BIOFORCE NANOSCIENCES, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made this ______ day of ___________, 200_, by and
between BioForce Nanosciences, Inc., a Delaware corporation (the "Company"), and
__________________________________________ ("Employee").
WITNESSETH, THAT:
WHEREAS, the Company wishes to grant this stock option to Employee
pursuant to its 2000 Stock Incentive Plan (as it may be amended from time to
time, the "Plan").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Grant of Option
The Company grants to Employee the right and option (hereinafter called
the "Option") to purchase all or any part of an aggregate of __________ shares
of the Company common stock, no par value per share (the "Common Stock"), at the
price of $_____ per share, which price is not less than the fair market value
per share of Common Stock on the date of grant, as determined by the Board of
Directors; provided, however, that in the event Employee owns stock representing
more than 10% of the total combined voting power of all classes of stock of the
Company, such price is not less than 110% of the fair market value per share of
Common Stock on the date of grant, as determined by the Board of Directors. This
Option is intended to be an incentive stock option within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"). The Option
shall terminate at the close of business ten years from the date hereof, or such
shorter period as is prescribed herein. Employee shall not have any of the
rights of a shareholder with respect to the shares subject to the Option until
such shares shall be issued to Employee upon the proper exercise of the Option.
2. Duration; Term
The Option shall in all events terminate ten (10) years after the date of
grant.
3. Exercisability and Vesting
(a) Subject to the other terms and conditions set forth herein, the Option
shall vest and may be exercised by Employee in cumulative installments as
follows:
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Cumulative percentage
On or after each of of shares as to which
the following dates option is exercisable
------------------- ---------------------
grant date 0%
first anniversary of grant date 33.3%
second anniversary of grant date 33.3%
third anniversary of grant date 33.4%
(b) During the lifetime of Employee, the Option shall be exercisable only
by Employee and shall not be assignable or transferable by Employee, other than
by will or the laws of descent and distribution in accordance with the terms of
the Plan.
(c) Employee understands that to the extent that the aggregate fair market
value (determined at the time the Option was granted) of the shares of Common
Stock with respect to which all incentive stock options within the meaning of
Section 422 of the Code are exercisable for the first time by Employee during
any calendar year exceed $100,000, in accordance with Section 422(d) of the Code
such options shall be treated as options that do not qualify as incentive stock
options.
4. Investment Representations: Restrictions on Transfer.
By receipt of the Option, by its execution and by its exercise in whole or in
part, Employee represents to the Company the following:
(a) Employee understands that the Option and any shares purchased upon its
exercise are securities, the issuance of which requires compliance with federal
and state securities laws.
(b) Employee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the securities. Employee is
acquiring these securities for investment for Employee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(c) Employee acknowledges and understands that the securities constitute
"restricted securities" under the Securities Act and must be held indefinitely
unless they are subsequently registered under the Securities Act or an exemption
from such registration is available. Employee further acknowledges and
understands that the Company is under no obligation to register the securities.
Employee understands that the certificate evidencing the securities will be
imprinted with a legend that prohibits the transfer of the securities unless
they are registered or such registration is not required in the opinion of
counsel satisfactory to the Company, a legend [prohibiting their transfer
without the consent of the Commissioner of Corporations of the State of
California and any other legend] required under applicable state securities
laws.
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5. Lock-Up. Employee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (a) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by Employee (other than those
shares included in the registration) without the prior written consent of the
Company or the underwriters managing such initial underwritten public offering
of the Company's securities for one hundred eighty (180) days from the effective
date of such registration, and (b) further agrees to execute any agreement
reflecting (a) above as may be requested by the underwriters at the time of the
public offering.
6. Effect of Termination of Employment
(a) In the event that Employee shall cease to be employed by the Company
or its subsidiaries, if any, for any reason other than termination for cause or
Employee's death or disability (as provided in paragraph (b) and (c) of this
Section 6, respectively), Employee shall have the right to exercise the Option
at any time within 30 days after such termination of employment to the extent of
the full number of shares Employee was entitled to purchase under the Option on
the date of termination, subject to the condition that this Option shall not be
exercisable after the expiration of its term.
