("Grant Date") to
purchase up to _____________ shares of the Common Stock ("Total Purchasable
Shares") at an option price of $_____ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Corporate Secretary of the Corporation, Optionee shall pay the Option Price for
the Purchased Shares in accordance with the provisions of the agreement between
the Corporation and Optionee evidencing the Option (the "Option Agreement") and
shall deliver whatever additional documents may be required by the Option
Agreement as a condition for exercise, together with (if any Purchased Shares
are Unvested Shares as defined in Section 5.1 hereof) a duly-executed blank
Assignment Separate from Certificate (in the form attached hereto as Exhibit I).
1.3 Delivery of Certificates. The certificates representing any
Purchased Shares which are Unvested Shares hereunder shall be held in escrow by
the Corporate Secretary of the Corporation in accordance with the provisions of
Article 7. Certificates representing Vested Shares shall be delivered to
Optionee within a reasonable time of the date hereof.
1.4 Shareholder Rights. Until such time as the Corporation actually
exercises any repurchase right, rights of first refusal or special purchase
right under this Agreement, Optionee (or any successor in interest) shall have
all the rights of a shareholder (including voting and dividend rights) with
respect to the Purchased Shares, including the Purchased Shares held in escrow
under Article 7, subject, however, to the transfer restrictions of Article 4.
2. SECURITIES LAW COMPLIANCE.
2.1 Purchase Entirely for Own Account. This Agreement is made with
Participant in reliance upon Participant's representation to the Corporation,
which by Participant's
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execution of this Agreement Participant hereby confirms, that the Shares are
being acquired for investment for Participant's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that Participant has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Participant further represents that Participant does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participations to such person or to any third person, with
respect to any of the Shares. Participant represents that he has full power and
authority to enter into this Agreement.
2.2 Exemption from Registration. The Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
are accordingly being issued to Optionee in reliance upon the exemption from
such registration provided by Rule 701 of the Securities and Exchange Commission
for stock issuances under written compensatory agreements.
2.3 Restricted Securities.
A. Optionee hereby confirms that Optionee has been informed that the
Purchased Shares are restricted securities under the 1933 Act and may not be
resold or transferred unless the Purchased Shares are first registered under the
Federal securities laws or unless an exemption from such registration is
available. Accordingly, Optionee hereby acknowledges that Optionee is prepared
to hold the Purchased Shares for an indefinite period and that Optionee is aware
that Rule 144 of the Securities and Exchange Commission issued under the 1933
Act is not presently available to exempt the sale of the Purchased Shares from
the registration requirements of the 1933 Act.
B. Upon the expiration of the ninety (90)-day period immediately
following the date on which the Corporation first becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Purchased Shares, to the extent vested under Article 5, may
be sold (without registration) pursuant to the applicable requirements of Rule
144. If Optionee is at the time of such sale an affiliate of the Corporation for
purposes of Rule 144 or was such an affiliate during the preceding three (3)
months, then the sale must comply with all the requirements of Rule 144
(including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the one (1)-year holding period requirement
of the Rule will not be applicable. If Optionee is not at the time of the sale
an affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Purchased Shares held for less than two
(2) years following
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payment in cash of the Option Price therefor) will be applicable to the sale.
C. Should the Corporation not become subject to the reporting
requirements of the Exchange Act, then Optionee may, provided he/she is not at
the time an affiliate of the Corporation (nor was such an affiliate during the
preceding three (3) months), sell the Purchased Shares (without registration)
pursuant to paragraph (k) of Rule 144 after the Purchased Shares have been held
for a period of two (2) years following the payment in cash of the Option Price
for such shares.
2.4 Disposition of Shares. Optionee hereby agrees that Optionee shall
make no disposition of the Purchased Shares (other than a permitted transfer
under paragraph 4.1) unless and until there is compliance with all of the
following requirements:
(a) Optionee shall have notified the Corporation of the proposed
disposition and provided a summary of the terms and conditions of the
proposed disposition.
(b) Optionee shall have completed and provided to the Corporation
a written statement, on a form to be prepared and provided by the
Corporation at the Corporation's sole cost, that Optionee is in
compliance with all requirements of this Agreement applicable to the
disposition of the Purchased Shares.
(c) Optionee shall have provided the Corporation with a written
statement, on a form to be prepared and provided by the Corporation at
the Corporation's sole cost, that, to the best of Optionee's knowledge
and belief, (i) the proposed disposition does not require registration
of the Purchased Shares under the 1933 Act or (ii) all appropriate
action necessary for compliance with the registration requirements of
the 1933 Act or of any exemption from registration available under the
1933 Act (including Rule 144) has been taken.
The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Article 2 nor (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
2.5 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with restrictive legends, including one or more of the
following legends:
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(i) "The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares may not be sold or
offered for sale in the absence of (a) an effective registration statement for
the shares under such Act, (b) a 'no action' letter of the Securities and
Exchange Commission with respect to such sale or offer, or (c) satisfactory
assurances to the Corporation that registration under such Act is not required
with respect to such sale or offer."
(ii) "The shares represented by this certificate are unvested and
accordingly may not be sold, assigned, transferred, encumbered, or in any manner
disposed of except in conformity with the terms of a written agreement dated
__________________, 199_ between the Corporation and the registered holder of
the shares (or the predecessor in interest to the shares). Such agreement grants
certain repurchase rights and rights of first refusal to the Corporation (or its
assignees) upon the sale, assignment, transfer, encumbrance or other disposition
of the Corporation's shares or upon termination of service with the Corporation.
The Corporation will upon written request furnish a copy of such agreement to
the holder hereof without charge."
3. SPECIAL TAX ELECTION.
3.1 Section 83(b) Election. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S
SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S TO TIMELY FILE ANY ELECTION WHICH
OPTIONEE DETERMINES TO BE APPROPRIATE UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER
BEHALF. An appropriate form for filing a Section 83(b) election is attached
hereto as Exhibit II. Such filing must be made within 30-days of the purchase of
the Purchased Shares, should be made by registered or certified mail, return
receipt requested, and Optionee must retain two (2) copies of the completed form
for filing with his or her State and Federal tax returns for the current tax
year and an additional copy for his or her records.
4. TRANSFER RESTRICTIONS.
4.1 Restriction on Transfer. Optionee shall not transfer, assign,
encumber or otherwise dispose of any of the Purchased Shares which are subject
to the Corporation's Repurchase Right under Article 5. In addition, Purchased
Shares which are released from the Repurchase Right shall not be transferred,
assigned, encumbered or otherwise made the subject of disposition in
contravention of the Corporation's First Refusal Right under Article 6. Such
restrictions on transfer, however, shall not be applicable to (i) a gratuitous
transfer of the Purchased Shares made to the Optionee's spouse or issue,
including adopted children, or to a trust for the exclusive benefit of the
Optionee or the Optionee's spouse or issue, provided and only if the Optionee
obtains the Corporation's
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prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to the Optionee's will or the laws of
intestate succession or (iii) a transfer to the Corporation in pledge as
security for any purchase money indebtedness incurred by the Optionee in
connection with the acquisition of the Purchased Shares.
4.2 Transferee Obligations. Each person (other than the Corporation) to
whom the Purchased Shares are transferred by means of one of the permitted
transfers specified in paragraph 4.1 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Corporation that such
person is bound by the provisions of this Agreement and that the transferred
shares are subject to (i) both the Corporation's Repurchase Right and the
Corporation's First Refusal Right granted hereunder and (ii) the market
stand-off provisions of paragraph 4.4, to the same extent such shares would be
so subject if retained by the Optionee.
4.3 Definition of Owner. For purposes of Articles 4, 5, 6 and 7 of this
Agreement, the term "Owner" shall include the Optionee and all subsequent
holders of the Purchased Shares who derive their chain of ownership through a
permitted transfer from the Optionee in accordance with paragraph 4.1.
4.4 Market Stand-Off Provisions.
A. In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Purchased Shares without the prior written consent of the
Corporation or its underwriters. Such limitations shall be in effect for such
period of time from and after the effective date of such registration statement
as may be requested by the Corporation or such underwriters; provided, however,
that in no event shall such period exceed one hundred-eighty (180) days. The
limitations of this paragraph 4.4 shall remain in effect for the two-year period
immediately following the effective date of the Corporation's initial public
offering and shall thereafter terminate and cease to have any force or effect.
B. Owner shall be subject to the market stand-off provisions of this
paragraph 4.4 provided and only if the officers and directors of the Corporation
are also subject to similar arrangements.
C. In the event of any stock dividend, stock split, recapitalization or
other change affecting the Corporation's outstanding Common Stock effected as a
class without receipt of
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consideration, then any new, substituted or additional securities distributed
with respect to the Purchased Shares shall be immediately subject to the
provisions of this paragraph 4.4, to the same extent the Purchased Shares are at
such time covered by such provisions.
D. In order to enforce the limitations of this paragraph 4.4, the
Corporation may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.
5. REPURCHASE RIGHT.
5.1 Grant. The Corporation is hereby granted the right (the "Repurchase
Right"), exercisable at any time during the sixty (60)-day period following the
date the Optionee ceases for any reason to remain in Service or (if later)
during the sixty (60)-day period following the execution date of this Agreement,
to repurchase at the Option Price all or (at the discretion of the Corporation
and with the consent of the Optionee) any portion of the Purchased Shares in
which the Optionee has not acquired a vested interest, if any, in accordance
with the vesting provisions of paragraph 5.3 (such shares to be herein referred
to as "Unvested Shares"). For purposes of this Agreement, the Optionee shall be
deemed to remain in Service for so long as the Optionee continues to render
periodic services to the Corporation or any parent or subsidiary corporation,
whether as an employee, a non-employee member of the board of directors, or an
independent contractor or consultant.
5.2 Exercise of the Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the applicable sixty (60)-day period specified in
paragraph 5.1. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the date of notice. To the extent one or
more certificates representing Unvested Shares may have been previously
delivered out of escrow to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Corporation the certificates representing the Unvested Shares to be
repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents (including the cancellation
of any purchase-money indebtedness), an amount equal to the Option Price
previously paid for the Unvested Shares which are to be repurchased.
5.3 Termination of the Repurchase Right. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 5.2.
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In addition, the Total Purchasable Shares shall vest on ______________
(the "Employment Vesting Date"), provided that Optionee has remained in Service
to the Corporation at all times from and after the Grant Date through the
Employment Vesting Date.
