EXECUTIVE STOCK OPTION AGREEMENT
Exhibit 10.13
Award Granted to (“Participant”):
Effective Date (“Effective Date”):
Number of Shares (“Shares”):
Exercise Price (“Exercise Price”)
Effective Date (“Effective Date”):
Number of Shares (“Shares”):
Exercise Price (“Exercise Price”)
THIS AGREEMENT, made as of the Effective Date, by and between Xxxxxx Medical Group, Inc., a
Delaware corporation formerly known as Xxxxxx Acquisition Holdings, Inc. (the “Company”), and the
Participant.
WITNESSETH:
WHEREAS, the Company desires to afford the Participant the opportunity to acquire ownership of
the Company’s common stock, par value $.01 per share (“Common Stock”), so that he may have a direct
proprietary interest in the Company’s success.
NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties
hereby agree as follows:
1. Grant of Options. Subject to the terms and conditions set forth herein and in the
Company’s 1999 Equity Incentive Plan, as amended from time to time, a copy of which is attached
hereto as Exhibit A (the “Plan”), on the Effective Date the Company does hereby grant to the
Participant, during the period commencing on the Effective Date and ending on the 10th anniversary
of the Effective Date (the “Expiration Date”), the right and option (the right to purchase any one
share under this Agreement being an “Option”) to purchase from the Company the Shares of Common
Stock indicated above. The Option to purchase such Common Stock shall have an exercise price per
share equal to the Exercise Price indicated above.
2. Limitations on Exercise of Options.
(a) Subject to the terms and conditions set forth herein and in the Plan, the Options shall
vest and become exercisable, on a cumulative basis, with respect to 25% of the shares of Common
Stock on the first anniversary of the Effective Date and on each succeeding anniversary thereafter
so long as the Participant is employed by the Company; provided, however, that upon the occurrence
of a Change in Control (as defined below), all of the then unvested Options shall automatically
vest and be fully exercisable and shall remain so exercisable in accordance with the terms of this
Agreement. The Committee or the Board may accelerate the vesting and exercisability of any or all
of the then unvested Options at any time.
(b) For the purposes of this Agreement, the term “Change in Control” means the first to occur
on or after the Effective Date of any of the following:
(i) the acquisition by any person or persons acting as a group (“Person”) of capital
stock of the Company which, when added to any capital stock of the
Company already owned by the Person, constitutes more than fifty percent (50%) of
either (i) the total fair market value of the outstanding capital stock of the
Company, or (ii) the total voting power of the outstanding capital stock of the
Company; provided, however, that a Change in Control will not be deemed to have
occurred when any Person who owns more than fifty percent (50%) of the total fair
market value or the total voting power of the outstanding capital stock of the
Company as of the date of this Agreement acquires any additional capital stock of
the Company; and provided further, that an increase in the percentage of the
outstanding capital stock of the Company owned by a Person as a result of a
transaction in which the Company acquires its capital stock in exchange for property
will be treated as an acquisition of such capital stock by such Person; or
(ii) the acquisition by a Person, in a single transaction or a series of
transactions within a twelve (12) month period, of capital stock of the Company
representing not less than thirty-five percent (35%) of the total voting power of
the outstanding capital stock of the Company; or
(iii) the acquisition by a Person, in a single transaction or a series of
transactions within a twelve (12) month period, of consolidated assets of the
Company which have a total gross fair market value of not less than forty percent
(40%) of the total gross fair market value of all of the consolidated assets of the
Company immediately prior to such acquisition(s), in each case without regard to any
liabilities associated with such assets; provided, however, that a Change in Control
will not be deemed to have occurred when such assets are acquired by:
(1) an entity of which the Company owns, directly or indirectly, fifty percent
(50%) or more of the total fair market value or the total voting power of the
outstanding capital stock;
(2) a Person which owns, directly or indirectly, fifty percent (50%) or more of
the total fair market value or the total voting power of the outstanding capital
stock of the Company;
(3) an entity of which a Person described in clause (ii) owns, directly or
indirectly, fifty percent (50%) or more of the total fair market value or the total
voting power of the outstanding capital stock;
(4) an entity which is controlled by the stockholders of the Company
immediately after the transfer; or
(5) a stockholder of the Company in exchange for or with respect to capital
stock of the Company; or
(iv) a majority of the members of the Board is replaced in any twelve (12) month
period by directors whose appointment or election is not endorsed by a majority of
the members of the Board prior to the date of the appointment or election.
2
In making a determination as to whether a Change in Control has occurred, the foregoing definition
shall be construed and applied in a manner which would avoid the imposition of federal income tax
on the Participant by operation of Section 409A of the Code, if applicable.
