Exhibit 10.23
VITAL IMAGES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
OPTIONEE: Xxxxxxx X. Xxxx
XXXXX DATE: February 24, 1998
NUMBER OF OPTION SHARES: 300,000 Shares
EXPIRATION DATE: February 24, 2006
THIS AGREEMENT is made as of the Grant Date set forth above, by and
between Vital Images, Inc. (the "Company"), and the Optionee named above, who is
serving as President and Chief Executive Officer of the Company (the
"Optionee").
The Company desires, by affording the Optionee an opportunity to
purchase shares of its Common Stock, $.01 par value (the "Common Stock"), as
hereinafter provided, to induce the Optionee to continue performing services for
the Company.
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereby
agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
and option to purchase all or any part of the aggregate number of shares of
Common Stock set forth above (the "Option Shares") (such number being subject to
adjustment as provided in paragraph 8, hereof) on the terms and conditions set
forth in this Agreement. This option is NOT intended to be an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").
2. Term and Exercise of Option.
a. The term of this option shall commence on the Grant Date and
shall continue until the Expiration Date set forth above, unless
earlier terminated. Except as otherwise provided herein, this option
will vest and become exercisable in cumulative installments as follows:
(i) Up to 100,000 of the Option Shares may be purchased
after February 24, 1998 and prior to the termination of this
option (Group I Option Shares);
(ii) An additional 100,000 of the Option Shares may be
purchased at any time on or after February 24, 1999 and prior
to termination of this option (Group II Option Shares); and
(iii) An additional 100,000 of the Option Shares may be
purchased at any time on or after February 24, 2000 and prior
to the termination of this option (Group III Option Shares).
b. The option shall cease vesting, as described paragraph 2.a.
above, at such time as the Optionee shall cease providing services to
the Company pursuant to a written employment or consulting contract for
any reason, including death and disability; provided that the option
shall remain exercisable, to the extent that the option has already
vested according to the schedule provided in paragraph 2.a.
above, pursuant to the terms of paragraphs 6 and 7 below.
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For example, if the Optionee terminated employment on December 31,
1999, he would be vested in 200,000 Option Shares (the Group I Options
Shares and Group II Option Shares), but not in the Group III Option
Shares.
c. To exercise this option, the Optionee shall give written notice to
the Company in the form attached as Exhibit A, to the attention of its
Chief Financial Officer or other designated agent, and shall deliver
payment in full for the Option Shares with respect to which this option
is then being exercised, as provided in paragraph 4.b. below.
d. The total purchase price of the shares to be purchased upon exercise
of this option will be paid entirely in cash (including check, bank
draft or money order); provided, however, that the Compensation
Committee, in its sole discretion and upon terms and conditions
established by the Compensation Committee, may allow such payments to
be made, in whole or in part, by tender of previously acquired shares
of Company stock, a promissory note (on terms acceptable to the
Compensation Committee in its sole discretion) or by a combination of
such methods.
e. Neither the Optionee nor the Optionee's legal representatives,
legatees or distributees, as the case may be, will be, or will be
deemed to be, a holder of any Option Shares for any purpose unless and
until certificates for such shares are issued to the Optionee or the
Optionee's legal representatives, legatees or distributees, under the
terms of the Option Plan.
3. Purchase Price. The purchase price of the Option Shares shall be as
follows (such purchase price being subject to adjustment as provided in
paragraph 8 hereof).
a. Group I Option Shares: the purchase price for the Group I Option
Shares shall be $1.125 per share.
b. Group II Option Shares: the purchase price of the Group II Option
Shares shall be $2.25 per share.
c. Group III Option Shares: the purchase price of the Group III Option
Shares shall $4.50 per share.
