**Exhibit 10.3**

 

ICAGEN, INC. 

 

Incentive Stock Option Agreement 

GrantedUnder 2004 Stock Incentive Plan 

 

 

This agreement evidences the grant by Icagen, Inc., a Delaware corporation (the “Company”), on            , 200[  ] (the “Grant Date”) to                    , an employee of the Company (the “Participant”), of an option to purchase, in whole or in part, on theterms provided herein and in the Company’s 2004 Stock Incentive Plan (the “Plan”), a total of             shares (the “Shares”) of common stock,$0.001 par value per share, of the Company (“Common Stock”) at $             per Share. Unless earlier terminated, this option shall expire at 5:00 p.m., Eastern time, on                     (the “Final Exercise Date”). 

 

It is intended that the option evidenced by this agreement shall be an incentive stock option as defined in Section 422 ofthe Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder (the “Code”). Except as otherwise indicated by the context, the term “Participant”, as used in this option, shall be deemed to include anyperson who acquires the right to exercise this option validly under its terms. 

 

 

[This option will become exercisable (“vest”) as to         % of the original number ofShares on the [first] anniversary of the Grant Date and as to an additional         % of the original number of Shares at the end of each successive [one-month] period following the firstanniversary of the Grant Date until the [fourth] anniversary of the Grant Date.] 

 

The right of exercise shall be cumulative so that to the extent the 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 allShares for which it is vested until the earlier of the Final Exercise Date or the termination of this option under Section 3 hereof or the Plan. 

 

 

(a) Form of Exercise. Each election to exercise this option shall be in writing, signed by the Participant, and received by the Company at itsprincipal office, accompanied by this agreement, and payment in full as follows: 

 

(1) in cash or by check, payable to the order of the Company; 

 

(2) by (i) delivery of an irrevocable and unconditional undertaking by a creditworthy broker to deliverpromptly to the Company sufficient funds to pay the exercise price and any required tax withholding or (ii) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a creditworthy broker to deliverpromptly 

 

to the Company cash or a check sufficient to pay the exercise price and any required tax withholding; 

 

(3) with the approval of the Board, when the Common Stock isregistered under the Exchange Act, by delivery of shares of Common Stock owned by the Participant valued at their fair market value as determined by (or in a manner approved by) the Board in good faith (“Fair Market Value”), provided (i)such method of payment is then permitted under applicable law and (ii) such Common Stock, if acquired directly from the Company, was owned by the Participant at least six months prior to such delivery; 

 

(4) to the extent permitted by applicable law and by theBoard, in its sole discretion by (i) delivery of a promissory note of the Participant to the Company on terms determined by the Board, or (ii) payment of such other lawful consideration as the Board may determine; or 

 

(5) by any combination of the above permitted forms ofpayment. 

 

The Participant may purchase less than the number of shares coveredhereby, provided that no partial exercise of this option may be for any fractional share. 

 

(b) Continuous Relationship with the Company Required. Except as otherwise provided in this Section 3, this option may not be exercised unless the Participant, at the time he or she exercises this option, is,and has been at all times since the Grant Date, an employee or officer of, or consultant or advisor to, the Company or any parent or subsidiary of the Company as defined in Section 424(e) or (f) of the Code (an “Eligible Participant”).

 

(c) Termination of Relationship with the Company. Ifthe Participant ceases to be an Eligible Participant for any reason, then, except as provided in paragraphs (d) and (e) below, the right to exercise this option shall terminate three months after such cessation (but in no event after the FinalExercise Date), providedthat this option shall be exercisable only to the extent that the Participant was entitled to exercise this option on the date of such cessation. Notwithstanding the foregoing, if the Participant, prior to theFinal Exercise Date, violates the non-competition or confidentiality provisions of any employment contract, confidentiality and nondisclosure agreement or other agreement between the Participant and the Company, the right to exercise this optionshall terminate immediately upon such violation. 

