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Exhibit 99.9
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE DUSA PHARMACEUTICALS, INC. 1996 OMNIBUS PLAN
THIS AGREEMENT made and entered into as of the 7th day of June, 1996,
by and between DUSA Pharmaceuticals, Inc., a corporation incorporated under the
laws of the State of New Jersey (the "Company"), and XXXXXXX X. XXXXXXX, ESQ.,
an individual residing in the State of New Jersey (the "Grantee").
WHEREAS, pursuant to the DUSA Pharmaceuticals, Inc. 1996 Omnibus Plan
(the "Plan"), the Company has determined that its interests will be advanced by
providing an incentive to the Grantee to acquire a proprietary interest in the
Company and, as a shareholder, to share in its success, with added incentive to
work effectively for and in the Company's interest;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereby agree as follows:
SECTION 1
GRANT
1.1 The Company hereby grants to the Grantee, as a matter of
separate agreement and not in lieu of salary or any other
compensation for services, the right and option (the "Option")
to purchase, in accordance with the vesting rights outlined in
Sections 3.1 and 3.6 hereof, up to 10,000 shares of authorized
but unissued Common Stock, without par value ("Common Stock"),
of the Company on the terms and conditions herein set forth in
this Agreement. This grant is automatic pursuant to the Plan.
SECTION 2
PRICE
2.1 The purchase price of the shares of Common Stock subject to
this Option shall be the fair market value of the shares of
Common Stock on the date of the grant ($9.875 PER SHARE)(the
"Exercise Price").
SECTION 3
WHEN EXERCISABLE
3.1 The aggregate number of shares of Common Stock of the Company
optioned by this Agreement (the "Optioned Shares") shall vest
in the Grantee as follows:
(a) one-quarter of the Option on the first anniversary of
the day of the grant, being June 7, 1997;
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(b) one-quarter of the Option on the second anniversary
of the day of the grant, being June 7, 1998;
(c) one-quarter of the Option on the third anniversary of
the day of the grant, being June 7, 1999; and
(d) one-quarter of the Option on the fourth anniversary
of the day of the grant, being June 7, 2000;
and, except as provided by Sections 3.6 and 6.3 hereof, the Grantee
shall only be entitled to exercise this Option, in whole or in part, in
the amounts set out above and from and after the dates so specified.
3.2 Subject to Sections 3.1 and 3.6 hereof, the Grantee shall have
the right, at any time prior to 5:00 p.m. (Eastern Standard
Time) on the date prior to the tenth anniversary date hereof,
being June 7, 2006, provided that if such day is not a day on
which the Company is open for business then on the first
following day on which the Company is open for business, to
exercise this Option for any number of the Optioned Shares up
to the maximum number of shares specified in Section 1.1
above.
3.3 No less than one thousand (1,000) shares may be purchased upon
any one exercise of the Option granted hereby unless the
number of shares purchased at such time is the total number of
shares in respect of which the Option hereby granted is then
exercisable.
3.4 In no event shall any Option granted hereby be exercisable for
a fractional share.
3.5 From time to time, in its discretion, the Committee may offer
the Grantee the right to cancel any Option granted hereunder
in exchange for such consideration as the Committee shall
determine.
3.6 Notwithstanding anything contained in Sections 1 and 3.1
hereof, the Option shall continue to vest in the Grantee only
so long as the Grantee shall continue to serve the Company as
an officer or director. Should the Grantee cease to serve in
all such capacities, the provisions of Section 5.2 shall apply
with respect to the vesting and exercise of the Option. The
Board of Directors shall be entitled to determine if and when
employment or service to the Company has ceased with respect
to the Grantee.
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SECTION 4
HOW EXERCISABLE
4.1 Subject to such administrative regulations as the Committee
may from time to time adopt, the Grantee or beneficiary shall,
in order to exercise this Option give to the Company at its
principal office notice in writing in the form of Schedule A
hereto setting out the number of Optioned Shares with respect
to which the Option is being exercised. The notice must be
accompanied by payment of a certified check, official bank
cashier's check or money order in an amount equal to the
Exercise Price multiplied by the number of shares requested
and a duly executed copy of this Agreement.
4.2 Any notice under this Section shall include an undertaking to
furnish or execute such documents as the Committee in its
discretion shall deem necessary (i) to evidence such exercise,
in whole or in part, of the Option evidenced by this
Agreement, (ii) to determine whether registration is then
required under the Securities Act of 1933, or any other law,
as then in effect, and (iii) to comply with or satisfy the
requirements of the Securities Act of 1933, or any other law,
as then in effect.
