NEXMED, INC.
AGREEMENT EVIDENCING THE GRANT OF A
NON-QUALIFIED STOCK OPTION UNDER THE
NEXMED, INC. RECOGNITION AND RETENTION
STOCK INCENTIVE PLAN TO XXXXXXX X. XXXXXXXXX
Agreement (this "Agreement") effective as of November 1, 2004 (the "Grant
Date"), between NexMed, Inc., a Nevada corporation (the "Company"), and Xxxxxxx
X. Xxxxxxxxx ("Grantee").
1. Grant of Option. Pursuant to the NexMed, Inc. Recognition and Retention
Stock Incentive Plan (the "Plan"), the Company hereby grants to Grantee, as of
the Grant Date, a non-qualified stock option (the "Option"), to purchase an
aggregate of 40,000 shares (the "Option Shares") of Common Stock of the Company
(the "Common Stock") at a price of $1.40 per share subject to adjustment and the
other terms and conditions set forth herein and in the Plan.
2. Grantee Bound by Plan. Enclosed is a copy of the Plan, which is
incorporated herein by reference and made a part hereof. The Plan shall govern
all aspects of this Agreement except as otherwise specifically stated herein.
Grantee hereby acknowledges receipt of a copy of the Plan and agrees to be bound
by all the terms and provisions thereof. Unless otherwise defined herein,
capitalized terms used but not defined herein shall have the meanings ascribed
to them in the Plan. The Plan should be carefully examined before any decision
is made to exercise this Option.
3. Exercise of Option. (a) Vesting. Subject to the earlier termination of
the Option as provided herein and in the Plan, the Option may be exercised, by
written notice to the Company at any time and from time to time after the Grant
Date, but, except as otherwise provided below, such Option shall not be
exercisable for more than the number of Option Shares which are then vested.
This Option shall vest in two (2) installments as follows:
(i) 50% of the Stock Option Shares (which represents 20,000 Stock
Option Shares) shall vest immediately;
(ii) 50% of the Stock Option Shares (which represents 20,000 Stock
Option Shares) shall vest on the date of the 2005 Annual Meeting of
Shareholders.
(b) Early Expiration of Option. (i) Upon the termination of the Grantee's
service with the Company (including any subsidiary thereof) for any reason,
including death, any portion of the Option granted hereunder that is not vested
and exercisable on the date of such termination shall automatically expire and
be forfeited as of such date and the vested portion of the Option shall expire
in accordance with subsections (ii) and (iii) of Section 3(b), or, in the event
of the Grantee's death, Section 5, as applicable;
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(ii) In the event that the Grantee's service with the Company
(including any subsidiary thereof) is terminated for Cause, the Grantee shall
automatically forfeit his right to exercise any portion of the Option granted
hereunder which shall automatically be cancelled effective on the date of such
termination.
(iii) If, however, the Grantee's service is terminated for any reason
other than for Cause, any portion of the Option granted hereunder that is vested
but has not been exercised as of the date of such termination shall
automatically expire, if not exercised, on the ninetieth (90th) day following
Grantee's termination of service with the Company, provided, however, that if
the Grantee's service terminates due to his retirement or permanent disability,
the portion of the Option that is vested but has not been exercised as of the
date of the Grantee's termination of service due to retirement or permanent
disability shall remain exercisable, subject to the terms and conditions of
Section 3 (c) of this Agreement, for a period of one year following the date of
the Grantee's termination of service with the Company.
(c) Normal Expiration of Option. This Option shall not be exercisable
after the tenth anniversary of the Grant Date. This Option may not be exercised
for a fraction of a share of Common Stock. Unvested Options are subject to
cancellation as provided in the Plan.
(d) Accelerated Vesting. All of the Grantee's outstanding but unvested
stock options shall vest immediately upon the occurrence of a Change in Control
(as defined in Appendix A hereto).
4. Conditions to Exercise. This Option may not be exercised by Grantee
unless the following conditions are met:
(a) Securities Requirements. Legal counsel for the Company must be
satisfied at the time of exercise that the issuance of Option Shares upon
exercise will be in compliance with the Securities Act of 1933, as amended (the
"Securities Act") and applicable United States federal, state, local and foreign
laws; and
(b) Payment of Exercise Price. At the time of exercise of all or any
portion of the Option, the Grantee must pay the full purchase price for the
Option Shares being purchased hereunder (i) in cash (or by certified check) or
(ii) by delivery of shares of Common Stock previously acquired by the Grantee or
(iii) through a combination of option (i) and (ii). Details with respect to the
methods for exercise, payment and delivery of Option Shares, including
requirements for the payment of withholding taxes applicable thereto are as set
forth in the Plan.
