EXHIBIT 10.25
CELL PATHWAYS, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Agreement") made as of January 11, 2002 by and
between CELL PATHWAYS, INC., a Delaware corporation ("Company"), and Xxxxx X.
Xxxxxx, a resident of the Commonwealth of Pennsylvania ("Grantee").
The Parties Hereto Do Hereby Agree As Follows:
1. Grant of Option. The Company considers it desirable and in its best
interest that, in light of the indebtedness of Grantee to the Company and in
lieu of a previously considered grant of shares of restricted stock, Grantee as
an employee, director and/or consultant to the Company be granted an additional
option to purchase shares of the Company's Common Stock, $0.01 par value
("Common Stock"), in accordance with the Company's 1997 Equity Incentive Plan,
as amended (the "Plan"). In consideration of Grantee's rendering services
("Services") as an employee, director and/or consultant of the Company during
the requisite vesting periods, and in further consideration of the agreements
and matter set forth herein, the Company therefore hereby grants to Grantee the
right, privilege and option ("Option") to purchase an aggregate of 30,000 shares
of Common Stock (the "Optioned Shares") at the price ("Exercise Price") of $6.35
per share thereof, in the manner and subject to the conditions hereinafter
provided. This Option shall be treated as a non-qualified stock option under the
Internal Revenue Code of 1986, as amended (the "Code").
2. Option Exercise Period; Application of Proceeds. This Option may be
exercised, with respect to vested shares, from the time such shares have vested
pursuant to Section 3 hereof until the termination of the option pursuant to
Section 5 hereof; provided that if as of December 4, 2005 there shall be any
indebtedness owed to the Company by the Grantee, the Grantee shall as of such
date exercise the stock option for as many of the Optioned Shares as shall be
required to generate after-tax funds sufficient to pay such indebtedness to the
Company. At any time that Grantee shall exercise any portion of this stock
option, Grantee shall immediately apply the after-tax funds generated by such
exercise first to reduce any outstanding indebtedness then owed by the Grantee
to the Company.
3. Option Vesting Period. The Optioned Shares shall vest based upon the
following schedule:
a. First Anniversary: On the last business day prior to the
first anniversary of the date of this Agreement, the 30,000 Optioned
Shares shall vest, provided that Grantee continues to render Services
to the Company or a subsidiary of the Company on such date. Vesting
will also occur during the period prior to the first anniversary date
of this Agreement but after six months from the date of this grant to
the extent that the Company and Grantee (while still rendering Services
to the Company or a subsidiary of the Company) agree to an exercise of
the option during such period with all after-tax proceeds being applied
immediately to reduce
1.
any outstanding indebtedness then owed by the Grantee to the Company.
Any Optioned Shares which have not vested prior to the time Grantee
ceases to continue to render Services to the Company or a subsidiary
shall not vest, regardless of whether the cessation of Services is at
the election of the Grantee for any reason, is at the election of the
Company for any reason, or is the result of death, disability or other
intervening cause.
4. Method of Exercise. As to those Optioned Shares that have vested,
the Option may be exercised by the Grantee executing, dating and delivering to
the Secretary of the Company at the Company's principal place of business a
written Option Exercise Notice in the form of Exhibit A attached hereto,
accompanied by a check made payable to the Company in the amount of the
aggregate Exercise Price for the number of shares for which the Option is then
being exercised. If the Company is required to withhold on account of any
present or future tax imposed as a result of such exercise, the notice of
exercise shall be accompanied by a check made payable to the Company in the
amount of such withholding. In connection with, and as part of the process of,
any exercise of this option, appropriate arrangements will be made to ensure
that the after-tax proceeds of such exercise are immediately applied to the
reduction of any then outstanding indebtedness of Grantee to the Company.
5. Termination of Option. Except as otherwise stated in this Agreement
or as the parties may otherwise agree, the Option (to the extent not theretofore
exercised) shall terminate and expire at 5:00 p.m., Philadelphia time, on the
first to occur of (i) the day immediately prior to the 10th anniversary of the
date of this Agreement, and (ii) the ninetieth day following the day on which
Grantee ceases for any reason to render Services to the Company or its
subsidiaries.
6. Transfer of Option. This Option shall not be sold, assigned,
pledged, hypothecated or otherwise transferred or disposed of in any way,
whether by operation of law or otherwise, without the consent of the Company,
and during the Grantee's lifetime shall be exercisable only by the Grantee or
Grantee's guardian or legal representative.
