EXHIBIT 99.2
FORM OF INCENTIVE STOCK OPTION AGREEMENT
VARIAGENICS, INC.
AGREEMENT made as of GRANT DATE, between Variagenics, Inc. (the
"Company"), a Delaware corporation having a principal place of business in
Cambridge, Massachusetts, and EMPLOYEE NAME & ADDRESS, 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, $0.01 par value per share (the "Shares"),
under and for the purposes set forth in the Company's Amended 1997 Employee,
Director and Consultant Stock Option 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 Incentive Stock Option ("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 NUMBER Shares, on the terms and
conditions and subject to all of the limitations set forth herein 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 PRICE
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. Payment shall be made in accordance with Paragraph 7 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:
ONE YEAR ANNIVERSARY NUMBER
On the first day of each month an additional NUMBER shares
thereafter
The foregoing rights are cumulative and are subject to the other terms
and conditions of this Agreement and the Plan.
4. TERM OF OPTION.
The Option shall terminate ten (10) years from the date of
this Agreement or, if the Employee owns as of the date hereof more than ten
percent (10%) of the total combined voting power of all classes of capital stock
of the Company or an Affiliate, five (5) 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 Employee's employment for "cause" (as defined in the Plan), the
Option may be exercised, if it has not previously terminated, within three (3)
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 death
within three (3) months after the termination of employment, the Employee's
legal representatives and/or any person or persons who acquired the Employee's
rights to the Option by will or by the laws of descent and distribution may
exercise the Option within one (1) year after the date of the Employee's death,
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 Company for
"cause" (as defined in the Plan), the Employee's right to exercise any
unexercised portion of this Option shall cease forthwith, 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 forthwith
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 (1) year
after the date of such Disability or, if earlier, the term originally prescribed
by the Option. In such event, the Option shall be exercisable:
(a) to the extent exercisable but not exercised as of the date of
Disability; and
(b) in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights as would have accrued had the Employee not
become Disabled prior to the end of the accrual period which
next ends following the date of Disability. The proration
shall be based upon the number of days of the accrual period
prior to the date of Disability.
2
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. In such event, the Option must be exercised, if at all, within one
(1) 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:
(x) to the extent exercisable but not exercised as of the date of
death; and
(y) in the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights as would have accrued had the Employee not
died prior to the end of the accrual period which next ends
following the date of death. The proration shall be based upon
the number of days during the accrual period prior to the
Employee's death.
5. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Agreement, the Option may
be exercised by written notice to the Company, at the principal executive office
of the Company. Such notice shall state the election to exercise the Option and
the number of Shares in respect of which it is being exercised, shall be signed
by the person or persons so exercising the Option, and shall be in substantially
the form attached hereto. Payment of the purchase price for such Shares shall be
made in accordance with Paragraph 7 of the Plan. The Company shall deliver a
certificate or certificates representing 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 certificate or
certificates for the Shares as to which the Option shall have been so exercised
shall be registered in the name of the person or persons so exercising the
Option (or, if the Option shall be exercised by Employee and if 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
or persons exercising the Option. In the event the Option shall be exercised,
pursuant to Section 4 hereof, by any person or persons other than the Employee,
such notice shall be accompanied by appropriate proof of the right of such
person or persons 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.
6. PARTIAL EXERCISE.
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.
7. NON-ASSIGNABILITY.
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 and shall not
be assigned, pledged or hypothecated in any way (whether by operation of law
3
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 or such rights, shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
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.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS.
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.
10. TAXES.
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 14
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.
11. PURCHASE FOR INVESTMENT.
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:
4
(a) 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:
"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
(b) 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).
12. NO OBLIGATION TO EMPLOY.
The Company is not by the Plan or this Option obligated to continue the
Employee as an employee of the Company.
13. OPTION IS INTENDED TO BE AN ISO.
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.
5
14. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
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.
15. PRIOR GRANTS. If the Fair Market Value (as defined in the Plan) of
the Option granted hereby (the "Current Grant"), determined at the time such
Option is granted, and all ISO's previously granted under the Plan or any other
plan which is exercisable for the first time in a calendar year (the "Prior
Grants") would exceed the $100,000 limit set forth in Section 6(B)(d) of the
Plan, such portion of the Current Grant shall not be an ISO but shall be a
Non-Qualified Option exercisable as a separate option at such date or dates as
is provided in the Current Grant.
16. NOTICES.
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:
To the Company: Variagenics, Inc.
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
ATTN: Chief Financial Officer
To the Employee: To the address first set forth above.
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.
17. GOVERNING LAW.
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.
6
18. BENEFIT OF AGREEMENT.
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.
19. 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.
20. MODIFICATIONS AND AMENDMENTS.
The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
21. WAIVERS AND CONSENTS.
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.
[Signature Page Follows]
7
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.
VARIAGENICS, INC.
By:_________________________________________
Xxxxxxx X. Xxxx, Chief Financial Officer
--------------------------------------------
EMPLOYEE NAME
8
EXHIBIT A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
To: Variagenics, Inc.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase _________
shares (the "Shares") of the common stock, $.01 par value, of Variagenics, Inc.
(the "Company"), at the exercise price of PRICE per share, pursuant to and
subject to the terms of that certain Incentive Stock Option Agreement between
the undersigned and the Company dated GRANT DATE.
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 stock certificate for the Shares (check one):
/ / to me; or
/ / to me and ____________________________, as joint tenants with
right of survivorship,
and mail the certificate to me at the following address:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
9
My mailing address for shareholder communications, if different from
the address listed above, is:
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
Very truly yours,
----------------------------------------------
Employee (signature)
----------------------------------------------
Print Name
----------------------------------------------
Date
----------------------------------------------
Social Security Number
10