3. Non-Transferable. Except as specifically authorized by the Committee, the
Participant may not transfer the Options except by will or the laws of descent and distribution and
the Options shall be exercisable during the Participant’s lifetime only by the Participant or, in
the event of his incapacity, his guardian or legal representative. Except as so authorized, no
purported assignment or transfer of the Options, or of the rights represented thereby, whether
voluntary or involuntary, by operation of law or otherwise (except by will or the laws of descent
and distribution), shall vest in the assignee or transferee any interest or right herein
whatsoever.
4. Loss of Status as an Eligible Person. If prior to the Expiration Date Participant
ceases to be an Eligible Person, unless otherwise determined by the Committee, the Options shall
expire on the earlier of the Expiration Date or the date that is ninety (90) days after the date
upon which Participant ceased to be an Eligible Person. In such event, the Options shall remain
exercisable by Participant until expiration only to the extent the Options were exercisable at the
time Participant ceased to be an Eligible Person.
5. Adjustments and Corporate Reorganizations. In accordance with and subject to the
applicable terms of the Plan, the Options shall be subject to adjustment or substitution, as
determined by the Committee, as to the number, price or kind of Stock or other consideration
subject to such Options or as otherwise determined by the Committee to be equitable (i) in the
event of changes in the outstanding Stock or in the capital structure of the Company by reason of
stock dividends, stock splits, reverse stock splits, recapitalizations, reorganizations, mergers,
consolidations, combinations, exchanges, or other relevant changes in capitalization occurring
after the date hereof or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, the Participant. No such adjustment shall be made which would
result in an increase in the amount of gain or a decrease in the amount of loss inherent in the
Options. The Company shall give the Participant written notice of an adjustment hereunder.
Notwithstanding anything herein to the contrary, in the event of any of the following:
(a) The Company is merged or consolidated with another corporation or entity and, in
connection therewith, consideration is received by shareholders of the Company in a form other than
stock or other equity interests of the surviving entity;
(b) All or substantially all of the assets of the Company are acquired by another person; or
(c) The Company’s reorganization or liquidation;
then the Committee may, in its discretion and upon at least 10 days advance notice to the affected
persons, cancel any outstanding Options and pay to the Participant, in cash, the value of such
Options based upon the price per share of Stock received or to be received by other shareholders of
the Company in such event and the per share exercise price of the Options.
3
6. Exercise; Payment for and Delivery of Common Stock. The Options shall be exercised
by delivering written notice to the Committee stating the number of shares of Common Stock to be
purchased, the person or persons in whose name the shares of Common Stock are to be registered and
each such person’s address and social security number. Such notice shall not be effective unless
accompanied by the full purchase price for all shares to be purchased, and any applicable
withholding (as described below). The purchase price shall be payable in cash, in shares of Common
Stock, any combination of cash or shares of Common Stock or any other method authorized by the Plan
and consented to by the Committee. In the event that all or part of the purchase price is paid in
shares of Common Stock, the shares used in payment shall be valued at their Fair Market Value on
the date of exercise of the Options. Payment in currency or by certified or cashier’s check shall
be considered payment in cash.
7. Restrictive Covenants; Repurchase Rights.
(a) By accepting the Options, the Participant represents and agrees for himself and his
transferees (whether by will or the laws of descent and distribution) that:
(i) For the period commencing on the date of this Agreement and ending on the first one year
anniversary of the termination of the Participant’s employment (such period is hereinafter referred
to as the “Restricted Period”), with respect to any geographic territories in which the Participant
engaged in business or had supervisory and/or management responsibility during the Participant’s
employment with the Company, the Participant shall not participate or engage, directly or
indirectly, for himself or herself or on behalf of or in conjunction with any person, partnership,
corporation or other entity, whether as an employee, agent, officer, director, shareholder,
partner, joint venturer, investor or otherwise (other than a limited partner or stockholder of less
than one percent of the issued and outstanding limited partnership interests or stock of a publicly
held partnership or corporation whose gross assets exceed $1,000,000), in the distribution,
solicitation, promotion, manufacture, design, development, or sale of any medical products or
services competitive with products manufactured, marketed, or sold by the Company or any of its
subsidiaries or any medical products or services intended to be manufactured, marketed, or sold by
the Company of the same general type or function.
(ii) Except with the Company’s prior written approval or as may otherwise be required by law
or legal process, the Participant agrees not to disclose or use any material or information which
is confidential to the Company or its subsidiaries and not in the public domain or generally known
in the industry, whether tangible or intangible, made available, disclosed or otherwise known to
the Participant as a result of his employment with the Company for so long as such information
remains confidential and not in the public domain.
(iii) During the Restrictive Period, the Participant shall not attempt to influence, persuade
or induce, or assist any other person in so persuading or inducing, any employee of the Company or
its subsidiaries to give up, or to not commence, employment or a business relationship with the
Company.
