Exhibit 10.2
NEOSE TECHNOLOGIES, INC.
NON-QUALIFIED STOCK OPTION GRANT
This STOCK OPTION AGREEMENT (this "Agreement") evidences the grant as
of March 29, 2002 (the "Date of Grant"), by Neose Technologies, Inc. (the
"Company") of a non-qualified stock option to X. Xxxx Xxxxxx (the "Grantee"), an
employee of the Company.
RECITALS
The Board of Directors of the Company (the "Board") has approved the
award of this option to purchase shares of common stock of the Company to the
Grantee as an inducement to commence employment with the Company and to promote
the best interests of the Company and its stockholders. The Board, or any
committee appointed thereby, will administer the Plan. References in this
Agreement to the Committee shall be deemed to include the Board.
NOW, THEREFORE, the parties to this Agreement, intending to be legally
bound hereby, agree as follows:
1. Definitions. Capitalized terms not otherwise defined herein used
herein will have the meanings provided below:
a. "Change in Control" means a change in ownership or control of the
Company effected through any of the following transactions:
(i) the direct or indirect acquisition by any person or related
group of persons (other than the Company or a person that directly or indirectly
controls, is controlled by, or is under common control with, the Company) of
beneficial ownership (within the meaning of Rule 13d-3 of the 1934 Act) of
securities possessing more than 50% of the total combined voting power of the
Company's outstanding securities;
(ii) a change in the composition of the Board over a period of 36
months or less such that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to be comprised of
individuals who either (i) have been board members continuously since the
beginning of such period, or (ii) have been elected or nominated for election as
Board members during such period by at least a majority of the Board members
described in clause (i) who were still in office at the time such election or
nomination was approved by the Board;
(iii) the consummation of any consolidation, share exchange or
merger of the Company (i) in which the stockholders of the Company immediately
prior to such transaction do not own at least a majority of the voting power of
the entity which survives/results from that transaction, or (ii) in which a
shareholder of the Company who does not own a majority of the voting stock of
the Company immediately prior to such transaction, owns a majority of the
Company's voting stock immediately after such transaction; or
(iv) the liquidation or dissolution of the Company or any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company, including
stock held in subsidiary corporations or interests held in subsidiary ventures.
b. "Code" means the Internal Revenue Code of 1986, as amended.
c. "Committee" means the compensation committee of the Board, or if
no compensation committee then exists, then the Board.
d. "Common Stock" means shares of the Company's common stock.
e. "Employee" means an individual who performs services while in the
employ of the Company or one or more of its Parents or Subsidiary, subject to
the control and direction of the employer entity not only as to the work to be
performed but also as to the manner and method of performance.
f. "Employment Agreement" means the employment agreement by and
between the Grantee and the Company, dated March 29, 2002.
g. "Exercise Date" means the date on which the Company shall have
written notice of exercise of the Option.
h. "1934 Act" means the Securities Exchange Act of 1934, as amended.
i. "Option" means the non-qualified stock option to purchase Shares
granted to the Grantee by this Agreement.
j. "Parent" means any corporation (other than the Company) in an
unbroken chain of corporations ending with the Company, provided each such
corporation in the unbroken chain (other than the Company) owns, at the time of
the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes or stock in one of the other corporations
in such chain.
k. "Service" means the performance of services on a periodic basis
for the Company (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or an independent consultant.
l. "Share" means a share of Common Stock.
m. "Subsidiary" means each corporation (other than the Company) in
an unbroken chain of corporations beginning with the Company, provided each such
corporation (other than the last corporation) in the unbroken chain owns, at the
time of the determination, stock possessing fifty percent (50%) or more of the
total combined voting power of all classes of stock in one of the other
corporations in such chain.
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2. Grant of Option.
a. Subject to the terms and conditions set forth in this Agreement,
the Company hereby grants to the Grantee a non-qualified stock option to
purchase 487,520 shares at an exercise price of $32.05 per Share. The Option
shall become exercisable according to Paragraph 3 below.
b. The Option is designated as a non-qualified stock option and is
not intended to qualify as an incentive stock option as defined in section 422
of the Code.
