EXHIBIT 10.27
CELL PATHWAYS, INC.
1997 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
ADOPTED ON OCTOBER 14, 1997
1. PURPOSE.
(A) The purpose of the 1997 Non-Employee Directors' Stock Option Plan
(the "Plan") is to provide a means by which each director of Cell Pathways,
Inc., a Delaware corporation (the "Company") who is not otherwise an employee of
the Company or of any Affiliate of the Company (each such person being hereafter
referred to as a "Non-Employee Director") will be given an opportunity to
purchase stock of the Company.
(B) The word "Affiliate" as used in the Plan means any parent
corporation or subsidiary corporation of the Company as those terms are defined
in Sections 424(e) and (f), respectively, of the Internal Revenue Code of 1986,
as amended from time to time (the "Code").
(C) The Company, by means of the Plan, seeks to secure and retain the
services of persons capable of serving as Non-Employee Directors of the Company,
and to provide incentives for such persons to exert maximum efforts for the
success of the Company.
2. ADMINISTRATION.
(A) The Plan shall be administered by the Board of Directors of the
Company (the "Board").
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(B) The Board may delegate administration of the Plan to a committee
composed of one (1) or more members of the Board (the "Committee"). If
administration is delegated to a Committee, the Committee shall have, in
connection with the administration of the Plan, the powers theretofore possessed
by the Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.
3. SHARES SUBJECT TO THE PLAN.
(A) Subject to the provisions of paragraph 10 relating to adjustments
upon changes in stock, the stock that may be sold pursuant to options granted
under the Plan shall not exceed in the aggregate Two Hundred Fifty Thousand
(250,000) shares of the Company's common stock (after adjustment for the reverse
split of 1 for 1.8157). If any option granted under the Plan shall for any
reason expire or otherwise terminate without having been exercised in full, the
stock not purchased under such option shall again become available for the Plan.
(B) The stock subject to the Plan may be unissued shares or reacquired
shares, bought on the market or otherwise.
4. ELIGIBILITY.
Options shall be granted only to Non-Employee Directors of the
Company.
2.
5. NON-DISCRETIONARY GRANTS.
(A) Each person who is a Non-Employee Director on the date that the
registration of the initial offering of the Company's common stock for sale to
the public becomes effective (the "Effective Date") automatically shall be
granted an option to purchase Three Thousand (3000) shares of common stock of
the Company on the terms and conditions set forth herein.
(B) Each person who is, after the Effective Date, elected for the
first time to be a Non-Employee Director automatically shall, upon the date of
his or her initial election to be a Non-Employee Director by the Board or
stockholders of the Company, be granted an option to purchase Ten Thousand
(10,000) shares of common stock of the Company on the terms and conditions set
forth herein.
(C) On the date of each Annual Meeting of Stockholders of the Company,
commencing with the Annual Meeting of Stockholders occurring in 1998, each
person who has then been a Non-Employee Director for a period of at least three
hundred sixty five (365) days automatically shall be granted an option to
purchase Three Thousand (3000) shares of common stock of the Company on the
terms and conditions set forth herein.
6. OPTION PROVISIONS.
Each option shall contain the following terms and conditions:
(A) The term of each option commences on the date it is granted and,
unless sooner terminated as set forth herein, expires on the date ("Expiration
Date") ten (10) years from the date of grant. If the optionee's continuous
service with the Company, whether as a Director, or if
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his or her status changes, as an employee of or consultant to the Company or any
Affiliate of the Company, terminates for any reason or for no reason, the option
shall terminate on the earlier of the Expiration Date or the date twelve (12)
months following the date of termination of service. In any and all
circumstances, an option may be exercised following termination of the
optionee's service with the Company and all Affiliates of the Company only as to
that number of shares as to which it was exercisable on the date of termination
of such service under the provisions of subparagraph 6(e).
(B) The exercise price of each option shall be one hundred percent
(100%) of the fair market value of the stock subject to such option on the date
such option is granted. For purposes of the Plan, "fair market value" means, as
of any date, the value of the common stock of the Company determined as follows:
(I) If the common stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the fair market value of a share of common stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Company's common stock) on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal or such
other source as the Board deems reliable.
(II) In the absence of such markets for the common stock, the
fair market value shall be determined in good faith by the Board.
4.
Notwithstanding the foregoing, for purposes of options granted
pursuant to subparagraph 5(a), "fair market value" shall mean the price per
share at which shares of common stock are first sold to the public in the
Company's initial public offering as specified in the final prospectus with
respect to that offering.
