As Filed with the Securities and Exchange Commission on May 27, 1997
Registration No.____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
AGOURON PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
California 33-0061928
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10350 North Torrey Pines Road
La Jolla, California 92037
(Address of Principal Executive Offices)
Alanex Corporation1993 Stock Plan
Alanex Corporation 1996 Equity Incentive Plan
Individual Alanex Corporation Stock Option Agreements
(Full title of plan)
PETER JOHNSON
Agouron Pharmaceuticals, Inc.
10350 North Torrey Pines Road
La Jolla, California 92037
(619) 622-3000
(Telephone number, including area code, of agent for service)
Calculation of Registration Fee
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Title of Amount to be Proposed Proposed
securities to registered(1) maximum maximum Amount of
be registered offering aggregate registration
price per offering fee
unit(2) price(2)
Common Stock 141,488 $0.53 $74,989 $23.00
No Par Value Shares
Common Stock
No Par Value 47,554 $7.96 $378,530 $115.00
Shares
<FN>
(1)In addition, this Registration Statement also covers any additional shares
of Common Stock which become issuable under the above plans and agreements
by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration which
results in an increase in the number of the Registrant's outstanding shares
of Common Stock.
(2) Calculated in accordance with Rule 457(h)(1) under the Securities Act of
1933.
</FN>
</TABLE>
<PAGE>
Part II
Information Required in the Registration Statement
On April 28, 1997, AGOURON PHARMACEUTICALS, INC. (the "Company" or
"Registrant") and Alanex Corporation, a Delaware corporation, entered into an
Agreement and Plan of Reorganization (the "Merger Agreement"). Pursuant to the
Merger Agreement, on May 23, 1997 Alanex Corporation merged with and became a
wholly owned subsidiary of the Registrant. Registrant assumed all options to
purchase common stock of Alanex Corporation issued under Alanex's 1993 Stock
Plan, as amended, its 1996 Equity Incentive Plan and pursuant to any other
outstanding option agreements.
Item 3. Incorporation of Documents by Reference.
The following documents filed by the Registrant with the Securities and
Exchange Commission are incorporated by reference in this Registration
Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended June 30, 1996;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended September 30, 1996, December 31, 1996 and March 31,
1997;
(3) The description of the Company's Common Stock contained in the
Company's Form 8-A Registration Statement filed April 17,
1987, including any amendment or report filed for the purpose
of updating such description; and
(4) The Company's Form 8-A Registration Statement filed on
November 7, 1996, in which there is described the terms,
rights and provisions applicable to the Company's outstanding
Common Stock under the Rights Agreement dated as of November
7, 1996, between the Company and Chase Mellon Shareholder
Services, L.L.C., including any amendment or report filed for
the purpose of updating such description.
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Gary E. Friedman, Esq., who has provided the opinion to the Registrant
on the validity of the securities being registered which is attached as Exhibit
5 to this Registration Statement, is Vice President, General Counsel and
Secretary of the Registrant.
<PAGE>
Item 6. Indemnification of Directors and Officers.
Section 317 of the California General Corporation Law generally provides
indemnification to officers and directors of the Company against expenses,
judgments, fines and amounts paid in settlement under certain conditions and
subject to certain limitations.
Article VII of the articles of incorporation of the Company provides that
liability of the directors of the Company for monetary damages shall be
eliminated to the fullest extent permissible under California law. Further,
Article VIII of the articles of incorporation of the Company authorizes the
Company to provide indemnification of agents (as defined in Section 317) for
breach of duty to the Company and its shareholders through bylaw provisions or
through agreements with such agents, or both, in excess of the indemnification
otherwise permitted by Section 317, subject to the limits on such excess
indemnification set forth in Section 317.
Section 3.15 of the bylaws of the Company authorizes the Company to
indemnify any person who was or is a party, or is threatened to be made a party,
to any proceeding (other than actions by or in the right of the Company to
procure a judgment in its favor) by reason of the fact that such person is or
was an agent of the Company, against expenses, judgments, fines, settlements and
other amounts actually and reasonably incurred in connection with such
proceeding if such person acted in good faith and in a manner such person
reasonably believed to be in the best interests of the Company. Section 3.15
also authorizes the Company to indemnify any person who was or is a party, or is
threatened to be made a party, to any threatened, pending or completed action by
or in the right of the Company to procure a judgment in its favor by reason of
the fact that such person is or was an agent of the Company, against expenses
actually and reasonably incurred by such person in connection with the defense
or settlement of such action if such person acted in good faith.
Any indemnification under Section 3.15 is to be made by the Company only if
authorized in the specific case upon determination that indemnification of the
agent is proper in the circumstances because the agent has met the applicable
standard of conduct required by Paragraphs 3.15.2 or 3.15.3 of the bylaws.
Pursuant to authorization provided under the articles of incorporation and
the bylaws, the Company has entered into indemnification agreements with each of
its present directors. The Company has also entered into similar agreements with
certain of the Company's officers who are not directors. Generally, the
indemnification agreements attempt to provide the maximum protection permitted
by California law as it may be amended from time to time. Moreover, the
indemnification agreements provide for certain additional indemnification. Under
such additional indemnification provisions, however, an individual will not
receive indemnification for judgments, settlements or expenses if he or she is
found liable to the Company (except to the extent the court determines he or she
is fairly and reasonably entitled to indemnity for expenses) for settlements not
approved by the Company or for settlements and expenses if the settlement is not
approved by the court. The indemnification agreements provide for the Company to
advance to the individual any and all reasonable expenses (including legal fees
and expenses) incurred in investigating or defending any such action, suit or
proceeding. In order to receive an advance of expenses, the individual must
submit to the Company copies of invoices presented to him or her for such
expenses. Also, the individual must repay such advances upon a final judicial
decision that he or she is not entitled to indemnification.
<PAGE>
Section 3.15 of the bylaws also provides that, in the event of a
determination by the Board of Directors of the Company to purchase insurance for
certain of its agents, the Company shall purchase and maintain insurance on
behalf of any such agent against liability asserted against or incurred by the
agent in such capacity or arising out of the agent's status, whether or not the
Company would have the power to indemnify the agent against such liability under
the provisions of Section 3.15.
The Company has in effect directors and officers liability insurance
policies which insure directors and officers of the Company. Although the
Company intends to renew the policies on or before their expiration date, there
can be no assurance that the policies will be renewed on terms acceptable to the
Company. Under the policies, the directors and officers of the Company are
insured against loss arising from claims made against them due to wrongful acts
while acting in their individual and collective capacities as directors and
officers, subject to certain exclusions. In addition, the policies insure the
Company against losses for which its directors and officers are entitled to
indemnification, subject to certain retentions payable by the Company. The
policies are "claims made" policies and provide coverage only for losses arising
out of claims first made against the Company and reported to the insurer during
the policy period.
Item 7. Exemption from Registration Claimed.
Not Applicable.
Item 8. Exhibits.
4.1 Restated Articles of Incorporation dated October 20, 1990,
incorporated by reference to the Company's Form 10-Q for the
quarter ended December 31, 1992.
4.2 Rights Agreement dated as of November 7, 1996, between the
Company and Chase Mellon Shareholder Services, L.L.C., which
includes the Certificate of Designation, Preferences and
Rights of Series B Participating Preferred Stock as Exhibit A,
the Form of Rights Certificate as Exhibit B and the Form of
Summary of Rights as Exhibit C, incorporated by reference to
Exhibit 4.4 of the Company's current report on Form 8-K dated
November 7, 1996.
5 Opinion of Gary E. Friedman, Esq.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Gary E. Friedman, Esq. (included in his opinion
filed as Exhibit 5).
24 Power of Attorney (contained on signature page of this
Registration Statement).
99.1 Alanex Corporation 1993 Stock Plan.
99.2 Alanex Corporation Form of Incentive Stock Option Agreement
(under the 1993 Stock Plan).
99.3 Alanex Corporation Form of Nonstatutory Stock Option Agreement
(under the 1993 Stock Plan).
<PAGE>
99.4 Alanex Corporation 1996 Equity Incentive Plan.
99.5 Alanex Corporation Form of Incentive Stock Option Agreement
(under the 1996 Equity Incentive Plan).
99.6 Alanex Corporation Form of Nonstatutory Stock Option
Agreement (under the 1996 Equity Incentive Plan).
99.7 Alanex Corporation Nonstatutory Stock Option Agreement for
Marvin R. Brown.
99.8 Alanex Corporation Nonstatutory Stock Option Agreement for
Alexander Polinsky.
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement:
(i) to include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in this Registration Statement;
(iii) to include any material information with
respect to the plan of distribution not previously
disclosed in this Registration Statement or any
material change to such information in this
Registration Statement;
provided, however, that paragraphs (a)(l)(i) and (a)(l)(ii) do not
apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by
the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from Registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing
of the
<PAGE>
Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and each filing of the
annual report of the Plan pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<PAGE>
II-1
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on May 23, 1997.
AGOURON PHARMACEUTICALS, INC.
May 23, 1997 By /s/ Peter Johnson
-------------------------
Peter Johnson
President, Principal
Executive Officer
May 23, 1997 By /s/ Steven S. Cowell
-------------------------
Steven S. Cowell
Vice President, Finance,
Chief Financial Officer
and Principal Accounting
Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Peter Johnson and Gary E. Friedman, or
any of them, his true and lawful attorney-in-fact and agents, with full power of
substitution and resubstitution, for him/her and in his/her name, place and
stead, in any and all capacities, to sign any or all amendments to this
Registration Statement, and to file the same, with all exhibits thereto, and
under documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agents full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, as fully and to all intents and purposes
as he/she might or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents or their substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C> <C>
Signature Title Date
/s/ Peter Johnson President, Principal Executive Officer, May 23, 1997
- --------------------------- and Director
Peter Johnson
/s/ Steven S. Cowell Vice President, Finance, Chief Financial May 23, 1997
- --------------------------- Officer and Principal Accounting Officer
Steven S. Cowell
/s/ Gary E. Friedman Vice President and General Counsel, May 23, 1997
- --------------------------- Secretary and Director
Gary E. Friedman
/s/ John N. Abelson Director May 20, 1997
- ---------------------------
John N. Abelson
/s/ Patricia M. Cloherty Director May 16, 1997
- ---------------------------
Patricia M. Cloherty
/s/ A.E. Cohen Director May 20, 1997
A.E. Cohen
/s/ Michael E. Herman Director May 17, 1997
- ---------------------------
Michael E. Herman
/s/ Irving S. Johnson Director May 20, 1997
- ---------------------------
Irving S. Johnson
/s/Antonie T. Knoppers Director May 17, 1997
Antonie T. Knoppers
/s/ Melvin I. Simon Director May 19, 1997
- ---------------------------
Melvin I. Simon
</TABLE>
<PAGE>
EXHIBIT INDEX
EXHIBIT
4.1 Restated Articles of Incorporation dated October 20, 1990,
incorporated by reference to the Company's Form 10-Q for the
quarter ended December 31, 1992.
4.2 Rights Agreement dated as of November 7, 1996, between the
Company and Chase Mellon Shareholder Services, L.L.C., which
includes the Certificate of Designation, Preferences and
Rights of Series B Participating Preferred Stock as Exhibit A,
the Form of Rights Certificate as Exhibit B and the Form of
Summary of Rights as Exhibit C, incorporated by reference to
Exhibit 4.4 of the Company's current report on Form 8-K dated
November 7, 1996.
5 Opinion of Gary E. Friedman, Esq.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Gary E. Friedman, Esq. (included in his opinion
filed as Exhibit 5).
24 Power of Attorney (contained on signature page of this
Registration Statement).
99.1 Alanex Corporation 1993 Stock Plan.
99.2 Alanex Corporation Form of Incentive Stock Option Agreement
(under the 1993 Stock Plan).
99.3 Alanex Corporation Form of Nonstatutory Stock Option Agreement
(under the 1993 Stock Plan).
99.4 Alanex Corporation 1996 Equity Incentive Plan.
99.5 Alanex Corporation Form of Incentive Stock Option Agreement
(under the 1996 Equity Incentive Plan).
99.6 Alanex Corporation Form of Nonstatutory Stock Option
Agreement (under the 1996 Equity Incentive Plan).
99.7 Alanex Corporation Nonstatutory Stock Option Agreement for
Marvin R. Brown.
99.8 Alanex Corporation Nonstatutory Stock Option Agreement for
Alexander Polinsky.
<PAGE>
May 23, 1997
AGOURON PHARMACEUTICALS, INC.
10350 North Torrey Pines Road
La Jolla, California 92037
Gentlemen:
In connection with the registration on Form S-8 (the "Registration Statement")
under the Securities Act of 1933, as amended, of 189,042 shares of Common Stock
of Agouron Pharmaceuticals, Inc. (the "Company"), I advise you that, in my
opinion, when such shares have been issued and sold pursuant to the provisions
of the Alanex 1993 Stock Plan, the 1996 Equity Incentive Plan and the applicable
individual option agreements all as assumed by the Company, and in accordance
with the Registration Statement, such shares will be duly authorized, validly
issued, fully paid and non-assessable shares of the Company's Common Stock.
I hereby consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Gary E. Friedman
Gary E. Friedman, Esq.
Vice President and General Counsel
GEF:hhf
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated August 7, 1996 included in the Annual
Report on Form 10-K of Agouron Pharmaceuticals, Inc. for the year ended June 30,
1996.
/s/ Price Waterhouse
PRICE WATERHOUSE LLP
San Diego, California
May 21, 1997
ALANEX CORPORATION
1993 STOCK PLAN
Adopted November 22, 1993
Amended by the Board of Directors December 31, 1993
1. PURPOSES.
(a) The purpose of the 1993 Stock Plan (the "Plan") is to provide a
means by which Employees and Directors of and Consultants to the Company, and
its Affiliates, may be given an opportunity to benefit from increases in value
of the stock of the Company through the granting of (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses and (iv) rights to purchase
restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the services
of persons who are now Employees or Directors of or Consultants to the Company,
to secure and retain the services of new Employees, Directors and Consultants,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
(c) The Company intends that the Stock Awards issued under the Plan
shall, in the discretion of the Board or any Committee to which responsibility
for administration of the Plan has been delegated pursuant to subsection 3(c),
be either (i) Options granted pursuant to Section 6 hereof, including Incentive
Stock Options and Nonstatutory Stock Options, or (ii) stock bonuses or rights to
purchase restricted stock granted pursuant to Section 7 hereof. All Options
shall be separately designated Incentive Stock Options or Nonstatutory Stock
Options at the time of grant, and in such form as issued pursuant to section 6,
and a separate certificate or certificates will be issued for shares purchased
on exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the
Board in accordance with subsection 3(c) of the Plan.
(e) "Company" means Alanex Corporation, a California
corporation.
(f) "Consultant" means any person, including an advisor, engaged by
the Company or an Affiliate to render services and who is compensated for such
services, provided
<PAGE>
that the term "Consultant" shall not include Directors who are paid only a
director's fee by the Company or who are not compensated by the Company for
their services as Directors.
