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Exhibit 10.1
VARIAGENICS, INC.
AMENDED 1997 EMPLOYEE, DIRECTOR AND
CONSULTANT STOCK OPTION PLAN
1. DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires,
the following terms, as used in this Variagenics, Inc. 1997 Employee,
Director and Consultant Stock Option Plan, have the following meanings:
ADMINISTRATOR means the Board of Directors, unless it has
delegated power to act on its behalf to a committee. (See
Paragraph 4)
AFFILIATE means a corporation which, for purposes of Section
424 of the Code, is a parent or subsidiary of the Company,
direct or indirect.
BOARD OF DIRECTORS means the Board of Directors of the
Company.
CODE means the United States Internal Revenue Code of 1986, as
amended.
COMMITTEE means the Committee to which the Board of Directors
has delegated power to act under or pursuant to the provisions
of the Plan.
COMMON STOCK means shares of the Company's common stock, $0.01
par value.
COMPANY means Variagenics, Inc., a Delaware corporation.
DISABILITY or DISABLED means permanent and total disability as
defined in Section 22(e)(3) of the Code.
FAIR MARKET VALUE of a Share of Common Stock means:
(1) If the Common Stock is listed on a national securities
exchange or traded in the over-the-counter market and sales
prices are regularly reported for the Common Stock, either (a)
the average of the closing or last prices of the Common Stock
on the Composite Tape or other comparable reporting system for
the ten (10)
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consecutive trading days immediately preceding
the applicable date or (b) the closing or last price of the
Common Stock on the Composite Tape or other comparable
reporting system for the trading day immediately preceding the
applicable date, as the Administrator shall determine.
(2) If the Common Stock is not traded on a national securities
exchange but is traded on the over-the-counter market, if
sales prices are not regularly reported for the Common Stock
for the trading days or day referred to in clause (1), and if
bid and asked prices for the Common Stock are regularly
reported, either (a) the average of the mean between the bid
and the asked price for the Common Stock at the close of
trading in the over-the-counter market for the ten (10)
trading days on which Common Stock was traded immediately
preceding the applicable date or (b) the mean between the bid
and the asked price for the Common Stock at the close of
trading in the over-the-counter market for the trading day on
which Common Stock was traded immediately preceding the
applicable date, as the Administrator shall determine; and
(3) If the Common Stock is neither listed on a national
securities exchange nor traded in the over-the-counter market,
such value as the Administrator, in good faith, shall
determine.
ISO means an option meant to qualify as an incentive stock
option under Code Section 422.
KEY EMPLOYEE means an employee of the Company or of an
Affiliate (including, without limitation, an employee who is
also serving as an officer or director of the Company or of an
Affiliate), designated by the Administrator to be eligible to
be granted one or more Options under the Plan.
NON-QUALIFIED OPTION means an option which is not intended to
qualify as an ISO.
OPTION means an ISO or Non-Qualified Option granted under the
Plan.
OPTION AGREEMENT means an agreement between the Company and a
Participant delivered pursuant to the Plan.
PARTICIPANT means a Key Employee, director or consultant to
whom one or more Options are granted under the Plan. As used
herein, "Participant" shall
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include "Participant's Survivors" where the context requires.
PARTICIPANT'S SURVIVORS means a deceased Participant's legal
representatives and/or any person or persons who acquired the
Participant's rights to an Option by will or by the laws of
descent and distribution.
PLAN means this Variagenics, Inc. Amended 1997 Employee,
Director and Consultant Stock Option Plan.
SHARES means shares of the Common Stock as to which Options
have been or may be granted under the Plan or any shares of
capital stock into which the Shares are changed or for which
they are exchanged within the provisions of Paragraph 3 of the
Plan. The Shares issued upon exercise of Options granted under
the Plan may be authorized and unissued shares or shares held
by the Company in its treasury, or both.
2. PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Key Employees,
directors and certain consultants to the Company in order to attract such
people, to induce them to work for the benefit of the Company or of an Affiliate
and to provide additional incentive for them to promote the success of the
Company or of an Affiliate. The Plan provides for the granting of ISOs and
Non-Qualified Options.
3. SHARES SUBJECT TO THE PLAN.
The number of Shares subject to this Plan as to which Options may be
granted from time to time shall be 4,000,000, or the equivalent of such number
of Shares after the Administrator, in its sole discretion, has interpreted the
effect of any stock split, stock dividend, combination, recapitalization or
similar transaction in accordance with Paragraph 16 of the Plan.
If an Option ceases to be "outstanding", in whole or in part, the
Shares which were subject to such Option shall be available for the granting of
other Options under the Plan. Any Option shall be treated as "outstanding" until
such Option is exercised in full, or terminates or expires under the provisions
of the Plan, or by agreement of the parties to the pertinent Option Agreement.
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4. ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to
the extent the Board of Directors delegates its authority to a Committee of the
Board of Directors. Following the date on which the Common Stock is registered
under the Securities and Exchange Act of 1934, as amended (the "1934 Act"), the
Plan is intended to comply in all respects with Rule 16b-3 or its successors,
promulgated pursuant to Section 16 of the 1934 Act with respect to Participants
who are subject to Section 16 of the 1934 Act, and any provision in this Plan
with respect to such persons contrary to Rule 16b-3 shall be deemed null and
void to the extent permissible by law and deemed appropriate by the
Administrator. Subject to the provisions of the Plan, the Administrator is
authorized to:
a. Interpret the provisions of the Plan or of any Option or
Option Agreement and to make all rules and determinations
which it deems necessary or advisable for the administration
of the Plan;
b. Determine which employees of the Company or of an Affiliate
shall be designated as Key Employees and which of the Key
Employees, directors and consultants shall be granted Options;
c. Determine the number of Shares for which an Option or Options
shall be granted; and
d. Specify the terms and conditions upon which an Option or
Options may be granted;
provided, however, that all such interpretations, rules, determinations, terms
and conditions shall be made and prescribed in the context of preserving the tax
status under Code Section 422 of those Options which are designated as ISOs.
Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Option granted under it
shall be final, unless otherwise determined by the Board of Directors, if the
Administrator is other than the Board of Directors.
5. ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants
in the Plan, provided, however, that each Participant must be a Key Employee,
director or consultant of the Company or of an Affiliate at the time an Option
is granted. Notwithstanding any of the foregoing provisions, the
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Administrator may authorize the grant of an Option to a person not then an
employee, director or consultant of the Company or of an Affiliate. The actual
grant of such Option, however, shall be conditioned upon such person becoming
eligible to become a Participant at or prior to the time of the execution of
the Option Agreement evidencing such Option. ISOs may be granted only to Key
Employees. Non-Qualified Options may be granted to any Key Employee, director
or consultant of the Company or an Affiliate. The granting of any Option to any
individual shall neither entitle that individual to, nor disqualify him or her
from, participation in any other grant of Options.
6. TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in writing in an Option Agreement, duly
executed by the Company and, to the extent required by law or requested by the
Company, by the Participant. The Administrator may provide that Options be
granted subject to such conditions as the Administrator may deem appropriate
including, without limitation, subsequent approval by the shareholders of the
Company of this Plan or any amendments thereto. The Option Agreements shall be
subject to at least the following terms and conditions:
A. NON-QUALIFIED OPTIONS: Each Option intended to be a
Non-Qualified Option shall be subject to the terms and
conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject
to the following minimum standards for any such Non-Qualified
Option:
a. Option Price: The option price (per share) of the
Shares covered by each Option shall be determined by
the Administrator but shall not be less than the par
value per share of Common Stock.
b. Each Option Agreement shall state the number of
Shares to which it pertains;
c. Each Option Agreement shall state the date or dates
on which it first is exercisable and the date after
which it may no longer be exercised, and may provide
that the Option rights accrue or become exercisable
in installments over a period of months or years, or
upon the occurrence of certain conditions or the
attainment of stated goals or events; and
d. Exercise of any Option may be conditioned upon the
Participant's execution of a Share purchase
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agreement in form satisfactory to the Administrator
providing for certain protections for the Company
and its other shareholders including requirements
that:
i. The Participant's or the Participant's
Survivors' right to sell or transfer the
Shares may be restricted; and
ii. The Participant or the Participant's
Survivors may be required to execute letters
of investment intent and must also
acknowledge that the Shares will bear
legends noting any applicable restrictions.
B. ISOs: Each Option intended to be an ISO shall be issued only
to a Key Employee and be subject to at least the following
terms and conditions, with such additional restrictions or
changes as the Administrator determines are appropriate but
not in conflict with Code Section 422 and relevant regulations
and rulings of the Internal Revenue Service:
a. Minimum standards: The ISO shall meet the minimum
standards required of Non-Qualified Options, as
described above, except clause (a) thereunder.
b. Option Price: Immediately before the Option is
granted, if the Participant owns, directly or by
reason of the applicable attribution rules in Code
Section 424(d):
i. Ten percent (10%) OR LESS of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, the Option price per share of the
Shares covered by each Option shall not be
less than one hundred percent (100%) of the
Fair Market Value per share of the Shares on
the date of the grant of the Option.
ii. More than ten percent (10%) of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, the Option price per share of the
Shares covered by each Option shall not be
less than one hundred ten percent (110%) of
the said Fair Market Value on the date of
grant.
c. Term of Option: For Participants who own
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i. Ten percent (10%) OR LESS of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, each Option shall terminate not
more than ten (10) years from the date of
the grant or at such earlier time as the
Option Agreement may provide.
ii. More than ten percent (10%) of the total
combined voting power of all classes of
share capital of the Company or an
Affiliate, each Option shall terminate not
more than five (5) years from the date of
the grant or at such earlier time as the
Option Agreement may provide.
d. Limitation on Yearly Exercise: The Option Agreements
shall restrict the amount of Options which may be
exercisable in any calendar year (under this or any
other ISO plan of the Company or an Affiliate) so
that the aggregate Fair Market Value (determined at
the time each ISO is granted) of the stock with
respect to which ISOs are exercisable for the first
time by the Participant in any calendar year does not
exceed one hundred thousand dollars ($100,000),
provided that this subparagraph (e) shall have no
force or effect if its inclusion in the Plan is
not necessary for Options issued as ISOs to qualify
as ISOs pursuant to Section 422(d) of the Code.
e. Limitation on Grant of ISOs: No ISOs shall be granted
after the date which is the EARLIER of ten (10) years
from the date of the adoption of the Plan by the
Company and the date of the approval of the Plan by
the shareholders of the Company.
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7. EXERCISE OF OPTION AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address, together
with provision for payment of the full purchase price in accordance with this
paragraph for the Shares as to which such Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such
written notice shall be signed by the person exercising the Option, shall state
the number of Shares with respect to which the Option is being exercised and
shall contain any representation required by the Plan or the Option Agreement.
Payment of the purchase price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check, or (b)
at the discretion of the Administrator, through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of the Option, determined in good faith by the
Administrator, or (c) at the discretion of the Administrator, by delivery of the
grantee's personal recourse note bearing interest payable not less than annually
at no less than 100% of the applicable Federal rate, as defined in Section
1274(d) of the Code, or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities
brokerage firm, and approved by the Administrator or (e) at the discretion of
the Administrator, by any combination of (a), (b), (c) and (d) above.
Notwithstanding the foregoing, the Administrator shall accept only such payment
on exercise of an ISO as is permitted by Section 422 of the Code.
The Company shall then reasonably promptly deliver the Shares as to
which such Option was exercised to the Participant (or to the Participant's
Survivors, as the case may be). In determining what constitutes "reasonably
promptly," it is expressly understood that the delivery of the Shares may be
delayed by the Company in order to comply with any law or regulation which
requires the Company to take any action with respect to the Shares prior to
their issuance. The Shares shall, upon delivery, be evidenced by an appropriate
certificate or certificates for fully paid, non-assessable Shares.
The Administrator shall have the right to accelerate the date of
exercise of any installment of any Option; provided that the Administrator shall
not accelerate the exercise date of any installment of any Option granted to any
Key Employee as an ISO (and not previously converted into a Non-Qualified Option
pursuant to Paragraph 19) if such acceleration would violate the annual vesting
limitation contained in Section 422(d) of the Code, as described in paragraph
6(e).
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The Administrator may, in its discretion, amend any term or condition
of an outstanding Option provided (i) such term or condition as amended is
permitted by the Plan, (ii) any such amendment shall be made only with the
consent of the Participant to whom the Option was granted, or in the event of
the death of the Participant, the Participant's Survivors, if the amendment is
adverse to the Participant, (iii) any such amendment of any ISO shall be made
only after the Administrator, after consulting the counsel for the Company,
determines whether such amendment would constitute a "modification" of any
Option which is an ISO (as that term is defined in Section 424(h) of the Code)
or would cause any adverse tax consequences for the holders of such ISO, and
(iv) with respect to any Option held by any Participant who is subject to the
provisions of Section 16(a) of the 1934 Act, any such amendment shall be made
only after the Administrator, after consulting with counsel for the Company,
determines whether such amendment would constitute the grant of a new Option.
8. RIGHTS AS A SHAREHOLDER.
No Participant to whom an Option has been granted shall have rights as
a shareholder with respect to any Shares covered by such Option, except after
due exercise of the Option and tender of the full purchase price for the Shares
being purchased pursuant to such exercise and registration of the Shares in the
Company's share register in the name of the Participant.
9. ASSIGNABILITY AND TRANSFERABILITY OF OPTIONS.
By its terms, an Option granted to a Participant shall not be
transferable by the Participant other than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined by
the Code or Title I of the Employee Retirement Income Security Act or the rules
thereunder, provided, however, that the designation of a beneficiary of an
Option by a Participant shall not be deemed a transfer prohibited by this
Paragraph. Except as provided in the preceding sentence, an Option shall be
exercisable, during the Participant's lifetime, only by such Participant (or by
his or her legal 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 any Option or of any
rights granted thereunder contrary to the provisions of this Plan, or the levy
of any attachment or similar process upon an Option, shall be null and void.
