Exhibit 10.11
-------------
STOCK OPTION AGREEMENT
----------------------
This STOCK OPTION AGREEMENT made as of this 23rd day of July, 2003
(this "Agreement"), by and between Elite Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx Xxxx (the "Executive").
WITNESSETH THAT:
WHEREAS, on July 22, 2003 the Compensation Committee of the Board of
Directors of the Company granted to the Executive an option (the "Option") to
purchase 300,000 shares (the "Option Shares") of the Corporation's Common Stock,
par value $.01 per share (the "Common Stock") effective upon the date of the
execution and delivery of the Executive's Employment Agreement (the "Grant
Date"); and
WHEREAS, the Company and the Executive desire to memorialize the terms
and conditions of the grant of the Option to the Executive;
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
1. Option Grant. The Company granted to the Executive an Option to purchase
from the Company all or any portion of the Option Shares, on the terms and
conditions herein set forth. It is intended that the grant of the Option
shall, to the maximum extent permitted by law, qualify as an incentive
stock option, as defined in Section 422 of the Internal Revenue Code of
1986, as amended. However, notwithstanding such designation, the Executive
acknowledges that, if he will becomes eligible in any calendar year to
exercise Option Shares having a fair market value (as determined as of the
Grant Date) in excess of $100,000, those Option Shares representing the
excess shall be treated as nonstatutory stock options. The portion of the
Option that qualifies as an incentive stock shall be subject to the terms
and conditions of the Company's 1997 Incentive Stock Plan (the "Plan"). In
the event of any conflict between the terms and conditions of this
Agreement and the Plan, this Agreement shall control.
2. Exercise Price; Time of Exercise.
---------------------------------
(a) The exercise price for the Option Shares shall be $2.15 per share (the
"Option Price"), the closing price of a share of Common Stock, as listed on
the American Stock Exchange, on the Grant Date. The exercise price shall be
paid by check of the Executive.
(b) The Option shall be exercisable solely upon the Company's consummation
of a Strategic
Transaction (as defined in the Employment Agreement, dated as of July 23,
2003 (the "Employment Agreement"), by and between the Company and the
Executive).
3. Term of Option. The term of the Option shall be for a period of ten (10)
years from the Grant Date (the "Termination Date"), subject to earlier
termination as hereinafter provided.
4. Termination Period. This Option may be exercised for three (3) months after
the Executive ceases to be employed by the Company (but in no event later
than the Termination Date); provided, however, in the event the Executive
ceases to be employed by the Company due to his death or Permanent
Disability (as defined in the Employment Agreement), this Option may be
exercised by the Executive (or, in the case of the Executive's death, by
the Executive's estate or by any person who acquires the right to exercise
the Option by bequest or inheritance) for six (6) months after the
Executive ceases to be employed by the Company (but in no event later than
the Termination Date). Notwithstanding the foregoing, in the event the
Company terminates the Executive's employment pursuant to a Termination for
Cause (as defined in the Employment Agreement) or the Executive voluntarily
terminates his employment with the Company (other than as a result of a
Termination for Good Reason (as defined in the Employment Agreement) or the
death or Permanent Disability of the Executive), the Option shall
immediately terminate upon the date the Executive ceases to be employed by
the Company and the Executive shall no longer have the right to exercise
the Option and purchase the Option Shares.
5. Non-Transferability. The Option shall not be transferable otherwise than by
will or the laws of descent and distribution, and the Option may be
exercised, during the lifetime of the Executive, only by the Executive.
6. Not a Contract of Employment. Nothing in this Agreement shall confer upon
the Executive any right to continue in the employ of the Company or of any
of its subsidiaries or interfere in any way with the right of the Company
or any such subsidiary to terminate the employment of the Executive at any
time.
7. Reservation of Shares. The Company shall at all times during the term of
the Option reserve and keep available such number of shares of Common Stock
as will be sufficient to satisfy the requirements of this Agreement.
8. Investment Certificate. Prior to the receipt of stock certificates pursuant
to the exercise of the Option granted hereunder, the Executive shall, if
required in the Company's discretion, demonstrate an intent to hold the
shares acquired by exercise of the Option for investment and not with a
view to resale or distribution thereof to the public by delivering to the
Company an investment certificate or letter in such form as the Company may
require.
9. Status. Neither the Executive nor the Executive 's executor, administrator,
heirs or legatees shall have any rights as a holder of shares of Common
Stock subject to this Option until exercise of the Option, payment of the
Option Price, and the issuance of a stock certificate evidencing the Option
Shares issuable upon exercise of the Option.
