EXHIBIT 10.18
US ONCOLOGY, INC.
CHIEF EXECUTIVE OFFICER STOCK
OPTION PLAN AND AGREEMENT
This Stock Option Plan and Agreement (this "Agreement") between US
Oncology, Inc., a Delaware corporation (the "Company"), and R. Xxxx Xxxx
("Optionee") sets forth the terms and conditions of a grant by the Company to
Optionee of an option to purchase shares of the Company's Common Stock (as
herein defined).
Section 1. Definitions. As used herein the words and phrases below shall
have the following meanings:
a. "Board" shall mean the Board of Directors of the Company, or an
authorized committee thereof.
b. "Change in Control" shall mean (i) the acquisition by any person
or entity (including a "group" as defined in Section 13(d)(3) of the
Exchange Act, but excluding any person or entity that was a stockholder, or
an affiliate of a stockholder, of the Company on the effective date of this
Stock Option Plan and Agreement) of beneficial ownership of, or voting
control over, thirty percent (30%) or more of the outstanding Common Stock
or (ii) approval by the Company's stockholders of a definitive agreement
(A) to merge or consolidate the Company with or into another corporation,
in which the Company is not the continuing or surviving corporation or
pursuant to which any shares of Common Stock of the Company would be
converted into cash, securities or other property of another corporation,
other than a merger of the Company in which holders of Common Stock
immediately prior to the merger have the same proportionate ownership of
common stock of the surviving corporation immediately after the merger as
immediately before, or (B) to sell or otherwise dispose of substantially
all of the assets of the Company.
c. "Code" shall mean the Internal Revenue Code of 1986, as amended.
d. "Common Stock" shall mean the common stock of the Company, $.01
par value per share.
e. "Disability" shall mean that Optionee is unable to engage in
substantial gainful activity by reason of any medically determinable
physical or mental impairment which can be expected to result in death or
which has lasted or can be expected to last for a continuous period of not
less than one hundred eighty (180) days. The Company's determination as to
whether Optionee has incurred a Disability shall be made in good faith by
the Board based on the opinion of a licensed physician.
f. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
now in effect or as hereafter amended.
g. "Fair Market Value" shall mean, with respect to a share of Common
Stock on any date herein specified, the average daily Closing Price per
share of Common Stock
for the ten (10) consecutive trading days commencing fifteen (15) trading
days before the date in question. The term "Closing Price" of per share of
Common Stock for a day or days shall mean (i) if the shares of Common Stock
are listed or admitted for trading on a national securities exchange, the
last reported sales price regular way, or, in case no such reported sale
takes place on such day or days, the average of the reported closing bid
and asked prices regular way, in either case on the principal national
securities exchange on which the shares of Common Stock are listed or
admitted for trading, or (ii) if the shares of Common Stock are not listed
or admitted for trading on a national securities exchange, (A) the last
transaction price of the shares of Common Stock on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ") or, in the case
no such reported transaction takes place on such day or days, the average
of the reported closing bid and asked prices thereof quoted on NASDAQ, or
(B) if the shares of Common Stock are not quoted on NASDAQ, the average of
the closing bid and asked prices of the shares of Common Stock in the over-
the-counter market, as reported by The National Quotation Bureau, Inc., or
an equivalent generally accepted reporting service, (iii) if on any such
trading days the shares of Common Stock are not quoted by any such
organization, the fair market value per share of Common Stock on such
day(s), as determined in good faith by the Board, or (iv) in the event that
the Company is no longer registered under the Exchange Act and the Optionee
shall at its option request such appraisal, the appraised value thereof as
determined by an Independent Financial Expert selected by the Company and
approved by Optionee (which approval may be withheld for any reason at
Optionee's sole discretion).
