EXHIBIT 10.19
ENZON PHARMACEUTICALS, INC.
NON-INCENTIVE STOCK OPTION AGREEMENT
This Non-Incentive Stock Option Agreement (the "Agreement") is made this
3rd day of December, 2002, by and between Enzon Pharmaceuticals, Inc., a
Delaware corporation (the "Company") and Xxxxxx X. Xxxxxxx an individual
resident of Illinois ("Employee").
WITNESSETH, THAT:
WHEREAS, the Company has adopted the Enzon Pharmaceuticals, Inc. 2001
Incentive Stock Plan (the "Plan") which permits issuance of stock options for
the purchase of shares of common stock of the Company, and the Company has taken
all necessary actions to grant the following option pursuant and subject to the
terms of the Plan.
NOW THEREFORE, in accordance with the terms and conditions of the Plan and
the mutual covenants herein contained, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants Employee the right and
option (the "Option") to purchase all or any part of an aggregate of two hundred
thousand (200,000) shares of the Company's common stock, par value $0.01 per
share (the "Common Stock"), at the price of $17.80 per share (the "Option
Price") on the terms and conditions set forth in this Agreement and in the Plan.
It is understood and agreed that the Option Price is the per share Fair Market
Value (as defined in the Plan) of the Common Stock as of December 3, 2002, the
date that the Compensation Committee (the "Compensation Committee") of the Board
of Directors (the "Board") of the Company granted the Option to the Employee
(the "Grant Date"). The Option is not intended to be an Incentive Stock Option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). The Option is issued pursuant to the Plan and is subject
to its terms. A copy of the Plan will be furnished upon request of Employee.
Except as otherwise provided in Section 3 hereof, once the Option becomes
exercisable it shall remain exercisable until 5:00 pm New York City time on the
tenth (10th) anniversary of the Grant Date (the "Expiration Date"). Employee
shall not have any of the rights of a shareholder with respect to the shares
subject to the Option until such shares shall be issued to Employee upon the
proper exercise of the Option.
2. Vesting of Option Rights.
(a) Except as otherwise provided in Sections 3 or 4 of this
Agreement, the Option may be exercised by Employee in accordance with the
following schedule:
Number of shares
---------------------------
with respect to which
On or after each of ---------------------------
the following dates: the Option is exercisable:
------------------------ ---------------------------
December 3, 2003 200,000
3. Exercise of Option upon Termination of Employment or Upon Change in
Control. The Option shall terminate and may no longer be exercised if Employee
ceases to be employed by the Company or its subsidiaries, except that:
(a) In the event the Company terminates Employee's employment as the
Company's President and Chief Executive Officer without Cause pursuant to
Section 9(a)(iv) of the Employment Agreement between the Company and
Employee, dated as of May 9, 2001, as amended as of May 23, 2001 (the
"Employment Agreement"), or Employee terminates such employment for Good
Reason pursuant to Section 9(c) of the Employment Agreement:
(i) prior to December 3, 2003 and the Option has not otherwise
vested pursuant to Section 3 hereof, the Option granted to
Employee pursuant to Section 1 hereof will be of no further
force or effect; provided however that the Option shall vest
and become exercisable as to a pro rated portion (based on the
portion of the year between the Grant Date and December 3,
2003 during which Employee is employed by the Company) of the
shares subject to the Option and such Option shall remain
exercisable as to such shares until the expiration date; or
(ii) on or subsequent to December 3, 2003 or such earlier date
on which the Option has vested pursuant to this Section 3, the
Option granted to Employee pursuant to Section 1 hereof will
remain exercisable until its expiration date.
(b) In the event the Company terminates Employee's employment as the
Company's President and Chief Executive Officer for Cause pursuant to
Section 9(a)(iii) of the Employment Agreement:
(i) prior to December 3, 2003, the Option granted to Employee
pursuant to Section 1 hereof will terminate as of the date of
such termination and will be of no further force and effect;
or
(ii) on or subsequent to December 3, 2003, the Option granted
to Employee pursuant to Section 1 hereof shall remain
exercisable for a period of six months following such
termination of employment.
