eGene, Inc.
2006 STOCK OPTION PLAN
1. Purpose.
This 2006 Stock Option
Plan (this "Plan") is established
as a compensatory plan to attract, retain and provide equity
incentives to
employees, directors and consultants or other independent
contractors to
promote the success of eGene, Inc., a Nevada corporation or such
successor
entity upon merger or reincorporation (the "Company"). Capitalized terms not
previously defined herein are defined in Section 17 of this
Plan.
2. Types of
Options and Shares.
Options granted under this Plan (the
"Options") may be either (a) incentive stock options ("ISOs")
within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the
"Code"), or (b) nonqualified stock options ("NQSOs"), as designated
at the
time of grant. The
shares of stock that may be purchased upon exercise of
Options granted under this Plan (the "Shares") are shares of Common
Stock of
the Company ("Common Stock").
3. Number of
Shares. The aggregate
number of Shares that may be
issued pursuant to Options granted under this Plan is 2,500,000
Shares,
subject to adjustment as provided in this Plan. If any Option expires or is
terminated without being exercised in whole or in part, the
unexercised or
released Shares from such Option shall be available for future
grant and
purchase under this Plan. At all times during the term of
this Plan, the
Company shall reserve and keep available such number of Shares as
shall be
required to satisfy the requirements of outstanding Options under
this Plan.
4.
Eligibility.
(a)
General Rules of Eligibility. Officers of the Company,
other employees of the Company or its subsidiaries or affiliates,
members of
the Board of Directors, and consultants or other independent
contractors who
provide services to the Company or its subsidiaries or affiliates
shall be
eligible to receive Options under the Plan when designated by the
Committee.
The employees eligible to be considered for the grant of incentive
stock
options hereunder are any persons regularly employed by the Company
or its
subsidiaries on a full time, salaried basis. The Committee (as defined in
Section 14) in its sole discretion shall select the recipients of
Options
("Optionees").
(b)
Company Assumption of Options. The Company may also, from
time to time, assume outstanding options granted by another
company, whether
in connection with an acquisition of such other company or
otherwise, by
either (i) granting an Option under this Plan in replacement of the
option
assumed by the Company, or (ii) treating the assumed option as if
it had been
granted under this Plan if the terms of such assumed option could
be applied
to an option granted under this Plan. Such assumption shall be
permissible if
the holder of the assumed option would have been eligible to be
granted an
option hereunder if the other company had applied the rules of this
Plan to
such grant.
5. Terms and
Conditions of Options.
The Committee shall determine
whether each Option is to be an ISO or an NQSO, the number of
Shares subject
to the Option, the exercise price of the Option, the period during
which the
Option may be exercised, and all other terms and conditions of the
Option,
subject to the following:
(a) Form of Option
Grant. Each Option
granted under this Plan
shall be evidenced by a written Stock Option Grant (the "Grant")
in
substantially the form attached hereto as Exhibit "A" or such other
form as
shall be approved by the Committee.
(b) Date of Grant.
The date of grant of
an Option shall be the
date on which the Committee makes the determination to grant such
Option
unless otherwise specified by the Committee and subject to
applicable
provisions of the Code. The Grant representing the Option
will be delivered
to the Optionee with a copy of this Plan within a reasonable time
after the
date of grant; provided, however, that if, for any reason,
including a
unilateral decision by the Company not to execute an agreement
evidencing such
option, a written Grant is not executed within one hundred eighty
(180) days
after the date of grant, such option shall be deemed null and void.
No Option
shall be exercisable until such Grant is executed by the Company
and the
Optionee.
(c) Exercise Price.
The exercise price of
an ISO shall be not
less than one hundred percent (100%) of the Fair Market Value of
the Shares on
the date the Option is granted.
(d) Exercise Period.
