PROTALEX, INC. Stock Option Agreement (this “Agreement”)
PROTALEX,
INC.
(this
“Agreement”)
Dated:
January 15, 2010
(“Grant Date”)
Protalex,
Inc., a Delaware corporation (the “Company”), hereby grants to
Xxxx X. Xxxxxxx (the “Optionee”), a stock option to
purchase a total of 1,000,000 shares of the Company's Common Stock, par value
$.00001 per share (the “Common
Stock”), at a the price of $0.10 per share (the “Exercise
Price”).
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1.
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This option shall expire ten (10) years
from the date hereof (the “Termination
Date”).
The option granted pursuant to this
Agreement is intended to constitute a non-qualified option, subject to §83 of
the Internal Revenue Code of 1986, as amended (the “Code”).
(a) This
option shall vest and become exercisable on December 29, 2012, subject to
earlier vesting and exercisability as follows:
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Milestone 1:
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Upon
the commencement of the Company’s Rheumatoid Arthritis trial in South
Africa (the “RA Trial”), this option shall vest and become exercisable
with respect to the purchase of up to 200,000 shares of Common
Stock;
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Milestone 2:
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Upon
demonstrated efficacy of the RA Trial, this option shall vest and become
exercisable with respect to the purchase of up to 500,000 shares of Common
Stock, including the shares from Milestone 1;
and
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Milestone 3:
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Upon
the execution of either a licensing, strategic or financing agreement with
a strategic or financial third party which yields minimum gross proceeds
to the Company of $7.5 million, this option shall vest and become
exercisable with respect to the purchase of up to 1,000,000 shares of
Common Stock, including the shares from Milestones 1 and
2.
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(b) To
the extent vested prior to the Termination Date, this option shall be
exercisable by written notice of such exercise, in the form prescribed by the
Board of Directors of the Company (the “Board”), to the Secretary or Treasurer
of the Company at its principal office. The notice shall specify the
number of shares of Common Stock for which the option is being exercised (which
number, if less than all of the shares then subject to exercise, shall be 50 or
a multiple thereof) and shall be accompanied by payment (i) in cash or by check
in the amount equal to the Exercise Price multiplied by the number of shares to
be purchased upon exercise, or (ii) in such other manner as the Board shall deem
acceptable. No shares shall be delivered upon exercise of any option
until all laws, rules and regulations which the Board may deem applicable have
been complied with.
(c) The
Optionee shall not be considered a record holder of the Common Stock issuable
pursuant to this Agreement for any purpose until the date on which he is
actually recorded as the holder of such Common Stock in the records of the
Company.
(d) To
the extent vested, prior to the Termination Date, this option shall be
exercisable only so long as the Optionee shall continue to be a Board member and
within the ninety (90) day period after the date of termination of such Board
membership, to the extent vested on the such date of termination; provided,
however, such termination was without cause.
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(e)
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Notwithstanding
the provision of Section 3(d)
above:
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(i) In
the event the Optionee is unable to continue as a Board member due to his total
and permanent disability (as defined in §105(d)(4) of the Code), this option may
be exercised, to the extent vested on the date of such disability, within the
ninety (90) day period from the date of such disability;
(ii) In
the event of death of the Optionee, this option may be exercised, to the extent
vested on the date of death, at any time within twelve (12) months following
such date of death by the Optionee's estate or by a person who acquired the
right to exercise this option by bequest or inheritance; provided that at the
time of his death the Optionee was a Board member; and
(iii) In
the event the Optionee’s Board membership is terminated for cause, this option
may be exercised, to the extent vested on the date of such termination, within
the thirty (30) day period after the date of such termination.
Notwithstanding
the provisions of this Section (e), in no event shall this option be exercisable
after the Termination Date.
(a) If
there is any stock dividend, stock split, or combination of shares of Common
Stock, the number and amount of shares then subject to this option shall be
proportionately and appropriately adjusted; no change shall be made in the
aggregate purchase price to be paid for all shares subject to this option, but
the aggregate purchase price shall be allocated among all shares subject to this
option after giving effect to the adjustment.
(b) If
there is any other change in the Common Stock, including recapitalization,
reorganization, sale or exchange of assets, exchange of shares, offering of
subscription rights, or a merger or consolidation in which the Company is the
surviving corporation, an adjustment, if any, shall be made in the shares then
subject to this option as the Board may deem equitable. Failure of
the Board to provide for an adjustment pursuant to this subparagraph prior to
the effective date of any Company action referred to herein shall be conclusive
evidence that no adjustment is required in consequence of such
action.
(c) If
the Company is merged into or consolidated with any other corporation, or if it
sells all or substantially all of its assets to any other corporation, then
either (i) the Company shall cause provisions to be made for the continuance of
this option after such event, or for the substitution for this option of an
option covering the number and class of securities which the Optionee would have
been entitled to receive in such merger or consolidation by virtue of such sale
if the Optionee had been the holder of record of a number of shares of Common
Stock equal to the number of shares covered by the unexercised portion of this
option, or (ii) the Company shall give to the Optionee written notice of its
election not to cause such provision to be made and this option shall become
exercisable in full (or, at the election of the Optionee, in part) at any time
during a period of 20 days, to be designated by the Company, ending not more
than 10 days prior to the effective date of the merger, consolidation or sale,
in which case this option shall not be exercisable to any extent after the
expiration of such 20-day period.
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The Optionee agrees that until such
time as a registration statement under the Securities Act of 1933, as amended
(the “1933 Act”), becomes effective with respect to the option and/or the stock,
the Optionee is taking this option and will take the stock underlying this
option, for his own account, for investment and not with a view to the resale or
distribution thereof. The Company shall have the right to place upon
the face of any stock certificate or certificates evidencing shares issuable
upon the exercise of this option such legend as the Board may prescribe for the
purpose of preventing disposition of such shares in violation of the 1933 Act,
as now or hereafter provided.
This option shall not be transferable
by the Optionee other than by will or by the laws of descent or distribution,
and is exercisable during the lifetime of the Optionee only by the
Optionee.
The Optionee shall not, by virtue of
holding this option, be entitled to any rights of a stockholder in the
Company.
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8.
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The Company shall pay all original
issue and transfer taxes with respect to the issuance and transfer of shares of
Common Stock pursuant hereto and all other fees and expenses necessarily
incurred by the Company in connection therewith.
In no event shall this option be
exercisable after the Termination Date. Nothing herein shall be
deemed to create any employment agreement or guaranty of the Optionee’s position
as a Board member or limit in any way the Company's right to terminate
Optionee's position as a Board member at any time.
IN WITNESS WHEREOF, the
parties have caused this Agreement to be executed by their respective duly
authorized representatives as of the date first above written.
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PROTALEX,
INC.
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By:
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Xxxxxx
X. Xxxxx,
President
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Accepted
as of the date
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first set forth
above:
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Xxxx
X. Xxxxxxx, Optionee
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