Common use of Milestone Options Clause in Contracts

Milestone Options. On September 2, 2005, the Company granted to the Executive options to purchase up to four hundred thousand (400,000) shares of Common Stock (the "MILESTONE OPTIONS"), pursuant to the Plan. The Milestone Options (ii) shall, to the maximum extent permitted under applicable law, qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code, (ii) shall have a per share exercise price equal to $2.69, the closing price of a share of Common Stock, as listed on the American Stock Exchange, on September 1, 2005, (iii) are subject to the terms and conditions set forth in the Plan and the Incentive Stock Option Letter Agreement entered into by the Company and Executive dated September 2, 2005, as amended simultaneously herewith and (iv) shall vest and become exercisable only upon the occurrence of the following events which occur during the Initial Term (up to a maximum of 400,000 shares of Common Stock in the aggregate): (1) Milestone Options exercisable for one hundred twenty-five thousand (125,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the first Non-Generic Opioid Drug developed by the Company; (2) Milestone Options exercisable for seventy-five thousand (75,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the second Non-Generic Opioid Drug developed by the Company; (3) Milestone Options exercisable for fifty thousand (50,000) shares of Common Stock shall vest and become immediately exercisable in full only upon the closing of an exclusive product license for the United States national market or product sale transaction of all of the Company's ownership rights (on a product by product basis and only once for each individual product) for each Company drug product, other than the Non-Generic Opioid Drugs for which Opioid Product Options were granted under Section 3(e) above; (4) Milestone Options exercisable for ten thousand (10,000) shares of Common Stock shall vest and become immediately exercisable in full upon the filing by the Company (in the Company's name) with the United States Food and Drug Administration (the "FDA") of either an abbreviated new drug application (an "ANDA") or a new drug application (including a NDA filed with the FDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 301 ET SEQ.) (a "NDA"), for a product not covered by a previous FDA application; (5) Milestone Options exercisable for forty thousand (40,000) shares of Common Stock shall vest and become immediately exercisable in full upon the approval by the FDA of any ANDA or NDA (filed in the Company's name) for a product not previously approved by the FDA; (6) Milestone Options exercisable for twenty-five (25,000) shares of Common Stock shall vest and become immediately exercisable in full upon filing of an application for U.S. patent by the Company (filed in the Company's name); and (7) Milestone Options exercisable for twenty-five (25,000) shares of Common stock shall vest and become immediately exercisable in full upon the granting by U.S. Patent and Trademark Office ("PTO") of a patent to the Company (filed in the Company's name). Upon the earlier to occur of the expiration of the Initial Term of this Agreement or the termination of Executive's employment hereunder, all unvested Milestone Options granted shall automatically terminate and all vested but unexercised Milestone Options shall terminate in accordance with the terms of the stock option agreement by and between the Executive and the Company with respect to the Milestone Options and the Plan; provided that, in the case of any Milestone Options that may be vested pursuant to clause (5) or clause (7) of Section 3(f)(iv) above, if (x) the applicable filing with the FDA or PTO, as the case may be, was made by the Company during the Initial Term but prior to Without Cause Termination (as defined below), (y) the approval relating to such filing (either from the FDA or the PTO) occurs within five hundred forty (540) days of such filing and (x) such approval occurring within the three year Initial Term, the Milestone Options relating to such filing shall vest in accordance with clause (5) or clause (7), as the case may be. The shares of Common Stock issuable upon exercise of the Milestone Options are subject to an effective registration statement filed with the SEC.

Milestone Options. On September 2Subject to Section 2.3.7. hereof, 2005in addition to the other grants set forth in this Section 2.3, effective on the date hereof, the Company granted shall grant to the Executive options to purchase up to four hundred thousand (400,000) shares of Common Stock (the "MILESTONE OPTIONS")) to purchase up to two hundred thousand (200,000) shares of Common Stock, pursuant to the Plan. The Milestone Options Options: (iii) shall, to the maximum extent permitted under applicable law, qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code, ; (ii) shall have a per share exercise price equal to $2.69, the closing price of a share of Common Stock, as listed on the American Stock Exchange, on September 1, 2005, 2.25; (iii) are subject to the terms and conditions set forth in the Plan and the Incentive Stock Option Letter Agreement entered into by the Company and Executive dated September 2, 2005, as amended simultaneously herewith and (iv) shall vest and become exercisable only upon the occurrence of the following events which occur during the Initial Term (up to a maximum of 400,000 200,000 shares of Common Stock in the aggregate): (1a) Milestone Options exercisable for one hundred twenty-five thousand (125,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the first Non-Generic Opioid Drug developed by the Company; (2b) Milestone Options exercisable for seventy-five thousand (75,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the second Non-Generic Opioid Drug developed by the Company; (3c) Milestone Options exercisable for fifty thousand (50,000) shares of Common Stock shall vest and become immediately exercisable in full only upon the closing of an exclusive product license for the United States national market or product sale transaction of all of the Company's ownership rights (on a product by product basis and only once for each individual product) for each Company drug product, other than the Non-Generic Opioid Drugs for which Opioid Product Options were granted under Section 3(e) 2.3.2 above; (4d) Milestone Options exercisable for ten thousand (10,000) shares of Common Stock shall vest and become immediately exercisable in full upon the filing by the Company (in the Company's name) with the United States Food and Drug Administration (the "FDA") of either an abbreviated new drug application (an "ANDA") or a new drug application (including a NDA filed with the FDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 301 ET SEQ.) (a "NDA"), for a product not covered by a previous FDA application; (5e) Milestone Options exercisable