INCENTIVE STOCK OPTION AGREEMENT INTERLEUKIN GENETICS, INC.
Exhibit
10.5.2
INTERLEUKIN
GENETICS, INC.
AGREEMENT
made as of the _____ day of _________ 200__, between Interleukin Genetics, Inc.
(the “Company”), a Delaware corporation having a principal place of business in
_Waltham__, _Massachusetts__, and ___________ of
_______________________________, _________, 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, $.001 par value per share (the “Shares”), under and for the
purposes set forth in the Company’s 2004 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 (the
“Purchase Price”). Payment shall be made in accordance with Paragraph
8 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:
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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.
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4.
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TERM OF
OPTION.
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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. 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.
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.
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 Participant’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 8 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.
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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.
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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 If,
in connection with a registration statement filed by the Company pursuant to the
Securities Act, the Company or its underwriter so requests, the Employee will
agree not to sell any Shares for a period not to exceed 180 days following the
effectiveness of such registration.
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.
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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:
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Interleukin Genetics, Inc.
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000 Xxxxxx Xxxxxx
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Xxxxxxx, XX 00000
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Attention: Chief Financial
Officer
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If to the
Employee:
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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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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. For
the purpose of litigating any dispute that arises under this Agreement, the
parties hereby consent to exclusive jurisdiction in Massachusetts and agree that
such litigation shall be conducted in the courts of Suffolk County, Massachusetts or the federal
courts of the United States for the District of Massachusetts.
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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.
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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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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.
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.
[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 Employee has hereunto set his or her hand, all
as of the day and year first above written.
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INTERLEUKIN
GENETICS, INC.
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By:
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Name
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Title
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Employee
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9
Exhibit
A
NOTICE OF
EXERCISE OF INCENTIVE STOCK OPTION
TO: Interleukin
Genetics, Inc.
IMPORTANT
NOTICE: This form of Notice of Exercise may only be used at such time
as the Company has filed a Registration Statement with the Securities and
Exchange Commission under which the issuance of the Shares for which this
exercise is being made is registered and such Registration Statement remains
effective.
Ladies
and Gentlemen:
I hereby
exercise my Incentive Stock Option to purchase _________ shares (the “Shares”)
of the common stock, $.001 par value, of Interleukin 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):
¨ to me;
or
¨ to me
and ____________________________, as joint tenants with right of
survivorship,
at the following address:
A-1
My
mailing address for shareholder communications, if different from the address
listed above, is:
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Very
truly yours,
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Employee
(signature)
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Print
Name
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Date
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Social
Security
Number
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A-2
