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Exhibit
10.2
A RROWHEAD
R ESEARCH C ORPORATION
Stock Option
Agreement
This Stock Option Agreement
(the “ Agreement ”) is made and entered into as
of the Effective Date by Dr. Christopher Anzalone (“
Executive ”) and Arrowhead Research Corporation, a
Delaware corporation (or successor thereto, the “
Company ”) with respect to the terms of
Executive’s stock option grant by the Company. Certain
capitalized terms are defined in Section 13 hereof.
WHEREAS, the Company and
Executive have previously entered into a letter agreement, dated as
of November 19, 2007, outlining the terms of Executive’s
employment with the Company, including the grant of stock options
to Executive; and
WHEREAS, the Company and
Executive desire to enter into this Agreement.
NOW THEREFORE, in
consideration of the mutual covenants contained herein and other
good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Grant of Option . This
Agreement evidences the grant by the Company, on December 3,
2007 (the “ Initial Grant Date ”), to Executive,
of an option (the “ Option ”) to purchase, in
whole or in part, on the terms provided herein, a total of Two
Million (2,000,000) shares of the Company’s common stock
(the “ Shares ”) at $3.92 per Share (the “
Exercise Price ”). The Exercise Price is equal to the
closing price of the Company’s common stock on the NASDAQ
National Market on the Initial Grant Date. Unless earlier
terminated, this Option shall expire at 5:00 p.m., Eastern Time, on
December 3, 2017 (the “ Final Exercise Date
”). To the maximum extent possible, this Option shall be
treated as an “incentive stock option” as such term is
defined in Code Section 422.
2. Vesting Schedule .
(a) Subject to Sections 7
and 11 hereof, and except as described in
Section 2(b) hereof, this Option shall vest, so long as
Executive is an employee of the Company, over four (4) years
as follows: (i) the first Two Hundred Fifty Thousand Shares
(250,000) shall vest on the six (6) month anniversary of
the Initial Grant Date and (ii) forty one thousand six hundred
sixty-seven (41,667) Shares shall vest on each monthly
anniversary thereafter in forty-two (42) equal installments,
after which time this Option shall be vested as to one hundred
percent (100%) of the Shares.
(b) The right of exercise
shall be cumulative so that to the extent this Option is not
exercised in any period to the maximum extent permissible it shall
continue to be exercisable, in whole or in part, with respect to
all Shares for which it is vested until the earlier of the Final
Exercise Date and the termination of this Option under
Section 5 hereof.
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3. Exercise of Option
.
(a) Method of Exercise
. This Option is exercisable before its expiration or termination
by delivery of an exercise notice, in the form attached as
Exhibit A (the “ Exercise Notice
”), which shall state the election to exercise this Option,
the number of Shares in respect of which this Option is being
exercised (the “ Exercised Shares ”), and such
other representations and agreements as may be required by the
Company. The Exercise Notice shall be completed by the Optionee and
delivered to the Secretary 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.
(b) Compliance with
Applicable Laws. 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.
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;
(b) check;
(c) other shares of common
stock which (i) in the case of shares acquired upon exercise
of an Option, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii) 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;
(d) consideration received by
the Company from a licensed broker under a cashless exercise
program implemented by the Company to facilitate “same
day” exercises and sales of Options; or
(e) any combination of the
foregoing methods of payment.
5. Termination of Option . This
Option shall terminate upon the first to occur of the following
events:
(a) The expiration of three
months from the date of the Executive’s Termination of
Employment for a reason, other than for “ Cause
,” as such term is defined in the Employment Agreement, or
the Executive’s death, Disability or Retirement,
or
(b) The Final Exercise Date,
in the case of Executive’s Retirement, or
(c) The expiration of twelve
months from the date of the Executive’s Termination of
Employment by reason of Disability, or
(d) The expiration of twelve
months from the date of the Executive’s death, if such death
occurs while the Executive is in the employ or service of the
Company or an Affiliate, or
(e) Immediately upon
Executive’s Termination of Employment for “
Cause ,” as such term is defined in the Employment
Agreement.
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6. Non-Transferability of Option and
Shares . This Option may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by
will, the laws of descent and distribution. All Options granted
pursuant to this Agreement shall be exercisable during
Executive’s lifetime only by Executive.
7. Board of Directors Discretion
. The Board of Directors, in its sole and absolute discretion, may
extend the maximum term of this Option or accelerate the vesting of
this Option, subject to restrictions of Applicable Law. The Board
of Directors may impose such restrictions on any Shares acquired
pursuant to the exercise of this Option, as it may deem advisable,
including, but not limited to, restrictions related to Federal
securities laws, the requirements of any national securities
exchange or system upon which such Shares are then listed and/or
traded, and/or any blue sky or state securities laws.
8. Beneficiary Designation .
Executive may name a beneficiary or beneficiaries to whom any
unpaid vested Option shall be paid in event of Executive’s
death. Each such designation shall revoke all prior designations by
Executive and shall be effective only if given in a form and manner
acceptable to the Board of Directors. In the absence of any such
designation, benefits remaining unpaid at Executive’s death
shall be paid to Executive’s estate and, subject to the
limitations set forth in this Agreement; any unexercised vested
Option may be exercised by Executive’s estate.
9. No Employment Rights . Nothing
in this Agreement shall interfere with or limit in any way the
right of the Company to terminate Executive’s employment or
service at any time, with or without cause.
10. Tax Withholding Requirements
. Prior to the delivery of any Shares or cash pursuant to this
Option, the Company shall deduct or withhold, or require Optionee
to remit to the Company, an amount sufficient to satisfy Federal,
state, and local taxes required to be withheld with respect to this
Option. The Board of Directors, in its sole and absolute discretion
and pursuant to such procedures as it may specify from time to
time, may permit Optionee to satisfy the minimum statutory tax
withholding obligation, in whole or in part, by delivering to the
Company shares of Company common stock already owned for more than
six (6) months having a value equal to the amount required to
be withheld. The value of the shares of Company common stock to be
delivered will be based on their Fair Market Value on the date of
delivery.
11. Dissolution, Merger or Asset
Sale .
(a) Dissolution or
Liquidation . In the event of the proposed dissolution or
liquidation of the Company, the Board of Directors shall notify
Optionee as soon as practicable prior to the effective date of such
proposed transaction. The Board of Directors in its discretion may
provide for Optionee to have the right to exercise this Option
until ten (10) days prior to such transaction as to all of the
Shares covered thereby. In addition, the Board of Directors may
provide that any Company repurchase option applicable to any Shares
purchased upon exercise of an Option 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 will terminate
immediately prior to the consummation of such proposed
action.
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(b) 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 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 this Option, the Optionee shall fully vest in and
have the right to exercise this Option as to all of the Shares as
to which it would not otherwise be vested or exercisable. If an
Option becomes fully vested and exercisable in lieu of assumption
or substitution in the event of a merger or sale of assets, the
Board of Directors shall notify the Optionee in writing or
electronically that the Option shall be fully vested and
exercisable for a period of fifteen (15) days from the date of
such notice, and this Option shall terminate upon the expiration of
such period. For the purposes of this paragraph, this Option 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 subject to this Option immediately prior to the merger
or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or s
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