for forty thousand (40,000) shares of Common Stock shall vest and become immediately exercisable in full upon the approval by the FDA of any ANDA or NDA (filed in the Company's name) for a product not previously approved by the FDA; (6f) Milestone Options exercisable for twenty-five (25,000) shares of Common Stock shall vest and become immediately exercisable in full upon filing of an application for U.S. patent by the Company (filed in the Company's name); and (7g) Milestone Options exercisable for twenty-five (25,000) shares of Common stock shall vest and become immediately exercisable in full upon the granting by U.S. Patent and Trademark Office ("PTO") of a patent to the Company (filed in the Company's name); and (iv) be subject to the terms and conditions set forth in the Plan and Option Agreement. All such options shall be subject to acceleration pursuant to Section 3 hereof. Upon the earlier to occur of the expiration of the Initial Term of this Agreement or the termination of Executive's employment hereunder, all unvested Milestone Options granted shall automatically terminate and all vested but unexercised Milestone Options shall terminate in accordance with the terms of the stock option agreement by and between the Executive and the Company with respect to the Milestone Options and the Plan; provided that, in the case of any Milestone Options that may be vested pursuant to clause (5e) or clause (7g) of Section 3(f)(iv2.3.4(iii) above, if (x) the applicable filing with the FDA or PTO, as the case may be, was made by the Company during the Initial Term but prior to Without Cause Termination (as defined below)the termination of the Executive by the Company without Cause, (y) the approval relating to such filing (either from the FDA or the PTO) occurs within five hundred forty (540) days of such filing and (x) such approval occurring within the three year Initial Term, the Milestone Options relating to such filing shall vest in accordance with clause (5e) or clause (7g), as the case may be. The shares of Common Stock issuable upon exercise of the Milestone Options are subject to an effective registration statement filed with the SEC.

Milestone Options. On September 2Subject to Section 2.3.7. hereof, 2005in addition to the other grants set forth in this Section 2.3, effective on the Commencement Date, the Company granted to the Executive options to purchase up to four hundred thousand (400,000) shares of Common Stock (the "MILESTONE OPTIONS")) to purchase up to two hundred thousand (200,000) shares of Common Stock, pursuant to the Plan. The Milestone Options Options: (iii) shall, to the maximum extent permitted under applicable law, qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code, ; (ii) shall have a per share exercise price equal to $2.69, the closing price of a share of Common Stock, as listed on the American Stock Exchange, on September 1, 2005, 2.25; (iii) are subject to the terms and conditions set forth in the Plan and the Incentive Stock Option Letter Agreement entered into by the Company and Executive dated September 2, 2005, as amended simultaneously herewith and (iv) shall vest and become exercisable only upon the occurrence of the following events which occur during the Initial Term (up to a maximum of 400,000 200,000 shares of Common Stock in the aggregate): (1a) Milestone Options exercisable for one hundred twenty-five thousand (125,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the first Non-Generic Opioid Drug developed by the Company; (2b) Milestone Options exercisable for seventy-five thousand (75,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the second Non-Generic Opioid Drug developed by the Company; (3c) Milestone Options exercisable for fifty thousand (50,000) shares of Common Stock shall vest and become immediately exercisable in full only upon the closing of an exclusive product license for the United States national market or product sale transaction of all of the Company's ownership rights (on a product by product basis and only once for each individual product) for each Company drug product, other than the Non-Generic Opioid Drugs for which Opioid Product Options were granted under Section 3(e) 2.3.2 above; (4d) Milestone Options exercisable for ten thousand (10,000) shares of Common Stock shall vest and become immediately exercisable in full upon the filing by the Company (in the Company's name) with the United States Food and Drug Administration (the "FDA") of either an abbreviated new drug application (an "ANDA") or a new drug application (including a NDA filed with the FDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 301 ET SEQ.) (a "NDA"), for a product not covered by a previous FDA application; (5e) Milestone Options exercisable for forty thousand (40,000) shares of Common Stock shall vest and become immediately exercisable in full upon the approval by the FDA of any ANDA or NDA (filed in the Company's name) for a product not previously approved by the FDA; (6f) Milestone Options exercisable for twenty-five (25,000) shares of Common Stock shall vest and become immediately exercisable in full upon filing of an application for U.S. patent by the Company (filed in the Company's name); and (7g) Milestone Options exercisable for twenty-five (25,000) shares of Common stock shall vest and become immediately exercisable in full upon the granting by U.S. Patent and Trademark Office ("PTO") of a patent to the Company (filed in the Company's name); and (iv) be subject to the terms and conditions set forth in the Plan and Option Agreement. All such options shall be subject to acceleration pursuant to Section 3 hereof. Upon the earlier to occur of the expiration of the Initial Term of this Agreement or the termination of Executive's employment hereunder, all unvested Milestone Options granted shall automatically terminate and all vested but unexercised Milestone Options shall terminate in accordance with the terms of the stock option agreement by and between the Executive and the Company with respect to the Milestone Options and the Plan; provided that, in the case of any Milestone Options that may be vested pursuant to clause (5e) or clause (7g) of Section 3(f)(iv2.3.4(iii) above, if (x) the applicable filing with the FDA or PTO, as the case may be, was made by the Company during the Initial Term but prior to Without Cause Termination (as defined below)the termination of the Executive by the Company without Cause, (y) the approval relating to such filing (either from the FDA or the PTO) occurs within five hundred forty (540) days of such filing and (x) such approval occurring within the three year Initial Term, the Milestone Options relating to such filing shall vest in accordance with clause (5e) or clause (7g), as the case may be. The shares of Common Stock issuable upon exercise of the Milestone Options are subject to an effective registration statement filed with the SEC.

