Exhibit 10.6
FLEMINGTON PHARMACEUTICAL CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT, made as of this ____ day of _____________, by and between
FLEMINGTON PHARMACEUTICAL CORPORATION, a New Jersey Corporation, having offices
at __________________________________________________ (the "Company"), and
__________ (the "Optionee"). Capitalized terms not defined herein shall have the
meanings ascribed thereto in the Plan.
WHEREAS, on April 30, 1992, the Board of Directors of the Company (the
"Board") adopted the Flemington Pharmaceutical Corporation 1992 Stock Option
Plan (the "Plan"), subject to approval by the stockholders of the Company by
__________ 1993; and
WHEREAS, on __________ (the "Grant Date") pursuant to the terms and
conditions of the Plan, the Board authorized the grant to the Optionee of an
Option (the "Option") to purchase an aggregate of ________ (________) shares of
the authorized but unissued Common Stock (the "Option Shares"), conditioned upon
the Optionee's acceptance thereof upon the terms and conditions set forth in
this Agreement and subject to the terms and conditions of the Plan; and
WHEREAS, the Optionee desires to acquire the Option on the terms and
conditions set forth in this Agreement and subject to the terms and conditions
of the Plan;
NOW, THEREFORE, it is agreed:
1. Date of Grant. The date of grant of this Option is __________.
2. Nature of the Option. This Option is intended to qualify as an
Incentive Stock Option.
3. Exercise Price. The exercise price is _____ (110% of the Fair Market
Value of the Common Stock on the date hereof) for each share of Common
Stock, subject to adjustment in accordance with the Plan.
4. Exercisability of Option. This Option shall be exercisable during its
term as follows:
4.1 The Option granted hereby shall be fully exercisable immediately.
4.2 This Option may not be exercised for a fraction of a share.
4.3 After a portion of the Option becomes exercisable it shall remain
exercisable except as otherwise provided herein, until the close of business on
the tenth anniversary of the Grant Date.
5. Method of Exercise.
5.1 Notice to the Company. The Option shall be exercised in whole or in
part by written notice in substantially the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment of the exercise price as hereinafter provided for the number of Option
Shares specified in the notice.
5.2 Delivery of Option Shares. The Company shall deliver a certificate
for the Option Shares to the Optionee as soon as practicable after payment
therefor.
5.3 Payment of Purchase Price.
5.3.1 Cash Payment. The Optionee shall make cash payments by
wire transfer, certified or bank check or personal check, in each case payable
to the order of the Company; the Company shall not be required to deliver
certificates for Option Shares until the Company has confirmed the receipt of
good and available funds in payment of the purchase price thereof.
5.3.2 Cashless Payment. At the election of the Optionee, the
purchase price for any or all of the Option Shares to be acquired may be paid
by: (i) surrender of shares of Common Stock of the Company held by or for the
account of the Optionee with a Fair Market Value equal to the purchase price
multiplied by the number of Option Shares to be purchased, or (ii) the surrender
of any exercisable but unexercised portion of the Option having a Fair Market
Value equal to the purchase price multiplied by the number of Option Shares to
be purchased. In either case, the Fair Market Value of the surrendered shares or
options shall be determined as of the date of exercise as follows: "Fair Market
Value" of the Common Stock means, as of the exercise date: (i) if the Common
Stock is listed on a national securities exchange or quoted on the NASDAQ
National Market or NASDAQ SmallCap Market, the last sale price of the Common
Stock in the principal trading market for the Common Stock on the last trading
day preceding such date, as reported by the exchange or NASDAQ, as the case may
be; (ii) if the Common Stock is not listed on a national securities exchange or
quoted on the NASDAQ National Market or NASDAQ SmallCap Market, but is traded in
the over-the-counter market, the closing bid price of the Common Stock on the
last trading day preceding such date for which such quotations are reported by
the National Quotation Bureau, Incorporated or similar publisher of such
quotations; and (iii) if the fair market value of the Common Stock cannot be
determined pursuant to clause (i) or (ii) above, such price as the Company shall
determine, in good faith. The Fair Market Value of a surrendered portion of the
Option means, as of the exercise date, an amount equal to the excess of the
total fair market value of the shares of Common Stock underlying the surrendered
portion of the Option (as determined in accordance with the immediately
preceding sentence) over the total purchase price of such shares of Common Stock
underlying the surrendered portion of the Option. The Company shall issue a
certificate or certificates evidencing the Option Shares as soon as practicable
after the notice and payment is received. The certificate or certificates
evidencing the Option Shares shall be registered in the name of the person or
persons so exercising the Option.
