1
EXHIBIT 10.3
INCENTIVE STOCK OPTION - EXECUTIVE OFFICERS
[DATE]
_______________________
_______________________
_______________________
Re: Stock Option
The Board of Directors (the "Board") of Universal Standard Healthcare,
Inc. (the "Company"), or the committee (the "Committee") designated by the
Board for the purpose of administering the Universal Standard Healthcare, Inc.
1992 Stock Option Plan (the "Plan"), hereby grants ______to (the "Grantee"),
the _____ of the Company, a stock option (the "Option"), pursuant to the
Plan. The Option is subject in all respects to the Plan. Certain capitalized
terms used in this agreement (the "Agreement") which are not defined herein
have the meanings indicated for such terms in Section 10.1 of the Plan.
1. Stock Option. The Option entitles the Grantee to purchase up to
______ shares (the "Option Shares") of the Company's Common Stock, no par value
(the "Common Stock"), at an option price per share of $______ (the "Option
Price"), subject to the terms and conditions of this Agreement. The Option is
intended to be an Incentive Stock Option.
2. (a) Exercisability. The Option may be exercised and Option Shares
may be purchased at any time and from time to time after the execution of this
Agreement, subject to the vesting limitations imposed by Section 2(b). The
Option Price for Option Shares shall be paid in full in cash or by check by the
Grantee at the time of the delivery of Option Shares, or, at the written
election of the Grantee, payment may be made by (i), to the extent permitted by
the Committee, delivery to the Company of outstanding shares of Common Stock,
(ii), to the extent permitted by the Committee, retention by the Company of one
or more of such Option Shares or (iii) any combination of cash, check, and, to
the extent permitted by the Committee, the Grantee's delivery of outstanding
Shares and retention by the Company of one or more of such Option Shares.
(b) Vesting/Exercisability. The Grantee may only exercise his
Option to purchase Option Shares to the extent that the Option has vested and
become exercisable with respect to such Option Shares.
(i) Time Vesting. The Option will vest and become exercisable in
installments of 25% of the Option Shares on each of the first, second, third and
fourth anniversaries of the date of this Option, subject to the Grantee's
continued employment with the Company or any subsidiary of the Company
("Subsidiary") in the position held as of the date of this Agreement or a higher
position. In the event the Grantee no longer continues to be employed by the
Company or any Subsidiary in the position held as of the date of this Agreement
or a higher position, all Options which have not become exercisable at the date
of such event shall immediately terminate. Whether
2
the Grantee has continued to be employed by the Company or any Subsidiary in the
position held as of the date of this Agreement or a higher position shall be
determined by the Committee in its sole discretion. To the extent not exercised,
installments shall accumulate and the Grantee may exercise them thereafter in
whole or in part.
(ii) Death, Disability, Change in Control or Termination. The
Option shall vest and become exercisable with respect to all of the Option
Shares automatically upon (i) the death or permanent disability (as determined
by the Board or the Committee) of the Grantee, (ii) a Change of Control, or
(iii), at the sole discretion of the Committee, a termination of the Grantee's
employment. For purposes hereof, a "Change of Control" shall mean the (x) sale
of all of the assets of the Company to an unaffiliated third-party, (y) the
merger or consolidation of the Company with an unaffiliated third-party in which
the Company is not the surviving corporation or (z) any person or group of
persons (as defined in Section 13(d) of the Securities Exchange Act of 1934)
(other than WestSphere Capital Associates, L.P. and its affiliates) shall
acquire or control in excess of 51% of the Company's Common Stock on a
fully-diluted basis. Notwithstanding the foregoing, the Option shall not vest
and become automatically exercisable as described in Section 2(b)(ii) without
the written consent of the Committee, to the extent such acceleration of vesting
would result, when taken in the aggregate with all other payments from the
Company, in the payment by such Grantee of any excise tax provided for in
Sections 280G and 4999 of the Code.
(iii) Termination of Employment. The Grantee shall have the
right to exercise all unexercised Options which have vested as of the Grantee's
Termination Date (as defined in the Plan) for a period of three (3) months
following such Termination Date or such longer period as may be provided in the
Plan or as the Committee may approve in its sole discretion in connection with
such termination; provided, that the Option shall not be exercisable after its
expiration pursuant to Section 7.
3. Transferability of this Option.
(a) Except in the case of death or permanent disability of the
Grantee, this Option shall not be transferable.
(b) The Company may assign its rights and delegate its duties
under this Agreement.
4. Conformity with Plan. The Grantee's Option is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Inconsistencies between this
Agreement and the Plan shall be resolved in accordance with the terms of the
Plan. By executing and returning the enclosed copy of this Agreement, the
Grantee acknowledges his receipt of the Plan and agrees to be bound by all of
other terms of the Plan.
5. Employment. Notwithstanding any contrary oral representations or
promises made to Grantee prior to or after the date hereof, Grantee and the
Company acknowledge Xxxxxxx's
2
3
employment with the Company and its subsidiaries is and will continue to be
subject to the willingness of each to continue such employment and nothing
herein confers any right or obligation on Grantee to continue in the employ of
the Company or its subsidiaries or shall affect in any way Grantee's right or
the right of the Company or its subsidiaries to terminate Xxxxxxx's employment
at any time, for any reason, with or without cause.
6. Share Legends. At the sole discretion of the Committee, all
certificates representing any Option Shares subject to the provisions of this
Agreement shall have endorsed thereon the following legend:
"THE SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAW."
7. Expiration. The Option shall expire at 5:00 p.m., New York time, on
the tenth anniversary of the date hereof. In the event that the Grantee shall
cease to be employed by the Company or Subsidiaries for any reason, all Option
Shares which shall not have vested pursuant to Section 2 shall automatically
terminate.
8. Further Actions. The parties agree to execute such further
instruments and to take such further actions as may reasonably be required to
carry out the intent of this Agreement.
9. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the successors and assigns of the Company and, subject
to the restrictions on transfer herein set forth, be binding upon Xxxxxxx's
heirs, executors, administrators, successors and assigns.
3
4
10. Governing Law. This Agreement and all documents contemplated
hereby, and all remedies in connection therewith and all questions or
transactions relating thereto, shall be construed in accordance with and
governed by the laws of the State of Michigan.
* * * * *
Please execute the extra copy of this Agreement in the space below and
return it to the Secretary of the Company to confirm your understanding and
acceptance of the agreements contained in this letter.
Very truly yours,
UNIVERSAL STANDARD HEALTHCARE, INC.
By:
---------------------------------------
Its:
--------------------------------------
The undersigned hereby acknowledges having read this Agreement, the
Plan, and the other enclosures to this Agreement, and hereby agrees to be bound
by all provisions set forth herein and in the Plan.
GRANTEE:
--------------------------------------------
(Signature)
--------------------------------------------
(Please print name)
4
