Exhibit 10.3
PHARMAPRINT INC.
FORM OF
NON-QUALIFIED STOCK OPTION AGREEMENT
OPTIONEE:
GRANT DATE:
OPTION PRICE:
NUMBER OF SHARES:
EXPIRATION DATE:
This Agreement, made as of ___________, 19__, (the "Grant Date") between
PharmaPrint Inc., a California corporation (hereinafter called the "Company"),
and ___________________ (hereinafter called "Optionee").
WITNESSETH:
WHEREAS, the Company has adopted the PHARMAPRINT INC. 1995 STOCK OPTION
PLAN, AS AMENDED (the "Plan"), which Plan is incorporated herein by reference
and made a part of this Agreement; and
WHEREAS, the Company regards Optionee as a valuable contributor to the
success of the Company and its Affiliates, and has determined that it would be
to the advantage and interest of the Company and its shareholders to grant the
Option provided for in this Agreement to Optionee under the Plan (as an
inducement to remain in the service of the Company and its Affiliates , and as
an incentive for increased efforts during such service);
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:
1. NUMBER OF SHARES AND OPTION PRICE. The Company hereby grants to
Optionee the right and option to purchase from the Company on the terms and
conditions hereinafter set forth, all or any part of an aggregate of the number
of shares of the
Common Stock, without par value, of the Company (hereinafter called the "Stock")
set forth above. The purchase price of the Stock subject to this Option shall
be the Option Price per share set forth above.
2. OPTION PERIOD. This Option shall be exercisable only during the
Option Period, and during such Option Period, the exercisability of the Option
shall be subject to the limitations of paragraph 3 and paragraph 4 (including
Exhibit A). The Option Period shall commence on the Grant Date set forth above
and, except as provided in paragraph 3 or paragraph 4 (including Exhibit A),
shall end on the Expiration Date as set forth above.
3. LIMITS ON OPTION PERIOD. The Option Period may end before the
Expiration Date, as follows:
(a) If Optionee's status as an employee of or consultant to the
Company or an Affiliate terminates for any reason during the Option Period,
other than as set forth in paragraphs 3(b), (c) or (d) below, the Option
Period shall end ninety (90) days after such termination or on the
Expiration Date, whichever occurs first. Optionee shall have the right to
exercise, to the extent then exercisable (or on such accelerated basis as
the Plan Committee shall determine at or after Grant Date), any portion of
this Option in accordance with the terms hereof.
(b) If Optionee's status as an employee of or consultant to the
Company is terminated by reason of (i) the Company terminating Optionee's
employment Agreement for Cause (as defined therein) or (ii) Optionee
terminating the Employment Agreement in breach of the provisions thereof,
the Option Period shall immediately end as of the date of termination and
Optionee shall forfeit all rights which he may have to exercise any vested
or unvested options. For purposes of determining the date of termination
of Optionee's Employment Agreement in the event of a termination by the
Company for Cause, such date shall be deemed for purposes of this paragraph
3(b) only, to be the date the Company provides Optionee with written notice
of his material failure to perform his duties under the Employment
Agreement.
(c) If Optionee's status as an employee of or consultant to the
Company is terminated by reason of death, the Option Period shall end one
year after the date of death or on the Expiration Date, whichever shall
occur first, and Optionee's executor or administrator or the person or
persons to whom Optionee's rights under this Option shall pass by will or
by the applicable laws of descent and distribution may exercise, to the
extent then exercisable (or on such accelerated basis as the Plan Committee
shall determine at or after Grant Date), any portion of this Option in
accordance with the terms hereof.
(d) If Optionee's status as an employee of or consultant to the
Company is terminated by reason of disability, the Option Period shall end
one year after the date of cessation of such status or on the Expiration
Date, whichever shall first occur. Optionee shall have the right to
exercise, to the extent then exercisable (or on such accelerated basis as
the Plan Committee shall determine at or after Grant Date), any portion of
this Option in accordance with the terms hereof.
4. VESTING OF RIGHT TO EXERCISE OPTIONS; PARTIAL EXERCISE; FRACTIONAL
SHARES.
(a) Subject to the terms of paragraphs 2 and 3 above, this Option
shall vest in accordance with Exhibit A and shall be exercisable at any
time during the Option Period with respect to any shares that have vested
in accordance with such Exhibit. No options shall vest after the date on
which Optionee is no longer an employee of or consultant to the Company.
