1997 EXECUTIVE OFFICERS STOCK OPTION AGREEMENT
Palatin Technologies, Inc., a Delaware corporation (the "Company") and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (each individually an
"Optionee" and together the "Optionees") agree:
1. Recitals. As of the date hereof, the Board of Directors of the
Company approved the grant of nonqualified stock options (each individually an
"Option" and together the "Options") to Optionees to purchase Palatin Common
Stock (as defined in Section 2 below), for the purpose of providing additional
compensation to Optionees and to induce Optionees, who are key executive
officers of the Company, to remain in the employ and service of the Company.
This 1997 Executive Officers Stock Option Agreement (the "Agreement") sets forth
the terms and conditions of the grant of the Options, and is effective as of
June 3, 1997.
2. Definitions. In addition to capitalized terms defined in context, the
following capitalized terms have the following meanings in this Agreement:
"Committee" means the Compensation Committee of the Company's Board of
Directors, or if the Company's Board of Directors has not established a
Compensation Committee, then it is the Company's Board of Directors.
"Employee" means an employee or consultant of the Company or its present
or future subsidiaries (the "Subsidiaries").
"Option Price" means the number of shares of Option Stock as to which an
Option is being exercised, multiplied by the Exercise Price per share.
"Option Stock" means Palatin Common Stock obtained upon exercise of an
Option.
"Palatin Common Stock" means the $.01 par value common stock of the
Company, or any other stock issuable upon exercise of the Option as adjusted
pursuant to this Agreement, or as substituted or assumed as permitted by this
Agreement.
3. Grant of Options. Effective as of June 3, 1997, the Company grants
nonqualified stock options as follows:
---------------------------------------------------------------------------
EXERCISE PRICE
OPTIONEE NUMBER OF SHARES PER SHARE
---------------------------------------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 49,472 $4.96
---------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ 26,766 $4.96
---------------------------------------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 26,766 $4.96
---------------------------------------------------------------------------
The foregoing number of shares of Palatin Common Stock and exercise price per
share are stated after giving effect to the 1-for-4 reverse split of Palatin
Common Stock effected on September 5, 1997.
4. Exercisability of Options. The Option is exercisable by each Optionee
as follows:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ In 17 equal monthly installments on the 16th day of each
month following July 1, 1997
▇▇▇▇ ▇▇▇▇▇ As to one-third of the total number of shares on July
1, 1997, with an additional one-third exercisable on
July 1, 1998 and the remaining one-third exercisable
on July 1, 1999
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ As to one-third of the total number of shares on July
1, 1997, with an additional one-third exercisable
on July 1, 1998 and the remaining one-third exercisable
on July 1, 1999
The exercisability of each Option is cumulative, so that after any portion of an
Option becomes exercisable, that portion will remain exercisable until the Final
Expiration Date (as defined in Section 6 below).
5. Exercise of Option; conditions on exercise. If the Company determines
that exercise of an Option or issuance of Option Stock will violate any tax,
securities or other law or regulation, then the Optionee may not exercise the
Option until the Company determines that the exercise or issuance will comply
with that law or regulation. Otherwise, the Optionee may exercise all or any
part of the exercisable portion of an Option by delivering written notice
directed to the Vice President and Chief Financial Officer of the Company at the
Company's principal place of business (▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, or such other address as the Company may specify
in writing to the Optionee), stating the number of shares of Option Stock which
the Optionee intends to purchase, along with payment in immediately available
U.S. funds of the Option Price for the number of shares specified, and the entry
by the Optionee into such arrangements with the Company with respect to federal
income tax withholding as the Company may reasonably require. The Company will
issue and deliver the shares of Option Stock promptly upon exercise. In lieu of
issuing fractional shares of Palatin Common Stock, the Company will pay the
Optionee cash for any fraction of a share exercised, at the rate of the closing
market price per share of Palatin Common Stock on the date of exercise or last
date preceding exercise on which Palatin Common Stock was traded, as quoted on
any national securities exchange or automated quotation system, including the
OTC Electronic Bulletin Board, on which the Palatin Common Stock is traded.
6. Period for exercise of Options. Each Option will be exercisable until
June 3, 2007 (the "Final Expiration Date"), subject to earlier termination as
set forth in Section 7 below.
