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Exhibit 10.16(a)
EXHIBIT A
STANDARD FORM OF
DEMEGEN, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
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THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.
DEMEGEN, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Demegen, Inc. (the "Company") granted to the individual named below an
option to purchase certain shares of Common Stock of the Company, in the manner
and subject to the provisions of this Option Agreement.
1. Definitions:
(a) "Optionee" shall mean Xxxxx X. Xxxxx, Ph.D.
(b) "Date of Option Grant" shall mean September 18, 1998.
(c) "Number of Option Shares" shall mean 5,000 shares of
Common Stock of the Company as adjusted from time to time pursuant to paragraph
10 below.
(d) "Exercise Price" shall mean $0.45 per share as adjusted
from time to time pursuant to paragraph 10 below.
(e) "Vesting Schedule" Except as provided in paragraph 9
below, the "Vesting Schedule shall be determined as follows:
Vested
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On Date of Option Grant All
On each subsequent N/A
(f) "Option Term Date" shall mean the date five (5) years
after the Date of Option Grant.
(g) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(h) "Company" shall mean Demegen, Inc., a Colorado
corporation, and any successor corporation thereto.
(i) "Plan" shall mean the Demegen, Inc.. 1998 Stock Option
Plan.
2. Incorporation of Plan by Reference. This Option is granted under the
terms of the Plan, the terms of which are incorporated herein by reference and
are to be considered to be part of this Option Agreement as though set forth
herein.
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3. Status of the Option. This Option is intended to be a nonqualified
stock option and shall not be treated as an incentive stock option as described
in Section 422 of the Code.
4. Administration. All questions of interpretation concerning this
Option Agreement shall be determined by the Board of Directors of the Company
(the "Board") and/or by a duly appointed committee of the Board having such
powers as shall be specified by the Board. Any subsequent references herein to
the Board shall also mean the committee if such committee has been appointed
and, unless the powers of the committee have been specifically limited, the
committee shall have all of the powers of the Board granted in the Plan,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All determinations by the Board shall be final and binding upon all persons
having an interest in the Option.
5. Exercise of the Option.
(a) Right to Exercise. The Option shall first become
exercisable in accordance with the Vesting Schedule set forth in Section 1
above. In no event shall the Option be exercisable for more shares than the
Number of Option Shares.
(b) Method of Exercise. The Option may be exercised by written
notice to the Company which must state the election to exercise the Option, the
number of shares for which the Option is being exercised and such other
representations and agreements as to the Optionee's investment intent with
respect to such shares and other administrative matters as may be required
pursuant to the provisions of this Option Agreement and the exercise form used
by the Company. The written notice must be signed by the Optionee and is not
effective until it is delivered in person or by certified or registered mail,
return receipt requested, to the President of the Company prior to the
termination of the Option as set forth in paragraph 7 below, accompanied by full
payment of the exercise price for the number of shares being purchased.
(c) Form of Payment of Exercise Price. Such payment shall be
made in cash, by check, cash equivalent, or pursuant to a "cashless exercise" in
which the appropriate number of shares being purchased are retained by the
Company in satisfaction of such payment obligations.
(d) Withholding. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
hereby agrees to make adequate provision for foreign, federal and state tax
withholding obligations of the Company, if any, which arise in connection with
the Option. The Optionee is cautioned that the Option is not exercisable unless
the Company's withholding obligations are satisfied. Accordingly, the Optionee
may not be able to exercise the Option when desired even though the Option is
vested and the Company shall have no obligation to issue a certificate for such
shares.
(e) Certificate Registration. The certificate or certificates
for the shares as to which the Option shall be exercised shall be registered in
the name of the Optionee, or, if applicable, the heirs of the Optionee.
(f) Restrictions on Grant of the Option and Issuance of
Shares. The grant of the Option and the issuance of the shares upon exercise of
the Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal, state or foreign securities laws or other
law or regulations. In addition, the Option may not be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable exemption
from the registration requirements of the Securities Act. The Optionee is
cautioned that the Option may not be exercisable unless the foregoing conditions
are satisfied. Accordingly, the Optionee may not be able to
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exercise the Option when desired even though the Option is vested. Questions
concerning this restriction should be directed to the President of the Company.
As a condition to the exercise of the Option, the Company may require the
Optionee to satisfy any qualifications that may be necessary or appropriate, to
evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto as may be requested by the
Company.
