STOCK OPTION AGREEMENT
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STOCK OPTION AGREEMENT, dated as of August 15, 1996 (the "Effective Date")
between Viragen, Inc. a Delaware Corporation (the "Company") and Xxxxxx Xxxxxxx
("Optionee").
The Company, hereby grants to Optionee a Non-Statutory Option ("NSO") to acquire
Common Stock, par value $.01 per share, of the Company (the "Common Stock"),
subject to the following terms and conditions:
1. GRANT OF OPTION. The Company hereby grants to Optionee an NSO (the
"Option") to purchase up to 150,000 shares (30,000 options issued pursuant to
the provisions of the Company's 1995 Stock Option Plan (the "1995 Plan")) of
Common Stock (the "Shares"), to be transferred upon the exercise thereof, fully
paid and nonassessable.
2. EXERCISE PRICE. The exercise price of the Shares subject to the
Option shall be $2.79 per share. The Company shall pay all original issue or
transfer taxes upon the exercise of the Option by Optionee.
3. EXERCISABILITY OF OPTION; RIGHTS AND PRIVILEGES. Subject to the
provisions of Paragraph 6 hereof, the Option shall be exercisable by Optionee in
whole or in part, at any time and from time to time, commencing from the
Effective Date for a period of five (5) years.
All granted but unexercised Options shall continue to be fully exercisable in
accordance with the provisions herein:
(i) if there occurs any corporate transaction (which shall
include a series of corporate transactions occurring within 60 days or occurring
pursuant to a plan), that has the result that shareholders of the Company
immediately before such transaction cease to own at least 66 2/3 percent of the
voting stock of the Company in a (a) reorganization, (b) consolidation, (c)
merger, (d) liquidation or (e) a similar of corporate transaction;
(ii) if the shareholders of the Company shall approve a plan
of merger, consolidation, reorganization, liquidation or dissolution in which
the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(iii) if the shareholders of the Company shall approve a plan
for the sale, lease, exchange or other disposition of all or substantially all
the property and assets of the Company (unless such plan is subsequently
abandoned).
4. NON-ASSIGNABILITY OF OPTION. The Option shall not be given, granted,
sold, exchanged, transferred, pledged, encumbered, assigned or otherwise
disposed of by Optionee, other than by will or the laws of descent and
distribution, and during the lifetime of Optionee, shall not be exercisable by
any other person, but only by Optionee.
5. METHOD OF EXERCISE OF OPTION. Optionee shall notify the Company by
written notice, in the form of the Notice of Exercise attached hereto
(Attachment A), delivered to the Company's principal office, attention: Chief
Financial Officer. At the Optionee's option, the payment for the Shares may be
made either by Optionee's check payable to the order to the Company in full
payment for the total exercise price of the number of Shares purchased or by
execution and delivery by the Optionee to the Company of a Note(s), in similar
form and content as Notes previously used by the Company for similar purposes
("Note(s)"), dated as of each Notice of Exercise. As soon as practicable after
the receipt of such Notice of Exercise and accompanying payment for the purchase
of Shares, the Company shall, at its principal office, tender to Optionee a
certificate or certificates issued in Optionee's name evidencing the Shares
purchased by Optionee hereunder.
6. TERMINATION OF OPTION. To the extent exercisable but not
exercised, the Option shall terminate upon the first to occur of the
following dates:
(a) five (5) years from the Effective Date as defined herein; or
(b) the expiration of ninety (90) days following the date Optionee's
employment terminates with the Company and/or any of its subsidiaries included
in the Plan with Cause, as defined in Optionee's Employment Agreement.
Subject to the provisions of this paragraph, in the event of Optionee's death,
the exercisable but unexercised portion of the Option may be exercised by the
estate of Optionee, or by the person who acquired the right to exercise the
Option by bequest or inheritance or by reason of the death of Optionee.