3. Exercisability of Option. Subject to Paragraph 6, the Option will
become vested in installments as and on the dates set forth in the schedule
attached hereto as Exhibit A, so long as the Grantee is employed by the Company
as of the applicable date; provided, however that:
a. if the Grantee's employment with the Company is terminated by the
Company without Cause or by the Grantee for Good Reason (both as determined in
accordance with the Employment Agreement) other than as described below in
Subparagraph b of this Paragraph 3, then, subject to the Grantee's execution of
the mutual release described in Section 8 of the Employment Agreement, the
Option will become fully vested and immediately exercisable with respect to that
number of additional shares with respect to which the Option would have become
vested and exercisable had the Grantee remained continuously employed by the
Company for an additional twelve (12) months following his termination of
employment; and
b. if the Grantee's employment with the Company is terminated by the
Company without Cause or by the Grantee for Good Reason (both as determined in
accordance with the Employment Agreement) in the eighteen (18) months following
a Change in Control, then, subject to the Grantee's execution of the mutual
release described in Section 8 of the Employment Agreement, the Option will
become fully vested and immediately exercisable with respect to 100% of the
shares subject to the Option.
4. Term of Option; Termination of Service.
a. The Option shall have a term of ten years from the Date of Grant
and will terminate at the expiration of that period unless it is terminated at
an earlier date pursuant to the provisions of this Agreement.
b. Upon termination of the Grantee's employment, the term of the
Option will be reduced as follows:
(i) Should the Grantee terminate Service with the Company other
than for Good Reason (as determined in accordance with the Employment
Agreement), then the period during which the Option is to remain exercisable
shall be limited to the three (3)-month period following the date the Grantee
ceases such Service.
(ii) Should the Grantee's Service cease by reason of termination
by the Company without Cause or by the Grantee for Good Reason, then the period
during which the Option is to remain exercisable shall be limited to the twelve
(12)-month period following the date of such cessation of Service. Should the
Grantee die while holding the Option, then during such limited period of
exercisability, the Option may be exercised by the personal representative of
the Grantee's estate or by the person or persons to whom the Option is
transferred pursuant to the Grantee's will or in accordance with the laws of
descent and distribution.
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(iii) Should the Grantee's Service be terminated for Cause, then
the Option shall terminate immediately and cease to be outstanding.
During the applicable post-Service exercise period, the Option may be exercised
only to the extent the Option is exercisable on the date of the Grantee's
cessation of Service, subject to Subparagraphs a and b of Paragraph 3 above.
Upon the expiration of the applicable post-Service exercise period or (if
earlier) upon the expiration of the Option term, the Option shall terminate and
cease to be exercisable. Upon the Grantee's cessation of Service, the Option
shall terminate and cease to be outstanding with respect to any Shares for which
the Option is not exercisable at that time. Under no circumstances will the
Option be exercisable after the expiration date of the Option's term provided in
Subparagraph a of this Paragraph 4.
5. Exercise Procedures.
a. Subject to the provisions of Paragraphs 3 and 4 above, the
Grantee may exercise part or all of the Option by giving the Committee written
notice of intent to exercise in the manner provided in Paragraph 17 below,
specifying the number of Shares as to which the Option is to be exercised. On
the delivery date, the Grantee shall pay the exercise price (i) by cash or check
payable to the order of the Company, (ii) in Shares of common stock of the
Company held by the Grantee for the requisite period necessary to avoid a charge
to the Company's earnings for financial reporting purposes and valued at fair
market value on the Exercise Date; or (iii) through a special sale and
remittance procedure pursuant to which the Grantee shall concurrently provide
irrevocable written instructions to (a) a brokerage firm designated by the
Company to effect the immediate sale of the purchased Shares and remit to the
Company, out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for the purchased Shares
plus all applicable federal, state and local income and employment taxes
required to be withheld by the Company by reason of such purchase and (b) the
Company to deliver the certificates for the purchased Shares directly to such
brokerage firm in order to complete the sale transaction.
