-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CXSPAFjQBvJa85q7AcGIHCeodhcIoRrzTfM8i1m94D6Iafy8xjmY7L5sTOZf73JE whMlEi3aPQsp9fskFuBW8g== 0000725058-01-500012.txt : 20020410 0000725058-01-500012.hdr.sgml : 20020410 ACCESSION NUMBER: 0000725058-01-500012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CYTOGEN CORP CENTRAL INDEX KEY: 0000725058 STANDARD INDUSTRIAL CLASSIFICATION: IN VITRO & IN VIVO DIAGNOSTIC SUBSTANCES [2835] IRS NUMBER: 222322400 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14879 FILM NUMBER: 1784641 BUSINESS ADDRESS: STREET 1: 600 COLLEGE RD EAST CN 5308 CITY: PRINCETON STATE: NJ ZIP: 08540 BUSINESS PHONE: 6099878200 MAIL ADDRESS: STREET 1: 600 COLLEGE RD EAST CN 5308 STREET 2: 600 COLLEGE RD EAST CN 5308 CITY: PRINCETON STATE: NJ ZIP: 08540 10-Q 1 cyto3q10q.txt CYTOGEN CORPORATION 2001 3RD QTR 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2001 ------------------ OR |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to -------- -------- Commission file number 000-14879 Cytogen Corporation ------------------- (Exact name of Registrant as specified in its charter) Delaware 22-2322400 - -------------------------------- ---------------------- (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification Number) 600 College Road East, CN 5308, Princeton, NJ 08540-5308 -------------------------------------------------------- (Address of Principal Executive Offices and Zip Code) Registrant's telephone number, including area code (609) 750-8200 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes X No . --- --- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Class Outstanding at November 1, 2001 - ---------------------------- ------------------------------- Common Stock, $.01 par value 79,386,800 PART I - FINANCIAL INFORMATION Item 1 - Consolidated Financial Statements CYTOGEN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (All amounts in thousands, except share data) (Unaudited)
September 30, December 31, 2001 2000 ------------ ------------ ASSETS: Current Assets: Cash and cash equivalents ...................................... $ 14,548 $ 11,993 Receivable on income tax benefit sold .......................... - 1,625 Accounts receivable, net ....................................... 2,198 1,841 Inventories .................................................... 1,712 883 Other current assets ........................................... 575 377 --------- --------- Total current assets ........................................ 19,033 16,719 Property and Equipment, net ........................................ 1,794 2,193 Other Assets ....................................................... 1,855 1,504 --------- --------- $ 22,682 $ 20,416 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY: Current Liabilities: Current portion of long-term debt .............................. $ 89 $ 151 Accounts payable and accrued liabilities ....................... 4,890 7,218 Deferred revenue ............................................... 685 859 --------- --------- Total current liabilities ................................... 5,664 8,228 --------- --------- Long-Term Debt ..................................................... 2,336 2,374 --------- --------- Deferred Revenue ................................................... 2,125 2,596 --------- --------- Stockholders' Equity: Preferred stock, $.01 par value, 5,400,000 shares authorized - Series C Junior Participating Preferred Stock, $.01 par value, 200,000 shares authorized, none issued and outstanding ....... - - Common stock, $.01 par value, 250,000,000 shares authorized, 78,887,000 and 75,594,000 shares issued and outstanding at September 30, 2001 and December 31, 2000, respectively .... 789 756 Additional paid-in capital ..................................... 350,476 335,938 Deferred compensation .......................................... (608) (895) Accumulated deficit ............................................ (338,100) (328,581) --------- --------- Total stockholders' equity .................................. 12,557 7,218 --------- --------- $ 22,682 $ 20,416 ========= =========
The accompanying notes are an integral part of these statements. 2 CYTOGEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (All amounts in thousands, except per share data) (Unaudited)
Three Months Nine Months Ended September 30, Ended September 30, --------------------- --------------------- 2001 2000 2001 2000 -------- -------- -------- -------- Revenues: Product related: ProstaScint ............................................... $ 1,679 $ 1,849 $ 5,670 $ 5,036 Others .................................................... 317 130 643 437 -------- -------- -------- -------- Total product sales ................................ 1,996 1,979 6,313 5,473 Quadramet royalties ....................................... 579 523 1,615 1,529 -------- -------- -------- -------- Total product related .............................. 2,575 2,502 7,928 7,002 License and contract ........................................ 225 231 697 809 -------- -------- -------- -------- Total revenues ..................................... 2,800 2,733 8,625 7,811 -------- -------- -------- -------- Operating Expenses: Cost of product ............................................... 1,400 1,136 3,174 3,047 Research and development ...................................... 2,661 2,005 6,882 5,037 Acquisition of marketing and technology rights ................ - 13,241 - 13,241 Selling and marketing ......................................... 1,489 1,242 4,820 3,695 General and administrative .................................... 1,147 1,716 3,670 3,770 -------- -------- -------- -------- Total operating expenses ........................... 6,697 19,340 18,546 28,790 -------- -------- -------- -------- Operating loss ..................................... (3,897) (16,607) (9,921) (20,979) Interest income ................................................ 162 182 538 545 Interest expense ................................................ (44) (24) (136) (133) -------- -------- -------- -------- Loss before cumulative effect of accounting change ................................. (3,779) (16,449) (9,519) (20,567) Cumulative effect of accounting change .......................... - - - (4,314) -------- -------- -------- -------- Net loss ........................................................ $ (3,779) $(16,449) $ (9,519) $(24,881) ======== ======== ======== ======== Net loss per share: Basic and diluted net loss before cumulative effect of accounting change .............................. $ (0.05) $ (0.22) $ (0.12) $ (0.28) Cumulative effect of accounting change ...................... - - - (0.06) -------- -------- -------- -------- Basic and diluted net loss .................................. $ (0.05) $ (0.22) $ (0.12) $ (0.34) ======== ======== ======== ======== Weighted average common shares outstanding ...................... 78,866 73,632 77,446 72,660 ======== ======== ======== ========
The accompanying notes are an integral part of these statements. 3 CYTOGEN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (All amounts in thousands) (Unaudited)
Nine Months Ended September 30, ------------------------------- 2001 2000 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ................................................. $ (9,519) $(24,881) -------- -------- Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization ..................... 885 679 Imputed interest .................................. (32) (66) Stock based compensation .......................... 480 284 Amortization of deferred revenue .................. (645) (645) Cumulative effect of accounting change ............ - 4,314 Acquisition of marketing and technology rights .... - 13,079 Gain on sale of equipment ......................... - (148) Changes in assets and liabilites: Accounts receivable, net ........................ 1,300 (169) Inventories ..................................... (829) 54 Other assets .................................... (49) (91) Accounts payable and accrued liabilities ........ (2,138) (495) Other liabilities ............................... - 117 -------- -------- Total adjustments ...................... (1,028) 16,913 -------- -------- Net cash used in operating activities ............. (10,547) (7,968) -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of product rights ............................... (500) - Purchase of property and equipment ....................... (486) (751) Net proceeds from sale of equipment ...................... - 148 Redemption of short-term investments ..................... - 1,593 -------- -------- Net cash (used in) provided by investing activities (986) 990 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock ................... 14,188 10,411 Payment of long-term liabilities ......................... (100) (56) -------- -------- Net cash provided by financing activities ......... 14,088 10,355 -------- -------- Net increase in cash and cash equivalents ................ 2,555 3,377 Cash and cash equivalents, beginning of period ........... 11,993 10,801 -------- -------- Cash and cash equivalents, end of period ................. $ 14,548 $ 14,178 ======== ========
The accompanying notes are an integral part of these statements. 4 CYTOGEN CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. THE COMPANY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Company Cytogen Corporation ("Cytogen" or the "Company") is a biopharmaceutical company with an established and growing product line in prostate cancer and other areas of oncology, and a leadership position in proteomics research designed to accelerate drug discovery and development. In oncology, FDA-approved products include ProstaScint(R) (a monoclonal antibody-based imaging agent used to image the extent and spread of prostate cancer); BrachySeed(TM) (a uniquely designed next-generation radioactive seed implant for the treatment of localized prostate cancer), Quadramet(R) (a therapeutic agent marketed for the relief of bone pain in prostate and other types of cancer), and OncoScint CR/OV(R) (a monoclonal antibody-based imaging agent for colorectal and ovarian cancer). Cytogen is evolving a pipeline of oncology product candidates by exploiting its prostate specific membrane antigen, or PSMA, technologies, which are exclusively licensed from Memorial Sloan-Kettering Cancer Center. In addition, Cytogen plans to use AxCell's proteomics technology to research and develop novel drug targets independently or via collaborative ventures. AxCell Biosciences, a subsidiary of Cytogen Corporation, is a pioneer in the effort to chart protein signaling pathways in the human proteome to accelerate the discovery of new drug targets and facilitate efficient pharmaceutical and biotechnology research and development. Through the systematic and industrialized application of proteomics, AxCell provides a growing portfolio of protein pathway solutions based on its proprietary Genetic Diversity Library(TM), Cloning of Ligand Targets(TM), and affinity screening technologies. In conjunction with InforMax, Inc., AxCell is developing a proprietary protein pathway database, called ProChart(TM), which is commercially available as a discovery and development tool for subscribers in the pharmaceutical, biotechnology and agricultural industries. AxCell is also seeking to develop alliances for the development of custom protein pathway information and intends to leverage its proteomic capabilities to identify novel drug targets for internal use. Basis of Consolidation The consolidated financial statements include the accounts of Cytogen and its subsidiaries. Intercompany balances and transactions have been eliminated in consolidation. Basis of Presentation The consolidated financial statements and notes thereto of Cytogen are unaudited and include all adjustments, which in the opinion of management, are necessary to present fairly the financial condition and results of operations as 5 CYTOGEN CORPORATION NOTES TO CONSOLIDATED FINANCIALS STATEMENTS (Cont'd) of and for the periods set forth in the Consolidated Balance Sheets, Consolidated Statements of Operations and Consolidated Statements of Cash Flows. All such accounting adjustments are of a normal, recurring nature. The consolidated financial statements do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission, which includes financial statements as of and for the year ended December 31, 2000. The results of the Company's operations for any interim period are not necessarily indicative of the results of the Company's operations for any other interim period or for a full year. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, cash in banks and all highly-liquid investments with a maturity of three months or less at the time of purchase. Net Loss Per Share Basic net loss per share is based upon the weighted average common shares outstanding during each period. Diluted net loss per share is the same as basic net loss per share, as the inclusion of common stock equivalents would be antidilutive. Inventories The Company's inventories are primarily related to ProstaScint and OncoScint CR/OV. Inventories are stated at the lower of cost or market using the first-in, first-out method and consisted of the following: September 30, December 31, 2001 2000 -------------- -------------- Raw materials................. $1,383,000 $718,000 Work-in process............... 135,000 59,000 Finished goods................ 194,000 106,000 ---------- --------- $1,712,000 $883,000 ========== ======== Revenue Recognition Effective January 1, 2000, the Company adopted U.S. Securities and Exchange Commission Staff Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB 101"), which, as applied to the Company, requires up-front, non-refundable license fees to be deferred and recognized over the performance period. The cumulative effect of adopting SAB 101 resulted in a one-time, non-cash charge of $4.3 million or $0.06 per share, which reflects the deferral of an up-front license fee received from Berlex Laboratories, Inc., net of associated costs, related to the licensing of Quadramet recognized in October 6 CYTOGEN CORPORATION NOTES TO CONSOLIDATED FINANCIALS STATEMENTS (Cont'd) 1998 and a license fee for certain applications of PSMA to a joint venture formed by Cytogen and Progenics Pharmaceuticals Inc. recognized in June 1999. Previously, the Company had recognized up-front license fees when the Company had no obligations to return the fees under any circumstances. Under SAB 101, these payments are recorded as deferred revenue to be recognized over the remaining term of the related agreements. 2. DRAXIMAGE INC.: In December 2000, the Company entered into a Product Manufacturing and Supply Agreement with Draximage Inc. ("Draximage") to market and distribute BrachySeed(TM) implants for prostate cancer therapy in the U.S. Under the terms of the agreement, Draximage will supply radioactive iodine and palladium seeds to Cytogen in exchange for royalties on sales and certain milestone payments. Accordingly, Cytogen paid Draximage $500,000 upon the execution of the contract in 1999 and $500,000 upon the first sale of the Iodine-125 BrachySeeds in 2000. These payments have been recorded as other assets in the accompanying consolidated balance sheet and are being amortized over the ten year term of the Draximage agreement. In addition, pursuant to the agreement, Cytogen will pay Draximage $1.0 million upon the first sale of the Palladium-103 BrachySeeds. Other payments are due Draximage upon the achievement of certain other milestones. The Company launched the radioactive Iodine BrachySeed in the U.S. in February 2001. 3. SALES OF CYTOGEN COMMON STOCK: Under the terms of a $70 million equity financing facility (the "Equity Financing Facility") entered into between the Company and Acqua Wellington North American Equities Fund, Ltd. ("Acqua Wellington") in October 2000, Cytogen could, at its discretion, sell shares of its common stock to Acqua Wellington at a small discount to the market price. Pursuant to this Equity Financing Facility, in February 2001, the Company sold to Acqua Wellington 1,276,557 shares of its common stock at an aggregate price of $6.5 million or $5.092 per share. The Equity Financing Facility was terminated in June 2001. In June 2001, the Company entered into a Share Purchase Agreement (the "Agreement") with the State of Wisconsin Investment Board ("SWIB"), pursuant to which the Company sold 1,820,000 shares of Cytogen common stock to SWIB for an aggregate purchase price of $8.2 million, before transaction costs, or $4.50 per share. In connection with the Agreement, the Company was required to discontinue the use of the Equity Financing Facility and such agreement was terminated. 