Consulting Agreement - CytoTherapeutics Inc. and Irving Weissman
CYTOTHERAPEUTICS, INC.
CONSULTING AGREEMENT -- WEISSMAN
This Agreement, dated as of September 25, 1997, is between Irving
Weissman, M.D., an individual with an address at 4147 Jefferson, Redwood
City, California 94062 (the "Consultant") and CytoTherapeutics, Inc., a
Delaware corporation with an address at 2 Richmond Square, Providence, Rhode
Island 02906 (the "Company").
In consideration of the mutual promises, terms, provisions and conditions
set forth in this Agreement, the parties hereby agree as follows:
1. University Policies. Reference is made to the policies to which
Consultant is subject as a result of his engagement with the Stanford
University Medical Center (the "University") and his obligations to the
University thereunder (the "University Policies"). It is the intention of
the Company and the Consultant that the services to be performed by the
Consultant hereunder be consistent with such Policies.
2. Consulting and Other Services. Subject to the terms and conditions
set forth in this Agreement, Consultant shall provide to the Company the
following services:
a. Consulting Services. The Consultant will act as a consultant to the
Company during those hours when he is not working for the University
and as mutually agreed to by and between the Consultant and the
Company. The Consultant's consulting services to be rendered
hereunder will involve those areas mutually agreed to by and between
the Consultant and the Company. These areas include applications of
the isolation, expansion and gene modification of stem and
progenitor cells primarily for the liver, pancreas, and the central
and peripheral nervous systems (the "Specialty Area").
Notwithstanding the generality of the foregoing, the Specialty Area
shall specifically exclude applications of hematopoietic stem and
progenitor cell isolation, expansion and gene-modification and
SCID-Hu mice. The Company hereby retains the Consultant as a
consultant to the Company, and the Consultant hereby agrees to
perform the following services related to the Specialty Area for the
Company:
i. The Consultant shall spend at least one day per month
consulting for the Company and a reasonable amount of time for
informal consultations over the telephone or otherwise. In
addition, as a member of the Company's Scientific Advisory
Board, Consultant shall attend four one-day meetings per year
at such times and places as the Company may request, which may
include weekends.
<PAGE>
ii. The Consultant may from time to time be unavailable to
attend meetings or perform other consulting duties, due to
other prior obligations including but not limited to teaching
and other academic duties and attending scientific conferences,
and such unavailability shall not be considered a breach of
this Agreement if the Consultant gives the Company reasonable
notice of such unavailability.
b. Other Services. In addition, (i) during the term of this
Agreement, the Company shall cause Consultant to be elected to the
Board of Directors of its subsidiary, StemCells, Inc.; (ii) until at
least June 30, 1999, the Company shall appoint Consultant as
Chairman of the Company's Scientific Advisory Board and (iii) the
Company shall elect Consultant as a member of the Company's Board of
Directors to serve until the next annual meeting of Stockholders and
shall, at such annual meeting, nominate Consultant for election to a
three-year term as a director. Consultant agrees to serve in all
such capacities when so appointed or elected.
3. Cash Compensation. Consultant will receive cash compensation for his
services hereunder as provided in the attached Schedule A.
4. Stock Options. In further consideration for the services provided
hereunder, the Company will grant to Consultant options to purchase 500,000
shares of Common Stock of the Company in accordance with the terms and
conditions set forth in the form of Performance-Based Incentive Option
Agreement (the "Option Agreement") attached hereto as Schedule B.
5. Expenses. The Company will reimburse the Consultant for any actual
expenses incurred by the Consultant while rendering services under this
Agreement so long as the expenses are reasonable and necessary. Such
expenses shall include reasonable and necessary travel, lodging and meals in
connection with services performed under this Agreement. Requests for
reimbursement shall be in a form reasonably acceptable to the Company.
