<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(mark one)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1996
or
/ / Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER: 0-19454
ANERGEN, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 77-0183594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 PENOBSCOT DRIVE
REDWOOD CITY, CALIFORNIA 94063
(Address of principal executive offices) (Zip Code)
Telephone number: (415) 361-8901
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
At September 30, 1996, Registrant had outstanding 18,734,754 shares of Common
Stock.
<PAGE> 2
ANERGEN, INC.
INDEX
<TABLE>
Part I: Financial Information Page No.
- ------- --------------------- --------
<S> <C>
ITEM 1. Condensed Consolidated Financial Statements (unaudited)
Condensed balance sheets - September 30, 1996
and December 31, 1995....................................... 3
Condensed statements of operations - three and nine months
ended September 30, 1996 and 1995........................... 4
Condensed statements of cash flows - nine months ended
September 30, 1996 and 1995................................. 5
Notes to condensed financial statements....................... 6
ITEM 2. Management's discussion and analysis of
financial condition and results of operations............... 7
Part II: Other Information
ITEM 6. Exhibits and reports on Form 8-K.............................. 9
Signatures.................................................... 10
</TABLE>
<PAGE> 3
Part I: Financial Information
ANERGEN, INC.
CONDENSED BALANCE SHEETS
(IN THOUSANDS )
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents ........................................ $ 138 $ 468
Short-term investments ...................................... 17,387 11,024
Contract receivables - related party ........................ 993 815
Prepaid expenses ............................................ 145 102
-------- --------
Total current assets ........................... 18,663 12,409
Property and equipment, net ...................................... 1,648 2,010
Other assets ..................................................... 36 36
-------- --------
$ 20,347 $ 14,455
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities .................... $ 1,108 $ 1,040
Current portion of capital lease obligations and debt ....... 722 883
-------- --------
Total current liabilities ...................... 1,830 1,923
Long-term portion of capital lease obligations and debt .......... 275 818
Commitments
Shareholders' equity:
Preferred stock, no par value; none issued and outstanding . -- --
Common stock, no par value; 40,000,000 shares authorized;
18,734,025 issued and outstanding (14,967,680 at
December 31, 1995).O .................................. 57,362 47,359
Additional paid-in-capital .................................. 659 648
Unrealized gain (loss) on investments ....................... (41) 16
Accumulated deficit ......................................... (39,738) (36,309)
-------- --------
Total shareholders' equity ..................... 18,242 11,714
-------- --------
$ 20,347 $ 14,455
======== ========
</TABLE>
See accompanying notes.
3
<PAGE> 4
ANERGEN, INC.
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Contract revenues - related party ... $ 864 $ 627 $ 2,286 $ 2,189
License fee ......................... 2,000 -- 2,000 --
Interest income ..................... 167 185 426 352
-------- -------- -------- --------
3,031 812 4,712 2,541
Expenses:
Research and development ............ 2,389 2,101 6,229 6,331
General and administrative .......... 716 448 1,775 1,375
Interest expense .................... 38 92 137 244
-------- -------- -------- --------
3,143 2,641 8,141 7,950
-------- -------- -------- --------
Net loss ................................. $ (112) $ (1,829) $ (3,429) $ (5,409)
-------- -------- -------- --------
Net loss per
share .................................... $ (0.01) $ (0.12) $ (0.22) $ (0.45)
-------- -------- -------- --------
Shares used in calculating per share data 17,077 14,943 15,714 12,149
-------- -------- -------- --------
</TABLE>
See accompanying notes.
4
<PAGE> 5
ANERGEN, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
1996 1995
---- ----
<S> <C> <C>
Cash flows used in operating activities:
Net loss ............................................ $ (3,429) $ (5,409)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ..................... 813 793
Deferred compensation amortization ................ 11 36
Changes in operating assets and liabilities:
Contract receivables - related party .............. (178) 112
Prepaid expenses .................................. (43) 62
Other assets ...................................... -- (16)
Accounts payable and accrued liabilities .......... 68 18
-------- --------
Net cash used in operating activities .................. (2,758) (4,404)
Cash flows provided by (used in) investing activities:
Purchase of investments available-for-sale .......... (21,985) (27,353)
Sale of investments available-for-sale .............. 15,565 16,952
Purchase of property and equipment .................. (451) (747)
-------- --------
Net cash used in investing activities .................. (6,871) (11,148)
-------- --------
Cash flows provided by (used in) financing activities:
Proceeds from facility and equipment debt financing -- 497
Repayments of capital lease obligations and debt .... (704) (745)
Issuance of common stock, net ....................... 10,003 14,734
-------- --------
Net cash provided by financing activities .............. 9,299 14,486
Net decrease in cash ................................... (330) (1,066)
Cash and equivalents at beginning of period ........... 468 1,248
-------- --------
Cash and equivalents at end of period ................. 138 182
Short-term investments at end of period ................ 17,387 12,999
-------- --------
Cash and short-term investments at end of period ....... $ 17,525 $ 13,181
-------- --------
</TABLE>
See accompanying notes.
5
<PAGE> 6
ANERGEN, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
1. NATURE OF BUSINESS
Anergen, Inc. (the "Company") was incorporated on April 26, 1988 for
the purpose of developing therapies using biopharmaceutical compounds
for the treatment of autoimmune diseases.
2. BASIS OF PRESENTATION
The interim financial statements included herein have been prepared by
the Company without audit, pursuant to the rules and regulations
promulgated by the Securities and Exchange Commission (the
"Commission"). Certain information and footnote disclosures, normally
included in financial statements prepared in accordance with generally
accepted accounting principles, have been omitted pursuant to
Commission rules and regulations; nevertheless, the Company believes
that the disclosures are adequate to make the information presented not
misleading. These condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments, necessary to present
fairly the financial position of the Company (subject to year-end
adjustments) with respect to the interim financial statements, and of
the results of its operations and cash flows for the interim periods
then ended, have been included. The results of operations for the
interim periods are not necessarily indicative of the results for the
full year.
Loss Per Share
Net loss per share is computed using the weighted average number of
shares of common stock outstanding. Common equivalent shares from
outstanding stock options and warrants are excluded from the
computation as their effect is anti-dilutive.
3. SIGNIFICANT EVENTS
On August 9, 1996 the Company completed a follow-on offering of
3,500,000 shares of its Common Stock in exchange for gross proceeds of
$10.5 million. On September 12, 1996 the underwriters of the follow-on
offering exercised a portion of their over-allotment option totaling
168,000 shares of Common Stock, raising the total gross proceeds from
the offering to approximately $11.0 million.
On September 2, 1996 the Company received a $2 million license fee
related to its collaborative agreement which it entered into on June
28, 1996 with N.V. Organon, of Oss, The Netherlands. Under the
collaboration, the parties intend to develop a product to treat
rheumatoid arthritis by utilizing a peptide discovered by N.V. Organon
using the Company's proprietary AnergiX technology.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results
of Operations contains certain forward-looking statements which involve risks
and uncertainties. The Company's actual results could differ materially from the
results anticipated in these forward looking statements as a result of certain
factors set forth hereunder, in the Company's Annual Report as filed on Form
10-K and Form 10-K/A filed with the Securities and Exchange Commission, and in
the Registration Statement as filed on Form S-1 by the Company in August 1996.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has financed its operations primarily through
private placements of its equity securities with venture capitalists
(which raised an aggregate of approximately $7.6 million in net
proceeds), through the sale of its Common Stock to Novo Nordisk A/S
(which raised approximately $8 million in net proceeds), through the
issuance of its Common Stock and Warrants to purchase shares of Common
Stock through a private placement in exchange for $1.5 million in
proceeds, and through public offerings of its Common Stock which have
raised an aggregate of $38.8 million in net proceeds, including $9.5
million in net proceeds from the sale of 3.5 million shares of Common
Stock to the public in August 1996 (the "1996 Follow-on Offering") and
an additional $469,000 from the underwriters' exercise of the
over-allotment option in September 1996. The Company's cash, cash
equivalents and short-term investments at September 30, 1996 were
approximately $17.5 million, representing an increase from the end of
the previous quarter of approximately $9.8 million. The Company had
shareholders' equity at September 30, 1996 of approximately $18.2
million. Accounts payable and accrued liabilities increased to
$1,108,000 at September 30, 1996 from $1,040,000 at December 31, 1995.
