Exhibit 10.4
PHOTOGEN TECHNOLOGIES, INC.
INCENTIVE STOCK OPTION AWARD AGREEMENT
THIS AWARD AGREEMENT ("Agreement") is made effective as of May 17,
2000, by and between Photogen Technologies, Inc., a Nevada corporation (the
"Company"), and Xxxxx X. Xxxxxxxx, Ph.D. (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company, through its Compensation Committee (the
"Committee"), desires to grant to the Optionee an incentive stock option
pursuant to its Senior Executive Long Term Incentive Compensation Plan (the
"Plan") to purchase shares of the Company's common stock, par value $.001 per
share (the "Common Stock").
NOW, THEREFORE, the parties hereto, intending to be legally bound,
agree as follows:
1. GRANT OF OPTION AND TAX CONSEQUENCES. Subject to the terms and
conditions of this Agreement and the Plan, a copy of which has been delivered
to the Optionee, the Company hereby grants to the Optionee the right and
option to purchase from the Company all or part of an aggregate of 3,000,000
shares of Common Stock (the "Option"). The per share exercise price at which
the shares subject to Option may be purchased by Optionee shall be $15.00,
which price equals the closing sale price of the Common Stock as reported by
the Nasdaq SmallCap Market on the effective date of grant of this Option.
This Option is intended to qualify as an Incentive Stock Option within the
meaning of Section 422A of the Internal Revenue Code of 1986, as amended (the
"Code") (except to the extent limited by Section 422(d) of the Code, in which
case such portion of the Option that does not qualify as an Incentive Stock
Option under Section 422(a) shall be a NonQualified Stock Option). Optionee
should seek advice from his or her tax advisor concerning the Federal and
State income tax consequences of the Options and disposition of the Common
Stock following exercise.
2. TIME OF EXERCISE. The Option will vest in accordance with, and
Optionee's right to exercise this Option shall be subject to, the following:
1,000,000 Shares covered by the Option will vest and may first be
exercised on the first anniversary date of this Agreement; 1,000,000
additional Shares will vest and may first be exercised on the second
anniversary date of this Agreement; and 1,000,000 additional Shares will vest
and may first be exercised on the third anniversary date of this Agreement.
Subject to Section 5, below, the right to exercise this Option shall in all
events expire at the close of business on the tenth anniversary of the date
of this Agreement, unless such right expires and terminates sooner in
accordance with this Agreement and the Plan. The Optionee's right to exercise
this Option shall be accelerated as provided in paragraph 5(e) below and as
may be provided by action of the Committee.
3. ISO PROVISIONS.
(a) Optionee represents and warrants to the Company that
Optionee does not own, directly or by reason of the applicable attribution
rules in Code Section 424(d) and related Treasury Regulations, more than 10%
of the total combined voting power of all classes of share capital of the
Company or an Affiliate.
(b) Optionee understands and agrees that Code Section
422(d) provides that to the extent the Fair Market Value of stock with
respect to which incentive stock options are exercisable for the first time
(and thereby vest) during any calendar year (under the Plan and any other
incentive stock option plan of the Company or an Affiliate) exceeds $100,000,
such excess options will be non-qualified stock options. Accordingly,
Optionee agrees that to the extent this Option first becomes exercisable in
any year with respect to stock whose Fair Market Value exceeds $100,000, the
remaining portion of the Option that first becomes exercisable in that year
shall be a Non-Qualified Stock Option.
(c) Optionee agrees to notify the Company in writing
immediately after Optionee makes a Disqualifying Disposition of any Shares
acquired pursuant to the exercise of the Option. A "Disqualifying
Disposition" is any disposition (including any sale) of such Shares before
the later of (i) two years after the date the Optionee was granted the Option
hereunder, or (ii) one year after the date the Optionee acquired Shares by
exercising any part of the Option. If the Participant has died before such
stock is sold, these holding period requirements do not apply and no
Disqualifying Disposition can occur thereafter.
4. METHOD OF EXERCISE AND PAYMENT FOR SHARES. This Option shall be
exercised by written notice directed to the Company at its principal office,
specifying the number of Shares to be acquired upon such exercise and
indicating that the exercise is being paid for (i) in cash, (ii) if
applicable, by a commitment by a broker-dealer to pay to the Company that
portion of any sale proceeds receivable by the Optionee upon the exercise of
the Option and sale of underlying Shares, or (iii) in a cashless exercise
whereby the number of Shares to be acquired shall be equal to the product of
(x) the number of Shares as to which the Option is being exercised,
multiplied by (y) a fraction, the numerator of which is the Fair Market Value
of the Shares as of the close of business on the date of exercise, minus the
Option Price of the Shares and the denominator of which is the said Fair
Market Value per share. Full payment for the Shares to be purchased on
exercise shall
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accompany the notice, as applicable. The Option may be exercised by the
designated beneficiary or legal representative of Optionee in accordance with
Section 8 of the Plan.