7 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion contains historical information as well as forward looking statements that involve a number of risks and uncertainties. Statements contained or incorporated by reference in this Quarterly Report on Form 10-Q that are not based on historical fact are "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Generally, forward looking statements can be identified by the use of phrases like "believe", "expect", "anticipate", "plan", "may", "will", "could", "estimate", "potential", "opportunity" and "project" and similar terms. The Company's actual results could differ materially from the Company's historical results of operations and those discussed in the forward looking statements. Factors that could cause actual results to differ materially, include, but are not limited to those identified in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 under the caption "Additional Factors That May Affect Future Results". Investors are cautioned not to put undue reliance on any forward looking statement. Cautionary Statement In addition to the risks discussed under the caption referred to above, among other factors that could cause actual results to differ materially from expected results are the following: (i) the Company's ability to access the capital markets in the near term and in the future for continued funding of its operations including existing projects and for the pursuit of new projects; (ii) the ability to attract and retain personnel needed for business operations and strategic plans; (iii) the timing and results of clinical studies, and regulatory approvals; (iv) market acceptance of the Company's products, including programs designed to facilitate use of the products, such as the Partners in Excellence or PIE Program; (v) demonstration over time of the efficacy and safety of the Company's products; (vi) the degree of competition from existing or new products; (vii) the decision by the majority of public and private insurance carriers on whether to reimburse patients for the Company's products; (viii) the ability of the Company to comply with applicable governmental regulations and changes thereto; (ix) the profitability of its products; (x) the ability to attract, and the ultimate success of, strategic partnering arrangements, collaborations, and acquisition candidates; (xi) the ability of the Company and its partners to identify new products as a result of those collaborations that are capable of achieving FDA approval, that are cost-effective alternatives to existing products and that are ultimately accepted by the key users of the product; (xii) the success of the Company in obtaining marketing approvals for its products in Canada and Europe; (xiii) the ability of the Company to protect its proprietary technology, trade secrets or know-how under the patent and other intellectual property laws of the United States and other countries; and (xiv) the ability of Advanced Magnetics Inc. to satisfy the conditions specified by the FDA regarding approval to market Combidex in the United States. The following discussion and analysis should be read in conjunction with the Financial Statements and related notes thereto contained elsewhere herein, as well as the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and from time to time the Company's other filings with the Securities and Exchange Commission. 8 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Significant Events in 2001 In the first half of 2001, the Company launched the iodine version of BrachySeed(TM), a second generation radioactive implant for treatment of localized prostate cancer, which was in-licensed by the Company from Draximage Inc. The Company expects to introduce, during the fourth quarter of 2001, the palladium version of BrachySeed, a uniquely designed next generation radioactive seed implant, which recently received marketing clearance from the U.S. Food and Drug Administration. The Company is utilizing its existing oncology sales force to market BrachySeed. There can be no assurance, however, as to the market acceptance of these products or whether these products will significantly increase the revenues of the Company. AxCell Biosciences Corporation, a subsidiary of the Company, began marketing the ProChart database with its marketing partner InforMax, Inc. during the second quarter of 2001. ProChart is a proprietary protein pathway database which measures protein domain-ligand interactions in a high-throughput manner. ProChart is being marketed by InforMax using its Protein-Protein Interaction module, a new addition to its GenoMax(TM) enterprise software package. There can be no assurance, however, as to the market acceptance of this product or whether this product will significantly increase the revenues for the Company. Results of Operations Three Months Ended September 30, 2001 and 2000 Revenues. Total revenues for the third quarter of 2001 were $2.8 million compared to $2.7 million for the same period in 2000. The increase from the prior year period is due to higher product related revenues. Product related revenues, which included product sales and royalties, accounted for 92% of total revenues in each of year 2000 and 2001. License and contract revenues accounted for the remainder of revenues in such periods. Product related revenues for the third quarter of 2001 were $2.6 million compared to $2.5 million for the same period in 2000. Sales of ProstaScint accounted for 65% and 74% of product related revenues in the third quarters of 2001 and 2000, respectively, while Quadramet royalties accounted for 22% and 21% of product related revenues, respectively, for such periods. Sales of ProstaScint were $1.7 million in the third quarter of 2001, which is slightly below the $1.8 million recorded in the third quarter of 2000. Beginning in July 2000, the Company assumed sole responsibility for selling and marketing ProstaScint from the Bard Urological Division of C.R. Bard Inc. ("Bard"), its former co-marketing partner. The Company took this step because it believed that a highly trained and dedicated internal sales force would be able to market its products most effectively and to build a marketing capability for future products. There can be no assurance, however, the Company's internal sales force will be able to significantly increase the sale of ProstaScint. 9 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Other product revenues include sales of BrachySeed and OncoScint CR/OV. Sales of BrachySeed were $244,000 in the third quarter of 2001. Since the launch of BrachySeed in February 2001, the Company has increased its market penetration for the treatment of localized prostate cancer using its radioactive seed product. This has contributed to a positive sales trend and consistent quarter-over-quarter growth since the launch. The Company plans to launch the palladium version of BrachySeed in the fourth quarter of 2001. Sales of OncoScint were $73,000 in the third quarter of 2001 compared to $130,000 in the same period of 2000. The market for OncoScint CR/OV for colorectal cancer diagnosis has been negatively affected by positron emission tomography or "PET" scans which have shown the same or higher sensitivity than OncoScint CR/OV. Accordingly, the Company is emphasizing marketing of OncoScint for the recurrent ovarian cancer setting. There can be no assurance, however, as to the market acceptance of the BrachySeed products or whether these new products along with a different strategy for OncoScint will significantly increase the revenues of the Company. Quadramet royalties for the third quarter of 2001 increased to $579,000 from $523,000 in the same period of 2000. Quadramet is currently marketed by the Company's marketing partner, Berlex Laboratories ("Berlex"). Although Cytogen believes that Berlex is an advantageous partner, there can be no assurance that Quadramet will achieve greater market penetration on a timely basis or result in significant revenues for Cytogen. License and contract revenues for the third quarter of 2001 were $225,000 compared to $231,000 for the same period of 2000. As a result of the adoption of SAB 101 (see Note 1 to the Consolidated Financial Statements), license revenues for both 2000 and 2001 include the recognition of $215,000 of deferred revenues from certain up-front, non-refundable license fees previously recognized in prior years. Operating Expenses. Total operating expenses for the third quarter of 2001 were $6.7 million compared to $19.3 million recorded in the same quarter of 2000. The decrease from the prior year period is attributable primarily to charges in 2000 for the acquisition of the marketing and technology rights to two product candidates (Combidex and Code 7228) in the amount of $13.2 million and costs associated with the termination of the Company's proposed merger with Advanced Magnetics Inc. The decrease during the current year is partially offset by costs associated with the development of new manufacturing and purification processes for ProstaScint, costs associated with the launch of BrachySeed and higher cost of goods. Cost of product for the third quarter of 2001 was $1.4 million compared to $1.1 million recorded in the same period of the prior year. The increase from the prior year period is primarily due to costs associated with the purchase of the BrachySeed product from Draximage Inc. Research and development expenses for the third quarter of 2001 were $2.7 million compared to $2.0 million recorded in the same period of 2000. The increase from the prior year period is due to increased funding for the proteomics research program and to costs associated with the development of new manufacturing and purification processes to enable the Company to outsource the manufacturing of ProstaScint. During the third quarter of 2001, the Company invested $1.2 million in its proteomics research compared to $924,000 for the 10 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) third quarter of 2000. The Company anticipates that funding for this research and the manufacturing process development will continue to at its current trend over the remainder of this year. Acquisition of marketing and technology rights of $13.2 million in the third quarter of 2000 represents a charge related to the acquisition of certain rights to product candidates Combidex and Code 7228 from Advanced Magnetics Inc., of which $13.1 million was non-cash. Selling and marketing expenses were $1.5 million for the third quarter of 2001 compared to $1.2 million in the same period of 2000. The current year expenses reflect the Company's efforts to expand its in-house sales force related to the selling and marketing of ProstaScint and BrachySeed. General and administrative expenses for the third quarter 2001 were $1.1 million compared to $1.7 million for the comparable period in 2000. The decrease from the prior year period is due primarily to legal expenses incurred relating to the termination of the Company's proposed merger with Advanced Magnetics Inc. and relocation expenses for certain key employees. Interest Income/Expense. Interest income for the third quarter of 2001 was $162,000 compared to $182,000 recorded in the same period of 2000. The decrease from the prior year period is due to a lower average yield on investments for the period in 2001. Interest expense for the third quarter of 2001 was $44,000 compared to $24,000 recorded in the same period of 2000. The interest expenses included finance charges related with various equipment leases. Net Loss. Net loss for the third quarter of 2001 was $3.8 million compared to $16.4 million recorded in the same period of 2000. The net loss per share for the third quarter of 2001 was $0.05 based on average common shares outstanding of 78.9 million compared to a net loss per share of $0.22 based on average common shares outstanding of 73.6 million for the same period in 2000. The 2000 net loss included a $13.2 million one-time charge for the acquisition of certain product rights to two product candidates as described above. Nine months ended September 30, 2001 and 2000 Revenues. Total revenues for the nine months ended September 30, 2001 and 2000 were $8.6 million and $7.8 million, respectively. The increase from the prior year period is due to higher product related revenues, partially offset by lower license and contract revenues. Product related revenues, which included product sales and royalties, accounted for 92% of total revenues in 2001 compared to 90% from the comparable period of 2000. License and contract revenues accounted for the remainder of revenues. Product related revenues for the nine months ended September 30, 2001 and 2000 were $7.9 million and $7.0 million, respectively. Sales of ProstaScint accounted for 72% of product related revenues for each of the nine months ended September 30, 2001 and 2000, respectively, while Quadramet royalties accounted for 20% and 22% of product related revenues, respectively. Sales of ProstaScint were $5.7 million in the nine months ended September 2001, compared to $5.0 million in the same period of 2000, due primarily to a price increase which 11 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) became effective in January 2001. Beginning in July 2000, the Company assumed sole responsibility for the selling and marketing of ProstaScint from Bard. Royalties from Quadramet were $1.6 million and $1.5 million in the nine months ended September 30, 2001 and 2000, respectively. Quadramet royalties are based on net sales of Quadramet by Berlex. Other revenues include sales of BrachSeed and OncoScint CR/OV. For the nine months ended September 30, 2001, sales of BrachySeed were $347,000. This product was launched in February 2001. The Company also plans to introduce to market the palladium version of BrachySeed in the fourth quarter of 2001. Sales of OncoScint during the nine months ended September 30, 2001 were $296,000 in 2001 compared to $437,000 in the same period of 2000. The market for OncoScint CR/OV for colorectal cancer diagnosis has been negatively affected by positron emission tomography or "PET" scans which have shown the same or higher sensitivity than OncoScint CR/OV. Accordingly, the Company is emphasizing marketing of OncoScint for the recurrent ovarian cancer setting. There can be no assurance, however, as to the market acceptance of the BrachySeed products or whether these new products along with a different strategy for OncoScint will significantly increase the revenues of the Company. License and contract revenues for the nine months ended September 30, 2001 and 2000 were $697,000 and $809,000, respectively. As a result of the adoption of SAB 101 (see Note 1 to the Consolidated Financial Statements), license revenues for both 2001 and 2000 include the recognition of $645,000 of deferred revenues from certain up-front non-refundable license fees previously recognized in prior years. Operating Expenses. Total operating expenses for the nine months ended September 30, 2001 were $18.5 million compared to $28.8 million recorded in the same period of 2000. The current year operating expenses reflect costs associated with the proteomics research program, the development of new manufacturing and purification processes for ProstaScint, the expansion of Cytogen's in-house sales force to assume sole responsibility of marketing and sales of ProstaScint and the 2001 launch of BrachySeed. The decrease in operating expenses from the prior year period is attributable primarily to charges in 2000 for the acquisition of marketing and technology rights to two product candidates (Combidex and Code 7228) in the amount of $13.2 million and costs associated with the termination of the Company's proposed merger with Advanced Magnetics Inc. The decrease is partially offset by 2001 costs associated with the development of new manufacturing and purification processes for ProstaScint, the launch of BrachySeed and higher cost of goods. Cost of product for the nine months ended September 30, 2001 was $3.2 million compared to $3.0 million recorded in the same period of the prior year. The increase from the prior year period is due primarily to the 2001 costs associated with the purchase of BrachySeed. Research and development expenses for the nine months ended September 2001 were $6.9 million compared to $5.0 million recorded in the same period of 2000. The increase from the prior year period is due to increased funding for the proteomics research program and costs associated with the development of new manufacturing and purification processes to enable the Company to outsource the manufacturing of ProstaScint to another contract manufacturer. During the nine months ended September 30, 2001, the Company invested $3.6 million in the 12 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) proteomics research compared to $2.2 million for the same period of 2000. The Company anticipates that funding for this research and manufacturing process development will continue at its current trend for the remainder of this year. Acquisition of marketing and technology rights of $13.2 million in the third quarter of 2000 represents a charge related to the acquisition of certain rights to product candidates Combidex and Code 7228 from Advanced Magnetics, of which $13.1 million was non-cash. Selling and marketing expenses were $4.8 million for the nine months ended September 30, 2001 compared to $3.7 million in the same period of 2000. The current year expenses reflect the Company's efforts to expand its in-house sales force for the selling and marketing of ProstaScint and the launch costs associated with the BrachySeed. General and administrative expenses for the nine months ended September 30, 2001 were $3.7 million compared to $3.8 million for the comparable period in 2000. The decrease from the prior year period is due primarily to legal expenses incurred relating to the termination of the Company's proposed merger with Advanced Magnetics Inc. and relocation expenses for certain key employees, partly offset by higher costs in 2001 for stock based compensation and professional fees. Interest Income/Expense. Interest income for the nine months ended September 30, 2001 was $538,000 compared to $545,000 recorded in the same period of 2000. The decrease from the prior year period is due to a lower average yield on investments, partly offset by income resulting from a higher average cash balance during 2001. Interest expense for the nine months ended September 30, 2001 was $136,000 compared to $133,000 recorded in the same period of 2000. The interest expenses included finance charges related with various equipment leases. Net Loss. Net loss for the nine months ended September 30, 2001 was $9.5 million compared to $24.9 million recorded in the same period of 2000. The net loss per share for the nine months ended September 30, 2001 was $0.12 based on average common shares outstanding of 77.4 million compared to a net loss per share of $0.34 based on average common shares outstanding of 72.7 million for the same period in 2000. The 2000 net loss included a $13.2 million one-time charge for the acquisition of certain product rights to two product candidates as described above and $4.3 million or $0.06 per share for the cumulative effect of an accounting change as a result of the adoption of SAB 101 (see Note 1 to the Consolidated Financial Statements). Liquidity and Capital Resources The Company's cash and cash equivalents were $14.5 million as of September 30, 2001, compared to $12.0 million as of December 31, 2000. The cash used for operating activities for the nine months ended September 30, 2001 was $10.5 million compared to $8.0 million in the same period of 2000. The increase from the prior year period is due primarily to the increased funding for the proteomics program at AxCell, the Company's expansion of its in-house sales force, the inventory build-up of the Company's antibody products, the reduction in accounts payable and accrued liabilities and milestone payments to Draximage Inc. related to the 2001 launch of BrachySeed. 