INTERNATIONAL GENETIC ENGINEERING, INC.
1985 NONQUALIFIED STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE, AND DEFINITIONS.
(a) There is hereby established the 1985 Nonqualified Stock Option Plan
(the "Plan") of International Genetic Engineering, Inc. (the "Company"). The
Plan permits the granting to "significant employees or consultants," (as
hereinafter defined) of stock options ("Options"). These Options are not
intended to qualify as incentive stock options under Section 422A of the
Internal Revenue Code of 1954, as amended (the "Code").
(b) The purpose of this Plan is to provide a means by which significant
employees and consultants of the Company or its affiliates may be given an
opportunity to purchase shares of the Common Stock of the Company (the "Stock")
pursuant to Options.
(c) In the absence of contrary action by the Board of Directors of the
Company (the "Board"), any action taken by the Board, or by the committee of
directors appointed by the Board to administer the Plan (such committee being
hereinafter referred to as the "Committee") with respect to the implementation,
interpretation or administration of the Plan shall be final, conclusive and
binding. The Committee shall have authority to grant options, to establish the
terms and conditions thereof and otherwise to act for the Company with respect
to the Plan, except as provided in Paragraph 9.
(d) The term "affiliates" as used in the Plan means parent or subsidiary
corporations of the Company, as defined in section 425 of the Code (but
substituting "Company" for "employer corporation"), including parents or
subsidiaries which become such after adoption of the Plan. The term "significant
employees and consultants" shall mean one or more employees, officers,
consultants or directors of the Company or its affiliates who, in the judgment
of the Committee or the Board (as hereinafter defined), render those types of
services which tend to contribute materially to the success of the Company or
which may reasonably be anticipated to contribute materially to the future
success of the company.
2. STOCK SUBJECT TO THE PLAN.
(a) Options may be granted under this Plan from time to time to significant
employees and consultants to purchase an aggregate of no more than 550,000
shares of Stock. As the Committee or the Board may determine from time to time,
the shares may consist either in whole or in part of shares of authorized but
unissued Stock, or shares of authorized and issued Stock reacquired by the
Company and held in its treasury. If an Option ceases to be exercisable in whole
or in part, the shares which were subject to such Option, but as to which the
-2-
Option had not been exercised, shall continue to be available for granting under
the Plan.
(b) It there shall be any change in the Stock subject to this Plan or the
Stock subject to any Option granted hereunder, through merger, consolidation,
reorganization, recapitalization, reincorporation, stock split, stock dividend,
or other change in the corporate or capital structure of the Company (including
a liquidating dividend but not an ordinary and reasonable dividend), that event
shall simultaneously, and without any further action by the Committee or the
Board, cause appropriate adjustments to be made in (i) the number of shares and
the price per share subject to outstanding Options in order to preserve, but not
to increase, the benefits of the optionee, so that immediately after such event
each holder of an Option shall be entitled, upon payment to the Company of the
aggregate amount of money provided in the Option, to receive that number of
shares or other property that he would have received it he had exercised the
Option in full (without regard to any provisions relating to the dates on which
the Option becomes exercisable) immediately prior to such event; and (ii) the
aggregate number of shares subject to this Plan. Provided, however, that subject
to any required action by the stockholders of the Company, if there shall be a
dissolution or liquidation of the Company or if the Company shall not be the
surviving corporation in any merger, consolidation or reorganization or
-3-
if eighty percent (80%) or more of the Company's then outstanding voting stock
is acquired by another corporation or if the Company agrees to sell
substantially a11 of its assets and property to another person (a "Terminating
Event"), each optionee shall have the right immediately prior to such
dissolution, liquidation, merger, consolidation, reorganization, acquisition or
sale of assets to exercise his Option(s) to the extent not theretofore
exercised, whether or not they are then exercisable in the ordinary course of
events, unless there is a surviving corporation or a parent or subsidiary
corporation thereof that shall assume (with appropriate changes) the outstanding
Options or replace them with new options of comparable value. The Company shall
give reasonable notice of any Terminating Event. Thirty (30) days after delivery
of such notice, every Option or any portion thereof outstanding hereunder shall
thereupon terminate, unless there is a surviving corporation or a parent or
subsidiary corporation thereof that shall assume (with appropriate changes) the
outstanding Options or replace them with new options of comparable value.