 

(d)Exercise Period Upon Death or Disability. If the Participant dies or becomes disabled (within the meaning of Section 22(e)(3) of the Code) prior to the Final Exercise Date while he or she is an Eligible Participant and the Company has notterminated such relationship for “cause” as specified in paragraph (e) below, this option shall be exercisable, within the period of one year following the date of death or disability of the Participant, by the Participant (or in the caseof death by an authorized transferee), providedthat this option shall be exercisable only to the extent that this option was exercisable by the Participant on the date of his or her death or disability, and further provided that thisoption shall not be exercisable after the Final Exercise Date. 

 

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(e) Discharge for Cause. If the Participant, prior to the Final Exercise Date, is discharged bythe Company for “cause” (as defined below), the right to exercise this option shall terminate immediately upon the effective date of such discharge. “Cause” shall mean willful misconduct by the Participant or willful failure bythe Participant to perform his or her responsibilities to the Company (including, without limitation, breach by the Participant of any provision of any employment, consulting, advisory, nondisclosure, non-competition or other similar agreementbetween the Participant and the Company), as determined by the Company, which determination shall be conclusive. The Participant shall be considered to have been discharged for “Cause” if the Company determines, within 30 days after theParticipant’s resignation, that discharge for cause was warranted. 

 
4.Agreement in Connection with Public Offering. 
 

The Participant agrees, in connection with an underwritten public offering of the Company’s securities pursuant to a registration statement under theSecurities Act, (i) not to sell, make short sale of, loan, grant any options for the purchase of, or otherwise dispose of any shares of Common Stock held by the Participant (other than those shares included in the offering) without the prior writtenconsent of the Company or the underwriters managing such initial underwritten public offering of the Company’s securities for such number of days (not to exceed 180 days) from the effective date of such registration statement as the managingunderwriters or the Company may require, and (ii) to execute any agreement reflecting clause (i) above as may be requested by the Company or the managing underwriters at the time of such offering. 

 
5.Tax Matters. 
 

(a) Withholding. No Shares will be issued pursuant to the exercise of this option unless and until the Participant pays to the Company, or makesprovision satisfactory to the Company for payment of, any federal, state or local withholding taxes required by law to be withheld in respect of this option. When the Common Stock is registered under the Exchange Act, Participant may satisfy suchtax obligations in whole or in part by delivery of shares of Common Stock owned by Participant; provided, however, that the total tax withholding where stock is being used to satisfy such tax obligations cannot exceed the Company’s minimumstatutory withholding obligations (based on minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to such supplemental taxable income). The Company may, to the extent permitted by law,deduct any such tax obligations from any payment of any kind otherwise due to Participant. 

 

(b) Disqualifying Disposition. If the Participant disposes of Shares acquired upon exercise of this option within two years from the Grant Date or one year after such Shares were acquired pursuant to exerciseof this option, the Participant shall notify the Company in writing of such disposition. 

 
6.Nontransferability of Option. 
 

This option may not be sold, assigned, transferred, pledged or otherwise encumbered by the Participant, either voluntarily or by operation of law, exceptby will or the laws of descent 

 

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and distribution, and, during the lifetime of the Participant, this option shall be exercisable only by the Participant. 

 
7.Provisions of the Plan. 
 

This option is subject to the provisions of the Plan, a copy of which is furnished to the Participant with this option. 

 

IN WITNESS WHEREOF, the Company has caused this option to be executed underits corporate seal by its duly authorized officer. This option shall take effect as a sealed instrument. 

 
    
Icagen, Inc.

Dated:
 
________
   
By:
          
Name:
          
Title:
  
 

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PARTICIPANT’S ACCEPTANCE

 

The undersigned hereby accepts the foregoing option and agreesto the terms and conditions thereof. The undersigned hereby acknowledges receipt of a copy of the Company’s 2004 Stock Incentive Plan. 

 

PARTICIPANT:
 
Address:
     
 

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