4.3 The Grantee agrees that all shares purchased by him or her
under the Option will be acquired for investment, not
distribution, and that any notice of exercise of the Option
must be accompanied by a written representation to that
effect, signed by the Grantee.
SECTION 5
TERMINATION OF OPTION
5.1 The Option granted hereby shall terminate and be of no force
or effect upon the expiration of ten years from the date of
the Grant unless terminated prior to such time as provided
below.
5.2 Subject to Section 3.6 hereof, should the Grantee cease to
serve the Company as an officer or director, the Grantee's
Option shall be exercised as follows:
(a) If the Grantee's termination of employment or service is
other than for Cause, the Option may be exercised, to the
extent exercisable, for a period of three months after the
date of such termination of employment;
(b) If the Grantee's termination of employment or service is
by reason of retirement or disability, the Option may be
exercised, to the extent exercisable, for a period of 12
months after the date of such termination;
(c) In the event of death of the Grantee after termination of
employment or service pursuant to (b) or (c) above, the person
or persons to whom the Grantee's rights are transferred by
will or the laws of descent and distribution shall have a
period of three years from the date of termination of the
Grantee's employment or service to exercise the Option which
could have been
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exercised during such period; and
(d) In the event of death of the Grantee while employed, the
Option shall become fully and immediately exercisable and may
be exercised by the person or persons to whom the Grantee's
rights are transferred by will or the laws of descent and
distribution for a period of three years after the Grantee's
death, subject to exercise during the remaining term of the
Option;
5.3 Any determination made by the Committee with respect to any
matter referred to in this Section 5 shall be final and
conclusive on all persons affected thereby. Employment by, or
service to, the Company shall be deemed to include employment
by, or service to, any subsidiary of the Company by the
Grantee.
SECTION 6
ADJUSTMENTS TO OPTION
6.1 Subject to any required action by the Committee and
shareholders, the number of shares provided for in the Option,
the price per share thereof and the number of shares provided
for in the Plan shall be proportionately adjusted for any
increase or decrease in the number of issued shares of the
Company resulting from the payment of a share dividend, a
share split or any transaction which is a "corporate
transaction" (as defined in the Treasury regulations
promulgated under Section 424 of the Code.
6.2 Subject to any required action by the Committee and
shareholders, if the Company shall be the surviving entity in
any merger or consolidation, or after a consolidation of the
Company and one or more entities in which the resulting entity
is an independent entity, the Option shall pertain to and
apply to the securities of the surviving entity in an amount
that the board of directors of the surviving entity, at its
sole discretion, determines to be equivalent, as nearly as
practicable, to the nearest whole number and class of shares
that were subject to the Option. These shares of stock or
other securities shall, after such merger or consolidation, be
deemed to be shares for all purposes of the Plan. The
aforesaid adjustments, when applicable, shall be made by the
Committee, and the Committee's determination shall be final,
binding and conclusive.
6.3 In the event of a Change of Control (as defined below), any
and all outstanding Options not fully vested shall
automatically vest in full and shall be immediately
exercisable. The date on which such accelerated vesting and
immediate exercisability shall occur shall be the date of the
occurrence of the Change of Control.
A "Change of Control" shall be deemed to have taken place upon
(i) the acquisition by a third person, including a "group" as
defined in Section
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13(d)(3) of the Securities Exchange Act of 1934, as amended,
of shares of the Company having 50% or more of the total
number of votes that may be cast for the election of Directors
of the Company; (ii) shareholder approval of a transaction for
the acquisition of the Company, or substantially all of its
assets by another entity or for a merger, reorganization,
consolidation or other business combination to which the
Company is a part; or (iii) the election during any period of
24 months or less of 50% or more of the Directors of the
Company where such Directors were not in office immediately
prior to such period provided, however, that no "Change of
Control" shall be deemed to have taken place if the Directors
of the Company in office on the date of adoption of the Plan,
or their successors in office nominated by such Directors,
affirmatively approve a resolution to such effect.
Except as provided with respect to a Grantee in his or her
stock option agreement or other controlling agreement between
him or her and the Company, to the extent that the
acceleration, exercisability or parachute payment attributable
to the Option following a Change of Control would result in
"excess parachute payments"1 when the former are aggregated
with other payments or benefits to the Grantee (whether or not
payable by the Plan), such parachute payments or benefits
provided to a Grantee under this Agreement shall be reduced to
the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Section 4999 of the Code.