h. "Independent Financial Expert" shall mean a firm that routinely
provides securities valuation services, that does not (and whose affiliates
do not) have a direct or indirect financial interest in the Company, that
has not been, and, if applicable, at the time it is called upon to provide
independent valuation services to the Company, is not (and none of whose
affiliates is) a promoter, director or officer of the Company or any of its
affiliates, or an underwriter with respect to any of its securities, that
does not provide any advice or opinions to the Company except solely in the
capacity as an Independent Financial Expert; provided, however, that,
subject to the agreement at the applicable time of the Optionee, the
Company's independent certified public accountant may perform the services
of an Independent Financial Expert.
i. "Liquidation Event" shall mean the decision of the Company's
stockholders to dissolve the Company.
j. "Securities Act" shall mean the Securities Act of 1933, as now in
effect or as hereafter amended.
k. "Stock Option" shall have the meaning specified in Section 2.
Section 2. Grant of the Stock Option. Under the terms and conditions
hereof, the Company hereby grants to Optionee an option to purchase 1,000,000
shares of the Company's Common Stock at an exercise price of $4.96 per share
(the "Stock Option"). The Stock Option may be exercised by the Optionee, in
whole or in part at any time after, and to the extent, it is or becomes vested
as provided in Section 3 below. In no event may the Stock Option granted
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hereunder be exercised, in whole or in part, after the expiration of the term
described in Section 8.
Section 3. Vesting Schedule.
a. Except to the extent otherwise provided herein, the Stock Option
shall vest fully, and may be exercised by the Optionee, in whole or in
part, six months after the effective date of the grant if the Optionee is
at that time either an employee or a director of the Company.
b. Notwithstanding the foregoing, all shares covered by the Stock
Option may be exercised fully and immediately without regard to the vesting
schedule set forth in this section, in the event of one of the following:
(1) a Change in Control or announcement of a tender offer that,
if successfully completed, would result in a Change in
Control, or
(2) a Liquidation Event.
c. Notwithstanding the foregoing, in the event of Optionee's death or
Disability, 100% of all shares covered by the Stock Option that are not
vested as of the date of such event may be exercised fully and immediately
without regard to the vesting schedules set forth in this section.
d. Notwithstanding the foregoing, if at any time prior to the vesting
of the Stock Option, the Optionee ceases to have a relationship with the
Company, either as an employee or a director, then the Stock Option shall
automatically expire.
Section 4. Characterization of Stock Option. The Stock Option granted or
to be granted hereunder is not intended to qualify as an Incentive Stock Option
under Section 422 of the Code.
Section 5. Method of Exercise. The Stock Option shall be exercised by the
delivery of written notice to the Company setting forth the number of shares of
Common Stock with respect to which the Stock Option is to be exercised and,
subject to the subsequent provisions hereof, the address to which the
certificates representing shares of the Common Stock issuable upon the exercise
of such Stock Option shall be mailed. In order to be effective, such written
notice shall be accompanied at the time of its delivery to the Company by
payment of the exercise price for such shares of Common Stock, which, except as
provided below and in Section 6, shall be made in cash or by check payable to
the order of the Company. Such notice shall be delivered in person to the
Secretary of the Company, or shall be sent by registered mail, return receipt
requested, to the Secretary of the Company, in which case, delivery shall be
deemed made on the date such notice is deposited in the mail. Whenever shares
of Common Stock are to be issued or delivered pursuant hereto, the Company shall
require Optionee to pay to the Company an amount sufficient to satisfy federal,
state, and local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares, which payment may be made in cash,
by check payable to the order of the Company or in the manner provided in
Section 6 hereof.