4
The parties intend the restrictions in this Paragraph 7(a) to be completely severable and
independent, and any invalidity or unenforceability of any one or more of such restrictions shall
not render invalid or unenforceable any one or more restrictions.
(b) In addition to all other legal and equitable remedies available to it, the Company shall
have the right, and not the obligation, to purchase and acquire from the Participant any or all of
the shares of Common Stock previously acquired by the Participant upon exercise of the Option (the
“Repurchased Shares”) if the Committee elects to take such action, in its absolute discretion, on
the basis of the Committee’s determination that the Participant has violated any of the covenants
set forth in this Agreement or if the Participant’s employment is terminated or could have been
terminated for Cause. The Company may exercise the right granted to it under this Section 7(b) by
delivering written notice to the Participant stating that the Company is exercising the repurchase
right granted to it under this Section 7(b). The delivery of such notice by the Company to the
Participant shall constitute a binding commitment of the Company to purchase and acquire all of the
Repurchased Shares. The total purchase price for the Repurchased Shares shall be delivered to the
Participant against delivery by the Participant of certificates evidencing the Repurchased Shares
no later than 30 days after the delivery of the election notice by the Company. The price per
share of the Repurchased Shares shall be the lesser of the Fair Market Value of each of the
Repurchased Shares on the date of the Company’s delivery of its written notice to the Participant
or the exercise price of the Option.
(c) In addition to all other legal and equitable remedies available to it, the Company shall
have the right, and not the obligation, to cancel any or all of the Participant’s Options if the
Committee elects to take such action, in its absolute discretion, on the basis of the Committee’s
determination that the Participant has violated the covenants set forth in this Agreement. The
Company may exercise the right granted to it under this Section 7(c) by delivering a written notice
to the Participant stating that the Company is exercising the cancellation right granted to it
under this Section 7(c).
(d) Anything in this Section 7 to the contrary, the Company shall not be obligated to purchase
any Common Stock at any time to the extent that the purchase would result in a violation of any
law, statute, rule, regulation, order, writ, injunction, decree or judgment promulgated or entered
by any Federal, state, local or foreign court or governmental authority applicable to the Company
or any of its property.
8. Rights as Stockholder.
(a) The Participant or a transferee of the Options shall have no rights as a stockholder with
respect to any shares covered by the Options until he shall have become the holder of record of
such shares (and the Company shall use its reasonable best efforts to cause the Participant
promptly to become the holder of record of such shares), and, except as provided in Section 5
hereof, no adjustment shall be made for dividends or distributions or other rights in respect of
such shares for which the record date is prior to the date upon which he shall become the holder of
record thereof.
(b) The Participant acknowledges and agrees that any Common Stock
5
acquired in respect of the Options granted under Section 2 shall be “Shares” as such term is
used in the Stockholders Agreement, dated as of December 7, 1999, among the Company and certain
“Investors” listed in Schedule I thereto, and, as such, will be subject to certain restrictions,
including restrictions on resale and such other transfers. In the event of any conflict or
inconsistency between the terms and provisions of this Agreement and the Stockholders Agreement,
the Stockholders Agreement shall govern and control.
9. Company; Participant.
(a) The term “Company” as used in this Agreement with reference to employment or as otherwise
indicated by the context shall include the Company and its Related Entities.
(b) Whenever the word “Participant” is used in any provision of this Agreement under
circumstances where the provision should logically be construed to apply to the executors, the
administrators, the legal representatives, the person or persons to whom the Options may be
transferred by will or by the laws of descent and distribution or any other transferee to whom the
Options may be transferred with the consent of the Committee, the word “Participant” shall be
deemed to include such person or persons.
10. Taxes. Grantee understands that Grantee may recognize income for federal and, if
applicable, state income tax purposes upon exercise of Options. Grantee shall be liable for any
and all taxes, including withholding taxes, arising out of the grant of the Options or their
exercise hereunder. By accepting the Options, Grantee covenants to report such income in
accordance with applicable federal and state laws. To the extent that the exercise of Options
results in income to Grantee and withholding obligations of the Company, including federal or state
withholding obligations, Grantee agrees that the obligation shall be satisfied in the manner
Grantee has chosen by checking one of the following boxes:
| o | At least one working day prior to the exercise date Grantee may deliver to the Company an amount of cash determined by the Company to be adequate to satisfy the Company’s withholding obligation. If Grantee does not deliver such amount of cash, the Company shall withhold an amount of the Grantee’s current or future remuneration in an amount that satisfies the Company’s withholding obligation. Notwithstanding the foregoing, the Company may in its sole discretion withhold from the Shares to be issued the specific number of Shares having a fair market value on the vesting date equal to the amount required to satisfy the Company’s withholding obligation. | ||
| o | The Company shall retain and instruct a registered broker(s) to sell such number of Shares issued upon exercise of Options necessary to satisfy the Company’s withholding obligations, after deduction of the broker’s commission, and the broker shall remit to the Company the cash necessary in order for the Company to satisfy its withholding obligations. Grantee covenants to execute any such documents as are requested by the broker of the Company in order to effectuate the sale of the Shares and payment of the tax obligations to the Company. The Grantee represents to the Company that, as of the date hereof, he or she is not |
6
| aware of any material nonpublic information about the Company or the Shares. The Grantee and the Company have structured this Agreement to constitute a “binding contract” relating to the sale of Shares pursuant to this Section, consistent with the affirmative defense to liability under Section 10(b) of the Exchange Act under Rule 10b5-1(c) promulgated under the Exchange Act.* |
