SEC File No.: 0-22245
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB/A
Amendment No. 2
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
NEXMED, INC.
- --------------------------------------------------------------------------------
(Name of Small Business Issuer in Its Charter)
Nevada 87-0449967
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6087 Triangle Drive, Commerce, CA 90040
- ------------------------------------------------ -----------------------
(Address of Principal Executive Offices) (Zip Code)
(213) 890-0881
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(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
------------------- ------------------------------
N/A N/A
Securities to be registered under Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of Class)
<PAGE>
PART III
Item 1. Index to Exhibits.*
** 2.1 Amended and Restated Articles of Incorporation of the Company
** 2.2 By-laws of the Company
** 2.3 Amendment to By-laws of the Company
** 3.1 Specimen Common Stock Certificate
*** 5.1 Form of Irrevocable Proxy
** 6.1 Technology Acquisition Agreement between the Company and
Odontex, Inc.
6.2 Research Agreement between the Company and the University of
Kansas, effective June 15, 1996 and modified November 22, 1996
6.3 Research Agreement between the Company and the University of
Kansas, executed November 1996
6.4 The NexMed, Inc. Stock Option and Long-Term Incentive
Compensation Plan
6.5 The NexMed, Inc. Recognition and Retention Stock Incentive Plan
6.6 The NexMed, Inc. Non-Qualified Stock Option Plan
*** 12.1 Statement re: Computation of Per Share Earnings
*** 12.2 Letter on Change in Certifying Accountant
*** 12.3 Subsidiaries of the Company
*** 27 Financial Data Schedule
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* Pursuant to Item 1(b) of Part III to Form 10-SB, exhibits are listed
according to the numbers assigned in Part III of Form 1-A or Item 2 of
Part III to Form 10-SB.
** Filed as an exhibit to the Registrant's Form 10-SB filed with the
Securities and Exchange Commission on March 14, 1997.
*** Filed as an exhibit to the Registrant's Form 10-SB/A filed with the
Securities and Exchange Commission on May 13, 1997.
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
/s/
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NEXMED, INC.
Date: June 5, 1997 By: /s/ Y. Joseph Mo
-----------------------------------
Y. Joseph Mo
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
registration statement has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Date: June 5, 1997 By: /s/ Y. Joseph Mo
-----------------------------------
Y. Joseph Mo
Chairman of the Board of Directors,
President and Chief Executive Officer
(Principal Executive Officer)
Date: June 5, 1997 By: /s/ Vivian H. Liu
-----------------------------------
Vivian H. Liu,
Vice President, Treasurer and
Secretary (Principal Financial and
Accounting Officer)
Date: June 5, 1997 By: /s/ Gilbert S. Banker
-----------------------------------
Gilbert S. Banker
Director
Date: June 5, 1997 By: /s/ Robert W. Gracy
-----------------------------------
Robert W. Gracy
Director
Date: June 5, 1997 By: /s/ Yu-Chung Wei
-----------------------------------
Yu-Chung Wei
Director
Exhibit 6.2
THE UNIVERSITY OF KANSAS
FIXED-PRICE AGREEMENT FOR RESEARCH
1. Introduction
This agreement, effective June 15, 1996, by and between the University of
Kansas, Lawrence, Kansas (hereinafter referred to as the UNIVERSITY), an
educational institution of the State of Kansas, and NexMed (hereinafter referred
to as CONTRACTOR) is made under the following terms.
2. Scope of Work
The UNIVERSITY will perform the scope of work as described in the proposal
entitled, "Development of Dermal Devices & Formulations" which forms the basis
of this research grant and is incorporated in to this agreement as Attachment A.
3. Duration
The investigation covered by this agreement shall extend for a period of
12 months, beginning on July 1, 1996 and continuing through June 30, 1997, and
is subject to renewal by mutual agreement.
4. Costs and Payments
(a) The CONTRACTOR agrees to pay to the UNIVERSITY a fixed price amount of
$20,000.00 to cover the partial cost of all direct labor, supervision, supplies,
equipment, materials, other operating and incidental expenses, and indirect
costs necessary for the execution of work.
(b) Budget transfers between categories is at the discretion of the
Project Director.
(c) Payment will be made by the CONTRACTOR to the UNIVERSITY in advance.
(d) Title to equipment purchased or built with these funds to perform the
investigation shall be vested in the UNIVERSITY upon completion of the work.
5. Indemnification
CONTRACTOR shall indemnify and hold harmless the UNIVERSITY, its agents
and employees from any and all claims of every kind including all costs of
defense arising out of the performance of this agreement.
6. Warranty
The UNIVERSITY agrees that the information provided to CONTRACTOR under
this agreement will be reasonably accurate in accordance with scientifically
accepted standards. The University disclaims all warranties including all
implied warranties of merchantability and fitness for a particular purpose.
7. Nature of Relationship
The UNIVERSITY is an independent contractor amid shall not act as an agent
for the CONTRACTOR, nor shall it be deemed to be an employee of the CONTRACTOR
for any purposes whatsoever. The CONTRACTOR shall not enter into any agreement
nor incur any obligations on behalf of the UNIVERSITY nor commit the UNIVERSITY
in any manner without the prior written consent of the UNIVERSITY.
8. Publications
The UNIVERSITY reserves the right to publish any results of its research
at the conclusion of the investigation conducted under this agreement. The
UNIVERSITY will submit
<PAGE>
to the CONTRACTOR the text of any written disclosure of the results of the
investigation at least six (6) weeks in advance of any disclosure of the
results. The UNIVERSITY will consider any suggestions concerning the disclosure,
but is not bound to incorporate such suggestions in any publications.
9. Publicity
Neither the CONTRACTOR nor the University shall use the name of the other
or the name of any of its staff on any unpublished information or in any
publicity or advertisement, whether with respect to this agreement or any other
related matter, without prior written approval.
10. Extension
The parties may agree to continue the investigation beyond the termination
date for additional periods under terms provided for in writing and approved by
both parties. Such an agreement must be reached not less than 30 days prior to
the original termination date.
11. Termination
Either party may terminate this agreement provided written notification is
received by the other party 30 days prior to the proposed termination date. The
UNIVERSITY will return to CONTRACTOR all funds which have not been expended or
irrevocably encumbered at that time.
12. Patents
If patentable discoveries result from research sponsored by this
agreement, patent rights will be vested proportionately as determined by
subsequent negotiations and mutual agreement. In consideration of CONTRACTOR
transferring five thousand shares of NexMed common stock to the UNIVERSITY, the
UNIVERSITY acknowledges CONTRACTOR'S sole rights to those technologies listed in
Appendix B which CONTRACTOR owns and which are subject to further development
under the scope of work as described in Appendix A.
13. Assignment
UNIVERSITY may re-assign this agreement in whole or in part to the
University of Kansas Center for Research for administrative purposes.
14. This document constitutes the entire agreement between the CONTRACTOR and
the UNIVERSITY with respect to this research investigation. Any modification of
this agreement shall be in writing and shall be signed by both parties.
In witness whereof, the UNIVERSITY OF KANSAS and NexMed have executed this
agreement as of the date first above written.
NEXMED THE UNIVERSITY OF KANSAS
/s/ Vivian Liu /s/ Kim Moreland
- ---------------------------- ---------------------------------
Name: Vivian Liu Kim Moreland
Title: Vice-President Director
Research Support & Grants Administration
2
<PAGE>
APPENDIX A
RESEARCH PLAN
One of the primary limitations of transdermal drug delivery is the natural
barrier function of the skin that prevents most drugs from passing through the
skin in an efficacious manner. Many approaches have been used to increase the
permeability of the skin. These include the use of physical (e.g. iontophoresis,
electroporation, occlusion (hydration), etc.) and chemical (penetration
enhancers, chemical modification, etc.) methods.
NexMed has acquired the rights to an electronic device to treat herpes
infections of the skin and mouth. NexMed is negotiating a licensing agreement
with Odontex to use several biodegradable penetration enhancers developed at the
University of Kansas.
The primary research objectives of this program include:
1. A significant objective of the work will involve testing, evaluation
and further development of the electronic device for treating herpes infections
of the skin and mouth.
2. Prototype topical formulations will be prepared utilizing appropriate
biodegradable enhancers and useful topical vehicles and excipients. The in-vitro
permeation of drug substances from prototype formulations will be evaluated
initially using a shed snake skin diffusion model developed in our laboratories.
The effect of formulation variables such as pH, vehicle composition (choice of
excipients) and enhancer concentration on the permeation of the drug substances
chosen for evaluation will be determined.
3. The physical and chemical stability of selected formulations will be
evaluated.
4. Local irritation and toxicity studies may be conducted with selected
formulations.
It is anticipated that most of the studies listed above will be performed
by visiting scientists whose salaries and some supply and equipment needs will
be provided by NexMed.
<PAGE>
APPENDIX B
[Letterhead of J. L. Yeager and Associates, Inc., Consultant to the Company]
June 10, 1996
Howard Rytting, Ph.D.
Professor
School of Pharmacy
Department of Pharmaceutical Chemistry
University of Kansas
HIGUCHI BIOSCIENCES CENTER
2095 Constant Avenue
Lawrence, Kansas 66047
Dear Dr. Rytting:
NexMed, Inc. is excited about the prospect of continuing the development of
pharmaceutical and cosmetic products based on novel transdermal penetration
enhancers discovered by you and your colleagues at the Higuchi Biosciences
Center (HBC) in Lawrence, Kansas. NexMed, Inc. firmly believes that the best way
to successfully accomplish the transfer of the basic penetration enhancer
technology to the product development stage is to occupy laboratory space and
conduct the development activities at the Higuchi Biosciences Center.
NexMed, Inc. recognizes that the Higuchi Biosciences Center is part of the
University of Kansas, a state supported public institution. It is, therefore,
very important that the University of Kansas and NexMed, Inc. are in agreement
regarding the know-how and intellectual property resulting from product
development activities conducted by NexMed, Inc. employees in HBC laboratories
that solely occupied by NexMed, Inc. In this regard, all development activities
conducted in the NexMed, Inc. occupied laboratories must be private and
confidential. All know-how and intellectual property developed as a result of
development activities conducted by NexMed, Inc. employees in the NexMed, Inc.
occupied laboratory must be the sole property of NexMed, Inc. and without
encumbrances or claims by the University of Kansas or employees of the
University of Kansas.
NexMed, Inc. states that the laboratories at the Higuchi Biosciences Center will
be used for the development of new pharmaceutical, cosmetic and device products
based on intellectual property and know-how that NexMed, Inc. owns or has
acquired rights as stated below.
1. Pharmaceutical products that utilize transdermal penetration technology
described in issued patents owned by NexMed, Inc.
2. Pharmaceutical and cosmetic products that utilize transdermal penetration
technology described by issued patents, including patent filings, which
NexMed,Inc. has acquired rights.
3. Pharmaceutical and cosmetic products that utilize the know-how of its
employees.
<PAGE>
4. Pharmaceutical devices that utilize technology described in issued patents
or patent applications owned or rights acquired by NexMed, Inc.
5. Pharmaceutical devices that utilize the know-how of its employees.
Once again, I am looking forward to our continued scientific collaboration.
Very best regards,
/s/ James L. Yeager
- ------------------------------
James L. Yeager, Ph.D.
Consultant to NexMed.
2
<PAGE>
[Letterhead of the Company]
August 6, 1996
Ms. Kim Moreland
Director, Research Support & Grants Administration
University of Kansas
2099 Constant Avenue, Room 152
Lawrence, KS 66045
VIA FAX TRANSMISSION: (913) 864-5272
Dear Ms. Moreland:
This is to confirm our phone conversation regarding the Fixed-Price Agreement
for Research signed last month between our two organizations.
We agreed that "Appendix B" as indicated in paragraph 12 of the
Agreement to be the June 10, 1996 letter written by Dr. James L.
Yeager. Dr. Yeager's letter summarizes the technologies and know-hows
to which the Contractor has sole rights.
Please acknowledge your agreement by signing and returning one copy of this fax
to us. Thank you for your attention concerning this matter.
Sincerely,
/s/ Vivian Liu
- --------------------------------
Vivian Liu
Vice President
NexMed, Inc.
On behalf of the University of Kansas, I acknowledge that "Appendix B"
as indicated in paragraph 12 of the Agreement signed with NexMed, Inc.
to be the letter written by Dr. James L. Yeager to Dr. Howard Rytting,
Professor of Pharmacy, Department of Pharmaceutical Chemistry. Higuchi
Biosciences Center, on June 10, 1996.
/s/ Kim Moreland Date: 8-7-96
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Director
Research Support & Grants Administration
<PAGE>
The University of Kansas
Fixed-Price Agreement for Research
Subcontract Modification #1
November 22, 1996
This document modifies the Fixed-Price Agreement for Research between the
University of Kansas and NexMed, Inc., which was effective on June 15, 1996 for
work under the direction of Professor Howard Rytting. The project is entitled
"Development of Dermal Devices and Formulations." Subcontract Modification 1
extends the agreement for an additional period of two months and provides
supplemental funds in the amount of $13,100.00. The following wording replaces
language in the original Fixed-Price Agreement for Research:
Section 3. Duration
The investigation covered by this agreement shall extend for a period
beginning on June 15, 1996 and continuing through August 31, 1997, and is
subject to renewal by mutual agreement.
