1
EXHIBIT 4.5
GENETIC ANOMALIES, INC.
INCENTIVE STOCK OPTION AGREEMENT
Genetic Anomalies, a Delaware corporation (the "Company"), hereby grants
this day of [Month, Year] (the "Grant Date"), to [Name of Employee] (the
"Employee"), an option to purchase a maximum of [Number of Optioned Shares (#)]
shares of the Company's Common Stock, $.01 par value (the "Common Stock"), at
the price of [Per Share Option Price ($)] per share, on the following terms and
conditions:
1. Grant Under 1997 Stock Option/Stock Issuance Plan. This option is
granted pursuant to and is governed by and subject to the Company's 1997 Stock
Option/Stock Issuance Plan (the "Plan"), the terms and conditions of which are
incorporated herein by this reference. Unless the context otherwise requires,
terms used herein shall have the same meaning as in the Plan. Determinations
made pursuant to the Plan in connection with this option shall be governed by
the Plan as it exists on the date of this option agreement ("Agreement").
2. Grant as Incentive Stock Option; Other Options. This option is
intended to qualify as an incentive stock option ("ISO") within the meaning of
Section 422 of the Internal Revenue Code of 1986 (the "Code"). This option is in
addition to any other options heretofore or hereafter granted to the Employee by
the Company, but a duplicate original of this instrument shall not effect the
grant of another option.
3. Exercise of Option and Provisions for Termination.
(a) Vesting Schedule. Except as otherwise provided in this
Agreement, and subject to all other terms and conditions of this Agreement, if
the Employee has continued to be employed by the Company through any applicable
date in the table below, this option may be exercised prior to the tenth
anniversary of the Grant Date (hereinafter the "Expiration Date") in
installments for not more than the number of shares set forth opposite such
applicable date:
[Insert Vesting Schedule]
The right of exercise shall be cumulative so that if the option is not exercised
to the maximum extent permissible as of an applicable date, it shall be
exercisable, in whole or in part, with respect to all shares not so purchased at
any time prior to the Expiration Date or the earlier termination of this option.
Notwithstanding any other provision of this Agreement or the Plan, this option
may not be exercised at any time on or after the Expiration Date.
(b) Method of Exercise. Subject to the terms and conditions set forth in
this Agreement, this option shall be exercised by the Employee's delivery of
written notice of exercise to the Treasurer of the Company, specifying the
number of shares to be purchased and the purchase price to be paid therefor and
accompanied by payment in full in accordance with Section 4 hereof.
-2-
2
Such exercise shall be effective upon receipt by the Treasurer of the Company of
such written notice together with the required payment. The Employee may
purchase less than the number of shares covered hereby, provided that no partial
exercise of this option may be for any fractional share or for fewer than
[Number of Shares] whole shares.
(c) Continuous Employment Required. Except as otherwise provided in this
Section 3, this option may not be exercised unless the Employee, at the time he
or she exercises this option, is, and has been at all times since the Grant
Date, an employee of the Company. For all purposes of this option, (i)
"employee" and "employment" shall be defined in accordance with the provisions
of Treasury Regulation Section 1.421-7(h) under the Code, or any successor
regulations, and (ii) if this option shall be assumed or a new option
substituted therefor in a transaction to which Section 424(a) of the Code
applies, employment by such assuming or substituting corporation (hereinafter a
"Successor Corporation") shall be considered for all purposes of this option to
be employment by the Company.
(d) Exercise Period Upon Termination of Employment. If the Employee
ceases to be employed by the Company for any reason, then, except as provided in
paragraphs (e) and (f) below, the right to exercise this option shall terminate
on the date which is three (3) months after the date of cessation of employment
(but in no event after the Expiration Date); provided, however, that this option
shall be exercisable only to the extent that the Employee was entitled to
exercise this option on the date of such cessation. Notwithstanding the
foregoing, if the Employee, prior to the Expiration Date, materially violates
the non-competition or confidentiality provisions of any employment contract,
confidentiality and nondisclosure agreement or other agreement between the
Employee and the Company, the right to exercise this option shall terminate
immediately upon written notice to the Employee from the Company describing such
violation.
(e) Exercise Period Upon Death or Disability. If the Employee dies or
becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to
the Expiration Date while he or she is an employee of the Company, or if the
Employee dies within three (3) months after the date on which the Employee
ceases to be an employee of the Company [(other than as the result of a
discharge for "cause" as specified in Paragraph (f) below)], this option shall
be exercisable within the period of one (1) year following the date of death or
disability of the Employee (but in no event after the Expiration Date), by the
Employee or by the person to whom this option is transferred by will or the laws
of descent and distribution; provided, however, that this option shall be
exercisable only to the extent that this option was exercisable by the Employee
on the date of his or her death or disability. Except as otherwise indicated by
the context, the term "Employee", as used in this Agreement, shall include the
estate of the Employee, the Employee's personal representative, or any other
person who acquires the right to exercise this option by bequest or inheritance
or otherwise by reason of the death of the Employee or by reason of the
Employee's incapacity.
