BRADLEY PHARMACEUTICALS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of Bradley Pharmaceuticals, Inc.:
The Annual Meeting of Shareholders (the "Meeting") of Bradley
Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will be held at
the Radisson Hotel, 690 Route 46 East, Fairfield, New Jersey 07004, on July 23,
1999, 9:00 A.M., Local Time, to consider and act upon the following:
1. To elect six directors of the Company, two by the holders of
the Class A Common Stock of the Company voting separately as a
class, and four by the holders of the Class B Common Stock of
the Company voting separately as a class, to serve until the
next Annual Meeting of Shareholders and until their successors
are duly elected and qualified;
2. To ratify and approve a proposal to amend the Certificate of
Incorporation to change the title of the Class A Common Stock
to "common stock" without affecting any of the rights or
holdings of the holders of Class A Common Stock;
3. To ratify and approve a proposal to amend the Certificate of
Incorporation to permit transfers of the Class B Common Stock
without restriction, without affecting any other rights or
holdings of the holders of Class B Common Stock;
4. To ratify and adopt the 1999 Incentive and Non-Qualified Stock
Option Plan to replace the Company's 1990 Stock Option Plan
which expires January 31, 2000; and
5. To consider and act upon such other matters as may properly
come before the Meeting or any adjournment thereof.
Only shareholders of record of the Class A and Class B Common
Stock of the Company, each $.01 par value per share, at the close of business on
May 17, 1999 shall be entitled to receive notice of, and to vote at, the
Meeting, and at any adjournment thereof. A Proxy and a Proxy Statement for the
Meeting are enclosed herewith.
All shareholders are cordially invited to attend the Meeting.
If you do not expect to be present, you are requested to fill in, date and sign
the enclosed Proxy, which is solicited by the Board of Directors of the Company,
and to mail it promptly in the enclosed envelope to make sure that your shares
are represented at the Meeting. In the event you decide to attend the Meeting in
person, you may, if you desire, revoke you Proxy and vote your shares in person.
By Order of the Board of Directors.
DANIEL GLASSMAN
Chairman and CEO
Dated: , 1999
IMPORTANT
THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY THE EXPENSE OF FURTHER
REQUESTS FOR PROXIES IN ORDER TO ENSURE A QUORUM. A SELF-ADDRESSED ENVELOPE IS
ENCLOSED FOR YOUR CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED WITHIN THE
UNITED STATES.
<PAGE>
BRADLEY PHARMACEUTICALS, INC.
383 Route 46 West
Fairfield, New Jersey 07004-2402
PROXY STATEMENT
Annual Meeting of Shareholders
July 23, 1999
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Bradley Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), to be voted at the Annual Meeting of Shareholders
of the Company (the "Meeting") which will be held the at Radisson Hotel, 690
Route 46 East, Fairfield, New Jersey 07004, on July 23, 1999, at 9:00 A.M.,
Local Time, and any adjournment or adjournments thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting of Shareholders and in this
Proxy Statement.
The principal executive offices of the Company are located at
383 Route 46 West, Fairfield, New Jersey 07004-2402. The approximate date on
which this Proxy Statement and accompanying Proxy is first being sent or given
to the shareholders is June 5, 1999.
The Proxy, in the accompanying form, which is properly
executed, duly returned to the Company and not revoked will be voted in
accordance with the instructions contained therein and, in the absence of
specific instructions, will be voted FOR the election as directors of the
persons who have been nominated by the Board of Directors, FOR the ratification
and approval of a proposal to amend the Certificate of Incorporation to change
the title of the Class A Common Stock to "common stock" without affecting any of
the rights or holdings of the holders of Class A Common Stock, FOR the
ratification and approval of a proposal to amend the Certificate of
Incorporation to permit transfers of the Class B Common Stock without
restriction, without affecting any other rights or holdings of the holders of
Class B Common Stock, FOR the ratification and adoption of the 1999 Incentive
and Non-Qualified Stock Option Plan, which replaces the Company's 1990 Stock
Option Plan which expires January 31, 2000, and in accordance with the judgment
of the person or persons voting the proxies on any other matters that may be
properly brought before the Meeting. Each such Proxy granted may be revoked at
any time thereafter by writing to the Secretary of the Company prior to the
Meeting, or by execution and delivery of a subsequent Proxy or by attendance and
voting in person at the Meeting, except as to any matter or matters upon which,
prior to such revocation, a vote shall have been cast pursuant to the authority
conferred by such Proxy.
VOTING SECURITIES
At the close of business on May 17, 1999, the record date for
the determination of shareholders entitled to vote at the Meeting (the "Record
Date"), the Company had outstanding 8,198,883 shares of its Class A Common
Stock, $.01 par value per share (the "Class A Common Stock"), and 431,552 shares
of its Class B Common Stock, $.01 par value per share (the "Class B Common
Stock"). There were no other classes of voting securities outstanding at the
Record Date. The holders of such Class A and Class B Common Stock are entitled
to one vote and five votes, respectively, for each share held on such Record
Date, but with
<PAGE>
respect to the election of Directors, so long as there are at
least 325,000 shares of Class B Common Stock issued and outstanding (of which
there were as of the Record Date), holders of Class B Common Stock, voting
separately as a class, are entitled to elect a majority of the directors
(consisting of one-half of the number of directors, plus one) and holders of
Class A Common Stock, voting separately as a class, are entitled to elect the
balance of the directors. Thus, the holders of the Class B Common Stock will
elect four of the directors and the holders of the Class A Common Stock will
elect two of the directors.
Under the rules of the Securities and Exchange Commission,
boxes and a designated blank space are provided on the Proxy card for
shareholders to mark if they wish to withhold authority to vote for one or more
nominees for director. Votes withheld in connection with the election of one or
more of the nominees for director will be counted as votes cast against such
individuals and will be counted toward the presence of a quorum for the
transaction of business. If no direction is indicated, the Proxy will be voted
for the election of the nominees for director, and in favor of the proposals to
amend the Certificate of Incorporation to change the title of the Class A Common
Stock to "common stock" without affecting any of the rights or holdings of the
holders of Class A Common Stock and to permit transfers of the Class B Common
Stock without restriction, without affecting any other rights or holdings of the
holders of Class B Common Stock, and to adopt the 1999 Incentive and
Non-Qualified Stock Option Plan, replacing the 1990 Stock Option Plan, which
expires on January 31, 2000. Under the rules of the National Association of
Securities Dealers, Inc., a broker "non-vote" has no effect on the outcome of
the election of directors or the establishment of a quorum for such election.
The form of proxy does not provide for abstentions with respect to the election
of directors; however, a shareholder present at the Meeting may abstain with
respect to such election. The treatment of broker "non-votes" and abstentions
with respect to the election of directors is consistent with applicable Delaware
law and the Company's By-Laws.
No person has been authorized to give any information or to
make any representation other than those contained in this Proxy Statement and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company.
A copy of the Company's 1998 Annual Report to Shareholders is
also being mailed to you with this Proxy Statement. Said Annual Report contains
the financial statements of the Company and a report with respect thereto by
Grant Thornton, the Company's independent auditors. Said Annual Report is not
deemed a part of the soliciting material for the Proxy.
OWNERSHIP OF COMMON STOCK BY DIRECTORS, EXECUTIVE OFFICERS
AND FIVE PERCENT BENEFICIAL HOLDERS
The following table sets forth certain information as of
December 31, 1998, regarding the ownership of the Company's Class A and Class B
Common Stock by (i) each director of the Company, (ii) each executive officer of
the Company named in the Summary Compensation Table set forth elsewhere in this
Proxy Statement, (iii) each beneficial owner of more than five percent of the
Class A and Class B Common Stock of the Company known by management and (iv) all
directors and executive officers of the Company, as a group, and the percentage
of outstanding shares of Class A and Class B Common Stock beneficially held by
them on that date.