11. Requirements of Law.
(a) By accepting the Options, the Participant represents and agrees for himself and his
transferees (whether by will or the laws of descent and distribution) that, unless a registration
statement under the Securities Act is in effect as to the shares purchased upon any exercise of the
Options, (i) any and all shares so purchased shall be acquired for his personal account and not
with a view to or for sale in connection with any distribution, and (ii) each notice of the
exercise of any portion of this Option shall be accompanied by a representation and warranty in
writing, signed by the person entitled to exercise the same, that the shares are being so acquired
in good faith for his personal account and not with a view to or for sale in connection with any
distribution.
(b) No certificate or certificates for shares of Common Stock may be purchased, issued or
transferred if the exercise hereof or the issuance or transfer of such shares shall constitute a
violation by the Company or the Participant of any (i) provision of any Federal, state or other
securities law, (ii) requirement of any securities exchange listing agreement to which the Company
may be a party, or (iii) other requirement of law or of any regulatory body having jurisdiction
over the Company. Any reasonable determination in this connection by the Board, upon notice given
to the Participant, shall be final, binding and conclusive.
(c) The certificates representing shares of Common Stock acquired pursuant to the exercise of
Options shall carry such appropriate legend, and such written instructions shall be given to the
Company’s transfer agent, as may be deemed necessary or advisable by counsel to the Company in
order to comply with the requirements of the Securities Act or any state securities laws.
12. Notices. Any notice to be given to either party shall be in writing and shall be
given by hand delivery to such party or by registered or certified mail, return receipt requested,
postage prepaid, addressed to the Company in care of its Secretary at its principal office, and to
the Participant at the address given beneath his signature hereto, or at such other address as
either party shall have furnished to the other in writing in accordance herewith. Notice and
communications shall be effective when actually received by the addressee.
13. Binding Effect. This Agreement shall be binding upon the heirs, executors,
administrators, successors and permitted assigns of the parties hereto.
14. The Plan. The terms and provisions of the Plan are incorporated herein by
| * | By selecting the second option, Grantee understands that the sale of Shares to satisfy the Company’s withholding obligations will be considered a sale for purposes of short-swing liability under Section 16(b) of the Exchange Act. Any profit realized in a purchase of shares of the Company’s stock within six months of the sale may be recovered by the Company or by a stockholder of the Company on behalf of the Company. |
7
reference and made a part hereof as though fully set forth herein. In the event of any conflict or
inconsistency between discretionary terms and provisions of this Agreement, this Agreement shall
govern and control. In all other instances of conflicts or inconsistencies or omissions, the terms
and provisions of the Plan shall govern and control. All capitalized terms not otherwise expressly
defined in this Agreement shall have the meaning ascribed to them in the Plan.
15. Governing Law. This Agreement shall be construed and interpreted in accordance
with the laws of the State of Tennessee, without regard to the principles of conflicts of law
thereof.
16. Entire Agreement. This Agreement, together with the Plan, contains the entire
agreement and understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto. This Agreement, and this
integration clause, is not intended to, and does not, limit or alter in any manner, the parties’
obligations under any previous agreement concerning obligations to maintain confidentiality or with
respect to restrictive covenants, including, but not limited to, any Nondisclosure Agreement,
Confidentiality and Inventions Agreement, Employment Agreement, Distributor Agreement, Sales
Representative Agreement, or any similar agreement between the parties, all of which obligations
shall remain in full force and effect.
8
This Agreement and the Options evidenced by this Agreement will not be effective until an original
signed Agreement is received by the Xxxxxx Medical Group, Inc. Legal Department. Please print and
sign this Agreement immediately, then send the signed Agreement to the Xxxxxx Medical Group, Inc.
Legal Department as soon as possible.
IN WITNESS WHEREOF, the Company has granted this Option on the date of grant specified above.
This instrument may be executed in any number of counterparts, each of which shall be deemed to be
an original, and such counterparts together shall constitute one and the same instrument.
| XXXXXX MEDICAL GROUP, INC. |
||||
| By: | ||||
| Xxxxx X. Xxxx | ||||
| Vice President, General Counsel, and Secretary |
||||
ACCEPTED:
PARTICIPANT:
9
