EXHIBIT 10.3
PROTEIN POLYMER TECHNOLOGIES, INC.
FORM OF STOCK OPTION AGREEMENT
(NONSTATUTORY OPTION)
THIS AGREEMENT is entered into this ___________ between Protein Polymer
Technologies, Inc., a Delaware corporation (the "Company"), and _________ (the
"Optionee").
R E C I T A L S
A. The Board of Directors of the Company (the "Board") desires to
provide key employees, advisers, directors and consultants of the Company with a
favorable opportunity to acquire shares of the Company's common stock.
B. The Board regards the Optionee as a key employee, adviser,
consultant or non-employee director and has determined that it would be in the
best interests of the Company and its stockholders to grant the option described
in this Agreement to the Optionee as compensation, as an inducement to remain in
the service of the Company, and as an incentive for increasing efforts during
such service.
NOW, THEREFORE, it is agreed as follows:
1. Definitions. Unless otherwise defined herein or the context requires
otherwise, the capitalized terms used herein shall have the following meanings:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean either (i) a committee appointed by the
Board to award options, or (ii) the Board if a Committee is not so appointed.
(e) "Common Stock" shall mean the $.01 par value Common Stock of the
Company.
(f) "Disability" shall mean the condition of an Employee who is
unable to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or which has lasted or can be expected to last for a continuous period of
not less than twelve 12 months.
(g) "Employee" shall mean an individual who is employed (within the
meaning of Code Section 3401 and the regulations thereunder) by the Company or a
subsidiary.
(h) "Exercise Price" shall mean $0.48 per Share, subject to
adjustment in accordance with Section 15 of the Agreement.
(i) "Fair Market Value" shall mean the value of a Share, determined
as follows:
(1) If the Shares are traded on an exchange or over-the-counter
on the National Market System (the "NMS") of the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ"), (A) if listed on
an exchange, the closing price as reported for composite transactions on the
date of valuation or, if no sale occurred on that date, then the mean between
the closing bid and asked prices on such exchange on such date, and (B) if
traded on the NMS, the last sale price on the date of valuation or, if no sale
occurred on such date, then the mean between the highest bid and lowest asked
prices as of the close of business on the date of valuation, as reported in the
NASDAQ system:
(2) If the Shares are not traded on an exchange or the NMS but
are otherwise traded over-the-counter, the mean between the highest bid and
lowest asked prices quoted in the NASDAQ system as of the close of business on
the date of valuation or, if on such day such security is not quoted in the
NASDAQ system, the mean between the representative bid and asked prices on such
date in the domestic over-the-counter market as reported by the National
Quotation Bureau, Inc., or any similar successor organization; and
(3) If neither (1) nor (2) applies, the fair market value as
determined in good faith by the Committee or by the Board. Such determination
shall be conclusive and binding on all persons.
(j) "Option" shall mean the stock option granted pursuant to this
Agreement.
(k) "Option Shares" shall mean the Shares that may be obtained by the
Optionee upon exercise of the Option.
(l) "Purchase Price" shall mean the Exercise Price times the number
of Option Shares.
(m) "Share" shall mean one (1) share of Common Stock.
(n) "Subsidiary" shall mean any corporation at least fifty percent
(50%) of the total combined voting power of which is owned by the Company or by
another Subsidiary.
2. Grant of Option. The Company hereby grants to the Optionee as of the
date set forth hereinabove the option to purchase all or any part of an
aggregate of 10,000 Shares (the "Option"), subject to adjustment in accordance
with Section 15 herein. The Option is not intended to qualify as an incentive
stock option under Section 422A of the code.
3. Exercise Price. The price to be paid for Option Shares upon exercise
of the Option or any part thereof shall be $0.48 per share, subject to
adjustment in accordance with section 15 hereof.
4. Right to Exercise. Subject to the conditions set forth in this
Agreement, the right to exercise the Option shall accrue in accordance with
Schedule 1 attached hereto and hereby made a part hereof.
5. Term of Option. The Option shall terminate in any event on the 11th
December 2011, at 11:59 P. M.
6. Nontransferability. The Option shall be exercisable during the
Optionee's lifetime only by the Optionee and shall be nontransferable, except
that the Optionee may transfer all or any part of the Option by will or by the
laws of descent and distribution. Except as otherwise provided herein, any
attempted alienation, assignment, pledge, hypothecation, attachment, execution
or similar process, whether voluntary or involuntary, with respect to all or any
part of the Option or any right thereunder, shall be null and void and, at the
Company's option, shall cause all of the Optionee's rights under this Agreement
to terminate.
