Exhibit 10.55
NOVA HOLDINGS, INC.
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Incentive Stock Option Agreement
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July 10, 1998
Employee/Optionee: Xxxxxx X. Xxxx, Xx.
Number of shares of
Common Stock subject
to this Agreement: 50,000
Pursuant to the Nova Holdings, Inc. and its Subsid iaries
Stock Option and Restricted Stock Purchase Plan (the "Plan"), the Board of
Directors of Nova Holdings, Inc. (the "Company") has granted to you on this
date an option (the "Op tion") to purchase the number of shares of the
Company's Common Stock, $.01 par value ("Common Stock"), set forth above.
Such shares (as the same may be adjusted as described in Section 12 below)
are herein referred to as the "Option Shares." The Option shall constitute
and be treated at all times by you and the Company for Federal income tax
purposes as an "incentive stock option" as defined under Section 422(b) of
the Internal Revenue Code of 1986, as amended (the "Code") except to the
extent that Section 422(d) of the Code may be applicable; provided that
nothing herein shall be deemed to obligate you to adhere to any holding
periods set forth in Section 422(a)(1) of the Code. The terms and conditions
of the Option are set out below.
1. Date of Grant. The Option is granted to you on July 10,
1998.
2. Termination of Option. Your right to exercise the
Option (and to purchase the Option Shares) shall expire and terminate in all
events on the earlier of (i) ten years from date of grant or (ii) the date
provided in Section 10 below in the event you cease to be employed by the
Company or any subsidiary or parent thereof.
3. Option Price. The purchase price to be paid upon the
exercise of the Option is $6.00 per share (subject to adjust ment as provided
in Section 13 below).
4. Tranche A Vesting Provisions. With respect to an
aggregate 35,000 Option Shares (the "Tranche A Option Shares"), except as
provided in Section 6 below, you will not be entitled to exercise the Option
(and purchase any such Option Shares) prior to May 31, 1999. Commencing on
May 31, 1999, and on each of the three succeeding anniversaries of that date
on which you shall continue to be employed on a full-time basis by the
Company or any subsidiary or parent thereof, you shall become entitled to
exercise the Option with respect to 25% of such Tranche A Option Shares (as
the same may be adjusted from time to time pursuant to Section 13 below, and
rounded to the nearest whole share) until the Option expires and terminates
pursuant to Section 2 hereof.
5. Tranche B Vesting. (a) With respect to an aggregate
15,000 of Option Shares (the "Tranche B Option Shares"), except as
hereinafter provided in this Section 5 and in Section 6 below, you will not
be entitled to exercise the Option (and purchase any Tranche B Option Shares)
prior to May 31, 2002. Commencing on May 31, 2002 and provided that you
shall continue to be employed on a full time basis by the Company or any
subsid iary or parent thereof, you shall be entitled to exercise the Option
with respect to 100% of such Tranche B Option Shares (as the same may be
adjusted from time to time pursuant to Section 13 below, and rounded to the
nearest whole share) until the Option expires and terminates pursuant to
Section 2 hereof.
(b) In the event that Actual EBT (as hereinafter defined)
for any full fiscal year beginning with the fiscal year ending June 30, 1999,
equals or exceeds the Target EBT (as hereinafter defined) for such fiscal
year, then, as of the August 1 next following the last day of such fiscal
year, you shall become entitled (subject to the calculation of Actual EBT for
such fiscal year by the Board of Directors of the Company as provided in
Section 5(d) below) to exercise the Option with respect to 25% of the Tranche
B Option Shares (rounded to the nearest whole share) until the Option expires
and terminates pursuant to Section 2 hereof.
(c) In the event that (i) Actual EBT for any of the full
fiscal years ending June 30, 1999 and 2000 (the "Shortfall Year") is less
than the Target EBT for such year, and (ii) the sum of (x) Actual EBT for the
Shortfall Year plus (y) Actual EBT for the immediately succeeding fiscal year
(the "Make-up Year") equals or exceeds the sum of the Target EBT for the
Shortfall Year and the Make-up Year combined, then, as of the September 1
next following the last day of the Make-up Year, you shall become entitled
(subject to the calculation of Actual EBT for the Makeup Year by the Board of
Directors of the Company as provided in Section 5(d) hereof) to exercise the
Option with respect to 25% of the Tranche B Option Shares (rounded to the
nearest whole
share) until the Option expires and terminates pursuant to Section 2 hereof.
Your right to exercise the Option with respect to any Tranche B Option Shares
pursuant to this Section 5(c) shall be in addition to your right to exercise
the Option with respect to the Make-up Year as provided in Section 5(b) above.
