Exhibit 10.85
Employee Copy _________
Company Copy _________
Option Number _________
SPARTA PHARMACEUTICALS, INC.
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made as of the 15th day of March, 1996, between Sparta
Pharmaceuticals, Inc. (the "Company"), a Delaware corporation having a principal
place of business in Horsham, Pennsylvania, and Xxxxxxx XxXxxxxxx, M.D., 00000
Xxxxx Xxxx, Xxxxxxx, XX 00000, an employee of the Company (sometimes referred to
below as the "Employee" and as the "Optionee").
WHEREAS, the Company desires to grant to the Employee an option (the
"Option") to purchase shares of its common stock, $.001 par value (the "Shares")
under and for the purposes of the 1991 Stock Plan of the Company (the "Plan");
WHEREAS, the Company and the Employee understand and agree that any
terms used and not defined herein have the same meanings as in the Plan;
WHEREAS, the Company and the Employee each intend that the Option
granted herein qualify as an Incentive Stock Option.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
agree as follows:
1. GRANT OF OPTION
The Company hereby irrevocably grants to the Employee, as of the date
first set forth above (the "Effective Date"), the right and option to purchase
all or any part of an aggregate of Forty Thousand (40,000) Shares (the "Option
Shares") on the terms and conditions and subject to all the limitations set
forth herein and in the Plan, which is incorporated herein by reference. The
number of Option Shares is subject to adjustment, as provided in this Agreement,
in the event some or all of the contingencies set forth in Section 3 are not
met, and as provided in the Plan, in the event of a stock split, reverse stock
split or other events affecting the holders of Shares after the date hereof.
Determinations made in connection with this Option pursuant to the Plan shall be
governed by the Plan as it exists on this date. The Employee acknowledges
receipt of a copy of the Plan.
This Option is in addition to any other options heretofore or hereafter
granted to the Employee by the Company, but a duplicate original of this
instrument shall not effect the grant of another option.
2. PURCHASE PRICE
The purchase price of the Option Shares shall be at a price per Share
of Three Dollars and No Cents ($3.00) (subject to adjustment, as provided in the
Plan, in the event of a stock split, a reverse stock split or other events
affecting the holders of Shares).
3. EXERCISE OF OPTION
If the Employee has continued to be employed by the Company on the
following dates, and provided the contingencies set forth below with respect to
the respective amounts of Option Shares shall have been met:
With respect to Twenty Thousand (20,000) of the Option Shares, an
investigational new drug application ("IND") for X.X.X.X.(TM) 5-FP shall have
become effective and the first patient in the Phase I clinical trial to be
conducted pursuant to such IND shall have commenced receiving X.X.X.X. 5-FP no
later than August 1, 1996;
With respect to Ten Thousand (10,000) of the Option Shares, the first patient in
the Phase I clinical trial to be conducted pursuant to the Company's
Spartaject(TM) Busulfan IND shall have commenced receiving X.X.X.X. 5-FP no
later than August 1, 1996; and
With respect to Ten Thousand (10,000) of the Option Shares, the first patient in
the Phase I clinical trial to be conducted pursuant to the Company's RII
Retinamide IND shall have commenced receiving RII Retinamide no later than July
1, 1996;
the Employee may exercise the Option for the number of Option Shares (subject to
meeting the respective contingencies set forth above and to adjustment as
provided in the Plan) set opposite the applicable date:
Prior to the first anniversary as to no Shares
of the Effective Date
On or after the first anniversary up to Twenty Five Percent (25%) of the Option Shares as to
of the Effective Date which such contingencies shall have been met
On or after the second anniversary up to an additional Twenty Five Percent (25%) of such
of the Effective Date Option Shares
On or after the third anniversary up to an additional Twenty Five Percent (25%) of such
of the Effective Date Option Shares
On or after the fourth anniversary up to an additional Twenty Five Percent (25%) of such
of the Effective Date Shares
The foregoing rights are cumulative and are subject to the other terms and
conditions of this Agreement and the Plan, including, without limitation, the
term of the Option and the provisions affecting the Employee's ability to
exercise the Option after a termination of employment.