Options shall be
exercisable within the
times or upon the events determined by the Committee as set forth
in the
Grant; provided, however, that each Option must become exercisable
at a rate
of at least twenty five percent (25%) per year over four (4) years
from the
date the Option is granted; and provided further, that no ISO
granted to a Ten
Percent Shareholder shall be exercisable after the expiration of
five (5)
years from the date the Option is granted. No Options granted to a non-
employee person shall be exercisable after the expiration of five
(5) years
from the date the Option is granted. Unless otherwise provided in
this Plan,
all Options shall expire upon the tenth anniversary date of the
grant date.
(e) Limitations on
Options. The aggregate
Fair Market Value
(determined as of the time an Option is granted) of stock with
respect to
which ISOs are exercisable for the first time by an Optionee during
any
calendar year (under this Plan or under any other incentive stock
option plan
of the Company or any Parent or Subsidiary of the Company) shall
not exceed
one hundred thousand dollars ($100,000). To the extent that the Fair
Market
Value of stock with respect to which ISOs are exercisable for the
first time
by an Optionee during any calendar year exceeds $100,000, such
Options shall
be treated as NQSOs.
The foregoing shall be applied by taking options into
account in the order in which they were granted. In the event that the Code
or the regulations promulgated thereunder are amended after the
effective date
of this Plan to provide for a different limit on the Fair Market
Value of
Shares permitted to be subject to ISOs, such different limit shall
be
incorporated herein and shall apply to any Options granted after
the effective
date of such amendment. In the event Section 162(m) of the
Code or any
proposed or final regulations promulgated thereunder are amended
after the
effective date of this Plan to eliminate the requirement of a per
Optionee
limit on the number of Options which may be granted, then the
restriction in
the immediately preceding sentence shall not apply to any Options
granted
after the effective date of such amendment.
(f) Options
Non-Transferable.
Options granted under this Plan,
and any interest therein, shall not be transferable or assignable
by the
Optionee, and may not be made subject to execution, attachment or
similar
process, otherwise than by will or by the laws of descent and
distribution and
shall be exercisable during the lifetime of the Optionee only by
the Optionee
or any permitted transferee.
(g) Assumed Options.
In the event the
Company assumes an option
granted by another company in accordance with Section 4(b) above,
the terms
and conditions of such option shall remain unchanged (except the
exercise
price and the number and nature of shares issuable upon exercise,
which will
be adjusted appropriately pursuant to Section 424 of the Code and
the Treasury
Regulations applicable thereto). In the event the Company elects to
grant a
new Option rather than assuming an existing option (as specified in
Section
4), such new Option need not be granted at Fair Market Value on the
date of
grant and may instead be granted with a similarly adjusted exercise
price.
6. Exercise of
Options.
(a)
Notices. Options may
be exercised only by delivery to the
Company of a written exercise agreement in a form approved by the
Committee
(which need not be the same for each Optionee), stating the number
of Shares
being purchased, the restrictions imposed on the Shares, if any,
and such
representations and agreements regarding the Optionee's investment
intent and
access to information, if any, as may be required by the Company to
comply
with applicable securities laws, together with payment in full of
the exercise
price for the number of Shares being purchased.
(b) Payment.