(g) "Continuous Status as an Employee, Director or Consultant" means
the employment or relationship as a Director or Consultant is not interrupted or
terminated by the Company or any Affiliate. The Board, in its sole discretion,
may determine whether Continuous Status as an Employee, Director or Consultant
shall be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave; provided, however, that for purposes of Incentive Stock Options,
any such leave may not exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; or (ii) transfers between locations of the Company or
between the Company, Affiliates or its successor.
(h) "Director" means a member of the Board.
(i) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(j) "Disinterested Person" means a Director: (i) who was not during
the one year prior to service as an administrator of the Plan granted or awarded
equity securities pursuant to the Plan or any other plan of the Company or any
of its affiliates entitling the participants therein to acquire equity
securities of the Company or any of its affiliates except as permitted by Rule
16b-3(c)(2)(i) under the Exchange Act; or (ii) who is otherwise considered to be
a "disinterested person" in accordance with Rule 16b-3(c)(2)(i) under the
Exchange Act, or any other applicable rules, regulations or interpretations of
the Securities and Exchange Commission.
(k) "Employee" means any person, including Officers and Directors,
employed by the Company or any Affiliate of the Company. Neither service as a
Director nor payment of a director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(m) "Fair Market Value" means, as of any date, the fair market value
of the common stock of the Company determined by the Board pursuant to Rule
260.140.50 of Title 10 of the California Code of Regulations.
(n) "Incentive Stock Option" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.
(o) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
<PAGE>
(p) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the
Plan.
(r) "Option Agreement" means a written agreement between the Company
and an Optionee evidencing the terms and conditions of an individual Option
grant. The Option Agreement is subject to the terms and conditions of the Plan.
(s) "Optionee" means an Employee, Director or Consultant
who holds an outstanding Option.
(t) "Plan" means this 1993 Stock Plan.
(u) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
(v) "Stock Award" means any right granted under the Plan, including
any Option, any stock bonus and any right to purchase restricted stock.
(w) "Stock Award Agreement" means a written agreement
between the Company and a holder of a Stock Award evidencing the terms and
conditions of an individual Stock Award grant. The Stock Award Agreement is
subject to the terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and until the
Board delegates administration to a Committee, as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and
how Stock Awards shall be granted; whether a Stock Award will be an Incentive
Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to
purchase restricted stock, or a combination of the foregoing; the provisions
of each Stock Award granted (which need not be identical), including the
time or times when a person shall be permitted to receive stock pursuant to
a Stock Award; and the number of shares with respect to which Stock Awards
shall be granted to each such person.
(2) To construe and interpret the Plan and
Stock Awards granted under it, and to establish, amend and revoke
rules and regulations for its administration. The Board, in the exercise
of this power, may correct any defect, omission or inconsistency in the
Plan or in any Stock Award Agreement, in a manner and to the extent it shall
deem necessary or expedient to make the Plan fully effective.
<PAGE>
(3) To amend the Plan as provided in Section 13.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient to promote the best
interests of the Company.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members (the "Committee"), all of
the members of which Committee shall be Disinterested Persons, if required and
as defined by the provisions of subsection 3(d). If administration is delegated
to a Committee, the Committee shall have, in connection with the administration
of the Plan, the powers theretofore possessed by the Board (and references in
this Plan to the Board shall thereafter be to the Committee), subject, however,
to such resolutions, not inconsistent with the provisions of the Plan, as may be
adopted from time to time by the Board. The Board may abolish the Committee at
any time and revest in the Board the administration of the Plan. Additionally,
prior to the date of the first registration of an equity security of the Company
under Section 12 of the Exchange Act, and notwithstanding anything to the
contrary herein, the Board may delegate administration of the Plan to any person
or persons and the term "Committee" shall apply to any person or persons to whom
such authority has been delegated.
(d) Any requirement that an administrator of the Plan be a
Disinterested Person shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that such
requirement shall not apply. Any Disinterested Person shall otherwise comply
with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 13 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards shall not exceed in the aggregate one million three hundred fifty
thousand (1,350,000) shares of the Company's common stock. If any Stock Award
shall for any reason expire or otherwise terminate without having been exercised
in full, the stock not purchased under such Stock Award shall again become
available for the Plan.
(b) The stock subject to the Plan may be unissued
shares or reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees.
Stock Awards other than Incentive Stock Options may be granted only to
Employees, Directors or Consultants.
(b) A Director shall in no event be eligible for the benefits of
the Plan unless at the time discretion is exercised in the selection of the
Director as a person to whom Stock Awards may be granted, or in the
determination of the number of shares which may be covered by Stock Awards
granted to the Director: (i) the Board has delegated its discretionary authority
<PAGE>
over the Plan to a Committee which consists solely of Disinterested Persons; or
(ii) the Plan otherwise complies with the requirements of Rule 16b-3. The Board
shall otherwise comply with the requirements of Rule 16b-3. This subsection 5(b)
shall not apply (i) prior to the date of the first registration of an equity
security of the Company under Section 12 of the Exchange Act, or (ii) if the
Board or Committee expressly declares that it shall not apply.
(c) No person shall be eligible for the grant of an Option if, at
the time of grant, such person owns (or is deemed to own pursuant to Section
424(d) of the Code) stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or of any of its
Affiliates unless the exercise price of such Option is at least one hundred ten
percent (110%) of the Fair Market Value of such stock at the date of grant and
the Option is not exercisable after the expiration of five (5) years from the
date of grant.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. The provisions of separate
Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option shall
be not less than one hundred percent (100%) of the Fair Market Value of the
stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be not less than eighty-five
percent (85%) of the Fair Market Value of the stock subject to the Option on the
date the Option is granted.
(c) Consideration. The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the option is exercised, or (ii) at
the discretion of the Board or the Committee, either at the time of the grant or
exercise of the Option, (A) by delivery to the Company of other common stock of
the Company, (B) according to a deferred payment or other arrangement (which may
include, without limiting the generality of the foregoing, the use of other
common stock of the Company) with the person to whom the Option is granted or to
whom the Option is transferred pursuant to subsection 6(d), or (C) in any other
form of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be payable
at least annually and shall be charged at the minimum rate of interest necessary
to avoid the treatment as interest, under any applicable provisions of the Code,
of any amounts other than amounts stated to be interest under the deferred
payment arrangement.
(d) Transferability. An Option shall not be transferable except
by will or by the laws of descent and distribution, and shall be exercisable
during the lifetime of the person to
<PAGE>
whom the Option is granted only by such person; provided, however, a
Nonstatutory Stock Option may be transferred 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 (a "QDRO"), and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person or any transferee pursuant to a QDRO.
(e) Vesting. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The vesting provisions of individual Options may vary but in
each case will provide for vesting of at least twenty percent (20%) of the total
number of shares subject to the Option per year. During the remainder of the
term of the Option (if its term extends beyond the end of the installment
periods), the option may be exercised from time to time with respect to any
shares then remaining subject to the Option. The provisions of this subsection
6(e) are subject to any Option provisions governing the minimum number of shares
as to which an Option may be exercised.
(f) Securities Law Compliance. The Company may require any
Optionee, or any person to whom an Option is transferred under subsection 6(d),
as a condition of exercising any such Option, (1) to give written assurances
satisfactory to the Company as to the Optionee's knowledge and experience in
financial and business matters and/or to employ a purchaser representative
reasonably satisfactory to the Company who is knowledgeable and experienced in
financial and business matters, and that he or she is capable of evaluating,
alone or together with the purchaser representative, the merits and risks of
exercising the Option; and (2) to give written assurances satisfactory to the
Company stating that such person is acquiring the stock subject to the Option
for such person's own account and not with any present intention of selling or
otherwise distributing the stock. These requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (i) the issuance of the
shares upon the exercise of the Option has been registered under a then
currently effective registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), or (ii) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws.
(g) Termination of Employment or Relationship as a Director or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
Disability), the Optionee may exercise his or her Option, but only within such
period of time as is determined by the Board (which period shall not be less
than thirty (30) days from the date of such termination), and only to the extent
that the Optionee was entitled to exercise it at the date of termination (but in
no event later than the expiration of the term of such Option as set forth in
the Option Agreement). If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to the Plan. If, after
termination, the
<PAGE>
Optionee does not exercise his or her Option within the time specified in the
Option Agreement, the Option shall terminate, and the shares covered by such
Option shall revert to the Plan.
(h) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee, Director or Consultant terminates as a result
of the Optionee's Disability, the Optionee may exercise his or her Option, but
only within such period of time as is determined by the Board (which period
shall not be less than six (6) months from the date of such termination), and
only to the extent that the Optionee was entitled to exercise it at the date of
such termination (but in no event later than the expiration of the term of such
Option as set forth in the Option Agreement). If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the shares
covered by the unexercisable portion of the Option shall revert to the Plan. If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the shares covered by
such Option shall revert to the Plan.
(i) Death of Optionee. In the event of the death of an Optionee,
the Option may be exercised, at any time within such period as is determined by
the Board (which period shall not be less than six (6) months following the date
of death) by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, and only to the extent the
Optionee was entitled to exercise the Option at the date of death (but in no
event later than the expiration of the term of such Option as set forth in the
Option Agreement). If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to the Plan. If, after death, the Optionee's
estate or a person who acquired the right to exercise the Option by bequest or
inheritance does not exercise the Option within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to
the Plan.
(j) Withholding. To the extent provided by the terms of an
Option Agreement, the Optionee may satisfy any federal, state or local tax
withholding obligation relating to the exercise of such Option by any of the
following means or by a combination of such means: (1) tendering a cash payment;
(2) authorizing the Company to withhold shares from the shares of the common
stock otherwise issuable to the participant as a result of the exercise of the
Option; or (3) delivering to the Company owned and unencumbered shares of the
common stock of the Company.
(k) Re-Load Options. Without in any way limiting the authority
of the Board or Committee to make or not to make grants of Options hereunder,
the Board or Committee shall have the authority (but not an obligation) to
include as part of any Option Agreement a provision entitling the Optionee to a
further Option (a "Re-Load Option") in the event the Optionee exercises the
Option evidenced by the Option Agreement, in whole or in part, by surrendering
other shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option Agreement. Any such Re-Load Option (i) shall be for a
number of shares equal to the number of shares surrendered as part or all of the
exercise price of such Option; (ii) shall have an expiration date which is the
same as the expiration date of the Option the exercise of which gave rise to
such Re-Load
<PAGE>
Option; and (iii) shall have an exercise price which is equal to one hundred
percent (100%) of the Fair Market Value of the Common Stock subject to the
Re-Load Option on the date of exercise of the original Option or, in the case
of a Re-Load Option which is granted to a ten percent (10%) shareholder (as
described in subparagraph 5(c)), shall have an exercise price which is equal to
one hundred ten percent (110%) of the Fair Market Value of the stock subject to
the Re-Load Option on the date of exercise of the original Option.
Any such Re-Load Option may be an Incentive Stock Option or a Nonstatutory
Stock Option, as the Board or Committee may designate at the time of the grant
of the original Option, provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollars ($100,000) annual limitation on exercisability of Incentive Stock
Options described in subsection 11(e) of the Plan and in Section 422(d) of the
Code. There shall be no Re-Load Options on a Re-Load Option. Any such Re-Load
Option shall be subject to the availability of sufficient shares under
subparagraph 4(a) and shall be subject to such other terms and conditions as the
Board or Committee may determine.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be
in such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) Purchase Price. The purchase price under each stock purchase
agreement shall be such amount as the Board or Committee shall determine and
designate in such agreement (which purchase price shall in any event be not less
than eighty-five percent (85%) of the Fair Market Value of the stock on the date
such award is made), provided that the purchase price shall be one hundred
percent (100%) of the fair market value of the stock on the date such award is
made, in the case of any person who owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the
Applicant. Notwithstanding the foregoing, the Board or the Committee may
determine that eligible participants in the Plan may be awarded stock pursuant
to a stock bonus agreement in consideration for past services actually rendered
to the Company or for its benefit.
(b) Transferability. No rights under a stock bonus or restricted
stock purchase agreement shall be transferable except by will or by the laws of
descent and distribution.
(c) Consideration. The purchase price of stock acquired pursuant
to a stock purchase agreement shall be paid either: (i) in cash at the time of
purchase; (ii) at the discretion of the Board or the Committee, according to a
deferred payment or other arrangement with the person to whom the stock is sold;
or (iii) in any other form of legal consideration that may be acceptable to the
Board or the Committee in their discretion. Notwithstanding the foregoing, the
Board or the Committee to which administration of the Plan has been delegated
may award stock pursuant to a stock bonus agreement in consideration for past
services actually rendered to the Company or for its benefit.
<PAGE>
(d) Vesting. Shares of stock sold or awarded under the Plan may,
but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule to be determined by the Board or the
Committee.
(e) Termination of Employment or Relationship as a Director or
Consultant. In the event a Participant's Continuous Status as an Employee,
Director or Consultant terminates, the Company may repurchase or otherwise
reacquire any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.
8. CANCELLATION AND RE-GRANT OF OPTIONS.
The Board or the Committee shall have the authority to effect, at
any time and from time to time, with the consent of the affected holders of
Options, (i) the repricing of any outstanding Options under the Plan and/or (ii)
the cancellation of any outstanding Options under the Plan and the grant in
substitution therefor of new Options under the Plan covering the same or
different numbers of shares of stock, but having an exercise price per share not
less than eighty-five percent (85%) of the Fair Market Value (one hundred
percent (100%) of the Fair Market Value in the case of an Option or, in the case
of a ten percent (10%) shareholder (as described in subparagraph 5(c)), not less
than one hundred ten percent (110%) of the Fair Market Value) per share of stock
on the new grant date.
9. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall keep
available at all times the number of shares of stock required to satisfy such
Stock Awards up to the number of shares of stock authorized under the Plan.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock under the Stock Awards; provided,
however, that this undertaking shall not require the Company to register under
the Securities Act either the Plan, any Stock Award or any stock issued or
issuable pursuant to any such Stock Award. If, after reasonable efforts, the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock under such Stock Awards unless and
until such authority is obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
11. MISCELLANEOUS.
<PAGE>
(a) The Board shall have the power to accelerate the time at
which a Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest, notwithstanding the provisions in the Stock
Award stating the time at which it may first be exercised or the time during
which it will vest.
(b) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
Option unless and until such person has satisfied all requirements for exercise
of the Option pursuant to its terms.
(c) Throughout the term of any Option granted pursuant to the
Plan, the Company shall deliver to the holder of such Option, not later than one
hundred twenty (120) days after the close of each of the Company's fiscal years
during the Option term, a balance sheet and an income statement. This subsection
shall not apply when an issuance is limited to key employees whose duties in
connection with the Company assure them access to equivalent information.
