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Exhibit 10.19
LIPID SCIENCES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
(For Non-Employee Directors and Consultants)
THIS AGREEMENT made and entered into as of the ____ day of _______, 200_
(the "Grant Date"), by Lipid Sciences, Inc., a Delaware corporation (the
"Company"), and _________________ ("Participant").
RECITALS
WHEREAS, the Company has in effect the Lipid Sciences, Inc. 2000 Stock
Plan (the "Plan") which permits options to purchase shares of the Company's
common stock, $________ par value ("Stock"), to be granted to certain employees,
non-employee directors, consultants and advisors of the Company.
WHEREAS, the Company believes it to be in the best interests of the
Company and its stockholders for such individuals to obtain or increase their
stock ownership interest in the Company in order that they will have a greater
incentive to work for and manage the Company's affairs.
WHEREAS, the Participant is a non-employee member of the Board of
Directors of the Company or a consultant or advisor to the Company and has been
selected by the Board of Directors (the "Board") to receive an option under the
Plan.
AGREEMENT
NOW, THEREFORE, in consideration of the promises and of the covenants and
agreements herein set forth, the parties hereby mutually covenant and agree as
follows:
1. Option.
(a) Grant. Subject to the terms and conditions of this Agreement
and the Plan, the Company hereby grants to Participant a Non-Qualified Stock
Option to purchase all or any part of the Shares set forth on the signature page
hereof, at the exercise price set forth on the signature page hereof.
(b) Term. The term of the Option shall expire at 11:59 p.m. on the
date immediately preceding the fifth anniversary of the date of grant of the
Option.
(c) Vesting. The Option shall vest as set forth in the following
table:
Number of Optioned Shares Vested Vesting Date
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2. Exercise. The Option may not be exercised prior to the date it is
vested or after the expiration date. Participant may, subject to the limitations
of this Agreement and the Plan, exercise all or any portion of the Option that
has vested pursuant to Section 1 hereof by providing written notice of exercise
to the Company specifying the number of Shares with respect to which the Option
is being exercised and accompanied by payment of the exercise price for such
Shares. The exercise price shall be paid in cash, by the surrender of a whole
number of Shares (free of all adverse claims and duly endorsed in blank by
Participant or accompanied by stock powers duly endorsed in blank) having a Fair
Market Value on the date of exercise equal to the exercise price, or by the
surrender of the unexercised, vested portion of the Option as to which the
Spread (as hereinafter defined) is equal to the exercise price, or any
combination of the foregoing. "Spread" means the Fair Market Value on the date
of exercise of the underlying Shares less the exercise price. No portion of the
Option may be exercised after it has expired pursuant to Section 1 hereof.
3. Termination of Service.
(a) Except as otherwise provided by the Board, if the Participant
ceases to provide services to the Company for any reason other than death,
disability or cause (as defined below), then the Participant may exercise the
Option, to the extent vested and exercisable as of the date of such cessation of
services, for a period of three (3) months after such date, but in no event
beyond the Expiration Date of the Option.
(b) If the Participant ceases to provide services to the Company by
reason of death or disability as defined in Section 22(e)(3) of the Code, then
the Participant (or the Participant's beneficiary or estate in the event of the
Participant's death) may exercise the Option, to the extent vested and
exercisable as of the date of the Participant's death or disability, for a
period of twelve (12) months following the date of death or disability, but in
no event beyond the Expiration Date.
(c) If the Participant ceases to provide services to the Company
for cause, the Option (whether or not vested) shall immediately terminate upon
such cessation of services. For this purpose, "cause" is defined to mean a
termination of services as a result of: (i) the failure of the Participant to
perform or observe any of the terms or provisions of any written agreement
between the Participant and the Company, or, if no written agreement exists, the
gross dereliction of the Participant's duties with respect to the Company; (ii)
the failure of the Participant to comply fully with the lawful directives of the
Board of Directors of the Company, or the officers or supervisory employees to
whom the Participant is reporting; (iii) dishonesty; (iv) misconduct; (v)
conviction of a crime involving moral turpitude; (vi) substance abuse; (vii)
misappropriation of funds; (viii) disloyalty or disparagement of the Company or
its management or employees; or (ix) other proper cause determined in good faith
by the Board.
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4. Change of Control. In the event of a Change of Control, any unvested
portion of the Option shall vest in full. Change of Control means: (i) the
adoption of a plan of reorganization, merger, share exchange or consolidation of
the Company with one or more other corporations or other entities as a result of
which the holders of the Shares as a group would receive less than fifty percent
(50%) of the voting power of the capital stock or other interests of the
surviving or resulting corporation or entity (unless such plan is subsequently
abandoned); (ii) the adoption by the Company's shareholders of a plan of
liquidation or the approval of the dissolution of the Company (unless such
liquidation or dissolution is subsequently abandoned); (iii) the approval by the
Company's shareholders of an agreement providing for the sale of all or
substantially the assets of the Company unless such sale is subsequently
abandoned); or (iv) the acquisition of more than thirty percent (30%) of the
outstanding Shares by any person within the meaning of Rule 13(d)(3) under the
Securities Exchange Act of 1934 if such acquisition is not preceded by a prior
expression of approval by the Board; or (v) one-third or more of the Company's
Board of Directors are not Continuing Directors (a "Continuing Director" means
any member of the Board of Directors who was a member on May 19, 1999, and any
Director who was recommended for election, or is elected to fill a vacancy, as a
director by a majority of the Continuing Directors then on such Board).
