DERMA SCIENCES, INC.
SENIOR MANAGEMENT STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, hereby made and dated as of the 30th day of
April, 1997 between Derma Sciences, Inc., a Pennsylvania corporation (the
"Company"), and Xxxxxx X. Xxxxxx (the "Optionee").
WHEREAS, the Company desires to afford the Optionee an opportunity to
purchase shares of Common Stock, $.01 par value per share, of the Company
("Shares") as hereinafter provided,
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration the legal sufficiency of
which is hereby acknowledged, the parties hereto, intending to be legally bound
hereby, agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right and
option to purchase all or any part of an aggregate of 50,000 shares (the
"Option") which Option is intended as a "nonqualified stock option". The Option
is in all respects limited and conditioned as hereinafter provided.
2. Purchase Price. The purchase price per share (the "Option Price") of the
Shares covered by the Option (the "Option Shares") shall be the lower of: (a)
the closing price of the Company's Common Stock as reported on the National
Association of Securities Dealers Automated Quotation System (Nasdaq) on April
8, 1997 (the "Grant Date"), to wit: $1.1875, or (b) the price of the Company's
Common Stock as determined in connection with the Company's contemplated private
placement thereof.
3. Term. The Option will expire on April 8, 2007 (the "Expiration Date").
4. Exercise of Option. (a) Except as provided in paragraph 4.(d) below, the
right of the Optionee to exercise is subject to the condition that the Optionee
be an employee of the Company. Except as provided in paragraph 4.(b) below, the
Option shall become exercisable in five (5) equal installments and the Optionee
shall have the right to purchase from the Company, on and after the following
dates, the following number of shares:
Date Installment Number of
Becomes Exercisable Option Shares
April 8, 1997 10,000
April 8, 1998 10,000
April 8, 1999 10,000
April 8, 2000 10,000
April 8, 2001 10,000
(b) The foregoing notwithstanding, the Option shall become exercisable
and the Optionee shall have the right to purchase from the Company, on and
after the occurrence of the following events, not less than the following
number of shares:
Event Upon Which Number of
Option Becomes Exercisable Option Shares
Net sales greater than $6,000,000 25,000
during any period of 12 consecutive
months, or
Attainment of an average share
price of at least $3.00 for a period
of 180 consecutive days
________________________________________________________________________________
Net sales greater than $8,000,000 50,000
during any period of 12 consecutive
months, or
Attainment of an average share
price of at least $5.00 for a period
of 180 consecutive days
(c) The right of the Optionee to purchase the Option Shares may be
exercised, in whole or in part, at any time or times prior to the
expiration or other termination of the Option.
(d) If the Optionee's employment by the Company is terminated prior to
the Expiration Date of his Option, such Option may be exercised by the
Optionee, to the extent of the number of Option Shares with respect to
which the Optionee could have exercised it on the date of such termination,
or to any greater extent permitted by the Board of Directors of the
Company, at any time prior to the earlier of: (i) three (3) months after
the date of termination, or (ii) the Expiration Date of such Option;
provided, however, if the Optionee's employment was terminated voluntarily
by the Optionee or by the Company "For Cause" (as defined below), Optionee
shall have no right to exercise his Option on or after the date of such
termination. As used herein, termination of an Optionee's employment by the
Company shall be "For Cause" if the Board of Directors reasonably concludes
that the Optionee has materially failed to perform his responsibilities to
the Company, materially failed to follow directives or policies established
by or at the direction of the Board of Directors, or conducted himself in a
manner materially detrimental to the interests of the Company.
5. Method of Exercising Option. (a) Subject to the terms and conditions of
this Option Agreement, the Option may be exercised by giving written notice to
the Company at its principal office specifying the number of Option Shares to be
purchased and accompanied by payment in full of the aggregate purchase price for
the Shares. Only full Shares shall be delivered and any fractional share which
might otherwise be deliverable upon exercise of an Option granted hereunder
shall be forfeited. Attached as Exhibit 1 is a form of written notice acceptable
to the Company.
(b) The purchase price shall be payable: (i) in cash or its
equivalent, or (ii) in whole or in part through the transfer of Common
Stock previously acquired by the Optionee.
(c) Upon receipt of such notice and payment, the Company, as promptly
as possible, shall deliver or cause to be delivered a certificate or
certificates representing the Shares with respect to which the Option is so
exercised. The certificate or certificates for such Shares shall be
registered in the name of the person or persons exercising the Option (or,
if the Optionee shall so request in the notice exercising the Option, in
the name of the Optionee and his spouse, jointly, with right of
survivorship) and shall be delivered as provided above to or upon the
written order of the person or persons exercising the Option. In the event
the Option is exercised by any person or persons after the death or legal
disability of the Optionee, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option. All
shares that are purchased upon the exercise of the Option as provided
herein shall be fully paid and nonassessable.
6. Non-transferability of Option. The Option is not assignable or
transferable, in whole or in part, by the Optionee other than by will or by the
laws of descent and distribution. During the lifetime of the Optionee, the
Option shall be exercisable only by the Optionee or, in the event of his legal
disability, by his legal representative.
7. Withholding of Taxes. The obligation of the Company to deliver Shares
upon the exercise of any Option shall be subject to any applicable federal,
state and local tax withholding requirements.
8. Governing Law. This Agreement shall be construed in a manner consistent
with the Internal Revenue Code provisions concerning nonqualified stock options
and its interpretation shall otherwise be governed by Pennsylvania law.
IN WITNESS WHEREOF, the parties have set their hands and seals the day and
year first written above.
DERMA SCIENCES, INC.
By: /s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
President
OPTIONEE
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Xxxxxx X. Xxxxxx
EXHIBIT 1
DERMA SCIENCES, INC.
NOTICE OF EXERCISE OF STOCK OPTION
I hereby exercise nonqualified stock options granted to me on
_______________ by Derma Sciences, Inc. with respect to the following number of
shares of Derma Sciences, Inc. Common Stock, $.01 par value per share,
("Shares") covered by said option:
Number of Shares to be purchased ________________
Option price per Share ________________
Total option price ________________
Enclosed is my check in the amount of $_________ (and/or ________ Shares)1.
Please have the certificate or certificates representing the purchased Shares
registered in the following name or names2 ________________________________ and
sent to _________________________________________________.
DATED: ______________, ____.
OPTIONEE
_________________________
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1The option price may be paid in whole or in part by delivery of Shares, subject
to the terms of the Optionee's Stock Option Agreement.
2Certificates may be registered in the name of the Optionee alone or in the
joint names of the Optionee and his spouse.