3. ELIGIBILITY.
The significant employees and consultants who shall be eligible to have
Options granted to them are defined to be those employees and consultants as the
Committee or the Board, in its absolute discretion, shall designate from time to
time.
-4-
4. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Committee. The Board may from
time to time remove members from, or add members to, the Committee. Vacancies on
the Committee, however caused, shall be filled by the Board. The Committee shall
hold meetings at such times and places as it may determine. A majority of the
Committee shall constitute a quorum. A majority of the members present may act
at any meeting at which a quorum is present. Any action that may be taken at a
meeting may be taken without a meeting if reduced to and approved in writing by
all the members of the Committee. Options may be granted to significant
employees who are members of the Committee, provided that they are approved by a
majority of the members of the whole Committee with the person to whom Options
are to be issued not voting, unless the Company's shares become subject to the
Securities and Exchange Act of 1934. If the Company becomes subject to the
Securities and Exchange of 1934, no options may be granted to any member of the
Committee during the term of his or her membership on the Committee. No person
shall be eligible to serve on the Committee unless he or she is then a
"disinterested person" within the meaning of paragraph (b) of Rule 16B-3, which
has been adopted by the Securities and Exchange Commission under the Securities
Exchange Act of 1934, if and as such rule is then in effect.
-5-
(b) Subject to and consistent with the provisions of this Plan, either the
Board or the Committee may from time to time determine which significant
employees and consultants shall be granted Options, the terms and conditions
thereof, and the number of shares for which an Option or Options shall be
granted to an optionee.
(c) In addition to any other authority it may have, either the Board or the
Committee shall have authority, subject to and consistent with the provisions of
this Plan:
(1) To substitute Options with different terms for previously granted
Options;
(2) To amend the terms of any Option or Options previously granted,
including the authority to reduce the Option exercise price from time to
time, but not to reduce the price below the price as determined under
Paragraph 5; and
(3) To accept, upon exercise of Options, consideration other than
cash, including without limitation, a promissory note or notes of the
Optionee, shares of the Company's Stock valued at its fair market value at
the time or the surrender of options to purchase Stock, valued at the
difference between fair market value at the time of the Stock subject to
the Option less the exercise price thereof.
-6-
If the Stock is neither listed nor admitted to trading on any stock
exchange nor actively traded in the over-the-counter market at the time an
Option is granted, then the Committee or the Board shall in good faith determine
the fair market value of the Stock on the basis of such criteria as may appear
to it to be reasonable at the time. If the Stock is listed or admitted to
trading on a stock exchange or is actively traded over-the-counter at the time
the Option is granted, the fair market value shall be the mean between the
highest reported bid price and the lowest reported asked price of the Stock in
the over-the-counter market on the last business day prior to the date the
Option is granted, as reported by any publication selected by the Company which
regularly reports the market price of the Stock in such market. If the Stock is
then listed or admitted to trading on any stock exchange, the fair market value
shall be the last reported sales price on the last business day prior to the
date the Option is granted on the principal stock exchange on which the Stock is
then listed or admitted to trading as reported by any publication selected by
the Company which regularly reports the market price of the Stock on such
exchange, or, if no sale takes place on such day on such principal stock
exchange, then the closing bid price of the Stock on such exchange on such day.
Such price shall be subject to adjustment as provided in Paragraph 2(b) hereof.
-7-
(d) The Board or the Committee shall report to the Secretary of the Company
the names of persons to whom Options have been granted, the number of shares
covered by each Option, and the terms and conditions of each such Option.
(e) Subject to the terms and conditions of the Plan, either the Board or
the Committee shall have full power to adopt, amend, and rescind roles and
regulations relating to its administration of this Plan; to construe and
interpret this Plan, such rules and regulations, and the instruments evidencing
Options; and to make all other determinations deemed necessary or advisable for
the administration of this Plan. All decisions, determinations, and
interpretations of the Board of Directors and the Committee shall be final and
binding.
5. THE OPTION EXERCISE PRICE.
(a) the exercise price of the Stock covered by each Option shall be not
less than 100 percent of the fair market value of such stock, as determined in
good faith by the Committee or the Board (as the case may be), on the date the
Option is granted. For all purposes hereof, the date on which an Option is
granted shall be the date on which the Committee or the Board determines to make
the grant and establishes the price thereof, without regard to subsequent delays
in approvals of other terms and conditions or preparation of documents.