4. TERM OF OPTION
The Option shall terminate five (5) years from the date it shall become
fully exercisable, but in no event later than March 15, 2005, and shall be
subject to earlier termination as provided herein or in the Plan.
a. Termination of Employment (Other than for Death. Disability
or Cause)
If the Employee's employment terminates (for any reason other than
death, Disability or Cause), the Option may be exercised within three (3) months
after the date the Employee's employment terminates, or within the originally
prescribed term of the Option, whichever is earlier, but may not be exercised
thereafter. In such event, the Option shall be exercisable only to the extent
that the right to purchase Shares under this Agreement or the Plan has accrued
and is in effect at the date of such termination of employment.
Notwithstanding the foregoing, in the event of the Employee's death
within three (3) months after the termination of employment, the Optionee's
Survivors may exercise the Option within one (1) year after the date of the
Employee's death, but in no event after the date of expiration of the term of
the Option.
b. Termination of Employment as a Result of Disability or Death
In the event the Employee's employment terminates by reason of
Disability, as determined in accordance with the Plan, or death, the Option
shall be exercisable only within one (1) year after the date of such Disability
or death, as the case may be, or if earlier, the term originally prescribed by
the Option. In such event, the Option shall be exercisable:
(1) to the extent that the right to purchase the Shares hereunder
has accrued on the date of Disability or death and is in
effect as of such date; and
(2) to the extent of a pro rata portion of any such rights as
would have accrued under Section 3 had the Employee's
employment not terminated by reason of Disability or death
prior to the end of the current accrual period, i.e. the next
anniversary date of the Employment Effective Date after the
date of Disability or death. The proration shall be based upon
the number of days of the accrual period prior to the date of
the Employee's Disability or death.
c. Termination of Employment for Cause and Finding of Cause after
Termination of Employment
In the event the Employee's employment is terminated by the Company for
Cause, as determined in accordance with the Employee's employment agreement with
the Company, Employee's right to exercise any unexercised portion of this Option
shall cease forthwith, and this Option shall thereupon terminate.
Notwithstanding anything herein to the contrary, if subsequent to the Employee's
termination as an employee, but prior to the exercise of the Option, the
Administrator (as defined in the Plan) determines that, either prior or
subsequent to the Employee's termination, the Employee engaged in conduct which
would constitute Cause, then the Employee shall forthwith cease to have any
right to exercise the Option.
5. METHOD OF EXERCISING OPTION
Subject to the terms and conditions of this Agreement, including,
without limitation, Section 10 hereof, the Option may be exercised by written
notice to the Company, at the principal executive office of the Company. Such
notice shall state the election to exercise the Option and the number of Shares
in respect of which it is being exercised, shall be signed by the person or
persons so exercising the Option, and shall be in substantially the form
attached hereto as Exhibit A. Such notice shall be accompanied by payment of the
full purchase price for such Shares in United States dollars or, in the
discretion of the Administrator such other consideration as it may approve, and
the Company shall deliver a certificate or certificates representing such Shares
as soon as practicable after the notice shall be received, provided, however,
that the Company may delay issuance of such Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including, without limitation, state securities or "blue sky"
laws). The certificate or certificates for the Shares as to which the Option
shall have been so exercised shall be registered in the name of the person or
persons so exercising the Option (or, if the Option shall be exercised by
Employee and if the Employee shall so request in the notice exercising the
Option, shall be registered in the name of the Employee and another person
jointly, with right of survivorship) and shall be delivered as provided above to
or upon the written order of the person or persons exercising the Option. In the
event the Option shall be exercised, pursuant to Section 4 hereof, by any person
or persons other than the Employee, such notice shall be accompanied by
appropriate proof of the right of such person or persons to exercise the Option.
All Shares that shall be purchased upon the exercise of the Option as provided
herein shall be fully paid and non-assessable.