Notwithstanding the above, vesting of a portion of the Total Purchasable
Shares shall be accelerated upon the attainment of the "Objectives" set forth in
Exhibit III in accordance with the weighted percentage of the Total Purchasable
Shares for each Objective also set forth in Exhibit III.
All Purchased Shares as to which the Repurchase Right lapses shall,
however, continue to be subject to (i) the First Refusal Right of the
Corporation and its assignees under Article 6, (ii) the market stand-off
provisions of paragraph 4.4 and (iii) the Special Purchase Right under Article
8.
5.4 Aggregate Vesting Limitation. If the Option is exercised in more
than one increment so that the Optionee is a party to one or more other Stock
Purchase Agreements ("Prior Purchase Agreements") which are executed prior to
the date of this Agreement, then the total number of Purchased Shares as to
which the Optionee shall be deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not exceed in the aggregate
the number of Purchased Shares in which the Optionee would otherwise at the time
be vested, in accordance with the vesting provisions of paragraph 5.3, had all
the Purchased Shares been acquired exclusively under this Agreement.
5.5 Fractional Shares. No fractional shares shall be repurchased by the
Corporation. Accordingly, should the Repurchase Right extend to a fractional
share (in accordance with the vesting provisions of paragraph 5.3) at the time
the Optionee ceases Service, then such fractional share shall be added to any
fractional share in which the Optionee is at such time vested in order to make
one whole vested share no longer subject to the Repurchase Right.
5.6 Additional Shares or Substituted Securities. In the event of any
stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which is
by reason of any such transaction distributed with respect to the Purchased
Shares shall be immediately subject to the Repurchase Right, but only to the
extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments to reflect the distribution of such securities or property shall be
made to the number of Purchased Shares and Total Purchasable Shares hereunder
and to the price per share to be paid upon the exercise of the Repurchase Right
in order to
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17
reflect the effect of any such transaction upon the Corporation's capital
structure; provided, however, that the aggregate purchase price shall remain the
same.
5.7 Corporate Transaction.
A. Immediately prior to the consummation of any of the following
shareholder-approved transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) any transaction (other than an issuance of shares by the
Corporation for cash) in or by means of which one or more persons acting
in concert acquire, in the aggregate, more than 50% of the outstanding
shares of the stock of the Corporation,
the Repurchase Right shall automatically lapse in its entirety except to the
extent the Repurchase Right is to be assigned to the successor corporation (or
its parent company) in connection with such Corporate Transaction.
B. To the extent the Repurchase Right remains in effect following such
Corporate Transaction, such right shall apply to the new capital stock or other
property (including cash) received in exchange for the Purchased Shares in
consummation of the Corporate Transaction, but only to the extent the Purchased
Shares are at the time covered by such right. Appropriate adjustments shall be
made to the price per share payable upon exercise of the Repurchase Right to
reflect the effect of the Corporate Transaction upon the Corporation's capital
structure; provided, however, that the aggregate purchase price shall remain the
same.
C. 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.
6. RIGHT OF FIRST REFUSAL.
6.1 Grant. The Corporation is hereby granted rights of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Purchased Shares in which the Optionee has vested in accordance
with the vesting provisions of Article 5. For purposes of this Article 6, the
term "transfer" shall include any sale, assignment, pledge, encumbrance or other
disposition for value of the Purchased
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18
Shares intended to be made by the Owner, but shall not include any of the
permitted transfers under paragraph 4.1.
6.2 Notice of Intended Disposition. In the event the Owner desires to
accept a bona fide third-party offer for the transfer of any or all of the
Purchased Shares (the shares subject to such offer to be hereinafter called the
"Target Shares"), Owner shall promptly (i) deliver to the Corporate Secretary of
the Corporation written notice (the "Disposition Notice") of the terms and
conditions of the offer, including the purchase price and the identity of the
third-party offeror, and (ii) provide satisfactory proof that the disposition of
the Target Shares to such third-party offeror would not be in contravention of
the provisions set forth in Articles 2 and 4 of this Agreement.
6.3 Exercise of Right. The Corporation shall, for a period of forty-five
(45) days following receipt of the Disposition Notice, have the right to
repurchase any or all of the Target Shares specified in the Disposition Notice
upon the same terms and conditions specified therein or upon terms and
conditions which do not materially vary from those specified therein. Such right
shall be exercisable by delivery of written notice (the "Exercise Notice") to
Owner prior to the expiration of the forty-five (45)-day exercise period. If
such right is exercised with respect to all the Target Shares specified in the
Disposition Notice, then the Corporation (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than ten (10) business days after delivery of the Exercise Notice; and at
such time Owner shall deliver to the Corporation the certificates representing
the Target Shares to be repurchased, each certificate to be properly endorsed
for transfer. To the extent any of the Target Shares are at the time held in
escrow under Article 7, the certificates for such shares shall automatically be
released from escrow and delivered to the Corporation for purchase. Should the
purchase price specified in the Disposition Notice be payable in property other
than cash or evidences of indebtedness, the Corporation (or its assignees) shall
have the right to pay the purchase price in the form of cash equal in amount to
the value of such property. If the Owner and the Corporation (or its assignees)
cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser
of recognized standing selected by the Corporation (or its assignees) within
(20) days after the Corporation's receipt of the Disposition Notice, whose
appraisal shall be determinative of such value. The cost of such appraisal shall
be paid entirely by the Corporation. The closing shall then be held on the later
of (i) the tenth business day following delivery of the Exercise Notice or (ii)
the tenth business day after such cash valuation shall have been made.
-9-
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6.4 Non-Exercise of Right. In the event the Exercise Notice is not given
to Owner within forty-five (45) days following the date of the Corporation's
receipt of the Disposition Notice, Owner shall have a period of thirty (30) days
thereafter in which to sell or otherwise dispose of the Target Shares to the
third-party offeror identified in the Disposition Notice upon terms and
conditions (including the purchase price) no more favorable to such third-party
offeror than those specified in the Disposition Notice; provided, however, that
any such sale or disposition must not be effected in contravention of the
provisions of Article 2 of this Agreement. To the extent any of the Target
Shares are at the time held in escrow under Article 7, the certificates for such
shares shall automatically be released from escrow and surrendered to the Owner.
The third-party offeror shall acquire the Target Shares free and clear of the
Corporation's Repurchase Right under Article 5 and the Corporation's First
Refusal Right hereunder, but the acquired shares shall remain subject to (i) the
securities law restrictions of Article 2 and (ii) the market stand-off
provisions of paragraph 4.4. In the event Owner does not effect such sale or
disposition of the Target Shares within the specified thirty (30)-day period,
the Corporation's First Refusal Right shall continue to be applicable to any
subsequent disposition of the Target Shares by Owner until such right lapses in
accordance with paragraph 6.7.
6.5 Partial Exercise of Right. In the event the Corporation (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) to elect not to sell any shares to the Corporation pursuant
to the First Refusal Right, but to instead sell all the Target Shares to
the third-party offeror identified in the Disposition Notice (which sale
shall otherwise be in full compliance with the requirements of paragraph
6.4 as if the Corporation did not offer to exercise the First Refusal
Right with respect to any of the Target Shares); or
(ii) sale to the Corporation (or its assignees) of the portion of
the Target Shares which the Corporation (or its assignees) has elected
to purchase, such sale to be effected in substantial conformity with the
provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to the Corporation under
this paragraph 6.5 shall be deemed to be an election by Owner to sell the Target
Shares pursuant to alternative (i) above.
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6.6 Recapitalization/Merger.
A. In the event of any stock dividend, stock split, recapitalization or
other transaction affecting the Corporation's outstanding Common Stock as a
class effected without receipt of consideration, then any new, substituted or
additional securities or other property which is by reason of such transaction
distributed with respect to the Purchased Shares shall be immediately subject to
the Corporation's First Refusal Right hereunder, but only to the extent the
Purchased Shares are at the time covered by such right.
B. In the event of any of the following transactions:
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to person or persons other than those
who held such securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the State in
which the Corporation is incorporated, or to create a holding company
structure,
the Corporation's First Refusal Right shall remain in full force and effect and
shall apply to the new capital stock or other property received in exchange for
the Purchased Shares in consummation of the transaction but only to the extent
the Purchased Shares are at the time covered by such right.
6.7 Lapse. The First Refusal Right under this Article 6 shall lapse and
cease to have effect upon the earliest to occur of (i) the first date on which
shares of the Corporation's Common Stock are held of record by more than five
hundred (500) persons, (ii) a determination is made by the Corporation's Board
of Directors that a public market exists for the outstanding shares of the
Corporation's Common Stock, or (iii) a firm commitment underwritten public
offering pursuant to an effective registration statement under the 1933 Act,
covering the offer and sale of the Corporation's Common Stock in the aggregate
amount of at least $5,000,000. However, the market stand-off provisions of
paragraph 4.4 shall continue to remain in full force and effect following the
lapse of the First Refusal Right hereunder.
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7. ESCROW.
7.1 Deposit. Upon issuance, the certificates for any Unvested Shares
purchased hereunder shall be deposited in escrow with the Corporate Secretary of
the Corporation to be held in accordance with the provisions of this Article 7.
Each deposited certificate shall be accompanied by a duly-executed Assignment
Separate from Certificate in the form of Exhibit I. The deposited certificates,
together with any other assets or securities from time to time deposited with
the Corporate Secretary pursuant to the requirements of this Agreement, shall
remain in escrow until such time or times as the certificates (or other assets
and securities) are to be released or otherwise surrendered for cancellation in
accordance with paragraph 7.3. Upon delivery of the certificates (or other
assets and securities) to the Corporate Secretary of the Corporation, the Owner
shall be issued an instrument of deposit acknowledging the number of Unvested
Shares (or other assets and securities) delivered in escrow.
7.2 Recapitalization. All regular cash dividends on the Unvested Shares
(or other securities at the time held in escrow) shall be paid directly to the
Owner and shall not be held in escrow. However, in the event of any stock
dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration or in the event of a Corporate Transaction, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporate Secretary to be held in escrow under this Article 7,
but only to the extent the Unvested Shares are at the time subject to the escrow
requirements of paragraph 7.1.