13 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) Historically, the Company's primary sources of cash have been proceeds from the issuance and sale of its stock through public offerings and private placements, product related revenues, revenues from research services, fees received under license agreements and interest earned on cash and short-term investments. In January 2001, the Company received cash of $1.6 million relating to the December 2000 sale of New Jersey State net operating losses and research and development credits. Under the current legislation, the Company may be able to sell a minimum $977,000 of the remaining approved $3.7 million of tax benefits in 2001. The actual amount of tax credits the Company may sell will depend upon the allocation among qualifying companies of an annual pool established by the State of New Jersey. Under the terms of a $70 million equity financing facility (the "Equity Financing Facility") entered into between the Company and Acqua Wellington North American Equities Fund, Ltd. ("Acqua Wellington") the Company sold to Acqua Wellington 1,276,557 shares of its common stock in February 2001 at an aggregate price of $6.5 million or $5.092 per share. The Equity Financing Facility was terminated in June 2001. In June 2001, the Company entered into a Share Purchase Agreement (the "Agreement") with the State of Wisconsin Investment Board ("SWIB"), pursuant to which the Company sold 1,820,000 shares of Cytogen common stock to SWIB for an aggregate purchase price of $8.2 million before transaction costs or $4.50 per share. In connection with the Agreement, the Company was required to discontinue the use of the Equity Financing Facility and such arrangement was terminated. In October 2001, the Company filed a shelf Registration Statement on Form S-3 to register 10,000,000 shares of its common stock. Such Registration Statement was declared effective by the Securities and Exchange Commission in November 2001. The Company may issue such registered shares of common stock from time to time and may use the proceeds thereof for general corporate purposes, including, but not limited to, continued development and commercialization of its proteomics technologies, research and development of additional products and expansion of its sales and marketing capabilities. The Company's capital and operating requirements may change depending upon various factors, including: (i) whether the Company and its strategic partners achieve success in manufacturing, marketing and commercialization of its products; (ii) the amount of resources which the Company devotes to clinical evaluations and the expansion of marketing and sales capabilities; (iii) results of clinical trials and research and development activities; and (iv) competitive and technological developments, in particular, the Company expects to incur significant costs for the development of its proteomics and PSMA technologies. 14 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations (Cont'd) The Company's financial objectives are to meet its capital and operating requirements through revenues from existing products and licensing arrangements. To achieve its strategic objectives, the Company may enter into research and development partnerships and acquire, in-license and develop other technologies, products or services. Certain of these strategies may require payments by the Company in either cash or stock in addition to the costs associated with developing and marketing a product or technology. However, the Company believes that, if successful, such strategies may increase long-term revenues. There can be no assurance as to the success of such strategies or that resulting funds will be sufficient to meet cash requirements until product revenues are sufficient to cover operating expenses, if ever. To fund these strategic and operating activities, the Company may sell equity or debt securities as market conditions permit or enter into credit facilities. The Company has incurred negative cash flows from operations since its inception, and has expended, and expects to continue to expend in the future, substantial funds to implement its planned product development efforts, including acquisition of products and complementary technologies, research and development, clinical studies and regulatory activities, and to further its marketing and sales programs. The Company expects that its existing capital resources should be adequate to fund the Company's operations for the foreseeable future. The Company cannot be certain that it will not consume a significant amount of its currently available resources and reasonably expects that it will have additional requirements for debt or equity capital, irrespective of whether and when it reaches profitability, for further product development costs, product and technology acquisition costs, and working capital. The Company's future capital requirements and the adequacy of available funds will depend on numerous factors, including the successful commercialization of its products, the costs associated with the acquisition of complementary products and technologies, progress in its product development efforts, the magnitude and scope of such efforts, progress with clinical trials, progress with regulatory affairs activities, the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights, competing technological and market developments, and the expansion of strategic alliances for the sales, marketing, manufacturing and distribution of its products. To the extent that the currently available funds and revenues are insufficient to meet current or planned operating requirements, the Company will be required to obtain additional funds through equity or debt financing, strategic alliances with corporate partners and others, or through other sources. There can be no assurance that the financial sources described above will be available when needed or at terms commercially acceptable to the Company. If adequate funds are not available, the Company may be required to delay, further scale back or eliminate certain aspects of its operations or attempt to obtain funds through arrangements with collaborative partners or others that may require the Company to relinquish rights to certain of its technologies, product candidates, products or potential markets. If adequate funds are not available, the Company's business, financial condition and results of operations will be materially and adversely affected. 15 Item 3 - Quantitative and Qualitative Disclosures About Market Risk The Company does not have operations subject to risks of foreign currency fluctuations, nor does it use derivative financial instruments in its operations or investment portfolio. The Company does not have exposure to market risks associated with changes in interest rates, as it has no variable interest rate debt outstanding. The Company does not believe it has any other material exposure to market risks associated with interest rates. 16 PART II - OTHER INFORMATION Item 5 - Other Events In October 2001, the Company filed a shelf Registration Statement on Form S-3 to register 10,000,000 shares of its common stock. Such Registration Statement was declared effective by the Securities and Exchange Commission in November 2001. The Company may issue such registered shares of common stock from time to time and may use the proceeds thereof for general corporate purposes, including, but not limited to, continued development and commercialization of its proteomics technologies, research and development of additional products and expansion of its sales and marketing capabilities. In connection with the closing of the SWIB financing, the Company was obligated to adopt certain amendments to its Bylaws and option plans. Such amendments are attached hereto as exhibits. At the Annual Meeting of Shareholders, the Company obtained shareholder approval for certain amendments to the Employee Stock Purchase Plan and the 1999 Non-Employee Directors Plan. Such amendments are attached hereto as exhibits. Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits: 3.1 Amended Bylaws of Cytogen Corporation 10.1 Amended and Restated 1995 Stock Option Plan 10.2 Amended and Restated 1999 Stock Option Plan for Non-Employee Directors 10.3 Amended Employee Stock Purchase Plan of Cytogen Corporation (b) Reports on Form 8-K: None 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CYTOGEN CORPORATION Date November 13, 2001 By /s/ H. Joseph Reiser ---------------------- --------------------------------------------- H. Joseph Reiser President and Chief Executive Officer Date November 13, 2001 By /s/ Lawrence R. Hoffman ---------------------- --------------------------------------------- Lawrence R. Hoffman Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 18 EX-3 3 bylaws.txt EXHIBIT 3.1 EXHIBIT 3.1 B Y - L A W S OF CYTOGEN CORPORATION (a Delaware corporation) (amended as of June 19, 2001) ARTICLE I OFFICES SECTION 1. OFFICES. The corporation shall maintain its registered office in the State of Delaware at 100 West Tenth Street, City of Wilmington, County of New Castle and its resident agent at such address is The Corporation Trust Company. The Corporation may also have offices in such other places in the United States or elsewhere as the Board of Directors may, from time to time, appoint or as the business of the Corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS SECTION 1. ANNUAL MEETINGS. Annual meetings of stockholders for the election of directors and for such other business as may properly be conducted at such meeting shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors shall determine by resolution and set forth in the notice of the meeting. In the event that the Board of Directors fails to so determine the time, date and place for the annual meeting, it shall be held, beginning in 1981, at the principal office of the Corporation at 10 o'clock A.M. on the last Friday in February of each year. SECTION 2. SPECIAL MEETINGS. Special meetings of stockholders, unless otherwise prescribed by statute, may be called by the Chairman of the Board, the President or by resolution of the Board of Directors and shall be called by the President or Secretary upon the written request of not less than 50% in interest of the stockholders entitled to vote thereat. Notice of each special meeting shall be given in accordance with Section 3 of this Article II. Unless otherwise permitted by law, business transacted at any special meeting of stockholders shall be limited to the purpose stated in the notice. SECTION 3. NOTICE OF MEETINGS. Whenever stockholders are required or permitted to take any action at a meeting, a written notice of the meeting, which shall state the place, date and time of the meeting, and, in the case of a special meeting, the purposes for which the meeting is called, shall be mailed to or delivered to each stockholder of record entitled to vote thereat. Such notice shall be given not less than ten (10) days nor more than sixty (60) days before the date of any such meeting. SECTION 4. QUORUM. Unless otherwise required by law or the Certificate of Incorporation, the holders of a majority of the issued and outstanding stock entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of stockholders. SECTION 5. VOTING. Unless otherwise provided in the Certificate of Incorporation, each stockholder shall be entitled to one vote for each share of capital stock held by such stockholder. Upon the request of not less than 10% in interest of the stockholders entitled to vote at a meeting, voting shall be by written ballot. All elections of directors shall be decided by plurality vote. Unless otherwise required by law, these By-Laws or the Certificate of Incorporation, all other corporate action shall be decided by majority vote of the shares cast on the proposed action. SECTION 6. INSPECTORS. The Board of Directors may, in advance of any meeting of stockholders, appoint one or more inspectors to act at such meeting or any adjournment thereof. If any of the inspectors so appointed shall fail to appear or act, the chairman of the meeting shall, or if inspectors shall not have been appointed, the chairman of the meeting may, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability. The inspectors shall determine the number of shares of capital stock of the Corporation outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the results, and do such acts as are proper to conduct the election or vote with fairness to all stockholders. On request of the chairman of the meeting, the inspectors shall make a report in writing of any challenge, request or matter determined by them and shall execute a certificate of any fact found by them. No director or candidate for the office of director shall act as an inspector of an election of directors. SECTION 7. CHAIRMAN OF MEETINGS. The Chairman of the Board of Directors of the Corporation, if one is elected, or, in his absence or disability, the President of the Corporation, shall preside at all meetings of the stockholders. SECTION 8. SECRETARY OF MEETING. The Secretary of the Corporation shall act as Secretary at all meetings of the stockholders. In the absence or disability of the Secretary, the Chairman of the Board of Directors or the President shall appoint a person to act as Secretary at such meetings. SECTION 9. LISTS OF STOCKHOLDERS. The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of each stockholder and the number and class of shares held by each. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior 2 to the meeting, at a place within the city where the meeting is to be held, which shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the meeting and may be inspected by any stockholder who is present. SECTION 10. ACTION WITHOUT MEETING. Unless otherwise provided by the Certificate of Incorporation, any action required by law to be taken at any annual or special meeting of stockholders, or any action which may be taken at such meetings, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. SECTION 11. ADJOURNMENT. At any meeting of stockholders of the Corporation, if less than a quorum be present, a majority of the stockholders entitled to vote thereat, present in person or by proxy, shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting until a quorum shall be present. Any business may be transacted at the adjourned meeting which might have been transacted at the meeting originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date, as provided for in Section 5 of Article V of these By-Laws, is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. ARTICLE III BOARD OF DIRECTORS SECTION 1. POWERS. The property, business and affairs of the Corporation shall be managed and controlled by its Board of Directors. The Board shall exercise all of the powers and duties conferred by law except as provided by the Certificate of Incorporation or these By-Laws. SECTION 2. NUMBER AND TERM. The number of directors shall be fixed at no less than two nor more than seven. Within the limits specified above, the number of directors shall be fixed from time to time by the Board. The Board of Directors shall be elected by the stockholders at their annual meeting, and each director shall be elected to serve for the term of one year and until his successor shall be elected and qualify or until his earlier resignation or removal. Directors need not be stockholders. SECTION 3. RESIGNATIONS. Any director may resign at any time. Such resignation shall be made in writing, and shall take effect at the time specified therein, and if no time is specified, at the time of its receipt by the President or Secretary. The acceptance of a resignation shall not be necessary to make it effective. 