RESPONSE GENETICS, INC. NON-QUALIFIED STOCK OPTION AGREEMENT
Exhibit
10.17
RESPONSE
GENETICS, INC.
AGREEMENT
made as of the __ day of _________ 200_, between Response Genetics, Inc. (the
“Company”), a Delaware corporation, and _______________ (the
“Participant”).
WHEREAS,
the Company desires to grant to the Participant an Option to purchase shares
of
its common stock, $.01 par value per share (the “Shares”), under and for the
purposes set forth in the Company’s 2006 Employee, Director and Consultant Stock
Plan (the “Plan”);
WHEREAS,
the Company and the Participant understand and agree that any terms used and
not
defined herein have the same meanings as in the Plan; and
WHEREAS,
the Company and the Participant each intend that the Option granted herein
shall
be a Non-Qualified Option.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto agree as
follows:
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1.
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GRANT
OF OPTION.
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The
Company hereby grants to the Participant the right and option to purchase all
or
any part of an aggregate of _______________ Shares, on the terms and conditions
and subject to all the limitations set forth herein, under United States
securities and tax laws, and in the Plan, which is incorporated herein by
reference. The Participant acknowledges receipt of a copy of the
Plan.
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2.
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PURCHASE
PRICE.
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The
purchase price of the Shares covered by the Option shall be $_____ per Share,
subject to adjustment, as provided in the Plan, in the event of a stock split,
reverse stock split or other events affecting the holders of Shares after the
date hereof (the “Purchase Price”). Payment shall be made in accordance with
Paragraph 9 of the Plan.
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3.
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EXERCISABILITY
OF OPTION.
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Subject
to the terms and conditions set forth in this Agreement and the Plan, the Option
granted hereby shall become exercisable as follows:
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On
the first anniversary of the date of this Agreement
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up
to ____________ Shares
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On
the second anniversary of the date of this Agreement
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an
additional __________ Shares
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On
the third anniversary of the date of this Agreement
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an
additional __________ Shares
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On
the fourth anniversary of the date of this Agreement
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an
additional __________ Shares
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The
foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan.
Notwithstanding
the foregoing, in the event of a Change of Control (as defined below), all
of
the Shares shall fully accelerate and will be vested for purposes of Section
24(B) of the Plan unless this Option has otherwise expired or been terminated
pursuant to its terms or the terms of the Plan.
Change
of Control
means
the occurrence of any of the following events:
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(i)
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Ownership.
Any “Person” (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) becomes the “Beneficial
Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly,
of securities of the Company representing 50% or more of the total
voting
power represented by the Company’s then outstanding voting securities
(excluding for this purpose the Company or its Affiliates or any
employee
benefit plan of the Company) pursuant to a transaction or a series
of
related transactions which the Board of Directors does not approve;
or
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(ii)
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Merger/Sale
of Assets. A merger or consolidation of the Company whether or not
approved by the Board of Directors, other than a merger or consolidation
which would result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or the parent of such corporation) at least 50% of the total
voting
power represented by the voting securities of the Company or such
surviving entity or parent of such corporation outstanding
immediately after such merger or consolidation, or the stockholders
of the
Company approve an agreement for the sale or disposition by the Company
of
all or substantially all of the Company’s assets;
or
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(iii)
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Change
in Board Composition. A change in the composition of the Board of
Directors, as a result of which fewer than a majority of the directors
are
Incumbent Directors. “Incumbent Directors” shall mean directors who either
(A) are directors of the Company as of the date of this
Agreement, or (B) are elected, or nominated for election, to the
Board of Directors with the affirmative votes of at least a majority
of the Incumbent Directors at the time of such election or nomination
(but
shall not include an individual whose election or nomination is in
connection with an actual or threatened proxy contest relating to
the
election of directors to the
Company).
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4.
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TERM
OF OPTION.
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The
Option shall terminate ten years from the date of this Agreement, but shall
be
subject to earlier termination as provided herein or in the Plan.
If
the
Participant ceases to be an employee, director or consultant of the Company
or
of an Affiliate (for any reason other than the death or Disability of the
Participant or termination of the Participant for “cause” (as defined in the
Plan)), the Option may be exercised, if it has not previously terminated, within
three months after the date the Participant ceases to be an employee, director
or consultant of the Company or an Affiliate, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the Option has become exercisable and is in effect at the date of such
cessation of service.
Notwithstanding
the foregoing, in the event of the Participant’s Disability or death within
three months after the termination of service, the Participant or the
Participant’s Survivors may exercise the Option within one year after the date
of the Participant’s termination of service, but in no event after the date of
expiration of the term of the Option.
In
the
event the Participant’s service is terminated by the Company or an Affiliate for
Cause (as defined in the Plan), the Participant’s right to exercise any
unexercised portion of this Option shall cease immediately as of the time the
Participant is notified his or her service is terminated for Cause, and this
Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Participant’s termination, but prior to the
exercise of the Option, the Board of Directors of the Company determines that,
either prior or subsequent to the Participant’s termination, the Participant
engaged in conduct which would constitute Cause, then the Participant shall
immediately cease to have any right to exercise the Option and this Option
shall
thereupon terminate.
In
the
event of the Disability of the Participant, as determined in accordance with
the
Plan, the Option shall be exercisable within one year after the Participant’s
termination of service or, if earlier, within the term originally prescribed
by
the Option. In such event, the Option shall be exercisable:
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(a)
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to
the extent that the Option has become exercisable but has not been
exercised as of the date of Disability;
and
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(b)
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in
the event rights to exercise the Option accrue periodically, to the
extent
of a pro rata portion through the date of Disability of any additional
vesting rights that would have accrued on the next vesting date had
the
Participant not become Disabled. The proration shall be based upon
the
number of days accrued in the current vesting period prior to the
date of
Disability.
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In
the
event of the death of the Participant while an employee, director or consultant
of the Company or of an Affiliate, the Option shall be exercisable by the
Participant’s Survivors within one year after the date of death of the
Participant or, if earlier, within the originally prescribed term of the Option.
In such event, the Option shall be exercisable:
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(x)
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to
the extent that the Option has become exercisable but has not been
exercised as of the date of death;
and
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(y)
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in
the event rights to exercise the Option accrue periodically, to the
extent
of a pro rata portion through the date of death of any additional
vesting
rights that would have accrued on the next vesting date had the
Participant not died. The proration shall be based upon the number
of days
accrued in the current vesting period prior to the Participant’s date of
death.
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5.
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METHOD
OF EXERCISING OPTION.
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Subject
to the terms and conditions of this Agreement, the Option may be exercised
by
written notice to the Company or its designee, in substantially the form of
Exhibit A
attached
hereto. Such notice shall state the number of Shares with respect to which
the
Option is being exercised and shall be signed by the person exercising the
Option. Payment of the purchase price for such Shares shall be made in
accordance with Paragraph 9 of the Plan. The Company shall deliver such Shares
as soon as practicable after the notice shall be received, provided, however,
that the Company may delay issuance of such Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under
any
applicable law (including, without limitation, state securities or “blue sky”
laws). The Shares as to which the Option shall have been so exercised shall
be
registered in the Company’s share register in the name of the person so
exercising the Option (or, if the Option shall be exercised by the Participant
and if the Participant shall so request in the notice exercising the Option,
shall be registered in the name of the Participant and another person jointly,
with right of survivorship) and shall be delivered as provided above to or
upon
the written order of the person exercising the Option. In the event the Option
shall be exercised, pursuant to Section 4 hereof, by any person other than
the
Participant, such notice shall be accompanied by appropriate proof of the right
of such person to exercise the Option. All Shares that shall be purchased upon
the exercise of the Option as provided herein shall be fully paid and
nonassessable.
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6.
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PARTIAL
EXERCISE.
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Exercise
of this Option to the extent above stated may be made in part at any time and
from time to time within the above limits, except that no fractional share
shall
be issued pursuant to this Option.
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7.
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NON-ASSIGNABILITY.
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The
Option shall not be transferable by the Participant otherwise than 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 the Employee Retirement
Income Security Act or the rules thereunder. However, the Participant, with
the
approval of the Administrator, may transfer the Option for no consideration
to
or for the benefit of the Participant’s Immediate Family (including, without
limitation, to a trust for the benefit of the Participant’s Immediate Family or
to a partnership or limited liability company for one or more members of the
Participant’s Immediate Family), subject to such limits as the Administrator may
establish, and the transferee shall remain subject to all the terms and
conditions applicable to the Option prior to such transfer and each such
transferee shall so acknowledge in writing as a condition precedent to the
effectiveness of such transfer. Except as provided in the previous sentence,
the
Option shall be exercisable, during the Participant’s lifetime, only by the
Participant (or, in the event of legal incapacity or incompetency, by the
Participant’s guardian or representative) and shall not be assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall
not
be subject to execution, attachment or similar process. Any attempted transfer,
assignment, pledge, hypothecation or other disposition of the Option or of
any
rights granted hereunder contrary to the provisions of this Section 7, or the
levy of any attachment or similar process upon the Option shall be null and
void. The term “Immediate Family” shall mean the Participant’s spouse, former
spouse, parents, children, stepchildren, adoptive relationships, sisters,
brothers, nieces, nephews and grandchildren (and, for this purpose, shall also
include the Participant.)
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8.