7.3 Release/Surrender. The Unvested Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Corporation for repurchase and cancellation:
(i) Should the Corporation (or its assignees) elect to exercise
the Repurchase Right under Article 5 with respect to any Unvested
Shares, then the escrowed certificates for such Unvested Shares
(together with any other assets or securities issued with respect
thereto) shall be delivered to the Corporation concurrently with the
payment to the Owner, in cash or cash equivalent (including the
cancellation of any purchase-money indebtedness), of an amount equal to
the aggregate Option Price for such Unvested Shares, and the Owner shall
cease to have any further rights or claims with respect to such Unvested
Shares (or other assets or securities attributable to such Unvested
Shares).
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(ii) Should the Corporation (or its assignees) elect to exercise
its First Refusal Right under Article 6 with respect to any vested
Target Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall, concurrently with the payment of
the paragraph 6.3 purchase price for such Target Shares to the Owner, be
surrendered to the Corporation, and the Owner shall cease to have any
further rights or claims with respect to such Target Shares (or other
assets or securities).
(iii) Should the Corporation (or its assignees) elect not to
exercise its First Refusal Right under Article 6 with respect to any
Target Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall be surrendered to the Owner for
disposition in accordance with provisions of paragraph 6.4.
(iv) As the interest of the Optionee in the Unvested Shares (or
any other assets or securities attributable thereto) vests in accordance
with the provisions of Article 5, the certificates for such vested
shares (as well as all other vested assets and securities) shall be
released from escrow and delivered to the Owner in accordance with the
following schedule:
a. The initial release of vested shares (or other vested
assets and securities) from escrow shall be effected within
thirty (30) days following the expiration of the initial twelve
(12)-month period measured from the Grant Date.
b. Subsequent releases of vested shares (or other vested
assets and securities) from escrow shall be effected at
semi-annual intervals thereafter, with the first such semi-annual
release to occur eighteen (18) months after the Grant Date.
c. Upon the Optionee's cessation of Service, any escrowed
Purchased Shares (or other assets or securities) in which the
Optionee is at the time vested shall be promptly released from
escrow.
d. Upon any earlier termination of the Corporation's
Repurchase Right in accordance with the applicable provisions of
Article 5, any Purchased Shares (or other assets or securities)
at the time held in escrow hereunder shall promptly be released
to the Owner as fully vested shares or other property.
(v) All Purchased Shares (or other assets or securities) released
from escrow in accordance with the
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provisions of subparagraph (iv) above shall nevertheless remain subject
to (I) the Corporation's First Refusal Right under Article 6 until such
right lapses pursuant to paragraph 6.7, (II) the market stand-off
provisions of paragraph 4.4 until such provisions terminate in
accordance therewith and (III) the Special Purchase Right under Article
8.
8. MARITAL DISSOLUTION OR LEGAL SEPARATION.
8.1 Grant. In connection with the dissolution of the Optionee's marriage
or the legal separation of the Optionee and the Optionee's spouse, the
Corporation shall have the right (the "Special Purchase Right"), exercisable at
any time during the thirty (30)-day period following the Corporation's receipt
of the required Dissolution Notice under paragraph 8.2, to purchase from the
Optionee's spouse, in accordance with the provisions of paragraph 8.3, all or
any portion of the Purchased Shares which would otherwise be awarded to such
spouse in settlement of any community property or other marital property rights
such spouse may have in such shares.
8.2 Notice of Decree or Agreement. The Optionee shall promptly provide
the Secretary of the Corporation with written notice (the "Dissolution Notice")
of (i) the entry of any judicial decree or order resolving the property rights
of the Optionee and the Optionee's spouse in connection with their marital
dissolution or legal separation or (ii) the execution of any contract or
agreement relating to the distribution or division of such property rights. The
Dissolution Notice shall be accompanied by a copy of the actual decree of
dissolution or settlement agreement between the Optionee and the Optionee's
spouse which provides for the award to the spouse of one or more Purchased
Shares in settlement of any community property or other marital property rights
such spouse may have in such shares.
8.3 Exercise of Special Purchase Right. The price at which the Special
Purchase Right shall be exercisable by the Corporation will be the higher of the
Option Price as set forth in Section 1.1 hereof or the fair market value of the
shares as of the date the Special Purchase Right is exercised. The right shall
be exercised by delivery of written notice (the "Purchase Notice") to the
Optionee and the Optionee's spouse within thirty (30) days after the
Corporation's receipt of the Dissolution Notice. The Purchase Notice shall
indicate the number of shares to be purchased by the Corporation, the date such
purchase is to be effected (such date to be not less than five (5) business
days, nor more than ten (10) business days, after the date of the Purchase
Notice), and the price to be paid for such Purchased Shares. The Optionee (or
the Optionee's spouse, to the extent such spouse has physical possession of the
Purchased Shares) shall, prior to the close of business on the date specified
for the purchase, deliver to the Corporate Secretary
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of the Corporation the certificates representing the shares to be purchased,
each certificate to be properly endorsed for transfer. To the extent any of the
shares to be purchased by the Corporation are at the time held in escrow under
Article 7, the certificates for such shares shall be promptly delivered out of
escrow to the Corporation. The Corporation shall, concurrently with the receipt
of the stock certificates, pay to the Optionee's spouse (in cash or cash
equivalents) an amount equal to the price to be paid for such shares as
specified in the Purchase Notice.
If the Optionee's spouse does not agree with the Corporation's
determination of the fair market value of the shares, then the spouse shall
promptly notify the Corporation in writing of such disagreement and the fair
market value of such shares shall thereupon be determined by an appraiser of
recognized standing selected by the Corporation whose appraisal shall be
determinative of such value. The cost of the appraisal shall be borne entirely
by the Corporation. The closing shall then be held on the fifth business day
following the completion of such appraisal; provided, however, that if the
appraised value is more than fifteen percent (15%) greater than the fair market
value specified for the shares in the Purchase Notice, the Corporation shall
have the right, exercisable prior to the expiration of such five
(5)-business-day period, to rescind the exercise of the Special Purchase Right
and thereby revoke its election to purchase the shares awarded to the spouse.
8.4 Lapse. The Special Purchase Right under this Article 8 shall lapse
and cease to have effect upon the earlier to occur of (i) the first date on
which the First Refusal Right under Article 6 lapses or (ii) the expiration of
the thirty (30)-day exercise period specified in paragraph 8.3, to the extent
the Special Purchase Right is not timely exercised in accordance with such
paragraph.
9. GENERAL PROVISIONS.
9.1 Assignment. The Corporation may assign its Repurchase Right under
Article 5, its First Refusal Right under Article 6 and/or its Special Purchase
Right under Article 8 to any person or entity selected by the Corporation's
Board of Directors, including (without limitation) one or more shareholders of
the Corporation.
If the assignee of the Repurchase Right is other than a one hundred
percent (100%) owned subsidiary corporation of the Corporation or the parent
corporation owning one hundred percent (100%) of the Corporation, then such
assignee must make a cash payment to the Corporation, upon the assignment of the
Repurchase Right, in an amount equal to the excess (if any) of (i) the fair
market value of the Unvested Shares at the time subject to the assigned
Repurchase Right over (ii) the aggregate repurchase price payable for the
Unvested Shares thereunder.
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9.2 Definitions. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to
be a parent corporation of the Corporation, provided each such
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.
(ii) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered
to be a subsidiary of the Corporation, provided each such 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.
9.3 No Employment or Service Contract. Nothing in this Agreement shall
confer upon the Optionee any right to continue in the Service of the Corporation
(or any parent or subsidiary corporation of the Corporation employing or
retaining Optionee) for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any parent or
subsidiary corporation of the Corporation employing or retaining Optionee) or
the Optionee, which rights are hereby expressly reserved by each, to terminate
the Optionee's Service at any time for any reason whatsoever, with or without
cause.
9.4 Notices. Any notice required in connection with (i) the Repurchase
Right, the Special Purchase Right or the First Refusal Right or (ii) the
disposition of any Purchased Shares covered thereby shall be given in writing
and shall be deemed effective upon personal delivery or upon deposit in the
United States mail, registered or certified, postage prepaid and addressed to
the party entitled to such notice at the address indicated below such party's
signature line on this Agreement or at such other address as such party may
designate by ten (10) days advance written notice under this paragraph 9.4 to
all other parties to this Agreement.
9.5 No Waiver. The failure of the Corporation (or its assignees) in any
instance to exercise the Repurchase Right granted under Article 5, or the
failure of the Corporation (or its assignees) in any instance to exercise the
First Refusal Right granted under Article 6, or the failure of the Corporation
(or its assignees) in any instance to exercise the Special Purchase Right
granted under Article 8 shall not constitute a
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26
waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other agreement
between the Corporation and the Optionee or the Optionee's spouse. No waiver of
any breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different nature.
9.6 Cancellation of Shares. If the Corporation (or its assignees) shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to he repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
10. MISCELLANEOUS PROVISIONS.
10.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
10.2 Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
10.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State without resort to
that State's conflict-of-laws rules.
10.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this
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Agreement and have agreed in writing to join herein and be bound by the terms
and conditions hereof.
10.6 Power of Attorney. Optionee's spouse hereby appoints Optionee his
or her true and lawful attorney in fact, for him or her and in his or her name,
place and ▇▇▇▇▇, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further instruments and
take such further actions as may reasonably be necessary to carry out the intent
of this Agreement. Optionee's spouse further gives and grants unto Optionee as
his or her attorney in fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he or she might or could do if personally present, with full power
of substitution and revocation, hereby ratifying and confirming all that
Optionee shall lawfully do and cause to be done by virtue of this power of
attorney.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
NANOGEN, INC.
By:
---------------------------------
Title:
------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------
Optionee
Address:
------------------------------------
------------------------------------
The undersigned spouse of Optionee has read and hereby approves the
foregoing Performance Stock Option Agreement. In consideration of the
Corporation's granting the Optionee the right to acquire the Option Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement.
------------------------------------
Address:
------------------------------------
------------------------------------
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EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _________________________ hereby sell(s), assign(s)
and transfer(s) unto Nanogen, Inc. (the "Corporation"),
_____________________________ (_______) shares of the Common Stock of the
Corporation standing in his\her name on the books of the Corporation represented
by Certificate No. __________ and do hereby irrevocably constitute and appoint
_________________________________ as Attorney to transfer the said stock on the
books of the Corporation with full power of substitution in the premises.
Dated:_____________________
Signature
----------------------------------
Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Corporation to exercise its
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Optionee.
