EXHIBIT 10.1
EXECUTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, made as of <> (the "Effective Date"), by
and between Xxxxxx Medical Group, Inc., a Delaware corporation formerly known as
Xxxxxx Acquisition Holdings, Inc. (the "Company"), and <> (the
"Participant").
WITNESSETH:
WHEREAS, the Company desires to afford the Participant the opportunity to
acquire ownership of the Company's common stock, par value $.01 per share
("Common Stock"), so that he may have a direct proprietary interest in the
Company's success.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereby agree as follows:
1. Grant of Options. Subject to the terms and conditions set forth herein
and in the Company's Third Amended and Restated 1999 Equity Incentive Plan, a
copy of which is attached hereto as Exhibit A (the "Plan"), on the Effective
Date the Company does hereby grant to the Participant, during the period
commencing on the Effective Date and ending on the 10th anniversary of the
Effective Date (the "Expiration Date"), the right and option (the right to
purchase any one share under this Agreement being an "Option") to purchase from
the Company <> shares of Common Stock. The Option to purchase such
Common Stock shall have an exercise price of $<> per share. Each
of the Options granted pursuant to this Agreement shall, to the fullest extent
permissible under Section 422 of the Code, constitute Incentive Stock Options
under the Plan.
2. Limitations on Exercise of Options.
(a) Subject to the terms and conditions set forth herein and in the
Plan, the Options shall vest and become exercisable, on a cumulative basis, with
respect to 25% of the shares of Common Stock on the first anniversary of the
Effective Date and on each succeeding anniversary thereafter so long as the
Participant is employed by the Company; provided, however, that upon the
occurrence of a Change in Control (as defined below), all of the then unvested
Options shall automatically vest and be fully exercisable and shall remain so
exercisable in accordance with the terms of this Agreement. The Committee or the
Board may accelerate the vesting and exercisability of any or all of the then
unvested Options at any time.
(b) For the purposes of this Agreement, the term "Change in Control"
means the first to occur on or after the Effective Date of any of the following:
(i) the acquisition by any person or persons acting as a group
("Person") of capital stock of the Company which, when added to any
capital stock of the Company already owned by the Person,
constitutes more than fifty percent (50%) of either (i) the total
fair market value of the outstanding capital stock of the Company,
or (ii) the total voting power of the outstanding capital stock of
the
Company; provided, however, that a Change in Control will not be
deemed to have occurred when any Person who owns more than fifty
percent (50%) of the total fair market value or the total voting
power of the outstanding capital stock of the Company as of the date
of this Agreement acquires any additional capital stock of the
Company; and provided further, that an increase in the percentage of
the outstanding capital stock of the Company owned by a Person as a
result of a transaction in which the Company acquires its capital
stock in exchange for property will be treated as an acquisition of
such capital stock by such Person; or
(ii) the acquisition by a Person, in a single transaction or a
series of transactions within a twelve (12) month period, of capital
stock of the Company representing not less than thirty-five percent
(35%) of the total voting power of the outstanding capital stock of
the Company; or
(iii) the acquisition by a Person, in a single transaction or a
series of transactions within a twelve (12) month period, of
consolidated assets of the Company which have a total gross fair
market value of not less than forty percent (40%) of the total gross
fair market value of all of the consolidated assets of the Company
immediately prior to such acquisition(s), in each case without
regard to any liabilities associated with such assets; provided,
however, that a Change in Control will not be deemed to have
occurred when such assets are acquired by:
(1) an entity of which the Company owns, directly or
indirectly, fifty percent (50%) or more of the total fair market
value or the total voting power of the outstanding capital stock;
(2) a Person which owns, directly or indirectly, fifty percent
(50%) or more of the total fair market value or the total voting
power of the outstanding capital stock of the Company;
(3) an entity of which a Person described in clause (ii) owns,
directly or indirectly, fifty percent (50%) or more of the total
fair market value or the total voting power of the outstanding
capital stock;
(4) an entity which is controlled by the stockholders of the
Company immediately after the transfer; or
(5) a stockholder of the Company in exchange for or with
respect to capital stock of the Company; or
(iv) a majority of the members of the Board is replaced in any
twelve (12) month period by directors whose appointment or election
is not endorsed by a majority of the members of the Board prior to
the date of the appointment or election.
In making a determination as to whether a Change in Control has occurred, the
foregoing definition shall be construed and applied in a manner which would
avoid the imposition of
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federal income tax on the Participant by operation of Section 409A of the Code,
if applicable.
3. Non-Transferable. Except as specifically authorized by the Committee,
the Participant may not transfer the Options except by will or the laws of
descent and distribution and the Options shall be exercisable during the
Participant's lifetime only by the Participant or, in the event of his
incapacity, his guardian or legal representative. Except as so authorized, no
purported assignment or transfer of the Options, or of the rights represented
thereby, whether voluntary or involuntary, by operation of law or otherwise
(except by will or the laws of descent and distribution), shall vest in the
assignee or transferee any interest or right herein whatsoever.
