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Exhibit 10.3
RULES OF THE
NuCana BioMed Limited
2016 SHARE OPTION SCHEME (INCLUDING ENTERPRISE
MANAGEMENT INCENTIVES & INCENTIVE STOCK OPTIONS)
Approved and Adopted by the Board of NuCana BioMed Ltd
on 14 January 2016
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5. | 8 | |||||
6. | 9 | |||||
7. | 11 | |||||
8. | 12 | |||||
9. | 14 | |||||
10. | 14 | |||||
11. | 15 | |||||
12. | 16 | |||||
13. | 17 |
SCHEDULE 1 | LETTER OF INVITATION | |
SCHEDULE 2 | OPTION AGREEMENT | |
SCHEDULE 3 | INCENTIVE STOCK OPTIONS: US SUB-PLAN |
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NuCana Biomed Limited
2016 SHARE OPTION SCHEME
RULES
(INCLUDING ENTERPRISE MANAGEMENT INCENTIVES
& INCENTIVE STOCK OPTIONS)
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“Board” | the board of directors for the time being of the Company or a committee thereof duly authorised for the purposes of the Scheme; | |||
“Capital” | issued equity share capital of the Company as that term is defined in section 548 of the Companies Act 2006; | |||
“Change of Control” | means any of the events set out in Rule 8.1 (a) to (c); | |||
“Close Period” | any period where there are restrictions on dealing in the shares as stipulated by a relevant authority including under the rules of AIM; | |||
“Company” | NuCana BioMed Limited registered in the UK with registration number 03308778 and whose registered address is 77-78 Cannon Street, London, England, EC4N 6AF; | |||
“Control” | has the meaning given to it by section 840 ICTA and “Controlled” shall have a similar meaning; | |||
“Date of Grant” | the date on which an Option was or is to be granted under Rule 2; | |||
“Eligible Employee” | An employee or director of the Company or of a Qualifying Subsidiary and additionally, in the case of an Option which is to be granted as an EMI Option, a person who at the appropriate time (as defined in Schedule 5) also satisfies the requirements of paragraphs 25 and 26 of Schedule 5, and whose average amount per week of reckonable time in relevant employment (as defined in section 535(3) ITEPA and paragraph 26 Schedule 5) during a tax year is not less than 25 hours a week or such other relevant statutory threshold at the appropriate time; | |||
“EMI Code” | the provisions set out in sections 527 to 541 ITEPA (inclusive), Schedule 5 and Part 4 Schedule 7D TCGA; | |||
“EMI Option” | a right (for the time being subsisting) to acquire Shares under the Scheme in accordance with these Rules and which is a Qualifying Option; | |||
“Exercise Conditions” | conditions, if any, determined by the Board at the Date of Grant and as set out in the Appendix of the Option Agreement required to be satisfied before the Option can be exercised, such conditions being subject to the provisions set out in Rule 5; |
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“FSMA” | the Financial Services and Markets Act 2000; | |||
“Group” | the Company and its Subsidiaries and “Group Member” shall be construed accordingly; | |||
“HMRC” | HM Revenue and Customs; | |||
“Incentive Stock Option” | means an option or portion thereof intended to meet the requirements of an incentive stock option as defined in US Code Section 422, subject to the provisions of Schedule 3 to these Rules and designated as an Incentive Stock Option in the applicable Option Agreement, and if the Board does not designate an Option as an Incentive Stock Option in the Option Agreement, the terms of the Option Agreement for such Option hereby provide that the Option will not be treated as an Incentive Stock Option under US Code Section 422: | |||
“ICTA” | the Income and Corporation Taxes Act 1988; | |||
“ITEPA” | the Income Tax (Earnings and Pensions) Act 2003; | |||
“Joint Election” | means a joint election pursuant to sections 425, 430 or 431 ITEPA; | |||
“Letter of Invitation” | a letter substantially in the form set out in Schedule 1 to these Rules provided by the Company to an employee or director inviting him to accept the grant of an Option; | |||
“Market Value” | has the same meaning as it has for the purposes of Part VIII TCGA and which shall be deemed to be: | |||
(a) the middle market quotation of a Share as decided from the Official List for the dealing day immediately preceding the Date of Grant; or | ||||
(b) (if the Shares are not for the time being so quoted) the price determined by the Board, as being the market value of a Share on the day prior to the day on which the Option in question is granted | ||||
and, for an EMI Option agreed by Shares Valuation at HMRC | ||||
and, for an Incentive Stock Option the Fair Market Value as defined in Schedule 3 to these Rules; |
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“Material Interest” | means an interest in the Company as set out in paragraph 29 of Schedule 5; | |||
“NIC” | national insurance contributions; | |||
“Notice of Exercise” | a notice of exercise substantially in the form set out in the Appendix to the Option Agreement; | |||
“Notice of Grant” | in the case of Options which are to be EMI Options, a notification to HMRC to be jointly signed by | |||
(a) the employer company of the Option Holder and | ||||
(b) the Option Holder | ||||
in such form required by HMRC from time to time; | ||||
“Official List” | the official listing as referred to in Part VI FSMA; | |||
“Option” | an option to acquire Shares granted under these Rules, whether an EMI Option or an Unapproved Option or an Incentive Stock Option; | |||
