Exhibit 10.12
ORTHODONTIX, INC.
STOCK OPTION AWARD AGREEMENT
1. Grant of Option. Orthodontix, Inc., a Florida corporation (the
"Company"), hereby grants to Xxxx Xxxxx, Ph.D. (the "Grantee"), an option (the
"Option") to purchase 354,601 shares of the common stock, par value $.0001
(which gives effect to the reverse stock split that went into effect on December
29, 2006) (the "Common Stock"), of the Company (the "Shares"), at an exercise
price per share equal to $16.70 (the "Exercise Price") subject to the terms and
provisions of this Stock Option Award Agreement (the "Option Agreement"). The
Company, during the term of the Option, will at all times reserve and keep
available such number of Shares as shall be sufficient to satisfy the
requirements of the Option.
2. Exercise of Option.
(a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the following Vesting Schedule:
Percentage of Stock Vesting Date
------------------- ------------
20% Sixth months after
the Company's Common
Stock begins trading
on the American Stock
Exchange
20% on the first day of
each six month period
thereafter such that
all shall be fully
vested on the 30th
month after the
Company's Common
Stock begins trading
on the American Stock
Exchange.
Notwithstanding the foregoing, such vesting schedule shall cease and all
unvested options shall remain unvested in the event Grantee ceases to express
the willingness to serve on the Board of Directors of the Company and no longer
serves on such Board and, if not on the Board of Directors of the Company,
ceases to provide and has not provided any services to the Company of the same
type that was provided while such Grantee was a member of the Board of Directors
("Continuous Service"). In no event shall the Company issue fractional Shares.
(b) Acceleration of Award Upon Change in Control.
(i) Change in Control. Following a Change in Control, the
Options granted hereunder automatically shall become fully vested and
exercisable, immediately upon the consummation of such Change in Control.
(ii) Definition of "Change in Control". For purposes hereof, a
"Change in Control" means a change in ownership or control of the Company
effected through either of the following transactions:
(A) the direct or indirect acquisition by any person
or related group of persons (other than an acquisition from or by the Company or
by a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than fifty percent (50%) of the
total combined voting power of the Company's outstanding securities pursuant to
a tender or exchange offer made directly to the Company's stockholders which a
majority of the Continuing Directors who are not Affiliates or Associates (as
such terms are defined in Rule 12b-2 promulgated under the Securities Exchange
Act of 1934, as amended) of the offeror do not recommend such stockholders
accept, or
(B) a change in the composition of the Board over a
period of twelve (12) months or less such that a majority of the Board members
(rounded up to the next whole number) ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who are
Continuing Directors. For purposes hereof, "Continuing Directors" means members
of the Board who either (i) have been Board members continuously for a period of
at least twelve (12) months or (ii) have been Board members for less than twelve
(12) months and were elected or nominated for election as Board members by at
least a majority of the Board members described in clause (i) who were still in
office at the time such election or nomination was approved by the Board.
(c) Method of Exercise. The Option shall be
exercisable by delivery of an exercise notice (a form of which is attached as
Exhibit A) which shall state the election to exercise the Option, the whole
number of Shares in respect of which the Option is being exercised, and such
other provisions as set forth in Exhibit A. The exercise notice shall be
delivered in person, by certified mail, or by such other reasonable method
(including electronic transmission) accompanied by payment of the Exercise Price
and all applicable income and employment taxes required to be withheld. The
Option shall be deemed to be exercised upon receipt by the Company of such
notice accompanied by the Exercise Price and all applicable withholding taxes,
which, to the extent selected, shall be deemed to be satisfied by use of the
broker-dealer sale and remittance procedure to pay the Exercise Price provided
in Section 3(d) below to the extent such procedure is available to the Grantee
at the time of exercise and such an exercise would not violate any applicable
law.
(d) Taxes. No Shares will be delivered to the Grantee
or other person pursuant to the exercise of the Option until the Grantee or
other person has made reasonable arrangements for the satisfaction of applicable
income tax and employment tax withholding obligations, including, without
limitation, such other tax obligations of the Grantee incident to the receipt of
Shares. Upon exercise of the Option, the Company or the Grantee's employer may
offset or withhold (from any amount owed by the Company or the Grantee's
employer to the Grantee) or collect from the Grantee or other person an amount
sufficient to satisfy such tax withholding obligations.