7. Capitalization Adjustments. Subject to the provisions of the Plan,
if the outstanding shares of stock or other securities of the class then subject
to the Option are increased or decreased, or are changed into or exchanged for a
different number or kind of Company shares or other Company securities, in any
such case as a result of one or more recapitalizations, stock splits, reverse
stock splits, stock dividends or the like, then appropriate adjustments shall be
made in the number and/or kind of Company shares or other Company securities for
which the unexercised portion of this Option may thereafter be exercised, all
without any change in the aggregate Exercise Price applicable to the unexercised
portion of the Option, but with a corresponding adjustment in the Exercise Price
per share or other unit. No fractional share of Company stock shall be issued
under the Option in connection with any such adjustment. Such adjustments shall
be made by or under authority of the Company's Board of Directors or duly
authorized Committee thereof, whose determinations as to what adjustments shall
be made, and the extent thereof, shall be final, binding and conclusive.
8. Certain Transactions. If at any time while this Option remains
outstanding:
2.
a. any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) other than the Company,
any trustee or other fiduciary holding securities under an
employee benefit plan of the Company, any person acquiring
securities from the Company solely pursuant to written
agreement with the Company, or any corporation owned, directly
or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
in the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or
more of the combined voting power of the Company's then
outstanding securities, or
b. during any period of two consecutive years
commencing the day after the first election of directors
following termination of the stockholder voting provisions of
the Company's Stockholders' Agreement dated as of December 10,
1992, as amended, individuals who at the beginning of such
period constitute the Board, and any new director (other than
a director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in clauses (a) (c) or (d) of this Section) whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors
at the beginning of the period or whose election or nomination
for election was previously so approved, cease for any reason
to constitute at least a majority thereof, or
c. the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation,
other than a merger or consolidation where no person within
the meaning of subsection (a) above becomes the "beneficial
owner" (as defined above) of 20% or more of the resulting
voting power and where the voting securities of the Company
outstanding immediately prior thereto continue to represent
(either by remaining outstanding or by being converted into
voting securities of the surviving or controlling entity) more
than 50% of the combined voting power of the voting securities
of the Company or such surviving or controlling entity
outstanding immediately after such merger or consolidation, or
d. the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets,
(each of (a), (b), (c) and (d) above, an "Acceleration Event"), then the Option
shall become vested and may be exercised as to all Optioned Shares for which it
has not previously been exercised, and all Optioned Shares for which the Option
has been exercised but which have not yet vested shall vest.
Upon the occurrence of an Acceleration Event the Company's Stock Option
Committee shall provide for cancellation of the unexercised portion of the
Option as of the Cancellation Date; provided, however, that (i) if the Option
has been held for less than six months then for purposes of such cancellation
the Acceleration Event and/or Cancellation Date shall be restricted in such
manner
3.
as the Company's Stock Option Committee may determine necessary to comply with
the conditions and requirements of Rule 16b-3; (ii) in the event of a
transaction described in clause (c) that is treated as a pooling of interests
for accounting purposes, if required for such accounting treatment, outstanding
options shall not be cancelled but, instead, the surviving corporation (or the
parent of the surviving corporation) shall assume outstanding options (or grant
options in substitution for the outstanding options) on terms comparable to the
outstanding options; and (iii) in the event of a transaction described in clause
(c) that is not treated as a pooling of interests for accounting purposes, the
Committee may determine that outstanding options will not be cancelled and that
the surviving corporation (or the parent of the surviving corporation) shall
assume outstanding options (or grant options in substitution for the outstanding
options) on terms comparable to the outstanding options.
"Cancellation Date" shall mean (i) the 60th day following the
occurrence of any Acceleration Event described in clause (a) or (b) of the first
sentence hereof, and (ii) the closing of any merger, consolidation, liquidation
or sale of assets stockholder approval of which constituted an Acceleration
Event under clause (c) or (d) of the first sentence hereof. Upon cancellation of
the Option pursuant to an Acceleration Event under clause (a), (b) or (d) of the
first sentence hereof, the Company shall make, and upon cancellation of the
Option following an Acceleration Event under clause (c) of the first sentence
hereof, the Company may make, in exchange therefor, a cash payment under the
Option in an amount equal to the product of the number of Optioned Shares
covered by the unexercised portion of the Option multiplied by the difference
between the Exercise Price and (i) in the case of a transaction described in
clause (a) or (b) of the first sentence hereof, the highest fair market value of
an Optioned Share at any time during the 60-day period immediately preceding the
Cancellation Date, and (ii) in the case of a transaction described in clause (c)
or (d) of the first sentence hereof, the fair market value of an Optioned Share
on the Cancellation Date. The "fair market value" of Optioned Shares shall be
determined by the Company's Stock Option Committee by reference to any national
securities market on which the Optioned Shares may then be trading, or as
otherwise determined by the Company's Stock Option Committee.
