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EXHIBIT 10.6
CELL PATHWAYS, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT ("Agreement") made as of this day of
, 1998, by and between CELL PATHWAYS, INC., a Delaware corporation
("Company"), and , a resident of the State of ("Grantee").
The Parties Hereto Do Hereby Agree As Follows:
1. Grant of Option. The Company considers it desirable and in its best
interest that Grantee [as a (consultant) (director) (other) to the Company] be
given an inducement to acquire a proprietary interest in the Company and an
added incentive to advance the interests of the Company by being granted an
option to purchase share of the Company's Common Stock, $0.01 par value ("Common
Stock"), in accordance with the Company's 1997 Equity Incentive Plan, as amended
(the "Plan"). In consideration of Grantee's agreement [to perform consulting
services for] [to serve as a director of] the Company, the Company therefore
hereby grants to Grantee the right, privilege and option ("Option") to purchase
an aggregate of shares of Common Stock (the "Optioned Shares") at the price
("Exercise Price") of $ per share thereof, in the manner and subject to the
conditions hereinafter provided. This Option shall be treated as a non-qualified
stock option under the Internal Revenue Code of 1986, as amended (the "Code").
2. Option Exercise Period. This Option may be exercised, with respect
to vested shares, from the time such shares have vested pursuant to Section 3
hereof until the termination of the option pursuant to Section 5 hereof.
3. Option Vesting Period. The Optioned Shares shall vest based upon the
following schedule:
a. First Anniversary: On the first anniversary of the
date of this Agreement, one quarter of the Optioned Shares
will vest, provided that Grantee continues to render services
to the Company or a subsidiary of the Company on such date.
b. Second Anniversary: On the second anniversary date
of this Agreement an additional quarter of the Optioned Shares
will vest provided that Grantee continues to render services
to the Company or a subsidiary of the Company on such date.
c. Third Anniversary: On the third anniversary date
of this Agreement an additional quarter of the Optioned Shares
will vest provided that Grantee continues to render services
to the Company or a subsidiary of the Company on such date.
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d. Fourth Anniversary: On the fourth anniversary date
of this Agreement an quarter of the Optioned Shares will vest
provided that Grantee continues to render services to the
Company or a subsidiary of the Company on such date.
If the Company or its subsidiaries shall terminate Grantee's Services for any
reason (other than the failure of Grantee substantially to perform his duties)
with the effect that Grantee shall cease to render Services to the Company or
its subsidiaries prior to the time that all Optioned Shares shall have vested,
then such number of Optioned Shares shall vest on the date of termination as
would have vested on the next ensuing anniversary of this Agreement which would
have occurred but for such termination.
4. Method of Exercise. (a) As to those Optioned Shares that have
vested, the Option may be exercised by the Grantee executing, dating and
delivering to the Secretary of the Company at the Company's principal place of
business a written Option Exercise Notice in the form of Exhibit A attached
hereto, accompanied by a check made payable to the Company in the amount of the
aggregate Exercise Price for the number of shares for which the Option is then
being exercised. If the Company is required to withhold on account of any
present or future tax imposed as a result of such exercise, the notice of
exercise shall be accompanied by a check made payable to the Company in the
amount of such withholding.
5. Termination of Option. Except as otherwise stated in this Agreement
or as the parties may otherwise agree, the Option (to the extent not theretofore
exercised) shall terminate and expire at 5:00 p.m., Chicago time, on the day
immediately prior to the 10th anniversary of the date of this Agreement.
6. Transfer of Option. Grantee may not transfer this Option except by
will or the laws of descent and distribution. This Option shall not be otherwise
sold, assigned, pledged, hypothecated or otherwise transferred or disposed of in
any way, whether by operation of law or otherwise, and during the Grantee's
lifetime shall be exercisable only by the Grantee or his guardian or legal
representative.
7. Capitalization Adjustments. Subject to the provisions of the Plan,
if the outstanding shares of stock or other securities of the class then subject
to the Option are increased or decreased, or are changed into or exchanged for a
different number or kind of Company shares or other Company securities, in any
such case as a result of one or more recapitalizations, stock splits, reverse
stock splits, stock dividends or the like, then appropriate adjustments shall be
made in the number and/or kind of Company shares or other Company securities for
which the unexercised portion of this Option may thereafter be exercised, all
without any change in the aggregate Exercise Price applicable to the unexercised
portion of the Option, but with a corresponding adjustment in the Exercise Price
per share of other unit. No fractional share of Company stock shall be issued
under the Option in connection with any such adjustment. Such adjustments shall
be made by or under authority of the Company's Board of Directors or duly
authorized Committee thereof, whose determinations as to what adjustments shall
be made, and the extent thereof, shall be final, binding and conclusive.
