STOCK OPTION AGREEMENT
[Employee Incentive Stock Option Agreement Under Plan]
AGREEMENT, dated March 29, 2000 by and between PRIME CELLULAR, INC. a
Delaware corporation (the "Company"), and Xxxxx X. Xxx (the "Employee" or
"Holder").
WHEREAS, simultaneously herewith, Sentigen Corp., a wholly-owned subsidiary
of the Company, has entered into an Employment Agreement ("Employment
Agreement"), with Employee pursuant to which Employee is entitled to the grant
of an option to purchase an aggregate of 200,000 shares of the authorized but
unissued Common Stock of the Company, $.01 par value (the "Common Stock")
pursuant to the terms and conditions of the Company's 2000 Performance Equity
Plan (the "Plan") (capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Plan);
WHEREAS, pursuant to the terms and conditions of the Plan, the Board of
Directors of the Company or the Committee authorized the grant to the Employee
of the Option, conditioned upon the Employee's acceptance thereof upon the terms
and conditions set forth in this Agreement; and
WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants Employee the Option to
purchase all or any part of an aggregate of 200,000 shares of Common Stock (the
"Option Shares") on the terms and conditions set forth herein and subject to the
provisions of the Plan.
2. Incentive Stock Option. Options to purchase up to 20,000 shares of
Common Stock in any one year period are intended to be Options that qualify as
"Incentive Stock Options" under Section 422 of the Internal Revenue Code of
1986, as amended (the "Code"), such amount being the maximum amount permitted by
such section.
3. Exercise Price. The exercise price of the Option shall be $5.00 per
share, subject to adjustment as hereinafter provided.
4. Exercisability. This Option shall vest and become exercisable in four
(4) equal annual installments, commencing on March 29, 2000, subject to the
terms and conditions of the Plan and this Agreement. After a portion of the
Option becomes exercisable, it shall remain exercisable except as otherwise
provided herein, until the close of business on March 29, 2005 ("Exercise
Period").
5. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of Employee for Federal income tax purposes
with respect to the Option, Employee may be required to pay to the Company, or
make arrangements satisfactory to the Company regarding the payment of any
Federal, state and local taxes of any kind required by law to be withheld or
paid with respect to such amount. The obligations of the Company under the Plan
and pursuant to this Agreement shall be conditional upon such payments or
arrangements with the Company, if such payments or arrangements are required,
and the Company shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to Employee from the
Company.
6. Adjustments.
(a) In the event of a stock split, stock dividend, combination of
shares, or any other similar change in the Common Stock of the Company as a
whole, the Board of Directors of the Company shall make equitable, proportionate
adjustments in the number and kind of shares covered by the Option and in the
option price hereunder.
(b) In the event of any reclassification or reorganization of the
outstanding shares of Common Stock other than a change covered by subsection (a)
hereof or that solely affects the par value of such shares of Common Stock, or
in the case of any merger or consolidation of the Company with or into another
corporation (other than a consolidation or merger in which the Company is the
continuing corporation and that does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), the Holder shall have
the right thereafter (until the expiration of the right of exercise of this
Option) to receive upon the exercise hereof after such event, for the same
aggregate Exercise Price payable hereunder immediately prior to such
reclassification, reorganization, merger or consolidation the amount and kind of
consideration receivable by a holder of the number of shares of Common Stock of
the Company obtainable upon exercise of this Option immediately prior to such
event. The provisions of this subsection (b) shall similarly apply to successive
reclassifications, reorganizations, mergers or consolidations, sales or other
transfers.
7. Effect of Termination of Employment.
(a) Termination Due to Death. If Employee's employment by the Company
terminates by reason of death, the portion of the Option, if any, that was
exercisable as of the date of death may thereafter be exercised by the legal
representative of the estate or by the legatee of the Employee under the will of
the Employee, for a period of one year from the date of such death or until the
expiration of the Exercise Period, whichever period is shorter. The portion of
the Option, if any, that was not exercisable as of the date of death shall
immediately expire.