7. Effect of Exercise Upon exercise of all or any part of the Option,
the number of Option Shares shall be reduced by the number of shares with
respect to which such exercise is made.
8. Exercise of Option. The Option may be exercised by delivering to the
Company (a) a written notice of exercise in substantially the form prescribed
from time to time by the Board and (b) full payment of the Exercise Price for
each Share purchased under the Option. Such notice shall specify the number of
Shares with respect to which the Option is exercised and shall be signed by the
person exercising the Option. If the Option is exercised by a person other than
the Optionee, such notice shall be accompanied by proof, satisfactory to the
Company, of such person's right to exercise the Option. The Purchase Price shall
be payable in U. S. dollars;
provided, however, that the Purchase Price may be paid (i) by the surrender of
Shares in good form for transfer, owned by the Optionee and having a Fair Market
Value on the date of exercise equal to the Purchase Price, or in any combination
of cash and Shares, as long as the sum of the cash so paid and the Fair Market
Value of the Shares so surrendered equals the Purchase Price, or (ii) with a
full recourse promissory note executed by the Optionee. The interest rate and
other terms and conditions of such note shall be determined by the Committee.
The Committee may require that the Optionee pledge his or her Shares to the
Company for the purpose of securing the payment of such note. In no event shall
the stock certificate(s) representing such Shares be released to the Optionee
until such note has been paid in full.
9. Withholding Taxes. If the Optionee is an Employee or former Employee
of the Company when all or part of the Option is exercised, the Company may
require the Optionee to deliver payment of any withholding taxes (in addition to
the Purchase Price) in cash with respect to the difference between the Purchase
Price and the Fair Market Value of the Shares acquired upon exercise.
10. Issuance of Shares. Subject to the foregoing conditions, the
Company, as soon as reasonably practicable after receipt of a proper notice of
exercise and without transfer or issue tax or other incidental expense to the
person exercising the Option, shall deliver to such person at the principal
office of the Company, or such other location as may be acceptable to the
Company and such person, one or more certificates for the Shares with respect to
which the Option is exercised. Such Shares shall be fully paid and nonassessable
and shall be issued in the name of such person. However, at the request of the
Optionee, such Shares may be issued in the names of the Optionee and his or her
spouse (a) as joint tenants with right of survivorship, (b) as community
property or (c) as tenants in common without right of survivorship.
11. Rights as a Stockholder. Neither the Optionee nor any other person
entitled to exercise the Option shall have any rights as a stockholder of the
Company with respect to the Option Shares until a certificate for such Option
Shares has been issued to him or her upon exercise of the Option.
12. Extension and Renewal of the Option. The Committee may extend or
renew the Option or accept the cancellation of the Option (to the extent not
previously exercised) for the granting of a new Option in substitution therefor.
13. Financial and Other Information to the Optionee. The Company shall
provide, on an annual basis, financial and other information, which the Company
deems appropriate, regarding the Company to the Optionee; provided, however,
that this information will be provided only to the Optionee if his or her right
to exercise the Option has accrued pursuant to the terms of this Agreement and
has not previously been exercised.
14. Investment Representation. In connection with his or her acceptance
of the Option, the Optionee represents and warrants to the Company that he or
she:
(a) is acquiring the Option, and will acquire Option Shares on
exercise of the Option, for investment for his or her own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Act. The Optionee understands that the Option has not
been, and the Option Shares will not be, registered under the Act by reason of a
specific exemption under Section 4(2) of the Act, which exemption depends upon,
among other things, the bona fide nature of his or her investment intent as
expressed herein; and
(b) (i) is an officer or director of the Company, (ii) has a
preexisting personal or business relationship with the Company or its officers
or directors, such that he or she is aware of the business and financial
condition of the Company, or (iii) has business or financial experience such
that he or she has the capacity to protect his or her own interest in acquiring
this Option.
15. Recapitalizations. Subject to any required action by stockholders,
the number of Option Shares and the Exercise Price thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
Shares resulting from a subdivision or consolidation of Shares or the payment of
a stock dividend (but only of
Common Stock) or any other increase or decrease in the number of issued Shares
effected without receipt of consideration by the Company.