Since each share of Class B Common Stock may be converted at
any time by the holder into one share of Class A Common Stock, the beneficial
ownership rules promulgated under the Securities Exchange Act of 1934, as
amended, require that all shares of Class A Common Stock issuable upon the
conversion of Class B
<PAGE>
Common Stock by any stockholder be included in determining
the number of shares and percentage of Class A Common Stock held by such
stockholder. The effect of the assumption that such stockholder is the
beneficial owner of such shares is also reflected in the following table. For a
more complete description of the method used to determine such beneficial
ownership, see footnote 2 to the following table:
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Owner(1)(2) Percent of Class(2)
Name and Address of Class A Class B Class A Class B
Beneficial Owner Common Stock Common Stock Common Stock Common Stock
- ------------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
Daniel Glassman ......... 1,106,044(3) 316,736(4) 13.51% 73.39%
383 Route 46 West
Fairfield, NJ
Iris S. Glassman ........ 252,373(5) 37,283(6) 3.08% 8.64%
383 Route 46 West
Fairfield, NJ
David H. Hillman ........ 117,433(7) 43,610 1.43% 10.11%
383 Route 46 West
Fairfield, NJ
Phillip W. McGinn, Jr ... 14,337(8) -0- * --
383 Route 46 West
Fairfield, NJ
Alan G. Wolin ........... 74,730(9) -0- * --
383 Route 46 West
Fairfield, NJ
Seymour I. Schlager ..... -0- -0- -- --
383 Route 46 West
Fairfield, NJ
Robert Dubin ............ 13,500(11) -0- * --
383 Route 46 West
Fairfield, NJ
Gene L. Goldberg ........ 59,872(10) 10,192 * 2.36%
383 Route 46 West
Fairfield, NJ
Maurice Woosley ......... 15,889(12) -0- * --
383 Route 46 West
Fairfield, NJ
Berlex Laboratories, Inc. 1,450,000 -0- 17.71% --
110 East Hanover Avenue
Cedar Knolls, NJ
All executive officers .. 1,654,178(3)(4)(5) 407,821(4)(6) 20.20% 94.50%
and directors as a group (6)(7)(8)(9)
(9 persons)
* Represents less than one percent. (Footnotes appear on next page)
</TABLE>
<PAGE>
(1) Unless otherwise indicated, the stockholders identified in this table
have sole voting and investment power with respect to the shares
beneficially owned by them.
(2) Each named person and all executive officers and directors, as a group,
are deemed to be the beneficial owners of securities that may be
acquired within 60 days through the exercise of options, warrants or
exchange or conversion rights. Accordingly, the number of shares and
percentage set forth opposite each stockholder's name under the columns
"Class A Common Stock" includes shares of Class A Common Stock issuable
upon exercise of presently exercisable warrants and stock options and
shares of Class A Common Stock issuable upon conversion of shares of
Class B Common Stock. The shares of Class A Common Stock so issuable
upon such exercise, exchange or conversion by any such stockholder are
not included in calculating the number of shares or percentage of Class
A Common Stock beneficially owned by any other stockholder.
(3) Includes 316,736 shares issuable upon conversion of a like number of
shares of Class B Common Stock. Of these shares, 62,019 shares are
owned indirectly by Mr. Glassman through affiliates and 721,089 shares
underlie presently exercisable options owned by Mr. Glassman. Mr.
Glassman's affiliates have disclaimed beneficial ownership over all of
these shares. Mr. Glassman disclaims beneficial ownership over shares
and options owned by his wife, Iris S. Glassman.
(4) Includes 26,098 shares owned indirectly by Mr. Glassman through
affiliates. Mr. Glassman's affiliates have disclaimed beneficial
ownership over these shares. Does not include 16,403 shares
beneficially owned by Iris S. Glassman, Mr.
Glassman's wife.
(5) Includes 37,283 shares issuable upon conversion of a like number of
shares of Class B Common Stock, 6,800 shares owned indirectly by Mrs.
Glassman through affiliates, 40,220 shares owned indirectly by Mrs.
Glassman as trustee for her children's trusts and 168,070 shares
underlying presently exercisable options. Mrs. Glassman disclaims
beneficial ownership over all shares beneficially owned by her husband,
Daniel Glassman.
(6) Includes 20,880 shares owned indirectly by Mrs. Glassman as trustee for
the Bradley Glassman 1995 Trust. Mrs. Glassman disclaims beneficial
ownership over all shares of Class B Common Stock beneficially owned by
her husband, Daniel Glassman.
(7) Includes 43,610 shares issuable upon conversion of a like number of
shares of Class B Common Stock, 1,780 shares owned indirectly by Mr.
Hillman through an affiliate and 65,568 shares underlying presently
exercisable options. Mr. Hillman's affiliate has disclaimed beneficial
ownership over shares owned by it.
(8) Includes 5,000 shares underlying presently exercisable options.
(9) Includes 7,300 shares underlying presently exercisable options.
(10) Includes 10,192 shares issuable upon conversion of a like number of
shares of Class B Common Stock. Of these shares 48,446 shares underlie
presently exercisable options.
(11) 1,000 shares are owned indirectly as trustee for Mr. Dubin's children.
Includes 12,500 shares underlying presently exercisable options.
(12) Includes 12,000 shares underlying presently exercisable options.
<PAGE>
PROPOSAL I
ELECTION OF DIRECTORS
At the meeting, six directors are to be elected to serve until
the next Annual Meeting of Shareholders and until their successors shall be duly
elected and shall qualify. Two directors are to be elected by the holders of the
Class A Common Stock, voting separately as a class, and four directors are to be
elected by the holders of the Class B Common Stock, voting separately as a
class. Unless otherwise specified, all proxies received will be voted in favor
of the election of the nominees of the Board of Directors named below as
directors of the Company for each respective class of stock. All of the nominees
are presently directors of the Company. The term of the current directors
expires at the Meeting. Should any of the nominees not remain a candidate for
election at the date of the Meeting (which contingency is not now contemplated
or foreseen by the Board of Directors), proxies solicited hereunder will be
voted in favor of those nominees who do remain candidates and may be voted for
substitute nominees selected by the Board of Directors. Assuming a quorum is
present with respect to each of the Class A and Class B Common Stock, a vote of
a majority of the shares of Class A Common Stock present, in person or by proxy,
at the Meeting, is required to elect the Class A nominees as directors and a
vote of a majority of the shares of Class B Common Stock present, in person or
by proxy, at the Meeting, is required to elect the Class B nominees as
directors.
Nominees for Election by the Holders of Class A Common Stock
Dr. Philip W. McGinn, Jr.
Dr. Philip W. McGinn, age 73, has served as a director of the
Company since December 1996. Since 1984, Dr. McGinn has also served as President
of Worldwide Marketing and Translation Services, Inc., a New Jersey based
company providing consulting services in new product and company acquisitions,
marketing, market analysis, promotional planning, sales training, management
development and business, educational and translation services. Dr. McGinn also
served as Associate Dean, School of Health Professions, Long Island University,
from 1990 to 1996.
Alan G. Wolin, Ph.D.
Alan G. Wolin, Ph.D., age 66, has served as a director of the
Company since May 1997. Since 1988, Dr. Wolin has served as an independent
consultant to various companies in the food, drug and cosmetic industries.