4. Termination of Employment.
(a) Disability; Retirement. If, prior to the Expiration Date, the
Participant shall cease to be employed by the Company by reason of a Disability
or retirement from the Company pursuant to any retirement plan of the Company,
or the Participant's employment with the Company ceases for any reason with the
written consent of the Committee, then the Options shall remain exercisable
until the earlier of the Expiration Date or the date that is thirty (30) days
after the date of such cessation of employment, but only to the extent the
Options were vested and exercisable at the time of such cessation of employment.
(b) Without Cause. If the Company terminates the Participant's
employment without Cause, then upon such cessation of employment all then
unvested Options shall automatically vest and be fully exercisable and all then
unexercised Options shall be exercisable in accordance with the terms of this
Agreement until the earlier of the Expiration Date or the date that is three (3)
months after the date of such cessation of employment.
(c) Voluntary; For Cause. If the Participant voluntarily terminates
employment with the Company for reasons other than Disability or retirement
pursuant to any retirement plan of the Company and without the consent of the
Committee or the Company terminates the Participant's employment for Cause, then
all of the Options, to the extent not exercised prior to such termination,
whether exercisable or not, shall lapse and be canceled immediately upon such
cessation of employment.
(d) Death. If the Participant shall cease to be employed by the
Company prior to the Expiration Date by reason of death, or if the Participant
dies within the three (3) month period following a termination of employment
with the Company while entitled to exercise any of the Options pursuant to
Section 4(a) or 4(b), the executor or administrator of the estate of the
Participant or the person or persons to whom the Options shall have been validly
transferred by the executor or administrator pursuant to will or the laws of
descent and distribution shall have the right, until the earlier of the
Expiration Date or one (1) year after the date of death, to exercise the
Options, but only to the extent that the Participant was entitled to exercise
them on the date of death and subject to any other limitation contained herein
on the exercise of the Options in effect on the date of exercise.
(e) Whether employment has been or could have been terminated for
the purposes of this Agreement, and the reasons therefor, shall be determined by
the Committee,
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whose determination shall be final, binding and conclusive.
(f) Except as otherwise provided in this Section 4, Options that
have not yet vested at the time of termination of the Participant's employment
with the Company shall expire and no further vesting shall occur with respect
thereto. After the expiration of any exercise period described in this Section
4, the Options and all of the Participant's rights hereunder, to the extent not
previously exercised, shall terminate.
5. Adjustments and Corporate Reorganizations. In accordance with and
subject to the applicable terms of the Plan, the Options shall be subject to
adjustment or substitution, as determined by the Committee, as to the number,
price or kind of Stock or other consideration subject to such Options or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in capitalization occurring after the date
hereof or (ii) in the event of any change in applicable laws or any change in
circumstances which results in or would result in any substantial dilution or
enlargement of the rights granted to, or available for, the Participant. No such
adjustment shall be made which would result in an increase in the amount of gain
or a decrease in the amount of loss inherent in the Options. The Company shall
give the Participant written notice of an adjustment hereunder. Notwithstanding
anything herein to the contrary, in the event of any of the following:
(a) The Company is merged or consolidated with another corporation
or entity and, in connection therewith, consideration is received by
shareholders of the Company in a form other than stock or other equity interests
of the surviving entity;
(b) All or substantially all of the assets of the Company are
acquired by another person;
(c) The Company's reorganization or liquidation; or
(d) The Company shall enter into a written agreement to undergo an
event described in clauses (a), (b) or (c) above,
then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Options and pay to the
Participant, in cash, the value of such Options based upon the price per share
of Stock received or to be received by other shareholders of the Company in such
event and the per share exercise price of the Options.
6. Exercise; Payment for and Delivery of Common Stock. The Options shall
be exercised by delivering written notice to the Committee stating the number of
shares of Common Stock to be purchased, the person or persons in whose name the
shares of Common Stock are to be registered and each such person's address and
social security number. Such notice shall not be effective unless accompanied by
the full purchase price for all shares to be purchased, and any applicable
withholding (as described below). The purchase price shall be payable in cash,
in shares of Common Stock, any combination of cash or shares of Common Stock or
any other
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method authorized by the Plan and consented to by the Committee; provided,
however, that the Participant may use Common Stock in payment of the exercise
price only if the shares so used are considered "mature" for purposes of
generally accepted accounting principles (i.e., (i) been held by the Participant
free and clear for at least six (6) months prior to the use thereof to pay part
of an Option exercise price, (ii) been purchased by the Participant in other
than a compensatory transaction, or (iii) meet any other requirements for
"mature" shares as may exist on the date of the use thereof to pay part of an
Option exercise price). In the event that all or part of the purchase price is
paid in shares of Common Stock, the shares used in payment shall be valued at
their Fair Market Value on the date of exercise of the Options. At the time of
exercise, the Participant shall pay to the Company, in cash, or by having the
Company withhold upon exercise of the Option a sufficient number of shares of
Common Stock otherwise deliverable to the Participant based on the Fair Market
Value of the Common Stock on the date of exercise, at the election of the
Participant, such minimum amount as the Company deems necessary to satisfy its
obligation to withhold Federal, state or local income or other taxes incurred by
reason of the exercise or the transfer of shares thereupon. Payment in currency
or by certified or cashier's check shall be considered payment in cash.