Milestone Options. On September 2Subject to Section 2.3.7. hereof, 2005in addition to the other grants set forth in this Section 2.3, effective on the date hereof, the Company granted shall grant to the Executive options to purchase up to four hundred thousand (400,000) shares of Common Stock (the "MILESTONE OPTIONS")) to purchase up to two hundred thousand (200,000) shares of Common Stock, pursuant to the Plan. The Milestone Options Options: (iii) shall, to the maximum extent permitted under applicable law, qualify as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code, ; (ii) shall have a per share exercise price equal to $2.69, the closing price of a share of Common Stock, as listed on the American Stock Exchange, on September 1, 2005, 2.25; (iii) are subject to the terms and conditions set forth in the Plan and the Incentive Stock Option Letter Agreement entered into by the Company and Executive dated September 2, 2005, as amended simultaneously herewith and (iv) shall vest and become exercisable only upon the occurrence of the following events which occur during the Initial Term (up to a maximum of 400,000 200,000 shares of Common Stock in the aggregate): (1a) Milestone Options exercisable for one hundred twenty-five thousand (125,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the first Non-Generic Opioid Drug developed by the Company; (2b) Milestone Options exercisable for seventy-five thousand (75,000) shares of Common Stock shall vest and become immediately exercisable in full upon the commencement of the first Phase III clinical trial relating to the second Non-Generic Opioid Drug developed by the Company; (3c) Milestone Options exercisable for fifty thousand (50,000) shares of Common Stock shall vest and become immediately exercisable in full only upon the closing of an exclusive product license for the United States national market or product sale transaction of all of the Company's ownership rights (on a product by product basis and only once for each individual product) for each Company drug product, other than the Non-Generic Opioid Drugs for which Opioid Product Options were granted under Section 3(e) 2.3.2 above; (4d) Milestone Options exercisable for ten thousand (10,000) shares of Common Stock shall vest and become immediately exercisable in full upon the filing by the Company (in the Company's name) with the United States Food and Drug Administration (the "FDA") of either an abbreviated new drug application (an "ANDA") or a new drug application (including a NDA filed with the FDA under Section 505(b)(2) of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. Section 301 ET SEQet seq.) (a "NDA"), for a product not covered by a previous FDA application; (5e) Milestone Options exercisable for forty thousand (40,000) shares of Common Stock shall vest and become immediately exercisable in full upon the approval by the FDA of any ANDA or NDA (filed in the Company's name) for a product not previously approved by the FDA; (6f) Milestone Options exercisable for twenty-five (25,000) shares of Common Stock shall vest and become immediately exercisable in full upon filing of an application for U.S. patent by the Company (filed in the Company's name); and (7g) Milestone Options exercisable for twenty-five (25,000) shares of Common stock shall vest and become immediately exercisable in full upon the granting by U.S. Patent and Trademark Office ("PTO") of a patent to the Company (filed in the Company's name); and (iv) be subject to the terms and conditions set forth in the Plan and Option Agreement. All such options shall be subject to acceleration pursuant to Section 3 hereof. Upon the earlier to occur of the expiration of the Initial Term of this Agreement or the termination of Executive's employment hereunder, all unvested Milestone Options granted shall automatically terminate and all vested but unexercised Milestone Options shall terminate in accordance with the terms of the stock option agreement by and between the Executive and the Company with respect to the Milestone Options and the Plan; provided that, in the case of any Milestone Options that may be vested pursuant to clause (5e) or clause (7g) of Section 3(f)(iv2.3.4(iii) above, if (x) the applicable filing with the FDA or PTO, as the case may be, was made by the Company during the Initial Term but prior to Without Cause Termination (as defined below)the termination of the Executive by the Company without Cause, (y) the approval relating to such filing (either from the FDA or the PTO) occurs within five hundred forty (540) days of such filing and (x) such approval occurring within the three year Initial Term, the Milestone Options relating to such filing shall vest in accordance with clause (5e) or clause (7g), as the case may be. The shares of Common Stock issuable upon exercise of the Milestone Options are subject to an effective registration statement filed with the SEC.