Between 1962 and 1987, Dr. Wolin served M&M/Mars, the world's largest candy
company, in various capacities, including Director of Consumer Quality Assurance
and Quality Coordination. In his capacity as Director of Consumer Quality
Assurance and Quality Coordination, Dr. Wolin was responsible for ensuring
consumer quality and public health issues relating to M&M/Mars' products.
Nominees for Election by the Holders of Class B Common Stock
Daniel Glassman
Daniel Glassman, age 56, is the founder of the Company and has served as
its Chief Executive Officer since the Company's inception in January 1985. Mr.
Glassman has also served as the Company's Chairman of the Board since January
1985 and as President of the Company since February 1991. Mr. Glassman, a
registered pharmacist, is also Chairman of the Board of Banyan Communications
Group Inc., a communications company founded by Mr. Glassman ("Banyan"). Banyan
encompasses two marketing research organizations (Danis Research and Hospital
<PAGE>
Research Associates) and an advertising agency (Daniel Glassman Advertising).
Mr. Glassman has operated these companies for more than the last eighteen years.
Mr. Glassman was previously Vice President for Client Services for Medicus
Communications, Inc., where he directed marketing programs for pharmaceutical
companies such as Procter & Gamble, Rorer, Schering-Plough Corporation and
Merrill-Dow, Inc. Mr. Glassman is the husband of Iris Glassman, the Treasurer
and a director of the Company. Mr. Glassman is also Chairman of the Board,
President and Chief Executive Officer of Doak Dermatologics, Inc., Bradley
Pharmaceuticals Overseas, Ltd. and Bradley Pharmaceuticals (Canada), Inc., each
a subsidiary of the Company. Mr. Glassman was the recipient of the Entrepreneur
of the Year Award in the Life Sciences category, sponsored by Ernst & Young LLP
in 1995. Also in 1995, under the leadership of Mr. Glassman, the Company was
recognized as one of INC Magazine's 100 Hottest Small Public Companies.
Iris S. Glassman
Iris S. Glassman, age 56 has served as Treasurer of the Company since its
inception in 1985. Mrs. Glassman has also served as a director of the Company
since January 1985. Mrs. Glassman is the wife of Daniel Glassman and has fifteen
years of diversified administrative and financial management experience,
including serving in the capacity of Secretary of Banyan.
David H. Hillman
David H. Hillman, age 58, has served as Secretary of the
Company since 1985 and as a director of the Company since January 1990. For more
than the past five years, Mr. Hillman has also served as a director of Banyan
and since 1990, as President of Banyan's Health Care Division and Treasurer of
Banyan. Mr. Hillman, a registered pharmacist, has also served as President of
Hospital Research Associates, a division of Banyan engaged in the business of
conducting market research for the pharmaceutical industry since 1983. Mr.
Hillman has over sixteen years of market research, sales and marketing
experience, including group product manager for Lederle Laboratories.
Seymour I. Schlager, M.D.
Seymour I. Schlager, M.D., J.D., age 49, has served as a director of the
Company since July 1998. From 1989 to 1991, Dr. Schlager served as Venture Head
of the AIDS/Antiviral Pharmaceutical product development group of Abbott
Laboratories. In 1997, Dr. Schlager received a Juris Doctorate, cum laude, from
William Howard Taft University School of Law complementing his M.D. from the
University of Miami School of Medicine. Currently, Dr. Schlager is Worldwide
Medical Director for the Becton Dickinson Medical and Advanced Drug Delivery
businesses.
Other Executive Officers of the Company
Robert Dubin, R.Ph
Robert Dubin, R.Ph, age 51, has served as Vice President,
Sales and Contract Administration since 1997. Prior experience as a manufacturer
of food products for a major U.S. food distributor. Previously held Consultant
Pharmacist position for a major group of nursing homes in the Chicago area; also
owner/operator of 15 pharmacies and health clinics.
<PAGE>
Gene L. Goldberg
Gene L. Goldberg, age 61, has served as Senior Vice President,
Marketing and Business Planning of the Company since January 1997. Formerly
Executive Vice President of Daniel Glassman Advertising and Vice President and
Account Supervisor for William Douglas McAdams. Also garnered experience as
Senior Product Manager for USV Pharmaceutical Corporation, division of Revlon
Healthcare Group; Project Director in Market Research at McAdams, Geigy
Pharmaceutical Company and Lea-Mendota Research Group.
Maurice Woosley
Maurice Woosley, age 58, has served as President of the
Company's international division and Vice President since January 1997. From May
1996 to December 1996, Mr. Woosley served as Vice President of the Company's
international division. From November 1994 to April 1996, Mr. Woosley served as
Worldwide Marketing Director of Datascope, Inc., a New Jersey based medical
device manufacturer. From September 1990 to October 1994, Mr. Woosley served as
Global Marketing Director for Davis & Geck, a New Jersey based medical product
manufacturer.
BOARD OF DIRECTORS AND COMMITTEES
During the year ended December 31, 1998, there were five (5) meetings of
the Board of Directors. All directors attended at least 75% of these meetings.
The Board of Directors has designated from among its members an Audit
Committee, which consists of Messrs. Hillman and McGinn and Dr. Wolin. The Audit
Committee, which reviews the Company's financial and accounting practices and
controls, held one (1) meeting during 1998. The Company does not have a
nominating committee.
The current members of the Compensation Committee are Mr. Glassman, Mrs.
Glassman and Dr. McGinn. Except for Mr.and Mrs. Glassman, no member of the
Compensation Committee was at any time during 1997, or formerly, an officer or
employee of the Company or any subsidiary of the Company, nor had any
relationship with the Company requiring disclosure under Item 404 of Regulation
S-K under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
No executive officer of the Company has served as a director or member of
the Compensation Committee (or other committee serving an equivalent function)
of any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of the Company.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During 1998 and 1997, the Company received administrative support services
(consisting principally of advertising services, mailing, copying, data
processing and other office services) which were charged to operations from
Banyan, an affiliated company, amounting to approximately $184,800 and $135,000,
respectively.
The Company leases 14,100 square feet of office and warehouse space at 383
Route 46 West, Fairfield, New Jesey, pursuant to a lease expiring on January 31,
2003 with Daniel Glassman, the Company's Chairman and President, and his wife
Iris S. Glassman, Treasurer of the Company. This lease is renewable at the
Company's option for two consecutive five year terms. Rent expense,
<PAGE>
including the Company's proportionate share of real estate taxes, was
approximately $228,000 and $194,000,in 1998 and 1997, respectively.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table shows all the cash compensation paid by
the Company, as well as certain other compensation paid or accrued during the
fiscal years ended December 31, 1998, 1997, and 1996, to Daniel Glassman, the
Company's President and Chief Executive Officer, Robert Dubin, Vice President of
Sales, Gene L. Goldberg, Senior Vice President of Marketing and Business
Planning and Maurice Woosley, President, Bradley International. No other
executive officer of the Company earned total annual salary and bonus for 1998
in all capacities in which such person served the Company in excess of $100,000.
