EXHIBIT 10.7
XXXXX LABORATORIES, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of <> between Xxxxx Laboratories,
Inc., a Texas corporation (the Company or AdamsLabs) and
<> (Employee), pursuant to the Xxxxx Laboratories, Inc. 1999
Long-Term Incentive Plan (the Plan).
WHEREAS, the Board of Directors of the Company (the Board) has authority
to make certain Awards under the Plan to employees of the Company and its
Affiliates; and
WHEREAS, the Board has determined to award Employee the Option described
in the Agreement;
NOW, THEREFORE, the Company and Employee agree as follows:
1. Effect of Plan and Authority of Board. This Agreement and the Award
granted hereunder are subject to the Plan, which is incorporated herein by
reference. The Board is authorized to make all determinations and
interpretations with respect to matters arising under the Plan, this Agreement
and the Award granted hereunder. Capitalized terms used and not otherwise
defined herein have the respective meanings given them in the Plan.
2. Grant of Option.
(a) Effective as of the Effective Date, the Company grants to Employee an
Option to purchase an aggregate <> shares of Common Stock at an
exercise price of <> per share (the Option). The shares of Common
Stock acquired by Employee pursuant to the exercise of the Option shall be
subject to the following restrictions:
(i) Right of First Refusal. In the event that Employee desires to
accept a bona fide offer made in good faith by a third party (the Third
Party Offer) with respect to the sale, assignment, transfer or other
disposition of all or a part of the shares of Common Stock purchased
pursuant to the exercise of the Option (the Offered Shares), Employee
shall, as a condition precedent to his or her right to do so, by written
notice, inform the Company of the receipt of such Third Party Offer, the
price per share and all of the other terms, provisions and conditions of
such offer, including the name of the proposed purchaser, and Employee's
intention to accept the same, and shall by such notice offer the Offered
Shares for sale to the Company or its designee at the price per share and
on the terms and conditions set forth in the Third Party Offer. Within 30
days of the receipt of such notice, the Company or its designee may, by
giving notice in writing to Employee, elect to purchase any or all of the
Offered Shares on the basis of the Third Party Offer. If AdamsLabs elects
to purchase any or all of the Offered Shares, then within 15 days after
the date AdamsLabs makes an election to purchase the shares, Employee
shall deliver such shares by delivering the certificate or certificates
representing the shares to be sold to the principal place of business of
AdamsLabs, duly endorsed in black for transfer or accompanied by an
appropriate stock power, together with all documents necessary or
appropriate for an effective transfer of such shares, AdamsLabs shall pay
to Employee the purchase price for the shares acquired. In the event
AdamsLabs elects not to purchase any or to purchase less than all of the
Offered Shares, Employee may sell the Offered Shares not purchased by
AdamsLabs to the third party pursuant to the Third Party Offer; provided
that such sale is in accordance with the terms and conditions of
INCENTIVE STOCK OPTION AGREEMENT - Page 1
the Third Party Offer and is consummated within 60 days after the election
of AdamsLabs not to purchase such Offered Shares; and provided further
that any such third party transferee shall receive and hold such Offered
Shares pursuant to the terms and provisions of the Agreement and the Plan
and no transfer shall be effective unless the transferee executes an
agreement or acknowledgment to such effect in a form acceptable to
AdamsLabs.
(ii) Right to Repurchase. In the event of Employee's termination of
employment for any reason, AdamsLabs, its successors and designees, shall
have the right at any time on or after such termination of employment to
repurchase all or any of the shares of Common Stock acquired pursuant to
the exercise of this Option by payment of an amount equal to the then Fair
Market Value of the shares as determined by the Board of AdamsLabs in good
faith; provided, however, that if Employee's termination of employment was
on account of cause as described in Section 7.6(d) of the Plan, the
purchase price for the repurchase of said shares shall be the lesser of
said Fair Market Value or the price paid for such shares upon exercise of
this Option.
