EXHIBIT 99.03
HUMAN BIOSYSTEMS
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement"), by and between Human
BioSystems, a California corporation (the "Company"), and Xxxxx XxXxxxxx
("Optionee"), is made effective as of this 6th day of May 2003.
RECITALS
A. Pursuant to the Human BioSystems 2001 Stock Option Plan (the
"Plan"), the Board of Directors of the Company (the "Board") has
authorized the grant of an option to purchase common stock of the
Company ("Common Stock") to Optionee, effective on the date indicated
above, thereby allowing Optionee to acquire a proprietary interest in
the Company in order that Optionee will have further incentive for
continuing his or her employment by, and increasing his or her efforts
on behalf of, the Company or an Affiliate of the Company.
B. The Company desires to issue a stock option to Optionee and
Optionee desires to accept such stock option on the terms and conditions
set forth below.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties agree as follows:
AGREEMENT
1. Option Grant. The Company hereby grants to the Optionee, as a
separate incentive and not in lieu of any fees or other compensation for
his or her services, an option to purchase, on the terms and conditions
hereinafter set forth, all or any part of an aggregate of thirty
thousand (30,000) shares of authorized but unissued shares of Common
Stock, at the Purchase Price set forth in paragraph 2 of this Agreement.
2. Purchase Price. The Purchase Price per share (the "Option
Price") shall be $0.15, which is the fair market value per share of
Common Stock on the date hereof. The Option Price shall be payable in
the manner provided in paragraph 9 below.
3. Adjustment. The number and class of shares specified in
paragraph 1 above, and the Option Price, are subject to appropriate
adjustment in the event of certain changes in the capital structure of
the Company such as stock splits, recapitalizations and other events
which alter the per share value of Common Stock or the rights of holders
thereof. In connection with (i) any merger, consolidation, acquisition,
separation, or reorganization in which more than fifty percent (50%) of
the shares of the Company outstanding immediately before such event are
converted into cash or into another security, (ii) any dissolution or
liquidation of the Company or any partial liquidation involving fifty
percent (50%) or more of the assets of the Company, (iii) any sale of
more than fifty percent (50%) of the Company's assets, or (iv) any like
occurrence in which the Company is involved, the Company may, in its
absolute discretion, do one or more of the following upon ten days'
prior written notice to the Optionee: (a) accelerate any vesting
schedule to which this option is subject; (b) cancel this option upon
payment to the Optionee in cash, to the extent this option is then
exercisable, of any amount which, in the absolute discretion of the
Company, is determined to be equivalent to any excess of the market
value (at the effective time of such event) of the consideration that
the Optionee would have received if this option had been exercised
before the effective time over the Option Price; (c) shorten the period
during which this option is exercisable (provided that this option shall
remain exercisable, to the extent otherwise exercisable, for at least
ten (10) days after the date the notice is given); or (d) arrange that
new option rights be substituted for the option rights granted under
this option, or that the Company's obligations under this option be
assumed, by an employer corporation other than the Company or by a
parent or subsidiary of such employer corporation. The actions
described in this paragraph 3 may be taken without regard to any
resulting tax consequence to the Optionee.
4. Option Exercise. Commencing on the date of this Agreement the
right to exercise this option should be 50% vested after one year and
100% vested after 2 years. Shares entitled to be, but not, purchased
as of any accrual date may be purchased at any subsequent time, subject
to paragraphs 5 and 6 below. The number of shares which may be
purchased as of any such anniversary date will be rounded up to the
nearest whole number. No partial exercise of the option may be for an
aggregate exercise price of less than One Hundred Dollars ($100). In
order to exercise any part of this option, Optionee must agree to be
bound by that certain Shareholder Agreement by and among the Company's
shareholders.
4(i) Early Exercise. Subject to the conditions of this
Section 4, Optionee may elect during such time as Optionee is
employed by the Company, to exercise such Options or part
thereof, prior to such time as the Options are vested as set
forth above, provided however, (a) a partial exercise shall be
deemed to cover vested shares of Common Stock first and then the
earliest installment of unvested shares of Common Stock; (b) any
Common Stock purchased shall be subject to the repurchase right
as set forth below if applicable as Advisory Board Member. Any
shares issued pursuant to an exercise of an option hereunder
shall contain the following legend condition in addition to any
other applicable legend condition:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE PROVISIONS
IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.
5. Termination of Option. The right to exercise this option will
lapse five years (5) from the date of this agreement. Notwithstanding
any other provision of this Agreement, this option may not be exercised
after, and will completely expire on, the close of business on the fifth
(5th) year after the effective date of this Agreement, unless terminated
sooner pursuant to paragraph 6 below.
