LIFE MEDICAL SCIENCES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
NOT UNDER THE PLAN
AGREEMENT entered into as of the date set forth on the signature
page hereto by and between Life Medical Sciences, Inc., a Delaware corporation,
with a principal place of business at 000 Xxxxxxxx Xxxxxx in Edison, New Jersey
(together with its subsidiaries, if any, the "Company"), and the undersigned
individual (the "Optionee").
WHEREAS, the Company desires to grant to the Optionee a
non-qualified stock option to acquire shares of the Company's Common Stock,
$.00l par value per share (the "Shares").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and the Optionee hereby
agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee a non-qualified stock
option (the "Option") to purchase all or any part of an aggregate of the number
of Shares set forth on the signature page to this Agreement on the terms and
conditions hereinafter set forth. This Option is not granted under the Company's
stock option plan and shall not be treated as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price ("Purchase Price") for the Shares covered by the
Option shall be the dollar amount per Share set forth on the signature page to
this Agreement.
3. Time of Vesting and Exercise of Option.
Subject to Section 4 hereof, the Option shall vest and become
exercisable on the dates and as to the installment amounts set forth on the
signature page to this Agreement. To the extent the Option (or any portion
thereof) is not exercised by the Optionee when it becomes exercisable, it shall
not expire, but shall be carried forward and shall be exercisable, on a
cumulative basis, until the Expiration Date (as hereinafter defined) or until
earlier termination as hereinafter provided.
4. Term; Extent of Exercisability.
(a) Term.
(i) The Option shall expire as to each installment amount on
the date set forth next to each such amount on the
signature page to this Agreement (the "Expiration
Date"), subject to earlier termination as herein
provided.
(ii) Except as otherwise provided in this Section 4, if the
Optionee ceases to be employed, retained by or otherwise
perform services for the Company, the Option granted to
the Optionee hereunder shall terminate thirty (30) days
after the effective date of the cessation of such
services, or on the date on which the Option expires by
its terms, whichever occurs first, provided, however, if
(i) the Optionee ceases to render services to the
Company on account of his voluntary resignation and (ii)
within thirty (30) days after such resignation the Board
of Directors of the Company (the "Board") determines in
good faith that termination for cause would have been
warranted based on information that becomes known to the
Company, then the Option shall terminate on the date the
Optionee voluntarily resigned from the Company. The
Company shall have the right to postpone any exercise of
this Option for a period of up to thirty (30) days
following voluntary resignation by the Optionee.
(iii) If the Optionee's employment, retention or other
arrangement pursuant to which services are performed for
the Company is terminated because of dismissal for cause
or because the Optionee is in breach of any agreement
with the Company, the Option will terminate on the
effective date of such termination. The determination of
"cause" shall be made in good faith by the Company's
Board of Directors (whose determination shall be final)
with a written explanation thereof provided to the
Optionee.
(iv) If the Optionee's employment, retention or other
arrangement pursuant to which services are performed for
the Company is terminated because the Optionee has
become Permanently Disabled (within the meaning of
Section 22(e)(3) of the Code), the Option shall
terminate one year from the effective date of such
termination, or on the date on which the Option expires
by its terms, whichever occurs first.
(v) In the event of the death of the Optionee, the Option
shall terminate one year from the date of death, or on
the date on which the Option expires by its terms,
whichever occurs first.
(b) Extent of Exercisability.
(i) Except as provided below, if the Optionee ceases to be
employed, retained by, or otherwise perform services
for, the Company, the Option granted to the Optionee
hereunder shall be exercisable only to the extent that
the right to purchase Shares under such Option has
accrued and is in effect on the effective date of the
cessation of such services.
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(ii) If the Optionee's employment, retention or other
arrangement pursuant to which services are performed for
the Company is terminated because the Optionee has
become Permanently Disabled, as defined above, the
Option may be exercised as to the full number of Shares
covered thereby whether or not under the provisions of
Section 3 hereof the Optionee was entitled to do so on
the effective date of such termination.
(iii) In the event of the death of the Optionee, the Option
may be exercised as to the full number of Shares covered
thereby whether or not under the provisions of Section 3
hereof the Optionee was entitled to do so at the date of
his or her death, by the executor, administrator or
personal representative of the Optionee, or by any
person or persons who acquired the right to exercise the
Option by bequest or inheritance or by reason of the
death of the Optionee.
5. Manner of Exercise of Option.
(a) To the extent that the right to exercise the Option has accrued
and is in effect, the Option may be exercised in full or in part by giving
written notice to the Company stating the number of Shares as to which the
Option is being exercised and accompanied by payment in full for such Shares. No
partial exercise may be made for less than one hundred (100) full Shares.
