GENESIS BIOPHARMA, INC. STOCK OPTION AGREEMENT
GENESIS BIOPHARMA, INC.
Unless otherwise defined herein, the
terms defined in this Stock Option Agreement (“Agreement”) shall have the same defined meanings
as in the 2010 Equity Compensation Plan (“Plan”) of Genesis Biopharma, Inc. (the “Company”).
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I.
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NOTICE
OF STOCK OPTION GRANT
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Name: [xxx]
Address: [xxx]
You (the “Optionee”) have been granted an option to
purchase common stock of the Company, subject to the terms and conditions of the
Plan and this
Agreement. The terms of your grant are set forth
below:
Grant Date: xxx , 20xx
Vesting: xxx shares vested [immediately]
Commencement
Date: xxx ,
20xx
Exercise Price per Share (“Exercise Price”): $x.xx
Total Number of Shares Granted
(“Shares”): xxx
Total Exercise Price: $xxx
Type of Option: Incentive Stock Option (“ISO”)
Term/Expiration Date: xxx , 20xx
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II.
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AGREEMENT
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1. Grant of
Option. The
Company hereby grants to the Optionee a Stock Option to purchase the Shares as
set forth in the Notice of
Stock Option Grant (“Notice
of Grant”) above, at the
Exercise Price set forth in the Notice of Grant. Notwithstanding
anything to the contrary anywhere else in this Agreement, this grant of a Stock
Option is subject to the terms, definitions, and provisions of the Plan adopted
by the Company, which is incorporated herein by reference.
If designated in the Notice of Grant as
an ISO, this Stock Option is intended to qualify as an ISO as defined in
Section 422 of the Code; provided, however, that to the extent that the aggregate
fair market value of Stock with respect to which ISOs, including the Stock
Option, are exercisable for the first time by the Optionee during any calendar
year (under the Plan and all other incentive stock option plans of the Company or any Subsidiary)
exceeds $100,000, such options shall be treated as not qualifying under Code
Section 422, but rather shall be treated as No-Qualified Stock Options
(“NSOs”) to the extent required by Code Section
422. The rule set forth in the preceding sentence shall be
applied by taking options into account in the order in which they were
granted. For purposes of these rules, the Fair Market Value of Stock
shall be determined as of the time the Stock Option with respect to such Stock
is granted.
2. Exercise of
Option. This
Stock Option is exercisable as follows:
(a) Right to
Exercise.
(i) This Stock Option shall be exercisable
cumulatively according to the vesting schedule set out in the Notice of
Grant. For purposes of this Agreement, Shares subject to this Stock Option shall vest
based on continued employment of or consulting services by the Optionee with the
Company.
(ii) This Stock Option may not be exercised
for a fraction of a Share.
(iii) In the event of the Optionee’s death, Disability, or other
termination of the
employment or consulting relationship, the exercisability of the Stock Option is
governed by Sections 5,6, and 7 below.
(iv) In no event may this Stock Option be
exercised after the date of expiration of the term of this Stock Option as set
forth in the Notice of
Grant.
(b) Method of
Exercise. This
Stock Option shall be exercisable by written notice in the form attached as
Exhibit
A (“Exercise Notice”). The Exercise Notice must
state the number of Shares for which the Stock Option is being exercised, and such other representations and
agreements with respect to such shares of common stock as may be required by the
Company pursuant to the provisions of the Plan. The Exercise Notice
must be signed by the Optionee and shall be delivered in person or by certified mail to the Secretary of
the Company. The Exercise Notice must be accompanied by payment of
the Exercise Price, including payment of any applicable withholding
tax. This Stock Option shall be deemed to be exercised upon receipt
by the Company of such written Exercise Notice
accompanied by the Exercise Price and payment of any applicable withholding
tax.
No Shares shall be issued pursuant to
the exercise of a Stock Option unless such issuance and such exercise comply
with all relevant provisions of law and the requirements of any
stock exchange upon which the Shares may then be listed. Assuming
such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Stock Option is
exercised with respect to such
Shares.
3. Method of
Payment. Payment
of the Exercise Price shall be by any of the following, or a combination
thereof, at the election of the Optionee:
(a) cash, check, bank draft, or postal or
express money order;
(b) with the consent of the Committee, surrendered Shares issuable
upon the exercise of the Stock Option having a Fair Market Value on the date of
exercise equal to the aggregate Exercise Price of the Stock Option or exercised
portion thereof, surrender of such shares to be evidenced by delivery of the certificate(s)
representing such shares in such manner, and endorsed in such form, or
accompanied by stock powers endorsed in such form, as the Committee may
determine;
(c) the proceeds of a loan from an
independent broker-dealer whereby the loan is secured by the Stock Option
or the Stock to be received upon exercise of the Stock Option;
(d) by
electing to receive upon such exercise the “Net Number” of Shares determined
according to the following formula (the “Cashless
Exercise”):
Net
Number = (A x B) - (A
x C)
B
For
purposes of the foregoing formula:
A
= the total number of Shares with respect to which this Stock Option is then
being exercised.