6. Termination of Employment. In the event of termination of
Optionee's employment with the Company for any reason, this option will
terminate immediately upon the date of the termination of Optionee's
employment, unless terminated earlier pursuant to paragraph 5 above.
However, (i) if termination is due to the death of Optionee, the
Optionee's estate or a legal representative thereof, may at any time
within and including three (3) months after the date of death of
Optionee, exercise the option to the extent it was exercisable at the
date of termination; or (ii) if termination is due to Optionee's
"disability" (as determined in accordance with Section 22(e)(3) of the
Internal Revenue Code), Optionee may, at any time, within six (6) months
following the date of this Agreement, exercise the option to the extent
it was exercisable at the date of termination. If the Optionee or his
or her legal representative fails to exercise the option within the time
periods specified in this paragraph 6, the option shall expire. The
Optionee or his or her legal representative may, on or before the close
of business on the earlier of the date for exercise set forth in
paragraph 5 or the dates specified in paragraph 4 above, exercise the
option only to the extent Optionee could have exercised the option on
the date of such termination of employment pursuant to paragraphs 4 and
5 above.
7. Repurchase Option of Company. Notwithstanding anything to the
contrary contained in this Agreement, pursuant to Section 6.1.8 of the
Plan, in the event of termination of Optionee's employment with the
Company for any reason, the Company shall have an option to repurchase
("Repurchase Option") any Common Stock owned by the Optionee or his or
her heirs, legal representatives, successors or assigns at the time of
termination, or acquired thereafter by any of them at any time, by way
of an option granted hereunder. The Repurchase Option must be
exercised, if at all, by the Company within ninety (90) days after the
date of termination upon notice ("Repurchase Notice") to the Optionee or
his or her heirs, legal representatives, successors or assigns, in
conformance with paragraph 13 below. If the shares of the Company are
publicly trade over an exchange such as NASDAQ, NYSE or OTC Bulletin
Board, the purchase price to be paid for the shares subject to the
Repurchase Option shall be the average trading price for the shares of
common stock of the Company over a thirty (30) day period prior to the
delivery of the Repurchase Notice. If the shares of the Company are not
publicly traded, the purchase price shall be the fair market value of
the shares as determined by good faith judgment of the Board of
Directors. Any shares issued pursuant to an exercise of an option
hereunder shall contain the following legend condition in addition to
any other applicable legend condition:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE
PROVISIONS IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE
COMPANY AND THE SHAREHOLDER, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY.
8. Transferability. This option will be exercisable during
Optionee's lifetime only by Optionee. Except as otherwise set forth in
the Plan, this option will be non-transferable.
9. Method of Exercise. Subject to paragraph 10 below, this option
may be exercised by the person then entitled to do so as to any shares
which may then be purchased by delivering to the Company an exercise
notice in the form attached hereto as Exhibit A and:
(a) full payment of the Option Price thereof (and the amount
of any tax the Company is required by law to withhold by reason
of such exercise) in the form of:
(i) cash or readily available funds; or
(ii) delivery of a secured promissory note (the
"Note") in a form satisfactory to the Company;
(iii) a written request to Net Exercise, as defined in
this paragraph 9(a)(iii). In lieu of exercising this
Option via cash payment or promissory note, Optionee may
elect to receive shares equal to the value of this
Option (or portion thereof being canceled) by surrender
of Options at the principal office of the Company
together with notice of election to exercise by means of
a Net Exercise in which event the Company shall issue to
Optionee a number of shares of the Company computed
using the following formula:
X = Y (A-B)/ A
where X is the number of shares
of stock to be issued to Optionee; Y is
the number of shares purchasable under
this Option; A is the fair market value
of the stock determined in accordance
with Section 6.1.12 of the Plan; and B
is the Option Price as adjusted to the
date of such calculation.
(b) payment of any withholding or employment taxes, if any.
The Company will issue a certificate representing the shares so purchased within
a reasonable time after its receipt of such notice of exercise, payment of the
Option Price and withholding or employment taxes, and execution of any other
appropriate documentation, with appropriate certificate legends.
10. Securities Laws. The issuance of shares of Common Stock upon
the exercise of the option will be subject to compliance by the Company
and the person exercising the option with all applicable requirements of
federal and state securities and other laws relating thereto. No person
may exercise the option at any time when, in the opinion of counsel to
the Company, such exercise is permitted under applicable federal or
state securities laws. Nothing herein will be construed to require the
Company to register or qualify any securities under applicable federal
or state securities laws, or take any action to secure an exemption from
such registration and qualification for the issuance of any securities
upon the exercise of this option.