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NO
RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
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The
Participant shall have no rights as a stockholder with respect to Shares subject
to this Agreement until registration of the Shares in the Company’s share
register in the name of the Participant. Except as is expressly provided in
the
Plan with respect to certain changes in the capitalization of the Company,
no
adjustment shall be made for dividends or similar rights for which the record
date is prior to the date of such registration.
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9.
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ADJUSTMENTS.
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The
Plan
contains provisions covering the treatment of Options in a number of
contingencies such as stock splits and mergers. Provisions in the Plan for
adjustment with respect to stock subject to Options and the related provisions
with respect to successors to the business of the Company are hereby made
applicable hereunder and are incorporated herein by reference.
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10.
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TAXES.
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The
Participant acknowledges that upon exercise of the Option the Participant will
be deemed to have taxable income measured by the difference between the then
fair market value of the Shares received upon exercise and the price paid for
such Shares pursuant to this Agreement. The Participant acknowledges that any
income or other taxes due from him or her with respect to this Option or the
Shares issuable pursuant to this Option shall be the Participant’s
responsibility.
The
Participant agrees that the Company may withhold from the Participant’s
remuneration, if any, the minimum statutory amount of federal, state and local
withholding taxes attributable to such amount that is considered compensation
includable in such person’s gross income. At the Company’s discretion, the
amount required to be withheld may be withheld in cash from such remuneration,
or in kind from the Shares otherwise deliverable to the Participant on exercise
of the Option. The Participant further agrees that, if the Company does not
withhold an amount from the Participant’s remuneration sufficient to satisfy the
Company’s income tax withholding obligation, the Participant will reimburse the
Company on demand, in cash, for the amount under-withheld.
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11.
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PURCHASE
FOR INVESTMENT.
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Unless
the offering and sale of the Shares to be issued upon the particular exercise
of
the Option shall have been effectively registered under the Securities Act
of
1933, as now in force or hereafter amended (the “1933 Act”), the Company shall
be under no obligation to issue the Shares covered by such exercise unless
and
until the following conditions have been fulfilled:
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(a)
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The
person(s) who exercise the Option shall warrant to the Company, at
the
time of such exercise, that such person(s) are acquiring such Shares
for
their own respective accounts, for investment, and not with a view
to, or
for sale in connection with, the distribution of any such Shares,
in which
event the person(s) acquiring such Shares shall be bound by the provisions
of the following legend which shall be endorsed upon the certificate(s)
evidencing the Shares issued pursuant to such
exercise:
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“The
shares represented by this certificate have been taken for investment and they
may not be sold or otherwise transferred by any person, including a pledgee,
unless (1) either (a) a Registration Statement with respect to such shares
shall
be effective under the Securities Act of 1933, as amended, or (b) the Company
shall have received an opinion of counsel satisfactory to it that an exemption
from registration under such Act is then available, and (2) there shall have
been compliance with all applicable state securities laws;” and
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(b)
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If
the Company so requires, the Company shall have received an opinion
of its
counsel that the Shares may be issued upon such particular exercise
in
compliance with the 1933 Act without registration thereunder. Without
limiting the generality of the foregoing, the Company may delay issuance
of the Shares until completion of any action or obtaining of any
consent,
which the Company deems necessary under any applicable law (including
without limitation state securities or “blue sky”
laws).
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12.
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RESTRICTIONS
ON TRANSFER OF SHARES.
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12.1 The
Participant agrees that in the event the Company proposes to offer for sale
to
the public any of its equity securities and such Participant is requested by
the
Company and any underwriter engaged by the Company in connection with such
offering to sign an agreement restricting the sale or other transfer of Shares,
then it will promptly sign such agreement and will not transfer, whether in
privately negotiated transactions or to the public in open market transactions
or otherwise, any Shares or other securities of the Company held by him or
her
during such period as is determined by the Company and the underwriters, not
to
exceed 90 days following the closing of the offering, plus such additional
period of time as may be required to comply with Marketplace Rule 2711 of the
National Association of Securities Dealers, Inc. or similar rules thereto (such
period, the “Lock-Up Period”). Such agreement shall be in writing and in form
and substance reasonably satisfactory to the Company and such underwriter and
pursuant to customary and prevailing terms and conditions. Notwithstanding
whether the Participant has signed such an agreement, the Company may impose
stop-transfer instructions with respect to the Shares or other securities of
the
Company subject to the foregoing restrictions until the end of the Lock-Up
Period.
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12.2 The
Participant acknowledges and agrees that neither the Company, its shareholders
nor its directors and officers, has any duty or obligation to disclose to the
Participant any material information regarding the business of the Company
or
affecting the value of the Shares before, at the time of, or following a
termination of the employment of the Participant by the Company, including,
without limitation, any information concerning plans for the Company to make
a
public offering of its securities or to be acquired by or merged with or into
another firm or entity.