Section 4. Costs and Payments
(a) The CONTRACTOR agrees to pay to the UNIVERSITY a fixed-price amount of
$33,100.00 to cover the partial cost of all direct labor, supervision, supplies,
equipment, materials, other operating and incidental expenses, and indirect
costs necessary for the execution of the work.
All other terms and conditions of the Fixed-Price Agreement for Research,
effective June 15, 1996, remain in force.
NEXMED THE UNIVERSITY OF KANSAS
/s/ Vivian Liu /s/ Kim Moreland
- -------------------------------- -----------------------------------
Name: Vivian Liu Kim Moreland
Title: Vice-President Director
Research Support & Grants Administration
Date: December 2, 1996 Date: 12-11-96
Exhibit 6.3
A Research Proposal By:
THE UNIVERSITY OF KANSAS
Lawrence, Kansas 66045
to
NEXMED, INC.
Los Angeles, CA
TITLE
DEVELOPMENT OF EFFECTIVE TRANSDERMAL DELIVERY ENHANCEMENT
Principal Investigator: Dr. J. Howard Rytting
Center for Drug Delivery Research
Pharmaceutical Chemistry Laboratories
(913) 864-3757
Starting Date: Dec.1 1996 Completion Date: Nov. 30, 1997
Total Budget: $49,932
SIGNATURES OF APPROVAL
/s/ J. Howard Rytting
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J. Howard Rytting
Principal Investigator
/s/ Kim Moreland
- -------------------------------------
Kim Moreland, Director
Research Support and Grants Administration
<PAGE>
PROPOSED STUDY
I. SCOPE OF THE WORK
It is proposed to conduct a study which will involve the development and
evaluation of transdermal penetration enhancer substances with respect to
compounds of interest to NEXMED, Inc. as outlined below and in accordance with
the accompanying research agreement. In general the program will focus on the
design and evaluation of several potential transdermal drug enhancers to improve
the efficacy of several compounds of interest to NEXMED and to understand the
mechanism of their actions.
Specific activities would be in the following areas.
1. Synthesis of small batches of penetration enhancers of the N,
N-dialkylaminoalkanoate type that have been found to be effective in promoting
the transdermal penetration of a number of drugs. The choices will be based on
the chemical and physical nature of the compounds of interest to NEXMED.
2. Determine steady-state flux, lag times and permeability constants for a
several chemical entities provided by NEXMED (1-5 compounds), with and without
flux enhancement utilizing biodegradable transdermal penetration enhancers
developed at the University of Kansas. For comparative purposes, studies may
also be conducted with oleic acid, Azone , and lauryl alcohol.
Initially shed skin (stratum corneum) of the black rat snake will be used
as the model membrane. For the initial studies, pieces of the shed snake skin
will be pretreated with 15 ul of pure liquid enhancer approximately 2 hr before
each experiment. The studies will be carried out using Franz type vertical
diffusion cells with an effective diffusional area of 1.8 cm^2 If the analysis
will take place using HPLC. If direct uv or visible spectrophotometry can be
used an automated diffusion cell apparatus developed In our laboratories will be
used. Depending on the solubility characteristics of the drugs to be studied,
either solutions or suspensions of the drug will be applied to the donor cells
for the initial studies. Studies with ointment and gel formulations will also be
considered. Depending on the acid/base characteristics of the drugs to be
studied pH will be controlled appropriately. In most cases the receptor cell
will contain a buffer at neutral pH.
The drug penetrating into the receptor cell will be assayed according to
procedures supplied by NEXMED or if necessary appropriate procedures developed
in our laboratory. The data obtained will be plotted as the cumulative amount of
drug appearing in the receptor compartment as a function of time. The steady
state flux, lag times and permeability constants will be determined and
evaluated.
3. Efforts will also be directed towards preparing formulations containing
various GRAS additives such as hydrogenated phospholipid and alcohols. In
addition, if the compounds are suitable, we will look at the effects of
including certain ion pairing agents that we have found to be effective in the
formulations along with our transdermal flux enhancing agents.
4. If time and the level of support allows, it is anticipated that the
work will lead to structure/activity relationships for effective percutaneous
absorption.
5. As time permits, we will conduct studies on the mechanism of action of
the biodegradable flux enhancers. This will involve some of the following types
of studies.
<PAGE>
a. We will examine the effects of the penetration enhancers on the
various phase transitions of components of the skin using DSC of the skin both
treated and untreated with flux enhancing agents. Preliminary studies have shown
that the enhancers generally lower the phase transition temperature of the lipid
phase of the stratum corneum.
b. We will examine the effects of the enhancers on flux enhancement
in both normal and delipidized shed snake skin. Delipidization will be
accomplished by soaking pieces of shed snake skin in chloroform: methanol (2:1
ratio) mixtures for about 24 hr. After delipidization the shed snake skin pieces
will be dried for about 1 hr. to evaporate the chloroform and methanol. These
samples will then be used as described earlier. It is anticipated that the
results will assist us in differentiating the involvement of the lipid and
protein domains of the stratum corneum in the transport of drugs through the
skin.
c. We will use fluorescence polarization to examine the effects of
the penetration enhancers on the lipid domains of the skin. Fluorescence
polarization is a method commonly used to monitor the degree of molecular
packing order in the apolar regions of cell membranes. Decreases in the packing
order suggest that the lipid domains become more "fluid", which is generally
related to increased membrane permeability. The effects of several penetration
enhancers on stratum corneum membrane lipids will be examined by labeling the
cells with various fluorescent probes such as diphenylhexatriene fluorophores
and characterizing their interactions with the cell membranes using fluorescence
anisotropy and fluorescence lifetimes. Various probes that tend to interact with
lipids in different regions will be utilized.
As the program is currently defined, a successful research effort would
require several years, beginning on Dec. 1, 1996 and continuing indefinitely.
However, initial funding will be for a period of one year through Nov.30, 1997.
During this period, specific activities 1 and 2 should be completed for several
drugs as well as some progress on activities 3-5.
II. BUDGET
KU BUDGET
YEAR 1
Personnel
J. H. Rytting, P.I., 5% 4,150
Mehmet Tanol, Postdoc (100%) 22,000
Fringe Benefits 6,550
Subtotal 32,700
Supplies
Chemicals, glassware,
columns, repair, etc. 1,000
2
<PAGE>
Animals
Snakes 500
Total Direct Costs 34,200
Indirect Costs
(@ 46% of direct costs) 15,732
Total 49,932
Budget transfers between categories are at the discretion of the Principal
Investigator.
Project funds shall be paid to the University by NEXMED in two semiannual
payments, the first upon executing this agreement and the second on or about 6
months later.
III. TERM AND TERMINATION
This agreement shall be effective as of the date of its execution by both
parties and shall continue in effect for a period of one (1) year, unless
further extended and agreed to by the parties in writing; provided however, the
Agreement may be terminated by either party at any time by giving 3 months
written notice to the other. In the event by NEXMED, the University shall be
paid all of its costs and expenses incurred to the date of termination (reduced
by prior payments by NEXMED).
IV. REPORTS AND MEETINGS
The University shall provide a final report regarding the progress of the
project to NEXMED at the conclusion of the project. Further, the University
shall provide NEXMED with oral progress reports as requested. NEXMED shall
designate representative(s) to participate in meetings to review research and
development activities as it deems necessary. NEXMED's designated
representative(s) shall have access at reasonable times to observe the project
in process or review overall performance of the program. NEXMED shall pay all
reasonable travel and living expenses to Professor Rytting or other University
personnel for any such meetings held away from University premises.
V. RESEARCH RESULTS
Inventorship of patentable inventions shall be determined in accordance
with the patent laws and practices of the United States of America. The
University shall own the patent rights to inventions made by University
personnel and arising from the Projects. With NEXMED's discretion and consent,
filing and prosecution of United States patent applications and patent
maintenance on inventions arising from the Project and any foreign patent
applications based thereon shall be carried out at NEXMED's expense by counsel
mutually agreeable to both parties. University may file and prosecute, or cause
to be filed and prosecuted, any patent applications which NEXMED does not elect
to support. NEXMED in its discretion may at any time discontinue its financial
support of any patent application or patent hereunder in which case its rights
with regard thereto shall cease. NEXMED is hereby granted irrevocable options to
obtain exclusive worldwide licenses, including sublicensing rights, to any U.S.
and foreign patent applications and patents claiming inventions for the life of
the patents which arise from the Project. The term of each option shall commence
with the filing date of the relevant patent application and continue for one (1)
year from the date of issue of each relevant United States Patent. Terms of the
licenses shall be negotiated substantially in accord with ordinary practice.
3
<PAGE>
NEXMED shall have a right to first refusal to license U.S. and foreign patents
claiming inventions which arise from the Project and obtained at the
University's expense commencing with the filing date of the relevant patent
application and continuing for a period of one (1) year from the date of issue
of any relevant U S. patent under similarly negotiated terms.
VI. PUBLICATIONS
The University retains full rights to publish or present on the work of
UNIVERSITY personnel under this Agreement. However, the University will provide
NEXMED with a copy of any written publication material or text of any oral
presentation relating to the project at least sixty (60) days prior to
submission for publication or presentation to permit NEXMED to review the
material for possible disclosure of confidential and proprietary information of
NEXMED or of patentable inventions. Upon request by NEXMED, the University will
delete any of NEXMED's confidential and proprietary information prior to
submission for publication or presentation. If NEXMED does not respond within
said sixty days, the University may proceed to publish or disclose. However,
disclosure by the University may be delayed for an additional six (6) months if
NEXMED notifies the University of its intent to file a patent application(s)
based upon the material disclosed in the publication or presentation.
VII. CONFIDENTIALITY
In order to carry out the project, it may be necessary for NEXMED and the
University to exchange information which each party considers confidential and
proprietary. All confidential and proprietary information shall be maintained in
strict confidence by the receiving party and shall not be disclosed to any third
party or used for any purpose without the prior written consent of the
disclosing party. Such confidentiality will not, however, apply to information
or materials which are publicly available or which become such through no breach
of this agreement, or which can be documented to have been in the receiving
party's possession at the time of disclosure or which is subsequently disclosed
to any party by a fourth party having no obligation of confidentiality to any
party hereto.
VIII. PUBLICITY
Upon execution hereof and during the term of this Agreement, neither,
NEXMED nor the University shall issue any press release or other third-party
communication without the prior written approval of the other parties, except as
may be required by University policies.
IX. NOTICES
Any notice required or permitted hereunder shall be in writing and shall
be deemed given as of the date it is (a) delivered by hand or (b) sent by
registered or certified mail, postage prepaid, return receipt requested and
addressed to the party to receive such notice at the address set forth below, or
such other address as is subsequently specified in writing:
TO NEXMED: NEXMED, Inc.
1301 West Olympic Blvd., #509
Los Angeles, CA 90064
Attn: James L. Yeager, Ph.D.
4
<PAGE>
TO UNIVERSITY: Kim Moreland, Director
Research Support and Grants Administration
The University of Kansas
220 Strong Hall
Lawrence, Kansas 66045
X. APPLICABLE LAW
This Agreement shall be deemed to have been made in the State of Kansas
and shall be interpreted and enforced in accordance with the laws of the State
of Kansas.
XI. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding of the parties with
respect to the research and development program. Any modification of this
agreement shall be valid only if made in writing and signed by both parties.
IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the day and year set forth
below.
NEXMED, INC THE UNIVERSITY OF KANSAS
By: /s/ James L. Yeager BY: /s/ Kim Moreland
---------------------------- --------------------------------
James L. Yeager Kim Moreland, Director
Vice President Research Support and Grants
Administration
Date: 11/30/96 Date: 11/20/96
5
Exhibit 6.4
THE NEXMED, INC. STOCK OPTION AND
LONG TERM INCENTIVE COMPENSATION PLAN
Adopted and Effective as of December 4, 1996
<PAGE>
THE NEXMED, INC. STOCK OPTION AND
LONG TERM INCENTIVE COMPENSATION PLAN
1. Purpose of the Plan.
This NexMed, Inc. Stock Option and Long-Term Incentive Compensation Plan
is intended to promote the interests of the Company and its shareholders by
providing the Company's key employees, on whose judgment, initiative, and
efforts the successful conduct of the business of the Company depends, and who
are responsible for the management, growth, and protection of the business, with
appropriate incentives and rewards to encourage them to continue in the employ
of the Company and to maximize their performance.
