Ancillary Stock Option Plan - Aastrom Biosciences Inc.
ANCILLARY STOCK OPTION PLAN
THIS ANCILLARY STOCK OPTION PLAN (the "Ancillary Plan") is made as of
August 6, 1991, by Aastrom Biosciences, Inc. (the "Company"), with respect to
the facts set forth below.
RECITALS
A. On August 15, 1989, the Company formally approved the 1989 Stock
Option Plan (the "1989 Plan"), pursuant to which the Board of Directors of the
Company (the "Board") is authorized to grant tax qualified "incentive stock
options" to employees of the Company or its affiliates and tax nonqualified
"supplemental stock options" to employees, officers, employed directors and
consultants of the Company or its affiliates.
B. In order to advance the growth and prosperity of the Company, the
Board believes that it is in the best interests of the Company to also grant
stock options on certain occasions to certain parties and persons selected by
the Board who are not otherwise eligible to receive stock options under the
terms of the 1989 Plan.
AGREEMENT
NOW, THEREFORE, Company hereby authorizes and establishes this
Ancillary Plan, pursuant to the terms and conditions set forth below.
1. Purpose. The purpose of the Ancillary Plan is to advance the
growth and prosperity of the Company and its shareholders by providing
incentives to certain parties and persons selected by the Board who are not
otherwise eligible to receive stock options under the 1989 Plan. The stock
options granted pursuant to this Ancillary Plan shall be treated as
"nonqualified tax options" under the U.S. Internal Revenue Code.
2. Term. The term of this Ancillary Plan shall commence on the
date set forth above and shall terminate upon resolution by the Board.
3. Shares of Stock Subject to this Ancillary Plan. The shares of
Common Stock which may be issued pursuant to the Ancillary Plan upon exercise of
stock options shall not exceed in the aggregate Fifty Thousand (50,000) shares
of the Company's Common Stock, unless otherwise approved by the Board by vote of
not less than two thirds (2/3) of the Board. Such shares of Common Stock shall
be authorized and unissued shares. The shares allocated to this Ancillary Plan
and the stock options granted pursuant to this Ancillary Plan are in addition
to, and not part of, the shares allocated to and granted pursuant to the 1989
Plan.
<PAGE>
4. Administration of the Plan. The Board shall administer the
Ancillary Plan, select the persons to whom stock options shall be granted,
determine the number of shares of Common Stock to be optioned and awarded,
determine the purchase price per share of Common Stock deliverable upon the
exercise of a stock option, determine the method of payment upon the exercise of
an option, and interpret, construe and implement the provisions of this
Ancillary Plan. An option may be exercisable at any time from time to time,
subject to such timing, performance criteria, conditions and restrictions as
determined by the Board on a case by case basis for each option as set forth in
the Stock Option Agreements.
5. Stock Option Agreements. The granting of stock options shall be
evidenced by a Stock Option Agreement, containing such terms and conditions as
the Board of Directors shall deem appropriate. The provisions of the Stock
Option Agreements granted pursuant to this Ancillary Plan need not be identical,
may be similar to or different from the form of Stock Option Agreements granted
under the 1989 Plan, and may be customized as determined by the Board on a case
by case basis.
6. Amendment of this Ancillary Plan. This Ancillary Plan may, at
any time or from time to time, be terminated, modified or amended by the Board.
7. Approval. Approved by the Board on August 6, 1991.
/s/ R. DOUGLAS ARMSTRONG
--------------------------
R. Douglas Armstrong, Ph.D
President/CEO
<PAGE>
ANCILLARY STOCK OPTION AGREEMENT
Optionee:
AASTROM Biosciences, Inc., formerly known as Ann Arbor Stromal, Inc., (the
"Company"), pursuant to its Ancillary Stock Option Plan dated August 6, 1991
(the "Plan"), has granted to you, the Optionee named above, an option to
purchase shares of the common stock of the Company ("Common Stock"). This
option is not intended to qualify and will not be treated as an "incentive stock
option" within the meaning of Section 422A of the Internal Revenue code of 1986,
as amended from time to time (the "Code"). The date of grant of this option is
as of _________________, ____.
The grant hereunder is a matter of separate inducement and agreement in
connection with your services to the Company and not in lieu of any other
compensation for services, and is intended to comply with the provisions of Rule
701 promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act"), and applicable state law exemptions from
registration.