(b) Termination Due to Disability. If Employee's employment by the
Company terminates by reason of disability (as such term is defined in the
Plan), the portion of the Option, if any, that was exercisable as of the date of
disability may thereafter be exercised by the Employee for a period of one year
from the date of such termination or until the expiration of the Exercise
Period, whichever period is shorter. The portion of the Option, if any, that was
not exercisable as of the date of termination shall immediately expire.
(c) Termination by the Company Without Cause and/or Due to Retirement.
If Employee's employment is terminated by the Company without "Cause" (as such
term is defined in the Employment Agreement) or due to the normal retirement of
Employee after his 65th birthday, then the portion of the Option that has vested
by the date of termination of employment may be exercised for a period of three
months from termination of employment or until the expiration of the Exercise
Period, whichever is shorter. The portion of the Option, if any, that was not
exercisable as of the date of termination of employment shall immediately
expire.
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8. Other Termination.
(a) If Employee's employment is terminated for any reason other than
(i) death, (ii) disability, or (iii) without "Cause" (as such term is defined in
the Employment Agreement) by the Company, the Option, whether or not then
exercisable, shall expire on the date of termination of employment.
(b) The Board of Directors of the Company or the Committee, in the
event the Employee's employment is terminated for "Cause" (as such term is
defined in the Employment Agreement), may require the Employee to return to the
Company the economic benefit of any Option Shares purchased hereunder by the
Employee within the six month period prior to the date of termination. In such
event, the Employee hereby agrees to remit to the Company, in cash, an amount
equal to the difference between the Fair Market Value (on the date of
termination) of the Option Shares so purchased by Employee (or the sales price
of such Option Shares if the Option Shares were sold during such six month
period) and the Exercise Price.
(c) Competing With the Company. In the event that after the term of
his employment with the Company, Employee engages in activities that violate the
prohibitions set forth in Section 5.4 of the Employment Agreement (even if such
provisions are deemed unenforceable by a court of law), the Committee, in its
sole discretion, may require such Employee to return to the Company the economic
value of any Option Shares purchased hereunder by the Employee within the
six-month period prior to the date of termination. In such event, Employee
agrees to remit the economic value to the Company in accordance with Section
8(b).
9. Method of Exercise.
(a) Notice to the Company. The Option may be exercised in whole or in
part by written notice in the form attached hereto as Exhibit A directed to the
Company at its principal place of business accompanied by full payment as
hereinafter provided of the exercise price for the number of Option Shares
specified in the notice.
(b) Delivery of Option Shares. The Company shall deliver a certificate
for the Option Shares to the Employee as soon as practicable after payment
therefor.
10. Payment of Purchase Price.
(a) Cash Payment. The Employee shall make cash payments by wire
transfer, certified or bank check or personal check, in each case payable to the
order of the Company. The Company shall not be required to deliver certificates
for Option Shares until the Company has confirmed the receipt of good and
available funds in payment of the purchase price thereof.
(b) Cashless Payment. The Company, in its sole discretion, may allow
Employee to use Common Stock of the Company owned by him to pay the purchase
price for the Option Shares by delivery of stock certificates in negotiable form
that are effective to transfer good and valid title thereto to the Company, free
of any liens or encumbrances. Shares of Common Stock used for this purpose shall
be valued at the Fair Market Value on the last trading day preceding the date of
exercise.
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(c) Payment of Withholding Tax. Any required withholding tax may be
paid in cash or with Common Stock in accordance with Sections 5, 10(a) and
10(b).
(d) Exchange Act Compliance. Notwithstanding the foregoing, the
Company shall have the right to reject payment in the form of Common Stock if in
the opinion of counsel for the Company, (i) it could result in an event of
"recapture" under Section 16(b) of the Securities Exchange Act of 1934, as
amended ("Exchange Act"); (ii) such shares of Common Stock may not be sold or
transferred to the Company; or (iii) such transfer could create legal
difficulties for the Company.