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8. Certain Transactions. If at any time while this Option remains
outstanding:
a. any "person" (as such term is used in Sections
13(d) and 14(d) of the Exchange Act) other than the Company,
FGN, Inc., any affiliate of FGN, Inc., any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company, any person acquiring securities from the Company
solely pursuant to written agreement with the Company
(including, in particular, any investor purchasing from the
Company in a private placement before the Company's shares
have become publicly traded), or any corporation owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock
in the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 20%
(which percentage shall be 50% prior to the completion of the
Company's first public offering of securities) or more of the
combined voting power of the Company's then outstanding
securities, or
b. during any period of two consecutive years
commencing the day after the first election of directors
following termination of the stockholder voting provisions of
the Company's Stockholders' Agreement dated as of December 10,
1992, as amended, individuals who at the beginning of such
period constitute the Board, and any new director (other than
a director designated by a person who has entered into an
agreement with the Company to effect a transaction described
in clauses (a) (c) or (d) of this Section) whose election by
the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of
the directors then still in office who either were directors
at the beginning off the period or whose election or
nomination for election was previously so approved, cease for
any reason to constitute at least a majority thereof, or
c. the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation,
other than a merger or consolidation (i) where no person
within the meaning of subsection (a) above becomes the
"beneficial owner" (as defined above) of 20% or more of the
resulting voting power and where the voting securities of the
Company outstanding immediately prior thereto continue to
represent (either by remaining outstanding or by being
converted into voting securities of the surviving or
controlling entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving or
controlling entity outstanding immediately after such merger
or consolidation or (ii)(without derogating from the power of
the Committee in other situations) which the Committee
determines should not, because of the nature and purpose of
the transaction, qualify as an Acceleration Event under this
subsection, or
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d. the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the
sale or disposition by the Company of all or substantially all
of the Company's assets,
(each of (a), (b), (c) and (d) above, an "Acceleration Event"), then the Option
shall become vested and may be exercised as to all Optioned Shares for which it
has not previously been exercised and as to all Optioned Shares for which the
Option has been exercised but which have not yet vested such Optioned Shares
shall vest.
Upon the occurrence of an Acceleration Event the Company's Stock Option
Committee shall provide for cancellation of the unexercised portion of the
Option as of the Cancellation Date; provided, however, that if the Option has
been held for less than six months then for purposes of such cancellation the
Acceleration Event and/or Cancellation Date shall be restricted in such manner
as the Company's Stock Option Committee may determine necessary to comply with
the conditions and requirements of Rule 16b-3. "Cancellation Date" shall mean
(i) the 60th day following the occurrence of any Acceleration Event described in
clause (a) or (b) of the first sentence hereof, and (ii) the closing of any
merger, consolidation, liquidation or sale of assets stockholder approval of
which constituted an Acceleration Event under clause (c) or (d) of the first
sentence hereof. Upon cancellation of the Option pursuant to an Acceleration
Event under clause (a), (b) or (d) of the first sentence hereof, the Company
shall make, and upon cancellation of the Option following an Acceleration Event
under clause (c) of the first sentence hereof, the Company may make, in exchange
therefor, a cash payment under the Option in an amount equal to the product of
the number of Optioned Shares covered by the unexercised portion of the Option
multiplied by the difference between the Exercise Price and (i) in the case of a
transaction described in clause (a) or (b) of the first sentence hereof, the
highest fair market value of an Optioned Share at any time during the 60-day
period immediately preceding the Cancellation Date, and (ii) in the case of a
transaction described in clause (c) or (d) of the first sentence hereof, the
fair market value of an Optioned Share on the Cancellation Date. The "fair
market value" of Optioned Shares shall be determined by the Company's Stock
Option Committee by reference to any national securities market on which the
Optioned Shares may then be trading, or as otherwise determined by the Company's
Stock Option Committee.
9. Securities Laws. Grantee hereby represents and agrees for himself,
and for his transferees by will or the laws of descent and distribution, that
unless a registration statement under the Securities Act of 1933, as amended, is
in effect as to shares purchased upon any exercise of the Option, (i) any and
all shares so purchased shall be acquired for his personal account and not with
a view to or for sale in connection with any distribution, and (ii) each notice
of the exercise of any portion of the Option shall be accompanied by a
representation and warranty in writing, signed by the person entitled to
exercise the same, that the shares are being so acquired in good faith for his
personal account and not with a view to or for sale in connection with any
distribution. Notwithstanding anything else contained in this Agreement, no
share of stock or other securities shall be issued pursuant to any exercise of
the Option unless and until, in the opinion of counsel for the Company, such
securities may be issued and delivered without causing the Company to be in
violation of or incur any liability under any federal, state or other securities
laws, any requirement of any securities exchange listing agreement to which the
Company may
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be a party, or any other requirement of law or of any regulatory body having
jurisdiction over the Company.