“Option Agreement” | a written agreement between the Company and the Option Holder in the form of a deed substantially in the form set out in Schedule 2 to these Rules and (i) if it is an EMI Option containing the information required by Schedule 5; and (ii) if it is an Incentive Stock Option being subject to the provisions of Schedule 3 to these Rules; | |||
“Option Holder” | a person who holds an Option or (where the context admits) his personal representatives; | |||
“Option Price” | the price at which each Share may be acquired on the exercise of an Option determined by the Board at the Date of Grant being not substantially less than the Market Value and, subject to Rule 10, not less than the nominal value of the Share where the Shares are to be acquired by direct issue from the Company; | |||
“Qualifying Option” | an option which at the time of grant meets the requirements of Schedule 5 and in respect of which a Notice of Grant is executed; | |||
“Qualifying Subsidiary” | has the meaning given in paragraph 11 of Schedule 5; | |||
“Redundancy” | termination of employment by reason of redundancy in accordance with section 139 Employment Rights Act 1996; |
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“Relevant CSOP Option” | an option to acquire shares under a scheme approved pursuant to the provisions of Schedule 4 ITEPA; | |||
“Rules” | these rules of the Scheme as from time to time altered pursuant to the provisions of Rule 11; | |||
“Sale” | the making of one or more agreements (whether conditional or not) for an acquisition of the Capital of the Company giving rise to a change of Control of the Company; | |||
“Schedule 5” | Schedule 5 ITEPA; | |||
“Scheme” | means the 2016 NuCana BioMed Limited Share Option Scheme; | |||
“Secondary NIC Liability” | any employer’s secondary NIC charge arising on the exercise or release of an Option; | |||
“Share” | a fully paid ordinary share of the Company; | |||
“Subsidiaries” | a subsidiary as defined under section 1159 Companies Act 2006; | |||
“Tax Liabilities” | any income tax and NIC charge arising as a consequence of the exercise or release of the Option or in respect of the Shares acquired pursuant to the exercise of such options and including arising under a Joint Election or receipt of money or money’s worth in connection with such Options or the acquired Shares, for which the Company or a Group Member has accounted or is required to account for to HMRC and including, unless otherwise stated, where permitted by law the employer’s national insurance contributions (or their equivalent); | |||
“TCGA” | the Taxation of Chargeable Gains Act 1992; | |||
“UK Listing Authority” | the Financial Services Authority acting in its capacity as the competent authority for the purposes of Part VI Financial Services and Markets Act 2000; | |||
“Unapproved Option” | an option to acquire Shares granted under this Scheme and subject to these Rules which: | |||
(a) is designated an Unapproved Option; and/or | ||||
(b) does not fall within the provisions of Schedules 3, 4 or 5 ITEPA and does not satisfy the EMI Code but in respect of which these Rules apply; and/or | ||||
(c) a Non-Qualified Option as defined in paragraph 3.3 of Schedule 3 to these Rules. |
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6.3 | Result of Exercise of Options | |||||
(a) | Subject to: | |||||
(i) | the obtaining of any necessary consent from H.M. Treasury, the Bank of England, the UK Listing Authority, the London Stock Exchange Plc or other relevant authority; | |||||
(ii) | the terms of any such consent; | |||||
(iii) | receipt by the Company of the appropriate payment for Shares to be acquired on exercise in full | |||||
the Company shall (subject to Rule 8.7) within 30 days of receipt by the Company Secretary of a valid Notice of Exercise issue to or arrange the transfer to the Option Holder the number of Shares in respect of which the Option has been exercised (but if during a Close Period such issue or transfer shall be effected as soon as reasonably practicable after the end of the Close Period). | ||||||
(b) | The Board shall at all times keep available sufficient unissued Shares or shall procure that there are available sufficient Shares to satisfy the exercise of all Options granted under the Scheme. For this purpose the Board may enter into an agreement with any individual, company or the trustees of any employee benefit trust for the provision by such persons of Shares to satisfy Options. In such case, and if appropriate, the Option Price payable by the Option Holder shall be received by a member of the Board as trustee for such persons (to whom it shall account) and the Board shall procure the transfer of Shares by such persons upon exercise of the Option. | |||||
(c) | All Shares issued on exercise of Options shall on issue rank equally in all respects with the Company’s existing Shares of the same class, save that the Shares issued under the Scheme will not rank for any dividends or other distributions declared or recommended the record date for which falls on or prior to the date when the Option is exercised. | |||||
6.4 | Tax Liability | |||||
(a) | It being a condition of the grant of an Option that each Option Holder indemnifies the Company and any other Group Member against Tax Liabilities and/or secondary NIC Liabilities (“Liabilities”) pursuant to Rule 2.6(a), to the extent that the Liabilities cannot be (or are not) deducted from payments made by the Company or Group Member to the Option Holder, the Company shall be authorised by the Option Holder: | |||||
(i) | to retain and sell on the Option Holder’s behalf sufficient Shares issued or acquired on exercise of the Option to raise the necessary funds to meet and to apply such funds in discharging the Liabilities or reimbursing the Company or the relevant Group Member; and/or |