4. Limitations on Exercise of Option.
a. The exercise of this option will be contingent upon receipt from the
Optionee (or the purchaser acting under paragraph 7 below) of the full
purchase price of such Option Shares. Payment of the purchase price may
be made in cash, check, bank draft, money order, in shares of Common
Stock, including shares issuable upon exercise of this option, having
an aggregate fair market value on the date of exercise which is not
less than the total purchase price, by tender of a broker exercise
notice, or by a combination of such methods.
b. The issuance of Option Shares upon the exercise of this option shall
be subject to all applicable laws, rules, and regulations. If, in the
opinion of the Board of Directors of the Company, (i) the listing,
registration, or qualification of the Option Shares under any state or
federal law, (ii) the consent or approval of any regulatory body, or
(iii) an agreement of the Optionee with respect to the disposition of
the Option Shares, is necessary or desirable as a condition to the
issuance or sale of the Option Shares, this option shall not be
exercisable unless and until such listing, registration, qualification,
consent, approval or agreement is effected or obtained in form
satisfactory to the Board of Directors.
5. Nontransferability of Option. This option shall not be transferable
by the Optionee, other than by will or the laws of descent and distribution.
During the lifetime of the Optionee, this option shall be exercisable only by
the Optionee.
6. Termination of Service.
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a. If the Optionee shall cease to serve as an employee of or consultant
to the Company pursuant to a written contract for any reason
whatsoever, this option may be exercised, to the extent the option was
exercisable on the date of such termination, until the Expiration Date
set forth above. For example, if the Optionee terminated employment
with the Company on December 31, 1999, this option would continue to be
exercisable as to the Group I Option Shares and Group II Option Shares
until February 24, 2006.
b. This option will not confer upon the Optionee any right to continue
to serve as an employee of or consultant to the Company, nor will it
interfere in any way with the Company's right to terminate the
Optionee's service as an employee or consultant at any time.
7. Death of Optionee.
a. In the event of the death of the Optionee while the Optionee is an
employee of or consultant to the Company pursuant to a written
contract, and has continuously served as such since the Grant Date,
this option may be exercised, to the extent the Optionee shall have
been entitled to do so at the date of death, until the Expiration Date
set forth above. In such event, this option shall be exercisable only
by the executors or administrators of the Optionee or by the person or
persons to whom the Optionee's rights under the option shall pass by
the Optionee's Will or the laws of descent and distribution. For
example, if the Optionee died on December 31, 1999, this option would
continue to be exercisable by the Optionee's representative as to the
Group I Option Shares and Group II Option Shares until February 24,
2006.
b. In the event of the death of the Optionee after the termination of
the Optionee's service as an employee of or consultant to the Company,
this option may be exercised, to the extent the Optionee shall have
been entitled to do so at the date of death, until the Expiration Date
set forth above. In such event, this option shall be exercisable only
by the executors or administrators of the Optionee or by the person or
persons to whom the Optionee's rights under the option shall pass by
the Optionee's Will or the laws of descent and distribution.
8. Merger, Consolidation, Reorganization, Liquidation; Adjustments.
Subject to the other provisions of this option, in the event of any change in
the outstanding shares of Common Stock by reason of any reorganization, merger,
consolidation, liquidation, stock dividend or split, recapitalization,
reclassification, combination, or exchange of shares or other similar corporate
change, then if the Board of Directors shall determine, in its sole discretion,
that such change necessarily or equitably requires an adjustment in the number
of Option Shares or in the Option Price Per Share in order to prevent
enlargement or dilution of the rights of the Optionee, such adjustments shall be
made by the Board of Directors and shall be conclusive and binding for all
purposes of this option. No adjustment shall be made in connection with the
issuance by the Company of any warrants, rights, or options to acquire
additional Common Stock or of securities convertible into Common Stock.
