TECHNICLONE CORPORATION
FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
THIS OPTION AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
OR ANY STATE SECURITIES LAW, AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF OR EXERCISED UNLESS (i) A REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS SHALL
HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (ii) AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK. OPTIONEE MUST
RELY ON THEIR OWN ANALYSIS OF THE INVESTMENT AND ASSESSMENT OF THE RISKS
INVOLVED.
This Nonqualified Consultant Stock Option Agreement (the "Agreement")
is entered into as of ___________ by and between TECHNICLONE CORPORATION, a
Delaware corporation (the "Company") and __________ (the "Optionee").
1. GRANT OF OPTION. The Company hereby grants to Optionee an option
(the "Option") to purchase all or any portion of a total of
______________(xxxxx) shares (the "Shares") of the Common Stock of the Company
at a purchase price of $xxxxx 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 "nonqualified stock option" as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code").
2. VESTING OF OPTION. The right to exercise this Option shall vest with
respect to ______________ (xxxxx) shares on ____________and with respect to
____________ (xxxxx) shares on _____________ and with respect to
_____________(xxxxx) shares on ___________ and with respect to _____________
(xxxxx) 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 (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.
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 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 of
terminated if such termination is due to the Optionee's death; or
(d) the expiration of ninety (90) days from the date Optionee
is terminated if such termination occurs for any reason other than permanent
disability or death; or
A transfer of the Optionee's services, 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.
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
2
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;
(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.
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.
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.
3
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.
7. LIMITATION OF COMPANY'S LIABILITY FOR NONISSUANCE. During the term
of the Agreement, 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. 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.
4
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, ("Change in Control")
this Option, if not already exercisable, shall concurrent with and conditioned
upon the effective date of the proposed transaction, be accelerated and the
Optionee shall have the right to exercise the Option in respect to any or all of
the Shares on the effective date of the transaction after which this Option
shall terminate 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 of
the successor corporation with appropriate adjustments as to the number and kind
of shares and the Exercise Price, in accordance with the Plan. In the event of a
Change in Control the Committee shall cause written notice of the proposed
transaction to be given to the Optionee not less than fifteen (15) days prior to
the anticipated effective date of the proposed transaction.
10. NO CONSULTING CONTRACT CREATED. Nothing in this Agreement shall be
construed to constitute or be evidence of any right with respect to continuance
of consulting for 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 consulting agreement 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.
12. 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.
13. 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.
5
14. 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.
15. 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.
16. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
TECHNICLONE 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 this Agreement. 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"
____________________________________
Name