Payment may be either wholly in cash or in whole or in part in shares of Common
Stock already owned by the person exercising the Option, valued at fair market
value as of the date of exercise, provided, however, that payment of the
exercise price by delivery of shares of Common Stock may be made only if such
payment does not result in a charge to earnings for financial accounting
purposes as determined by the Board. Upon such exercise, delivery of a
certificate for paid-up, non-assessable Shares shall be made at the principal
office of the Company to the person exercising the Option, not less than thirty
(30) and not more than ninety (90) days from the date of receipt by the Company
of the notice of exercise.
(b) The Company shall at all times during the term of the Option
reserve and keep available such number of Shares of its Common Stock as will be
sufficient to satisfy the requirements of the Option.
6. Non-Transferability.
The right of the Optionee to exercise the Option shall not be
assignable or transferable by the Optionee otherwise than by will or the laws of
descent and distribution, and the Option may be exercised during the lifetime of
the Optionee only by him or her. The Option shall be null and void and without
effect upon the bankruptcy of the Optionee or upon any attempted assignment or
transfer, except as hereinabove provided, including without limitation any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition contrary to the provisions hereof, or levy of
execution, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
7. Representation Letter and Investment Legend.
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(a) In the event that for any reason the Shares to be issued upon
exercise of the Option shall not be effectively registered under the Securities
Act of 1933, as amended ("1933 Act"), upon any date on which the Option is
exercised in whole or in part, the person exercising the Option shall give a
written representation to the Company in the form attached hereto as Exhibit 1
and the Company shall place an "investment legend", so-called, as described in
Exhibit 1, upon any certificate for the Shares issued by reason of such
exercise.
(b) The Company shall be under no obligation to qualify Shares or to
cause a registration statement or a post-effective amendment to any registration
statement to be prepared for the purposes of covering the Option or exercise
thereof.
8. Adjustments on Changes in Capitalization and Other Events.
(a) In the event that the outstanding shares of the Common Stock of
the Company are changed into or exchanged for a different number or kind of
shares or other securities of the Company or of another corporation by reason of
any reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, combination of shares, or dividends payable in capital stock,
appropriate adjustment shall be made in the number and kind of shares as to
which the unexercised portion of the Option shall be exercisable, to the end
that the proportionate interest of the Optionee shall be maintained as before
the occurrence of such event; such adjustment shall be made without change in
the total price applicable to the unexercised portion of the Option and with a
corresponding adjustment in the Purchase Price per Share.
(b) In addition, unless otherwise determined by the Board in its
sole discretion, in the case of any (i) sale or conveyance to another entity of
all or substantially all of the property and assets of the Company or (ii)
Change in Control (as hereinafter defined) of the Company, the purchaser(s) of
the Company's assets or stock, in his, her, or its sole discretion, may deliver
to the Optionee the same kind of consideration that is delivered to the
shareholders of the Company as a result of such sale, conveyance or Change in
Control, or the Board may cancel the Option in exchange for consideration in
cash or in kind, which consideration in both cases shall be equal in value to
the value of those shares of stock or other securities the Optionee would have
received had the Option been exercised (but only to the extent then exercisable)
and had no disposition of the Shares acquired upon such exercise been made prior
to such sale, conveyance or Change in Control, less the full Purchase Price
therefor. Upon receipt of such consideration, the Option (whether or not then
exercisable) shall immediately terminate and be of no further force and effect.
The value of the stock or other securities the Optionee would have received if
the Option had been exercised shall be determined in good faith by the Board.
(c) The Board shall also have the power and right to accelerate the
exercisability of the Option, notwithstanding any limitation in this Agreement,
upon such a sale, conveyance or Change in Control.
(d) A "Change in Control" shall be deemed to have occurred if any
person or any two or more persons acting as a group, and all affiliates of such
person or persons, who prior to such time owned less than fifty percent (50%) of
the then outstanding Common Stock, shall acquire such additional shares of
Common Stock in one or more transactions, or series of
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transactions, such that following such transaction or transactions, such person
or group and affiliates beneficially own fifty percent (50%) or more of the
Common Stock outstanding.
(e) Upon dissolution or liquidation of the Company, the Option shall
terminate, but the Optionee (if at such time in the employ of or otherwise
associated with the Company or any of its subsidiaries as a director, agent or
consultant) shall have the right, immediately prior to such dissolution or
liquidation, to exercise the Option to the extent then exercisable.
(f) No fraction of a Share shall be purchasable or deliverable upon
the exercise of the Option, but in the event any adjustment hereunder in the
number of Shares underlying the Option shall cause such number to include a
fraction of a Share, such fraction shall be adjusted to the nearest smaller
whole number.