Any portion of the Option that is not exercised shall accumulate and may be
exercisable at any time prior to the Expiration Date.
(b) No partial exercise of this Option may be for less than five (5)
percent of the total number of shares then available under this Option to
purchase shares of Stock.
(c ) In no event shall the Company be required to issue fractional
shares.
(d) In the event of a Change of Control (as defined below) of the
Company, all unvested options shall immediately vest and become
exercisable. Change of Control shall mean the occurrence of any or all of
the following events: (i) the sale of all or substantially all of the
Company's assets, (ii) the merger or consolidation of the Company where (x)
the Company is not the surviving entity (other than a merger for the
purposes of reincorporating the Company in a jurisdiction other than
California) or (y) parties other than the Company's securityholders own,
following consummation of the merger, in excess of 50% of the Company's
issued and outstanding shares of Common Stock on a fully diluted basis
after giving effect to the exercise, exchange or conversion of any options,
warrants, preferred stock or other securities exercisable, exchangeable or
convertible into Common Stock of the Company, or (iii) if any individual,
corporation, partnership or other entity (a "Person"), other than the
Company or any employee benefit plan of the Company or of any Affiliate or
Associate (each as defined in Rule 12b-2 under the Securities Exchange Act
of 1934, as amended), shall, together with Affiliates or Associates of
such Person, acquire or become the beneficial owner of, in the aggregate,
in excess of 50% of the Common Stock of the Company issued and
outstanding following such acquisition on a fully diluted basis after
giving effect to the exercise, exchange or conversion of any options,
warrants, preferred stock or other securities exercisable, exchangeable or
convertible into Common Stock of the Company.
5. METHOD OF EXERCISE. Subject to Section 4, Optionee may exercise this
Option with respect to all or any part of the shares of Stock then subject to
such exercise as follows:
(a) By giving the Company written notice of such exercise, specifying
the number of shares as to which this Option is exercised. Such notice
shall be accompanied by an amount equal to the Option Price of such shares,
in the form of any one or combination of the following: cash, a certified
check, bank draft, postal or express money order payable to the order of
the Company in lawful money of the United States.
(b) Optionee shall be required, as a condition precedent to acquiring
Stock through exercise of the Option to execute one or more agreements
relating to obligations in connection with ownership of the Stock or
restrictions on transfer of the Stock no less restrictive than the
obligations and restrictions to which other shareholders of the Company are
subject at the time of such exercise.
(c) Optionee shall give the Company satisfactory assurance in writing
signed by Optionee or Optionee's legal representative, as the case may be,
that such shares are being purchased for investment and not with a view to
the distribution thereof; provided that such assurance shall be deemed
inapplicable to (1) any sale of such shares by such Optionee made in
accordance with the terms of a registration statement covering such sale,
which has heretofore been (or may hereafter be) filed and become effective
under the Securities Act of 1933, as, amended (the "Securities Act"), and
with respect to which no stop order suspending the effectiveness thereof
has been issued, and (2) any other sale of such shares with respect to
which in the opinion of counsel for the Company, such assurance is not
required to be given in order to comply with the provisions of the
Securities Act.
As soon as practicable after receipt of the notice required in paragraph
5(a) hereof and satisfaction of the conditions set forth in paragraphs 5(b) and
5 (c ), the Company shall, without transfer or issue tax and without any other
incidental expense to the Optionee, deliver to Optionee at the office of the
Company or such other place as may be mutually acceptable to the Company and
Optionee a certificate or certificates of such shares of Stock; provided,
however, that the time of such delivery may be postponed by the Company for such
period as may be required for it with reasonable diligence to
comply with applicable registration requirements under the Securities Act, the
Securities Exchange Act of 1934, as amended any applicable listing requirements
of any national securities exchange, and requirements under any other law or
regulation applicable to the issuance or transfer of such shares. Optionee
shall not be entitled to the privileges of stock ownership as to any shares of
Stock purchased hereunder until such certificate is delivered pursuant to this
paragraph 5. If Optionee fails to accept delivery any pay for all or any part
of the number of shares specified in such notice upon tender of delivery
thereof, Optionee's right to purchase such undelivered shares may be terminated
by the Company at its election.