7. Restrictive Covenants; Repurchase Rights.
(a) By accepting the Options, the Participant represents and agrees
for himself and his transferees (whether by will or the laws of descent and
distribution) that:
(i) For the period commencing on the date of this Agreement
and ending on the first one year anniversary of the termination of the
Participant's employment (such period is hereinafter referred to as the
"Restricted Period"), with respect to any geographic territories in which the
Participant engaged in business or had supervisory and/or management
responsibility during the Participant's employment with the Company, the
Participant shall not participate or engage, directly or indirectly, for himself
or herself or on behalf of or in conjunction with any person, partnership,
corporation or other entity, whether as an employee, agent, officer, director,
shareholder, partner, joint venturer, investor or otherwise (other than a
limited partner or stockholder of less than one percent of the issued and
outstanding limited partnership interests or stock of a publicly held
partnership or corporation whose gross assets exceed $1,000,000), in the
distribution, solicitation, promotion, manufacture, design, development, or sale
of any medical products or services competitive with products manufactured,
marketed, or sold by the Company or any of its subsidiaries or any medical
products or services intended to be manufactured, marketed, or sold by the
Company of the same general type or function.
(ii) Except with the Company's prior written approval or as
may otherwise be required by law or legal process, the Participant agrees not to
disclose or use any material or information which is confidential to the Company
or its subsidiaries and not in the public domain or generally known in the
industry, whether tangible or intangible, made available, disclosed or otherwise
known to the Participant as a result of his employment with the Company for so
long as such information remains confidential and not in the public domain.
(iii) During the Restrictive Period, the Participant shall not
attempt to
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influence, persuade or induce, or assist any other person in so persuading or
inducing, any employee of the Company or its subsidiaries to give up, or to not
commence, employment or a business relationship with the Company.
The parties intend the restrictions in this Paragraph 7(a) to be completely
severable and independent, and any invalidity or unenforceability of any one or
more of such restrictions shall not render invalid or unenforceable any one or
more restrictions.
(b) In addition to all other legal and equitable remedies available
to it, the Company shall have the right, and not the obligation, to purchase and
acquire from the Participant any or all of the shares of Common Stock previously
acquired by the Participant upon exercise of the Option (the "Repurchased
Shares") if the Committee elects to take such action, in its absolute
discretion, on the basis of the Committee's determination that the Participant
has violated any of the covenants set forth in this Agreement or if the
Participant`s employment is terminated or could have been terminated for Cause.
The Company may exercise the right granted to it under this Section 7(b) by
delivering written notice to the Participant stating that the Company is
exercising the repurchase right granted to it under this Section 7(b). The
delivery of such notice by the Company to the Participant shall constitute a
binding commitment of the Company to purchase and acquire all of the Repurchased
Shares. The total purchase price for the Repurchased Shares shall be delivered
to the Participant against delivery by the Participant of certificates
evidencing the Repurchased Shares no later than 30 days after the delivery of
the election notice by the Company. The price per share of the Repurchased
Shares shall be the lesser of the Fair Market Value of each of the Repurchased
Shares on the date of the Company's delivery of its written notice to the
Participant or the exercise price of the Option.
(c) In addition to all other legal and equitable remedies available
to it, the Company shall have the right, and not the obligation, to cancel any
or all of the Participant's Options if the Committee elects to take such action,
in its absolute discretion, on the basis of the Committee's determination that
the Participant has violated the covenants set forth in this Agreement. The
Company may exercise the right granted to it under this Section 7(c) by
delivering a written notice to the Participant stating that the Company is
exercising the cancellation right granted to it under this Section 7(c).
(d) Anything in this Section 7 to the contrary, the Company shall
not be obligated to purchase any Common Stock at any time to the extent that the
purchase would result in a violation of any law, statute, rule, regulation,
order, writ, injunction, decree or judgment promulgated or entered by any
Federal, state, local or foreign court or governmental authority applicable to
the Company or any of its property.
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8. Rights as Stockholder.
