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EXHIBIT 99.4
MARINER HEALTH GROUP, INC.
Non-Qualified Stock Option Agreement
This Non-Qualified Stock Option Agreement dated as of October 3, 1997
(the "Agreement") by and between Mariner Health Group, Inc., a Delaware
corporation (the "Company") with a principal place of business in New London,
Connecticut, and Xxxxxxx X. Xxxxxxx (the "Optionee"):
WITNESSETH:
WHEREAS, the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") has authorized the grant of stock options upon certain
terms and conditions set forth below; and
WHEREAS, the grant of stock options pursuant to this Agreement, is
contemplated by Section 4(g) of the Optionee's Employment Agreement dated as of
September 12, 1997 (the "Employment Agreement") by and among the Company, Prism
Rehabilitation Systems, Inc. and the Optionee (capitalized terms used in this
Agreement, unless otherwise defined in this Agreement, shall have the respective
meaning ascribed to them in the Employment Agreement).
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained, the Company and the parties hereto
agree as follows:
1. Grant. The Company does hereby grant to the Optionee an option (the
"Option") to purchase from the Company 150,000 shares of its Common Stock
("Stock") upon the terms and conditions set forth herein.
2. Option Exercise Prices. This Option may be exercised at the option
price of $16.25 per share of Stock, subject to adjustment as provided herein.
3. Term and Exercisability of Option. This Option shall expire on the
day prior to the tenth (10th) anniversary of the date of this Agreement. This
Option shall become exercisable on the third (3rd) anniversary of the date of
this Agreement, unless the following conditions are satisfied (in which case the
specified portion of this Option shall become exercisable on the date specified
for the specified portion of this Option):
(a) Contract Therapy EBIT (as defined in Exhibit A to the
Employment Agreement to which this Option Agreement is also an Exhibit
("Exhibit A")) with respect to the quarterly period ending December 31,
1997 equals or exceeds the Contract Therapy EBIT Target for such period
as set forth in Exhibit A, in which case 25,000 shares of Stock subject
to the Option shall become exercisable at the time the Company's
earnings for such quarters are announced publicly;
(b) Contract Therapy EBIT with respect to the fiscal year
ending December 31, 1998 equals or exceeds the Contract Therapy EBIT
Target for such period as set forth in Exhibit A, in which case 50,000
shares of Stock subject to the Option shall become exercisable at the
time the Company's earnings for such year is announced publicly;
(c) the Company's EPS for the year ending December 31, 1999 is
at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised
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from time to time), in which case 25,000 shares of Stock subject to the
Option shall become exercisable at the time the Company's earnings for
such year are announced publicly;
(d) the Company's EPS for the year ending December 31, 2000 is
at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised from time to time), in which case 25,000 shares of
Stock subject to the Option shall become exercisable at the time the
Company's earnings for such year are announced publicly; and
(e) the Company's EPS for the year ending December 31, 2001 is
at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised from time to time), in which case 25,000 shares of
Stock subject to the Option shall become exercisable at the time the
Company's earnings for such year are announced publicly.
If either (x) the Company terminates the Executive's employment at any time
during a period commencing with a Change in Control (as defined in the
Employment Agreement) and ending one year from such Change in Control pursuant
to the provisions of Section 5(b) (without Cause) of the Employment Agreement,
or (y) the Executive terminates his employment at any time during a period
commencing with a Change in Control and ending one year from such Change in
Control pursuant to the provisions of Section 5(c) of the Employment Agreement
because of a Material Breach or Section 5(d) (for Good Reason) of the Employment
Agreement, all outstanding shares of Stock subject to this Option at the time of
such termination which have not yet vested at the time of such termination shall
immediately be fully vested and shall immediately become exercisable in full.
Such right to exercise the Option is subject to Sections 5 and 6 hereof, as
appropriate, if the Optionee ceases to be employed by the Company and any
present or future parent or subsidiary of the Company ("Related Corporation").
4. Method of Exercise. To the extent that the right to purchase shares
of Stock has accrued hereunder, this Option may be exercised from time to time
by written notice to the Company in the form attached hereto, stating the number
of shares with respect to which this Option is being exercised, accompanied by
payment in full of the option price for the number of shares to be delivered. As
soon as practicable after its receipt of such notice, the Company shall, without
transfer or issue tax to the Optionee (or other person entitled to exercise
these options), deliver to the Optionee (or other person entitled to exercise
this Option), at the principal executive offices of the Company or such other
place as shall be mutually acceptable, a certificate or certificates for such
shares out of theretofore authorized but unissued shares or reacquired shares of
its Stock as the Company may elect; provided, however, that the time of such
delivery may be postponed by the Company for such period as may be required for
it with reasonable diligence to comply with any applicable requirements of law.
The option price shall be paid, at the election of the Optionee, (i) in cash or
by check; (ii) by delivery of shares of the Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise to the option
price; (iii) by delivery of an assignment satisfactory in form and substance to
the Company of a sufficient amount of the proceeds from the sale of the Stock
and an instruction to the broker or selling agent to pay that amount to the
Company; or (iv) by any combination of the foregoing. If the Optionee (or other
person entitled to exercise this Option) fails to pay for and accept delivery of
all of the shares specified in such notice upon tender of delivery thereof, his
right to exercise this Option with respect to such shares not paid for may be
terminated by the Company.
