EXHIBIT 10.38
FORM OF
NONTRANSFERABLE
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of the 13th day of December, 1996, is
by and between SYNAPTIC PHARMACEUTICAL CORPORATION, a Delaware corporation (the
"Company"), and ______________ (the "Optionee," which term as used herein shall
be deemed to include any successor to the Optionee by will or by the laws of
descent and distribution, unless the context shall otherwise require).
W I T N E S S E T H:
WHEREAS, the Company and the Optionee are parties to an Employment
Agreement (the "Employment Agreement") dated as of ________________; and
WHEREAS, pursuant to the Synaptic Pharmaceutical Corporation
1996 Incentive Plan (the "Plan"), the Company, acting through the Compensation
Committee (the "Committee") of its Board of Directors (the "Board"), on December
13, 1996 (the "Start Date"), granted to the Optionee an option to purchase up to
an aggregate of ______ shares of Common Stock, $0.01 par value, of the Company
(the "Common Stock"), at the price of $12.00 per share, such option to be for
the term and upon the terms and conditions hereinafter stated.
NOW, THEREFORE, in consideration of the mutual premises and
undertakings hereinafter set forth, the parties hereto agree as follows:
1. Option; Option Price. Pursuant to said action of the
Committee, the Company has granted to the Optionee the option (the "Option") to
purchase, upon and subject to the terms and conditions of this Agreement and the
terms and conditions of the Plan (which are hereby incorporated by reference
herein), ______ shares (the "Option Shares") of Common Stock of the Company at
the price of $12.00 per share (the "Option Price"), which Option is intended to
qualify for Federal income tax purposes as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. Term. The term (the "Option Term") of the Option shall commence on the
Start Date and expire on the tenth anniversary of the Start Date, unless the
Option shall theretofore have been terminated in accordance with the terms
hereof or of the Plan.
3. Exercisability; Time of Exercise.
(a) General. Unless accelerated in the discretion of the
Committee or as otherwise provided herein, the Option shall become exercisable
as to 25% of the Option Shares on January 1 of each of 1998, 1999, 2000, and
2001; provided, however, that if the Optionee dies or retires with the consent
of the Company any time prior to January 1, 2001, then the Option shall be
exercisable
-1-
as to that number of Option Shares which is equal to the product of (i) the
total number of Option Shares and (ii) 2-1/12% times the number of full calendar
months which shall have elapsed during the period commencing on January 1, 1997,
and ending on the date of the Optionee's death or retirement; provided further,
however, that if, at any time prior to January 1, 2001, the Optionee's
employment with the Company is terminated in contemplation of, or at any time
within one (1) year following, a Change in Control (capitalized terms used and
not defined herein having the meanings ascribed to them in the Employment
Agreement ) and such termination constitutes a Termination Without Cause or a
Resignation for Good Reason, then the Option shall, as of the date of such
termination, become exercisable in full as to all of the Option Shares. The
Option shall remain exercisable as to all of such shares until the expiration of
the Option Term, unless it is terminated earlier as provided in any of the other
paragraphs of this Section 3 or Section 6 or as provided in the Plan.
(b) Termination for Cause. If the Optionee shall cease to be
an employee of the Company as a result of a termination by the Company for
Cause, the Option shall automatically terminate on, and the Optionee shall have
no further right to exercise the Option on or after, the date as of which notice
of such termination is given to the Optionee by the Company.
(c) Termination without Cause. If the Optionee's employment
with the Company terminates for any reason other than Cause or the Optionee's
death or Disability or Retirement (as defined in the Plan), the Option shall
thereafter be exercisable only to the extent of the purchase rights, if any,
which shall have accrued pursuant to paragraph (a) of this Section 3 as of the
date of such termination, and the Option and such accrued rights to purchase
shall in any event terminate upon, and the Optionee shall have no further right
to exercise the Option after, the earlier of (i) the expiration of the Option
Term and (ii) (A) in the case of any such termination governed by Section 11 of
the Employment Agreement, 120 days after the date of such termination and (B) in
the case of any such termination not governed by said Section 11, 90 days after
the date of such termination; provided, however, that, in the case of any such
termination other than a termination resulting from the Optionee being
"disabled" within the meaning of Section 22(e)(3) of the Code, the Option shall
no longer be treated as an "incentive stock option" within the meaning of
Section 422 of the Code unless exercised within three (3) months following the
date of such termination.
(d) Termination as a Result of Disability or Retirement. If
the Optionee's employment with the Company terminates as a result of the
Optionee's Disability or Retirement, the Option shall thereafter be exercisable
only to the extent of the purchase rights, if any, which shall have accrued
pursuant to paragraph (a) of this Section 3 as of the date of such termination,
and the Option and such accrued rights to purchase shall in any event terminate
upon, and the Optionee shall have no further right to exercise the Option after,
the earlier of (i) the expiration of the Option Term and (ii) 180 days after the
date of such termination; provided, however, that, in the case of any such
termination other than a termination resulting from the Optionee being
"disabled" within the meaning of Section 22(e)(3) of the Code, the Option shall
no longer be treated as an "incentive stock option" within the meaning of
Section 422 of the Code unless exercised within three (3) months following the
date of such termination.
-2-
(e) Termination as a Result of Death. If the Optionee's
employment with the Company terminates as a result of the Optionee's death, the
Option shall thereafter be exercisable by the Optionee's Designated Beneficiary
(as defined in the Plan) or personal representatives, heirs or legatees (as
provided in the Plan), but only to the extent of the purchase rights, if any,
which shall have accrued pursuant to paragraph (a) of this Section 3 as of the
date of such termination, and the Option and such accrued rights to purchase
shall in any event terminate upon, and the Optionee shall have no further right
to exercise the Option after, the earlier of (i) the expiration of the Option
Term and (ii) one (1) year after the date of death. Notwithstanding anything
contained in the Plan to the contrary, the Option shall continue to be treated
as an "incentive stock option" within the meaning of Section 422 of the Code
even if it is not exercised until after the third month following the date of
the Optionee's death.
(f) Death Following Disability or Retirement. In the event of
the Optionee's death within 180 days following the Optionee's termination of
employment as a result of the Optionee's Disability or Retirement, the Option
shall thereafter be exercisable by the Optionee's Designated Beneficiary or
personal representatives, heirs or legatees, to the extent of the purchase
rights, if any, which shall have accrued pursuant to paragraph (a) of this
Section 3 as of the date of such termination, for a period of one (1) year
following the date of death but in no event later than the expiration of the
Option Term; provided, however, that, in the case in which the Optionee's
termination of employment resulted from the Optionee being "disabled" within the
meaning of Section 22(e)(3) of the Code, the Option shall no longer be treated
as an "incentive stock option" within the meaning of Section 422 of the Code
unless exercised within one (1) year following the date of such termination; and
provided further, however, that, in all other cases, the Option shall no longer
be treated as an "incentive stock option" within the meaning of Section 422 of
the Code unless exercised within three (3) months following the date of such
termination.
4. Procedure for Exercise. (a) The Option may be exercised, from time to
time, in whole or in part (but for the purchase of whole shares only), by
delivery of a written notice (the "Notice") from the Optionee to the Secretary
of the Company, which Notice shall:
(i) state that the Optionee elects to exercise the Option;
(ii) state the number of shares with respect to which the Optionee is
exercising the Option (the "Acquired Shares");
(iii) include any representations of the Optionee required under Section
7(b) hereof;
(iv) state the method of payment for the Acquired Shares pursuant to
Section 4(b);
-3-
(v) in the event that the Option shall be exercised
by any person other than the Optionee pursuant to Sections 3
and 8, include appropriate proof of the right of such person
to exercise the Option; and
(vi) state the date upon which the Optionee desires
to consummate the purchase of the Acquired Shares (which date
must be prior to the termination of such Option).
(b) Payment of the Option Price for the Acquired Shares shall,
unless otherwise provided by the Committee, be made in cash or by personal or
certified check.
5. No Rights as a Stockholder. The Optionee shall not have any
privileges of a stockholder with respect to any Option Shares until the date of
a stock certificate representing such Option Shares is issued to the Optionee.
6. Adjustments.
(a) Stock Dividends, Splits, Subdivisions or Combinations.
Subject to the other provisions of this Section 6, if, at any time while the
Option is outstanding, the Common Stock is changed by reason of dividends
payable in Common Stock or splits, subdivisions or combinations of shares of
Common Stock, then the number of shares of Common Stock deliverable upon the
exercise thereafter of the Option shall be increased or decreased
proportionately, as the case may be, without change in the aggregate Option
Price.
(b) Cash Mergers. Upon the occurrence of a merger on
consolidation of the Company with another corporation in a transaction in which
the stockholders of the Company receive cash consideration in exchange for their
shares of capital stock of the Company (a "cash merger"), the Option shall
automatically terminate; provided, however, that the Optionee shall be given (i)
written notice of such cash merger at least 20 days prior to its proposed
effective date (as specified in such notice) and (ii) an opportunity, during the
period commencing with delivery of such notice and ending ten (10) days prior to
such proposed effective date, to exercise the Option in full as to all of the
Option Shares, whether or not then vested.
(c) Assumption or Substitution of Options. Notwithstanding
anything contained herein or in the Plan to the contrary, Section 6(b) shall not
be applicable if provision shall be made in connection with such cash merger for
the assumption of the Option by, or the substitution for the Option of a new
option covering the stock of, the surviving, successor or purchasing
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to the number, kind and option price of shares subject to such option; provided,
however, that the Board shall, to the extent not inconsistent with the best
interests of the Company or its subsidiaries (such best interests to be
determined in good faith by the Board, in its sole discretion), use its best
efforts to ensure that any such assumption or substitution will not constitute a
modification, extension or renewal of the Option within the meaning of Section
424(h) of the Code and the regulations thereunder.
-4-
(d) Corporate Transactions. Notwithstanding anything contained
herein or in the Plan to the contrary, upon the occurrence of (i) a merger or
consolidation of the Company with another corporation in a transaction (other
than a cash merger) in which the Company shall not survive or in which the
Company is the survivor but its capital stock is exchanged for stock,
securities, or property of another entity or (ii) a sale of all or substantially
all of the assets of the Company (any transaction described in clause (i) or
(ii) being referred to herein as a "corporate transaction"), provision shall be
made in connection with such corporate transaction for the assumption of the
Option by, or the substitution for the Option of a new option covering the stock
of, the surviving, successor or purchasing corporation, or a parent or
subsidiary thereof, with appropriate adjustments as to the number, kind and
option price of shares subject to such option; provided, however, that the Board
shall, to the extent not inconsistent with the best interests of the Company or
its subsidiaries (such best interests to be determined in good faith by the
Board, in its sole discretion), use its best efforts to ensure that any such
assumption or substitution will not constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code and the
regulations thereunder.
(e) Termination within One Year of Cash Merger or Corporate
Transaction. Notwithstanding anything contained herein or in the Plan to the
contrary, in the event the Optionee's employment with the Company or the person
which is the surviving, successor or purchasing corporation in a cash merger to
which Section 6(c) applies or a corporate transaction to which Section 6(d)
applies, or a parent or subsidiary thereof, is terminated without Cause and
other than as a result of the Optionee's death or disability, at any time prior
to the first anniversary of such transaction or merger, the Option shall become
exercisable in full as to all Option Shares, whether or not vested, as of the
date on which notice of termination is given to the Optionee, and the Optionee
shall have the right to exercise the Option as to any or all of such shares
until the earlier of (i) the expiration of the Option Term and (ii) the 90th day
following the date of such termination, at which time the Option shall
terminate.
7. Additional Provisions Related to Exercise. (a) The Option shall be
exercisable only on such date or dates and during such period and for such
number of shares of Common Stock as are set forth in this Agreement.
(b) To exercise the Option, the Optionee shall follow the
procedures set forth in Section 4 hereof. Upon the exercise of the Option at a
time when there is not in effect a registration statement under the Securities
Act of 1933, as amended, relating to the shares of Common Stock issuable upon
exercise of the Option, the Optionee shall provide the Company with such
representations and warranties as may be required by the Committee to the effect
that the Acquired Shares are being acquired for investment and not with a view
to the distribution thereof. Anything contained herein to the contrary
notwithstanding, in the event the Board shall determine, in its sole and
subjective discretion, that the registration, qualification or listing of the
Option Shares upon a securities exchange or under any state or Federal law, or
the consent or approval or any government or regulatory body, is necessary or
desirable as a condition of or in connection with the exercise of the Option,
the Option may not be exercised, in whole or in part, unless and until such
registration,
-5-
qualification, listing, consent or approval shall have been effected or obtained
free of any conditions not acceptable to the Board.
(c) The Option shall not be affected by any change of duties
or position of the Optionee (including transfer to or from a subsidiary), so
long as the Optionee continues to be an employee of the Company or one of its
subsidiaries. Nothing in the Option granted hereunder shall confer upon the
Optionee any right to continue in the employ of the Company or any of its
subsidiaries or interfere in any way with the right of the Company or its
subsidiaries or the stockholders of the Company, as the case may be, to
terminate the Optionee's employment or to increase or decrease the Optionee's
compensation at any time.
8. Restriction on Transfer. The Option may not be transferred,
pledged, assigned, hypothecated (whether by operation of law or otherwise), sold
or otherwise disposed of in any way by the Optionee, except by will or by the
laws of descent and distribution, and may be exercised during the lifetime of
the Optionee only by the Optionee. If the Optionee dies, the Option shall
thereafter be exercisable, during the applicable period specified in Section 3,
by the Optionee's Designated Beneficiary or personal representatives, heirs or
legatees (as provided in the Plan) to the full extent to which the Option was
exercisable by the Optionee at the time of the Optionee's death as provided
herein. The Option shall not be subject to execution, attachment or similar
process. Any attempted transfer, pledge, assignment, hypothecation, sale or
other disposition of the Option contrary to the provisions hereof, and the levy
of any execution, attachment or similar process upon the Option, shall be null
and void and without effect.
9. Restrictive Legends. In order to reflect certain
restrictions on disposition of the shares acquired upon exercise of the Option
(the "Restricted Shares"), all stock certificates representing the Restricted
Shares issued shall have affixed thereto any legends determined by the Company
to be appropriate.
10. Notices. All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if (i)
personally delivered or sent by telecopier, (ii) sent by nationally-recognized
overnight courier or (iii) sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows:
if to the Optionee, to:
-------------------
-------------------
-------------------
-6-
if to the Corporation, to:
Synaptic Pharmaceutical Corporation
000 Xxxxxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: President
Telecopier: 201-261-0623
or to such other address as the party to whom notice is to be given may have
furnished to each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, sent by telecopier or sent by nationally-recognized
overnight courier and (ii) on the third Business Day (as hereinafter defined)
following the date on which the piece of mail containing such communication is
posted, if sent by mail. As used herein, "Business Day" means a day that is not
a Saturday, Sunday or a day on which banking institutions in the city to which
the notice or communication is to be sent are not required to be open.
11. No Waiver. No waiver of any breach or condition of this Agreement shall
be deemed to be a waiver of any other or subsequent breach or condition, whether
of like or different nature.
12. Optionee Undertaking. The Optionee hereby agrees to take
whatever additional actions and execute whatever additional documents the
Company may in its reasonable judgement deem necessary or advisable in order to
carry out or effect one or more of the obligations or restrictions imposed on
the Optionee pursuant to the express provisions of this Agreement.
13. Modification of Rights. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan.
14. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New Jersey without giving effect to
principles of conflicts of laws.
15. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
16. Entire Agreement. This Agreement, the Employment
Agreement(the provisions relating to stock options of which are hereby
incorporated herein by reference) and the Plan constitute the entire agreement
between the parties with respect to the subject matter hereof and thereof, and
supersede all previously written or oral negotiations, commitments,
representations and agreements with respect thereto. In the event of any
inconsistency among the terms of this Agreement, the terms of the Employment
Agreement and the terms of the Plan, the terms of the Employment Agreement shall
control.
-7-
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
SYNAPTIC PHARMACEUTICAL CORPORATION
By:----------------------------------------------
Xxxxxxxx X. Xxxxxxxx
Chairman, President and Chief Executive Officer
-------------------------------------------------
-8-