6. PARTIAL EXERCISE
Exercise of this Option to the extent above stated may be made in part
at any time and from time to time within the above limits, except that no
fractional Share shall be issued pursuant to this Option.
7. NON-ASSIGNABILITY
The Option shall not be transferable by the Employee otherwise than by
will or by the
laws of descent and distribution and shall be exercisable, during the Employee's
lifetime, only by the Employee. Except as provided in the preceding sentence,
the Option shall not be assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to execution, attachment
or similar process. Any attempted transfer, assignment, pledge, hypothecation or
other disposition of the Option or of any rights granted hereunder contrary to
the provisions of this Section 7, or the levy of any attachment or similar
process upon the Option or such rights, shall be null and void.
8. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE
The Employee shall have no rights as a stockholder with respect to
Shares subject to this Agreement until the Company has authorized delivery of a
stock certificate therefor to the Employee and such Shares are fully paid for.
Except as is expressly provided in the Plan with respect to certain changes in
the capitalization of the Company, no adjustment shall be made for dividends or
similar rights for which the record date is prior to the date such stock
certificate is issued.
9. CAPITAL CHANGES AND BUSINESS SUCCESSIONS
The Plan contains provisions covering the treatment of Options in a
number of contingencies such as stock splits and mergers and sales of the
Company. Provisions in the Plan for adjustment with respect to stock subject to
Options and the related provisions with respect to successors to the business of
the Company are hereby made applicable hereunder and are incorporated herein by
reference.
10. TAXES AND WITHHOLDING
The Employee acknowledges that any income or other taxes due from him
with respect to this Option or the Shares issuable pursuant to this Option shall
be the Employee's responsibility.
In the event of a Disqualifying Disposition (as defined in Section 14
below) or if the Option is converted into a Non-Qualified Option and such
Non-Qualified Option is exercised, the Company may withhold from the Employee's
salary and wages, if any, or other remuneration, or as a condition of the
exercise hereof, may require the Employee to pay additional federal, state, and
local income tax withholding and employee contributions to employment taxes in
respect of the amount that is considered compensation includable in such
person's gross income.
11. PURCHASE FOR INVESTMENT
Unless the offering and sale of the Shares to be issued upon the
particular exercise of the Option shall have been effectively registered under
the Securities Act of 1933, as now in force or hereafter amended (the "Act") and
no stop order or proceedings to suspend or revoke effectiveness thereof have
been issued, commenced or are pending or threatened, the Company shall be under
no obligation to issue the Shares covered by such exercise unless and until the
following conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such person(s) are
acquiring such Shares for their own respective accounts, for
investment, and not with a view to, or for sale in connection
with, the distribution of any such Shares, in which event the
person(s) acquiring such Shares shall be bound by the
provisions of the following legend which shall be endorsed
upon the certificate(s) evidencing the Shares issued pursuant
to such exercise:
"The shares represented by this certificate have been
taken for investment and they may not be sold or
otherwise transferred by any person, including a
pledgee, unless (1) either (a) a registration
statement with respect to such shares shall be
effective under the Securities Act of 1933, as
amended, or (b) the Company shall have received an
opinion of counsel satisfactory to it that an
exemption from registration under such Act is then
available, and (2) there shall have been compliance
with all applicable state securities laws."
(b) If the Company so requires, the Company shall have received an
opinion of its counsel that the Shares may be issued upon such
particular exercise in compliance with the Act without
registration thereunder. Without limiting the generality of
the foregoing, the Company may delay issuance of the Shares
until completion of any action or obtaining of any consent
which the Company deems necessary under any applicable law
(including without limitation state securities or "blue sky"
laws).
12. NO OBLIGATION TO EMPLOY
Neither the Company nor any subsidiary is by the Plan or this Agreement
obligated to continue the Employee as an employee of the Company or any
subsidiary.
