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EXHIBIT 99.1
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE DUSA PHARMACEUTICALS, INC. 1996 OMNIBUS PLAN, AS AMENDED
AGREEMENT made and entered into as of the 7th day of March, 2000, by
and between DUSA Pharmaceuticals, Inc., a corporation incorporated under the
laws of the State of New Jersey (the "Company"), and Xxxxxxx X. Xxxxxxx, an
individual residing in the State of New Jersey (the "Grantee").
WHEREAS, pursuant to the DUSA Pharmaceuticals, Inc. 1996 Omnibus Plan,
as amended (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 2,500 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 date of the grant ($31.00 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 March 7, 2001;
(b) one-quarter of the Option on the second anniversary
of the day of the grant, being March 7, 2002;
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(c) one-quarter of the Option on the third anniversary of
the day of the grant, being March 7, 2003; and
(d) one-quarter of the Option on the fourth anniversary
of the day of the grant, being March 7, 2004;
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 March 6,
2010, 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. Should the
Grantee cease to serve in all such capacities, 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
employment or 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 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
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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, the Grantee's Option shall be exercised as follows:
(a) If the Grantee's termination of employment or service
is other than for cause or for the reasons provided in
subsections (b)-(d) below, 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 (a) or (b)
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 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.
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SECTION 6
ADJUSTMENTS TO OPTION
6.1 Subject to any required action by the Committee and the
Company's 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 the
Company's 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 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
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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.
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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
rate(2) 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 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 any individual
Grantee in any way other than by will and the laws of descent and
distribution. During the lifetime of any individual Grantee, the
Option shall be exercisable only by him or her. Any other attempted
assignment, transfer, pledge, hypothecation or other disposition of
the Option by any Grantee 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
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(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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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.
SECTION 10
ADMINISTRATION
10.1 The Committee shall have full authority and discretion
(subject only to the express provisions of the 1996 Omnibus Plan, as
amended) 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.
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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 it, 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.
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.
00 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Dr. D. Xxxxxxxx Xxxxxxx
If to the Grantee: Xxxxxxx X. Xxxxxxx
991 Route 22 West, X.X. Xxx 0000
Xxxxxxxxxx, Xxx Xxxxxx 00000
or at the address of the Grantee 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 it, he or she 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
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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 it, he or she
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 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.
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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/ 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 March 7, 2000,
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.
(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.
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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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