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10. EFFECT OF TERMINATION OF SERVICE OTHER THAN "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, in the
event of a termination of service (whether as an employee, director or
consultant) with the Company or an Affiliate before the Participant has
exercised all Options, the following rules apply:
a. A Participant who ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason
other than termination "for cause", Disability, or death for
which events there are special rules in Paragraphs 11, 12, and
13, respectively), may exercise any Option granted to him or
her to the extent that the Option is exercisable on the date
of such termination of service, but only within such term as
the Administrator has designated in the pertinent Option
Agreement.
b. In no event may an Option Agreement provide, if the Option is
intended to be an ISO, that the time for exercise be later
than three (3) months after the Participant's termination of
employment.
c. The provisions of this Paragraph, and not the provisions of
Paragraph 12 or 13, shall apply to a Participant who
subsequently becomes disabled or dies after the termination of
employment, director status or consultancy, provided, however,
in the case of a Participant's death within three (3) months
after the termination of employment, director status or
consulting, the Participant's Survivors may exercise the
Option within one (1) year after the date of the Participant's
death, but in no event after the date of expiration of the
term of the Option.
d. Notwithstanding anything herein to the contrary, if subsequent
to a Participant's termination of employment, termination of
director status or termination of consultancy, but prior to
the exercise of an Option, the Board of Directors determines
that, either prior or subsequent to the Participant's
termination, the Participant engaged in conduct which would
constitute "cause", then such Participant shall forthwith
cease to have any right to exercise any Option.
e. A Participant to whom an Option has been granted under the
Plan who is absent from work with the Company or with an
Affiliate because of temporary disability (any
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disability other than a permanent and total Disability as
defined in Paragraph 1 hereof), or who is on leave of absence
for any purpose, shall not, during the period of any such
absence, be deemed, by virtue of such absence alone, to have
terminated such Participant's employment, director status or
consultancy with the Company or with an Affiliate, except as
the Administrator may otherwise expressly provide.
f. Options granted under the Plan shall not be affected by any
change of employment or other service within or among the
Company and any Affiliates, so long as the Participant
continues to be an employee, director or consultant of the
Company or any Affiliate, provided, however, if a
Participant's employment by either the Company or an Affiliate
should cease (other than to become an employee of an Affiliate
or the Company), such termination shall affect the
Participant's rights under any Option granted to such
Participant in accordance with the terms of the Plan and the
pertinent Option Agreement.
11. EFFECT OF TERMINATION OF SERVICE "FOR CAUSE".
Except as otherwise provided in the pertinent Option Agreement, the
following rules apply if the Participant's service (whether as an employee,
director or consultant) with the Company or an Affiliate is terminated "for
cause" prior to the time that all of his or her outstanding Options have been
exercised:
a. All outstanding and unexercised Options as of the date the
Participant is notified his or her service is terminated "for
cause" will immediately be forfeited, unless the Option
Agreement provides otherwise.
b. For purposes of this Paragraph, "cause" shall include (and is
not limited to) dishonesty with respect to the employer,
insubordination, substantial malfeasance or non-feasance of
duty, unauthorized disclosure of confidential information, and
conduct substantially prejudicial to the business of the
Company or any Affiliate. The determination of the
Administrator as to the existence of cause will be conclusive
on the Participant and the Company.
c. "Cause" is not limited to events which have occurred prior to
a Participant's termination of service, nor is it necessary
that the Administrator's finding of "cause" occur prior to
termination. If the
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Administrator determines, subsequent to a Participant's
termination of service but prior to the exercise of an
Option, that either prior or subsequent to the Participant's
termination the Participant engaged in conduct which would
constitute "cause", then the right to exercise any Option is
forfeited.
d. Any definition in an agreement between the Participant and the
Company or an Affiliate, which contains a conflicting
definition of "cause" for termination and which is in effect
at the time of such termination, shall supersede the
definition in this Plan with respect to such Participant.
12. EFFECT OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in the pertinent Option Agreement, a
Participant who ceases to be an employee, director or consultant of the Company
or of an Affiliate by reason of Disability may exercise any Option granted to
such Participant:
a. To the extent exercisable but not exercised on 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 Participant
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 such
accrual period prior to the date of Disability.
A Disabled Participant may exercise such rights only within a period of
not more than one (1) year after the date that the Participant became Disabled,
notwithstanding that the Participant might have been able to exercise the Option
as to some or all of the Shares on a later date if he or she had not become
disabled and had continued to be an employee, director or consultant or, if
earlier, within the originally prescribed term of the Option.
The Administrator shall make the determination both of whether
Disability has occurred and the date of its occurrence (unless a procedure for
such determination is set forth in another agreement between the Company and
such Participant, in which case such procedure shall be used for such
determination). If requested, the Participant shall be examined by a physician
selected or approved by the Administrator, the cost of which examination shall
be paid for by the Company.
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13. EFFECT OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in the pertinent Option Agreement, in the
event of the death of a Participant to whom an Option has been granted while the
Participant is an employee, director or consultant of the Company or of an
Affiliate, such Option may be exercised by the Participant's Survivors:
a. To the extent exercisable but not exercised on the date of
death; and
b. In the event rights to exercise the Option accrue
periodically, to the extent of a pro rata portion of any
additional rights which would have accrued had the Participant
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 of such accrual period prior to the
Participant's death.
If the Participant's Survivors wish to exercise the Option, they must
take all necessary steps to exercise the Option within one (1) year after the
date of death of such Participant, notwithstanding that the decedent might have
been able to exercise the Option as to some or all of the Shares on a later date
if he or she had not died and had continued to be an employee, director or
consultant or, if earlier, within the originally prescribed term of the Option.
14. PURCHASE FOR INVESTMENT.
Unless the offering and sale of the Shares to be issued upon the
particular exercise of an 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:
a. The person(s) who exercise such Option shall warrant to the
Company, prior to the receipt of such Shares, 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 their Shares
issued pursuant to such exercise or such grant:
"The shares represented by this certificate have
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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.
b. 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.
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).
15. DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted
under this Plan which as of such date shall not have been exercised will
terminate and become null and void; provided, however, that if the rights of a
Participant or a Participant's Survivors have not otherwise terminated and
expired, the Participant or the Participant's Survivors will have the right
immediately prior to such dissolution or liquidation to exercise any Option to
the extent that the Option is exercisable as of the date immediately prior to
such dissolution or liquidation.
16. ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant's
rights with respect to any Option granted to him or her hereunder which have not
previously been exercised in full shall be adjusted as hereinafter provided,
unless otherwise specifically provided in the written agreement between the
Participant and the Company relating to such Option:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
shall be subdivided or combined into a greater or smaller number of shares or if
the Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, the number of shares of Common Stock deliverable upon
the
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exercise of such Option shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made in the purchase price
per share to reflect such subdivision, combination or stock dividend.
B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated with
or acquired by another entity in a merger, sale of all or substantially all of
the Company's assets or otherwise (an "Acquisition"), the Administrator or the
board of directors of any entity assuming the obligations of the Company
hereunder (the "Successor Board"), shall, as to outstanding Options, either (i)
make appropriate provision for the continuation of such Options by substituting
on an equitable basis for the Shares then subject to such Options either the
consideration payable with respect to the outstanding shares of Common Stock in
connection with the Acquisition or securities of any successor or acquiring
entity; or (ii) upon written notice to the Participants, provide that all
Options must be exercised (either to the extent then exercisable or, at the
discretion of the Administrator, all Options being made fully exercisable for
purposes of this subsection), within a specified number of days of the date of
such notice, at the end of which period the Options shall terminate; or (iii)
terminate all Options in exchange for a cash payment equal to the excess of the
Fair Market Value of the shares subject to such Options (either to the extent
then exercisable or, at the discretion of the Administrator, all Options being
made fully exercisable for purposes of this subsection) over the exercise price
thereof.
C. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than a transaction
described in subparagraph B above) pursuant to which securities of the Company
or of another corporation are issued with respect to the outstanding shares of
Common Stock, a Participant upon exercising an Option shall be entitled to
receive for the purchase price paid upon such exercise the securities he or she
would have received if he or she had exercised such Option prior to such
recapitalization or reorganization.
D. MODIFICATION OF ISOs. Notwithstanding the foregoing, any adjustments
made pursuant to subparagraph A, B or C with respect to ISOs shall be made only
after the Administrator, after consulting with counsel for the Company,
determines whether such adjustments would constitute a "modification" of such
ISOs (as that term is defined in Section 424(h) of the Code) or would cause any
adverse tax consequences for the holders of such ISOs. If the Administrator
determines that such adjustments made with respect to ISOs would constitute a
modification of such ISOs, it may refrain from making such adjustments, unless
the holder of an ISO specifically requests in writing that such adjustment be
made
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and such writing indicates that the holder has full knowledge of the
consequences of such "modification" on his or her income tax treatment with
respect to the ISO.
17. ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares subject to Options. Except as
expressly provided herein, no adjustments shall be made for dividends paid in
cash or in property (including without limitation, securities) of the Company.
18. FRACTIONAL SHARES.
No fractional share shall be issued under the Plan and the person
exercising such right shall receive from the Company cash in lieu of such
fractional share equal to the Fair Market Value thereof.
19. CONVERSION OF ISOs INTO NON-QUALIFIED OPTIONS:
TERMINATION OF ISOs.
The Administrator, at the written request of any Participant, may in
its discretion take such actions as may be necessary to convert such
Participant's ISOs (or any portions thereof) that have not been exercised on the
date of conversion into Non-Qualified Options at any time prior to the
expiration of such ISOs, regardless of whether the Participant is an employee of
the Company or an Affiliate at the time of such conversion. Such actions may
include, but not be limited to, extending the exercise period or reducing the
exercise price of the appropriate installments of such Options. At the time of
such conversion, the Administrator (with the consent of the Participant) may
impose such conditions on the exercise of the resulting Non-Qualified Options as
the Administrator in its discretion may determine, provided that such conditions
shall not be inconsistent with this Plan. Nothing in the Plan shall be deemed to
give any Participant the right to have such Participant's ISO's converted into
Non-Qualified Options, and no such conversion shall occur until and unless the
Administrator takes appropriate action. The Administrator, with the consent of
the Participant, may also terminate any portion of any ISO that has not been
exercised at the time of such termination.
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<PAGE>
20. WITHHOLDING.
In the event that any federal, state, or local income taxes, employment
taxes, Federal Insurance Contributions Act ("F.I.C.A.") withholdings or other
amounts are required by applicable law or governmental regulation to be withheld
from the Option holder's salary, wages or other remuneration in connection with
the exercise of an Option or a Disqualifying Disposition (as defined in
Paragraph 21), the Option holder shall advance in cash to the Company, or to any
Affiliate of the Company which employs or employed the Option holder, the amount
of such withholdings unless a different withholding arrangement, including the
use of shares of the Company's Common Stock, is authorized by the Administrator
(and permitted by law), provided, however, that with respect to persons subject
to Section 16 of the 1934 Act, any such withholding arrangement shall be in
compliance with any applicable provisions of Rule 16b-3 promulgated under
Section 16 of the 1934 Act. For purposes hereof, the fair market value of the
shares withheld for purposes of payroll withholding shall be determined in the
manner provided in Paragraph 1 above, as of the most recent practicable date
prior to the date of exercise. If the fair market value of the shares withheld
is less than the amount of payroll withholdings required, the Option holder may
be required to advance the difference in cash to the Company or the Affiliate
employer. The Administrator in its discretion may condition the exercise of an
Option for less than the then Fair Market Value on the Participant's payment of
such additional withholding.
21. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Key Employee who receives an ISO must agree to notify the Company
in writing immediately after the Key Employee makes a Disqualifying Disposition
of any shares acquired pursuant to the exercise of an ISO. A Disqualifying
Disposition is any disposition (including any sale) of such shares before the
later of (a) two years after the date the Key Employee was granted the ISO, or
(b) one year after the date the Key Employee acquired shares by exercising the
ISO. If the Key Employee has died before such stock is sold, these holding
period requirements do not apply and no Disqualifying Disposition can occur
thereafter.
22. TERMINATION OF THE PLAN.
The Plan will terminate on the date which is ten (10) years from the
EARLIER of the date of its adoption and the date of its approval by the
shareholders of the Company. The Plan may be
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terminated at an earlier date by vote of the shareholders of the Company;
provided, however, that any such earlier termination will not affect any
Options granted or Option Agreements executed prior to the effective date of
such termination.
23. AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan
may also be amended by the Administrator, including, without limitation, to the
extent necessary to qualify any or all outstanding Options granted under the
Plan or Options to be granted under the Plan for favorable federal income tax
treatment (including deferral of taxation upon exercise) as may be afforded
incentive stock options under Section 422 of the Code, to the extent necessary
to ensure the qualification of the Plan under Rule 16b-3, at such time, if any,
as the Company has a class of stock registered pursuant to Section 12 of the
1934 Act, and to the extent necessary to qualify the shares issuable upon
exercise of any outstanding Options granted, or Options to be granted, under the
Plan for listing on any national securities exchange or quotation in any
national automated quotation system of securities dealers. Any amendment
approved by the Administrator which is of a scope that requires shareholder
approval in order to ensure favorable federal income tax treatment for any
incentive stock options or requires shareholder approval in order to ensure the
compliance of the Plan with Rule 16b-3 at such time, if any, as the Company has
a class of stock registered pursuant to Section 12 of the 1934 Act, shall be
subject to obtaining such shareholder approval. Any modification or amendment of
the Plan shall not, without the consent of a Participant, adversely affect his
or her rights under an Option previously granted to him or her. With the consent
of the Participant affected, the Administrator may amend outstanding Option
Agreements in a manner which may be adverse to the Participant but which is not
inconsistent with the Plan. In the discretion of the Administrator, outstanding
Option Agreements may be amended by the Administrator in a manner which is not
adverse to the Participant.
24. EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Option Agreement shall be deemed to prevent
the Company or an Affiliate from terminating the employment, consultancy or
director status of a Participant, nor to prevent a Participant from terminating
his or her own employment, consultancy or director status or to give any
Participant a right to be retained in employment or other service by the Company
or any Affiliate for any period of time.
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<PAGE>
25. GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of
the State of Delaware.
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<PAGE>
FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT
VARIAGENICS, INC.
AGREEMENT made this GRANT DATE, between Variagenics, Inc. (the
"Company"), a Delaware corporation having a principal place of business in
Cambridge, Massachusetts and NAME & ADDRESS a consultant of the Company (the
"Consultant").