2. Definitions.
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean, when used in connection with the termination of a
Participant's employment, the termination of the Participant's employment on
account of: (i) the willful and continued failure by the Participant
substantially to perform his or her duties and obligations to the Company (other
than any such failure resulting from incapacity due to physical or mental
illness), (ii) the willful violation by the Participant of (A) any federal or
state law or (B) any rule of the Company, which violation would materially
reflect on the Participant's character, competence, or integrity, (iii) a breach
by a Participant of the Participant's duty of loyalty to the Company such as
Participant's solicitation of customers or employees of the Company on behalf of
any other person, (iv) the Participant's unauthorized removal from the Company's
premises of any document (in any medium or form) relating to the Company, its
business, or its customers, provided, however, that no such removal shall be
deemed "unauthorized" if it is in furtherance of an individual's duties and
obligations to the Company and such removal is a common practice at the Company,
(v) the Participant's unauthorized disclosure to any person of any confidential
information regarding the Company, or (vi) the willful engaging by the
Participant in any other misconduct which is materially injurious to the
Company. For purposes of this Section 2(b), no act, or failure to act, on a
Participant's part shall be considered "willful" unless done, or omitted to be
done, by the Participant in bad faith and without reasonable belief that the
action or omission was in the best interests of the Company. Any rights the
Company may have hereunder in respect of the events giving rise to Cause shall
be in addition to the rights the Company may have under any other agreement with
the participant or at law or in equity. If, subsequent to the termination of a
Participant's employment without Cause, it is determined that the Participant's
employment could have been terminated for
<PAGE>
Cause, such Participant's employment shall, at the election of the Committee in
its sole discretion, be deemed to have been terminated for Cause.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Compensation Committee of the Board;
provided, however, the Compensation Committee shall not take any action under
this Plan unless it is at all times composed solely of not less than three
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Securities Exchange Act of 1934, as amended. In the event the Compensation
Committee is not composed of three Non-Employee Directors when the Company is
subject to the Securities Act, or, in the event the Committee is unable to act,
the Board shall take any and all actions required or permitted to be taken by
the Committee under this Plan and shall serve as the Committee.
(e) "Company" shall mean NexMed, Inc., a Nevada corporation.
(f) "Company Stock" shall mean the common stock, par value $.001 per
share, of NexMed, Inc.
(g) "Disability" shall mean any physical or mental condition as a result
of which a Participant is disabled within the meaning of Section 422(c)(6) of
the Code.
(h) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(i) "Fair Market Value" shall mean with respect to a share of Company
Stock the average closing price per share of Company Stock for the ten (10)
consecutive trading days ending two (2) trading days prior to the date of
determination. The closing price for each day shall be as reported in the Wall
Street Journal, or, if not reported therein, as reported in another newspaper of
national circulation chosen by the Board, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices regular way, on the
New York Stock Exchange Composite Tape, or if the Company Stock is not then
listed or admitted to trading on the New York Stock Exchange, on the largest
principal national securities exchange, or if the Company Stock is not so listed
or admitted to trading, then the average of the last reported sales prices for
such shares in the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or, if
on any day such stock is not quoted on NASDAQ, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization.
(j) "Incentive Award" shall mean an Option, a SAR, a Restricted Stock, or
Stock Bonus Award granted pursuant to the terms of the Plan.
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(k) "Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code and that is
identified as an Incentive Stock Option in the agreement by which it is
evidenced.
(l) "Issue Date" shall mean the date established by the Committee on which
certificates representing shares of Restricted Stock shall be issued by the
Company pursuant to the terms of Section 8(d) hereof.
(m) "Non-Qualified Stock Option" shall mean an Option that is not an
Incentive Stock Option.
(n) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option, or portion thereof, shall be
identified as either an Incentive Stock Option or a Non-Qualified Stock Option
in the agreement by which such Option is evidenced.
(o) "Participant" shall mean an employee or officer of the Company
selected to participate in the Plan and to whom an Incentive Award is granted
pursuant to the Plan, and, upon his or her death, that person's successors,
heirs, executors, and administrators, as the case may be.
(p) "Person" shall mean a "person," such as term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(q) "Plan" shall mean The NexMed, Inc. Stock Option and Long-Term
Incentive Compensation Plan, as it may be amended from time to time.
(r) "Restricted Stock" shall mean a share of Company Stock that is granted
pursuant to the terms of Section 8 hereof and that is subject to the
restrictions set forth in Section 8(c) hereof for as long as such restrictions
continue to apply to such share.
(s) "Retirement" shall mean a Participant's termination of employment
(other than by reason of death or Disability and other than a termination that
is (or is deemed to have been) for Cause) on or after the later of (i) the date
the Participant attains age 65 and (ii) the date the Participant has completed
five years of service with the Company.
(t) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(u) "SAR" shall mean a stock appreciation right granted pursuant to
Section 7 hereof.
(v) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 9 hereof.
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(w) "Vesting Date" shall mean the date established by the Committee on
which an Incentive Award may vest, with vesting to be time-based,
performance-based, or a combination, to be determined by the Committee in its
discretion.
3. Stock Subject to the Plan.
(a) Plan Awards.
Under the Plan, the Committee may, in its sole and absolute
discretion, grant any or all of the following types of Incentive Awards to a
Participant: an Option, a SAR, a Restricted Stock, or Stock Bonus Award.
(b) Individual Awards.
Incentive Awards granted under this Plan may be made up entirely of
one type of Incentive Award or any combination of types of Incentive Awards
available under the Plan, in the Committee's sole discretion.
(c) Aggregate Plan Share Reserve.
The total number of shares of Company Stock available for grants of
Incentive Awards under the Plan shall be 1,500,000 subject to adjustment in
accordance with Section 10 of the Plan. These shares may be either authorized
but unissued, newly issued shares, or reacquired shares of Company Stock. If an
Incentive Award or portion thereof shall expire or terminate for any reason
without having been exercised in full, the unexercised shares covered by such
Incentive Award shall be available for future grants of Incentive Awards under
the Plan.
4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee shall from
time to time designate the employees, officer, directors and outside directors
of the Company who shall be granted Incentive Awards and the amount and type of
such Incentive Awards.
The Committee shall have the full authority and discretion to administer
the Plan, including authority to interpret and construe any provision of the
Plan and the terms of any Incentive Award issued under the Plan. The Committee
may also adopt any rules and regulations for administering the Plan as it may
deem necessary or appropriate. Decisions of the Committee shall be final and
binding on all parties.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or SAR granted under the Plan
becomes exercisable or otherwise adjust any of the terms of such Option or SAR
(except that no such adjustment shall,
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without the consent of a Participant, reduce the Participant's rights under any
previously granted and outstanding Incentive Award), (ii) accelerate the Vesting
Date or Issue Date of any share of Restricted Stock issued under the Plan, or
waive any condition imposed thereunder, and (iii) otherwise adjust or waive any
condition imposed on any Incentive Award made hereunder.
In addition, the Committee may, in its absolute discretion and without
amendment to the Plan, grant Incentive Awards of any type to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards of the same or any other type (including, without
limitation, Incentive Awards with higher exercise prices or values) as the
Committee specifies. Notwithstanding Section 3(a) herein, prior to the surrender
of such other Incentive Awards, Incentive Awards granted pursuant to the
preceding sentence of this Section 4 shall not count against the limit set forth
in such Section 3(a).
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee, subject to applicable laws.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company (and any affiliate that may
adopt this Plan), jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of the Company (or
affiliate) to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission,
or determination unless such action, omission or determination was taken or made
by such member, director, or employee in bad faith and without reasonable belief
that it was in the best interests of the Company and its affiliates, as the case
may be.
5. Eligibility.
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be those employees and officers of the Company who are largely
responsible for the management, growth, and protection of the business of the
Company.
6. Stock Option Awards.
The Committee may grant Options pursuant to the Plan. Such Options shall
be evidenced by agreements in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
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(a) Identification of Options.
All Options granted under the Plan shall be clearly identified in
the agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options or a combination of both.
(b) Exercise Price.
The exercise price of any Non-Qualified Stock Option granted under
the Plan shall be such price as the Committee shall determine which may be equal
to or less than the Fair Market Value of a share of Company Stock on the date
such Non-Qualified Stock Option is granted; provided, that such price may not be
less than the minimum price required by law. The exercise price of any Incentive
Stock Option granted under the Plan shall be not less than 100% of the Fair
Market Value of a share of Company Stock on the date on which such Incentive
Stock Option is granted.
(c) Term and Exercise of Options.
(i) Each Option shall be exercisable on such date or dates,
during such period, and for such number of shares of Company Stock as shall be
determined by the Committee on the day on which such Option is granted and set
forth in the Option agreement with respect to such Option; provided, however
that no Option shall be exercisable after the expiration of ten years from the
date such Option was granted; and, provided, further, that each Option shall be
subject to earlier termination, expiration, or cancellation as provided in the
Plan.
(ii) Each Option shall be exercisable in whole or in part;
provided, that no partial exercise of an Option shall be for an aggregate
exercise price of less than $1,000. The partial exercise of an Option shall not
cause the expiration, termination, or cancellation of the remaining portion
thereof. Upon the partial exercise of an Option, the agreement evidencing such
Option, marked with such notations as the Committee may deem appropriate to
evidence such partial exercise, shall be returned to the Participant exercising
such Option together with the delivery of the certificates described in Section
6(c)(v) hereof.
(iii) An Option shall be exercised by delivering a written
notice to the Company's principal office to the attention of its Secretary, no
less than three business days in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the agreement (or agreements)
evidencing the Option, shall specify the number of shares of Company Stock with
respect to which the Option is being exercised, and the effective date of the
proposed exercise, and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of the business day
immediately preceding the effective date of the proposed exercise, in which case
such agreement(s) shall be returned to the Participant. Payment for shares of
Company Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise in any combination of the following:
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(A) in cash, by certified check, bank cashier's check,
or wire transfer,
(B) subject to the approval of the Committee, in shares
of Company Stock owned by the Participant and valued at their Fair Market Value
on the effective date of such exercise, or
(C) subject to the approval of the Committee pursuant to
a "cashless exercise" by (I) authorizing the Company to retain whole shares of
Company Stock that otherwise would be issuable upon the exercise of the Option
and that have an aggregate Fair Market Value as of the date of exercise equal to
the exercise price of the Option or (III) pursuant to procedures adopted by the
Committee whereby the Participant, by a properly written notice, directs (a) an
immediate market sale or margin loan respecting all or a part of the shares of
Company Stock to which the Participant is entitled upon exercise pursuant to an
extension of credit by the Company to the Participant of the exercise price, (b)
the delivery of the shares of the Company Stock from the Company directly to the
brokerage firm, and (c) the delivery of the exercise price from the sale or
margin loan proceeds from the brokerage firm directly to the Company.
Any payments in shares of Company Stock shall be effected by the delivery of
such shares to the Secretary of the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time
(D) During the lifetime of a Participant, each Option
granted to him or her shall be exercisable only by him or her. No Option shall
be assignable or transferable otherwise than by will or by the laws of descent
and distribution.
(E) Certificates for shares of Company Stock purchased
upon the exercise of an Option shall be issued in the name of the Participant or
his or her beneficiary, as the case may be, and delivered to the Participant or
his or her beneficiary, as the case may be, as soon as practicable following the
effective date on which the Option is exercised.
(iv) Limitations on Grant of Incentive Stock Options.
(A) The aggregate Fair Market Value of shares of Company
Stock with respect to which Incentive Stock Options granted hereunder are
exercisable for the first time by a Participant during any calendar year under
the Plan and any other stock option plan of the Company (or any "subsidiary
corporation" of the Company within the meaning of Section 424 of the Code) shall
not exceed $100,000. Such Fair Market Value shall be determined as of the date
on which each such Incentive Stock Option is granted. In the event that the
aggregate Fair Market Value of shares of Company Stock with respect to such
Incentive Stock Options exceeds $100,000, then Incentive Stock Options granted
hereunder to such Participant shall, to the extent and in the order in which
they were granted, automatically be deemed to be Non-Qualified Stock
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Options, but all other terms and provisions of such Incentive Stock Options
shall remain unchanged.
(B) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its "subsidiary corporations" (within the meaning
of Section 424 of the Code), unless (I) the exercise price of such Incentive
Stock Option is at least 110% of the Fair Market Value of a share of Company
Stock at the time such Incentive Stock Option is granted and (II) such Incentive
Stock Option is not exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.
(v) Effect of Termination of Employment.
(i) In the event the employment of a Participant with the
Company shall terminate (as determined by the Committee in its sole discretion)
for any reason other than Retirement, Disability, death or for Cause, (A)
Options granted to such Participant, to the extent that they were exercisable at
the time of such termination, shall remain exercisable until 90 days after the
date of such termination, on which date they shall expire, and (B) Options
granted to such Participant, to the extent that they were not exercisable, at
the time of such termination, shall expire at the close of business on the date
of such termination; provided, however, that no Option shall be exercisable
after the expiration of its term.