Long-term debt decreased from $818,000 at December 31, 1995 to $275,000
at September 30, 1996.
The Company anticipates that its current cash, short-term investments
and expected revenues under its collaborative agreements, combined with
the net proceeds from the 1996 Follow-on Offering, will be sufficient
to fund its operations for approximately two years. Thereafter, the
Company will require substantial additional funds to continue its
operations. The Company anticipates that its current resources will be
primarily used to fund the Company's ongoing Phase II clinical trials
of AnervaX(TM) for rheumatoid arthritis, manufacturing of GMP grade
material for the Phase I clinical trial of the Company's AnergiX(TM)
for multiple sclerosis and the conduct of such clinical trial, research
activities in its core AnervaX and AnergiX technologies to further
current programs in rheumatoid arthritis, multiple sclerosis, insulin
dependent diabetes mellitus and myasthenia gravis and to develop
programs in other autoimmune diseases, and to support research
activities in academic institutions. The balance of such resources will
be used to fund continued limited research on other autoimmune diseases
and general and administrative activities, including those associated
with seeking collaborative arrangements to enable the Company to
increase its research and development activities in other autoimmune
diseases. The foregoing forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially. In
particular, the Company's working capital requirements may vary
depending on numerous factors that are beyond the Company's control.
These factors include the progress of the Company's research and
development programs, manufacturing activities, the progress of the
Company's clinical programs, the results of laboratory testing, the
time and cost required to seek regulatory approvals to commence
clinical trials for the Company's initial products, the need to obtain
licenses to other proprietary rights, any required adjustments to the
Company's operating plan to respond to competitive pressures or
technological advances, developments with respect to the Company's
existing or future collaborative arrangements and the availability of
various methods of financing. The Company expects to seek to raise
additional capital either from the public equity market, private
placements, and/or R&D collaborations with other pharmaceutical
companies. Any additional equity financing may be dilutive to
shareholders, and debt financing, if available, may involve
restrictions on stock dividends. Adequate funds for the Company's
operations, whether from financial markets, collaborative or other
arrangements with corporate partners or from other sources, may not be
available when needed or on terms attractive to the Company.
Insufficient funds may require the Company to delay, scale back or
eliminate some or all of its research and product development programs
or to license third parties to commercialize products or technologies
that the Company would otherwise seek to develop itself. The Company's
liquidity will be reduced as amounts are expended for continuing
research and development.
7
<PAGE> 8
RESULTS OF OPERATIONS
The Company's net loss decreased by 94% to $112,000 in the fiscal
quarter ended September 30, 1996 compared to a $1,829,000 loss in the
corresponding period in the previous year due to an increase in
revenues of 273% to $3,031,000 in the fiscal quarter ended September
30, 1996 compared to $812,000 in the corresponding period in the
previous year. This increase in revenues was primarily due to a $2
million license fee received in the third quarter related to the
Company's collaborative agreement with N.V. Organon. Total expenses
increased by 19% from $2,641,000 to $3,143,000 due primarily to
increased expenses related to clinical trial and corporate development
activities. The Company expects total operating expenses to increase as
it increases research and development efforts.
Research and development expenses increased 14% to $2,389,000 for the
quarter ended September 30, 1996 from $2,101,000 in the corresponding
period in the previous year. This is due to an increase in clinical
activities related to the Company's AnergiX for multiple sclerosis
which is in Phase I testing, and to an increase in clinical costs
associated with the Company's ongoing Phase II clinical trial of
AnervaX for rheumatoid arthritis. The Phase II clinical trial of
AnervaX was initiated in June of 1996.
General and administrative expenses increased 60% to $716,000 for the
quarter ended September 30, 1996 compared to $448,000 in the
corresponding period in the previous year primarily due to compensation
costs associated with the retirement of John Fara, Ph.D., the former
President and CEO, the recruitment and compensation costs related to
the hiring of Barry Sherman, M.D., as President and CEO, costs related
to additional recruitment efforts and increased corporate development
activities.
Interest income decreased to $167,000 for the quarter ended September
30, 1996 as compared to $185,000 in the corresponding period in the
previous year due to lower average cash balances in 1996. Interest
expense decreased to $38,000 for the quarter ended September 30, 1996
as compared to $92,000 in the corresponding period in the previous year
due to lower debt balances. Interest income is expected to increase as
a result of the investment of the net proceeds from the 1996 Follow-on
Offering, and to decline gradually over future periods as invested
capital is used for operating activities.
The Company expects to incur substantial and increasing operating
losses for at least the next several years. The Company's losses on a
quarter-by-quarter basis may vary depending upon a variety of factors,
any of which may fluctuate, including the level of research activities,
the timing of hiring of additional scientific and management personnel,
the retention of consultants, the purchase or leasing of laboratory
equipment, the licensing of any required technology and other factors.
Accordingly, the Company believes that quarter-by-quarter losses will
not be a useful indicator of the performance of the Company.
FACTORS THAT MAY AFFECT FUTURE OPERATING PERFORMANCE
The factors discussed in Item 1 and Item 7 of the Company's Annual
Report on Form 10-K and Form 10-K/A for fiscal year 1995 and the
section entitled "Risk Factors" in the Company's Registration Statement
as filed on Form S-1 in August 1996 are hereby incorporated by
reference. Readers are cautioned that such factors, among others, in
some cases have affected, and in the future could cause the Company's
actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company.
Factors that could cause actual results to differ include but are not
limited to (i) the Company's ability to successfully develop and market
its products, (ii) the extent to which the Company's products, if any,
prove to be safe and efficacious in clinical trials, meet applicable
regulatory standards and are capable of being produced in commercial
quantities at acceptable costs, (iii) uncertainties related to
preclinical and clinical trials including the rate of completion of the
Company's clinical trials, (iv) market acceptance of the Company's
products, if any, (v) government regulation and future health care
legislation, (vi) the Company's success in maintaining existing and
developing collaborations with corporate partners, licensors,
licensees, and others, (vii) the Company's ability to maintain patent
protection for its therapeutic approach and for any developed products,
to preserve its trade secrets and to operate without infringing the
proprietary rights of third parties, (viii) competition and
technological change, (ix) general economic conditions, (x) the
Company's ability to attract and retain key management and skilled
employees and (xi) potential liability claims and other litigation.
8
<PAGE> 9
ANERGEN, INC.
PART II: Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon senior securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and reports on Form 8-K
a) Exhibits
<TABLE>
<CAPTION>
Exhibit Description Page
------- ----------- ----
<S> <C> <C>
3.1 Restated and Amended Articles of Incorporation. (1)
3.2 Bylaws, as amended. (1)
4.1 Form of Common Stock Certificate. (1)
10.15 Employment Agreement of Barry M. Sherman, M. D.
10.16 1996 Stock Plan and form of agreement.
27.1 Financial Data Schedule
</TABLE>
(1) Incorporated by reference to the exhibit filed with
Registrant's Registration Statement on Form S-1
(No. 33-42107), as amended.
b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended September 30, 1996.
9
<PAGE> 10
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANERGEN, INC.
Date: November 8, 1996 By:/s/ JOHN W. VARIAN
--------------------------------
John W. Varian
Vice President,
Finance and Chief Financial Officer
on behalf of the Company and
as principal financial and accounting
officer
10
<PAGE> 11
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
3.1 Restated and Amended Articles of Incorporation (1)
3.2 Bylaws, as amended. (1)
4.1 Form of Common Stock Certificate. (1)
10.15 Employment Agreement of Barry M. Sherman, M.D.
10.16 1996 Stock Plan and form of agreement.