5. Transferability. This Option may not be sold, assigned, transferred,
pledged, hypothecated or otherwise disposed of by Grantee, except by will or the
laws of descent and distribution (in which case, such transferee shall succeed
to the rights and obligations of Grantee hereunder). During Grantee's lifetime,
the Option shall only be exercisable by Grantee. If Grantee or anyone claiming
under or through Grantee attempts to violate this Section 5, such attempted
violation shall be null and void and without effect, and the Company's
obligation hereunder shall terminate. If at the time of Grantee's death this
Option has not been fully exercised, Grantee's estate or any person who acquires
the right to exercise this Option by bequest or inheritance or by reason of
Grantee's death may, at any time within one year after the date of Grantee's
death (but in no event after the expiration of two years from the Grant Date),
exercise this Option with respect to the number of shares, determined under
Section 3 above, as to which Grantee could have exercised the Option at the time
of Grantee's death. The applicable requirements of Section 4 above must be
satisfied in full at the time of such exercise.
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6. Administration. Any action taken or decision made by the Company, the
Board or the Committee or its delegates arising out of or in connection with the
construction, administration, interpretation or effect of the Plan or this
Agreement shall lie within its sole and absolute discretion, as the case may be,
and shall be final, conclusive and binding on Grantee and all persons claiming
under or through Grantee. By accepting this grant or other benefit under the
Plan, Grantee and each person claiming under or through Grantee shall be
conclusively deemed to have indicated acceptance and ratification of, and
consent to, any action taken under the Plan by the Company, the Board or the
Committee or its delegates.
7. No Rights as Stockholder. Unless and until a certificate or
certificates representing shares of Common Sock shall have been issued to
Grantee (or any person acting under Section 5 above), Grantee shall not be or
have any of the rights or privileges of a stockholder of the Company with
respect to shares of Common Stock acquirable upon exercise of the Option.
8. Investment Representation. Grantee hereby acknowledges that the shares
of Common Stock which Grantee may acquire by exercising the Option shall be
acquired for investment without a view to distribution, within the meaning of
the Securities Act, and shall not be sold, transferred, assigned, pledged or
hypothecated in the absence of an effective registration statement for the
shares of Common Stock under the Securities Act and applicable state securities
laws or an applicable exemption from the registration requirements of the
Securities Act and any applicable state securities laws. Grantee also agrees
that the shares of Common Stock which Grantee may acquire by exercising the
Option will not be sold or otherwise disposed of in any manner which would
constitute a violation of any applicable securities laws, whether federal or
state.
9. Listing and Registration of Common Stock. The Company, in its
discretion, may postpone the issuance and/or delivery of shares of Common Stock
upon an exercise of this Option until registration, or other qualification of
such shares under any state and/or federal law, rule or regulation as the
Company may reasonably in good faith consider appropriate.
10. Notices. Any notice hereunder to the Company shall be addressed to the
Company, NexMed, Inc., 000 Xxxxxxxxx Xxxx., Xxxxxxxxxxxx, XX 00000, Attention:
Secretary, and any notice hereunder to Grantee shall be addressed to Grantee at
Grantee's last address on the records of the Company, subject to the right of
either party to designate at any time hereafter in writing some other address.
Any notice shall be deemed to have been duly given when delivered personally,
one day following dispatch if sent by reputable overnight courier, fees prepaid,
or three days following mailing if sent by registered mail, return receipt
requested, postage prepaid and addressed as set forth above.
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11. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Grantee.
12. Governing Law. The validity, construction, interpretation
administration and effect of the Plan, and of its rules and regulations, and
rights relating to the Plan and to this Agreement, shall be governed by the
substantive laws, but not the choice of law rules, of the State of Nevada.
IN WITNESS WHEREOF, the Company and the Grantee have executed this
Agreement as of the date first above written.
NexMed, Inc.