6. Confidentiality and Noncompetition Provisions. Consultant agrees
that some restrictions on his activities during and after his consulting
service are necessary to protect the goodwill, Confidential Information and
other legitimate interests of the Company:
a. Proprietary Information. Consultant agrees to be bound by the
following:
i. The Consultant recognizes that in performance under this
Agreement he will have contact with information of substantial
value to the Company that is not generally known outside the
Company and that gives the Company an advantage over its
competitors who do not know or use it, including, but not
limited to, techniques, designs, drawings, processes,
inventions, developments, equipment, prototypes, slides,
customer information and business, scientific and financial
information relating to the business,
-2-
<PAGE>
products, practices or techniques of the Company. The Consultant
agrees to regard and preserve as confidential such information.
ii. The Consultant will not, at any time (except as authorized by
the Company), divulge or disclose, directly or indirectly, to
any person, firm, association or corporation other than bona
fide employees of the Company or any affiliate of the Company,
acting in that capacity, or use for his own benefit or gain or
any purpose other than the performance of services hereunder,
any Confidential Information (as hereinafter defined), of the
Company or any of its affiliates. "Confidential Information"
means any knowledge, or data concerning the business,
technology or affairs of the Company or any affiliate of the
Company including any inventions, discoveries, improvements,
products, processes, technology, trade secrets, know-how,
designs, formulas, or any other confidential material, data,
information or instructions, technical or otherwise, owned by
the Company or any affiliate of the Company.
iii. All documents, data, records, apparatus, equipment and other
physical property produced by the Consultant or others in
connection with the Consultant's activities pursuant to this
Agreement or which are furnished to the Consultant by the
Company shall be and remain the sole property of the Company
and shall be returned promptly to the Company as and when
requested by the Company.
iv. The limitations imposed by this Section 6.1 shall not apply
to (i) information which at the time of disclosure to
Consultant is in the public domain or already possessed by the
Consultant, (ii) information which becomes available to the
public at any time, other than as a result of acts by the
Consultant in violation of this Agreement, (iii) information
which is lawfully required to be disclosed to any governmental
agency or is otherwise required to be disclosed by law and (iv)
information disclosed to the Consultant in good faith by a
third party who has an independent right to such information
and who discloses the same to the Consultant.
b. Exclusive Consulting Agreement. With the exception of the
Consultant's existing relationships with the University pursuant to
the University Policies during the term of this Agreement and, in the
case of any termination of this Agreement by the Company for "Cause"
(as defined below) or by the Consultant for other than "Good Reason"
(as defined below), for two years thereafter, the Consultant will not,
directly or indirectly, own, manage, operate, join, control, finance
or participate in the ownership, management, operation, control or
financing of, or be connected as an officer, director, employee,
partner, principal, agent, investigator, consultant or advisor with
any person, business or enterprise which is engaged in
-3-
<PAGE>
developing products or technology relating to the Specialty Area in
actual or potential competition with the Company or its affiliates,
without the express prior written consent of the Company.
c. Non-solicitation. During the term of this Agreement and for two
years thereafter, Consultant will not, directly or indirectly, attempt
to hire any employee of the Company, assist in such hiring by any
other person, corporation or other entity, or otherwise solicit,
induce or encourage any employee of the Company to terminate his or
her relationship with the Company.
d. Non-Disclosure of Third Party Proprietary Information.
Consultant will not, during his consulting service with the Company,
improperly use or disclose any proprietary information or trade
secrets of any former or concurrent employer, or other person or
entity with whom he has an agreement or duty to keep in confidence
information acquired by him in confidence, if any.
e. Remedies. Consultant agrees that the Company shall, in addition
to any other remedies available to it, be entitled to preliminary and
permanent injunctive relief against any breach by Consultant of the
covenants contained in this Section 6, without having to post bond.
In the event that any provision of this Section shall be determined by
any court of competent jurisdiction to be unenforceable by reason of
its being extended over too great a time, too large a geographic area
or too great a range of activities, it shall be interpreted to extend
only over the maximum period of time, geographic area or range of
activities as to which it may be enforceable.