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8.2 | Replacement Options: | |||
(a) | If a company (in this Rule called the “Acquiring Company”) has acquired Control of the Company as a result of any of the events described in Rule 8.1(a) or 8.1(c), or becomes entitled or bound as mentioned in Rule 8.1(b) or obtains all the shares of the Company whose shares are subject to any outstanding Qualifying Options as a result of a qualifying exchange of shares (as defined in paragraph 40(1) Schedule 5) (such acquiring of Control or becoming entitled or bound or obtains, being referred to below as a “Specific Event”), any Option Holder may by agreement with the Acquiring Company at any time within the Appropriate Period as defined in Rule 8.3 below release his rights in respect of any EMI Option held by him (in this Rule referred to as the “Old Option”) in consideration of the grant to him of rights (in this Rule referred to as the “Replacement Option”) which are equivalent and relate to shares in the Acquiring Company, and which comply with Rule 8.2(b). | |||
(b) | A Replacement Option is one in relation to which the requirements of paragraph 43 of Schedule 5 are satisfied at the time of release of the Old Option including grant by reason of the Option Holder’s employment with the Acquiring Company. | |||
8.3 | “Appropriate Period” means: | |||
(a) | in a case falling within Rule 8.1(a) and where Rule 8.1(b) does not apply, the period of six months beginning with the time when the person making the offer has obtained Control of the Company and any condition subject to which the offer is made is satisfied; | |||
(b) | in a case falling within Rule 8.1(b) the period during which the person remains bound or entitled as mentioned in that paragraph; and | |||
(c) | in a case falling within Rule 8.1(c) the period of six months beginning with the time when the court sanctions the compromise or arrangement. | |||
8.4 | If a Replacement Option shall be granted to an Option Holder by reference to any Specific Event, Rules 8.1(a), 8.1(b) and 8.1(c) above shall cease to apply by reference to that Specific Event (but without prejudice to their application by reference to any other Specific Event). Any EMI Option which is not exercised or released pursuant to this Rule within the Appropriate Period following a Specific Event (but not any Replacement Option granted by reference to that Specific Event) shall lapse. | |||
8.5 | Sale: If the Option Agreement allows for exercise of the Option on a Sale, in the event that the Board becomes aware that there may be a Sale of the Company they shall give notice (a “Sale Notice”) in writing to the Option Holder specifying that a Sale may be forthcoming and that the Option will lapse immediately following the sale if not exercised prior to completion of the Sale unless a Replacement Option is offered to the Option Holder in accordance with Rule 8.2 (or unless some other form of replacement option is offered by the prospective purchaser). |
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THIS IS THE SCHEDULE TO THE RULES OF THE NUCANA BIOMED LIMITED 2016 SHARE OPTION SCHEME (INCLUDING ENTERPRISE MANAGEMENT INCENTIVES & US INCENTIVE STOCK OPTIONS)
SCHEDULE 1 LETTER OF INVITATION
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SCHEDULE 2 OPTION AGREEMENT
Form of Unapproved Option Agreement
This Agreement which is in the form of a deed is made the [●] day of [●] 2016
BETWEEN
(1) | NuCana Biomed Limited (03308778 ) whose registered office is at 77-78 Cannon Street, London, England, EC4N 6AF (“the Company”); and |
(2) | [option holder’s name] of [option holder’s address] who will become “the Option Holder” |
RECITALS
A. | This Unapproved Option is granted subject to the rules of the 2016 NuCana Biomed Limited Share Option Scheme (“the Scheme”). |
B. | A copy of the rules which is appended to this Agreement provides for the grant of options for commercial reasons in order to recruit and retain key Eligible Employees (“theRules”). |
C. | The Option Holder [commenced employment] or [became a director] with the Company on [●] (“the Commencement Date”). |
NOW THIS AGREEMENT WITNESSES
1. | In this Agreement the definitions in the Rules shall apply. |
2. | The Company hereby grants to the Option Holder the Unapproved Option to acquire a maximum of [●] Shares, at an Option Price of [●] per Share. |
3 | Exercise |
3.1 | The options shall be exercisable as follows: |
a) | options over [●] Shares may be exercised at any time after the date falling 12 months from the Commencement Date (“the First Anniversary”) provided the Option Holder is an Eligible Employee on the First Anniversary; |
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b) | options over a further [●] Shares may be exercised at any time after the date falling 24 months from the Commencement Date (“the Second Anniversary”) provided the Option Holder is an Eligible Employee on the Second Anniversary; |
c) | options over a further [●] Shares may be exercised at any time after the date falling 36 months from the Commencement Date (“the Third Anniversary”) provided the Option Holder is an Eligible Employee on the Third Anniversary; |
d) | options the final [●] Shares may be exercised at any time after the date falling 48 months from the Commencement Date (“the Fourth Anniversary”) provided the Option Holder is an Eligible Employee on the Fourth Anniversary; |
and where options become exerciseable in accordance with the foregoing they shall be referred to as having “vested” or “vest” and those which are not exerciseable shall be referred to as “unvested”.