There were no restricted stock awards, long-term incentive plan payouts or other
compensation paid during 1998 to the executive officers named in the following
table except as set forth below:
Long-Term
Compensation
Annual Compensation Awards
------------------- ------------
Securities
Name and Principal Position Year Salary Bonus Underlying Options(1)
Daniel Glassman ............. 1998 $164,800 -0- 55,000(3)
President and Chief ....... 1997 $128,900 -0- -0-
Executive Officer ......... 1996 $122,500 -0- 404,500(2)
Robert Dubin
Vice President of Sales ... 1998 $115,400 -0- 6,000
and Contract Administration 1997 $100,600 20,000 -0-
1996 $ 70,600 20,000 7,500
Gene L. Goldberg
Senior Vice President ..... 1998 $135,400 -0- -0-
Marketing and Business .... 1997 $129,400 -0- -0-
Planning .................. 1996 N/A N/A N/A
Maurice Woosley
President, Bradley ........ 1998 $120,900 -0- -0-
International ............. 1997 $114,500 -0- -0-
1996 $68,800 18,000
(1) All of these options are exercisable into shares of Class A Common
Stock.
(2) Of these shares, 31,500 shares underlie options granted on December 5,
1996 to replace a like number of options previously granted to Mr. Glassman
which expired by their terms. These options are exercisable at any time prior to
December 4, 2001 at an exercise price of $0.825 per share, 110% of the fair
market value for shares of Class A Common Stock on the date of grant. The
remaining 373,000 shares are exercisable at various times through 2000 at an
exercise price of approximately $1.44 per share, 110% of the fair market value
for shares of Class A Common Stock on the date of the grant.
(3) Of these shares, 25,000 underlie options granted on January 27, 1998 to
replace a like number of options previously granted to Mr. Glassman which
expired by their terms. These options are exercisable after January 27, 1999,
2000, 2001 for 8,333, 8,333, 8,333 shares, respectively, at an
<PAGE>
exercise price of $1.99 per share, 110% of the fair market value for shares
of Class A Common Stock on the date of the grant. These options will expire on
January 26, 2003. The remaining 30,000 shares underlie options granted on June
9, 1998 to replace a like number of options previously granted to Mr. Glassman
which expired by their terms. These options are exercisable anytime prior to
June 8, 2003 at an exercise price of $2.07 per share, 110% of the fair market
value for shares of Class A Common Stock on the date of grant.
Option Grants in 1998
The following table sets forth information concerning
outstanding options to purchase shares of the Company's Class A Common Stock
granted by the Company to Directors and Officers during 1998. Neither options to
purchase shares of Class B Common Stock nor stock appreciation rights were
granted by the Company during 1998. The exercise prices for all options reported
below are not less than 100% of the per share market prices for Class A Common
Stock on their dates of grant.
Individual Grants
Number of % of Total
Securities Options
Underlying Granted to Exercise
Options Employees in or Base Expiration
Name Granted 1998(1) Price (Date)
- --------------------- ----------- ------------ --------- ------------
Robert Dubin ........ 6,000 8.71% 2.13 06/10/08
Daniel Glassman ..... 25,000 22.33% 1.99 01/26/03
30,000 26.80% 2.07 06/08/03
David H. Hillman .... 9,750 8.71% 1.99 01/26/03
7,000 6.25% 1.99 01/26/08
Seymour I. Schlager .. 15,000 13.40% 2.19 07/12/08
Aggregated Option Exercises in 1998 and Year-End Option Values
The following table presents the value, on an aggregate basis,
as of December 31, 1998, of outstanding stock options held by the executive
officers of the Company listed in the Summary Compensation Table above. No stock
options were exercised by the executive officers listed below during 1998.
Number of Value of
Securities Underlying Unexercised In-the-Money
Unexercised Options at Options at
Year-End Year-End(1)
---------------------- ------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------- ----------- -------------
Daniel Glassman 721,089 25,000 $425,220 -0-
(1) Based on the closing sale price of $1.188 per share of Class A Common
Stock on December 31, 1998 as reported by NASDAQ.
Employment Contracts and
Termination of Employment and Change-in-Control Arrangements
The Company does not have any employment contracts or
termination of employment or change-in-control arrangements with any of its
executive officers.
<PAGE>
Compensation of Directors
Directors who are not officers or employees of the Company
receive a director's fee of $600 for each meeting of the Board of Directors, or
a committee thereof, attended by such director, plus out-of-pocket costs.
Directors who are also officers or employees of the Company receive no
additional compensation for their services as directors.
On August 29, 1997, Alan G. Wolin, Ph.D., was granted options
to purchase up to 15,000 shares of Class A Common Stock of the Company at an
exercise price of $1.25 per share (the fair market value per share of Class A
Common Stock as of the date of grant). These options vest in three equal and
annual installments commencing on May 12, 1998 and expire on May 11, 2007.
On January 26, 1998, Mr. David Hillman was granted options to
purchase up to 16,750 shares of Class A Common Stock of the Company at an
exercise price of $1.99 per share, 110% of the fair market value for shares.
These options vest in three annual installments of 5,583, 5,583 and 5,584 with
9,750 expiring January 26, 2003 and the remaining 7,000 expiring January 26,
2008. These options were granted by agreement with the Company in consideration
for Mr. Hillman's previous options which expired by their terms.
On July 12, 1998, Seymour Schlager, M.D., J.D., was granted
options to purchase up to 15,000 shares of Class A Common Stock of the Company
at an exercise price of $2.19 per share (the fair market value per share of
Class A Common Stock as of the date of grant). These options vest in three equal
and annual installments commencing on July 12, 1999 and expire on July 11, 2008.
Comparative Stock Performance
The comparative stock performance graph below compares the
cumulative stockholder return on the Common Stock of the Company for the period
from December 31, 1993 through the year ended December 31, 1998 with the
cumulative total return on (i) the Total Return Index for the Nasdaq Stock
market (U.S. Companies) (the "Nasdaq Composite Index"), and (ii) the Nasdaq
Pharmaceutical Index (assuming the investment of $100 in the Company's Common
Stock, the Nasdaq Composite Index and the Nasdaq Pharmaceutical Index on
December 31, 1993 and reinvestment of all dividends). Measurement points are on
the last trading day of the Company's years ended December 31, 1993, 1994, 1995,
1996, 1997 and 1998.
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
-------- -------- -------- -------- -------- --------
Bradley
Pharmaceutical 100.00 98.35 29.17 35.01 53.33 31.68
NASDAQ Composite
Index 100.00 97.75 138.26 170.03 208.53 293.83
NASDAQ
Pharmaceutical
Index 100.00 75.26 138.04 138.47 142.98 181.89
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF
THE NOMINEES FOR DIRECTOR. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE
SO VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.
<PAGE>
PROPOSAL II
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO CHANGE DESIGNATION OF CLASS A COMMON STOCK
On May 20, 1999, the Board of Directors unanimously adopted a
resolution proposing that Article IV of the Company's Certificate of
Incorporation be amended to change the title of twenty six million, four hundred
thousand (26,400,000) shares from "Class A Common Stock" to "Common Stock"
without affecting any of the rights or holdings of the holders of Class A Common
Stock. The Board directed that the proposed amendment be submitted to a vote of
the holders of all of the Company's outstanding stock. The Certificate of
Incorporation of the Company requires that the holders of Class A Common Stock
and Class B Common Stock vote as two separate classes to authorize any proposed
amendment to the Certificate of Incorporation which amends, restates or repeals
Article IV. If the amendment is approved by the holders of a majority of the
Company's shares represented in person or by proxy at the Meeting, the Company's
Certificate of Incorporation will be amended to provide that the Company's
Twenty Seven Million Three Hundred Thousand (27,300,000) shares of Common Stock,
with a par value of $.01 per share shall be divided into two classes of which
twenty six million, four hundred thousand (26,400,000) shares will be designated
as Common Stock and nine hundred thousand (900,000) shares will remain
designated as Class B Common Stock.