5. TERMINATION OF OPTION. Optionee is a party to that certain
Employment Agreement with the Company dated as of May 17, 2000 (the
"Employment Agreement"). Section 8 of the Employment Agreement provides that
the Employment Agreement and Optionee's employment by the Company may be
terminated upon the occurrence of certain events. The effective date of the
termination under the Employment Agreement is referred to herein as the
"Effective Date." The Options subject to this Agreement will terminate in
accordance with the following provisions if the Employment Agreement
terminates:
(a) If the Employment Agreement is terminated pursuant to
Sections 8(b)(i)(1) or (2) or Section 8(b)(ii) thereof, all Options that were
not vested before the Effective Date and all vested Options that Optionee
does not exercise before the Effective Date shall terminate as of the
Effective Date.
(b) If the Employment Agreement is terminated pursuant to
Section 8(b)(i)(3) thereof, Optionee (or his estate or personal
representative) will have 12 months after the Effective Date to exercise any
Options that vested in accordance with this Agreement before the Effective
Date. All Options that were not vested before the Effective Date shall
terminate as of the Effective Date and all vested Options that Optionee does
not exercise within such 12-month period shall terminate as of the end of
such 12-month period.
(c) If the Employment Agreement is terminated pursuant to
Section 8(b)(iii) thereof, the entire Option will immediately vest and will
remain exercisable for the remaining term of the Option.
(d) If the parties fail to renew this Agreement after the
Initial or any Renewal Term, all vested Options will remain exercisable for
the remaining term of the Option.
(e) Upon a termination of employment related to a Change in
Control, Options shall be treated in the manner set forth in Section 10 of
the Plan.
6. ADJUSTMENT. The Committee shall make adjustments to the aggregate
number and kind of shares or other securities subject to this Option and in
the purchase price of this Option to reflect any change in the capitalization
of the Company as contemplated in Section 4(b) of the Plan.
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7. OPTION NON-ASSIGNABLE AND NON-TRANSFERABLE. This Option and all
rights hereunder shall be non-assignable and non-transferable other than by
will or the laws of descent and distribution and shall be exercisable during
the Optionee's lifetime only by the Optionee or the Optionee's guardian or
legal representative. The Plan and this Agreement shall be binding upon the
Optionee and any permitted successors and assigns.
8. LIMITATION OF RIGHTS.
(a) No Rights as an Employee. Nothing in this Agreement or
the Plan shall be deemed to: create or affect any contract of employment
between the Optionee and Company or an Affiliate; prevent the Company or an
Affiliate from terminating Optionee's employment; give Optionee a right to be
retained in employment by the Company or any Affiliate for any period of
time; confer on any person any right to be selected as a Participant under
the Plan or the right to any other compensation, remuneration or benefits
(except to the extent expressly set forth in this Agreement).
(b) No Rights as a Stockholder. The Optionee shall have no
rights as a stockholder with respect to the shares covered by this Option
until the date the Optionee tenders full payment of the exercise price for
the portion of the Option being exercised and the issuance of a stock
certificate therefor, and no adjustment will be made for any dividends or
other rights for which the record date is prior to the date such certificate
is issued.
9. STOCK LEGEND. The Optionee hereby represents and warrants to the
Company that upon exercise of any portion of the Option hereunder that the
Optionee will be acquiring such Shares for his or her own account, for
investment and not with a view to, or for the sale in connection with, the
distribution of any such Shares except in compliance with applicable
securities laws. The Optionee hereby agrees that the following legend shall
be endorsed upon the certificates evidencing the Optionee's Shares issued
pursuant to the exercise of this Option (unless there is an effective
registration covering such Shares):
The Shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or
under state securities laws to the extent applicable. The
Shares may not be sold, offered for sale, or otherwise
transferred in the absence of an effective registration
statement under said Act (and any registration or
qualification as may be required under such state laws) or an
opinion of counsel satisfactory to the Company and its counsel
that such registration or qualification is not required.
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10. PLAN GOVERNS. The Optionee acknowledges that he or she has
received and reviewed a copy of the Company's Plan and acknowledges that the
Award and this Agreement are subject to all the terms and provisions of the
Plan which are applicable to Incentive Stock Options. All capitalized terms
not otherwise defined in this Agreement shall have the meanings given to them
in the Plan. In the event of any inconsistency between the term of this
Agreement and the Plan, the terms of the Plan (all of which are incorporated
in this Agreement by reference) shall prevail; provided, however, that the
provisions of Section 5 hereof and Section 7 of the Employment Agreement
shall prevail over any conflicting provisions of Sections 2(f) or 6(g) of the
Plan (it being agreed that the conflicting provisions of Sections 2(f) and
6(g) of the Plan shall not be applicable to this Agreement).
