Exhibit 10.9
VIRAL GENETICS, INC.
Option for the Purchase of _________
Shares of Common Stock
Par Value $0.001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE OPTION
AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION, AGREES AND ACKNOWLEDGES
THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.
This is to certify that, for value received, _____________- (the
"Optionee") is entitled to purchase from VIRAL GENETICS, INC. (the "Company" or
"Corporation"), on the terms and conditions hereinafter set forth, all or any
part of __________ shares ("Option Shares") of the Company's common stock, par
value $0.001 (the "Common Stock"), at the purchase price of $o per share
("Option Price"). Upon exercise of this option in whole or in part, a
certificate for the Option Shares so purchased shall be issued and delivered to
the Optionee. If less than the total option is exercised, a new option of
similar tenor shall be issued for the unexercised portion of the options
represented by this Agreement.
This option is granted subject to the following further terms and
conditions:
1. This option shall vest and be exercisable immediately. The right to
exercise this option with respect to any of the Option Shares shall terminate on
the earlier to occur of: the date that is two years following termination for
any reason of Optionee's employment; or, May 31, 2008. No right to purchase
unvested Option Shares shall vest and become exercisable after termination of
Optionee's employment for any reason. In order to exercise this option with
respect to all or any part of the Option Shares for which this option is at the
time exercisable, Optionee (or in the case of exercise after Optionee's death,
Optionee's executor, administrator, heir or legatee, as the case may be) must
take the following actions:
(a) Deliver to the Corporate Secretary of the Corporation an executed
notice of exercise in substantially the form of that attached to this Agreement
(the "Exercise Notice") in which there is specified the number of Option Shares
which are to be purchased under the exercised option.
(b) Pay the aggregate Option Price for the purchased shares through one
or more of the following alternatives:
(i) full payment in cash or by check made payable to the
Corporation's order;
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(ii) full payment in shares of Common Stock held for the
requisite period necessary to avoid a charge to the
Company's earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date
(as such term is defined below);
(iii) full payment through a combination of shares of
Common Stock held for the requisite period necessary
to avoid a charge to the Company's earnings for
financial reporting purposes and valued at Fair
Market Value on the Exercise Date and cash or check
payable to the Company's order; or
(iv) full payment effected through a broker-dealer sale
and remittance procedure pursuant to which Optionee
shall provide concurrent irrevocable written
instructions (i) to a brokerage firm to effect the
immediate sale of the purchased shares and remit to
the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the
aggregate Option Price payable for the purchased
shares plus all applicable Federal, state and local
income and employment taxes required to be withheld
in connection with such purchase and (ii) to the
Company to deliver the certificates for the purchased
shares directly to such brokerage firm in order to
complete the sale transaction; or
(c) Furnish to the Corporation appropriate documentation that the
person or persons exercising the option (if other than Optionee) have the right
to exercise this option.
(d) For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Exercise Notice shall have been delivered to the Company.
Except to the extent the sale and remittance procedure specified above is
utilized in connection with the option exercise, payment of the Option Price for
the purchased shares must accompany such Exercise Notice.
(e) For all valuation purposes under this Agreement, the Fair Market
Value per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any national securities
exchange but is traded on the Nasdaq National Market,
the Fair Market Value shall be the mean between the
highest "bid" and lowest "offered" quotations of a
share of Common Stock on such date (or if none, on
the most recent date on which there were bid and
offered quotations of a share of Common Stock), as
reported by the Nasdaq National Market or any
successor system.
(ii) If the Common Stock is at the time listed or admitted
to trading on any national securities exchange, then
the Fair Market Value shall be the closing selling
price per share on the date in question on the
securities exchange, as such price is officially
quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then
the Fair Market Value shall be the closing selling
price on the exchange on the last preceding date for
which such quotation exists.
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(iii) If the Common Stock is not listed on such date on any
national securities exchange nor included in the
Nasdaq National Market, but is traded in the
over-the-counter market, the highest "bid" quotation
of a share of Common Stock on such date (or if none,
on the most recent date on which there were bid
quotations of a share of Common Stock), as reported
on the Nasdaq Smallcap Market or the NASD OTC
Bulletin Board, as applicable.