/s/ Xxxxxx X. Xxx
------------------------------
Xxxxxx Xxx
Vice-President & Secretary
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GRANTEE ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE
NEXMED, INC. RECOGNITION AND RETENTION STOCK INCENTIVE PLAN WHICH IS
INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON GRANTEE ANY RIGHT WITH
RESPECT TO CONTINUATION OF SERVICE BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY
WAY WITH GRANTEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE SERVICE AT ANY
TIME, WITH OR WITHOUT CAUSE.
Grantee acknowledges receipt of a copy of the Plan and represents that he is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions of the Plan thereof except as
otherwise specifically stated in this Option Agreement. Grantee has reviewed the
Plan and this Option Agreement in this entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Option Agreement and fully
understands all provisions of this Option Agreement. Grantee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.
GRANTEE
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxxx
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Appendix A
Change in Control
For the purpose of this Agreement, a "Change in Control" shall be deemed to have
taken place if:
A. Individuals who, on the date hereof, constitute the Board (the "Incumbent
Directors") cease for any reason to constitute at least a majority of the Board,
provided that any person becoming a director subsequent to the date hereof,
whose election or nomination for election was approved by a vote of at least
two-thirds of the Incumbent Directors then on the Board (either by a specific
vote or by approval of the proxy statement of the Company in which such person
is named as a nominee for director, without written objection to such
nomination) shall be an Incumbent Director; provided, however, that, no
individual initially elected or nominated as a director of the Company as a
result of an actual or threatened election contest with respect to directors or
as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;
B. Any "Person" (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the "Exchange Act") and as used in Sections 13(d)(3) and
14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 25% or more of the combined voting power of the Company's
then outstanding securities eligible to vote for the election of the Board (the
"Voting Securities"); provided, however, that, the event described in this
paragraph B shall not be deemed to be a Change in Control by virtue of any of
the following acquisitions: (i) by the Company or any subsidiary of the Company
in which the Company owns more than 25% of the combined voting power of such
entity (a "Subsidiary"), (ii) by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any Subsidiary, (iii) by any
underwriter temporarily holding the Company's Voting Securities pursuant to a
public offering of such Voting Securities, (iv) pursuant to a Non-Qualifying
Transaction (as defined in paragraph C immediately below), (v) pursuant to any
acquisition by Executive or by any Person which is an "affiliate" (within the
meaning of 17 C.F.R. ss. 230.405) of Executive (an "Excluded Person");
C. The consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving the Company or any of its
Subsidiaries that requires the approval of the Company's stockholders, whether
for such transaction or the issuance of securities in the transaction (a
"Business Combination"), unless immediately following such Business Combination:
(i) more than 25% of the total voting power of (A) the corporation resulting
from such Business Combination (the "Surviving Corporation"), or (B) if
applicable, the ultimate parent corporation that directly or indirectly has
beneficial ownership of 100% of the voting securities eligible to elect
directors of the Surviving Company (the "Parent Corporation"), is represented by
the Company's Voting Securities that were outstanding immediately prior to such
Business Combination (or, if applicable, is represented by shares into which the
Company's Voting Securities were converted pursuant to such Business
Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of the Company's Voting
Securities among the holders thereof immediately prior to the Business
Combination, (ii) no Person (other than (A) any employee benefit plan (or
related trust) sponsored or maintained by the Surviving Corporation or the
Parent Corporation or (B) an Excluded Person is or becomes the beneficial owner,
directly or indirectly, of 25% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the Parent
Corporation (or, if there is no Parent Corporation, the Surviving Corporation)
and (iii) at least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the Surviving
Corporation) following the consummation of the Business Combination were
Incumbent Directors at the time of the Board's approval of the execution of the
initial agreement providing for such Business Combination (any Business
Combination which satisfies all of the criteria specified in (i), (ii) and (iii)
above shall be deemed to be a "Non-Qualifying Transaction");
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D. A sale of all or substantially all of the Company's assets, other than to an
Excluded Person;
E. The stockholders of the Company approve a plan of complete liquidation or
dissolution of the Company; or
F. Such other events as the Board may designate.
Notwithstanding the foregoing, a Change in Control of the Company shall
not be deemed to occur solely because any person acquires beneficial ownership
of more than 25% of the Company's Voting Securities as a result of the
acquisition of the Company's Voting Securities by the Company which reduces the
number of the Company's Voting Securities outstanding; provided, that, if after
such acquisition by the Company such person becomes the beneficial owner of
additional Company Voting Securities that increases the percentage of
outstanding Company Voting Securities beneficially owned by such person, a
Change in Control of the Company shall then occur.
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