STOCK OPTION AGREEMENT
Exhibit 10.6
THIS STOCK OPTION AGREEMENT (this “Agreement”) is made as of , 20 between ENCORE MEDICAL CORPORATION, a Delaware corporation (the “Company”), and (“Optionee”).
WHEREAS, Optionee has agreed to serve as a Director of the Company;
WHEREAS, the Company has established the 2000 Non-Employee Directors Stock Option Plan (the “Plan”); and
WHEREAS, in view of the foregoing, Company desires to grant to Optionee an option to purchase shares of Company’s Common Stock, par value $0.001, (the “Stock”).
NOW, THEREFORE, in consideration of the foregoing, of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Company and Optionee, intending legally to be bound, hereby agree as follows:
1. Grant of Option and Vesting. Company hereby grants to Optionee an option to purchase an aggregate total of ( ) shares of Stock upon the terms and conditions hereinafter set forth. Such option shall vest on , 200 , provided that Optionee is still a Director of the Company as of such date.
2. Term of Option.
(a) The Optionee may exercise any vested option and purchase shares of Stock under the Agreement at any time on or after the date hereof. The option to purchase shares of Stock under this Agreement shall terminate on , 20 .
(b) In the event of the failure of Optionee timely to exercise his option on or prior to , 20 , or in the event of the failure of Optionee to exercise his option with respect to all of the shares of Stock subject to the option within such time period, such part or parts, or the whole, as the case may be, of Optionee’s option shall, ipso facto, become null and void and shall no longer be of or have any further force or effect.
3. Purchase Price. The purchase price per share of Stock subject to the option specified herein shall be .
4. Procedure for Exercise of Option. Subject to the provisions of Article 2, Optionee may exercise the option specified herein by complying with the provisions of Article 5 of the Plan.
5. Changes in the Company’s Capital Structure.
(a) After a merger of one or more corporations into the Company, Optionee shall, at no additional cost, be entitled upon exercise of such options to receive (subject to any required action by stockholders) in lieu of the number of shares as to which such option shall then be so exercisable, the number and class of shares of stock or other securities to which such holder would have been
entitled pursuant to the terms of the agreement of merger if, immediately prior to such merger, such holder had been the holder of record of a number of shares of Stock equal to the number of shares as to which such option shall be so exercised.
(b) If the Company is merged into or consolidated with another corporation under circumstances where the Company is not the surviving corporation or where the Company will be a wholly owned subsidiary of another corporation, or if the Company sells or otherwise disposes of all or substantially all of its property or assets to another corporation while unexercised, vested or unvested options remain outstanding under the Agreement, then:
(i) subject to the provisions of clause (ii) below, after the effective date of such merger, consolidation, or sale, as the case may be, Optionee shall be entitled, upon exercise of any vested option, to receive, in lieu of shares of Stock, the number and class of shares of such stock, other securities, cash, and other property or rights as the holders of shares of Common Stock received pursuant to the terms of the merger, consolidation, or sale and to which he would have been entitled if, immediately prior to such merger, consolidation, or sale, he had been the holder of record of a number of shares of Stock equal to the number of shares as to which such vested option shall be so exercised; and
(ii) all outstanding vested options may be canceled by the Board of Directors of the Company as of the effective date of any such merger, consolidation, or sale, provided that (x) written notice of such cancellation is given to the Optionee not later than thirty (30) days prior to such effective date and (y) the Optionee shall have the right to exercise any vested option in full (without regard to any limitations set forth in or imposed pursuant to Article 2 hereof) during the said thirty (30)-day period preceding the effective date of such merger, consolidation, or sale.
(c) Except as hereinbefore expressly provided, the issuance 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 upon 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 or price of shares of Stock then subject to outstanding options.
6. Investment Warranty. Optionee acknowledges and understands that, in connection with the issuance of any shares of Stock to it pursuant to the exercise of the option specified in this Agreement (such shares hereinafter in this Article 6 referred to as the “Shares”):
(a) He has been fully informed as to the circumstances under which he is permitted to take and required to hold the Shares pursuant to the requirements of the Securities Act of 1933, as amended (the “Act”), and any applicable state securities or Blue Sky law;
(b) Rule 144 under the Act may not be available and, even if it is available, Company will not be required to supply him with any information necessary to enable him to make sales of the Shares pursuant to Rule 144 under the Act (assuming such Rule is applicable and is otherwise available to him with respect to the Shares), but Company may make publicly available such adequate current public information with respect to Company as is required by Rule 144 under the Act.