-8-
(b) The Option price shall be paid in full at the time of exercise of the
Option in cash, by check, or, at the discretion of the Committee or the Board,
by delivering stock of the Company already owned by the Optionee, or also at the
discretion of the Committee or the Board, by the promissory note or notes of the
Optionee, or at the discretion of the Committee or the Board by a combination of
these methods. The value of any stock delivered in payment shall, prior to the
stock's being publicly traded, be the fair market value of the stock as
determined by the Committee or the Board and, after the stock is publicly
traded, be the fair market value of the Company's stock, as defined in Section
4(c) but using market quotations on the last business day prior to delivery. Any
promissory notes shall bear a rate of interest not less than the rate, as it may
change from time to time, required under federal tax law to prevent any
imputation of interest, unless the rate exceeds the maximum rate permissible
under California law, in which case the rate shall be the maximum permitted
under California law. Such promissory notes shall be secured by a security
interest in the shares issued upon exercise and such other security, if any as
the Committee or the Board may require. All other terms of such loan shall be
determined solely by the Committee, and all terms and conditions, including
whether the loan shall become due upon cessation of employment, shall be set
forth in the promissory note or notes executed by the Optionee. The Committee
shall
-9-
furnish the Optionee with a Truth-in-Lending Statement showing the terms of the
loan, including the amount financed, total payments of interests, total payments
of principal and annual percentage rate. The Board or Committee may in its
discretion, during any time in which any portion of the loan is outstanding,
provide for forgiveness of the loan, on such terms and conditions as the Board
or Committee shall determine.
6. TERMS AND CONDITIONS OF OPTIONS.
(a) Each Option granted pursuant to this Plan shall be evidenced by a
written Stock Option Agreement executed by the Company and the person to whom
such Option is granted, in such form and on such terms as the Board or the
Committee shall approve from time to time, but subject to the following
subparagraphs (b) and (c) of this Paragraph 6.
(b) Each Stock Option Agreement entered into pursuant to this Plan shall
contain at least the following provisions:
(1) The number of shares that may be purchased upon exercise of the
Option and such exercise price as the Board of Directors or the Committee
may determine, but which is not less than the price determined in
accordance with Paragraph 5;
-10-
(2) A prohibition against the transfer of any Option to purchase Stock
other than a transfer by will or the laws of descent and distribution and a
limitation that the Option is exercisable during the optionee's lifetime
only by him or after his death by his legal representative;
(3) Provisions for termination of the Option thirty days after
termination of employment except for cause or for death or permanent and
total disability of the Option holder, one year in the event of termination
of employment by reason of death or permanent and total disability, and
immediate termination of the Option in the event of termination for cause;
and
(4) Such term for any Option, which is not in excess of a period of
ten years and one day from the date it is granted as the Committee or the
Board may determine and a schedule under which at least 20% of the shares
granted under this Option shall become exercisable each year.
-11-
(c) Each Stock Option Agreement may also contain:
(1) Such provisions as are necessary to render the issuance of
Stock in compliance with all applicable requirements of law and to
relieve the Company of any obligation to issue or deliver Stock unless
and until, in the opinion of the Company's counsel, there has been
full compliance with all applicable requirements of the securities
laws and all applicable listing requirements of any national
securities exchange on which shares of the same class are then listed;
(2) Such restrictions on sale or other disposition of the Stock
purchased upon exercise of the Option as may be determined by the
Board or the Committee; and
(3) Such other terms and conditions not inconsistent with this
Plan as may be determined by the Board or the Committee.
7. USE OF PROCEEDS.
Proceeds realized from the sale of Stock pursuant to Options granted under
this Plan shall constitute general funds of the Company.
-12-
8. AMENDMENT, SUSPENSION, OR TERMINATION OF PLAN.
The Board may at any time suspend or terminate this Plan, and may amend it
from time to time in such respects as the Board may deem advisable; provided,
however (except as provided in Paragraph 2(b) hereof), the Board shall not amend
the Plan in the following respects without shareholder approval:
(a) To increase the maximum number of shares subject to the Plan; or
(b) To change the designation of class of persons eligible to receive
Options under the Plan.
No amendment, suspension, or termination of this Plan shall, without the
optionee's consent, alter or impair any rights or obligations under any Option
theretofore granted to him under this Plan.
9. EFFECTIVE DATE AND TERMINATION OF PLAN.
(a) The Plan was adopted by the Board and became effective on December 19,
1985. The Plan was approved by the shareholders of the Company on November 20,
1985.