WHEREAS, the Company desires to grant to the Consultant an Option to
purchase shares of its common stock, $.01 par value (the "Shares"), under and
for the purposes of the 1997 Employee, Director and Consultant Stock Option Plan
of the Company (the "Plan");
WHEREAS, the Company and the Consultant understand and agree that any
terms used and not defined herein have the same meanings as in the Plan;
WHEREAS, the Company and the Consultant each intend that the Option
granted herein shall be a Non-Qualified Stock Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION.
The Company hereby grants to the Consultant 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 the limitations set forth herein and in
the Plan, which is incorporated herein by reference. The Consultant 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. EXERCISE 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 Effective Date NUMBER
On the 1st day of each month thereafter NUMBER
<PAGE>
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, but shall be subject to earlier termination as provided herein or in
the Plan.
If the Consultant ceases to be an employee, director or
consultant of the Company or of an Affiliate (for any reason other than the
death or Disability of the Consultant or termination by the Consultant's
employer 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
Consultant ceases to be an employee, director or consultant of the Company or an
Affiliate, or within the originally prescribed term of the Option, whichever is
earlier, but may not be exercised thereafter. In such event, the Option shall be
exercisable only to the extent that the Option has become exercisable and is in
effect at the date of such cessation of employment, consultancy or directorship.
Notwithstanding the foregoing, in the event of the
Consultant's death within three (3) months after the termination of employment,
directorship or consultancy, the Consultant's legal representatives and/or any
person or persons who acquired the Consultant'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 Consultant's death, but in no event after the date of
expiration of the term of the Option.
In the event the Consultant's employment, directorship or
consultancy is terminated by the Company for "cause" as defined in the Plan, the
Consultant'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 Consultant's termination
as an employee, director or consultant but prior to the exercise of the Option,
the Board of Directors of the Company determines that, either prior or
subsequent to the Consultant's termination, the Consultant engaged in conduct
which would constitute "cause," then the Consultant 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 Consultant, 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
Consultant 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
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<PAGE>
the accrual period prior to the
date of Disability.
In the event of the death of the Consultant while an employee,
consultant or director of the Company or of an Affiliate, the Option shall be
exercisable by the Consultant's Survivors. In such event, the Option must be
exercised, if at all, within one (1) year after the date of death of the
Consultant 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
Consultant 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 Consultant'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 Consultant and if Consultant
shall so request in the notice exercising the Option, shall be registered in the
name of the Consultant 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
Consultant, 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.
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<PAGE>
Notwithstanding the foregoing, any exercise of this Option shall be conditioned
upon: (i) the Consultant purchasing at least fifty percent (50%) of the
aggregate vested portion of the Option as of the date of exercise; and (ii) the
Consultant not exercising the Consultant's right to purchase stock hereunder
more than once per calendar year, except that an additional exercise shall be
permitted following any involuntary termination of the Consultant's relationship
with the Company if such exercise is otherwise permitted under Section 4 hereof.
7. NON-ASSIGNABILITY.
The Option shall not be transferable by the Consultant
otherwise than by will or by the laws of descent and distribution or pursuant to
a qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act or the rules thereunder. Except as
provided in the previous section, the Option shall be exercisable, during the
Consultant's lifetime, only by the Consultant 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 or such rights,
shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE.
The Consultant shall have no rights as a stockholder with respect to
Shares subject to this Agreement until a stock certificate therefor has been
issued to the Consultant and is fully paid for. 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 such stock certificate is issued.
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 AND WITHHOLDING.
The Consultant acknowledges that upon exercise of the Option the
Consultant will be deemed to have taxable income measured by the difference
between the then fair market value of the Shares received upon exercise and the
price paid for such Shares pursuant to this Agreement (the "Taxable Income").
The Consultant 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 Consultant's responsibility.
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<PAGE>
If the Company in its discretion determines that it is obligated to
withhold income or other taxes with respect to the exercise of the Option, the
Consultant hereby agrees that the Company may withhold from the Consultant's
remuneration, if any, the appropriate amount of federal, state and local
withholding 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 common stock otherwise deliverable to the Consultant on
exercise of the Option, provided, however, that with respect to persons subject
to Section 16 of the Securities Exchange Act of 1934 (the "1934 Act"), any such
withholding arrangement shall be in compliance with any applicable provisions of
Rule 16b-3 promulgated under Section 16 of the 1934 Act. The Consultant further
agrees that, if the Company does not withhold an amount from the Consultant's
remuneration sufficient to satisfy the Company's income tax withholding
obligation, the Consultant will reimburse the Company on demand, in cash, for
the amount underwithheld.
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:
(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 their
Option 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 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
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<PAGE>
under any applicable law (including without
limitation state securities or "blue sky" laws).
12. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Consultant pursuant to the
exercise of the Option granted hereby shall not be transferred by the
Consultant except as permitted herein.
12.2 In the event of the Consultant's termination of employment,
consultancy or directorship by the Company, any parent or subsidiary of the
Company, direct or indirect, or any subsidiary of the parent of the Company,
Disability or death, the Company shall have the option, but not the obligation,
to repurchase all or any part of the Shares issued pursuant to this Agreement
(including, without limitation, Shares purchased after termination of
employment, consultancy or directorship, Disability or death in accordance with
Section 4 hereof). In the event the Company does not, upon the death or
Disability of the Consultant or termination of his or her employment,
directorship or consultancy (as described above), exercise its option pursuant
to this Section 12.2, the restrictions set forth in the balance of this
Agreement shall not thereby lapse, and the Consultant for himself or herself,
and his or hers heirs, legatees, executors, administrators and other successors
in interest, agrees that the Shares shall remain subject to such restrictions.
The following provisions shall apply to a repurchase under this Section 12.2:
(i) The per share repurchase price of the Shares to be sold to the
Company upon exercise of its option under this Section 12.2
shall be equal to the Fair Market Value of each such Share
determined in accordance with the Plan as of the date of
termination, death or Disability.
(ii) The Company's option to repurchase the Consultant's Shares in
the event of termination of employment, consultancy or
directorship, death or Disability shall be valid for a period
of six (6) months commencing with the date of such
termination, death or Disability.
(iii) In the event the Company shall be entitled to and shall elect
to exercise its option to repurchase the Consultant's Shares
under this Section 12.2, the Company shall notify the
Consultant, or in case of death, his or her representative, in
writing of its intent to repurchase the Shares. Such written
notice may be mailed by the Company up to and including the
last day of the time period provided for in Section 12.2(ii)
for exercise of the Company's option to repurchase.
(iv) The written notice to the Consultant shall specify the address
at, and the time and date on, which payment of the repurchase
price is to be made (the "Closing"). The date specified shall
not be less than ten (10) days nor more than sixty (60) days
from the date of the mailing of the notice, and the Consultant
or his or her successor in interest with respect to the Shares
shall have no further rights as the owner thereof from and
after the date specified in the notice. At the Closing, the
repurchase price shall be delivered to the
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<PAGE>
Consultant or his or her successor in interest and the Shares
being purchased, duly endorsed for transfer, shall, to the
extent that they are not then in the possession of the
Company, be delivered to the Company by the Consultant or his
or her successor in interest.
12.3 It shall be a condition precedent to the validity of any sale
or other transfer of any Shares by the Consultant that the following
restrictions be complied with (except as hereinafter otherwise provided):
(i) No Shares owned by the Consultant may be sold, pledged or
otherwise transferred (including by gift or devise) to any
person or entity, voluntarily, or by operation of law, except
in accordance with the terms and conditions hereinafter set
forth.
