Exhibit 10.58
NON-PLAN OPTION
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is entered into, effective
as of October 21, 2004, by VAXGEN, INC., a Delaware corporation (the "Company"),
and Xxxxx X. Xxxxxx (the "Holder").
RECITALS
A. The Holder has been designated to receive an option outside an equity
incentive plan maintained by the Company in connection with his initial election
to the Board.
NOW, THEREFORE, the Company and the Holder agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to the Holder a
non-qualified stock option (the "Option") to acquire from the Company thirty
thousand (30,000) shares of Common Stock (the "Shares") at the price of $12.27
per share (the "Purchase Price").
2. TERM OF THE OPTION. The Option (or certain portions thereof) shall
terminate on the earliest to occur of the following: (i) ten (10) years from the
date of this Agreement; (ii) the earlier termination of one or more portions of
the Option in the event that such portions do not become exercisable for shares
on an applicable anniversary date of this Agreement pursuant to Section 3(b);
and (iii) the earlier termination of the Option pursuant to Section 8.
3. EXERCISABILITY.
(a) The Option shall vest and become exercisable with respect to
one-third (1/3) of the shares subject to the Option on each successive annual
anniversary of the date of this Agreement such that all of the shares subject to
the Option shall be vested and exercisable on the third anniversary of the date
of this Agreement.
(b) Notwithstanding the preceding, the Option shall not become
exercisable for shares for which it is scheduled to become exercisable on each
applicable anniversary of this Agreement if (i) more than sixty (60) days prior
to the applicable anniversary date, the Holder ceases to serve as a director of
the Company for any reason other than his death; or (ii) during the annual
period measured initially from the date of this Agreement and subsequently from
each anniversary date (or such portion of that period during which the Holder is
serving as a director of the Company), the Holder does not attend at least
seventy-five percent (75%) of the combined number of meetings of the full Board
and any committee(s) of the Board of which the Holder is a member, or does not
attend at least fifty percent (50%) of such combined number of meetings in
person. For purposes of this Section 3(b), if the Board takes action by
unanimous written consent, such consent shall be deemed to be a meeting of the
Board that the Holder attended in person.
(c) After a portion of the Option becomes exercisable, the Option
may be exercised for the shares covered thereby in whole or in part at any time
and from time to time prior to its termination pursuant to Section 2.
1.
4. ADMINISTRATION.
(a) The Option shall be administered by the Board or the
Compensation Committee of the Board (the "Administrator").
(b) The Administrator shall have the sole authority, in its absolute
discretion, to (i) construe and interpret the terms of the Option; (ii) define
the terms used in this Agreement; (iii) prescribe, amend and rescind rules and
regulations relating to the Option; (iv) correct any defect, supply any omission
or reconcile any inconsistency in this Agreement; and (v) make all other
determinations necessary or advisable for the administration of the Option. All
decisions, determinations and interpretations made by the Administrator shall be
binding and conclusive on the Holder and on his legal representatives, heirs and
beneficiaries.
5. LIMITED TRANSFERABILITY. The Option is not transferable, except (i) by
will or by the laws of descent and distribution; (ii) with the prior written
approval of the Company, by instrument to an inter vivos or testamentary trust,
in a form accepted by the Company, in which the option is to be passed to
beneficiaries upon the death of the trustor (settlor); and (iii) with the prior
written approval of the Company, by gift, in a form accepted by the Company, to
a permitted transferee under a Form S-8 registration statement promulgated by
the Securities and Exchange Commission.
6. EXERCISE OF THE OPTION. In order to exercise the Option, the Holder
must do the following:
(a) deliver to the Company a written notice, substantially in the
form of the attached Exhibit A, specifying the number of Shares for which the
Option is being exercised;
(b) tender payment to the Company of the aggregate Purchase Price
for the Shares for which the Option is being exercised, which amount may be paid
(i) in cash or by certified or cashier's check; (ii) by delivery to the Company
of shares of Common Stock held by the Holder 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 date of exercise; or (iii) pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds; and
(c) pay, or make arrangements satisfactory to the Administrator for
payment to the Company of, all applicable federal and state income and
employment taxes required to be withheld by the Company in connection with the
exercise of the Option.
7. CHANGES IN CAPITALIZATION.
(a) If the outstanding shares of Common Stock are increased or
decreased, or changed into or exchanged for a different number or kind of shares
or securities of the Company through a reorganization, merger, recapitalization,
reclassification, share exchange or other material alteration in the capital
structure of the Company, the Administrator shall proportionately adjust the
number of shares of Common Stock subject to the Option, the exercise
2.
price per share, or both, so as to preserve the rights of the Holder
substantially proportionate to the rights of the Holder prior to such event.
