EXHIBIT 10.22
PICIS, INC.
DEFERRED STOCK AWARD AGREEMENT
This Deferred Stock Award Agreement (this "Agreement") is executed as
of December 31, 2005, by and between PICIS, Inc., a Delaware corporation (the
"Company"), and the Honorable Xxxxx Xxxxxxxx, (the "Participant").
W I T N E S S E T H:
WHEREAS the Board of Directors of the Company has agreed to award the
Participant 150,000 shares of deferred stock of the Company as an incentive
for the Participant to serve as a non-employee director of the Company for
the continued success of the Company.
NOW, THEREFORE, in consideration of the benefits that the Company will
derive in connection with the services to be rendered by the Participant, the
Company and the Participant hereby agree as follows:
1. DEFERRED STOCK; NUMBER OF SHARES. The Participant is hereby
granted 150,000 shares of Deferred Stock. Each share of Deferred Stock
represents the right to receive one share of the Company's common stock (a
"Share") at such future time as is set forth in this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, in the
event of any stock dividend, stock split, recapitalization, merger,
consolidation, combination or exchange of shares, or the like, as a result of
which shares of any class shall be issued in respect of the outstanding
Shares, or the Shares shall be changed into the same or a different number of
the same or another class of stock, or into securities of another person,
cash or other property (not including a regular cash dividend), the amount
distributed to the Participant in exchange for the 150,000 shares of Deferred
Stock shall be appropriately adjusted as determined by the Company's Board of
Directors (the "Board").
2. DIVIDENDS AND DISTRIBUTIONS. As of each record date for the
payment of dividends on the Company's Shares, the Participant shall be
granted a number of additional shares of Deferred Stock equal to the quotient
of the amount of dividends which would have been received by a shareholder of
record of a number of Shares equal to the number of shares of Deferred Stock
held by the Participant immediately before such dividend, divided by the Fair
Market Value on such date. In the event of any distribution with respect to
Shares other than a cash dividend, then the Participant shall be granted a
number of additional shares of Deferred Stock which could have been purchased
at the Fair Market Value as of the date of such distribution with an amount
equal to the Fair Market Value of the consideration which would have been
received on such date by a shareholder of record of a number of Shares equal
to the number of shares of Deferred Stock then held by such Participant.
"Fair Market Value" means the value of a Share as determined in good faith by
the Company's Board, with the Board's determination being binding on the
Company and the Participant for all purposes.
3. VESTING PROVISIONS. The Deferred Stock granted to the
Participant hereunder shall vest as to 50,000 shares of Deferred Stock on the
first annual anniversary date hereof and an additional 50,000 shares of
Deferred Stock shall vest on each of the two (2) subsequent annual
anniversaries of such date, provided that the Participant is serving as a
member of the Company's Board on each such date. Notwithstanding anything to
the contrary contained in this Agreement, any unvested Deferred Stock
hereunder shall immediately vest upon the occurrence of a Change of Control
while Participant is serving as a member of the Company's Board. "Change in
Control" shall mean any of the following events:
(i) the acquisition by an individual, entity or group
(within the meaning of Section 13(d)(2) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), (a "Person"), after the date
hereof, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of either (A) the
then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") plus the then outstanding shares of
preferred stock of the Company, on an as converted basis or (B) the
combined voting power of the then outstanding voting securities of the
Company entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (i), the following acquisitions shall not
constitute a Change of Control: (A) any acquisition directly from the
Company, (B) any acquisition by the Company, (C) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the
Company, or (D) any acquisition by any corporation pursuant to a
transaction which complies with clauses (A), (B) and (C) of
subsection (iii) of this paragraph 3; and provided, further, that for
purposes of this subsection and subsection (iii), below, none of the
stockholders of the Company, and/or any person who becomes a
stockholder of the Company in a private placement conducted by the
Company shall be aggregated and treated as members of a group
constituting a single "Person"; or
(ii) individuals who, as of the date hereof, constitute
the Board (the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, that any individual
becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then constituting the
Incumbent Board shall be considered as though such individual were a
member of the Incumbent Board, but excluding, for this purpose, any
such individual whose initial assumption of office occurs as a result
of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other
than the Board; or
(iii) consummation of a reorganization, merger or
consolidation or sale or other disposition of all or substantially all
of the assets of the Company for which approval of the shareholders of
the Company is required (a "Business Combination"), in each case,
unless, immediately following such Business Combination, (A) all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such Business Combination beneficially own, directly or indirectly,
more than 60% of, respectively; the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors, as
the case may be, of the
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corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Common Stock and
Outstanding Company Voting Securities, as the case may be, (B) no
Person (excluding any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or indirectly, 35% or more of,
respectively, the then outstanding common stock of the corporation
resulting from such Business Combination or the combined voting power
of the then outstanding voting securities of such corporation except to
the extent that such ownership existed prior to the Business
Combination and (C) at least a majority of the members of the Board of
Directors of the corporation resulting from such Business Combination
were members of the Incumbent Board at the time of the execution of the
initial agreement, or of the action of the Board, providing for such
Business Combination; or
(iv) approval by the shareholders of the Company of a
complete liquidation or dissolution of the Company.
