Exhibit 10.6
UROLOGIX, INC.
STOCK OPTION AGREEMENT
This Option is hereby issued pursuant to the terms and conditions set forth in
this Option Agreement and is not issued pursuant to any existing Stock Option
Plan of the Company.
I. NOTICE OF STOCK OPTION GRANT
Optionee: Xxxx X. Xxxxx
As an inducement essential to you entering into your Employment Agreement
with the Company, you have been granted an option to purchase Common Stock of
the Company, subject to the terms and conditions of this Option Agreement, as
follows:
Date of Grant May 27, 2003
Vesting Commencement Date May 27, 2004
Exercise Price per Share $2.75
Total Number of Shares Granted 225,000
Type of Option Nonstatutory Stock Option
Term/Expiration Date May 27, 2013
1. Exercise and Vesting Schedule. This Option may be exercised, in whole or
in part, and shall vest in accordance with the following vesting schedule:
56,268 Shares shall vest one year from the date of grant and 4,687 of the
remaining Shares shall vest on the 27th day in each of the thirty-six months
following the one-year anniversary of the option grant.
2. Termination Period. This Option may be exercised, to the extent it is
then vested, for 30 days after termination of employment. Upon death or
Disability of Optionee (defined as permanent and total disability as determined
by the Compensation Committee of the Board of Directors), this option may be
exercised, to the extent it is then vested, for a period of twelve months after
termination of employment as a result of Optionee's death or Disability.
Notwithstanding the foregoing, the exercise period for this Option shall
automatically be extended and Options shall continue to vest in the event
Optionee continues as Chairman of the Board or in some other consulting role
with the Company after termination of employment, in which case this Option may
be exercised for 30 days, to the extent it is then vested, after the later of
(i) resignation or removal as Chairman of the Board and (ii) termination of any
such consulting relationship. If either of the events in (i) or (ii) is caused
by the death or Disability of the Optionee, this Option may be exercised, to the
extent it is then vested, for a period of twelve months after such event. In no
event may this Option be exercised later than the Term/Expiration as provided
above.
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II. AGREEMENT
1. Grant of Option. The Company hereby grants to the Optionee named in the
Notice of Grant above (the "Optionee"), an option (the "Option") to purchase a
number of Shares, as set forth above, at the exercise price per share set forth
above (the "Exercise Price"), subject to the terms and conditions set forth in
this Option Agreement.
The Option will be administered by the Compensation Committee of the
Company's Board of Directors (the "Committee"). Any or all functions of the
Committee specified in this Agreement may be exercised by the Board of
Directors, unless this Agreement specifically states otherwise. The Committee
has the authority to adopt, alter and repeal such administrative rules,
guidelines and practices governing the Option as it may, from time-to-time, deem
advisable; to interpret the terms and provisions of this Option Agreement and to
otherwise supervise the administration of the Option. The Committee may not
amend, alter or terminate the Option without the written consent of Optionee.
All decisions made by the Committee pursuant to this Agreement will be final and
binding on all persons, including the Company and Optionee.
2. Exercise of Option.
(a) Right to Exercise. Subject to subsection (i) and (ii) below, this
Option is exercisable during its term in accordance with the Vesting Schedule
set out in the Notice of Grant and the provisions of this Option Agreement. In
the event of Optionee's death, disability or other termination of Optionee's
employment or consulting relationship, the exercisability of the Option is
governed by Section 2 of Article I of this Option Agreement.
(i) This Option may not be exercised for a fraction of a Share.
(ii) Upon a Change of Control, the Option shall become
exercisable in full as to all of the shares covered thereby without regard to
any installment exercise or vesting provisions. For purposes of this Section
2(a)(ii), the term "Change of Control" means any of the following:
(A) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes a "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities and is required to file a Schedule 13D under the
Exchange Act; or
(B) the Incumbent Directors cease for any reason to
constitute at least a majority of the Board of Directors. The term, "Incumbent
Directors," shall mean those individuals who are members of the Board of
Directors on May 27, 2003 and any individual who subsequently becomes a member
of the Board of Directors whose election or nomination for election by the
Company's shareholders was approved by a vote of at least a majority of the then
Incumbent Directors; or
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(C) all or substantially all of the assets of the Company
are sold, leased, exchanged or otherwise transferred and immediately thereafter,
there is no substantial continuity of ownership with respect to the Company and
the entity to which such assets have been transferred.