(d) For the purposes of this Agreement, the following terms
have the meanings set forth below:
"Actual EBT" means, with respect to any fiscal year, EBT (as
hereinafter defined) for such fiscal year as calcu lated by the Board
of Directors of the Company based on the audited consolidated financial
statements of the Company and its subsidiaries for such fiscal year,
which financial statements shall be conclusive and binding upon the
Company and you.
"EBT" means, with respect to any fiscal year (i) the net
income (determined in accordance with generally accepted accounting
principles applied consistently with the Company's audited financial
statements, but excluding the effect of any extraordinary or other
material non-recurring gain (but not loss) outside the ordinary course
of business) of the Company and its consolidated subsidiaries,
determined on a consolidated basis for such period ("Consolidated Net
Income") plus (ii) to the extent deducted in determining Consolidated
Net Income for such period, the amount of the provision for income
taxes for such period.
"Target EBT" means, (i) for the fiscal year ending June 30,
1999 - $13,300,000, (ii) for the fiscal year ending June 30, 2000 -
$16,600,000, and (iii) for the fiscal year ending June 30, 2001 - (as
determined by the Board of Directors)." Notwithstanding the "Target
EBT" amounts set forth above, if at any time or from time to time
after the date hereof the Company or any of its subsidiaries acquires
a business, substantially all of the assets of a business, or any
assets material to the business of the Company or any of its sub
sidiaries, the Board of Directors of the Company shall make such
adjustments to the Target EBT amounts, if any, as the Board of
Directors of the Company in its discretion deems equitable in light of
each such acquisition. Any such determination by the Board of
Directors shall be effective and binding for all purposes of this
Agreement and the Plan.
(e) The satisfaction of any and all conditions set forth in
this Section 5 regarding your right to exercise the Option for Tranche B Option
Shares (and purchase any Tranche B Option Shares) shall be reasonably determined
in good faith by the Board of Directors of the Company.
(f) Notwithstanding anything contained herein to the contrary,
no new rights to exercise the Option with respect to any Tranche B Option Shares
shall be acquired under this Section 5 after the date on which you cease to be
employed on a full-time basis by the Company or any subsidiary or parent
thereof.
6. Accelerated Vesting for Change of Control. (a)
Concurrently with the occurrence of any "Change of Control" (as defined below)
in connection with which Welsh, Carson, Xxxxxxxx & Xxxxx VII, L.P. ("WCAS VII")
shall achieve an "Internal Rate of Return" (as defined below) of 35% or more,
you shall become entitled to exercise the Option with respect to all the Option
Shares (with the effect that you shall be deemed to be entitled to exercise the
Option immediately prior to the consummation of such Change of Control with
respect to all Option Shares not theretofore purchased by you).
For purposes of the foregoing, the term "Change of Control"
means the acquisition of (a) beneficial ownership of more than 50% of the voting
equity securities of the Company or any successor to the Company (by merger or
otherwise) or (b) all or substantially all the assets of the Company, by any
person or entity (including, without limitation, any group within the meaning of
Section 13(d)(3) of the Securities Exchange Act, as amended) other than WCAS VII
and WCAS Healthcare Partners, L.P., or their respective affiliates.
For purposes of the foregoing, the term "Internal Rate of
Return" means, as of any date, an internal rate of return or discount factor
that nets to zero, calculated on a daily basis, a cash flow stream consisting of
"cash ins" and "cash outs." For this purpose, "cash ins" equal (i) the aggregate
purchase price of all equity securities (including, without limitation, pre
ferred stock whether or not convertible) of the Company purchased by WCAS VII.
For this purpose, "cash outs" equal the sum of (x) the aggregate amounts of
income and gain realized and capital recovered by WCAS VII in respect of its
investment in the Company as of such specified date, plus (y) the aggregate fair
market value of all equity securities of the Company held by WCAS VII at the
close of business on the date of a Change of Control. Such fair market value
shall be determined in good faith by the Board of Directors of the Company, in
the case of a transaction de scribed in clause (a) of the definition of Change
of Control,
having due regard for the price per share reflected in the last transaction
or event giving rise to such Change of Control, unless such price was
established on other than an arm's-length basis, and in the case of a
transaction described in clause (b) of such definition, assuming liquidation
of the Company immedi ately after such acquisition of assets. Internal Rates
of Return shall be determined from the date the "cash in" is deemed to occur
to the date the "cash out" is deemed to occur. For this purpose, "cash ins"
shall be deemed to occur on the date that securities are purchased from the
Company or the holder thereof and the purchase price therefor paid in full,
and "cash outs" shall be deemed to occur on the date on which any income or
gain is realized or capital recovered or, if later, the date of a Change of
Control.