(d) Nothing in the Plan or any instrument executed or Stock
Award granted pursuant thereto shall confer upon any Employee, Director,
Consultant, Optionee, or other holder of Stock Awards any right to continue in
the employ of the Company or any Affiliate (or to continue acting as a Director
or Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment of any Employee, or the relationship as a Director or
Consultant of any Director or Consultant with or without cause.
(e) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which Incentive Stock
Options granted after 1986 are exercisable for the first time by any Optionee
during any calendar year under all plans of the Company and its Affiliates
exceeds one hundred thousand dollars ($100,000), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and outstanding Stock Awards will
be appropriately adjusted in the class(es) and maximum number of shares subject
to the Plan and the class(es) and number of shares and price per share of stock
subject to outstanding Stock Awards.
(b) In the event of: (1) a merger or consolidation in which the
Company is not the surviving corporation; or (2) a reverse merger in which the
Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise, then, at the sole discretion of the Board and to the extent permitted
by applicable law: (i) any surviving corporation shall assume any Stock Awards
outstanding
<PAGE>
under the Plan or shall substitute similar Stock Awards for those
outstanding under the Plan or (ii) such Stock Awards shall continue in full
force and effect. In the event any surviving corporation refuses to assume or
continue such Stock Awards, or to substitute similar awards for those
outstanding under the Plan, the Stock Awards shall be terminated if not
exercised prior to such event. In the event of a dissolution or liquidation of
the Company, any Stock Awards outstanding under the Plan shall terminate if not
exercised prior to such event.
13. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 13 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
shareholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for
Stock Awards under the Plan;
(ii) Modify the requirements as to eligibility
for participation in the Plan to the extent such modification requires
shareholder approval in order for the Plan to satisfy the requirements of
Section 422 of the Code; or
(iii) Modify the Plan in any other way if
such modification requires shareholder approval in order for the Plan to
satisfy the requirements of Section 422 of the Code or to comply with the
requirements of Rule 16b-3.
(b) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide Optionees
with the maximum benefits provided or to be provided under the provisions of the
Code and the regulations promulgated thereunder relating to Incentive Stock
Options and/or to bring the Plan and/or Incentive Stock Options granted under it
into compliance therewith.
(c) Rights and obligations under any Stock Award granted before
amendment of the Plan shall not be altered or impaired by any amendment of the
Plan unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on November 21, 2003. No
Stock Awards may be granted under the Plan while the Plan is suspended or after
it is terminated.
(b) Rights and obligations under any Stock Award granted while
the Plan is in effect shall not be altered or impaired by suspension or
termination of the Plan, except with the consent of the person to whom the Stock
Award was granted.
<PAGE>
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but
no Stock Awards granted under the Plan shall be exercisable unless and until the
Plan has been approved by the shareholders of the Company, and, if required, an
appropriate permit has been issued by the Commissioner of Corporations of the
State of California.
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
INCENTIVE STOCK OPTION
_________________________, Optionee:
Alanex Corporation (the "Company"), pursuant to its 1993 Stock Plan
(the "Plan") has this day granted to you, the optionee named above, an option to
purchase shares of the common stock of the Company ("Common Stock"). This option
is intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers) directors or consultants and is intended to comply with the
provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this
option is ____________________ (__________). Subject to the limitations
contained herein, this option shall be exercisable with respect to each
installment shown below on or after the date of vesting applicable to such
installment, as follows [THE TERMS OF INDIVIDUAL OPTIONS WILL VARY BUT WILL IN
ANY CASE PROVIDE FOR VESTING OF AT LEAST 20% PER YEAR]:
Number of Shares (Installment) Date of Earliest Exercise (Vesting)
<PAGE>
2. (a) The exercise price of this option is
___________ ($___________) per share, being not less than the Fair Market
Value of the Common Stock on the date of grant of this option.
(b) Payment of the exercise price per share
is due in full in cash (including check) upon exercise of all or any part of
each installment which has become exercisable by you. Notwithstanding the
foregoing, this option may be exercised pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance of Common Stock.
3. The minimum number of shares with respect to which this
option may be exercised at any one time is one hundred (100), except (a) as to
an installment subject to exercise, as set forth in paragraph 1, which amounts
to fewer than one hundred (100) shares, in which case, as to the exercise of
that installment, the number of shares in such installment shall be the minimum
number of shares, and (b) with respect to the final exercise of this option this
minimum shall not apply. In no event may this option be exercised for any number
of shares which would require the issuance of anything other than whole shares.
4. Notwithstanding anything to the contrary contained herein,
this option may not be exercised unless the shares issuable upon exercise of
this option are then registered under the Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and,
unless sooner terminated as set forth below or in the Plan, terminates on
____________, 2003 (which date shall be no more than ten (10) years from the
date this option is granted). In no event may this option be exercised on or
after the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: three (3) months after the termination of
your employment with the Company or an Affiliate of the Company (as defined in
the Plan) for any reason or for no reason unless:
(a) such termination of employment is due to
your permanent and total disability (within the meaning of Section 422(c)(6) of
the Code), in which event the option shall terminate on the earlier of the
termination date set forth above or twelve (12) months following such
termination of employment; or
(b) such termination of employment is due
to your death, in which event the option shall terminate on the earlier of
the termination date set forth above or twelve (12) months after your death;
or
(c) during any part of such three (3) month
period the option is not exercisable solely because of the condition set forth
in paragraph 4 above, in which event the option shall not terminate until
the earlier of the termination date set forth above or until it shall have
been exercisable for an aggregate period of three (3) months after the
termination of employment; or
<PAGE>
(d) exercise of the option within three (3)
months after termination of your employment with the Company or with an
affiliate would result in liability under section 16(b) of the Securities
Exchange Act of 1934, in which case the option will terminate on the earlier of
(i) the termination date set forth above, (ii) the tenth (10th) day after the
last date upon which exercise would result in such liability or (iii) six
(6) months and ten (10) days after the termination of your employment with the
Company or an affiliate.
However, this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.
6. (a) This option may be exercised, to the extent
specified above, by delivering a notice of exercise (in a form designated by
the Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate, during
regular business hours, together with such additional documents as the Company
may then require.
(b) By exercising this option you agree that:
(i) the Company may require you to
enter an arrangement providing for the payment by you to the Company of
any tax withholding obligation of the Company arising by reason of (1) the
exercise of this option; (2) the lapse of any substantial risk of forfeiture
to which the shares are subject at the time of exercise; or (3) the disposition
of shares acquired upon such exercise;
(ii) you will notify the Company in
writing within fifteen (15) days after the date of any disposition of any
of the shares of the Common Stock issued upon exercise of this option that
occurs within two (2) years after the date of this option grant or within one
(1) year after such shares of Common Stock are transferred upon exercise of
this option; and
(iii) the Company (or a
representative of the underwriters) may, in connection with the first
underwritten registration of the offering of any securities of the Company
under the Act, require that you not sell or otherwise transfer or
dispose of any shares of Common Stock or other securities of the Company during
such period (not to exceed one hundred eighty (180) days) following the
effective date (the "Effective Date") of the registration statement of the
Company filed under the Act as may be requested by the Company or the
representative of the underwriters; provided, however, that such restriction
shall apply only if, on the Effective Date, you are an officer, director, or
owner of more than one percent (1%) of the outstanding securities of the
Company. For purposes of this restriction you will be deemed to own securities
which (i) are owned directly or indirectly by you, including securities held for
your benefit by nominees, custodians, brokers or pledgees; (ii) may be acquired
by you within sixty (60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for your brothers or sisters (whether by whole or half blood)
spouse, ancestors and lineal descendants; or (iv) are owned, directly or
indirectly, by or for a corporation, partnership, estate or trust of which you
are a shareholder, partner or beneficiary, but only to the extent of your
proportionate
<PAGE>
interest therein as a shareholder, partner or beneficiary thereof. You further
agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
7. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you.
8. This option is not an employment contract and nothing in
this option shall be deemed to create in any way whatsoever any obligation on
your part to continue in the employ of the Company, or of the Company to
continue your employment with the Company.
9. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
10. This option is subject to all the provisions of the Plan,
a copy of which is attached hereto and its provisions are hereby made a part of
this option, including without limitation the provisions of paragraphs 5 and 6
of the Plan relating to option provisions, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of this option and those of the Plan, the provisions of
the Plan shall control.
Dated the ____ day of ______________________, 1993.
Very truly yours,
ALANEX CORPORATION
By______________________________
Duly authorized on behalf of
the Board of Directors
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and
liabilities with respect to this option are set forth in the option and the
Plan; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE ___________
(Initial)
OTHER _________________________________________
_________________________________________
_________________________________________
(c) Acknowledges receipt of a copy of Section 260.141.11
of Title 10 of the California Code of Regulations.
_____________________________
Optionee
Address: _______________________
_______________________
Attachments:
1993 Stock Plan
Regulation 260.141.11
Notice of Exercise
<PAGE>
NOTICE OF EXERCISE
Alanex Corporation
3550 General Atomics Court
San Diego, CA 92121
Date of
Exercise: _________
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Type of option (check one) Incentive __ Nonstatutory __
Stock option dated ___________________
Number of shares as
to which option is
exercised: ___________________
Certificates to be
issued in name of: ___________________
Total exercise price: $__________________
Cash payment delivered
herewith: $__________________
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the 1993 Stock Plan, (ii) to provide for
the payment by me to you (in the manner designated by you) of your withholding
obligation, if any, relating to the exercise of this option, and (iii) if this
exercise relates to an incentive stock option, to notify you in writing within
fifteen (15) days after the date of any disposition of any shares of Common
Stock issued upon exercise of this option that occurs within two (2) years after
the date of grant of this option or within one (1) year after such shares of
Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
<PAGE>
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for at
least ninety (90) days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the Shares
subject to the provisions of the Option shall have endorsed thereon appropriate
legends reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or
applicable securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Act (the "Effective Date") as may be requested by the Company or the
representative of the underwriters; provided, however, that such restriction
shall apply only if, on the Effective Date, you are an officer, director, or
owner of more than one percent (1%) of the outstanding securities of the
Company. For purposes of this restriction I will be deemed to own securities
that (i) are owned directly or indirectly by me, including securities held for
my benefit by nominees, custodians, brokers or pledgees; (ii) may be acquired by
me within sixty (60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for my brothers or sisters (whether by whole or half blood),
spouse, ancestors and lineal descendants; or (iv) are owned, directly or
indirectly, by or for a corporation, partnership, estate or trust of which I am
a shareholder, partner or beneficiary, but only to the extent of my
proportionate interest therein as a shareholder, partner or beneficiary thereof.
I further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
Very truly yours,
-----------------------
<PAGE>
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
TITLE 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: RESTRICTION ON TRANSFER. (a) The issuer of any security upon which a
restriction on transfer has been imposed pursuant to Sections 260.102.6,
260.141.10 or 260.534 shall cause a copy of this section to be delivered to each
issuee or transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102 of
the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a
transferee by a trustee or custodian for the account of the
transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same
issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign
state, territory or country who is neither domiciled in this
state to the knowledge of the broker-dealer, nor actually
present in this state if the sale of such securities is not in
violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or a member of an
underwriting syndicate or selling group;
(9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the
security for which the Commissioner's written consent is
obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112, 25113,
or 25121 of the Code, of the securities to be transferred,
provided that no order under Section 25140 or Subdivision (a)
of Section 25143 is in effect with respect to such
qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a
corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or
25113 of the Code, provided that no order under Section 25140
or Subdivision (a) of Section 25143 is in effect with respect
to such qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in
this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property
law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law
or by the administrator of the unclaimed property law of
another state if, in either such case, such person (i)
discloses to potential purchasers at the sale that transfer of
the securities is restricted under this rule, (ii) delivers to
each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of the
securities;
(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification
requirement of Section 25110 of the Code but exempt from that
qualification requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any
certificate evidencing the security issued to such transferee
shall contain the legend required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently
stamped or printed thereon in capital letters of not less than 10-point
size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE
STATE OF CALIFORNIA, EXCEPT AS PERMITTED IN THE
COMMISSIONER'S RULES."
IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS SECURITY, OR ANY
INTEREST THEREIN, OR TO RECEIVE ANY CONSIDERATION THEREFOR, WITHOUT THE PRIOR
WRITTEN CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE OF CALIFORNIA,
EXCEPT AS PERMITTED IN THE COMMISSIONER'S RULES.
NONSTATUTORY STOCK OPTION
________________, Optionee:
Alanex Corporation (the "Company"), pursuant to its 1993 Stock Plan
(the "Plan") has this day granted to you, the optionee named above, an option to
purchase shares of the common stock of the Company ("Common Stock"). This option
is not intended to qualify and will not be treated as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act").
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this
option is ____________. Subject to the limitations contained herein, this option
shall be exercisable with respect to each installment shown below on or after
the date of vesting applicable to such installment, as follows [THE TERMS OF
INDIVIDUAL OPTIONS WILL VARY BUT WILL IN ANY CASE PROVIDE FOR VESTING OF AT
LEAST 20% PER YEAR]:
Number of Shares (Installment) Date of Earliest Exercise (Vesting)
<PAGE>
2. (a) The exercise price of this option is
$_______ ($____) per share, being not less than eighty-five (85%) of the Fair
Market Value of the Common Stock on the date of grant of this option.
(b) Payment of the exercise price per share
is due in full in cash (including check) upon exercise of all or any part of
each installment which has become exercisable by you. Notwithstanding the
foregoing, this option may be exercised pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which results in the
receipt of cash (or check) by the Company prior to the issuance of Common Stock.
3. The minimum number of shares with respect to which this
option may be exercised at any one time is one hundred (100), except (a) as to
an installment subject to exercise, as set forth in paragraph 1, which amounts
to fewer than one hundred (100) shares, in which case, as to the exercise of
that installment, the number of such shares in such installment shall be the
minimum number of shares, and (b) with respect to the final exercise of this
option this minimum shall not apply. In no event may this option be exercised
for any number of shares which would require the issuance of anything other than
whole shares.
4. Notwithstanding anything to the contrary contained herein,
this option may not be exercised unless the shares issuable upon exercise of
this option are then registered under the Act or, if such shares are not then so
registered, the Company has determined that such exercise and issuance would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and,
unless sooner terminated as set forth below or in the Plan, terminates on
____________, 2003 (which date shall be no more than ten (10) years from the
date this option is granted). In no event may this option be exercised on or
after the date on which it terminates. This option shall terminate prior to the
expiration of its term as follows: six (6) months after the termination of your
employment with the Company or an Affiliate of the Company (as defined in the
Plan) for any reason or for no reason unless:
(a) such termination of employment is due to
your permanent and total disability (within the meaning of Section 422(c)(6) of
the Code), in which event the option shall terminate on the earlier of the
termination date set forth above or twelve (12) months following such
termination of employment;
(b) such termination of employment is due
to your death, in which event the option shall terminate on the earlier of
the termination date set forth above or twelve (12) months after your death;
or
(c) during any part of such six (6) month
period the option is not exercisable solely because of the condition set
forth in paragraph 4 above, in which event the option shall not terminate
until the earlier of the termination date set forth above or until it shall
have been exercisable for an aggregate period of six (6) months after the
termination of employment; or
<PAGE>
(d) exercise of the option within six (6)
months after termination of your employment with the Company or with an
affiliate would result in liability under section 16(b) of the Securities
Exchange Act of 1934, in which case the option will terminate on the earlier of
(i) the termination date set forth above, (ii) the tenth (10th) day after the
last date upon which exercise would result in such liability or (iii) six
(6) months and ten (10) days after the termination of your employment with the
Company or an affiliate.