b. The obligation of the Company to deliver Shares upon exercise of
an Option shall be subject to all applicable laws, rules, and regulations and
such approvals by governmental agencies as may be deemed appropriate by the
Committee, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations. The Company
may require that the Grantee (or other person exercising the Option after the
Grantee's death or otherwise) represent that he is purchasing Shares for his own
account and not with a view to or for sale in connection with any distribution
of the Shares, or such other representation as the Committee deems appropriate.
The Company's obligation upon the issuance of any Shares or upon the exercise of
any Option to deliver Shares of common stock is subject to the satisfaction of
all applicable federal, state and local income and employment tax withholding
requirements.
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6. Change in Control.
a. In the event of a Change in Control described in Subparagraphs
(iii) or (iv) of the definition of Change in Control above (each a "Corporate
Transaction"), the vesting and exercisability of the Option will automatically
accelerate so that the Option will, immediately prior to the specified effective
date for such Corporate Transaction, become fully exercisable with respect to
the total number of shares of Common Stock subject to the Option and may be
exercised for all or any portion of those Shares as fully-vested Shares;
provided, however, that the Option shall not so accelerate if and to the extent:
(i) the Option is, in connection with such Corporate Transaction, either to be
assumed by the successor corporation or parent thereof or to be replaced with a
comparable option to purchase shares of the capital stock of the successor
corporation or parent thereof, (ii) the Option is to be replaced with a cash
incentive program of the successor corporation which preserves the option spread
existing at the time of such Corporate Transaction and provides for subsequent
payout in accordance with the same vesting schedule applicable to the Option, or
(iii) the Option is to be replaced by another incentive program which the
Committee determines is reasonably equivalent in value to the program
contemplated by either clause (i) or (ii) above. However, upon the Grantee's
cessation of Service by the Company without Cause or by the Grantee for Good
Reason (both as determined in accordance with the Employment Agreement) within
eighteen (18) months after such Corporate Transaction in which the Option is
assumed or replaced pursuant to clause (i), (ii) or (iii) above, each such
option under clause (i) will automatically accelerate and become fully vested
and exercisable with respect to the total number of shares of stock at the time
subject to such option and may be exercised for all or any portion of such
shares, the cash incentive program under clause (ii) will become fully vested
and the benefits under a clause (iii) replacement program will become fully
vested. The option, as so accelerated, will remain exercisable until the earlier
of (A) the expiration of the option term or (B) the expiration of the twelve
(12)-month period measured from the date of such termination of Service. The
determination of option comparability under clause (i) or program comparability
under clause (iii) above shall be made by the Committee, and its determination
shall be final, binding and conclusive.
b. Immediately following the consummation of a Corporate
Transaction, the Option will terminate and cease to remain outstanding, except
to the extent the Option is assumed by, or is otherwise an obligation of, the
successor corporation or its parent company.
c. If the Option is not terminated pursuant to Subparagraph b of
this Paragraph 6 in connection with a Corporate Transaction, then the Option
will be appropriately adjusted, immediately after such Corporate Transaction, to
apply and pertain to the number and class of securities which would have been
issued to the Grantee in consummation of such Corporate Transaction had he
exercised the Option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share, provided the aggregate exercise price payable for such securities shall
remain the same.
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d. The Committee shall have the discretionary authority at any time
while the Option remains outstanding to provide for the automatic acceleration
of the vesting and exercisability of the Option upon the occurrence of a Change
in Control.
e. If the Option's vesting and exercisability is accelerated in
connection with a Change in Control (other than a Corporate Transaction), it
will remain fully exercisable until the expiration of the option term or sooner
termination in accordance with Paragraph 4.
f. The grant of the Option will in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
7. Restrictions on Exercise. Only the Grantee (or a person to whom the
Grantee transfers the Option pursuant to Paragraph 13) may exercise the Option
during the Grantee's lifetime. After the Grantee's death, the Option shall be
exercisable (subject to the limitations specified herein) solely by the legal
representatives of the Grantee, or by the person who acquires the right to
exercise the Option by will or by the laws of descent and distribution (or
transfer pursuant to Paragraph 13), to the extent that the Option is exercisable
pursuant to this Agreement.