7. Inventions.
a. This Section 7 does not apply to any inventions, discoveries,
improvements, products, processes, technology, trade secrets,
know-how, designs, formulas, or any other subject matter that is owned
by University pursuant to the University Policies.
b. Subject to Section 7.1, Consultant agrees that any Inventions (as
defined below) shall be the property of the Company and its assigns.
Consultant agrees to assign, and does hereby assign, to the Company
all right, title and interest in and to all such Inventions. As
used herein, "Inventions" includes all inventions, improvements,
biological materials, know-how, data and other subject matter
(whether or not patented or patentable, and including all
intellectual property rights therein) developed, made, conceived,
reduced to practice, discovered or learned by Consultant, solely or
jointly with others, that arise from the performance of services
under this Agreement, relate to the Specialty Area or are based upon
Confidential Information of the Company. To the extent he is free
to do so, the Consultant shall promptly disclose to the Company all
inventions, discoveries,
-4-
<PAGE>
improvements, processes, technology and know-how (whether or not
patentable and whether or not reduced to practice) which the
Consultant may conceive or make (either by himself or jointly with
others) during the term of this Agreement with the Company.
c. Consultant agrees to assist Company, or its designee, at the
Company's expense, in every proper way to secure the Company's rights
in the Inventions and any intellectual property rights therein in any
and all countries, including the disclosure to the Company of all
pertinent information and data with respect thereto, the execution of
all applications, specifications, oaths, assignments and all other
instruments which the Company shall deem necessary in order to apply
for and obtain such rights and in order to assign and convey to the
Company, its successors, assigns and nominees the sole and exclusive
rights, title and interest in and to such Inventions, and any
intellectual property rights therein.
d. Consultant agrees that if in the course of performing the
Services, Consultant incorporates into any Invention developed
hereunder any invention, improvement, development, concept, discovery
or other proprietary subject matter owned by Consultant or in which
Consultant has an interest, the Company is hereby granted and shall
have a nonexclusive, royalty-free, perpetual, irrevocable, worldwide
license, with the right to grant and authorize sublicenses, to make,
have made, modify, use and sell such item as part of or in connection
with such Invention.
8. Term and Termination. This Agreement shall be in effect for ten
(10) years commencing on the date hereof subject to earlier termination as set
forth in this Section 8. The Company may terminate Consultant's service under
this Agreement at any time for Cause (as defined below). Consultant may
terminate his service under this Agreement at any time for Good Reason (as
defined below). At any time after June 30, 1999, the Company may terminate the
Consultant's service under this Agreement other than for Cause and the
Consultant may terminate his service hereunder other than for those for Good
Reason. Consultant's services hereunder shall also terminate on his death or
disability (as defined in Section 7 of the Option).
a. Upon termination of Consultant's service with the Company for any
reason, the Company shall have no further obligation to Consultant
under this Agreement other than for amounts earned through the date of
termination. No severance pay or other benefits of any kind will be
provided. The effect of such termination (if any) on the options
granted pursuant to Section 4 shall be as set forth in the Option
Agreement.
b. The following shall constitute "Cause": (i) any willful act of
personal dishonesty, fraud or misrepresentation taken by the
consultant in connection with his or her responsibilities as a
Consultant which was intended to result in substantial gain
-5-
<PAGE>
or personal enrichment of the Consultant at the expense of the Company
and was materially and demonstrably injurious to the Company; (ii) the
Consultant's conviction of a felony on account of any act which was
materially and demonstrably injurious to the Company; (iii) the
Consultant's willful and continued failure to substantially perform
his or per principal duties and obligations or employment (other than
any such failure resulting from incapacity due to physical or mental
illness), which failure is not remedied in a reasonable period of time
after receipt of written notice from the Company; or (iv) any change
in University Policies which materially adversely affects Consultant's
ability to perform the services contemplated hereunder or to assign
his rights in Inventions to the Company. For the purposes of this
Section, no act or failure to act shall be considered "willful" unless
done or omitted to be done in bad faith and without reasonable belief
that the act or omission was in or not opposed to the best interests
of the company.
c. The following shall constitute "Good Reason" for termination:
material breach by the Company of any provision of this Agreement
which breach continues for more than ten (10) business days following
written notice from Consultant to the Company setting forth in
reasonable detail the nature of such breach.