10. Stock Restrictions. No shares of stock or other securities issued
upon exercise of the Option may be sold, assigned, pledged, hypothecated or
otherwise transferred or disposed of in any way unless and until, in the opinion
of counsel for the Company, such securities may be so transferred or disposed of
without causing the Company to be in violation of or incur any liability under
any federal, state or other securities laws, any requirement of any securities
exchange listing agreement to which the Company may be a party, or any other
requirement of law or of any regulatory body having jurisdiction over the
Company.
11. Restrictive Legends. Unless and until otherwise permitted by this
Section 11, each certificate for stock or other securities issued pursuant to
exercise of this Option shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, ARE HELD FOR INVESTMENT PURPOSES ONLY AND MAY
NOT BE SOLD, TRANSFERRED OR DISTRIBUTED AT ANY TIME UNLESS A REGISTRATION
STATEMENT IS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO THE
SECURITIES ACT OF 1933 COVERING SUCH SHARES OR UNLESS, IN THE OPINION OF COUNSEL
FOR THE COMPANY, SUCH A REGISTRATION STATEMENT IN NOT REQUIRED".
The Company may order its stock transfer agents to stop the transfer of any
shares of stock or other securities bearing the legend set forth in this Section
11 until the conditions of Section 10 hereof with respect to the transfer of
such stock or other securities have been satisfied.
12. Stock Option Plan. The Option is subject to, and the Company and
Grantee agree to be bound by, all of the terms and conditions of the Plan, as
the same shall have been amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive Grantee, without his
consent, of this Option or any of his rights hereunder. Pursuant to the Plan,
the Company's Stock Option Committee is vested with final authority to interpret
and construe the Plan and the Option, and is authorized to adopt rules and
regulations for carrying out the Plan. A copy of the Plan in its present form is
available for inspection during business hours by Grantee or other persons
entitled to exercise this Option at the Company's principal office.
13. No Employment or Stockholder Rights. Neither this Agreement nor the
establishment of the Plan shall be construed to (i) give Grantee any right to
become employed by, or continue to be a director of, or consultant to, the
Company or any of its subsidiaries, (ii) give Grantee any benefits not
specifically provided by this Agreement, or (iii) in any manner limit the right
of the Company or any of its subsidiaries to modify, amend or terminate the Plan
or any of its other benefit plans. Grantee shall not have any rights as a
stockholder of the Company with respect to any of the Optioned Shares until such
time as such shares have been delivered to him.
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14. Notices. Any notice to be given to the Company shall be addressed
to the Company in care of its Secretary at its principal office, and any notice
to be given to Grantee shall be addressed to him at the address given beneath
his signature hereto or at such other address as Grantee may hereafter designate
in writing to the Company.
15. Governing Law. This Agreement shall be governed by the laws of the
State of Delaware, other than its conflict laws provisions.
IN WITNESS WHEREOF, the Company has entered into this Agreement and
granted the Option as of the date of this Agreement first written above.
CELL PATHWAYS, INC.
By___________________________________
Senior Vice President, General Counsel
and Secretary
ACCEPTED:
_____________________________________
_____________________________________
Street Address
_____________________________________
City and State
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EXHIBIT A
OPTION EXERCISE NOTICE
To: Cell Pathways, Inc.
Attention: Secretary
The undersigned hereby exercises his/her option to acquire shares
of [e.g., Common Stock] (the "Securities") pursuant to the
option granted to the undersigned in that certain Stock Option Agreement (the
"Agreement") dated , 19__, by and between Cell Pathways, Inc.
(the "Company") and the undersigned, and in connection with this exercise does
hereby tender herewith as provided in the Agreement the full Exercise Price (as
defined in the Agreement) with respect to the Securities, and does hereby
represent and warrant to the Company that the Securities are being acquired in
good faith for the undersigned's own account and not with a view to or for sale
in connection with any distribution.
IN WITNESS WHEREOF, the undersigned has signed this Option Exercise
Notice as of the date written below.
_____________________________________
Signature
_____________________________________
Print Name
_____________________________________
Date
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