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EXHIBIT 10.9
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement"), is effective as of
August 6, 1998 (the "Grant Date") and is by and between MedPartners, Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxxxxx, Xx. (the
"Optionee").
RECITALS
WHEREAS, on August 6, 1998, the Board of Directors (the "Board") of the
Company adopted a stock option plan known as the "MedPartners, Inc. 1998 New
Employee Stock Option Plan" (the "Plan") which authorizes the Compensation
Committee of the Board (the "Committee") to grant options to purchase shares of
the Company's common stock, $.001 par value (the "Common Stock") to persons who
were not previously employees of the Company as a material inducement to such
persons to enter into employment agreements with the Company;
WHEREAS, the Committee has granted the Optionee an Option (as described
below) to purchase the number of shares of Common Stock as set forth below;
WHEREAS, Optionee has indicated that the granting of an Option is a
material inducement to Optionee to enter into an employment agreement with the
Company
WHEREAS, the Optionee has agreed to exercise an employment agreement of
even date herewith with the Company (the "Employment Agreement"); and
WHEREAS, the Company and the Optionee desire to enter into a written
agreement with respect to the Option in accordance with the Plan.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, the parties hereto agree as follows.
1. Incorporation of Plan. This Option is granted pursuant to the
provisions of the Plan and the terms and conditions of the Plan are incorporated
herein by reference and made a part hereof. A copy of the Plan has been
delivered to, and receipt is hereby acknowledged by, the Optionee. Except as
otherwise noted, capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Plan. Notwithstanding anything
in this Agreement to the contrary, to the extent the terms of this Agreement
conflict with or otherwise attempt to exceed the authority of the Committee set
forth under the Plan, the Plan shall govern and control in all respects.
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2. Grant of Option. Subject to the terms, restrictions, limitations,
and conditions stated herein and in the Plan, the Company hereby evidences its
grant to the Optionee of the right and option to purchase 400,000 shares of
Common Stock (the "Option") at a price of $3.25 per share (the "Exercise
Price").
3. Additional Changes in Control and Option Term.
3.1. Additional Change in Control. Without amending the provisions
of Article 9 of the Plan and without limiting the definition of "Change in
Control" contained in Section 2.7 of the Plan, pursuant to the authority granted
to the Committee in Section 2.7(e) of the Plan, the Committee does hereby
include in the definition of "Change in Control" contained in the Plan, the
sale, transfer or other disposition, in a transaction or series of related
transactions, of a majority of the assets of any one of the Company's three
major lines of business as of the Grant Date (consisting of its physician
practice management services business, pharmacy benefit management services
business and contracts management services business).
3.2. Option Term. Unless earlier terminated pursuant to the Plan,
this Option shall terminate on the day that is the tenth (10th) anniversary of
the Grant Date (the "Term"). In the event this Option is not exercised with
respect to all or any part of the shares of Common Stock subject to this Option
prior to the expiration of the Term or the cancellation of the Option as
provided in the Plan, the shares of Common Stock with respect to which this
Option was not exercised shall no longer be subject to this Option and Optionee
shall have no further right to purchase such shares.
4. Restrictions on Transferability.
4.1. Transfers to Immediate Family Members. This Option may not be
transferred to any person or entity except for (i) Immediate Family Members,
(ii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, or (iii) a partnership in which such Immediate Family Members are the
only partners, provided that, Optionee may receive no form of consideration or
value whatsoever (whether tangible or intangible) for such transfer.
4.2. Application of the Plan. Following any transfer allowed
pursuant to Section 4.1 (such transfer a "Permitted Transfer"), (i) the Option
shall be subject to the terms and conditions of the Plan and this Agreement and
(ii) to the extent not inconsistent with the terms of this Agreement or the
Plan, such transferee shall be deemed the "Participant" pursuant to the Plan,
provided that, the events of termination of the Option as provided in the Plan
and this Agreement shall continue to be applied with respect to the Optionee
such that the Option shall be exercisable by transferee only to the extent and
for the periods specified in Section 6.9 of the Plan as such periods, terms and
events are applied to the Optionee.
