INCENTIVE STOCK OPTION AGREEMENT RESPONSE GENETICS, INC.
Exhibit
10.18
RESPONSE
GENETICS, INC.
AGREEMENT
made as of the ___ day of _______ 200_, between Response Genetics, Inc. (the
“Company”), a Delaware corporation and ____________, an employee of the Company
(the “Employee”).
WHEREAS,
the Company desires to grant to the Employee 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 Employee 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 Employee each intend that the Option granted herein qualify
as an ISO.
NOW,
THEREFORE, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the parties hereto agree as
follows:
| 1. |
GRANT
OF OPTION.
|
The
Company hereby grants to the Employee 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 Employee acknowledges receipt of a copy of the Plan.
| 2. |
PURCHASE
PRICE.
|
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.
| 3. |
EXERCISABILITY
OF OPTION.
|
Subject
to the terms and conditions set forth in this Agreement and the Plan, the Option
granted hereby shall become exercisable as follows:
|
On
the first anniversary of the date of this Agreement
|
up
to _________ Shares
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On
the second anniversary of the date of this Agreement
|
an
additional _________ Shares
|
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On
the third anniversary of the date of this Agreement
|
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)
|
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)
|
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 [insert 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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2
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4.
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TERM
OF OPTION.
|
This
Option shall terminate ten years from the date of this Agreement or, if the
Employee owns as of the date hereof more than 10% of the total combined voting
power of all classes of capital stock of the Company or an Affiliate, five
years
from the date of this Agreement, but shall be subject to earlier termination
as
provided herein or in the Plan.
If
the
Employee ceases to be an employee of the Company or of an Affiliate (for any
reason other than the death or Disability of the Employee or termination of
the
Employee’s employment 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 Employee ceases to be an employee of the Company or an Affiliate,
or
within the originally prescribed term of the Option, whichever is earlier,
but
may not be exercised thereafter except as set forth below. 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
employment.
If
the
Employee ceases to be an employee of the Company or of an Affiliate but
continues after termination of employment to provide service to the Company
or
an Affiliate as a consultant, this Option shall continue to vest in accordance
with Section 3 above as if this Option had not terminated until the Employee
is
no longer providing services to the Company. In such case, this Option shall
automatically convert and be deemed a Non-Qualified Option as of the date that
is three months from termination of the Employee's employment and this Option
shall continue on the same terms and conditions set forth herein until such
Employee is no longer providing service to the Company or an
Affiliate.
Notwithstanding
the foregoing, in the event of the Employee’s Disability or death within three
months after the termination of employment, the Employee or the Employee’s
Survivors may exercise the Option within one year after the date of the
Employee’s termination of employment, but in no event after the date of
expiration of the term of the Option.
In
the
event the Employee’s employment is terminated by the Employee’s employer for
“cause” (as defined in the Plan), the Employee’s right to exercise any
unexercised portion of this Option shall cease immediately as of the time the
Employee is notified his or her employment is terminated for “cause,” and this
Option shall thereupon terminate. Notwithstanding anything herein to the
contrary, if subsequent to the Employee’s termination as an employee, but prior
to the exercise of the Option, the Board of Directors of the Company determines
that, either prior or subsequent to the Employee’s termination, the Employee
engaged in conduct which would constitute “cause,” then the Employee shall
immediately cease to have any right to exercise the Option and this Option
shall
thereupon terminate.
3
In
the
event of the Disability of the Employee, as determined in accordance with the
Plan, the Option shall be exercisable within one year after the Employee’s
termination of employment 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
Employee 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 Employee while an employee of the Company or of an
Affiliate, the Option shall be exercisable by the Employee’s Survivors within
one year after the date of death of the Employee 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 Employee
not died. The proration shall be based upon the number of days accrued
in
the current vesting period prior to the Employee’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 Employee
and
if the Employee shall so request in the notice exercising the Option, shall
be
registered in the name of the Employee 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 Employee,
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.
