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EXHIBIT 10.8
UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
AGREEMENT FOR INCENTIVE STOCK OPTION AWARD PROGRAM
INCENTIVE STOCK OPTION
SEPTEMBER 27, 1996
The Board of Directors (the "Board") of Universal Standard Medical
Laboratories, Inc. (the "Company"), or the Stock Option Committee thereof (the
"Committee") designated by the Board to administer the Universal Standard
Medical Laboratories, Inc. 1992 Stock Option Plan (the "Plan"), hereby grants
to Xxxx Xxx (the "Grantee") a stock option (the "Option"), pursuant to the
Plan and the Incentive Stock Option Award Program (the "ISOAP"). The Option is
subject in all respects to the Plan. Certain capitalized terms used in this
agreement (the "Agreement") which are not defined herein have the meanings
indicated for such terms of the Plan.
1. Stock Option. The Option entitles the Grantee to purchase up
to 40,000 shares (the "Option Shares") of the Company's Common Stock, no par
value (the "Common Stock"), at an option price per share of $3.93 (the "Option
Price"), subject to the terms and conditions of this Agreement. The Option is
intended to be an Incentive Stock Option.
2. (a) Exercisability. Any portion of this Option which
vests and becomes exercisable as provided in Section 2(b) may be exercised and
Option Shares may be purchased pursuant thereto at any time and from time to
time thereafter; provided that the Grantee may not, without the written consent
of the Committee, exercise this Option in a manner which results in a
limitation on the Company's annual tax deduction for compensation payments to
the Grantee pursuant to the $1 million per person limitation on annual
compensation deductions under Section 162(m) of the Code. The Option Price for
Option Shares shall be paid in full in cash or by check by the Grantee at the
time of the delivery of Option Shares, or, at the written election of the
Grantee, payment may be made by (i) delivery to the Company of outstanding
shares of Common Stock, (ii) retention by the Company of one or more of vested
Option Shares or (iii) any combination of cash, check, the Grantee's delivery
of outstanding Shares and retention by the Company of one or more of such
Option Shares.
(b) Vesting/Exercisability. The Grantee may only
exercise his Option to purchase Option Shares to the extent that the Option has
vested and become exercisable with respect to such Option Shares. One half of
the Option Shares shall be designated as the Turnaround Incentive Options and
will vest on June 30, 1997 if the required goals, as set forth below, are
attained by such date. One half of the Option Shares shall be designated as
the High Growth Incentive Options and will vest on December 31, 1997 if the
required goals, as set forth below, are attained by such date.
(i) Turnaround Incentive Options. (A) 6,666
shares of the Turnaround Incentive Options will vest if the Company's
consolidated net loss per share is ($.04) or less for the
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three months ended March 31, 1997 (the "First Quarter Corporate Objective").
If the First Quarter Corporate Objective is not met, 13,333 shares of the
Turnaround Incentive Options will vest if the Company's Consolidated net
earnings per share is $0 or more for the three months ended June 30, 1997 (the
"Second Quarter Corporate Objective"). If the First Quarter Corporate
Objective is met, 6,667 shares of the Turnaround Incentive Options will vest
if the Second Quarter Corporate Objective is met.
(B) 6,667 shares of the Turnaround Incentive Options will vest if the
Grantee meets the Grantee's individual goals set forth in Exhibit A (the
"Individual Goals"), by the date set forth in Exhibit A, or June 30, 1997, if
no date is set forth in Exhibit A. However, if the Grantee fails to meet
his/her Individual Goals, he/she will forfeit the right to any Turnaround
Incentive Options that may have vested through the attainment of the Corporate
Objectives unless otherwise approved by the Committee.
(ii) High Growth Incentive Options. A number of
High Growth Incentive Options equal to the number of Turnaround Incentive
Options which vested as described in Section 2(b)(i) above, or if no Turnaround
Incentive Options vested, then, if the Grantee attains all of his/her
Individual Goals by December 31, 1997, one half of the High Growth Incentive
Options, will vest if the Company's consolidated net earnings per share for the
year ended December 31, 1997 is $.10 or more.
(iii) Time Vesting. Subject to the Grantee's
continued employment with the Company as of any such date, Turnaround Incentive
Options which vested on June 30, 1997, and High Growth Incentive Options which
vested on December 31, 1997, will become exercisable in increments of 25% per
annum on each anniversary of the date on which the option first vested,
beginning June 30, 1998. All vested Option Shares which have not yet become
exercisable will expire if the Grantee's employment with the Company terminates
prior to the date on which such Option Shares become exercisable. To the
extent not exercised, exercisable Option Shares shall accumulate and the
Grantee may exercise them thereafter in whole or in part. All unvested
Turnaround Incentive Options expire on June 30, 1997 and all unvested High
Growth Incentive Options expire on December 31, 1998, except as otherwise
determined by the Committee.
(iv) Death or Disability; Change of Control. The
Option shall become exercisable (A), with respect to all of the vested Option
Shares, automatically upon the death or permanent disability (as determined by
the Board or the Committee) of the Grantee and (B), with respect to all
unexpired Option Shares, automatically upon a Change of Control. For purposes
hereof, a "Change of Control" shall mean the sale of all or substantially all
of the assets of the Company to an unaffiliated third-party; the merger or
consolidation of the Company with an unaffiliated third-party in which the
Company is not the surviving corporation; or the acquisition or control in
excess of 51% of the Company's Common Stock on a fully-diluted basis by any
person or group of persons (as defined in Section 13(d) of the Securities
Exchange Act of 1934) (other than WestSphere Capital Associates, L.P. and its
affiliates). Notwithstanding the foregoing, the Option shall not vest and
become automatically exercisable as described in Section 2(b)(iv)(B) without
the
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written consent of the Committee, to the extent such acceleration of vesting
would result, when taken in the aggregate with all other payments from the
Company, in the payment by such Grantee of any excise tax provided for in
Sections 280G and 4999 of the Code.