(C) The optionee may elect to make payment of the exercise price under
one of the following alternatives:
(I) Payment of the exercise price per share in cash at the
time of exercise; or
(II) Provided that at the time of the exercise the Company's
common stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of shares of common stock of the Company already owned by
the optionee, held for the period required to avoid a charge to the Company's
reported earnings, and owned free and clear of any liens, claims, encumbrances
or security interest, which common stock shall be valued at fair market value on
the date preceding the date of exercise; or
(III) Payment by a combination of the methods of payment
specified in subparagraph 6(c)(i) and 6(c)(ii) above.
Notwithstanding the foregoing, this option may be exercised pursuant
to a program developed under Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check) by the Company prior to
the issuance of shares of the Company's common stock.
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(D) An option shall not be transferable except by will or by the laws
of descent and distribution, and shall be exercisable during the lifetime of the
person to whom the option is granted only by such person or by his or her
guardian or legal representative, unless otherwise specified in the option, in
which case the option may be transferred upon such terms and conditions as are
set forth in the option, as the Board or the Committee shall determine in its
discretion, including (without limitation) pursuant to a "domestic relations
order." Notwithstanding the foregoing, the person to whom an option is granted
may, by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the optionee,
shall thereafter be entitled to exercise the option.
(E) Options granted under the Plan shall vest and become exercisable
as follows:
(I) An option granted pursuant to subparagraph 5(a) shall be
fully vested and exercisable on March 31, 1998, provided that the optionee has,
during the entire period prior to such vesting date, continuously served as a
Director of the Company or as an employee of or consultant to the Company or any
Affiliate of the Company, whereupon such option shall become fully vested and
exercisable in accordance with its terms.
(II) An option granted pursuant to subparagraph 5(b) shall
become vested and exercisable in three equal annual installments occurring on
the first through third anniversary dates of the date of grant of the option,
provided that the optionee has, during the entire period prior to such vesting
date, continuously served as a Director of the Company or as an employee of or
consultant to the Company or any Affiliate of the Company, whereupon such option
shall become vested and exercisable with respect to such installment in
accordance with its terms.
6.
(III) An option granted pursuant to subparagraph 5(c) shall be
fully vested and exercisable one year after the date of grant of the option,
provided that the optionee has, during the entire period prior to such vesting
date, continuously served as a Director of the Company or as an employee of or
consultant to the Company or any Affiliate of the Company, whereupon such option
shall become fully vested and exercisable in accordance with its terms.
(F) The Company may require any optionee, or any person to whom an
option is transferred under subparagraph 6(d), as a condition of exercising any
such option: (i) to give written assurances satisfactory to the Company as to
the optionee's knowledge and experience in financial and business matters; and
(ii) to give written assurances satisfactory to the Company stating that such
person is acquiring the stock subject to the option for such person's own
account and not with any present intention of selling or otherwise distributing
the stock. These requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (i) the issuance of the shares upon the
exercise of the option has been registered under a then-currently-effective
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or (ii), as to any particular requirement, a determination is
made by counsel for the Company that such requirement need not be met in the
circumstances under the then-applicable securities laws.
(G) Notwithstanding anything to the contrary contained herein, an
option may not be exercised unless the shares issuable upon exercise of such
option are then registered under the Securities Act or, if such shares are not
then so registered, the Company has determined that such exercise and issuance
would be exempt from the registration requirements of the Securities Act.
7.
7. COVENANTS OF THE COMPANY.
(A) During the terms of the options granted under the Plan, the
Company shall keep available at all times the number of shares of stock required
to satisfy such options.
(B) The Company shall seek to obtain from each regulatory commission
or agency having jurisdiction over the Plan such authority as may be required to
issue and sell shares of stock upon exercise of the options granted under the
Plan; provided, however, that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any option granted under the
Plan, or any stock issued or issuable pursuant to any such option. If the
Company is unable to obtain from any such regulatory commission or agency the
authority which counsel for the Company deems necessary for the lawful issuance
and sale of stock under the Plan, the Company shall be relieved from any
liability for failure to issue and sell stock upon exercise of such options.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to options granted under the
Plan shall constitute general funds of the Company.
9. MISCELLANEOUS.
(A) Neither an optionee nor any person to whom an option is
transferred under subparagraph 6(d) shall be deemed to be the holder of, or to
have any of the rights of a holder with respect to, any shares subject to such
option unless and until such person has satisfied all requirements for exercise
of the option pursuant to its terms.