(b) In the event that Employee shall cease to be employed by the Company
or its subsidiaries, if any, upon termination for cause, the Option shall be
terminated as of the date of the act giving rise to such termination.
Termination for cause shall mean termination of the Employee's employment with
the Company for the following acts: dishonesty, fraud, conviction or confession
of a felony or of a crime involving moral turpitude, destruction or theft of the
Company's property, physical attack on a fellow employee, willful malfeasance or
gross negligence, refusal or failure to perform job duties (other than failure
resulting from disability), misconduct materially injurious to the Company,
participation in fraud against the Company, entering into competition against
the Company, and/or a material breach or threatened material breach of any
agreements with the Company.
(c) If Employee shall die while this Option is still exercisable according
to its terms, or if employment is terminated because Employee has become
disabled (within the meaning of Code Section 22(e)(3)) while in the employment
of the Company or a subsidiary, if any, and Employee shall not have fully
exercised the Option, such Option may be exercised at any time within 6 months
after Employee's death or date of termination of employment for disability by
Employee, personal representatives or administrators, or guardians of Employee,
as applicable, or by any person or persons to whom the Option is transferred by
will or the applicable laws of descent and distribution, to the extent of the
full number of shares Employee was entitled to purchase under the Option on the
date of death, termination of employment, if earlier, or date of termination for
such disability and subject to the condition that no Option shall be exercisable
after the expiration of the term of the Option.
7. Manner of Exercise
(a) The Option may be exercised only by Employee or other proper party by
delivering within the Option period written notice in the form set forth in
Exhibit A hereto to the Company at its principal office. The notice shall state
the number of shares as to which the Option is being exercised and be
accompanied by payment in full of the Option price for all shares designated in
the notice.
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(b) Employee may pay the Option price by check (bank check, certified
check or personal check), by money order, or with the approval of the Company
(i) by delivering to the Company for cancellation shares of Common Stock of the
Company with a fair market value as of the date of exercise equal to the Option
price or the portion thereof being paid by tendering such shares, or (ii) by
delivering to the Company a combination of check or money order and Common Stock
of the Company with an aggregate fair market value and a principal amount equal
to the Option price. For these purposes, the fair market value of the Company's
shares of Common Stock of the Company as of any date shall be as reasonably
determined by the Company pursuant to the Plan.
8. Acceleration of Exercisability Upon Change in Control
(a) Notwithstanding any installment or delayed exercise provision
contained in this Agreement, this Option may be exercised in full immediately at
or anytime after the occurrence of a "Change in Control" (as hereinafter
defined).
(b) "Change in Control" shall mean any of the following events:
(i) the public announcement (which, for purposes of this definition,
shall include, without limitation, a report filed pursuant to Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) that any person, entity or "group", within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, other than the Company or any of
its subsidiaries, or the Company Retirement Plan or any other employee
benefit plan of the Company or any of its subsidiaries, or any entity
holding shares of the Company's Common Stock organized, appointed or
established for, or pursuant to the terms of, any such plan, has become
the beneficial owner (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 30% or more of the combined voting power of the
Company's then outstanding voting securities in a transaction or series of
transactions;
(ii) the Continuing Directors cease to constitute a majority of the
Company's Board of Directors;
(iii) the shareholders of the Company approve (1) any consolidation
or merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's stock
would be converted into cash, securities or other property, other than a
merger of the Company in which shareholders immediately prior to the
merger have the same proportionate ownership of stock of the surviving
corporation immediately after the merger; (2) any sale, lease, exchange or
other transfer (in one transaction or a series of related transactions) of
all or substantially all of the assets of the Company; or (3) any plan of
liquidation or dissolution of the Company; or
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(iv) the majority of the Continuing Directors determine in their
sole and absolute discretion that there has been a change in control of
the Company.
