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EXHIBIT 10.4
Revised form of Supplemental Stock Option Agreement under the Plan.
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Optionee:_________________________________________________Date:_________________
ISIS PHARMACEUTICALS, INC.
SUPPLEMENTAL STOCK OPTION AGREEMENT
Isis Pharmaceuticals, Inc. (the "Company"), pursuant to its 1989 Stock Option
Plan (the "Plan") has this day granted to the undersigned optionee, an option to
purchase shares of the common stock of the Company ("Common Stock") as described
herein. This option is not intended to qualify and will not be treated as an
"incentive stock option" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended from time to time (the "Code"). This option is
subject to all of the terms and conditions as set forth herein and on Attachment
I hereto, which is incorporated herein in its entirety.
Number of Shares Subject to Option:______________________
VESTING SCHEDULE:
Number of Shares (installment) Date of Earliest Exercise (vesting)(1)
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Exercise Price Per Share: (2) Expiration Date: (3)
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Percentage of Full-Time Work:_________
Isis Pharmaceuticals, Inc.
By:______________________________ Optionee:_____________________________
Duly authorized on behalf of
the Board of Directors Address:
OPTIONEE:
Acknowledges receipt of the option as described herein and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option and the Plan; and acknowledges that
as of the date of grant of this option, it sets forth the entire understanding
between the optionee and the Company regarding the acquisition of stock in the
Company and supersedes all prior oral and written agreements on that subject.
(1)After the first year, the option will vest monthly with 2.08% of the total
grant vesting each month; provided, however, that during any period in which the
undersigned provides service at less than the Percentage of Full-Time Work set
forth above, a reduced number of shares will vest as follows: the percentage of
shares which will vest during such period of reduced service will equal (a) the
percentage of shares that would vest as set forth on this schedule, multiplied
by (b) the percentage of full-time work furnished during the period of reduced
service divided by the Percentage of Full Time Work as set forth above.
Increases of work percentage up to but not in excess of the Percentage of Full
Time Work specified above will result in a corresponding increase in the
percentage of shares vesting. This reduction in vesting will not apply during
any period of paid leave or the first 20 weeks of a period of unpaid leave. No
shares will vest during unpaid leave after the first 20 weeks of such leave.
Shares which do not vest because of reductions in work percentage or unpaid
leave will be canceled and no longer subject to this option.
(2)Not less than 85% of the fair market value of the Common Stock on the date of
grant of this option.
(3)Less than 10 years from the date of grant of this option.
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ATTACHMENT I
TERMS OF SUPPLEMENTAL STOCK OPTION
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
set forth on the first page of the Supplemental Stock Option Agreement. Subject
to the limitations contained herein, this option shall be exercisable with
respect to each installment indicated in the Vesting Schedule set forth on the
first page of the Supplemental Stock Option Agreement on or after the date of
vesting applicable to such installment.
2. (a) The Exercise Price of this option is set forth on the first page
of the Supplemental Stock Option Agreement.
(b) Payment of the exercise price per share is due in full in
cash (including check) upon exercise of all or any part of each installment
which has become exercisable by you.
3. The minimum number of shares with respect to which this option may
be exercised at any one time is 1,000, unless the number of shares available for
exercise (that is, the remaining vested shares pursuant to paragraph 1) equals
less than 1,000 shares, in which case the minimum number of shares exercised
must equal the number of shares then vested.
4. Notwithstanding anything to the contrary contained herein, this
option may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below or in the Plan, terminates on the
Expiration Date. This option shall terminate prior to the expiration of its term
as follows: 3 months after the termination of your employment with the Company
or an affiliate of the Company (as defined in the Plan) for any reason or for no
reason unless:
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(a) such termination of employment is due to your permanent
and total disability (within the meaning of Section 422(c)(6) of the Code), in
which event the option shall terminate on the earlier of the termination date
set forth above or one 1 year following such termination of employment;
(b) such termination of employment is due to your death, in
which event the option shall terminate on the earlier of the termination date
set forth above or 18 months after your death; or
(c) during any part of such 3 month period the option is not
exercisable solely because of the condition set forth in paragraph 4 above, in
which event the option shall not terminate until the earlier of the termination
date set forth above or until it shall have been exercisable for an aggregate
period of 3 months after the termination of employment; or
(d) exercise of the option within 3 months after termination
of your employment with the Company or with an affiliate would result in
liability under section 16(b) of the Securities Exchange Act of 1934, in which
case the option will terminate on the earlier of the termination date set forth
above, the 10th day after the last date upon which exercise would result in such
liability or 6 months and 10 days after the termination of your employment with
the Company or an affiliate.
However, this option may be exercised following termination of employment only
as to that number of shares as to which it was exercisable on the date of
termination of employment under the provision of paragraph 1 of this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together
with the exercise price to the Secretary of the Company, or to such other person
as the Company may designate, during regular business hours, together with such
additional documents as the Company may then require pursuant to subparagraph
5(f) of the Plan.
(b) By exercising this option you agree that:
(i) the Company may require you to enter to
arrangement providing for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of: the exercise of this
option; the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or the disposition of shares acquired upon such
exercise.
7. This option is not transferable except by will or by the laws of
descent and distribution, and is exercisable during your lifetime only by you;
notwithstanding the foregoing, you may transfer part or all of this option to
any of the following:
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(i) your spouse, children (by birth or adoption),
stepchildren, grandchildren, or parents;
(ii) a trust or other entity established solely for your
benefit or the benefit of your spouse, children (by birth or adoption),
stepchildren, grandchildren, or parents for estate planning purposes; or,
(iii) an organization which is exempt from taxation under
Section 501(c)(3) of the Code or to which tax-deductible charitable
contributions may be made under Section 170 of the Code.
Furthermore, you may, by delivering written notice to the Company, in a
form satisfactory to the Company, designate a third party who, in the event of
your death, will thereafter be entitled to exercise the option.
8. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your part to
continue in the employ of the Company, or of the Company to continue your
employment with the Company. In the event that this option is granted to you in
connection with the performance of services as a consultant or director,
references to employment, employee and similar terms shall be deemed to include
the performance of services as a consultant or a director, as the case may be,
provided, however, that no rights as an employee shall arise by reason of the
use of such terms.
9. Any notices provided for in this option or the Plan shall be given
in writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five 5 days after deposit in the United
States mail, postage prepaid, addressed to you at the address specified below or
at such other address as you hereafter designate by written notice to the
Company.
10. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of this
option, including without limitation the provisions of paragraph 5 of the Plan
relating to option provisions, and is further subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Attachments:
1989 Stock Option Plan
Notice of Exercise
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