27.1 Financial Data Schedule
(1) Incorporated by reference to the exhibit filed with
Registrant's Registration Statement on Form S-1 (No. 33-42107),
as amended.
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT
THIS AGREEMENT, by and between Barry Sherman, M.D. (the "Employee") and
Anergen, Inc., a California corporation (the "Company"), shall become effective
as of May 27, 1996.
In consideration of the mutual covenants herein contained, and in
consideration of the employment of Employee by the Company, the parties agree as
follows:
1. Duties and Scope of Employment.
(a) Position. The Company agrees to employ the Employee
under the terms of this Agreement in the position of President and Chief
Executive Officer. Employee shall report to the Board of Directors. In addition,
Employee shall be elected to the Board of Directors of the Company as of the
effective date and shall be nominated for re-election at each meeting of the
shareholders where directors are elected during the term of this Agreement.
Employee agrees to resign from the Board of Directors upon termination of
employment with the Company.
(b) Obligations and Duties. During the term of this
Agreement, the Employee shall devote his full business efforts and time to the
Company and shall use his best efforts to promote and protect the business
interests of the Company. Specifically, Employee's responsibilities will be to
manage the operations of the Company; to build and maintain an outstanding and
harmonious working team of both scientific and business employees; to secure,
promote and maintain the appropriate financing and capital structure of the
Company; to manage and direct the strategic development of the Company's
business plan and its implementation; and to oversee the overall scientific
affairs of the Company. The foregoing, however, shall not preclude the Employee
from engaging in appropriate civic, charitable or religious activities or from
devoting a reasonable amount of time to private investments, writing of books,
journals and/or articles, and making public appearances or from serving on the
boards of directors of other entities, as long as such activities and service do
not interfere or conflict with his responsibilities to the Company and do not
represent business conflicts with the Company's business.
(c) Rules, Regulations and Policies. Employee shall
comply with all of the Company's reasonable rules and regulations applicable to
the employees of the Company and with all of the Company's reasonable policies
established by its management and Board of Directors.
2. Compensation. Beginning on the effective date of this
Agreement, the Employee shall be paid a base salary (the "Base Compensation") of
$250,000 annually, paid in bi-monthly payments. Employee shall also be eligible
at the end of 12 months to receive a performance bonus of up to 25% of the Base
Compensation at the direction of the Board of Directors. The bonus shall be
determined based upon full or partial completion of reasonable goals established
by mutual agreement between the Employee and the Board of Directors. The
Employee's base salary and bonus shall be reviewed by the Board of Directors for
possible increases annually.
<PAGE> 2
3. Employee Benefits.
(a) General. During the term of his employment under this
Agreement, Employee will be entitled to receive all employee benefits currently
and hereafter provided to senior management at the Company including medical,
dental, and life insurance so long as and to the extent these benefits exist,
provided that Employee is otherwise eligible and insurable in accordance to the
terms of such plan(s), and subject in each case to the generally applicable
terms and conditions of the plan or program in question and to the
administrative determinations of any committee or the Board of Directors
administering such plan or program. Employee will be eligible for participation
in the Company's Employee Stock purchase plan on the next enrollment date, which
is October 1, 1996. Employee may participate in the Company's 401(k) plan
beginning on July 1, 1997, which is the next enrollment date after one year from
date of employment. The Board will provide Employee with an equivalent benefit
to offset any loss resulting from unavailability of immediate enrollment in the
plan.
(b) Stock Awards. Through the Company Stock Option Plan,
Employee will be granted options to acquire an aggregate 400,000 shares of
Common Stock of the Company at a price per share on May 14, 1996, the date of
acceptance of employment. These options will vest over a four-year period at the
rate of 6/48th of the shares after 6 months, and 1/48th per share per month
thereafter. The options will be subject to the standard terms and conditions
under the stock option plan.
4. Business Expenses and Travel. During the term of his
employment under this Agreement, the Employee shall be authorized to incur
necessary and reasonable travel, entertainment and other business expenses in
connection with his duties hereunder. The Company shall reimburse the Employee
for such expenses upon presentation of an itemized account and appropriate
supporting documentation, all in accordance with the Company's generally
applicable policies.
5. Definitions. As used herein, the following definitions shall
apply:
(a) "Cause" shall mean the termination of employment of
Employee shall have taken place as a result of (i) Employee's continued failure
to substantially perform his principal duties (other than as a result of
Disability) after thirty (30) days' written notice from the Company specifying
the nature of Employee's failure and demanding that such failure be remedied;
(ii) Employee's material and continuing breach of his obligations to the Company
set forth in this Agreement or the Proprietary Information Agreement after
thirty (30) days' written notice from the Company specifying the nature of
Employee's breach and demanding that such breach be remedied (unless such breach
by its nature cannot be cured, in which case notice and an opportunity to cure
shall not be required); (iii) Employee's being convicted of a felony or (iv) act
or acts of dishonesty undertaken by Employee and intended to result in
substantial gain or personal enrichment of Employee at the expense of the
Company.
(b) "Change in Control" shall mean the occurrence of any
of the following events:
-2-
<PAGE> 3
(i) The stockholders of the Company approve a
merger or consolidation of the Company with any other corporation or entity,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity or
such surviving entity's parent outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets, except a sale to an
entity of which at least fifty percent (50%) of the total voting power
represented by the voting securities of such entity are held by stockholders of
the Company at the time of such sale.
(ii) The acquisition by any Person as Beneficial
Owner (as such terms are defined in the Securities Exchange Act of 1934, as
amended), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the
Company's then outstanding voting securities.
(iii) A majority of the Board of Directors of the
Company in office at the beginning of any thirty-six (36) month period is
replaced during the course of such thirty-six (36) month period (other than by
voluntary resignation of individual directors in the ordinary course of
business) and such replacement was not initiated by the Board of Directors of
the Company as constituted at the beginning of such thirty-six (36) month period
and as changed during such period to add directors approved by the incumbent
Board of Directors.
(c) "Constructive Termination" shall mean (i) a material
reduction in Employee's salary, title, bonus opportunity or benefits not agreed
to by Employee (except in connection with a decrease to be applied because the
Company's performance has decreased and which is also applied to other officers,
and excluding the substitution of substantially equivalent compensation and
benefits), (ii) a significant reduction in Employee's responsibilities not
agreed to by Employee, or (iii) a change in reporting from the Board of
Directors to another officer.
(d) "Disability" shall mean that the Employee, at the
time notice is given, has been unable to perform his duties under this Agreement
for a period of not less than ninety (90) days consecutively as the result of
his incapacity due to physical or mental illness. In the event that the Employee
resumes the performance of substantially all of his duties hereunder before the
termination of his employment under Section 6(b)(iii) becomes effective, the
notice of termination shall automatically be deemed to have been revoked.
6. Termination of Employment.
(a) Termination by the Company. The Company may terminate
Employee's employment at any time, for any reason or for no reason, with fifteen
(15) days advance notice in writing.
-3-
<PAGE> 4
(i) Termination Without Cause. If the Company
terminates Employee's employment for any reason whatsoever, including a
Constructive Termination, and other than voluntary termination of Employment or
Termination for Cause, the provisions of Section 7(a) shall apply.
(ii) Termination for Cause. If the Company
terminates Employee's employment for Cause, the provisions of Section 7(b) shall
apply.
(iii) Termination on Death or Disability. If the
Company terminates Employee's employment as a result of Employee's Death or
Disability, the provisions of Section 7(c) shall apply.
(iv) Constructive Termination. If any of the
circumstances which are described in Section 5(c) occur when the Company
terminates Employee's employment, the Employee shall be deemed to be terminated
without Cause and the provisions of Section 7(a) shall apply.