(b) Unless sooner terminated by the Board, the Plan shall terminate ten
years and one day after the date of Board approval as stated in Paragraph 9(a).
-13-
INTERNATIONAL GENETIC ENGINEERING, INC.
STOCK OPTION AGREEMENT UNDER THE 1985
NONQUALIFIED STOCK OPTION PLAN
THIS AGREEMENT is dated as of the (blank) day of (blank), 19 (blank) by and
between International Genetic Engineering, Inc. (the "Company") and (blank)
("Optionee").
WHEREAS, pursuant to the 1985 Nonqualified Stock Option Plan of the Company
(the "Plan"), the Board of Directors (the "Board") of the Company or the Stock
Incentive Committee (the "Committee") of the Board has authorized granting to
Optionee a Non-Qualified Stock Option (the "Option") to purchase shares of
common stock of the Company in accordance with and on the terms and conditions
hereinafter stated;
NOW, THEREFORE, it is hereby agreed:
1. Grant of Option. Subject to the terms and conditions of the Plan, which
is incorporation herein by reference and a copy of which is available to
Optionee upon request, and pursuant to the action of the Board of the Committee
and in accordance with authorizations granted by all appropriate regulatory and
governmental agencies, the Company hereby grants to Optionee the Option to
purchase all or any part of (blank) shares of common stock of the Company at the
price of $(blank) per share, which price has been determined by the Board or the
Committee. The date of grant of this Option is the date first above set forth.
2. Exercise.
(a) This Option shall be exercisable as follows:
(blank)
(b) This Option shall remain exercisable as to all of such shares until ten
years and one day from the date of grant of this Option, unless this Option has
expired or terminated earlier in accordance with the provisions hereof. Shares
as to which this Option becomes exercisable pursuant to the foregoing provision
may be purchased at any time prior to expiration of this Option.
(c) Notwithstanding the preceding provisions of this paragraph, upon
delivery of notice from the Company of the pendency of dissolution or
liquidation of the Company or a reorganization, merger, consolidation of the
Company with one or more corporations as a result of which the Company will not
be the surviving corporation, or the acquisition of eighty percent (80%) or more
of the Company's then outstanding voting stock by another corporation, a sale of
substantially all of the assets and property of the Company to another person (a
"Terminating Even"), this Option shall be exercisable in full and not merely as
to those shares with respect to which installments, if any, have then accrued,
unless there is a
-2-
surviving corporation or a parent or subsidiary corporation thereof that shall
assume (with appropriate changes) the outstanding Options or replace them with
new options of comparable value. Notwithstanding the above, if this Option shall
expire within 30 days of delivery of said notice pursuant to Section 3(b), 4, 5
or 6 of this Agreement, this Section 2(c) shall have no effect. Thirty (30) days
after delivery or said notice, this Option or any portion hereof not exercised
shall terminate, unless provision be made in connection with the Terminating
Event for assumption of this Option or for substitution of new options for this
Option covering an equivalent amount of stock of a successor employer
corporation, or a parent or subsidiary corporation thereof, solely at the
election of such successor corporation or parent or subsidiary corporation, with
appropriate adjustments as to number and kind of shares and prices.
(d) This Option shall be subject to appropriate adjustment sin price and
number of shares to reflect any stock split, stock dividend, recapitalization or
similar event (other than those specified in (c) above), as set forth in Section
2(b) of the Plan.
3. Exercise of Option. This Option may be exercised only in 100-share lots,
or, if less than 100 shares remain to be purchased upon exercise of any vested
installments of this Option, then to the extent of the remaining shares which
may be
-3-
purchased. The Option shall be exercised by delivery to the Company of (a)
written notice of exercise stating the number of shares being purchased; (b)
cash, check, or, at the discretion of the Committee or the Board, delivery of
stock of the Company already owned by the Optionee, or also at the discretion of
the Committee or the Board, by execution and delivery of the promissory note or
notes of the Optionee, or at the discretion of the Committee or the Board by a
combination of these methods; and (c) the written statement provided for in
Section 8(b) hereof.