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7. No Rights as Stockholder. The option specified in this Agreement shall not, in and of itself, entitle Optionee to any rights as a stockholder of Company including, without limitation, the right to receive dividends or other distributions of any kind, the right to vote or otherwise act at any annual or special meeting of Stockholders of Company, the right to receive notice of any corporate action (except as otherwise specified in Article 5 hereof) and the right to exercise any preemptive rights.
8. Expenses. All expenses incurred by or on behalf of either party hereto in connection with the authorization, preparation, execution and consummation of this Agreement, the option specified herein and the possible purchase of the shares of Stock subject to the option, including, without limitation of the generality of the foregoing, all fees and expenses of representatives, counsel and accountants employed by either such party, shall be borne solely and entirely by the party who or which has incurred the same.
9. Warranties of Company. Company hereby represents and warrants as follows:
(a) The Board of Directors of Company has authorized the execution and delivery of this Agreement by the officers of Company executing same;
(b) The Board of Directors of Company has reserved for issuance, during the period the option specified herein is exercisable, such number of shares of Stock of Company as shall be necessary for full exercise of the option specified in this Agreement and shall take such steps as are necessary to cause there to be authorized shares available for the issuance of the Stock in the event that the option is exercised; and
(c) Any shares of Stock of Company issued and delivered pursuant to the exercise of the option specified herein shall be validly issued, fully paid and non assessable.
10. Miscellaneous.
(a) All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given, if delivered or sent by registered or certified mail, return receipt requested, first class postage prepaid, as follows:
| (1 | ) | If to Company, to: | ||||
| Encore Medical Corporation | ||||||
| Attn.: Xxxxx X. Xxxxxxxxx, Executive Vice President – | ||||||
| General Counsel | ||||||
| 0000 Xxxxxx Xxxxxxxxx | ||||||
| Xxxxxx, Xxxxx 00000 | ||||||
| (2 | ) | If to Optionee, to: | ||||
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or to such other address as either such party may designate in accordance with this Section 10(a).
(b) This Agreement shall be binding upon the parties hereto and their respective successors and assigns.
(c) The provisions of this Agreement are not intended to be (and shall not serve) for the benefit of any creditor (other than a party hereto in its or his capacity as such) of, or any other person (other than a party hereto in its or his capacity as such) to whom any debts, liabilities obligations are owed by (or who otherwise has a claim against), either party hereto, and no such creditor or other person shall obtain any right under any provision hereof or shall by reason of any such provision make claims in respect of the aforesaid debts, liabilities or obligations (or otherwise) against Company or the other party hereto.
(d) The Article and other headings in this Agreement are inserted solely as a matter of convenience and for reference and are not a part of this Agreement.
(e) This Agreement supersedes all prior agreements and understandings, oral or written, between the parties hereto with respect to the subject matter hereof. Neither this Agreement, nor any provision hereof, may be changed, waived, discharged or terminated orally, but only by a statement in writing signed by the party against which or whom the enforcement of such change, waiver, discharge or termination is sought.
(f) This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware.
(g) The Company does not guarantee the Stock from loss or depreciation.
(h) All claims, disputes and other matters in question between the parties to this Agreement, arising out of or relating to this Agreement or the breach thereof, shall be decided by arbitration in accordance with the Arbitration Rules of the American Arbitration Association then obtaining unless the parties mutually agree otherwise. Notice of the demand for arbitration shall be filed in writing with the other party to this Agreement and with the American Arbitration Association. The demand shall be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event shall the demand for arbitration be made after the date when institution of legal or equitable proceedings based on such claim, dispute or other matter in question would be barred by the applicable statute of limitations. The award rendered by the arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof.
(i) If any action is asserted or brought to enforce this Agreement, the party or parties prevailing in any such action are entitled to reimbursement, and shall be reimbursed by the non-prevailing party or parties for all costs and expenses (including, without limitation, attorneys’ and accounting fees and expenses) reasonably incurred by the prevailing party or parties in asserting or bringing such action; provided, however, if such action is asserted for monetary damages and if the party or parties asserting same are only partially successful in asserting or bringing any such action, they shall be entitled to reimbursement hereunder for their costs and expenses only in the proportion
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that the amount awarded to such prevailing party bears to the total amount for which any such action is brought or asserted.
(j) The terms of this Agreement are also subject to the terms and conditions of the Plan. Any conflict between the terms of this Agreement and the Plan shall be resolved in favor of the specific terms of this Agreement, but in the event that there is no specific language in this Agreement concerning any specific provision, the terms and conditions of the Plan shall govern.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
| COMPANY: | ||||
| ENCORE MEDICAL CORPORATION, | ||||
| a Delaware corporation | ||||
| By: | ||||
| Xxxxxxx X. Xxxxxxxx, | ||||
| Chief Executive Officer | ||||
| OPTIONEE: | ||||
| NAME | ||||
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