However, this option may be exercised following termination of
employment only as to that number of shares as to which it was exercisable on
the date of termination of employment under the provisions of paragraph 1 of
this option.
6. (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.
(b) By exercising this option you agree that:
(i) the Company may require you to
enter an arrangement providing for the cash payment by you to the Company of
any tax withholding obligation of the
Company arising by reason of: (1) the exercise of this option; (2) the lapse of
any substantial risk of forfeiture to which the shares are subject at the time
of exercise; or (3) the disposition of shares acquired upon such exercise; and
(ii) the Company (or a representative
of the underwriters) may, in connection with the first underwritten
registration of the offering of any securities of the Company under the Act,
require that you not sell or otherwise transfer or dispose of any shares of
Common Stock or other securities of the Company during such period (not to
exceed one hundred eighty (180) days) following the effective date (the
"Effective Date") of the registration statement of the Company filed under
the Act as may be requested by the Company or the representative of the
underwriters; provided, however, that such restriction shall apply only if,
on the Effective Date, you are an officer, director, or owner of more than
one percent (1%) of the outstanding securities of the Company. For
purposes of this restriction you will be deemed to own securities which (i) are
owned directly or indirectly by you, including securities held for your benefit
by nominees, custodians, brokers or pledgees; (ii) may be acquired by you
within sixty (60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for your brothers or sisters (whether by whole or half blood)
spouse, ancestors and lineal descendants; or (iv) are owned, directly or
indirectly, by or for a corporation, partnership, estate or trust of which you
are a shareholder, partner or beneficiary, but only to the extent of your
proportionate interest therein as a shareholder, partner or beneficiary thereof.
You further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
<PAGE>
7. This option is not transferable, except by will
or by the laws of descent and distribution, and is exercisable during your
life only by you.
8. This option is not an employment contract and nothing in
this option shall be deemed to create in any way whatsoever any obligation on
your part to continue in the employ of the Company, or of the Company to
continue your employment with the Company. In the event that this option is
granted to you in connection with the performance of services as a consultant or
director, references to employment, employee and similar terms shall be deemed
to include the performance of services as a consultant or a director, as the
case may be, provided, however, that no rights as an employee shall arise by
reason of the use of such terms.
9. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after deposit
in the United States mail, postage prepaid, addressed to you at the address
specified below or at such other address as you hereafter designate by written
notice to the Company.
10. This option is subject to all the provisions of the Plan,
a copy of which is attached hereto and its provisions are hereby made a part of
this option, including without limitation the provisions of paragraphs 5 and 6
of the Plan relating to option provisions, and is further subject to all
interpretations, amendments, rules and regulations which may from time to time
be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the provisions of this option and those of the Plan, the provisions of
the Plan shall control.
Dated the ____ day of _________, 1993.
Very truly yours,
ALANEX CORPORATION
By _______________________________
Duly authorized on behalf of the
Board of Directors
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and
liabilities with respect to this option are set forth in the option and the
Plan;
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE _________
(Initial)
OTHER
___________________________________
___________________________________
___________________________________
(c) Acknowledges receipt of a copy of Section 260.141.11
of Title 10 of the California Code of Regulations.
___________________________________
Optionee
Address:___________________________________
___________________________________
Attachments:
1993 Stock Plan
Regulation 260.141.11
Notice of Exercise
<PAGE>
NOTICE OF EXERCISE
Alanex Corporation
3550 General Atomics Court Date of
San Diego, CA 92121 Exercise: _________
Ladies and Gentlemen:
This constitutes notice under my stock option that I elect to purchase
the number of shares for the price set forth below.
Type of option (check one) Incentive __ Nonstatutory __
Stock option dated ___________________
Number of shares as
to which option is
exercised: ___________________
Certificates to be
issued in name of: ___________________
Total exercise price: $__________________
Cash payment delivered
herewith: $__________________
By this exercise, I agree (i) to provide such additional documents as you
may require pursuant to the terms of the 1993 Stock Plan, (ii) to provide for
the payment by me to you (in the manner designated by you) of your withholding
obligation, if any, relating to the exercise of this option, and (iii) if this
exercise relates to an incentive stock option, to notify you in writing within
fifteen (15) days after the date of any disposition of any shares of Common
Stock issued upon exercise of this option that occurs within two (2) years after
the date of grant of this option or within one (1) year after such shares of
Common Stock are issued upon exercise of this option.
I hereby make the following certifications and representations with
respect to the number of shares of Common Stock of the Company listed above (the
"Shares"), which are being acquired by me for my own account upon exercise of
the Option as set forth above:
<PAGE>
I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Act"), and are deemed to constitute
"restricted securities" under Rule 701 and "control securities" under Rule 144
promulgated under the Act. I warrant and represent to the Company that I have no
present intention of distributing or selling said Shares, except as permitted
under the Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for at
least ninety (90) days after the stock of the Company becomes publicly traded
(i.e., subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934) under Rule 701 and that more restrictive
conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the Shares
subject to the provisions of the Option shall have endorsed thereon appropriate
legends reflecting the foregoing limitations, as well as any legends reflecting
restrictions pursuant to the Company's Articles of Incorporation, Bylaws and/or
applicable securities laws.
I further agree that, if required by the Company (or a representative of
the underwriters) in connection with the first underwritten registration of the
offering of any securities of the Company under the Act, I will not sell or
otherwise transfer or dispose of any shares of Common Stock or other securities
of the Company during such period (not to exceed one hundred eighty (180) days)
following the effective date of the registration statement of the Company filed
under the Act (the "Effective Date") as may be requested by the Company or the
representative of the underwriters; provided, however, that such restriction
shall apply only if, on the Effective Date, you are an officer, director, or
owner of more than one percent (1%) of the outstanding securities of the
Company. For purposes of this restriction I will be deemed to own securities
that (i) are owned directly or indirectly by me, including securities held for
my benefit by nominees, custodians, brokers or pledgees; (ii) may be acquired by
me within sixty (60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for my brothers or sisters (whether by whole or half blood),
spouse, ancestors and lineal descendants; or (iv) are owned, directly or
indirectly, by or for a corporation, partnership, estate or trust of which I am
a shareholder, partner or beneficiary, but only to the extent of my
proportionate interest therein as a shareholder, partner or beneficiary thereof.
I further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
Very truly yours,
-----------------------
<PAGE>
STATE OF CALIFORNIA - CALIFORNIA ADMINISTRATIVE CODE
TITLE 10. Investment - Chapter 3. Commissioner of Corporations
260.141.11: RESTRICTION ON TRANSFER. (a) The issuer of any security upon which a
restriction on transfer has been imposed pursuant to Sections 260.102.6,
260.141.10 or 260.534 shall cause a copy of this section to be delivered to each
issuee or transferee of such security at the time the certificate evidencing the
security is delivered to the issuee or transferee.
(b) It is unlawful for the holder of any such security to consummate a sale or
transfer of such security, or any interest therein, without the prior written
consent of the Commissioner (until this condition is removed pursuant to Section
260.141.12 of these rules), except:
(1) to the issuer;
(2) pursuant to the order or process of any court;
(3) to any person described in Subdivision (i) of Section 25102
of the Code or Section 260.105.14 of these rules;
(4) to the transferor's ancestors, descendants or spouse, or any
custodian or trustee for the account of the transferor or the
transferor's ancestors, descendants, or spouse; or to a
transferee by a trustee or custodian for the account of the
transferee or the transferee's ancestors, descendants or
spouse;
(5) to holders of securities of the same class of the same issuer;
(6) by way of gift or donation inter vivos or on death;
(7) by or through a broker-dealer licensed under the Code (either
acting as such or as a finder) to a resident of a foreign
state, territory or country who is neither domiciled in this
state to the knowledge of the broker-dealer, nor actually
present in this state if the sale of such securities is not in
violation of any securities law of the foreign state,
territory or country concerned;
(8) to a broker-dealer licensed under the Code in a principal
transaction, or as an underwriter or a member of an
underwriting syndicate or selling group;
(9) if the interest sold or transferred is a pledge or other lien
given by the purchaser to the seller upon a sale of the
security for which the Commissioner's written consent is
obtained or under this rule not required;
(10) by way of a sale qualified under Sections 25111, 25112, 25113,
or 25121 of the Code, of the securities to be transferred,
provided that no order under Section 25140 or Subdivision (a)
of Section 25143 is in effect with respect to such
qualification;
(11) by a corporation to a wholly owned subsidiary of such
corporation, or by a wholly owned subsidiary of a
corporation to such corporation;
(12) by way of an exchange qualified under Section 25111, 25112 or
25113 of the Code, provided that no order under Section 25140
or Subdivision (a) of Section 25143 is in effect with respect
to such qualification;
(13) between residents of foreign states, territories or
countries who are neither domiciled nor actually present in
this state;
(14) to the State Controller pursuant to the Unclaimed Property
Law or to the administrator of the unclaimed property
law of another state; or
(15) by the State Controller pursuant to the Unclaimed Property Law
or by the administrator of the unclaimed property law of
another state if, in either such case, such person (i)
discloses to potential purchasers at the sale that transfer of
the securities is restricted under this rule, (ii) delivers to
each purchaser a copy of this rule, and (iii) advises the
Commissioner of the name of each purchaser;
(16) by a trustee to a successor trustee when such transfer does
not involve a change in the beneficial ownership of
the securities;
(17) by way of an offer and sale of outstanding securities in an
issuer transaction that is subject to the qualification
requirement of Section 25110 of the Code but exempt from that
qualification requirement by subdivision (f) of Section 25102;
provided that any such transfer is on the condition that any
certificate evidencing the security issued to such transferee
shall contain the legend required by this section.
(c) The certificates representing all such securities subject to such a
restriction on transfer, whether upon initial issuance or upon any
transfer thereof, shall bear on their face a legend, prominently
stamped or printed thereon in capital letters of not less than 10-point
size, reading as follows:
"IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF THIS
SECURITY, OR ANY INTEREST THEREIN, OR TO RECEIVE ANY
CONSIDERATION THEREFOR, WITHOUT THE PRIOR WRITTEN
CONSENT OF THE COMMISSIONER OF CORPORATIONS OF THE STATE
OF CALIFORNIA, EXCEPT AS PERMITTED IN THE COMMISSIONER'S
RULES."
ALANEX CORPORATION
1996 EQUITY INCENTIVE PLAN
Adopted July 17, 1996
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which
selected Employees and Directors of and Consultants to the Company, and its
Affiliates, may be given an opportunity to benefit from increases in value of
the stock of the Company through the granting of (i) Incentive Stock Options,
(ii) Nonstatutory Stock Options, (iii) stock bonuses, and (iii) rights to
purchase restricted stock, all as defined below.
(b) The Company, by means of the Plan, seeks to retain the
services of persons who are now Employees or Directors of or Consultants to the
Company or its Affiliates, to secure and retain the services of new Employees,
Directors and Consultants, and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.
(c) The Company intends that the Stock Awards issued under the
Plan shall, in the discretion of the Board or any Committee to which
responsibility for administration of the Plan has been delegated pursuant to
subsection 3(c), be either (i) Options granted pursuant to Section 6 hereof,
including Incentive Stock Options and Nonstatutory Stock Options, or (ii) stock
bonuses or rights to purchase restricted stock granted pursuant to Section 7
hereof. All Options shall be separately designated Incentive Stock Options or
Nonstatutory Stock Options at the time of grant, and in such form as issued
pursuant to Section 6, and a separate certificate or certificates will be issued
for shares purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "Affiliate" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f) respectively, of the Code.
(b) "Board" means the Board of Directors of the Company.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means a Committee appointed by the
Board in accordance with subsection 3(c) of the Plan.
(e) "Company" means Alanex Corporation.
<PAGE>
(f) "Consultant" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.
(g) "Continuous Status as an Employee, Director or Consultant"
means the employment or relationship as a Director or Consultant is not
interrupted or terminated. The Chief Executive Officer of the Company may
determine, in his or her sole discretion, whether Continuous Status as an
Employee, Director or Consultant shall be considered interrupted in the case of:
(i) any leave of absence approved by the Board or the Chief Executive Officer of
the Company, including sick leave, military leave, or any other personal leave;
or (ii) transfers between locations of the Company or between the Company,
Affiliates or their successors.
(h) "Covered Employee" means the chief executive officer and
the four (4) other highest compensated officers of the Company for whom total
compensation is required to be reported to shareholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.
(i) "Director" means a member of the Board.
(j) "Employee" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the Company. Neither
service as a Director nor payment of a director's fee by the Company shall be
sufficient to constitute "employment" by the Company.
(k) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(l) "Fair Market Value" means, as of any date, the
value of the common stock of the Company determined as follows:
(1) If the Common Stock is listed on any established
stock exchange, or traded on the Nasdaq National Market or the Nasdaq SmallCap
Market, the Fair Market Value of a share of Common Stock shall be the closing
sales price for such stock (or the closing bid, if no sales were reported) as
quoted on such exchange or market (or the exchange or market with the greatest
volume of trading in Common Stock) on the last market trading day prior to the
day of determination, as reported in the Wall Street Journal or such other
source as the Board deems reliable;
(2) In the absence of such markets for the Common
Stock, the Fair Market Value shall be determined in good faith by the Board.
For Stock Awards granted prior to the date of the first registration of
an equity security of the Company under Section 12 of the Exchange Act, Fair
Market Value shall also be determined in a manner consistent with Section
260.140.50 of Title 10 of the California Code of Regulations.
<PAGE>
(m) "Incentive Stock Option" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.
(n) "Non-Employee Director" means a Director who either (i) is
not a current Employee or Officer of the Company or its parent or subsidiary,
does not receive compensation (directly or indirectly) from the Company or its
parent or subsidiary for services rendered as a consultant or in any capacity
other than as a Director (except for an amount as to which disclosure would not
be required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act of 1933 ("Regulation S-K"), does not possess an interest in any
other transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K, and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.
(o) "Nonstatutory Stock Option" means an Option not
intended to qualify as an Incentive Stock Option.
(p) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
(q) "Option" means a stock option granted pursuant to the Plan.
(r) "Option Agreement" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. Each Option Agreement shall be subject to the terms and conditions
of the Plan.
(s) "Optionee" means an Employee, Director or Consultant who
holds an outstanding Option.