3 SECTION 4. REMOVAL. Any director or the entire Board of Directors may be removed either for or without cause at any time by the affirmative vote of the holders of a majority of the shares entitled to vote for the election of directors at any annual or special meeting of the stockholders called for that purpose. Vacancies thus created may be filled at such meeting by the affirmative vote of a majority of the stockholders entitled to vote, or, if the vacancies not so filled, by the directors as provided in Section 5 of this Article III. SECTION 5. VACANCIES AND NEWLY CREATED DIRECTORSHIPS. Except as provided in Section 4 of this Article III, vacancies occurring in any directorship and newly created directorship may be filled by a majority vote of the remaining directors then in office. Any director so chosen shall hold office for the unexpired term of his predecessor and until his successor shall be elected and qualify or until his earlier death, resignation or removal. The Board may not fill the vacancy created by removal of a director by electing the director so removed. SECTION 6. MEETINGS. The newly elected directors shall hold their first meeting to organize the Corporation, elect officers and transact any other business which may properly come before the meeting. An annual organizational meeting of the Board of Directors shall be held immediately after each annual meeting of the stockholders, or at such time and place as may be noticed for the meeting. Regular meetings of the Board may be held without notice at such places and times as shall be determined from time to time by resolution of the directors. Special meetings of the Board shall be called by the President or by the Secretary on the written request of any director with at least two days' notice to each director and shall be held at such place as may be determined by the directors or as shall be stated in the notice of the meeting. SECTION 7. QUORUM, VOTING AND ADJOURNMENT. A majority of the total number of directors or any committee thereof shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. In the absence of a quorum, a majority of the directors present thereat may adjourn such meeting to another time and place. Notice of such adjourned meeting need not be given if the time and place of such adjourned meeting are announced at the meeting so adjourned. SECTION 8. COMMITTEES. The Board of Directors may, by resolution passed by a majority of the Board, designate one or more committees, including but not limited to an Executive Committee and an Audit Committee, each such committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee to replace any absent or disqualified member at any meeting of the committee. Any such committee, to the extent provided in the resolution of the Board, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and, affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority to amend the Certificate of 4 Incorporation, adopt an agreement of merger or consolidation, recommend to the stockholders the sale, lease, or exchange of all or substantially all of the Corporation's properties and assets, recommend to the stockholders a dissolution of the Corporation or a revocation of a dissolution or to amend these By-Laws. Unless a resolution of the Board expressly provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock of the Corporation. All committees of the Board shall report their Proceedings to the Board when recruited. SECTION 9. ACTION WITHOUT A MEETING. Unless otherwise restricted by the Certificate of Incorporation or these By-Laws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or any committee thereof consent thereto in writing. SECTION 10. COMPENSATION. The Board of Directors shall have the authority to fix the compensation of directors for their services. A director may also serve the Corporation in other capacities and receive compensation therefor. SECTION 11. TELEPHONIC MEETING. Unless otherwise restricted by the Certificate of Incorporation, members of the Board, or any committee designated by the Board, may participate in a meeting by means of conference telephone or similar communications equipment in which all persons participating in the meeting can hear each other. Participation in such telephonic meeting shall constitute the presence in person at such meeting. ARTICLE IV OFFICERS SECTION 1. The officers of the Corporation shall include a President, a Secretary and one or more subordinate officers, all of whom shall be elected by the Board of Directors and who shall hold office for a term of one year and until their successors are elected and qualify or until their earlier resignation or removal. In addition, the Board of Directors may elect a Chairman of the Board, one or more Vice Presidents, including an Executive Vice President, a Treasurer and one or more Assistant Treasurers and one or more Assistant Secretaries, who shall hold their office for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. The initial officers shall be elected at the first meeting of the Board of Directors and, thereafter, at the annual organizational meeting of the Board held after each annual meeting of the stockholders. Any number of offices may be held by the same person. SECTION 2. OTHER OFFICERS AND AGENTS. The Board of Directors may appoint such other officers and agents as it deems advisable, who shall hold their office for such terms and shall exercise and perform such powers and duties as shall be determined from time to time by the Board of Directors. SECTION 3. CHAIRMAN. The Chairman of the Board of Directors shall be a member of the Board and shall preside at all meetings of the Board of Directors and of the stockholders. In addition, the Chairman of the Board shall have such powers and perform such other duties as from time to time may be assigned to him by the Board of Directors. SECTION 4. PRESIDENT. The President shall be the Chief Executive Officer of the Corporation. He shall exercise such duties as customarily pertain to the office of President and Chief Executive Officer, and shall have general and active management of the property, business and affairs of the Corporation, subject to the supervision and control of the Board. He shall perform such other duties as prescribed from time to time by the Board or these By-Laws. 5 In the absence, disability or refusal of the Chairman of the Board to act, or the vacancy of such office, the President shall preside at all meetings of the stockholders and of the Board of Directors. Except as the Board of Directors shall otherwise authorize, the President shall execute bonds, mortgages and other contracts on behalf of the Corporation, and shall cause the seal to be affixed to any instrument requiring it and, when so affixed, the seal shall be attested by the signature of the Secretary or the Treasurer or an Assistant Secretary or an Assistant Treasurer. SECTION 5. VICE PRESIDENTS. Each Vice President, if any are elected, of whom one or more may be designated an Executive Vice President, shall have such powers and shall perform such duties as shall be assigned to him by the President or the Board of Directors. SECTION 6. TREASURER. The Treasurer shall have custody of the corporate funds, securities, evidences of indebtedness and other valuables of the Corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation. He shall deposit all moneys and other valuables in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation, taking proper vouchers therefor. He shall render to the President and Board of Directors, upon their request, a report of the financial condition of the Corporation. If required by the Board of Directors, he shall give the Corporation a bond for the faithful discharge of his duties in such amount and with such surety as the Board shall prescribe. The Treasurer shall have such further powers and perform such other duties incident to the office of Treasurer as from time to time assigned to him by the Board. SECTION 7. SECRETARY. The Secretary shall be the Chief Administrative Officer of the Corporation and shall: (a) cause minutes of all meetings of the stockholders and directors to be recorded and kept; (b) cause all notices required by these By-Laws or otherwise to be given properly; (c) see that the minute books, stock books, and other nonfinancial books, records and papers of the Corporation are kept properly; and (d) cause all reports, statements, returns, certificates and other documents to be prepared and filed when and as required. The Secretary shall have such further powers and perform such other duties as prescribed from time to time by the Board. SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. Each Assistant Treasurer and each Assistant Secretary, if any are elected, shall be vested with all the Powers and shall perform all the duties of the Treasurer and Secretary, respectively, in the absence or disability of such officer, unless or until the Board of' Directors shall otherwise determine. In addition, Assistant Treasurers and Assistant Secretaries shall have such powers and shall perform such duties as shall be assigned to them by the Board. SECTION 9. CORPORATE FUNDS AND CHECKS. The funds of the Corporation shall be kept in such depositories as shall from time to time be prescribed by the Board of Directors. All checks or other orders for the payment of money shall be signed by the President or the Treasurer or such other person or agent as may from time to time be authorized and with such countersignature, if any, as may be required by the Board of Directors. 6 SECTION 10. CONTRACTS AND OTHER DOCUMENTS. The President or Treasurer, or such other officer or officers as may from time to time be authorized by the Board of Directors, shall have power to sign and execute on behalf of the Corporation deeds, conveyances and contracts, and any and all other documents requiring execution by the Corporation. SECTION 11. OWNERSHIP OF STOCK OF ANOTHER CORPORATION. The President or the Treasurer, or such other officer or agent as shall be authorized by the Board of Directors, shall have the power and authority, on behalf of the Corporation, to attend and to vote at any meeting of stockholders of any corporation in which the Corporation holds stock and may exercise, on behalf of the corporation, any and all of the rights and powers incident the ownership of such stock at any such meeting, including authority to execute and deliver proxies and consents on behalf of the corporation. SECTION 12. DELEGATION OF DUTIES. In the absence, disability or refusal of any officer to exercise and perform his duties, the Board of Directors may delegate to another officer such powers or duties. SECTION 13. RESIGNATION AND REMOVAL. Any officer of the Corporation may be removed from office for or without cause at any time by the Board of Directors. Any officer may resign at any time in the same manner prescribed under Section 3 of Article III of these By-laws. SECTION 14. VACANCIES. The Board of Directors shall have power to fill vacancies occurring in any office. ARTICLE V STOCK SECTION 1. CERTIFICATES OF STOCK. Every holder of stock in the Corporation shall be entitled to have a certificate signed by, or in the name of the Corporation by, the Chairman of the Board or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number and class of shares of stock in the Corporation owned by him. Any or all of the signatures on the certificate may be a facsimile. The Board of Directors shall have the power to appoint one or more transfer agents and/or registrars for the transfer or registration of certificates of stock of any class, and may require stock certificates to be countersigned or registered by one or more of such transfer agents and/or registrars. SECTION 2. TRANSFER OF SHARES. Shares of stock of the Corporation shall be transferable upon its books by the holders thereof, in person or by their duly authorized attorneys or legal representatives, upon surrender to the Corporation by delivery thereof to the person in charge of the stock and transfer books and ledgers. Such certificates shall be cancelled and new certificates shall 7 thereupon be issued. A record shall be made of each transfer. Whenever any transfer of shares shall be made for collateral security, and not absolutely, it shall be so expressed in the entry of the transfer if, when the certificates are presented, both the transferor and transferee request the Corporation to do so. The Board shall have power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of certificates for shares of stock of the corporation. SECTION 3. LOST CERTIFICATES. A new certificate of stock may be issued in the place of any certificate previously issued by the Corporation, alleged to have been lost, stolen, destroyed or mutilated, and the Board of Directors may, in their discretion, require the owner of such lost, stolen, destroyed or mutilated certificate, or his legal representative, to give the Corporation a bond, in such sum as the Board may direct, not exceeding double the value of the stock, in order to indemnify the Corporation against any claims that may be made against it in connection therewith. SECTION 4. STOCKHOLDERS OF RECORD. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder thereof, in fact, and shall not be bound to recognize any equitable or other claim to or interest in such shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise expressly provided by law. SECTION 5. STOCKHOLDERS RECORD DATE. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. SECTION 6. DIVIDENDS. Subject to the provisions of the Certificate of Incorporation, the Board of Directors may at any regular or special meeting, out of funds legally available therefor, declare dividends upon the stock of the Corporation. Before the declaration of any dividend, the Board of Directors may set apart, out of any funds of the Corporation available for dividends, such sum or sums as from time to time in their discretion may be deemed proper for working capital or as a reserve fund to meet contingencies or for such other purposes as shall be deemed conducive to the interests of the Corporation. ARTICLE VI NOTICE AND WAIVER OF NOTICE SECTION 1. NOTICE. Whenever any written notice is required to be given by law, the Certificate of Incorporation or these By-Laws, such notice, if mailed, shall be deemed to be given when deposited in the United States mail, postage 8 prepaid, addressed to the person entitled to such notice at his address as it appears on the books and records of the Corporation. Such notice may also be sent by telegram. SECTION 2. WAIVER OF NOTICE. Whenever notice is required to be given by law, the Certificate of Incorporation or these By-laws, a written waiver thereof signed by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any meeting of the stockholders, directors, or members of a committee of the Board need be specified in any written waiver of notice. ARTICLE VII AMENDMENT OF BY-LAWS SECTION 1. AMENDMENTS. These By-Laws may be amended or repealed or new By-Laws may be adopted by the affirmative vote of a majority of the Board of Directors at any regular or special meeting of the Board. If any By-Law regulating an impending election of directors is adopted, amended or repealed by the Board, there shall be set forth in the notice of the next meeting of shareholders for the election of directors the By-Law(s) so adopted, amended, or repealed, together with a precise statement of the changes made. By-Laws adopted by Board of Directors may be amended or repealed by stockholders. Notwithstanding the foregoing to the contrary, the provisions of Article X hereof may not be further amended or repealed without the affirmative vote of the holders of a majority of the shares of common stock of the Corporation present and entitled to vote at a duly convened meeting of the stockholders of the Corporation. ARTICLE VIII SECTION 1. The seal of the Corporation shall be circular in form and shall have the name of the corporation on the circumference and the jurisdiction and year of incorporation in the center. SECTION 2. FISCAL YEAR. The fiscal year of the Corporation shall end on September 30 of each year, or such other twelve consecutive months as the Board of Directors may designate. ARTICLE IX INDEMNIFICATION SECTION 1. A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or 9 omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derived an improper personal benefit. SECTION 2. Each person who has or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a "proceeding"), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action or inaction in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys' fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in this Section 2, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. The right to indemnification conferred in this Section 2 shall be a contract right and shall include the right to be paid by the Corporation the expenses incurred in defending any such proceeding in advance of its final disposition as authorized by the Board of Directors; provided, however, that if the Delaware General Corporation Law so requires, the payment of such expenses incurred by a director, officer, employee or agent of the Company in his or her capacity as such in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director, officer, employee or agent of the Company, to repay all amounts so advanced if it shall ultimately be determined that such director, officer, employee or agent of the Company is not entitled to be indemnified under this Section 2 or otherwise. SECTION 3. If a claim under Section 2 of this Article IX is not paid in full by the Corporation within 30 days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standard of conduct which makes it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the 10 Corporation. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. SECTION 4. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article IX shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these By-Laws, agreement, vote of stockholders or disinterested directors or otherwise. SECTION 5. The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law. ARTICLE X MISCELLANEOUS SECTION 1. STOCK OPTIONS. The Corporation may not grant any stock options having an exercise price that is less than 100% of the fair market value of the underlying stock on the date of grant. Furthermore, the Corporation may not reduce the exercise price of any stock option granted under any existing stock option plan or under any stock option plan adopted after the date of these amended By-Laws. SECTION 2. CONVERTIBLE SECURITIES. The Corporation may not sell or issue any security of the Corporation convertible, exercisable or exchangeable into shares of common stock of the Corporation, having a conversion, exercise or exchange price per share which is subject to downward adjustment based on the market price of the common stock at the time of conversion, exercise or exchange of such security into common stock (except for appropriate adjustments made to give effect to any stock splits or stock dividends). SECTION 3. SALE OF STOCK. The Corporation may not enter into: (a) any equity line or similar agreement or arrangement; or (b) any agreement to sell common stock of the Corporation (or any security convertible, exercisable or exchangeable into shares of common stock ("Common Stock Equivalent")) at a per share price (or, with respect to a Common Stock Equivalent, at a conversion, exercise or exchange price, as the case may be ("Equivalent Price")) that is fixed after the execution date of the agreement, whether or not based on any predetermined price-setting formula or calculation method. Notwithstanding the 11 foregoing, however, a price protection clause shall be permitted in an agreement for sale of Common Stock or Common Stock Equivalent, if such clause provides for an adjustment to the price per share of Common Stock or, with respect to a Common Stock Equivalent, to the Equivalent Price (provided that such price or Equivalent Price is fixed on or before the execution date of the agreement)(the "Fixed Price") in the event that the Corporation, during the period beginning on the date of the agreement and ending no later than 90 days after the closing date of the transaction, sells shares of Common Stock or Common Stock Equivalent to another investor at a price or Equivalent Price, as the case may be, below the Fixed Price. 12 EX-10.1 MATERIAL CON 4 sop.txt EXHIBIT 10.1 AMENDED AND RESTATED 1995 SOP EXHIBIT 10.1 CYTOGEN CORPORATION AMENDED AND RESTATED 1995 STOCK OPTION PLAN (last amended as of June 19, 2001) 1. Purpose; Effective Date. (a) The purposes of this Plan are to further the interests of Cytogen Corporation (the "Company") and its Subsidiaries by retaining the services of persons now serving as officers and other employees and consultants of the Company and its Subsidiaries, attracting and retaining the services of persons capable of serving as officers, employees and consultants of the Company and its Subsidiaries and providing incentives for such employees and consultants to exert maximum efforts to promote the success of the Company and its Subsidiaries. (b) The effective date of this Plan is March 28, 1995. This Plan will become effective on that date, subject to approval of the Plan not later than September 30, 1995 by a majority of the votes cast at a duly held stockholders meeting at which a quorum representing a majority of all outstanding voting stock is, either in person or by proxy, present and voting on the Plan. Nothing in this Plan shall affect the rights or obligations of holders of options granted under any other Company stock option plan. 2. Definitions. Whenever used in this Plan, the following terms will have the meanings set forth in this paragraph: "Board of Directors" means the Board of Directors of the Company. "Code" means the U.S. Internal Revenue Code of 1986, as amended. "Committee" means the committee described in paragraph 3. "Common Stock" means the common stock, par value $. 01 per share, of the Company. "Date of Grant" means with respect to any Option the date the Committee approves the grant of the Option or such later date as may be specified by the Committee as the date the option will become effective. "Disinterested Director" means a member of the Board who is a "disinterested person" within the meaning of Rule 16b-3(d)(3) under the Securities Exchange Act of 1934, or any successor provision. "Eligible Consultant" means a consultant providing services to, and who is not an employee of, the Company or any of its Subsidiaries. "Employee" means any person employed by the Company or any of its Subsidiaries (including, without limitation, a person employed by the Company or any of its Subsidiaries who is also an officer or director of the Company or any of its Subsidiaries). "Exercise Price" means with respect to any Option the price per share which must be paid upon exercise of the Option. "Fair Market Value" means (i) if the Common Stock is traded in a market in which actual transactions are reported, the mean of the high and low prices at which the Common Stock is reported to have traded on the relevant date in all markets on which trading in the Common Stock is reported, or if there is no reported sale of the Common Stock on the relevant date, the mean of the highest reported bid price and lowest reported asked price for the Common Stock on the relevant date, (ii) if the Common Stock is Publicly Traded but only in markets in which there is no reporting of actual transactions, the mean of the highest reported bid price and the lowest reported asked price for the Common Stock on the relevant date, or (iii) if the Common Stock is not Publicly Traded, the value of a share of Common Stock as determined by the most recent valuation prepared by an independent expert at the request of the Committee. "Incentive Stock Option" means any Option that at the time of the grant qualifies and is designated as an incentive stock option within the meaning of Section 422 of the Code. "Non-Qualified Option" means any Option that is not an Incentive Stock Option. "Option" means any Incentive Stock Option or Non-Qualified Option granted under this Plan. "Option Agreement" means an agreement in such form as may be determined by he Committee, executed and delivered by the Company to the holder of any Option with respect to that Option. "Outside Director" means a member of the Board who is not a current employee of the Company (or a related entity), is not a former employee who is receiving compensation for prior services (other than benefits under a tax-qualified retirement plan), was not an officer of the Company at any time, and is not currently receiving remuneration, either directly or indirectly, in any capacity other than as a director. "Plan" means the Cytogen Corporation 1995 Stock Option Plan, as amended. "Publicly Traded" means, with respect to any class of stock, that the class of stock is required to be registered under Section 12 of the Securities Exchange Act of 1934, as amended, or that stock of that class has been sold within the preceding 12 months in an underwritten public offering. 2 "Subsidiary" means any corporation that, at the time in question is a subsidiary corporation of the Company within the meaning of section 424(f) of the Code. "Ten Percent Shareholder" means, with respect to the grant of any Option, a person who at the Date of Grant is the beneficial owner of stock possessing more than 10% of the total combined voting power of all classes of stock of the Company. "Termination of Service" means (a) the time when the employee-employer relationship between an Employee and the Company ceases to exist for any reason, or (b) the time when an officer who is not also an Employee ceases to be an officer of the Company for any reason or (c) the time when an Eligible Consultant ceases to be such a consultant for any reason, including, but not limited to, a termination by resignation, discharge, death, Total Disability or retirement. Any leave of absence taken with the consent of the Company for a period of not more than 90 days shall not be a Termination of Service, or if longer, so long as the optionee's right to reemployment with the Company is guaranteed by contract. If the period of leave exceeds 90 days and if the right to reemployment is not guaranteed by contract, the Termination of Service will be deemed to occur on the 91st day of the leave. "Total Disability" means inability of an Employee or Eligible Consultant to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. All determinations as to the date and extent of disability of an Employee or Eligible Consultant will be made by the Committee. 3. Administration. (a) This Plan shall be administered by a Committee, which shall be composed of not less than two Outside Directors who are also Disinterested Directors. The Committee may, from time to time, adopt or rescind rules and regulations for carrying out the provisions and purposes of this Plan. Subject to the express provisions of this Plan, the Committee shall have sole authority, in its absolute discretion, to determine which officers, Employees and Eligible Consultants shall receive Options, the time when Options shall be granted, the terms and provisions of the Options (which may differ from one another) and to do everything necessary or appropriate to administer this Plan, including, without limitation, interpreting the provisions of this Plan and the Options. All determinations made by the Committee with respect to this Plan and the Options shall be final, binding and conclusive. (b) No member of the Committee shall be liable for any act or omission of the Committee or any other member of the Committee, or for any act or omission on his own part, in connection with the administration of this Plan, unless it resulted from the member's own willful misconduct. 4. Persons Eligible to Receive Options. (a) Options may be granted under this Plan only to persons who at the Date of Grant either (i) are officers, Employees or Eligible Consultants of the 3 Company or any of its Subsidiaries or (ii) have agreed to become officers, Employees or Eligible Consultants of the Company or any of its Subsidiaries, and, in either case, are determined by the Committee to be of substantial importance to the Company or any of its Subsidiaries. (b) Options granted to persons who are not yet officers, Employees or Eligible Consultants at the Date of Grant may not be exercised until the optionee has become an officer, Employee or Eligible Consultant, and shall expire if the optionee fails to commence service as an officer, Employee or Eligible Consultant within six months (or such other period as the Committee may determine) after the Date of Grant. (c) Incentive Stock Options may be granted only to persons who are Employees at the Date of Grant, and only on such terms as are provided in paragraphs 6, 7 and 8 hereof. (d) No Employee or Eligible Consultant to whom Options may be granted under this Plan may be granted Options to purchase more than 200,000 shares in any one calendar year. 5. Stock Subject to the Plan. (a) Subject to any adjustment as provided in paragraph 9, the maximum number of shares of Common Stock as to which Options may be granted under this Plan is 4,502,635 shares reduced by the number of outstanding options granted under the Cytogen Corporation 1989 Employee Stock Option Plan (the "1989 Plan") that are exercised after the effective date of this Plan. If any Option expires or is cancelled or surrendered without being exercised in full, the number of shares as to which the Option is not exercised will once again become shares as to which new Options may be granted. The Common Stock which is issued on exercise of Options may be authorized but unissued shares or shares which have been issued and reacquired by the Company. (b) For administrative purposes only, the Committee shall establish an account indicating the number of shares of Common Stock as to which Options may then be granted under this Plan (the "Current Account"), and the Committee may issue Options only with respect to the shares of Common Stock available for grant as set forth in the Current Account. The Current Account shall contain the number of shares available for grant calculated as follows: (a) 4,502,635, minus (b) the number of shares of Common Stock subject to options granted under the 1989 Plan that are exercised after the effective date of this Plan, minus (c) the number of shares of Common Stock subject to outstanding options granted under the 1989 Plan and this Plan, plus (d) the number of shares of Common Stock subject to outstanding options granted under the 1989 Plan and/or this Plan that expire, are cancelled or surrendered without being exercised in full. 6. Grants of Options. (a) Subject to paragraph 4(d), the Committee will have complete discretion to determine when, and to which officers or other Employees or Eligible Consultants, Options are to be granted, the number of shares of Common Stock to which Options granted to each officer or other Employee or Eligible Consultant, will relate, whether and to what extent Options granted to an officer or other 4 Employee or Eligible Consultant, will be Incentive Stock Options or Non-Qualified Options and, subject to the provisions of paragraphs 7 and 8, the Exercise Price and the term of each Option. The Committee may, in its discretion at the time of granting the Option, provide that the Exercise Price may be paid in cash, by the surrender of Common Stock, by an interest-bearing promissory note, or by other means; subject, however, to any requirements of applicable law which may limit the type or amount of such non-cash consideration. If payment by promissory note is permitted: (i) the optionee shall be required to make a cash payment upon exercise of the Option of not less than 20% of the Exercise Price; (ii) the note shall provide for full recourse against the maker; and (iii) the note shall be payable in full prior to its stated maturity upon the optionee's Termination of Service for any reason other than death or Total Disability. (b) Any Options which are not designated as Incentive Stock Options when they are granted will be Non-Qualified Options. (c) Promptly after the Date of Grant of each Option, the Company shall cause an Option Agreement to be executed and delivered to the holder of the Option. The Option Agreement shall clearly state whether the Option granted is or is not an Incentive Stock Option. Separate Option Agreements shall be used for Incentive Stock Options and Non-Qualified Stock Options. (d) Except as otherwise determined by the Committee, and subject to the requirements of applicable law, the entire Exercise Price received by the Company upon the exercise of an option shall constitute stated capital to the extent of the aggregate par value of the Common Stock issued upon exercise of the Option. (e) Any Option granted under this Plan prior to the date the Plan is approved by the Company's stockholders shall not be exercisable unless and until the Plan is so approved. 7. Option Provisions. (a) Exercise Price. No consideration shall be payable by any optionee for the grant of an Option. Subject to the provisions of paragraph 7(a)(i) and paragraph 8, the Exercise Price of each Option will be as determined by the Committee. (i) The Committee shall not grant any Option with an exercise price that is less than 100% of the Fair Market Value of the underlying stock on the date of grant or reduce the exercise price of any Option granted under the Plan. (b) Term. The term of each Option will be as determined by the Committee, but in no event will the term of an Option be longer than ten years from the Date of Grant, or five years in the case of an Incentive Stock Option granted to a Ten Percent Shareholder. Options may not be exercised before six months after the Date of Grant. Options will cease to be exercisable prior to the expiration of their term under certain circumstances as provided in paragraphs 7(f), (g), and (h). Subject to the foregoing, and to any vesting or other conditions imposed at the time it is granted, an Option may be exercised in whole or in part at any time, or from time to time, during its term. 5 (c) Manner of Exercise. To exercise an Option, the person exercising the Option must deliver to the Company, at its principal office: (i) a notice of exercise, which states the extent to which the Option is being exercised; (ii) a certified or bank cashier's check in an amount, or Common Stock with a Fair Market Value, equal to the Exercise Price of the Option times the number of shares as to which it is being exercised, or consideration in such other form as may be permitted under the terms on which the Option is granted; and (iii) a certified or bank cashier's check equal to any withholding taxes the Company is required to pay because of the exercise of the Option. The Committee may permit an Employee, as an alternative to making the payment described in clause (iii), to authorize the Company to withhold a sum equal to the withholding taxes the Company is required to pay from the Employee's salary and bonus payments over a period of not more than six months (or such longer period as the Company may approve). The date on which the Company receives all the items specified in this subsection will be the date on which the Option is exercised to the extent described in the notice of election. (d) Delivery of Stock Certificates. As promptly as practicable after an Option is exercised, the Company will deliver to the person who exercises the Option certificates, registered in that person's name, representing the number of shares of Common Stock which were purchased by the exercise of the Option. Each certificate may bear a legend to indicate, if applicable, that (i) the Common Stock represented by the certificate was issued in a transaction which was not registered under the Securities Act of 1933, as amended, and may only be sold or transferred in a transaction which is registered under that Act or is exempt from the registration requirements of that Act, and (ii) the Common Stock represented by the certificate is subject to the obligation of the holder to pay any unpaid balance of the Exercise Price (whether pursuant to a promissory note or otherwise), and/or that the Common Stock is pledged to secure such an obligation. (e) Nontransferability of Options. During the lifetime of the person to whom an Option is issued, the Option may be exercised only by that person or his or her guardian or legal representative. An Option may not be assigned, pledged or hypothecated in any way, will not be subject to execution, and will not be transferable otherwise than by will or the laws of descent and distribution. The Company will not recognize any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of an Option contrary to the provisions of this Plan, or any levy of any attachment or similar process upon any Option, and, except as expressly stated in this Plan, the Company will not be required to, and will not, issue Common Stock on exercise of an Option to anyone who claims to have acquired that Option from the person to whom it was granted. 