(iii) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, other change in corporate structure affecting
the Shares or spin-off or other distribution of assets to shareholders, such
substitution or adjustment shall be made in the number and option price of
Shares subject to this Option, as may be determined to be appropriate by the
Committee, in its sole discretion, provided that the number of Shares subject to
any award shall always be a whole number. The grant of the Option shall not
limit in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge, exchange or consolidate or to dissolve, liquidate, sell
or transfer all or any part of its business or assets.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"), and
such other representations and agreements as may be required by the Company. The
Exercise Notice shall be signed by the Optionee and shall be delivered in person
or by certified mail to the principal financial officer of the Company. The
Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon
receipt by the Company of such fully executed Exercise Notice accompanied by
such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange upon which the Shares are then
listed. Assuming such compliance, for income tax purposes the Exercised Shares
shall be considered transferred to the Optionee on the date the Option is
exercised with respect to such Exercised Shares.
3. Method of Payment. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) cash; or
(b) check.
4. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by the Optionee. The terms of
this Option Agreement shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
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5. Term of Option. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Option Agreement.
6. Registration. As promptly as practicable, the Company shall prepare,
file and maintain with the Securities and Exchange Commission, an effective
registration statement on Form S-8 (or, in the Company's sole discretion, on any
appropriate comparable form under the Securities Act of 1933, as amended, as may
then be available to the Company) relating to the resale of the Shares issued
pursuant to exercise of the Option granted hereunder.
7. Tax Withholding. Optionee shall, no later than the date as of which any
part of the value of the Option first becomes includible as compensation in the
gross income of Optionee for Federal income tax purposes, pay to the Company, or
make arrangements satisfactory to the Committee regarding payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to the Option. The obligations of the Company under this Option shall be
conditional on such payment or arrangements and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to Optionee.
8. Notices. Notices required hereunder shall be given in person or by first
class mail to the address of Optionee shown on the records of the Company, and
to the Company at its principal executive office.
9. Survival of Terms. This Agreement shall apply to and bind Optionee and
the Company and their respective permitted assignees and transferees, heirs,
legatees, executors, administrators and legal successors.
10. Entire Agreement; Governing Law; Notice. This Option Agreement,
together with Exhibit A, constitute the entire agreement of the parties with
respect to the subject matter of this Option Agreement and supersedes in its
entirety all prior undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This Option Agreement is governed by the internal substantive laws but
not the choice of law rules of Minnesota.
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION IS EARNED ONLY BY CONTINUING EMPLOYMENT, CONSULTANCY OR SERVING AS
CHAIRMAN OF THE BOARD AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING
HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT SHALL CONFER UPON
OPTIONEE ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY
THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE OPTIONEE'S EMPLOYMENT, CONSULTANCY OR POSITION AS
ITS CHAIRMAN OF THE BOARD AT ANY TIME, WITH OR WITHOUT CAUSE.
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By your signature and the signature of the Company's representative below,
you and the Company agree that this Option is granted under and governed by the
terms and conditions of this Option Agreement. Optionee has reviewed Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option Agreement and fully understands all
provisions of this Option Agreement.
OPTIONEE UROLOGIX, INC.
/s/ Xxxx X. Xxxxx By: /s/ Xxxxx Xxxxxx
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Signature
Xxxx X. Xxxxx Title: Vice-President, U.S. Sales
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Print Name
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EXHIBIT A
UROLOGIX, INC.
EXERCISE NOTICE
Urologix, Inc.
00000 00xx Xxxxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Principal Financial Officer
1. Exercise of Option. Effective as of today, ,
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, the undersigned ("Purchaser") hereby elects to purchase
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shares (the "Shares") of the Common Stock of Urologix, Inc. (the
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"Company") under and pursuant to the Stock Option Agreement dated May 27, 2003
(the "Option Agreement"). The purchase price for the Shares shall be
$ , as required by the Option Agreement.
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2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price for the Shares.
3. Representation of Optionee. Optionee acknowledges that Optionee has
received, read and understood the Option Agreement and agrees to abide by and be
bound by their terms and conditions.
4. Rights as Shareholder. Subject to the terms and conditions of this
Agreement, Optionee shall have all of the rights of a shareholder of the Company
with respect to the Shares from and after the date that Optionee delivers full
payment of the Exercise Price until such time as Optionee disposes of the
Shares.
5. Tax Consultation. Optionee understands that Optionee may suffer adverse
tax consequences as a result of Optionee's purchase or disposition of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.
6. Entire Agreement; Governing Law. The Option Agreement is incorporated
herein by reference. This Agreement and the Option Agreement constitute the
entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the
subject matter hereof, and such agreement is governed by Minnesota law except
for that body of law pertaining to conflict of laws.
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Submitted by: Accepted by:
OPTIONEE: UROLOGIX, INC.
By:
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Signature
Its:
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Print Name
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Social Security Number
Address:
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