NONSTATUTORY STOCK OPTION AGREEMENT
Exhibit 10.3
, Optionee:
Questcor Pharmaceuticals, Inc. (the “Company”), pursuant to its 2006 Equity Incentive Award
Plan (the “Plan”) has this day granted to you, the optionee named above, an option to purchase
shares of the common stock of the Company (“Common Stock”). This option is not intended to qualify
and will not be treated as an “incentive stock option” within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the “Code”).
The grant hereunder is in connection with and in furtherance of the Company’s compensatory
benefit plan for participation of the Company’s employees (including officers), directors or
consultants. Any capitalized term not defined herein shall have the same meaning ascribed to it in
the Plan.
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
( ). Subject to the limitations contained herein, this option shall vest and be
exercisable beginning ___, 20___under the following schedule: 1/4th of the total
number of options will vest and be exercisable on the first (1st) anniversary of the date of this
Agreement. Thereafter, the remaining shares will vest at the rate of 1/48th of the
total options subject to this grant on each monthly anniversary of the date of this option grant.
Notwithstanding the foregoing, in the event of a Change in Control of the Company, then this option
shall become vested as provided in Section 12.2 of the Plan.
2. (a) The exercise price of this option is ($___) per
share.
(b) Payment of the exercise price per share is due in full in cash (including check)
upon exercise of all or any part of each installment which has become exercisable by you; provided,
however, that, if at the time of exercise, the Company’s Common Stock is publicly traded and quoted
regularly in the Wall Street Journal, payment of the exercise price, to the extent permitted by
applicable statutes and regulations, may be made by delivery of already-owned shares of Common
Stock, or a combination of cash and already-owned Common Stock. Such Common Stock (i) shall be
valued at its fair market value on the date of exercise, (ii) if originally acquired from the
Company, must have been held for the period required to avoid a charge to the Company’s reported
earnings, and (iii) must be owned free and clear of any liens, claims, encumbrances or security
interests.
1.
(c) Notwithstanding the foregoing, this option may be exercised pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board which results in
the receipt of cash (or check) by the Company prior to the issuance of Common Stock.
3. The minimum number of shares with respect to which this option may be exercised
at any one time is one hundred (100), except (a) as to an installment subject to exercise, as set
forth in paragraph 1, which amounts to fewer than one hundred (100) shares, in which case, as to
the exercise of that installment, the number of such shares in such installment shall be the
minimum number of shares, and (b) with respect to the final exercise of this option this minimum
shall not apply. In no event may this option be exercised for any number of shares which would
require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein, this option may not be
exercised unless the shares issuable upon exercise of this option are then registered under the
Securities Act or, if such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the Securities Act.
5. The term of this option commences on the date hereof and, unless sooner
terminated as set forth below or in the Plan, terminates on (which date shall be no
more than (___) years from the date this option is granted). In no event may this option be
exercised after the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: ninety (90) calendar days after the termination of your
employment with the Company or an affiliate of the Company (as defined in the Plan) for any reason
or for no reason unless:
(a) such termination of employment is due to your permanent and total disability
(within the meaning of Section 422(c)(6) of the Code), in which event the option shall terminate on
the earlier of the termination date set forth above or twelve (12) months following such
termination of employment;
(b) such termination of employment is due to your death, in which event the option
shall terminate on the earlier of the termination date set forth above or twelve (12) months after
your death; or
(c) during any part of such three (3) month period the option is not exercisable
solely because of the condition set forth in paragraph 4 above, in which event the option shall not
terminate until the earlier of the termination date set forth above or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of employment; or
(d) exercise of the option within three (3) months after termination of your
employment with the Company or with an affiliate would result in liability under section 16(b) of
the Exchange Act, in which case the option will terminate on the earlier of (i) the termination
date set forth above, (ii) the tenth (10th) day after the last date upon which exercise would
result in such liability or (iii) six (6) months and ten (10) days after the termination of your
employment with the Company or an affiliate.
2.
However, this option may be exercised following termination of employment only as to that
number of shares as to which it was exercisable on the date of termination of employment under the
provisions of paragraph 1 of this option.
6. (a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company) together with the exercise
price to the Secretary of the Company, or to such other person as the Company may designate, during
regular business hours, together with such additional documents as the Company may then require.