(f) Discharge for Cause. If the Employee, prior to the Expiration Date,
is discharged by the Company for "cause" (as defined below), the right to
exercise this option shall terminate immediately upon such cessation of
employment. "Cause" shall mean willful misconduct in
-3-
3
connection with the Employee's employment or willful failure to perform his or
her employment responsibilities in the best interests of the Company (including,
without limitation, breach by the Employee of any provision of any employment,
nondisclosure, non-competition or other similar agreement between the Employee
and the Company), as determined by the Company, which determination shall be
conclusive. The Employee shall be considered to have been discharged "for cause"
if the Company determines, within thirty (30) days after the Employee's
resignation, that discharge for cause was warranted.
4. Payment of Purchase Price. Payment of the purchase price for shares
purchased upon exercise of this option shall, at the optionee's election, be
made in any of the following ways: (i) by delivery to the Company of cash or
wire transfer or a check payable to the order of the Company in an amount equal
to the purchase price per share as hereinabove set forth times the number of
shares so purchased (the "exercise price"); (ii) by delivery of a recourse
promissory note of the optionee bearing interest payable not less than annually
at the applicable Federal rate as defined in Section 1274(d) of the Code and
otherwise payable on such terms as are specified by the Board in its sole
discretion; (iii) by delivery to the Company of shares of Common Stock of the
Company already owned by the optionee having a fair market value determined by
the Board to be equal in amount to the exercise price of the option being
exercised; (iv) by requesting that the Company withhold shares of Common Stock
of the Company issuable upon exercise of the option having a fair market value
determined by the Board to be equal in amount to the exercise price of the
option being exercised; or (v) by any combination of the above methods of
payment.
5. Delivery of Shares.
(a) General. The Company shall, upon payment of the exercise
price for the number of shares purchased and paid for, make prompt delivery of
such shares to the Employee; provided, however, that if any law or regulation
requires the Company to take any action with respect to such shares before the
issuance thereof, then the date of delivery of such shares shall be extended for
the period necessary to complete such action.
(b) Listing, Registration, Qualification, Etc. This option shall
be subject to the requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the shares subject
hereto upon any securities exchange or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that the
disclosure of non-public information or the satisfaction of any other condition
is necessary as a condition of, or in connection with, the issuance or purchase
of shares hereunder, this option may not be exercised, in whole or in part,
unless such listing, registration, qualification, consent or approval,
disclosure or satisfaction of such other condition shall have been effected or
obtained on terms acceptable to the Board of Directors of the Company. Nothing
herein shall be deemed to require the Company to apply for, effect or obtain
such listing, registration, qualification, or disclosure, or to satisfy such
other condition.
6. Nontransferability of Option. Except as provided in Paragraph (e) of
Section 3 hereof, this option is personal and no rights granted hereunder may be
transferred, assigned, pledged or hypothecated in any way (whether by operation
of law or otherwise) nor shall any such rights be
-4-
4
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this option or of
such rights contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon this option or such rights, this option and
such rights shall, at the election of the Company, become null and void.
7. No Special Employment Rights. Nothing contained in the Plan or this
Agreement shall be construed or deemed by any person under any circumstances to
obligate the Company to continue the employment of the Employee for any period.
8. Rights as a Shareholder. The Employee shall have no rights as a
shareholder with respect to any shares which may be purchased by exercise of
this option (including, without limitation, any rights to vote or to receive
dividends or other distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Employee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date such stock certificate is issued.
9. Adjustment Provisions.
(a) General. If through, or as a result of, any merger,
consolidation, sale of all or substantially all of the assets of the Company,
reorganization, recapitalization, reclassification, stock dividend, stock split,
reverse stock split or other similar transaction, (i) the outstanding shares of
Common Stock are increased or decreased or are exchanged for a different number
or kind of shares or other securities of the Company, or (ii) additional shares
or new or different shares or other securities of the Company or other non-cash
assets are distributed with respect to such shares of Common Stock or other
securities, the Employee shall, with respect to this option or any unexercised
portion hereof, be entitled to the rights and benefits, and be subject to the
limitations, set forth in Paragraph 14 of the Plan.
(b) Board Authority to Make Adjustments. Any adjustments under
this Section 9 will be made by the Board of Directors of the Company, whose
determination as to what adjustments, if any, will be made and the extent
thereof will be final, binding and conclusive. No fractional shares will be
issued with respect to this option on account of any such adjustments.
