Exhibit (d)(3)
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1999 STOCK PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
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(TIME VESTING OPTION FOR BOARD OF DIRECTORS)
, 2003
The parties to this Non-Qualified Stock Option Contract are MedSource
Technologies, Inc., a Delaware corporation (the "Company"), and ____________
(the "Optionee"). Each capitalized term used but not defined herein shall have
the meaning assigned to it in the Company's 1999 Stock Plan (the "Plan").
The parties agree as follows:
1. The Company, in accordance with the allotment made by the
Administrators and subject to the terms and conditions of the Plan, hereby
grants to the Optionee an option to purchase an aggregate of _____ shares of
Common Stock at an exercise price equal to $______ per share (the closing price
per share of Common Stock on the Nasdaq National Market on the date prior to the
date hereof).
2. (a) The term of this option shall be 10 years from the date hereof,
subject to earlier termination as provided in this Contract and the Plan. This
option shall vest as to one-third of the total number of shares of Common Stock
subject hereto on the first anniversary of the date hereof and as to an
additional one-third of such total number of shares on each of the next two
anniversaries of the date hereof.
(b) If the termination of the Optionee's directorship with the
Company occurs by reason of the Optionee's death or Disability (i) less than six
months before the first anniversary of the date hereof, then this option shall
vest as to one-half of the total number of shares of Common Stock (rounded up to
the nearest whole share) that would otherwise have vested on the first
anniversary of the date hereof if the Optionee had continued to be a director of
the Company, (ii) less than six months before the second anniversary of the date
hereof, then, in addition to the number of shares of Common Stock as to which
this option is then otherwise vested, this option shall vest as to one-half of
the total number of shares of Common Stock (rounded up to the nearest whole
share) that would otherwise have vested on the second anniversary of the date
hereof if the Optionee had continued to be a director of the Company, (iii) less
than six months before the third anniversary of the date hereof, then, in
addition to the number of shares of Common Stock as to which this option is then
otherwise vested, this option shall vest as to one-half of the total number of
shares of Common Stock (rounded up to the nearest whole share) that would
otherwise have vested on the third anniversary of the date hereof if the
Optionee had continued to be a director of the Company, or (iv) less than six
months before the fourth anniversary of the date hereof, then, in addition to
the number of shares of Common Stock as to
which this option is then otherwise vested, this option shall vest as to
one-half of the total number of shares of Common Stock (rounded up to the
nearest whole share) that would otherwise have vested on the fourth anniversary
of the date hereof if the Optionee had continued to be a director of the
Company.
(c) Immediately prior to the consummation of a Transaction (as
defined herein), this option shall vest as to all of the shares of Common Stock
subject hereto.
(d) The right to purchase shares of Common Stock under this option
shall be cumulative, so that if the full number of shares purchasable in a
period shall not be purchased, the balance may be purchased at any time or from
time to time thereafter, but not after the expiration of the term of this option
as herein provided and as provided in the Plan.
3. This option shall be exercised by giving written notice to the
Company at its then principal office, currently 000 Xxxxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxxx, Xxxxxxxxx 00000 Attention: Chief Financial Officer, stating that
the Optionee is exercising the option hereunder, specifying the number of shares
being purchased and accompanied by payment in full of the aggregate purchase
price therefor (a) in cash or by certified check, (b) with the consent of the
Company, with previously acquired shares of Common Stock that are fully paid,
vested, transferable and have been held by the Optionee for the requisite period
to avoid a charge to the Company's earnings for financial accounting purposes,
or (c) with the consent of the Company, with a combination of the foregoing.
4. The Company may withhold cash and/or shares of Common Stock to be
issued to the Optionee in the amount that the Company determines is necessary to
satisfy its obligation to withhold taxes or other amounts incurred by reason of
the grant, exercise or disposition of this option or the disposition of the
underlying shares of Common Stock. Alternatively, the Company may require the
Optionee to pay the Company such amount and the Optionee agrees to pay such
amount to the Company in cash, promptly upon demand.
