Document:

Exhibit 10.3

 

NEOPHARM, INC.

2006 EQUITY INCENTIVE PLAN

AWARD AGREEMENT

(Stock Option)

Unless
otherwise defined herein, the terms defined in the Plan shall have the same
defined meanings in this Award Agreement.

 

I.                                         NOTICE OF STOCK OPTION AWARD

 

You
have been granted an option to purchase Common Stock of the Company, subject to
the terms and conditions of the Plan and this Award Agreement, as follows:

Date of Grant

Exercise Price per Share

Total Number of Shares Granted

Total Option Price

Type of Option:

Term/Expiration Date:

Vesting Schedule:

This
Option may be exercised, in whole or in part, in accordance with the following
schedule:

	
  As of the following Date:

  	
   

  	
  The Option shall become exercisable cumulatively with respect to the
  following percentage of Shares:

  	
   

  
	
   

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
  25

  	
  %

  
	
   

  	
   

  	
   

  	
   

  

 

 

1

 

The
Option shall not become exercisable in accordance with the foregoing schedule,
if the Grantee’s termination of Continuous Status as an Employee or Consultant
occurs before such date.  Exercisability
under this schedule is cumulative, and after the Option becomes exercisable
under the schedule with respect to any portion of the Optioned Stock, it shall
continue to be exercisable with respect to that portion of the Optioned Stock
until the Option expires. 
Notwithstanding the foregoing provisions, the Option shall become
exercisable with respect to all of the Optioned Stock as follows:

a.                                         The Option
shall become fully exercisable upon the Optionee’s death or Disability as
provided in the Plan.

b.                                     In the event of
a Change of Control, all unvested Awards shall become immediately vested and
exercisable.

                                                Termination
Period:

                                                This Option
shall terminate immediately if Grantee has a termination of his Continuous Status
as an Employee or Consultant for Cause and may be exercised for ninety (90)
days after termination of the Grantee’s Continuous Status as an Employee or
Consultant because of Retirement or for any reason other than death, Disability
or Cause.  Upon the death or Disability
of the Grantee, this Option may be exercised for such longer period as provided
in the Plan. In the event of the Grantee’s change in status from Employee to
Consultant or Consultant to Employee, this Option Agreement shall remain in effect.
In no event shall this Option be exercised later than the Term/Expiration Date
as provided above or in the Plan.

 

II.                                     AGREEMENT

                                                1.                                       Grant of Option. The
Administrator hereby grants to the Grantee named in Part I “Notice of Stock
Option Award” (the “Notice of Award”) of this Agreement (the “Grantee”), an
option (the “Option”) to purchase the number of Shares, as set forth in the
Notice of Award, at the exercise price per share set forth in the Notice of
Award (the “Exercise Price”), subject to the terms and conditions of the Plan,
which are incorporated herein by reference. In the event of a conflict between
the terms and conditions of the Plan and the terms and conditions of this Award
Agreement, the terms and conditions of the Plan shall prevail.

                                                2.                                       Exercise of
Option.

                                                                                                (a)                                  Right to
Exercise. This Option is exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Award and the
applicable provisions of the Plan and this Award Agreement. In the event of
Optionee’s death, Disability or other termination of Grantee’s Continuous
Status as an Employee or Consultant, the exercisability of the Option is
governed by the applicable provisions of the Plan and this Award Agreement.

 

2

 

                                                                                                (b)                                 Method of
Exercise. This Option is exercisable by delivery of an
exercise notice to the Administrator, which shall state the election to
exercise the Option, the number of shares of Stock in respect of which the
Option is being exercised (the “Exercised Shares”), and such other
representations and agreements as may be required by the Company pursuant to
the provisions of the Plan. The Exercise Notice shall be signed by the Grantee
(or a permitted transferee under Section 8 of the Plan) and shall be delivered
in person or by certified mail, or electronically in accordance with procedures
established by the Administrator, in each case to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate Option
Price as to all Exercised Shares. This Option shall be deemed to be exercised
upon receipt by the Company of such fully executed Exercise Notice accompanied
by such aggregate Option Price.

                                                                                                No shares of
Stock shall be issued pursuant to the exercise of this Option unless such
issuance and exercise complies with all relevant provisions of law and the
requirements of any stock exchange or quotation service upon which the Stock is
then listed. Assuming such compliance, for income tax purposes the Exercised
Shares shall be considered transferred to the Grantee on the date the Option is
exercised with respect to such Exercised Shares.