11. Nonassignability. The Option shall not be assignable or transferable,
without the consent of the Company, except by will or by the laws of descent and
distribution in the event of the death of the Employee. No transfer of the
Option by the Employee by will or by the laws of descent and distribution shall
be effective to bind the Company unless the Company shall have been furnished
with written notice thereof and a copy of the will and/or such other evidence as
the Company may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions of the
Option.
12. Company Representations. The Company hereby represents and warrants to
the Employee that:
(a) the Company, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the transactions
contemplated hereunder; and
(b) the Option Shares, when issued and delivered by the Company to the
Employee in accordance with the terms and conditions hereof, will be duly and
validly issued and fully paid and non-assessable.
13. Employee Representations. The Employee hereby represents and warrants
to the Company that:
(a) he or she is acquiring the Option and shall acquire the Option
Shares for his or her own account and not with a view towards the distribution
thereof;
(b) he or she has received a copy of the Plan as in effect as of the
date of this Agreement;
(c) he or she has received a copy of all reports and documents
required to be filed by the Company with the Securities and Exchange Commission
pursuant to the Exchange Act within the last 24 months and all reports issued by
the Company to its stockholders;
(d) he or she understands that he or she must bear the economic risk
of the investment in the Option Shares, which cannot be sold by him unless they
are registered under the Securities Act of 1933, as amended (the "Securities
Act") or an exemption therefrom is available thereunder and that the Company is
under no obligation to register the Option Shares for sale under the Securities
Act;
(e) in his or her position with the Company, he or she has had both
the opportunity to ask questions and receive answers from the officers and
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directors of the Company and all persons acting on its behalf concerning the
terms and conditions of the offer made hereunder and to obtain any additional
information to the extent the Company possesses or may possess such information
or can acquire it without unreasonable effort or expense necessary to verify the
accuracy of the information obtained pursuant to clause (iii) above;
(f) he or she is aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Option Shares in the
absence of registration under the Securities Act or an exemption therefrom as
provided herein; and
(g) the certificates evidencing the Option Shares shall bear the
following legends:
"The shares represented by this certificate have been acquired for
investment and have not been registered under the Securities Act of
1933. The shares may not be sold or transferred in the absence of such
registration or an exemption therefrom under said Act."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of March 29, 2000, a
copy of which is on file with the Company, and may not be transferred,
pledged or disposed of except in accordance with the terms and
conditions thereof."
14. Restriction on Transfer of Option Shares.
(a) Anything in this Agreement to the contrary notwithstanding,
Employee hereby agrees that he shall not sell, transfer by any means or
otherwise dispose of the Option Shares acquired by him without registration
under the Securities Act, or in the event that they are not so registered,
unless (i) an exemption from the Securities Act registration requirements is
available thereunder, and (ii) the Employee has furnished the Company with
notice of such proposed transfer and the Company's legal counsel, in its
reasonable opinion, shall deem such proposed transfer to be so exempt.
(b) Anything in this Agreement to the contrary notwithstanding,
Employee hereby agrees that he shall not sell, transfer by any means or
otherwise dispose of the Option Shares acquired by him except in accordance with
the Company's policy, if any, regarding the regarding the sale and disposition
of securities owned by employees and/or directors of the Company.
15. Miscellaneous.
(a) Notices. All notices, requests, deliveries, payments, demands and
other communications that are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier, return receipt
requested, to the parties at their respective addresses set forth herein, or to
such other address as either shall have specified by notice in writing to the
other. Notice shall be deemed duly given hereunder when delivered or mailed as
provided herein.
(b) Plan Paramount; Conflicts with Plan. This Agreement and the Option
shall, in all respects, be subject to the terms and conditions of the Plan,
whether or not stated herein. In the event of a conflict between the provisions
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of the Plan and the provisions of this Agreement, the provisions of the Plan
shall in all respects be controlling.
(c) Employee and Stockholder Rights. Employee shall not have any of
the rights of a stockholder with respect to the Option Shares until such shares
have been issued after the due exercise of the Option. Nothing contained in this
Agreement shall be deemed to confer upon Employee any right to continued
employment with the Company or any subsidiary thereof, nor shall it interfere in
any way with the right of the Company or any subsidiary thereof to terminate
Employee in accordance with the provisions regarding such termination set forth
in Employee's written employment agreement, or if there exists no such
agreement, to terminate Employee at will.
