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EXHIBIT 10.20
IMMUSOL, INC.
STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
A. Immusol, Inc. (the "Company") has adopted the 1996 Stock
Option/Stock Issuance Plan (the "Plan") for the purpose of attracting and
retaining the services of selected key employees (including officers and
directors) and consultants and other independent contractors who contribute to
the financial success of the Company or its parent or subsidiary corporations.
B. Optionee is an individual who is to render valuable services
to the Company or its parent or subsidiary corporations, and this Agreement is
executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Company's grant of a stock option to Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and
conditions set forth in this Agreement, the Company hereby grants to Optionee,
as of the grant date (the "Grant Date") specified in the accompanying Notice of
Grant of Stock Option (the "Notice of Grant"), a stock option to purchase up to
that number of shares of the Company's Common Stock (the "Option Shares") as is
specified in the Notice of Grant. The Option Shares shall be purchasable from
time to time during the option term at the option price per share (the "Option
Price") specified in the Notice of Grant.
2. OPTION TERM. This option shall have a maximum term
of ten (10) years measured from the Grant Date and shall accordingly expire at
the close of business on the expiration date (the "Expiration Date") specified
in the Notice of Grant, unless sooner terminated in accordance with Paragraph 5
or 6.
3. LIMITED TRANSFERABILITY. This option shall be
neither transferable nor assignable by Optionee other than by will or by the
laws of descent and distribution following the Optionee's death and may be
exercised, during Optionee's lifetime, only by Optionee, unless such assignment
or transfer is expressly approved by the Plan Administrator.
4. EXERCISABILITY. This option shall become exercisable
for the Option Shares in one or more installments as specified in the Notice of
Grant. As the option becomes exercisable for the Option Shares in one or more
such installments, those
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installments shall accumulate and the option shall remain exercisable for the
accumulated installments until the Expiration Date or the sooner termination of
the option term under Paragraph 5 or 6 of this Agreement.
5. TERMINATION OF SERVICE. The option term specified in
Paragraph 2 shall terminate (and this option shall cease to be exercisable)
prior to the Expiration Date should one of the following provisions become
applicable:
(i) Except to the extent otherwise
provided in subparagraphs (ii) and (iii) below, should Optionee cease
to remain in the Service of the Company at any time during the option
term, then this option shall not remain exercisable for more than a
ninety (90)-day period commencing with the date of such cessation of
Service. Upon the expiration of such ninety (90)-day period or (if
earlier) upon the specified Expiration Date of the option term, this
option shall terminate and cease to be outstanding.
(ii) Should Optionee die while in Service
or within the ninety (90)-day period following his or her cessation of
Service, then the personal representative of the Optionee's estate or
the person or persons to whom this option is transferred pursuant to
the Optionee's will or in accordance with the law of descent and
distribution shall have the right to exercise this option. Such right
shall lapse, and this option shall terminate and cease to remain
exercisable, upon the earlier of (A) the expiration of the twelve
(12)-month period measured from the date of Optionee's death or (B)
the Expiration Date.
(iii) Should Optionee become permanently
disabled and cease by reason thereof to remain in Service at any time
during the option term, then this option shall not remain exercisable
for more than a twelve (12) month period commencing with the date of
such cessation of Service. Upon the expiration of such limited period
of exercisability or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iv) In no event shall this option be
exercisable at any time after the specified Expiration Date of the
option term.
(v) During the limited post-Service
period of exercisability determined in accordance with subparagraphs
(i) through (iii) above, this option may not be exercised for more
than the number of Option Shares (if any) for which this option is, at
the time of the Optionee's cessation of Service, exercisable in
accordance with either the normal
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exercise provisions specified in the Notice of Grant or the special
acceleration provisions of Paragraph 6 of this Agreement. However,
the number of Option Shares purchasable after the Optionee's death
shall be reduced for any Option Shares purchased by the Optionee after
his or her cessation of Service but prior to death.
(vi) For purposes of this Paragraph 5 and
for all other purposes under this Agreement, the following
definitional provisions shall be in effect:
A. The Optionee shall be deemed to
remain in SERVICE for so long as the Optionee continues to render
periodic services to the Company or any parent or subsidiary
corporation, whether as an Employee, a non-employee member of the
Company's Board of Directors or an independent consultant or advisor.