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3. Method of Payment. Payment of the Exercise Price shall be made by any
of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
applicable law:
(a) cash;
(b) check;
(c) surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares which have a Fair Market Value on the date of
surrender or attestation equal to the aggregate Exercise Price of the Shares as
to which the Option is being exercised;
(d) payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company-designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (ii) shall provide
written directives to the Company to deliver the certificates for the purchased
Shares directly to such brokerage firm in order to complete the sale
transaction;
(e) issuance of a note to the extent not prohibited by applicable
law;
(f) payment through a "net exercise" such that, without the payment
of any funds, the Grantee may exercise the Option and receive the net number of
Shares equal to (i) the number of Shares as to which the Option is being
exercised, multiplied by (ii) a fraction, the numerator of which is the Fair
Market Value per Share (on such date as is determined by the Administrator) less
the Exercise Price, and the denominator of which is such Fair Market Value per
Share (the number of net Shares to be received shall be rounded down to the
nearest whole number of Shares); or
(g) any combination of the foregoing methods of payment.
4. Restrictions on Exercise. The Option must be exercised no later than
the ten year anniversary of the date of grant (the "Expiration Date"). After the
Expiration Date, the Option shall be of no further force or effect and may not
be exercised. The Option may not be exercised if the issuance of the Shares
subject to the Option upon such exercise would constitute a violation of any
Applicable Laws. If the exercise of the Option is prevented by the provisions of
this Section 4, the Option shall remain exercisable until one (1) month after
the date the Grantee is notified by the Company that the Option is exercisable,
but in any event no later than the Expiration Date.
5. Transferability of Option. The Option may be transferred by Grantee to
any person so long as Grantee provides notice of such transfer to the Company
within five business days of completing such transfer. In addition, Grantee may
designate one or more beneficiaries of the Grantee's Stock Option in the event
of the Grantee's death on a beneficiary designation form provided by the
officer, director, committee of the Board of Directors, Board of Directors or
other person designated to administer the terms of the Company's equity
incentive compensation (the "Administrator"). Following the death of the
Grantee, the Option may be exercised (a) by the person or persons designated
under the deceased Grantee's beneficiary
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designation or (b) in the absence of an effectively designated beneficiary, by
the Grantee's legal representative or by any person empowered to do so under the
deceased Grantee's will or under the then applicable laws of descent and
distribution. The terms of the Option shall be binding upon the executors,
administrators, heirs, successors and transferees of the Grantee.
6. Adjustment. Subject to any required action by the stockholders of the
Company, the number of Shares covered by this Option and the Exercise Price
shall be proportionately adjusted for (i) any increase or decrease in the number
of issued shares of Common Stock resulting from a stock split, reverse stock
split, stock dividend, combination or reclassification of the Shares, or similar
transaction affecting the Shares, (ii) any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of
consideration by the Company, or (iii) any other transaction with respect to
Common Stock including a corporate merger, consolidation, acquisition of
property or stock, separation (including a spin-off or other distribution of
stock or property), reorganization, liquidation (whether partial or complete) or
any similar transaction.
7. Tax Consequences. The Grantee may incur tax liability as a result of
the Grantee's purchase or disposition of the Shares. THE GRANTEE SHOULD CONSULT
A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
8. Entire Agreement: Governing Law. This Option Agreement constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersede in their entirety all prior undertakings and agreements of the Company
and the Grantee with respect to the subject matter hereof, and may not be
modified adversely to the Grantee's interest except by means of a writing signed
by the Company and the Grantee. Nothing in this Option Agreement (except as
expressly provided therein) is intended to confer any rights or remedies on any
persons other than the parties. This Option Agreement is to be construed in
accordance with and governed by the internal laws of the State of Florida
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Florida to the rights and duties of the parties. Should any provision of this
Option Agreement be determined to be illegal or unenforceable, such provision
shall be enforced to the fullest extent allowed by law and the other provisions
shall nevertheless remain effective and shall remain enforceable.
9. Construction. The captions used in this Option Agreement are inserted
for convenience and shall not be deemed a part of the Option for construction or
interpretation. Except when otherwise indicated by the context, the singular
shall include the plural and the plural shall include the singular. Use of the
term "or" is not intended to be exclusive, unless the context clearly requires
otherwise.