B
= the closing bid price of the common stock of the Company on the date of
exercise of the Stock Option.
C
= the Exercise Price then in effect for the applicable Shares at the time of
such exercise; or
(e) any combination of the
foregoing.
4. Restrictions
on Exercise. If
the issuance of Shares upon such exercise or if the method of payment for such
shares would constitute a
violation of any applicable federal or state securities or other law or
regulation, then the Stock Option may not be exercised. The Company
may require the Optionee to make any representation and warranty to the Company
as may be required by any applicable law or regulation before
allowing the Stock Option to be exercised.
5. Termination
of Relationship.
(a) In the case of an ISO grant, if
the Optionee’s employment with the Company is terminated other than by
Disability or death, the terms of this Stock Option shall extend for a period
ending on the earlier of the date on which this Stock Option would otherwise
expire or three months after such termination of employment, and this Stock
Option shall be exercisable to the extent it was exercisable as of such last
date of employment.
(b) In
the case of a NSO grant, if the Optionee’s employment with the Company is
terminated, a Director Optionee ceases to be a Director, or a Consultant
Optionee ceases to be a Consultant, other than by reason of Disability or death,
the terms of any then outstanding NSO held by the Optionee shall extend for a
period ending on the earlier of the date established by the Committee at the
time of grant or three months after the Optionee’s last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of the date of termination of
employment or cessation of being a Director or Consultant.
6. Disability
of Optionee.
(a) In the case of an ISO grant, if
the Optionee’s employment with the Company is terminated by reason of
Disability, the terms of this Stock Option shall extend for a period ending on
the earlier of the date on which this Stock Option would otherwise expire or
twelve months after such termination of employment, and this Stock Option shall
be exercisable to the extent it was exercisable as of such last date of
employment.
(b) In
the case of a NSO grant, if the Optionee’s employment is terminated by reason of
Disability, a Director Optionee ceases to be a Director by reason of Disability
or a Consultant Optionee ceases to be a Consultant by reason of Disability, the
term of any then outstanding NSO held by the Optionee shall extend for a period
ending on the earlier of the date on which such Stock Option would otherwise
expire or twelve months after the Optionee’s last date of employment or
cessation of being a Director or Consultant, and such Stock Option shall be
exercisable to the extent it was exercisable as of such last date of employment
or cessation of being a Director or Consultant.
7. Death of
Optionee.
(a) In the case of an ISO grant, if
the Optionee’s employment with the Company is terminated by reason of death, the
representative of his estate or beneficiaries thereof to whom this Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which this Stock Option would otherwise expire or twelve
months after such date of death, to exercise any then outstanding portion of
this Stock Option in whole or in part. If the Optionee dies without
having fully exercised any of this Stock Option, the representative of his
estate or beneficiaries thereof to whom this Stock Option has been transferred
shall have the right to exercise this Stock Option in whole or in
part.
(b) In
the case of a NSO grant, if the Optionee’s employment is terminated by reason of
death, a Director Optionee ceases to be a Director by reason of death or a
Consultant Optionee ceases to be a Consultant by reason of death, the
representative of his estate or beneficiaries thereof to whom the Stock Option
has been transferred shall have the right during the period ending on the
earlier of the date on which such Stock Option would otherwise expire or twelve
months following his death to exercise any then outstanding NSO in whole or in
part. If the Optionee dies without having fully exercised any then
outstanding NSO, the representative of his estate or beneficiaries thereof to
whom the Stock Option has been transferred shall have the right to exercise such
Stock Options in whole or in part.
8. Non-Transferability
of Option. During the
Optionee’s lifetime, the Option shall be exercisable only by the Optionee and
shall not be transferable except in case of the death of the Optionee or by will
or the laws of descent and distribution.
9. Term of
Option. This
Stock Option may be exercised only within the term set out in the Notice of
Grant.
10. Tax
Consequences. Set forth below is a brief
summary as of the date of this Stock Option of some of the federal
income tax consequences of
exercise of this Stock Option and disposition of the
Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS STOCK OPTION OR DISPOSING OF
THE SHARES.