3.2 | Upon the Option Holder ceasing to be an Eligible Employee for any reason all options which are unvested shall lapse forthwith. |
3.3 | All unvested options which have not lapsed in accordance with clause 3.2 shall immediately vest if following a Change of Control of the Company (as defined in the Rules):- |
(a) | The Option Holder remains an Eligible Employee; and |
(b) | One of the following conditions is also satisfied:- |
(i) | The Option Holder has experienced a material reduction in his base compensation payable on or around the Date of Grant or as the same may be increased from time to time; or |
(ii) | The Option Holder has experienced a material change or reduction in his authority, duties, reporting or responsibilities, provided, however, that a change in job title shall not be deemed a “material reduction” unless the Option Holder’s new authority, duties, reporting or responsibilities are substantially changed or reduced from the prior authority, duties, reporting or responsibilities. |
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4. | The Unapproved Option may not be exercised: |
4.1 | after the time in Rule 6.2(a); |
4.2 | from the date the Option Holder ceases to be an Eligible Employee of the Company or of any Qualifying Subsidiary in accordance with Rule 6.2 (b) (except to the extent provided in Rule 6.2 (b) and Rule 7) and Rule 6.2 (b) shall be deemed to refer to the Option Holder ceasing to be an “Eligible Employee”; |
4.3 | following a Change of Control or a Sale of the Company except to the extent provided in Rule 8; |
4.4 | following the commencement of the winding up of the Company as set out in Rule 9. |
provided that in the case of sub-clause 4.3 above where options have not vested in accordance with any of clauses 3.1 (a) to (d) prior to the occurrence of a Change of Control or Sale and where the vesting conditions to any such options are thereafter satisfied on the relevant vesting anniversaries occurring after the Change of Control or Sale (a “Post Event Vested Option”) the Option Holder shall remain entitled to exercise the Post Event Vested Option within the period of 30 days following the date of it becoming vested and Rule 8 shall be interpreted accordingly. Where the Post Event Vested Option is not so exercised within the period of 30 days following the date of it becoming so vested it shall lapse.
5. | The Unapproved Option will lapse on the occurrence of any of the events as set out in Rule 6.2. |
6. | To exercise the Unapproved Option the Option Holder must lodge with the Company Secretary of the Company (or such other person as the Company may from time to time notify to the employee in writing): |
6.1 | this Option Agreement; |
6.2 | a duly completed Notice of Exercise in the form appended to this Option Agreement; |
6.3 | where required by the Company, a duly completed Joint Election; and |
6.4 | a cheque made payable to the Company in respect of the Option Price. |
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7. | The Option Holder hereby: |
7.1 | covenants with the Company to allow the Company to recover from the Option HolderTax Liabilitiesarising in connection with or as a result of the exercise of the Unapproved Option and to indemnify and keep indemnified on a continuing basis the Company and any Group Member in respect of such Tax Liabilities and for the purposes of such indemnity: |
7.2 | hereby authorises the Company to deduct sufficient funds which, in the reasonable opinion of the Board, would be equal to any Tax Liabilities from any payment made to or in respect of the Option Holder by it or any Group Member during the same calendar month or other relevant period in which such Tax Liabilities arise. If there is no such payment made or the Tax Liabilities exceed the amount of such payment the Option Holder hereby agrees to pay the full amount of the Tax Liabilities or any such excess (as the case may be) in cleared funds within seven days of a valid demand by the Company or any Group Member; and |
7.3 | appoints a member of the Board as his trustee for the purposes of providing the Company or any Group Member (as appropriate) with sufficient funds to recover any Tax Liabilities by receiving on trust or retaining on trust (as the case may be) (out of the total number of Shares to which the Option Holder is entitled following the relevant exercise of the Unapproved Option) the legal title to and selling such number of Shares as, in the reasonable opinion of the Board, is required to realise a cash amount equivalent to the Tax Liabilities and the Option Holder hereby covenants to pay to the Company, should such sale realise a cash amount less than the Tax Liabilities, an amount equal to the difference within seven working days of demand by the Company. |
8. | The Unapproved Option is exercisable only by the Option Holder (or his personal representatives) and may not be transferred, assigned or charged and the Unapproved Option will lapse on the occasion of any assignment, charge, disposal or other dealing with the rights conveyed by it. |
9. | The Company has agreed or will agree the Market Value of a Share for the purposes of this Scheme as at the Date of Grant with HM Revenue and Customs. |
10. | A person who is not a party to this deed shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this deed. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act. |
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11. | The Shares which will be acquired when the Option is exercised are subject to the terms and restrictions set out in the Company’s articles of association, and a copy of the current articles of association is attached. |
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APPENDIX
Form of Notice of Exercise
Please read the notes at the foot of his form carefully before completing it
To: | The Secretary |
NuCana Biomed Limited
I, the undersigned1, having become entitled so to do, hereby exercise the Unapproved Option referred to in the attached Agreement in respect of Shares comprised in the Unapproved Option upon the terms of the 2016 NuCana Biomed Limited Share Option Scheme (“Scheme”) and agree to accept the Shares to be allotted and issued pursuant to this Notice of Exercise subject to and in accordance with the memorandum and articles of association of the Company and hereby request you to place my name on the register of members in respect thereof.
I enclose a remittance for £2 being the aggregate Option Price payable for the Shares in respect of which the Unapproved Option is now exercised, the Option Price (per Share) being [ ].