(ii) Before selling or otherwise transferring all or part of the
Shares, the Consultant shall give written notice of such
intention to the Company which notice shall include the name
of the proposed transferee, the proposed purchase price per
share, the terms of payment of such purchase price and all
other matters relating to such sale or transfer and shall be
accompanied by a copy of the binding written agreement of the
proposed transferee to purchase the Shares of the Consultant.
Such notice shall constitute a binding offer by the Consultant
to sell to the Company such number of the Shares then held by
the Consultant as are proposed to be sold in the notice at the
monetary price per share designated in such notice, payable on
the terms offered to the Consultant by the proposed transferee
(provided, however, that the Company shall not be required to
meet any non-monetary terms of the proposed transfer,
including, without limitation, delivery of other securities in
exchange for the Shares proposed to be sold). The Company
shall give written notice to the Consultant as to whether such
offer has been accepted in whole by the Company within sixty
(60) days after its receipt of written notice from the
Consultant. The Company may only accept such offer in whole
and may not accept such offer in part. Such acceptance notice
shall fix a time, location and date for the closing on such
purchase ("Closing Date") which shall not be less than ten
(10) nor more than sixty (60) days after the giving of the
acceptance notice. The place for such closing shall be at the
Company's principal office. At such closing, the Consultant
shall accept payment as set forth herein and shall deliver to
the Company in exchange therefor certificates for the number
of Shares stated in the notice accompanied by duly executed
instruments of transfer.
(iii) If the Company shall fail to accept any such offer, the
Consultant shall be free to sell all, but not less than all,
of the Shares set forth in his or her notice to the designated
transferee at the price and terms designated in the
Consultant's notice, provided that (i) such sale is
consummated within six (6) months after the giving of notice
by the Consultant to the Company as aforesaid, and (ii) the
transferee first agrees in writing to be bound by the
provisions of this Section 12 so that he or she (and all
subsequent transferees) shall thereafter only be permitted to
sell or transfer the Shares in accordance with the terms
hereof. After the expiration of such six (6) months, the
provisions of this Section 12.3
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<PAGE>
shall again apply with respect to any proposed voluntary
transfer of the Consultant's Shares.
The restrictions on transfer contained in this Section 12.3
shall not apply to (a) transfers by a Consultant to the
trustee or trustees of a trust revocable solely by him or her,
(b) transfers by a Consultant to his or her guardian or
conservator, (c) or transfers by a Consultant, in the event of
his or her death, to his or her executor(s) or
administrator(s) or to trustee(s) under his or her will
(collectively, "Permitted Transferees"); provided, however,
that in any such event the Shares so transferred in the hands
of each such Permitted Transferee shall remain subject to this
Agreement, and each such Permitted Transferee shall so
acknowledge in writing as a condition precedent to the
effectiveness of such transfer.
(iv) The provisions of this Section 12.3 may be waived by the
Company. Any such waiver may be unconditional or based upon
such conditions as the Company may impose.
12.4 In the event that the Consultant or his or her successor in
interest fails to deliver the Shares to be repurchased by the Company under this
Agreement, the Company may elect (a) to establish a segregated account in the
amount of the repurchase price, such account to be turned over to the Consultant
or his or her successor in interest upon delivery of such Shares, and (b)
immediately to take such action as is appropriate to transfer record title of
such Shares from the Consultant to the Company and to treat the Consultant and
such Shares in all respects as if delivery of such Shares had been made as
required by this Agreement. The Consultant hereby irrevocably grants the Company
a power of attorney which shall be coupled with an interest for the purpose of
effectuating the preceding sentence.
12.5 If the Company shall pay a stock dividend or declare a stock
split on or with respect to any of its common capital stock, or otherwise
distribute securities of the Company to the holders of its common capital
stock, the number of Shares of stock or other securities of the Company issued
with respect to the Shares then subject to the restrictions contained in this
Agreement shall be added to the Shares subject to the Company's rights to
repurchase pursuant to this Agreement. If the Company shall distribute to its
stockholders shares of stock of another corporation, the shares of stock of
such other corporation, distributed with respect to the Shares then subject
to the restrictions contained in this Agreement, shall be added to the Shares
subject to the Company's rights to repurchase pursuant to this Agreement.
12.6 If the outstanding shares of common capital stock of the
Company shall be subdivided into a greater number of shares or combined into a
smaller number of shares, or in the event of a reclassification of the
outstanding shares of common capital stock of the Company, or if the Company
shall be a party to a merger, consolidation or capital reorganization, there
shall be substituted for the Shares then subject to the restrictions contained
in this Agreement such amount and kind of securities as are issued in such
subdivision, combination, reclassification, merger, consolidation or capital
reorganization in respect of the Shares subject immediately prior thereto to
the Company's rights to repurchase pursuant to this Agreement.
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12.7 The Company shall not be required to transfer any Shares on
its books which shall have been sold, assigned or otherwise transferred in
violation of this Agreement, or to treat as owner of such Shares, or to accord
the right to vote as such owner or to pay dividends to, any person or
organization to which any such Shares shall have been so sold, assigned or
otherwise transferred, in violation of this Agreement.
12.8 The provisions of Section 12.3 shall terminate upon the
effective date of the registration of the Shares pursuant to the Securities
Exchange Act of 1934, as amended.
12.9 All certificates representing the Shares to be issued to the
Consultant pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in a Non-Qualified Stock Option Agreement
dated January 20, 1998 with this Company, a copy of which Agreement is available
for inspection at the offices of the Company or will be made available upon
request."
12.10 If in connection with a registration statement filed by the
Company pursuant to the 1933 Act, the Company or its underwriter so requests,
the Consultant will agree not to sell any of its Shares for a period not to
exceed the lesser of: (i) 180 days following the effectiveness of such
registration statement or (ii) such period as the officers and directors of the
Company agree not to sell their Shares.
13. NO OBLIGATION TO MAINTAIN RELATIONSHIP.
The Company is not by the Plan or this Option obligated to continue the
Consultant as an employee, consultant or director of the Company.
14. 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.
60 Hampshire St.
Cambridge, MA 02139
ATTN: Richard P. Shea, Chief Financial Officer
To the Consultant: NAME & ADDRESS
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
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<PAGE>
or certified mail.
15. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance
with the law of the State of Delaware.
16. 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.
17. 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.
18. MODIFICATIONS AND AMENDMENTS.
The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
19. WAIVERS AND CONSENTS.
The terms and provisions of this Agreement may be waived, or consent
for the departure therefrom granted, only by written document executed by the
party entitled to the benefits of such terms or provisions. No such waiver or
consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement, whether or not
similar. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
20. HOLDING PERIOD APPLICABLE TO PERSONS SUBJECT TO SECTION 16
OF THE SECURITIES EXCHANGE ACT OF 1934.
If the Consultant to whom the Option has been granted pursuant to this
Agreement is subject to Section 16 of the 1934 Act, Section 16 requires that at
least six (6) months must elapse from the date of grant of the Option to the
date of disposition of the Shares.
-10-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Consultant has hereunto set his
or her hand, all as of the day and year first above written.
