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EXHIBIT 10.7
AMENDMENT NO 1 TO NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AMENDMENT No. 1 to Non-Qualified Stock Option Agreement (this
"Amendment") is made this ___ day of November, 1996, by and between Vaxcel,
Inc., a Delaware corporation (the "Corporation") and Xxxx X. Xxxxxx
("Employee").
WHEREAS, the Corporation and Employee are parties to that certain Non-
Qualified Stock Option Agreement, dated as of August 16, 1993, and identified as
No. 9393-1 (the "Agreement"), pursuant to which Employee has the right to
purchase up to 500,000 shares of the common stock of the Corporation (the
"Option"); and
WHEREAS, the Corporation and Employee desire to amend the Agreement (i)
to reduce the purchase price of the Options, and (ii) to change the vesting
schedule described in Paragraph 3 of the Agreement;
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
A. Paragraph 2 of the Agreement is hereby deleted in its entirety and
the following is hereby substituted in lieu thereof:
2. Purchase Price. The purchase price of each of the shares
covered by the Option shall be $1.50 for the Category I, II and III
Options as provided in Paragraph 3 below.
B. Paragraph 3 of the Agreement is hereby deleted in its entirety and
the following is hereby substituted in lieu thereof:
3. Time of Exercise of Option. The Option, until the
termination thereof as provided in Paragraph 5 below, may be exercised
by Employee according to the following schedule:
(a) Category I Options: Options to purchase up to
175,000 shares will vest as follows: (i) 40,000 of the Category I
Options shall be exercisable after the Employee has been employed for
one full year from August 16, 1993; (ii) an additional 40,000 of the
Category I Options shall be exercisable after the Employee has been
employed for two years from August 16, 1993; (iii) an additional 40,000
of the Category I Options shall be exercisable after the Employee has
been employed for three years from August 16, 1993; (iv) an additional
35,000 of the Category I Options shall be exercisable after the
Employee has been employed for four years from August 16, 1993; and (v)
the final 20,000 of the Category I Options shall be exercisable after
the Employee has been employed for five years from August 16, 1993.
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(b) Category II Options: Options to purchase up to
150,000 shares shall become exercisable upon entry by the Corporation
into a sublicense agreement with any Category A or Category B vaccine
company identified on Appendix 1 hereto (40,000 shares for each
sublicense agreement with any such Category A vaccine company and
20,000 shares each for up to four sublicense agreements with any such
Category B vaccine company).
(c) Category III Options: Options to purchase up to
175,000 shares shall become exercisable when and if the specified event
occurs: (i) 25,000 of the Category III Options shall become exercisable
upon consummation of amendments to the SRI/UAB license agreement in a
form acceptable to the Board of Directors of the Corporation; (ii)
30,000 of the Category III Options shall become exercisable upon each
consummation (up to three, for a total of 90,000 Options) of a
public/private offering of stock of the Corporation for $20 million or
more which results in new cash raised for the Corporation and/or
redistribution of shares held among current shareholders of the
Corporation so as to create a more balanced ownership profile, as
determined by the Board of Directors of the Corporation; and (iii)
15,000 of the Category III Options shall become exercisable if the
market capitalization of the Corporation, based on shares outstanding
for 20 consecutive days during the term of the Employee's employment
with the Corporation ("Market Capitalization"), reaches or exceeds $65
million; (iv) 30,000 of the Category III Options shall become
exercisable if the Market Capitalization reaches or exceeds $100
million; and (v) 15,000 of the Category III Options shall become
exercisable if the Market Capitalization reaches or exceeds $135
million.
Subject to the foregoing limitation, Employee may
exercise the Option to Purchase all the shares granted by this Option
at one time or Employee may purchase a portion of the shares granted by
this Option from time to time, until the termination thereof as
provided in paragraph 5 below.
C. Paragraph 5 of the Agreement is hereby deleted in its entirety and
the following is hereby substituted in lieu thereof:
5. Acceleration and Termination of Options.
(a) If Employee's employment is terminated by the
Corporation for cause under Section 4.01 of his Employment Agreement
with the Corporation, the Option will cease vesting as of the effective
date of termination.
(b) If Employee's employment is terminated for any
reason (except termination for cause under Section 4.01 of his
Employment Agreement), the portion of the Category I Options that would
have vested at the next subsequent anniversary will accelerate and
become vested immediately.
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(c) If Employee's employment is terminated for any
reason (except termination for cause under Section 4.01 of his
Employment Agreement), and any of the milestones set forth for the
Category II or Category III Options are achieved by the Corporation
within twelve (12) months after the effective date of the termination
of Employee's employment, the portion of such Category II or Category
III Options that would have vested under such terms will vest as of the
date of such event.
(d) The Option, to the extent not theretofore
exercised, shall remain exercisable for the periods specified below and
shall automatically terminate upon the first to occur of the following
dates:
(i) if Employee's termination of employment occurs
for any reason other than his death or his permanent and total
disability (within the meaning of Section 22(e)(3) of the
Code), then (A) all Category I, Category II and Category III
Options that are vested on the date on which Employee's
employment by the Corporation is terminated will remain
exercisable for ninety (90) days after the effective date of
termination of Employee's employment and will automatically
terminate at the end of such ninetieth (90th) day, and (B) any
Category II or Category III Options that become exercisable
during the 12-month period described in Paragraph 5(c) above,
will remain exercisable for ninety (90) days after the date on
which such Options first become vested and will automatically
terminate at the end of such ninetieth (90th) day;
(ii) if Employee's termination of employment occurs
by reason of his permanent and total disability (within the
meaning of Section 22(e)(3) of the Code), then (A) all
Category I, Category II and Category III Options that are
vested on the date on which Employee's employment by the
Corporation is terminated will remain exercisable for twelve
(12) months after the effective date of termination of
Employee's employment and will automatically terminate at the
end of the last day of such 12-month period, and (B) any
Category II or Category III Options that become exercisable
during the 12-month period described in Paragraph 5(c) above,
will remain exercisable for ninety (90) days after the date on
which such Options first become vested and will automatically
terminate at the end of such ninetieth (90th) day;
(iii) if Employee's termination of employment occurs
by reason of his death, then (A) all Category I, Category II
and Category III Options that are vested on the date of death
will remain exercisable for a period of one hundred eighty
(180) days by the transferee of said Option (or any
unexercised portion thereof) pursuant to Employee's Will or
the law of descent and distribution, and such Options will
automatically terminate at the end of such one hundred
eightieth (180th) day, and (B) any Category II
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or Category III Options that become exercisable during the
12-month period described in Paragraph 5(c) above, will remain
exercisable for ninety (90) days after the date on which such
Options first become vested and will automatically terminate
at the end of such ninetieth (90th) day; and
(iv) all Options shall automatically terminate at the
end of the day which is ten (10) years and one (1) day
following the Date of Grant.
D. Paragraph 7 of the Agreement is hereby amended by adding the
following words immediately following the words "directly or indirectly," in
clause (iii) of the first sentence thereof: "in any transaction or series of
transactions that has not been approved by the Board".
E. The references in Paragraph 8 of the Agreement to "Paragraph 5(c)"
are hereby changed to "Paragraph 5(d)".
F. This Amendment shall become effective as of the day and year first
above written. Except as expressly amended or modified herein, all of the terms
and conditions of the Agreement shall continue in full force and effect.
(signatures on following page)
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed on the day and year first above written.
VAXCEL, INC.
By:
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Chairman of the Board
(CORPORATE SEAL) Attest:
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Secretary
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Xxxx X. Xxxxxx
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