I understand that income tax and NIC (referred to as a Tax Liabilities in the Rules of the Scheme) may need to be accounted for by the Company to HM Revenue and Customs on this exercise and in respect of which I have indemnified the Company. I further understand that the Company has an obligation to deduct, insofar as possible, the amount of any Tax Liabilities from payments that it makes to me and I authorise the Company to make such deductions from my salary or other payments due to me.
(please tick as appropriate3)
☐ | I wish to make a cash payment to the Company in respect of the outstanding Tax Liabilities (after deduction by the Company) arising from this exercise and enclose a second cheque made payable to the Company for £●. |
☐ | I authorise the Company to retain and to sell on my behalf sufficient Shares so as to realise an amount sufficient to discharge the Tax Liabilities arising from this exercise. |
If applicable, I hereby request you to despatch a balance certificate for the Unapproved Option to subscribe for any Shares included in the Unapproved Option referred to overleaf and not exercised on this occasion, by post at my risk to the address mentioned below.
1 | Although the Option referred to overleaf is personal to the holder named overleaf it may be exercised by his personal representative(s) if he dies while the Option is still capable of exercise provided the personal representative(s) does/do so before the expiration of 12 months from the date of the Option Holder’s death or 10 years from the date of its grant (if sooner). If there are more than one, each of the personal representatives must sign this form. A copy of the Grant of Probate must be provided with the completed Notice of Exercise. |
2 | The remittance should be for an amount equal to the Option Price per Share shown overleaf, multiplied by the number of Shares applied for. |
3 | Please tick the appropriate box. If you fail to tick a box or if you tick the first box but your cash payment or next month’s salary are insufficient to cover the full liability, the Company will retain and sell sufficient shares to cover the liability or shortfall or will withhold the transferring of the shares to you until the full tax liabilities have been met by you. |
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Signature: | Date: | |||||||
Surname: | ||||||||
Forename(s): | ||||||||
Address: | ||||||||
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In Witnesswhereof the parties have signed this Agreement on the date specified above:
EXECUTEDas aDEED | ) |
but not delivered until the date hereof | ) |
for and on behalf ofTHE COMPANY | ) |
Director
Director/Secretary
SIGNEDas aDEED | ) |
but not delivered until the date hereof | ) |
by ● | ) |
in the presence of: | ) |
Name of Witness | ||
Address | ||
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Form of Option Agreement
This Agreement which is in the form of a deed is made the [●] day of [●] 2016
BETWEEN
(1) | NuCana Biomed Limited (03308778 ) whose registered office is at 77-78 Cannon Street, London, England, EC4N 6AF (“the Company”); and |
(2) | [employee name] of [employee address] who will become “the Option Holder” |
RECITALS
A. | This EMI Option is granted subject to the rules of the 2016 NuCana Biomed Limited Share Option Scheme, and is granted pursuant to Schedule 5 ITEPA 2003 (“the Scheme”). |
B. | A copy of the rules which is appended to this Agreement provides for the grant of options for commercial reasons in order to recruit and retain key employees (“theRules”). |
C. | The Option Holder commenced employment with the Company on [●] (“the Commencement Date”). |
NOW THIS AGREEMENT WITNESSES
1. | In this Agreement the definitions in the Rules shall apply. |
2. | The Company hereby grants to the Option Holder the EMI Option to acquire a maximum of [●] Shares, at an Option Price of [●] per Share. |
3 | Exercise |
3.4 | The options shall be exercisable as follows: |
e) | options over [●] Shares may be exercised at any time after the date falling 12 months from the Commencement Date (“the First Anniversary”) provided the Option Holder is an Eligible Employee on the First Anniversary; |
f) | options over a further [●] Shares may be exercised at any time after the date falling 24 months from the Commencement Date (“the Second Anniversary”) provided the Option Holder is an Eligible Employee on the Second Anniversary; |
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g) | options over a further [●] Shares may be exercised at any time after the date falling 36 months from the Commencement Date (“the Third Anniversary”) provided the Option Holder is an Eligible Employee on the Third Anniversary; |
h) | options the final [●] Shares may be exercised at any time after the date falling 48 months from the Commencement Date (“the Fourth Anniversary”) provided the Option Holder is an Eligible Employee on the Fourth Anniversary; |
and where options become exerciseable in accordance with the foregoing they shall be referred to as having “vested” or “vest” and those which are not exerciseable shall be referred to as “unvested”. |
3.5 | Upon the Option Holder ceasing to be an Eligible Employee for any reason all options which are unvested shall lapse forthwith. |
3.6 | All unvested options which have not lapsed in accordance with clause 3.2 shall immediately vest if following a Change of Control of the Company (as defined in the Rules):- |
(c) | The Option Holder remains an Eligible Employee; and |
(d) | One of the following conditions is also satisfied:- |
(i) | The Option Holder has experienced a material reduction in his base compensation payable on or around the Date of Grant or as the same may be increased from time to time; or |
(ii) | The Option Holder has experienced a material change or reduction in his authority, duties, reporting or responsibilities, provided, however, that a change in job title shall not be deemed a “material reduction” unless the Option Holder’s new authority, duties, reporting or responsibilities are substantially changed or reduced from the prior authority, duties, reporting or responsibilities. |