Notwithstanding the foregoing, (a) in no event will an
initial public offering of the stock of the Company constitute a Change
in Control and (b) subparagraph (iv) will only be included as a Change
of Control to the extent it would not cause payments hereunder to be
subject to penalty under Section 409A of the Internal Revenue Code of
1986, as amended from time to time (the "Code").
Following the occurrence of an event which is not a Change in Control
whereby there is a successor holding company to the Company, or, if there is
no such successor, whereby the Company is not the surviving corporation in a
merger or consolidation, the surviving corporation or successor holding
company (as the case may be), for purposes of this definition, shall
thereafter be referred to as the Company.
4. PROHIBITION AGAINST TRANSFER OF DEFERRED STOCK. Except as
provided herein, Deferred Stock may not be sold, assigned, conveyed, donated,
pledged, transferred or otherwise disposed of or encumbered or subjected to
execution, attachment, or similar process. The Participant shall have the
right to transfer Deferred Stock upon his death, either to his designated
beneficiary (such designation to be made in writing at such time and in such
manner as the Company shall prescribe or approve), or, he dies without a
surviving designated beneficiary, by the terms of the Participant's will or
under the laws of descent and distribution.
5. DISTRIBUTION OF DEFERRED STOCK. The Shares represented by the
Deferred Stock shall be distributed to the Participant within 30 days after
the first to occur of (a) the date the Participant terminates his services as
a member of the Board, provided such termination qualifies as a "separation
from service" under Section 409A of the Code or any guidance promulgated
thereunder (b) a Change in Control, provided such Change in Control qualifies
as a "change in the ownership or effective control" or a "change in the
ownership of a substantial portion of the assets" of the Company under
Section 409A of the Code or any guidance promulgated thereunder; or
(c) December 31, 2010. The Company shall have the right to delay the issue
or
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delivery of any Shares to be delivered hereunder until (i) the completion of
such registration or qualification of such Shares under federal, state or
foreign law, ruling or regulation as the Company shall deem to be necessary
or advisable, or (ii) receipt from the Participant of such documents and
information as the Company may deem necessary or appropriate in connection
with such registration or qualification or the issuance of Shares hereunder.
6. PARTICIPANT'S REPRESENTATIONS. The Participant acknowledges that
he or she shall have no interest in any fund or in any specific asset or
assets of the Company by reason of any Deferred Stock granted hereunder, nor
any right to exercise any of the rights or privileges of a shareholder with
respect to any Deferred Stock or any Shares distributable with respect to any
Deferred Stock until such Shares are so distributed. This will continue to
be the case even though the Company has established a trust to hold the
Shares (a so-called "Rabbi Trust"). The Participant further acknowledges
that the award of the Deferred Stock, in and of itself, is not a guaranty of
Participant's continued membership on the Board. In the event the Shares
have not been registered under the Securities Act of 1933, as amended (the
"Securities Act"), at the time the Shares are distributed to the Participant
in accordance with Paragraph 5, above, the Participant shall, if required by
the Company, concurrently with the delivery of the Shares, deliver to the
Company his Investment Representation Statement, in the form attached hereto
as EXHIBIT A, and in such other form as is then acceptable to the Company's
securities counsel.
7. RIGHT OF FIRST OFFER FOR SHARES. The following provisions of
this Section 7 apply after a distribution of the Shares to the Participant
pursuant to Section 5 hereof, but only for the period prior to an in initial
public offering of the Company's common stock (an "IPO"). In addition, any
transfer of Shares by the Participant to a purchaser in a Change of Control
is not governed by this Section 7.
(a) NOTICE OF TRANSFER. Except in the case of a transfer to a
Permitted Transferee or an Involuntary Transfer, as defined below, if the
Participant intends to transfer all or any portion of his Shares, he must
send a Notice of Transfer to the Company, and the applicable provisions of
this Section 7 must be complied with, before a transfer will be effective and
the transferee will be considered a shareholder of the Company. Subject to
subsection (c) below, the Notice of Transfer shall constitute an irrevocable
and exclusive offer to the Company to purchase all the Participant's Shares
proposed to be transferred at the price and on the terms and conditions
specified in the Notice of Transfer.