4.3. No Obligation of Committee or Company. Neither the Company, its
Board of Directors, nor the Committee shall have any obligation to notify or
otherwise provide notice to a transferee of any early termination of the Option.
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4.4. Subsequent Transfers. Any transferee of Options hereunder shall
be prohibited from subsequently transferring such Options other than pursuant to
a will or by the laws of descent.
5. Notice of Exercise of Option.
5.1. Exercise of Option. This Option may be exercised by the
Optionee, or by the Optionee's administrators, executors, personal
representatives, or permitted transferees (collectively and together with
Optionee, the "Exercising Parties" and each an "Exercising Party") by a written
notice (in substantially the form of the Notice of Exercise attached hereto as
Exhibit A) signed by the appropriate Exercising Party and delivered or mailed to
the Company as specified in Section 11.3 hereof to the attention of the
President and Chief Executive Officer or such other officer as the Company may
designate.
5.2. Content of Notice. Any such notice shall:
(1) specify the number of shares of Stock which the appropriate
Exercising Party then elects to purchase hereunder,
(2) contain such information as may be reasonably required
pursuant to Section 9 hereof, and
(3) be accompanied by (i) a certified or cashier's check
payable to the Company in an amount equal to the Exercise Price times
the number of shares of Common Stock to be purchased (such amount, the
"Aggregate Purchase Price"); or, (ii) if approved by the Committee, (A)
shares of Common Stock owned by the Optionee and duly endorsed or
accompanied by stock transfer powers and having an aggregate Fair
Market Value equal to the Aggregate Purchase Price; or (B) a certified
or cashier's check accompanied by the number of shares of Common Stock
whose aggregate Fair Market Value when added to the amount of the check
equals the Aggregate Purchase Price, subject to compliance with
applicable federal and state laws.
5.3. Issuance of Stock. Upon receipt of any such notice and
accompanying payment, and subject to the terms hereof, the Company agrees to
issue to the appropriate Exercising Party stock certificates for the number of
shares specified in such notice registered in the name of the person exercising
this Option.
5.4. Fair Market Value. As used herein, the term "Fair Market Value"
shall be determined in accordance with Section 6.7 of the Plan on the date the
Exercising Party sends notice of its intent to exercise all or a portion of the
Option in accordance with Section 5.1 hereof.
6. Adjustment in Option. The number of shares of Stock subject to this
Option, the Exercise Price and other matters are subject to adjustment during
the term of this Option in accordance with the Plan.
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7. Death of Optionee. In the event of the Optionee's death, the
appropriate Exercising Party may exercise this Option at any time within a
period ending on the earlier of (a) the last day of the one (1) year period
following the Optionee's death or (b) the expiration date of this Option.
8. Date of Grant. This Option was granted by the Committee on the Grant
Date.
9. Compliance with Regulatory Matters. The Optionee acknowledges that
the issuance of capital stock of the Company is subject to limitations imposed
by federal and state law and the Optionee hereby agrees that the Company shall
not be obligated to issue any shares of Common Stock upon exercise of this
Option that would cause the Company to violate law or any rule, regulation,
order or consent decree of any regulatory authority (including without
limitation the Securities and Exchange Commission) having jurisdiction over the
affairs of the Company. The Optionee (or any appropriate Exercising Party)
agrees that he or she will provide the Company with such information as is
reasonably requested by the Company or its counsel to determine whether the
issuance of Common Stock complies with the provisions described by this Section.
10. Investment Representation of Optionee.
10.1. Representations. Optionee represents to the Company the
following:
(1) that Optionee has read and understands the terms and
provisions of the Plan, and hereby accepts this Agreement subject to
all the terms and provisions of the Plan;
(2) that optionee shall accept as binding and final all
decisions or interpretations of the Board or of the Committee upon any
questions arising under the Plan;
(3) that Optionee understands that, unless at the time of
exercise of the Option a registration statement under the Securities
Act of 1933 (the "Act"), as amended, is in effect covering shares of
Common Stock to be issued upon exercise of the Option, as a condition
to the exercise of the Option the Company may require Optionee to
represent that Optionee is acquiring the Common Stock for Optionee's
own account only and not with a view to, or for sale in connection
with, any distribution of the Stock.