(t) "Outside Director" means a Director who either (i) is not
a current employee of the Company or an "affiliated corporation" (within the
meaning of Treasury regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time, and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director, or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.
(u) "Plan" means this Alanex Corporation 1996 Equity Incentive
Plan.
(v) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.
<PAGE>
(w) "Stock Award" means any right granted under the Plan,
including any Option, any stock bonus, and any right to purchase restricted
stock.
(x) "Stock Award Agreement" means a written agreement between
the Company and a holder of a Stock Award evidencing the terms and conditions
of an individual Stock Award grant. Each Stock Award Agreement shall be
subject to the terms and conditions of the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a Committee, as provided in
subsection 3(c).
(b) The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the
persons eligible under the Plan shall be granted Stock Awards; when and how
each Stock Award shall be granted; whether a Stock Award will be an Incentive
Stock Option, a Nonstatutory Stock Option, a stock bonus, a right to purchase
restricted stock, or a combination of the foregoing; the provisions of each
Stock Award granted (which need not be identical), including the time or
times when a person shall be permitted to receive stock pursuant to a Stock
Award; and the number of shares with respect to which a Stock Award shall be
granted to each such person.
(2) To construe and interpret the Plan and Stock
Awards granted under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in
any Stock Award Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully effective.
(3) To amend the Plan or a Stock Award as provided in
Section 13.
(4) Generally, to exercise such powers and to
perform such acts as the Board deems necessary or expedient which are not
inconsistent with the terms of the Plan to promote the best interests of the
Company.
(c) The Board may delegate administration of the Plan to a
committee of the Board composed of not fewer than two (2) members (the
"Committee"), all of the members of which Committee may be, in the discretion of
the Board, Non-Employee Directors and/or Outside Directors. If administration is
delegated to a Committee, the Committee shall have, in connection with the
administration of the Plan, the powers theretofore possessed by the Board,
including the power to delegate to a subcommittee of two (2) or more Outside
Directors any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board shall thereafter be to the
Committee or such a subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted from time to
time by the Board. The Board may abolish the Committee at any time and revest in
the
<PAGE>
Board the administration of the Plan. Notwithstanding anything in this
Section 3 to the contrary, at any time the Board or the Committee may delegate
to a committee of one or more members of the Board the authority to grant Stock
Awards to eligible persons who (1) are not then subject to Section 16 of the
Exchange Act and/or (2) are either (i) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of income resulting
from such Stock Award, or (ii) not persons with respect to whom the Company
wishes to comply with Section 162(m) of the Code.
(d) Any requirement that an administrator of the Plan be a
Non-Employee Director shall not apply (i) prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, or (ii) if the Board or the Committee expressly declares that such
requirement shall not apply. Any Non-Employee Director shall otherwise comply
with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 12 relating to
adjustments upon changes in stock, the stock that may be issued pursuant to
Stock Awards granted under the Plan shall not exceed in the aggregate five
hundred thousand (500,000) shares of the Company's common stock. If any Stock
Award granted under the Plan shall for any reason expire or otherwise terminate,
in whole or in part, without having been exercised in full, the stock not
acquired under such Stock Award shall revert to and again become available for
issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to Employees.
Stock Awards other than Incentive Stock Options may be granted only to
Employees, Directors or Consultants. Notwithstanding the foregoing, no Stock
Awards shall be granted to a Director (including a Director who is an Employee
or a Consultant) between (i) the date of the first registration of an equity
security of the Company under Section 12 of the Exchange Act, and (ii) August
15, 1996 (or such later date as the amendments to Rule 16b-3 adopted by the
Securities and Exchange Commission pursuant to Release No. 34-37260 become
effective as to the Company), unless such Director is expressly declared
eligible to participate in the Plan by action of the Board or the Committee.
(b) No person shall be eligible for the grant of an Incentive
Stock Option if, at the time of grant, such person owns (or is deemed to own
pursuant to Section 424(d) of the Code) stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or of any of its Affiliates unless the exercise price of such Option is at least
one hundred ten percent (110%) of the Fair Market Value of such stock at the
date of grant and the Option is not exercisable after the expiration of five (5)
years from the date of grant. Prior to the date of the first registration of an
equity security of the Company under
<PAGE>
Section 12 of the Exchange Act, the provisions of this subsection 5(b)
shall also apply to the grant of a Nonstatutory Stock Option made to a
ten percent (10%) stockholder as described in the preceding sentence.
(c) Subject to the provisions of Section 12 (relating to
adjustments upon changes in stock) no person shall be eligible to be granted
Options covering more than three hundred seventy-five thousand (375,000) shares
of the Company's common stock in any calendar year. This subsection 5(c) shall
not apply prior to the date of the first registration of an equity security of
the Company under Section 12 of the Exchange Act and, following such
registration, shall not apply until (i) the earliest of: (A) the first material
modification of the Plan (including any increase to the number of shares
reserved for issuance under the Plan in accordance with Section 4); (B) the
issuance of all of the shares of common stock reserved for issuance under the
Plan; (C) the expiration of the Plan; or (D) the first meeting of stockholders
at which directors are to be elected that occurs after the close of the third
calendar year following the calendar year in which occurred the first
registration of an equity security under Section 12 of the Exchange Act; or (ii)
such other date required by Section 162(m) of the Code and the rules and
regulations promulgated thereunder.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. The provisions of
separate Options need not be identical, but each Option shall include
(through incorporation of provisions hereof by reference in the Option or
otherwise) the substance of each of the following provisions:
(a) Term. No Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.
(b) Price. The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair Market Value of
the stock subject to the Option on the date the Option is granted. The exercise
price of each Nonstatutory Stock Option shall be determined by the Board or the
Committee. Notwithstanding the foregoing sentence, the exercise price of each
Nonstatutory Stock Option granted prior to the date of the first registration of
an equity security of the Company under Section 12 of the Exchange Act shall be
not less than eighty-five percent (85%) of the Fair Market Value of the stock
subject to the Option on the date the Option is granted. Notwithstanding the
foregoing, an Option may be granted with an exercise price lower than that set
forth above if such Option is granted pursuant to an assumption or substitution
for another option in a manner satisfying the provisions of Section 424(a) of
the Code.
(c) Consideration. The purchase price of stock acquired
pursuant to an Option shall be paid, to the extent permitted by applicable
statutes and regulations, either (i) in cash at the time the Option is
exercised, or (ii) at the discretion of the Board or the Committee, at the time
of the grant of the Option, (A) by delivery to the Company of other common stock
of the Company, (B) according to a deferred payment or other arrangement (which
may include,
<PAGE>
without limiting the generality of the foregoing, the use of other common stock
of the Company) with the person to whom the Option is granted or to
whom the Option is transferred pursuant to subsection 6(d), or (C) in any other
form of legal consideration that may be acceptable to the Board.
In the case of any deferred payment arrangement, interest shall be
payable at least annually and shall be charged at the minimum rate of interest
necessary to avoid the treatment as interest, under any applicable provisions of
the Code, of any amounts other than amounts stated to be interest under the
deferred payment arrangement.
(d) Transferability. An Option shall not be transferable
except by will or by the laws of descent and distribution, and shall be
exercisable during the lifetime of the person to whom the Option is granted only
by such person, except that, after the date of the first registration of an
equity security of the Company under Section 12 of the Exchange Act, a
Nonstatutory Stock Option may be transferred by the Optionee upon such terms and
conditions as are set forth in the Option Agreement for such Nonstatutory
Option, as the Board or the Committee shall determine in its discretion,
including (without limitation) pursuant to a "domestic relations order" within
the meaning of such rules, regulations or interpretations of the Securities and
Exchange Commission as are applicable for purposes of Section 16 of the Exchange
Act (a "DRO"). In the event of a transfer of a Nonstatutory Option as provided
in the Option Agreement, the transferee shall be entitled to exercise such
Nonstatutory Option to the extent of his or her interest received in such
transfer, subject to the terms and conditions of the Option Agreement.
Notwithstanding the foregoing, the person to whom an Option is granted may, by
delivering written notice to the Company, in a form satisfactory to the Company,
designate a third party who, in the event of the death of the Optionee, shall
thereafter be entitled to exercise the Option.
(e) Vesting. The total number of shares of stock subject to an
Option may, but need not, be allotted in periodic installments (which may, but
need not, be equal). The Option Agreement may provide that from time to time
during each of such installment periods, the Option may become exercisable
("vest") with respect to some or all of the shares allotted to that period, and
may be exercised with respect to some or all of the shares allotted to such
period and/or any prior period as to which the Option became vested but was not
fully exercised. The Option may be subject to such other terms and conditions on
the time or times when it may be exercised (which may be based on performance or
other criteria) as the Board may deem appropriate. The vesting provisions of
individual options may vary; provided, however, that Options granted prior to
the date of the first registration of an equity security of the Company under
Section 12 of the Exchange Act will in each case provide for vesting of at least
twenty percent (20%) per year of the total number of shares subject to the
Option. The provisions of this subsection 6(e) are subject to any Option
provisions governing the minimum number of shares as to which an Option may be
exercised.
(f) Termination of Employment or Relationship as a Director or
Consultant. In the event an Optionee's Continuous Status as an Employee,
Director or Consultant terminates (other than upon the Optionee's death or
disability), the Optionee may exercise his or her Option
<PAGE>
(to the extent that the Optionee was entitled to exercise it at the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months after the termination of the Optionee's Continuous
Status as an Employee, Director or Consultant (or such longer or shorter period
specified in the Option Agreement, which period shall be no less than thirty
(30) days for Options granted prior to the date of the first registration of
an equity security of the Company under Section 12 of the Exchange Act),
or (ii) the expiration of the term of the Option as set forth in the Option
Agreement. If, at the date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become available for
issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified in the Option Agreement,
the Option shall terminate, and the shares covered by such Option shall revert
to and again become available for issuance under the Plan.
An Optionee's Option Agreement may also provide that if the
exercise of the Option following the termination of the Optionee's Continuous
Status as an Employee, Director, or Consultant (other than upon the Optionee's
death or disability) would result in liability under Section 16(b) of the
Exchange Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in the Option Agreement, or (ii)
the tenth (10th) day after the last date on which such exercise would result in
such liability under Section 16(b) of the Exchange Act.
(g) Disability of Optionee. In the event an Optionee's
Continuous Status as an Employee, Director or Consultant terminates as a result
of the Optionee's disability, the Optionee may exercise his or her Option (to
the extent that the Optionee was entitled to exercise it at the date of
termination), but only within such period of time ending on the earlier of (i)
the date twelve (12) months following such termination (or such longer or
shorter period specified in the Option Agreement, which period shall be no less
than six (6) months for Options granted prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act), or (ii) the expiration of the term of the Option as set forth in
the Option Agreement. If, at the date of termination, the Optionee is not
entitled to exercise his or her entire Option, the shares covered by the
unexercisable portion of the Option shall revert to and again become available
for issuance under the Plan. If, after termination, the Optionee does not
exercise his or her Option within the time specified herein, the Option shall
terminate, and the shares covered by such Option shall revert to and again
become available for issuance under the Plan.
(h) Death of Optionee. In the event of the death of an
Optionee during, or within a period specified in the Option after the
termination of, the Optionee's Continuous Status as an Employee, Director or
Consultant, the Option may be exercised (to the extent the Optionee was entitled
to exercise the Option at the date of death) by the Optionee's estate, by a
person who acquired the right to exercise the Option by bequest or inheritance
or by a person designated to exercise the option upon the Optionee's death
pursuant to subsection 6(d), but only within the period ending on the earlier
of (i) the date eighteen (18) months following the date of death (or such
longer or shorter period specified in the Option Agreement, which period
shall be no less than six (6) months for Options granted prior to the date
of the first registration of an equity
<PAGE>
security of the Company under Section 12 of the Exchange Act), or (ii) the
expiration of the term of such Option as set forth in the Option Agreement. If,
at the time of death, the Optionee was not entitled to exercise his or her
entire Option, the shares covered by the unexercisable portion of the Option
shall revert to and again become available for issuance under the Plan. If,
after death, the Option is not exercised within the time specified herein, the
Option shall terminate, and the shares covered by such Option shall revert to
and again become available for issuance under the Plan.
(i) Early Exercise. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while an Employee, Director
or Consultant to exercise the Option as to any part or all of the shares subject
to the Option prior to the full vesting of the Option. Any unvested shares so
purchased may be subject to a repurchase right in favor of the Company or to any
other restriction the Board determines to be appropriate.
With respect to Options granted prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, the right of the Company under this subsection 6(i) to repurchase
at the original purchase price shall lapse at a minimum rate of twenty percent
(20%) per year over five (5) years from the date the Option was granted, and
(ii) such right shall be exercisable only within the ninety (90) day period
following the termination of employment or the relationship as a Director or
Consultant, and (iii) such right shall be exercisable only for cash or
cancellation of purchase money indebtedness for the shares. Should such right of
repurchase be assigned by the Company, the assignee shall pay the Company cash
equal to the difference between the original purchase price and the stock's Fair
Market Value if the original purchase price is less than the stock's Fair Market
Value.
(j) Re-Load Options. Without in any way limiting the authority
of the Board or Committee to make or not to make grants of Options hereunder,
the Board or Committee shall have the authority (but not an obligation) to
include as part of any Option Agreement a provision entitling the Optionee to a
further Option (a "Re-Load Option") in the event the Optionee exercises the
Option evidenced by the Option agreement, in whole or in part, by surrendering
other shares of Common Stock in accordance with this Plan and the terms and
conditions of the Option Agreement. Any such Re-Load Option (i) shall be for a
number of shares equal to the number of shares surrendered as part or all of the
exercise price of such Option; (ii) shall have an expiration date which is the
same as the expiration date of the Option the exercise of which gave rise to
such Re-Load Option; and (iii) shall have an exercise price which is equal to
one hundred percent (100%) of the Fair Market Value of the Common Stock subject
to the Re-Load Option on the date of exercise of the original Option.
Notwithstanding the foregoing, a Re-Load Option which is an Incentive Stock
Option (or a Nonstatutory Stock Option granted prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act) and which is granted to a 10% stockholder (as described in
subsection 5(c)), shall have an exercise price which is equal to one hundred ten
percent (110%) of the Fair Market Value of the stock subject to the Re-Load
Option on the date of exercise of the original Option and shall have a term
which is no longer than five (5) years.
<PAGE>
Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board or Committee may designate at the time
of the grant of the original Option; provided, however, that the designation of
any Re-Load Option as an Incentive Stock Option shall be subject to the one
hundred thousand dollar ($100,000) annual limitation on exercisability of
Incentive Stock Options described in subsection 11(d) of the Plan and in Section
422(d) of the Code. There shall be no Re-Load Options on a Re-Load Option. Any
such Re-Load Option shall be subject to the availability of sufficient shares
under subsection 4(a) and shall be subject to such other terms and conditions as
the Board or Committee may determine.
