Exhibit 10.49
NOVA HOLDINGS, INC.
Incentive Stock Option Agreement
September 3, 1997
Employee/Optionee: Xxxx Xxxxxxxx
Number of shares of
Common Stock subject
to this Agreement: 30,000
Pursuant to the Nova Holdings, Inc. and its Subsidiaries 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 "Option") 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
September 3, 1997.
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 adjustment as provided in
Section 13 below).
4. Tranche A Vesting Provisions. With respect to an aggregate
15,000 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, 1998. Commencing on May 31, 1998, 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 subsidiary 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, 1997, 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, 1997, 1998 and 1999 (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 Make-up 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 calculated 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,
1997 - $8,500,000, (ii) for the fiscal year ending June 30, 1998 -
$10,600,000, (iii) for the fiscal year ending June 30, 1999 -
$13,300,000 and (iv) for the fiscal year ending June 30, 2000 -
$16,600,000. 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 subsidiaries, 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,
preferred 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 described 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 immediately 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 Com-pany,
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 meaning 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 thereof 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 thereof 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 disability 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 exercised 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) neither the Option
nor the Option Shares have been registered with the Securities and Exchange
Commission by reason of their issuance 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 understand 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 exercise of the Option and purchase of Option Shares, and the
subsequent sale or other disposition of any Option Shares. In addition, you
understand that the Company will be required to withhold Federal, state or local
taxes in respect of any compensation income realized by you as a result of any
"disqualifying disposition" 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 increased 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 theretofore 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 outstanding shares of such Common
Stock equal to the number of shares of such stock immediately theretofore so
receivable had such reorganization, 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 relationship 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
---------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
Accepted and Agreed to
as of September 3, 1997:
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Employee/Optionee
NOVA HOLDINGS, INC. AND ITS SUBSIDIARIES
STOCK OPTION AND RESTRICTED STOCK PURCHASE PLAN
-----------------------------------------------
OPTION EXERCISE FORM
I, ___________ , a Participant under the Nova Holdings, 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
September 3, 1997 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