(c) "Continuing Director" shall mean any person who is a member of the
Board of Directors of the Company, while such a person is a member of the Board
of Directors, who is not an Acquiring Person (as hereinafter defined) or an
Affiliate or Associate (as hereinafter defined) of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, and
who (i) was a member of the Board of Directors on the date of this Agreement or
(ii) subsequently becomes a member of the Board of Directors, if such person's
initial nomination for election or initial election to the Board of Directors is
recommended or approved by a majority of the Continuing Directors. For purposes
of this paragraph (c), "Acquiring Person" shall mean any "person" (as such term
is used in Sections 13(d) and 14(d) of the Exchange Act) who or which, together
with all Affiliates and Associates of such person, is the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 30% or more of the
combined voting power of the Company's then outstanding securities, but shall
not include the Company, any subsidiary of the Company or any employee benefit
plan of the Company or of any subsidiary of The Company or any entity holding
shares of the Company's Common Stock organized, appointed or established for, or
pursuant to the terms of, any such plan; and "Affiliate" and "Associate" shall
have the respective meanings ascribed to such terms in Rule 12b-2 promulgated
under the Exchange Act.
(d) If a Change in Control shall occur, then the Board of Directors or the
Committee (if authority is delegated by the Board of Directors), in its sole
discretion, and without the consent of Employee, may determine that Employee
shall receive, with respect to some or all of the shares of Common Stock subject
to this option, as of the effective date of any such Change in Control, cash in
an amount equal to the excess of the Fair Market Value of such shares
immediately prior to the effective date of such Change in Control over the
exercise price per share of this Option.
9. Company's Option to Repurchase Common Stock.
(a) Upon the occurrence of any one or more of the Option Events, as
hereinafter defined, the Company shall have the irrevocable right and option
(the "Call Option") to purchase from Employee or Employee's heirs, successors,
personal representatives or assigns, and Employee, on behalf of Employee and his
or her heirs, successors, personal representatives or assigns, agrees to sell to
the Company upon the exercise of the Call Option all or any part of the Common
Stock acquired by Employee pursuant to this option. (The Company's Call Option,
and any reference to Common Stock acquired by Employee pursuant to this option,
shall be deemed to include all other shares of any class or series of the
Company's capital stock acquired by Employee on account of or with respect to
Common Stock acquired pursuant to this option, whether the acquisition of such
shares is by stock dividend, stock split, recapitalization or any other similar
means.) The Call Option shall apply to each Option Event, regardless of whether
the Call Option was not exercised with respect to a previous Option Event. The
Option Events shall be:
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(i) The express desire of Employee to sell, assign, pledge,
transfer, give or otherwise dispose of or encumber any Common Stock
acquired by Employee pursuant to this option to a bona fide third
party or any attempt by Employee to transfer any such Common Stock
except in strict compliance with the terms and conditions of this
Agreement.
(ii) The appointment by a court of competent jurisdiction or
otherwise of a receiver, trustee or assignee of Employee or
Employee's property.
(iii) The expiration of thirty (30) days immediately following
the date upon which a money judgment entered in a court of record
against Employee becomes final, provided such judgment remains
unsatisfied.
(iv) Voluntary application of Employee for relief any act of
Congress or any of the laws of the several states now or hereafter
enacted providing for the relief of debtors.
(v) Institution of a levy, garnishment or attachment involving
such Common Stock, unless released or discharged within a period of
thirty (30) days.
(vi) Employee's termination of employment with the Company,
whether voluntary or involuntary with or without cause, including
without limitation termination as a result of death or disability.
(vii) Any breach by Employee of any employment agreement,
confidentiality agreement or other agreement between Employee and
the Company or any subsidiary of the Company.
(b) Upon the occurrence of any one or more of the Option Events, Employee
(or a legal representative thereof) shall deliver a written notice thereof to
the Company, which notice shall specify the Option Event, the person to whom the
shares are to be sold, transferred, exchanged or disposed of, if applicable, the
purchase price or other consideration to be received by Employee for such
shares, if any, and the terms upon which such purchase price or other
consideration is to be paid, if applicable. The Company may then exercise its
Call Option with respect to all or any part of such Common Stock by delivering a
written acceptance to Employee (or a legal representative thereof) within thirty
(30) days after receipt of the foregoing written notice from Employee. If the
Company elects not to exercise the Call Option, Employee (or a legal
representative thereof) shall be able to transfer or encumber such shares on the
terms specified in the written notice to the Company, but only if such
transaction is consummated within ninety (90) days after such notice to the
Company.