11. REGISTRATION RIGHTS. The Company and Optionee agree to the
piggyback registration provisions set forth on Exhibit A attached hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be signed by one of its duly authorized officers, and the Optionee has
affixed his or her signature hereto on the date set forth above.
/s/ Xxxxx X. Xxxxxxxx, Ph.D.
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Xxxxx X. Xxxxxxxx, Ph.D., Optionee
Photogen Technologies, Inc.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx, President
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EXHIBIT A
PIGGYBACK REGISTRATION RIGHTS
1. PIGGYBACK REGISTRATIONS. (a) RIGHT TO PIGGYBACK. If, at any time
before the Company's registration statement on Form S-8 covering shares
issued pursuant to the Senior Executive Long Term Incentive Compensation Plan
becomes effective pursuant to the Securities Act the Company shall propose to
register Common Stock under the Securities Act (other than in a registration
on Form S-3 relating to sales of securities to participants in a Company
dividend reinvestment plan, Forms S-4 or S-8 or any successor forms, or in
connection with an acquisition or exchange offer or an offering of securities
solely to the existing shareholders or employees of the Company), the Company
shall give prompt written notice to the Optionee of its intention to effect
such a registration and, subject to the other terms of this Exhibit A, shall
include in such registration all Registrable Securities that are permitted
under applicable securities laws to be included in the form of registration
statement selected by the Company and with respect to which the Company has
received written requests for inclusion therein by the Optionee within 10
days after the receipt of the Company's notice (each, a "PIGGYBACK
REGISTRATION").
(b) PRIORITY ON PIGGYBACK REGISTRATIONS. If in the
Company's reasonable judgment, the number of securities requested to be
included in such registration exceeds the number which can be sold in such
offering without adversely affecting the marketability of the offering, the
Company may allocate or reduce the number of shares to be registered
hereunder as follows:
(i) first, up to that number of securities the Company
proposes to sell;
(ii) second, up to that number of registrable securities
requested to be included in such registration by the holders of the Series A
Convertible Exchangeable Preferred Stock;
(iii) third, up to that number of registrable securities
requested to be included in such registration by the holders of the Series B
Convertible Preferred Stock;
(iv) fourth, up to that number of registrable securities
requested to be included in such registration by the holders of Company
securities whose registration rights, in the reasonable judgment of the
Company, are senior to the registration rights of Optionee hereunder;
(v) fifth, up to that number of Registrable Securities
requested to be included in such registration by the Optionee; and
(vi) sixth, up to that number of other securities requested
to be included in such registration.
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(c) RIGHT TO TERMINATE REGISTRATION. If, at any time after
giving written notice of its intention to effect a Piggyback Registration and
prior to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register such securities, the Company may, at its election, give written
notice of such determination to Optionee and thereupon be relieved of its
obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay the Registration Expenses in
connection therewith as provided herein).
2. EXPENSES OF REGISTRATION. Expenses incurred in connection with
Piggyback Registrations shall be borne by the Company.
3. HOLDBACK AGREEMENTS. Optionee agrees, in the event of an
underwritten public offering of Common Stock under a registration statement
on Form X-0, X-0 or S-4, not to effect any offer, sale, distribution or
transfer, including a sale pursuant to Rule 144 (or any similar provision
then effect) under the Securities Act (except as part of such registration),
beginning on the date of receipt of a written notice from the Company setting
forth its intention to effect such registration and ending on the earlier of
(i) 180 days from the date of receipt of such written notice or (ii) 90 days
from the effective date of such Registration Statement.