(d) Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver
of any other or subsequent breach.
(e) Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended except by writing executed by the Employee and the Company.
(f) Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives, any rights, remedies,
obligations or liabilities.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York (without regard to choice
of law provisions); provided, however, that all matters relating to or involving
corporate law shall be governed by the Delaware General Corporation Law.
(h) Headings. The headings contained herein are for the sole purpose
of convenience of reference and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
THE NEXT PAGE IS THE SIGNATURE PAGE
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written:
PRIME CELLULAR, INC. Address: 000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxxxx 00000
/s/ Xxxxxx X. Xxxxxx
By: ___________________________
Xxxxxx X. Xxxxxx
Chairman of the Board
and President
EMPLOYEE: Address: 000 Xxxx 000xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
/s/ Xxxxx Xxx
______________________________
Xxxxx Xxx
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
----------------------------
DATE
PRIME CELLULAR, INC.
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Stock Option Committee of
the Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of March 29, 2000
("Agreement") with Prime Cellular, Inc. (the "Company"), I hereby irrevocably
elect to exercise the right to purchase _________ shares of the Company's common
stock, par value $.01 per share ("Common Stock"), which are being purchased for
investment and not resale.
As payment for my shares, enclosed is (check and complete applicable
box[es]):
|_| a [personal check] [certified check] [bank check] payable to the order
of the Company in the sum of $_________;
|_| confirmation of wire transfer in the amount of $_____________; and/or
|_| with the consent of the Company, a certificate for __________ shares
of the Company's Common Stock, free and clear of any encumbrances,
duly endorsed, having a Fair Market Value (as such term is defined in
the Company's 2000 Performance Equity Plan) of $_________.
I hereby represent and warrant to, and agree with, the Company that:
(i) I am acquiring the shares of Common Stock ("Option Shares") for my
own account, for investment, and not with a view towards the distribution
thereof;
(ii) I have received a copy of the Plan and all reports and documents
required to be filed by the Company with the Commission pursuant to the
Securities Exchange Act of 1934, as amended within the last 24 months and all
reports issued by the Company to its stockholders;
(iii) I understand that I must bear the economic risk of the
investment in the Option Shares, which cannot be sold by me unless they are
registered under the Securities Act of 1933, as amended (the "Securities Act")
or an exemption therefrom is available thereunder and that the Company is under
no obligation to register the Option Shares for sale under the Securities Act;
(iv) I agree that I will not sell, transfer by any means or otherwise
dispose of the Option Shares acquired by me hereby except in accordance with
Company's policy, if any, regarding the sale and disposition of securities owned
by employees and/or directors of the Company;
(v) in my position with the Company, I have had both the opportunity
to ask questions and receive answers from the officers and directors of the
Company and all persons acting on its behalf concerning the terms and conditions
of the offer made hereunder and to obtain any additional information to the
extent the Company possesses or may possess such information or can acquire it
without unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to clause (ii) above;
(vi) I am aware that the Company shall place stop transfer orders with
its transfer agent against the transfer of the Option Shares in the absence
of registration under the Securities Act or an exemption therefrom as
provided herein;
(vii) my rights with respect to the Option Shares shall, in all
respects, be subject to the terms and conditions of the Company's 2000
Performance Equity Plan and this Agreement; and
(viii) the certificates evidencing the Option Shares shall bear the
following legends:
"The shares represented by this certificate have been acquired
for investment and have not been registered under the Securities
Act of 1933. The shares may not be sold or transferred in the
absence of such registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been acquired
pursuant to a Stock Option Agreement, dated as of March 29, 2000,
a copy of which is on file with the Company, and may not be
transferred, pledged or disposed of except in accordance with the
terms and conditions thereof."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
--------------------------------- -----------------------------------
(Signature) (Address)
---------------------------------- -----------------------------------
(Print Name)
-----------------------------------
(Social Security Number)
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