6 (f) Termination of Service of Holder of Option Other Than Because of Total Disability or Death. If there is a Termination of Service of a person to whom an Option has been granted, other than by reason of the person's death or Total Disability, each Option held by the person may be exercised (if otherwise exercisable) until the earlier of (i) the end of the three-month period immediately following the date of the Termination of Service, (ii) the expiration of the term specified in the Option, or (iii) such earlier time as may be determined by the Committee at the time of granting the Option. (g) Total Disability of Holder of Option. If there is a Termination of Service of a person to whom an Option has been granted by reason of his or her Total Disability, each Option held by the person may be exercised (if otherwise exercisable) until the earlier of (i) the end of the one-year period immediately following the date of the Termination of Service, (ii) the expiration of the term specified in the Option, or (iii) such earlier time as may be determined by the Committee at the time of granting the Option. (h) Death of Holder of Option. If there is a Termination of Service of a person to whom an Option has been granted by reason of his or her death, or a former officer or Employee or Eligible Consultant dies following the date of his or her Termination of Service but at a time when an Option still would be exercisable by that person but for the death of the person, each Option held by the person at the time of his or her death may be exercised by the person or persons to whom the Option passed by will or by the laws of descent and distribution (but by no other persons) until the earlier of (i) the end of the one-year period immediately following the date of death (or such other period as may be determined by the Committee at the time of granting the Option), (ii) the expiration of the term specified in the Option, or (iii) if the death occurs after the Termination of Service, the end of the period in which the Option could be exercised under paragraph 7(f) or (g). 8. Special Provisions Relating to Incentive Stock Options. No Incentive Stock Option may be granted after March 27, 2005. The Exercise Price of an Incentive Stock Option will be not less than 100% of the Fair Market Value of the Common Stock on the Date of Grant of the Option. An Incentive Stock Option may not be granted to a person who, at the time the Option is granted, is a Ten Percent Shareholder, unless (i) the Exercise Price of the Option is at least 110% of the Fair Market Value of the Common Stock on the Date of Grant and (ii) the Option by its terms is not exercisable after the expiration of five years from the Date of Grant. To the extent that the aggregate Fair Market Value (determined at the time an Incentive Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are first exercisable by an Employee during any calendar year (under this Plan and any other incentive stock option plans of the Company) exceeds $100,000, such Options shall be treated as Non-Qualified Options. 7 9. Recapitalization. (a) The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. Unless otherwise determined by the Board, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or on conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Common Stock then subject to outstanding Options. (b) If as a result of any (i) reorganization or liquidation of the Company or (ii) reclassification of the Company's capital stock, or (iii) consolidation or merger of the Company with or into another corporation, or sale of all or substantially all the assets of the Company (a reorganization or liquidation of the Company or reclassification of the Company's capital stock, or a merger, consolidation or sale of the type described in this subsection being a "Corporate Transaction") while an Option is outstanding, the holders of the Common Stock become entitled to receive with respect to their Common Stock, securities or assets other than, or in addition to, their Common Stock, upon exercise of that Option the holder will receive what the holder would have owned if the holder had exercised the Option immediately before the Corporate Transaction which occurred while the Option was outstanding and had not disposed of anything the holder would have received as a result of that and all subsequent Corporate Transactions. 10. Rights of Option Holder. (a) The holder of an Option will not have any rights as a stockholder by reason of holding that Option. Upon exercise of an Option, the holder will be deemed to acquire the rights of a stockholder when, but not before, the issuance of Common Stock as a result of the exercise is recorded in the stock records of the Company. (b) Nothing in this Plan or in the grant of an Option will confer upon any Employee the right to continue in the employment of the Company or will interfere with or restrict in any way the rights of the Company to discharge any Employee at any time for any reason whatsoever, with or without cause, nor will it impose any obligation on the Employee to remain in the employ of the Company. 11. Laws and Regulations. The obligation of the Company to sell and deliver shares of Common Stock on exercise of Options will be subject to the condition that legal counsel for the Company be satisfied that the sale and delivery will not violate the Securities Act of 1933, as amended, or any other applicable laws, rules or regulations. 8 12. Withholding of Taxes. (a) In addition to the requirement in paragraph 7(c) that in order to exercise an Option a person must make a payment to the Company or authorize withholding in order to enable the Company to pay any withholding taxes due as a result of the exercise, if a person who exercised an Incentive Stock Option disposes of shares of Common Stock acquired through exercise of that Incentive Stock Option either (i) within two years after the Date of Grant of the Incentive Stock Option or (ii) within one year after the issuance of the shares on exercise of the Incentive Stock Option, the person will notify the Company promptly of the occurrence of the event and, if the event was a disposition of Common Stock acquired on exercise of an Incentive Stock Option, the amount realized upon the disposition. (b) If, whether because of a disposition of Common Stock acquired on exercise of an Incentive Stock Option, or otherwise, the Company is required to pay withholding taxes to any Federal, state or other taxing authority and the Employee fails to provide the Company with the funds with which to pay that withholding tax, the Company may withhold up to 50% of each payment of salary or bonus to the Employee (which will be in addition to any other required or permitted withholding), until the Company has been reimbursed for the entire withholding tax it was required to pay. (c) The obligations contained in this paragraph 12 shall bind each optionee, and each optionee, by accepting and/or exercising an Option, shall be deemed to agree to observe and comply with them. 13. Reservation of Shares. The Company will at all times keep reserved for issuance on exercise of Options a number of authorized but unissued or reacquired shares of Common Stock equal to the maximum number of shares the Company may be required to issue on exercise of outstanding Options (assuming no subsequent adjustments under paragraph 9). 14. Amendment of the Plan. The Board of Directors may at any time and from time to time modify or amend this Plan in any respect effective at any date the Board of Directors determines; provided, that without the approval of the stockholders of the Company the Board of Directors may not, (i) except as provided in paragraph 9, increase the maximum number of shares of Common Stock which may be issued on exercise of Options granted under this Plan; (ii) change the categories of persons eligible to receive Options; (iii) increase the per-optionee limit specified in paragraph 4(d), (iv) take any other action requiring the approval of the stockholders of the Company in order to maintain the exemption available under Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission, or (v) modify the provisions of paragraph 7(a)(i). No modification or amendment of this Plan will, without the consent of the holder of an outstanding Option, adversely affect the holder's rights under that Option. 9 15. Interpretation The Committee shall have the power to interpret the Plan and to make and amend rules for putting it into effect and administering it. It is intended that the Incentive Stock Options granted under the Plan shall constitute incentive stock options within the meaning of section 422 of the Code, that the Non-Qualified Options shall constitute property subject to federal income tax pursuant to the provisions of section 83 of the Code and that the Plan shall qualify for the exemption available under Rule 16b-3 (or any similar rule) of the Securities and Exchange Commission. It is also intended that all compensation income recognized by optionees as the result of the exercise of Options or the disposition of Common Stock acquired on exercise of Options shall be considered performance-based compensation excludable from such optionee's "applicable employee remuneration" pursuant to section 162(m)(4)(C) of the Code. The provisions of the Plan shall be interpreted and applied insofar as possible to carry out such intent. 16. Termination of the Plan. This Plan shall terminate on March 27, 2005 unless sooner terminated. The Board of Directors may suspend or terminate this Plan at any time or from time to time, but no such action may adversely affect the rights of a person holding an outstanding Option. 10 EX-10.2 MATERIAL CON 5 exhibit10-2.txt EXHIBIT 10.2 1999 SOP EXHIBIT 10.2 CYTOGEN CORPORATION AMENDED AND RESTATED 1999 STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS 1. Purpose; Effective Date. (a) The purposes of this Plan are to further the interests of Cytogen Corporation (the "Company") by retaining the services of persons now serving as non-employee Directors of the Company, attracting and retaining the services of persons capable of serving on the Board of Directors of the Company, and by providing such persons with an incentive that aligns their interests with the interests of the Company's shareholders. (b) This Plan will become effective on approval of the Plan by the affirmative vote of the majority of shares present in person or represented by proxy at a meeting of the shareholders of the Company and cast on the proposal for approval of the Plan. 2. Definitions. Whenever used in this Plan, the following terms will have the meanings set forth in this Section: "Board of Directors" means the Board of Directors of the Company. "Cash Component" means director cash compensation, including but not limited to annual services fees, fees payable for board and committee meetings attended and fees for committees chaired. "Code" means the United States Internal Revenue Code of 1986, as amended. "Common Stock" means the common stock, par value $.0l per share, of the Company. "Compensation Shares" means any shares of Common Stock issued to Eligible Directors hereunder in payment of such Eligible Director's Cash Component of compensation. "Date of Grant" means with respect to any Option the date the Option will become effective under the provisions of this Plan. "Disability" means inability of a Director to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which reasonably can be expected to last for a continuous period of not less than six months. "Eligible Director" means, as of any time, a person who is a director of the Company but is not then an Employee. "Employee" means any person employed by the Company (including, without limitation, a person employed by the Company who is also an officer or director of the Company). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and rules and regulations promulgated thereunder. "Exercise Price" means with respect to any Option the price per share which must be paid upon exercise of the Option. "Fair Market Value" means (i) if the Common Stock is traded in a market in which actual transactions are reported, the average of the high and low prices at which the Common Stock is reported to have traded on the relevant date in all markets on which trading in the Common Stock is reported, or if there is no reported sale of the Common Stock on the relevant date, the mean of the highest reported bid price and lowest reported asked price for the Common Stock on the relevant date, (ii) if the Common Stock is Publicly Traded but only in markets in which there is no reporting of actual transactions, the mean of the highest reported bid price and the lowest reported asked price for the Common Stock on the relevant date, or (iii) if the Common Stock is not Publicly Traded, the value of a share of Common Stock as determined by the most recent annual valuation prepared by an independent expert at the request of the Board of Directors. "Major Event" means when (i) the Company enters into one or more definitive agreements to merge or consolidate the Company with or into another corporation, or to sell or otherwise dispose of all or substantially all of the Company's assets, or to effect any other transaction, consolidation or reorganization having similar results or effect; (ii) any person other than the Company makes a tender or exchange offer for more than 50% of Common Stock pursuant to which purchases of any amount of Common Stock are made; or (iii) stock representing more than 50% of the voting power of the Company is acquired by any person other than the Company in any one or more transactions occurring in any 24-month period. "Option" means any option granted under this Plan. "Option Agreement" means an agreement, in such form as may be determined by the Board of Directors or the Committee, executed and delivered by the Company to the holder of any Option with respect to that option. "Option Shares" means, with respect to any Option, the maximum number of shares of Common Stock which may be acquired under the option prior to its expiration. "Plan" means the Cytogen Corporation 1999 Directors Stock Option Plan, as amended. "Publicly Traded" means, with respect to any class of stock, that the class of stock is required to be registered under Section 12 of the Securities Exchange Act of 1934, as amended, or that stock of that class has been sold within the preceding 12 months in an underwritten public offering. 2 "Termination of Service" means the time when a Director ceases to serve as a Director for any reason, including without limitation by reason of resignation, retirement, removal, death or Disability. 3. Administration of the Plan. (a) The Compensation Committee of the Board of Directors will be responsible for the administration of this Plan. The Committee shall consist of two or more non-employee directors of the Company who meet the definition of "outside director" under the provisions of Section 162(m) of the Code and the definition of "non-employee director" under the provisions of the Exchange Act. No member of the Committee shall have been within one year prior to appointment to, or while serving on, the Committee granted or awarded equity securities of the Company pursuant to this or any other plan of the Company except to the extent that participation in any such plan or receipt of any such grant or award would not adversely affect the Committee member's status as a "non-employee director" or as an "outside director". (b) The Committee shall (i) determine or provide for the terms and conditions of the issuance of Compensation Shares, if so authorized by the Board of Directors, or grant Agreements, and all election and other forms, which terms and conditions shall not be inconsistent with this Plan, (ii) interpret the Plan and (iii) make all other decisions relating to the operation of the Plan. The Committee may adopt such rules or guidelines as it deems appropriate to implement the Plan. The Committee's determinations under the Plan shall be final and binding on all persons. (c) No member of the Board of Directors or of any committee of the Board of Directors shall be liable for any act or omission of the Board or any committee, or of any other member of the Board or any committee, or for any act or omission on his own part, in connection with the administration of this Plan unless it resulted from the member's own willful misconduct. 