4. REGISTRATION PROCEDURES. Whenever the Company is under the
obligation to register Registrable Securities hereunder, the Company will use
all reasonable efforts to effect the registration and the sale of such
Registrable Securities, and pursuant thereto the Company will as
expeditiously as possible:
(a) subject to the provisions hereof, prepare and file with
the Commission a registration statement within 45 days of the receipt of
notice from the Optionee on any form for which the Company qualifies with
respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective (provided that before
filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will (i) furnish to the one counsel selected
by the Holders copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel, and (ii) notify
Optionee of Registrable Securities covered by such registration of any stop
order issued or threatened by the Commission);
(b) subject to the provisions hereof, prepare and file with
the Commission such amendments and supplements to such registration statement
and the prospectus used in connection therewith as may be necessary to keep
such registration statement effective for a period equal to the shorter of
(i) the time at which the registered shares are freely saleable under Rule
144(k), or (ii) the time by which all registrable securities covered by such
registration statement have been sold, and Optionee shall comply with
Company's reasonable requests in connection with such termination, and
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comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(c) furnish to Optionee such number of copies of such
registration statement, each amendment and supplement thereto, the prospectus
included in such registration statement (including each preliminary
prospectus) and such other documents as such seller may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by
Optionee;
(d) use all reasonable efforts to register or qualify such
Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable Optionee
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by Optionee (provided that the Company will not be required
to (i) qualify generally to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 6(d), (ii) subject
itself to taxation in any jurisdiction, or (iii) consent to general service
of process in any such jurisdiction);
(e) notify Optionee, at any time when a prospectus relating
thereto is required to be delivered under the Securities Act, of the
happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or
omits any fact necessary to make the statements therein not misleading, and,
at the request of any such seller, the Company will prepare a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact necessary to
make the statements therein not misleading; provided, however, that the
Company shall not be required to amend the registration statement or
supplement the Prospectus for a period of up to 90 days if the board of
directors determines in good faith that to do so would reasonably be expected
to have a material adverse effect on any proposal or plan by the Company to
engage in any financing, acquisition or disposition of assets (other than in
the ordinary course of business) or any merger, consolidation, tender offer
or similar transaction or would require the disclosure of any information
that the board of directors determines in good faith the disclosure of which
would be detrimental to the Company, it being understood that the period for
which the Company is obligated to keep the Registration Statement effective
shall be extended for a number of days equal to the number of days the
Company delays amendments or supplements pursuant to this provision. Upon
receipt of any notice pursuant to this Section 6(e), the Optionee shall
suspend all offers and sales of securities of the Company and all use of any
prospectus until advised by the Company that offers and sales may resume, and
shall keep confidential the fact and content of any notice given by the
Company pursuant to this Section 6(e);
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(f) cause all such Registrable Securities to be listed on
each securities exchange on which similar securities issued by the Company
are then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other actions as
the reasonably request in order to expedite or facilitate the disposition of
such Registrable Securities;
(i) make available for inspection by a representative of
the Optionee any underwriter participating in any disposition pursuant to
such registration statement and any attorney, accountant or other agent
retained by any such seller or underwriter, all pertinent financial and other
records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such
seller, underwriter, attorney, accountant or agent in connection with such
registration statement;
(j) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months beginning with the first day of the
Company's first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order
suspending the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or suspending the
qualification of any Common Stock included in such registration statement for
sale in any jurisdiction, use all reasonable efforts promptly to obtain the
withdrawal of such order; and
(l) if the registration is an underwritten offering, use
all reasonable efforts to obtain a so-called "cold comfort" letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by cold comfort letters.
5. OBLIGATIONS OF OPTIONEE. Whenever Optionee sells any Registrable
Securities pursuant to a Piggyback Registration, Optionee shall be obligated
to comply with the applicable provisions of the Securities Act, including the
prospectus delivery requirements thereunder, and any applicable state
securities or blue sky laws. Optionee shall furnish to the Company such
written information regarding Optionee and any distribution proposed by
Optionee as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration,
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qualification or compliance referred to in this Exhibit A and shall promptly
notify the Company of any changes in such information.
6. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. Optionee may not
participate in any registration hereunder which is underwritten unless
Optionee (a) agrees to sell his securities on the basis provided in any
underwriting arrangements approved by the Company, (b) as expeditiously as
possible notifies the Company of the occurrence of any event as a result of
which any prospectus contains an untrue statement of material fact or omits
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (c) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements. The Company shall have the right to select the investment
banker(s) and manager(s) to administer an offering pursuant to a Piggyback
Registration.
7. CERTAIN DEFINITIONS. As used in this Exhibit, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the U.S. Securities and Exchange
Commission.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder,
all as the same shall be in effect from time to time.
"EXPENSES" shall mean all expenses incurred by the Company
in complying with Section 1 hereof, including without limitation, all
registration, qualification and filing fees, exchange listing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company,
blue sky fees and expenses, and the expense of any special audits incident to
or required by any such registration; and all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered
by the Optionee, but excluding the costs and fees of any accountants,
attorneys or other experts retained personally by the Optionee.
"REGISTRABLE SECURITIES" means any Common Stock of the
Company issued or issuable upon exercise of options granted pursuant to the
Senior Executive Long Term Compensation Plan, or restricted stock awarded
pursuant to such Plan.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement
in compliance with the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
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