4. | The EMI Option may not be exercised: |
4.1 | after the time in Rule 6.2(a); |
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4.2 | from the date the Option Holder ceases to be an employee of the Company or of any Qualifying Subsidiary in accordance with Rule 6.2 (b) (except to the extent provided in Rule 6.2 (b) and Rule 7); |
4.3 | following a Change of Control or a Sale of the Company except to the extent provided in Rule 8; |
4.4 | following the commencement of the winding up of the Company as set out in Rule 9. |
provided that in the case of sub-clause 4.3 above where options have not vested in accordance with any of clauses 3.1 (a) to (d) prior to the occurrence of a Change of Control or Sale and where the vesting conditions to any such options are thereafter satisfied on the relevant vesting anniversaries occurring after the Change of Control or Sale (a “Post Event Vested Option”) the Option Holder shall remain entitled to exercise the Post Event Vested Option within the period of 30 days following the date of it becoming vested and Rule 8 shall be interpreted accordingly. Where the Post Event Vested Option is not so exercised within the period of 30 days following the date of it becoming so vested it shall lapse. |
5. | The EMI Option will lapse on the occurrence of any of the events as set out in Rule 6.2. |
6. | To exercise the EMI Option the Option Holder must lodge with the Company Secretary of the Company (or such other person as the Company may from time to time notify to the employee in writing): |
6.1 | this Option Agreement; |
6.2 | a duly completed Notice of Exercise in the form appended to this Option Agreement; |
6.3 | where required by the Company, a duly completed Joint Election; and |
6.4 | a cheque made payable to the Company in respect of the Option Price. |
7. | The Option Holder hereby: |
7.1 | covenants with the Company to allow the Company to recover from the Option HolderTax Liabilitiesarising in connection with or as a result of the exercise of the EMI Option and to indemnify and keep indemnified on a continuing basis the Company and any Group Member in respect of such Tax Liabilities and for the purposes of such indemnity: |
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7.2 | hereby authorises the Company to deduct sufficient funds which, in the reasonable opinion of the Board, would be equal to any Tax Liabilities from any payment made to or in respect of the Option Holder by it or any Group Member during the same calendar month or other relevant period in which such Tax Liabilities arise. If there is no such payment made or the Tax Liabilities exceed the amount of such payment the Option Holder hereby agrees to pay the full amount of the Tax Liabilities or any such excess (as the case may be) in cleared funds within seven days of a valid demand by the Company or any Group Member; and |
7.3 | appoints a member of the Board as his trustee for the purposes of providing the Company or any Group Member (as appropriate) with sufficient funds to recover any Tax Liabilities by receiving on trust or retaining on trust (as the case may be) (out of the total number of Shares to which the Option Holder is entitled following the relevant exercise of the EMI Option) the legal title to and selling such number of Shares as, in the reasonable opinion of the Board, is required to realise a cash amount equivalent to the Tax Liabilities and the Option Holder hereby covenants to pay to the Company, should such sale realise a cash amount less than the Tax Liabilities, an amount equal to the difference within seven working days of demand by the Company. |
8. | The EMI Option is exercisable only by the Option Holder (or his personal representatives) and may not be transferred, assigned or charged and the EMI Option will lapse on the occasion of any assignment, charge, disposal or other dealing with the rights conveyed by it. |
9. | The Company has agreed or will agree the Market Value of a Share for the purposes of this Scheme as at the Date of Grant with HM Revenue and Customs. |
10. | A person who is not a party to this deed shall have no right under the Contracts (Rights of Third Parties) Act 1999 to enforce any term of this deed. This clause does not affect any right or remedy of any person which exists or is available otherwise than pursuant to that Act. |
11. | The Shares which will be acquired when the Option is exercised are subject to the terms and restrictions set out in the Company’s articles of association, and a copy of the current articles of association is attached. |
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APPENDIX
Form of Notice of Exercise
Please read the notes at the foot of his form carefully before completing it
To: | The Secretary |
NuCana Biomed Limited |
I, the undersigned4, having become entitled so to do, hereby exercise the EMI Option referred to in the attached Agreement in respect of Shares comprised in the EMI Option upon the terms of the 2016 NuCana Biomed Limited Share Option Scheme (“Scheme”) and agree to accept the Shares to be allotted and issued pursuant to this Notice of Exercise subject to and in accordance with the memorandum and articles of association of the Company and hereby request you to place my name on the register of members in respect thereof.
I enclose a remittance for £5 being the aggregate Option Price payable for the Shares in respect of which the EMI Option is now exercised, the Option Price (per Share) being [ ].
I understand that income tax and NIC (referred to as a Tax Liabilities in the Rules of the Scheme) may need to be accounted for by the Company to HM Revenue and Customs on this exercise and in respect of which I have indemnified the Company. I further understand that the Company has an obligation to deduct, insofar as possible, the amount of any Tax Liabilities from payments that it makes to me and I authorise the Company to make such deductions from my salary.