(b) OPTIONS TO PURCHASE. The Company shall have 30 days from
the date of receipt of the Notice of Transfer to exercise its right to
purchase contained in this Section 7 by providing written notice of such
exercise to the Participant. If exercised, the Participant shall be
obligated to sell, and the Company shall be obligated to purchase, all of the
Participant's Shares being offered upon the same terms, conditions and price
as described in the Notice of Transfer.
(c) TRANSFER TO THIRD PARTY. If all of the Participant's
Shares designated in the Notice of Transfer are not purchased as provided in
Section 7(b), the Participant may transfer Shares pursuant to this
Section 7(c), provided the following conditions are met:
(i) The Participant may transfer all (but not less than
all) of the Shares identified in the Notice of Transfer to a transferee
third party at the same (or a greater)
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price and on the same (or less favorable to the transferee) terms of
payment specified in the Notice of Transfer, provided that the transfer
is made within 120 days after the date of the Notice of Transfer.
(ii) The transferee must, as part of the closing of the
transfer, take all actions and execute all instruments required by the
Company in order for the transfer to comply with any applicable federal
or state laws and regulations relating to the transfer of Shares.
If the Shares proposed to be transferred pursuant to the Notice of
Transfer are not transferred within the applicable periods and in accordance
with the foregoing provisions of this Section 7(c), the Shares shall again be
subject to the restrictions of this Section 7.
(d) DEFINITIONS.
(i) "Permitted Transferee" means (1) the spouse or lineal
descendants of the Executive, (2) a custodian or guardian for such
person, such person's spouse, or such person's lineal descendants,
(3) a trust solely for the benefit of the Executive or the persons
referenced in (1) or (2), (4) a corporation or other entity 100% owned
by the Executive or any of the persons listed in (1), (2) or (3), if,
in all cases, such person(s) and/or the transferee entity agree to
restrictions that put the Company in the same position as if the Shares
were still held by the Executive.
(ii) "Involuntary Transfer" means a transfer as a result
of the Executive's death or by operation of law, including the
Executive's bankruptcy.
8. LOCK-UP PERIOD. If so requested by the Company or any
representative of the underwriters (the "Managing Underwriter") in connection
with any registration of the offering of any securities of the Company under
the Securities Act, the Participant shall not sell or otherwise transfer any
Shares or other securities of the Company during the 180-day period (or such
other period as may be requested in writing by the Managing Underwriter and
agreed to in writing by the Company) (the "Market Standoff Period") following
the effective date of a registration statement of the Company filed under the
Securities Act. Such restriction shall apply only to the first registration
statement of the Company to become effective under the Securities Act that
includes securities to be sold on behalf of the Company to the public in an
underwritten public offering under the Securities Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such Market Standoff Period.
9. GOVERNING LAW. This Agreement and all questions arising
hereunder or in connection herewith shall be determined in accordance with
the laws of the State of Delaware, without giving effect to the principles of
conflicts of laws.
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IN WITNESS WHEREOF, the Company has caused these presents to be
executed as of the date and year first above written, which is the date of
the granting of the Deferred Stock evidenced hereby.
PICIS, INC.
By: /S/ R. Xxxxx Xxxxx
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The undersigned Participant hereby accepts the foregoing Deferred Stock
and agrees to the several terms and conditions hereof.
/S/ XXXXX X. XXXXXXXX
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EXHIBIT A
INVESTMENT REPRESENTATION STATEMENT
PARTICIPANT: _____________________________
COMPANY: PICIS, INC.
SECURITY: COMMON STOCK
AMOUNT: _____________________________
DATE: _____________________________
In connection with the receipt of the above-listed common stock, the
undersigned Participant represents to the Company the following:
(a) Participant is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the Securities.
Participant is acquiring these Securities for investment for Participant's
own account only and not with a view to, or for resale in connection with,
any "distribution" thereof within the meaning of the Securities Act of 1933,
as amended (the "Securities Act").
(b) Participant acknowledges and understands that the
Securities constitute "restricted securities" under the Securities Act and
have not been registered (nor is registration contemplated) under the
Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of
Participant's investment intent as expressed herein. In this connection,
Participant understands that, in the view of the Securities and Exchange
Commission, the statutory basis for such exemption may be unavailable if
Participant's representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in
the market price of the Securities, or for a period of one year or any other
fixed period in the future. Participant further understands that the
Securities are not freely tradable and must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from
such registration is available. Participant further acknowledges and
understands that the Company is under no obligation to register the
Securities, or to publicly disseminate information concerning the Company
pursuant to the Securities Exchange Act of 1934, as amended. Participant
understands that the certificate evidencing the Securities will be imprinted
with a legend which prohibits the transfer of the Securities unless they are
registered or such registration is not required in the opinion of counsel
satisfactory to the Company, and any other legend required under applicable
state securities laws.
Signature of Participant:
---------------------------------
Date:
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