(c) Limits on Adjustments. No adjustment shall be made under this
Section 9 which would, for purposes of any applicable provision of the Code,
constitute a modification, extension or renewal of this option or a grant of
additional benefits to the Employee.
10. Mergers. Consolidations, Asset Sales, Liquidations, Etc. In the
event of a consolidation or merger or sale of all or substantially all of the
assets of the Company in which outstanding shares of Common Stock are exchanged
for securities, cash or other property of any other corporation or business
entity, or in the event of the liquidation of the Company, prior to the
Expiration Date or other termination of this option, the Employee shall, with
respect to this option or any unexercised portion hereof, be entitled to the
rights and benefits, and be subject to the limitations, set forth in Paragraph
16 of the Plan.
-5-
5
11. Withholding of Taxes. The Company's obligation to deliver shares
upon the exercise of this option shall be subject to the Employee's satisfaction
of all applicable federal, state and local income and employment tax withholding
requirements as described in Paragraph 23 of the Plan. Without limiting the
generality of the foregoing, if the Company in its discretion determines that it
is obligated to withhold tax with respect to a Disqualifying Disposition (as
defined in Section 12 hereof, the Employee agrees that the Company may withhold
from the Employee's wages the appropriate amount of federal, state and local
withholding taxes attributable to such Disqualifying Disposition. If any portion
of this option is treated as a Non-Qualified Option, the Employee agrees that
the Company may withhold from the Employee's wages the appropriate amount of
federal, state and local withholding taxes attributable to the Employee's
exercise of such Non-Qualified Option. At the Company's discretion, the amount
required to be withheld may be withheld in cash from such wages, or (with
respect to compensation income attributable to the exercise of this option) in
kind from the shares of Common Stock otherwise deliverable to the Employee on
exercise of this option. The Employee further agrees that, if the Company does
not withhold an amount from the Employee's wages sufficient to satisfy the
Company's withholding obligation, the Employee will reimburse the Company on
demand, in cash, for the amount underwithheld.
12. Limitations on Disposition of Incentive Stock Option Shares.
(a) Except as set forth in Section 14, no disposition (whether by
sale, exchange, gift, transfer or otherwise) may be made of any shares acquired
upon exercise of this option, other than by will or the laws of descent and
distribution.
(b) It is understood and intended that this option shall qualify
as an "incentive stock option" as defined in Section 422 of the Code (an "ISO").
Accordingly, the Employee understands that in order to obtain the beneficial tax
treatment accorded an ISO, no sale or other disposition may be made of any
shares acquired upon exercise of the option within one (1) year after the day of
the transfer of such shares to the Employee, nor within two (2) years after the
Grant Date. If the Employee intends to dispose, or does dispose (whether by
sale, exchange, gift, transfer or otherwise), of any such shares within either
of said periods, he or she will notify the Company in writing within ten (10)
days after such disposition (a "Disqualifying Disposition").
13. Investment Representations: Legends.
(a) Representations. The Employee represents, warrants and
covenants that:
(i) Any shares purchased upon exercise of this option shall be
acquired for the Employee's account for investment only and not with a view to,
or for sale in connection with, any distribution of the shares in violation of
the Securities Act of 1933 (the "Securities Act") or any rule or regulation
under the Securities Act.
(ii) The Employee has had such opportunity as he or she has
deemed adequate to obtain from representatives of the Company such information
as is necessary to permit the Employee to evaluate the merits and risks of his
or her investment in the Company.
-6-
6
(iii) The Employee is able to bear the economic risk of holding
shares acquired pursuant to the exercise of this option for an indefinite
period.
(iv) The Employee understands that (A) the shares acquired
pursuant to the exercise of this option will not be registered under the
Securities Act and are "restricted securities" within the meaning of Rule 144
under the Securities Act; (B) such shares cannot be sold, transferred or
otherwise disposed of unless they are subsequently registered under the
Securities Act or an exemption from registration is then available; (C) in any
event, an exemption from registration under Rule 144 or otherwise under the
Securities Act may not be available for at least two years and even then will
not be available unless a public market then exists for the Common Stock,
adequate information concerning the Company is then available to the public and
other terms and conditions of Rule 144 are complied with; and (D) there is now
no registration statement on file with the Securities and Exchange Commission
with respect to any stock of the Company and the Company has no obligation or
current intention to register any shares acquired pursuant to the exercise of
this option under the Securities Act.
(v) The Employee agrees that, if the Company offers for the first
time any of its Common Stock for sale pursuant to a registration statement under
the Securities Act, the Employee will not, without the prior written consent of
the Company, publicly offer, sell, contract to sell or otherwise dispose of,
directly or indirectly, any shares purchased upon exercise of this option for a
period of ninety (90) days after the effective date of such registration
statement.