6. ADJUSTMENTS. If there should be any change in the Stock subject to
this Option, through merger, consolidation, reorganization, recapitalization,
reincorporation, stock split, stock dividend (in excess of two percent) or other
change in the corporate structure of the Company, appropriate adjustments shall
be made to this Option in order to preserve, but not to increase, the benefits
to the Optionee, including adjustments in the number of shares subject to the
Option and in the price per share. Any adjustments made pursuant to this
paragraph 6 as a consequence of a change in the corporate structure of the
Company shall not entitle Optionee to acquire a number of shares of Stock of the
Company or shares of stock of any successor company greater than the number of
shares Optionee would receive if, prior to such change, Optionee had actually
held a number of shares of Stock equal to the number of shares subject to this
Option.
7. NON-TRANSFERABLE OPTION. This Option shall, during Optionee's
lifetime, be exercisable only by Optionee, and neither this Option nor any right
hereunder shall be transferable by Optionee by operation of law or otherwise
other than by will or the laws of descent and distribution. In the event of any
attempt by Optionee to alienate, assign, pledge, hypothecate, or otherwise
dispose of this Option or of any right hereunder, except as provided for in this
Agreement, or in the event of any attachment, execution, or similar process upon
the rights or interest hereby conferred, the Company at its election may
terminate this Option by notice to Optionee and this Option shall thereupon
become null and void.
8. NO SHAREHOLDER RIGHTS. Neither Optionee nor any person entitled to
exercise Optionee's rights in the event of Optionee's death shall have any of
the rights of a shareholder with respect to the shares of Stock subject to this
Option except to the extent the certificates for such shares shall have been
issued upon the exercise of this Option.
9. CONTINUATION OF SERVICE. Nothing in this Agreement shall confer upon
any person any right to continue in the service of the Company or any Affiliate
thereof, or interfere in any way with the right of the Company or any such
Affiliate to terminate such relationship at any time, with or without cause, but
nothing contained herein shall effect any other contractual rights of an
employee or consultant.
10. CONFLICT WITH THE PLAN. This Agreement and the Option herein granted
is expressly subject to the terms and conditions of the Plan, which Optionee
acknowledges is incorporated herein by reference, and a copy of which has been
delivered to the Optionee. In the event of any conflict between this Agreement
and the Plan, the Plan shall prevail.
11. ABSENCE OF REGISTRATION OF OPTION SHARES AND EFFECT THEREOF. The
Optionee has been advised that the shares of stock acquired by exercise of the
option (the "Option Shares") have not been registered with the Securities and
Exchange Commission (the "SEC"), or under applicable state securities laws, and
accordingly may not be offered, sold, or otherwise transferred except in
compliance with the Securities Act and applicable state securities laws. The
Optionee has been further advised that the effect of the representations and
warranties above set forth is that the Optionee must bear the economic risk of
Optionee's investment in the stock indefinitely unless registered pursuant to
the Securities Act and applicable state securities laws or if, in the opinion of
counsel in form and substance satisfactory to the Company, an exemption from
such registration requirements is available.
12. REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE OPTION SHARES.
Optionee represents and warrants that Optionee is familiar with the business and
prospects of the Company and that the by-laws, minute book, stock transfer book
and other records of the Company have been made available for inspection by
Optionee, and that the Company has made available the opportunity to ask
questions and receive answers concerning the business and affairs of the
Company.
The Company has discussed with Optionee certain aspects of its business and
prospects and provided Optionee access to the records referred to above. Those
discussions and written information were intended to describe the aspects of the
Company's business and prospects which it believes to be material, but were no a
thorough or exhaustive description of the Company's business or prospects.
Therefore, the Company does not warrant the completeness of those discussions or
information but only that such discussions and information represent its good
faith opinion of its business and prospects.
Optionee represents and warrants that the investment occurring by reason of
exercise of the Option is in accord with the nature and size of Optionee's
present investments and net worth and that Optionee is financially able to bear
the economic risk of this investment for an indefinite period of time. Optionee
covenants to make such representations, warranties and covenants upon exercise,
in whole or in part, of the Option as counsel to the Company may deem
appropriate to assure compliance with securities laws.