4. Persons Eligible to Receive Options and Compensation Shares. Options and Compensation Shares shall be granted only to Eligible Directors. 5. Stock Subject to the Plan. The maximum number of shares of Common Stock as to which Options or Compensation Shares may be granted or issued under this Plan is 500,000 shares, subject to adjustment as provided in Section 8. If any Option or Compensation Share expires or is cancelled, surrendered or forfeited without being exercised in full (with respect to Options), the number of shares as to which the Option is not exercised, or Options or Compensation Shares are canceled, surrendered or forfeited, will once again become shares as to which new Options or Compensation Shares may be granted. The Common Stock which is issued upon the exercise of Options or issued as Compensation Shares may be authorized but unissued shares or shares which have been issued and reacquired by the Company. 3 6. Grants of Options or Compensation Shares. (a) Each person who is newly-elected a director of the Company at an annual meeting of the stockholders of the Company, such person having not previously served as a director of the Company and such person then being an Eligible Director, shall, as of the date of such annual meeting, be granted an Option to purchase twenty thousand (20,000) shares of Common Stock. In addition, each person who is appointed a director of the Company after the date of the most recent annual meeting of the stockholders of the Company, and is an Eligible Director as of such date, shall be granted on such date an Option to purchase a pro rata portion of twenty thousand (20,000) shares of Common Stock, based upon the number of full months remaining from the date of appointment until the one year anniversary month of such preceding annual meeting. (b) Effective on approval of the Plan by the shareholders, each person who is on that date an Eligible Director shall be granted an Option to purchase twenty one thousand (21,000) shares of Common Stock (the "Initial Option"). (c) Each person who is appointed a director of the Company after the date of approval of the Plan by the Shareholders and is an Eligible Director as of such date shall be granted an Option to purchase a pro rata portion of ten thousand (10,000) shares of Common Stock, based upon the number of full months remaining from the date of election until the one year anniversary month of the preceding annual meeting, as of the effective date of their appointment. (d) On the day following each annual meeting of the stockholders of the Company, commencing with the 2000 annual meeting, each person who is on that date an Eligible Director and was re-elected at that meeting shall be granted an Option to purchase 10,000 shares of Common Stock. In addition, a Chairman of the Board of Directors, unless the Compensation Committee of the Board determines otherwise, shall receive an additional grant of fifteen thousand (15,000) shares of Common Stock. (e) Eligible Directors shall receive, at the sole discretion of and after formal action by the Board of Directors, Compensation Shares in such number of shares of Common Stock that is equal to each respective Eligible Director's Cash Component compensation divided by the Fair Market Value of the Company's Common Stock as of the date of issuance of such Compensation Shares, which shall be no earlier than the date on which the applicable Cash Component compensation becomes due and payable by the Company, subject to the terms and conditions set forth herein. Compensation Shares shall not be issued for services not yet rendered by an Eligible Director to the Company. (f) Subject to Section 6(e) hereof, Eligible Directors shall receive Compensation Shares in lieu of the Cash Component of such Eligible Director's compensation until at least such time as: (i) such Eligible Director owns twenty thousand (20,000) shares of the Company's Common Stock, excluding options or other rights to acquire shares of the Company's Common Stock, whether exercisable or unexercisable; or (ii) if fewer than 20,000 shares are so owned, such smaller number of shares having a Fair Market Value of in excess of one hundred thousand dollars ($100,000), excluding the value, if any, of options to purchase Common Stock, whether exercisable or unexercisable, or other rights to acquire Common Stock of the Company. 4 (g) Upon achieving either of the milestones (i) or (ii) set forth in Section 6(f) hereof, each such Eligible Director may, at his or her option, elect to cease receiving his or her Cash Component to which he or she is entitled in shares of Common Stock under the Plan; provided, however, that such Eligible Director must make such election by providing notice of such election to the Company. (h) Each Option provided for in this Section 6 shall be granted automatically and without further action by the Company, the Board of Directors or the Company's stockholders. Promptly after the Date of Grant of each Option provided for in this Section 6, the Company shall cause an Option Agreement to be executed and delivered to the holder of the Option. No other Options may be granted at any time under this Plan. 7. Option and Compensation Shares Provisions. (a) Exercise Price. The Exercise Price of the Initial Option will be 200% of the Fair Market Value of the Common Stock on the Date of Grant of the Option. The Exercise Price of each Option other than the Initial Option will be 100% of the Fair Market Value of the Common Stock on the Date of Grant of the Option. The Committee may not reduce the Exercise Price of any Option granted under the Plan. (b) Term; Vesting. (i) No Option granted under this Plan may be exercised more than 10 years after the Date of Grant of the option. (ii) Except as provided in Sections 7(b)(iii), 7(f), 7(g) and 7(h), the Initial Option shall become exercisable in one-third increments annually on the first, second, and third anniversaries of the Date of Grant, and Options other than the Initial Option shall become exercisable in full on the first anniversary of the Date of Grant. (iii)Upon the occurrence of a Major Event, all of the Option Shares covered by an Option shall become immediately available for purchase upon exercise of the option, without regard to the vesting provisions of Section 7(b)(ii). (c) Exercise of Options. An Option may be exercised in whole or in part at any time, or from time to time, during its term. To exercise an Option, the person exercising the Option must deliver to the Company, at its principal office: (i) a notice of exercise of the Option, which states the extent to which the option is being exercised; and (ii) payment in full in cash, which may be satisfied by a check, in an amount equal to the Exercise Price of the option times the number of shares as to which it is being exercised. 5 (d) Delivery of Stock Certificates. As promptly as practicable after an option is exercised or Compensation Shares become payable to an Eligible Director, the Company will deliver to the person who exercises the Option or is owed such Compensation Shares, certificates registered in that person's name representing the number of shares of Common Stock which were purchased by the exercise of the option or grant of Compensation Shares in payment for services rendered. Each certificate may bear a legend to indicate, if applicable, that the Common Stock represented by the certificate was issued in a transaction which was not registered under the Securities Act of 1933, as amended, and may only be sold or transferred in a transaction which is registered under that Act or is exempt from the registration requirements of that Act. (e) Nontransferability (i) Options. During the lifetime of a person to whom an option is issued, the Option may be exercised only by that person or his or her guardian or legal representative. An Option may not be assigned, pledged or hypothecated in any way, will not be subject to execution, and will not be transferable otherwise than by will or the laws of descent and distribution. The Company will not recognize any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of an option contrary to the provisions of this Plan, or any levy of any attachment or similar process upon any Option, and, except as expressly stated in this Plan, the Company will not be required to, and will not, issue Common Stock on exercise of an option to anyone who claims to have acquired that option from the person to whom it was granted. (ii) Compensation Shares. For one year after the date of issuance of Compensation Shares to any Eligible Director, such Compensation Shares shall not be transferable by such Eligible Director. During this one year period, Compensation Shares may not be assigned, pledged or hypothecated in any way, and will not be transferable otherwise than by will or the laws of descent and distribution. The Company will not recognize any attempt to assign, transfer, pledge, hypothecate or otherwise dispose of Compensation Shares contrary to the provisions of this Plan, or any levy of any attachment or similar process upon any Compensation Shares, and, except as expressly stated in this Plan, the Company will not be required to, and will not, remove any related restrictive legend from the Compensation Shares until such one year period has expired. The Compensation Shares shall bear a restrictive legend evidencing such lock-up (the "Lock-up Legend"). Upon the expiration of such one year lock-up period, Compensation Share s shall become fully transferable by the holder, subject to the terms of the Securities Act of 1933, as amended and state securities laws. The Company shall take reasonable steps to remove the Lock-up Legend from the Compensation Shares within a reasonable time after the expiration of such period upon the request of an Eligible Director. Notwithstanding such lock-up provision, upon the occurrence of a Major Event, all of the Compensation Shares issued hereunder to Eligible Directors shall be treated in a like manner as are the outstanding shares of the Company's Common Stock upon the occurrence of such Major Event. 6 (f) Termination of Service of Director Holding an Option Other Than Because of Death or Disability. Subject to the provisions of Sections 7(b) and 7(h), if there is a Termination of Service of a director to whom an Option has been granted, other than by reason of the director's death or disability, or retirement, each Option held by the director may be exercised until the earlier of (x) the end of the three-month period immediately following the date of Termination of service, or (y) the expiration of the term of the option. (g) Death or Disability of Director Holding an Option. Notwithstanding the provisions of Section 7(b), if there is a Termination of Service of a director to whom an option has been granted by reason of the director's death or disability, or a former director dies within three months following the date of his or her Termination of Service, each option held by the Director on the date of the Director's Termination of Service may be exercised in full (i.e., in respect of up to 100% of the Option shares, regardless of the time elapsed since the Date of Grant) until the earlier of (x) the end of the one-year period immediately following the date of Termination of service or (y) the expiration of the term of the option. In the event of an Eligible Director's death, all of such person's outstanding Options will transfer to the maximum extent permitted by law to such person's designated Beneficiary. Each Eligible Director may name, from time to time, any beneficiary or beneficiaries (which may be named contingent ly or successively) as his or her Beneficiary for purposes of this Plan. Each designation shall be on a form prescribed by the Company, will be effective only when delivered to the Company and when effective will revoke all prior designations by the Eligible Director. If an Eligible Director dies with no such beneficiary designation in effect, such person's Options will be transferable by will or pursuant to the laws of descent and distribution applicable to such person. (h) Retirement or Resignation. If there is a Termination of Service of a Director by reason of the Director's retirement or resignation at any time after the Director has reached age 55 with a minimum of three years' service as a non-employee director, each Option held by the Director on the date of the Director's Termination of Service may be exercised in full (i.e., in respect of up to 100% of the Option Shares, regardless of the time elapsed since the Date of Grant) until the earlier of (x) the end of the five year period immediately following the date of Termination of Service or (y) the expiration of the term of the option. 8. Recapitalization, reorganizations, stock splits and the like. (a) The existence of outstanding Options or Compensation Shares shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business or any other corporate act or proceeding, whether of a similar character or otherwise. Except as hereinafter expressly provided, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale or upon the 7 exercise of rights or warrants to subscribe therefor, or on conversion of shares or obligations o f the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number, class or price of shares of Common Stock then subject to outstanding options. (b) If as a result of any (i) reorganization or liquidation of the Company or (ii) reclassification of the Company's capital stock, stock splits, stock splits in the form of dividends, reverse stock splits, or similar recapitalizations of the Company, or (iii) consolidation or merger of the Company with or into another corporation, or sale of all or substantially all the assets of the Company (a reorganization or liquidation of the Company or reclassification of the Company's capital stock, or a merger, consolidation or sale of the type described in this subsection being a "Corporate Transaction") while an Option is outstanding, the holders of the Common Stock become entitled to receive with respect to their Common Stock, securities or assets other than, or in addition to, their Common Stock, upon exercise of that Option the holder will receive what the holder would have owned if the holder had exercised the Option immediately before the first Corporate Transaction which occurred while the option was outstan ding and had not disposed of anything the holder would have received as a result of that and all subsequent Corporate Transactions. Compensation Shares shall be adjusted in the same manner as the Company's Common Stock in all events. 9. Rights of Option Holder. The holder of an Option will not have any rights as a stockholder by reason of holding that Option. Upon exercise of an Option, the holder will be deemed to acquire the rights of a stockholder when, but not before, the issuance of Common Stock as a result of the exercise is recorded in the stock records of the Company. 10. Laws and Regulations. The obligation of the Company to sell and deliver shares of Common Stock on exercise of options or upon the issuance of Compensation Shares will be subject to the condition that legal counsel for the Company be satisfied that the sale and delivery will not violate the Securities Act of 1933, as amended, or any other applicable laws, rules or regulations. 11. Reservation of Shares. The Company will at all times keep reserved for issuance on exercise of options a number of authorized but unissued or reacquired shares of Common Stock equal to the maximum number of shares the Company may be required to issue on exercise of outstanding options (assuming no subsequent adjustments under Section 8). 12. Amendment of the Plan. The Board of Directors may at any time and from time to time modify or amend this Plan in any respect effective at any date the Board of Directors determines; provided, that without the approval of the stockholders of the Company the Board of Directors may not, (i) except as provided in Section 8, 8 increase the maximum number of shares of Common Stock which may be issued on exercise of Options or the payment of Compensation Shares granted under this Plan; (ii) change the provisions of Section 6 or Section 7; (iii) change the categories of persons eligible to receive options or Compensation Shares under this Plan; or (iv) otherwise materially increase (within the meaning of Rule 16b-3 of the Exchange Act) the benefits accruing under this Plan. No modification or amendment of this Plan will, without the consent of the holder of an outstanding Option or Compensation Shares, adversely affect the holder's rights under that Option or with respect to such Compensation Shares. Notwithstanding approval by shareholde rs, the Board may amend this Plan without further shareholder approval to add provisions required or enabled by changes to Rule 16b-3. 13. Termination of the Plan. This Plan will terminate on June 16, 2009, unless sooner terminated. The Board of Directors may suspend or terminate this Plan at any time or from time to time, but no such action may adversely affect the rights of a person holding an outstanding Option or Compensation Share. The applicable terms of the Plan, and any terms and conditions as applicable to Options or Compensation Shares granted prior to such date, shall survive the termination of the Plan and continue to apply to such Options or Compensation Shares. 