EXHIBIT I-1
30
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the Internal Revenue
Code, pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address:________________________________________________________________
Taxpayer Ident. No.:____________________________________________________
(2) The property with respect to which the election is being made is ______
shares of the common stock of Nanogen, Inc.
(3) The property was issued on _____________________, 19__.
(4) The taxable year in which the election is being made is the calendar
year 19_.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of annual
and monthly installments over a four (4) year period ending on
___________________________________________________.
(6) The fair market value at the time of transfer (determined without regard
to any restriction other than a restriction which by its terms will
never lapse) is $_________ per share.
(7) The amount paid for such property is $_________ per share.
(8) A copy of this statement was furnished to Nanogen, Inc. for whom
taxpayer rendered the service underlying the transfer of property.
(9) This statement is executed as of: __________________, 19_.
---------------------------------
Spouse (if any)
Taxpayer
This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Restricted Stock Issuance
Agreement.
EXHIBIT II-1
31
NANOGEN, INC.
PERFORMANCE STOCK OPTION AGREEMENT
AGREEMENT made as of this ____ day of ______, 1997, by and among
Nanogen, Inc. (the "Corporation"), _______________, an individual and an
employee of Corporation (the "Optionee") and _________________, the Optionee's
spouse.
RECITALS
A. The Board of Directors of the Corporation has determined that it is
in the best interests of the Corporation to award certain options to certain key
employees for the purpose of creating incentives for such persons to achieve
certain milestones in the development of the business of the Corporation.
B. Optionee is an employee who the Board of Directors believe is
critical to the future success of the business and to the achievement by the
Corporation of its business goals.
AGREEMENT
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions set
forth in this Agreement, the Corporation hereby grants to Optionee, as of
______________, the date on which this option was granted to Optionee (the
"Grant Date"), a stock option to purchase up to __________ shares of the
Corporation's Common Stock (the "Option Shares"). The Option Shares shall be
purchasable at the option price per share (the "Option Price") of $______. This
option is not intended to qualify as an incentive stock option.
2. Option Term. This option shall have a maximum term of ten years
measured from the Grant Date and shall expire at the close of business on
_________________ (the "Expiration Date"), unless sooner terminated in
accordance with Paragraph 5 or 6 (the "Option Term").
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, provided that this option may be assigned to a
revocable inter vivos trust established for the benefit of Optionee.
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4. Dates of Exercise. This option may be exercised in whole or in part
at any time or from time to time during the Option Term.
5. Accelerated Termination of Option Term. The Option Term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should any of the following provisions become
applicable:
(i) Except as otherwise provided in subparagraph (ii) or (iii)
below, should Optionee cease to remain in Service while this option is
outstanding, then the period for exercising this option shall be reduced
to a three (3)-month period commencing with the date of such cessation
of Service, but in no event shall this option be exercisable at any time
after the Expiration Date. Upon the expiration of such three (3)-month
period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding.
(ii) Should Optionee die while this option is outstanding, then
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the law of descent and distribution shall
have the right to exercise this option. Such right shall lapse and this
option shall cease to be exercisable upon the earlier of (A) the
expiration of the twelve (12) month period measured from the date of
Optionee's death or (B) the Expiration Date. Upon the expiration of such
twelve (12) month period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iii) Should Optionee become permanently disabled and cease by
reason thereof to remain in Service while this option is outstanding,
then the Optionee shall have a period of twelve (12) 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. Optionee shall be deemed to be
permanently disabled if Optionee is unable to engage in any substantial
gainful activity for the Corporation or the parent or subsidiary
corporation retaining his/her services by reason of any medically
determinable physical or mental impairment, which can be expected to
result in death or which has lasted or can be expected to last for a
continuous period of not less than twelve (12) months. Upon the
expiration of such limited period of exercisability or (if earlier) upon
the Expiration Date, this option shall terminate and cease to be
outstanding.
(iv) For purposes of this Paragraph 5 and for all other purposes
under this Agreement:
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A. The Optionee shall be deemed to remain in Service for so long
as the Optionee continues to render periodic services to the Corporation
or any parent or subsidiary corporation, whether as an Employee, a
non-employee member of the board of directors, or an independent
contractor or consultant.
B. The Optionee shall be deemed to be an Employee of the
Corporation and to continue in the Corporation's employ for so long as
the Optionee remains in the employ of the Corporation or one or more of
its parent or subsidiary corporations, 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.
C. A corporation shall be considered to be a subsidiary
corporation of the Corporation if it is a member of an unbroken chain of
corporations beginning with the Corporation, provided each such
corporation in the chain (other than the last corporation) owns, at the
time of determination, stock possessing 50% or more of the total
combined voting power of all classes of stock in one of the other
corporations in such chain.
D. A corporation shall be considered to be a parent corporation
of the Corporation if it is a member of an unbroken chain ending with
the Corporation, provided each such corporation in the chain (other than
the Corporation) owns, at the time of determination, stock possessing
50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
6. Special Termination of Option.
A. This Option, to the extent not previously exercised, shall terminate
and cease to be exercisable upon the consummation of one or more of the
following shareholder-approved transactions (a "Corporate Transaction") unless
this Option is expressly assumed by the successor corporation or parent thereof:
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) any transaction (other than an issuance of shares by the
Corporation for cash) in or by means of which one or more persons acting
in concert acquire, in the aggregate, more than 50% of the outstanding
shares of the stock of the Corporation.
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B. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the option on both an aggregate and per
Optionee basis following the consummation of such Corporate Transaction and (ii)
the exercise price payable per share under each outstanding option, provided the
aggregate exercise price payable for such securities shall remain the same.
C. 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.
7. Adjustment in Option Shares. In the event any change is made to the
Corporation's outstanding Common Stock by reason of any stock split, stock
dividend, combination of shares, exchange of shares, or other change affecting
the outstanding Common Stock as a class without receipt of consideration, then
appropriate adjustments shall be made to (i) the total number of Option Shares
subject to this option, and (ii) the Option Price payable per share in order to
reflect such change and thereby preclude a dilution or enlargement of benefits
hereunder.
8. Privilege of Stock Ownership. The holder of this option shall not
have any of the rights of a shareholder with respect to the Option Shares until
such individual shall have exercised the option and paid the Option Price.
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
in the case of exercise after Optionee's death, the Optionee's executor,
administrator, heir or legatee, as the case may be) must take the following
actions: (i) Execute and deliver to the Secretary of the Corporation a stock
purchase agreement (the "Purchase Agreement") in substantially the form attached
hereto as Exhibit A; (ii) pay the aggregate Option Price for the purchased
shares in one or more forms approved hereunder; and (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.
B. Except as provided in subparagraph C. below, the Option Price payable
hereunder may be paid in cash.
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C. Should the Corporation's outstanding Common Stock be registered under
Section 12(g) of the 1934 Act at the time the option is exercised, then the
Option Price may also be paid as follows:
(i) in shares of Common Stock held by the Optionee 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
(ii) through a special sale and remittance procedure pursuant to
which the Optionee is to provide irrevocable written instructions (a) to
a 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 Option Price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to be
withheld by the Corporation by reason of such purchase and (b) to the
Corporation to deliver the certificates for the purchased shares
directly to such brokerage firm in order to effect the sale transaction.
D. For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Purchase Agreement shall have been delivered to the
Corporation, and the fair market value of a share of Common Stock on any
relevant date shall be determined in accordance with subparagraphs (i) through
(iii) below:
(i) If the Common Stock is not at the time listed or admitted to
trading on any stock exchange but is traded on the Nasdaq Stock Market
or the Nasdaq National Market, the fair market value shall be the
closing selling price of one share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers through the Nasdaq Stock Market or the Nasdaq
National Market. If there is no closing selling price for the Common
Stock on the date in question, then the closing selling price on the
last preceding date for which such quotation exists shall be
determinative of fair market value.
(ii) If the Common Stock is at the time listed or admitted to
trading 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 Corporation 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 reported
sale of Common Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
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(iii) If the Common Stock at the time is neither listed nor
admitted to trading on any stock exchange nor traded in the
over-the-counter market, or if the Board of Directors of the Corporation
determines that the value determined pursuant to subparagraphs (i) and
(ii) above does not accurately reflect the fair market value of the
Common Stock, then such fair market value shall be determined by the
Board of Directors of the Corporation after taking into account such
factors as the Board of Directors of the Corporation shall deem
appropriate.
E. As soon after the Exercise Date as practical, the Corporation shall
mail or deliver to Optionee, or to the other person or persons entitled thereto
in accordance with the terms of this Option or the Purchase Agreement, a
certificate or certificates representing the shares so purchased and paid for,
with the appropriate legends affixed thereto.
F. In no event may this option be exercised for any fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of Option Shares upon
such exercise shall be subject to compliance by the Corporation and the Optionee
with all applicable requirements of law relating thereto and with all applicable
regulations of any stock exchange on which shares of the Corporation's Common
Stock may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option, Optionee shall
execute and deliver to the Corporation such representations in writing as may be
requested by the Corporation in order for it to comply with the applicable
requirements of Federal and State securities laws.
11. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, 5 or 6, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the successors, administrators, heirs, legal
representatives and assigns of Optionee and the successors and assigns of the
Corporation.
12. REPURCHASE RIGHTS. THE OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES
ACQUIRED UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO REPURCHASE RIGHTS
AND RIGHTS OF FIRST REFUSAL AS SET FORTH IN THE PURCHASE AGREEMENT TO BE
EXECUTED BY OPTIONEE UPON EXERCISE THIS OPTION.
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 in care of the Corporate Secretary at its principal corporate
offices. Any notice required to be given or delivered to Optionee shall be in
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writing and addressed to Optionee at the address indicated below Optionee's
signature line. All notices shall be deemed to have been given or delivered upon
personal delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.
14. No Employment or Service Contract. Nothing in this Agreement shall
confer upon the Optionee any right to continue in the Service of the Corporation
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Corporation or the Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason whatsoever, with or without cause.
15. Governing Law. The interpretation, performance, and enforcement of
this Agreement shall be governed by the laws of the State of California without
resort to that State's conflict-of-laws rules.
16. Withholding. Optionee hereby agrees to make appropriate arrangements
with the Corporation or parent or subsidiary corporation employing Optionee for
the satisfaction of all Federal, State or local income tax withholding
requirements and Federal social security employee tax requirements applicable to
the exercise of this option.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
NANOGEN, INC.