13. ABSENCE OF POSSIBILITIES FOR REGISTRATION RIGHTS. Only the Company
may file a registration statement with the SEC, and the Company is under no
obligation to file a registration statement or any other disclosure statement
with the SEC respecting the Option Shares.
14. EXEMPTION FROM REGISTRATION OF OPTION SHARES NOT ASSURED. The
Optionee also has been advised that holders of Option Shares cannot be assured
that any exemption from the Securities Act will be available, or if available,
will allow such holders to dispose of or otherwise transfer Option Shares, under
the circumstances, in the amounts, or at the times proposed by them.
Specifically, Optionee has been advised that Rule 144 promulgated under the
Securities Act which provides for certain limited, routine sales of unregistered
securities, is not available with respect to the Option Shares. If, as seems
unlikely, Rule 144 should come available, the Optionee understands that the
Company is under no obligation to furnish the Optionee or others with the
information necessary to enable the Optionee to sell any of the Optionee Shares
under Rule 144.
15. LEGENDS AND STOP-TRANSFER ORDER ON OPTION SHARES. The certificates
representing the Option Shares acquired by the Optionee upon exercise of the
Option shall bear legends substantially similar to the following (in addition to
any other legends deemed appropriate by counsel to the Company):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED ("THE ACT") OR ANY APPLICABLE STATE SECURITIES LAWS, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT AND ALL APPLICABLE STATE SECURITIES
LAWS OR, IN THE OPINION OF COUNSEL (IN FORM AND SUBSTANCE SATISFACTORY TO THE
COMPANY), SUCH OFFER, SALE OR TRANSFER OR HYPOTHECATION IS IN COMPLIANCE
THEREWITH.
Additionally, in order to conform with various state securities and other
laws the following or similar legend may appear on any and all share
certificates issued to the Optionee upon exercise of the Option:
THE SECURITIES REPRESENTED HEREBY ARE SUBJECT TO RESTRICTIONS UPON TRANSFER
(INCLUDING RIGHTS OF FIRST REFUSAL AND OF REPURCHASE) AS SET FORTH IN A
NONQUALIFIED STOCK OPTION AGREEMENT AND STOCK PURCHASE AGREEMENT BY AND BETWEEN
THE COMPANY AND THE RECORD HOLDER, AND IN THE BYLAWS OF THE COMPANY.
The Optionee further agrees, in order to ensure compliance with the
restrictions referred to in the foregoing legends, or elsewhere herein, that the
Company may issue
appropriate "stop transfer" instructions to its transfer agent, if any, with
respect to such certificates or instruments, or if the Company transfers its own
securities, that it may make appropriate notations to the same effect in the
Company's records.
16. NOTICES. Any notice required to be given under the terms of this
Option Agreement shall be addressed to the Company in care of its Chief
Financial Officer at the Office of the Company, and any notice given to Optionee
shall be addressed to Optionee at the address indicated beneath Optionee's
signature hereto or such other address as either party may here after designate
in writing to the other. Any such notice shall be deemed to have been duly
given when actually received or when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, registered or certified, and deposited (postage
or registration or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States.
17. CONCLUSIVE AUTHORITY OF COMMITTEE AND BOARD. All decisions of the
Committee and the Board upon any question arising under the Plan or under this
Agreement shall be conclusive.
18. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of any successor or assignee of the Company. Where the
context permits, "Optionee" as used in this Agreement shall include Optionee's
executor, administrator or other legal representative or the person or persons
to whom Optionee's rights pass by will or the applicable laws of descent and
distribution.
19. WITHHOLDING. Optionee agrees to make appropriate arrangements with
the Company for satisfaction of any applicable state or local income tax
withholding requirements or social security requirements.
20. GOVERNING LAW. The interpretation, performance, and enforcement of
this Option Agreement shall be governed by the laws of the State of California.
21. ATTORNEY'S FEES. In the event of litigation arising hereunder, the
prevailing party shall be entitled to reimbursement of reasonable attorney's
fees and costs.
IN WITNESS WHEREOF, the Company has caused these presents to be executed on
its behalf by a duly authorized individual, and Optionee has hereunto set his
hand as of the day and year first written above.
Company: PharmaPrint Inc.
By ________________________________
Its ______________________________
Optionee: ________________________________
Signature
Address: ________________________________
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