(a) The Participant or a transferee of the Options shall have no
rights as a stockholder with respect to any shares covered by the Options until
he shall have become the holder of record of such shares (and the Company shall
use its reasonable best efforts to cause the Participant promptly to become the
holder of record of such shares), and, except as provided in Section 5 hereof,
no adjustment shall be made for dividends or distributions or other rights in
respect of such shares for which the record date is prior to the date upon which
he shall become the holder of record thereof.
(b) The Participant acknowledges and agrees that any Common Stock
acquired in respect of the Options granted under Section 2 shall be "Shares" as
such term is used in the Stockholders Agreement, dated as of December 7, 1999,
among the Company and certain "Investors" listed in Schedule I thereto, and, as
such, will be subject to certain restrictions, including restrictions on resale
and such other transfers. In the event of any conflict or inconsistency between
the terms and provisions of this Agreement and the Stockholders Agreement, the
Stockholders Agreement shall govern and control.
9. Company; Participant.
(a) The term "Company" as used in this Agreement with reference to
employment or as otherwise indicated by the context shall include the Company
and its Related Entities.
(b) Whenever the word "Participant" is used in any provision of this
Agreement under circumstances where the provision should logically be construed
to apply to the executors, the administrators, the legal representatives, the
person or persons to whom the Options may be transferred by will or by the laws
of descent and distribution or any other transferee to whom the Options may be
transferred with the consent of the Committee, the word "Participant" shall be
deemed to include such person or persons.
10. Requirements of Law.
(a) By accepting the Options, the Participant represents and agrees
for himself and his transferees (whether by will or the laws of descent and
distribution) that, unless a registration statement under the Securities Act is
in effect as to the shares purchased upon any exercise of the Options, (i) any
and all shares so purchased shall be acquired for his personal account and not
with a view to or for sale in connection with any distribution, and (ii) each
notice of the exercise of any portion of this Option shall be accompanied by a
representation and warranty in writing, signed by the person entitled to
exercise the same, that the shares are being so acquired in good faith for his
personal account and not with a view to or for sale in connection with any
distribution.
(b) No certificate or certificates for shares of Common Stock may be
purchased, issued or transferred if the exercise hereof or the issuance or
transfer of such shares shall constitute a violation by the Company or the
Participant of any (i) provision of any Federal,
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state or other securities law, (ii) requirement of any securities exchange
listing agreement to which the Company may be a party, or (iii) other
requirement of law or of any regulatory body having jurisdiction over the
Company. Any reasonable determination in this connection by the Board, upon
notice given to the Participant, shall be final, binding and conclusive.
(c) The certificates representing shares of Common Stock acquired
pursuant to the exercise of Options shall carry such appropriate legend, and
such written instructions shall be given to the Company's transfer agent, as may
be deemed necessary or advisable by counsel to the Company in order to comply
with the requirements of the Securities Act or any state securities laws.
11. Notices. Any notice to be given to either party shall be in writing
and shall be given by hand delivery to such party or by registered or certified
mail, return receipt requested, postage prepaid, addressed to the Company in
care of its Secretary at its principal office, and to the Participant at the
address given beneath his signature hereto, or at such other address as either
party shall have furnished to the other in writing in accordance herewith.
Notice and communications shall be effective when actually received by the
addressee.
12. Binding Effect. This Agreement shall be binding upon the heirs,
executors, administrators, successors and permitted assigns of the parties
hereto.
13. The Plan. The terms and provisions of the Plan are incorporated herein
by reference and made a part hereof as though fully set forth herein. In the
event of any conflict or inconsistency between discretionary terms and
provisions of this Agreement, this Agreement shall govern and control. In all
other instances of conflicts or inconsistencies or omissions, the terms and
provisions of the Plan shall govern and control. All capitalized terms not
otherwise expressly defined in this Agreement shall have the meaning ascribed to
them in the Plan.
14. Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Tennessee, without regard to the
principles of conflicts of law thereof.
15. Entire Agreement. This Agreement, together with the Plan, contains the
entire agreement and understanding between the parties with respect to the
subject matter hereof and supersedes all prior agreements, written or oral, with
respect thereto. This Agreement, and this integration clause, is not intended
to, and does not, limit or alter in any manner, the parties' obligations under
any previous agreement concerning obligations to maintain confidentiality or
with respect to restrictive covenants, including, but not limited to, any
Nondisclosure Agreement, Confidentiality and Inventions Agreement, Employment
Agreement, Distributor Agreement, Sales Representative Agreement, or any similar
agreement between the parties, all of which obligations shall remain in full
force and effect.
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IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above. This instrument may be executed in any number of
counterparts, each of which shall be deemed to be an original, and such
counterparts together shall constitute one and the same instrument.
XXXXXX MEDICAL GROUP, INC.
By: ____________________________________
Xxxxx X. Xxxx
Vice President, General Counsel, and
Secretary
ACCEPTED:
______________________________
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