(ii) In the event that the employment of a Participant with
the Company shall terminate on account of the Retirement, Disability, or death
of the Participant, (A) Options granted to such Participant, to the extent that
they were exercisable at the time of such termination, shall remain exercisable
until the expiration of their term and (B) Options granted to such Participant,
to the extent that they were not exercisable at the time of such termination,
shall expire at the close of business on the date of such termination. The
effect of exercising any Incentive Stock Option on a day that is more than 90
days after the date of such termination (or, in the case of a termination of
employment on account of Disability, on a day that is more than one year after
the date of such termination) will be to cause such Incentive Stock Option to be
treated as a Non-Qualified Stock Option.
(4) In the event of the termination of a Participant's employment
for Cause, all outstanding Options granted to such Participant shall
automatically expire at the commencement of business as of the date of such
termination.
7. SARs.
The Committee may grant SARs pursuant to the Plan, which SARs shall be
evidenced by agreements in such form as the Committee shall from time to time
approve. SARs shall comply with and be subject to the following terms and
conditions:
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(a) Exercise Price.
The exercise price of any SAR granted under the Plan shall be
determined by the Committee in its discretion at the time of the grant of such
SAR.
(b) Benefit Upon Exercise.
(i) The exercise of a SAR with respect to any number of shares
of Company Stock shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (A) the Fair Market Value of a share of Company
Stock on the exercise date over (B) the exercise price of the SAR (subject to
applicable withholding payment requirements).
(ii) All payments under this Section 7(b) shall be made as
soon as practicable, but in no event later than five business days, after the
effective date of the exercise.
(c) Term and Exercise of SARs.
(i) Each SAR shall be exercisable on such date or dates,
during such period, and for such number of shares of Company Stock as shall be
determined by the Committee and set forth in the SAR agreement with respect to
such SAR; provided, however, that no SAR shall be exercisable after the
expiration of ten years from the date such SAR was granted; and provided,
further, however, that each SAR shall be subject to earlier termination,
expiration, cancellation as provided in the Plan.
(ii) Each SAR may be exercised in whole or in part, provided,
that no partial exercise of a SAR shall be for an aggregate exercise price of
less than $1,000. The partial exercise of a SAR shall not cause the expiration,
termination, or cancellation of the remaining portion thereof. Upon the partial
exercise of a SAR, the agreement evidencing such SAR, marked with such notations
as the Committee may deem appropriate to evidence such partial exercise shall be
returned to the Participant exercising such SAR together with the payment
described in Section 7(b) or 7(b)(ii) hereof.
(iii) A SAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less than
three business days in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the applicable agreement evidencing the SAR,
shall specify the number of shares of Company Stock with respect to which the
SAR is being exercised and the effective date of the proposed exercise, and
shall be signed by the Participant. The Participant may withdraw such notice at
any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case the
agreement evidencing the SAR shall be returned to the Participant.
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<PAGE>
(iv) During the lifetime of a Participant, each SAR granted to
him or her shall be exercisable only by him or her. No SAR shall be assignable
or transferable otherwise than by will or by the laws of descent and
distribution.
(d) (i) In the event that the employment of a Participant with the
Company shall terminate (as determined by the Committee in its sole discretion)
for any reason other than Retirement, Disability, death or for Cause, (A) SARs
granted to such Participant, to the extent that they were exercisable at the
time of such termination, shall remain exercisable until the day one month after
such termination, on which date they shall expire and (B) SARs granted to such
Participant, to the extent that they were not exercisable at the time of such
termination, shall expire at the close of business on the date of such
termination; provided, however, that no SAR shall be exercisable after the
expiration of its term.
(ii) In the event that the employment of a Participant with
the Company shall terminate on account of the Retirement, Disability, or death
of the Participant, (A) SARs granted to such Participant, to the extent that
they were exercisable at the time of such termination, shall remain exercisable
until the expiration of their term and (B) SARs granted to such Participant, to
the extent that they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination.
(iii) In the event of the termination of the Participant's
employment for Cause, all outstanding SARs granted to such Participant shall
automatically expire at the commencement of business as of the date of such
termination.
8. Restricted Stock.
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of shares
of Restricted Stock shall comply with and be subject to the following terms and
conditions:
(a) Issue Date and Vesting Date.
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide such shares
into classes and assign a different Issue Date and/or Vesting Date for each
class. Except as provided in Sections 8(c) and 8(f) hereof, upon the occurrence
of the Issue Date with respect to a share of Restricted Stock, a share of
Restricted Stock shall be issued in accordance with the provisions of Section
8(d) hereof. Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 8(b) hereof are satisfied, and
except as provided in Sections 8(c) and 8(f) hereof, upon the occurrence of the
Vesting Date with respect to a share of Restricted Stock, such share shall vest
and the restrictions of Section 8(c) hereof shall cease to apply to such share.
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(b) Conditions to Vesting.
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any shares of
Restricted Stock, that the Participant or the Company achieve such performance
criteria as the Committee may specify at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a share of Restricted Stock, no transfer of
a Participant's rights to such share, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any interest, or
right in, or with respect to, such share, but immediately upon any attempt to
transfer such rights, such share, and all the rights related thereto, shall be
forfeited by the Participant and the transfer shall be of no force or effect.
(d) Issuance of Certificates.
(i) Except as provided in Sections 8(c) or 8(f) hereof,
reasonably promptly after the Issue Date with respect to shares of Restricted
Stock, the Company shall cause to be issued a stock certificate, registered in
the name of the Participant to whom such shares were granted, evidencing such
shares, provided, that the Company shall not cause to be issued such stock
certificate unless it has received a stock power duly endorsed in blank with
respect to such shares. Each such stock certificate shall bear the following
legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS, AND CONDITIONS
(INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE NEXMED, INC. STOCK OPTION AND LONG-TERM INCENTIVE
COMPENSATION PLAN AND INCENTIVE AWARD AGREEMENT ENTERED INTO BETWEEN THE
REGISTERED OWNER OF SUCH SHARES AND NEXMED, INC. A COPY OF THE PLAN AND
AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY OF NEXMED, INC., 6087
TRIANGLE DRIVE, COMMERCE, CALIFORNIA 90040.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Section 8(d)(i)
hereof, together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate,
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shall be deposited by the Company with a custodian designed by the Company. The
Company shall cause such custodian to issue to the Participant a receipt
evidencing the certificates held by it which are registered in the name of the
Participant.
(e) Consequences Upon Vesting.
Upon the vesting of a share of Restricted Stock pursuant to the
terms hereof, the restrictions of Section 8(c) hereof shall cease to apply to
such share. Reasonably promptly after a share of Restricted Stock vests pursuant
to the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Section 8(d)(i) hereof, together with any
other property of the Participant held by the custodian pursuant to Section
8(d)(ii) hereof.
(f) Effect of Termination of Employment.
(i) In the event that the employment of a Participant with the
Company shall terminate for any reason other than Cause prior to the vesting of
shares of Restricted Stock granted to such Participant, a proportion of such
shares, to the extent not forfeited or cancelled on or prior to such termination
pursuant to any provision hereof, shall vest on the date of such termination.
The proportion referred to in the preceding sentence shall initially be
determined by the Committee at the time of the grant of such shares of
Restricted Stock and may be based on the achievement of any conditions imposed
by the Committee with respect to such shares pursuant to Section 8(b). Such
proportion may be equal to zero.
(ii) In the event of the termination of a Participant's
employment for Cause, all shares of Restricted Stock granted to such Participant
which have not vested as of the date of such termination shall immediately be
forfeited.
9. Stock Bonuses.
The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time and
subject to such conditions as the Committee shall determine at the time of the
grant of such Stock Bonus. Certificates for shares of Company Stock granted as a
Stock Bonus shall be issued in the name of the Participant to whom such grant
was made and delivered to such Participant as soon as practicable after the date
on which such Stock Bonus is required to be paid.
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10. Adjustment Upon Changes in Company Stock.
(a) Shares Available for Grants.
In the event of any change in the number of shares of Company Stock
outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the maximum number of shares of Company Stock with
respect to which the Committee may grant Options, SARs, shares of Restricted
Stock, and Stock Bonuses under Section 3 hereof shall be appropriately adjusted
by the Committee. In the event of any change in the number of shares of Company
Stock outstanding by reason of any other event or transaction, the Committee
may, but need not, make such adjustments in the number of shares of Company
Stock with respect to which Options, SARs, shares of Restricted Stock, and Stock
Bonuses may be granted under Section 3 hereof as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock.
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including dividends paid in cash)
received by a Participant with respect to a share of Restricted Stock, the Issue
Date with respect to which occurs prior to such event, but which has not vested
as of the date of such event, as a result of any dividend, stock split, reverse
stock split, recapitalization, merger, consolidation, combination, exchange of
shares, or similar corporate exchange will not vest until such share of
Restricted Stock vests and shall be promptly deposited with the custodian
designated pursuant to Section 8(d)(ii) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, to
reflect any dividend, stock split, reverse stock split, recapitalization,
merger, consolidation, combination, exchange of shares, or similar corporate
change as the Committee may deem appropriate to prevent the enlargement or
dilution of rights of Participants under the grant.
(c) Outstanding Options and SARs - Increase
or Decrease in Issued Shares Without Consideration.
Subject to any required action by the shareholders of the Company,
in the event of any increase or decrease in the number of issued shares of
Company Stock resulting from a subdivision or consolidations of shares of
Company Stock or the payment of a stock dividend on the shares of Company Stock,
or any other increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the Company shall proportionally adjust
the number of shares of Company Stock subject to each outstanding Option and
SAR, and the exercise price per share of Company Stock of each such Option and
SAR.
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(d) Outstanding Options and SARs - Certain Mergers.
Subject to any required action by the shareholders of the Company,
in the event that the Company shall be the surviving corporation in any merger
or consolidation (except a merger or consolidation as a result of which the
holders of shares of Company Stock receive securities of another corporation),
each Option and SAR outstanding on the date of such merger or consolidation
shall pertain to and apply to the securities which a holder of the number of
shares of Company Stock subject to such Option or SAR would have received in
such merger or consolidation.
(e) Outstanding Options, SARs - Certain Other Transactions.
In the event of a dissolution or liquidation of the Company; a sale
of substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving corporation; or
a merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Company Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of
such event, each Option and SAR outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option or SAR was granted an
amount in cash, for each share of Company Stock subject to such Option or SAR,
respectively, equal to the excess of (A) the value, as determined by the
Committee in its absolute discretion, of the property (including cash) received
by the holder of a share of Company Stock as a result of such event over (B) the
exercise price of such Option or SAR (subject to applicable withholding payment
requirements); or
(ii) provide for the exchange of each Option and SAR
outstanding immediately prior to such event (whether or not then exercisable)
for an option on or stock appreciation right with respect to, as appropriate,
some or all of the property for which such Option or SAR is exchanged and,
incident thereto, make an equitable adjustment as determined by the Committee in
its absolute discretion in the exercise price of the option or stock
appreciation right, or, if appropriate, provide for a cash payment to the
Participant to whom such Option or SAR was granted in partial consideration for
the exchange of the Option or SAR.
(f) Outstanding Options and SARs - Other Changes.
In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Section 10(c),(d)
or (e) hereof, the Committee may in its absolute discretion, make such
adjustments in the number of shares subject to Options or SARs outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option and SAR as the Committee may consider appropriate to prevent
dilution or enlargement or rights.
14
<PAGE>
(g) No Other Rights.
Except as expressly provided in the Plan, no Participant shall have
any rights by reason of any subdivision or consolidation of Company Stock, the
payment of any dividend, any increase or decrease in the number of shares of
Company Stock or any dissolution, liquidation, merger, or consolidation of the
Company or any other corporation. Except as expressly provided in the Plan, no
issuance by the Company of Company Stock, or securities convertible into shares
of Company Stock, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Company Stock subject to an
Incentive Award or the exercise price of any Option or SAR.
11. Rights as a Stockholder.
No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date the person becomes the owner of record with
respect to such shares. Except as otherwise expressly provided in Section 10
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
12. No Special Employment Rights; No Rights to Incentive Award.
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his or her employment
by the Company or interfere in any way with the right of the Company, subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.
13. Securities Matters.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any
15
<PAGE>
certificates evidencing shares of Company Stock pursuant to the Plan unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authority, and the requirements of NASDAQ and any other securities
exchange on which shares of Company Stock are traded. The Committee may require,
as a condition of the issuance and delivery of certificates evidencing shares of
Company Stock pursuant to the terms hereof, that the recipient of such shares
make such covenants, agreements, and representations, and that such certificates
bear such legends, as the Committee, in its sole discretion, deems necessary or
desirable.
(b) The exercise of any Option granted hereunder shall be effective only
at such time as counsel to the Company shall have determined that the issuance
and delivery of shares of Company Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Company Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain are fund of any amount
paid with respect thereto.
(c) All Company Stock issued pursuant to the terms of this Plan shall
constitute "restricted securities," as that term is defined in Rule 144
promulgated pursuant to the Securities Act, and may not be transferred except in
compliance with the registration requirements of the Securities Act or an
exemption therefrom.