5. Withholding. The Company may deduct and withhold from any cash
payable to Participant such amount as may be required for the purpose of
satisfying the Company's obligation to withhold federal, state or local taxes in
connection with any exercise of this Option. The Participant may elect to
satisfy such withholding obligation, in whole or in part, (a) by causing the
Company to withhold Shares otherwise issuable pursuant to the exercise of the
Option or (b) by delivering to the Company Shares already owned by the
Participant. The Shares so delivered or withheld shall be a whole number, have a
Fair Market Value equal to such withholding obligation as of the date that the
amount of tax to be withheld is to be determined, shall be free of all adverse
claims, and shall be duly endorsed in blank by Participant or accompanied by
stock powers duly endorsed in blank.
6. Non-transferability. Participant shall have no rights to sell,
assign, transfer, pledge, assign or otherwise alienate the Option under this
Agreement, except by will or by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined by the Code or Title I of
ERISA, or the rules thereunder, and any such attempted sale, assignment,
transfer, pledge or other conveyance shall be null and void. The Option shall be
exercisable during the Participant's lifetime only by the Participant (or his or
her legal representative).
7. Beneficiary. The person whose name appears on the signature page
hereof after the caption "Beneficiary" or any successor designated by
Participant in accordance herewith (the person who is Participant's Beneficiary
at the time of his or her death is
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referred to as the "Beneficiary") shall be entitled to exercise the Option, to
the extent it is exercisable, after the death of Participant. Participant may
from time to time revoke or change his or her Beneficiary designation without
the consent of any prior Beneficiary by filing a new designation with the Board
of Directors. The last such designation received by the Board of Directors shall
be controlling; provided, however, that no designation, or change or revocation
thereof, shall be effective unless received by the Board of Directors prior to
Participant's death, and in no event shall any designation be effective as of a
date prior to such receipt. If no Beneficiary designation is in effect at the
time of Participant's death, or if no designated Beneficiary survives
Participant or if such designation conflicts with law, Participant's estate
shall be entitled to exercise the Option, to the extent it is exercisable after
the death of Optionee. If the Board of Directors is in doubt as to the right of
any person to exercise the Option, the Company may refuse to recognize such
exercise, without liability for any interest or dividends on the underlying
Shares, until the Board of Directors determines the person entitled to exercise
the Option, or the Company may apply to any court of appropriate jurisdiction
and such application shall be a complete discharge of the liability of the
Company therefor.
8. Securities Law Restrictions. Participant acknowledges that he is
acquiring the Option and the Shares purchasable pursuant to the Option for
investment purposes only and not with a view to resale or other distribution
thereof to the public in violation of the Securities Act of 1933, as amended
(the "Act"). Participant agrees and acknowledges with respect to any Shares that
have not been registered under the Act, that (i) Participant will not sell or
otherwise dispose of such Shares except pursuant to an effective registration
statement under the Act and any applicable state securities laws, or in a
transaction which in the opinion of counsel for the Company, is exempt from such
registration, and (ii) a legend will be placed on the certificates for the
Shares to such effect. As a further condition to the issuance of the Shares, the
Participant agrees for himself, and his heirs, legatees and legal
representatives, prior to such issuance to execute and deliver to the Company
such investment representations and warranties, and to take such other actions,
as counsel for the Company determines may be necessary or appropriate for
compliance with the Act and any applicable securities laws.
Unless otherwise determined by the Board, the Participant agrees that any
certificate representing shares of Stock acquired upon exercise of the Option
shall bear the following legend:
The shares of Stock represented by this certificate are restricted
securities as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended (the "Act"). These shares may not be
sold, transferred or disposed of unless they are registered under the Act,
or sold in a transaction that is exempt from registration under the Act
and any applicable state securities laws.
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9. Limited Interest.
(a) The grant of the Option shall not be construed as giving
Participant any interest other than as provided in this Agreement.
(b) Participant shall have no rights as a stockholder as a result
of the grant of the Option, until the Option is exercised, the exercise price is
paid, and the Shares issued thereunder.
(c) The grant of the Option shall not confer on Participant any
right to continue as an employee, nor interfere in any way with the right of the
Company to terminate the Participant at any time.
(d) The grant of the Option shall not affect in any way the right
or power of the Company to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company's capital
structure or its business, or any merger, consolidation or business combination
of the Company, or any issuance or modification of any term, condition, or
covenant of any bond, debenture, debt, preferred stock or other instrument ahead
of or affecting the Shares or the rights of the holders thereof, or the
dissolution or liquidation of the Company, or any sale or transfer of all or any
part of its assets or business or any other Company act or proceeding, whether
of a similar character or otherwise.
10. Incorporation by Reference. The terms of the Plan to the extent not
stated herein are expressly incorporated herein by reference and in the event of
any conflict between this Agreement and the Plan, the Plan shall govern.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
12. Amendment. This Agreement may not be amended, modified, terminated
or otherwise altered except by the written consent of the parties thereto.
13. Counterparts. This Non-Qualified Stock Option Agreement may be
executed in one or more counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officers and its corporate seal hereunto affixed, and the
Participant has hereunto affixed his hand the day and year first above written.
LIPID SCIENCES, INC.
By:
____________________________________
Its:
____________________________________
("Company")
_________________________________________
Name:
____________________________________
("Participant")
No. of Shares: Grant Date:
Exercise Price Per Share: Initial Exercise Date:
Option Expiration Date:
Date of Agreement: _________, __ Date of First Service:
Beneficiary: Address of Beneficiary:
_________________________ ____________________________________
____________________________________
Beneficiary Tax Identification No.:
____________________________________
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