9. No Conflict. Consultant represents that to the best of his
knowledge and belief (a) his execution and delivery of, and performance of his
expected duties under, this Agreement do not conflict with any other agreement
to which he is a party or by which he is bound, including, without limitation,
any agreement to keep in confidence proprietary information acquired by
Consultant in confidence or trust prior to his retention as a consultant by the
Company, and (b) he has not brought and will not bring with him to the Company
or use in performance of his responsibilities at the Company any equipment,
supplies, facility or trade secret information of any current or former employer
which are not generally available to the public, unless he has obtained written
authorization for their use.
10. Independent Contractor. In rendering services to the Company,
Consultant shall act as an independent contractor and not as an employee or
agent of the Company.
11. Amendment. The provisions of this Agreement may be amended by
the written agreement of the Company and Consultant.
12. Choice of Law. This Agreement shall be governed and construed in
accordance with the internal laws of the State of Rhode Island.
13. Successors, etc. This Agreement shall be binding upon and shall
inure to the benefit of the Company's successors, transferees and assigns. The
Company requires the personal services of Consultant hereunder, and Consultant
may not assign this Agreement.
-6-
<PAGE>
14. Execution of Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which, when
taken together, shall constitute one instrument.
15. Severability. In the event that any provision of this Agreement
would, under applicable law, be invalid or unenforceable, such provision shall,
to the extent permitted under applicable law, be construed by modifying or
limiting it so as to be valid and enforceable to the maximum extent possible
under applicable law. The provisions of this Agreement are severable, and in
the event that any provision hereof should be held invalid or unenforceable in
any respect, it shall not invalidate, render unenforceable or otherwise affect
any other provision hereof.
16. Notices. Any and all notices, requests, demands and other
communications provided for by this Agreement shall be in writing and shall be
effective when delivered in person or five business days after deposit in the
United States mail, postage prepaid, registered or certified, and addressed to
Consultant at his address set forth above or, in the case of the Company, at its
address set forth above, attention of President, or to such other address as
either party may specify by notice to the other.
17. Prior Agreement with StemCells. As of the Effective Time, this
Agreement supersedes any consulting agreement, commitment, understanding or
arrangements, express, implied, oral, or written between StemCells, Inc. and
Consultant, except that any agreement between StemCells, Inc. and Consultant, to
the extent that such agreement relates to confidentiality or non-disclosure or
assignment of proprietary rights, noncompetition or nonsolicitation relating to
StemCell's business, shall remain in full force and effect and inure to the
benefit of the Company, and shall be in addition to, and not in limitation of,
the rights of the Company hereunder.
18. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto, and supersedes any and all prior or
contemporaneous communications, agreements and understandings, written or oral,
with respect to the terms and conditions of Consultant's service to the Company.
-7-
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
and delivered by its duly authorized officer and Consultant has executed and
delivered this Agreement.
CYTOTHERAPEUTICS, INC.
By: /S/ SETH RUDNICK
-------------------------------------
Name: Seth Rudnick
Title: President
/S/ IRVING WEISSMAN
------------------------------------------
Irving Weissman, M.D.
<PAGE>
Schedule A
$50,000 per year, payable quarterly in advance.
<PAGE>
Schedule B
FORM OF PERFORMANCE-BASED INCENTIVE OPTION AGREEMENT
<PAGE>
Optionee: Irving Weisman Shares Subject to Option: 500,000
Dated: September 25, 1997
CYTOTHERAPEUTICS, INC.
