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Exhibit 4.12
NONQUALIFIED STOCK OPTION AGREEMENT
AGREEMENT made and entered into as of the 21ST day of OCTOBER, 1997, by
and between DUSA Pharmaceuticals, Inc., a corporation incorporated under the
laws of the State of New Jersey (the "Company"), and Xxxx Van Vugt, who resides
at 0 Xxxxxxxxx Xxxx. Kingston, the "(Grantee").
WHEREAS, the Company granted to PARTEQ RESEARCH AND DEVELOPMENT
INNOVATIONS, a corporation incorporated under the laws of Ontario, CANADA
("PARTEQ") on October 21, 1991 (the "Grant Date") stock options for 85,000
shares of the Company's common stock without par value ("Common Stock") in
connection with the agreement to amend a certain License Agreement dated August
27, 1991; and
WHEREAS, PARTEQ has determined to assign a certain number of said
options to the Grantee in consideration of services rendered by him to the
Company; and
WHEREAS, the Company has determined that its interests will be advanced
by acknowledging the assignment by PARTEQ of the options;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties agree as follows:
SECTION 1
GRANT
1.1 The Company hereby acknowledges the assignment to the Grantee of
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 2,261 shares of authorized but unissued Common Stock of the
Company on the terms and conditions herein set forth in this
Nonqualified Stock Option 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 Grant Date ($10.875 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:
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(a) 25% of the Option on the first anniversary of the day of
the grant, being October 21, 1998;
(b) 25% of the Option on the second anniversary of the day
of grant, being October 21, 1999;
(c) 25% of the Option on the third anniversary of the day of
the grant, being October 21, 2000;
(d) 25% of the Option on the fourth anniversary of the day
of the grant, being October 21,2001; and
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 of the
grant, being October 20, 2007, 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 Company's Stock Option
Committee (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 services to the Company.
Should the Grantee cease to provide services to the Company, 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
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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. At the discretion of the
Committee, the Grantee may pay all or a portion of the purchase
price by tender of Common Stock or a combination of stock and
cash or other means determined by the Committee.
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 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 if the Amended and Restated
License Agreement is terminated by PARTEQ, the Option may be
exercised, to the extent exercisable, for a period of three
months after the date of such termination or such later date as
the Company's Board of Directors may approve; and if such
Agreement is terminated by DUSA, the Option shall continue to
vest in the Grantee as provided in Section 3.1 above.
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.
SECTION 6
ADJUSTMENTS TO OPTION
6.1 Subject to any required action by the Committee and shareholders,
the number of shares provided for in the Option, and the price
per share thereof 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 shareholders,
if the Company shall be the surviving entity in any merger or
consolidation, or after a consolidation
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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 hereof. 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 stock option
agreement or other controlling agreement between him 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, 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
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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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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 this Agreement.
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 the Grantee in any way.
During the lifetime of the Grantee, the Option shall be
exercisable only by him. Any other attempted assignment,
transfer, pledge, hypothecation or other disposition of the
Option 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 it 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
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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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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 to decide
all matters relating to the administration and interpretation of
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
AMENDMENT(S)
11.1 This Agreement may not in any way be amended without the
Grantee's written consent.
SECTION 12
FORCE AND EFFECT
12.1 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 13
NOTICE OF DISPOSITION OF SHARES
13.1 The Grantee agrees that if he 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 twelve (12) months of the date such shares are transferred
to the Grantee, the Grantee will notify the Company promptly of
such disposition.
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SECTION 14
NOTICES
14.1 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, XX X0X 0X0
XXXXXX
Attention: Dr. D. Xxxxxxxx Xxxxxxx
If to the Grantee: Xxxx Van Vugt
or such other address as to which either party may from time to
time notify the other as aforesaid.
SECTION 15
RESTRICTIONS ON TRANSFER
15.1 The Grantee understands and acknowledges that he 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.
SECTION 16
REPORTING REQUIREMENTS
16.1 The Grantee understands and acknowledges that he 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.
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SECTION 17
GOVERNING LAW
17.1 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
GRANTEE
s/Xxxx Van Vugt
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Xxxx Van Vugt
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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 October 21, 1997,
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.
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(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 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