By:
--------------------------------
Title:
------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
------------------------------------
Optionee
Address:
------------------------------------
------------------------------------
The undersigned spouse of Optionee has read and hereby approves the
foregoing Performance Stock Option Agreement. In consideration of the
Corporation's granting the Optionee the right to acquire the Option Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
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irrevocably bound by all the terms and provisions of such
Agreement.
------------------------------------
Address:
------------------------------------
------------------------------------
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EXHIBIT A
STOCK PURCHASE AGREEMENT
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NANOGEN, INC.
STOCK PURCHASE AGREEMENT
UNDER PERFORMANCE STOCK OPTION AGREEMENT
AGREEMENT made as of this _____ day of _____________, 1997, by and among
Nanogen, Inc. (the "Corporation"), ______________ (the "Optionee") and
___________________, the Optionee's spouse.
1. EXERCISE OF OPTION.
1.1 Exercise. Optionee hereby purchases _______ shares ("Purchased
Shares") of the Corporation's common stock ("Common Stock") pursuant to that
certain option ("Option") granted Optionee on ________________ ("Grant Date") to
purchase up to _____________ shares of the Common Stock ("Total Purchasable
Shares") at an option price of $__________ per share ("Option Price").
1.2 Payment. Concurrently with the delivery of this Agreement to the
Corporate Secretary of the Corporation, Optionee shall pay the Option Price for
the Purchased Shares in accordance with the provisions of the agreement between
the Corporation and Optionee evidencing the Option (the "Option Agreement") and
shall deliver whatever additional documents may be required by the Option
Agreement as a condition for exercise, together with (if any Purchased Shares
are Unvested Shares as defined in Section 5.1 hereof) a duly-executed blank
Assignment Separate from Certificate (in the form attached hereto as Exhibit I).
1.3 Delivery of Certificates. The certificates representing any
Purchased Shares which are Unvested Shares hereunder shall be held in escrow by
the Corporate Secretary of the Corporation in accordance with the provisions of
Article 7. Certificates representing Vested Shares shall be delivered to
Optionee within a reasonable time of the date hereof.
1.4 Shareholder Rights. Until such time as the Corporation actually
exercises any repurchase right, rights of first refusal or special purchase
right under this Agreement, Optionee (or any successor in interest) shall have
all the rights of a shareholder (including voting and dividend rights) with
respect to the Purchased Shares, including the Purchased Shares held in escrow
under Article 7, subject, however, to the transfer restrictions of Article 4.
2. SECURITIES LAW COMPLIANCE.
2.1 Purchase Entirely for Own Account. This Agreement is made with
Participant in reliance upon Participant's representation to the Corporation,
which by Participant's
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execution of this Agreement Participant hereby confirms, that the Shares are
being acquired for investment for Participant's own account, not as a nominee or
agent, and not with a view to the resale or distribution of any part thereof,
and that Participant has no present intention of selling, granting any
participation in, or otherwise distributing the same. By executing this
Agreement, Participant further represents that Participant does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Shares. Participant represents that he has full power and
authority to enter into this Agreement.
2.2 Exemption from Registration. The Purchased Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), and
are accordingly being issued to Optionee in reliance upon the exemption from
such registration provided by Rule 701 of the Securities and Exchange Commission
for stock issuances under written compensatory agreements.
2.3 Restricted Securities.
A. Optionee hereby confirms that Optionee has been informed that the
Purchased Shares are restricted securities under the 1933 Act and may not be
resold or transferred unless the Purchased Shares are first registered under the
Federal securities laws or unless an exemption from such registration is
available. Accordingly, Optionee hereby acknowledges that Optionee is prepared
to hold the Purchased Shares for an indefinite period and that Optionee is aware
that Rule 144 of the Securities and Exchange Commission issued under the 1933
Act is not presently available to exempt the sale of the Purchased Shares from
the registration requirements of the 1933 Act.
B. Upon the expiration of the ninety (90)-day period immediately
following the date on which the Corporation first becomes subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the Purchased Shares, to the extent vested under Article 5, may
be sold (without registration) pursuant to the applicable requirements of Rule
144. If Optionee is at the time of such sale an affiliate of the Corporation for
purposes of Rule 144 or was such an affiliate during the preceding three (3)
months, then the sale must comply with all the requirements of Rule 144
(including the volume limitation on the number of shares sold, the
broker/market-maker sale requirement and the requisite notice to the Securities
and Exchange Commission); however, the one (1)-year holding period requirement
of the Rule will not be applicable. If Optionee is not at the time of the sale
an affiliate of the Corporation nor was such an affiliate during the preceding
three (3) months, then none of the requirements of Rule 144 (other than the
broker/market-maker sale requirement for Purchased Shares held for less than two
(2) years following
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payment in cash of the Option Price therefor) will be applicable
to the sale.
C. Should the Corporation not become subject to the reporting
requirements of the Exchange Act, then Optionee may, provided he/she is not at
the time an affiliate of the Corporation (nor was such an affiliate during the
preceding three (3) months), sell the Purchased Shares (without registration)
pursuant to paragraph (k) of Rule 144 after the Purchased Shares have been held
for a period of two (2) years following the payment in cash of the Option Price
for such shares.
2.4 Disposition of Shares. Optionee hereby agrees that Optionee shall
make no disposition of the Purchased Shares (other than a permitted transfer
under paragraph 4.1) unless and until there is compliance with all of the
following requirements:
(a) Optionee shall have notified the Corporation of the proposed
disposition and provided a summary of the terms and conditions of the
proposed disposition.
(b) Optionee shall have completed and provided to the Corporation
a written statement, on a form to be prepared and provided by the
Corporation at the Corporation's sole cost, that Optionee is in
compliance with all requirements of this Agreement applicable to the
disposition of the Purchased Shares.
(c) Optionee shall have provided the Corporation with a written
statement, on a form to be prepared and provided by the Corporation at
the Corporation's sole cost, that, to the best of Optionee's knowledge
and belief, (i) the proposed disposition does not require registration
of the Purchased Shares under the 1933 Act or (ii) all appropriate
action necessary for compliance with the registration requirements of
the 1933 Act or of any exemption from registration available under the
1933 Act (including Rule 144) has been taken.
The Corporation shall not be required (i) to transfer on its books any
Purchased Shares which have been sold or transferred in violation of the
provisions of this Article 2 nor (ii) to treat as the owner of the Purchased
Shares, or otherwise to accord voting or dividend rights to, any transferee to
whom the Purchased Shares have been transferred in contravention of this
Agreement.
2.5 Restrictive Legends. In order to reflect the restrictions on
disposition of the Purchased Shares, the stock certificates for the Purchased
Shares will be endorsed with restrictive legends, including one or more of the
following legends:
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(i) "The shares represented by this certificate have not been
registered under the Securities Act of 1933. The shares may not be sold or
offered for sale in the absence of (a) an effective registration statement for
the shares under such Act, (b) a 'no action' letter of the Securities and
Exchange Commission with respect to such sale or offer, or (c) satisfactory
assurances to the Corporation that registration under such Act is not required
with respect to such sale or offer."
(ii) "The shares represented by this certificate are unvested and
accordingly may not be sold, assigned, transferred, encumbered, or in any manner
disposed of except in conformity with the terms of a written agreement dated
__________________, 1997 between the Corporation and the registered holder of
the shares (or the predecessor in interest to the shares). Such agreement grants
certain repurchase rights and rights of first refusal to the Corporation (or its
assignees) upon the sale, assignment, transfer, encumbrance or other disposition
of the Corporation's shares or upon termination of service with the Corporation.
The Corporation will upon written request furnish a copy of such agreement to
the holder hereof without charge."
3. SPECIAL TAX ELECTION.
3.1 Section 83(b) Election. OPTIONEE ACKNOWLEDGES THAT IT IS OPTIONEE'S
SOLE RESPONSIBILITY, AND NOT THE CORPORATION'S TO TIMELY FILE ANY ELECTION WHICH
OPTIONEE DETERMINES TO BE APPROPRIATE UNDER SECTION 83(b), EVEN IF OPTIONEE
REQUESTS THE CORPORATION OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS/HER
BEHALF. An appropriate form for filing a Section 83(b) election is attached
hereto as Exhibit II. Such filing must be made within 30-days of the purchase of
the Purchased Shares, should be made by registered or certified mail, return
receipt requested, and Optionee must retain two (2) copies of the completed form
for filing with his or her State and Federal tax returns for the current tax
year and an additional copy for his or her records.
4. TRANSFER RESTRICTIONS.
4.1 Restriction on Transfer. Optionee shall not transfer, assign,
encumber or otherwise dispose of any of the Purchased Shares which are subject
to the Corporation's Repurchase Right under Article 5. In addition, Purchased
Shares which are released from the Repurchase Right shall not be transferred,
assigned, encumbered or otherwise made the subject of disposition in
contravention of the Corporation's First Refusal Right under Article 6. Such
restrictions on transfer, however, shall not be applicable to (i) a gratuitous
transfer of the Purchased Shares made to the Optionee's spouse or issue,
including adopted children, or to a trust for the exclusive benefit of the
Optionee or the Optionee's spouse or issue, provided and only if the Optionee
obtains the Corporation's
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prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to the Optionee's will or the laws of
intestate succession or (iii) a transfer to the Corporation in pledge as
security for any purchase money indebtedness incurred by the Optionee in
connection with the acquisition of the Purchased Shares.
4.2 Transferee Obligations. Each person (other than the Corporation) to
whom the Purchased Shares are transferred by means of one of the permitted
transfers specified in paragraph 4.1 must, as a condition precedent to the
validity of such transfer, acknowledge in writing to the Corporation that such
person is bound by the provisions of this Agreement and that the transferred
shares are subject to (i) both the Corporation's Repurchase Right and the
Corporation's First Refusal Right granted hereunder and (ii) the market
stand-off provisions of paragraph 4.4, to the same extent such shares would be
so subject if retained by the Optionee.
4.3 Definition of Owner. For purposes of Articles 4, 5, 6 and 7 of this
Agreement, the term "Owner" shall include the Optionee and all subsequent
holders of the Purchased Shares who derive their chain of ownership through a
permitted transfer from the Optionee in accordance with paragraph 4.1.