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Section 6. Alternative Payment for Stock. In lieu of payment of the
exercise price in cash or by check, payment may be made, in whole or in part, by
delivery of shares of Common Stock previously issued to Optionee. Unless
otherwise permitted by the Company, payment of the exercise price with shares of
Common Stock shall be made only with shares owned by Optionee for at least six
(6) months. If payment is made in whole or in part in shares of Common Stock
owned by Optionee, then Optionee shall deliver to the Company, in payment of the
exercise price of the shares of Common Stock with respect to which such Stock
Option is exercised, (i) certificates registered in the name of Optionee
representing a number of shares of Common Stock legally and beneficially owned
by Optionee, free of all liens, claims and encumbrances of every kind and having
a Fair Market Value as of the date of delivery of such notice that is not
greater than the exercise price of the shares of Common Stock with respect to
which such Stock Option is to be exercised, such certificates to be accompanied
by stock powers duly endorsed in blank by the record holder of the shares
represented by such certificates; and (ii) if the exercise price of the shares
of Common Stock with respect to which such Stock Option is to be exercised
exceeds such Fair Market Value, cash or check payable to the order of the
Company in an amount equal to the amount of such excess.
Section 7. Transferability of Stock Option. The Stock Option shall not be
subject to sale, assignment or transfer, other than by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Code. The designation of a beneficiary by Optionee shall not
constitute a transfer. The Stock Option shall be exercisable (i) during
Optionee's lifetime, only by Optionee (or in the event of his incapacity, by his
legal representative) or (ii) following Optionee's death, by his executors,
administrators or any person(s) to whom the Stock Option was transferred by will
or by the laws of descent and distribution.
Section 8. Expiration Date of Stock Option. The Stock Option granted
pursuant to this Stock Option Agreement shall expire and be of no force and
effect after 11:59 p.m. on the day before the tenth anniversary of the date of
this Agreement.
Section 9. Compliance with Securities Law; Registration.
a. The Company shall not be required to sell or issue any shares
under this Agreement if the issuance of such shares shall constitute a
violation by Optionee or the Company of any provisions of any law, statute
or regulation of any governmental authority. In addition, in connection
with the Securities Act, upon exercise of the Stock Option, the Company
shall not be required to issue any such shares unless it, in the exercise
of its reasonable discretion, has received evidence satisfactory to it to
the effect that Optionee will not transfer such shares except pursuant to a
registration statement in effect under the Securities Act or unless an
opinion of counsel satisfactory to the Company, in the exercise of its
reasonable discretion, has been received by the Company to the effect that
such registration is not required. In the event the shares issuable on
exercise of the Stock Option are not registered under the Securities Act,
the Company may imprint the following legend or any other legend which
counsel for the Company considers necessary or advisable to comply with the
Securities Act:
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"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon such
registration or upon receipt by the Company of an opinion of counsel
satisfactory to the Company that registration is not required for such
sale or transfer."
b. As soon as practical after the date hereof, the Company shall
file, and use its best efforts to cause to be declared effective, a
registration statement on Form S-8 (or any successor or otherwise
permissible form) with respect to the Stock Option and the shares of Common
Stock issuable upon exercise thereof. The Company shall notify Optionee of
the effectiveness of such registration statement and, if applicable, any
such amendments or supplements.
Section 10. Change in Stock and Adjustments. The number of shares covered
by Stock Option and the exercise price per share thereof shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from the subdivision or consolidation of shares
or any other capital adjustment, the payment of a stock dividend or any other
increase in such shares effected without receipt of consideration by the Company
or any other decrease therein effected without a distribution of cash or
property in connection therewith. In the event the outstanding shares of the
Common Stock, as constituted from time to time, shall be changed as a result of
any other change in capitalization of the Company or as a result of a
combination, merger, or reorganization of the Company into or with any other
corporation or any other transaction with similar effects, there then shall be
substituted (at no additional cost to Optionee) for each share of Common Stock,
theretofore subject, or which may become subject, to issuance or transfer
hereunder, the number and kind of shares of Common Stock or other securities or
other property into which each outstanding share of Common Stock shall be
changed or for which each such shares shall be exchanged and the Company may
make other equitable adjustments which it deems to be warranted at no additional
cost to Optionee. If the Company merges or consolidates with another entity, or
if the Company is liquidated or sells or otherwise disposes of substantially all
of its assets while unexercised options remain outstanding, all outstanding
Stock Options may be cancelled by the Board as of the effective date of such
merger, consolidation, liquidation or sale provided that notice of such
cancellation shall be given to Optionee at least thirty days prior to such
cancellation.