5.3.3 Payment Price of Withholding Tax. Any required
withholding tax may be paid in cash or with Common Stock in accordance with
Sections 5.3.1 and 5.3.2.
5.3.4 Exchange Act Compliance. Notwithstanding the foregoing,
the Company shall have the right to reject the payment in the form of Common
Stock if in the reasonable opinion of counsel for the Company (i) it could
result in an event of "recapture" under Section 16(b) of the Securities Exchange
Act of 1934; or (ii) such shares of Common Stock may not be sold or transferred
to the Company.
5.3.5 Restrictions on Exercise. This Option may not be
exercised if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including any
rule under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation
G") as promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require the Optionee to make any representation
and warranty to the Company as may be required by any applicable law or
regulation.
6. Optionee's Representations. The Optionee hereby represents and warrants to
the Company that:
6.1 Investment Intent. The Optionee is acquiring the Option and shall
acquire the Option Shares for his own account and not with a view towards the
distribution thereof.
6.2 Exchange Act Documents. [Intentionally omitted]
6.3 Registration. The Optionee understands that he or she must for an
indefinite period of time bear the economic risk of the investment in the Option
Shares, which cannot be sold by him unless they are registered under the
Securities Act of 1933, as amended (the "1933 Act") or an exemption therefrom is
available thereunder and that the Company is under no obligation to register the
Option Shares for sale under the 0000 Xxx. The issuance of the Option Shares is
intended to qualify for the exemption from registration under the 1933 Act
provided by Rule 701 thereunder.
6.4 Access to Information. The Optionee has had both the opportunity to
ask questions and receive answers from the officers and directors of the Company
and all persons acting on its behalf concerning the terms and conditions of the
offer made hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it without
unreasonable effort or expense.
6.5 Transfer Restrictions. The Optionee is aware that the Company shall
place stop transfer orders with its transfer agent against the transfer of the
Option Shares in the absence of registration under the 1933 Act or an exemption
therefrom as provided herein.
6.6 Legends. The certificates evidencing the Option Shares shall bear
the following legends:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of __________,
a copy of which is on file with the Company, and may not be
transferred, pledged or disposed of except in accordance with
the terms and conditions thereof."
7. Withholding Tax. Not later than the date as of which an amount first becomes
includable in the gross income of the Optionee for Federal income tax purposes
with respect to the Option, the Optionee shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of, any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount. The obligations of the Company under the Plan
and pursuant to this Agreement shall be conditional upon such payment or
arrangements with the Company and the Company shall, to the extent permitted by
law, have the right to deduct any such taxes from any payment of any kind
otherwise due to the Optionee from the Company.
8. Termination of Status as an Employee. If Optionee ceases to serve as an
Employee, the Optionee may, but only within thirty (30) days after the date the
Optionee ceased to be an Employee of the Company, exercise this Option to the
extent that the Optionee was entitled to exercise it at the date of such
termination. If the Optionee's employment is terminated by the Company for any
reason other than for Cause, as defined in the Employment Agreement, the
Optionee, at his option, may (i) exercise this Option in accordance with the
provisions of the foregoing sentence, or (ii) exchange this Option for
non-qualified stock option having like terms.
9. Disability of Optionee. Notwithstanding the provisions of Section 8 above, if
Optionee is unable to continue the Optionee's employment with the Company as a
result of his total and permanent disability (as defined in Section 105(d)(4) of
the Code), the Optionee may, but only within twelve (12) months from the date of
termination of employment, exercise this Option to the extent the Optionee was
entitled to exercise it at the date of such termination, or if the Optionee does
not exercise such Option (which the Optionee was entitled to exercise) within
the time specified herein, the Option shall terminate.