(iii) Public Offering. The rights of AdamsLabs, its successors and
designees, as set forth in subparagraphs (i) and (ii) of this Section 2(a)
shall terminate in the event of and upon the closing of the first
underwritten public offering of the common stock of AdamsLabs that is
pursuant to a registration statement filed with, and declared effective
by, the Securities and Exchange Commission under the Securities Act of
1933, as amended, covering the offer and sale of any common stock to the
public for AdamsLabs' account.
(b) Except as provided below, this Option may not be exercised unless
Employee shall have been in the continuous employ of the Company or an Affiliate
from the date of the Agreement to the date of exercise of this Option:
(i) In the event of Employee's termination of employment for
Retirement, death or permanent or total disability, (within the meaning of
Section 22(e)(3) of the Code) this Option may be exercised, to the extent
then vested, for up to one year from the date of such termination of
employment, unless the Option, by its terms, expires earlier.
(ii) In the event of Employee's termination of employment for any
reason (other than the reasons set forth in subparagraphs (i) and (iii) of
this paragraph (b)) this Option may be exercised, to the extent then
vested, for up to three months from the date of such termination of
employment, unless the Option, by its terms, expires earlier.
(iii) Notwithstanding subparagraphs (i) and (ii) above, if
Employee's termination of employment was on account of cause as described
in Section 7.6(d) of the Plan, this Option shall be immediately forfeited
to the Company and no additional exercise period shall be allowed,
regardless of the vested status of the Option.
In no event shall this Option be exercisable in whole or in part after the
expiration of 10 years from the date of this Agreement. The Option is intended
to be and shall be treated as an Incentive Stock Option.
(c) Subject to the provisions of Section 2(a) hereof, this Option may be
exercised over a period commencing on the date of this Agreement and ending 10
years from the date of the Agreement in accordance with the vesting schedule set
forth on Schedule A attached hereto.
(d) Notwithstanding the provisions in the preceding paragraph relating
to the vesting schedule set forth on Schedule A, while Employee remains in the
employ of the Company or an Affiliate
INCENTIVE STOCK OPTION AGREEMENT - Page 2
this Option may be exercised as to any and all shares of Common Stock covered
hereby prior to the dates set forth for the vesting thereof on Schedule A,
provided, however, that any shares of Common Stock purchased pursuant to the
exercise of the Option in excess of the number of shares otherwise then
exercisable as set forth on Schedule A attached hereto. During the Restriction
Period the shares of Restricted Stock shall be subject to the following
provisions and restrictions, in addition to the restrictions and provisions set
forth in paragraph (a) above and those set forth in the Plan:
(i) In the event of Employee's termination of employment with the
Company and its Affiliates during the Restriction Period, all shares of
Restricted Stock with respect to which the Restriction Period has not
ended shall be forfeited to AdamsLabs and AdamsLabs shall pay to Employee
an amount equal to the lesser of the price paid by Employee upon exercise
of the shares so forfeited or the Fair Market Value of the shares on the
date of forfeiture;
(ii) During the Restriction Period, employee shall not be entitled
to receive dividends or to vote the shares or enjoy other stockholder
rights with respect to any shares of Restricted Stock for which the
Restriction Period has not ended;
(iii) Employee shall not be entitled to possession of the stock
certificate representing the Restricted Stock until the Restriction Period
has expired and the Company shall retain custody of the Restricted Stock
during the Restriction Period; and
(iv) Employee may not sell, transfer, pledge, exchange, hypothecate
or otherwise dispose of the Restricted Stock during the Restriction
Period.
(e) Upon exercise of the Option, the exercise price of the Option shall
be payable to the Company in the Manner specified in Section 7.5 of the Plan.