8. Authority of the Committee. The Committee has and will have full
power and authority (subject to the express provisions of this Agreement) to
establish rules and regulations for the proper administration of the Option and
to make such determinations under, and issue such interpretations of, the
provisions of this Agreement as it may deem necessary or advisable. Decisions of
the Committee are and will be final and binding on all parties who have an
interest in the Option.
9. Adjustments. Should any change be made to the Common Stock issuable
under this Agreement by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Company's receipt
of consideration, then appropriate adjustments will be made by the Committee to
the number and/or class of securities and price per share in effect under the
Option. Such adjustments to the Option are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Committee will be final, binding and
conclusive.
10. Tax Withholding. The Company's obligation to deliver Shares upon
the exercise of the Option will be subject to the satisfaction of all applicable
Federal, state and local income and employment tax withholding liabilities in
connection with the exercise of the Option (the "Taxes"), and the Company will,
to the extent permitted by law and to the extent the Taxes are not otherwise
satisfied by the Grantee pursuant to this Paragraph 10, have the right to deduct
any such Taxes from any payment of any kind otherwise due from the Company to
the Grantee. The Grantee may pay cash to the Company, or make other arrangements
satisfactory to the Committee, to satisfy all or part of the Taxes. The
Committee may, in its discretion and in accordance with the provisions of this
Paragraph 10 and such supplemental rules as the Committee may from time to time
adopt (including the applicable safe-harbor provisions of Rule 16b-3 of the
Securities and Exchange Commission), permit the Grantee to use Shares to satisfy
the Taxes. Such right may be provided to any such holder in either or both of
the following formats:
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a. The Grantee may be provided with the election to have the Company
withhold, from the Shares otherwise issuable upon the exercise of the Option, a
portion of those Shares with an aggregate fair market value equal to the
percentage of the applicable Taxes (not to exceed one hundred percent (100%))
designated by the holder.
b. The Committee may, in its discretion, permit the Grantee to
deliver to the Company, at the time the Option is exercised, one or more Shares
previously acquired the Grantee (other than in connection with the Option
exercise triggering the Taxes) with an aggregate fair market value equal to the
percentage of the Taxes incurred in connection with the Option exercise (not to
exceed one hundred percent (100%)) designated by the holder.
11. No Employment Rights. The grant of the Option shall not confer upon
the Grantee any right to be retained by or in the employ of the Company and
shall not interfere in any way with the right of the Company to terminate the
Grantee's employment or service at any time. The right of the Company to
terminate at will the Grantee's employment or service at any time for any reason
is specifically reserved.
12. No Stockholder Rights. Neither the Grantee, nor any person entitled
to exercise the Grantee's rights in the event of the Grantee's death or
otherwise, shall have any of the rights and privileges of a stockholder with
respect to the Shares subject to the Option, until certificates for Shares have
been issued upon the exercise of the Option.
13. Assignment and Transfers. The rights and interests of the Grantee
under this Agreement may not be sold, assigned, encumbered or otherwise
transferred except, in the event of the death of the Grantee, by will or by the
laws of descent and distribution, or if permitted by the Committee, pursuant to
a domestic relations order (as defined under the Code or Treasury Regulations).
Notwithstanding the foregoing, the Committee may provide that the Grantee may
transfer the Option to family members or other persons or entities according to
such terms as the Committee may determine; provided that the Grantee receives no
consideration for the transfer of the Option and the transferred Option will
continue to be subject to the same terms and conditions as were applicable to
the Option immediately before the transfer. The rights and protections of the
Company hereunder shall extend to any successors or assigns of the Company and
to the Company's Parents, Subsidiaries and affiliates. This Agreement may be
assigned by the Company without the Grantee's consent.