By making payment upon any exercise of this option, in whole or in part, the
Employee shall be deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 13.
(b) Legends on Stock Certificates. All stock certificates representing
shares of Common Stock issued to the Employee upon exercise of this option shall
have affixed thereto legends substantially in the following forms, in addition
to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 and may not be
transferred, sold or otherwise disposed of in the absence of an
effective registration statement with respect to the shares
evidenced by this certificate, filed and made effective under the
Securities Act of 1933, or an opinion of counsel satisfactory to
the Company to the effect that registration under such Act is not
required."
"The shares of stock represented by this certificate are subject
to certain restrictions on transfer contained in an Option
Agreement, a copy of which will be furnished upon request by the
issuer."
14. First Refusal Rights.
-7-
7
(a) If the Employee or the Employee's successor in interest
desires to sell all or any part of the shares acquired under this option
(including any securities received in respect thereof pursuant to
recapitalizations and the like), and an offeror (the "Offeror") has made an
offer therefor, which offer the Employee desires to accept, the Employee shall:
(i) obtain in writing an irrevocable and unconditional bona fide offer (the
"Bona Fide Offer") for the purchase thereof from the Offeror; and (ii) give
written notice (the "Option Notice") to the Company setting forth the Employee's
desire to sell such shares, which Option Notice shall be accompanied by a
photocopy of the original executed Bona Fide Offer and shall set forth at least
the name and address of the Offeror and the price and terms of the Bona Fide
Offer. Upon receipt of the Option Notice, the Company shall have an option to
purchase any or all of the shares specified in the Option Notice, such option to
be exercisable by giving, within thirty (30) days after receipt of the Option
Notice, a written counter-notice to the Employee. If the Company elects to
purchase, the Employee shall be obligated to sell to the Company such shares at
the price and terms indicated in the Bona Fide Offer within sixty (60) days from
the date of receipt by the Company of the Option Notice. The Company's purchase
rights under this Section 14 are assignable by the Company.
(b) The Employee may sell, pursuant to the terms of the Bona Fide
Offer, any or all of such shares not purchased by the Company or which the
Company does not elect to purchase in the manner set forth hereinabove after the
expiration of the 30-day period during which the Company may give the aforesaid
counter-notice; provided, however, that the Employee may not sell such shares to
the Offeror if the Offeror is (i) a competitor of the Company, or (ii) a person
that controls, is controlled by or under common control with a competitor of the
Company, or (iii) a member of management of a competitor of the Company (any
person described in clauses (i) through (iii) being hereinafter referred to as a
"Competitor") and the Company gives to the Employee, within thirty (30) days of
its receipt of the Option Notice, written notice stating that the Employee shall
not sell the shares to the Offeror; and provided, further, that prior to the
sale of any such shares to the Offeror, the Offeror shall execute an agreement
with the Company under which the Offeror agrees not to become a Competitor of
the Company and further agrees to be subject to the restrictions set forth in
this Agreement. If any or all of such shares are not sold pursuant to a Bona
Fide Offer within the time permitted above, the unsold shares shall remain
subject to the terms of this Agreement.
(c) The first refusal rights of the Company set forth above shall
remain in effect until the closing of an initial public offering of the
Company's Common Stock pursuant to a registration statement filed under the
Securities Act of 1933, as amended, or a successor statute, at which time the
first refusal rights set forth herein will automatically expire.
15. Miscellaneous.
(a) Except as otherwise expressly provided herein, this Agreement
may not be amended or otherwise modified unless evidenced in writing and signed
by the Company and the Employee.
-8-
8
(b) All notices under this Agreement shall be delivered by hand,
or sent by registered or certified mail, return receipt requested, and
first-class postage prepaid, to the parties at their respective addresses set
forth beneath their names below or at such other address as may be designated in
writing by either of the parties to one another. Notwithstanding the foregoing,
any notice sent to such an address in a country other than that from which the
notice is sent may be sent by telefax, telegram or commercial air courier.
(c) Any reference in this Agreement to a Section of the Code
shall refer to that Section as it reads as of the date of this Agreement and as
it may be amended from time to time, and to any successor provision.
(d) Each provision of this Agreement shall be considered
separable. The invalidity or unenforceability of any provision shall not affect
the other provisions, and this Agreement shall be construed in all respects as
if such invalid or unenforceable provision were omitted.
(e) This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts.
Date of Grant:
[Month, Day, Year]
Genetic Anomalies, Inc.
By:
Title:
Address:
00 Xxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
-9-
9
Employee's Acceptance
The undersigned hereby accepts the foregoing option and agrees to the
terms and conditions of this Agreement. The undersigned hereby acknowledges
receipt of a copy of the Company's 1997 Stock Option/Stock Issuance Plan.
[Name of Employee]
Signature
Address:
-10-