PERFORMANCE-BASED INCENTIVE OPTION AGREEMENT
This Agreement is made as of the date set forth above by and between
CytoTherapeutics, Inc., a Delaware corporation (the "Company" or "CTI"), and the
Optionee specified above (the "Optionee").
WHEREAS, Optionee has entered into a Consulting or Employment Agreement
with the Company which provides for the grant of the options evidenced hereby
(the "Consulting/Employment Agreement"); and
WHEREAS, Optionee is in a position to make a significant contribution to
the long-term success of the Company, and in particular the Company's stemcell
research program.
NOW, THEREFORE, the Company and Optionee agree as follows:
1. Grant of Option. This agreement evidences the grant by the Company to
Optionee pursuant to the Company's 1997 Stemcells Research Stock Option Plan
(the "Plan") of an option to purchase, in whole or in part, on the terms
provided herein, the number of shares specified above of the Company's Common
Stock, $.01 par value (the "Common Stock"), at a per share price equal to $5.25
(the "Option"). This Option is not intended to qualify as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended. This Option shall terminate on the tenth anniversary of the date of
this Agreement (the "Final Exercise Date"), and is subject to earlier
termination as provided in Sections 6 and 7 below.
2. Exercisability of Option. Subject to the terms and conditions hereof,
this Option shall vest and become exercisable as follows:
% of Shares
Milestone Vesting
--------- -----------
On the date of this Agreement 6.25%
First Corporate Partnership (as defined below)
(before September 1, 1998)
If > $5,000,000 and $10,000,000 6.25%
If > $10,000,000 and $15,000,000 8.75%
If > $15,000,000 11.25%
Second Corporate Partnership (before September 1, 1999)
If > $5,000,000 and $10,000,000 6.25%
If > $10,000,000 and $15,000,000 8.75%
If > $15,000,000 11.25%
First Corporate Partnership resulting from
discovery of a new stem cell (before June 30, 2000)
If > $5,000,000 and $10,000,000 6.25%
If > $10,000,000 and $15,000,000 8.75%
If > $15,000,000 11.25%
Second Corporate Partnership resulting from
discovery of a new stem cell (before June 30, 2000)
If > $5,000,000 and $10,000,000 6.25%
If > $10,000,000 and $15,000,000 8.75%
If > $15,000,000 11.25%
Commencement of first clinical trial of a CTI 12.50%
stem cell product (before June 30, 2000)
Filing of first United States regulatory filing for marketing 12.50%
approval of a CTI stem cell product (before June 30, 2003)
Filing of first European Union or Japanese regulatory
filing for market approval with respect to a CTI stem 12.50%
cell product (before June 30, 2004)
-2-
<PAGE>
First United States commercial approval of a 25.00%
CTI stem cell product (before June 30, 2005)
First European Union or Japanese commercial 25.00%
approval of a CTI stem cell product (before June 30, 2005)
For purposes of the foregoing, "Corporate Partnership" means any joint
venture, licensing agreement, collaboration agreement, or research and
development agreement to which the Company is a party and which is material
to the long-term success of the Company. A "Corporate Partnership resulting
from the discovery of a new stem cell" shall mean a Corporate Partnership
which is formed to commercially develop technology resulting from research
conducted pursuant to the Research Plan (as such term is defined in a letter
agreement between the Company and Messrs. Weissman, Gage and Anderson, dated
as of September __, 1997) which the corporate partner and CTI reasonably
believe has resulted in the discovery of a previously undiscovered stem cell.
The dollar amounts set forth above with respect to Corporate Partnerships
refer to the receipt by the Company of the aggregate amount of the following
payments received in connection with any such Corporate Partnership:
(i) any non-refundable up-front license fees;
(ii) the present value of all non-refundable, non-contingent
license fees payable at a later date;
(iii) the amount by which the purchase price paid for any
non-refundable, non-contingent equity investment in the
Company made in connection with such Corporate Partnership
exceeds the fair market value of such equity investment as
reasonably determined by the Board of Directors of the
Company; and
(iv) 50% of all non-contingent payments for sponsored research
under any sponsored research agreement, provided, however,
that in the case of the $5 million target in each of the first
two corporate partnership milestones, 100% of such payments
shall count toward satisfaction of such target.