(f) Promptly after demand by the Company, and at its direction, Employee
shall pay to the Company or the appropriate Affiliate an amount equal to the
applicable withholding taxes, if any, due in connection with the exercise of the
Option. Pursuant to Section 11.6 of the Plan, such withholding taxes may be paid
in cash or, subject to the further provisions of this Section 2(e), in whole or
in part, by having the Company withhold from the shares of Common Stock
otherwise issuable upon exercise of the Option a number of shares of Common
Stock having a value equal to the amount of such withholding taxes or by
delivering to the Company or the appropriate Affiliate a number of issued and
outstanding shares of Common Stock (excluding restricted shares still subject to
a risk of forfeiture) having a value equal to the amount of such withholding
taxes. The value of any shares of Common Stock so withheld by or delivered to
the Company or the appropriate Affiliate shall be based on the Fair Market Value
(as defined in the Plan) of such shares on the date on which the tax withholding
is to be made. Employee shall pay to the Company or the appropriate Affiliate in
cash the amount, if any, by which the amount of such withholding taxes exceeds
the value of the shares of Common Stock so withheld or delivered. An election by
Employee to have shares withheld or to deliver shares to pay withholding taxes
(an "Election") must be made at or prior to the time of exercise of the Option.
All Elections shall be made in the same manner as is required for the exercise
of the Option and shall be made on a form approved by the Company.
3. Acceleration of Vesting. Notwithstanding anything contained in this
Agreement or the Plan to the contrary, in the event of a Corporate Transaction
(as defined in the Plan), this Option shall become immediately exercisable in
full and the Restriction Period shall end with respect to any shares of
Restricted Stock previously purchased by Employee pursuant to exercise of this
Option.
INCENTIVE STOCK OPTION AGREEMENT - Page 3
4. Delivery of Shares. Delivery of the certificates representing the
shares of Common Stock purchased upon exercise of this Option shall be made
promptly after receipt of notice of exercise and full payment of the exercise
price and any required withholding taxes; provided, however, that delivery of
the certificates representing the shares of Restricted Stock purchased upon
exercise of this Option with respect to which the Restriction Period has ended
shall be made promptly after the later of receipt of notice of exercise and full
payment of the exercise price and the end of Restriction Period, subject to full
payment of any required withholding taxes. If the Company so elects, its
obligation to deliver shares of Common Stock upon the exercise of this Option
and Restricted Stock purchased upon exercise of this Option with respect to
which the Restriction Period has ended shall be conditioned upon its receipt
from the person exercising this Option of an executed investment letter, in form
and content satisfactory to the Company and its legal counsel, evidencing the
investment intent of such person and such other matters as the Company and its
legal counsel, evidencing the investment intent of such person and such other
matters as the Company may reasonably require. If the Company so elects, the
certificate or certificates representing the shares of Common Stock, including
any Restricted Stock with respect to which the Restriction Period has ended,
issued upon exercise of this Option shall bear a legend in substantially the
following form:
THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED UNLESS SUCH SHARES ARE FIRST REGISTERED THEREUNDER OR UNLESS
THE COMPANY RECEIVES A WRITTED OPINION OF COUNSEL, WHICH OPINION AND
COUNSEL ARE ACCEPTABLE TO THE COMPANY, TO THE EFFECT THAT REGISTRATION
THEREUNDER IS NOT REQUIRED.
In addition, each certificate representing shares of Common Stock, including any
Restricted Stock with respect to which the Restriction Period has ended, issued
pursuant to the Option shall bear a legend in substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
THE TERMS OF THE 1999 LONG-TERM INCENTIVE PLAN OF XXXXX LABORATORIES, INC.
("ADAMSLABS") AND MAY NOT BE SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR
OTHERWISE ENCUMBERED OR DISPOSED OF EXCEPT AS SET FORTH IN THE TERMS OF AN
AGREEMENT ENTERED INTO BETWEEN THE REGISTERED OWNER HEREOF AND ADAMSLABS.
A COPY OF SUCH PLAN AND AGREEMENT ARE ON FILE AT THE PRINCIPAL EXECUTIVE
OFFICES OF ADAMSLABS.