As of the record date, the Company has 8,630,435 shares of
Common Stock outstanding. The Company has outstanding Class B Common Stock which
is convertible into shares of Common Stock, and will have outstanding options
exercisable for shares of Common Stock and options reserved for issuance if the
1999 Incentive and Stock Option Plan is approved. Other than to meet the
requirements of various employee benefit and incentive plans of the Company and
its Class B Common Stock, the Company has no present plan, understanding or
agreement to issue additional shares of Common Stock.
The Board of Directors believes that the proposed amendment is
desirable because it will permit the Company's publicly held common stock to
trade under the designation of "Common Stock" rather than "Class A Common Stock"
on the NASDAQ Stock Market TM.
A vote in favor of the proposed amendment to the Company's
Certificate of Incorporation by the holders of a majority of the outstanding
shares of Common Stock represented at the Meeting, in person or by proxy, is
necessary for the adoption of this proposal. If the proposed amendment is
adopted by the shareholders, it will become effective upon filing a Certificate
of Amendment as required by the Delaware General Corporation Law.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND ARTICLE IV OF THE CERTIFICATE OF INCORPORATION. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT
CHOICE.
<PAGE>
PROPOSAL III
AMENDMENT TO CERTIFICATE OF INCORPORATION
TO PERMIT TRANSFERS OF CLASS B COMMON STOCK
On May 20, 1999, the Board of Directors unanimously adopted a
resolution proposing that Article IV of the Company's Certificate of
Incorporation be amended to change subparagraph A.2.d. thereof to permit
unrestricted transfers of Class B Common Stock which would eliminate the
automatic conversion of Class B Common Stock to Class A Common Stock upon the
sale, pledge, hypothecation or any other transfer of such shares to such persons
who were not a holder of Class B Common Stock prior to such specified transfer.
This amendment to the Certificate of Incorporation would not affect any of the
rights or holdings of the holders of Class A Common Stock. The Board directed
that the proposed amendment be submitted to a vote of the holders of all of the
Company's outstanding stock. The Certificate of Incorporation of the Company
requires that the holders of Class A Common Stock and Class B Common Stock vote
as two separate classes to authorize any proposed amendment to the Certificate
of Incorporation which amends, restates or repeals Article IV. If the amendment
is approved by the holders of a majority of the Company's shares of each class
represented in person or by proxy at the Meeting, the Company's Certificate of
Incorporation will be amended to permit unrestricted transfers of Class B Common
Stock.
As of the record date, the Company has 8,630,435 shares of
Common Stock outstanding. The Company has outstanding Class B Common Stock which
is convertible into shares of Class A Common Stock, and will have outstanding
options exercisable for shares of Common Stock and options reserved for issuance
if the 1999 Incentive and Stock Option Plan is approved. Other than to meet the
requirements of various employee benefit and incentive plans of the Company and
its Class B Common Stock, the Company has no present plan, understanding or
agreement to issue additional shares of Common Stock.
The Board of Directors believes that the proposed amendment is
desirable to appropriately permit the executive officers of the Company to
attain an equity ownership in the Company and to facilitate unrestricted
transfers, retirement and estate planning by the holders of the Class B Common
Stock.
A vote in favor of the proposed amendment to the Company's
Certificate of Incorporation by the holders of a majority of the outstanding
shares of Common Stock represented at the Meeting, in person or by proxy, is
necessary for the adoption of this proposal. If the proposed amendment is
adopted by the shareholders, it will become effective upon filing a Certificate
of Amendment as required by the Delaware General Corporation Law. The Company's
financial statements, included in its 1998 Annual Report furnished to
shareholders in connection with the distribution of this Proxy Statement, are
incorporated in this Proxy Statement by reference.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO
AMEND ARTICLE IV OF THE CERTIFICATE OF INCORPORATION. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY A DIFFERENT
CHOICE.
<PAGE>
PROPOSAL IV
1999 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
Summary Description of Options and Tax Status
The full text of the 1999 Incentive and Non-Qualified Stock Option Plan
(the "1999 Plan") is set forth as Exhibit A to this Proxy Statement and
reference is made thereto for a complete statement of the terms of that
document.
Shares Reserved for Issuance. Pursuant to the terms of the 1999 Plan,
Three Million Two Hundred Fifty Thousand (3,250,000) shares of the Company's
Common Stock are reserved for issuance thereunder. In the event there is any
change in the number of issued shares of the Common Stock of the Company without
new consideration to the Company (such as by stock dividends or stock splits),
the number of shares reserved for issuance under the 1999 Plan, the number of
shares subject to any outstanding option and the option price per share of each
outstanding stock option shall be appropriately adjusted. Similarly, if the
Company shall be party to a merger, consolidation, reorganization, sale or
similar occurrence, equitable adjustment in the options may be made.
Administration of Plan; Award of Options. The 1999 Plan is administered
by the President and Chief Executive Officer under the guidelines set forth by
the Board of Directors. Pursuant to its authority, the Board may grant options
to purchase shares of Common Stock reserved under the Plan to all employees,
consultants and others as deemed appropriate by the Chief Executive Officer of
the Company.
Amendments. The Board of Directors may amend the Plan as it deems
advisable. No amendment may, without further approval of the stockholders of the
Company within twelve months before or after the date on which such amendment
was adopted, (a) increase the total number of shares which may be made the
subject of options granted under the 1999 Plan, either in the aggregate or to
any individual employee, (b) change the manner of determining the option price,
(c) change the criteria of determining which employees and others which are
eligible to receive options, (d) extend the period during which options may be
granted or exercised, or (e) withdraw the administration of the 1999 Plan from
the Board of Directors.
Vesting. Non-Qualified options granted to optionees under the 1999 Plan
are to vest and become exercisable at the rate of 33 1/3% per year following the
year of grant of such options provided that certain conditions are satisfied.
For a description of these conditions, see the subsection below entitled
"Termination of Employment". The incentive options granted to optionees under
the 1999 Plan vest on the first anniversary of the date of grant unless
otherwise specified on the date of grant.
Exercise Period. The options granted to employees under the 1999 Plan
may not be exercised more than ten (10) years after the 1999 Plan is approved by
the Company's stockholders.
Termination of Employment. Outstanding options must be exercised during
employment with the Company or within ninety (90) days after termination of
employment with the Company (other than by reason of death or permanent
disability, in which case they must be exercised within twelve months after
termination). In addition, options are exercisable only to the extent that they
are vested as of the date of termination of employment.
<PAGE>
Nontransferability. Each option granted under the 1999 Plan is not
transferable by the holder except by will or the laws of descent and
distribution of the State wherein the holder is domiciled at the time of his
death.
Sale or Public Offering of the Company. In the case of (i) a sale of
all or substantially all of the Company's assets outside the ordinary course of
business; (ii) an offer to purchase at least a majority of the Company's issued
and outstanding common stock or an offer to the Company's stockholders to tender
for sale at least a majority of the Company's issued and outstanding common
stock, which offer is accepted or tender made with respect to at least a
majority of the Company's issued and outstanding shares of Common Stock; (iii)
the merger or consolidation of the Company with another corporation or entity;
(iv) a public or private offering of the Company's Common Stock, whether of
newly or previously issued shares; or (v) a dissolution or liquidation of the
Company, options granted but unexercised shall, at the discretion of the Board
of Directors, become fully vested and exercisable for a period of twenty days
from the date notice of such sale or public offering given to the optionees.
Upon the expiration of the twenty day period, the Board of Directors at its
discretion, may suspend or cancel the right of any optionee to exercise such
options.