5. (a) The Optionee represents and warrants that any and all shares of
Common Stock purchased by the Optionee pursuant to the exercise of this option
will be acquired for the Optionee's own account and not with a view to, or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act and such shares may not be disposed of except
in compliance with all federal and state securities laws. Notwithstanding any
other provisions of this agreement to the contrary, the Company shall not be
required to sell or issue any shares of Common Stock pursuant to this option if
the sale or issuance of such shares would constitute a violation of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. The
Company may require that the Optionee deliver at the time of each exercise of
the option and as a condition to exercise of the option, a further written
representation that the shares of Common Stock being acquired upon exercise
shall be acquired by the Optionee solely for investment and will not be sold or
transferred without registration or an exemption from registration under the
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Securities Act and applicable state securities laws and regulations, including
compliance with all requirements for such exemption. The Company may also
require that the Optionee deliver other written representations that will permit
the Company to comply with federal and applicable state securities laws in
connection with the issuance of the shares, including representations as to the
knowledge and experience in financial and business matters of the Optionee and
the Optionee's ability to bear the economic risk of the Optionee's investment.
The Company may require that the Optionee obtain a "purchaser representative" as
that term is defined in applicable federal and state securities laws, prior to
the sale or issuance of such shares.
The Optionee shall have no right to require the Company, and the
Company shall have no obligation, to register the issuance or sale of any
security acquired pursuant to the exercise of the Option granted by this
agreement under the Securities Act or under any other law or regulation.
(b) The Optionee acknowledges and agrees that in any event or series
of events set forth in Section 11(b) of the Plan (a "Transaction"), unless other
provision is made therefor in such Transaction, (x) the Company (or its
designee) shall have the right (but not the obligation) to purchase all options
that are vested prior to the closing of such Transaction for an amount equal to
the excess, if any, of the aggregate amount that would have been received in
such Transaction by the Optionee with respect to the shares of Common Stock
subject to the vested portion of this option, determined as if the Optionee had
exercised such vested portion immediately prior to such Transaction, over the
aggregate exercise price therefor, which excess may be paid in cash or the
property to be received by owners of Common Stock in such Transaction and (y)
the rights of the Optionee with respect to the unvested portion of this option
shall be cancelled. Prior to a Transaction, the Company may, in its discretion,
notify the Optionee of such proposed purchase by sending to the Optionee written
notice of such proposed Transaction. The notice may set forth a date by which
the Company shall close such purchase and shall contain such other information
as the Company, in its discretion, believes is necessary to close such purchase
at or prior to consummation of such Transaction.
6. (a) Upon the resignation of the Optionee as a director of the
Company or upon any termination of the Optionee's directorship with the Company
by reason of the Optionee's death or Disability, then the Optionee may exercise
the option to the extent vested (whether or not otherwise exercisable) during
the period beginning on the effective date of such termination and ending 90
days after such date.
(b) Subject to the right of the Company referred to in clause (x) of
paragraph 5(b) of this Contract, in the event the Optionee shall cease to serve
as a director of the Company as a result of a Transaction referred to in
paragraph 2(c) of this Contract or as a result of any corporate policy that
applies to directors in general, the Optionee may exercise the option during the
period beginning on the effective date of such cessation or such Transaction, as
the case may be, and ending on the tenth anniversary of the date of this
Contract.
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(c) The right to purchase shares under this option shall terminate
immediately upon the termination of the Optionee's directorship with the Company
for any reason not previously specified in this paragraph 6 (including, without
limitation, for Cause), but the option granted hereunder shall not be affected
by a change in status of the Optionee so long as the Optionee continues to be a
consultant or advisor to the Company, any of its Subsidiaries or a Parent
(regardless of having changed from one to the other or having been transferred
from one entity to the other).
7. The Optionee hereby represents and warrants to the Company that,
unless a registration statement under the Securities Act with respect to the
shares of Common Stock to be received upon an exercise of this option is
effective and current at the time of exercise of this option, the shares of
Common Stock to be issued upon the exercise of this option will be acquired by
the Optionee for the Optionee's own account, for investment only and not with a
view to the resale or distribution thereof. In any event, the Optionee shall
notify the Company of any proposed resale of the shares of Common Stock issued
to him upon exercise of this option. Any subsequent resale or distribution of
shares of Common Stock by the Optionee shall be made only pursuant to (a) a
registration statement under the Securities Act which is effective and current
with respect to the sale of shares of Common Stock being sold, or (b) a specific
exemption from the registration requirements of the Securities Act, but in
claiming such exemption, the Optionee shall, prior to any offer of sale or sale
of such shares of Common Stock, provide the Company (unless waived by the
Company) with a favorable written opinion of counsel satisfactory to the
Company, in form, substance and scope satisfactory to the Company, as to the
applicability of such exemption to the proposed sale or distribution. Such
representations and warranties shall also be deemed to be made by the Optionee
upon each exercise of this option. Nothing herein shall be construed as
requiring the Company to register the shares subject to this option under the
Securities Act or to keep any registration statement effective or current.