The details of your option are as follows:
1. The total number of shares of Common Stock subject to this option is
_____________________. Subject to the limitations contained herein,
including without limitation Section 5 hereof, this option shall be
exercisable with respect to each installment shown below on or after
the date of vesting applicable to such installment, as follows:
Number of Shares Date of Earliest Exercise
---------------- ------------------------
(Installment) (Vesting)
<PAGE>
Ancillary Stock Option Agreement
Page 2
2. a. The exercise price of this option is ___________ per share, being
not less than the fair market value of the Common Stock on the
date of grant of this option.
b. Payment of the exercise price per share is due in full in cash
(including check) upon exercise of all or any part of each
installment which has become exercisable by you. Notwithstanding
the foregoing, this option may be exercised pursuant to a program
developed under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash (or check) by
the Company prior to the issuance of Common Stock.
3. The minimum number of shares with respect to which this option may be
exercised at any one time is one hundred (100) except (a) as to an
installment subject to exercise, as set forth in paragraph 1, which
amounts to fewer than one hundred (100) shares, in which case, as to
the exercise of that installment, the number of shares in such
installment shall be the minimum number of shares, and (b) with
respect to the final exercise of this option this paragraph 3 shall
not apply.
4. Notwithstanding anything to the contrary contained herein, this option
may not be exercised unless the shares issuable upon exercise of this
option are then registered under the Act or if such shares are not
then so registered, the exercise and issuance of such shares would be
exempt from the registration requirements of the Act.
5. The term of this option commences on the date hereof and, unless
sooner terminated as set forth below, terminates twelve (12) years
from the date this option is granted. This option shall terminate
prior to the expiration of its term as follows: this option shall
terminate three (3) months after the termination of your participation
in the University of Michigan ex vivo bone marrow project more fully
described in that certain Option Agreement dated March 24, 1989,
between the Company, the University of Michigan and H&Q Life Science
Technology Fund 1 (hereinafter such participation in the ex vivo bone
marrow project
<PAGE>
Ancillary Stock Option Agreement
Page 3
shall be referred to as "Employment") for any
reason or for no reason unless:
a. such termination of your Employment is due to
your permanent and total disability (within
the meaning of Section 422A(c)(7) of the
Code), in which event the option shall
terminate on the earlier of the termination
date set forth above or one (1) year
following such termination of Employment; or
b. such termination of Employment is due to your
death, in which event the option shall
terminate on the earlier of the termination
date set forth above or eighteen (18) months
after your death; or
c. during any part of such three (3) month
period the option is not exercisable solely
because of the condition set forth in
paragraph 4 above, in which event the option
shall not terminate until the earlier of the
termination date set forth above or until it
shall have been exercisable for an aggregate
period of three (3) months after the
termination of Employment; or
d. exercise of the option within three (3)
months after termination of your Employment
would result in liability under section 16
(b) of the Securities Exchange Act of 1934,
in which case the option will terminate on
the earlier of (i) the tenth (10th) day after
the last date upon which exercise would
result in such liability or (ii) six (6)
months and ten (10) days after the
termination of your Employment; or
e. such termination of your Employment is a
temporary leave of absence occasioned by your
resuming studies at the University of
Michigan toward a doctorate degree, in which
event vesting of installments of this option
as set forth in Section 1 scheduled for any
date after the date on which the leave of
absence commenced (the "Leave Date") will be
suspended, and the vesting schedule set forth
in Section 1 shall be deemed to have been
amended as follows. Should you Employment
<PAGE>
Ancillary Stock Option Agreement
Page 4
resume at any time during the two (2) year
period after the Leave Date, vesting of
installments of this option will resume, with
the first suspended installment vesting on
the date that your Employment resumes, the
second suspended installment vesting 3 months
thereafter, and so on, so that each
succeeding suspended installment vests 3
months after the date on which the previous
suspended installment vested. If your
Employment does not resume during the two (2)
year period after the Leave Date, this option
will be deemed to have terminated on the
Leave Date, and only those shares that vested
on or prior to the Leave Date will be
exercisable.
f. The termination of this option pursuant to
this Section 5 shall apply only to those
shares not yet vested according to the
schedule contained in Section 1 herein, and
any provision herein or in the Plan
notwithstanding, shall not apply to such
vested shares. Any shares that have vested
hereunder shall remain exercisable for the
twelve (12) year period specified in this
Section 5.