4.4 Market Stand-Off Provisions.
A. In connection with any underwritten public offering by the
Corporation of its equity securities pursuant to an effective registration
statement filed under the 1933 Act, including the Corporation's initial public
offering, Owner shall not sell, make any short sale of, loan, hypothecate,
pledge, grant any option for the purchase of, or otherwise dispose or transfer
for value or otherwise agree to engage in any of the foregoing transactions with
respect to, any Purchased Shares without the prior written consent of the
Corporation or its underwriters. Such limitations shall be in effect for such
period of time from and after the effective date of such registration statement
as may be requested by the Corporation or such underwriters; provided, however,
that in no event shall such period exceed one hundred-eighty (180) days. The
limitations of this paragraph 4.4 shall remain in effect for the two-year period
immediately following the effective date of the Corporation's initial public
offering and shall thereafter terminate and cease to have any force or effect.
B. Owner shall be subject to the market stand-off provisions of this
paragraph 4.4 provided and only if the officers and directors of the Corporation
are also subject to similar arrangements.
C. In the event of any stock dividend, stock split, recapitalization or
other change affecting the Corporation's outstanding Common Stock effected as a
class without receipt of
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consideration, then any new, substituted or additional securities distributed
with respect to the Purchased Shares shall be immediately subject to the
provisions of this paragraph 4.4, to the same extent the Purchased Shares are at
such time covered by such provisions.
D. In order to enforce the limitations of this paragraph 4.4, the
Corporation may impose stop-transfer instructions with respect to the Purchased
Shares until the end of the applicable stand-off period.
5. REPURCHASE RIGHT.
5.1 Grant. The Corporation is hereby granted the right (the "Repurchase
Right"), exercisable at any time during the sixty (60)-day period following the
date the Optionee ceases for any reason to remain in Service or (if later)
during the sixty (60)-day period following the execution date of this Agreement,
to repurchase at the Option Price all or (at the discretion of the Corporation
and with the consent of the Optionee) any portion of the Purchased Shares in
which the Optionee has not acquired a vested interest, if any, in accordance
with the vesting provisions of paragraph 5.3 (such shares to be herein referred
to as "Unvested Shares"). For purposes of this Agreement, the Optionee shall be
deemed to remain in Service for so long as the Optionee continues to render
periodic services to the Corporation or any parent or subsidiary corporation,
whether as an employee, a non-employee member of the board of directors, or an
independent contractor or consultant.
5.2 Exercise of the Repurchase Right. The Repurchase Right shall be
exercisable by written notice delivered to the Owner of the Unvested Shares
prior to the expiration of the applicable sixty (60)-day period specified in
paragraph 5.1. The notice shall indicate the number of Unvested Shares to be
repurchased and the date on which the repurchase is to be effected, such date to
be not more than thirty (30) days after the date of notice. To the extent one or
more certificates representing Unvested Shares may have been previously
delivered out of escrow to the Owner, then Owner shall, prior to the close of
business on the date specified for the repurchase, deliver to the Secretary of
the Corporation the certificates representing the Unvested Shares to be
repurchased, each certificate to be properly endorsed for transfer. The
Corporation shall, concurrently with the receipt of such stock certificates
(either from escrow in accordance with paragraph 7.3 or from Owner as herein
provided), pay to Owner in cash or cash equivalents (including the cancellation
of any purchase-money indebtedness), an amount equal to the Option Price
previously paid for the Unvested Shares which are to be repurchased.
5.3 Termination of the Repurchase Right. The Repurchase Right shall
terminate with respect to any Unvested Shares for which it is not timely
exercised under paragraph 5.2.
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▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Right shall terminate with respect to Purchased Shares
(which to the extent thereof shall "vest") on the basis of performance criteria
determined annually and mutually agreed upon between Optionee and the
Corporation. Such performance criteria, once agreed upon, shall be attached to
this Agreement as Exhibit III.
Exactly twenty-five percent (25%) of the Total Purchasable Shares
shall be eligible for vesting in each of the four successive one-year periods
commencing ______________. To the extent performance criteria set forth in
Exhibit III for the applicable one-year period are not met, and accordingly the
vesting percentage for that year's allotment is less than 100%, Purchased Shares
which do not vest shall thereafter remain subject to the Repurchase Right and
shall not be eligible for vesting in any subsequent year.
All Purchased Shares as to which the Repurchase Right lapses shall,
however, continue to be subject to (i) the First Refusal Right of the
Corporation and its assignees under Article 6, (ii) the market stand-off
provisions of paragraph 4.4 and (iii) the Special Purchase Right under Article
8.
Notwithstanding anything herein to the contrary, if the Optionee resigns
during the first 12 month period of his employment, none of the Purchasable
Shares will vest.
Notwithstanding the above, the Optionee will automatically be vested in
50% of any remaining Unvested Shares if he is terminated "without cause" or if
he terminates employment for "good reason" (even if such termination occurs
before the first anniversary of Optionee's employment).
For purposes hereof, termination "without cause" shall mean an
involuntary termination of Optionee's employment by Corporation for any reason
other than: (1) repeated and willful failure by Optionee to perform duties
reasonably assigned by Corporation; (2) Optionee's repeated gross negligence in
carrying out such duties; (3) Optionee's illegal conduct in carrying out such
duties; (4) Optionee's repeated refusal to comply with lawful and reasonable
instructions from the Corporation's board of directors; or (5) Optionee's
repeated and willful actions contrary to the Corporation's best interests.
For purposes hereof, termination for "good reason" shall mean the
Optionee's termination of employment on account of any of the following without
Optionee's good faith consent: (1) material and adverse change of Optionee's
status, title, position or responsibilities with Corporation; (2) relocation of
Optionee's principal office outside metropolitan San Diego, CA; (3) reduction in
Optionee's base salary or a material reduction of Optionee's other compensation
and benefits; (4) harassment of Optionee by the Corporation or its employees in
violation of law or in frustration of Optionee's abilities to perform his duties
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with the Corporation; (5) request by Corporation or its employees that Optionee
commit an illegal act; (6) material breach of the Corporation's employment
agreement with Optionee; (7) conviction of the Corporation by a court of
competent jurisdiction for a felony or in connection with a fraudulent or
dishonest act; or (8) insolvency or bankruptcy of the Corporation.
5.4 Aggregate Vesting Limitation. If the Option is exercised in more
than one increment so that the Optionee is a party to one or more other Stock
Purchase Agreements ("Prior Purchase Agreements") which are executed prior to
the date of this Agreement, then the total number of Purchased Shares as to
which the Optionee shall be deemed to have a fully-vested interest under this
Agreement and all Prior Purchase Agreements shall not exceed in the aggregate
the number of Purchased Shares in which the Optionee would otherwise at the time
be vested, in accordance with the vesting provisions of paragraph 5.3, had all
the Purchased Shares been acquired exclusively under this Agreement.
5.5 Fractional Shares. No fractional shares shall be repurchased by the
Corporation. Accordingly, should the Repurchase Right extend to a fractional
share (in accordance with the vesting provisions of paragraph 5.3) at the time
the Optionee ceases Service, then such fractional share shall be added to any
fractional share in which the Optionee is at such time vested in order to make
one whole vested share no longer subject to the Repurchase Right.
5.6 Additional Shares or Substituted Securities. In the event of any
stock dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration, then any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which is
by reason of any such transaction distributed with respect to the Purchased
Shares shall be immediately subject to the Repurchase Right, but only to the
extent the Purchased Shares are at the time covered by such right. Appropriate
adjustments to reflect the distribution of such securities or property shall be
made to the number of Purchased Shares and Total Purchasable Shares hereunder
and to the price per share to be paid upon the exercise of the Repurchase Right
in order to reflect the effect of any such transaction upon the Corporation's
capital structure; provided, however, that the aggregate purchase price shall
remain the same.
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5.7 Corporate Transaction.
A. Immediately prior to the consummation of any of the following
shareholder-approved transactions (a "Corporate Transaction"):
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets, or
(iii) any transaction (other than an issuance of shares by the
Corporation for cash) in or by means of which one or more persons acting
in concert acquire, in the aggregate, more than 50% of the outstanding
shares of the stock of the Corporation,
the Repurchase Right shall automatically lapse in its entirety except to the
extent the Repurchase Right is to be assigned to the successor corporation (or
its parent company) in connection with such Corporate Transaction.
B. To the extent the Repurchase Right remains in effect following such
Corporate Transaction, such right shall apply to the new capital stock or other
property (including cash) received in exchange for the Purchased Shares in
consummation of the Corporate Transaction, but only to the extent the Purchased
Shares are at the time covered by such right. Appropriate adjustments shall be
made to the price per share payable upon exercise of the Repurchase Right to
reflect the effect of the Corporate Transaction upon the Corporation's capital
structure; provided, however, that the aggregate purchase price shall remain the
same.
C. 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.
6. RIGHT OF FIRST REFUSAL.
6.1 Grant. The Corporation is hereby granted rights of first refusal
(the "First Refusal Right"), exercisable in connection with any proposed
transfer of the Purchased Shares in which the Optionee has vested in accordance
with the vesting provisions of Article 5. For purposes of this Article 6, the
term "transfer" shall include any sale, assignment, pledge, encumbrance or other
disposition for value of the Purchased Shares intended to be made by the Owner,
but shall not include any of the permitted transfers under paragraph 4.1.
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6.2 Notice of Intended Disposition. In the event the Owner desires to
accept a bona fide third-party offer for the transfer of any or all of the
Purchased Shares (the shares subject to such offer to be hereinafter called the
"Target Shares"), Owner shall promptly (i) deliver to the Corporate Secretary of
the Corporation written notice (the "Disposition Notice") of the terms and
conditions of the offer, including the purchase price and the identity of the
third-party offeror, and (ii) provide satisfactory proof that the disposition of
the Target Shares to such third-party offeror would not be in contravention of
the provisions set forth in Articles 2 and 4 of this Agreement.