In the event of Optionee's termination without Cause, all granted but
unexercised Options shall continue to be fully exercisable in accordance with
the provisions herein. Additionally, in the event this Agreement is not renewed
at the end of the Optionee's Employment Term, then all granted but unexercised
Options shall continue to be fully exercisable in accordance with the provisions
herein.
7. PLEDGE OF SHARES. If payment for the purchase of Shares under this
Option is made through execution and delivery of a Note(s), effective upon
Optionee's purchase(s) of the Shares and the delivery of the Note(s), in order
to secure the Company's obligations under the Note(s), Optionee hereby pledges,
assigns and sets over to the Company, and grants to the Company a security
interest in, the Shares. The Shares pledged pursuant hereto shall be maintained
in escrow with Atlas, Xxxxxxxx, Trop & Borkson, P.A. pursuant to the terms of a
Pledge and Escrow Agreement previously used by the Company for similar purposes,
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which shall be executed by Optionee and the Company upon delivery of a Note(s).
As long as any Shares remain subject to the lien of the Pledge, such Shares may
not be further pledged or encumbered in any manner, and shall not be sold,
transferred or otherwise disposed of. The Escrow Agent shall not be required to
relinquish the Pledge or the Escrow Agent's possession of the certificates
evidencing the Shares, unless no later than concurrently with the sale of the
Shares pursuant to the current S-8 registration, (to the extent of the 30,000
options included in the 1995 Plan or any future registration which includes the
120,000 options not included in the 1995 Plan) all Notes which are secured by
such Shares are paid in full. In the event any of the Shares are to be titled in
the name of an immediate family member of Optionee or a trust pursuant to the
terms herein, as a condition thereto the designated title holder(s) of such
Shares shall execute and deliver to the Company a pledge and escrow agreement,
in form and content reasonably satisfactory to the Company and its counsel,
consistent with the terms herein. No transfer of Shares to, or designation by
Optionee of (for the purposes of owning Shares) any person or entity shall
relieve Optionee of any of his obligations under the Note(s) or this Agreement.
With respect to each Note under which a voluntary prepayment is made by
Optionee, provided that interest payments on such Note are current through the
date of prepayment and such Note is not in default and has not been accelerated,
for each $27,900 of principal paid by Optionee under such Note, 10,000 Shares of
the Shares pledged to secure such Note shall be released from the lien of the
Pledge. As long as no event of default has occurred with respect to a Note and
no event giving right to accelerate such Note has occurred, Optionee shall
retain all voting rights with respect to all Shares securing such Note.
Following an event of default or an acceleration event, the Company shall have
and may exercise all voting rights with respect to such Shares. Optionee hereby
irrevocably appoints the Company Optionee's attorney-in-fact for such purpose,
it being acknowledged that such appointment is coupled with an interest. Any
dividends or distributions payable in respect of any Shares subject to the
Pledge shall automatically be applied to pay down the Note(s) in inverse order
of their respective maturity date(s). In the event of a default under any Note,
in addition to and not in limitation or lieu of any other rights or remedies the
Company may have against Optionee as a result of such default, the Company may
exercise all of its rights at law and in equity as a secured party, including
without limitation under the Uniform Commercial Code, with respect to all Shares
then securing the Note with respect to which the default has occurred. Upon a
default, without limiting any of the Company's other rights and remedies, the
Company may conduct a public or private foreclosure sale of the Shares securing
the Note with respect to which the default has occurred. Optionee agrees that 10
days notice to him of any private sale is fair and reasonable. The Company may
be the purchaser at any public foreclosure sale, and may bid any commercially
reasonable amount at such sale. In all events, in the event of a public or
private foreclosure sale, Optionee shall be liable for any deficiency. All of
the Company's rights and remedies under the Note(s), the Pledge and this
Agreement, and at law or in equity, are cumulative, and none is intended to be
in substitution or in lieu of, nor is the exercise of one intended to be a
waiver of, any other. The Company shall have no obligation to proceed against
the Shares before proceeding against Optionee with respect to any default under
any of the Notes.