13. OPTION INTENDED TO BE AN INCENTIVE STOCK OPTION
The parties each intend that the Option be an incentive stock option so
that the Employee (or the Optionee's Survivors) may qualify for the favorable
tax treatment provided to holders of Options that meet the standards of Code
Section 422. Except with respect to the purchase price of the Shares, any
provision of this Agreement or the Plan which conflicts with the Code so that
this Option would not be deemed an incentive stock option is null and void and
any ambiguities shall be resolved so that the Option qualifies as an incentive
stock option. If the Option is determined not to be an incentive stock option,
the Employee understands that the Company and any subsidiary are not responsible
to compensate him or otherwise make up for the treatment of the Option as a
Non-Qualified Option and not as an incentive stock option. Employee should
consult with Employee's own tax advisors regarding the tax effects of the Option
and the requirements necessary to obtain favorable tax treatment under Section
422 of the Code, including, but not limited to, holding period requirements.
14. NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION
The Employee agrees to notify the Company in writing immediately after
the Employee makes a Disqualifying Disposition of any of the Shares acquired
pursuant to the exercise of the Option. A Disqualifying Disposition is defined
in Section 424(c) of the Code and includes any disposition (including any sale)
of such Shares before the later of (a) two years after the date the Employee was
granted the Option or (b) one year after the date the Employee acquired Shares
by exercising the Option, except as otherwise provided in Section 424(c) of the
Code. If the Employee has died before the Shares are sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
15. NOTICES
Any notices required or permitted by the terms of this Agreement or the
Plan shall be given when delivered in person or by registered or certified mail,
return receipt requested, addressed as follows:
To the Company:
Sparta Pharmaceuticals, Inc.
000 Xxxx Xxxx
Xxxxxxx, XX 00000
Attn: President
To the Employee:
Xxxxxxx XxXxxxxxx, M.D.
00000 Xxxxx Xxxx
Xxxxxxx, XX 00000
or to such other address or addresses of which notice in the same manner has
previously been given. Any such notice shall be deemed to have been given when
received in accordance with the foregoing provisions.
16. GOVERNING LAW
This Agreement shall be construed and enforced in accordance with the
law of the Commonwealth of Pennsylvania.
17. BENEFIT OF AGREEMENT
Subject to the provisions of the Plan and the other provisions hereof,
this Agreement shall be for the benefit of and shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
18. ENTIRE AGREEMENT
This Agreement, together with the Plan, embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior oral or written agreements and understandings
relating to the subject matter hereof. No statement, representation, warranty,
covenant or agreement not expressly set forth in this Agreement shall affect or
be used to interpret, change or restrict, the express terms and provisions of
this Agreement, provided, however, in any event, this Agreement shall be subject
to and governed by the Plan.
19. MODIFICATIONS AND AMENDMENTS
The terms and provisions of this Agreement may be modified or amended
only by written agreement executed by all parties hereto.
20. WAIVERS AND CONSENTS
The terms and provisions of this Agreement may be waived, or consent
for the departure therefrom granted, only by written document executed by the
party entitled to the benefits of such terms or provisions. No such waiver or
consent shall be deemed to be or shall constitute a waiver or consent with
respect to any other terms or provisions of this Agreement, whether or not
similar. Each such waiver or consent shall be effective only in the specific
instance and for the purpose for which it was given, and shall not constitute a
continuing waiver or consent.
21. HEADINGS AND CAPTIONS
The headings and captions of the various subdivisions of this Agreement
are for convenience of reference only and shall in no way modify, or affect the
meaning or construction of, any of the terms or provisions hereof.
22. SURVIVAL
The expiration or other termination of the Option granted to the
Employee shall neither affect nor alter the Employee's obligations under
Sections 10, 11 and 14 hereof.
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IN WITNESS WHEREOF, the Company has caused this Incentive Stock Option
Agreement to be executed by a duly authorized officer, and the Employee has
hereunto set his hand, all as of the day and year first above written.
SPARTA PHARMACEUTICALS, INC.
By /s/ Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X. Xxxx, Ph.D.