(v) Termination of Employment. The Grantee shall
have the right to exercise all unexercised Options which have vested as of the
Grantee's Termination Date (as defined in the Plan) for a period of three (3)
months following such Termination Date or such longer period as may be provided
in the Plan or as the Committee may approve in its sole discretion in
connection with such termination; provided, that the Option shall not be
exercisable after its expiration pursuant to Section 7.
(vi) All calculations of net earnings (loss) per
share required by this Agreement shall be as determined by the Chief Financial
Officer of the Company. If there shall be any disputes as to such
calculations, the determination of the Committee as to the net earnings (loss)
per share amounts shall be final and binding on the Grantee.
3. Transferability of this Option.
(a) Except in the case of death or permanent disability
of the Grantee, this Option shall not be transferable.
(b) The Company may assign its rights and delegate its
duties under this Agreement.
4. Conformity with Plan. The Grantee's Option is intended to
conform in all respects with, and is subject to all applicable provisions of
the Plan, which is incorporated herein by reference. Inconsistencies between
this Agreement and the Plan shall be resolved in accordance with the terms of
the Plan. By executing and returning the enclosed copy of this Agreement, the
Grantee acknowledges his receipt of the Plan and agrees to be bound by all of
the other terms of the Plan.
5. Employment. Notwithstanding any contrary oral representations
or promises made to Grantee prior to or after the date hereof, Grantee and the
Company acknowledge Grantee's employment with the Company and its subsidiaries
is and will continue to be subject to the willingness of each to continue such
employment and nothing herein confers any right or obligation on Grantee to
continue in the employ of the Company or its subsidiaries or shall affect in
any way Grantee's right or the right of the Company or its subsidiaries to
terminate Grantee's employment at any time, for any reason, with or without
cause.
6. Share Legends. At the sole discretion of the Committee, all
certificates representing any Option Shares subject to the provisions of this
Agreement shall have endorsed thereon the following legend:
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"THE SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAW."
7. Expiration. The Option shall expire at 5:00 p.m., New York
time, on the tenth anniversary of the date hereof. In the event that the
Grantee shall cease to be employed by the Company or its subsidiaries for any
reason, all Option Shares which shall not have vested and become exercisable
prior thereto pursuant to Section 2 shall automatically terminate.
8. Further Actions. The parties agree to execute such further
instruments and to take such further actions as may reasonably be required to
carry out the intent of this Agreement.
9. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the Company and,
subject to the restrictions on transfer herein set forth, be binding upon
Grantee's heirs, executors, administrators, successors and assigns.
10. Governing Law. This Agreement and all documents contemplated
hereby, and all remedies in connection therewith and all questions or
transactions relating thereto, shall be construed in accordance with and
governed by the laws of the State of Michigan.
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Please execute the extra copy of this Agreement in the space below and
return it to the Secretary of the Company to confirm your understanding and
acceptance of the agreements contained in this letter.
Very truly yours,
UNIVERSAL STANDARD MEDICAL
LABORATORIES, INC.
By: /s/ Xxxxxx Xxxxxxxx
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Its: Chief Executive Officer
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The undersigned hereby acknowledges having read this Agreement, the
Plan, and the other enclosures to this Agreement, and hereby agrees to be bound
by all provisions set forth herein and in the Plan.
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GRANTEE:
/s/ Xxxx X. Xxx
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(Signature)
Xxxx X. Xxx
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(Please print name)
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NOTICE OF EXERCISE OF INCENTIVE
STOCK OPTION GRANTED UNDER THE
UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
INCENTIVE STOCK OPTION AWARD PROGRAM
President
Universal Standard Medical
Laboratories, Inc.
00000 Xxxxxxxxxxxx Xxxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
An Option was granted to me on September 27, 1996 to purchase up to
40,000 shares of Universal Standard Medical Laboratories, Inc. (the
"Company") Common Stock at a price of $3.93 per share (the "Option").
I hereby elect to exercise the Option with respect to ______ shares
(the "Exercise Shares"). Payment of the exercise price of $______ ($3.93
multiplied by the number of Exercise Shares, referred to herein as the
"Exercise Price") is being made as follows:
[ ] A. Cash or check delivered with this notice.
[ ] B. Certificates representing shares of Common Stock
having a Fair Market Value on the date of delivery of
this notice equal to the Exercise Price.
[ ] C. The Company is directed to retain shares from the
number of Exercise Shares having a Fair Market Value
on the date of delivery of this notice equal to the
Exercise Price.
[ ] D. A combination of A, B and/or C above, having a value
equal to the Exercise Price, as follows:______________
______________________________________________________
______________________________________________________
______________________________________________________
The stock certificate for the shares acquired upon exercise should be
issued to:
(name)____________________________
(address)_________________________
__________________________________
Social Security No.)______________
Dated: ____________________, ____ _______________________________
(print name)___________________
