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Exhibit 99.4
NONQUALIFIED STOCK OPTION AGREEMENT
UNDER THE DUSA PHARMACEUTICALS, INC. 1996 OMNIBUS PLAN
AGREEMENT made and entered into as of the 23rd day of June, 1999, by
and between DUSA Pharmaceuticals, Inc., a corporation incorporated under the
laws of the State of New Jersey (the "Company"), and PARTEQ RESEARCH &
DEVELOPMENT INNOVATIONS, with offices in the Province of Ontario, CANADA (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; and
WHEREAS, the Board of Directors of the Company approved a resolution,
effective June 23, 1999, directing the officers of the Company to grant
non-qualified stock options for 10,000 shares of the Company's common stock
without par value ("Common Stock") to the Grantee; and
WHEREAS, PARTEQ has determined to assign a certain number of said
options to the individuals providing services to the Company and the Company has
determined to acknowledge such assignments;
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 partial consideration
for services under an Extension of Research Agreement dated June 22,
1999, 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
6,834 shares of authorized but unissued 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 ($9.25 per share)(the "Exercise Price").
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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 23, 2000;
(b) one-quarter of the Option on the second anniversary
of the day of the grant, being June 23, 2001;
(c) one-quarter of the Option on the third anniversary of
the day of the grant, being June 23, 2002; and
(d) one-quarter of the Option on the fourth anniversary
of the day of the grant, being June 23, 2003;
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 22, 2009,
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 provide research services to the Company.
Should the Grantee cease to provide services in all such capacities,
the Option shall not further vest or become exercisable.
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
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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 in Section 3.6 hereof.
5.2 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 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.
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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 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 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.
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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.
2This 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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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, or the existence of any
other Grantee, the Option shall be exercisable only by him, her or it.
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 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 its employment or consultantship at any time.
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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 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.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx, X0X 0X0
XXXXXX
Attention: Dr. D. Xxxxxxxx Xxxxxxx
If to the Grantee: PARTEQ RESEARCH & DEVELOPMENT INNOVATIONS
Queen's University
BioSciences Complex, Room 1625
Xxxxxxxx, Xxxxxxx X0X 0X0
XXXXXX
Attention: Xx. Xxxx X. Xxxxxx,
Acting Executive Director
or such other address as to which either party may from time
to time notify the other as aforesaid.
SECTION 16
RESTRICTIONS ON TRANSFER
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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
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.
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
PARTEQ RESEARCH & DEVELOPMENT
INNOVATIONS
By: /s/ Xxxx Xxxxxx
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Xxxx X. Xxxxxx, Acting Executive
Director
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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 as of JUNE 23, 1999,
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.
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
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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