10. Death of Optionee. In the event of the death of the Optionee:
10.1 During the term of this Option and while an Employee of the
Company and having been in Continuous Status an an Employee since the date of
grant of the Option, this Option may be exercised, at any time within twelve
(12) months following the date of death, by Optionee's estate or by a person who
acquired the right to exercise this Option by bequest or
inheritance, but only to the extent of the right to exercise that would have
accrued had Optionee continued living one (1) month after the date of death; or
10.2 Within thirty (30) days after the termination of Optionee's
Continous Status as an Employee, the Option may be exercised, at any time within
three (3) months following the date of death, by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
termination.
11. 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
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee. No transfer of the Option by the
Optionee by will or by the laws of descent and distribution shall be effective
to bind the Company unless the Company shall have been furnished with written
notice thereof and a copy of the Will and such other evidence as the Company may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of the Option.
12. Early Disposition of Shares. Optionee understands that if the Optionee
disposes of any Option Shares received upon exercise of this Option within two
(2) years after the date of this Agreement or within one (1) year after the date
after such Option Shares were issued to the Optionee, the Optionee will be
treated for federal income tax purposes as having received ordinary income at
the time of such disposition in an amount equal to the excess of the fair market
value of the Option Shares at the time such Option Shares were delivered to the
Optionee over the price paid for the Option Shares. Optionee hereby agrees to
notify the Company in writing within thirty (30) days after the date of any such
disposition. Optionee understands that if the Optionee disposes of such Option
Shares at any time after the expiration of such two-year and one-year holding
periods, any gain on such sale will be taxed as capital gain.
13. Term of Option. This Option may not be exercised more than ten years from
the date of grant of this Option, and may be exercised during such term only in
accordance with the Plan and the terms of this Option Agreement.
14. Restriction on Transfer of Option Shares. Anything in this Agreement to the
contrary notwithstanding, the Optionee hereby agrees that he or she shall not
sell, transfer by any means or otherwise dispose of the Option Shares acquired
by him or her without registration under the 1933 Act, or in the event that they
are not so registered, unless (i) an exemption from the 1933 Act registration
requirements is available thereunder, and (ii) the Optionee has furnished the
Company with notice of such proposed transfer and the Company's legal counsel,
in its reasonable opinion, shall deem such proposed transfer to be so exempt.
15. Miscellaneous.
15.1 Notices. All notices, requests, deliveries, payments, demands and
other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier, return receipt
requested, postage prepaid to the Company at its principal executive office and
to the Optionee at his or her address set forth below, or to such other address
as either party shall have specified by notice in writing to the other. Notice
shall be deemed duly given hereunder when delivered or mailed as provided
herein.
15.2 Plan Paramount; Conflicts with Plan. This Agreement and the Option
shall, in all respects, be subject to the terms and conditions of the Plan,
whether or not stated herein. In the event of a conflict between the provisions
of the Plan and the provisions of this Agreement, the provisions of the Plan
shall in all respects be controlling.
15.3 Stockholder Rights. The Optionee shall not have any of the rights
of a stockholder with respect to the Option Shares until such shares have been
issued after the due exercise of the Option.
15.4 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
15.5 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended except by writing executed by the Optionee and the Company.
15.6 Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
15.7 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New Jersey (without regard to choice
of law provisions).
15.8 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
FLEMINGTON PHARMACEUTICAL CORPORATION
(a New Jersey corporation)
By: _____________________
Optionee acknowledges receipt of a copy of the Plan, a copy of
which is annexed hereto, and represents that the Optionee is familiar with the
terms and provisions thereof, and hereby accepts this Option subject to all of
the terms and provisions thereof. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Board upon any
questions arising under the Plan.
_________________________
_______________, Optionee
EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
-------------------------
Date
Flemington Pharmaceutical Corporation
Attention: Board of Directors
Re: Flemington Pharmaceutical Corporation Stock Option Plan
Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of __________
("Agreement") with Flemington Pharmaceutical Corporation (the "Company"), I
hereby irrevocably elect to exercise the right to purchase __________ shares of
the Company's common stock, par value $.01 per share ("Common Stock"), which are
being purchased for investment and not for resale. All capitalized terms not
defined herein shall have the meanings ascribed to them in the Plan.