6.3 Exercise of Right. The Corporation shall, for a period of forty-five
(45) days following receipt of the Disposition Notice, have the right to
repurchase any or all of the Target Shares specified in the Disposition Notice
upon the same terms and conditions specified therein or upon terms and
conditions which do not materially vary from those specified therein. Such right
shall be exercisable by delivery of written notice (the "Exercise Notice") to
Owner prior to the expiration of the forty-five (45)-day exercise period. If
such right is exercised with respect to all the Target Shares specified in the
Disposition Notice, then the Corporation (or its assignees) shall effect the
repurchase of the Target Shares, including payment of the purchase price, not
more than ten (10) business days after delivery of the Exercise Notice; and at
such time Owner shall deliver to the Corporation the certificates representing
the Target Shares to be repurchased, each certificate to be properly endorsed
for transfer. To the extent any of the Target Shares are at the time held in
escrow under Article 7, the certificates for such shares shall automatically be
released from escrow and delivered to the Corporation for purchase. Should the
purchase price specified in the Disposition Notice be payable in property other
than cash or evidences of indebtedness, the Corporation (or its assignees) shall
have the right to pay the purchase price in the form of cash equal in amount to
the value of such property. If the Owner and the Corporation (or its assignees)
cannot agree on such cash value within ten (10) days after the Corporation's
receipt of the Disposition Notice, the valuation shall be made by an appraiser
of recognized standing selected by the Corporation (or its assignees) within
(20) days after the Corporation's receipt of the Disposition Notice, whose
appraisal shall be determinative of such value. The cost of such appraisal shall
be paid entirely by the Corporation. The closing shall then be held on the later
of (i) the tenth business day following delivery of the Exercise Notice or (ii)
the tenth business day after such cash valuation shall have been made.
6.4 Non-Exercise of Right. In the event the Exercise Notice is not given
to Owner within forty-five (45) days following the date of the Corporation's
receipt of the
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Disposition Notice, Owner shall have a period of thirty (30) days thereafter in
which to sell or otherwise dispose of the Target Shares to the third-party
offeror identified in the Disposition Notice upon terms and conditions
(including the purchase price) no more favorable to such third-party offeror
than those specified in the Disposition Notice; provided, however, that any such
sale or disposition must not be effected in contravention of the provisions of
Article 2 of this Agreement. To the extent any of the Target Shares are at the
time held in escrow under Article 7, the certificates for such shares shall
automatically be released from escrow and surrendered to the Owner. The
third-party offeror shall acquire the Target Shares free and clear of the
Corporation's Repurchase Right under Article 5 and the Corporation's First
Refusal Right hereunder, but the acquired shares shall remain subject to (i) the
securities law restrictions of Article 2 and (ii) the market stand-off
provisions of paragraph 4.4. In the event Owner does not effect such sale or
disposition of the Target Shares within the specified thirty (30)-day period,
the Corporation's First Refusal Right shall continue to be applicable to any
subsequent disposition of the Target Shares by Owner until such right lapses in
accordance with paragraph 6.7.
6.5 Partial Exercise of Right. In the event the Corporation (or its
assignees) makes a timely exercise of the First Refusal Right with respect to a
portion, but not all, of the Target Shares specified in the Disposition Notice,
Owner shall have the option, exercisable by written notice to the Corporation
delivered within thirty (30) days after the date of the Disposition Notice, to
effect the sale of the Target Shares pursuant to one of the following
alternatives:
(i) to elect not to sell any shares to the Corporation pursuant
to the First Refusal Right, but to instead sell all the Target Shares to
the third-party offeror identified in the Disposition Notice (which sale
shall otherwise be in full compliance with the requirements of paragraph
6.4 as if the Corporation did not offer to exercise the First Refusal
Right with respect to any of the Target Shares); or
(ii) sale to the Corporation (or its assignees) of the portion of
the Target Shares which the Corporation (or its assignees) has elected
to purchase, such sale to be effected in substantial conformity with the
provisions of paragraph 6.3.
Failure of Owner to deliver timely notification to the Corporation under
this paragraph 6.5 shall be deemed to be an election by Owner to sell the Target
Shares pursuant to alternative (i) above.
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6.6 Recapitalization/Merger.
A. In the event of any stock dividend, stock split, recapitalization or
other transaction affecting the Corporation's outstanding Common Stock as a
class effected without receipt of consideration, then any new, substituted or
additional securities or other property which is by reason of such transaction
distributed with respect to the Purchased Shares shall be immediately subject to
the Corporation's First Refusal Right hereunder, but only to the extent the
Purchased Shares are at the time covered by such right.
B. In the event of any of the following transactions:
(i) a merger or consolidation in which the
Corporation is not the surviving entity,
(ii) a sale, transfer or other disposition of all or
substantially all of the Corporation's assets,
(iii) a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to person or persons other than those
who held such securities immediately prior to the merger, or
(iv) any transaction effected primarily to change the State in
which the Corporation is incorporated, or to create a holding company
structure,
the Corporation's First Refusal Right shall remain in full force and effect and
shall apply to the new capital stock or other property received in exchange for
the Purchased Shares in consummation of the transaction but only to the extent
the Purchased Shares are at the time covered by such right.
6.7 Lapse. The First Refusal Right under this Article 6 shall lapse and
cease to have effect upon the earliest to occur of (i) the first date on which
shares of the Corporation's Common Stock are held of record by more than five
hundred (500) persons, (ii) a determination is made by the Corporation's Board
of Directors that a public market exists for the outstanding shares of the
Corporation's Common Stock, or (iii) a firm commitment underwritten public
offering pursuant to an effective registration statement under the 1933 Act,
covering the offer and sale of the Corporation's Common Stock in the aggregate
amount of at least $5,000,000. However, the market stand-off provisions of
paragraph 4.4 shall continue to remain in full force and effect following the
lapse of the First Refusal Right hereunder.
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7. ESCROW.
7.1 Deposit. Upon issuance, the certificates for any Unvested Shares
purchased hereunder shall be deposited in escrow with the Corporate Secretary of
the Corporation to be held in accordance with the provisions of this Article 7.
Each deposited certificate shall be accompanied by a duly-executed Assignment
Separate from Certificate in the form of Exhibit I. The deposited certificates,
together with any other assets or securities from time to time deposited with
the Corporate Secretary pursuant to the requirements of this Agreement, shall
remain in escrow until such time or times as the certificates (or other assets
and securities) are to be released or otherwise surrendered for cancellation in
accordance with paragraph 7.3. Upon delivery of the certificates (or other
assets and securities) to the Corporate Secretary of the Corporation, the Owner
shall be issued an instrument of deposit acknowledging the number of Unvested
Shares (or other assets and securities) delivered in escrow.
7.2 Recapitalization. All regular cash dividends on the Unvested Shares
(or other securities at the time held in escrow) shall be paid directly to the
Owner and shall not be held in escrow. However, in the event of any stock
dividend, stock split, recapitalization or other change affecting the
Corporation's outstanding Common Stock as a class effected without receipt of
consideration or in the event of a Corporate Transaction, any new, substituted
or additional securities or other property which is by reason of such
transaction distributed with respect to the Unvested Shares shall be immediately
delivered to the Corporate Secretary to be held in escrow under this Article 7,
but only to the extent the Unvested Shares are at the time subject to the escrow
requirements of paragraph 7.1.
7.3 Release/Surrender. The Unvested Shares, together with any other
assets or securities held in escrow hereunder, shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Corporation for repurchase and cancellation:
(i) Should the Corporation (or its assignees) elect to exercise
the Repurchase Right under Article 5 with respect to any Unvested
Shares, then the escrowed certificates for such Unvested Shares
(together with any other assets or securities issued with respect
thereto) shall be delivered to the Corporation concurrently with the
payment to the Owner, in cash or cash equivalent (including the
cancellation of any purchase-money indebtedness), of an amount equal to
the aggregate Option Price for such Unvested Shares, and the Owner shall
cease to have any further rights or claims with respect to such Unvested
Shares (or other assets or securities attributable to such Unvested
Shares).
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(ii) Should the Corporation (or its assignees) elect to exercise
its First Refusal Right under Article 6 with respect to any vested
Target Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall, concurrently with the payment of
the paragraph 6.3 purchase price for such Target Shares to the Owner, be
surrendered to the Corporation, and the Owner shall cease to have any
further rights or claims with respect to such Target Shares (or other
assets or securities).
(iii) Should the Corporation (or its assignees) elect not to
exercise its First Refusal Right under Article 6 with respect to any
Target Shares held at the time in escrow hereunder, then the escrowed
certificates for such Target Shares (together with any other assets or
securities attributable thereto) shall be surrendered to the Owner for
disposition in accordance with provisions of paragraph 6.4.
(iv) As the interest of the Optionee in the Unvested Shares (or
any other assets or securities attributable thereto) vests in accordance
with the provisions of Article 5, the certificates for such vested
shares (as well as all other vested assets and securities) shall be
released from escrow and delivered to the Owner in accordance with the
following schedule:
a. The initial release of vested shares (or other vested
assets and securities) from escrow shall be effected within
thirty (30) days following the expiration of the initial twelve
(12)-month period measured from the Grant Date.
b. Subsequent releases of vested shares (or other vested
assets and securities) from escrow shall be effected at
semi-annual intervals thereafter, with the first such semi-annual
release to occur eighteen (18) months after the Grant Date.
c. Upon the Optionee's cessation of Service, any escrowed
Purchased Shares (or other assets or securities) in which the
Optionee is at the time vested shall be promptly released from
escrow.
d. Upon any earlier termination of the Corporation's
Repurchase Right in accordance with the applicable provisions of
Article 5, any Purchased Shares (or other assets or securities)
at the time held in escrow hereunder shall promptly be released
to the Owner as fully vested shares or other property.
(v) All Purchased Shares (or other assets or securities) released
from escrow in accordance with the
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provisions of subparagraph (iv) above shall nevertheless remain subject
to (I) the Corporation's First Refusal Right under Article 6 until such
right lapses pursuant to paragraph 6.7, (II) the market stand-off
provisions of paragraph 4.4 until such provisions terminate in
accordance therewith and (III) the Special Purchase Right under Article
8.
8. MARITAL DISSOLUTION OR LEGAL SEPARATION.
8.1 Grant. In connection with the dissolution of the Optionee's marriage
or the legal separation of the Optionee and the Optionee's spouse, the
Corporation shall have the right (the "Special Purchase Right"), exercisable at
any time during the thirty (30)-day period following the Corporation's receipt
of the required Dissolution Notice under paragraph 8.2, to purchase from the
Optionee's spouse, in accordance with the provisions of paragraph 8.3, all or
any portion of the Purchased Shares which would otherwise be awarded to such
spouse in settlement of any community property or other marital property rights
such spouse may have in such shares.
8.2 Notice of Decree or Agreement. The Optionee shall promptly provide
the Secretary of the Corporation with written notice (the "Dissolution Notice")
of (i) the entry of any judicial decree or order resolving the property rights
of the Optionee and the Optionee's spouse in connection with their marital
dissolution or legal separation or (ii) the execution of any contract or
agreement relating to the distribution or division of such property rights. The
Dissolution Notice shall be accompanied by a copy of the actual decree of
dissolution or settlement agreement between the Optionee and the Optionee's
spouse which provides for the award to the spouse of one or more Purchased
Shares in settlement of any community property or other marital property rights
such spouse may have in such shares.