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(B) Nothing in the Plan or in any instrument executed pursuant thereto
shall confer upon any Non-Employee Director any right to continue in the service
of the Company or any Affiliate or shall impair any right of the Company, its
Board or stockholders or any Affiliate to terminate the service of any Non-
Employee Director.
(C) No Non-Employee Director, individually or as a member of a group,
and no beneficiary or other person claiming under or through such Non-Employee
Director, shall have any right, title or interest in or to any option reserved
for the purposes of the Plan except as to such shares of common stock, if any,
as shall have been reserved for such Non-Employee Director pursuant to any
previous option grant.
(D) In connection with each option made pursuant to the Plan, it shall
be a condition precedent to the Company's obligation to issue or transfer shares
to a Non-Employee Director, or to evidence the removal of any restrictions on
transfer, that such Non-Employee Director make arrangements satisfactory to the
Company to insure that the amount of any federal or other withholding tax
required to be withheld with respect to such sale or transfer, or such removal,
is made available to the Company for timely payment of such tax.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(A) If any change is made in the stock subject to the Plan, or subject
to any option granted under the Plan, without the receipt of consideration by
the Company (through merger, consolidation, reorganization, recapitalization,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by the
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Company), the Plan will be appropriately adjusted in the class(es) and maximum
number of shares subject to the Plan, and the outstanding options will be
appropriately adjusted in the class(es) and number of shares and price per share
of stock subject to such outstanding options. Such adjustments shall be made by
the Board or the Committee, the determination of which shall be final, binding
and conclusive. (The conversion of any convertible securities of the Company
shall not be treated as a "transaction not involving the receipt of
consideration by the Company".)
(B) In the event of: (1) a dissolution, liquidation or sale of all or
substantially all of the assets of the Company; (2) a merger or consolidation in
which the Company is not the surviving corporation and in which the stockholders
of the Company immediately prior to such transaction fail to hold beneficial
ownership (within the meaning of Rule 13d-3 or any successor rule or regulation
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act") of securities representing at least eighty percent (80%) of the combined
voting power of the then-outstanding securities of the surviving corporation;
(3) a reverse merger in which the Company is the surviving corporation but the
shares of the Company's common stock outstanding immediately preceding the
merger are converted by virtue of the merger into other property, whether in the
form of securities, cash or otherwise, and in which the stockholders of the
Company immediately prior to such transaction fail to hold beneficial ownership
(as defined above) of securities representing at least eighty percent (80%) of
the combined voting power of the then-outstanding securities of the Company or
any corporation which then owns more than fifty percent (50%) of the combined
voting power of the Company; or (4) the acquisition by any person, entity or
group within the meaning of Section 13(d) or 14(d) of the Exchange Act, or any
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comparable successor provisions (excluding any employee benefit plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least twenty percent (20%) of the combined voting power entitled
to vote in the election of directors, then the vesting and exercisability of all
outstanding options shall be accelerated prior to such event and the options
terminated if not exercised (if applicable) after such acceleration and at or
prior to such event.
11. AMENDMENT OF THE PLAN.
(A) The Board at any time, and from time to time, may amend the Plan.
Except as provided in paragraph 10 relating to adjustments upon changes in
stock, no amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary for the Plan to
satisfy any Nasdaq or securities exchange listing requirements.
(B) Rights and obligations under any option granted before any
amendment of the Plan shall not be impaired by such amendment unless (i) the
Company requests the consent of the person to whom the option was granted and
(ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(A) The Board may suspend or terminate the Plan at any time. Unless
sooner terminated, the Plan shall terminate on the tenth (10th) anniversary of
its adoption by the Board. No options may be granted under the Plan while the
Plan is suspended or after it is terminated.
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(B) Rights and obligations under any option granted while the Plan is
in effect shall not be impaired by suspension or termination of the Plan, except
with the consent of the person to whom the option was granted.
(C) The Plan shall terminate upon the occurrence of any of the events
described in Section 10(b) above.
13. EFFECTIVE DATE OF PLAN; CONDITIONS OF EXERCISE.
(A) The Plan shall become effective upon adoption by the Board of
Directors, approval by the Stockholders of the Company and the Effective Date of
the Initial Public Offering.
(B) No option granted under the Plan shall be exercised or exercisable
unless and until the condition of subparagraph 13(a) above has been met.
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