However, this option may be exercised
following termination of Employment only as
to that number of shares as to which it was
exercisable under the provisions of paragraph
1 of this option on the date of termination
of Employment.
6. a. This option may be exercised, to the extent
specified above, by delivering a notice to
exercise (in a form designated by the
Company) together with the exercise price to
the Secretary of the Company, or to such
other person as the Company may designate,
during regular business hours, together with
such additional documents as the Company may
then require pursuant to subparagraph 5(f) of
the Plan.
<PAGE>
Ancillary Stock Option Agreement
Page 5
b. By exercising this option you agree that:
(i) the Company may require you to enter an arrangement providing
for the cash payment by you to the Company of any tax
withholding obligation of the Company arising by reason of
(1) the exercise of this option; (2) the lapse of any
substantial risk of forfeiture to which the shares are
subject at the time of exercise; or (3) the disposition of
shares acquired upon such exercise;
(ii) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the
offering of any securities of the Company under the Act,
require that you not sell or otherwise transfer or dispose of
any shares of Common Stock or other securities of the Company
during such period (not to exceed one hundred fifty (150)
days) following the effective date (the "Effective Date") of
the registration statement of the Company filed under the Act
as may be requested by the Company or the representative of
the underwriters; provided, however, that such restriction
shall apply only if, on the Effective Date, you are an
officer, director, or owner of more than one percent (1%) of
the outstanding securities of the Company. For purposes of
this restriction, you will be deemed to own securities which
(i) are owned directly or indirectly by you, including
securities held for your benefit by nominees, custodians,
brokers or pledgees; (ii) may be acquired by you within sixty
(60) days of the Effective Date; (iii) are owned directly or
indirectly, by or for your brothers or sisters (whether by
whole or half blood), spouse, ancestors and lineal
descendants; or (iv) are owned, directly or indirectly, by or
for a corporation, partnership, estate or trust of which you
are a shareholder, partner or
<PAGE>
Ancillary Stock Option Agreement
Page 6
beneficiary, but only to the extent of your proportionate
interest therein as a shareholder, partner or beneficiary
thereof. You further agree that the Company may impose stop-
transfer instructions with respect to securities subject to
the foregoing restrictions until the end of such period.
7. This option is not transferable, except by will or by the laws of
descent and distribution, and is exercisable during your life only by
you.
8. Upon exercise of the option in whole or in part, you will be required
to execute a Stock Transfer Restriction and Buy-Out Agreement
substantially in the form attached hereto, which sets forth
restrictions on transfer of the Stock and gives the Company the right
to purchase the Stock under certain circumstances.
9. This option is not an employment contract and nothing in this option
shall be deemed to create in any way whatsoever any obligation on your
part to continue Employment, or of the Company to employ you.
10. Any notices provided for in this option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the
case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at
the address specified below or at such other address as you hereafter
designate by written notice to the Company.
11. This option is subject to all the provisions of the Plan, a copy of
which is attached hereto and its provisions are hereby made a part of
this option, including without limitation the provisions of paragraph 5
of the Plan relating to stock option agreements, and is further subject
to all interpretations, amendments, rules and regulations which may
from time to time be promulgated and adopted pursuant to the Plan. In
the event of any conflict between the provisions of this option and
those of the Plan, the provisions of the Plan shall control.
<PAGE>
Ancillary Stock Option Agreement
Page 7
Dated as of the ____ day of _______________________, 19__.
Very truly yours,
AASTROM BIOSCIENCES, INC.
By:
--------------------------------------
R. Douglas Armstrong, Ph.D.
President/CEO
Duly authorized on behalf of the
Board of Directors
The undersigned:
a. Acknowledges receipt of this Agreement and the attachments referenced
therein and understands that all rights and liabilities with respect
to this option are set forth in this Agreement and the Plan; and
b. Acknowledges that as of the date of grant of this option, this
Agreement sets forth the entire understanding between the undersigned
optionee and the Company its affiliates regarding the acquisition of
stock in the Company and supersedes all prior oral and written
agreements on that subject.
-----------------------------------------
OPTIONEE
Address:
---------------------------------
Attachments:
Ancillary Stock Option Plan dated August 6, 1991
Stock Transfer Restriction and Buy-Out Agreement