EXHIBIT 10.17
EXECUTIVE AGREEMENT
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EXECUTIVE AGREEMENT dated as of August __, 1996 among Diagnostics
Holding, Inc., a Delaware corporation (the "Company"), and
____________
("Executive").
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Pursuant to the Company's 1996 Executive Stock Purchase and Option Plan
(the "1996 Plan"), the Company and Executive desire to enter into an agreement
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pursuant to which Executive will purchase, and the Company will sell, _____
shares of Class L Common and _____ shares of Common. In addition, the Company
desires to grant to Executive options to acquire ____ shares of Common, which
options shall be divided into three grants, two grants for ____ shares of Common
which will be based on performance targets and will have different exercise
prices (the "Target Options") and one grant for _____ shares of Common which
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will be subject to time vesting (the "Time Option"). The Target Options and the
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Time Option are hereinafter referred to individually as an "Option" and
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collectively as the "Options". All shares of Common Stock now or hereafter
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acquired by Executive pursuant to the 1996 Plan are referred to herein as the
"Executive Stock."
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The parties hereto agree as follows:
STOCK AND OPTION PROVISIONS
1. PURCHASE AND SALE OF STOCK.
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a. Upon execution of this Agreement, Executive will purchase, and the
Company will sell, ______ shares of Class L Common at a price of $44.00 per
share and ______ shares of Common at a price of $4.00 per share (collectively,
the "Purchased Stock"). The Company will deliver to Executive a copy of, and a
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receipt for, the certificate representing such Class L Common and such Common,
and Executive will deliver to the Company a certified check or wire transfer of
funds in the amount of $_____. Such shares of Class L Common and Common shall
be fully vested immediately upon issuance.
b. 83(b) Election. Within 30 days after the date hereof, Executive will
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make an effective election with the Internal Revenue Service under Section 83(b)
of the Internal Revenue Code and the regulations promulgated thereunder.
c. Representations and Warranties. In connection with the purchase and
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sale of the Purchase Stock hereunder, Executive represents and warrants to the
Company that:
(i) The Purchased Stock to be acquired by Executive pursuant to this
Agreement will be acquired for Executive's own account and not with a view to,
or intention of, distribution thereof in violation of the Securities Act of
1933, as amended (the "1933 Act"), or any applicable state securities laws, and
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the Purchased Stock will not be disposed of in contravention of the 1933 Act or
any applicable state securities laws.
(ii) Executive [IS AN EXECUTIVE OFFICER OF THE COMPANY/1/,] is
sophisticated in financial matters and is able to evaluate the risks and
benefits of the investment in the Purchase Stock.
(iii) Executive is able to bear the economic risk of his investment in the
Purchase Stock for an indefinite period of time because the Purchased Stock has
not been registered under the 1933 Act and, therefore, cannot be sold unless
subsequently registered under the 1933 Act or an exemption from such
registration is available.
(iv) Executive has had an opportunity to ask questions and receive answers
concerning the terms and conditions of the offering of Purchased Stock and has
had full access to such other information concerning the Company and its
Subsidiaries as he has requested.
(v) This Agreement constitutes the legal, valid and binding obligation of
Executive, enforceable in accordance with its terms, and the execution, delivery
and performance of this Agreement by Executive does not and will not conflict
with, violate or cause a breach of any agreement, contract or instrument to
which Executive is a party or any judgment, order or decree to which Executive
is subject.
d. Acknowledgment. As an inducement to the Company to sell the Purchased
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Stock to Executive, as a condition thereto, Executive acknowledges and agrees
that neither the issuance of the Purchased Stock to Executive nor any provision
contained herein shall entitle Executive to
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/1/ To be included only where executive officer is purchasing.
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remain in the employment of the Company and its Subsidiaries or affect the right
of the Company to terminate Executive's employment at any time for any reason.
e. 1996 Plan Acknowledgment. The Company and Executive acknowledge and
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agree that this Agreement has been executed and delivered, and the Purchased
Stock has been issued hereunder, in connection with and as part of the
compensation and incentive arrangements between the Company and Executive.