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8. PIGGYBACK REGISTRATION RIGHTS. The Company hereby grants Piggyback
Registration Rights to Optionee with respect to any registration statement filed
by the Company on Form X-0, X-0, X-0, or SB-2 following the Effective Date for
any and all shares purchased by Optionee hereunder. In the event that the
Option(s) has not been exercised, in whole or in part, the Company agrees to
include in such registrations any and all such shares underlying the Option(s).
In the case of any registrations pursuant to this Paragraph 8, the Company (i)
will keep Optionee advised as to the initiation and progress of proceedings for
such registrations and as to the completion thereof and (ii) at its expense will
keep such registrations effective for a period of at least nine months from the
initial effective date of the registrations. Optionee agrees to provide such
information to the Company as is reasonably requested by the Company which the
Company believes is necessary in order for the Company to register the stock,
and Optionee shall execute such documents, certificates and other instruments as
the Company reasonably determines is necessary or appropriate in connection
therewith.
9. INCLUSION IN FUTURE STOCK OPTION PLANS. To the extent permitted by
Federal Securities Regulations and Internal Revenue Service guidelines, the
Company intends to include Optionees 120,000 options (not included in the 1995
Plan) in any Stock Option Plan established by the Company and approved by
shareholders subsequent to the effective date.
10. SECURITIES LAWS. The Company represents and warrants that with respect
to 30,000 options (i) the shares underlying the Options will be issued from
shares authorized by and subject to the provisions of the 1995 Plan (ii) the
1995 Plan and the shares underlying the Options have been registered under the
applicable regulations of the Securities and Exchange Commission on Form S-8
(iii) such registration is effective as of the Effective Date, and (iv) such
registration covering the shares underlying the Options will be maintained as
effective for the longer of (a) the Employment Term as stated in Optionee's
Employment Agreement or (b) the Exercise Period of the Options as defined
herein.
11. ADJUSTMENT OF SHARES. If at any time prior to the expiration or
exercise in full of the Option, there shall be any increase or decrease in the
number of issued and outstanding shares of the Common Stock through the
declaration of a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of the Common Stock, then and in such
event:
(i) appropriate adjustment shall be made in the maximum number of
Shares available for grant, so that the same percentage of the Company's issued
and outstanding Shares shall continue to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the number of Shares,
and the exercise price per Share thereof, that remain unexercised under the
Option, so that the same percentage of the Company's issued and outstanding
shares of Common Stock shall remain subject to purchase at the same aggregate
exercise price.
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Except as otherwise expressly provided herein, the issuance by the Company of
shares of its capital stock of any class, or securities convertible into shares
of capital stock of any class, either in connection with a direct sale of upon
the exercise of rights or warrants to subscribe therefore, or upon conversions
of shares or obligations the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number of exercise price of the Shares that remain
unexercised under the Option.
Without limiting the generality of the foregoing, the existence of unexercised
Shares under the Option shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business; (ii) any merger or consolidation of the Company;
(iii) any issue by the Company of debt securities, or preferred or preference
stock that would rank above the Shares issuable upon exercise of the Option;
(iv) the dissolution or liquidation of the Company; (v) any sale, transfer or
assignment of all or any part of the assets or business of the Company; or (vi)
any other corporate act or proceeding, whether of a similar character or
otherwise.
12. NO RIGHTS AS STOCKHOLDER. Optionee shall have no rights as a
stockholder of the Company in respect of the Shares as to which the Option shall
not have been exercised and payments made therefore as herein provided.
13. BINDING EFFECT. Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
heirs, legal representatives, successors and permitted assigns. Optionee
acknowledges that Optionee has read and understands the Plan and agrees to abide
by its terms.
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14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the conflict of laws principles thereof. All terms not defined in this Agreement
shall have the same meaning as in the Plan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
VIRAGEN, INC.
By: /S/ XXXXXX X. XXXXXX
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Xxxxxx X. Xxxxxx
Executive Vice President
OPTIONEE
By: /S/ XXXXXX XXXXXXX
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Xxxxxx Xxxxxxx