This reduction will only be made if it will cause the
Grantee's net after-tax benefit to exceed the net after-tax
benefit that would have existed if such reduction were not
made. "Net after-tax benefit" shall be the sum of (i) all
payments and benefits which a Grantee receives or is entitled
to receive that would constitute a "parachute payment" under
Section 280G of the Code, less (ii) the amount of federal
income taxes payable with respect to the payments and benefits
described in (i) above, calculated at the maximum marginal
income tax rate2 for the year in which such payments and
benefits shall be paid to the Grantee, less (iii) the amount
of excise taxes imposed with respect to the payments and
benefits described in (i) above by Section 4999 of the Code.
6.4 In the event of a change in the Company's shares which is
limited to a change of all of its authorized shares with par
value into the same number of shares with a different par
value or without par value, the shares resulting from any such
change shall be deemed to be shares within the meaning of the
Plan.
6.5 Except as herein before expressly provided in Paragraphs 6.1,
6.2, 6.3, and 6.4 of this Section 6, the Grantee shall have no
rights by reason of any subdivision or consolidation of shares
of any class or payment of any share dividend or any other
increase or decrease in the number of shares of any class or
by reason of any dissolution, liquidation, merger,
consolidation or
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1"Excess parachute payments" are defined in Section 280G of the Code
and are determined by tax counsel of the Company.
2"This rate is based on the rate for the year set forth in the Code at
the time of the first payment to the participant.
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spin-off of assets or stock of another corporation and any
issuance by the Company of shares of any class, or securities
convertible into shares of any class, shall not affect the
Option, and no adjustment by reason thereof shall be made with
respect to the number or price of the Company's shares subject
to the Option. The grant of the Option shall not affect in any
way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital
or business structure or to merge, consolidate, dissolve,
liquidate, sell or transfer all or any part of its business or
assets.
SECTION 7
TRANSFER
7.1 This Option shall not be transferable by the Grantee in any
way other than by will and the laws of descent and
distribution. During the lifetime of the Grantee, the Option
shall be exercisable only by him or her. Any other attempted
assignment, transfer, pledge, hypothecation or other
disposition of the Option shall be void and have no effect
unless in accordance with the terms set forth herein.
SECTION 8
WITHHOLDING TAXES
8.1 The Company shall have the right to retain and withhold from
any payment, under the Option granted, any amount that is to
be withheld or otherwise deducted and paid with respect to
such payment. At its discretion, the Company may require the
Grantee, if he or she receives shares under a nonqualified
stock option grant, to reimburse the Company for any taxes
that are required to be withheld by the Company, and may
withhold any distribution in whole or in part until the
Company is so reimbursed. In lieu thereof, the Company shall
have the right to withhold from any other cash amounts due (or
to become due) to the Grantee an amount equal to such taxes
required to be withheld by the Company to reimburse the
Company for any such taxes, or the Company may retain and
withhold a number of shares of Common Stock having a market
value not less than the amount of such taxes and cancel (in
whole or in part) any shares of Common Stock so withheld in
order to reimburse the Company for any such taxes.
SECTION 9
IMPACT ON OTHER BENEFITS
9.1 The value of the Option (either on the date of grant of the
Option or at the time the shares are vested) shall not be
includable as compensation or earnings for purposes of any
other benefit plan offered by the Company.
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SECTION 10
ADMINISTRATION
10.1 The Committee shall have full authority and discretion
(subject only to the express provisions of the 1996 Omnibus
Plan) to decide all matters relating to the administration and
interpretation of the Plan and this Agreement. All such
Committee determinations shall be final, conclusive and
binding upon the Company, the Grantee and any and all
interested parties.
SECTION 11
AGREEMENT TO CONTINUE IN EMPLOYMENT
OR SERVICE AS A CONSULTANT
11.1 Nothing in the Plan or this Agreement shall confer on a
Grantee any right to continue in the employ of the Company or
in the service of the Company as a consultant or interfere in
any way with the right of the Company to terminate his or her
employment or consultantship at any time.
SECTION 12
AMENDMENT(S)
12.1 This Agreement shall be subject to the terms of the Plan as
amended except that the Option that is the subject of this
Agreement may not in any way be amended or terminated without
the Grantee's written consent.
SECTION 13
FORCE AND EFFECT
13.1 The various provisions of this Agreement are severable in
their entirety. Any determination of invalidity or
unenforceability of any one provision shall have no effect on
the continuing force and effect of the remaining provisions.
SECTION 14
NOTICE OF DISPOSITION OF SHARES
14.1 The Grantee agrees that if he or she should dispose of any
shares of Common Stock acquired on the exercise of the Option,
including a disposition by sale, exchange, gift or transfer of
legal title within six months of the date such shares are
transferred to the Grantee, the Grantee will notify the
Company promptly of such disposition.