-2-
10. Certain Adjustments. In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, other change in corporate
structure affecting the Common Stock, or spin-off or other distribution of
assets to stockholders, an appropriate adjustment shall be made to the
number of Option Shares, the Option Price and the number of shares of
Common Stock reserved for issuance under this Agreement.
11. Tax Withholding. The exercise of any Option Shares is subject to the
condition that, if at any time the Company shall determine, in its
discretion, that the satisfaction of withholding tax or other withholding
liabilities under any state or Federal law is necessary or desirable as a
condition of, or in connection with, such exercise or the delivery of
Option Shares pursuant thereto, then, in such event, the exercise of the
Option or any portion thereof shall not be effective unless and until such
withholding tax or other withholding liabilities shall have been satisfied
in a manner acceptable to the Company.
12. Miscellaneous.
--------------
(a) All notices, demands, requests, or other communications that may be or
are required to be given, served, or sent by a party pursuant to this
Agreement shall be in writing and shall be (i) personally delivered, (ii)
mailed by first-class, registered or certified mail, return receipt
requested, postage prepaid, or (iii) sent by overnight delivery carrier,
addressed as follows:
(A) If to the Company:
Elite Pharmaceuticals, Inc.
000 Xxxxxx Xxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chairman of the Board
(B) If to the Executive:
Xxxxxxx Xxxx
[____________________]
Each party may designate by notice in writing, in the manner described
above, a new address to which any notice, demand, request, or communication
required or permitted by this Agreement may be sent. Any notice, demand,
request, or communication that shall be delivered, mailed or transmitted in
the manner described above shall be deemed given, served, sent or received
for all purposes when it is delivered to the addressee. An affidavit of
personal delivery, the return receipt, or the delivery receipt shall be
deemed conclusive, but not exclusive, evidence of such delivery.
(b) The invalidity of any one or more provisions hereof shall not affect
the remaining portions of this Agreement; and if one or more of the
provisions contained herein should be invalid, or should operate to render
this Agreement invalid, this Agreement shall be construed as if such
invalid provisions had not been inserted.
-3-
(c) It is the express intention and agreement of the parties hereof that
all covenants and agreements made in this Agreement shall survive the
execution and delivery of this Agreement and the exercise (if any) of the
Option.
(d) Neither the waiver by a party of a breach of or a default under any of
the provisions of this Agreement, nor the failure of a party, on one or
more occasions, to enforce any of the provisions of this Agreement or to
exercise any right, remedy, or privilege hereunder shall thereafter be
construed as a waiver of any subsequent breach or default of a similar
nature, or as a waiver of any such provisions, rights, remedies, or
privileges hereunder.
(e) Subject to any provisions hereof restricting transfer, encumbrance and
assignment, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, personal
representatives, successors, and assigns.
(f) It is the explicit intention of the parties hereto that no person or
entity other than the parties hereof is or shall be entitled to bring any
action to enforce any provisions of this Agreement against any parties
hereto, and that the covenants, undertakings, and agreements set forth in
the Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto and their respective heirs, personal
representatives, successors and assigns as permitted hereunder.
(g) This Agreement contains the entire agreement among the parties with
respect to subject matter hereof, and supersedes all prior oral or written
agreements, commitments, or understandings with respect to the matters
provided for herein.
(h) Article, section and subsection headings contained in this Agreement
are inserted for convenience of reference only, shall not be deemed to be
part of this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions hereof.
(i) This Agreement, the rights and obligations of the parties hereto, and
any claims or disputes relating thereto, shall be governed by and construed
in accordance with the internal laws of the State of Delaware without
giving effect to the choice of law principles thereof. Each of the parties
hereto irrevocably submits and consents to the exclusive jurisdiction of
and laying of venue in the courts of the State of New Jersey and the United
States District Court for the District of New Jersey for the purpose of any
suit, action, proceeding or judgment relating to or arising, directly or
indirectly, out of this Agreement and the transactions contemplated hereby.
Each party hereto irrevocably waives any objection to the exclusive laying
of venue of any suit, action or proceeding brought in such courts and
irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(j) THE EXECUTIVE REPRESENTS THAT HE AND/OR HIS OTHER PROFESSIONAL
ADVISORS HAVE HAD THE OPPORTUNITY TO REVIEW THIS AGREEMENT.
-4-
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by an officer hereunto duly authorized, and the Executive has hereunto
set his hand, all as of the day and year first above written.
ELITE PHARMACEUTICALS, INC.
By:
---------------------------------
Name: Xxxx X. Xxxxx
Title: Chairman of the Board
------------------------------------
Xxxxxxx Xxxx