VARIAGENICS, INC.
By:
--------------------------------------
Richard P. Shea
Chief Financial Officer
---------------------------------------
Consultant
-11-
<PAGE>
FORM OF NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
To: Variagenics, Inc.
Ladies and Gentlemen:
I hereby exercise my Non-Qualified Stock Option to purchase _____
shares (the "Securities") 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 Non-Qualified Stock Option Agreement
between the undersigned and the Company dated GRANT DATE.
I am aware that the Securities have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Securities; (2) I have had the opportunity to ask questions
concerning the Securities and the Company and all questions posed have been
answered to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Securities and the Company; and (4) I have
such knowledge and experience in financial and business matters that I am able
to evaluate the merits and risks of purchasing the Securities and to make an
informed investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Securities for
my own personal account for investment and not with a view to the sale or
distribution of all or any part of the Securities.
I understand that because the Securities have not been registered under
the 1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Securities cannot be sold unless the Securities are
subsequently registered under applicable federal and state securities laws or an
exemption from such registration is available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Securities unless (1) there is an effective
registration statement under the 1933 Act and applicable state securities laws
covering any such transaction involving the Securities or (2) the Company
receives an opinion of my legal counsel (concurred in by legal counsel for the
Company) stating that such transaction is exempt from registration or the
Company otherwise satisfies itself that such transaction is exempt from
registration.
I consent to the placing of a legend on my certificate for the
Securities stating that the Securities have not been registered and setting
forth the restriction on transfer contemplated hereby and to the placing of a
stop transfer order on the books of the Company and with any transfer agents
against the
-1-
<PAGE>
Securities until the Securities may be legally resold or distributed
without restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Securities by me. I understand that the Company has no
obligation to me to register the sale of the Securities with the SEC and has not
represented to me that it will register the sale of the Securities.
I understand the terms and restrictions on the right to dispose of the
Securities set forth in the 1997 Employee, Director and Consultant Stock Option
Plan and the Non-Qualified Stock Option Agreement which I have carefully
reviewed. I consent to the placing of a legend on my certificate for the
Securities referring to such restriction and the placing of stop transfer orders
until the Securities may be transferred in accordance with the terms of such
restrictions.
I have considered the Federal, state and local income tax implications
of the exercise of my Option and the purchase and subsequent sale of the
Securities.
I am paying the option exercise price for the Securities as follows:
Please issue the stock certificate for the Securities (check one):
to me,
to me and __________ as joint tenants with right of
survivorship;
and mail the certificate to me at the following address:
____________________________________________
____________________________________________
____________________________________________
-2-
<PAGE>
My mailing address, if different from the address listed above, for
shareholder communications is:
Very truly yours,
------------------------------
Consultant (signature)
------------------------------
Print Name
------------------------------
Date
------------------------------
Social Security Number
-3-
<PAGE>
FORM OF INCENTIVE STOCK OPTION AGREEMENT
VARIAGENICS, INC.
AGREEMENT made as of the 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 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
<PAGE>
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, but shall be subject to earlier termination as provided herein or in
the Plan.
If the Employee ceases to be an employee, director or consultant of the
Company or of an Affiliate (for any reason other than the death or Disability of
the Employee or termination by the Employee's employer 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,
director or consultant of the Company or an Affiliate, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the Option has become exercisable and is in effect at the date of such
cessation of employment, consultancy or directorship.
Notwithstanding the foregoing, in the event of the Employee's death
within three (3) months after the termination of employment, directorship or
consultancy, 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, directorship or consultancy 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,
director or consultant 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
<PAGE>
In the event of the death of the Employee while an employee, consultant
or director 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 or pursuant to a qualified
domestic relations order as defined by the Code or
3
<PAGE>
Title I of the Employee Retirement Income Security Act or the rules thereunder.
Except as provided in the previous section, 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 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 a stock certificate therefor has been
issued to the Employee and is fully paid for. 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 such stock certificate is issued.
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 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 appropriate 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
4
<PAGE>
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:
(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. RESTRICTIONS ON TRANSFER OF SHARES.
12.1 The Shares acquired by the Employee pursuant to the exercise
of the Option granted hereby shall not be transferred by the Employee except as
permitted herein.
12.2 In the event of the Employee's termination of employment,
consultancy or directorship by the Company, any parent or subsidiary of the
Company, direct or indirect, or any subsidiary of the parent of the Company,
Disability or death, the Company shall have the option, but not the obligation,
to repurchase all or any part of the Shares issued pursuant to this Agreement
(including, without limitation, Shares purchased after termination of
employment, consultancy or directorship, Disability or death in accordance with
Section 4 hereof). In the event the Company does not, upon the death or
Disability of the Employee or termination of his or her employment, directorship
or consultancy (as described above), exercise its option pursuant to this
Section 12.2, the restrictions set forth in the balance of this Agreement shall
not thereby lapse, and the Employee for himself or herself, and his or hers
heirs, legatees, executors, administrators and other successors in interest,
agrees that the Shares shall remain subject to such restrictions. The following
provisions shall apply to a repurchase under this Section 12.2:
5
<PAGE>
(i) The per share repurchase price of the Shares to be sold to the
Company upon exercise of its option under this Section 12.2
shall be equal to the Fair Market Value of each such Share
determined in accordance with the Plan as of the date of
termination, death or Disability.
(ii) The Company's option to repurchase the Employee's Shares in
the event of termination of employment, consultancy or
directorship, death or Disability shall be valid for a period
of six (6) months commencing with the date of such
termination, death or Disability.
(iii) In the event the Company shall be entitled to and shall elect
to exercise its option to repurchase the Employee's Shares
under this Section 12.2, the Company shall notify the
Employee, or in case of death, his or her representative, in
writing of its intent to repurchase the Shares. Such written
notice may be mailed by the Company up to and including the
last day of the time period provided for in Section 12.2(ii)
for exercise of the Company's option to repurchase.
(iv) The written notice to the Employee shall specify the address
at, and the time and date on, which payment of the repurchase
price is to be made (the "Closing"). The date specified shall
not be less than ten (10) days nor more than sixty (60) days
from the date of the mailing of the notice, and the Employee
or his or her successor in interest with respect to the Shares
shall have no further rights as the owner thereof from and
after the date specified in the notice. At the Closing, the
repurchase price shall be delivered to the Employee or his or
her successor in interest and the Shares being purchased, duly
endorsed for transfer, shall, to the extent that they are not
then in the possession of the Company, be delivered to the
Company by the Employee or his or her successor in interest.
12.3 It shall be a condition precedent to the validity of any sale
or other transfer of any Shares by the Employee that the following restrictions
be complied with (except as hereinafter otherwise provided):
(i) No Shares owned by the Employee may be sold, pledged or
otherwise transferred (including by gift or devise) to any
person or entity, voluntarily, or by operation of law, except
in accordance with the terms and conditions hereinafter set
forth.
