XXXXXXX X. XXXXXX STOCK OPTION AGREEMENT
Palatin Technologies, Inc., a Delaware corporation (the "Company") and
Xxxxxxx X. Xxxxxx ("Optionee") agree:
1. Recitals. This stock option is granted to Optionee for the purpose of
providing compensation to Optionee for services as a member of the Board of
Directors of the Company, the Optionee having served as a director from August
1, 1996 until August 26, 1997, such stock option to be in lieu of the set
compensation of $12,000 per annum due Optionee as a non-employee director for
services as such, and in replacement of options heretofore granted to Optionee
pursuant to the Company's 1996 Stock Option Plan which, by the terms thereof,
had terminated following his resignation as a director, and to be in
satisfaction of all such amounts as are due and owing Xxxxxxx X. Xxxxxx for
services as a director of the Corporation. This Xxxxxxx X. Xxxxxx Stock Option
Agreement (the "Option Agreement") sets forth the terms and conditions of such
grant, and is effective as of December 4, 1997.
2. Definitions. In addition to capitalized terms defined in context, the
following capitalized terms have the following meanings in this Agreement:
"Code" means the Internal Revenue Code of 1986, as amended, and
regulations promulgated under the Internal Revenue Code of 1986, as amended, or
any successor legislation and regulations.
"Committee" means the Compensation Committee of the Company's Board of
Directors, or if the Company's Board of Directors has not established a
Compensation Committee, then it is the Company's Board of Directors.
"Option Price" means the number of shares of Option Stock as to which
the Option is being exercised, multiplied by the Exercise Price per share.
"Option Stock" means Palatin Common Stock obtained upon exercise of the
Option.
"Palatin Common Stock" means the $.01 par value common stock of the
Company, or any other stock issuable upon exercise of the Option as adjusted
pursuant to this Agreement, or as substituted or assumed as permitted by this
Agreement.
3. Grant of Option. Effective as of December 4, 1997, the Company grants
a nonqualified stock option to Optionee to purchase 5,000 shares of Palatin
Common Stock at a per share price of $5.44 and 1,066 shares of Palatin Common
Stock at a per share price of $7.50 (such grant collectively the "Option," and
each such price an "Exercise Price").
4. Exercisability of Option. The Option is immediately exercisable by
Optionee.
5. Exercise of Option; conditions on exercise. If the Company determines
that exercise of the Option or issuance of Option Stock will violate any tax,
securities or other law or regulation, then the Optionee may not exercise the
Option until the Company determines that the exercise or issuance will comply
with that law or regulation. Otherwise, the Optionee may exercise all or any
part of the Option by delivering written notice directed to the Vice President
and Chief Financial Officer of the Company at the Company's principal place of
business (214 Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxx Xxxxxx, 00000, or such
other address as the Company may specify in writing to the Optionee), stating
the number of shares of Option Stock which the Optionee intends to purchase,
along with payment in immediately available U.S. funds of the Option Price for
the number of shares specified, and the entry by the Optionee into such
arrangements with the Company with respect to federal income tax withholding as
the Company may reasonably require. The Company will issue and deliver the
shares promptly upon exercise. In lieu of issuing fractional shares of Palatin
Common Stock, the Company will pay the Optionee cash for any fraction of a share
exercised, at the rate of the closing market price per share of Palatin Common
Stock on the date of exercise or last date preceding exercise on which Palatin
Common Stock was traded, as quoted on any national securities exchange or
automated quotation system, including the OTC Electronic Bulletin Board, on
which the Palatin Common Stock is traded.
6. Period for exercise of Option. The Option will be exercisable until
December 4, 2007 (the "Final Expiration Date").
7. Early expiration of Option in certain corporate transactions. If the
Company enters into an agreement to engage in a transaction to which Code
section 424(a) would apply if
the Option were an incentive option as defined in Code section 422 and the
requirements rporation either substitutes a Option for or assumes the Option, or
agrees in writing to do so upon consummation of the transaction, then the Option
will expire on the earlier of (i) consummation of the transaction or (ii) the
Option's original expiration date. The Committee will give the Optionee written
notice of potential early expiration of the Option at least thirty days before
its potential early expiration date.
8. Changes in Stock. If the Company's stockholders approve an amendment
to the Company's certificate of incorporation which effects a change in the
Palatin Common Stock or rights of Palatin Common Stock holders, or an exchange,
reclassification or cancellation of the Palatin Common Stock or rights of
Palatin Common Stock holders, then the Committee will immediately adjust the
amount and/or class of Option Stock and/or the Option Price so that the Option
will be exercisable at the same aggregate price as before the amendment, for the
kind and number of securities which the Optionee would have been entitled to
receive had the Optionee exercised the Option in full before the amendment.
9. Transferability of Option and Option Stock. The Option is not
transferable otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionee's lifetime, only by the Optionee. The
Company may restrict transferability of Option Stock issued upon exercise, in
order to comply, in the Company's judgment, with federal and state securities
laws and/or the requirements of any stock exchange on which the Palatin Common
Stock is then traded.
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10. Stockholder rights. Neither the Optionee nor the Optionee's
successor has any of the rights of a stockholder of the Company, with respect to
any Option Stock, until the Company has received payment in full of the Option
Price for that Option Stock upon exercise.
11. Purchase for investment and withholding. Unless the Option Shares to
be issued upon the exercise of the Option shall be registered prior to the
issuance thereof under the Securities Act of 1933, as amended, the Optionee
will, as a condition of the Company's obligation to issue such Option Shares, be
required to give a representation in writing that he is acquiring such shares
for his own account as an investment and not with a view to, or for sale in
connection with, the distribution of any thereof.
12. Miscellaneous. This Agreement benefits and is binding on the
parties, their successors and assigns, represents the entire agreement of the
parties as to its subject matter, may be modified only in writing signed by the
parties (except as permitted under paragraph 8 of this Agreement), and is
governed by the laws of the state of Delaware.
Dated as of December 4, 1997.
Palatin Technologies, Inc. Optionee:
by___________________________ ___________________________
Xxxxxxx X. Xxxxx Xxxxxxx X. Xxxxxx
Vice President and
Chief Financial Officer
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