(b) Voluntary Termination by the Employee. The Employee
may terminate his employment voluntarily by giving the Company thirty (30) days'
advance notice in writing, at which time the provisions of Section 7(b) shall
apply. However, if the Employee terminates his employment pursuant to this
Section 6(b) as a result of a Constructive Termination, the provisions of
Section 7(a) shall apply, provided the Employee has provided written notice to
the Company reasonably specifying the reasons why a Constructive Termination has
occurred and the Company has not cured (retroactively where possible) such
Constructive Termination within twenty (20) days after receipt of such notice.
(c) Waiver of Notice. Any waiver of notice shall be valid
only if it is made in writing and expressly refers to the applicable notice
requirement in this Section 6.
7. Payments Upon Termination of Employment.
(a) Payments Upon Termination Pursuant to Section 6(a)(i)
and Constructive Termination. If, during the term of this Agreement, the
Employee's employment is terminated by the Company pursuant to Section 6(a)(i)
or voluntarily by Employee under Section 6(b) as a result of a Constructive
Termination, the Employee shall be entitled to receive the following:
(i) Severance Payment. The Company shall
continue to pay to the Employee his Base Compensation and provide medical,
dental and life insurance benefits for twelve (12) months following termination
(the "Severance Payment"). Such Base Compensation amount shall be determined
with reference to the Base Compensation in effect for the month in which the
date of employment termination occurs.
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<PAGE> 5
(ii) Stock Options. The stock options referred to
in Section 3(b) shall be exercisable to the extent that reflects an additional
twelve (12) months of vesting from the date of termination. Employee shall have
six (6) months from the date of termination of employment in which to exercise
any non-qualified stock option and three (3) months from the date of termination
of employment to exercise any incentive stock option.
(iii) Method of Payment. The Severance Payment
shall be made in monthly installments.
(iv) Payment in Lieu of Contract Damages. The
Severance Payment shall be in lieu of any further payments to the Employee and
any further accrual of benefits with respect to periods subsequent to the date
of the employment termination.
(v) No Duty To Mitigate. The Employee shall not
be required to mitigate the amount of any payment contemplated by this Section
7(a) (whether by seeking new employment or in any other manner).
(b) Termination By Company for Cause or Voluntary
Termination. If the Employee's employment is terminated pursuant to Section
6(a)(ii) or voluntarily (other than a Constructive Termination) pursuant to
Section 6(b), no compensation or payments will be paid or provided to the
Employee for the periods following the date when such a termination of
employment is effective. Notwithstanding the preceding sentence, the Employee's
rights under the benefit plans and option agreements of the Company shall be
determined under the provisions of those plans and agreements, provided Employee
shall have six (6) months from the date of termination of employment in which to
exercise any non-qualified stock option and three (3) months from the date of
termination of employment to exercise any incentive stock option in each case to
the extent such options are exercisable as of the date of termination.
(c) Termination on Death or Disability. If the Employee's
employment is terminated because of Employee's Death or Disability (as defined
in Section 3(c) herein), then no payments for the period following such
termination shall be owed under this Agreement and Employee shall receive
severance and disability payments as provided in the Company's standard benefit
plans. Employee's stock options shall be exercisable as provided in the option
agreement.
(d) Termination After a Change in Control. In the event
that after a Change in Control the Employee's employment is terminated pursuant
to Section 6(a)(i) or voluntarily by Employee under Section 6(b) as a result of
a Constructive Termination, then the provisions of Section 7(a) shall apply
except that the accelerated vesting of the exercisability of stock options shall
be twenty-four (24) months instead of twelve (12) months or such longer period
than twenty-four (24) months for which accelerated vesting may be granted
without incurring Federal excise tax imposed pursuant to Section 4996 of the
Internal Revenue Code (or without increasing any such excise tax otherwise
payable without regard to such additional vesting), and provided Employee shall
receive acceleration of less options than twenty-four (24) months if Employee
would receive a greater
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<PAGE> 6
after tax benefit as a result of any such excise tax than if Employee received
acceleration of the full twenty-four (24) months.
8. Proprietary Information. The Employee agrees to comply fully
with the Company's policies relating to non-disclosure of the Company's trade
secrets and proprietary information and processes, as set out in the Proprietary
Information Agreement set out as Exhibit B hereto.
9. Non-Competition. For the twelve (12) month period after
termination of this Agreement for any reason, Executive shall not provide
services, whether for compensation or otherwise, as an officer, director,
employee, consultant or in any other capacity to any person or company that
competes with the products, projects or technology which on the date of
termination are actively being pursued by the Company for the diagnosis,
prevention or treatment of disease. In this regard, Executive acknowledges that
this period of time, scope of business and geographic extent are reasonably
necessary to protect the legitimate business interest of the Company. In the
event Executive breaches this Section, Executive agrees that all obligations of
the Company to make the Severance Payment and to accelerate options upon the
termination shall immediately terminate and Executive shall repay any amounts
paid to Executive after the date Executive breached this Section and return any
shares issued upon exercise of any options which were accelerated. The foregoing
shall be the sole remedy for any breach of this provision.
10. No Conflicts. Employee covenants that he is not subject to any
agreement or obligation that conflicts with or would be breached by the
provisions of this Agreement.
11. Successors.
(a) Company's Successors. The Company shall require in
any agreement through which any successor to the Company (whether directly or
indirectly and whether by purchase, lease, merger, consolidation, liquidation or
otherwise) acquires all or substantially all of the Company's business and/or
assets such successor to assume this Agreement and agree expressly to perform
this Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of a succession. For all purposes under
this Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by this Agreement by
operation of law.
(b) Employee's Successors. This Agreement and all rights
of the Employee hereunder shall inure to the benefit of, and be enforceable by,
the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees.
12. Notice. Notices and all other communications contemplated by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or five days after being mailed by U.S. registered or
certified mail, return receipt requested and postage prepaid. In the case of the
Employee, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing. In the case of the
Company, mailed notices shall
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<PAGE> 7
be addressed to its corporate headquarters, and all notices shall be directed to
the attention of its Chief Executive Officer.
13. Termination of Agreement. This Agreement shall terminate upon
the earlier of (i) the date that all obligations of the parties hereunder have
been satisfied or (ii) May __, 2000. A termination of this Agreement pursuant to
the preceding sentence shall be effective for all purposes, except that such
termination shall not affect the payment or provision of compensation or
benefits on account of a termination of employment occurring prior to or upon
the termination of this Agreement. No payments under this Agreement shall be
required for any termination of employment occurring after May __, 2000. The
parties contemplate that at the end of the four year term of this Agreement, the
parties will negotiate a new agreement for a further term of employment. In the
event that a new agreement is not reached between the parties, this Agreement
shall continue to govern the terms of Employee's employment until a new
agreement is entered into.
14. Miscellaneous Provisions.
(a) Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or discharge is
agreed to in writing and signed by the Employee and by the Chief Executive
Officer or a director of the Company authorized by the Board of Directors. No
waiver by either party of any breach of, or of compliance with, any condition or
provision of this Agreement by the other party shall be considered a waiver of
any other condition or provision or of the same condition or provision at
another time.
(b) Whole Agreement. No agreements, representations or
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof, except for the
Indemnification Agreement and Proprietary Information Agreement between the
Employee and the Company, each of which shall remain in full force and effect
notwithstanding termination of this Agreement. This Agreement shall supersede
the provisions regarding acceleration of vesting after a Change in Control as
defined and provided in any stock options.
(c) Choice of Law. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of California.
(d) Severability. The invalidity or unenforceability of
any provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.
(e) Arbitration. Any dispute or controversy arising under
or in connection with this Agreement shall be settled exclusively by arbitration
in San Mateo County, California, in accor dance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction.
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<PAGE> 8
(f) No Assignment of Benefits. The rights of any person
to payments or benefits under this Agreement shall not be made subject to option
or assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (f) shall be
void.