(a) Exercise of
ISO. If this
Stock Option qualifies as an ISO, there will be no regular federal income tax
liability upon the exercise of the Stock Option, although the excess, if any, of
the Fair Market Value of the Shares on the date of exercise over the Exercise
Price will be treated as an adjustment to the alternative minimum tax for
federal tax purposes and may subject the Optionee to the alternative minimum tax
in the year of exercise.
(b) Exercise of
ISO Following Disability. If the Optionee’s continuous status as an employee of,
or consultant to, the Company terminates as a result of disability that is not
total and permanent disability as defined in Code Section 22(e)(3), to the
extent permitted on the date of termination, the Optionee must exercise an ISO
within 90 days of such termination for the ISO to be qualified as an
ISO.
(c) Exercise of
NSO. There may
be a regular federal income tax liability upon the exercise of an
NSO. The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If the
Optionee is an employee of the Company, the Company will be required
to withhold from the Optionee’s compensation or collect from the
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise. If
the Optionee is subject to Section 16 of the Securities Act of 1934, as amended, the date
of income recognition may be deferred for up to six months.
(d) Disposition
of Shares. In
the case of an NSO, if the Shares are held for the minimum long-term capital
gain holding period in effect at the time of disposition, any gain realized on disposition
of the Shares will be treated as long-term capital gain for federal income tax
purposes. In the case of an ISO, if the Shares transferred pursuant
to the Stock Option are held for the minimum long-term capital gain holding period in effect at the time of
disposition (and provided such holding period comprises at least one year after
exercise of the Stock Option) and are disposed of at least two years after the
date of grant, any gain realized on disposition of the Shares will also be treated as long-term
capital gain for federal income tax purposes. If the Shares purchased under an
ISO are disposed of after such one-year period following exercise, but before
the expiration of the minimum long-term capital gain holding period in effect at the time of
disposition, then gain realized on such disposition may be taxed as a short-term
capital gain, which may or may not be equivalent to taxation as compensation
income (taxable at ordinary income rates). If the Shares
purchased under an ISO are disposed of within
such one-year period or within two years after the date of grant, any gain
realized on such disposition will be treated as compensation income to the
extent of the difference between the Exercise Price and the lesser of (1) the Fair Market Value of the
Shares on the date of exercise, or (2) the sale price of the
Shares.
(e) Notice of
Disqualifying Disposition of ISO Shares. If the Stock Option granted
to the Optionee herein is an ISO, and if the Optionee sells or
otherwise disposes of any
of the Shares acquired pursuant to the ISO on or before the later of
(1) the date two years after the date of grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. The Optionee
agrees that the Optionee may be subject to income tax withholding by the Company
on the compensation income recognized by the Optionee.
[Signature page
follows]
This Agreement may be executed in two or
more counterparts, each of
which shall be deemed an original and all of which shall constitute one
document.
| GENESIS BIOPHARMA, INC. | |
| By: | |
| Name: Xxxxxx Xxxxxx | |
| Title: President and Chairman of the Board | |
The
foregoing Option is hereby accepted on the terms and conditions set forth
herein. The undersigned acknowledges that the Option is expressly
subject to all the provisions set forth in the Company’s 2010 Equity
Compensation Plan, and acknowledges receipt of a copy of such Plan.
| OPTIONEE: |
| Signature |
| Print Name |
EXHIBIT
A
GENESIS BIOPHARMA, INC.
2010 EQUITY COMPENSATION PLAN
EXERCISE NOTICE
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Date:____________________
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1.
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The
undersigned hereby irrevocably elects to purchase __________ shares of the
common stock of Genesis Biopharma, Inc. pursuant to provisions of the
attached Stock Option Agreement.
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2.
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[The
undersigned is delivering to the Company, with this Notice of Exercise,
payment for the aggregate purchase price of the foregoing number of shares
(“Shares”), computed in accordance with the Stock Option Agreement.]
[or]
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2.
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[The
undersigned elects to exercise the Cashless Exercise provision in
accordance with the Stock Option
Agreement.]
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3.
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In
exercising the Option, the undersigned hereby confirms and acknowledges
that the Shares are being acquired solely for the account of the
undersigned and not a nominee for any other party, and for investment, and
that the undersigned will not offer, sell, or otherwise dispose of any
such Shares except under circumstances that will not result in a violation
of the Securities Act of 1933, as amended, or any applicable state
securities laws.
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3.
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Please
issue a certificate representing said Shares in the name of the
undersigned.
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| OPTIONEE: |
| Signature |
| Print Name |
| Address |
| Social Security Number |