(c) The purchase price for the Common Stock that is repurchased by the
Company pursuant to the exercise of its Call Option shall be (i) in the case of
an Option Event described in Section 9(a)(i) where Employee has received a bona
fide offer to purchase the Stock from an unaffiliated third party, the amount to
be paid therefor by the bona fide third party purchaser or (ii) in the case of
all other Option Events (including those described in Section 9(a)(i) where
there is no offer from a bona fide third party) the fair market value thereof.
Employee and the Company agree that the fair market of the Stock shall be an
amount determined by the Company in its sole and absolute discretion.
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(d) The Company shall make payment of the purchase price for any Common
Stock reacquired by it pursuant to its exercise of the Call Option by delivering
to Employee or Employee's heirs, successors, assigns or personal
representatives, as the case may be, the Company's check in the amount of the
purchase price. Upon receipt of such payment from the Company, Employee or his
or her heirs, successors, assigns or personal representatives, as the case may
be, shall deliver to the Company for cancellation the stock certificate or
certificates evidencing the Common Stock being repurchased by the Company
pursuant to the exercise of its Call Option, which certificate or certificates
shall be duly endorsed for cancellation by the Company.
(e) Employee shall not voluntarily or involuntarily sell, exchange,
transfer, pledge or otherwise dispose of any of the Common Stock acquired
pursuant to the exercise of this option unless Employee shall first offer to
sell such Common Stock to the Company pursuant to the Company's Call Option as
described above. The following legend shall be affixed to the certificates
evidencing the Common Stock acquired pursuant to the exercise of this option.
The shares evidenced by this certificate are subject to restrictions
on transferability and the repurchase options contained in an
Incentive Stock Option Agreement dated _________________ between
_____________ and BioForce Nanosciences, Inc., a copy of which is
available for review at the principal offices of BioForce
Nanosciences, Inc.
(f) Notwithstanding anything contained herein to the contrary, the
provisions of this Section 9 shall terminate at such time as the Company's
Common Stock is listed or admitted to unlisted trading privileges on a national
securities exchange or the Nasdaq National Market or if sales and offer
quotations are reported for that class of stock in the automated quotation
system operated by the National Association of Securities Dealers, Inc.
10. Miscellaneous
(a) This Option is issued pursuant to the Plan and is subject to its
terms. The terms of the Plan are available for inspection during business hours
at the principal offices of the Company.
(b) This Agreement shall not confer on Employee any right with respect to
continuance of employment by the Company or any of its subsidiaries, nor will it
interfere in any way with the right of the Company to terminate such employment
at any time. Employee shall have none of the rights of a shareholder with
respect to shares subject to this Option until such shares shall have been
issued to Employee upon exercise of this Option.
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(c) The exercise of all or any parts of this Option shall only be
effective at such time that the sale of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws.
(d) If there shall be any change in the shares of Common Stock of the
Company through merger, consolidation, reorganization, recapitalization,
dividend in the form of stock (of whatever amount), stock split or other change
in the corporate structure of the Company, and all or any portion of the Option
shall then be unexercised and not yet expired, appropriate adjustments in the
outstanding Option shall be made by the Company, in order to prevent dilution or
enlargement of Option rights. Such adjustments shall include, where appropriate,
changes in the number of shares of Common Stock and the price per share subject
to the outstanding Option.
(e) The Company shall at all times during the term of the Option reserve
and keep available such number of shares as will be sufficient to satisfy the
requirements of this Agreement.