11. No Rights as Shareholder. Neither Optionee nor any person
claiming under or through Optionee will be, or have any of the rights or
privileges of, a shareholder of the Company in respect of any of the
shares issuable upon the exercise of the option, unless and until this
option is properly and lawfully exercised.
12. No Right to Continued Employment. Nothing in this Agreement
will be construed as granting Optionee any right to continued
employment. EXCEPT AS THE COMPANY AND OPTIONEE WILL HAVE OTHERWISE
AGREED IN WRITING, OPTIONEE'S EMPLOYMENT WILL BE TERMINABLE BY THE
COMPANY, AT WILL, WITH OR WITHOUT CAUSE FOR ANY REASON OR NO REASON.
Except as otherwise provided in the Plan, the Board in its sole
discretion will determine whether any leave of absence or interruption
in service (including an interruption during military service) will be
deemed a termination of employment for the purpose of this Agreement.
13. Notices. Any notice to be given to the Company under the terms
of this Agreement will be addressed to the Company, in care of its
Secretary, at its executive offices, or at such other address as the
Company may hereafter designate in writing. Any notice to be given to
Optionee will be in writing and delivered or mailed by registered or
certified mail, return receipt requested, postage prepaid, addressed to
Optionee at the address set forth beneath Optionee's signature in
writing. Any such notice will be deemed to have been duly given where
deposited in a United States post office in compliance with the
foregoing.
14. Non-Transferrable. Except as otherwise provided in the Plan or
in this Agreement, the option herein granted and the rights and
privileges conferred hereby will not be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise).
Upon any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of this option, or of any right or upon any attempted sale under
any execution, attachment or similar process upon the rights and
privileges conferred hereby, this option will immediately become null
and void.
15. Successor. Subject to the limitation on the transferability of
the option contained herein, this Agreement will be binding upon and
inure to the benefit of the heirs, legal representatives, successors and
assigns of the parties hereto.
16. California Law. This Agreement will be governed by and
construed in accordance with the laws of the State of California.
17. Type of Option. The option granted in this Agreement:
[ ] Is intended to be an Incentive Stock Option ("ISO") within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended.
[X] Is a non-qualified Option and is not intended to be an ISO.
18. Plan Provisions Incorporated by Reference. A copy of the Plan
is attached hereto as Exhibit B and incorporated herein by this
reference. In the case of conflict between any provision in this
Agreement and any provision in the Plan or that certain Shareholder
Agreement by and among the Company's shareholders, the terms of this
Agreement shall prevail. In the case of conflict between any provision
in the Plan and a provision in the Shareholder Agreement, the terms of
the Shareholder Agreement shall prevail.
19. Term. Capitalized terms used herein, except as otherwise
indicated, shall have the same meaning as those terms have under the
Plan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year written above.
COMPANY: HUMAN BIOSYSTEMS a California
corporation
By: Xxxxx Xxxxxx, President
OPTIONEE: Xxxxx XxXxxxxx
(signature)
Xxxxxx, XX 00000
SSN:
EXHIBIT A
HUMAN BIOSYSTEMS 2001 STOCK OPTION PLAN EXERCISE NOTICE
0000 Xxxxxx Xxxxxx Xxxx Xxxx, Xxxxxxxxxx 00000 Attention: Secretary
1. Exercise of Option. Effective as of today,---------------, the
undersigned ("Purchaser") hereby elects to purchase --------------( ) shares
(the "Shares") of the Common Stock of Human BioSystems. (the "Company") under
and pursuant to the Human BioSystems, 2001 Stock Option Plan (the "Plan") and
the Stock Option Agreement dated------------, 2001 (the "Option Agreement").
The purchase price for the Shares shall be ------------($ ), as required by
the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares in the form of:
[ ] Cash or readily available funds;
[ ] Promissory Note and Security
Agreement;
[ ] Formal Request to Net Exercise;
3. Representations of Purchaser. Purchaser acknowledges that Purchaser has
received, read and understood the Plan and the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
4. Rights as Stockholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a stockholder shall exist with respect to the Option,
notwithstanding the exercise of the Option. The Shares so acquired shall be
issued to the Optionee as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date
is prior to the date of issuance, except as provided in the Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6 Tax Impact. If the Company is an S-Corporation, purchaser
hereby agrees to be treated as a shareholder of a S-Corporation and to
complete such documents as may be necessary to evidence such treatment.
7. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and Purchaser with respect to the subject matter
hereof, and may not be modified adversely to the Purchaser's interest except by
means of a writing signed by the Company and Purchaser. This agreement is
governed by the law of the State of California.
Submitted by: Accepted by:
PURCHASER: HUMAN BIOSYSTEMS
By
Signature
Its
Print Name
Address: Date
Received:
