EXHIBIT NUMBER 6.8
INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT MADE as of this
______ day of ___________, 19__ between TORVEC, INC., a New
York business corporation (herein referred to as the
"Company"), and ______________________________ (herein
referred to as the "Optionee");
WITNESSETH:
1. The Company hereby grants to the Optionee an Option
(hereinafter referred to as "Option") to purchase an
aggregate of ____________ shares of the $.01 par value
Common Stock of the Company (herein referred to as the
"Shares") at a price of $___________ per Share to be paid by
the Optionee with cash, a certified check or a bank
cashier's check made payable to the order of the Company.
Alternatively, provided the Board of Directors shall approve
the specific transfer, the Optionee may pay for the Shares,
either in whole or in part, by the delivery of Common Stock
of the Company already owned by him which will be accepted
as payment for the Shares, based upon such Common Stock's
fair market value on the date of exercise. In addition,
provided the Board of Directors shall approve the specific
transfer, payment for the Shares, either in whole or in
part, may be made by delivery of Common Stock acquired by
the Optionee under any of the Company's stock option plans,
provided, however, that if this Option is exercised in part,
Shares acquired by such partial exercise may not be used as
payment for additional Shares to be acquired under this
Agreement. In order for the Optionee to so use shares of
Common Stock previously acquired under any of the Company's
stock option plans as payment for the Shares either in whole
or in part, the transfer of such previously acquired Common
Stock as payment for all or a portion of the exercise price
under this Agreement must occur more than two years from the
date of the grant and one year from the date of exercise of
the prior option pursuant to which the Optionee acquired
such Common Stock.
2. The term during which the Option shall be
exercisable shall commence on _______________ and expire on
the close of business _______________, subject to earlier
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termination as provided in the Torvec, Inc. 1998 Stock
Option Plan (herein referred to as the "Plan"). The Option
to purchase the number of Shares granted under this
Agreement may not be exercised by the Optionee for a period
of one year immediately following the date of grant (that
is, until _______________) and then may be exercised each
year during the Option term after such initial one year
period only to the extent of the greater of 2,500 Shares or
25% of the number of Shares subject to this Option,
provided, however, that to the extent the Optionee shall
fail to exercise or, due to the above limitation, be
prohibited from exercising his Option in any year during the
Option period, such annual right to exercise this Option
shall not expire, but shall be cumulative, and carry over
into and be exercisable in any subsequent year during which
the Option is outstanding.
However, this Option may be exercised only if the
Optionee is and has been continuously an employee of the
Company or its subsidiaries for a period beginning on the
date of grant and ending on the day three months before the
date of exercise. If the Optionee terminates employment due
to permanent and total disability, the three month period
referred to in the preceding sentence shall be one year.
3. The Option is not transferable by the Optionee
other than by Will or the laws of descent and
distribution and is exercisable, during his lifetime,
only by the Optionee. In the event that the right to
exercise the Option passes to the Optionee's estate, or
to a person to whom such right devolves by reason of the
Optionee's death, then the Option shall be non
transferable in the hands of the Optionee's Executor or
Administrator or of such person, except that the Option
may be distributed by the Optionee's Executor or
Administrator to the distributees of the Optionee's
estate as a part thereof.
4. In order for the Option to be exercised, in
whole or in part, the notice by the Optionee to the
Company in the form attached hereto must be accompanied
by payment in full of the option price for the Shares
being purchased.
5. The Company agrees that it will use its best
efforts to register the sale of the Shares to be issued upon
the exercise of the Option with the Securities and Exchange
Commission under the Securities Act of 1933. Upon the
effectiveness of the Registration Statement covering the
Shares, the Optionee shall be able to sell the Shares in
"open market transactions" free of Federal Securities Law
restrictions, provided that at the time of sale, or within
the three month period immediately prior to such sale, he is
not nor has he been an "affiliate" of the Company. The
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Optionee further understands that, in accordance with
applicable Commission rules governing controlling persons of
public companies, members of the board of directors of a
public company, such as the Company, are deemed to be
"affiliates" during their term of office. The Optionee,
therefore, agrees that he will consult with the Company's
counsel as to any Securities Law restrictions, including a
limitation on the number of Shares which may be sold at any
one time, on his ability to sell the Shares prior to any
sale thereof.
6. The Company agrees to provide the Optionee with a
copy of the Prospectus prepared by the Company in connection
with the Registration Statement filed to register the
Shares, together with its exhibits, and the Company hereby
acknowledges its obligation to provide the Optionee with all
proxy and other shareholder communications, including the
annual report to security holders, for the most recently
completed fiscal year of the Company and all updates
thereof. The Optionee agrees that prior to exercise, either
in whole or in part of the Option granted to him hereunder,
he shall have read such materials, including the most recent
annual and quarterly reports to shareholders, and shall have
received, if requested, and read all the documents
incorporated by reference in the Prospectus and Registration
Statement filed with the Securities and Exchange Commission.
7. The Optionee understands that except as provided in
Paragraph 5 above, the Company has not agreed to register
either the issuance or the resale of the Shares in
accordance with the provisions of the Securities Act of 1933
or to register either the issuance or the resale of the
Shares under any applicable State Securities Laws. Hence,
the Optionee agrees that by virtue of the provision of
certain rules respecting "restricted securities" promulgated
under such Federal and/or State Laws, unless the resale of
the Shares is registered as provided in Paragraph 5 above,
and until the registration of such Shares in accordance with
Paragraph 5 above shall have been declared effective by
order of the Commission, the Shares which the Optionee shall
purchase upon the exercise of this Option must be held
indefinitely and may not be sold, transferred, pledged,
hypothecated, or otherwise encumbered for value, unless and
until a secondary distribution and/or resale of such Shares
is subsequently registered under such Federal and/or State
Securities Laws, or unless an exemption from registration is
available, in which case the Optionee still may be limited
as to the amount of the Shares that may be sold,
transferred, pledged and/or encumbered for value. The
Optionee therefore agrees that, until the registration of
such Shares shall have been declared effective by order of
the Commission, the Company may affix upon any certificate
representing the Shares, a legend that such Shares may not
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be transferred in violation of Section 5 of the Securities
Act of 1933.
8. The Optionee understands and agrees that the
Shares to be acquired upon the exercise of the Option
may not be sold, transferred, exchanged, hypothecated,
encumbered, pledged or otherwise disposed of for value
for a period of six (6) months from the date of the
grant of this Option.
9. The Optionee understands that the Company has
established certain policies and procedures governing
trading in the Company's securities, including the
Shares to be acquired upon the exercise of this Option,
while in possession of material, inside information
regarding the Company and/or any of its subsidiaries.
The Optionee agrees that upon exercise of this Option,
either in whole or in part, he will comply with all of
the terms and conditions of such policy, including the
procedures and guidelines established for its
implementation. In particular, the Optionee agrees that
where required under such guidelines and procedures, he
will obtain permission of the Company's Clearinghouse
Committee composed of senior management prior to
effectuating any sale or other transfer for value of the
Shares to be acquired by virtue of the exercise of this
Option.
10. All the terms and provisions of the Plan, duly
adopted at a meeting of the Company's Board of Directors
on _______________, 1998 and approved by a majority vote
of the Company's shareholders either in person or by
proxy at a duly called meeting of such shareholders held
on _______________, 1998 and as amended to date, are
hereby expressly incorporated into this Agreement and
made a part hereof as if printed herein and the
Optionee, by the Optionee's signature hereon,
acknowledges receipt of a certified copy of said Plan.
If there shall be any conflict between this agreement
and the Plan, the provisions of the Plan shall control.
11. In accordance with certain terms and conditions
of the Plan, the aggregate number and kind of Shares
that may be purchased pursuant to the grant of the
Option under this Agreement shall be proportionately
adjusted for any increase, decrease or change in the
total number of the outstanding shares of the Company
resulting from a stock dividend, stock-split or other
corporate reorganization which would result in or have
the effect of the Optionee being treated differently
(but for the adjustment) than he would be treated had he
been the beneficial owner of the Shares subject to the
Option on the record date for such dividend, split or
reorganization, as the case may be.
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12. The Optionee understands that the Option
granted hereunder constitutes an "incentive stock
option" within the meaning of Section 422 of the
Internal Revenue Code. Consequently, under current
provisions of federal tax law, if the holding periods
set forth in this paragraph are observed, no income or
gain shall be recognized for regular income tax purposes
to the Optionee upon either the grant of the Option or
upon his exercise of all or a portion of the Option
granted hereunder. Upon the disposition of the Shares
of the Company acquired pursuant to exercise, long or
short term capital gain or loss will be recognized by
the Optionee, depending uon the holding period (eighteen
months for long term capital gain or loss) and the
extent to which the seling price exceeds or is less than
the Optionee's basis in the Shares.
The amount of gain will be taxed at normal,
ordinary tax rates, with a maximum rate of 20% if the
Shares are held for a period of at least eighteen
months. If the Shares are held for a period of at least
twelve months, the maximum rate on any gain from their
sale will be taxed at 28%.