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SECTION 15
NOTICES
15.1 All notices which may be or are required to be given by one
party to the other party pursuant to this Agreement shall be
in writing and shall be mailed by first class or certified
mail, return receipt requested, postage prepaid, or
transmitted by hand delivery as follows:
If to the Company: DUSA Pharmaceuticals, Inc.
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX X0X 0X0
XXXXXX
Attention: Dr. D. Xxxxxxxx Xxxxxxx
If to the Grantee: Xxxxxxx X. Xxxxxxx
at the address of the Participant from
time to time in the records of the
Company,
or such other address as to which either party may from time
to time notify the other as aforesaid.
SECTION 16
RESTRICTIONS ON TRANSFER
16.1 The Grantee understands and acknowledges that he is subject to
certain restrictions on transfer under the Securities Act of
1933 of the United States, as amended, (the "1933 Act") of the
shares issued pursuant to the exercise of the Option; such
restrictions provide that the shares may not be sold without
registration or exemption from registration under the 1933
Act; and, for purposes of the Securities Act (Ontario) (the
"Ontario Act"), the first trade of such shares, other than a
trade exempted by the Ontario Act, will be a distribution
unless the Company has been a reporting issuer for at least
twelve (12) months and the Company is not in default of any
requirement of the Ontario Act, disclosure has been made to
the Ontario Securities Commission of the exempt trade, no
unusual effort is made to prepare the market or create a
demand for the shares, and no extraordinary commission or
consideration is paid with respect to the trade, provided that
such first trade is not from the holdings of a so-called
"control block".
SECTION 17
REPORTING REQUIREMENTS
17.1 The Grantee understands and acknowledges that he may be
subject to certain reporting requirements upon his receipt and
exercise of the Option, and in connection therewith, upon the
receipt and exercise of the Option, the Grantee agrees to
timely file with the Securities and Exchange Commission, the
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National Association of Securities Dealers, Inc., and any
appropriate Canadian securities regulatory authorities, the
appropriate documentation regarding his ownership of the
Company's securities.
SECTION 18
GOVERNING LAW
18.1 This Agreement shall be construed and enforced in accordance
with and governed by the laws of the State of New Jersey.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto.
Attest: DUSA PHARMACEUTICALS, INC.,
a New Jersey Corporation
/s/ Xxxxxxx Xxxxxxxxxxx By: /s/ D. Xxxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxxxxxx, Dr. D. Xxxxxxxx Xxxxxxx,
Vice President President
GRANTEE
/s/ Xxxxxxx X. Xxxxxxx
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Xxxxxxx X. Xxxxxxx
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SCHEDULE A
SUBSCRIPTION FORM
To: The Secretary of DUSA Pharmaceuticals, Inc.
Pursuant to the terms and subject to the conditions set forth in the
Nonqualified Stock Option Agreement (the "Agreement") dated , between DUSA
Pharmaceuticals, Inc. and the undersigned, and the Option granted to the
undersigned by such Agreement, I hereby elect to purchase shares of Common Stock
of DUSA Pharmaceuticals, Inc. which were the subject of such Option. I
understand that such purchase is subject to all the terms and conditions of the
Agreement. I request that the certificates for such shares of Common Stock shall
be issued in the name of:
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(please print or type name and address)
and be delivered to:
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(please print or type name and address)
The undersigned hereby represents and warrants to, and agrees with the
Company as follows:
(a) The shares are being purchased for the undersigned's own account,
for investment purposes only, and not for the account of any other person, and
not with a view to distribution, assignment, or resale to others, or to
fractionalization in whole or in part and that the offering and sale of the
shares is intended to be exempt from registration under the Securities Act of
1933 (the "Act"). In furtherance thereof, the undersigned represents, warrants
and agrees as follows: (i) no other person has or will have a direct or indirect
beneficial interest in such shares and the undersigned will not sell,
hypothecate, or otherwise transfer his shares except in accordance with the Act
and applicable state securities laws or unless in the opinion of counsel for the
Company, an exemption from the registration requirements of the Act and such
laws is available; and (ii) the Company is under no obligation to register the
shares on behalf of the undersigned or to assist the undersigned in complying
with any exemption from registration.
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(b) The undersigned has such knowledge and experience in financial and
business matters that the undersigned is capable of evaluating the merits and
risks of investment in the Company and of making an informed investment
decision.
In full payment of the purchase price with respect to the Option
exercised, the undersigned hereby tenders payment of $___________ by certified
check or official bank cashier's check or money order payable in Canadian or
United States currency to the order of DUSA Pharmaceuticals, Inc.
Dated: X
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(Signature)
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Name (Please Print)
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(Address)
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Taxpayer Identification Number
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