Exhibit 10.4


 


SYNERGY
PHARMACEUTICALS INC.


 


NON-STATUTORY
STOCK OPTION AGREEMENT


 


	
  Option No.

  	
   

  	
  Date of Grant: As of
            , 2008

  
	
   

  	
   

  	
  Shares:

  



 


To:  Gabriele M. Cerrone


 


We are pleased to notify
you that SYNERGY PHARMACEUTICALS INC.
(the “Company”) has granted to you a non-statutory stock option, to purchase
all or any part of an aggregate of                         
shares of the Common Stock of the Company (the “Optioned Shares”) at a price of
$      
per share, subject to the terms and conditions of this Agreement set forth
hereinafter.


 


1.             Vesting, Term and Exercise of Option. 
Subject to the provisions of this Agreement, this option may be
exercised for up to the number of vested Optioned Shares by you or the
representative of your estate on or prior to 10 years from the date of grant (“Last
Exercise Date”).        
of the Optioned Shares will vest on each of                                   .


 


2.             Any portion of the Optioned Shares that
you do not exercise shall accumulate and can be exercised by you any time prior
to the Last Exercise Date.   You may not
exercise your option to purchase a fractional share or fewer than 100 shares,
and you may only exercise your option by purchasing shares in increments of 100
shares unless the remaining shares purchasable are less than 100 shares.


 


This option may be
exercised by delivering to the Secretary of the Company (i) a written
Notice of Intention to Exercise in the form attached hereto as Exhibit A
signed by you and specifying the number of Optioned Shares you desire to
purchase, (ii) payment in full of the exercise price for all such Optioned
Shares in cash, certified check or surrender of shares of Common Stock of the
Company having a value equal to the exercise price of the Optioned Shares as to
which you are exercising this option, provided that such surrendered shares, if
previously acquired by exercise of a Company stock option, have been held by
you at least six months prior to their surrender. As a holder of an option, you
shall have the rights of a shareholder with respect to the Optioned Shares only
after they shall have been issued to you upon the exercise of this option.
Subject to the terms and provisions of this Agreement, the Company shall use
its best efforts to cause the Optioned Shares to be issued as promptly as
practicable after receipt of your Notice of Intention to Exercise.


 


3.             Change of
Control. Notwithstanding
the foregoing, in the event there shall have been a Change in Control of the
Company), all unvested Optioned Shares shall immediately and irrevocably vest
and the exercise period of such Optioned Shares shall be automatically extended
to ten years following the date of the Change of Control.  For purposes of this Agreement, a “Change in
Control” shall be deemed to have occurred if (i) there shall be
consummated (A) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of the Company’s Common Stock would be 


 

















 


converted
into cash, securities or other property, other than a merger of the Company in
which the holders of the Company’s Common Stock immediately prior to the merger
have substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (B) any sale,
lease, exchange or other transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company; or (ii) the
stockholders of the Company shall approve any plan or proposal for the
liquidation or dissolution of the Company, (ii) any person (as such term
is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act
of 1934 (the “Exchange Act”)), other than the Company or any employee benefit
plan sponsored by the Company, shall become the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
representing 20% or more of the combined voting power of the Company’s then
outstanding securities ordinarily (and apart from rights accruing in special
circumstances) having the right to vote in the election of directors, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, or (iv) at any time during a period of
two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company shall cease for any reason to
constitute at least a majority thereof, unless the election or the nomination
for election by the Company’s stockholders of each new director during such
two-year period was approved by a vote of at least two-thirds of the directors
then still in office who were directors at the beginning of such two-year
period.


 


4.             Non-transferability of Option. 
This Option shall not be transferable and may be exercised during your
lifetime only by you. Any purported transfer or assignment of this option shall
be void and of no effect, and shall give the Company the right to terminate
this option as of the date of such purported transfer or assignment. No transfer
of an option by you by will or by the laws of descent and distribution shall be
effective unless the Company have been furnished with written notice thereof,
and such other evidence as the Board of Directors may deem necessary to
establish the validity of the transfer and conditions of the option, and to
establish compliance with any laws or regulations pertaining thereto.


 


5.             Certain Rights and Restrictions With
Respect to Common Stock.  The Optioned Shares which you
may acquire upon the exercise of this option will not be registered under the
Securities Act of 1933, as amended, or under state securities laws and the
resale by you of such Optioned Shares will, therefore, be restricted. You will
be unable to transfer such Optioned Shares without either registration under
such Act and compliance with applicable state securities laws or the
availability of an exemption therefrom. Accordingly, you represent and warrant
to the Company that all shares of Common Stock you may acquire upon the
exercise of this option will be acquired by you or your estate in the event of
your death for your own account for investment and that you will not sell or
otherwise dispose of any such shares except in compliance with all applicable
federal and state securities laws. The Company may place a legend to such
effect upon each certificate representing Optioned Shares acquired by you upon
the exercise of this option.


 


6.             Disputes.  Any dispute
which may arise under or as a result of or pursuant to this Agreement shall be
finally and conclusively determined in good faith by the Board of Directors of
the Company in its sole discretion, and such determination shall be binding
upon all parties.


 

















 


7.             Governing Law. 
This Agreement shall be interpreted, construed and administered in
accordance with the laws of the State of New York as they apply to contracts
made, delivered and performed in the State of New York.


 


	
   

  	
  SYNERGY PHARMACEUTICALS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  



 

















 


Exhibit A


 


NOTICE OF
INTENTION TO EXERCISE STOCK OPTIONS


 


The undersigned grantee
of a Synergy Pharmaceuticals Inc. Stock Option Agreement dated as of       ,
2008 to purchase          shares of Synergy
Pharmaceuticals Inc. common stock hereby gives notice of his or her intention
to exercise the Stock Option (or a portion thereof) and elects to purchase                     
shares of Synergy Pharmaceuticals Inc. common stock.


 


Shares should be issued
in the name of the undersigned and should be sent to the undersigned at:


	
   

  
	
   

  
	
  (Address where
  you want stock certificates mailed to)

  



 


 


Date:


 


Social Security Number


 


 


	
   

  	
   

  
	
   

  	
   

  
	
  Signature

  



 


 


INSTRUCTIONS:  The exercise of
these Stock Options is effective on the date the Company has received all of (1) this
Notice of Intention to Exercise Stock Options, and (2) payment in full in
cash of the exercise price for all shares being purchased pursuant to this
Notice.