Exhibit 10.6

 

EMBREX, INC.

 

AMENDED AND RESTATED INCENTIVE STOCK OPTION

AND NONSTATUTORY STOCK OPTION PLAN

 

STOCK OPTION AGREEMENT

 

Unless otherwise defined herein, the terms defined in the Amended and Restated
Incentive Stock Option and Nonstatutory Stock Option Plan (the “Plan”) shall
have the same defined meanings in this Option Agreement.

 

I.   NOTICE OF STOCK OPTION GRANT

 

«Firstname»«Lastname»

«Address»

«City» «State» «Zipcode»

 

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

 

    «Grantnumber»                

Date of Grant/Vesting
Commencement Date

  _________

Exercise Price per Share

 

$                  

Total Number of Shares Granted

 

    «sharesgranted»                

Type of Option:

 

                 Incentive Stock Option

   

                 Nonstatutory Stock Option

Term/Expiration Date:

  ____________

 

Vesting Schedule:

 

This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:

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25% of the Shares subject to the Option shall vest on each of the first four
anniversaries of the Vesting Commencement Date, subject to you continuing to be
an employee, consultant or director of the Company on such dates.

 

Period for Exercise Following Termination:

 

This Option shall be exercisable for 90 days after you cease to be an employee,
consultant or director (a “Service Provider”). Upon your death or disability,
this Option may be exercised for one year after you cease to be a Service
Provider. In no event shall this Option be exercised later than the
Term/Expiration Date as provided above.

 

II.   AGREEMENT

 

3. Grant of Option. The Committee hereby grants to the optionee named in the
Notice of Grant in Part I of this Agreement (the “Optionee”) an option (the
“Option”) to purchase the number of Shares set forth in the Notice of Grant
above, at the exercise price per share set forth in the Notice of Grant (the
“Exercise Price”), subject to the terms and conditions of this Agreement and the
Plan, which is incorporated herein by reference. Subject to Section 19 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, to the extent that an option designated as an ISO exceeds the
$100,000 rule of Code Section 422(d), it shall be treated as a Nonstatutory
Stock Option (“NSO”).

 

4. Exercise of Option.

 

(a) Right to Exercise. This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and with the
applicable provisions of the Plan and this Option Agreement.

 

(b) Method of Exercise. This Option shall be 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 with
respect to 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 Stock Plan Administrator. The Exercise
Notice shall be accompanied by payment of the 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 the Exercise Price.

 

No Shares shall be issued pursuant to the exercise of this Option unless such
issuance and exercise complies with any applicable registration requirements of
the Securities Act of 1933, any applicable listing requirement of any national
securities exchange on

 

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which stock of the same class is then listed, and any other requirements of
federal, state or local law or of any regulatory bodies having jurisdiction over
such issuance and exercise. 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 Shares.

 

(c) 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:

 

(1) cash or cash equivalent; or

 

(2) consideration received by the Company under a cashless exercise program
implemented by the Company in connection with the Plan; or

 

(3) surrender of other Shares that (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 Exercised Shares.

 

(d) Tax Withholding. The Company shall have the right to deduct from any payment
or settlement under this Agreement, including, without limitation, the exercise
of this Option and the delivery of the Option Shares, any federal, state, local
or other taxes that the Committee, in its sole discretion, deems necessary to be
withheld to comply with the Code or any other applicable law, rule or
regulation.

 

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 this Option Agreement.

 

7. Tax Consequences. The federal tax consequences relating to 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.

 

(a) Exercising the Option.

 

(i) Nonstatutory Stock Option. The Optionee may incur regular federal income tax
liability upon the exercise of an NSO. The Optionee will be treated as having
received compensation income (taxable at ordinary income tax rates) equal to the
excess, if any,

 

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of the Fair Market Value of the Exercised Shares on the date of exercise over
their Exercise Price. If the Optionee is an Employee or a former Employee, the
Company will be required to withhold for income and employment tax purposes, as
set forth in Section 2(d) above.

 

(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 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 the 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 (a “Disqualifying Disposition”), 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 Exercise Price, or (B) the difference between the sale price
of such Shares and the Exercise Price. Any additional gain will be taxed as
capital gain, short-term or long-term, depending on the period that the ISO
Shares are held.

 

(c) Notice of Disqualifying Disposition of ISO Shares. In the event of a
Disqualifying Disposition, the Optionee shall immediately notify the Company in
writing of such disposition.

 

8. Entire Agreement; Governing Law. 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. Neither the Plan nor the Option
Agreement may 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 North
Carolina.

 

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

 

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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 AND SHALL NOT INTERFERE WITH THE COMPANY’S OR
THE OPTIONEE’S RIGHT TO TERMINATE THE OPTIONEE’S RELATIONSHIP AS A SERVICE
PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

 

Optionee 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 Committee upon any questions relating to the Plan and
Option Agreement.

 

OPTIONEE

 

EMBREX, INC.

 

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By:

 

 

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Signature

       

 

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Title:

 

 

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Print Name

       

 

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Residence Address

       

 

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Date:

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Date:

 

 

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Exhibit A

 

EXERCISE NOTICE

 

Embrex, Inc.

1040 Swabia Court

Durham, North Carolina 27703

 

Attention: Chief Financial Officer

 

1. Exercise of Option. Effective as of today,             ,             , the
undersigned (“Purchaser”) hereby elects to purchase              shares (the
“Shares”) of the Common Stock of Embrex, Inc. (the “Company”) under and pursuant
to the Amended and Restated Incentive Stock Option and Nonstatutory Stock Option
Plan (the “Plan”) and the Stock Option Agreement dated                     ,
         (the “Option Agreement”). The purchase price for the Shares shall be
$            , per share, as set 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 shall 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 14 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 he or she has consulted with any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that he or she is not relying on the Company for any tax advice.

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6. Entire Agreement; Governing Law. The Plan and Option Agreement are
incorporated herein by reference. This Notice, the Plan and the 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 Purchaser and may not be modified adversely to the
Purchaser’s interest except by means of a writing signed by the Company and
Purchaser. This Notice is governed by the internal substantive laws, but not the
choice of law rules, of North Carolina.

 

Submitted by:

 

Accepted by:

PURCHASER

 

EMBREX, INC.

 

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By:

 

 

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Signature

       

 

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Title:

 

 

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Print Name

           

Date Received:

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