(g) Fractional Shares. The Company at its discretion shall
determine whether to issue fractional shares upon the exercise of the Option.
6. Non-Transferability of the Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee or the Optionee's
guardian or legal representative and may not be assigned or transferred in any
manner except by will or by the laws of descent and distribution. Following the
death of the Optionee, the Option, to the extent unexercised and exercisable by
the Optionee on the date of death, may be exercised by the Optionee's legal
representative or by any person empowered to do so under the deceased Optionee's
will or under the then applicable laws of descent and distribution.
7. Termination of the Option. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Term Date as defined
above, (b) the last date for exercising the Option following termination of
membership on Scientific Advisory Board ("Scientific Board") as described in
paragraph 8 below, or (c) upon a Transfer of Control to the extent provided in
paragraph 9 below.
8. Termination of Membership on Scientific Advisory Board
(a) Termination of the Option.
(i) Termination for Cause. If the Optionee ceases to
be a member of the Scientific Board of the Company by reason of "termination for
cause," as defined below, the Option, to the extent unexercised and exercisable
by the Optionee on the date on which the Optionee ceased to be an employee,
shall terminate on the date on which the Optionee's membership on the Scientific
Board terminated. For the purposes of this paragraph 8(a)(i), "termination for
cause" shall mean an involuntary termination by the Company or a voluntary
termination by the Optionee as a result of or in connection with the following
events:
(1) the Optionee's intentional, persistent
failure, dereliction, or refusal to perform such duties as are reasonably
assigned to him or her by the officers and directors of the Company from time to
time; or
(2) the Optionee's fraud, dishonesty, or
other deliberate injury to the Company in the performance of his or her duties;
or
(3) the Optionee's conviction of a crime
which constitutes a felony involving moral turpitude, fraud or deceit in the
jurisdiction in which the Optionee is employed, regardless of whether such crime
involves the Company; or
(4) the Optionee's willful, improper
disclosure of confidential information relating to the Company.
(ii) Death or Disability. If the Optionee ceases to
be a member of the Scientific Board of the Company by reason of the death or
disability of the Optionee within the meaning of Section 422(c) of the Code, the
Option, to the extent unexercised by the Optionee, may be exercised by the
Optionee (or the Optionee's legal representative) at any time prior to the
expiration of one (1) year from the date on which the Optionee's membership on
the Board terminated, but in any event no later than the Option Term Date.
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(iii) Other Termination. If the Optionee ceases to be
a member of the Scientific Board of the Company for any reason, except death or
disability within the meaning of Section 422(c) of the Code or "termination for
cause," as defined in paragraph 8(a)(i) above, the Option, to the extent
unexercised and exercisable by the Optionee on the date on which the Optionee
ceased to be a member of the Board, may be exercised by the Optionee within
thirty (30) days after the date on which the Optionee's membership on the
Scientific Board is terminated, but in any event no later than the Option Term
Date.
Except as provided in this paragraph 8(a), the Option shall terminate
and may not be exercised after the Optionee ceases to be an member of the
Scientific Board of the Company.
(b) Extension if Exercise Prevented by Law. Notwithstanding
the foregoing, if the exercise of the Option within the applicable time periods
set forth above is prevented by the provisions of paragraph 5(f) above, the
Option shall remain exercisable until thirty (30) days after the date the
Optionee is notified by the Company that the Option is exercisable, but in any
event no later than the Option Term Date.
9. Ownership Change and Transfer of Control. An "Ownership Change"
shall be deemed to have occurred in the event any of the following occurs with
respect to the Company:
(a) the direct or indirect sale or exchange by the
shareholders of the Company of all or substantially all of the stock of the
Company where shareholders of the Company before such sale or exchange do not
retain, directly or indirectly, at least a majority of the beneficial interest
in the voting stock of the Company after such sale or exchange;
(b) a merger or consolidation involving the Company in which
the Company is not the surviving entity;
(c) the sale, exchange, or transfer of all or substantially
all of the assets of the Company (other than a sale, exchange, or transfer to
one or more parent or subsidiary corporations of the Company); or
(d) A liquidation or dissolution of the Company.