7. Additional Provisions Relating to Exercise. (a) Once you
become entitled to exercise the Option (and purchase Option Shares) as provided
in Sections 4, 5 and 6 hereof, such right will continue until the date on which
the Option expires and terminates pursuant to Section 2 hereof.
(b) The Board of Directors of the Company, in its sole
discretion, may at any time accelerate the time set forth in Section 4, 5 or 6
hereof at which the Option may be exercised by you with respect to any Option
Shares.
8. Exercise of Option. To exercise the Option, you must
deliver a completed copy of the attached Option Exercise Form to the address
indicated on the Form, specifying the number of Option Shares being purchased
as a result of such exercise, together with payment of the full option price
for the Option Shares being purchased. Payment of the option price may be
made, at your election, (i) in cash or by check, (ii) by delivery to the
Company of a number of shares of Common Stock which shall have been owned by
you for not less than six months at the date of delivery having a fair value
as of the date of exercise, as determined in good faith by the Board of
Directors of the Company, equal to the option price, or (iii) by tendering
such other consideration as may be acceptable to the Board of Directors of
the Company.
9. Transferability of Option. The Option may not be
transferred by you (other than by will or the laws of descent and distribution)
and may be exercised during your lifetime only by you.
10. Termination of Employment. (a) In the event that (i) the
Company or any subsidiary or parent thereof terminates your employment by such
entity "for cause" or (ii) you terminate your employment by such entity for any
reason whatsoever (other
than as a result of your death or "disability" (within the mean ing of Section
22(e)(3) of the Code), then the Option may only be exercised within three months
after such termination, and only to the same extent that you were entitled to
exercise the Option on the date your employment was so terminated and had not
previously done so.
(b) In the event that you cease to be employed on a full-time
basis by the Company or any subsidiary or parent there of as a result of the
termination of your employment by the Company or any subsidiary or parent
thereof at any time other than "for cause" or as a result of your death or
"disability" (within the meaning of Section 22(e)(3) of the Code) the Option
may only be exercised within three months after the date you cease to be so
employed, and only to the same extent that you were entitled to exercise the
Option on the date you ceased to be so employed by reason of such termination
and had not previously done so.
(c) In the event that you cease to be employed on a full-time
basis by the Company or any subsidiary or parent there of by reason of a
"disability" (within the meaning of Section 22(e)(3) of the Code), the Option
may only be exercised within one year after the date you cease to be so
employed, and only to the same extent that you were entitled to exercise the
Option on the date you ceased to be so employed by reason of such disabili ty
and had not previously done so.
(d) In the event that you die while employed by the Company or
any subsidiary or parent thereof (or (i) within a period of one month after
ceasing to be employed by the Company or any subsidiary or parent thereof for
any reason described in Section 10(a) above, (ii) within a period of ninety
(90) days after ceasing to be employed by the Company or any subsidiary or
parent thereof for any reason described in Section 10(b) above or (iii)
within a period of one year after ceasing to be employed by the Company for
any reason described in Section 10(c) hereof), the Option may only be
exercised within one year after your death. In such event, the Option may be
exercised during such one-year period by the executor or administrator of
your estate or by any person who shall have acquired the Option through
bequest or inheritance, but only to the same extent that you were entitled to
exercise the Option immediately prior to the time of your death and you had
not previously done so.
(e) Notwithstanding any provision contained in this Section 10 to
the contrary, in no event may the Option be exer cised to any extent by anyone
after the tenth anniversary of the date of grant.
11. Representations. (a) You represent and warrant
to the Company that, upon exercise of the Option, you will be acquiring the
Option Shares for your own account for the purpose of investment and not with
a view to or for sale in connection with any distribution thereof, and you
understand that (i) nei ther the Option nor the Option Shares have been
registered with the Securities and Exchange Commission by reason of their
issu ance in a transaction exempt from the registration requirements and (ii)
the Option Shares must be held indefinitely by you unless a subsequent
disposition thereof is registered under the Securities Act or is exempt from
such registration. The stock certificates for any Option Shares issued to you
will bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE
SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THEY HAVE
BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
(b) You further represent and warrant that you under stand
the Federal, state and local income tax consequences of the granting of the
Option to you, the acquisition of rights to exercise the Option with respect
to any Option Shares, the exer cise of the Option and purchase of Option
Shares, and the subse quent sale or other disposition of any Option Shares.