(f) Upon such exercise, the Company shall issue and cause to be
delivered with all reasonable dispatch (and in any event within three business
days of such exercise) to or upon the written order of the Optionee at its
address, and in the name of the Optionee, a certificate or certificates for the
number of full Option Shares issuable upon the exercise together with such other
property (including cash) and securities as may then be deliverable upon such
exercise. Such certificate or certificates shall be deemed to have been issued
and the Optionee shall be deemed to have become a holder of record of such
Option Shares as of the Exercise Date.
2. The Optionee acknowledges that the shares subject to this option
have not and will not be registered as of the date of exercise of this option
under the Securities Act or the securities laws of any state. The Optionee
acknowledges that this option and the shares issuable on exercise of the option,
when and if issued, are and will be "restricted securities" as defined in Rule
144 promulgated by the Securities and Exchange Commission and must be held
indefinitely unless subsequently registered under the Securities Act and any
other applicable state registration requirements. Except as provided herein, the
Company is under no obligation to register the securities under the Securities
Act or under applicable state statutes. In the absence of such a registration or
an available exemption from registration, sale of the Option Shares may be
practicably impossible. The Optionee shall confirm to the Company the
representations set forth above in connection with the exercise of all or any
portion of this option. The Company agrees to register or qualify the Option
Shares, but not this option, for resale as follows:
(a) If, at any time during the period in which the rights represented
by this Agreement are exercisable, the Company proposes to file a registration
statement or notification under the Securities Act for the primary or secondary
sale of any debt or equity security, it will give written notice at least 30
days prior to the filing of such registration statement or notification to the
Optionee of its intention to do so. The Company agrees that, after receiving
written notice from the Optionee of its desire to include its Option Shares in
such proposed registration statement or notification, the Company shall afford
the Optionee the opportunity to have its Option Shares included therein.
Notwithstanding the provisions of this paragraph 2(a), the Company shall have
the right, at any time after it shall have given written notice pursuant to this
paragraph (whether or not a written request for inclusion of the Option Shares
shall be made) to elect not to file any such proposed registration statement or
notification or to withdraw the same after the filing but prior to the effective
date thereof. In no event shall the Company be obligated to include the Option
Shares in any registration statement or notification under this paragraph 2(a)
if, in the opinion of the underwriter, the inclusion of the Option Shares in
such registration statement or notification would be materially detrimental to
the proposed offering of debt or equity securities pursuant to which the Company
gave notice to the holders under this paragraph; provided, that the Option
Shares shall not be excluded from any such registration statement or
notification if debt or equity securities of the Company held by any other
persons are, or will be, included in such registration statement or
notification.
(b) In connection with the filing of a registration statement,
notification, or post-effective amendment under this section, the Company
covenants and agrees:
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(i) to pay all expenses of such registration statement,
notification, or post-effective amendment, including,
without limitation, printing charges, legal fees and
disbursements of counsel for the Company, blue sky
expenses, accounting fees and filing fees, but not
including legal fees and disbursements of counsel to
the Optionee and any sales commissions on Option
Shares offered and sold;
(ii) to take all necessary action which may reasonably be
required in qualifying or registering the Option
Shares included in a registration statement,
notification or post-effective amendment for the
offer and sale under the securities or blue sky laws
of such states as requested by the Optionee; provided
that the Company shall not be obligated to execute or
file any general consent to service of process or to
qualify as a foreign corporation to do business under
the laws of any such jurisdiction; and
(iii) to utilize its best efforts to keep the same
effective on a continuous or shelf basis until all
registered Option Shares of the Optionee have been
sold.
(c) The Optionee shall cooperate with the Company and shall furnish
such information as the Company may request in connection with any such
registration statement, notification or post-effective amendment hereunder, on
which the Company shall be entitled to rely, and the Optionee shall indemnify
and hold harmless the Company (and all other persons who may be subject to
liability under the Securities Act or otherwise) from and against any and all
claims, actions, suits, liabilities, losses, damages, and expenses of every
nature and character (including, but without limitation, all attorneys' fees and
amounts paid in settlement of any claim, action, or suit) which arise or result
directly or indirectly from any untrue statement of a material fact furnished by
the Optionee in connection with such registration or qualification, or from the
failure of the Optionee to furnish material information in connection with the
facts required to be included in such registration statement, notification or
post-effective amendment necessary to make the statements therein not
misleading.