(please tick as appropriate6)
☐ | I wish to make a cash payment to the Company in respect of the outstanding Tax Liabilities (after deduction by the Company) arising from this exercise and enclose a second cheque made payable to the Company for £●. |
☐ | I authorise the Company to retain and to sell on my behalf sufficient Shares so as to realise an amount sufficient to discharge the Tax Liabilities arising from this exercise. |
If applicable, I hereby request you to despatch a balance certificate for the EMI Option to subscribe for any Shares included in the EMI Option referred to overleaf and not exercised on this occasion, by post at my risk to the address mentioned below.
Signature: | Date: | |||||||
Surname: | ||||||||
Forename(s): | ||||||||
Address: | ||||||||
[If the shares are restricted under ITEPA the Option Holder should be required to enter into a Joint Election with the Company to which this Exercise Notice should refer.]
4 | Although the Option referred to overleaf is personal to the holder named overleaf it may be exercised by his personal representative(s) if he dies while the Option is still capable of exercise provided the personal representative(s) does/do so before the expiration of 12 months from the date of the Option Holder’s death or 10 years from the date of its grant (if sooner). If there are more than one, each of the personal representatives must sign this form. A copy of the Grant of Probate must be provided with the completed Notice of Exercise. |
5 | The remittance should be for an amount equal to the Option Price per Share shown overleaf, multiplied by the number of Shares applied for. |
6 | Please tick the appropriate box. If you fail to tick a box or if you tick the first box but your cash payment or next month’s salary are insufficient to cover the full liability, the Company will retain and sell sufficient shares to cover the liability or shortfall or will withhold the transferring of the shares to you until the full tax liabilities have been met by you. |
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In Witnesswhereof the parties have signed this Agreement on the date specified above:
EXECUTEDas aDEED | ) |
but not delivered until the date hereof | ) |
for and on behalf ofTHE COMPANY | ) |
Director
Director/Secretary
SIGNEDas aDEED | ) |
but not delivered until the date hereof | ) |
by ● | ) |
in the presence of: | ) |
Name of Witness | ||
Address | ||
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SCHEDULE 3 INCENTIVE STOCK OPTIONS: US SUB-PLAN
UNITED STATES SUB-PLAN TO THE NUCANA BIOMED LIMITED SHARE OPTION SCHEME
1. | The terms and conditions of this sub-plan (this “Sub-Plan”) shall apply to Options granted to Option Holders subject to taxation in the United States (“US Participants”). The terms and conditions provided herein shall apply in addition to, or instead of where inconsistent with, the terms and conditions of the 2016 NuCana BioMed Limited Share Option Scheme (as amended and/or restated from time to time, the “Scheme”). |
2. | Capitalized terms used but not defined in this Sub-Plan shall have the meanings set forth in the Scheme. |
3. | For purpose of this Sub-Plan, the following terms shall have the meanings set forth below: |
3.1. | “Fair Market Value” means, on any given date (i) if the Shares are listed on any established stock exchange or a national market system, including without limitation the NASDAQ Global Market, the NASDAQ Global Select Market or the NASDAQ Capital Market, the closing sales price for such Shares as quoted on such exchange or system on the day of determination, as reported inThe Wall Street Journal or such other source as the Board deems reliable (or, if no closing sales price was reported on that date, on the last trading date such closing sales price was reported); (ii) if (i) does not apply, then if the Shares are regularly quoted by a recognized securities dealer but selling prices are not reported, the mean between the high bid and low asked prices for the Shares on the day of determination (or, if no bids and asks were reported on that date, on the last trading date such bids and asks were reported); or (iii) if (i) and (ii) do not apply, such value as the Board in its discretion may in good faith determine in accordance with Section 409A of the US Code and the regulations thereunder (and, with respect to Incentive Stock Options, in accordance with Section 422 of the US Code and the regulations thereunder). |
3.2. | “Incentive Stock Option” means an Option or portion thereof intended to meet the requirements of an incentive stock option as defined in US Code Section 422 and designated as an Incentive Stock Option in the applicable Option Agreement, and if the Board does not designate an Option as an Incentive Stock Option in the Option Agreement, the terms of the Option Agreement for such Option hereby provide that the Option will not be treated as an Incentive Stock Option under US Code Section 422. |
3.3. | “Non-Qualified Option” means an Option or portion thereof that does not qualify as or is not intended to be an Incentive Stock Option or that is not designated as an Incentive Stock Option in the applicable Option Agreement. |
3.4. | “Ten Percent Shareholder” means an individual who on any given date owns, either directly or indirectly (taking into account the attribution rules contained in |
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US Code Section 424(d)), stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or a “parent” or “subsidiary” company (within the meaning of US Code Section 424). |
3.5. | “US Code” means the US Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. |
3.6. | “US Exchange Act” means the US Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. |
4. | Eligibility. An individual who is subject to US Code Section 409A will not be an Eligible Employee unless he or she is an employee of, or a director to, the Company or a Qualifying Subsidiary in which the Company has a “controlling interest” (for purposes of US Code Section 409A). |
5. | Options. The Option Price per Share of an Option granted to a US Participant shall not be less than the Fair Market Value of a Share underlying the Option on the grant date. The “Date of Grant” of an Option granted to a US Participant shall be the date on which such Option was approved by the Board. |