(d) Certificates for shares of Company Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE SHARES MAY NOT BE OFFERD FOR SALE, SOLD, PLEDGED,
TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES
EVIDENCE STATISFACTORY TO THE ISSUER (WHICH, IN THE DISCRETION OF THE
ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER) THAT
SUCH OFFER SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT VIOLATE
APPLICATE FEDERAL OR STATE LAWS.
16
<PAGE>
This legend shall not be required for shares of Company Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
14. Withholding Taxes.
(a) Cash Remittance.
Whenever shares of Company Stock are to be issued upon the exercise
of an Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state, and local withholding tax
requirements, if any, attributable to such exercise, occurrence, or payment
prior to the delivery of any certificate or certificates for such shares. In
addition, upon the exercise of an SAR, the Company shall have the right to
withhold from any cash payment required to be made pursuant thereto an amount
sufficient to satisfy the federal state, and local withholding tax requirements,
if any, attributable to such exercise or grant.
(b) Stock Remittance.
Subject to Section 14(d) hereof at the election of the Participant,
subject to the approval of the Committee, when shares of Company Stock are to be
issued upon the exercise of an Option, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock, or the grant of a
Stock Bonus, in lieu of the remittance required by Section 14(a) hereof, the
Participant may tender to the Company a number of shares of Company Stock
determined by such Participant, the Fair Market Value of which at the tender
date the Committee determines to be sufficient to satisfy the federal, state,
and local withholding tax requirements, if any, attributable to such exercise,
occurrence, or grant and not greater than the Participant's estimated total
federal, state, and local tax obligations associated with such exercise,
occurrence, or grant.
(c) Stock Withholding.
The Company shall have the right, when shares of Company Stock are
to be issued upon the exercise of an Option, the occurrence of the Issue Date or
the Vesting Date with respect to a share of Restricted Stock or the grant of a
Stock Bonus, in lieu of requiring the remittance required by Section 14(a)
hereof, to withhold a number of such shares, the Fair Market Value of which at
the exercise date the Committee determines to be sufficient to satisfy the
federal, state, and local withholding tax requirements, if any, attributable to
such exercise, occurrence, or grant and is not greater than the Participant's
estimated total, federal, state, and local tax obligations associated with such
exercise, occurrence, or grant.
17
<PAGE>
15. Amendment or Termination of the Plan.
The Board may at any time, or from time to time, suspend or terminate the
Plan in whole or in part, or amend it in such respects as the Board may deem
appropriate. No amendment, suspension or termination of this Plan shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option theretofore granted to an Participant under the Plan. The Board
may amend this Plan, subject to the limitations cited above, in such manner as
it deems necessary to permit the granting of Incentive Awards meeting the
requirements of future amendments or issued regulations, if any, to the Code and
to the Exchange Act.
16. No Obligation to Exercise.
The grant to a Participant of an Option or a SAR shall impose no
obligation upon such Participant to exercise such Option or SAR.
17. Transfers Upon Death.
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgments made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 17, no Incentive Award
shall be transferable, and shall be exercisable only by a Participant during the
Participant's lifetime.
18. Expenses and Receipts.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general purposes.
19. Failure to Comply.
In addition to the remedies of the Company elsewhere provided for herein,
a failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant (or
beneficiary) evidencing an Incentive Award, unless
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<PAGE>
such failure is remedied by such Participant (or beneficiary) within ten days
after having been notified of such failure by the Committee, shall be grounds
for the cancellation and forfeiture of such Incentive Award, in whole or in
part, as the Committee, in its absolute discretion may determine.
20. Adoption and Effective Date of Plan.
The Plan was adopted by unanimous written consent of the Board of
Directors of the Company, in lieu of a meeting of the Board, effective as of
December 4, 1996 and the Plan was subsequently ratified and approved through
action taken by the written consent of a majority of the shareholders of the
Company dated effective as of December 4, 1996, in lieu of a meeting of such
shareholders, all as permitted under Nevada law.
21. Term of the Plan.
The right to grant Incentive Awards under the Plan will terminate upon the
expiration of ten years from the date the Plan was initially adopted.
22. Applicable Law.
Except to the extent preempted by an applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of
Nevada, without reference to the principles of conflicts of law.
19
Exhibit 6.5
THE NEXMED, INC. RECOGNITION AND
RETENTION STOCK INCENTIVE PLAN
Adopted and Effective as of December 4, 1996
<PAGE>
THE NEXMED, INC. RECOGNITION AND
RETENTION STOCK INCENTIVE PLAN
1. Purpose of the Plan.
This NexMed, Inc. Recognition and Retention Stock Incentive Plan is
intended to promote the interests of the Company and its shareholders by
providing the Company's directors and consultants, on whose judgment,
initiative, and efforts the successful conduct of the business of the Company
depends, and who are responsible for the management, growth, and protection of
the business, with appropriate incentives and rewards to encourage them to
continue to provide valuable services to the Company and to maximize their
performance.
2. Definitions.
As used in the Plan, the following definitions apply to the terms
indicated below:
(a) "Board of Directors" shall mean the Board of Directors of the Company.
(b) "Cause" shall mean, when used in connection with the termination of a
Participant's service, the termination of the Participant's service on account
of: (i) the willful and continued failure by the Participant substantially to
perform his or her duties and obligations to the Company (other than any such
failure resulting from incapacity due to physical or mental illness), (ii) the
willful violation by the Participant of (A) any federal or state law or (B) any
rule of the Company, which violation would materially reflect on the
Participant's character, competence, or integrity, (iii) a breach by a
Participant of the Participant's duty of loyalty to the Company such as
Participant's solicitation of customers or employees of the Company on behalf of
any other person, (iv) the Participant's unauthorized removal from the Company's
premises of any document (in any medium or form) relating to the Company, its
business, or its customers, provided, however, that no such removal shall be
deemed "unauthorized" if it is in furtherance of an individual's duties and
obligations to the Company and such removal is a common practice at the Company,
(v) the Participant's unauthorized disclosure to any person of any confidential
information regarding the Company, or (vi) the willful engaging by the
Participant in any other misconduct which is materially injurious to the
Company. For purposes of this Section 2(b), no act, or failure to act, on a
Participant's part shall be considered "willful" unless done, or omitted to be
done, by the Participant in bad faith and without reasonable belief that the
action or omission was in the best interests of the Company. Any rights the
Company may have hereunder in respect of the events giving rise to Cause shall
be in addition to the rights the Company may have under any other agreement with
the participant or at law or in equity. If, subsequent to the termination of a
Participant's service without Cause, it is determined that the Participant's
service could have been terminated for Cause, such Participant's service shall,
at the election of the Committee in its sole discretion, be deemed to have been
terminated for Cause.
<PAGE>
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(d) "Committee" shall mean the Compensation Committee of the Board;
provided, however, the Compensation Committee shall not take any action under
this Plan unless it is at all times composed solely of not less than three
"Non-Employee Directors" within the meaning of Rule 16b-3, as promulgated under
the Securities Exchange Act of 1934, as amended. In the event the Compensation
Committee is not composed of three Non-Employee Directors when the Company is
subject to the Securities Act, or, in the event the Committee is unable to act,
the Board shall take any and all actions required or permitted to be taken by
the Committee under this Plan and shall serve as the Committee.
(e) "Company" shall mean NexMed, Inc., a Nevada corporation.
(f) "Company Stock" shall mean the common stock, par value $.001 per
share, of NexMed, Inc.
(g) "Disability" shall mean any physical or mental condition as a result
of which a Participant is disabled within the meaning of Section 422(c)(6) of
the Code.
(h) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(i) "Fair Market Value" shall mean with respect to a share of Company
Stock the average closing price per share of Company Stock for the ten (10)
consecutive trading days ending two (2) trading days prior to the date of
determination. The closing price for each day shall be as reported in the Wall
Street Journal, or, if not reported therein, as reported in another newspaper of
national circulation chosen by the Board, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices regular way, on the
New York Stock Exchange Composite Tape, or if the Company Stock is not then
listed or admitted to trading on the New York Stock Exchange, on the largest
principal national securities exchange, or if the Company Stock is not so listed
or admitted to trading, then the average of the last reported sales prices for
such shares in the over-the-counter market, as reported on the National
Association of Securities Dealers Automated Quotation System ("NASDAQ") or, if
on any day such stock is not quoted on NASDAQ, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization.
(j) "Incentive Award" shall mean an Option, a SAR, a Restricted Stock, or
Stock Bonus Award granted pursuant to the terms of the Plan.
(k) "Issue Date" shall mean the date established by the Committee on which
certificates representing shares of Restricted Stock shall be issued by the
Company pursuant to the terms of Section 8(d) hereof.
2
<PAGE>
(l) "Non-Qualified Stock Option" shall mean an Option that is not intended
to satisfy the requirements of Section 422 of the Code.
(m) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6 hereof. Each Option granted under this Plan shall
be a Non-Qualified Stock Option.
(n) "Participant" shall mean a director or consultant of the Company
selected to participate in the Plan and to whom an Incentive Award is granted
pursuant to the Plan, and, upon his or her death, that person's successors,
heirs, executors, and administrators, as the case may be.
(o) "Person" shall mean a "person," such as term is used in Sections 13(d)
and 14(d) of the Exchange Act.
(p) "Plan" shall mean The NexMed, Inc. Recognition and Retention Stock
Incentive Plan, as it may be amended from time to time.
(q) "Restricted Stock" shall mean a share of Company Stock that is granted
pursuant to the terms of Section 8 hereof and that is subject to the
restrictions set forth in Section 8(c) hereof for as long as such restrictions
continue to apply to such share.
(r) "Retirement" shall mean a Participant's termination of service (other
than by reason of death or Disability and other than a termination that is (or
is deemed to have been) for Cause) on or after the later of (i) the date the
Participant attains age 65 and (ii) the date the Participant has completed five
years of service with the Company.
(s) "Securities Act" shall mean the Securities Act of 1933, as amended.
(t) "SAR" shall mean a stock appreciation right granted pursuant to
Section 7 hereof.
(u) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Company Stock pursuant to Section 9 hereof.
(v) "Vesting Date" shall mean the date established by the Committee on
which an Incentive Award may vest.
3
<PAGE>
3. Stock Subject to the Plan.
(a) Plan Awards.
Under the Plan, the Committee may, in its sole and absolute
discretion, grant any or all of the following types of Incentive Awards to a
Participant: an Option, a SAR, a Restricted Stock, or Stock Bonus Award.
(b) Individual Awards.
Incentive Awards granted under this Plan may be made up entirely of
one type of Incentive Award or any combination of types of Incentive Awards
available under the Plan, in the Committee's sole discretion.
(c) Aggregate Plan Share Reserve.
The total number of shares of Company Stock available for grants of
Incentive Awards under the Plan shall be 500,000 subject to adjustment in
accordance with Section 10 of the Plan. These shares may be either authorized
but unissued, newly issued shares, or reacquired shares of Company Stock. If an
Incentive Award or portion thereof shall expire or terminate for any reason
without having been exercised in full, the unexercised shares covered by such
Incentive Award shall be available for future grants of Incentive Awards under
the Plan.
4. Administration of the Plan.
The Plan shall be administered by the Committee. The Committee shall from
time to time designate directors of the Board of the Company and consultants
providing valuable services to the Company who shall be granted Incentive Awards
and the amount and type of such Incentive Awards.
The Committee shall have the full authority and discretion to administer
the Plan, including authority to interpret and construe any provision of the
Plan and the terms of any Incentive Award issued under the Plan. The Committee
may also adopt any rules and regulations for administering the Plan as it may
deem necessary or appropriate. Decisions of the Committee shall be final and
binding on all parties.
The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or SAR granted under the Plan
becomes exercisable or otherwise adjust any of the terms of such Option or SAR
(except that no such adjustment shall, without the consent of a Participant,
reduce the Participant's rights under any previously granted and outstanding
Incentive Award), (ii) accelerate the Vesting Date or Issue Date of any share of
Restricted Stock issued under the Plan, or waive any condition imposed
thereunder, and (iii) otherwise adjust or waive any condition imposed on any
Incentive Award made hereunder.
4
<PAGE>
In addition, the Committee may, in its absolute discretion and without
amendment to the Plan, grant Incentive Awards of any type to Participants on the
condition that such Participants surrender to the Committee for cancellation
such other Incentive Awards of the same or any other type (including, without
limitation, Incentive Awards with higher exercise prices or values) as the
Committee specifies. Notwithstanding Section 3(a) herein, prior to the surrender
of such other Incentive Awards, Incentive Awards granted pursuant to the
preceding sentence of this Section 4 shall not count against the limit set forth
in such Section 3(a).
Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of service shall be determined
by the Committee, subject to applicable laws.