(c) In the event Employee's employment as the Company's President
and Chief Executive Officer is terminated as a result of Employee's death
or on account of Employee's disability pursuant to Section 9(a)(ii) of the
Employment Agreement, the Option granted to Employee pursuant to Section 1
hereof shall vest on December 3, 2003, and shall remain exercisable, until
the earlier of (A) three years from the date of such termination of
employment and (B) the Expiration Date.
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(d) In the event Employee voluntarily terminates his employment as
the Company's President and Chief Executive Officer, other than for Good
Reason:
(i) prior to December 3, 2003 and the Option has not otherwise
vested pursuant to Section 3 hereof, the Option granted to
Employee pursuant to Section 1 hereof will terminate as of the
date of such termination and will be of no further force and
effect; or
(ii) on or subsequent to December 3, 2003 or such earlier date
on which the Option has vested pursuant to this Section 3, the
Option granted to Employee pursuant to Section 1 hereof shall
remain exercisable for a period of six months following such
termination.
(e) Upon a Change in Control (as defined in Section 9(d) of the
Employment Agreement) which occurs while Employee is employed by the
Company this Option, to the extent it has not already vested, shall vest
in its entirety immediately prior to the effective date of such Change in
Control and the Option shall remain exercisable in accordance with the
terms herein.
(f) Each time that all or a portion of this Option is exercised, 50%
of the shares (after deducting any shares used or sold by Employee to pay
any applicable taxes in connection with such exercise) of Common Stock
received by Employee from such exercise on the date of such exercise (the
"Exercise Date") shall be held by Employee for three years from the
Exercise Date and the stock certificates representing such shares shall
bear appropriate legends reflecting such restriction on sale; provided,
however, the Compensation Committee, in its sole discretion, may waive
such restriction on transfer and all or a portion of such shares may be
sold or transferred prior to the expiration of such three year period.
Nothing in this Section 3(f) shall prevent Employee from accepting a
payment of cash, other property or securities in consideration for the
shares of Common Stock issued upon exercise of this Option in connection
with a Change in Control or other event described in Section 5(e),
provided that the restrictions on transfer set forth in this Section 3(f)
shall continue to apply to any securities received by Employee in
connection with any such Change in Control unless Employee terminates
employment and these restrictions cease to apply as provided in Section
3(g).
(g) Notwithstanding Section 3(f) above, if Employee is terminated
pursuant to Sections 3(a), 3(c) or 3(e) above, the Section 3(f)
restriction on transfer will automatically cease and so long as all
federal and state securities laws are adhered to, any shares which
Employee receives or has received pursuant to the exercise of the Option
granted pursuant to Section 1 hereof may be immediately sold or
transferred.
(h) Notwithstanding anything to the contrary in this Agreement or
the Employment Agreement, the Compensation Committee or the Board, in its
sole discretion, may waive any of the restrictions on vesting of the
Option set forth in this Section 3 in order to accelerate the
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vesting of all or a portion of the Option as the Compensation Committee or
the Board so determines in its sole discretion.
(i) Notwithstanding the above, in no case may the Option be
exercised to any extent by anyone after the Expiration Date.
(j) The Option may only be transferred or assigned in accordance
with subsection 6(d) of this Agreement.
(k) if upon a Change in Control or any of the events described in
Section 5(e) (each a "Section 5(e) Event") the shares of Common Stock
issuable upon exercise of this Option are replaced with other equity
securities, such other securities must be registered under the Securities
Act of 1933 and be freely transferable under all applicable federal and
state securities laws and regulations. In such event, the number of shares
issuable upon exercise of this Option shall be determined by using the
exchange ratio used for other outstanding shares of the Company's Common
Stock in connection with the Change in Control or Section 5(e) Event, or
if there is no such ratio, an exchange ratio to be determined by the
Compensation Committee or the Board, and the exercise price per share
shall be adjusted accordingly so as to preserve the same economic value in
this Option as existed prior to the Change in Control or Section 5(e)
Event. Also in the event of any such Change in Control or Section 5(e)
Event, all references herein to the Common Stock shall thereafter be
deemed to refer to the replacement equity securities issuable upon
exercise of this Option, references to the Company shall thereafter be
deemed to refer to the issuer of such replacement securities, and all
other terms of this Option shall continue in effect except as and to the
extent modified by this Section 3.