B. The Optionee shall be deemed to
be an EMPLOYEE and to continue in the Company's employ for so long as
the Optionee remains in the employ of the Company or one or more of
its parent or subsidiary corporations, subject to the control and
direction of the employer entity as to both the work to be performed
and the manner and method of performance.
C. The Optionee shall be deemed to
be PERMANENTLY DISABLED if the Optionee is, by reason of any medically
determinable physical or mental impairment expected to result in death
or to be of continuous duration of not less than twelve (12)
consecutive months or more, unable to perform his or her usual duties
for the Company or the parent or subsidiary corporation retaining his
or her services.
D. A corporation shall be
considered to be a SUBSIDIARY corporation of the Company if it is a
member of an unbroken chain of corporations beginning with the
Company, provided each such corporation in the chain (other than the
last corporation) owns, at the time of determination, stock possessing
50% or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
E. A corporation shall be
considered to be a PARENT corporation of the Company if it is a member
of an unbroken chain ending with the Company, provided each such
corporation in the chain (other than the Company) owns, at the time of
determination, stock possessing 50% or more of the total combined
voting power of all classes of stock in one of the other corporations
in such chain.
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6. CORPORATE TRANSACTION.
A. For purposes of this paragraph, a "Corporate
Transaction" shall be one or more of the following shareholder-approved
transactions:
(i) a merger or consolidation in which
the Company is not the surviving entity, except for a transaction the
principal purpose of which is to change the State of the Company's
incorporation,
(ii) the sale, transfer or other
disposition of all or substantially all of the assets of the Company
in liquidation or dissolution of the Company, or
(iii) any reverse merger in which the
Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of
the Company's outstanding securities are issued to holders different
from those who held such securities immediately prior to such merger.
B. If this option is to be assumed in connection with
the Corporate Transaction or is otherwise to continue in effect, then it shall
be appropriately adjusted, immediately after such Corporate Transaction, to
apply and pertain to the number and class of securities which would have been
issuable, in consummation of such Corporate Transaction, to an actual holder of
the same number of shares of Common Stock as are subject to such option
immediately prior to such Corporate Transaction. Appropriate adjustments shall
also be made to the option price payable per share, provided that the aggregate
option price payable for such securities shall remain the same.
C. Except to the extent that any option is to be assumed
by the acquiring or successor corporation in a Corporate Transaction (as herein
defined), each option outstanding hereunder shall expire and terminate
immediately prior to the consummation of such Corporate Transaction.
D. The exercisability of this option as an incentive
stock option under the Federal tax laws (if designated as such in the Notice of
Grant) shall, in connection with any such Corporate Transaction, be subject to
the applicable dollar limitation of Paragraph 18.
E. This Agreement shall not in any way affect the right
of the Company to adjust, reclassify, reorganize or otherwise make changes in
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
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7. ADJUSTMENT IN OPTION SHARES.
A. In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares, or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, then appropriate adjustments shall be made to (i) the total
number of Option Shares subject to this option and (ii) the Option Price
payable per share in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
B. If this option is to be assumed in connection with a
Corporate Transaction or is otherwise to continue in effect, then this option
shall, immediately after such Corporate Transaction, be appropriately adjusted
to apply and pertain to the number and class of securities which would have
been issued to the Optionee in the consummation of such Corporate Transaction
had the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the Option Price payable per
share, provided the aggregate Option Price payable hereunder shall remain the
same.
8. PRIVILEGE OF STOCK OWNERSHIP. The holder of this option shall
not have any of the rights of a shareholder with respect to the Option Shares
until such individual shall have exercised the option, paid the Option Price
for the purchased shares and been issued a stock certificate for such shares.
9. MANNER OF EXERCISING OPTION.
A. In order to exercise this option with respect to all
or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or in the case of exercise after Optionee's death, the
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following actions:
(i) Execute and deliver to the Secretary
of the Company a written notice of exercise (the "Exercise Notice"),
in substantially the form of Exhibit I attached hereto, in which there
is specified the number of Option Shares for which the option is
exercised.