(b) For purposes of Section 7(a), neither (i) the issuance of
additional shares of Common Stock or other securities of the Company in exchange
for adequate consideration (including services), nor (ii) the conversion into
Common Stock of any securities of the Company now or hereafter outstanding,
shall be deemed material alterations in the capital structure of the Company.
(c) If the Administrator determines that the nature of a material
alteration in the capital structure of the Company is such that it is not
feasible or advisable to make adjustments to the Option, such event shall be
subject to Section 8.
(d) The grant of the Option shall not affect in any way the right or
power of the Company to make adjustments, reclassifications, reorganizations or
changes of its capital or business structure, to merge, consolidate or dissolve,
to liquidate or to sell or transfer all or any part of its business or assets.
8. OTHER SIGNIFICANT EVENTS. In the event of (i) the acquisition by any
person, partnership, corporation or other entity of more than fifty percent
(50%) of the outstanding shares of Common Stock, (ii) a sale of substantially
all of the assets of the Company, (iii) the dissolution or liquidation of the
Company, or (iv) a material change in the capital structure of the Company that
is subject to this Section 8 in accordance with Section 7(c), the Administrator
shall have the power to determine what effect, if any, such event shall have
upon the Option, including but not limited to the power to cause the Option to
be surrendered and canceled and payments to be made to the Holder in exchange
therefor and to cause adjustments to be made in the number and/or kind of shares
or securities with respect to which the Option may be exercised and/or in the
purchase prices and other terms and conditions thereof. Upon such event, the
Option shall terminate, except to the extent the Administrator, pursuant to its
authority under this Section 8, has made provision for the continuation of the
Option or the substitution for the Option of new options or awards covering the
stock or securities of a successor entity, in which event the Option shall be
subject to the terms so provided.
9. NO SERVICE CONTRACT. The grant of the Option shall not confer upon the
Holder any right to continue in service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company or of
Holder, which rights are hereby expressly reserved by each, to terminate the
Holder's service at any time for any reason, with or without cause.
10. ENTIRE AGREEMENT; AMENDMENTS; BINDING EFFECT. This Agreement
constitutes the entire agreement and understanding between the Company and the
Holder regarding the subject matter hereof. No amendment of the Option or this
Agreement, or waiver of any provision of this Agreement, shall be valid unless
in writing and duly executed by the Company and the Holder. The failure of any
party to enforce any of that party's rights against the other party for breach
of any of the terms of this Agreement shall not be construed as a waiver of such
rights as to any continued or subsequent breach. This Agreement shall be binding
upon the Holder and his heirs, successors and assigns.
3.
11. DEFINITIONS.
(a) "Board" shall mean the board of directors of the Company.
(b) "Common Stock" shall mean the common stock of the Company.
(c) "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 (or other security) is publicly
traded, the last sales price (or, if no last sales price is reported, the
average of the high bid and low asked prices) for a share of Common Stock (or
unit of the other security) on that day (or, if that day is not a trading day,
on the next preceding trading day), as reported by the principal exchange on
which the Common Stock (or other security) is listed, or, if the Common Stock
(or other security) is publicly traded but not listed on an exchange, as
reported by The Nasdaq Stock Market, or, if such prices or quotations are not
reported by The Nasdaq Stock Market, as reported by any other available source
of prices or quotations selected by the Administrator;
(ii) If the Common Stock (or other security) is not publicly
traded, or if the Fair Market Value is not determinable by any of the foregoing
means, the Fair Market Value on any day shall be determined in good faith by the
Administrator on the basis of such considerations as the Administrator deems
appropriate.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
COMPANY VAXGEN, INC.
a Delaware corporation
By__________________________________
HOLDER ------------------------------------
Xxxxx Xxxxxx, M.D.
4.
EXHIBIT A
FORM OF EXERCISE OF OPTION
To: VaxGen, Inc.
0000 Xxxxxx Xxxx., Xxx. 000
Xxxxxxxx, XX 00000
The undersigned holds Option Number ____ (the "Option"), represented by a
Stock Option Agreement dated effective as of October 21, 2004 (the "Agreement").
The undersigned hereby exercises the Option and elects to purchase
________________ shares (the "Shares") of Common Stock of VaxGen, Inc. (the
"Company") pursuant to the Option.
This notice is accompanied by full payment of the Purchase Price for the
Shares in cash or by check or in another manner permitted by Section 6(b) of the
Agreement. The undersigned has also paid, or made arrangements satisfactory to
the Administrator for payment of, all taxes, if any, required to be withheld by
the Company in connection with the exercise of the Option.
Date: __________________, ____
--------------------------------
Xxxxx Xxxxxx, M.D.
5.