4. Method of Exercise of Option. Subject to the foregoing, the Option may
be exercised in whole or in part from time to time by Employee or other proper
party serving written notice of exercise on the Company at its principal office
within the period during which the Option is exercisable as provided in this
Agreement. The notice shall state the number of shares as to which the Option is
being exercised and shall be accompanied by payment in full of the Option Price
for all shares designated in the notice. Payment of the Option Price shall be
made in cash (including bank check, personal check or money order payable to the
Company), or, with the approval of the Company (which may be given in its sole
discretion), by delivering to the Company for cancellation shares of the
Company's Common Stock already owned by Employee having a Fair Market Value
equal to the full purchase price of the shares being acquired or a combination
of cash and such shares.
5. Miscellaneous.
(a) In the event that any provision of this Agreement conflicts with
or is inconsistent in any respect with the terms of the Plan, the terms of
the Plan shall control.
(b) Neither the Plan nor this Agreement shall (i) be deemed to give
any individual a right to remain an employee of the Company, (ii) restrict
the right of the Company to discharge any employee, with or without cause,
or (iii) be deemed to be a written contract of employment.
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(c) The exercise of all or any parts of the Option shall only be
effective at such time that the sale of shares of Common Stock pursuant to
such exercise will not violate any state or federal securities or other
laws.
(d) The Option shall not be transferred, except by will or the laws
of descent and distribution to the extent provided in subsection 3(c),
and, except for as provided in the Plan or this Agreement, during the
Employee's lifetime the Option is exercisable only by the Employee.
Notwithstanding the foregoing, Employee may transfer the Option to any
Family Member, provided, however, that (i) Employee may not receive any
consideration for such transfer, (ii) the Family Member must agree in
writing not to make any subsequent transfers of the Option other than by
will or the laws of the descent and distribution and (iii) the Company
receives prior written notice of such transfer. For purposes of this
subsection 7(d) the definition of Family Member shall be the definition
adopted by the Committee administering the Plan as of the date of the
attempted transfer of the Option.
(e) If there shall be any change in the Common Stock subject to the
Option through merger, consolidation, reorganization, recapitalization,
dividend or other distribution, stock split or other similar corporate
transaction or event of the Company, appropriate adjustments shall be made
by the Company in the number of shares and the price per share of the
shares subject to the Option in order to prevent dilution or enlargement
of the Option rights granted hereunder; provided, however, that the number
of shares subject to the Option shall always be a whole number.
(f) The Company shall at all times during the term of the Option
reserve and keep available such number of shares of the Company's Common
Stock as will be sufficient to satisfy the requirements of this agreement.
(g) In order to provide the Company with the opportunity to claim
the benefit of any income tax deduction which may be available to it upon
the exercise of the Option and in order to comply with all applicable
federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all
applicable federal or state payroll, withholding, income or other taxes
are withheld or collected from Employee.
(h) The Company, in its sole and absolute discretion, may allow
Employee to satisfy Employee's federal and state income tax withholding
obligations upon exercise of the Option by (i) having the Company withhold
a portion of the shares of Common Stock otherwise to be delivered upon
exercise of the Option having a Fair Market Value equal to the amount of
federal and state income tax required to be withheld upon such exercise,
in accordance with such rules as the Company may from time to time
establish, or (ii) delivering to the Company shares of its Common Stock
other than the shares issuable upon exercise of the Option with a Fair
Market Value equal to such taxes, in accordance with such rules.
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(i) This Agreement shall inure to the benefit of, and be binding
upon, the Company, its successors and assigns, and upon Employee, his
administrator, executor, personal representative, successors and heirs.
(j) Except as provided in Section 3(h), no change to or modification
of this Agreement shall be valid unless it is in writing and signed by the
Company and Employee.
IN WITNESS WHEREOF, the Company and Employee have executed this Agreement
on the date set forth in the first paragraph.
ENZON PHARMACEUTICALS, INC.
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By:
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Its:
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EMPLOYEE:
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Name:
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