No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company (and any affiliate that may
adopt this Plan), jointly and severally, shall indemnify and hold harmless each
member of the Committee and each other director or employee of the Company (or
affiliate) to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission,
or determination unless such action, omission or determination was taken or made
by such member, director, or employee in bad faith and without reasonable belief
that it was in the best interests of the Company and its affiliates, as the case
may be.
5. Eligibility.
The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be those directors and consultants of the Company who are largely
responsible for the management, growth, and protection of the business of the
Company.
6. Stock Option Awards.
The Committee may grant Options pursuant to the Plan. Such Options shall
be evidenced by agreements in such form as the Committee shall from time to time
approve. Options shall comply with and be subject to the following terms and
conditions:
(a) Identification of Options.
All Options granted under the Plan shall be Non-Qualified Stock
Options.
5
<PAGE>
(b) Exercise Price.
The exercise price of any Non-Qualified Stock Option granted under
the Plan shall be such price as the Committee shall determine which may be equal
to or less than the Fair Market Value of a share of Company Stock on the date
such Non-Qualified Stock Option is granted; provided, that such price may not be
less than the minimum price required by law.
(c) Term and Exercise of Options.
(i) Each Option shall be exercisable on such date or dates,
during such period, and for such number of shares of Company Stock as shall be
determined by the Committee on the day on which such Option is granted and set
forth in the Option agreement with respect to such Option; provided, however
that no Option shall be exercisable after the expiration of ten years from the
date such Option was granted; and, provided, further, that each Option shall be
subject to earlier termination, expiration, or cancellation as provided in the
Plan.
(ii) Each Option shall be exercisable in whole or in part;
provided, that no partial exercise of an Option shall be for an aggregate
exercise price of less than $1,000. The partial exercise of an Option shall not
cause the expiration, termination, or cancellation of the remaining portion
thereof. Upon the partial exercise of an Option, the agreement evidencing such
Option, marked with such notations as the Committee may deem appropriate to
evidence such partial exercise, shall be returned to the Participant exercising
such Option together with the delivery of the certificates described in Section
6(c)(v) hereof.
(iii) An Option shall be exercised by delivering a written
notice to the Company's principal office to the attention of its Secretary, no
less than three business days in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the agreement (or agreements)
evidencing the Option, shall specify the number of shares of Company Stock with
respect to which the Option is being exercised, and the effective date of the
proposed exercise, and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of the business day
immediately preceding the effective date of the proposed exercise, in which case
such agreement(s) shall be returned to the Participant. Payment for shares of
Company Stock purchased upon the exercise of an Option shall be made on the
effective date of such exercise in any combination of the following:
(A) in cash, by certified check, bank cashier's check,
or wire transfer,
(B) subject to the approval of the Committee, in shares
of Company Stock owned by the Participant and valued at their Fair Market Value
on the effective date of such exercise, or
(C) subject to the approval of the Committee pursuant to
a "cashless exercise" by (I) authorizing the Company to retain whole shares of
Company Stock that
6
<PAGE>
otherwise would be issuable upon the exercise of the Option and that have an
aggregate Fair Market Value as of the date of exercise equal to the exercise
price of the Option or (III) pursuant to procedures adopted by the Committee
whereby the Participant, by a properly written notice, directs (a) an immediate
market sale or margin loan respecting all or a part of the shares of Company
Stock to which the Participant is entitled upon exercise pursuant to an
extension of credit by the Company to the Participant of the exercise price, (b)
the delivery of the shares of the Company Stock from the Company directly to the
brokerage firm, and (c) the delivery of the exercise price from the sale or
margin loan proceeds from the brokerage firm directly to the Company.
Any payments in shares of Company Stock shall be effected by the delivery of
such shares to the Secretary of the Company, duly endorsed in blank or
accompanied by stock powers duly executed in blank, together with any other
documents and evidences as the Secretary of the Company shall require from time
to time
(D) During the lifetime of a Participant, each Option
granted to him or her shall be exercisable only by him or her. No Option shall
be assignable or transferable otherwise than by will or by the laws of descent
and distribution.
(E) Certificates for shares of Company Stock purchased
upon the exercise of an Option shall be issued in the name of the Participant or
his or her beneficiary, as the case may be, and delivered to the Participant or
his or her beneficiary, as the case may be, as soon as practicable following the
effective date on which the Option is exercised.
(iv) Effect of Termination of Service.
(i) In the event the service of a Participant with the
Company shall terminate (as determined by the Committee in its sole discretion)
for any reason other than Retirement, Disability, death or for Cause, (A)
Options granted to such Participant, to the extent that they were exercisable at
the time of such termination, shall remain exercisable until 90 days after the
date of such termination, on which date they shall expire, and (B) Options
granted to such Participant, to the extent that they were not exercisable, at
the time of such termination, shall expire at the close of business on the date
of such termination; provided, however, that no Option shall be exercisable
after the expiration of its term.
(ii) In the event that the service of a Participant with
the Company shall terminate on account of the Retirement, Disability, or death
of the Participant, (A) Options granted to such Participant, to the extent that
they were exercisable at the time of such termination, shall remain exercisable
until the expiration of their term and (B) Options granted to such Participant,
to the extent that they were not exercisable at the time of such termination,
shall expire at the close of business on the date of such termination.
7
<PAGE>
(4) In the event of the termination of a Participant's service for
Cause, all outstanding Options granted to such Participant shall automatically
expire at the commencement of business as of the date of such termination.
7. SARs.
The Committee may grant SARs pursuant to the Plan, which SARs shall be
evidenced by agreements in such form as the Committee shall from time to time
approve. SARs shall comply with and be subject to the following terms and
conditions:
(a) Exercise Price.
The exercise price of any SAR granted under the Plan shall be
determined by the Committee in its discretion at the time of the grant of such
SAR.
(b) Benefit Upon Exercise.
(i) The exercise of a SAR with respect to any number of shares
of Company Stock shall entitle a Participant to a cash payment, for each such
share, equal to the excess of (A) the Fair Market Value of a share of Company
Stock on the exercise date over (B) the exercise price of the SAR (subject to
applicable withholding payment requirements).
(ii) All payments under this Section 7(b) shall be made as
soon as practicable, but in no event later than five business days, after the
effective date of the exercise.
(c) Term and Exercise of SARs.
(i) Each SAR shall be exercisable on such date or dates,
during such period, and for such number of shares of Company Stock as shall be
determined by the Committee and set forth in the SAR agreement with respect to
such SAR; provided, however, that no SAR shall be exercisable after the
expiration of ten years from the date such SAR was granted; and provided,
further, however, that each SAR shall be subject to earlier termination,
expiration, cancellation as provided in the Plan.
(ii) Each SAR may be exercised in whole or in part, provided,
that no partial exercise of a SAR shall be for an aggregate exercise price of
less than $1,000. The partial exercise of a SAR shall not cause the expiration,
termination, or cancellation of the remaining portion thereof. Upon the partial
exercise of a SAR, the agreement evidencing such SAR, marked with such notations
as the Committee may deem appropriate to evidence such partial exercise shall be
returned to the Participant exercising such SAR together with the payment
described in Section 7(b) or 7(b)(ii) hereof.
8
<PAGE>
(iii) A SAR shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no less than
three business days in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the applicable agreement evidencing the SAR,
shall specify the number of shares of Company Stock with respect to which the
SAR is being exercised and the effective date of the proposed exercise, and
shall be signed by the Participant. The Participant may withdraw such notice at
any time prior to the close of business on the business day immediately
preceding the effective date of the proposed exercise, in which case the
agreement evidencing the SAR shall be returned to the Participant.
(iv) During the lifetime of a Participant, each SAR granted to
him or her shall be exercisable only by him or her. No SAR shall be assignable
or transferable otherwise than by will or by the laws of descent and
distribution.
(d) (i) In the event that the service of a Participant with
the Company shall terminate (as determined by the Committee in its sole
discretion) for any reason other than Retirement, Disability, death or for
Cause, (A) SARs granted to such Participant, to the extent that they were
exercisable at the time of such termination, shall remain exercisable until the
day one month after such termination, on which date they shall expire and (B)
SARs granted to such Participant, to the extent that they were not exercisable
at the time of such termination, shall expire at the close of business on the
date of such termination; provided, however, that no SAR shall be exercisable
after the expiration of its term.
(ii) In the event that the service of a Participant with the
Company shall terminate on account of the Retirement, Disability, or death of
the Participant, (A) SARs granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain exercisable until
the expiration of their term and (B) SARs granted to such Participant, to the
extent that they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination.
(iii) In the event of the termination of the Participant's
service for Cause, all outstanding SARs granted to such Participant shall
automatically expire at the commencement of business as of the date of such
termination.
8. Restricted Stock.
The Committee may grant shares of Restricted Stock pursuant to the Plan.
Each grant of shares of Restricted Stock shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of shares
of Restricted Stock shall comply with and be subject to the following terms and
conditions:
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(a) Issue Date and Vesting Date.
At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide such shares
into classes and assign a different Issue Date and/or Vesting Date for each
class. Except as provided in Sections 8(c) and 8(f) hereof, upon the occurrence
of the Issue Date with respect to a share of Restricted Stock, a share of
Restricted Stock shall be issued in accordance with the provisions of Section
8(d) hereof. Provided that all conditions to the vesting of a share of
Restricted Stock imposed pursuant to Section 8(b) hereof are satisfied, and
except as provided in Sections 8(c) and 8(f) hereof, upon the occurrence of the
Vesting Date with respect to a share of Restricted Stock, such share shall vest
and the restrictions of Section 8(c) hereof shall cease to apply to such share.
(b) Conditions to Vesting.
At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions, not inconsistent with the
provisions hereof, to the vesting of such shares as it, in its absolute
discretion, deems appropriate. By way of example and not by way of limitation,
the Committee may require, as a condition to the vesting of any shares of
Restricted Stock, that the Participant or the Company achieve such performance
criteria as the Committee may specify at the time of the grant of such shares.
(c) Restrictions on Transfer Prior to Vesting.
Prior to the vesting of a share of Restricted Stock, no transfer of
a Participant's rights to such share, whether voluntary or involuntary, by
operation of law or otherwise, shall vest the transferee with any interest, or
right in, or with respect to, such share, but immediately upon any attempt to
transfer such rights, such share, and all the rights related thereto, shall be
forfeited by the Participant and the transfer shall be of no force or effect.
(d) Issuance of Certificates.
(i) Except as provided in Sections 8(c) or 8(f) hereof,
reasonably promptly after the Issue Date with respect to shares of Restricted
Stock, the Company shall cause to be issued a stock certificate, registered in
the name of the Participant to whom such shares were granted, evidencing such
shares, provided, that the Company shall not cause to be issued such stock
certificate unless it has received a stock power duly endorsed in blank with
respect to such shares. Each such stock certificate shall bear the following
legend:
THE TRANSFERABILITY OF THIS CERTIFICATE AND THE SHARES OF STOCK
REPRESENTED HEREBY ARE SUBJECT TO THE RESTRICTIONS, TERMS, AND CONDITIONS
(INCLUDING FORFEITURE PROVISIONS AND RESTRICTIONS AGAINST TRANSFER)
CONTAINED IN THE NEXMED, INC. STOCK OPTION
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AND LONG-TERM INCENTIVE COMPENSATION PLAN AND INCENTIVE AWARD AGREEMENT
ENTERED INTO BETWEEN THE REGISTERED OWNER OF SUCH SHARES AND NEXMED, INC.
A COPY OF THE PLAN AND AGREEMENT IS ON FILE IN THE OFFICE OF THE SECRETARY
OF NEXMED, INC., 6087 TRIANGLE DRIVE, COMMERCE, CALIFORNIA 90040.
Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.
(ii) Each certificate issued pursuant to Section 8(d)(i)
hereof, together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate, shall be deposited by the Company with a
custodian designed by the Company. The Company shall cause such custodian to
issue to the Participant a receipt evidencing the certificates held by it which
are registered in the name of the Participant.
(e) Consequences Upon Vesting.
Upon the vesting of a share of Restricted Stock pursuant to
the terms hereof, the restrictions of Section 8(c) hereof shall cease to apply
to such share. Reasonably promptly after a share of Restricted Stock vests
pursuant to the terms hereof, the Company shall cause to be issued and delivered
to the Participant to whom such shares were granted, a certificate evidencing
such share, free of the legend set forth in Section 8(d)(i) hereof, together
with any other property of the Participant held by the custodian pursuant to
Section 8(d)(ii) hereof.
(f) Effect of Termination of Service.
(i) In the event that the service of a Participant with the
Company shall terminate for any reason other than Cause prior to the vesting of
shares of Restricted Stock granted to such Participant, a proportion of such
shares, to the extent not forfeited or cancelled on or prior to such termination
pursuant to any provision hereof, shall vest on the date of such termination.
The proportion referred to in the preceding sentence shall initially be
determined by the Committee at the time of the grant of such shares of
Restricted Stock and may be based on the achievement of any conditions imposed
by the Committee with respect to such shares pursuant to Section 8(b). Such
proportion may be equal to zero.