(f) If Employee shall dispose of any of the shares of Common Stock of the
Company acquired by Employee pursuant to the exercise of the Option within two
years from the date the Option was granted or within one year after the transfer
of any such shares to Employee upon exercise of the Option, in order to provide
the Company with the opportunity to claim the benefit of any income tax
deduction which may be available to it under the circumstances, Employee shall
promptly notify the Company of the dates of acquisition and disposition of such
shares, the number of shares so disposed of and the consideration, if any,
received for such shares. In order to comply with all applicable federal or
state income tax laws or regulations, the Company may take such action as it
deems appropriate to insure (i) notice to the Company of any disposition of the
Common Stock of the Company within the time periods described above and (ii)
that, if necessary, all applicable federal or state payroll, withholding, income
or other taxes are withheld or collected from Employee.
(g) In order to provide the Company with the opportunity to claim the
benefit of any income tax deduction which may be available to it upon the
exercise of the Option when the Option does not qualify as an incentive stock
option within the meaning of Section 422 of the Code and in order to comply with
all applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, withholding, income or other taxes are
withheld or collected from Employee. Employee may elect to satisfy his federal
and state income tax withholding obligations upon exercise of this option by (i)
having the Company withhold a portion of the shares of Common Stock otherwise to
be delivered upon exercise of such option having a fair market value equal to
the amount of federal and state income tax required to be withheld upon such
exercise, in accordance with such rules as the Company may from time to time
establish, or (ii) delivering to the Company shares of its Common Stock other
than the shares issuable upon exercise of such option with a fair market value
equal to such taxes, in accordance with such rules.
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(h) In accordance with Section 6(a)(iv) of the Plan, upon exercise of the
Option when payment of the exercise price is made by delivery of shares of
Common Stock of the Company owned by Employee and/or when shares of Common Stock
of the Company are tendered by Employee or forfeited as payment of the amount to
be withheld under applicable income tax laws in connection with the exercise of
the Option, the Company shall grant Employee a Reload Option, which shall be a
Non-Qualified Stock Option and otherwise subject to terms and conditions which
are the same as the Option, except that such Reload Option shall be immediately
exercisable in full.
(i) The Option shall be governed by the internal laws of the State of
Delaware, without regard to any conflict of laws principles.
[Intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of ___________, 200__.
BIOFORCE NANOSCIENCES, INC.
By:_______________________________________
Name: Xxxx X. Xxxxxxxx, Ph.D.
Title: President & Chief Executive Officer
EMPLOYEE
__________________________________________
Employee acknowledges receipt of a copy of the Plan, a copy of which is annexed
hereto represents that Employee is familiar with the terms and provisions
thereof, and hereby accepts the Option subject to all of the terms and
provisions thereof. Employee has reviewed the Plan and this Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Agreement and fully understands all provisions of the Agreement.
Employee hereby agrees to accept as binding conclusive and final all decisions
or interpretations of the Board or of the Committee upon any questions arising
under the Plan. Employee further agrees to notify the Company upon any change in
the residence address indicated below.
Date: _______________________
____________________________
Employee Name:
____________________________
____________________________
Residence Address
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EXHIBIT A
DATE: ______________________
TO: BioForce Nanosciences, Inc.
FROM: ______________________
RE: Exercise of Stock Option
I hereby exercise my option to purchase ______________ shares of Common
Stock at $ ________ per share (total exercise price of $ _________________),
effective today's date. This notice if given in accordance with the terms of my
Incentive Stock Option Agreement dated ________________, 2002). The Option price
and vested amount is in accordance with Section 1 and 3 of the Incentive Stock
Option Agreement.
Attached is a check payable to BioForce Nanosciences, Inc. for the total
exercise price of the shares being purchased. The undersigned confirms the
representations made in Section 4 of the Incentive Stock Option Agreement.
Please prepare the stock certificate in the following name(s):
________________________________________________
________________________________________________
________________________________________________
If the stock is to be registered in a name other than your name, please so
advise the Company. The Incentive Stock Option Agreement requires the Company's
approval for registrations in the name other than your name and requires certain
agreements from any joint owner.
Sincerely,
______________________________
(Signature)
Letter and consideration
Received on ___________, 200_