7. TERMS OF STOCK BONUSES AND PURCHASES OF RESTRICTED STOCK.
Each stock bonus or restricted stock purchase agreement shall be in
such form and shall contain such terms and conditions as the Board or the
Committee shall deem appropriate. The terms and conditions of stock bonus or
restricted stock purchase agreements may change from time to time, and the terms
and conditions of separate agreements need not be identical, but each stock
bonus or restricted stock purchase agreement shall include (through
incorporation of provisions hereof by reference in the agreement or otherwise)
the substance of each of the following provisions as appropriate:
(a) Purchase Price. The purchase price under each
restricted stock purchase agreement shall be such amount as the Board or
Committee shall determine and designate in such agreement.
Notwithstanding the foregoing sentence, the purchase price applicable to each
restricted stock purchase grant made prior to the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act shall be not less than eighty-five percent (85%) of the Fair
Market Value of the stock subject to the purchase right on the date such
restricted stock purchase right is granted. In any event, the Board or the
Committee may determine that eligible participants in the Plan may be awarded
stock pursuant to a stock bonus agreement in consideration for past services
actually rendered to the Company or for its benefit.
(b) Transferability. No rights under a stock bonus or
restricted stock purchase agreement shall be transferable except by will or
the laws of descent and distribution or, after the date of the first
registration of an equity security of the Company under Section 12 of the
Exchange Act, if the agreement so provides, pursuant to a DRO (as defined in
subsection 6(d) hereof), so long as stock awarded under such agreement
remains subject to the terms of the agreement.
(c) Consideration. The purchase price of stock acquired
pursuant to a stock purchase agreement shall be paid either: (i) in cash
at the time of purchase; (ii) at the discretion of the Board or the Committee,
according to a deferred payment or other arrangement with the person to whom the
stock is sold; or (iii) in any other form of legal consideration that may be
acceptable to the Board or the Committee in their discretion. Notwithstanding
the foregoing, the Board or the Committee to which administration of the Plan
has been delegated may award stock pursuant to a stock bonus agreement in
consideration for past services actually rendered to the Company or for its
benefit.
<PAGE>
(d) Vesting. Shares of stock sold or awarded under the Plan
may, but need not, be subject to a repurchase option in favor of the
Company in accordance with a vesting schedule to be determined by the
Board or the Committee; provided, however, with respect to Stock Awards
granted under this Section 7 prior to the date of the first registration of
an equity security of the Company under Section 12 of the Exchange Act,
that (i) the right of the Company to repurchase at the original purchase
price shall lapse at a minimum rate of twenty percent (20%) per year over
five (5) years from the date the Stock Award was granted, and (ii) such right
shall be exercisable only within the ninety (90) day period following the
termination of employment or the relationship as a Director or Consultant,
(iii) such right shall be exercisable only for cash or cancellation of purchase
money indebtedness for the shares, and (iv) should such right of repurchase
be assigned by the Company, the assignee shall pay the Company cash equal to
the difference between the original purchase price and the stock's Fair Market
Value if the original purchase price is less than the stock's Fair Market
Value.
(e) Termination of Employment or Relationship as a
Director or Consultant. In the event a Participant's Continuous Status as
an Employee, Director or Consultant terminates, the Company may repurchase
or otherwise reacquire, subject to the limitations described in subsection
7(d), any or all of the shares of stock held by that person which have not
vested as of the date of termination under the terms of the stock bonus or
restricted stock purchase agreement between the Company and such person.
8. CANCELLATION AND RE-GRANT OF OPTIONS.
(a) The Board or the Committee shall have the authority to
effect, at any time and from time to time, (i) the repricing of any outstanding
Options under the Plan and/or (ii) with the consent of any adversely affected
holders of Options, the cancellation of any outstanding Options under the Plan
and the grant in substitution therefor of new Options under the Plan covering
the same or different numbers of shares of stock, but having an exercise price
per share not less than eighty-five percent (85%) of the Fair Market Value (one
hundred percent (100%) of the Fair Market Value in the case of an Incentive
Stock Option or, in the case of an Option held by a 10% stockholder (as
described in subsection 5(b)), not less than one hundred ten percent (110%) of
the Fair Market Value) per share of stock on the new grant date.
(b) Shares subject to an Option canceled under this Section 8
shall continue to be counted against the maximum award of Options permitted to
be granted pursuant to subsection 5(c) of the Plan. The repricing of an Option
under this Section 8, resulting in a reduction of the exercise price, shall be
deemed to be a cancellation of the original Option and the grant of a substitute
Option; in the event of such repricing, both the original and the substituted
Options shall be counted against the maximum awards of Options permitted to be
granted pursuant to subsection 5(c) of the Plan. The provisions of this
subsection 8(b) shall be applicable only to the extent required by Section
162(m) of the Code.
<PAGE>
9. COVENANTS OF THE COMPANY.
(a) During the terms of the Stock Awards, the Company shall
keep available at all times the number of shares of stock required to satisfy
such Stock Awards.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such authority as may be
required to issue and sell shares of stock upon exercise of the Stock Award;
provided, however, that this undertaking shall not require the Company to
register under the Securities Act of 1933, as amended (the "Securities Act"),
either the Plan, any Stock Award or any stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of stock under the
Plan, the Company shall be relieved from any liability for failure to issue and
sell stock upon exercise of such Stock Awards unless and until such authority is
obtained.
10. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Stock Awards shall
constitute general funds of the Company.
11. MISCELLANEOUS.
(a) The Board shall have the power to accelerate the time at
which a Stock Award may first be exercised or the time during which a Stock
Award or any part thereof will vest pursuant to, notwithstanding the provisions
in the Stock Award stating the time at which it may first be exercised or the
time during which it will vest.
(b) Neither an Employee, Director or Consultant, nor any
person to whom a Stock Award is transferred in accordance with the Plan, shall
be deemed to be the holder of, or to have any of the rights of a holder with
respect to, any shares subject to such Stock Award unless and until such person
has satisfied all requirements for exercise of the Stock Award pursuant to its
terms.
(c) The Company shall deliver at least annually to the holder
of any Stock Award a balance sheet and an income statement. This section shall
not apply when issuance is limited to key employees whose duties in connection
with the Company assure them access to equivalent information.
(d) Nothing in the Plan, or any instrument executed or Stock
Award granted pursuant thereto, shall confer upon any Employee, Director or
Consultant or other holder of Stock Awards any right to continue in the employ
of the Company or any Affiliate (or to continue acting as a Director of or
Consultant) or shall affect the right of the Company or any Affiliate to
terminate the employment of any Employee with or without cause, the right of the
Company's Board and or the Company's stockholders to remove any Director
pursuant to the terms of the
<PAGE>
Company's By-Laws and the provisions of any applicable law, or the right to
terminate the relationship of any Consultant pursuant to the terms of such
Consultant's agreement with the Company or Affiliate.
(e) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect to which Incentive Stock
Options granted after 1986 are exercisable for the first time by any Optionee
during any calendar year under all plans of the Company and its Affiliates
exceeds one hundred thousand dollars ($100,000), the Options or portions thereof
which exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
(f) The Company may require any person to whom a Stock Award
is granted, or any person to whom a Stock Award is transferred in accordance
with the Plan, as a condition of exercising or acquiring stock under any Stock
Award, (1) to give written assurances satisfactory to the Company as to such
person's knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters, and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (2) to
give written assurances satisfactory to the Company stating that such person
is acquiring the stock subject to the Stock Award for such person's own account
and not with any present intention of selling or otherwise distributing the
stock. The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise or acquisition of stock under the Stock Award has been registered
under a then currently effective registration statement under the Securities
Act, or (ii) as to any particular requirement, a determination is made by
counsel for the Company that such requirement need not be met in the
circumstances under the then applicable securities laws. The Company may,
upon advice of counsel to the Company, place legends on stock certificates
issued under the Plan as such counsel deems necessary or appropriate in
order to comply with applicable securities laws, including, but not limited
to, legends restricting the transfer of the stock.
(g) To the extent provided by the terms of a Stock Award
Agreement, the person to whom a Stock Award is granted may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under a Stock Award by any of the following means or by a
combination of such means: (1) tendering a cash payment; (2) authorizing the
Company to withhold shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise or acquisition of stock
under the Stock Award; or (3) delivering to the Company owned and unencumbered
shares of the common stock of the Company.
12. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Stock Award, without the receipt of consideration by the Company
(through merger, consolidation, reorganization, recapitalization,
reincorporation, stock dividend, dividend in property other than
cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving
the receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of shares subject to the Plan
pursuant to subsection 4(a) and the maximum number of shares subject to award to
any person during any calendar year pursuant to subsection 5(c), and the
outstanding Stock Awards will be appropriately adjusted in the class(es) and
number of shares and price per share of stock subject to such outstanding
Stock Awards. Such adjustments shall be made by the Board or the Committee,
the determination of which shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not be treated as
a "transaction not involving the receipt of consideration by the Company".)
(b) In the event of: (1) a dissolution, liquidation or sale of
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation; or (3) a reverse merger in
which the Company is the surviving corporation but the shares of the Company's
common stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise; or (4) the acquisition by any person, entity or group within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, or any
comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors, then (i) any surviving or acquiring
corporation shall assume Stock Awards outstanding under the Plan or shall
substitute similar Stock Awards (including a Stock Award to acquire the same
consideration paid to stockholders in the transaction described in this
subsection 12(b)) for those outstanding under the Plan or (ii) to the extent
permitted by applicable law, in the event any surviving or acquiring corporation
refuses to assume such Stock Awards or to substitute similar Stock Awards for
those outstanding under the Plan, (A) with respect to Stock Awards held by
persons then performing services as Employees, Directors or Consultants, the
vesting and, if applicable, exercisability of such Stock Awards shall be
accelerated prior to such event and any Stock Awards requiring exercise shall be
terminated if not exercised after such acceleration and at or prior to such
event, and (B) with respect to any other Stock Awards outstanding under the
Plan, such Stock Awards shall be terminated if not exercised prior to such
event.
13. AMENDMENT OF THE PLAN AND STOCK AWARDS.
(a) The Board at any time, and from time to time, may amend
the Plan. However, except as provided in Section 12 relating to adjustments upon
changes in stock, no amendment shall be effective unless approved by the
stockholders of the Company within twelve (12) months before or after the
adoption of the amendment, where the amendment will:
(i) Increase the number of shares reserved for
Stock Awards under the Plan;
<PAGE>
(ii) Modify the requirements as to eligibility for
participation in the Plan (to the extent such modification requires stockholder
approval in order for the Plan to satisfy the requirements of Section 422 of the
Code); or
(iii) Modify the Plan in any other way if such
modification requires stockholder approval in order for the Plan to satisfy
the requirements of Section 422 of the Code or to comply with the requirements
of Rule 16b-3.
(b) The Board may in its sole discretion submit any other
amendment to the Plan for stockholder approval, including, but not limited to,
amendments to the Plan intended to satisfy the requirements of Section 162(m) of
the Code and the regulations promulgated thereunder regarding the exclusion of
performance-based compensation from the limit on corporate deductibility of
compensation paid to certain executive officers.
(c) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable to provide eligible
Employees, Directors or Consultants with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Stock Award granted
before amendment of the Plan shall not be impaired by any amendment of the Plan
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
(e) The Board at any time, and from time to time, may amend
the terms of any one or more Stock Award; provided, however, that the rights and
obligations under any Stock Award shall not be impaired by any such amendment
unless (i) the Company requests the consent of the person to whom the Stock
Award was granted and (ii) such person consents in writing.
14. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on July 15, 2006, which shall
be within ten (10) years from the date the Plan is adopted by the Board or
approved by the stockholders of the Company, whichever is earlier. No Stock
Awards may be granted under the Plan while the Plan is suspended or after it is
terminated.
(b) Rights and obligations under any Stock Award granted while
the Plan is in effect shall not be impaired by suspension or termination of the
Plan, except with the consent of the person to whom the Stock Award was granted.
<PAGE>
15. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Stock Awards granted under the Plan shall be exercised unless and until the Plan
has been approved by the stockholders of the Company, which approval shall be
within twelve (12) months before or after the date the Plan is adopted by the
Board, and, if required, an appropriate permit has been issued by the
Commissioner of Corporations of the State of California.
INCENTIVE STOCK OPTION
_________________________, Optionee:
ALANEX CORPORATION (the "Company"), pursuant to its 1996 Equity
Incentive Plan (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is intended to qualify as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). The grant of this
option and the issuance of shares upon the exercise of this option are also
intended to be exempt from the securities qualification requirements of the
California Corporations Code pursuant to Section 25102(o) of that code. Defined
terms not explicitly defined in this agreement but defined in the Plan shall
have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total
number of shares of Common Stock subject to this option is ________ (_________).
2. VESTING. Subject to the limitations contained herein,
__________ of the shares will vest (become exercisable) on the ____ day of each
month following ______________ and __________ of the shares will vest on the
final month. Vesting will be continuous until either (i) you cease to provide
services to the Company for any reason, or (ii) this option becomes fully vested
on _____________. [Vesting schedule subject to change from time to time as
determined by the Board of Directors, however, option must vest at least 20% per
year.]
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) Exercise Price. The exercise price
of this option is ___________________________ ($___________) per
share, being not less than the fair market value of the Common Stock on the
date of grant of this option.
(b) Method of Payment. Payment of the exercise
price per share is due in full upon exercise of all or any part of each
installment which has accrued to you. You may elect, to the extent permitted
by applicable statutes and regulations, to make payment of the exercise price
under one of the following alternatives:
<PAGE>
(i) Payment of the exercise price per share
in cash (including check) at the time of exercise;
(ii) Payment pursuant to a program developed
under Regulation T as promulgated by the Federal Reserve Board which,
prior to the issuance of Common Stock, results in either the receipt of cash (or
check) by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds;
(iii) Provided that at the time of exercise
the Company's Common Stock is publicly traded and quoted regularly in the
Wall Street Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market value
on the date of exercise; or
(iv) Payment by a combination of the
methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. The minimum number of shares with respect to
which this option may be exercised at any one time is one hundred (100), except
(a) as to an installment subject to exercise, as set forth in paragraph 2, which
amounts to fewer than one hundred (100) shares, in which case, the number of
shares in such installment shall be the minimum number of shares, and (b) with
respect to the final exercise of this option, this minimum shall not apply. In
no event may this option be exercised for any number of shares which would
require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
6. TERM. The term of this option commences on __________,
19__, the date of grant, and expires on ______________ (the "Expiration Date,"
which date shall be no more than ten (10) years from the date this option is
granted), unless this option expires sooner as set forth below or in the Plan.
In no event may this option be exercised on or after the Expiration Date. This
option shall terminate prior to the Expiration Date as follows: three (3) months
after the termination of your Continuous Status as an Employee, Director or
Consultant with the Company or an Affiliate of the Company unless one of the
following circumstances exists:
(a) Your termination of Continuous Status as an
Employee, Director or Consultant is due to your permanent and total
disability (within the meaning of Section 422(c)(6) of the Code). This
option will then expire on the earlier of the Expiration Date set forth above
<PAGE>
or twelve (12) months following such termination of Continuous Status as an
Employee, Director or Consultant.