9. Securities Laws. Grantee hereby represents and agrees for himself or
herself, and for Grantee's transferees by will or the laws of descent and
distribution, that unless a registration statement under the Securities Act of
1933, as amended, is in effect as to shares purchased upon any exercise of the
Option, (i) any and all shares so purchased shall be acquired for his personal
account and not with a view to or for sale in connection with any distribution,
and (ii) each notice of the exercise of any portion of the Option shall be
accompanied by a representation and warranty in writing, signed by the person
entitled to exercise the same, that the shares are being so acquired in good
faith for his personal account and not with a view to or for sale in connection
with any distribution. Notwithstanding anything else contained in this
Agreement, no share of stock or other securities shall be issued pursuant to any
exercise of the Option unless and until, in the opinion of counsel for the
Company, such securities may be issued and delivered without causing the Company
to be in violation of or incur any liability under any federal, state or other
securities laws, any requirement of any securities exchange listing agreement to
which the Company may be a party, or any other requirement of law or of any
regulatory body having jurisdiction over the Company.
4.
10. Stock Restrictions. No shares of stock or other securities issued
upon exercise of the Option may be sold, assigned, pledged, hypothecated or
otherwise transferred or disposed of in any way unless and until, in the opinion
of counsel for the Company, such securities may be so transferred or disposed of
without causing the Company to be in violation of or incur any liability under
any federal, state or other securities laws, any requirement of any securities
exchange listing agreement to which the Company may be a party, or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.
11. Restrictive Legends. Unless and until otherwise permitted by this
Section 11, or unless in the opinion of counsel for the Company such legend is
not required, each certificate for stock or other securities issued pursuant to
exercise of this Option shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, ARE HELD FOR INVESTMENT PURPOSES ONLY AND MAY
NOT BE SOLD, TRANSFERRED OR DISTRIBUTED AT ANY TIME UNLESS A REGISTRATION
STATEMENT IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
SECURITIES ACT OF 1933 COVERING SUCH SHARES OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH A REGISTRATION STATEMENT IN NOT REQUIRED".
The Company may order its stock transfer agents to stop the transfer of any
shares of stock or other securities bearing the legend set forth in this Section
11 until the conditions of Section 10 hereof with respect to the transfer of
such stock or other securities have been satisfied.
12. Stock Option Plan. The Option is subject to, and the Company and
Grantee agree to be bound by, all of the terms and conditions of the Plan, as
the same shall have been amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive Grantee, without his
consent, of this Option or any of his rights hereunder. Pursuant to the Plan,
the Company's Stock Option Committee is vested with final authority to interpret
and construe the Plan and the Option, and is authorized to adopt rules and
regulations for carrying out the Plan. A copy of the Plan in its present form is
available for inspection during business hours by Grantee or other persons
entitled to exercise this Option at the Company's principal office.
13. No Employment or Stockholder Rights. Neither this Agreement nor the
establishment of the Plan shall be construed to (i) give Grantee any right to
become employed by, or continue to be a director of, or consultant to, the
Company or any of its subsidiaries, (ii) give Grantee any benefits not
specifically provided by this Agreement, or (iii) in any manner limit the right
of the Company or any of its subsidiaries to modify, amend or terminate the Plan
or any of its other benefit plans. Employment may be terminated by the Grantee
or the Company at any time for any reason, in which event shares will vest or
fail to vest in accordance with Section 3 hereof. Grantee shall not have any
rights as a stockholder of the Company with respect to any of the Optioned
Shares until such time as such shares have been delivered to Grantee.
5.
14. Notices. Any notice to be given to the Company shall be addressed
to the Company in care of its Secretary at its principal office, and any notice
to be given to Grantee shall be addressed to Grantee at the address given
beneath Grantee's signature hereto or at such other address as Grantee may
hereafter designate in writing to the Company.
15. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, other than its conflict laws provisions.
IN WITNESS WHEREOF, the Company has entered into this Agreement and
granted the Option as of the date of this Agreement first written above.
CELL PATHWAYS, INC.
By /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Senior Vice President, General Counsel and
Secretary
ACCEPTED:
/s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
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Street Address
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City and State
6.
EXHIBIT A
OPTION EXERCISE NOTICE
To: Cell Pathways, Inc.
Attention: Secretary
The undersigned hereby exercises his/her option to acquire shares
of [e.g., Common Stock] (the "Securities") pursuant to the option
granted to the undersigned in that certain Stock Option Agreement (the
"Agreement") dated ,19__, by and between Cell Pathways, Inc. (the
"Company") and the undersigned, and in connection with this exercise does hereby
tender herewith as provided in the Agreement the full Exercise Price (as defined
in the Agreement) with respect to the Securities, and does hereby represent and
warrant to the Company that the Securities are being acquired in good faith for
the undersigned's own account and not with a view to or for sale in connection
with any distribution.
IN WITNESS WHEREOF, the undersigned has signed this Option Exercise
Notice as of the date written below.
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Signature
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Print Name
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Date
7.
