EXHIBIT 4.4
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED IN A TRANSACTION NOT
INVOLVING ANY PUBLIC OFFERING AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT.
CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
STOCK OPTION AGREEMENT
1. GRANT OF OPTION. Chesapeake Biological Laboratories, Inc., a Maryland
corporation (the "Company"), hereby grants to THOMAS P. RICE (the "Optionee") a
nonstatutory stock option (the "Option") to purchase an aggregate of two hundred
thousand (200,000) shares of the Company's Class A Common Stock (the "Common
Stock"), at an exercise price of one dollar $1.00 per share, purchasable as set
forth in, and subject to the terms and conditions of, this agreement (the
"Agreement"). This Option will expire at 5:00 p.m. Eastern Time on December 31,
2008 (the "Expiration Date"), unless fully exercised or terminated earlier
pursuant to this Agreement. This Option is not intended to qualify as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").
This Agreement shall be administered by the Compensation Committee of
the Company's Board of Directors or by such other committee as may be appointed
by the Board of Directors from time to time (hereinafter referred to as the
"Administrator").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. Except as otherwise provided in this
Agreement, this Option may be exercised as to its vested portion at any time and
from time to time, in whole or in part, on or before the Expiration Date or
earlier termination of the Option. To the extent not exercised, vested shares
shall accumulate and be exercisable, in whole or in part, at any time after
becoming exercisable, but not later than the Expiration Date or other
termination of the Option. In the event of the Optionee's death, disability or
other termination of employment, exercisability shall be governed by Section 5
of this Agreement.
(b) VESTING. 100,000 shares subject to the Option shall vest
upon execution of this Agreement, and the remaining 100,000 shares subject to
the Option shall vest in five equal installments of 20,000 shares on each
December 31 hereafter, beginning with December 31, 1999, provided that the
Optionee is in the continuous employ of the Company from the date hereof through
the applicable date upon which vesting is scheduled to occur. Unless the Option
has earlier terminated, vesting of the Option shall be accelerated so that the
unvested portion of the Option shall become 100% vested in the Optionee upon the
earliest to occur of: (i) any biotechnology or pharmaceutical company or company
providing services or products to the biotechnology or pharmaceutical industry
acquiring 20% or more of the Company's Common Stock; (ii) termination of the
Optionee's employment with the Company as a result of the Optionee's Total
Disability (as defined in his Employment Agreement with the Company); (iii)
termination of the Optionee's employment with the Company as a result of the
Optionee's death; (iv) the Company's sending to Optionee notice of non-renewal
of the Employment Period (as defined in his Employment Agreement with the
Company); (v) termination of the Optionee's employment with the Company without
cause (determined pursuant to his Employment Agreement with the Company); or
(vi) a Change in Control of the Company (as defined in his Employment Agreement
with the Company).
For purposes of this Agreement, references to Optionee's Employment Agreement
with the Company shall mean the Executive Employment Agreement, dated as of
January 11, 1999, any amendment thereto or any successor agreement thereto,
between the Company and the Optionee.
(c) EXERCISE PROCEDURE. Subject to the conditions set forth in
this Agreement, this Option may be exercised, in whole or in part, by the
Optionee's delivery of written notice of exercise to the Company, specifying the
number of vested shares to be purchased and the purchase price to be paid
therefor and accompanied by payment in full in accordance with Section 3. Such
exercise shall be effective upon receipt by the Company of such written notice
together with the required payment. The Optionee may purchase fewer than the
total number of shares covered hereby, provided that no partial exercise of this
Option may be for any fractional share or for fewer than one hundred (100) whole
shares.
3. PAYMENT OF PURCHASE PRICE. Payment of the purchase price for shares
purchased upon exercise of this Option shall be made by delivery to the Company
of cash or a certified check to the order of the Company in an amount equal to
the purchase price of such shares or by any other method that the Administrator
may approve.
So long as the Common Stock is registered under Section 12(b) of the
Securities Exchange Act of 1934, the Administrator may authorize payment of the
purchase price, in whole or in part, by delivery of a properly executed exercise
notice, together with irrevocable instructions: (i) to a brokerage firm approved
by the Administrator to deliver promptly to the Company so much of the aggregate
amount of sale or loan proceeds as are necessary to pay the purchase price and
any withholding tax obligations that may arise in connection with the exercise,
and (ii) to the Company to deliver the certificates for such purchased shares
directly to such brokerage firm.