In the event of any change in applicable laws or any change in
circumstances which results in or would result in any dilution of the rights
granted hereunder, or which otherwise warrants equitable adjustment because it
interferes with the intended operation of this Agreement, then, if the Company
shall, in its reasonable discretion, determine that such change equitably
requires an adjustment in the number or kind of shares of stock or other
securities or other property theretofore subject, or which may become subject,
to issuance or transfer hereunder or in the terms and conditions of the
outstanding Stock Option, such adjustment shall be made in accordance with such
determination. Such adjustments may include changes with respect to (i) the
number of shares subject to the Stock Option and (ii) the exercise price per
share for the outstanding Stock Option.
Section 11. No Rights as Shareholder. No holder of the Stock Option shall
have any rights as a shareholder with respect to shares covered by the Stock
Option until the date of
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exercise of the Stock Option as to such shares; and except as otherwise provided
in Section 10 hereof, no adjustment for dividends, or otherwise, shall be made
if the record date therefor is prior to the date of such exercise.
Section 12. Employment or Affiliation Obligation. The grant of the Stock
Option shall not impose upon the Company any obligation to employ or to continue
any employment or other affiliation with the Optionee. The right of the Company
to terminate its employment or affiliate relationship with any person, including
the Optionee, shall not be diminished or affected by reason of the fact that the
Stock Option has been granted.
Section 13. Notices. Any notice, consent, request or other communication
("Notice") required or permitted to be given hereunder shall be in writing.
Such Notice shall be (a) personally delivered or delivered by messenger, or (b)
mailed by certified mail, return receipt requested, postage prepaid, or (c) sent
by telecopy or the equivalent (provided, however, that the original Notice of
which a facsimile has been transmitted shall in all cases be delivered to the
addressee with two (2) business days following such transmission). Notices
given hereunder shall be addressed as follows:
If to the Company:
US Oncology, Inc.
00000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: General Counsel
If to Optionee:
Mr. R. Xxxx Xxxx
US Oncology, Inc.
00000 Xxxxxxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Any notice given in accordance herewith shall be deemed effective and to
have been received by the party to whom such notice is directed (a) upon
delivery, if delivered personally or by messenger or sent by telecopy or the
equivalent, or (b) three (3) days after the date of deposit in the U.S. Mail, if
sent by mail and the return receipt is received by the sender, or upon actual
receipt by the party receiving notice in the event that such return receipt is
not received by the sender.
Section 14. Amendment. This Stock Option Plan and Agreement may be
modified or amended only by a written instrument executed by the Company and
Optionee.
Section 15. Severability. In the event that any provision of this Stock
Option Plan and Agreement shall be held illegal, invalid or unenforceable for
any reason, such provision shall be fully severable, but shall not affect the
remaining provisions hereof, and this Stock Option Plan and Agreement shall be
construed and enforced as if the illegal, invalid, or unenforceable provision
had not been included herein.
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Section 16. Gender, Tense and Headings. Whenever the context so requires,
words of the masculine gender used herein shall include the feminine and neuter,
and words used in the singular shall include the plural. Section headings as
used herein are inserted solely for convenience and reference and are not to be
interpreted as part of the construction of this Stock Option Plan and Agreement.
Section 17. Governing Law. The provisions of this Stock Option Plan and
Agreement shall be construed according to the laws of the State of Texas, except
as superseded by federal law.
IN WITNESS WHEREOF, this Stock Option Plan and Agreement is executed
effective as of the 14th day of December, 2000.
"COMPANY"
US ONCOLOGY, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Vice President and General Counsel
"OPTIONEE"
/s/ R. Xxxx Xxxx
----------------
R. Xxxx Xxxx
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