Payment for the Shares
may be made in cash (by
check) or, where approved by the Committee in its sole discretion
at the time
of grant and where permitted by law: (i) by cancellation of
indebtedness of
the Company to the Optionee; (ii) by surrender of shares of Common
Stock of
the Company already owned by the Optionee, having Fair Market Value
equal to
the exercise price of the Option; (iii) by waiver of compensation
due or
accrued to Optionee for services rendered; (iv) through delivery of
a
promissory note for the full exercise price bearing interest at
such rate with
the note due at such time, on a secured or unsecured basis, as
determined by
the Committee; (v) provided that a public market for the Company's
stock
exists, through a "same day sale" commitment from the Optionee and
a broker-
dealer that is a member of the National Association of Securities
Dealers,
Inc. (an "NASD Dealer") whereby the Optionee irrevocably elects to
exercise
the Option and to sell a portion of the Shares so purchased to pay
for the
exercise price and whereby the NASD Dealer irrevocably commits upon
receipt of
such Shares to forward the exercise price directly to the Company;
(vi)
provided that a public market for the Company's stock exists,
through a
"margin" commitment from the Optionee and an NASD Dealer whereby
the Optionee
irrevocably elects to exercise the Option and to pledge the Shares
so
purchased to the NASD Dealer in a margin account as security for a
loan from
the NASD Dealer in the amount of the exercise price, and whereby
the NASD
Dealer irrevocably commits upon receipt of such Shares to forward
the exercise
price directly to the Company; (vii) by any combinations of the
foregoing or
(viii) any other form of legal consideration that may be acceptable
to the
Board of Directors in its discretion.
(c) Withholding Taxes.
Prior to issuance of
the Shares upon
exercise of an Option, the Optionee shall pay or make adequate
provision for
any federal or state withholding obligations of the Company, if
applicable.
Where approved by the Committee in its sole discretion, the
Optionee may
provide for payment of withholding taxes upon exercise of the
Option by
requesting that the Company retain Shares with a Fair Market Value
equal to
the minimum amount of taxes required to be withheld. In such case, the
Company shall issue the next number of Shares to the Optionee by
deduction the
Shares retained from the Shares exercised. 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 in accordance with Section 83 of
the Code
(the "Tax Date"). All
elections by Optionees to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the
Committee and
shall be subject to the following restrictions:
(i) the election must
be made on or prior to the
applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the
particular Shares as to which the election is made;
(iii) all elections
shall be subject to the consent or
disapproval of the Committee;
(iv) if the Optionee is an officer or director of the
Company or other person (in each case, an "Insider") whose
transactions in the
Company's Common Stock are subject to Section 16(b) of the
Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and if the Company is
subject to
Section 16(b) of the Exchange Act, the election must be made at
least six (6)
months prior to the Tax Date and must otherwise comply with Rule
16b-3 as
promulgated by the Securities and Exchange Commission ("Rule
16b-3").
(d) Limitations on
Exercise.
Notwithstanding anything else to
the contrary in the Plan or any Grant, no Option may be exercisable
later than
the expiration date of the Option.
7. Restrictions
on Shares. At the discretion of the Committee, the
Company may reserve to itself and/or its assignee(s) in the Grant
(a) a right
of first refusal to purchase all Shares that an Optionee (or a
subsequent
transferee) may propose to transfer to a third party, and (b) for
so long as
the Company's stock is not publicly traded, a right to repurchase a
portion of
or all Shares held by an Optionee upon the Optionee's termination
of
employment or service with the Company or its Parent, Subsidiary or
Affiliate
of the Company for any reason within a specified time as determined
by the
Committee at the time of grant at the higher of (i) the Optionee's
original
purchase price, or (ii) the Fair Market Value of such Shares.
8. Modification
Extenssion and Renewal of Options. The Committee
shall have the power to modify, extend or renew outstanding Options
and to
authorize the grant of new Options in substitution therefor,
provided that any
such action may not, without the written consent of the Optionee,
impair any
rights under any Option previously granted. Any outstanding ISO that is
modified, extended, renewed or otherwise altered shall be treated
in
accordance with Section 424(h) of the Code. The Committee shall have the
power to reduce the exercise price of outstanding options;
provided, however,
that the exercise price per share may not be reduced below the
minimum
exercise price that would be permitted under Section 5(c) of this
Plan for
options granted on the date the action is taken to reduce the
exercise price.
9. Privileges of
Stock Ownership. No
Optionee shall have any of the
rights of a shareholder with respect to any Shares subject to an
Option until
such Option is properly exercised. No adjustment shall be made for
dividends
or distributions or other rights for which the record date is prior
to such
date, except as provided in this Plan.