                                                3.                                       Method of
Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

                                                                                                (a)                                  cash;

                                                                                                (b)                                 check;

                                                                                                (c)                                  surrender of
other shares of Stock which (i) in the case of shares of Stock acquired upon
exercise of an option under any compensation plan maintained by the Company,
have been owned by the Grantee for more than six (6) months on the date of
surrender, and (ii) have a Fair Market Value on the date of surrender equal to
the aggregate Option Price of the Exercised Shares;

                                                                                                (d)                                 with the
approval of the Administrator surrender of shares of Restricted Stock held by
the Grantee for at least six (6) months prior to the exercise of the Option,
each valued at the Fair Market Value of a share of Stock on the date of
exercise.

                                                                                                (e)                                  delivery of a
properly executed exercise notice together with such other documentation as the
Administrator and a broker, if applicable, shall require to effect an exercise
of the Option and delivery to the Company of the sale or loan proceeds required
to pay the exercise price; or

                                                                                                (f)                                    any combination
of the foregoing methods of payment or if acceptable to the Administrator.

In the discretion of the Administrator, and to the extent permitted by
law, deferred payment by means of a loan may also be made in accordance with
Section 10 of the Plan.

                                                4.                                       Limited
Transferability of Option. Except as set forth in Section 8 of the
Plan, this Option may not be transferred in any manner.  The terms of the Plan and this Option
Agreement 

 

3

 

shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.

                                                5.                                       Term of Option. This Option
may be exercised only within the term set out in the Notice of Award, and may
be exercised during such term only in accordance with the Plan and the terms of
this Award Agreement.

                                                6.                                       Tax Consequences. THE EXERCISE
OF THIS OPTION WILL HAVE TAX CONSEQUENCES WHICH COULD BE ADVERSE TO THE
GRANTEE.  ACCORDINGLY, THE GRANTEE IS
URGED TO CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF
THE SHARES.

                                                7.                                       Entire
Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Award Agreement constitute the entire agreement of
the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and Grantee with
respect to the subject matter hereof, and may not be modified adversely to the
Grantee’s interest except by means of a writing signed by the Company and
Grantee. This agreement is governed by Illinois law except for that body of law
pertaining to conflict of laws.

                                                By your
signature and the signature of the Company’s representative below, you and the
Company agree that this Option is granted under and governed by the terms and
conditions of the Plan and this Award Agreement. Grantee has reviewed the Plan
and this Award Agreement in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Award Agreement and fully
understands all provisions of the Plan and Award Agreement. Grantee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Administrator upon any questions relating to the Plan
and Award Agreement. Grantee further agrees to notify the Company upon any
change in the residence address indicated below.

 

	
  OPTIONEE

  	
  NEOPHARM, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  By: 

  	
   

  
	
  Signature

  	
   

  	
  Title: 

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
  Print Name

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Date

  	
   

  
						

 

 

4

 

CONSENT OF SPOUSE

                                                The undersigned
spouse of Grantee has read and hereby approves the terms and conditions of the
Plan and this Award Agreement. In consideration of the Company’s granting his
or her spouse the right to purchase Shares as set forth in the Plan and this
Award Agreement, the undersigned hereby agrees to be irrevocably bound by the
terms and conditions of the Plan and this Award Agreement and further agrees
that any community property interest shall be similarly bound. The undersigned
hereby appoints the undersigned’s spouse as attorney-in-fact for the
undersigned with respect to any amendment or exercise of rights under the Plan
or this Award Agreement.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Spouse of Grantee

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date

  

 

 

 

 

 

 

 

 

 

 

 

 

 

5Exhibit
10.4

 

NON-EMPLOYEE
DIRECTOR COMPENSATION

 

 

	
  •       Board membership

  	
   

  	
  $50,000 restricted stock
  grant with a 1 year vesting period

  
	
  •       Board Chairman

  	
   

  	
  $20,000 restricted stock
  grant with a 1 year vesting period and $48,000 per year (paid $12,000 per
  quarter) cash compensation

  
	
   

  	
   

  	
   

  
	
  •       Corporate Governance
  Committee Members

  	
   

  	
  $20,000 per year (paid
  $5,000/quarter) cash compensation

  
	
  •       Corporate Governance
  Committee Chairman

  	
   

  	
  $45,000 per year (paid
  $11,250/quarter) cash compensation

  
	
   

  	
   

  	
   

  
	
  •       Audit Committee Members

  	
   

  	
  $20,000 per year (paid
  $5,000/quarter) cash compensation

  
	
  •       Audit Committee Chairman

  	
   

  	
  $40,000 per year (paid
  $10,000/quarter) cash compensation

  
	
   

  	
   

  	
   

  
	
  •       Compensation Committee
  Members

  	
   

  	
  $8,000 per year (paid
  $2,000/quarter) cash compensation

  
	
  •       Compensation Committee
  Chairman

  	
   

  	
  $20,000 per year (paid
  $5,000/quarter) cash compensation

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