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13.
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NO
OBLIGATION TO MAINTAIN RELATIONSHIP.
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The
Company is not by the Plan or this Option obligated to continue the Participant
as an employee, director or consultant of the Company or an Affiliate. The
Participant acknowledges: (i) that the Plan is discretionary in nature and
may
be suspended or terminated by the Company at any time; (ii) that the grant
of
the Option is a one-time benefit which does not create any contractual or other
right to receive future grants of options, or benefits in lieu of options;
(iii)
that all determinations with respect to any such future grants, including,
but
not limited to, the times when options shall be granted, the number of shares
subject to each option, the option price, and the time or times when each option
shall be exercisable, will be at the sole discretion of the Company; (iv) that
the Participant’s participation in the Plan is voluntary; (v) that the value of
the Option is an extraordinary item of compensation which is outside the scope
of the Participant’s employment contract, if any; and (vi) that the Option is
not part of normal or expected compensation for purposes of calculating any
severance, resignation, redundancy, end of service payments, bonuses,
long-service awards, pension or retirement benefits or similar
payments.
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14.
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NOTICES.
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Any
notices required or permitted by the terms of this Agreement or the Plan shall
be given by recognized courier service, facsimile, registered or certified
mail,
return receipt requested, addressed as follows:
If
to the
Company:
Response
Genetics, Inc.
Attn:
Finance
0000
Xxxxxxx Xxxxxx,
Xxx
Xxxxxxx, XX 00000
If
to the
Participant:
or
to
such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given upon
the earlier of receipt, one business day following delivery to a recognized
courier service or three business days following mailing by registered or
certified mail.
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15.
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GOVERNING
LAW.
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This
Agreement shall be construed and enforced in accordance with the law of the
State Delaware, without giving effect to the conflict of law principles thereof.
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16.
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BENEFIT
OF AGREEMENT.
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Subject
to the provisions of the Plan and the other provisions hereof, this Agreement
shall be for the benefit of and shall be binding upon the heirs, executors,
administrators, successors and assigns of the parties hereto.
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17.
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ENTIRE
AGREEMENT.
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This
Agreement, together with the Plan, embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect
or
be used to interpret, change or restrict, the express terms and provisions
of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
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18.
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MODIFICATIONS
AND AMENDMENTS.
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The
terms
and provisions of this Agreement may be modified or amended as provided in
the
Plan.
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19.
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WAIVERS
AND CONSENTS.
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Except
as
provided in the Plan, the terms and provisions of this Agreement may be waived,
or consent for the departure therefrom granted, only by written document
executed by the party entitled to the benefits of such terms or provisions.
No
such waiver or consent shall be deemed to be or shall constitute a waiver or
consent with respect to any other terms or provisions of this Agreement, whether
or not similar. Each such waiver or consent shall be effective only in the
specific instance and for the purpose for which it was given, and shall not
constitute a continuing waiver or consent.
| 20. |
DATA
PRIVACY.
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By
entering into this Agreement, the Participant: (i) authorizes the Company and
each Affiliate, and any agent of the Company or any Affiliate administering
the
Plan or providing Plan recordkeeping services, to disclose to the Company or
any
of its Affiliates such information and data as the Company or any such Affiliate
shall request in order to facilitate the grant of options and the administration
of the Plan; (ii) waives any data privacy rights he or she may have with respect
to such information; and (iii) authorizes the Company and each Affiliate to
store and transmit such information in electronic form.
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[Remainder
of Page Intentionally Left Blank]
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IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Participant has hereunto set his or her hand,
all as of the day and year first above written.
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Response
Genetics, Inc.
By:
_______________________________
Name
Title
___________________________________
Participant |
10
Exhibit
A
NOTICE
OF
EXERCISE OF NON-QUALIFIED STOCK OPTION
| TO: |
Response
Genetics, Inc.
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Ladies
and Gentlemen:
I
hereby
exercise my Non-Qualified Stock Option to purchase _________ shares (the
“Shares”) of the common stock, $.01 par value, of Response Genetics,
Inc. (the
“Company”), at the exercise price of $________ per share, pursuant to and
subject to the terms of that certain Non-Qualified Stock Option Agreement
between the undersigned and the Company dated _______________,
200_.
I
understand the nature of the investment I am making and the financial risks
thereof. I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
I
am
paying the option exercise price for the Shares as follows:
_________________________________________
Please
issue the Shares (check one):
o
to
me; or
o
to
me and
____________________________, as joint tenants with right of
survivorship,
at
the
following address:
My
mailing address for shareholder communications, if different from the address
listed above, is:
A-1
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Very
truly yours,
__________________________________ Participant
(signature)
__________________________________ Print
Name
__________________________________ Date
__________________________________ Social
Security Number
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A-2