8. Notwithstanding anything herein to the contrary, if at any time the
Administrators determine, in their sole discretion, that the listing or
qualification of the shares of Common Stock subject to this option on any
securities exchange, Nasdaq or under any applicable law, or the consent or
approval, or filing with, of any governmental agency or regulatory body, is
necessary or desirable as a condition to, or in connection with, the granting of
an option or the issue of shares of Common Stock hereunder, this option may not
be exercised in whole or in part unless such filing, listing, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Administrators.
9. The Company may endorse such legend or legends upon the certificates
for shares of Common Stock issued upon exercise of this option and may issue
such "stop transfer" instructions to its transfer agent in respect of such
shares as it determines, in its discretion, to be necessary or appropriate to
(a) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or any applicable state securities law, or
(b) implement the provisions of the Plan or this Contract or any other agreement
between the Company and the Optionee with respect to such shares of Common
Stock.
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10. Nothing in the Plan or herein shall confer upon the Optionee any
right to continue as a director of the Company or in the employ, or as a
consultant to, of the Company, any Parent or any of its Subsidiaries, or
interfere in any way with any right of the Company, any Parent or its
Subsidiaries to terminate any such relationship at any time for any reason
whatsoever without liability to the Company, any Parent or any of its
Subsidiaries.
11. If the Company, in connection with an underwritten offering of
securities for its own account, at any time shall register shares of Common
Stock under the Securities Act of 1933 for sale to the public (other than on
Forms S-4 or S-8 (or any successor or similar form) or a shelf registration),
the Optionee shall not sell, pledge, hypothecate, gift or otherwise dispose of
any securities of the Company without the prior written consent of the managing
underwriters for the period required by the underwriters and designated by the
Company, which period shall begin not more than 30 days prior to the
effectiveness of the registration statement pursuant to which such public
offering shall be made and shall last not more than 180 days. The Company may
legend and impose stop transfer instructions on any certificate evidencing
securities relating to the restrictions provided in this paragraph 11. The
Optionee agrees to maintain the confidentiality of any information provided to
him or learned by him by reason of, as result of, or in connection with, holding
an option or owing shares in the Company.
12. The Company and the Optionee are subject to and bound by all of the
terms and conditions of the Plan, a copy of which is attached hereto and made a
part hereof. In the event of a conflict between the terms of this Contract and
the terms of the Plan, the terms of the Plan shall govern.
13. The Optionee represents and agrees that he will comply with all
applicable laws relating to the Plan and the grant and exercise of this option
and the disposition of the shares of Common Stock acquired upon exercise of the
option, including without limitation, federal and state securities and "blue
sky" laws.
14. This option is not transferable by the Optionee and may be
exercised (a) during the lifetime of the Optionee, only by the Optionee and (b)
after the death of the Optionee, only by the personal representative of the
Optionee's estate.
15. This Contract shall be binding upon and inure to the benefit of any
successor or assign of the Company and to the personal representative of the
Optionee's estate.
16. This Contract shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without regard to the
conflict of law that would defer to the substantive laws of another
jurisdiction.
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17. The invalidity, illegality or unenforceability of any term or
provision herein shall not affect the validity, legality or enforceability of
any other term or provision, all of which shall be valid, legal and enforceable
to the fullest extent permitted by applicable law. This Contract shall not be
construed or interpreted with any presumption against the Company by reason of
the Company causing this Contract to be drafted.
18. This Contract (together with the Plan) constitutes the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes any prior and/or contemporaneous agreements or
understandings with respect thereto (whether written or oral), all of which are
merged herein. This Contract may not be amended or modified except by an
instrument in writing signed by the parties hereto, and no term or provision
hereof may be waived by any party except by an instrument in writing signed by
such party. Notwithstanding the foregoing, the Optionee agrees that the Company
may amend the Plan and the options granted to the Optionee under the Plan,
subject to the limitations contained in the Plan.
[The next page is the signature page]
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The parties have executed and delivered this Non-Qualified Stock Option
Contract as of the date first written above.
MEDSOURCE TECHNOLOGIES, INC.
By: _______________________________
Name:
Title:
___________________________________
Name:______________________________
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