To achieve this favorable income tax treatment,
the Optionee understands that he cannot dispose of any
Shares acquired pursuant to the exercise of the Option
granted hereunder for a period of two (2) years from the
date of the grant of this Option and for a period of one
(1) year from the date of exercise.
The Optionee also understands that for purposes of
the federal alternative minimum income tax calculation,
the difference between the exercise price and the fair
market value of the Shares on the date of exercise shall
be includible as an item of gross income for the taxable
year of exercise except to the extent that such Shares
are not transferable and are subject to a substantial
risk of forfeiture.
The Optionee also understands that the provisions
of federal tax law described herein are subject to
change and, consequently, the Optionee agrees to consult
with his or her own tax advisor with respect to the tax
treatment to be accorded the grant of the Option herein,
the exercise of such Option, and the disposition of the
Shares.
13. Consistent with the provisions of the Plan,
this Agreement shall be binding upon and inure to the
benefit of any successor or assignee of the Company and
to any executor, administrator, legal representative,
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legatee, or distributee entitled by law to the
Optionee's right hereunder.
14. Except insofar as an interpretation of federal
securities law otherwise is required, or is controlling,
this Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed on its behalf by its duly
authorized officer and the Optionee has hereunto set his
hand, as of the day and year first above written.
TORVEC, INC.
By:____________________
____________________,
,Optionee
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NOTICE OF EXERCISE OF STOCK OPTION
AND
RECORD OF STOCK TRANSFER
Torvec, Inc.
0000 Xxxxx 000
Xxxxxxxxxx, Xxx Xxxx 00000
Gentlemen:
I hereby exercise my Incentive Stock Option granted to
me by Torvec, Inc. under an Incentive Stock Option
Agreement dated _______________, subject to all the terms
and provisions thereof and of the Torvec, Inc. 1998 Stock
Option Plan referred to therein and notify you of my
desire to purchase Shares of the $.01 par
value Common Stock of the Company which were offered to
me pursuant to the Incentive Stock Option Agreement.
Enclosed is my payment in the sum of in
full payment of such Shares.
I understand that a Registration Statement covering
the Shares to be issued to me pursuant to this exercise
of the Option granted to me was filed with the Securities
and Exchange Commission on _______________. The
Registration Statement became effective on
_______________. Consequently, I understand that unless
I am an "affiliate" of the Company, the Shares I am
acquiring are freely tradeable and may be sold by me in
"open market" transactions. If I am an "affiliate" of
the Company, however, or have been one during the three
month period prior to sale, I recognize that I may not
sell freely on the open market and therefore agree that I
will consult the Company's counsel as to the securities
law restrictions on my ability to sell the Shares.
I also understand that under the Plan, and in
accordance with the terms of the Incentive Stock Option
Agreement, I may not sell, assign, alienate, pledge,
encumber or otherwise transfer for value the Shares
unless a period of six (6) months has elapsed from the
date of the grant of the Option to me.
I acknowledge that I am aware that the Company has
established a policy with respect to trading in its
securities while in possession of material inside
information regarding the Company and/or its
subsidiaries, and that, in accordance with certain
guidelines and procedures designed to implement such
policy, I may be required to obtain permission from a
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Clearinghouse Committee, composed of Senior Management,
prior to any sale or other transfer for value of the
Shares hereby acquired.
I also acknowledge that I have received and have read
the Prospectus dated _______________ prepared by the
Company in connection with the grant of the Option
contained herein, together with its exhibits, and all
proxy and other shareholder communications, including the
annual report to security holders, for the most recently
completed fiscal year and all quarterly and current
updates thereof. I acknowledge that I have received all
documents incorporated by reference in the Prospectus and
the Registration Statement filed with the Securities and
Exchange Commission that I requested and have read the
same. I acknowledge that I have had the opportunity to
ask questions of and receive answers from the Company's
management concerning the information set forth in such
Prospectus, reports and updates and have been satisfied
with the answers provided regarding the same.
Finally, I acknowledge that there are significant
federal income tax consequences resulting from my
exercise of this Option, that I have consulted with and
received advice from qualified tax counsel both as to the
nature of such tax consequences and their impact upon my
own personal income tax situation as the result of such
exercise, and that I fully understand such impact and
have planned accordingly.
DATED: __________________________
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Receipt is hereby acknowledged of the delivery to me by
Torvec, Inc. on , 19 of stock
certificates for shares of $.01 par value common
stock purchased by me pursuant to the terms and conditions of
the Torvec, Inc. 1998 Stock Option Plan referred to above.
DATED: ______________________
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