(g) Employment At Will; Limitation of Remedies. The
Company and the Employee acknowledge that the Employee's employment is at will,
as defined under applicable law. If the Employee's employment terminates for any
reason, the Employee shall not be entitled to any payments, benefits, damages,
awards or compensation other than as provided by this Agreement.
(h) Employment Taxes. All payments made pursuant to this
Agreement will be subject to withholding of applicable taxes.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.
ANERGEN, INC.
/s/ BARRY M. SHERMAN, M.D. By: /s/ NICOLE VITULLO
- ----------------------------- ----------------------------------
Barry M. Sherman, M.D.
Print Name: Nicole Vitullo
--------------------------
Title: Director
-------------------------------
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<PAGE> 1
EXHIBIT 10.16
ANERGEN, INC.
1996 STOCK PLAN
1. Purposes of the Plan. The purposes of this Stock Plan are:
- to attract and retain the best available personnel
for positions of substantial responsibility,
- to provide additional incentive to Employees,
Directors and Consultants, and
- to promote the success of the Company's business.
Options granted under the Plan may be Incentive Stock Options or
Nonstatutory Stock Options, as determined by the Administrator at the time of
grant. Stock Purchase Rights may also be granted under the Plan.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.
(b) "Applicable Laws" means the requirements relating to the
administration of stock option plans under U. S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Options or Stock Purchase Rights are,
or will be, granted under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a committee of Directors appointed by
the Board in accordance with Section 4 of the Plan.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Company" means Anergen, Inc., a California corporation.
(h) "Consultant" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services to such
entity.
<PAGE> 2
(i) "Director" means a member of the Board.
(j) "Disability" means total and permanent disability as
defined in Section 22(e)(3) of the Code.
(k) "Employee" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company. A
Service Provider shall not cease to be an Employee in the case of (i) any leave
of absence approved by the Company or (ii) transfers between locations of the
Company or between the Company, its Parent, any Subsidiary, or any successor.
For purposes of Incentive Stock Options, no such leave may exceed ninety days,
unless reemployment upon expiration of such leave is guaranteed by statute or
contract. If reemployment upon expiration of a leave of absence approved by the
Company is not so guaranteed, on the 181st day of such leave any Incentive Stock
Option held by the Optionee shall cease to be treated as an Incentive Stock
Option and shall be treated for tax purposes as a Nonstatutory Stock Option.
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 value of
Common Stock determined as follows:
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of determination, as reported in
The Wall Street Journal or such other source as the Administrator deems
reliable;
(ii) If the Common Stock is regularly quoted by a
recognized securities dealer but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the 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 Administrator deems reliable;
(iii) In the absence of an established market for the
Common Stock, the Fair Market Value shall be determined in good faith by the
Administrator.
(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.
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(p) "Notice of Grant" means a written or electronic notice
evidencing certain terms and conditions of an individual Option or Stock
Purchase Right grant. The Notice of Grant is part of the Option Agreement.
(q) "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.
(r) "Option" means a stock option granted pursuant to the
Plan.
(s) "Option Agreement" means an 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.
(t) "Option Exchange Program" means a program whereby
outstanding options are surrendered in exchange for options with a lower
exercise price.
(u) "Optioned Stock" means the Common Stock subject to an
Option or Stock Purchase Right.
(v) "Optionee" means the holder of an outstanding Option or
Stock Purchase Right granted under the Plan.
(w) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.
(x) "Plan" means this Anergen, Inc. 1996 Stock Plan.
(y) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of Stock Purchase Rights under Section 11 below.
(z) "Restricted Stock Purchase Agreement" means a written
agreement between the Company and the Optionee evidencing the terms and
restrictions applying to stock purchased under a Stock Purchase Right. The
Restricted Stock Purchase Agreement is subject to the terms and conditions of
the Plan and the Notice of Grant.
(aa) "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.
(bb) "Section 16(b)" means Section 16(b) of the Exchange Act.
(cc) "Service Provider" means an Employee, Director or
Consultant.
(dd) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 of the Plan.
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<PAGE> 4
(ee) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 of the Plan, as evidenced by a Notice of Grant.
(ff) "Subsidiary" means a "subsidiary corporation", whether
now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan. Subject to the provisions of
Section 13 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 1,000,000 Shares. The Shares may be
authorized, but unissued, or reacquired Common Stock.
If an Option or Stock Purchase Right expires or becomes
unexercisable without having been exercised in full, or is surrendered pursuant
to an Option Exchange Program, the unpurchased Shares which were subject thereto
shall become available for future grant or sale under the Plan (unless the Plan
has terminated); provided, however, that Shares that have actually been issued
under the Plan, whether upon exercise of an Option or Right, shall not be
returned to the Plan and shall not become available for future distribution
under the Plan, except that if Shares of Restricted Stock are repurchased by the
Company at their original purchase price, such Shares shall become available for
future grant under the Plan.
4. Administration of the Plan.
(a) Procedure.
(i) Multiple Administrative Bodies. The Plan may be
administered by different Committees with respect to different groups of Service
Providers.
(ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan shall be administered by a Committee of two or more "outside
directors" within the meaning of Section 162(m) of the Code.
(iii) Rule 16b-3. To the extent desirable to qualify
transactions hereunder as exempt under Rule 16b-3, the transactions contemplated
hereunder shall be structured to satisfy the requirements for exemption under
Rule 16b-3.
(iv) Other Administration. Other than as provided above,
the Plan shall be administered by (A) the Board or (B) a Committee, which
committee shall be constituted to satisfy Applicable Laws.
(b) Powers of the Administrator. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:
(i) to determine the Fair Market Value;
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<PAGE> 5
(ii) to select the Service Providers to whom Options and
Stock Purchase Rights may be granted hereunder;
(iii) to determine the number of shares of Common Stock
to be covered by each Option and Stock Purchase Right granted hereunder;
(iv) to approve forms of agreement for use under the
Plan;
(v) to determine the terms and conditions, not
inconsistent with the terms of the Plan, of any Option or Stock Purchase Right
granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options or Stock Purchase Rights may
be exercised (which may be based on performance criteria), any vesting
acceleration or waiver of forfeiture restrictions, and any restriction or
limitation regarding any Option or Stock Purchase Right or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator,
in its sole discretion, shall determine;
(vi) to reduce the exercise price of any Option or Stock
Purchase Right to the then current Fair Market Value if the Fair Market Value of
the Common Stock covered by such Option or Stock Purchase Right shall have
declined since the date the Option or Stock Purchase Right was granted;
(vii) to institute an Option Exchange Program;
(viii) to construe and interpret the terms of the Plan
and awards granted pursuant to the Plan;
(ix) to prescribe, amend and rescind rules and
regulations relating to the Plan, including rules and regulations relating to
sub-plans established for the purpose of qualifying for preferred tax treatment
under foreign tax laws;
(x) to modify or amend each Option or Stock Purchase
Right (subject to Section 15(c) of the Plan), including the discretionary
authority to extend the post-termination exercisability period of Options longer
than is otherwise provided for in the Plan;
(xi) to allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the Shares to be
issued upon exercise of an Option or Stock Purchase Right that number of Shares
having a Fair Market Value equal to the amount required to be withheld. The Fair
Market Value of the Shares to be withheld shall be determined on the date that
the amount of tax to be withheld is to be determined. All elections by an
Optionee to have Shares withheld for this purpose shall be made in such form and
under such conditions as the Administrator may deem necessary or advisable;
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<PAGE> 6
(xii) to authorize any person to execute on behalf of the
Company any instrument required to effect the grant of an Option or Stock
Purchase Right previously granted by the Administrator;
(xiii) to make all other determinations deemed necessary
or advisable for administering the Plan.
(c) Effect of Administrator's Decision. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options or Stock Purchase Rights.
5. Eligibility. Nonstatutory Stock Options and Stock Purchase
Rights may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.