8.3 Exercise of Special Purchase Right. The price at which the Special
Purchase Right shall be exercisable by the Corporation will be the higher of the
Option Price as set forth in Section 1.1 hereof or the fair market value of the
shares as of the date the Special Purchase Right is exercised. The right shall
be exercised by delivery of written notice (the "Purchase Notice") to the
Optionee and the Optionee's spouse within thirty (30) days after the
Corporation's receipt of the Dissolution Notice. The Purchase Notice shall
indicate the number of shares to be purchased by the Corporation, the date such
purchase is to be effected (such date to be not less than five (5) business
days, nor more than ten (10) business days, after the date of the Purchase
Notice), and the price to be paid for such Purchased Shares. The Optionee (or
the Optionee's spouse, to the extent such spouse has physical possession of the
Purchased Shares) shall, prior to the close of business on the date specified
for the purchase, deliver to the Corporate Secretary
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of the Corporation the certificates representing the shares to be purchased,
each certificate to be properly endorsed for transfer. To the extent any of the
shares to be purchased by the Corporation are at the time held in escrow under
Article 7, the certificates for such shares shall be promptly delivered out of
escrow to the Corporation. The Corporation shall, concurrently with the receipt
of the stock certificates, pay to the Optionee's spouse (in cash or cash
equivalents) an amount equal to the price to be paid for such shares as
specified in the Purchase Notice.
If the Optionee's spouse does not agree with the Corporation's
determination of the fair market value of the shares, then the spouse shall
promptly notify the Corporation in writing of such disagreement and the fair
market value of such shares shall thereupon be determined by an appraiser of
recognized standing selected by the Corporation whose appraisal shall be
determinative of such value. The cost of the appraisal shall be borne entirely
by the Corporation. The closing shall then be held on the fifth business day
following the completion of such appraisal; provided, however, that if the
appraised value is more than fifteen percent (15%) greater than the fair market
value specified for the shares in the Purchase Notice, the Corporation shall
have the right, exercisable prior to the expiration of such five
(5)-business-day period, to rescind the exercise of the Special Purchase Right
and thereby revoke its election to purchase the shares awarded to the spouse.
8.4 Lapse. The Special Purchase Right under this Article 8 shall lapse
and cease to have effect upon the earlier to occur of (i) the first date on
which the First Refusal Right under Article 6 lapses or (ii) the expiration of
the thirty (30)-day exercise period specified in paragraph 8.3, to the extent
the Special Purchase Right is not timely exercised in accordance with such
paragraph.
9. GENERAL PROVISIONS.
9.1 Assignment. The Corporation may assign its Repurchase Right under
Article 5, its First Refusal Right under Article 6 and/or its Special Purchase
Right under Article 8 to any person or entity selected by the Corporation's
Board of Directors, including (without limitation) one or more shareholders of
the Corporation.
If the assignee of the Repurchase Right is other than a one hundred
percent (100%) owned subsidiary corporation of the Corporation or the parent
corporation owning one hundred percent (100%) of the Corporation, then such
assignee must make a cash payment to the Corporation, upon the assignment of the
Repurchase Right, in an amount equal to the excess (if any) of (i) the fair
market value of the Unvested Shares at the time subject to the assigned
Repurchase Right over (ii) the aggregate repurchase price payable for the
Unvested Shares thereunder.
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9.2 Definitions. For purposes of this Agreement, the following
provisions shall be applicable in determining the parent and subsidiary
corporations of the Corporation:
(i) Any corporation (other than the Corporation) in an unbroken
chain of corporations ending with the Corporation shall be considered to
be a parent corporation of the Corporation, provided each such
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.
(ii) Each corporation (other than the Corporation) in an unbroken
chain of corporations beginning with the Corporation shall be considered
to be a subsidiary of the Corporation, provided each such 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.
9.3 No Employment or Service Contract. Nothing in this Agreement shall
confer upon the Optionee any right to continue in the Service of the Corporation
(or any parent or subsidiary corporation of the Corporation employing or
retaining Optionee) for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any parent or
subsidiary corporation of the Corporation employing or retaining Optionee) or
the Optionee, which rights are hereby expressly reserved by each, to terminate
the Optionee's Service at any time for any reason whatsoever, with or without
cause.
9.4 Notices. Any notice required in connection with (i) the Repurchase
Right, the Special Purchase Right or the First Refusal Right or (ii) the
disposition of any Purchased Shares covered thereby shall be given in writing
and shall be deemed effective upon personal delivery or upon deposit in the
United States mail, registered or certified, postage prepaid and addressed to
the party entitled to such notice at the address indicated below such party's
signature line on this Agreement or at such other address as such party may
designate by ten (10) days advance written notice under this paragraph 9.4 to
all other parties to this Agreement.
9.5 No Waiver. The failure of the Corporation (or its assignees) in any
instance to exercise the Repurchase Right granted under Article 5, or the
failure of the Corporation (or its assignees) in any instance to exercise the
First Refusal Right granted under Article 6, or the failure of the Corporation
(or its assignees) in any instance to exercise the Special Purchase Right
granted under Article 8 shall not constitute a
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waiver of any other repurchase rights and/or rights of first refusal that may
subsequently arise under the provisions of this Agreement or any other agreement
between the Corporation and the Optionee or the Optionee's spouse. No waiver of
any breach or condition of this Agreement shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of like or different nature.
9.6 Cancellation of Shares. If the Corporation (or its assignees) shall
make available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Purchased Shares to he repurchased in
accordance with the provisions of this Agreement, then from and after such time,
the person from whom such shares are to be repurchased shall no longer have any
rights as a holder of such shares (other than the right to receive payment of
such consideration in accordance with this Agreement), and such shares shall be
deemed purchased in accordance with the applicable provisions hereof and the
Corporation (or its assignees) shall be deemed the owner and holder of such
shares, whether or not the certificates therefor have been delivered as required
by this Agreement.
10. MISCELLANEOUS PROVISIONS.
10.1 Optionee Undertaking. Optionee hereby agrees to take whatever
additional action and execute whatever additional documents the Corporation may
in its judgment deem necessary or advisable in order to carry out or effect one
or more of the obligations or restrictions imposed on either the Optionee or the
Purchased Shares pursuant to the express provisions of this Agreement.
10.2 Agreement is Entire Contract. This Agreement constitutes the entire
contract between the parties hereto with regard to the subject matter hereof.
10.3 Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of California, as such laws are
applied to contracts entered into and performed in such State without resort to
that State's conflict-of-laws rules.
10.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
10.5 Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the Corporation and its successors
and assigns and the Optionee and the Optionee's legal representatives, heirs,
legatees, distributees, assigns and transferees by operation of law, whether or
not any such person shall have become a party to this
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Agreement and have agreed in writing to join herein and be bound by the terms
and conditions hereof.
10.6 Power of Attorney. Optionee's spouse hereby appoints Optionee his
or her true and lawful attorney in fact, for him or her and in his or her name,
place and ▇▇▇▇▇, and for his or her use and benefit, to agree to any amendment
or modification of this Agreement and to execute such further instruments and
take such further actions as may reasonably be necessary to carry out the intent
of this Agreement. Optionee's spouse further gives and grants unto Optionee as
his or her attorney in fact full power and authority to do and perform every act
necessary and proper to be done in the exercise of any of the foregoing powers
as fully as he or she might or could do if personally present, with full power
of substitution and revocation, hereby ratifying and confirming all that
Optionee shall lawfully do and cause to be done by virtue of this power of
attorney.
[Remainder of This Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first indicated above.
NANOGEN, INC.
By:
---------------------------------
Title:
------------------------------
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Optionee
Address:
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------------------------------------
The undersigned spouse of Optionee has read and hereby approves the
foregoing Performance Stock Option Agreement. In consideration of the
Corporation's granting the Optionee the right to acquire the Option Shares in
accordance with the terms of such Agreement, the undersigned hereby agrees to be
irrevocably bound by all the terms and provisions of such Agreement.
------------------------------------
Address:
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EXHIBIT I
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED _________________________ hereby sell(s), assign(s)
and transfer(s) unto Nanogen, Inc. (the "Corporation"),
_____________________________ (_______) shares of the Common Stock of the
Corporation standing in his\her name on the books of the Corporation represented
by Certificate No. __________ and do hereby irrevocably constitute and appoint
_________________________________ as Attorney to transfer the said stock on the
books of the Corporation with full power of substitution in the premises.
Dated:_____________________
Signature
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Instruction: Please do not fill in any blanks other than the signature line. The
purpose of this assignment is to enable the Corporation to exercise its
Repurchase Right set forth in the Agreement without requiring additional
signatures on the part of the Optionee.
EXHIBIT I-1
61
EXHIBIT II
SECTION 83(b) TAX ELECTION
This statement is being made under Section 83(b) of the
Internal Revenue Code, pursuant to Treas. Reg. Section 1.83-2.
(1) The taxpayer who performed the services is:
Name:
Address: ___________________________________________________________
Taxpayer Ident. No.:________________________________________________
(2) The property with respect to which the election is being made is ______
shares of the common stock of Nanogen, Inc.
(3) The property was issued on _____________________, 19__.
(4) The taxable year in which the election is being made is the calendar
year 19_.
(5) The property is subject to a repurchase right pursuant to which the
issuer has the right to acquire the property at the original purchase
price if for any reason taxpayer's employment with the issuer is
terminated. The issuer's repurchase right lapses in a series of annual
and monthly installments over a four (4) year period ending on
_______________________________________________________________.
(6) The fair market value at the time of transfer (determined without regard
to any restriction other than a restriction which by its terms will
never lapse) is $_________ per share.
(7) The amount paid for such property is $_________ per share.
(8) A copy of this statement was furnished to Nanogen, Inc. for whom
taxpayer rendered the service underlying the transfer of property.
(9) This statement is executed as of: __________________, 19_.
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Spouse (if any)
Taxpayer
This form must be filed with the Internal Revenue Service Center with which
taxpayer files his/her Federal income tax returns. The filing must be made
within 30 days after the execution date of the Restricted Stock Issuance
Agreement.
EXHIBIT II-1