(b) Your termination of Continuous Status as an
Employee, Director or Consultant is due to your death. This option will
then expire on the earlier of the Expiration Date set forth above or twelve
(12) months after your death.
(c) If during any part of such three (3) month
period you may not exercise your option solely because of the condition set
forth in paragraph 5 above, then your option will not expire until the earlier
of the Expiration Date set forth above or until this option shall have been
exercisable for an aggregate period of three (3) months after your
termination of Continuous Status as an Employee, Director or Consultant.
(d) If your exercise of the option within three (3)
months after termination of your Continuous Status as an Employee, Director
or Consultant with the Company or with an Affiliate of the Company would
result in liability under section 16(b) of the Securities Exchange Act of
1934, then your option will expire on the earlier of (i) the Expiration Date
set forth above, (ii) the tenth (10th) day after the last date upon which
exercise would result in such liability or (iii) six (6) months and ten (10)
days after the termination of your Continuous Status as an Employee, Director
or Consultant with the Company or an Affiliate of the Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on the
date of grant of the option and ending on the day three (3) months before the
date of the option's exercise, you must be an employee of the Company or an
Affiliate of the Company, except in the event of your death or permanent and
total disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit, but
cannot guarantee that your option will necessarily be treated as an "incentive
stock option" if you provide services to the Company or an Affiliate of the
Company as a consultant or exercise your option more than three (3) months after
the date your employment with the Company and all Affiliates of the Company
terminates.
7. EXERCISE.
(a) This option may be exercised, to the extent
specified above, by delivering a notice of exercise (in a form designated by
the Company) together with the exercise price to the Secretary of the Company,
or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then
require pursuant to subsection 12(f) of the Plan.
<PAGE>
(b) By exercising this option you agree that:
(i) as a precondition to the completion of
any exercise of this option, the Company may require you to enter an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise
of this option; (2) the lapse of any substantial risk of forfeiture to
which the shares are subject at the time of exercise; or (3) the disposition of
shares acquired upon such exercise;
(ii) you will notify the Company in writing
within fifteen (15) days after the date of any disposition of any of the
shares of the Common Stock issued upon exercise of this option that occurs
within two (2) years after the date of this option grant or within one (1)
year after such shares of Common Stock are transferred upon exercise of this
option; and
(iii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration
of the offering of any securities of the Company under the Act, require that
you not sell or otherwise transfer or dispose of any shares of Common Stock or
other securities of the Company during such period (not to exceed one
hundred eighty (180) days) following the effective date (the "Effective
Date") of the registration statement of the Company filed under the Act as
may be requested by the Company or the representative of the underwriters.
You further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
8. TRANSFERABILITY. This option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
9. OPTION NOT A SERVICE CONTRACT. This option is not an
employment contract and nothing in this option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate of
the Company, or their respective stockholders, Board of Directors, officers or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
10. NOTICES. Any notices provided for in this option or the
Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the address specified below or at such other address as you hereafter
designate by written notice to the Company.
<PAGE>
11. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
____________________________
By__________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Alanex Corporation 1996 Equity Incentive Plan
Notice of Exercise
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE _________
(Initial)
OTHER __________________________
__________________________
__________________________
__________________________________
OPTIONEE
Address:__________________________
__________________________
NONSTATUTORY STOCK OPTION
_____________________________, Optionee:
ALANEX CORPORATION (the "Company"), pursuant to its 1996 Equity
Incentive Plan (the "Plan"), has granted to you, the optionee named above, an
option to purchase shares of the common stock of the Company ("Common Stock").
This option is not intended to qualify and will not be treated as an "incentive
stock option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's employees
(including officers), directors or consultants and is intended to comply with
the provisions of Rule 701 promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). The grant of this
option and the issuance of shares upon the exercise of this option are also
intended to be exempt from the securities qualification requirements of the
California Corporations Code pursuant to Section 25102(o) of that code. Defined
terms not explicitly defined in this agreement but defined in the Plan shall
have the same definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total
number of shares of Common Stock subject to this option is ______________
(___________).
2. VESTING. Subject to the limitations contained herein,
__________ of the shares will vest (become exercisable) on the ____ day of each
month following ______________ and __________ of the shares will vest on the
final month. Vesting will be continuous until either (i) you cease to provide
services to the Company for any reason, or (ii) this option becomes fully vested
on _____________. [Vesting schedule subject to change from time to time as
determined by the Board of Directors, however, option must vest at least 20% per
year.]
3. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) Exercise Price. The exercise price of this option
is ______________ ($_______________) per share, being not less than 85% of the
fair market value of the Common Stock on the date of grant of this option.
(b) Method of Payment. Payment of the exercise
price per share is due in full upon exercise of all or any part of each
installment which has accrued to you. You may elect, to the extent permitted by
applicable statutes and regulations, to make payment of the exercise price under
one of the following alternatives:
<PAGE>
(i) Payment of the exercise price per
share in cash (including check) at the time of exercise;
(ii) Payment pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve Board
which, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to
pay the aggregate exercise price to the Company from the sales proceeds;
(iii) Provided that at the time of exercise
the Company's Common Stock is publicly traded and quoted regularly in the
Wall Street Journal, payment by delivery of already-owned shares of Common
Stock, held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market value
on the date of exercise; or
(iv) Payment by a combination of the
methods of payment permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. The minimum number of shares with respect to
which this option may be exercised at any one time is one hundred (100), except
(a) as to an installment subject to exercise, as set forth in paragraph 2, which
amounts to fewer than one hundred (100) shares, in which case, the number of
shares in such installment shall be the minimum number of shares, and (b) with
respect to the final exercise of this option, this minimum shall not apply. In
no event may this option be exercised for any number of shares which would
require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
6. TERM. The term of this option commences on _________, 19__,
the date of grant and expires on _____________________ (the "Expiration Date,"
which date shall be no more than ten (10) years from the date this option is
granted), unless this option expires sooner as set forth below or in the Plan.
In no event may this option be exercised on or after the Expiration Date. This
option shall terminate prior to the Expiration Date as follows: three (3) months
after the termination of your Continuous Status as an Employee, Director or
Consultant with the Company or an Affiliate of the Company for any reason or for
no reason unless:
(a) such termination of Continuous Status as an
Employee, Director or Consultant is due to your permanent and total
disability (within the meaning of Section 422(c)(6) of the Code), in which
event the option shall expire on the earlier of the Expiration Date set
<PAGE>
forth above or twelve (12) months following such termination of Continuous
Status as an Employee, Director or Consultant; or
(b) such termination of Continuous Status as an
Employee, Director or Consultant is due to your death, in which event the
option shall expire on the earlier of the Expiration Date set forth above or
twelve (12) months after your death; or
(c) during any part of such three (3) month period the
option is not exercisable solely because of the condition set forth in
paragraph 5 above, in which event the option shall not expire until the earlier
of the Expiration Date set forth above or until it shall have been
exercisable for an aggregate period of three (3) months after the termination
of Continuous Status as an Employee, Director or Consultant; or
(d) exercise of the option within three (3) months
after termination of your Continuous Status as an Employee, Director or
Consultant with the Company or with an Affiliate of the Company would result
in liability under section 16(b) of the Securities Exchange Act of 1934 (the
"Exchange Act), in which case the option will expire on the earlier of (i) the
Expiration Date set forth above, (ii) the tenth (10th) day after the last date
upon which exercise would result in such liability or (iii) six (6)
months and ten (10) days after the termination of your Continuous Status
as an Employee, Director or Consultant with the Company or an Affiliate of the
Company.
However, this option may be exercised following termination of
Continuous Status as an Employee, Director or Consultant only as to that number
of shares as to which it was exercisable on the date of termination of
Continuous Status as an Employee, Director or Consultant under the provisions of
paragraph 2 of this option.
7. EXERCISE.
(a) This option may be exercised, to the extent
specified above, by delivering a notice of exercise (in a form designated by
the Company) together with the exercise price to the Secretary of the
Company, or to such other person as the Company may designate, during
regular business hours, together with such additional documents as the
Company may then require pursuant to subsection 12(f) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of
any exercise of this option, the Company may require you to enter an
arrangement providing for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of: (1) the exercise
of this option; (2) the lapse of any substantial risk of forfeiture to which
the shares are subject at the time of exercise; or (3) the disposition of
shares acquired upon such exercise. You also agree that any exercise of this
option has not been completed and that the Company is under no obligation to
issue any Common Stock to you until such an arrangement
<PAGE>
is established or the Company's tax withholding obligations are satisfied,
as determined by the Company; and
(ii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration of
the offering of any securities of the Company under the Act, require that you
not sell or otherwise transfer or dispose of any shares of Common Stock or
other securities of the Company during such period (not to exceed one
hundred eighty (180) days) following the effective date (the "Effective
Date") of the registration statement of the Company filed under the Act as
may be requested by the Company or the representative of the underwriters.
You further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
8. TRANSFERABILITY. This option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written notice to
the Company, in a form satisfactory to the Company, you may designate a third
party who, in the event of your death, shall thereafter be entitled to exercise
this option.
9. OPTION NOT A SERVICE CONTRACT. This option is not an
employment contract and nothing in this option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate of
the Company, or their respective stockholders, Board of Directors, officers, or
employees to continue any relationship which you might have as a Director or
Consultant for the Company or Affiliate of the Company.
10. NOTICES. Any notices provided for in this option or the
Plan shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by the Company to you, five (5)
days after deposit in the United States mail, postage prepaid, addressed to you
at the address specified below or at such other address as you hereafter
designate by written notice to the Company.
11. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations, amendments, rules and regulations which
<PAGE>
may from time to time be promulgated and adopted pursuant to the Plan. In the
event of any conflict between the provisions of this option and those of the
Plan, the provisions of the Plan shall control.
Dated the ____ day of __________________, 19__.
Very truly yours,
_____________________________
By___________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Alanex Corporation 1996 Equity Incentive Plan
Notice of Exercise
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the
attachments referenced therein and understands that all rights and liabilities
with respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option,
it sets forth the entire understanding between the undersigned optionee and the
Company and its Affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE _________
(Initial)
OTHER ___________________________
___________________________
___________________________
__________________________________
OPTIONEE
Address:___________________________________
___________________________________
NONSTATUTORY STOCK OPTION
MARVIN R. BROWN, Optionee:
ALANEX CORPORATION (the "Company") has this day granted to
you, the optionee named above, an option to purchase shares of the common stock
of the Company ("Common Stock"). This option is not intended to qualify as and
will not be treated as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance
of the Company's compensatory benefit plan for participation of the Company's
employees (including officers, directors and consultants) and is intended to
comply with the provisions of Rule 701 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act") and
to satisfy the requirements of Section 25102(f) of the California Corporate
Securities Law of 1968, as amended.
The details of your option are as follows:
1. Number of Option Shares and Vesting. The total number of shares of
Common Stock subject to this option is One Hundred Thousand (100,000). Subject
to the limitations contained herein, this option shall vest and become
exercisable over a three year period beginning as of the date hereof at a
monthly rate of 2,777.78 shares.
2. (a) Exercise Price. The exercise price of this option is ten cents
($.10) per share.
(b) Method of Payment. Payment of the exercise price per share
is due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise;
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds;
<PAGE>
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall Street
Journal, payment by delivery of already-owned shares of Common Stock, held
for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market
value on the date of exercise of the option, or portion thereof, granted
hereunder;
(iv) Provided that the option exercise price for the
installment, or portion thereof, being purchased is at least one thousand
dollars ($1,000), payment pursuant to the deferred payment alternative as
described in paragraph 2(c) hereof; or
(v) Payment by a combination of the methods of payment
permitted by subparagraph 2(b)(i) through 2(b)(iv) above.
(c) Conditions of Deferred Payment. In the event that you
elect to make payment of the exercise price pursuant to the deferred payment
alternative:
(i) Not less than twenty-five percent (25%) of the
aggregate exercise price shall be due at the time of exercise, not less than
twenty-five percent (25%) of said exercise price, plus accrued interest, shall
be due each year after the date of exercise, and final payment of the remainder
of the exercise price, plus accrued interest, shall be due three (3) years
from the date of exercise or, at the Company's election, upon termination of
your employment with the Company or an affiliate of the Company;
(ii) Interest shall be payable at least annually and
shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
portion of any amounts other than amounts stated to be interest under the
deferred payment arrangement; and
(iii) In order to elect the deferred payment alternative,
you must, as a part of your written notice of exercise, give notice of the
election of this payment alternative and, in order to secure the payment of the
deferred exercise price to the Company hereunder, if the Company so
requests, you must tender to the Company a promissory note and a security
agreement covering the purchased shares, both in form and substance
satisfactory to the Company, and such other or additional documentation as the
Company may request.
3. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the Act. You
represent that you (i) are an officer or
<PAGE>
director of the Company, or (ii) have a preexisting personal or business
relationship with the Company or one or more of its officers, directors, or
controlling persons, or (iii) by reason of your business or financial
experience or the business or financial experience of your professional
advisors who are unaffiliated with and who are not directly or indirectly
compensated by the Company or any affiliate of the Company, you have the
capacity to protect your own interests in connection with the grant of this
option. You also represent that you are acquiring this option for your own
account and not with a view to or for sale in connection with any distribution
of this security. You also represent that you have acquired this option
unaccompanied by the publication of any advertisement. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
pursuant to the exercise of this option as such counsel deems necessary and
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of stock.
4. Minimum Exercise. The minimum number of shares with respect to which
this option may be exercised at any one time is one hundred (100), except (a) as
to an installment subject to exercise, as set forth in paragraph 1, which
amounts to fewer than one hundred (100) shares, in which case, as to the
exercise of that installment, the number of shares in such installment shall be
the minimum number of shares, and (b) with respect to the final exercise of this
option this minimum shall not apply. In no event may this option be exercised
for any number of shares which would require the issuance of anything other than
whole shares.
5. Term. The term of this option commences on January 19, 1996 (the
date of grant) and, unless sooner terminated as set forth below, terminates on
January 18, 2006 (the "Expiration Date" which date shall be no more than ten
(10) years from the date this option is granted). In no event may this option be
exercised on or after the date on which it terminates. This option shall
terminate prior to the expiration of its term as follows: three (3) months after
the termination of your continuous service to the Company as an employee,
consultant or director (your "Termination Date") for any reason or for no reason
unless:
(a) such termination of service is due to your permanent and
total disability (within the meaning of Section 422(c)(6) of the Code), in which
event the option shall terminate on the earlier of the Expiration Date set forth
above or twelve (12) months following your Termination Date; or
(b) such termination of service is due to your death, in which
event the option shall terminate on the earlier of the Expiration Date set forth
above or eighteen (18) months after your death; or
<PAGE>
(c) during any part of such three (3) month period the option
is not exercisable solely because of the condition set forth in paragraph 3
above, in which event the option shall not terminate until the earlier of the
Expiration Date set forth above or until it shall have been exercisable for an
aggregate period of three (3) months after your Termination Date; or
(d) exercise of the option within three (3) months after your
Termination Date would result in liability under section 16(b) of the Securities
Exchange Act of 1934, in which case the option will terminate on the earlier of
(i) the Expiration Date set forth above, (ii) the tenth (10th) day after the
last date upon which exercise would result in such liability or (iii) six (6)
months and ten (10) days after your Termination Date with the Company or an
affiliate of the Company.