(ii) Pay the aggregate Option Price for
the purchased shares in one or more of the following alternative
forms:
1. full payment in cash or
check drawn to the Company's order;
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2. full payment in shares of
Common Stock of the Company held by the Optionee for at least six (6)
months and valued at Fair Market Value on the Exercise Date (as such
terms are defined below);
3. full payment in a combination
of shares of Common Stock of the Company held by the Optionee for at
least six (6) months and valued at Fair Market Value on the Exercise
Date, and cash or check drawn to the Company's order;
4. full payment effected through a
broker-dealer sale and remittance procedure pursuant to which the
Optionee (I) shall provide irrevocable written instructions to a
designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate Option Price payable for the purchased shares plus all
applicable Federal and State income and employment taxes required to
be withheld by the Company by reason of such purchase and (II) shall
provide written directives to the Company to deliver the certificates
for the purchased shares directly to such brokerage firm in order to
complete the sale transaction; or
5. full payment in any other form
which the Plan Administrator may, in its discretion, approve at the
time of exercise in accordance with the provisions of Paragraph 15 of
this Agreement.1/
(iii) Furnish to the Company appropriate
documentation that the person or persons exercising the option (if
other than the Optionee) have the right to exercise this option.
B. For purposes of this Agreement, the Fair Market Value
of a share of Common Stock on any relevant date shall be determined in
accordance with subparagraphs (i) and (ii) below, and the Exercise Date shall
be the date on which the executed Exercise Notice is delivered to the Company.
Except to the extent the sale and remittance procedure specified above is
utilized for the exercise of the option, payment of the Option Price for the
purchased shares must accompany the Exercise Notice. The procedure for
measuring Fair Market Value shall be as follows:
(i) If the Common Stock is not at the
time listed or admitted to trading on any national stock exchange but
is traded on the
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1/ Authorization of a Company loan or installment payment pursuant
to this provision may, under currently proposed Treasury Regulations,
result in the loss of incentive stock option treatment under the
Federal tax laws.
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Nasdaq National Market System, Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
such price is reported by the National Association of Securities
Dealers through the Nasdaq National Market System or any successor
system. If there is no reported closing selling price for the Common
Stock on the date in question, then the closing selling price on the
last preceding date for which such quotation exists shall be
determinative of Fair Market Value.
(ii) If the Common Stock is at the time
listed or admitted to trading on any national stock exchange, then the
Fair Market Value shall be the closing selling price per share of
Common Stock on the date in question on the stock exchange determined
by the Plan Administrator to be the primary market for the Common
Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then the Fair Market
Value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.
(iii) If shares of the series of Common
Stock to be valued at the time are neither listed nor admitted to
trading on any stock exchange nor traded in the over-the-counter
market, then the fair market value shall be determined by the Plan
Administrator after taking into account such factors as the Plan
Administrator shall deem appropriate, including one or more
independent professional appraisals.
C. As soon after the Exercise Date as practical, the
Company shall mail or deliver to or on behalf of the Optionee (or to any other
person or persons exercising this option) a certificate or certificates
representing the purchased shares.
D. In no event may this option be exercised for any
fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
A. The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the Company
and the Optionee with all applicable requirements of law relating thereto and
with all applicable regulations of any stock exchange on which shares of the
Option Shares may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such representations in
writing as may be requested by the Company in order for it to comply with the
applicable requirements of federal and state securities laws.
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11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise
provided in Paragraph 3 or 6, the provisions of this Agreement shall inure to
the benefit of, and be binding upon, the successors, administrators, heirs,
legal representatives and assigns of Optionee and the successors and assigns of
the Company.
12. LIABILITY OF COMPANY.
A. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without shareholder approval be issued under the Plan, then this option shall
be void with respect to such excess shares, unless shareholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of Article 4,
Section III of the Plan.
B. The inability of the Company to obtain approval from
any regulatory body having authority deemed by the Company to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Company of any liability with respect to the non-issuance or sale
of the Common Stock as to which such approval shall not have been obtained.
The Company, however, shall use its best efforts to obtain all such approvals.
13. NO EMPLOYMENT OR SERVICE CONTRACT. Nothing in this Agreement
or in the Plan shall confer upon the Optionee any right to continue in the
Service of the Company (or any parent or subsidiary corporation of the Company
employing or retaining Optionee) for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any parent or subsidiary corporation of the Company employing or retaining
Optionee) or the Optionee, which rights are hereby expressly reserved by each,
to terminate the Optionee's Service at any time for any reason whatsoever, with
or without cause.
14. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed to
the Company in care of the Corporate Secretary at the Company's principal
corporate offices. Any notice required to be given or delivered to Optionee
shall be in writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Notice of Grant. All notices shall be deemed
to have been given or delivered upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
15. LOANS. The Plan Administrator may, in its absolute discretion
and without any obligation to do so, assist the Optionee in the exercise of
this option by (i) authorizing the extension of a loan to the Optionee from the
Company or (ii) permitting the Optionee to pay the Option Price for the
purchased Common Stock in installments over a period of years. The terms of
any loan or installment method of payment (including the interest rate,
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the collateral requirements and terms of repayment) shall be established by the
Plan Administrator in its sole discretion.
16. CONSTRUCTION. This Agreement and the option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by
and subject to the express terms and provisions of the Plan. All decisions of
the Plan Administrator with respect to any question or issue arising under the
Plan or this Agreement shall be conclusive and binding on all persons having an
interest in this option.
17. GOVERNING LAW. The interpretation, performance, and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
18. ADDITIONAL TERMS APPLICABLE TO AN INCENTIVE STOCK OPTION. In
the event this option is designated as an incentive stock option in the Notice
of Grant, the following terms and conditions shall also apply to the grant:
A. This option shall cease to qualify for favorable tax
treatment as an incentive stock option under the Federal tax laws if (and to
the extent) this option is exercised for one or more Option Shares: (i) more
than three (3) months after the date the Optionee ceases to be an Employee for
any reason other than death or permanent disability (as defined in Paragraph 5)
or (ii) more than one (1) year after the date the Optionee ceases to be an
Employee by reason of permanent disability.
B. No installment under this option (whether annual or
monthly) shall qualify for favorable tax treatment as an incentive stock option
under the Federal tax laws if (and to the extent) the aggregate fair market
value (determined at the Grant Date) of the Common Stock for which such
installment first becomes exercisable hereunder will, when added to the
aggregate fair market value (determined as of the respective date or dates of
grant) of any earlier installments of Common Stock for which this option or any
other post-1986 incentive stock options granted to the Optionee prior to the
Grant Date (whether under the Plan or any other option plan of the Company or
any parent or subsidiary corporations) first become exercisable during the same
calendar year, exceed One Hundred Thousand Dollars ($100,000) in the aggregate.
C. Should the exercisability of this option be
accelerated upon a Corporate Transaction, then this option shall qualify for
favorable tax treatment as an incentive stock option under the Federal tax laws
only to the extent the aggregate fair market value (determined at the Grant
Date) of the Common Stock for which this option first becomes exercisable at
the time the Corporate Transaction occurs does not, when added to the aggregate
fair market value (determined as of the respective date or dates of grant) of
any earlier installments of Common Stock for which this option or any other
post-1986 incentive stock options granted to the Optionee prior to the Grant
Date (whether under
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the Plan or any other option plan of the Company or any parent or subsidiary
corporations) first become exercisable during the calendar year in which the
Corporate Transaction occurs, exceed One Hundred Thousand Dollars ($100,000) in
the aggregate.
D. To the extent this option should fail to qualify as
an incentive stock option under the Federal tax laws, the Optionee will
recognize compensation income in connection with the acquisition of one or more
Option Shares hereunder, and the Optionee must make appropriate arrangements
for the satisfaction of all Federal, State or local income tax withholding
requirements and Federal social security employee tax requirements applicable
to such compensation income.
E. The Plan Administrator shall not consent to any
assignment or transfer not otherwise permitted hereunder.
19. ADDITIONAL TERMS APPLICABLE TO A NON-STATUTORY STOCK OPTION.
In the event this option is designated as a non-statutory stock option in the
Notice of Grant, Optionee hereby agrees to make appropriate arrangements with
the Company or parent or subsidiary corporation employing Optionee for the
satisfaction of any Federal, State or local income tax withholding requirements
and Federal social security employee tax requirements applicable to the
exercise of this option.
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EXHIBIT I
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Immusol, Inc. (the "Company") that I elect to purchase
_________ shares of the Company's Common Stock (the "Purchased Shares")
pursuant to that certain option (the "Option") granted to me under the
Company's 1996 Stock Option/Stock Issuance Plan (the "Plan") on
________________, 19___ to purchase up to __________ shares of such Common
Stock at an option price of $_________ per share (the "Option Price").
Concurrently with the delivery of this Exercise Notice to the
Secretary of the Company, I shall pay to the Company the Option Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Company evidencing the Option and shall deliver whatever additional documents
may be required by such agreement as a condition for exercise.
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Date Optionee
Address:
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Print name in exact manner
it is to appear on the
stock certificate:
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Address to which certificate
is to be sent, if different
from address above:
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Social Security Number:
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