9. Immediate Acceleration of Option. Notwithstanding any provision in
this option to the contrary, this option will become exercisable in full
immediately if, subsequent to the Grant Date set forth above, any of the
following events shall occur while the Optionee is an employee of the Company:
a. The sale, lease, exchange or other transfer, directly or indirectly,
of substantially all of the assets of the Company (in one transaction
or in a series of related transactions) to a person or entity that is
not controlled by the Company,
b. The approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company;
c. A merger or consolidation to which the Company is a party if the
shareholders of the Company immediately prior to effective date of such
merger or consolidation have "beneficial ownership" (as defined in Rule
13d-3 under the Exchange Act), immediately following the effective date
of such merger or consolidation, of securities of the surviving
corporation representing (A) more than 50%, but not more than 80%, of
the combined voting power of the surviving corporation's then
outstanding securities ordinarily having the right to vote at elections
of directors, unless such merger or consolidation has been approved in
advance by the Incumbent Directors (as defined below), or (B) 50% or
less of the combined voting power
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of the surviving corporation's then outstanding securities ordinarily
having the right to vote at elections of directors (regardless of any
approval by the Incumbent Directors);
d. Any person becomes after the effective date of the Plan the
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of (A) 20% or more, but not 50% or more, of the
combined voting power of the Company's outstanding securities
ordinarily having the right to vote at elections of directors, unless
the transaction resulting in such ownership has been approved in
advance by the Incumbent Directors, or (B) 50% or more of the combined
voting power of the Company's outstanding securities ordinarily having
the right to vote at elections of directors (regardless of any approval
by the Incumbent Directors);
e. The Incumbent Directors cease for any reason to constitute at least
a majority of the Board; or
f. Any other change in control of the Company of a nature that would be
required to be reported pursuant to Section 13 or 15(d) of the Exchange
Act, whether or not the Company is then subject to such reporting
requirements.
For purposes of this paragraph 9, "Incumbent Directors" of the Company
will mean any individuals who are members of the Board on the effective date of
this Option Agreement and any individual who subsequently becomes a member of
the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Incumbent
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).
The Compensation Committee may, in its sole discretion, determine that
the Optionee shall receive, with respect to some of the all of the Option
Shares, cash in an amount equal to the excess of the fair market value of such
Option Shares immediately prior to the effective date of such Change in Control
over the total purchase price of the Option Shares.
Notwithstanding any provision in this Option Agreement to the contrary,
neither the Board of Directors nor the Compensation Committee shall have the
power or right, either before or after the occurrence of an event described in
subparagraph (a) through (f) above, to rescind, modify or amend the provisions
of this paragraph 9 without the consent of the Optionee.
10. Interpretation. The interpretation and construction of any
provision of this Option Agreement shall be made by the Board of Directors and
shall be final, conclusive and binding on the Optionee and all other persons.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in its corporate name by its duly authorized officer, and the Optionee
has executed this Agreement as of the Grant Date set forth above.
COMPANY: VITAL IMAGES, INC.
By /s/ XXXXXXX X. XXXXXXX
Its: CHIEF FINANCIAL OFFICER
OPTIONEE: /s/ XXXXXXX X. XXXX
Xxxxxxx X. Xxxx
MPL1: 239857-1/#7639-2
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EXHIBIT A
NOTICE OF EXERCISE OF
STOCK OPTION
TO:
FROM:
DATE:
RE: Exercise of Stock Option
I here by exercise my option to purchase ______________ shares of
Common Stock at $___________ per share (total exercise price of $ __________ ).
This notice is given in accordance with the terms of my Stock Option Agreement
dated ____________ , 19__. The option price and vested amount is in accordance
with Sections 2 and 3 of the Stock Option Agreement.
Check one:
[ ] Attached is cash, or a check, bank draft or money order payable to
Vital Images, Inc. for the total exercise price of the shares being
purchased.
[ ] Attached is a certificate(s) for shares of common stock duly endorsed
in blank and surrendered for the exercise price of the shares being
purchased.
[ ] I wish to exercise my option by surrendering a sufficient number of
shares of Common Stock issuable upon exercise of such option to pay the
exercise price.
[ ] Attached is a broker exercise notice, together with a check made
payable to Vital Images, Inc. and instructions as to delivery of the
shares.
[ ] Please prepare the stock certificate in the following name(s):
Sincerely,
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(Signature)
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(Print or Type Name)
Letter and consideration
received on ____________, 19__
(effective date of exercise)
By:
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Name:
----------------------------
Title:
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