As payment for my shares, enclosed is (check and complete applicable
box[es]):
|_| a [personal check] [certified check] [bank check] payable to
the order of "Flemington Pharmacuetical Corporation" in the
sum of $__________;
|_| confirmation of wire transfer in the amount of $__________;
and/or
|_| certificate for __________ shares of the Company's Common
Stock, free and clear of any encumbrances, duly endorsed,
having a Fair Market Value (as such term is defined in the
Plan) of $___________.
|_| I hereby surrender that portion of the unexercised, but
exercisable, portion of the Option having a Fair Market Value
(as such term is defined in the Plan) equal to the purchase
price multiplied by the number of shares of Common Stock being
purchased hereunder, to wit: the Option to purchase __________
Option Shares.
I hereby represent, warrant to, and agree with, the Company that
(i) I am acquiring the Option Shares for my own account for
investment purposes only and not with a view to, or for the resale in connection
with any "distribution" thereof for purposes of the Securities Act of 1933 (the
"Securities Act");
(ii) I am aware of the Company's business affairs and
financial condition, and have acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the securities. I
have received a copy of all reports and documents required to be filed by the
Company with the Commission pursuant to the Exchange Act within the last 24
months and all reports issued by the Company to its stockholders;
(iii) I understand that I must bear for an indefinite period
of time the economic risk of an investment in the Option Shares, which cannot be
sold by me unless they are registered under the Securities Act or an exemption
therefrom is available thereunder and that the Company is under no obligation to
register the Option Shares for sale under the 1933 Act;
(iv) in my position with the Company, I have had both the
opportunity to ask questions and receive answers from the officers and directors
of the Company and all persons acting on its behalf concerning the terms and
conditions of the offer made hereunder and to obtain any additional information
to the extent the Company possess or may possess such information or can acquire
it without unreasonable effort or expense necessary to verify the accuracy of
the information obtained pursuant to clause (ii) above;
(v) I am aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Option Shares in the
absence of registration under the 1933 Act or an exemption therefrom as provided
herein;
(vi) my rights with respect to the Option Shares shall, in all
respects, be subject to the terms and conditions of this Company's Stock Option
Plan and this Agreement; and
(vii) the certificates evidencing the Option Shares shall bear
the following legends:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the
Securities Act of 1933. The shares may not be sold or
transferred in the absence of such registration or an
exemption therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of __________,
a copy of which is on file with the Company, and may not be
transferred, pledged or disposed of except in accordance with
the terms and conditions thereof."
(viii) I am familiar with the provisions of Rule 144,
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities" acquired, directly or indirectly, from
the issuer thereof (or from an affiliate of such issuer), in a non-public
offering subject to the satisfaction of certain conditions, including, among
other things: (1) the availability of certain public information about the
Company; (2) the resale occurring not less than two years after the party has
purchased, and made full payment within the
meaning of Rule 144, for the securities to be sold; and, in the case of an
affiliate, or of a non-affiliate who has held the securities less than three
years, (3) the sale being made through a broker in an unsolicited "broker's
transaction" or in transactions directly with a market maker (as said term is
defined under the Securities Exchange Act of 1934) and the amount of securities
being sold during any three-month period not exceeding the specified limitations
stated in Rule 144, if applicable.
(ix) I further understand that at the time I wish to sell the
securities there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144, and that, in
such event, I would be precluded from selling the securities under Rule 144 even
if the two-year minimum holding period is satisfied.
(x) I further understand that in the event all of the
applicable requirements of Rule 144 are not satisfied, registration under the
Securities Act, compliance with Regulation A, or some other registration
exemption will be required; and that, notwithstanding the fact that Rule 144 is
not exclusive, the Staff of the SEC has expressed its opinion that persons
proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to rule 144 will have a substantial burden
of proof in establishing that an exemption from registration is available for
such offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
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(Signature) (Address)
--------------------------------- ----------------------------------
(Print Name)
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(Social Security Number)