(ii) In the event of the termination of a Participant's
service for Cause, all shares of Restricted Stock granted to such Participant
which have not vested as of the date of such termination shall immediately be
forfeited.
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9. Stock Bonuses.
The Committee may grant Stock Bonuses in such amounts as it shall
determine from time to time. A Stock Bonus shall be paid at such time and
subject to such conditions as the Committee shall determine at the time of the
grant of such Stock Bonus. Certificates for shares of Company Stock granted as a
Stock Bonus shall be issued in the name of the Participant to whom such grant
was made and delivered to such Participant as soon as practicable after the date
on which such Stock Bonus is required to be paid.
10. Adjustment Upon Changes in Company Stock.
(a) Shares Available for Grants.
In the event of any change in the number of shares of Company Stock
outstanding by reason of any stock dividend or split, reverse stock split,
recapitalization, merger, consolidation, combination or exchange of shares or
similar corporate change, the maximum number of shares of Company Stock with
respect to which the Committee may grant Options, SARs, shares of Restricted
Stock, and Stock Bonuses under Section 3 hereof shall be appropriately adjusted
by the Committee. In the event of any change in the number of shares of Company
Stock outstanding by reason of any other event or transaction, the Committee
may, but need not, make such adjustments in the number of shares of Company
Stock with respect to which Options, SARs, shares of Restricted Stock, and Stock
Bonuses may be granted under Section 3 hereof as the Committee may deem
appropriate.
(b) Outstanding Restricted Stock.
Unless the Committee in its absolute discretion otherwise
determines, any securities or other property (including dividends paid in cash)
received by a Participant with respect to a share of Restricted Stock, the Issue
Date with respect to which occurs prior to such event, but which has not vested
as of the date of such event, as a result of any dividend, stock split, reverse
stock split, recapitalization, merger, consolidation, combination, exchange of
shares, or similar corporate exchange will not vest until such share of
Restricted Stock vests and shall be promptly deposited with the custodian
designated pursuant to Section 8(d)(ii) hereof.
The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, to
reflect any dividend, stock split, reverse stock split, recapitalization,
merger, consolidation, combination, exchange of shares, or similar corporate
change as the Committee may deem appropriate to prevent the enlargement or
dilution of rights of Participants under the grant.
12
<PAGE>
(c) Outstanding Options and SARs - Increase or Decrease in Issued
Shares Without Consideration.
Subject to any required action by the shareholders of the Company,
in the event of any increase or decrease in the number of issued shares of
Company Stock resulting from a subdivision or consolidations of shares of
Company Stock or the payment of a stock dividend on the shares of Company Stock,
or any other increase or decrease in the number of such shares effected without
receipt of consideration by the Company, the Company shall proportionally adjust
the number of shares of Company Stock subject to each outstanding Option and
SAR, and the exercise price per share of Company Stock of each such Option and
SAR.
(d) Outstanding Options and SARs - Certain Mergers.
Subject to any required action by the shareholders of the Company,
in the event that the Company shall be the surviving corporation in any merger
or consolidation (except a merger or consolidation as a result of which the
holders of shares of Company Stock receive securities of another corporation),
each Option and SAR outstanding on the date of such merger or consolidation
shall pertain to and apply to the securities which a holder of the number of
shares of Company Stock subject to such Option or SAR would have received in
such merger or consolidation.
(e) Outstanding Options, SARs - Certain Other Transactions.
In the event of a dissolution or liquidation of the Company; a sale
of substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving corporation; or
a merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Company Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of
such event, each Option and SAR outstanding immediately prior to such event
(whether or not then exercisable), and, in full consideration of such
cancellation, pay to the Participant to whom such Option or SAR was granted an
amount in cash, for each share of Company Stock subject to such Option or SAR,
respectively, equal to the excess of (A) the value, as determined by the
Committee in its absolute discretion, of the property (including cash) received
by the holder of a share of Company Stock as a result of such event over (B) the
exercise price of such Option or SAR (subject to applicable withholding payment
requirements); or
(ii) provide for the exchange of each Option and SAR
outstanding immediately prior to such event (whether or not then exercisable)
for an option on or stock appreciation right with respect to, as appropriate,
some or all of the property for which such Option or SAR is exchanged and,
incident thereto, make an equitable adjustment as determined by the Committee in
its absolute discretion in the exercise price of the option or stock
13
<PAGE>
appreciation right, or, if appropriate, provide for a cash payment to the
Participant to whom such Option or SAR was granted in partial consideration for
the exchange of the Option or SAR.
(f) Outstanding Options and SARs - Other Changes.
In the event of any change in the capitalization of the Company or a
corporate change other than those specifically referred to in Section 10(c),(d)
or (e) hereof, the Committee may in its absolute discretion, make such
adjustments in the number of shares subject to Options or SARs outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option and SAR as the Committee may consider appropriate to prevent
dilution or enlargement or rights.
(g) No Other Rights.
Except as expressly provided in the Plan, no Participant shall have
any rights by reason of any subdivision or consolidation of Company Stock, the
payment of any dividend, any increase or decrease in the number of shares of
Company Stock or any dissolution, liquidation, merger, or consolidation of the
Company or any other corporation. Except as expressly provided in the Plan, no
issuance by the Company of Company Stock, or securities convertible into shares
of Company Stock, shall affect, and no adjustment by reason thereof shall be
made with respect to, the number of shares of Company Stock subject to an
Incentive Award or the exercise price of any Option or SAR.
11. Rights as a Stockholder.
No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date the person becomes the owner of record with
respect to such shares. Except as otherwise expressly provided in Section 10
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.
12. No Special Rights; No Rights to Incentive Award.
Nothing contained in the Plan or any Incentive Award shall confer upon any
Participant any right with respect to the continuation of his or her service by
the Company or interfere in any way with the right of the Company, subject to
the terms of any separate service agreement to the contrary, at any time to
terminate such service or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.
No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other
14
<PAGE>
person at any time nor preclude the Committee from making subsequent grants to
such Participant or any other Participant or other person.
13. Securities Matters.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any shares of
Company Stock to be issued hereunder or to effect similar compliance under any
state laws. Notwithstanding anything herein to the contrary, the Company shall
not be obligated to cause to be issued or delivered any certificates evidencing
shares of Company Stock pursuant to the Plan unless and until the Company is
advised by its counsel that the issuance and delivery of such certificates is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Company Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements, and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.
(b) The exercise of any Option granted hereunder shall be effective only
at such time as counsel to the Company shall have determined that the issuance
and delivery of shares of Company Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authority, and
the requirements of NASDAQ and any other securities exchange on which shares of
Company Stock are traded. The Committee may, in its sole discretion, defer the
effectiveness of any exercise of an Option granted hereunder in order to allow
the issuance of shares of Company Stock pursuant thereto to be made pursuant to
registration or an exemption from registration or other methods for compliance
available under federal or state securities laws. The Committee shall inform the
Participant in writing of its decision to defer the effectiveness of the
exercise of an Option granted hereunder. During the period that the
effectiveness of the exercise of an Option has been deferred, the Participant
may, by written notice, withdraw such exercise and obtain are fund of any amount
paid with respect thereto.
(c) All Company Stock issued pursuant to the terms of this Plan shall
constitute "restricted securities," as that term is defined in Rule 144
promulgated pursuant to the Securities Act, and may not be transferred except in
compliance with the registration requirements of the Securities Act or an
exemption therefrom.
(d) Certificates for shares of Company Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
SECURITIES LAWS. THE
15
<PAGE>
SHARES MAY NOT BE OFFERD FOR SALE, SOLD, PLEDGED, TRANSFERRED OR OTHERWISE
DISPOSED OF UNTIL THE HOLDER HEREOF PROVIDES EVIDENCE STATISFACTORY TO THE
ISSUER (WHICH, IN THE DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER) THAT SUCH OFFER SALE, PLEDGE, TRANSFER
OR OTHER DISPOSITION WILL NOT VIOLATE APPLICATE FEDERAL OR STATE LAWS.
This legend shall not be required for shares of Company Stock issued
pursuant to an effective registration statement under the Securities Act and in
accordance with applicable state securities laws.
14. Withholding Taxes.
(a) Cash Remittance.
Whenever shares of Company Stock are to be issued upon the exercise
of an Option, the occurrence of the Issue Date or Vesting Date with respect to a
share of Restricted Stock or the payment of a Stock Bonus, the Company shall
have the right to require the Participant to remit to the Company in cash an
amount sufficient to satisfy federal, state, and local withholding tax
requirements, if any, attributable to such exercise, occurrence, or payment
prior to the delivery of any certificate or certificates for such shares. In
addition, upon the exercise of an SAR, the Company shall have the right to
withhold from any cash payment required to be made pursuant thereto an amount
sufficient to satisfy the federal state, and local withholding tax requirements,
if any, attributable to such exercise or grant.
(b) Stock Remittance.
Subject to Section 14(d) hereof at the election of the Participant,
subject to the approval of the Committee, when shares of Company Stock are to be
issued upon the exercise of an Option, the occurrence of the Issue Date or the
Vesting Date with respect to a share of Restricted Stock, or the grant of a
Stock Bonus, in lieu of the remittance required by Section 14(a) hereof, the
Participant may tender to the Company a number of shares of Company Stock
determined by such Participant, the Fair Market Value of which at the tender
date the Committee determines to be sufficient to satisfy the federal, state,
and local withholding tax requirements, if any, attributable to such exercise,
occurrence, or grant and not greater than the Participant's estimated total
federal, state, and local tax obligations associated with such exercise,
occurrence, or grant.
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<PAGE>
(c) Stock Withholding.
The Company shall have the right, when shares of Company Stock are
to be issued upon the exercise of an Option, the occurrence of the Issue Date or
the Vesting Date with respect to a share of Restricted Stock or the grant of a
Stock Bonus, in lieu of requiring the remittance required by Section 14(a)
hereof, to withhold a number of such shares, the Fair Market Value of which at
the exercise date the Committee determines to be sufficient to satisfy the
federal, state, and local withholding tax requirements, if any, attributable to
such exercise, occurrence, or grant and is not greater than the Participant's
estimated total, federal, state, and local tax obligations associated with such
exercise, occurrence, or grant.
15. Amendment or Termination of the Plan.
The Board may at any time, or from time to time, suspend or terminate the
Plan in whole or in part, or amend it in such respects as the Board may deem
appropriate. No amendment, suspension or termination of this Plan shall, without
the Participant's consent, alter or impair any of the rights or obligations
under any Option theretofore granted to an Participant under the Plan. The Board
may amend this Plan, subject to the limitations cited above, in such manner as
it deems necessary to permit the granting of Incentive Awards meeting the
requirements of future amendments or issued regulations, if any, to the Code and
to the Exchange Act.
16. No Obligation to Exercise.
The grant to a Participant of an Option or a SAR shall impose no
obligation upon such Participant to exercise such Option or SAR.
17. Transfers Upon Death.
Upon the death of a Participant, outstanding Incentive Awards granted to
such Participant may be exercised only by the executors or administrators of the
Participant's estate or by any person or persons who shall have acquired such
right to exercise by will or by the laws of descent and distribution. No
transfer by will or the laws of descent and distribution of any Incentive Award,
or the right to exercise any Incentive Award, shall be effective to bind the
Company unless the Committee shall have been furnished with (a) written notice
thereof and with a copy of the will and/or such evidence as the Committee may
deem necessary to establish the validity of the transfer and (b) an agreement by
the transferee to comply with all the terms and conditions of the Incentive
Award that are or would have been applicable to the Participant and to be bound
by the acknowledgments made by the Participant in connection with the grant of
the Incentive Award. Except as provided in this Section 17, no Incentive Award
shall be transferable, and shall be exercisable only by a Participant during the
Participant's lifetime.
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18. Expenses and Receipts.
The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general purposes.
19. Failure to Comply.
In addition to the remedies of the Company elsewhere provided for herein,
a failure by a Participant (or beneficiary) to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant (or
beneficiary) evidencing an Incentive Award, unless such failure is remedied by
such Participant (or beneficiary) within ten days after having been notified of
such failure by the Committee, shall be grounds for the cancellation and
forfeiture of such Incentive Award, in whole or in part, as the Committee, in
its absolute discretion may determine.
20. Effective Date of Plan.
The Plan was adopted by unanimous written consent of the Board of
Directors of the Company, in lieu of a meeting of the Board, effective as of
December 4, 1996 pursuant to Nevada law.
21. Term of the Plan.
The right to grant Incentive Awards under the Plan will terminate upon the
expiration of ten years from the date the Plan was initially adopted.
22. Applicable Law.
Except to the extent preempted by an applicable federal law, the Plan will
be construed and administered in accordance with the laws of the State of
Nevada, without reference to the principles of conflicts of law.
18
Exhibit 6.6
NEXMED, INC.
