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EXHIBIT 4.2
FORM OF STOCK OPTION AGREEMENT PERTAINING TO THE 1996 PLAN
INCENTIVE STOCK OPTION AGREEMENT
(GRANTED UNDER THE 1996 STOCK INCENTIVE PLAN)
This Incentive Stock Option Agreement (the "Agreement") is entered
into as of ________________________, by and between TECHNICLONE INTERNATIONAL
CORPORATION, a California corporation (the "Company") and ___________________
(the "Optionee") pursuant to the Techniclone International Corporation 1996
Stock Incentive Plan (the "Plan").
1. GRANT OF OPTION. The Company hereby grants to Optionee an
option (the "Option") to purchase all or any portion of a total of ______
(________) shares (the "Shares") of the Common Stock of the Company at a
purchase price of ___________ ($_____) per share (the "Exercise Price"),
subject to the terms and conditions set forth herein and in the Plan. This
Option is intended to qualify as an "incentive stock option" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). As
used in this Agreement, the term "Committee" shall refer to the committee of
the Board of Directors of the Company appointed to administer the Plan, and if
no such committee has been appointed, the term Committee shall mean the Board
of Directors.
2. VESTING OF OPTION. The right to exercise this Option shall
vest with respect to __________ shares on _______________, with respect to an
additional _______________ shares on _______________, with respect to an
additional _______________ shares on _______________ and with respect to an
additional ________________ shares on _____________, when this Option, unless
sooner terminated, will have become exercisable as to all the Shares issuable
hereunder. This Option shall be exercisable, in the manner set forth in
Section 4 hereof, from time to time in whole or in part as to any and all
vested installments, provided, however, that this Option shall not be exercised
as to any fractional shares.
No additional shares shall vest after the date of termination
of Optionee's "Continuous Employment" (as defined in Section 3 below), but this
Option shall continue to be exercisable in accordance with Section 3 below with
respect to that number of shares that have vested as of the date of termination
of Optionee's Continuous Employment.
3. TERM OF OPTION. Optionee's right to exercise this Option
shall terminate 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 twelve (12) months from the date
Optionee's "Continuous Employment" (as defined below) is terminated if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
(c) the expiration of twelve (12) months from the date
Optionee's Continuous Employment is terminated if such termination is due to
the Optionee's death; or
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(d) the expiration of ninety (90) days from the date
Optionee's Continuous Employment is terminated if such termination occurs for
any reason other than permanent disability or death; or
As used herein, the term "Continuous Employment" means employment by
the Company or any subsidiary or parent of the Company which is uninterrupted
except for vacations, illnesses (other than those which constitute 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 a subsidiary or parent of the
Company, if applicable. A transfer of the Optionee's employment, without an
intervening period, from the Company to, or to the Company from, any subsidiary
and/or parent of the Company, or between subsidiaries, shall not be considered
a termination of Continuous Employment.
4. EXERCISE OF OPTION. On or after the vesting of any portion of
this Option in accordance with Section 2 above, and until termination of 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) by 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 (which may not be less than 100, or
all of the Shares if less than 100 Shares then remain covered by this Option)
then being purchased (but no fractional Shares may be purchased);
(b) Payment of the Exercise Price in full for the number
of shares then being purchased (i) in cash, (ii) by check, (iii) with the prior
written consent of the Committee, by execution and delivery of Optionee's
promissory note in the principal amount of the aggregate Exercise Price, with
such term, interest rate and other terms and conditions, including, without
limitation, requiring the shares acquired upon exercise to be pledged to the
Company to secure payment of the note, as the Committee may specify, (iv) with
the prior written consent of the Committee, by the delivery of shares of Common
Stock of the Company owned by the Optionee having a fair market value on the
date of exercise equal to the aggregate Exercise Price of the shares as to
which such Option is exercised, (v) by cancellation of indebtedness of the
Company to the Optionee, (vi) with the Committee's written consent, the
cancellation by Optionee of other options to purchase a number of shares of
Common Stock of the Company that have an aggregate fair market value, net of
the aggregate exercise price thereof, which is equal to the aggregate exercise
price of the options being exercised, provided the options being cancelled are
held and are then fully exercisable by the Optionee, (vii) provided that a
public market for the Company's Common Stock exists, through a "same day sale"
commitment from the Optionee and a broker-dealer that is a member of the
National Association of Securities Dealers (an "NASD Dealer") whereby the
Optionee irrevocably elects to exercise the Option and to sell a portion of the
shares so purchased to pay for the Exercise Price and whereby the NASD Dealer
irrevocably commits upon receipt of such shares to forward the Exercise Price
directly to the Company, (viii) provided that a public market for the Company's
Common Stock exists, through a "margin" commitment from the Optionee and an
NASD Dealer whereby the Optionee irrevocably elects to exercise the Option and
to pledge the shares so purchased to the NASD Dealer in a margin account as
security for a loan from the NASD Dealer in the amount of the Exercise Price,
and whereby the NASD Dealer irrevocably commits upon receipt of such shares to
forward the Exercise Price directly to the Company, or (ix) by any combination
of the foregoing methods of payment;
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(c) A check or cash in the amount reasonably requested by
the Company to satisfy the Company's withholding obligations, if any, 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, in whole or
in part, of the Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages, bonus or
other income paid to Optionee by the Company or any parent or subsidiary of the
Company, provided such arrangements satisfy the requirements of applicable tax
laws); and
(d) A letter agreement, if requested by the Company, in
such form and substance as the Company may require, setting forth the
investment intent of, and agreements restricting the transferability of the
Option Shares from, the Optionee or person designated in Section 5 below, as
the case may be.