The Company shall not structure any Corporate Partnership in a bad faith
effort to avoid giving rise to the vesting of options hereunder.
3. Exercise of Option. Each election to exercise this Option shall be in
writing, signed by Optionee or by his duly appointed guardian or representative,
his executor or administrator or the person or persons to whom this Option is
transferred by will or the applicable laws of descent and distribution
(collectively, the "Legal Representative"), and received by the Company at its
principal office in Providence, Rhode Island, accompanied by payment in full as
provided in Section 4 below. In the event this Option is exercised by such
Legal Representative,
-3-
<PAGE>
the Company shall be under no obligation to deliver stock hereunder unless
and until the Company is reasonably satisfied that the person or persons
exercising this Option is or are the duly appointed guardian(s) or
representative(s) of Optionee, the duly appointed executor(s) or
administrator(s) of the deceased Optionee or the person or persons to whom
this Option has been transferred by will or the applicable laws of descent
and distribution.
4. Payment for Stock. Shares of Common Stock shall be issued only upon
receipt by the Company of full payment of the purchase price for the shares
as to which this Option is exercised. The purchase price is payable by
Optionee to the Company either (i) in cash or by certified check or cashier's
check payable to the order of the Company; or (ii) through the delivery of
shares of Common Stock (duly owned by Optionee and as to which Optionee has
good title free and clear of any liens and encumbrances) which have been
outstanding for at least six months and which have a fair market value (as
determined by the Board of Directors of the Company) on the last business day
prior to the date of exercise of this Option equal to the purchase price; or
(iii) by delivery of an unconditional and irrevocable undertaking by a broker
to deliver promptly to the Company sufficient funds to pay the exercise
price; or (iv) by any combination of the forgoing permissible forms of
payment. The Company will not be obligated to deliver any shares unless and
until, in the opinion of the Company's counsel, all applicable federal and
state laws and regulations have been complied with, nor, in the event the
outstanding Common Stock is at the time listed upon any stock exchange,
unless and until the shares to be delivered have been listed or authorized to
be listed upon official notice that legal matters in connection with the
issuance and delivery of such shares have been approved by the Company's
counsel. The Company will use its best efforts to effect any such compliance
or listing, and Optionee agrees to take any action reasonably requested by
the Company in connection therewith. Subject to any applicable limitations
under the Securities Act of 1933, as amended, and the rules and regulations
thereunder, the Company will promptly file a Registration Statement on Form
S-8 (or any successor form), with respect to the shares of Common Stock
issuable upon exercise of this Option, and the Company will use all
reasonable efforts to maintain the effectiveness of such registration
statement for so long as this Option shall remain outstanding. The Company
may require that Optionee agree that he will notify the Company when he makes
any disposition of the shares issued upon exercise of this Option whether by
sale, gift or otherwise. Optionee will have the rights of a shareholder only
as to shares actually acquired by him upon exercise of this Option.
5. Non-transferability of Option. This Option may not be transferred
by Optionee otherwise than by will or by the laws of descent and
distribution. During Optionee's lifetime this Option may be exercised only by
Optionee or Optionee's duly appointed guardian or representative.
6. Termination of Service. In the event Optionee ceases to be a
consultant to or employee of the Company because the Company terminates his
service for Cause (as defined in the Consulting/Employment Agreement) or
Optionee terminates his service without Good Reason (as defined in the
Consulting/Employment Agreement), this Option shall immediately terminate
except that Optionee may thereafter exercise this Option, to the extent he
was entitled to exercise
-4-
<PAGE>
it on the date when his service terminated, for a period of 90 days after the
date of such termination. In no event, however, may this Option be exercised
after the Final Exercise Date.