4. Cessation of Employment (Other Than Death or Total Disability). Except
as provided in Paragraph 5 hereof, if Optionee shall cease to be employed by the
Company or a subsidiary corporation for any reason other than Optionee's
permanent and total disability or death, this Option shall expire thirty (30)
days after the date on which the Optionee ceases employment or on the date
specified in Paragraph 2 hereof, whichever is earlier. Before such expiration,
Optionee shall have the right to exercise this Option only as to those shares
with respect to which installments, if any, had accrued under Paragraph 2 hereof
at the date of termination of employment.
5. Termination of Employment for Cause. If Optionee's employment by the
Company or a patent or subsidiary corporation is terminated for cause, this
Option shall expire immediately. Termination for cause shall include termination
for malfeasance or gross misfeasance in the performance of duties or conviction
of a felony or any conduct intentionally detrimental to the interests of the
Company or a parent or subsidiary corporation, or any other cause as specified
in any employment agreement between the Company and the Optionee, and in any
event, determination of the Board with respect thereto shall be final and
conclusive.
6. Nontransferability; Death or Total Disability of Optionee. This Option
shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during Optionee's lifetime only by
Optionee. If Optionee dies, or is permanently and totally disabled, while
employed by the Company or a subsidiary corporation, this Option shall expire
one(1) year after the date of Optionee's death, or permanent and total
disability, or on the day specified in paragraph 2 hereof, whichever is earlier.
After Optionee's death but before such expiration, the persons to whom
Optionee's rights under this Option shall have passed by will or by the
applicable laws of descent and distribution, or a person lawfully entitled to
act for him, shall have the right to exercise this Option only as to those
shares, if any, for which installments had accrued under Paragraph 2 hereof as
of the date on which Optionee ceased to be employed by the Company or subsidiary
corporation. Shares purchased by such persons shall be subject to all of the
terms and provisions of this Agreement.
-4-
7. Employment. This agreement shall not obligate the Company or a
subsidiary corporation to employ Optionee for any period, nor shall it interfere
in any way with the right of the Company or a subsidiary corporation to reduce
Optionee's compensation or to terminate the employment of Optionee.
8. Privileges and Restrictions of Stock Ownership.
(a) Optionee shall have no rights as a stockholder with respect to common
stock of the Company subject to this Option until the date of issuance of stock
certificates to him. Except as provided in Section 3(b) of the Plan, no
adjustment will be made for dividends or other rights for which the record date
is prior to the date such stock certificates are issued.
(b) By accepting this Option, Optionee, for himself and his transferees by
will or the laws of descent and distribution, agrees that any and all shares
purchased upon exercise of this Option shall be acquired for investment and not
for sale or for distribution, that each notice of the exercise of any portion of
this Option shall be accompanied by a representation and agreement in writing,
signed by the person entitled to exercise the same, that the shares are being
acquired in good faith for investment and not for sale or for distribution and
that any and all certificates presenting shares purchased on the exercise of
this Option may have affixed thereto an appropriate legend indicating that such
shares have not been
-5-
registered under the Securities Act of 1933, as amended, and are subject to
certain restrictions on transfer, and shall be subject to such restrictions on
transfer, and related legends, as in the opinion of counsel may be reasonably
prudent under the circumstances. Provided, however, that if the shares subject
to this Option are registered under the Securities Act of 1933, as amended, and
if other applicable laws do not require similar restrictions at the time, the
requirements set forth in this Section 8 shall be of no force and effect, and
the Optionee may acquire such shares without giving such a representation.
9. Modification and Termination. The rights of Optionee are subject to
adjustment, modification and termination as provided in Paragraph 2 (relating to
adjustments to reflect reorganizations, recapitalizations and like
transactions), 4 (relating to authority in administration of the Plan) and 9
(relating to amendment, termination and suspension of the Plan) of the Plan.
10. Notification of Sale. Optionee agrees that Optionee, or any person
acquiring shares upon exercise of this Option, will notify the Company not more
than five (5) days after any sale or disposition of such shares.
-6-
11. Withholding Taxes. Whenever shares are to be issued in satisfaction of
this Option, the Company shall have the right to require Optionee to remit to
the Company an amount sufficient to satisfy any federal, state and local
withholding tax requirements prior to the delivery of any certificate or
certificate of such shares.
12. Notices. Notices delivered under this Agreement shall be delivered to
the Company, at its principal office (Attention: President), and to the Optionee
at such address as Optionee shall designate to the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
OPTIONEE: INTERNATIONAL GENETIC
ENGINEERING, INC.
By (blank)
-7-