4. DELIVERY OF SHARES; COMPLIANCE WITH SECURITIES LAW.
(a) GENERAL. The Company shall, upon receipt of the Optionee's
payment of the option price for the number of shares purchased and paid for,
make prompt delivery of such shares to the Optionee, provided that if any law or
regulation requires the Company to take any action with respect to such shares
before the issuance thereof, then the date of delivery of such shares shall be
extended for the period necessary to complete such action.
(b) LISTING, QUALIFICATION, ETC. This Option shall be subject to
the requirement that if, at any time, counsel to the Company shall determine
that the listing, registration or qualification of the shares subject hereto on
any securities exchange or under any state or federal law, or the consent or
approval of any governmental or regulatory body, is necessary as a condition of,
or in connection with, the issuance or purchase of shares hereunder, this Option
may not be exercised, in whole or in part, unless such listing, registration,
qualification, consent or approval shall have been effected or obtained on
conditions acceptable to Administrator.
5. TERMINATION OF EMPLOYMENT.
(a) EXERCISE PERIOD FOLLOWING CESSATION OF EMPLOYMENT EXCEPT FOR
CAUSE. If the Optionee ceases to be employed by the Company for any reason other
than termination for cause (determined pursuant to his Employment Agreement with
the Company), this Option shall be exercisable during the 120-day period
following such cessation, but in no event after the Expiration Date, and this
Option shall terminate in its entirety upon the expiration of such 120-day
period.
(b) TERMINATION FOR CAUSE. This Option shall terminate in its
entirety, regardless of whether the Option is vested in whole or in part,
immediately upon the Optionee's termination of employment for cause (determined
pursuant to his Employment Agreement with the Company).
6. NONTRANSFERABILITY OF OPTION. This Option is personal to
Optionee, and no rights granted hereunder may be transferred, assigned, pledged
or hypothecated in any way (whether by operation of law or otherwise), nor shall
any such rights be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
Option or of such rights contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon this Option or such rights, this Option
and such rights shall, at the election of the Company, become null and void.
7. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a
stockholder with respect to any shares which may be purchased by exercise of
this Option unless and until a certificate representing such shares is duly
issued and delivered to the Optionee. No adjustment shall be made for dividends
or other rights for which the record date is prior to the date such stock
certificate is issued.
8. ADJUSTMENTS; CORPORATE TRANSACTIONS. In the event of changes in
the Common Stock of the Company by reason of any stock dividend, split-up,
spin-off, recapitalization, merger, consolidation, business combination or
exchange of shares and the like, the Administrator shall make appropriate
adjustments to the number, kind and price of shares covered by the Option.
Notwithstanding the foregoing, if following an exercise but
prior to issuance of shares of the corresponding number of Common Stock under
this Option, the Company sells or exchanges all or substantially all of its
assets, or a majority or more of the outstanding shares of Common Stock of the
Company are sold or exchanged to any party, then the Optionee at his option may
receive, in lieu of such shares of Common Stock otherwise issuable upon such
exercise, such money or property as he would have been entitled to receive if
this Option had been exercised prior to such sale or exchange.
9. WITHHOLDING TAXES. The Company's obligation to deliver shares of
Common Stock upon the exercise of this Option shall be subject to the Optionee's
satisfaction of all applicable federal, state and local tax withholding
requirements. The Company shall have the right to deduct from any compensation
or any other payment of any kind (including withholding the issuance of shares
of Common Stock) due the Optionee, the amount of any federal, state or local
taxes required by law to be withheld as the result of the exercise of the
Option.
10. INVESTMENT REPRESENTATION; LEGEND.
(a) REPRESENTATIONS. The Optionee represents, warrants and
covenants that:
(1) Any shares purchased upon exercise of this
Option shall be acquired for the Optionee's account for investment only and not
with a view to, or for sale in connection with, any distribution of the shares
in violation of the Securities Act of 1933 (the "Securities Act") or any rule or
regulation under the Securities Act, and that he will not distribute the same in
violation of any state or federal law or regulation; and.
