XXXX BIOMEDICAL, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
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This Nonqualified Stock Option Agreement (the "Agreement") is entered into
as of August 8, 2001 by and between Xxxx Biomedical, Inc., a California
corporation (the "Company"), and Xxxxx X. Xxxxx (the "Optionee").
1. Grant of Option. The Company hereby grants to Optionee an option (the
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"Option") to purchase all or any portion of a total of One Hundred Thousand
(100,000) shares (the "Shares") of the Common Stock of the Company at a purchase
price of 96 cents ($.96) per share (the "Exercise Price"), subject to the terms
and conditions set forth herein. The Option granted hereunder in intended to
constitute a nonqualified stock option.
2. Vesting of Option. The right to exercise this Option shall vest
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immediately, and this Option shall be exercisable from time to time in whole or
in part.
3. Term of Option. Optionee's right to exercise this Option shall terminate
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upon the first to occur of the following:
(a) the expiration of ten (10) years from the date of this Agreement;
(b) the expiration of three (3) months from the date of termination of
Optionee's Continuous Service if such termination occurs for any reason other
than permanent disability, death or voluntary resignation; provided, however,
that if Optionee dies during such three-month period the provisions of Section
3(e) below shall apply;
(c) the expiration of one (1) month from the date of termination of
Optionee's Continuous Service if such termination occurs due to voluntary
resignation; provided, however, that if Optionee dies during such one-month
period the provisions of Section 3(e) below shall apply;
(d) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to permanent disability
of the Optionee (as defined in Section 22(e)(3) of the Code); or
(e) the expiration of one (1) year from the date of termination of
Optionee's Continuous Service if such termination is due to Optionee's death or
if death occurs during either the three-month or one-month period following
termination of Optionee's Continuous Service pursuant to Section 3(b) or 3(c)
above, as the case may be.
As used herein, the term "Continuous Service" means (i) employment by
either the Company or any parent or subsidiary corporation of the Company, or by
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a corporation or a parent or subsidiary of a corporation issuing or assuming a
stock option in a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacation, illness (except for permanent disability,
as defined in Section 22(e)(3) of the Code), or leaves of absence which are
approved in writing by the Company or any of such other employer corporation, if
applicable, (ii) service as a member of the Board of Directors of the Company
until Optionee resigns, is removed from office, or Optionee's term of office
expires and he or she is not reelected, or (iii) so long as Optionee is engaged
as a consultant or service provided to the Company or other corporation referred
to in clause (i) above.
Additionally, for purposes of this Agreement "Fair Market Value" on any
given date means the value of one share of Common Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading on a NASDAQ
market system or a stock exchange which reports closing sale prices, the Fair
Market Value shall be the closing sale price on the date of valuation on such
NASDAQ market system or principal stock exchange on which the Common Stock is
then listed or admitted to trading, or, if no closing sale price is quoted on
such day, then the Fair Market Value shall be the closing sale price of the
Common Stock on such NASDAQ market system or such exchange on the next preceding
day for which a closing sale price is reported.
(b) If the Common Stock is not then listed or admitted to trading on a
NASDAQ market system or a stock exchange which reports closing sale prices, the
Fair Market Value shall be the average of the closing bid and asked prices of
the Common Stock in the over-the-counter market on the date of valuation.
(c) If neither (a)nor (b) is applicable as of the date of valuation,then
the Fair Market Value shall be determined by the Board of Directors in good
faith using any reasonable method of evaluation, which determination shall be
conclusive and binding on all interested parties.
4. Exercise of Option. On or after the vesting of any portion of this
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Option in accordance with Sections 2 or 9 hereof, and until termination of the
right to exercise this Option in accordance with Section 3 above, the portion of
this Option which has vested may be exercised in whole or in part by the
Optionee (or, after his or her death, by the person designated in Section 5
below) upon delivery of the following to the Company at its principal executive
offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased(but no fractional Shares may be
purchased);
(b) payment of the Exercise Price
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(c) a check or cash in the amount reasonably requested by the Company to
satisfy the Company's withholding obligations under federal, state or other
applicable tax laws with respect to the taxable income, if any, recognized by
the Optionee in connection with the exercise of this Option (unless the Company
and Optionee shall have made other arrangements for deductions or withholding
from Optionee's wages, bonus or other compensation payable to Optionee, provided
such arrangements satisfy the requirements of applicable tax laws); and
(d) a letter, if requested by the Company, in such form and substance as
the Company may require, setting forth the investment intent of the Optionee,
provided designated in Section 5 below, as the case may be.
5. Death of Optionee: No Assignment. The rights of the Optionee under this
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Agreement may not be assigned or transferred except by will or by the laws of
descent and distribution, and may be exercised during the lifetime of the
Optionee only by such Optionee. Any attempt to sell, pledge, assign,
hypothecate, transfer or dispose of this Option in contravention of this
Agreement or the Plan shall be void and shall have no effect. If the Optionee's
Continuous Service terminates as a result of his or her death, and provided
Optionee's rights hereunder shall have vested pursuant to Section 2 hereof,
Optionee's legal representative, his or her legatee, or the person who acquired
the right to exercise this Option by reason of the death of the Optionee
(individually, a "Successor") shall succeed to the Optionee's rights and
obligations under this Agreement. After the death of the Optionee, only a
Successor may exercise this Option.