3. The Company, during the term of this Agreement, will obtain from the
appropriate regulatory agencies any requisite authorization in order to issue
and sell such number of shares of its Common Stock as shall be sufficient to
satisfy the requirements of the Agreement.
4. The number of Option Shares purchasable upon the exercise of this
option and the Option Price per share shall be subject to adjustment from time
to time subject to the following terms. If the outstanding shares of Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, the Company or its successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the per-share
Option Price thereof, which may be issued to the Optionee under this Agreement
upon exercise of the options granted under this Agreement. The purchase rights
represented by this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common Stock arising from
the dilution or other adjustment in the number of shares subject to this option
shall rounded-up to the nearest whole share.
5. The Company covenants and agrees that all Option Shares which may be
delivered upon the exercise of this option will, upon delivery, be free from all
taxes, liens, and charges with respect to the purchase thereof; provided, that
the Company shall have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold such amount or
require the
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Optionee to make such provision of funds or other consideration as the Company
deems necessary to satisfy any income tax withholding obligation under federal
or state law.
6. The Company agrees at all times to reserve or hold available a
sufficient number of shares of Common Stock to cover the number of Option Shares
issuable upon the exercise of this and all other options of like tenor then
outstanding.
7. This option shall not entitle the holder hereof to any voting rights
or other rights as a shareholder of the Company, or to any other rights
whatsoever, except the rights herein expressed, and no dividends shall be
payable or accrue in respect of this option or the interest represented hereby
or the Option Shares purchasable hereunder until or unless, and except to the
extent that, this option shall be exercised.
8. The Company may deem and treat the registered owner of this option
as the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.
9. In the event that any provision of this Agreement is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
10. This Agreement shall be governed by and construed in accordance
with the internal laws of the state of California, without regard to the
principles of conflicts of law thereof.
11. Except as otherwise provided herein, this Agreement shall be
binding on and inure to the benefit of the Company and the person to whom an
option is granted hereunder, and such person's heirs, executors, administrators,
legatees, personal representatives, assignees, and transferees.
IN WITNESS WHEREOF, the Company has caused this option to be executed
on the 4th day of June 2003, by the signature of its duly authorized officer.
VIRAL GENETICS, INC.
By_________________________________
Duly Authorized Officer
The undersigned Optionee hereby acknowledges receipt of a copy of the
foregoing option and acknowledges and agrees to the terms and conditions set
forth in the option.
__________________________________
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Exercise Notice
(to be signed only upon exercise of Option)
TO: Viral Genetics, Inc.
The Optionee, holder of the attached option, hereby irrevocable elects
to exercise the purchase rights represented by the option for, and to purchase
thereunder, ________________________________ shares of common stock of Viral
Genetics, Inc., and herewith makes payment therefor, and requests that the
certificate(s) for such shares be delivered to the Optionee at:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
If acquired without registration under the Securities Act of 1933, as
amended ("Securities Act"), the Optionee represents that the Common Stock is
being acquired without a view to, or for, resale in connection with any
distribution thereof without registration or other compliance under the
Securities Act and applicable state statutes, and that the Optionee has no
direct or indirect participation in any such undertaking or in the underwriting
of such an undertaking. The Optionee understands that the Common Stock has not
been registered, but is being acquired by reason of a specific exemption under
the Securities Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any disposition of the
Common Stock may, under certain circumstances, be inconsistent with these
exemptions. The Optionee acknowledges that the Common Stock must be held and may
not be sold, transferred, or otherwise disposed of for value unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The Company is under no obligation to register the Common Stock under
the Securities Act, except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend restricting
transfer, except in compliance with applicable federal and state securities
statutes.
The Optionee agrees and acknowledges that this purported exercise of
the option is conditioned on, and subject to, any compliance with requirements
of applicable federal and state securities laws deemed necessary by the Company.
DATED this ________ day of _______________________________, __________.
_________________________________
Signature
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