2. STOCK OPTIONS.
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a. Target Option Grants. The Company hereby grants to Executive, pursuant
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to the Plan, the Target Options to purchase (A) _______ shares of Common (the
"Tranche I Options"), with an exercise price of $7.00 (the "Tranche I Price"),
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and (B) _______ shares of Common (the "Tranche II Options") with an exercise
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price of $16.00 the "Tranche II Price"). The shares issued upon exercise of the
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Tranche I Options or the Tranche II Options are referred to herein as the
("Target Option Shares"). The number of Target Option Shares, the Tranche I
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Price, and the Tranche II Price will be equitably adjusted for any stock split,
stock dividend, reclassification or recapitalization of the Company which occurs
subsequent to the date of this Agreement. The Target Options will expire (the
"Expiration Date") on the earlier of the tenth anniversary of the date hereof or
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the date of termination of Executive's employment with the Company or a
Subsidiary for any reason (the "Termination Date"), provided that Executive will
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have 30 days after the Expiration Date to exercise the Target Options with
respect to the Target Option Shares which are then exercisable pursuant to the
terms of the 1996 Plan.
b. Time Option Grant. The Company hereby grants to Executive, pursuant to
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the Plan, the Time Option to purchase ______ shares of Common Stock ("Time
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Option Shares"), at a price per share of $4.00 (the "Option Price"). The Option
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Price and the number of Time Option Shares will be equitably adjusted for any
stock split, stock dividend, reclassification or recapitalization of the Company
which occurs subsequent to the date of this Agreement. The Time Option will
expire on the Expiration Date, provided that Executive will have 30 days after
the Expiration Date to exercise the Time Option with respect to the percentage
of Time Option Shares as determined pursuant to the terms of the 1996 Plan.
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c. Securities Laws Restrictions. Executive represents that when Executive
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exercises the Options he will be purchasing Executive Stock for Executive's own
account and not on behalf of others. Executive understands and acknowledges
that federal and state securities laws govern and restrict Executive's right to
offer, sell or otherwise dispose of any Executive Stock unless Executive's
offer, sale or other disposition thereof is registered under the 1933 Act and
state securities laws or, in the opinion of the Company's counsel, such offer,
sale or other disposition is exempt from registration thereunder. Executive
agrees that he will not offer, sell or otherwise dispose of any Executive Stock
in any manner which would: (i) require the Company to file any registration
statement (or similar filing under state law) with the Securities and Exchange
Commission or to amend or supplement any such filing or (ii) violate or cause
the Company to violate the 1933 Act, the rules and regulations promulgated
thereunder or any other state or federal law. Executive further understands
that the certificates for any Executive Stock Executive purchases will bear the
legend set forth in paragraph 5 hereof or such other legends as the Company
deems necessary or desirable in connection with the 1933 Act or other rules,
regulations or laws.
d. Non-Transferability of Option. The Options are personal to Executive
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and are not transferable by Executive. Only Executive or his estate or heirs is
entitled to exercise the Options.
3. REPURCHASE OPTION. In the event that Executive is no longer employed by
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the Company or any of its Subsidiaries for any reason (the date of such
termination being referred to herein as the "Termination Date"), the Executive
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Stock, whether held by Executive, or one or more Permitted Transferees (as
defined in paragraph 4 below), will be subject to repurchase by the Company and
the Investors (solely at their option) pursuant to the terms and conditions set
forth in the 1996 Plan (the "Repurchase Option").
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4. RESTRICTIONS ON TRANSFER.
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a. Transfer of Executive Stock. Without the express written consent of
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the Company to transfers of Executive Stock in accordance with the terms of this
Agreement, Executive will not sell, pledge or otherwise transfer any interest in
any shares of Executive Stock, except pursuant to (i) the provisions of
paragraphs 2, 3 and 7 hereof, (ii) the provisions of paragraph 4(b) below, (iii)
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pursuant to the Registration Agreement, dated as of December 20, 1994, as
amended, among the Company and its stockholders or (iv) pursuant to the
provisions of the 1996 Plan.
b. Certain Permitted Transfers. The restrictions contained in this
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paragraph 4 will not apply with respect to transfers of Executive Stock pursuant
to applicable laws of descent and distribution, provided that the restrictions
contained in this paragraph 4 will continue to be applicable to the Executive
Stock after any such transfer and the transferees of such Executive Stock shall
agree in writing to be bound by the provisions of this Agreement. Any
transferee of Executive Stock pursuant to a transfer in accordance with the
provisions of this subparagraph 4(b) is herein referred to as a "Permitted
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Transferee." Upon the transfer of Executive Stock pursuant to this paragraph
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4(b), the Permitted Transferee(s) will deliver a written notice (the "Transfer
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Notice") to the Company. The Transfer Notice will disclose in reasonable detail
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the identity of the Permitted Transferee(s).