Federal Income Tax Treatment of Options. The options to be granted
under the 1999 Plan may be deemed to be qualified or non-qualified within the
meaning of the Code, at the discretion of the committee. Generally, an optionee
will recognize ordinary income upon the exercise of a non-qualified stock option
(or, if the stock subject to the option is restricted within the meaning of Code
Section 83 and the optionee does not otherwise elect to recognize income upon
the exercise of the stock option, at such time as the shares become transferable
or are no longer subject to a substantial risk of forfeiture) in an amount equal
to the excess (if any) of the fair market value of the shares purchased at the
time of exercise over the exercise price. The Company will be entitled to an
income tax deduction in the same amount and at the same time as the optionee
recognizes such income. Upon the sale of shares which were purchased upon the
exercise of an option, the optionee will recognize capital gain or loss measured
by the difference between the amount realized on the sale and the fair market
value of the shares at the time income was previously recognized in connection
with the exercise (or possibly the grant) of the stock option. Such capital gain
or loss will be short-term or long-term, depending upon the length of time the
shares were held by the optionee.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
APPROVAL AND RATIFICATION OF THE COMPANY'S 1999 INCENTIVE AND NON-QUALIFIED
STOCK OPTION PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED
UNLESS SHAREHOLDERS SPECIFY A DIFFERENT CHOICE.
ANNUAL REPORT
All shareholders of record of the Company as of the Record
Date are concurrently being sent a copy of the Company's Annual Report to
Shareholders for 1998. This Annual Report contains certified financial
statements of the Company for the years ended December 31, 1998 and 1997.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH BENEFICIAL
HOLDER OF ITS CLASS A AND CLASS B COMMON STOCK AS OF THE RECORD DATE, ON THE
WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE COMPANY'S ANNUAL REPORT ON
FORM 10-KSB, AS AMENDED, FOR THE YEAR ENDED DECEMBER 31, 1998, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. ANY SUCH REQUEST SHOULD BE MADE IN WRITING
TO BRADLEY PHARMACEUTICALS, INC., 383 ROUTE 46 WEST, FAIRFIELD, NEW JERSEY
07004-2402, ATTENTION: CORPORATE SECRETARY.
<PAGE>
SHAREHOLDER PROPOSALS
Shareholder proposals must be received by December 31, 1999 in
order to be considered for inclusion in proxy materials distributed in
connection with the next Annual Meeting of Shareholders.
MISCELLANEOUS
As of the date of this Proxy Statement, the Board of Directors of the
Company does not know of any other matter to be brought before the Meeting.
However, if any other matters not mentioned in the Proxy Statement are properly
brought before the Meeting or any adjournments thereof, the persons named in the
enclosed Proxy or their substitutes will have discretionary authority to vote
proxies given in said form, or otherwise act, in respect of such matters in
accordance with their best judgment.
All of the costs and expenses in connection with the
solicitation of proxies with respect to the matters described herein will be
borne by the Company. In addition to solicitation of proxies by use of the
mails, directors, officers and employees (who will receive no compensation
therefor in addition to their regular remuneration) of the Company may solicit
the return of proxies by telephone, telegram or personal interview. The Company
will request banks, brokerage houses and other custodians, nominees and
fiduciaries to forward copies of the proxy material to their principals and to
request instructions for voting the proxies. The Company may reimburse such
banks, brokerage houses and other custodians, nominees and fiduciaries for their
expenses in connection therewith.
It is important that proxies be returned promptly.
Shareholders are, therefore, urged to fill in, date, sign and return the Proxy
immediately. No postage need be affixed if mailed in the enclosed envelope in
the United States.
By Order of the Board of Directors,
DANIEL GLASSMAN
Chairman & CEO
June ____, 1999
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO
THE CERTIFICATE OF INCORPORATION
OF
BRADLEY PHARMACEUTICALS, INC.
Pursuant to the provisions of Section 242, General Corporation Law of
Delaware, the undersigned corporation certifies as follows:
<PAGE>
1. The name of the Corporation ("Corporation") is Bradley Pharmaceuticals,
Inc.
2. The Certificate of Incorporation of the Corporation is hereby amended by
striking out the introductory paragraph and subparagraph A of Article IV thereof
and by substituting in lieu of said paragraphs the following new paragraphs:
The aggregate number of shares of stock which the Corporation shall have
authority to issue is Twenty Nine Million Three Hundred Thousand (29,300,000)
shares of stock, of which Twenty Seven Million Three Hundred Thousand
(27,300,000) shall be shares of Common Stock, with a par value of $.01 per
share, and Two Million (2,000,000) shall be shares of Preferred Stock, with a
par value of $.01 per share.
A. Common Stock. This Corporation's Twenty Seven Million Three Hundred
Thousand (27,300,000) shares of Common Stock, with a par value of $.01 per
share, shall not have cumulative voting or preemptive rights and shall be
entitled to one vote for each share in the election of directors and on any
other matter presented to the stockholders, except to the extent provided as
follows:
1. The authorized shares of Common Stock of the Corporation shall be
divided into two classes, of which twenty six million four hundred thousand
(26,400,000) shares shall be designated Common Stock and nine hundred thousand
(900,000) shares shall be designated Class B Common Stock.
2. The rights, preferences and limitations of the Common Stock and the
Class B Common Stock shall be equal and identical in all respects except that,
unless otherwise provided by law:
<PAGE>
a. each share of Common Stock shall entitle the holder thereof to one vote
upon any and all matters submitted to the shareholders of the Corporation for a
vote, and each share of Class B Common Stock shall entitle the holder thereof to
five votes upon any and all matters submitted to the shareholders of the
Corporation for a vote, except the election of directors, as to which each share
of Class B Common Stock shall entitle the holder thereof to one vote.
b. holders of Common Stock and holders of Class B Common Stock shall vote
together as a single class upon any and all matters submitted to the
shareholders of the Corporation for a vote, provided, however, that the holders
of the Common Stock and holders of Class B Common Stock shall vote as two
separate classes to authorize any proposed amendment to the Corporation's
Certificate of Incorporation that amends, restates or repeals this Article IV,
Section A or has the effect of an amendment, restatement or repeal, and
provided, further, that notwithstanding anything to the contrary contained
herein, so long as there are at least three hundred twenty five thousand
(325,000) shares of Class B Common Stock issued and outstanding, the holders of
Class B Common Stock shall vote as a separate class to elect a majority
(consisting of the sum of one plus one-half of the total number of directors) of
the directors of the Corporation (who shall be known as "Class B Directors"), to
remove any Class B Director with or without cause at any time and to fill all
vacancies among Class B Directors, and the holders of Common Stock and voting
Preferred Stock, if any, shall vote together as a single class to elect the
remainder of the directors of the Corporation (who shall be known as "Common
Stock Directors"), to remove any Common Stock Director with or without cause at
any time and to fill all vacancies among Common Stock Directors.
c. each share of Class B Common stock shall convert into one share of
Common Stock upon, and as of the date of, the delivery to the Corporation of the
written demand by the holder thereof for such conversion, which demand may be
delivered at any time.
3. The foregoing amendment to the Certificate of Incorporation was approved
and adopted by the directors of the corporation on the day of , 1999 by
unanimous written consent, a copy of the unanimous written consent is attached
hereto as Exhibit A.
4. The number of shares of capital stock entitled to vote the foregoing
amendment was _____ shares of common stock, $.01 par value per share.
5. The number of shares voting for and against such amendment was as
follows:
No. of Common Stock Shares No. of Common Stock Shares
Voting For Amendment Voting Against Amendment
No. of Class B Common Stock No. of Class B Common Stock
Shares Voting For Amendment Shares Voting Against Amendment
6. The amendments to the Certificate of Incorporation herein certified have
been duly adopted and written consent has been given in accordance with the
provisions of Sections 228 and 242 of the General Corporation Law of the State
of Delaware.