6. Limitations.
(a) Each Option shall be designated in the Option Agreement as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Optionee during any calendar year (under
all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such
Options shall be treated as Nonstatutory Stock Options. For purposes of this
Section 6(a), Incentive Stock Options shall be taken into account in the order
in which they were granted. The Fair Market Value of the Shares shall be
determined as of the time the Option with respect to such Shares is granted.
(b) Neither the Plan nor any Option or Stock Purchase Right
shall confer upon an Optionee any right with respect to continuing the
Optionee's relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.
(c) The following limitations shall apply to grants of
Options:
(i) No Service Provider shall be granted, in any fiscal
year of the Company, Options to purchase more than 500,000 Shares.
(ii) In connection with his or her initial service, a
Service Provider may be granted Options to purchase up to an additional 500,000
Shares which shall not count against the limit set forth in subsection (i)
above.
(iii) The foregoing limitations shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 13.
(iv) If an Option is cancelled in the same fiscal year of
the Company in which it was granted (other than in connection with a transaction
described in Section 13), the cancelled
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<PAGE> 7
Option will be counted against the limits set forth in subsections (i) and (ii)
above. For this purpose, if the exercise price of an Option is reduced, the
transaction will be treated as a cancellation of the Option and the grant of a
new Option.
7. Term of Plan. Subject to Section 19 of the Plan, the Plan
shall become effective upon its adoption by the Board. It shall continue in
effect for a term of ten (10) years unless terminated earlier under Section 15
of the Plan.
8. Term of Option. The term of each Option shall be stated in the
Option Agreement. In the case of an Incentive Stock Option, the term shall be
ten (10) years from the date of grant or such shorter term as may be provided in
the Option Agreement. Moreover, in the case of an Incentive Stock Option granted
to an Optionee who, at the time the Incentive Stock Option is granted, owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant or such
shorter term as may be provided in the Option Agreement.
9. Option Exercise Price and Consideration.
(a) Exercise Price. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:
(i) In the case of an Incentive Stock Option
(A) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
Fair Market Value per Share on the date of grant.
(B) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price shall
be no less than 100% of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Nonstatutory Stock Option, the per
Share exercise price shall be determined by the Administrator. In the case of a
Nonstatutory Stock Option intended to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
(iii) Notwithstanding the foregoing, Options may be
granted with a per Share exercise price of less than 100% of the Fair Market
Value per Share on the date of grant pursuant to a merger or other corporate
transaction.
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<PAGE> 8
(b) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.
(c) Form of Consideration. The Administrator shall determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:
(i) cash;
(ii) check;
(iii) promissory note;
(iv) other Shares which (A) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six months on the date of surrender, and (B) have a Fair Market Value on
the date of surrender equal to the aggregate exercise price of the Shares as to
which said Option shall be exercised;
(v) consideration received by the Company under a
cashless exercise program implemented by the Company in connection with the
Plan;
(vi) a reduction in the amount of any Company liability
to the Optionee, including any liability attributable to the Optionee's
participation in any Company-sponsored deferred compensation program or
arrangement;
(vii) any combination of the foregoing methods of
payment; or
(viii) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.
10. Exercise of Option.
(a) Procedure for Exercise; Rights as a Shareholder. Any
Option granted hereunder shall be exercisable according to the terms of the Plan
and at such times and under such conditions as determined by the Administrator
and set forth in the Option Agreement. Unless the Administrator provides
otherwise, vesting of Options granted hereunder shall be tolled during any
unpaid leave of absence. An Option may not be exercised for a fraction of a
Share.
An Option shall be deemed exercised when the Company
receives: (i) written or electronic notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised. Full
payment may consist of any consideration and method of payment authorized by the
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<PAGE> 9
Administrator and permitted by the Option Agreement and the Plan. Shares issued
upon exercise of an Option shall be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the Shares are issued (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such Shares promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the Shares are issued, except as
provided in Section 13 of the Plan.
Exercising an Option in any manner shall decrease the
number of Shares thereafter available, both for purposes of the Plan and for
sale under the Option, by the number of Shares as to which the Option is
exercised.
(b) Termination of Relationship as a Service Provider. If an
Optionee ceases to be a Service Provider, other than upon the Optionee's death
or Disability, the Optionee may exercise his or her Option within such period of
time as is specified in the Option Agreement to the extent that the Option is
vested on 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). In the absence of
a specified time in the Option Agreement, the Option shall remain exercisable
for three (3) months following the Optionee's termination. If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested 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 by the Administrator, the Option shall terminate, and the
Shares covered by such Option shall revert to the Plan.
(c) Disability of Optionee. If an Optionee ceases to be a
Service Provider as a result of the Optionee's Disability, the Optionee may
exercise his or her Option within such period of time as is specified in the
Option Agreement to the extent the Option is vested on 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). In the absence of a specified time in the Option
Agreement, the Option shall remain exercisable for twelve (12) months following
the Optionee's termination. If, on the date of termination, the Optionee is not
vested as to his or her entire Option, the Shares covered by the unvested
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.
(d) Death of Optionee. If an Optionee dies while a Service
Provider, the Option may be exercised within such period of time as is specified
in the Option Agreement (but in no event later than the expiration of the term
of such Option as set forth in the Notice of Grant), by the Optionee's estate or
by a person who acquires the right to exercise the Option by bequest or
inheritance, but only to the extent that the Option is vested on the date of
death. In the absence of a specified time in the Option Agreement, the Option
shall remain exercisable for twelve (12) months following the Optionee's
termination. If, at the time of death, the Optionee is not vested as to his or
her entire
-9-
<PAGE> 10
Option, the Shares covered by the unvested portion of the Option shall
immediately revert to the Plan. The Option may be exercised by the executor or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise the Option under the Optionee's will or the laws of descent or
distribution. If the Option is not so exercised within the time specified
herein, the Option shall terminate, and the Shares covered by such Option shall
revert to the Plan.
(e) Buyout Provisions. The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted based
on such terms and conditions as the Administrator shall establish and
communicate to the Optionee at the time that such offer is made.
11. Stock Purchase Rights.
(a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. After the Administrator
determines that it will offer Stock Purchase Rights under the Plan, it shall
advise the offeree in writing or electronically, by means of a Notice of Grant,
of the terms, conditions and restrictions related to the offer, including the
number of Shares that the offeree shall be entitled to purchase, the price to be
paid, and the time within which the offeree must accept such offer. The offer
shall be accepted by execution of a Restricted Stock Purchase Agreement in the
form determined by the Administrator.
(b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock Purchase Agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's service with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at a rate determined by the
Administrator.
(c) Other Provisions. The Restricted Stock Purchase Agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Plan as may be determined by the Administrator in its sole discretion.
(d) Rights as a Shareholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 13
of the Plan.
12. Non-Transferability of Options and Stock Purchase Rights.
Unless determined otherwise by the Administrator, an Option or Stock Purchase
Right may not be sold, pledged, assigned, hypothecated, transferred, or disposed
of in any manner other than by will or by the laws of descent or distribution
and may be exercised, during the lifetime of the Optionee, only by the Optionee.
If the
-10-
<PAGE> 11
Administrator makes an Option or Stock Purchase Right transferable, such Option
or Stock Purchase Right shall contain such additional terms and conditions as
the Administrator deems appropriate.