7. Death or Disability. In the event Optionee dies or Optionee's
service with the Company terminates by reason of disability (meaning the
inability of Optionee, because of physical or mental illness or injury, to
perform substantially all of his duties and responsibilities to the Company),
this Option shall continue to be eligible for vesting as set forth in Section
2 of this Agreement for a period of two years after Optionee's death or the
termination of his service because of disability. In addition, this Option
may be exercised, as to all or any of (a) the shares that Optionee was
entitled to purchase immediately prior to his death or the termination of his
service because of disability and (b) the shares that vest in accordance with
the preceding sentence, by Optionee or his Legal Representative, at any time
or times within three years after his death or such termination of service.
Except as so exercised this Option will expire at the end of such period. In
no event, however, may this Option be exercised after the Final Exercise Date.
8. Administration. This Option will be administered by the Board of
Directors of the Company, which will have the authority to interpret this
agreement and to decide all questions and settle all controversies and
disputes which may arise in connection herewith. All decisions,
determinations and interpretations of the Board of Directors will be binding
on all parties concerned. A majority of the members of the Board of
Directors will constitute a quorum, and all determinations of the Board of
Directors will be made by a majority of its members. Any determination of
the Board of Directors under this agreement may be made without notice or
meeting of the Board of Directors by a written instrument signed by a
majority of the members of the Board of Directors. In the event of any
conflict between the terms of this Option and the terms of the Plan the terms
of this Option will control.
9. Stock to be Delivered. Stock to be delivered upon exercise of this
Option may constitute an original issue of authorized but unissued stock or
may consist of previously issued stock acquired by the Company as determined
from time to time by the Board of Directors. The Board of Directors and the
proper officers of the Company will take any appropriate action required for
such delivery.
10. Changes in Stock. In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's
capital structure, the Board of Directors of the Company (whose determination
will be binding on Optionee) will make appropriate adjustments to the number
and kind of shares of stock or other securities subject to this Option, the
exercise price and other relevant provisions. Except as provided in the
following paragraph, in the event of a Change in Control (as defined below),
this Option will expire and cease to be exercisable, provided that at least
twenty days prior to the effective date of any such Change in Control, the
Board of Directors shall either (a) make this Option immediately exercisable
in full, or (b) arrange to have the acquiror or an affiliate thereof grant a
replacement option or other replacement award containing terms that the Board
of Directors reasonably determines to be equitable under the circumstances.
"Change in Control" means any consolidation or merger in
-5-
<PAGE>
which the Company is not the surviving corporation, a transaction or series
of related transactions that result in the acquisition of all or
substantially all of the Company's outstanding Common Stock by a single
person or entity or by a group of persons or entities acting in concert, or
the sale or transfer of all or substantially all of the Company's assets.
11. Acceleration of Options on Change in Control. Any Change in Control
will result in the accelerated vesting of the lesser of (i) 50% of the shares
originally issuable pursuant to this Option or (ii) all of the shares which
would become vested on the achievement of all milestones which are not
time-barred at the time of Change in Control.
In addition, the Shares subject to this Option shall be accelerated under the
circumstances and to the extent described in Section 1 (f) of the Agreement
(the "Research Agreement") dated September 25, 1997 among the Company,
Irving Weissman and Fred H. Gage.
12. Amendments. The Board of Directors of the Company may at any time
or times amend this Option for the purpose of satisfying the requirements of
any changes in applicable laws or regulations or for any other purpose which
may at the time be permitted by law, provided that no such amendment will
adversely affect the rights of Optionee without his consent.
13. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware (not including the conflict
of laws principles thereof).
-6-
<PAGE>
[Incentive Option Agreement]
IN WITNESS WHEREOF, the Company has caused this agreement to be executed
by its duly authorized officer. This Option is granted at the Company's
office, on the date stated above.
CYTOTHERAPEUTICS, INC.
By:
---------------------------
President
Accepted and Agreed:
-------------------------
Optionee