6. | Incentive Stock Options. The following conditions apply to awards of Incentive Stock Options in addition to or, where inconsistent, in lieu of those described in the Scheme: |
6.1. | Eligibility. Incentive Stock Options may be granted only to US Participants who are employees of the Company or any of its “parent” or “subsidiary” companies (within the meaning of US Code Section 424). |
6.2. | Option Price. In the case of a Ten Percent Shareholder, the price at which a Share may be purchased upon exercise of an Incentive Stock Option shall not be less than 110% of the Fair Market Value of such Share on the grant date. |
6.3. | Certain Maximum Limits. The maximum number of Shares issuable upon the exercise of Incentive Stock Options at any time shall not exceed 2,750,000 Shares, subject to adjustment as provided in Rule 10 of the Scheme. |
6.4. | Term of Options. In the case of a Ten Percent Shareholder, the term of an Incentive Stock Option shall be no greater than five years. |
6.5. | Notice. Each US Participant awarded an Incentive Stock Option under the Scheme shall notify the Company in writing immediately after the date he or she makes a “disqualifying disposition” (as defined in US Code Section 421(b)) of any Shares acquired pursuant to the exercise of such Incentive Stock Option. The Company may, if determined by the Board and in accordance with procedures established by it, retain possession of any Shares acquired pursuant to the exercise of an Incentive Stock Option as agent for the applicable US Participant until the end of any period during which a disqualifying disposition could occur, subject to complying with any instructions from such US Participant as to the sale of such Shares. |
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6.6. | Certain Dollar Limitations. The aggregate Fair Market Value, determined as of the grant date, for Options granted under the Scheme (or any other stock option scheme required to be taken into account under US Code Section 422(d)) that are intended to be Incentive Stock Options which are first exercisable by the US Participant during any calendar year shall not exceed $100,000. To the extent an Option purporting to be an Incentive Stock Option exceeds the limitation in the previous sentence, the portion of the Option in excess of such limit shall be a Non-Qualified Option. |
6.7. | Limits on Transferability. Notwithstanding anything in the Scheme to the contrary, no Incentive Stock Option shall be pledged, encumbered, or hypothecated to, or in favor of, or subject to any lien, obligation, or liability of a US Participant to, any party, other than the Company or any Subsidiary, or assigned or transferred by a US Participant otherwise than by will or the laws of descent and distribution, and such Incentive Stock Options and rights shall be exercisable during the lifetime of the US Participant only by the US Participant or his or her guardian or legal representative. |
7. | Replacement Options. The provisions of Rule 8 of the Scheme regarding the granting of a Replacement Option shall apply to Options held by US Participants, provided that any such Replacement Option shall satisfy the requirements of US Code Section 409A (and to the extent applicable, US Code Section 422). |
8. | Variation of Capital. Any adjustment under Rule 10 of the Scheme to an Option held by a US Participant shall be done in accordance with US Code Section 409A (and to the extent applicable, US Code Section 422). |
9. | Tax Withholding. The Company and its subsidiaries shall be entitled to withhold from any payments or vesting or exercise of Options under the Scheme any amount of federal, state and local tax withholding determined by the Board to be required by law (including, without limitation, in their sole discretion, withholding Shares that otherwise would be acquired upon the exercise of an Option and/or withholding from any payroll or other amounts otherwise due to a US Participant). |
10. | US Code Section 409A. With respect to US Participants, the Scheme, this Sub-Plan and all Options are intended to comply with, or be exempt from, US Code Section 409A and all regulations, guidance, compliance programs and other interpretative authority thereunder, and all provisions of the Scheme, this Sub-Plan and related agreements shall be applied and interpreted in a manner consistent therewith. Notwithstanding anything contained herein to the contrary, in the event any Option is subject to US Code Section 409A, the Board or the Company’s general counsel may, in their sole discretion and without a US Participant’s prior consent, amend the Scheme, this Sub-Plan and/or any Option, adopt policies and procedures, or take any other actions as deemed appropriate by the Board or the Company’s general counsel to (i) exempt the Scheme, this Sub-Plan and/or any Option from the application of US Code Section 409A, (ii) preserve the intended tax treatment of any such Option or (iii) comply with the requirements of US Code Section 409A. Neither the Company nor any of its Subsidiaries shall be held liable |
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for any taxes, interest, penalties or other amounts owed by a US Participant under US Code Section 409A. In the event that a US Participant is a “specified employee” within the meaning of US Code Section 409A, and a payment or benefit provided for under the Scheme or this Sub-Plan would be subject to additional tax under US Code Section 409A if such payment or benefit is paid within six (6) months after such US Participant’s separation from service (within the meaning of US Code Section 409A), then such payment or benefit shall not be paid (or commence) during the six (6) month period immediately following such US Participant’s separation from service except as provided in the immediately following sentence. In such an event, any payments or benefits that would otherwise have been made or provided during such six (6) month period and which would have incurred such additional tax under US Code Section 409A instead shall be paid to the US Participant in a lump-sum, without interest, on the earlier of (i) the first business day of the seventh month following such US Participant’s separation from service or (ii) the tenth business day following such US Participant’s death. Any provision of the Scheme or this Sub-Plan that violates US Code Section 409A shall be deemed null and void with respect to any US Participant. |
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