6. Representations and Warranties of Optionee.
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(a) Optionee represents and warrants that this Option is being acquired
by Optionee for Optionee's personal account, for investment purposed only, and
not with a view to the distribution, resale or other disposition thereof.
(b) Optionee acknowledges that the Company may issue Shares upon the
exercise of the Option without registering such Shares under the Securities Act
of 1933, as amended (the "Securities Act"), on the basis of certain exemptions
from such registration requirement. Accordingly, Optionee agrees that his or her
exercise of the Option may be expressly conditioned upon his or her delivery to
the Company of an investment certificate including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including a representation that Optionee is
acquiring the Shares for investment and not with a present intention of selling
or otherwise disposing thereof and an agreement by Optionee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the Securities Act and the resulting restrictions on
transfer. Optionee acknowledges that, because Shares received upon exercise of
an Option may be unregistered, Optionee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the
Securities Act or an exemption from such registration is available.
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7. Restrictive Legends. Optionee hereby acknowledges that federal
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securities laws and the securities laws of the state in which Optionee resides
may require the placement of certain restrictive legends upon the Shares issued
upon exercise of this Option, and Optionee hereby consents to the placing of any
such legends upon certificates evidencing the Shares as the Company, or its
counsel, may deem necessary or advisable.
8. Adjustments Upon Changes in Capital Structure. In the event that the
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outstanding shares of Common Stock of the Company are hereafter increased or
decreased or changed into or exchanged for a different number or kind of shares
or other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend or other change in the
capital structure of the Company, then appropriate adjustment shall be made by
the Board of Directors to the number of Shares subject to the unexercised
portion of this Option and to the Exercise Price per share, in order to
preserve, as nearly as practical, but not to increase, the benefits of the
Optionee under this Option.
9. No Employment Contract Created. Neither the granting of this Option nor
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the exercise hereof shall be construed a granted to the Optionee any right with
respect to continuance of employment by the Company or any of its subsidiaries.
The right of the Company or any of its subsidiaries to terminate at will the
Optionee's employment at any time (whether by dismissal, discharge or
otherwise), with or without cause, is specifically reserved.
10. Rights as Shareholder. The Optionee (or transferee of this option by
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will or by the laws of descent and distribution) shall have no rights as a
shareholder with respect to any Shares covered by this Option until the date of
the issuance of a stock certificate or certificates to him or her for such
Shares, notwithstanding the exercise of this Option.
11. "Market Stand-Off" Agreement. Optionee agrees that, if requested by the
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Company or the managing underwriter of any proposed public offering of the
Company's securities, Optionee will not sell or otherwise transfer or dispose of
any Shares held by Optionee without the prior written consent of the Company or
such underwriter, as the case may be, during such period of time, not to exceed
180 days following the effective date of the registration statement filed by the
Company with respect to such offering, as the Company or the underwriter may
specify.
12. Interpretation. The Board of Directors shall interpret and construe
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this Option, and any action, decision, interpretation or determination made in
good faith by the Board of Directors shall be final and binding on the Company
and the Optionee.
13. Notices. Any notice, demand or request required or permitted to be
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given under this Agreement shall be in writing and shall be deemed given when
delivered personally or three (3) days after being deposited in the United
States mail, as certified or registered mail, with postage prepaid, and
addressed, if to the Company, at its principal place of business, Attention: the
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Chief Financial Officer, and if to the Optionee, at his or her most recent
address as shown in the employment or stock records of the Company.
14. Annual and Other Periodic Reports. During the term of this Agreement,
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the Company will furnish to the Optionee copies of all annual and other periodic
financial and informational reports that the Company distributes generally to
its shareholders.
15. Governing Law. The validity, construction, interpretation, and effect
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of this Option shall be governed by and determined in accordance with the laws
of the State of California.
16. Severability. Should any provision or portion of this Agreement be held
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to be unenforceable or invalid for any reason, the remaining provision and
portions of this Agreement shall be unaffected by such holding.
17. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
18. Securities Law Compliance. The sale of the Shares that are the subject
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of this Agreement has not been qualified with the Board of Directors of the
securities laws of any state and the issuance of such Shares or the payment or
receipt of any part of the consideration therefore prior to such qualification
may be unlawful, unless the sale of such Shares is exempt from such
qualification. The rights of all parties to this Agreement are expressly
conditioned upon such qualification being obtained, unless the sale is so
exempt.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXX BIOMEDICAL, INC. "OPTIONEE"
By: /s/ Xxxxxx X. Xxxxxx /s/ Xxxxx X. Xxxxx
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(Signature)
Name: Xxxxxx X. Xxxxxx
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Title: Chief Financial Officer Xxxxx X. Xxxxx
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(Type or print name)
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