10. No Obligation to
Employ; No Right to Future Grants. Nothing in
this Plan or any Option granted under this Plan shall confer on any
Optionee
any right (a) to continue in the employ of, or other relationship
with, the
Company or any Parent or Subsidiary of the Company or limit in any
way the
right of the Company or any Parent, Subsidiary or Affiliate of the
Company to
terminate the Optionee's employment or other relationship at any
time, with or
without cause, or (b) to have any Option(s) granted to such
Optionee under
this Plan, or any other plan, or to acquire any other securities of
the
Company, in the future.
11. Adjustment of
Option Shares. In the
event that the number of
outstanding shares of Common Stock of the Company is changed by a
stock
dividend, stock split, reverse stock split, combination,
reclassification or
similar change in the capital structure of the Company without
consideration,
or if a substantial portion of the assets of the Company are
distributed,
without consideration in a spin-off or similar transaction, to
the
shareholders of the Company, the number of Shares available under
this Plan
and the number of Shares subject to outstanding Options and the
exercise price
per share of such Options shall be proportionately adjusted,
subject to any
required action by the Board or shareholders of the Company and
compliance
with applicable securities laws; provided, however, that a
fractional share
shall not be issued upon exercise of any Option and any fractions
of a Share
that would have resulted shall either be cashed out at Fair Market
Value or
the number of Shares issuable under the Option shall be rounded
down to the
nearest whole number, as determined by the Committee; and provided
further
that the exercise price may not be decreased to below the par
value, if any,
for the Shares.
12. Assumption of
Options by Successors.
(a) In the event of
(i) a merger or consolidation in which the
Company is not the surviving corporation (other than a merger or
consolidation
with a wholly-owned subsidiary or where there is no substantial
change in the
shareholders of the corporation and the Options granted under this
Plan are
assumed by the successor corporation), or (ii) the sale of all
or
substantially all of the assets of the Company, any or all
outstanding Options
shall be assumed by the successor corporation, which assumption
shall be
binding on all Optionees. An equivalent option shall be
substituted by such
successor corporation or the successor corporation shall provide
substantially
similar consideration to Optionees as was provided to shareholders
(after
taking into account the existing provisions of the Optionees'
options such as
the exercise price and the vesting schedule), and, in the case of
outstanding
shares subject to a repurchase option, issue substantially similar
shares or
other property subject to repurchase restrictions no less favorable
to the
Optionee.
(b) In the event such
successor corporation, if any, refuses to
assume or substitute, as provided above, pursuant to an event
described in
subsection (a) above, or in the event of a dissolution or
liquidation of the
Company, the Options shall, notwithstanding any contrary terms in
the Grant,
expire on a date specified in a written notice given by the
Committee to the
Optionees specifying the terms and conditions of such termination
(which date
shall be at least twenty (20) days after the Committee gives the
written
notice).
13. Adoption and
Shareholder Approval.
This Plan shall become
effective on the date that it is adopted by the Board of Directors
of the
Company (the "Board").
This Plan shall be approved by the shareholders of the
Company, in any manner permitted by applicable corporate law,
within twelve
(12) months before or after the date this Plan is adopted by the
Board.
Thereafter, after the Company becomes subject to Section 16(b) of
the Exchange
Act, the Company will comply with the requirements of Rule 16b-3
(or its
successor) with respect to shareholder approval.
14. Administration.
This Plan may be
administered by the Board or the
Committee appointed by the Board (the "Committee"). As used in this Plan,
references to the "Committee" shall mean either such Committee or
the Board if
no committee has been established. The interpretation by the
Committee of any
of the provisions of this Plan, any related agreements, or any
Option granted
under this Plan shall be final and binding upon the Company and all
persons
having an interest in any Option or any Shares purchased pursuant
to an
Option.
15. Term of Plan.
Options may be granted
pursuant to this Plan from
time to time on or prior to December 31, 2011, a date w