5. ADDITIONAL RESTRICTIONS ON TRANSFER.
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a. The certificates representing the Executive Stock will bear the
following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND CERTAIN OTHER AGREEMENTS SET
FORTH IN AN EXECUTIVE AGREEMENT BETWEEN THE ISSUER (THE "COMPANY") AND A
CERTAIN EMPLOYEE OF THE COMPANY DATED AS OF AUGUST ______, 1996, A COPY OF
WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S PRINCIPAL PLACE
OF BUSINESS WITHOUT CHARGE."
b. No holder of Executive Stock may sell, transfer or dispose of any
Executive Stock (except pursuant to an effective registration statement under
the Securities Act of 1933) without first delivering to the Company an opinion
of counsel reasonably acceptable in form and substance to the Company (which
counsel shall be reasonably acceptable to the Company) that registration under
the 1933 Act is not required in connection with such transfer.
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6. DEFINITION OF EXECUTIVE STOCK. For all purposes of this Agreement,
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Executive Stock will continue to be Executive Stock in the hands of any holder
other than Executive (except for the Company and purchasers pursuant to an
offering registered under the 1933 Act or purchasers pursuant to a Rule 144
transaction), and each such other holder of Executive Stock will succeed to all
rights and obligations attributable to Executive as a holder of Executive Stock
hereunder. Executive Stock will also include shares of the Company's capital
stock issued with respect to shares of Executive Stock by way of a stock split,
stock dividend or other recapitalization.
7. SALE OF THE COMPANY.
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a. If the Board and the holders of a majority of the shares of Common
Stock then outstanding approve a sale of all or substantially all of the
Company's assets determined on a consolidated basis or a sale of all or
substantially all of the Company's outstanding capital stock (whether by merger,
recapitalization, consolidation, reorganization, combination or otherwise) to
any Independent Third Party or group of Independent Third Parties (collectively
an "Approved Sale"), each holder of Executive Stock will vote for, consent to
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and raise no objections against such Approved Sale. If the Approved Sale is
structured as (i) a merger or consolidation, each holder of Executive Stock will
waive any dissenters rights, appraisal rights or similar rights in connection
with such merger or consolidation or (ii) a sale of stock, each holder of
Executive Stock will agree to sell all of his shares of Executive Stock and
rights to acquire shares of Executive Stock on the terms and conditions approved
by the Board and the holders of a majority of the Common Stock then outstanding.
Each holder of Executive Stock will take all necessary or desirable actions in
connection with the consummation of the Approved Sale as requested by the
Company.
b. The obligations of the holders of Common Stock with respect to the
Approved Sale of the Company are subject to the satisfaction of the following
conditions: (i) upon the consummation of the Approved Sale, each holder of
Common Stock will receive the same form of consideration and the same portion of
the aggregate consideration that such holders of Common Stock would have
received if such aggregate consideration had been distributed by the Company in
complete liquidation pursuant to the rights and preferences set forth in the
Company's Certificate of Incorporation as in effect immediately prior to such
Approved Sale; (ii) if any holders of a class
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of Common Stock are given an option as to the form and amount of consideration
to be received, each holder of such class of Common Stock will be given the same
option; and (iii) each holder of then currently exercisable rights to acquire
shares of a class of Common Stock will be given an opportunity to exercise such
rights prior to the consummation of the Approved Sale and participate in such
sale as holders of such class of Common Stock.
c. If the Company or the holders of the Company's securities enter into
any negotiation or transaction for which Rule 506 (or any similar rule then in
effect) promulgated by the Securities Exchange Commission may be available with
respect to such negotiation or transaction (including a merger, consolidation or
other reorganization), the holders of Executive Stock will, at the request of
the Company, appoint a purchaser representative (as such term is defined in Rule
501) reasonably acceptable to the Company. If any holder of Executive Stock
appoints a purchaser representative designated by the Company, the Company will
pay the fees of such purchaser representative, but if any holder of Executive
Stock declines to appoint the purchaser representative designated by the Company
such holder will appoint another purchaser representative, and such holder will
be responsible for the fees of the purchaser representative so appointed.
d. Executive and the other holders of Executive Stock (if any) will bear
their pro-rata share (based upon the number of shares sold) of the costs of any
sale of Executive Stock pursuant to an Approved Sale to the extent such costs
are incurred for the benefit of all holders of Common Stock and are not
otherwise paid by the Company or the acquiring party. Costs incurred by
Executive and the other holders of Executive Stock on their own behalf will not
be considered costs of the transaction hereunder.
e. The provisions of this paragraph 7 will terminate upon completion of
the initial public offering of the Common Stock.