9. No Special Employment Rights.
The provisions of this Section 9 are applicable only to Optionees
who are employees of the Company. Nothing contained in this Agreement shall be
construed or deemed by any person under any circumstances to bind the Company to
continue the employment of the Optionee for the period within which this Option
may be exercised. However, during the period of the Optionee's employment, the
Optionee shall render diligently and faithfully the services which are assigned
to the Optionee from time to time by the Company and shall at no time take any
action which directly or indirectly would be inconsistent with the best
interests of the Company.
10. Rights as a Stockholder.
The Optionee shall have no rights as a stockholder with respect to
any Shares which may be purchased by exercise of this Option unless and until a
certificate or certificates representing such Shares are duly issued and
delivered to the Optionee.
11. Withholding Taxes.
Whenever Shares are to be issued upon exercise of the Option, the
Company shall have the right to require the Optionee to remit to the Company an
amount sufficient to satisfy all Federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
Shares. The Company may agree to permit the Optionee to withhold Shares
purchased upon exercise of the Option to satisfy the above-mentioned withholding
requirement; provided, however, no such agreement may be made by an Optionee who
is an officer or director within the meaning of Section 16 of the Securities
Exchange Act of 1934, as amended, except pursuant to a standing election to so
withhold Shares of Common Stock purchased upon exercise of an option, such
election to be made in the form set forth in Exhibit 2 hereto and to be made not
less than six (6) months prior to such exercise. Such election may be revoked
only upon six (6) months prior written notice to the Company.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed, and the Optionee has hereunto set his or her hand and seal, all as of
the ____ day of ________________, 2000.
LIFE MEDICAL SCIENCES, INC.
By:________________________________________
Title:
OPTIONEE
Print Name:________________________________
Sign Name:_________________________________
Address:___________________________________
Social Security Number:____________________
OPTION INFORMATION
Total Number of Shares Underlying Option: _______
Purchase Price Per Share: ______________________
Vesting And Expiration Schedule
Vesting Date Number of Shares Expiration Date
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EXHIBIT 1
TO STOCK OPTION AGREEMENT
Gentlemen:
In connection with the exercise by me of an option to purchase
shares of Common Stock, $.00l par value, of Life Medical Sciences, Inc. (the
"Company"), I hereby acknowledge that I have been informed as follows:
1. The shares of Common Stock of the Company to be issued to me pursuant
to the exercise of said option (the "Shares") have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and, accordingly, must
be held indefinitely unless the Shares are subsequently registered under the
Securities Act, or an exemption from such registration is available.
2. Routine sales of securities made in reliance upon Rule 144 under the
Securities Act can be made only after the holding period provided by that Rule
has been satisfied, and, in any sale to which that Rule is not applicable,
registration or compliance with some other exemption under the Securities Act
will be required.
3. The availability of Rule 144 is dependent upon adequate current public
information with respect to the Company being available and, at the time that I
may desire to make a sale pursuant to that Rule, the Company may neither wish
nor be able to comply with such requirement.
In consideration of the issuance of certificates for the Shares to
me, I hereby represent and warrant that I am acquiring the Shares for my own
account for investment, and that I will not sell, pledge or transfer the Shares
in the absence of an effective registration statement covering the same, except
as permitted by the provisions of Rule 144, if applicable, or some other
applicable exemption under the Securities Act. In view of this representation
and warranty, I agree that there may be affixed to the certificates for the
Shares to be issued to me, and to all certificates issued hereafter representing
the Shares (until in the opinion of counsel, which opinion must be reasonably
satisfactory in form and substance to counsel for the Company, it is no longer
necessary or required) a legend as follows:
"The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and were acquired by the
registered holder pursuant to a representation and warranty that such
holder was acquiring the Shares for his own account and for investment,
with no intention of transfer or disposition of the same in violation of
the registration requirements of that Act. These securities may not be
sold, pledged, or transferred in the absence of an effective registration
statement under such Act, or an opinion of counsel, which opinion is
reasonably satisfactory to counsel to the Company, to the effect that
registration is not required under such Act."
I further agree that the Company may place a stop transfer order
with its transfer agent, prohibiting the transfer of the Shares, so long as the
legend remains on the certificates representing the Shares.
Very truly yours,
Dated: ____________
EXHIBIT 2
TO STOCK OPTION AGREEMENT
Gentlemen:
The undersigned Optionee hereby elects and agrees that, whenever the
undersigned exercises a stock option (including any options which now or may
hereafter be granted), Life Medical Sciences, Inc. (the "Company") shall
withhold from that exercise such number of Shares equal in value to the Federal
and state withholding taxes due upon such exercise. The undersigned further
acknowledges and agrees that this election may not be revoked without six (6)
months prior written notice to the Company.
OPTIONEE:
____________________________________
(Signature)
____________________________________
(Print Name)
____________________________________
(Social Security Number)