10.2. Stock Legends. The Optionee understands and agrees that the
certificate or certificates representing any shares of Stock acquired hereunder
may bear an appropriate legend relating to registration and resale under federal
and state securities laws.
10.3. No Rights as Stockholder. The Optionee shall not have any
rights of a stockholder of the Company with respect to the shares of Common
Stock which may be purchased upon exercise of this Option, unless and until such
shares shall have been issued and
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delivered and his/her name has been entered as a stockholder on the stock
transfer records of the Company.
10.4. No Registration Right. Notwithstanding anything in this
Agreement or the Plan to the contrary, nothing herein shall obligate or require
the Company to file or keep effective a registration statement pursuant to the
Act or any state's securities law covering the shares of Common Stock to be
issued upon exercise of the Option.
11. Miscellaneous.
11.1. Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their representatives, successors and assigns.
11.2. Choice of Law. This Agreement shall be governed by the laws of
the State of Delaware, without regard to conflicts of laws principles.
11.3. Notice. Any notice, request, document or other communication
given hereunder shall be deemed to be sufficiently given upon personal delivery
to the other party or upon the expiration of three (3) days after depositing
same in the United States mail, return receipt requested, properly addressed to
the respective parties' or such other address as they may give to the other
party in writing in the same manner as follows:
Company: MedPartners, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: President and Chief Executive Officer
Optionee: Xxxxx X. Xxxxxxxxx, Xx.
0000 Xxxx Xxxxx Xxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
11.4. Amendment. This Agreement may not be modified except in writing
executed by each of the parties hereto.
11.5. Entire Agreement. This Agreement, together with the Plan,
contains the entire understanding of the parties hereto and supersedes any prior
understanding and/or written or oral agreement between them respecting the
subject matter hereof.
11.6. Severability. The parties agree that the provisions of this
Agreement are severable and the invalidity or unenforceability of any provision
in whole or part shall not affect
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the validity or enforceability of any enforceable part of such provision or any
other provisions hereof.
11.7. Section Headings. The paragraph and section headings herein are
included solely for convenience of reference and shall not control the meaning
or interpretation of any of the provisions of this Agreement.
11.8. Waiver. No waiver of any breach or default hereunder shall be
considered valid unless in writing, and no such waiver shall be deemed a waiver
of any subsequent breach or default of the same or similar nature.
11.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Committee has caused this Stock Option
Agreement to be executed on behalf of the Company and the Optionee has executed
this Stock Option Agreement.
COMPANY:
MEDPARTNERS, INC.
/s/ E. Xxx Xxxxxxxx
E. Xxx Xxxxxxxx
President and Chief Executive Officer
OPTIONEE:
/s/ Xxxxx X. Xxxxxxxxx, Xx.
Xxxxx X. Xxxxxxxxx, Xx.
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Exhibit A
to
Stock Option Agreement
between
MedPartners, Inc.
and
Xxxxx X. Xxxxxxxxx, Xx.
NOTICE OF EXERCISE
Dated
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The undersigned hereby notifies MedPartners, Inc. (the "Company") of
this election to exercise the undersigned's stock option to purchase
________________ shares of the Company's common stock, $.001 par value (the
"Common Stock"), pursuant to the Stock Option Agreement (the "Agreement")
between the undersigned and the Company dated ________________. Accompanying
this Notice is (1) a certified or a cashier's check in the amount of
$________________ payable to the Company, and/or (2) _______________ shares of
Common Stock presently owned by the undersigned and duly endorsed or accompanied
by stock transfer powers, having an aggregate Fair Market Value (as determined
by Section 5.4 of the Agreement) as of the date hereof of $__________________,
such amounts being equal, in the aggregate, to the Exercise Price per share set
forth in Section 2 of the Agreement multiplied by the number of shares being
purchased hereby (in each instance subject to appropriate adjustment pursuant to
Section 6 of the Agreement).
The undersigned is a resident of the State of .
IN WITNESS WHEREOF, the undersigned has set his/her hand and seal, this
________ day of____________________, ____________.
OPTIONEE [OR OPTIONEE'S ADMINISTRATOR, EXECUTOR
OR PERSONAL REPRESENTATIVE]
Name:
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Position (if other than Optionee):