(b) By exercising this option you agree that:
(i) the Company may require you to enter an arrangement providing for the cash
payment by you to the Company of any tax withholding obligation of the Company arising by reason
of: (1) the exercise of this option; (2) the lapse of any substantial risk of forfeiture to which
the shares are subject at the time of exercise; or (3) the disposition of shares acquired upon such
exercise; and
(ii) the Company (or a representative of the underwriters) may, in connection with
the first underwritten registration of the offering of any securities of the Company under the Act,
require that you not sell or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date (the “Effective Date”) of the registration statement of the Company
filed under the Act as may be requested by the Company or the representative of the underwriters;
provided, however, that such restriction shall apply only if, on the Effective Date, you are an
officer, director, or owner of more than one percent (1%) of the outstanding securities of the
Company. For purposes of this restriction you will be deemed to own securities which (i) are owned
directly or indirectly by you, including securities held for your benefit by nominees, custodians,
brokers or pledgees; (ii) may be acquired by you within sixty (60) days of the Effective Date;
(iii) are owned directly or indirectly, by or for your brothers or sisters (whether by whole or
half blood) spouse, ancestors and lineal descendants; or (iv) are owned, directly or indirectly, by
or for a corporation, partnership, estate or trust of which you are a shareholder, partner or
beneficiary, but only to the extent of your proportionate interest therein as a shareholder,
partner or beneficiary thereof. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions until the end of such
period.
7. This option is not transferable, except (i) by will or by the laws of descent and
distribution, or (ii) by written instruction, in a form accepted by the Company, to your spouse,
children, lineal ancestors and lineal descendants (or to a trust created solely for the benefit of
you and the foregoing persons) or to an organization exempt from taxation pursuant to Section
501(c)(3) of the Code or to which tax deductible charitable contributions may be made under Section
170 of the Code (excluding such organizations classified as private foundations under applicable
regulations and rulings), and is exercisable during your life only by you or a transferee
satisfying these conditions. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party who, in the event
of your death, shall thereafter be entitled to exercise this option.
3.
8. This option is not an employment contract and nothing in this option shall be
deemed to create in any way whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In the event that this
option is granted to you in connection with the performance of services as a consultant or
director, references to employment, employee and similar terms shall be deemed to include the
performance of services as a consultant or a director, as the case may be, provided, however, that
no rights as an employee shall arise by reason of the use of such terms.
9. Any notices provided for in this option or the Plan shall be given in writing and
shall be deemed effectively given upon receipt or, in the case of notices delivered by the Company
to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at
the address specified below or at such other address as you hereafter designate by written notice
to the Company.
10. This option is subject to all the provisions of the Plan, a copy of which is
attached hereto and its provisions are hereby made a part of this option, and this option is
further subject to all interpretations, amendments, rules and regulations which may from time to
time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan shall control.
Dated the ___day of ___, 20___.
Very truly yours,
QUESTCOR PHARMACEUTICALS, INC.
| By: | ||||||
| Duly authorized on behalf | ||||||
| of the Board of Directors |
4.
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments referenced
therein and understands that all rights and liabilities with respect to this option are set forth
in the option and the Plan;
(b) Acknowledges that as of the date of grant of this option, it sets forth the
entire understanding between the undersigned optionee and the Company and its affiliates regarding
the acquisition of stock in the Company and supersedes all prior oral and written agreements on
that subject with the exception of the following agreements only:
| NONE | ||||||
| (Initial) |
| OTHER | ||||||
Optionee: |
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Address: |
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SS# / Tax ID |
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Attachment:
Form of Exercise
5.
NOTICE OF EXERCISE
| 0000 Xxxxxxx Xxxx | Date of Exercise: | |
| Xxxxx Xxxx, Xxxxxxxxxx 00000 |
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase the number of shares
for the price set forth below.
| Type of option (check one) | Incentive __ Nonstatutory __ | |||||||
Stock option dated |
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Stock option grant ID# |
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Number of shares as
to which option is
exercised: |
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Certificates to be
issued in name of: |
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Total exercise price: |
$ | |||||||
+Cash payment delivered
herewith: |
$ | |||||||
+All checks must be made payable to “Questcor Pharmaceuticals, Inc.”
By this exercise, I agree (i) to provide such additional documents as you may require pursuant to
the terms of the 2006 Equity Incentive Award Plan, (ii) to provide for the payment by me to you (in
the manner designated by you) of your withholding obligation, if any, relating to the exercise of
this option, and (iii) if this exercise relates to an incentive stock option, to notify you in
writing within fifteen (15) days after the date of any disposition of any shares of Common Stock
issued upon exercise of this option that occurs within two (2) years after the date of grant of
this option or within one (1) year after such shares of Common Stock are issued upon exercise of
this option.
Very truly yours,
1.