Subject to any required action by stockholders, if the Company is
the surviving corporation in any merger or consolidation, the Option shall
pertain and apply to the securities to which a holder of the number of Option
Shares would have been entitled. In the event of a merger or consolidation in
which the Company is not the surviving corporation, the date of exercisability
of the Option shall be accelerated to a date prior to such merger of
consolidation, and the Optionee shall have at least thirty (30) days' notice of
such accelerated exercise date, unless the agreement of merger or consolidation
provides for the assumption of the Option by the successor to the Company.
To the extent that the foregoing adjustments relate to securities
of the Company, such adjustments shall be made by the Committee, whose
determination shall be conclusive and binding on all persons.
Except as expressly provided in this Section 19, the Optionee shall
have no rights by reason of any subdivision or consolidation of shares of stock
of any class, the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or stock
of another corporation, and any issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall not
affect, and no adjustment by reason thereof shall be made with respect to, the
number or Exercise Price of the Option Shares.
The grant of the Option shall not affect in any way the right or
power of the Company to made adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge or consolidate or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.
16. Securities Law Requirements.
(a) Legality of Issuance.
The issuance of Shares upon the exercise of the Option and the grant
of the Option shall be contingent upon the following:
(i) the Company and the Optionee shall have taken all actions, if
any, required to register the Option and the Option Shares under the Act or to
perfect an exemption from the registration requirements thereof:
(ii) any applicable listing requirement of any stock exchange on
which the Common Stock is listed shall have been satisfied; and
(iii) any other applicable provision of state or Federal law
shall have been satisfied.
(b) Restrictions on Transfer; Representations of Optionee; Legends.
Regardless of whether the offering and sale of Option Shares has been
registered under the Act or has been registered or qualified under the
securities laws of any state, the Company may impose restrictions upon the sale,
pledge or other transfer of such Option Shares (including the placement of
appropriate legends on stock certificates) if, in the judgment of the Company
and its counsel, such restrictions are necessary or desirable in order to
achieve compliance with the provisions of the Act, the securities laws of any
state or any other law. In the event that the sale of Option Shares is not
registered under the act but an exemption is available which requires an
investment representation or other representation, the Optionee shall be
required to represent that such Option Shares are being acquired for investment,
and not with a view to the sale or distribution thereof, and to make such other
representations as are deemed necessary or appropriate by the Company and its
counsel. Stock certificates evidencing Option Shares acquired pursuant to an
unregistered transaction shall bear the following
restrictive legend and such other restrictive legends as are required or deemed
advisable under the provisions of any applicable law:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY NOT BE OFFERED FOR SALE,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT OF 1933 OR
AN OPINION OF COUNSEL REASONABLY SATISFACTORY IN FORM AND CONTENT TO THE ISSUER
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
Any determination by the Company and its counsel in connection with any of
the matters set forth in this Section 20 shall be conclusive and binding on all
persons.
(c) Registration or Qualification of Securities.
The Company may, but shall not be obligated to, register or qualify
the issuance of the Option or the sale of Option Shares under the Act or any
other applicable law.
(d) Exchange of Certificates.
If, in the opinion of the Company and its counsel, any legend placed
on a stock certificate representing Option Shares sold is no longer required,
the holder of such certificate shall be entitled to exchange such certificate
for a certificate representing the same number of Option Shares but lacking such
legend.
17. Notices. Any notice to the Company contemplated by this Agreement
shall be addressed to it at the Company's principal executive offices in care of
its President; and any notice to the Optionee shall be addressed to him or her
at the address on file with the Company on the date hereof or at such other
address as he or she may hereafter designate in writing.
18. Interpretation. The interpretation, construction, performance and
enforcement of this Agreement shall lie within the sole discretion of the Board,
and the Board's determinations shall be conclusive and binding on all interested
persons.
19. Choice of Law. This Agreement shall be governed by the construed in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
Protein Polymer Technologies, Inc.
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_____________, Optionee J. Xxxxxx Xxxxxxxx, President
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Optionee's Spouse*
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(Please print spouse's name)
* Include signature and name of Optionee's spouse, if Optionee is married.
SCHEDULE 1
RIGHT TO EXERCISE
Subject to the conditions set forth in this Agreement, the right to
exercise the Option shall accrue as follows:
Date Exercisable Number of Shares
(a) Commencing as of the Grant Date, but in no event after
the tenth anniversary of the Grant Date, the entire Option may be exercised.