13. Adjustments Upon Changes in Capitalization, Dissolution,
Merger or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the shareholders of the Company, the number of shares of Common Stock covered
by each outstanding Option and Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options or Stock Purchase Rights have yet been granted or which have
been returned to the Plan upon cancellation or expiration of an Option or Stock
Purchase Right, as well as the price per share of Common Stock covered by each
such outstanding Option or Stock Purchase Right, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option or Stock
Purchase Right.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator shall notify each
Optionee as soon as practicable prior to the effective date of such proposed
transaction. The Administrator in its discretion may provide for an Optionee to
have the right to exercise his or her Option until ten (10) days prior to such
transaction as to all of the Optioned Stock covered thereby, including Shares as
to which the Option would not otherwise be exercisable. In addition, the
Administrator may provide that any Company repurchase option applicable to any
Shares purchased upon exercise of an Option or Stock Purchase Right shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes
place at the time and in the manner contemplated. To the extent it has not been
previously exercised, an Option or Stock Purchase Right will terminate
immediately prior to the consummation of such proposed action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, each outstanding Option and Stock Purchase Right
shall be assumed or an equivalent option or right substituted by the successor
corporation or a Parent or Subsidiary of the successor corporation. In the event
that the successor corporation refuses to assume or substitute for the Option or
Stock Purchase Right, the Optionee shall fully vest in and have the right to
exercise the Option or Stock Purchase Right as to all of the Optioned Stock,
including Shares as to which it would not otherwise be vested or exercisable. If
an Option or Stock Purchase Right becomes fully vested and exercisable in lieu
of assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee in writing or electronically that the
Option or Stock Purchase Right shall be fully vested and exercisable
-11-
<PAGE> 12
for a period of fifteen (15) days from the date of such notice, and the Option
or Stock Purchase Right shall terminate upon the expiration of such period. For
the purposes of this paragraph, the Option or Stock Purchase Right shall be
considered assumed if, following the merger or sale of assets, the option or
right confers the right to purchase or receive, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option or Stock Purchase Right, for each Share
of Optioned Stock subject to the Option or Stock Purchase Right, to be solely
common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.
14. Date of Grant. The date of grant of an Option or Stock
Purchase Right shall be, for all purposes, the date on which the Administrator
makes the determination granting such Option or Stock Purchase Right, or such
other later date as is determined by the Administrator. Notice of the
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.
15. Amendment and Termination of the Plan.
(a) Amendment and Termination. The Board may at any time
amend, alter, suspend or terminate the Plan.
(b) Shareholder Approval. The Company shall obtain shareholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Applicable Laws.
(c) Effect of Amendment or Termination. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company. Termination of the Plan shall not affect the Administrator's
ability to exercise the powers granted to it hereunder with respect to options
granted under the Plan prior to the date of such termination.
-12-
<PAGE> 13
16. Conditions Upon Issuance of Shares.
(a) Legal Compliance. Shares shall not be issued pursuant to
the exercise of an Option or Stock Purchase Right unless the exercise of such
Option or Stock Purchase Right and the issuance and delivery of such Shares
shall comply with Applicable Laws and shall be further subject to the approval
of counsel for the Company with respect to such compliance.
(b) Investment Representations. As a condition to the exercise
of an Option or Stock Purchase Right, the Company may require the person
exercising such Option or Stock Purchase Right to represent and warrant at the
time of any such exercise that the Shares are being purchased only for
investment and without any present intention to sell or distribute such Shares
if, in the opinion of counsel for the Company, such a representation is
required.
17. Inability to Obtain Authority. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
18. Reservation of Shares. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.
19. Shareholder Approval. The Plan shall be subject to approval by
the shareholders of the Company within twelve (12) months after the date the
Plan is adopted. Such shareholder approval shall be obtained in the manner and
to the degree required under Applicable Laws.
-13-
<PAGE> 14
ANERGEN, INC.
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Anergen, Inc.
1996 Stock Plan (the "Plan") shall have the same defined meanings in this Option
Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee's Name and Address]
You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as
follows:
Grant Number _________________________
Date of Grant _________________________
Vesting Commencement Date _________________________
Exercise Price per Share $________________________
Total Number of Shares Granted _________________________
Total Exercise Price $_________________________
Type of Option: ___ Incentive Stock Option
___ Nonstatutory Stock Option
Term/Expiration Date: _________________________
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
The Shares subject to the Option shall vest over a four year period at
the rate of 6/48th of the Shares six months after the Vesting Commencement Date,
and 1/48 of the Shares subject to the Option shall vest each month thereafter,
subject to the Optionee continuing to be a Service Provider on such dates.
-1-
<PAGE> 15
Termination Period:
Except as otherwise provided herein, this Option may be exercised for
three months after Optionee ceases to be a Service Provider. Upon the death or
Disability of the Optionee, this Option may be exercised for such longer period
as provided in the Plan. In no event shall this Option be exercised later than
the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby
grants to the Optionee named in the Notice of Grant attached as Part I of this
Agreement (the "Optionee") an option (the "Option") to purchase the number of
Shares, as set forth in the Notice of Grant, at the exercise price per share set
forth in the Notice of Grant (the "Exercise Price"), subject to the terms and
conditions of the Plan, which is incorporated herein by reference. Subject to
Section 15(c) of the Plan, in the event of a conflict between the terms and
conditions of the Plan and the terms and conditions of this Option Agreement,
the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an Incentive
Stock Option, to the extent that it exceeds the $100,000 rule of Code Section
422(d) it shall be treated as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
completed by the Optionee and delivered to the Chief Financial Officer of the
Company. The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares. This Option shall be deemed to be
exercised upon receipt by the Company of such fully executed Exercise Notice
accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with Applicable Laws. Assuming
such compliance, for income tax purposes the Exercised Shares shall be
considered transferred to the Optionee on the date the Option is exercised with
respect to such Exercised Shares.
-2-
<PAGE> 16
3. Vesting Acceleration on Change in Control.
(a) In the event Optionee's employment is terminated without
"Cause" or voluntarily as a result of a "Constructive Termination" following a
"Change in Control," the Optionee's rights to purchase stock under this Option
Agreement with the Company shall be automatically vested to the extent that
reflects an additional twenty-four (24) months of vesting from the date of
termination or such longer period than twenty-four (24) months for which
accelerated vesting may be granted without incurring Federal excise tax imposed
pursuant to Section 4996 of the Internal Revenue Code (or without increasing any
such excise tax otherwise payable without regard to such additional vesting),
and provided Optionee shall receive acceleration of less options than
twenty-four (24) months if Optionee would receive a greater after tax benefit as
a result of any such excise tax than if Optionee received acceleration of the
full twenty-four (24) months. Optionee shall be responsible for payment of any
such excise tax. Optionee shall have six (6) months from the date of termination
of employment in which to exercise any non-qualified stock option and three (3)
months from the date of termination of employment to exercise any incentive
stock option.
(b) "Cause" shall mean the termination of employment of
Optionee shall have taken place as a result of (i) Optionee's continued failure
to substantially perform his principal duties (other than as a result of
Disability) after thirty (30) days' written notice from the Company specifying
the nature of Optionee's failure and demanding that such failure be remedied;
(ii) Optionee's material and continuing breach of his obligations to the Company
after thirty (30) days' written notice from the Company specifying the nature of
Optionee's breach and demanding that such breach be remedied (unless such breach
by its nature cannot be cured, in which case notice and an opportunity to cure
shall not be required); (iii) Optionee's being convicted of a felony or (iv) act
or acts of dishonesty undertaken by Optionee and intended to result in
substantial gain or personal enrichment of Optionee at the expense of the
Company.
(c) "Change in Control" shall mean the occurrence of any of
the following events:
(i) The shareholders of the Company approve a merger or
consolidation of the Company with any other corporation or entity, other than a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity or
such surviving entity's parent outstanding immediately after such merger or
consolidation, or the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets, except a sale to an
entity of which at least fifty percent (50%) of the total voting power
represented by the voting securities of such entity are held by stockholders of
the Company at the time of such sale.
(ii) The acquisition by any Person as Beneficial Owner
(as such terms are defined in the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of
-3-
<PAGE> 17
the Company representing fifty percent (50%) or more of the total voting power
represented by the Company's then outstanding voting securities.
(iii) A majority of the Board of Directors of the Company
in office at the beginning of any thirty-six (36) month period is replaced
during the course of such thirty-six (36) month period (other than by voluntary
resignation of individual directors in the ordinary course of business) and such
replacement was not initiated by the Board of Directors of the Company as
constituted at the beginning of such thirty-six (36) month period and as changed
during such period to add directors approved by the incumbent Board of
Directors.