10. Venue and Waiver of Jury Trial. The Company, the Grantee, and the
Grantee's assignees (the "parties") agree that any suit, action, or proceeding
arising out of or relating to this Option Agreement shall be brought in the
United States District Court for the Southern District of Florida (or should
such court lack jurisdiction to hear such action, suit or proceeding, in a
Florida state court in the County of Miami-Dade) and that the parties shall
submit to the jurisdiction of such court. The parties irrevocably waive, to the
fullest extent permitted by law, any objection the party may have to the laying
of venue for any such suit, action or proceeding
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brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR
MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or
more provisions of this Section 10 shall for any reason be held invalid or
unenforceable, it is the specific intent of the parties that such provisions
shall be modified to the minimum extent necessary to make it or its application
valid and enforceable.
11. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such
other address as such party may designate in writing from time to time to the
other party.
12. Definition of "Fair Market Value". As used herein, "Fair Market Value"
means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on one or more established
stock exchanges or national market systems, including without limitation the
American Stock Exchange, its Fair Market Value shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on the
principal exchange or system on which the Common Stock is listed (as determined
by the Administrator) on the date of determination (or, if no closing sales
price or closing bid was reported on that date, as applicable, on the last
trading date such closing sales price or closing bid was reported), as reported
in The Wall Street Journal;
(ii) If the Common Stock is regularly quoted on an automated
quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, its Fair Market Value shall be the closing sales price for
such stock as quoted on such system or by such securities dealer on the date of
determination, but if selling prices are not reported, the Fair Market Value of
a share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on the date of determination (or, if no such prices
were reported on that date, on the last date such prices were reported), as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable; or
(iii) In the absence of an established market for the Common
Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be reasonably determined by the Board of Directors of the Company
in good faith.
END OF AGREEMENT
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Accepted by:
ORTHODONTIX, INC.
By: /s/ Xxxxx Xxxxxxx
------------------------
Title: CEO
---------------------
Date: December 31, 2006
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EXHIBIT A
ORTHODONTIX, INC.
EXERCISE NOTICE
Orthodontix, Inc.
0 Xxxxxx Xxxxxx
Science Park
POB 455
Carmiel, Israel 21000
Attention: Secretary
1. Exercise of Option. Effective as of today, ______________, ___ the
undersigned (the "Grantee") hereby elects to exercise the Grantee's option to
purchase ___________ shares of the Common Stock (the "Shares") of Orthodontix,
Inc. (the "Company") under and pursuant to the Stock Option Award Agreement (the
"Option Agreement") dated December 31, 2006. Unless otherwise defined herein,
the terms defined in the Option Agreement shall have the same defined meanings
in this Exercise Notice.
2. Representations of the Grantee. The Grantee acknowledges that the
Grantee has received, read and understood the Option Agreement and agrees to
abide by and be bound by their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 6 of the Plan.
4. Delivery of Payment. The Grantee herewith delivers to the Company the
full Exercise Price for the Shares, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 3(d) of the Option Agreement.
5. Tax Consultation. The Grantee understands that the Grantee may suffer
adverse tax consequences as a result of the Grantee's purchase or disposition of
the Shares. The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice.
6. Taxes. The Grantee agrees to satisfy all applicable foreign, federal,
state and local income and employment tax withholding obligations and herewith
delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations.
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7. Successors and Assigns. The Grantee may assign any of its rights under
this Exercise Notice to single or multiple assignees, and this agreement shall
inure to the benefit of the successors and assigns of the Company. This Exercise
Notice shall be binding upon the Company and its executors, administrators,
successors and assigns.
8. Construction. The captions used in this Exercise Notice are inserted
for convenience and shall not be deemed a part of this agreement for
construction or interpretation. Except when otherwise indicated by the context,
the singular shall include the plural and the plural shall include the singular.
Use of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.
9. Governing Law; Severability. This Exercise Notice is to be construed in
accordance with and governed by the internal laws of the State of Florida
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
Florida to the rights and duties of the parties. Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.
10. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to
such other address as such party may designate in writing from time to time to
the other party.
11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.
12. Entire Agreement. The Option Agreement is incorporated herein by
reference and together with this Exercise Notice constitute the entire agreement
of the parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of the Company and the Grantee
with respect to the subject matter hereof, and may not be modified adversely to
the Grantee's interest except by means of a writing signed by the Company and
the Grantee. Nothing in the Option Agreement and this Exercise Notice (except as
expressly provided therein) is intended to confer any rights or remedies on any
persons other than the parties.
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Submitted by: Accepted by:
GRANTEE: ORTHODONTIX, INC.
By:_________________________
_______________________________ Title:______________________
(Signature)
Address: Address:
_______________________________ Orthodontix, Inc.
_______________________________ 0 Xxxxxx Xxxxxx
Science Park
POB 455
Carmiel, Israel 21000
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