5. Termination of Employment. If the Optionee ceases to be employed by
the Company and all Related Corporations for any reason (including death or
disability or termination for Cause as defined in Section 5(a) of the Employment
Agreement), no further installments of this Option shall become exercisable
after the date of termination of his employment by the Company, and this Option
shall
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terminate no later than the earlier of (a) one year after the date of
termination of his employment and (b) the Option's specified expiration date. In
such a case, the Optionee's only rights hereunder shall be those which are
properly exercised by the Optionee or the Optionee's legal representative before
the termination of this Option.
6. Effect of Termination. At the expiration of the period provided in
Section 5 or the scheduled expiration date, whichever is the earlier, this
Option shall terminate and the only rights hereunder shall be those as to which
this Option were properly exercised before such termination.
7. Non-assignability. This Option shall not be assignable or
transferable by the Optionee except by will or by the laws of descent and
distribution. During the life of the Optionee, this Option shall be exercisable
only by the Optionee.
8. Compliance with Securities Act. The Company shall not be obligated
to sell or issue any shares of Stock or other securities pursuant to the
exercise of this Option unless the shares of Stock or other securities with
respect to which this Option are being exercised are at that time effectively
registered or exempt from registration under the Securities Act of 1933, and
applicable state securities laws. In the event shares of Stock or other
securities shall be issued which shall not be so registered, the Optionee hereby
represents, warrants and agrees that he will receive such shares or other
securities for investment and not with a view to their resale or distribution,
and will execute an appropriate investment letter satisfactory to the Company
and its counsel.
9. Legends. The Optionee hereby acknowledges that, if required by law,
the stock certificate representing the Stock will bear a legend setting forth
certain restrictions on its transferability.
10. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to this Option until such time as the
Optionee has exercised this Option by delivering a notice of exercise and has
paid in full the purchase price for the shares so exercised in accordance with
Section 4.
11. Equitable Adjustment. In the event of any stock dividend,
recapitalization, Stock split, reverse Stock split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporation transaction or event, then the Company shall make such
equitable changes or adjustments as are necessary or appropriate to (a) the
number and kind of shares of Stock issued or issuable in respect of outstanding
Options or (b) the exercise price.
12. Effect Upon Employment. Nothing in this Option shall be construed
to impose any obligation upon the Company to retain the Optionee in its employ.
13. Time for Acceptance. Unless the Optionee shall evidence his
acceptance of this Option by execution of this Agreement within ten (10) days of
the Effective Time this Option and this Agreement shall be null and void.
14. Withholding Taxes. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this Option, or in connection with the transfer of, or the
lapse of restrictions on, any Stock or other property acquired pursuant to this
Option, the Optionee hereby agrees that the Company or any Related Corporation
may withhold from the Optionee's wages or other remuneration the appropriate
amount of tax. At the discretion of the Company or Related Corporation, the
amount required to be withheld may be withheld in cash from such wages or other
remuneration or in kind from the Stock or other property otherwise deliverable
to the Optionee on exercise of this Option. The Optionee further agrees that, if
the Company or any Related Corporation does not withhold an amount from the
Optionee's wages or other remuneration sufficient to
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satisfy the withholding obligation of the Company or Related Corporation, the
Optionee will make reimbursement on demand, in cash, for the amount withheld.
15. Provision of Documentation to Optionee. By signing this Agreement
the Optionee acknowledges receipt of a copy of this Agreement.
16. General Provisions.
(a) Amendment; Waivers. This Agreement contains the full and complete
understanding and agreement of the parties hereto as to the subject matter
hereof and may not be modified or amended, nor may any provision hereof be
waived, except by a further written agreement duly signed by each of the
parties. The waiver by either of the parties hereto of any provision hereof in
any instance shall not operate as a waiver of any other provision hereof or in
any other instance.
(b) Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of laws thereof.
(d) Construction. The titles of the sections of this Agreement are
included for convenience only and shall not be construed as modifying or
affecting their provisions; the masculine gender shall include both sexes; the
singular shall include the plural and the plural the singular unless the context
otherwise requires. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Employment Agreement.
(e) Notices. Any notice in connection with this Agreement shall be
deemed to have been properly delivered if it is in writing and is delivered in
hand or sent by mail to the party addressed as follows, unless another address
has been substituted by notice so given:
To the Optionee: To his address as set forth in the Employment Agreement.
To the Company: Mariner Health Group, Inc.
000 Xxxxxx X'Xxxxx Xxxxx
Xxx Xxxxxx, XX 00000
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer thereunto duly authorized, and its corporate seal to be
affixed as of the date set forth below.
MARINER HEALTH GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
--------------------------------
Title: Vice President
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ACCEPTANCE
I hereby accept the foregoing Options in accordance with its terms and
conditions.
October 3, 1997 /s/ Xxxxxxx X. Xxxxxxx
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Date Signature of Optionee
Xxxxxxx X. Xxxxxxx