5. Nonassignability. The Option granted hereunder may not be sold,
transferred, pledged, exchanged, hypothecated or otherwise disposed of, other
than by will or pursuant to the applicable laws of descent and distribution. In
the case of the death of Employee or other person entitled to exercise the
Option, the Company may require, as a condition to the transfer of the Option by
will or pursuant to the laws of descent and distribution or the exercise
thereof, that the person entitled to exercise the Option execute and deliver to
the Company such instruments and documents as may be reasonably requested by the
Company to evidence and confirm such person's right and title to the Option.
6. Notices. All notice between the parties hereto shall be in writing.
Notices to Employee shall be given to Employee's address as contained in the
Company's records. Notices to the Company
INCENTIVE STOCK OPTION AGREEMENT - Page 4
shall be addressed to the Board of Directors, Xxxxx Laboratories, Inc., 00000
Xxxxxxxxx Xxxx, Xx. Xxxxx, Xxxxx 00000, Attention: LTIP Administration.
7. Relationship With Contract of Employment.
(a) The grant of an Option does not form part of Employee's entitlement
to remuneration or benefit pursuant to his/her contract of employment, if any,
nor does the existence of a contract of employment between any person and the
Company or an Affiliate give such person any right or entitlement to have an
Option granted to him/her or any expectation that an Option might be granted to
him/her whether subject to any conditions or at all.
(b) The rights and obligations of Employee under the terms of his/her
contract of employment with the Company or an Affiliate, if any, shall not be
affected by the grant of an Option.
(c) The rights granted to Employee upon the grant of an Option shall not
afford Employee any rights or additional rights to compensation or damages in
consequence of the loss or termination of his/her office or employment with the
Company or an Affiliate for any reason whatsoever.
(d) Employee shall not be entitled to any compensation or damages for
any loss or potential loss which he/she may suffer by reason of being or
becoming unable to exercise an Option in consequence of the loss or termination
of his/her office or employment with the Company or an Affiliate for any reason
(including, without limitation, any breach of contract by his/her employer) or
in any other circumstances whatsoever.
8. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws (and not the principles relating to conflicts
of laws) of the State of Texas, except as superceded by Federal law.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
XXXXX LABORATORIES, INC.
By /s/ Xxxxx X. Xxxxxx
--------------------------------
XXXXX X. XXXXXX
CHIEF FINANCIAL OFFICER
EMPLOYEE:
__________________________________
<> <>
<>
INCENTIVE STOCK OPTION AGREEMENT - Page 5
I have reviewed this Agreement and the related Plan and agree to and
accept all of the terms set forth therein to the extent of any interest I may
now have or may have in the future pursuant to the grant of the Award described
herein to my spouse.
SPOUSE:
______________________________________
Signature of Employee's spouse if any.
INCENTIVE STOCK OPTION AGREEMENT - Page 6
XXXXX LABORATORIES, INC.
SCHEDULE A
TO
INCENTIVE STOCK OPTION AGREEMENT
(a) <>% of such shares (if a fractional number, then the
next lower whole number) are purchasable, in whole at any time or in part from
time to time, commencing on <>, if the Employee serves as an employee of
the Company or an Affiliate until that date;
(b) an additional <>% of such shares (if a fractional
number, then the next lower whole number) are purchasable, in whole at any time
or in part from time to time, commencing on <>, if the Employee serves as
an employee of the Company or an Affiliate until that date;
(c) an additional <>% of such shares (if a fractional
number, then the next lower whole number) are purchasable, in whole at any time
or in part from time to time, commencing on <>, if the Employee serves as
an employee of the Company or an Affiliate until that date;
(d) an additional <>% of such shares (if a fractional
number, then the next lower whole number) are purchasable, in whole at any time
or in part from time to time, commencing on <>, if the Employee serves as
an employee of the Company or an Affiliate until that date;
(e) the remaining <>% of such shares are purchasable, in
whole at any time or in part from time to time, commencing on <>, if the
Employee serves as an employee of the Company or an Affiliate until that date.
INCENTIVE STOCK OPTION AGREEMENT - Page 7