(d) "Constructive Termination" shall mean (i) a material
reduction in Optionee's salary, title, bonus opportunity or benefits not agreed
to by Optionee (except in connection with a decrease to be applied because the
Company's performance has decreased and which is also applied to other officers
or employees at Optionee's level, as applicable, and excluding the substitution
of substantially equivalent compensation and benefits) or (ii) a significant
reduction in Optionee's responsibilities not agreed to by Optionee.
(e) "Disability" shall mean that the Optionee, at the time
notice is given, has been unable to perform his duties for a period of not less
than ninety (90) days consecutively as the result of his incapacity due to
physical or mental illness. In the event that the Optionee resumes the
performance of substantially all of his duties hereunder before the termination
of his employment becomes effective, the notice of termination shall
automatically be deemed to have been revoked.
4. Method of Payment. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election of
the Optionee:
(a) cash; or
(b) check.
5. Non-Transferability of Option. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.
6. Term of Option. This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option Agreement.
7. Tax Consequences. Some of the federal tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING
THIS OPTION OR DISPOSING OF THE SHARES.
-4-
<PAGE> 18
(a) Exercising the Option.
(i) Nonstatutory Stock Option. The Optionee may incur
regular federal income tax liability upon exercise of a NSO. The Optionee will
be treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise Price. If
the Optionee is an Employee or a former Employee, the Company will be required
to withhold from his or her compensation or collect from Optionee and pay to the
applicable taxing authorities an amount in cash equal to a percentage of this
compensation income at the time of exercise, and may refuse to honor the
exercise and refuse to deliver Shares if such withholding amounts are not
delivered at the time of exercise.
(ii) Incentive Stock Option. If this Option qualifies as
an ISO, the Optionee will have no regular federal income tax liability upon its
exercise, although the excess, if any, of the Fair Market Value of the Exercised
Shares on the date of exercise over their aggregate Exercise Price will be
treated as an adjustment to alternative minimum taxable income for federal tax
purposes and may subject the Optionee to alternative minimum tax in the year of
exercise. In the event that the Optionee ceases to be an Employee but remains a
Service Provider, any Incentive Stock Option of the Optionee that remains
unexercised shall cease to qualify as an Incentive Stock Option and will be
treated for tax purposes as a Nonstatutory Stock Option on the date three (3)
months and one (1) day following such change of status.
(b) Disposition of Shares.
(i) NSO. If the Optionee holds NSO Shares for at least
one year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
(ii) ISO. If the Optionee holds ISO Shares for at least
one year after exercise and two years after the grant date, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes. If the Optionee disposes of ISO Shares within one year
after exercise or two years after the grant date, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extent of the excess, if any, of the lesser of (A) the difference
between the Fair Market Value of the Shares acquired on the date of exercise and
the aggregate Exercise Price, or (B) the difference between the sale price of
such Shares and the aggregate Exercise Price. Any additional gain will be taxed
as capital gain, short-term or long-term depending on the period that the ISO
Shares were held.
(c) Notice of Disqualifying Disposition of ISO Shares. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant to
an ISO on or before the later of (i) two years after the grant date, or (ii) one
year after the exercise date, the Optionee shall immediately notify the Company
in writing of such disposition. The Optionee agrees that he or she may be
subject to income tax withholding by the Company on the compensation income
recognized from such early disposition of ISO Shares by payment in cash or out
of the current earnings paid to the Optionee.
-5-
<PAGE> 19
8. Entire Agreement; Governing Law. The Plan is incorporated
herein by reference. The Plan and this Option Agreement constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee's interest except by means of a writing signed by the
Company and Optionee. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of California.
9. NO GUARANTEE OF CONTINUED SERVICE. OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (AND
NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED AN OPTION OR PURCHASING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE
OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT
CAUSE.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement. Optionee has
reviewed the Plan and this Option Agreement in their entirety, has had an
opportunity to obtain the advice of counsel prior to executing this Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Administrator upon any questions relating to the Plan
and Option Agreement. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.
-6-
<PAGE> 20
OPTIONEE: ANERGEN, INC.
- ----------------------------------- ---------------------------------------
Signature By
- ------------------------------------ --------------------------------------
Print Name Title
- ------------------------------------
Residence Address
- ------------------------------------
-7-
<PAGE> 21
CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of the Plan and this Option Agreement. In consideration of
the Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Option Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Option
Agreement and further agrees that any community property interest shall be
similarly bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or exercise
of rights under the Plan or this Option Agreement.
---------------------------------------
Spouse of Optionee
-8-
<PAGE> 22
EXHIBIT A
ANERGEN, INC.
1996 STOCK PLAN
EXERCISE NOTICE
Anergen, Inc.
301 Penobscot Drive
Redwood City, CA 94063
Attention: Chief Financial Officer
1. Exercise of Option. Effective as of today, ________________, 199__,
the undersigned ("Purchaser") hereby elects to purchase ______________ shares
(the "Shares") of the Common Stock of Anergen, Inc. (the "Company") under and
pursuant to the 1996 Stock Plan (the "Plan") and the Stock Option Agreement
dated , 19___ (the "Option Agreement"). The purchase price for the Shares shall
be $______, as required by the Option Agreement.
2. Delivery of Payment. Purchaser herewith delivers to the Company the
full purchase price for the Shares.
3. Representations of Purchaser. Purchaser acknowledges that Purchaser
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
4. Rights as Shareholder. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the Shares, no right to vote or receive dividends or
any other rights as a shareholder shall exist with respect to the Optioned
Stock, notwithstanding the exercise of the Option. The Shares so acquired shall
be issued to the Optionee as soon as practicable after exercise of the Option.
No adjustment will be made for a dividend or other right for which the record
date is prior to the date of issuance, except as provided in Section 13 of the
Plan.
5. Tax Consultation. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Option
Agreement constitute the entire
-1-
<PAGE> 23
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and
Purchaser with respect to the subject matter hereof, and may not be modified
adversely to the Purchaser's interest except by means of a writing signed by the
Company and Purchaser. This agreement is governed by the internal substantive
laws, but not the choice of law rules, of California.
Submitted by: Accepted by:
PURCHASER: ANERGEN, INC.
- ---------------------------------- -------------------------------------
Signature By
- ---------------------------------- -------------------------------------
Print Name Its
Address: Address:
- --------------------------------- 301 Penobscot Drive
- --------------------------------- Redwood City, CA 94063
-------------------------------------
Date Received
-2-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
BALANCE SHEET AT DECEMBER 31,1995 AND STATEMENTS OF OPERATIONS FOR THE YEAR
ENDED DECEMBER 31,1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)
ANNUAL REPORT FILED ON FORM 10-K/A.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JUN-01-1996 JAN-1-1995
<PERIOD-END> SEP-30-1996 DEC-31-1995
<CASH> 138 468
<SECURITIES> 17,387 11,024
<RECEIVABLES> 993 815
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 18,663 12,409
<PP&E> 5,880 5,429
<DEPRECIATION> 4,232 3,419
<TOTAL-ASSETS> 20,347 14,455
<CURRENT-LIABILITIES> 1,830 1,923
<BONDS> 275 818
58,021 48,007
0 0
<COMMON> 0 0
<OTHER-SE> (39,779) (36,293)
<TOTAL-LIABILITY-AND-EQUITY> 20,347 14,455
<SALES> 0 0
<TOTAL-REVENUES> 3,031 3,534
<CGS> 0 0
<TOTAL-COSTS> 3,105 10,298
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 38 322
<INCOME-PRETAX> (112) (7,086)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (112) (7,086)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (112) (7,086)
<EPS-PRIMARY> (0.01) (0.55)
<EPS-DILUTED> (0.01) (0.55)
</TABLE>