7. Termination of employment and Option. A. In the event an Optionee
leaves the employ of the Company and the Subsidiaries or ceases to serve as a
consultant to the Company, whether voluntarily or otherwise, each Option
theretofore granted to him which shall not have theretofore expired or otherwise
been canceled shall, to the extent not theretofore exercised, terminate upon the
earlier to occur of the expiration of 90 days after the date of such Optionee's
2
termination of employment or service and the Final Expiration Date.
Notwithstanding the foregoing, if a Optionee's employment by the Company and the
Subsidiaries or service as a consultant is terminated for "cause" (as defined
herein), each Option theretofore granted to him which shall not have theretofore
expired or otherwise been canceled shall, to the extent not theretofore
exercised, terminate forthwith.
B. For purposes of the foregoing, the term "cause" shall mean: (i) the
commission by an Optionee of any act or omission that would constitute a crime
under federal, state or equivalent foreign law, (ii) the commission by an
Optionee of any act of moral turpitude, (iii) fraud, dishonesty or other acts or
omissions that result in a breach of any fiduciary or other material duty to the
Company and/or the Subsidiaries or (iv) continued alcohol or other substance
abuse that renders an Optionee incapable of performing his material duties to
the satisfaction of the Company and/or the Subsidiaries.
8. Adjustment of Number of Shares. A. In the event that a dividend shall
be declared upon the Palatin Common Stock payable in shares of Palatin Common
Stock, the number of shares of Palatin Common Stock then subject to any Option
shall be adjusted by adding to each share the number of shares which would be
distributable thereon if such shares had been outstanding on the date fixed for
determining the stockholders entitled to receive such stock dividend. In the
event that the outstanding shares of Palatin Common Stock shall be changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation, whether through
reorganization, recapitalization, stock split-up, combination of shares, sale of
assets, merger or consolidation in which the Company is the surviving
corporation, then there shall be substituted for each share of Palatin Common
Stock then subject to any Option the number and kind of shares of stock or other
securities into which each outstanding share of Palatin Common Stock shall be so
changed or for which each such share shall be exchanged.
B. In the event that there shall be any change, other than as specified
in this section, in the number or kind of outstanding shares of Palatin Common
Stock, or of any stock or other securities into which Palatin Common Stock shall
have been changed, or for which it shall have been exchanged, then, if the
Committee shall, in its sole discretion, determine that such change equitably
requires an adjustment in the number or kind of shares then subject to any
Option, such adjustment shall be made by the Committee and shall be effective
and binding for all purposes.
C. No adjustment or substitution provided for in this section shall
require the Company to sell a fractional share.
D. In the event of the dissolution or liquidation of the Company, or a
merger, reorganization or consolidation in which the Company is not the
surviving corporation, then, except as otherwise provided in the second sentence
of subsection A above, each Option, to the extent not theretofore exercised,
shall terminate forthwith.
3
9. Transferability of Option and Option Stock. The Option is not
transferable otherwise than by will or the laws of descent and distribution, and
is exercisable, during the Optionee's lifetime, only by the Optionee. The
Company may restrict transferability of Option Stock issued upon exercise, in
order to comply, in the Company's judgment, with federal and state securities
laws and/or the requirements of any stock exchange on which the Palatin Common
Stock is then traded.
10. Purchase for investment and withholding. Unless the Option Shares to
be issued upon the exercise of the Option shall be registered prior to the
issuance thereof under the Securities Act of 1933, as amended, the Optionee
will, as a condition of the Company's obligation to issue such Option Shares, be
required to give a representation in writing that he is acquiring such shares
for his own account as an investment and not with a view to, or for sale in
connection with, the distribution of any thereof.
11. Stockholder rights. Neither the Optionee nor the Optionee's
successor has any of the rights of a stockholder of the Company, with respect to
any Option Stock, until the Company has received payment in full of the Option
Price for that Option Stock upon exercise.
12. Miscellaneous. This Agreement benefits and is binding on the
parties, their successors and assigns, represents the entire agreement of the
parties as to its subject matter, may be modified only in writing signed by the
parties (except as permitted under Section 8 of this Agreement), and is governed
by the laws of the state of Delaware.
Dated as of June 3, 1997.
Palatin Technologies, Inc. Optionee:
by___________________________ ___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President and
Chief Financial Officer
___________________________
▇▇▇▇ ▇▇▇▇▇
___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
4