7. This Certificate of Amendment shall be effective as of the date of
filing.
DATED this day of , 1999.
BRADLEY PHARMACEUTICALS, INC.
By:_________________________________
Daniel Glassman, President
<PAGE>
EXHIBIT B
BRADLEY PHARMACEUTICALS, INC.
1999 STOCK OPTION PLAN
1. Purpose. The purpose of the 1999 Stock Option Plan of BRADLEY
PHARMACEUTICALS, INC. is to provide incentive to employees, consultants and
other individuals as appropriate in accordance herewith, of the Corporation, as
defined below, to encourage employee proprietary interest in the Corporation, to
encourage employees to remain in the employ of the Corporation, and to attract
to the Corporation individuals of experience and ability.
2. Definitions.
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(c) "Committee" shall mean the Committee appointed by the Board in
accordance with Section 4 of the Plan.
(d) "Common Stock" shall mean the $.01 par value per share Common Stock of
the Company.
(e) "Company" shall mean Bradley Pharmaceuticals, Inc., a Delaware
corporation.
(f) "Corporation" shall mean and include the Company and any parent or
subsidiary corporation thereof, within the meaning of Section 425 of the Code.
(g) "Disability" shall mean the condition of an Employee within the meaning
of Section 22(e)(3) of the Code.
(h) "Employee" shall mean any individual, including an officer or a
director (who is an employee of the Corporation (within the meaning of Section
3401 of the Code and the regulations thereunder).
(i) "Exercise Price" shall mean the price per share of Common Stock,
determined by the Board or Committee, at which an Option may be exercised.
(j) "Fair Market Value" of a Share of Common Stock as of a specified date
shall mean the closing price of a Share on the principal securities exchange on
which such Shares are traded on the date immediately preceding the date as of
which Fair Market Value is being determined, or on the next preceding date on
which such Shares are traded if no Shares were traded on such immediately
preceding day, or if the Shares are not traded on a securities exchange, Fair
Market shall be deemed to be the average of the high bid and low asked prices of
the Shares in the over-the-counter market on the day immediately preceding the
date as of which Fair Market Value is being determined or on the next preceding
date on which such high bid and low asked prices were recorded. If the Shares
are not publicly traded, Fair Market Value shall be determined by the Board or
Committee. In no case shall Fair Market Value be less than the par value of a
Share of Common Stock, and in no event shall Fair Market Value be determined
with regard to restrictions other than restrictions which, by their terms, will
never lapse.
(k) "Incentive Stock Option" shall mean an Option described in Code Section
422A(b).
(l) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option.
(m) "Option" shall mean a stock option granted pursuant to the Plan.
(n) "Optionee" shall mean a person to whom an Option has been granted.
(o) "Plan" shall mean this Bradley Pharmaceuticals, Inc. 1999 Stock Option
Plan.
(p) "Purchase Price" shall mean the Exercise Price times the number of
whole Shares with respect to which an Option is exercised.
(q) "Share" shall mean one share of Common Stock.
(r) "Ten Percent Shareholder" shall mean any Employee who, at the time of
the grant of an Option, owns (or is deemed to own, under Section 425(d) of the
Code) more than ten percent of the total combined voting power of all classes of
outstanding stock of the Corporation.
3. Effective Date. This Plan was approved by the Board effective
________________.
4. Administration. The Plan shall be administered by the Board. The Board
may delegate any of its functions under this Plan to a Committee appointed by
the Board or to the President or Chief Executive Officer. Wherever in this Plan
the term "Board" is used it shall be construed to mean such committee to the
extent that the Board may have delegated any of its functions to said committee
and only to the extent of any such delegation. The Board may from time to time
remove members from, or add members to, the Committee. Vacancies on the
Committee, however caused, shall be filled by the Board. The Board or Committee
shall from time to time at its discretion make determinations with respect to
the persons who shall be granted Options, the number of Shares to be optioned to
each and the designation of such Options as Incentive Stock Options or
Non-Qualified Stock Options. The interpretation and construction by the Board or
the Committee of any Option granted thereunder shall be binding and conclusive
on all Optionees and of their legal representatives and beneficiaries.
5. Eligibility. Any Employee may be granted Incentive Stock Options under
the Plan and any Employee or officer, director or consultant of the Corporation
may be granted Non-Qualified Stock Options under the Plan if, in each instance,
the Board or Committee determines that such person performs services of special
importance to the management, operation and development of the business of the
Corporation.
6. Stock. The stock subject to the Options granted under the Plan shall be
Shares of authorized but unissued or reacquired Common Stock. The aggregate
member of Shares which may be issued under Options exercised under this Plan
shall not exceed 3,250,000. The number of Shares subject to Options outstanding
under the Plan at any time may not exceed the number of Shares remaining
available for issuance under the Plan. In the event that any Option outstanding
under the Plan expires for any reason or is terminated, the Shares allocable to
the unexercised portion of such Option may again be subjected to an Option under
the Plan.
The limitations established by this Section 6 shall be subject to
adjustment upon the occurrence of the events specified and in the manner
provided in Section 10 hereof.
7. Terms and Conditions of Options. Options granted pursuant to the Plan
shall be evidenced by written agreements in such form as the Board or the
Committee shall from time to time determine, which agreements shall comply with
and be subject to the following terms and conditions:
(a) Date of Grant. Each Option shall specify its effective date (the "date
of grant"), which shall be the date specified by the Board or Committee in its
action relating to the grant of the Option.
(b) Number of Shares. Each Option shall state the number of Shares to which
it pertains and shall provide for the adjustment thereof in accordance with the
provisions of Section 10 hereof.
(c) Exercise Price. Each Option shall state the Exercise Price, which price
shall be determined by the Board or Committee, provided, however, that the
Exercise Price (i) in the case of an Incentive Stock Option granted to an
Employee who is not a Ten Percent Shareholder, shall not be less than the par
value nor less than the Fair Market Value of the Shares to which the Option
relates on the date of grant, (ii) in the case of an Incentive Stock Option
granted to an Employee who is a Ten Percent Shareholder, shall not be less than
the par value nor less than 110% of the Fair Market Value of the Shares to which
the Option relates on the date of grant, and (iii) in the case of a
Non-Qualified Stock Option granted to any Employee or officer or director of the
Corporation, shall not be less than the par value of the Shares to which the
Option relates. The Exercise Price of an Option shall be subject to adjustment
in accordance with Section 10 hereof.
(d) Exercise of Options and Medium and Time of Payment. To exercise an
Option, the Optionee shall give written notice to the Company specifying the
number of Shares to be purchased and accompanied by payment in cash or by
certified check of the full Purchase Price therefor. No Share shall be issued
until full payment therefor has been made.
(e) Term and Exercise of Options; Nontransferability of Options. Subject to
Section 10 hereof, Options may be exercised as determined by the Board or
Committee and as stated in the written agreement evidencing the Option,
provided, however, that no Incentive Stock Option granted to an Employee who is
not a Ten Percent Shareholder shall be exercisable after the expiration of ten
(10) years from the date it is granted, and no Incentive Stock Option granted to
an Employee who is a Ten Percent Shareholder shall be exercisable after the
expiration of five (5) years from the date it is granted. During the lifetime of
the Optionee, the Option shall be exercisable only by the Optionee and shall not
be assignable or transferable. In the event of the Optionee's death, no Option
shall be transferable by the Optionee otherwise than by will or by the laws of
descent and distribution.