9 EX-10.3 MATERIAL CON 6 exhibit10-3.txt EXHIBIT 10.3 EMPLOYEE STOCK PURCHASE PLAN EXHIBIT 10.3 CYTOGEN CORPORATION EMPLOYEE STOCK PURCHASE PLAN The CYTOGEN Corporation Employee Stock Purchase Plan (the "Plan") is intended to provide the eligible employees of CYTOGEN Corporation (the "Company") and its qualifying subsidiaries a convenient means of purchasing shares of the Company's common stock, par value $ .01 per share (the "Stock"). The Plan is intended to qualify as an "employee stock purchase plan" under section 423 of the Internal Revenue Code of 1986, as amended (the "Code"), and shall be administered, interpreted and construed in a manner consistent with the requirements of that section of the Code. ARTICLE I DEFINITIONS 1.1 "Account" means the bookkeeping account established on behalf of each Participant by the Administrator to record payroll deduction contributions made by such Participant and shares of Stock purchased on his behalf. 1.2 "Administrator" means the individual or committee appointed pursuant to Article VIII to administer the Plan. 1.3 "Board" means the Board of Directors of the Company. 1.4 "Business Day" means each day on which the Exchange (as defined in Section 4.3) is open for business. 1.5 "Compensation" means all regular salary, wages or earnings but excluding overtime, commissions, bonuses, amounts realized from the exercise of a qualified or non-qualified stock option and other special incentive payments, fees or allowances. 1.6 "Employee" means any person who is employed by the Company except an employee whose customary employment is: 1.6.1 less than 20 hours per week; or 1.6.2 less than 5 months a year. For the purpose of determining whether an individual is an Employee, the definition of Company shall also include the Company's subsidiaries, if any, as defined under Code section 424(f). 1.7 "Effective Date" means July 1, 1997, subject to the provisions of Section 9.8 of the Plan. 1.8 "Entry Date" means January 1 and July 1 of each Plan Year. 1.9 "Offering Commencement Date" means the first Business Day of each Offering Period. 1.10 "Offering Period" means each three month period. 1.11 "Offering Termination Date" means the last Business Day of each Offering Period. 1.12 "Participant" means an Employee who has met the eligibility requirements of Article II and who has elected to participate pursuant to an election under Section 3.1. 1.13 "Plan Year" means the 12-month period ending December 31. 1.14 "Shares" means shares of Stock that have been allocated to a Participant's Account. 1.15 "Term of Service" means a consecutive 6-month period during which an individual was an Employee. ARTICLE II ELIGIBILITY 2.1 Eligibility. Except as provided in Section 3.6, an Employee who has completed a Term of Service prior to the Effective Date and who continues to be employed by the Company shall be eligible to participate in the Plan as of the Effective Date. All other Employees, except as provided in Section 3.6, shall be eligible to participate in the Plan as of the Entry Date coinciding with or next following the completion of a Term of Service. 2.2 Eligibility Restrictions. A Participant who elects to terminate participation in the Plan in accordance with Section 3.5 shall be prohibited from participating in the Plan until the Entry Date next following the date of such termination. ARTICLE III PARTICIPATION 3.1 Commencement of Participation. An eligible Employee may become a Participant in the Plan on any Entry Date by completing an enrollment and payroll deduction form and delivering it to the Company in accordance with procedures established by the Administrator. 3.2 Payroll Deduction. At the time a Participant files his enrollment and payroll deduction form, he shall elect to have after-tax deductions made from his Compensation by a whole percentage that is not less than 1% nor more than 10% of his Compensation. 3.3 Participants' Accounts. All payroll deductions made from a Participant's Compensation shall be credited to his Account and used to purchase shares of Stock in accordance with Article V. Contributions credited to a Participant's Account shall not accrue interest or earnings during the period prior to being used to purchase shares of Stock in accordance with Article V. 3.4 Changes in Payroll Deductions. The percentage designated by a Participant as his rate of contribution under Section 3.2 shall automatically apply to increases and decreases in his Compensation. Except as provided in Section 3.5, a Participant may elect to change the rate of his contributions to -2- any other permissible rate effective as of the first day of the first payroll period of any Offering Period provided the Participant files written notice with the Administrator of an election to change his contribution rate at least ten (10) Business Days before the effective date of the election. 3.5 Suspension and Resumption of Payroll Deductions. A Participant may terminate contributions under the Plan as of the first day of any payroll period by filing written notice thereof with the Administrator at least ten (10) Business Days before the effective date of the termination. A Participant who has terminated his participation in the Plan in accordance with the preceding provisions, shall be prohibited from resuming contributions under the Plan until the following Entry Date. A Participant whose contributions have been terminated in accordance with the preceding provisions, may resume contributions under the Plan in accordance with Section 2.2. 3.6 Restrictions on Participation. Notwithstanding any provisions of the Plan to the contrary, no Employee shall be granted an option to participate in the Plan under the following conditions: 3.6.1 No Employee shall be granted an option if, immediately after the grant, such Employee would own stock, and/or hold outstanding options to purchase stock, possessing 5% or more of the total combined voting power or value of all classes of stock of the Company (for purposes of this paragraph, the rules of ss.424(d) of the Code shall apply in determining stock ownership of any Employee); or 3.6.2 No Employee shall be granted an option which permits his rights to purchase Stock under the Plan and all other employee stock purchase plans (as described in section 423 of the Code) of the Company to accrue at a rate which exceeds $25,000 of fair market value of such Stock (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. For purposes of this Section 3.6.2: 3.6.2.1 the right to purchase stock under an option accrues when the option (or any portion thereof) first becomes exercisable during the calendar year; 3.6.2.2 the right to purchase stock under an option accrues at the rate provided in the option, but in no case may such rate exceed $25,000 of fair market value of such stock (determined at the time such option is granted) for any one calendar year; and 3.6.2.3 a right to purchase stock which has accrued under one option granted pursuant a plan may not be carried over to any other option. -3- ARTICLE IV OFFERINGS 4.1 Quarterly Offerings. The Plan shall be implemented through quarterly offerings of the Company's Stock. Each Offering Period shall begin on the Offering Commencement Date and shall end on the Offering Termination Date. 4.2 Purchase Price. The "Purchase Price" per share of Stock with respect to each Offering Period shall be the lesser of: 4.2.1 Eighty-five (85) percent of the official closing price of the Stock on the Offering Termination Date on the National Association of Securities Dealers Automated Quotations (or on such other national securities exchange upon which the Stock may then be listed, hereinafter referred to as the "Exchange") or if no sale of Stock occurred on such date, the official closing price on the preceding Business Day; or 4.2.2 Eighty-five (85) percent of the official closing price of the Stock on the Offering Commencement Date on the Exchange (or if no sale of Stock occurred on such date, the closing price on the preceding business day). 4.3 Maximum Offering. The maximum number of shares of Stock which shall be issued under the Plan, subject to adjustment upon changes in capitalization of the Company as provided in Section 9.3, shall be 500,000 shares. If the total number of shares which would be purchased during any Offering Period exceeds the maximum number of available shares, the Administrator shall make a pro rata allocation of the available shares in a manner that it determines to be equitable and the balance of payroll deductions credited to the Accounts of Participants shall be returned to such Participants as soon as administratively practicable. ARTICLE V PURCHASE OF STOCK 5.1 Purchase of Shares. Subject to Section 3.6, on the Offering Commencement Date of each Offering Period, the Company will grant to each eligible employee who is then a Participant in the Plan an option to purchase on the Offering Termination Date of such Offering Period, at the option price hereinafter provided for, the largest number of whole shares of Stock of the Company as does not exceed the number of shares determined by dividing $25,000 by the Purchase Price (as defined in Section 4.2) on the Offering Commencement Date of such Offering Period. Each employee who continues to be a Participant in the Plan on the Offering Termination Date shall be deemed to have exercised his option at the option price on such date and shall be deemed to have purchased from the Company the number of full shares of Stock reserved for the purpose of the Plan that his or her accumulated payroll deductions on such date will pay for, but not in excess of the maximum number determined in the manner set forth above. Any balance remaining in an employee's Account at the end of a Offering Period will be automatically refunded to the employee. -4- ARTICLE VI ACCOUNTING 6.1 General. The Administrator shall establish procedures to account for payroll deductions made by a Participant, the number of Shares of Stock purchased on a Participant's behalf and the number of Shares allocated to a Participant's Account. 6.2 Registration of Stock. Shares of Stock allocated to a Participant's Account shall be registered in the name of the Company or its nominee for the benefit of the Participant on whose behalf such shares were purchased. 6.3 Accounting for Distributions. Shares of Stock distributed or sold from a Participant's Account shall be debited from his Account on a first-in first-out basis. 6.4 Account Statements. Each Participant shall receive at least semi-annual statements of all payroll deductions and shares of Stock allocated to his Account together with all other transactions affecting his Account. ARTICLE VII WITHDRAWALS AND DISTRIBUTIONS 7.1 Withdrawal of Shares. A Participant may elect to withdraw any number of Shares allocated to his Account by providing notification to the Company in accordance with procedures established by the Administrator. As soon as administratively practicable following notification of a Participant's election to withdraw Shares, the Administrator shall cause a certificate representing the number of Shares to be withdrawn to be delivered to the Participant. 7.2 Distribution Upon Termination. As soon as administratively practicable after a Participant's termination of employment with the Company or a participating subsidiary for any reason, a certificate representing all of such Participant's Shares shall be distributed to him (or his executor, in the event of his death). 7.3 Distribution of Payroll Deductions. In the event a Participant terminates his employment with the Company or a participating subsidiary or his participation in the Plan is terminated pursuant to Section 3.5, any payroll deductions allocated to his Account and not yet applied to purchase Stock in accordance with Section 5.1 shall be distributed to him in a cash lump sum as soon as administratively practicable thereafter. -5- ARTICLE VIII ADMINISTRATION 8.1 Appointment of Administrator. The Board shall appoint an individual or committee comprised of so many members as the Board shall determine to administer the Plan. The Board may from time to time, if the plan is administered by a committee, appoint members to the committee in substitution for or in addition to members previously appointed and may fill vacancies, however caused, in the committee. 8.2 Authority of Administrator. The Administrator shall have the exclusive power and authority to administer the Plan, including without limitation the right and power to interpret the provisions of the Plan and make all determinations deemed necessary or advisable for the administration of the Plan. All such actions, interpretations and determinations which are done or made by the Administrator in good faith shall be final, conclusive and binding on the Company, the Participants and all other parties and shall not subject the Administrator to any liability. 8.3 Administrator Procedures. The Administrator shall hold its meetings at such times and places as it shall deem advisable and may hold telephone meetings. In the event that the Administrator is a committee, a majority of its members shall constitute a quorum and all determinations shall be made by a majority of its members. Any decision or determination reduced to writing and signed by the Administrator shall be as fully effective as if it had been made by a majority vote at a meeting duly called and held. The Administrator may appoint a secretary and shall make such rules and regulations for the conduct of its business as it shall deem advisable. 8.4 Expenses. The Company will pay all expenses incident to the operation of the Plan, including the costs of recordkeeping, accounting fees, legal fees and the costs of delivery of stock certificates to Participants. -6- ARTICLE IX MISCELLANEOUS 9.1 Transferability. Neither payroll deductions credited to a Participant's Account nor any rights with regard to the purchase of Stock under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way by the Participant other than by will or the laws of descent and distribution. 9.2 Status as Owner. Each Participant shall be deemed to legally own all shares of Stock allocated to his Account and shall be entitled to exercise all rights associated with ownership of the shares, including, without limitation, the right to vote such shares in all matters for which Stock is entitled to vote, receive dividends, if any, and tender such shares in response to a tender offer. 9.3 Adjustment Upon Changes in Capitalization. In the event of a reorganization, recapitalization, stock split, spin-off, split-off, split-up, stock dividend, combination of shares, merger, consolidation or any other change in the corporate structure of the Company, or a sale by the Company of all or part of its assets, the Board may make appropriate adjustments in the number and kind of shares which are subject to purchase under the Plan and in the exercise price applicable to outstanding options. 9.4 Amendment and Termination. The Board shall have complete power and authority to terminate or amend the Plan (including without limitation the power and authority to make any amendment that may be deemed to affect the interests of any Participant adversely); provided, however, that the Board shall not, without the approval of the shareholders of the Company (i) increase the maximum number of shares which may be offered under the Plan (except pursuant to Section 9.3); or (ii) in any other way cause the Plan to fail the requirements of section 423 of the Code. The Plan and all rights of Employees hereunder shall terminate: (i) at any time, at the discretion of the Board, in which case any cash balance in Participants' Accounts shall be refunded to such Participants as soon as administratively possible; or (ii) on the Offering Termination Date on which Participants become entitled to purchase a number of shares of Stock that exceeds the maximum number of shares available under the Plan. 9.5 No Employment Rights. The Plan does not, directly or indirectly, create in any Employee any right with respect to continuation of employment by the Company and it shall not be deemed to interfere in any way with the Company's right to terminate, or otherwise modify, an Employee's terms of employment at any time. 9.6 Withholding. To the extent any payments or distributions under this Plan are subject to Federal, state or local taxes, the Company is authorized to withhold all applicable taxes. The Company may satisfy its withholding obligation by (i) withholding shares of Stock allocated to a Participant's Account, (ii) deducting cash from a Participant's Account, or (iii) deducting cash from a Participant's other compensation. A Participant's election to participate in the Plan authorizes the Company to take any of the actions described in the preceding sentence. -7- 9.7 Use of Funds. All payroll deductions held by the Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to hold such payroll deductions in trust or otherwise segregate such amounts. 9.8 Shareholder Approval. Notwithstanding the provision of Section 1.7 of the Plan, the Plan shall not take effect until approved by the shareholders of the Company. 9.9 Choice of Law. Except to the extent superseded by Federal law, the laws of the State of New Jersey will govern all matters relating to the Plan. * * * * To record the adoption of the Plan, CYTOGEN Corporation has caused its authorized officers to affix its Corporate name and seal this 13th day of Nov., 2001. [CORPORATE SEAL] CYTOGEN Corporation Attest: Katrina C. Jones By: Catherine M. Verna ------------------------ -------------------------------- -8- -----END PRIVACY-ENHANCED MESSAGE-----