14. Use of Proceeds. Any cash proceeds received by the Company from the
sale of Shares pursuant to exercise of the Option will be used for general
corporate purposes.
15. Regulatory Approvals. The granting of the Option and the issuance
of any Shares upon the exercise of the Option will be subject to the Company's
procurement of all approvals and permits required by regulatory authorities
having jurisdiction over the Option and the Common Stock subject to it.
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16. Applicable Law. The validity, construction, interpretation and
effect of this instrument shall be governed by and determined in accordance with
the laws of the Commonwealth of Pennsylvania without regard to the application
of the principles of conflicts of laws.
17. Notice. Any notice to the Company provided for in this instrument
shall be addressed to the Company in care of Chief Financial Officer at 000
Xxxxxx Xxxx, Xxxxxxx, XX 00000, and any notice to the Grantee shall be addressed
to such Grantee at the current address shown on the payroll of the Company, or
to such other address as the Grantee may designate to the Company in writing.
Any notice shall be delivered by hand, sent by telecopy or enclosed in a
properly sealed envelope addressed as stated above, registered and deposited,
postage prepaid, in a post office regularly maintained by the United States
Postal Service.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer, and the Grantee has executed this
Agreement, in each case effective as of the Date of Grant.
NEOSE TECHNOLOGIES, INC.
By: /s/ Xxxxxxx X. Xxxx, Ph.D.
-----------------------------------
Xxxxxxx X. Xxxx, Ph.D.,
Chairman
X. XXXX XXXXXX
/s/ X. Xxxx Xxxxxx
--------------------------------------
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Vesting Schedule
---------------------------------------------------------------
Number of Shares
Becoming Vested and
Vesting Date Exercisable
---------------------------------------------------------------
03/29/03 121,880
---------------------------------------------------------------
04/29/03 10,417
---------------------------------------------------------------
05/29/03 10,417
---------------------------------------------------------------
06/30/03 10,417
---------------------------------------------------------------
07/29/03 10,417
---------------------------------------------------------------
08/29/03 10,417
---------------------------------------------------------------
09/29/03 10,417
---------------------------------------------------------------
10/29/03 10,416
---------------------------------------------------------------
11/28/03 10,416
---------------------------------------------------------------
12/29/03 10,416
---------------------------------------------------------------
01/29/04 10,157
---------------------------------------------------------------
02/27/04 10,157
---------------------------------------------------------------
03/29/04 10,157
---------------------------------------------------------------
04/29/04 10,157
---------------------------------------------------------------
05/28/04 10,157
---------------------------------------------------------------
06/29/04 10,157
---------------------------------------------------------------
07/29/04 10,157
---------------------------------------------------------------
08/30/04 10,157
---------------------------------------------------------------
09/29/04 10,156
---------------------------------------------------------------
10/29/04 10,156
---------------------------------------------------------------
11/29/04 10,156
---------------------------------------------------------------
12/29/04 10,156
---------------------------------------------------------------
01/28/05 10,157
---------------------------------------------------------------
02/28/05 10,157
---------------------------------------------------------------
03/29/05 10,157
---------------------------------------------------------------
04/29/05 10,157
---------------------------------------------------------------
05/30/05 10,157
---------------------------------------------------------------
06/29/05 10,157
---------------------------------------------------------------
07/29/05 10,157
---------------------------------------------------------------
08/29/05 10,157
---------------------------------------------------------------
09/29/05 10,156
---------------------------------------------------------------
10/28/05 10,156
---------------------------------------------------------------
11/29/05 10,156
---------------------------------------------------------------
12/29/05 10,156
---------------------------------------------------------------
01/30/06 9,377
---------------------------------------------------------------
02/28/06 9,377
---------------------------------------------------------------
03/29/06 9,376
---------------------------------------------------------------
Total Shares: 487,520
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A