8. PUBLIC OFFERING. In the event that the Board and the holders of a majority
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of the shares of Common Stock then outstanding approve an initial public
offering and sale of Common Stock (a "Public Offering") pursuant to an effective
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registration statement under the Securities Act of 1933, as amended, the holders
of Executive Stock will take all necessary or desirable actions in connection
with the consummation of the Public Offering. In the event that such Public
Offering is an
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underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the Common Stock structure will adversely affect
the marketability of the offering, each holder of Executive Stock will consent
to and vote for a recapitalization, reorganization and/or exchange of the Common
Stock into securities that the managing underwriters, the Board and holders of a
majority of the shares of Common Stock then outstanding find acceptable and will
take all necessary or desirable actions in connection with the consummation of
the recapitalization, reorganization and/or exchange.
9. TERMINATION OF PROVISIONS RELATING TO EXECUTIVE STOCK. The provisions of
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paragraphs 3 and 4, and the rights of Executive under paragraph 7 of the Plan,
will terminate upon the first to occur of (i) an Approved Sale, or (ii) (A) the
Company (or its successor as a result of merger, consolidation, reorganization
or sale) becoming a reporting company under the Securities Exchange Act of 1934
as a result of the registration of its common equity securities thereunder and
(B) the Investors and their affiliates collectively ceasing to own at least 50%
of the aggregate number of shares of Common Stock that they own on the date
hereof (as adjusted for stock splits, stock dividends and recapitalization and
for exchanges in connection with a merger, consolidation, reorganization or
sale).
MISCELLANEOUS PROVISIONS
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10. NOTICES. Any notice provided for in this Agreement must be in writing and
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must be personally delivered, received by certified mail, return receipt
requested, or sent by guaranteed overnight delivery service, to the Investors at
the addresses indicated in the Company's records and to the other recipients at
the address indicated below:
To the Company:
Diagnostics Holding Inc.
c/o Bain Capital, Inc.
Two Xxxxxx Place
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx Xxxxxx
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To Executive:
[TO COME]
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement will be deemed to have been given when so delivered
or mailed.
11. SEVERABILITY. Whenever possible, each provision of this Agreement will be
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interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. COMPLETE AGREEMENT. This Agreement embodies the complete agreement and
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understanding among the parties and supersedes and preempts any prior
understandings, agreements or representations by or among the parties, written
or oral, which may have related to the subject matter hereof in any way.
13. COUNTERPARTS. This Agreement may be executed in separate counterparts,
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each of which will be deemed to be an original and all of which taken together
will constitute one and the same agreement.
14. SUCCESSORS AND ASSIGNS. This Agreement is intended to bind and inure to
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the benefit of and be enforceable by Executive, the Company, the Investors and
their respective successors and assigns, provided that Executive may not assign
any of his rights or obligations, except as expressly provided by the terms of
this Agreement.
15. GOVERNING LAW. The corporate law of Delaware will govern all issues
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concerning the relative rights of the Company and its stockholders. All other
issues concerning the enforceability, validity and binding effect of this
Agreement will be governed by and construed in accordance with the laws of the
State of Illinois, without giving effect to any choice of law or conflict of law
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provision or rule (whether of the State of Illinois or any other jurisdiction)
that would cause the application of the law of any jurisdiction other than the
State of Illinois.
16. REMEDIES. The parties hereto agree and acknowledge that money damages may
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not be an adequate remedy for any breach of the provisions of this Agreement and
that any party hereto will have the right to injunctive relief, in addition to
all of its other rights and remedies at law or in equity, to enforce the
provisions of this Agreement.
17. EFFECT OF TRANSFERS IN VIOLATION OF AGREEMENT. The Company will not be
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required (a) to transfer on its books any shares of Executive Stock which have
been sold or transferred in violation of any of the provisions set forth in this
Agreement or (b) to treat as owner of such shares, to accord the right to vote
as such owner or to pay dividends to any transferee to whom such shares have
been transferred in violation of this Agreement.
18. AMENDMENTS AND WAIVERS. Any provision of this Agreement may be amended or
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waived only with the prior written consent of the Company, Executive and the
Investors who hold 70% of the Common Stock held by the Investors.
19. THIRD PARTY BENEFICIARIES. The parties hereto acknowledge and agree that
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the Investors are third party beneficiaries of this Agreement. This Agreement
will inure to the benefit of and be enforceable by the Investors and their
respective successors and assigns.
20. DIAGNOSTICS HOLDING, INC. 1996 EXECUTIVE STOCK PURCHASE AND OPTION PLAN.
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The grant of Options and issuance of Executive Stock hereunder is pursuant to,
and subject to all the terms and conditions of, the Company's 1996 Executive
Stock Purchase and Option Plan (the "1996 Plan"), attached hereto as Exhibit A.
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Capitalized terms defined in the 1996 Plan and otherwise not defined herein are
used herein as therein defined.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.
Diagnostics Holding, Inc.
By:
______________________________
Title:
___________________________
___________________________
[Executive]
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