In the event of an Ownership Change, the Option shall (i) become fully
vested to the extent it is not otherwise fully vested and (ii) terminate and
cease to be outstanding effective as of the date of the Ownership Change to the
extent that the Option is neither assumed or substituted for in connection with
the Ownership Change nor exercised as of the date of the Ownership Change.
10. Effect of Change in Stock Subject to the Option. Appropriate
adjustments shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company. In the event a majority of the
shares which are of the same class as the shares that are subject to the Option
are exchanged for, converted into, or otherwise become shares of another
corporation (the "New Shares"), the Company may unilaterally amend the Option to
provide that the Option is exercisable for New Shares. In the event of any such
amendment, the number of shares and the exercise price shall be adjusted in a
fair and equitable manner.
11. Rights as a Shareholder or Board Member. The Optionee shall have no
rights as a shareholder with respect to any shares covered by the Option until
the date of the issuance of a certificate or certificates for the shares for
which the Option has been exercised. No adjustment shall be made for dividends
or distributions or other rights for which the record date is prior to the date
such certificate or certificates are issued, except as provided in paragraph 10
above. Nothing in the Option shall confer upon the Optionee any right to
continue to be a member of the Board of the Company or
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interfere in any way with any right of the Company to terminate the Optionee's
membership on that Board at any time.
12. Stock Dividends Subject to Option Agreement. If, from time to time,
there is any stock dividend, stock split, or other change in the character or
amount of any of the outstanding stock of the corporation the stock of which is
subject to the provisions of this Option Agreement, then in such event any and
all new substituted or additional securities to which the Optionee is entitled
by reason of the Optionee's ownership of the shares acquired upon exercise of
the Option shall be immediately subject to the Right of First Refusal with the
same force and effect as the shares subject to the Right of First Refusal
immediately before such event.
13. Legends. The Company may at any time place legends referencing any
applicable federal or state securities law restrictions on all certificates
representing shares of stock subject to the provisions of this Option Agreement.
The Optionee shall, at the request of the Company, promptly present to the
Company any and all certificates representing shares acquired pursuant to the
Option in the possession of the Optionee in order to effectuate the provisions
of this paragraph 13. Unless otherwise specified by the Company, legends placed
on such certificates may include, but shall not be limited to, the following:
(a) "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE
IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES
AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY
TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT."
(b) Any legend required to be placed thereon by applicable
law.
14. Initial Public Offerings. The Optionee hereby agrees that in the
event of any underwritten public offering of stock, including an initial public
offering of stock, made by the Company pursuant to an effective registration
statement filed under the Securities Act, the Optionee shall not offer, sell,
contract to sell, pledge, hypothecate, grant any option to purchase or make any
short sale of, or otherwise dispose of any shares of stock of the Company or any
rights to acquire stock of the Company for such period of time from and after
the effective date of such registration statement as may be established by the
underwriter for such public offering; provided, however, that such period of
time shall not exceed one hundred eighty (180) days from the effective date of
the registration statement to be filed in connection with such public offering.
The foregoing limitation shall not apply to shares registered in the initial
public offering under the Securities Act. The Optionee shall be subject to this
paragraph provided and only if the officers and directors of the Company are
also subject to similar arrangements.
15. Binding Effect. This Option Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
16. Termination or Amendment. The Board, including any duly appointed
committee of the Board, may terminate or amend the Plan and/or the Option at any
time; provided, however, that no such action shall deprive any person, without
such person's consent, of any rights previously granted pursuant to this Option
Agreement.
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17. Integrated Agreement. This Option Agreement constitutes the entire
understanding and agreement of the Optionee and the Company with respect to the
subject matter contained herein, and there are no agreements, understandings,
restrictions, representations, or warranties among the Optionee and the Company
other than those as set forth or provided for herein. To the extent contemplated
herein, the provisions of this Option Agreement shall survive any exercise of
the Option and shall remain in full force and effect.
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18. Applicable Law. This Option Agreement shall be governed by and
construed in accordance with the laws of the State of Pennsylvania without
regard to its choice of law provisions.
DEMEGEN, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: President
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The Optionee represents that the Optionee is familiar with the terms
and provisions of this Option Agreement, including, without limitation, the
terms of the Demegen, Inc. 1998 Stock Option Plan, the terms of which are
incorporated therein, and hereby accepts the Option subject to all of the terms
and provisions thereof.
Date: January 12, 1999 /s/ Xxxxx X. Xxxxx
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