Form of ] STOCK OPTION AGREEMENT Under the Intellect Neurosciences, Inc. 2005 Stock Option Plan
Exhibit 4.2
[ Form
of ]
THIS AGREEMENT
dated as of the [DAY] day of [MONTH],
200___, between Intellect Neurosciences, Inc., a
Delaware Corporation (the “Company”), and [DIRECTOR] (the “Optionee”).
W I T N E S S E T H:
In consideration of the mutual promises and covenants made herein and
the mutual benefits to be derived herefrom, the parties hereto agree as follows:
1. Grant of Stock Option. Subject to the provisions of this Agreement and to
the provisions of the Intellect Neurosciences, Inc. 2005 Stock Option Plan (the “Plan”), the
Company hereby grants to the Optionee as of [DATE] (the “Grant Date”) the right and option (the
“Stock Option”) to purchase [NUMBER] shares of common stock of the Company, par value $0.001 per
share (“Common Stock”), at the fair market value of such shares on the Grant Date. The fair market
value of the Company’s common shares as of [DATE] shall be determined by CBIZ Valuation Group, LLC,
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Committee of the Company, and their determination shall be final for purposes of this Agreement.
Unless earlier terminated pursuant to the terms of this Agreement, the Stock Option shall
expire on the tenth anniversary of the date hereof. Capitalized terms not defined herein shall have
the meaning set forth in the Plan.
2. Exercisability of the Stock Option. The Stock Option shall become vested and
exercisable with respect to the shares covered thereby as follows: [NUMBER] Stock Options shall
vest on the Grant Date and the remaining [NUMBER] Stock Options shall vest on a monthly basis pro
rata over the 20 month period beginning on the Grant Date. Upon the Optionee’s termination of
service as a director of, or consultant to the Company for any reason, the portion of the Stock
Option that is not vested as of such date shall cease vesting and terminate immediately. The
portion of the Stock Option, if any, which is exercisable at the time of such termination may be
exercised prior to the first to occur of (a) the expiration of the 180 day period commencing on the
date of termination or (b) the expiration date of the Stock Option.
3. Method of Exercise of the Stock Option.
(a) The portion of the Stock Option as to which the Optionee is vested shall be
exercisable by delivery to the Company of a written or electronic notice stating the number of
whole shares to be purchased pursuant to this Agreement and accompanied by payment of the full
purchase price of the shares of Common Stock to be purchased. Fractional share interests shall be
disregarded except they may be accumulated.
(b) The exercise price of the Stock Option shall be paid: (i) in cash or by
certified check or bank draft payable to the order of the Company; (ii) by exchange of shares of
unrestricted Common Stock of the Company already owned by the Optionee (that have been held by the
Optionee for six (6) months prior to exercise or which were acquired in the open market) and having
an aggregate fair market value equal to the aggregate purchase price, provided, that the Optionee
represents and warrants to the Company that the Optionee has held the shares of Common Stock free
and clear of liens and encumbrances and has held the shares for at least six (6) months prior to
exercise or that such shares were acquired in the open market; (iii) by delivering, along with a
properly executed exercise notice to the Company, a copy of irrevocable instructions to a broker to
deliver promptly to the Company the aggregate exercise price and, if requested by the Optionee, the
amount of any applicable federal, state, local or foreign withholding taxes required to be withheld
by the Company, provided, however, that such exercise may be implemented solely under a program or
arrangement established and approved by the Company with a brokerage firm selected by the Company;
(iv) by promissory note; or (v) by any other procedure approved by the Compensation Committee of
the Company, or by a combination of the foregoing.
4. Change in Control
In the event of a “Change in Control of the Company,” all Stock Options granted under the
Plan and outstanding at the time thereof shall become immediately vested. A “Change in Control of
the Company” shall be deemed to have occurred if (i) there is consummated (x) any consolidation or
merger of the Company in which the Company is not the continuing or surviving corporation or
pursuant to which shares of the Common Stock are converted into cash, securities or other property,
other than a merger of the Company in which the holders of the Common Stock immediately prior to
the merger have the same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (y) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all, of the assets of the
Company, (ii) the stockholders of the Company approve any plan or proposal for liquidation or
dissolution of the Company, (iii) any person (as such term is used in Section 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), becomes the beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of 40% or more of the Common Stock
outstanding other than pursuant to a plan or arrangement entered in by such person and the Company
or (iv) during any period of two consecutive years, individuals who at the beginning of such period
constitute the entire Board cease for any reason to constitute a majority thereof unless the
election, or the nomination for election by the Company’s stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office who were directors
at the beginning of the period.