5. DEATH OF OPTIONEE; NO ASSIGNMENT. The rights of the Optionee
under this 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
should die prior to the termination of this Option, 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.
(a) Optionee represents and warrants that this Option is
being acquired by Optionee for his or her personal account, for investment
purposes 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 this Option without registering such Common Stock
under the Securities Act of 1933, as amended (the "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 agreement that will include
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 such Shares and agreements by the
Optionee that the Shares may be transferred only in compliance with applicable
federal and state securities laws and that the certificates evidencing the
Shares shall bear a legend indicating such non-registration under the 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 Act or an exemption from such registration is
available.
(c) Optionee represents and warrants that he either (i)
has a pre-existing business or personal relationship with the Company or any of
its officers, directors or principal shareholders, or (ii) has a business or
financial experience either alone or with such Optionee's investor
representative sufficient to have the capacity to protect such Optionee's
interest in connection with the acquisition of the Option and, upon exercise
thereof, Shares.
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(d) Optionee acknowledges receipt of a copy of the Plan
and understands that all rights and liabilities connected with this Option are
set forth herein and in the Plan.
7. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. During the
term of the Plan, the Company agrees at all times to reserve and keep
available, and to use its reasonable best efforts to obtain from any regulatory
body having jurisdiction any requisite authority in order to issue and sell,
such number of shares of its Common Stock as shall be sufficient to satisfy its
obligations hereunder and the requirements of the Plan. Inability of the
Company to obtain, from any regulatory body having jurisdiction, authority
deemed by the Company's counsel to be necessary for the lawful issuance and
sale of any shares of its Common Stock hereunder and under the Plan shall
relieve the Company of any liability in respect of the nonissuance or sale of
such shares as to which such requisite authority shall not have been obtained.
8. RESTRICTIVE LEGENDS. Optionee hereby acknowledges that
federal securities laws and the securities laws of the state in which he or she
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.
9. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE, MERGER, ETC.
(a) In the event of any changes in the outstanding shares
of Common Stock of the Company resulting from a stock split, reverse stock
split, stock dividend, reclassification or similar change in the capital
structure of the Company, appropriate adjustments shall be made to the number
and kind of Shares subject to this Option and to the Exercise Price per Share,
in accordance with the provisions of Section 10.1 of the Plan.
(b) In the event of a merger, consolidation or other
reorganization in which the Company is not the surviving corporation, or
although it is the surviving corporation, the holders of its voting shares
immediately prior to such transaction will own less than 50% of the Company's
voting shares after the consummation of such transaction, this Option shall
terminate upon the effective date of such transaction unless a successor
corporation assumes this Option, provides substantially similar consideration
to Optionee as was provided to the shareholders of the Company, or substitutes
substantially equivalent options covering shares of the successor corporation,
in accordance with the provisions of Section 10.2 of the Plan.
10. NO EMPLOYMENT CONTRACT CREATED. Nothing in this Agreement
shall be construed to constitute or be evidence of any right with respect to
continuance of employment with the Company or any subsidiary or parent of the
Company, or to limit in any way the right of the Company or any subsidiary or
parent of the Company to terminate Optionee's employment at any time, with or
without cause.
11. NO RIGHTS AS SHAREHOLDER. The Optionee (or a Successor
pursuant to Section 5 hereof) 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.
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12. INTERPRETATION. This Option is granted pursuant to the terms
of the Plan, and shall in all respects be interpreted in accordance therewith.
The Committee shall interpret and construe this Option, and its decision shall
be conclusive upon any question arising hereunder.
13. NOTICES. Any notice, demand or request required or permitted
to be 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 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. GOVERNING LAW. The validity, construction, interpretation,
and effect of this Option shall be governed by and determined in accordance
with the laws of the State of California.
15. SEVERABILITY. Should any provision or portion of this
Agreement be held to be unenforceable or invalid for any reason, the remaining
provisions and portions of this Agreement shall be unaffected by such holding.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall be deemed one instrument.
17. CALIFORNIA CORPORATE SECURITIES LAW. The grant of the Option
and the sale of the shares that are the subject of this Agreement have not been
qualified with the Commissioner of Corporations of the State of California and
the grant of the Option, and the issuance of such shares or the payment or
receipt of any part of the consideration therefor, prior to such qualification
is unlawful, unless the sale of such shares is exempt from such qualification
by Section 25100, 25102 or 25105 of the California Corporate Securities Law of
1968, as amended. The rights of all parties to this Agreement are expressly
conditioned upon such qualification being obtained, unless the sale is so
exempt.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TECHNICLONE INTERNATIONAL
CORPORATION
By: _______________________________
Title: _____________________________
The Optionee hereby accepts this Option subject to all the terms and
provisions hereof. The Optionee hereby agrees to accept as binding, conclusive
and final all decisions or interpretations of the Committee upon any questions
arising under the Plan. The Optionee authorizes the Company to withhold in
accordance with applicable law from any compensation payable to him or her any
taxes required to be withheld by federal, state or local law as a result of the
exercise of this Option.
"OPTIONEE"
___________________________________
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