4
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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 Employee otherwise than by will or
by
the laws of descent and distribution. The Option shall be exercisable, during
the Employee’s lifetime, only by the Employee (or, in the event of legal
incapacity or incompetency, by the Employee’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.
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8.
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NO
RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
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The
Employee 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 Employee. 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
Employee 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 Employee’s responsibility.
In
the
event of a Disqualifying Disposition (as defined in Section 15 below) or if
the
Option is converted into a Non-Qualified Option and such Non-Qualified Option
is
exercised, the Company may withhold from the Employee’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 Employee on exercise of the Option. The
Employee further agrees that, if the Company does not withhold an amount from
the Employee’s remuneration sufficient to satisfy the Company’s income tax
withholding obligation, the Employee 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
Employee agrees that in the event the Company proposes to offer for sale to
the
public any of its equity securities and such Employee 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 Employee 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.
6
12.2 The
Employee acknowledges and agrees that neither the Company, its shareholders
nor
its directors and officers, has any duty or obligation to disclose to the
Employee 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 Employee 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 EMPLOY.
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The
Company is not by the Plan or this Option obligated to continue the Employee
as
an employee of the Company or an Affiliate. The Employee 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 Employee’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 Employee’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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OPTION
IS INTENDED TO BE AN ISO.
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The
parties each intend that the Option be an ISO so that the Employee (or the
Employee’s Survivors) may qualify for the favorable tax treatment provided to
holders of Options that meet the standards of Section 422 of the Code. Any
provision of this Agreement or the Plan which conflicts with the Code so that
this Option would not be deemed an ISO is null and void and any ambiguities
shall be resolved so that the Option qualifies as an ISO. Nonetheless, if the
Option is determined not to be an ISO, the Employee understands that neither
the
Company nor any Affiliate is responsible to compensate him or her or otherwise
make up for the treatment of the Option as a Non-Qualified Option and not as
an
ISO. The Employee should consult with the Employee’s own tax advisors regarding
the tax effects of the Option and the requirements necessary to obtain favorable
tax treatment under Section 422 of the Code, including, but not limited to,
holding period requirements.
7
Notwithstanding
the foregoing, to the extent that the Option is not deemed to be an ISO pursuant
to Section 422(d) of the Code because the aggregate fair market value
(determined as of the date hereof) of any of the Shares with respect to which
this ISO is granted becomes exercisable for the first time during any calendar
year in excess of $100,000, the portion of the Option representing such excess
value shall be treated as a Non-Qualified Option and the Employee shall 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.
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15.
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NOTICE
TO COMPANY OF DISQUALIFYING DISPOSITION.
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The
Employee agrees to notify the Company in writing immediately after the Employee
makes a Disqualifying Disposition of any of the Shares acquired pursuant to
the
exercise of the Option. A Disqualifying Disposition is defined in Section 424(c)
of the Code and includes any disposition (including any sale) of such Shares
before the later of (a) two years after the date the Employee was granted the
Option or (b) one year after the date the Employee acquired Shares by exercising
the Option, except as otherwise provided in Section 424(c) of the Code. If
the
Employee has died before the Shares are sold, these holding period requirements
do not apply and no Disqualifying Disposition can occur thereafter.
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16.
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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
Employee:
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.
8
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17.
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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 of Delaware, without giving effect to the conflict of law principles
thereof.
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18.
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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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19.
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ENTIRE
AGREEMENT.
|
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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20.
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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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21.
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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.
| 22. |
DATA
PRIVACY.
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By
entering into this Agreement, the Employee: (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]
10
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Employee 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
____________________________________
Employee |
11
Exhibit
A
NOTICE
OF
EXERCISE OF INCENTIVE STOCK OPTION
| TO: |
Response
Genetics, Inc.
|
Ladies
and Gentlemen:
I
hereby
exercise my Incentive 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 Incentive 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,
____________________________________ Employee
(signature)
____________________________________ Print
Name
____________________________________ Date
____________________________________ Social
Security Number
|
A-2