5. Death or Disability of Optionee.
(a) In the event of the Optionee’s termination of service as a Director or consultant due to
death (or, in the event of the Optionee’s death following termination of service while the Stock
Option remains exercisable) the portion of the Stock Option, if
any, which is exercisable at the time of death may be exercised by the Optionee’s estate or
by a person who acquired the right to exercise such Stock Option by bequest or inheritance or
otherwise by reason of the death of the Optionee at any time on or prior to the first to occur of
(i) the anniversary of the date of death or (ii) the expiration date of the Stock Option.
(b) In the event of the Optionee’s termination of service as a director or consultant
due to Disability, the portion of the Stock Option, if any, that is exercisable at the time of such
termination may be exercised by the Optionee or the Optionee’s guardian or legal representative at
any time on or prior to the first to occur of (i) the anniversary of such termination of employment
or (ii) the expiration date of the Stock Option.
6. Nontransferability of the Stock Option. The Stock Option is
non-transferable by the Optionee other than by will or the laws of descent and
distribution, or pursuant to a qualified domestic relations order, and the Stock Option
may be exercised, during the lifetime of the Optionee, only by the Optionee or by the
Optionee’s guardian or legal representative or any transferee described above.
7. Rights as a Stockholder. An Optionee or a transferee of the Stock
Option shall have no rights as a stockholder with respect to any shares covered by such
Stock Option until the date that his or her purchase is entered upon the records of the duly
authorized transfer agent of the Company. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or distribution of
other rights for which the record date is prior to the date a stock certificate is issued,
except as provided in the Plan.
8. Adjustment in the Event of Change in Stock. In the event of any
change in corporate capitalization, (including, but not limited to, a change in the number
of shares of Common Stock outstanding), such as a stock split, reverse stock split, stock
dividend, combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt of
consideration by the Company, the number and kind of shares subject to the Stock Option
and/or the exercise price per share will be appropriately adjusted by the Compensation
Committee of the Company consistent with such change and consistent with adjustments
made under the Plan for other Plan participants who have an outstanding Stock Option.
The determination of the Compensation Committee of the Company regarding any
adjustment will be final and conclusive.
9.
Payment of Transfer Taxes, Fees and Other Expenses. The
Company agrees to pay any and all original issue taxes and stock transfer taxes that may
be imposed on the issuance of shares acquired pursuant to exercise of the Stock Option,
together with any and all other fees and expenses necessarily incurred by the Company in
connection therewith. Notwithstanding the foregoing, the Optionee shall be solely
responsible for any other taxes (including, without limitation, federal, state, local or
foreign income, social security, estate or excise taxes) that may be payable as a result of
the Optionee’s participation in the Plan or as a result of the exercise of the Stock Option
and/or the sale, disposition or transfer of any shares of Common Stock acquired upon the
Optionee’s exercise of the Stock Option.
10. Other Restrictions. The exercise of the Stock Option shall be
subject to the requirement that, if at any time the Compensation Committee shall
determine that (i) the listing, registration or qualification of the shares of Common Stock
subject or related thereto upon any securities exchange or under any state or federal law,
or (ii) the consent or approval of any government regulatory body or (iii) an agreement
by the Optionee with respect to the disposition of shares of Common Stock, is necessary
or desirable as a condition of, or in connection with, such exercise or the delivery or
purchase of shares pursuant thereto, then in any such event, such exercise shall not be
effective unless such listing, registration, qualification, consent, approval or agreement
shall have been effected or obtained free of any conditions not acceptable to the
Compensation Committee.