(ii) Before selling or otherwise transferring all or part of the
Shares, the Employee shall give written notice of such
intention to the Company which notice shall include the name
of the proposed transferee, the proposed purchase price per
share, the terms of payment of such purchase price and all
other matters relating to such sale or transfer and shall be
accompanied by a copy of the binding written agreement of
the proposed transferee to purchase the Shares of the
Employee. Such notice shall constitute a binding offer by the
Employee to sell to the Company such number of the Shares
then held by the Employee as are proposed to be sold in the
notice at the monetary price per share designated in such
notice, payable on the terms offered to the Employee by the
proposed transferee (provided, however, that the Company shall
not be required to meet any non-monetary
6
<PAGE>
terms of the proposed transfer, including, without limitation,
delivery of other securities in exchange for the Shares
proposed to be sold). The Company shall give written notice
to the Employee as to whether such offer has been accepted in
whole by the Company within sixty (60) days after its receipt
of written notice from the Employee. The Company may only
accept such offer in whole and may not accept such offer in
part. Such acceptance notice shall fix a time, location and
date for the closing on such purchase ("Closing Date") which
shall not be less than ten (10) nor more than sixty (60) days
after the giving of the acceptance notice. The place for such
closing shall be at the Company's principal office. At such
closing, the Employee shall accept payment as set forth
herein and shall deliver to the Company in exchange therefor
certificates for the number of Shares stated in the notice
accompanied by duly executed instruments of transfer.
(iii) If the Company shall fail to accept any such offer, the
Employee shall be free to sell all, but not less than all, of
the Shares set forth in his or her notice to the designated
transferee at the price and terms designated in the
Employee's notice, provided that (i) such sale is consummated
within six (6) months after the giving of notice by the
Employee to the Company as aforesaid, and (ii) the transferee
first agrees in writing to be bound by the provisions of this
Section 12 so that he or she (and all subsequent transferees)
shall thereafter only be permitted to sell or transfer the
Shares in accordance with the terms hereof. After the
expiration of such six (6) months, the provisions of this
Section 12.3 shall again apply with respect to any proposed
voluntary transfer of the Employee's Shares.
The restrictions on transfer contained in this Section 12.3
shall not apply to (a) transfers by a participant to the
trustee or trustees of a trust revocable solely by him or her,
(b) transfers by a Employee to his or her guardian or
conservator, (c) or transfers by a Employee, in the event of
his or her death, to his or her executor(s) or
administrator(s) or to trustee(s) under his or her will
(collectively, "Permitted Transferees"); provided, however,
that in any such event the Shares so transferred in the hands
of each such Permitted Transferee shall remain subject to this
Agreement, and each such Permitted Transferee shall so
acknowledge in writing as a condition precedent to the
effectiveness of such transfer.
(iv) The provisions of this Section 12.3 may be waived by the
Company. Any such waiver may be unconditional or based upon
such conditions as the Company may impose.
12.4 In the event that the Employee or his or her successor in
interest fails to deliver the Shares to be repurchased by the Company under
this Agreement, the Company may elect (a) to establish a segregated account in
the amount of the repurchase price, such account to be turned over to the
Employee or his or her successor in interest upon delivery of such Shares, and
(b) immediately to take such action as is appropriate to transfer record title
of such Shares from the Employee to the Company and to treat the Employee and
such Shares in all respects as if delivery of such Shares had been made as
required by this Agreement. The Employee hereby irrevocably grants the Company
a power of attorney which shall be coupled with an interest for the purpose of
effectuating the preceding sentence.
7
<PAGE>
12.5 If the Company shall pay a stock dividend or declare a stock
split on or with respect to any of its common capital stock, or otherwise
distribute securities of the Company to the holders of its common capital
stock, the number of Shares of stock or other securities of the Company
issued with respect to the Shares then subject to the restrictions contained
in this Agreement shall be added to the Shares subject to the Company's rights
to repurchase pursuant to this Agreement. If the Company shall distribute to
its stockholders shares of stock of another corporation, the shares of stock
of such other corporation, distributed with respect to the Shares then subject
to the restrictions contained in this Agreement, shall be added to the Shares
subject to the Company's rights to repurchase pursuant to this Agreement.
12.6 If the outstanding shares of common capital stock of the
Company shall be subdivided into a greater number of shares or combined into a
smaller number of shares, or in the event of a reclassification of the
outstanding shares of common capital stock of the Company, or if the Company
shall be a party to a merger, consolidation or capital reorganization, there
shall be substituted for the Shares then subject to the restrictions
contained in this Agreement such amount and kind of securities as are issued
in such subdivision, combination, reclassification, merger, consolidation or
capital reorganization in respect of the Shares subject immediately prior
thereto to the Company's rights to repurchase pursuant to this Agreement.
12.7 The Company shall not be required to transfer any Shares on
its books which shall have been sold, assigned or otherwise transferred in
violation of this Agreement, or to treat as owner of such Shares, or to accord
the right to vote as such owner or to pay dividends to, any person or
organization to which any such Shares shall have been so sold, assigned or
otherwise transferred, in violation of this Agreement.
12.8 The provisions of Section 12.3 shall terminate upon the
effective date of the registration of the Shares pursuant to the Securities
Exchange Act of 1934, as amended.
12.9 All certificates representing the Shares to be issued to the
Employee pursuant to this Agreement shall have endorsed thereon a legend
substantially as follows: "The shares represented by this certificate are
subject to restrictions set forth in an Incentive Stock Option Agreement dated
September 22, 1999 with this Company, a copy of which Agreement is available for
inspection at the offices of the Company or will be made available upon
request."
13. 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.
14. 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
8
<PAGE>
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.
15. 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.
16. 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.
17. 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.
60 Hampshire Street
Cambridge, MA 02139
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.
9
<PAGE>
18. 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.
19. 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.
20. 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.
21. MODIFICATIONS AND AMENDMENTS.
The terms and provisions of this Agreement may be modified or amended
as provided in the Plan.
22. 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]
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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.
VARIAGENICS, INC.
By:
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Richard P. Shea, Chief Financial Officer
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EMPLOYEE NAME
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EXHIBIT A
FORM OF 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, $0.01 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 am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act"), or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Shares; (2) I have had the opportunity to ask questions
concerning the Shares and the Company and all questions posed have been answered
to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Shares and the Company; and (4) I have such
knowledge and experience in financial and business matters that I am able to
evaluate the merits and risks of purchasing the Shares and to make an informed
investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the
1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Shares cannot be sold unless the Shares are subsequently
registered under applicable federal and state securities laws or an exemption
from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless (1) there is an effective registration
statement under the 1933 Act and applicable state securities laws covering any
such transaction involving the Shares or (2) the Company receives an opinion of
my legal counsel (concurred in by legal counsel for the Company) stating that
such transaction is exempt from registration or the Company otherwise satisfies
itself that such transaction is exempt from registration.
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I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Shares until the Shares may be legally resold or distributed without
restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Shares by me. I understand that the Company has no
obligation to me to register the sale of the Shares with the SEC and has not
represented to me that it will register the sale of the Shares.
I understand the terms and restrictions on the right to dispose of the
Shares set forth in the Amended 1997 Employee, Director and Consultant Stock
Option Plan and the Incentive Stock Option Agreement, both of which I have
carefully reviewed. I consent to the placing of a legend on my certificate for
the Shares referring to such restriction and the placing of stop transfer orders
until the Shares may be transferred in accordance with the terms of such
restrictions.
I have considered the Federal, state and local income tax implications
of the exercise of my Option and the purchase and subsequent sale of the Shares.
I am paying the option exercise price for the Shares as follows:
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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:
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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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