(f) Termination of Employment. In the event that an Optionee shall cease to
be employed by the Corporation for any reason, such Optionee (or the heirs or
legatees of such Optionee, if applicable) shall have the right, subject to the
restrictions of Subsection (e) hereof, to exercise the Option at any time within
ninety (90) days after such termination of employment (twelve (12) months if the
termination was due to the death or Disability of the Optionee or, in the case
of a Non-Qualified Stock Option, retirement) to the extent that, on the day
preceding the date of termination of employment, the Optionee's right to
exercise such Option had accrued pursuant to the terms of the option agreement
pursuant to which such Option was granted, and had not previously been
exercised.
For this purpose, the employment relationship will be treated as continuing
intact while the Optionee is on military leave, sick leave or other bona fide
leave of absence (to be determined in the sole discretion of the Board and, in
the case of an Optionee who has received an Incentive Stock Option, only to the
extent permitted under Section 422A of the Code and the regulations promulgated
thereunder). Moreover, in the case of an Optionee who has been granted an
Incentive Stock Option, employment shall, in no event, be deemed to continue
beyond the ninetieth (90th) day after the Optionee ceased active employment,
unless the Optionee's reemployment rights are guaranteed by statute or by
contract.
<PAGE>
(g) Rights as a Shareholder. An Optionee or a transferee of a deceased
Optionee shall have no rights as a shareholder with respect to any Shares
covered by his or her Option until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as provided in Section 10.
(h) Modification, Extension and Renewal of Options. Subject to the terms
and conditions and within the limitations of the Plan, the Board or Committee
may modify, extend or renew outstanding Options granted under the Plan, or
accept the exchange of outstanding Options (to the extent not theretofore
exercised) for the granting of new Options in substitution therefor.
Notwithstanding the foregoing, however, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any Options theretofore granted under the Plan. Moreover, in the case of
any modification, extension or renewal of an Incentive Stock Option, all of the
requirements set forth herein shall apply in the same manner as though a new
Incentive Stock Option had been granted to the Optionee on the date of such
modification, extension or renewal, but only if such modification, extension or
renewal is treated, under Section 425(h) of the Code, as the granting of a new
option.
(i) Identification of Option. Each Option granted under the Plan shall
clearly identify its status as an Incentive Stock Option or Non-Qualified Stock
Option.
(j) Other Provisions. The option agreements authorized under the Plan shall
contain such other provisions not inconsistent with the terms of the Plan,
including, without limitation, restrictions upon the exercise of the Option, as
the Board or Committee shall deem advisable.
8. Limitation on Annual Awards.
General Rule. The aggregate Fair Market Value (determined at the time the
Option is granted) of stock for which Incentive Stock Options are exercisable
for the first time during any calendar year under the terms of the Plan (and all
other plans maintained by the Corporation and its parent or subsidiary
corporation) shall not exceed the sum of $100,000.
9. Term of Plan. Options may be granted pursuant to the Plan until ten
years from the date that the Plan is adopted by the Board or ten years from the
date that the Plan is approved by the shareholders of the Company, whichever
occurs earlier.
10. Recapitalization. Subject to any required action by the shareholders
and the last sentence of subsection 7(h) hereof, the number of Shares covered by
this Plan as provided in Section 6, the number of Shares covered by each
outstanding Option, and the Exercise Price thereof shall be proportionately
adjusted for any increase or decrease in the number of issued Shares resulting
from a subdivision or consolidation of Shares, stock split, or the payment of a
stock dividend.
Subject to any required action by the shareholders of the Company and the
last sentence of Subsection 7(h) hereof, if the Company shall be the surviving
corporation in any merger or consolidation, each outstanding Option shall
pertain and apply to the securities to which a holder of the number of Shares
subject to the Option would have been entitled. A dissolution or liquidation of
the Company or a merger or consolidation in which the Company is not the
surviving corporation shall cause each outstanding Option to terminate, unless
the agreement of merger or consolidation shall otherwise provide, provided that
each Optionee shall, in such event, have the right immediately prior to such
dissolution or liquidation, or merger or consolidation in which the Company is
not the surviving corporation, if a period of one (1) year from the date of the
grant of the Option shall have elapsed, to exercise the Option, in whole or in
part, subject to limitations on exercisability under Section 7(i) hereof.
In the event of a change in the Common Stock as presently constituted,
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be Shares of Common
Stock within the meaning of the Plan.
To the extent that the foregoing adjustments relate to stock or securities
of the Company, such adjustments shall be made by the Board or Committee, whose
determination in that respect shall be final, binding and conclusive.
Except as hereinbefore expressly provided in this Section 10, the Optionee
shall have no rights by reason of any subdivision or consolidation of shares of
stock of any class, stock split, or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class or by
reason of any dissolution, liquidation, merger, or consolidation or spin-off of
assets or stock of another corporation, and any issue by the Company of shares
of stock of any class or securities convertible into shares of stock of any
class, shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all of any part of its
business or assets.
11. Securities Law Requirements. No Shares shall be issued upon the
exercise of any Option unless and until the Company has determined that: (i) it
and the Optionee have taken all actions required to register the Shares under
the Securities Act of 1933 or perfect an exemption from the registration
requirements thereof; (ii) any applicable listing requirement of any stock
exchange on which the Common Stock are listed has been satisfied; and (iii) any
other applicable provision of state or Federal law has been satisfied.
12. Amendment of the Plan. The Board or Committee may, insofar as permitted
by law, from time to time, with respect to any Shares at the time not subject to
Options, suspend or discontinue the Plan or revise or amend it in any respect
whatsoever except that, without approval of the shareholders of the Company, no
such revision or amendment shall:
(a) Increase the number of Shares subject to the Plan; or
(b) Change the designation in Section 5 of the Plan of the class of
Employees eligible to receive options; or
(c) Amend this Section 12 to defeat its purpose.
13. Application of Funds. The proceeds received by the Company from the
sale of Common Stock pursuant to the exercise of an Option will be used for
general corporate purposes, including without limitation, to fund acquisitions
and other investment and growth projects defined by the Company's business
strategy.
14. No Obligation to Exercise Option. The granting of an Option shall
impose no obligation upon the Optionee to exercise such Option.
15. Withholding.
(a) Non-Qualified Options. Whenever Shares are to be delivered upon
exercise of a Non-Qualified Option, the Corporation shall be entitled to require
as a condition of delivery that the Optionee remit to the Corporation an amount
sufficient to satisfy the Corporation's federal, state and local withholding tax
obligations with respect to the exercise of the Option.
(b) Incentive Stock Options. The acceptance of Shares upon exercise of an
Incentive Stock Option shall constitute an agreement by the Optionee (unless and
until the Corporation shall notify the Optionee that it is relieved, in whole or
in part, of its obligations under Section 15(b)) (i) to notify the Corporation
if any or all of such Shares are disposed of by the Optionee within two years
from the date the Option was granted or within one year from the date the Shares
were transferred to the Optionee pursuant to his exercise of the Option, and
(ii) to remit to the Corporation, at the time of and in the case of any such
disposition, an amount sufficient to satisfy the Corporation's Federal, state
and local withholding tax obligations with respect to such disposition, whether
or not, as to both (i) and (ii), the Optionee is in the employ of the
Corporation at the time of such disposition.
16. Governing Law. The provisions of this Plan shall be governed and
construed in accordance with the laws of the State of New Jersey provided,
however, that in the case of the provisions applicable to Incentive Stock
Options, such provisions shall (to the extent possible) be construed in a manner
conforming to and consistent with the requirements of Section 422A of the Code.