The Company may, but will in no event be obligated to, register any securities issuable upon
the exercise of all or any portion of the Stock Option pursuant to the Securities Act of 1933 (as
now in effect or as hereafter amended) or to take any other affirmative action in order to cause
the exercise of the Stock Option or the issuance of shares pursuant thereto to comply with any law
or regulation of any governmental authority. The certificates representing shares issued to
Optionee hereunder shall bear such legends as Company determines appropriate referring to
restrictions on the transfer of such shares imposed by this Agreement and such other legends as are
required or appropriate under applicable law.
11. Taxes and Withholding. No later than the date of exercise of the
Stock Option granted hereunder, the Optionee shall pay to the Company or make
arrangements satisfactory to the Committee regarding payment of any federal, state or
local taxes of any kind required by law to be withheld upon the exercise of such Stock
Option and the Company shall, to the extent permitted or required by law, have the right
to deduct from any payment of any kind otherwise due to the Optionee, federal, state and
local taxes of any kind required by law to be withheld upon the exercise of such Stock
Option.
12. Notices. All notices and other communications under this
Agreement shall be in writing and shall be given by hand delivery to the other party or by
facsimile, overnight courier, or registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to the Optionee:
[name]
[address]
[address]
If to the Company:
Attn:
Office of the Controller
Intellect Neurosciences, Inc.
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Intellect Neurosciences, Inc.
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or to such other address or facsimile number as any party shall have furnished to the
other in writing in accordance with this Section 13. Notice and communications shall be
effective when actually received by the addressee.
13. Effect of Agreement. Except as otherwise provided hereunder, this
Agreement shall be binding upon and shall inure to the benefit of any successor or
successors of the Company, and shall inure to the benefit of any transferee or successor
of the Optionee pursuant to Sections 4 and 5 of this Agreement.
14. Laws Applicable to Construction. The interpretation, performance
and enforcement of this Agreement shall be governed by the laws of the State of
Delaware without reference to principles of conflict of laws, as applied to contracts
executed in and performed wholly within the State of Delaware.
15. Severability. The invalidity or enforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other provision of this
Agreement. If the final judgment of a court of competent jurisdiction declares that any
provision of this Agreement is invalid or unenforceable, the parties hereto agree that the
court making the determination of invalidity or unenforceability shall have the power,
and is hereby directed, to reduce the scope, duration or area of the provision, to delete
specific words or phrases and to replace any invalid or unenforceable provision with a
provision that is valid and enforceable and that conies closest to expressing the intention
of the invalid or unenforceable provision and this Agreement shall be enforceable as so
modified.
16. Conflicts and Interpretation. This Agreement is subject to all the
terms, conditions and provisions of the Plan, In the event of any conflict between this
Agreement and the Plan, the Plan shall control In the event of any ambiguity in this
Agreement, any term that is not defined in this Agreement, or any matters as to which
this Agreement is silent, the Plan shall govern, including, without limitation, the
provisions thereof pursuant to which the Committee has the power, among others, to (i)
interpret the Plan, (ii) prescribe, amend and rescind rules and regulations relating to the
Plan and (iii) make all other determinations deemed necessary or advisable for the
administration of the Plan.
17. Headings. The headings of Sections herein are included solely for
convenience of reference and shall not affect the meaning or interpretation of any of the
provisions of this Agreement.
18.
Amendment. This Agreement may not be modified, amended or
waived except by an instrument in writing signed by both parties hereto.
The waiver by
either party of compliance with any provision of this Agreement shall not operate or be construed
as a waiver of any other provision of this Agreement, or of any subsequent breach by such party of
a provision of this Agreement.
19.
Term. The term of this Agreement is two years from the date of grant, unless terminated prior to such date in accordance with the provisions herein.
20. Counterparts. This Agreement may be executed in counterparts,
which together shall constitute one and the same original.
IN WITNESS WHEREOF, as of the date first above written, the Company has caused this
Agreement to be executed on its behalf by a duly authorized officer and the Optionee has hereunto
set the Optionee’s hand.
| INTELLECT NEUROSCIENCES, INC. | ||||
| Chief Financial Officer | ||||