PROTALEX, INC.
145 Union Square Drive
New Hope, PA 18938
NONSTATUTORY STOCK OPTION
AGREEMENT
PROTALEX, INC.,
a Delaware corporation (the “Corporation”), and Victor
S. Sloan, M.D., an employee of the Corporation (the
“Optionee”), for good and valuable consideration the
receipt and adequacy of which are hereby acknowledged and intending
to be legally bound hereby, agree as follows:
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1.
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Grant of
Option . The Corporation
hereby confirms the grant to the Optionee on August 23, 2005
(the “Date of Grant”) of an option (the
“Option”) to purchase 50,000 shares of Common Stock of
the Corporation (the “Common Stock”) at an option price
of $2.50 per share, under and subject to the terms and conditions
of this Agreement.
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The Option
confirmed hereby is a “nonstatutory stock option,”
i.e., a stock option which is not intended to qualify under section
422 of the Internal Revenue Code of 1986, as amended. Subject to
the provisions of Section 3 of this Agreement regarding the periods
during which stock options may be exercised upon termination of
employment (including death of the Optionee), and Section 4 of this
Agreement regarding the exercise of stock options in connection
with a Capital Transaction, as hereinafter defined, the Option is
exercisable in accordance with the following schedule set forth
below:
On or after the
six month anniversary of the Date of Grant as to 6/48 of the shares
subject to the Option; and
On or after
each monthly anniversary of the Date of Grant thereafter as to an
additional 1/48 of the shares subject to the Option such that the
Option shall be fully exercisable upon the four year anniversary of
the Date of Grant;
and will expire
at the close of business on August 22, 2015. For purposes of
the foregoing schedule, any fractional shares shall be rounded up
to the next whole share. Notwithstanding the foregoing, the Board
of Directors of the Corporation or a designated committee thereof
may in its discretion authorize the acceleration of the date on
which the Option may be exercised.
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2.
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Acceptance
of Grant of Option . The
Optionee accepts the grant of the Option confirmed by this
Agreement, and agrees to be bound by the terms and provisions of
this Agreement, as this Agreement may be amended from time to time;
provided, however, that no alteration, amendment, revocation or
termination of this Agreement will, without the written consent of
the Optionee, adversely affect the rights of the Optionee with
respect to the Option.
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3.
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Termination
of Eligibility . If the
Optionee ceases to be employed by the Corporation, or its parent or
subsidiary, for any reason (other than for “cause,” as
hereinafter defined, or such Optionee’s death), any vested
Option granted hereunder to the Optionee shall expire three months
after the date of the occurrence giving rise to such termination of
eligibility (or 1 year in the event the Optionee is
“disabled,” as defined in Section 22(e)(3) of
the Internal Revenue Code of 1986, as amended) or upon the date it
expires by its terms, whichever is earlier. Any Option that has not
vested in the Optionee as of the date of such termination shall
immediately expire and shall be null and void. The Board of
Directors or designated committee thereof shall, in its sole and
absolute discretion, decide, using the provisions set forth in
Treasury Regulations Section 1.421-7(h), whether an authorized
leave of absence or absence for military or governmental service,
or absence for any other reason, shall constitute termination of
eligibility for purposes of this Section.
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If the Optionee
ceases to be employed by the Corporation, or its parent or
subsidiary, and such termination is as a result of
“cause,” as hereinafter defined, then all Options
granted hereunder to such Optionee shall expire on the date of the
occurrence giving rise to such termination of eligibility or upon
the date it expires by its terms, whichever is earlier, and the
Optionee shall have no rights with respect to any unexercised
Options. For purposes of this Agreement, “cause” shall
mean the Optionee’s personal dishonesty, misconduct, breach
of fiduciary duty, incompetence, intentional failure to perform
stated obligations, willful violation of any law, rule, regulation
or final cease and desist order, or any material breach of any
provision of this Agreement or any employment agreement. The Board
of Directors shall have complete discretion and authority to
determine whether the termination of the Optionee is for
cause.
In the event
the Optionee shall die, the Option may be exercised (subject to the
condition that no Option shall be exercisable after its expiration
and only to the extent that the Optionee’s right to exercise
such Option had accrued at the time of the Optionee’s death)
at any time within six months after the Optionee’s death by
the executors or administrators of the Optionee or by any person or
persons who shall have acquired the Option directly from the
Optionee by bequest or inheritance. Any Option that has not vested
in the Optionee as of the date of death or termination of
employment, whichever is earlier, shall immediately expire and
shall be null and void.
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4.
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Capital
Transactions . Upon a
sale or exchange of all or substantially all of the assets of the
Corporation, a merger or consolidation in which the Corporation is
not the surviving corporation, a merger, reorganization or
consolidation in which the Corporation is the surviving corporation
and share
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