(2) The Optionee understands that (A) the shares upon
exercise of this Option may not be registered under the Securities Act or under
the securities laws of any state and, therefore, will be "restricted securities"
within the meaning of Rule 144 under the Securities Act; (B) such shares cannot
be sold, transferred or otherwise disposed of unless they are subsequently
registered under the Securities Act, and such registration or qualification as
may be necessary under the securities laws of any state, or an exemption from
registration is then available and (C) there is currently no registration
statement on file with the Securities and Exchange Commission with respect to
the shares of Common Stock underlying this Option.
(3) Optionee is an "accredited investor" within
the meaning of Rule 501 of Regulation D promulgated under the Securities Act.
By making payment upon exercise of this Option, the Optionee
shall be deemed to have reaffirmed, as of the date of such payment, the
representations made in this Section 10.
(b) LEGEND ON STOCK CERTIFICATES. Unless previously registered
under the Securities Act and all applicable state securities laws, all stock
certificates representing shares of Common Stock issued to the Optionee upon
exercise of this Option shall contain a legend substantially in the following
form:
"The shares of Common Stock represented by this certificate have
not been registered under the Securities Act of 1933 and may not
be transferred, sold or otherwise disposed of in the absence of
an effective registration statement with respect to such shares
under the Securities Act of 1933, and qualification thereof
under applicable state securities laws, or an opinion of counsel
satisfactory to the Company to the effect that registration
under such Act or qualification under applicable state
securities laws is not required."
11. RESERVATION OF SHARES. The Company will reserve and set apart
and have at all times, free from preemptive rights, a sufficient number of
shares of authorized but unissued Common Stock deliverable upon the exercise of
this Option to enable it to fulfill all its obligations hereunder.
12. REGISTRATION OF SHARES. Promptly upon the request of the
Optionee following the earlier of (i) such time as the Corporation receives at
any time or from time to time hereafter from one or more equity investments,
whether through the sale of common or preferred stock of the Corporation or
otherwise, in an amount equal to or exceeding, in the aggregate, $3,000,000, or
(ii) December 31, 1999, the Corporation shall: (x) file a Registration Statement
under the Securities Act of 1933, as amended, with the Securities and Exchange
Commission, covering all of the shares deliverable upon exercise of this Option,
and (y) use all commercially reasonable efforts to cause such Registration
Statement to be declared effective as promptly as possible after its filing.
Once such Registration Statement has been declared effective, the Corporation
shall take such further action as is necessary to maintain its effectiveness
until Optionee shall have disposed of all of the shares covered by this Option,
except that if this Option shall terminate or expire without Optionee having
exercised any portion of it, the Corporation shall thereafter have no further
obligation to maintain the effectiveness of such Registration Statement. The
Corporation shall have the right to delay its performance under this Section 12,
insofar as may be reasonably necessary or appropriate in order to facilitate or
to otherwise avoid interference with any securities offering by the Company
which may be ongoing or imminent at the time which performance would otherwise
be due under this Section 12; and the Optionee agrees to cooperate with the
Corporation accordingly.
13. MISCELLANEOUS.
(a) Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed to apply to the estate, personal representative or beneficiary to whom
the Option may be transferred by will or by the laws of descent and
distribution, or the Optionee's successor, as the case may be, the word
"Optionee" shall be deemed to include such person.
(b) This Agreement contains the entire agreement between the
parties with respect to the subject matter contained herein and may not be
modified, except in a written document signed by each of the parties hereto. Any
oral or written agreements, representations, warranties, written inducements or
other communications made prior to the execution of this Agreement shall be void
and ineffective for all purposes.
(c) All notices under this Option shall be mailed or delivered
by hand to the parties at their respective addresses set forth beneath their
names below or at such other address as may be
designated in writing by either of the parties to one another, or, if the
receiving party consents in advance, transmitted and received via telecopy or
via such other electronic transmission mechanism as may be available to the
parties.
(d) This Option shall be governed by and construed in accordance
with the laws of the State of Maryland, other than the conflict of laws
principles thereof.
IN WITNESS WHEREOF, the Corporation has caused this Agreement
to be executed by its duly authorized officer as of January 11, 1999.
ATTEST: CHESAPEAKE BIOLOGICAL LABORATORIES, INC.
/s/ John T. Janssen By: /s/ Narlin B. Beaty
________________________________ _______________________________________
OPTIONEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing Option and agrees to the
terms and conditions thereof.
OPTIONEE:
/s/ Thomas P. Rice
_________________________________
Thomas P. Rice
Date: March 8, 1999
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