Title: President & CEO
/s/ Xxxxxxx XxXxxxxxx
---------------------------------
Xxxxxxx XxXxxxxxx, M.D.
EXHIBIT A
NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION
To: Sparta Pharmaceuticals, Inc.
Ladies and Gentlemen:
I hereby exercise my Incentive Stock Option to purchase ____ shares
(the "Shares") of the common stock, $.001 par value, of Sparta Pharmaceuticals,
Inc. (the "Company"), at the exercise price of __________ per share, pursuant to
and subject to the terms of that certain Incentive Stock Option Agreement
between the undersigned and the Company dated as of March 15, 1996.
I am aware that the Shares have not been registered under the
Securities Act of 1933, as amended (the "1933 Act") or any state securities
laws. I understand that the reliance by the Company on exemptions under the 1933
Act is predicated in part upon the truth and accuracy of the statements by me in
this Notice of Exercise.
I hereby represent and warrant that (1) I have been furnished with all
information which I deem necessary to evaluate the merits and risks of the
purchase of the Shares; (2) I have had the opportunity to ask questions
concerning the Shares and the Company and all questions posed have been answered
to my satisfaction; (3) I have been given the opportunity to obtain any
additional information I deem necessary to verify the accuracy of any
information obtained concerning the Shares and the Company; and (4) I have such
knowledge and experience in financial and business matters that I am able to
evaluate the merits and risks of purchasing the Shares and to make an informed
investment decision relating thereto.
I hereby represent and warrant that I am purchasing the Shares for my
own personal account for investment and not with a view to the sale or
distribution of all or any part of the Shares.
I understand that because the Shares have not been registered under the
1933 Act, I must continue to bear the economic risk of the investment for an
indefinite time and the Shares cannot be sold unless the Shares are subsequently
registered under applicable federal and state securities laws or an exemption
from such registration requirements is available.
I agree that I will in no event sell or distribute or otherwise dispose
of all or any part of the Shares unless (1) there is an effective registration
statement under the 1933 Act and applicable state securities laws covering any
such transaction involving the Shares and no stop order or proceedings to
suspend or revoke effectiveness thereof have been issued, commenced or are
pending or threatened, or (2) the Company receives an opinion of my legal
counsel (concurred in by legal counsel for the Company) stating that such
transaction is exempt from registration or the Company otherwise satisfies
itself that such transaction is exempt from registration.
I consent to the placing of a legend on my certificate for the Shares
stating that the Shares have not been registered and setting forth the
restriction on transfer contemplated hereby and to the placing of a stop
transfer order on the books of the Company and with any transfer agents against
the Shares until the Shares may be legally resold or distributed without
restriction.
I understand that at the present time Rule 144 of the Securities and
Exchange Commission (the "SEC") may not be relied on for the resale or
distribution of the Shares by me. I understand that the
Company has no obligation to me to register the Shares with the SEC and has not
represented to me that it will register the Shares.
I am aware that it is my responsibility to have consulted with
competent tax and legal advisors about the relevant national, state and local
income tax and securities laws affecting the exercise of the Option and the
purchase and subsequent sale of the Shares.
My payment in the amount of $_______ by _____________ is enclosed.
I acknowledge that the Company is authorized to withhold from my salary
and wages, if any, or other remuneration, or may require me, as a condition of
the exercise of the Option, to pay, additional federal, state and local income
tax withholding and if applicable, employee contributions to employment taxes in
respect of the amount that is considered compensation, if any, includable in my
gross income.
Please issue the stock certificate for the Shares (check one):
____ to me
____ to me and ________________________ as joint tenants with right
of survivorship
and mail the certificate to me at the following address:
__________________________________ __________________________
__________________________________ __________________________
My mailing address, if different from the address listed above, for
shareholder communications is:
__________________________________ __________________________
__________________________________ __________________________
Very truly yours,
__________________________
Employee (signature)
__________________________
Print Name
__________________________
Date
__________________________
Social Security Number
