Exhibit 99.5
LIPID SCIENCES, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made and entered into as of the 9th day of October, 2000
(the "Grant Date"), by Lipid Sciences, Inc., a Delaware corporation (the
"Company"), and Xxx Xxxxxxx ("Participant").
RECITALS
WHEREAS, the Participant is a non-employee member of the Board of
Directors of the Company (the "Board") or a consultant or advisor to the Company
and has been selected by the Board to receive an option.
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, the
Company hereby grants to Participant a Non-Qualified Stock Option (the "Option")
to purchase all or any part of the Company's shares of common stock (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 be immediately vested and fully
exercisable as of the Grant Date.
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, 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. 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 as determined by the Board ("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. 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.
4. 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).
5. 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 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. The last such designation received by the Board
shall be controlling; provided, however, that no designation, or change or
revocation thereof, shall be effective unless received by the Board 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 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 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.
6. 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.
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Participant has had the opportunity to ask questions of, and to receive
answers from, appropriate executive officers of the Company with respect to the
terms and conditions of this option and with respect to the business, affairs,
financial condition and results of operations of the Company. Participant has
had access to such financial and other information as is necessary in order for
Participant to make a fully informed decision as to investment in the Company,
and has had the opportunity to obtain any additional information necessary to
verify any of the information to which Participant has had access. Participant
further represents and warrants that the Participant is an accredited investor
as that term is defined in Rule 501 of Regulation D under the Securities Act of
1933.
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.
7. One-Year Market Stand-Off Agreement.
(a) Participant may not, without the prior written consent of the
Company's Board of Directors, or managing underwriter (if any), during the
period commencing on the date (1) the Company issues its stock in an initial
public offering; (2) the Company's stock begins trading on Nasdaq or any other
securities exchange or quotation system; or (3) of the closing of a merger,
stock exchange or similar transaction in which the Company is a party and the
stock held or received by the Company's stockholders is trading on Nasdaq or any
other securities exchange or quotation system at the closing, if one or two
above has not occurred, and ending on the date specified by the Company's Board
of Directors, or managing underwriter (if any) (the period may not exceed one
year), (i) lend, offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase, or otherwise transfer or dispose of, directly or
indirectly, any shares of common stock or any securities convertible into or
exercisable or exchangeable for common stock (whether such shares or any such
securities are then owned by the Participant or are thereafter acquired), or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the common
stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of common stock or such other securities, in cash or
otherwise. The prohibitions in this section apply to any stock received by the
Company's stockholders under subsection three above. In connection with the
Company's initial public offering, if any, the underwriters are intended third
party beneficiaries of this section and will have the right, power and authority
to enforce the provisions hereof as though they were a party hereto.
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(b) In order to enforce the covenant in this section, the Company may
impose stop-transfer instructions with respect to the securities of each
Participant (and the shares or securities of every other person subject to the
foregoing restriction) until the end of the relevant period.
8. 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 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.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
10. Amendment. This Agreement may not be amended, modified, terminated or
otherwise altered except by the written consent of the parties thereto.
11. 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.
[SIGNATURES ON FOLLOWING PAGE]
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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: /s/ Xxxxxxxxxxx X. Xxxxxxx
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Xxxxxxxxxxx X. Xxxxxxx, Chairman
("Company")
By: /s/ Xxx Xxxxxxx
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Xxx Xxxxxxx
("Participant")
No. of Shares: 5,000 Grant Date: October 9, 2000
Exercise Price Per Share: $5.00 Initial Exercise Date: October 9, 2000
Option Expiration Date:October 9, 2005
Date of Agreement: October 9, 2000
Beneficiary: Address of Beneficiary:
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Beneficiary Tax Identification No.: -----------------------------------
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