This option may be exercised following your Termination Date
only as to that number of shares as to which it was exercisable on your
Termination Date under the provisions of paragraph 1 of this option.
6. Exercise. (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then reasonably
require.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any
exercise of this option, the Company may require you to enter an arrangement
providing for the cash payment by you to the Company of any tax withholding
obligation of the Company arising by reason of: (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise; and
(ii) the Company (or a representative of the underwriters)
may, in connection with the first underwritten registration of the offering
of any securities of the Company under the Act, require that you not sell
or otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date (the "Effective Date") of
the registration statement of the Company filed under the Act as may be
requested by the Company or the representative of the underwriters. You
further agree that the Company may impose stop-transfer instructions with
respect to securities subject to the foregoing restrictions until the end of
such period.
<PAGE>
7. Covenant of Company. During the term of this option, the
Company shall keep available at all times the number of shares of stock
required to satisfy the exercise of such option.
8. Adjustment Upon Changes in Stock. (a) If any change is made in the
stock subject to this option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), this option will be appropriately adjusted in the
type(s) and number of securities and price per share of stock subject to the
option. Such adjustments shall be made by the Board of Directors, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company.")
(b) In the event of: (i) a merger or consolidation in which
the Company is not the surviving corporation; or (ii) a reverse merger in which
the Company is the surviving corporation but the shares of the Company's common
stock outstanding immediately preceding the merger are converted by virtue of
the merger into other property, whether in the form of securities, cash or
otherwise; or (iii) a sale of all or substantially all of the assets of the
Company, then, to the extent permitted by applicable law: (1) any surviving
corporation shall assume this option or shall substitute a similar option
(including an option to acquire the same consideration paid to stockholders in
the transaction described in this subparagraph 8(b)), if this option is still
outstanding, or (2) in the event any surviving corporation refuses to assume or
continue this option, or to substitute a similar option for this option (if
still outstanding), then this option shall become fully vested and exercisable
prior to such event and shall terminate after such acceleration of vesting if
not exercised at or prior to such corporate event. In the event of a dissolution
or liquidation of the Company, this option (if still outstanding) shall
terminate if not exercised prior to such event.
9. Transferability. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. By delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event of your death,
shall thereafter be entitled to exercise this option.
10. Option Not a Service Contract. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In the event
that this option is granted to you in connection with the performance of
services as a consultant or director, or in the
<PAGE>
event that this option is granted to you in connection with the performance of
services as an employee and you subsequently perform services as a consultant
or director, references to employment, employee and similar terms shall
be deemed to include the performance of services as a consultant or a
director, as the case may be, provided, however, that no rights as an
employee shall arise by reason of the use of such terms.
11. Notices. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. Amendment. This option may be amended by the Board of
Directors at any time; provided, however, that any change that would
adversely affect your rights in this option must first be approved by you in
writing before becoming effective.
13. Administration. This option is subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted by the Company. This authority shall be exercised by the Board, or by a
committee of one or more members of the Board in the event that the Board
delegates its authority to a committee. The Board, in exercise of this
authority, may correct any defect, omission or inconsistency in this option in a
manner and to the extent the Board shall deem necessary or desirable to make
this option fully effective. References to the Board shall mean the committee if
a committee has been appointed by the Board. Any interpretations, amendments,
rules and regulations promulgated by the Board shall be final and binding upon
the Company and its successors in interest as well as you and your heirs,
assigns, and other successors in interest.
<PAGE>
14. Rights as Stockholder. Neither you nor any person to whom this
option is transferred under paragraph 8 of this option shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to this option unless and until such person has satisfied all
requirements for exercise of this option pursuant to its terms.
Dated as of the 19th day of January, 1996.
Very truly yours,
ALANEX CORPORATION
By:______________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Notice of Exercise
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE __________
(Initial)
OTHER ___________________
___________________
___________________
_______________________________
MARVIN R. BROWN, OPTIONEE
Address:___________________________________
___________________________________
___________________________________
NONSTATUTORY STOCK OPTION
ALEXANDER POLINSKY, Optionee:
ALANEX CORPORATION (the "Company") has this day granted to
you, the optionee named above, an option to purchase shares of the common stock
of the Company ("Common Stock"). This option is not intended to qualify as and
will not be treated as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance
of the Company's compensatory benefit plan for participation of the Company's
employees (including officers, directors and consultants) and is intended to
comply with the provisions of Rule 701 promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act") and
to satisfy the requirements of Section 25102(f) of the California Corporate
Securities Law of 1968, as amended.
The details of your option are as follows:
1. Number of Option Shares and Vesting. The total number of shares of
Common Stock subject to this option is Fifty Thousand (50,000). Subject to the
limitations contained herein, this option shall vest and become exercisable over
a three year period beginning as of the date hereof at a monthly rate of
1,388.89 shares.
2. (a) Exercise Price. The exercise price of this option is ten
cents ($.10) per share.
(b) Method of Payment. Payment of the exercise price per share
is due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable statutes
and regulations, to make payment of the exercise price under one of the
following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise;
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board which, prior to the
issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds;
<PAGE>
(iii) Provided that at the time of exercise the
Company's Common Stock is publicly traded and quoted regularly in the Wall
Street Journal, payment by delivery of already-owned shares of Common Stock,
held for the period required to avoid a charge to the Company's reported
earnings, and owned free and clear of any liens, claims, encumbrances or
security interests, which Common Stock shall be valued at its fair market
value on the date of exercise of the option, or portion thereof, granted
hereunder;
(iv) Provided that the option exercise price for
the installment, or portion thereof, being purchased is at least one
thousand dollars ($1,000), payment pursuant to the deferred payment
alternative as described in paragraph 2(c) hereof; or
(v) Payment by a combination of the methods of
payment permitted by subparagraph 2(b)(i) through 2(b)(iv) above.
(c) Conditions of Deferred Payment. In the event that you
elect to make payment of the exercise price pursuant to the deferred payment
alternative:
(i) Not less than twenty-five percent (25%) of the
aggregate exercise price shall be due at the time of exercise, not less than
twenty-five percent (25%) of said exercise price, plus accrued interest, shall
be due each year after the date of exercise, and final payment of the remainder
of the exercise price, plus accrued interest, shall be due three (3) years
from the date of exercise or, at the Company's election, upon termination of
your employment with the Company or an affiliate of the Company;
(ii) Interest shall be payable at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
portion of any amounts other than amounts stated to be interest under the
deferred payment arrangement; and
(iii) In order to elect the deferred payment
alternative, you must, as a part of your written notice of exercise, give
notice of the election of this payment alternative and, in order to secure the
payment of the deferred exercise price to the Company hereunder, if the
Company so requests, you must tender to the Company a promissory note and a
security agreement covering the purchased shares, both in form and substance
satisfactory to the Company, and such other or additional documentation as the
Company may request.
3. Securities Law Compliance. Notwithstanding anything to the contrary
contained herein, this option may not be exercised unless the shares issuable
upon exercise of this option are then registered under the Act or, if such
shares are not then so registered, the Company has determined that such exercise
and issuance would be exempt from the registration requirements of the Act. You
represent that you (i) are an officer or
<PAGE>
director of the Company, or (ii) have a preexisting personal or business
relationship with the Company or one or more of its officers, directors, or
controlling persons, or (iii) by reason of your business or financial
experience or the business or financial experience of your professional
advisors who are unaffiliated with and who are not directly or indirectly
compensated by the Company or any affiliate of the Company, you have
the capacity to protect your own interests in connection with the grant of this
option. You also represent that you are acquiring this option for your own
account and not with a view to or for sale in connection with any distribution
of this security. You also represent that you have acquired this option
unaccompanied by the publication of any advertisement. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
pursuant to the exercise of this option as such counsel deems necessary and
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of stock.
4. Minimum Exercise. The minimum number of shares with respect to which
this option may be exercised at any one time is one hundred (100), except (a) as
to an installment subject to exercise, as set forth in paragraph 1, which
amounts to fewer than one hundred (100) shares, in which case, as to the
exercise of that installment, the number of shares in such installment shall be
the minimum number of shares, and (b) with respect to the final exercise of this
option this minimum shall not apply. In no event may this option be exercised
for any number of shares which would require the issuance of anything other than
whole shares.
5. Term. The term of this option commences on January 19, 1996 (the
date of grant) and, unless sooner terminated as set forth below, terminates on
January 18, 2006 (the "Expiration Date" which date shall be no more than ten
(10) years from the date this option is granted). In no event may this option be
exercised on or after the date on which it terminates. This option shall
terminate prior to the expiration of its term as follows: three (3) months after
the termination of your continuous service to the Company as an employee,
consultant or director (your "Termination Date") for any reason or for no reason
unless:
(a) such termination of service is due to your permanent and
total disability (within the meaning of Section 422(c)(6) of the Code), in which
event the option shall terminate on the earlier of the Expiration Date set forth
above or twelve (12) months following your Termination Date; or
(b) such termination of service is due to your death, in which
event the option shall terminate on the earlier of the Expiration Date set forth
above or eighteen (18) months after your death; or
<PAGE>
(c) during any part of such three (3) month period the option
is not exercisable solely because of the condition set forth in paragraph 3
above, in which event the option shall not terminate until the earlier of the
Expiration Date set forth above or until it shall have been exercisable for an
aggregate period of three (3) months after your Termination Date; or
(d) exercise of the option within three (3) months after your
Termination Date would result in liability under section 16(b) of the Securities
Exchange Act of 1934, in which case the option will terminate on the earlier of
(i) the Expiration Date set forth above, (ii) the tenth (10th) day after the
last date upon which exercise would result in such liability or (iii) six (6)
months and ten (10) days after your Termination Date with the Company or an
affiliate of the Company.
This option may be exercised following your Termination Date
only as to that number of shares as to which it was exercisable on your
Termination Date under the provisions of paragraph 1 of this option.
6. Exercise. (a) This option may be exercised, to the extent specified
above, by delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then reasonably
require.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any
exercise of this option, the Company may require you to enter an arrangement
providing for the cash payment by you to the Company of any tax withholding
obligation of the Company arising by reason of: (1) the exercise of this option;
(2) the lapse of any substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of shares acquired upon
such exercise; and
(ii) the Company (or a representative of the
underwriters) may, in connection with the first underwritten registration
of the offering of any securities of the Company under the Act, require
that you not sell or otherwise transfer or dispose of any shares of Common
Stock or other securities of the Company during such period (not to exceed
one hundred eighty (180) days) following the effective date (the
"Effective Date") of the registration statement of the Company filed under
the Act as may be requested by the Company or the representative of the
underwriters. You further agree that the Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions
until the end of such period.
<PAGE>
7. Covenant of Company. During the term of this option, the Company
shall keep available at all times the number of shares of stock required to
satisfy the exercise of such option.
8. Adjustment Upon Changes in Stock. (a) If any change is made in the
stock subject to this option (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), this option will be appropriately adjusted in the
type(s) and number of securities and price per share of stock subject to the
option. Such adjustments shall be made by the Board of Directors, the
determination of which shall be final, binding and conclusive. (The conversion
of any convertible securities of the Company shall not be treated as a
"transaction not involving the receipt of consideration by the Company.")
(b) In the event of: (i) a merger or consolidation
in which the Company is not the surviving corporation; or (ii) a reverse merger
in which the Company is the surviving corporation but the shares of the
Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form
of securities, cash or otherwise; or (iii) a sale of all or substantially
all of the assets of the Company, then, to the extent permitted by
applicable law: (1) any surviving corporation shall assume this option or
shall substitute a similar option (including an option to acquire the same
consideration paid to stockholders in the transaction described in this
subparagraph 8(b)), if this option is still outstanding, or (2) in the event
any surviving corporation refuses to assume or continue this option, or to
substitute a similar option for this option (if still outstanding), then
this option shall become fully vested and exercisable prior to such event and
shall terminate after such acceleration of vesting if not exercised at or
prior to such corporate event. In the event of a dissolution or liquidation
of the Company, this option (if still outstanding) shall terminate if not
exercised prior to such event.
9. Transferability. This option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. By delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event of your death,
shall thereafter be entitled to exercise this option.
10. Option Not a Service Contract. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the Company,
or of the Company to continue your employment with the Company. In the event
that this option is granted to you in connection with the performance of
services as a consultant or director, or in the
<PAGE>
event that this option is granted to you in connection with the performance of
services as an employee and you subsequently perform services as a consultant
or director, references to employment, employee and similar terms shall
be deemed to include the performance of services as a consultant or a
director, as the case may be, provided, however, that no rights as an
employee shall arise by reason of the use of such terms.
11. Notices. Any notices provided for in this option shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of
notices delivered by the Company to you, five (5) days after deposit in the
United States mail, postage prepaid, addressed to you at the address specified
below or at such other address as you hereafter designate by written notice to
the Company.
12. Amendment. This option may be amended by the Board of
Directors at any time; provided, however, that any change that would
adversely affect your rights in this option must first be approved by you in
writing before becoming effective.
13. Administration. This option is subject to all interpretations,
amendments, rules and regulations which may from time to time be promulgated and
adopted by the Company. This authority shall be exercised by the Board, or by a
committee of one or more members of the Board in the event that the Board
delegates its authority to a committee. The Board, in exercise of this
authority, may correct any defect, omission or inconsistency in this option in a
manner and to the extent the Board shall deem necessary or desirable to make
this option fully effective. References to the Board shall mean the committee if
a committee has been appointed by the Board. Any interpretations, amendments,
rules and regulations promulgated by the Board shall be final and binding upon
the Company and its successors in interest as well as you and your heirs,
assigns, and other successors in interest.
<PAGE>
14. Rights as Stockholder. Neither you nor any person to whom this
option is transferred under paragraph 8 of this option shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to this option unless and until such person has satisfied all
requirements for exercise of this option pursuant to its terms.
Dated as of the 19th day of January, 1996.
Very truly yours,
ALANEX CORPORATION
By:_______________________________
Duly authorized on behalf
of the Board of Directors
ATTACHMENTS:
Notice of Exercise
<PAGE>
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with respect
to this option are set forth in the option; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the entire understanding between the undersigned optionee and the Company
and its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the undersigned
under stock option plans of the Company, and (ii) the following agreements only:
NONE __________
(Initial)
OTHER ___________________
___________________
___________________
____________________________
ALEXANDER POLINSKY, OPTIONEE
Address:__________________________
__________________________
__________________________