NON-QUALIFIED STOCK OPTION PLAN
ARTICLE I
Purpose
The purpose of the NexMed, Inc., Non-Qualified Stock Option Plan, adopted
effective as of October 25, 1996, is to encourage executives, directors and
others selected for participation in the Plan to continue their association with
the Company by providing them with incentives designed to enable them to acquire
a proprietary interest in the Company. The availability and offering of stock
options to such personnel is believed to strengthen the ability of the Company
to attract and retain individuals with outstanding qualifications and
experience.
ARTICLE II
Definitions
The following capitalized terms used in the Plan shall have the respective
meanings set forth in this Article:
2.1 Board: The Board of Directors of NexMed, Inc..
2.2 Code: The Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.
2.3 Committee: The Compensation Committee of the Board; provided, however, the
Compensation Committee shall not take any action under this Plan unless it
is at all times composed solely of not less than three "Non-Employee
Directors" within the meaning of Rule 16b-3, as promulgated under the
Securities Exchange Act of 1934, as amended. In the event the Compensation
Committee is unable to act, the Board shall take any and all actions
required or permitted to be taken by the Committee under this Plan.
2.4 Common Stock: The common stock, par value $.001, of NexMed, Inc.
2.5 Company: NexMed, Inc. and any Subsidiary that elects to participate with
the consent of the Board.
2.6 Disability: Disability within the meaning of Section 22(e)(3) of the Code,
as determined by the Committee.
<PAGE>
2.7 Eligible Participant: An executive, director or consultant selected by the
Committee to participate in the Plan.
2.8 Fair Market Value: Fair Market Value shall mean with respect to a share of
Common Stock the average closing price per share of Common Stock for the
ten (10) consecutive trading days ending two (2) trading days prior to the
date of determination. The closing price for each day shall be as reported
in the Wall Street Journal, or, if not reported therein, as reported in
another newspaper of national circulation chosen by the Board, or, in case
no such sale takes place on such day, the average of the closing bid and
asked prices regular way, on the New York Stock Exchange Composite Tape,
or if the Common Stock is not then listed or admitted to trading on the
New York Stock Exchange, on the largest principal national securities
exchange, or if the Common Stock is not so listed or admitted to trading,
then the average of the last reported sales prices for such shares in the
over-the-counter market, as reported on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") or, if on any day
such stock is not quoted on NASDAQ, the average of the highest bid and
lowest asked prices on such day in the domestic over-the-counter market as
reported by the National Quotation Bureau, Incorporated, or any similar
successor organization.
2.9 Option: A stock option granted under the Plan that does not qualify as an
"incentive stock option" under Section 422 of the Code.
2.10 Option Price: The purchase price of a share of Common Stock under an
Option.
2.11 Optionee: An Eligible Participant who has been granted one or more Options
under this Plan.
2.12 Plan: The NexMed, Inc. Non-Qualified Stock Option Stock Plan, as from time
to time amended.
2.13 Subsidiary: A subsidiary corporation, as defined in Section 424(f) of the
Code.
2.14 Termination Date: A date fixed by the Committee but not later than the day
following the tenth anniversary of the date on which the Option is
granted.
ARTICLE III
Administration
3.1 Except as otherwise provided in the Plan, the Committee shall make all
grants hereunder, administer the Plan, construe and interpret the Plan,
establish and amend rules and regulations for its administration, and
perform all other acts relating to its administration, including the
delegation of administrative responsibilities, which it believes
reasonable and proper; provided, however, that all Options granted
hereunder shall be approved in
2
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advance by the Committee, and if the Committee is unable to act, then all
such Option grants made hereunder shall be approved in advance by the
Board.
3.2 The Committee shall consist of not less than three members of the Board.
The members of the Committee shall serve at the pleasure of the Board,
which shall have the power, at any time and from time to time, to remove
members from the Committee or to add members thereto. Vacancies on the
Committee, however caused, shall be filled by the Board.
3.3 Any decision made, or action taken, by the Committee in connection with
the interpretation and administration of the Plan shall be final and
conclusive.
ARTICLE IV
Shares Subject to the Plan
4.1 The total number of shares of Common Stock available for grants of Options
under the Plan shall be 100,000 subject to adjustment in accordance with
Article VIII of the Plan. These shares may be either authorized but
unissued or reacquired shares of Common Stock. If an Option or portion
thereof shall expire or terminate for any reason without having been
exercised in full, the unpurchased shares covered by such Option shall be
available for future grants of Options.
ARTICLE V
Eligibility and Grant of Options
5.1 Options may only be granted to Eligible Participants.
5.2 The Committee may, from time to time select one or more executives,
directors or consultants to participate in the Plan. A person so selected
shall become an "Eligible Participant". The Committee may grant Options to
Eligible Participants at such time and in such amounts as the Committee
may determine in its discretion, subject to any maximum limitation the
Board of Directors may institute with respect to the aggregate amount of
shares of Common Stock that may be subject to Options held by such
Optionee or Optionees, either individually or together as a group, under
the Plan.
ARTICLE VI
Terms of Options
6.1 Option Agreements: All Options shall be evidenced by written agreements
executed by the Company and the Optionee. Such Options shall be subject to
the applicable provisions of the Plan, and shall contain such provisions
as are required by the Plan and
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any other provisions the Committee may prescribe. All agreements
evidencing Options shall specify the total number of shares subject to
each grant, the Option Price and the Termination Date.
6.2 Option Price: The Option Price shall be determined by the Committee and
may be less than the Fair Market Value of a share of Common Stock on the
date the Option is granted.
6.3 Period of Exercise: Unless the Committee provides otherwise in an
Optionee's written agreement, Options shall be exercisable at any time
after the date of the Option grant provided such grant has been approved
in advance by the Committee (or the Board, as applicable). However, no
Option or portion thereof shall be exercisable after the Termination Date.
6.4 Manner of Exercise and Payment: An option, or portion thereof, shall be
exercised by delivery of a written notice of exercise to the Company and
payment of the full price of the shares being purchased pursuant to the
Option. An Optionee may exercise an Option with respect to less than the
full number of shares for which the Option may then be exercised, but an
Optionee must exercise the Option in full shares of Common Stock. The
price of Common Stock purchased pursuant to an Option, or portion thereof,
may be paid:
(a) in United States dollars in cash or by check, bank draft or
money order payable to the order of the Company;
(b) through the delivery of shares of Common Stock with an
aggregate Fair Market Value on the date of exercise equal to
the Option Price, if so specified in the relevant Option
agreement; or
(c) by any combination of the above methods of payment. The
Committee shall determine acceptable methods for tendering
Common Stock as payment upon exercise of an Option and may
impose such limitations and prohibitions on the use of Common
Stock to exercise an Option as it deems appropriate,
including, without limitation, any limitation or prohibition
designed to avoid certain accounting consequences which may
result from the use of Common Stock as payment upon exercise
of an Option.
6.5 Withholding Tax Requirements: It shall be a condition of the exercise of
any Option that the Optionee exercising the Option make appropriate
payment or other provision acceptable to the Company with respect to any
withholding tax requirement arising from such exercise. The amount of
withholding tax required, if any, with respect to any Option exercise (the
"Withholding Amount") shall be determined by the Treasurer or other
appropriate officer of the Company, and the Optionee shall furnish such
information and
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make such representations as such officer requires to make such
determination. If the Company determines that withholding tax is required
with respect to any Option exercise, the Company shall notify the Optionee
of the Withholding Amount, and the Optionee shall pay to the Company an
amount not less than the Withholding Amount.
6.6 Nontransferability of Options: Each Option shall, during the Optionee's
lifetime, be exercisable only by the Optionee, and neither it nor any
right hereunder shall be transferable otherwise than by will or the laws
of descent and distribution or be subject to attachment, execution or
other similar process. In the event of any attempt by the Optionee to
alienate, assign, pledge, hypothecate or otherwise dispose of an Option or
of any right hereunder, except as provided for herein, or in the event of
any levy or any attachment, execution or similar process upon the rights
or interest hereby conferred, the Company may terminate the Option by
notice to the Optionee and the Option shall thereupon become null and
void.
6.7 Termination of the Optionee's Services: If an Optionee's service on the
Board or for the Company as applicable, shall cease for any reason, each
Option held by the Optionee shall remain exercisable until the earlier of:
i. the Option's Termination Date;
ii. the date the Optionee's service terminates due to death or
Disability, or such later date not more than one year after
the death or Disability of the Optionee as the Committee, in
its discretion, may provide in the Optionee's written grant
agreement; or
iii. the first anniversary of the date of the cessation of the
Optionee's service; and thereafter, all such Options shall terminate
together with all rights hereunder, to the extent not previously
exercised.
ARTICLE VII
Adjustments
7.1 If (a) the Company shall at any time be involved in a transaction to which
Section 424(a) of the Code is applicable; (b) the Company shall declare a
dividend payable in, or shall subdivide or combine, its Common Stock; or
(c) any other event shall occur which in the judgment of the Board
necessitates action by way of adjusting the terms of the outstanding
Options, the Board shall take any such action, including price adjustment,
as in its judgment shall be necessary to preserve the Optionee's rights
substantially proportionate to the rights existing prior to such event,
and to the extent that such action shall include an increase or decrease
in the number of shares of Common Stock subject to outstanding Options,
the number of shares available under Article IV above shall be increased
or decreased, as the case may be, proportionately. The judgment of the
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Committee with respect to any matter referred to in this Article shall be
conclusive and binding upon each Optionee.
ARTICLE VIII
Amendment and Termination of Plan
8.1 The Board may at any time, or from time to time, suspend or terminate the
Plan in whole or in part, or amend it in such respects as the Board may
deem appropriate.
8.2 No amendment, suspension or termination of this Plan shall, without the
Optionee's consent, alter or impair any of the rights or obligations under
any Option theretofore granted to an Optionee under the Plan.
8.3 The Board may amend this Plan, subject to the limitations cited above, in
such manner as it deems necessary to permit the granting of Options
meeting the requirements of future amendments or issued regulations, if
any, to the Code and to Rule 16b-3, promulgated under the Securities
Exchange Act of 1934, as amended.
ARTICLE IX
Government and Other Regulations
9.1 The obligation of the Company to issue, or transfer and deliver shares for
Options exercised under the Plan shall be subject to all applicable laws,
regulations, rules, orders and approvals which shall then be in effect and
required by governmental entities and any stock exchanges on which Common
Stock is traded.
9.2 In addition to, and without limiting, the Company's rights under the
preceding paragraph, the Committee any postpone any exercise of an Option
for such time as the Committee in its discretion may deem necessary in
order to permit the Company with reasonable diligence (i) to effect or
maintain the listing of the Common Stock on the New York Stock Exchange or
to effect or maintain registration under the Securities Act of 1933, as
amended ("Securities Act"), of the Plan or the shares issuable upon the
exercise of the Option; (ii) to determine that such shares and Plan are
exempt from registration; or (iii) to comply with any applicable laws,
regulations, rules, orders or approval requirements then in effect and
required by governmental entities or any stock exchange on which the
Common Stock is traded. Any such postponement shall not extend the term of
an Option, and neither the Company or its directors or officers shall have
any obligation or liability to any Optionee or Optionee's successor with
respect to any shares subject to an Option that lapse unexercised because
of such postponement.
9.3 All Common Stock issued pursuant to the terms of this Plan shall
constitute "restricted securities," as that term is defined in Rule 144
promulgated pursuant to the Securities
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Act, and may not be transferred except in compliance with the registration
requirements of the Securities Act or an exemption therefrom.
9.4 Certificates for shares of Common Stock, when issued, may have
substantially the following legend, or statements of other applicable
restrictions, endorsed thereon, and may not be immediately transferable:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
STATE SECURITIES LAWS. THE SHARES MAY NOT BE OFFERED FOR SALE, SOLD,
PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNTIL THE HOLDER
HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL
SATISFACTORY TO THE ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER
OR OTHER DISPOSITION WILL NOT VIOLATE APPLICABLE FEDERAL OR STATE
LAWS.
This legend shall not be required for shares of Common Stock issued
pursuant to an effective registration statement under the Securities Act
and in accordance with applicable state securities laws.
ARTICLE X
Miscellaneous Provisions
10.1 Plan Does Not Confer Stockholder Rights: Neither the Optionee nor any
person entitled to exercise the Optionee's rights in the event of the
Optionee's death shall have any rights as a stockholder with respect to
the shares subject to each Option, except to the extent that, and until,
such shares shall have been issued upon the exercise of each Option.
10.2 Plan Expenses: Any expenses of administering this Plan shall be borne by
the Company.
10.3 Use of Exercise Proceeds: Payments received from Optionees upon the
exercise of Options shall be used for the general corporate purposes of
the Company, except that any Common Stock received in payment may be
retired, or retained in the Company's treasury and reissued.
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ARTICLE XI
Approval of Plan; Effective Date
11.1 The Plan shall become effective as of October 25, 1996, following adoption
by the Board of Directors of NexMed, Inc. Options may not be granted under
the Plan after October 25, 2006.
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