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Exhibit 4.16
NONQUALIFIED STOCK OPTION AGREEMENT
DUSA PHARMACEUTICALS, INC.
AGREEMENT made and entered into as of the 13TH day of MARCH, 1997, by and
between DUSA Pharmaceuticals, Inc., a corporation incorporated under the laws of
the State of New Jersey (the "Company"), and XXXXXX XXXXXXXXXX, with an address
c/o Therapeutics, Inc., 4180 La Xxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xx Xxxxx,
Xxxxxxxxxx 00000 (the "Grantee").
WHEREAS, the Company granted on March 13, 1997 (the "Grant Date") to
THERAPEUTICS, INC., a corporation with offices in the State of California,
("Therapeutics") stock options for 15,000 shares of the Company's common stock
(the "Options"); and
WHEREAS, Therapeutics has determined to assign its interest in the Options
to the Grantee, its principal shareholder, and the individual providing services
to the Company; and
WHEREAS, the Company has determined that its interests will be advanced by
acknowledging the assignment by Therapeutics of the Options.
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 acknowledges the assignment to the Grantee of 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 15,000
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.
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 Grant Date ($6.125 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:
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(a) 20% of the Option shall vest as of June 14, 1997;
(b) 20% of the Option on June 14, 1998;
(c) 20% of the Option on June 14, 1999;
(d) 20% of the Option on June 14, 2000; and
(e) 20% of the Option on June 14, 2001;
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 March
13, 2007, 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 Company's Stock Option
Committee (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 provide services to the Company. Should the
Grantee cease to serve the Company, the Option shall not further vest
or become exercisable, and the provisions of Section 5.2 shall apply
with respect to the exercise of the Option which has already vested in
the Grantee and has not yet been exercised. The Board of Directors
shall be entitled to determine if and when service to the Company has
ceased with respect to the Grantee.
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
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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. At the discretion of the
Committee, the Grantee may pay all or a portion of the purchase price
by tender of Common Stock or a combination of stock and cash or other
means determined by the Committee.
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 it 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 (i.e.,
March 13, 2007) 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, the Grantee's Option shall be exercised as follows:
(a) If the Grantee's termination of 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 service;
(b) If the Grantee's termination of 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 of service;
(c) In the event of death of Grantee within three months after
termination of service pursuant to (a) or (b) above, the person or
persons to whom the Grantee's rights are transferred if at all, 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 service to
exercise the Option which could have been exercised during such
period; and
(d) In the event of death of Grantee while Grantee is providing
services to the Company under the Consulting Agreement, 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 if
at all, 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;
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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. Service to the Company shall be deemed to
include 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, and the price per share
thereof 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 this Agreement. 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 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.
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Except as provided with respect to a Grantee in its stock option
agreement or other controlling agreement between it 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, 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 this Agreement.
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 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
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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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Option shall be exercisable only by him. 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 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.
SECTION 10
ADMINISTRATION
10.1 The Committee shall have full authority and discretion to decide all
matters relating to the administration and interpretation of 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 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 such consulting relationship at any time.
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SECTION 12
AMENDMENT(S)
12.1 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 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 twelve (12)
months of the date such shares are transferred to the Grantee, the
Grantee will notify the Company promptly of such disposition.
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.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX X0X 0X0
XXXXXX
Attention: Dr. D. Xxxxxxxx Xxxxxxx
If to the Grantee: Xxxxxx Xxxxxxxxxx
c/o Therapeutics, Inc.
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 000
Xx Xxxxx, Xxxxxxxxxx 00000
or such other address as to which either party may from time to time
notify the other as aforesaid.
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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.
SECTION 17
GOVERNING LAW
17.1 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 X. Xxxxxxx By: s/D. Xxxxxxxx Xxxxxxx
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Xxxxxxx X. Xxxxxxx, Secretary Dr. D. Xxxxxxxx Xxxxxxx, President
GRANTEE
s/Xxxxxx Xxxxxxxxxx
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Xxxxxx Xxxxxxxxxx
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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 MARCH 13, 1997
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 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