In addi tion, you understand that the Company will be required to with hold
Federal, state or local taxes in respect of any compensation income realized
by you as a result of any "disqualifying disposi tion" of any Option Shares
acquired upon exercise of the Option granted hereunder. To the extent that
the Company is required to withhold any such taxes as a result of any such
"disqualifying disposition", you hereby agree that the Company may deduct
from any payments of any kind otherwise due to you an amount equal to the
total Federal, state and local taxes required to be so withheld, or if such
payments are inadequate to satisfy such Federal, state and local taxes, or if
no such payments are due or to become due to you, then you agree to provide
the Company with cash funds or make other arrangements satisfactory to the
Company regarding such payment. It is understood that all matters with
respect to the total amount of taxes to be withheld in respect of any such
compensation income shall be determined by the Board of Directors in its sole
discretion.
12. Notice of Sale. You agree to give the Company prompt
notice of any sale or other disposition of any Option Shares that occurs (i)
within two years from the date of the granting of the Option to you, or (ii)
within one year after the transfer of such Option Shares to you upon the
exercise of the
Option.
13. Reorganization, Reclassification, Consolidation, Merger
or Sale. (a) In the event that, after the date hereof, the outstanding shares
of the Company's Common Stock shall be in creased or decreased or changed
into or exchanged for a different number or kind of shares of stock or other
securities of the Company or of another corporation through reorganization,
merger or consolidation, recapitalization, reclassification, stock split,
split-up, combination or exchange of shares or declaration of any dividends
payable in Common Stock, the Board of Directors of the Company shall
appropriately adjust the number of shares of Common Stock (and the option
price per share) subject to the unexercised portion of the Option (to the
nearest possible full share), and such adjustment shall be effective and
binding for all purposes of this Agreement and the Plan.
(b) If any capital reorganization or reclassification of
the capital stock of the Company or any consolidation or merger of the
Company with another corporation, or the sale of all or substantially all its
assets to another corporation, shall be effected after the date hereof in
such a way that holders of Common Stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for Common Stock, then
you shall thereafter have the right to receive upon the basis and upon the
terms and conditions specified in the Option and in lieu of the shares of
Common Stock of the Company immediately thereto fore receivable upon the
exercise of the Option, such shares of stock, securities or assets (including
cash) as may be issued or payable with respect to or in exchange for a number
of outstand ing shares of such Common Stock equal to the number of shares of
such stock immediately theretofore so receivable had such reorga nization,
reclassification, consolidation, merger or sale not taken place.
14. Continuation of Employment. Neither the Plan nor the
Option shall confer upon you any right to continue in the employ of the
Company or any subsidiary or parent thereof, or limit in any respect the
right of the Company or any subsidiary or parent thereof to terminate your
employment or other relation ship with the Company or any subsidiary or
parent thereof, as the case may be, at any time.
15. Plan Documents. This Agreement is qualified in
its entirety by reference to the provisions of the Plan, which
are incorporated herein by reference.
16. Restrictive Covenant & Confidentiality Agreement. You
acknowledge and agree that as a condition to the grant of any options pursuant
to the Plan that you either be bound by or
execute and become bound by a Restrictive Covenant and Confidentiality Agreement
with Nova Holdings, Inc.; receipt of a copy of which you hereby acknowledge.
17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Tennessee. If any one
or more provisions of this Agreement shall be found to be illegal or
unenforceable in any respect, the validity and enforceability of the
remaining provisions hereof shall not in any way be affected or impaired
thereby.
Please acknowledge receipt of this Agreement by signing in the
space provided below and returning it promptly to the Secretary of the Company.
NOVA HOLDINGS, INC.
By
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Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
Accepted and Agreed to
as of July 10, 1998:
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Employee/Optionee
NOVA HOLDINGS, INC. AND ITS SUBSIDIARIES
STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN
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OPTION EXERCISE FORM
I, , a Participant under the Nova Hold ings, Inc. and its
Subsidiaries Stock Option and Restricted Stock Purchase Plan (the "Plan"), do
hereby exercise the right to purchase __________ shares of Common Stock, $.01
par value, of Nova Holdings, Inc. pursuant to the Option granted to me on July
10, 1998 under the Plan.
Enclosed herewith is (indicate one):
[ ] Cash or a check in the amount of $ , an amount equal to the
total exercise price for the shares of Common Stock being
purchased pursuant to this Option Exercise Form.
OR
[ ] A certificate of certificates representing shares of
Common Stock of the Company, together with stock powers
and other documentation requested by the Company, for a
number of shares of Common Stock which the undersigned
has owned for not less than six months having a fair
value as of the date hereof equal to the total exercise
price for the shares of Common Stock being purchased
pursuant to this Option Exercise Form.
Date:
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Signature
Send a completed copy of this Option Exercise Form to:
Nova Holdings, Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: Secretary
