EX-10.1 2 d363668dex101.htm FORM OF NONSTATUTORY STOCK OPTION AGREEMENT NONSTATUTORY STOCK OPTION AGREEMENT (2012 Version)
Exhibit 10.1
NONSTATUTORY STOCK OPTION AGREEMENT
(2012 Version)
This NONSTATUTORY STOCK OPTION AGREEMENT (this “Agreement”), dated as of , 2012 (the “Effective Date”), is made by and between DJO Global, Inc. a Delaware corporation (the “Company”), and (the “Optionee”).
NOW THEREFORE, the parties to this Agreement, hereby agree as follows:
(a) “Board” means the Board of Directors of the Company.
(b) “Blackstone” means each of Blackstone Capital Partners V L.P. a Cayman Islands limited partnership, Blackstone Family Investment Partnership V L.P., a Cayman Islands limited partnership, Blackstone Family Investment Partnership V-A L.P., a Cayman Islands limited partnership, Blackstone Participation Partnership V L.P., a Cayman Islands limited partnership and each of their respective Affiliates.
(c) “Code” means the Internal Revenue Code of 1986, as amended.
(d) “Company” has the meaning specified in the introductory paragraph of this Agreement or its successors; provided, that to the extent that any class of equity securities of a member of the Company’s controlled group becomes publicly traded on an established securities market, the term “Company” shall be deemed to refer to such publicly traded entity.
(e) “Compensation Committee” means the Compensation Committee of the Board.
(f) “Credit Agreement” means that certain Credit Agreement dated November 20, 2007, by and between DJO Finance LLC (f/k/a ReAble Therapeutics Finance LLC), DJO Holdings LLC (f/k/a ReAble Therapeutics Holdings LLC), Credit Suisse and certain other lenders, as amended and restated by that certain Amendment and Restatement Agreement dated March 20, 2012, or any successor or replacement agreement.
(g) “Disability” shall mean the Optionee is disabled as determined under Section 409A(a)(2)(C) of the Code.
(h) “EBITDA” shall mean, for any applicable period, “Consolidated EBITDA” as defined in the Credit Agreement for such period, excluding forward cost savings as determined by the Board.
(i) “Fair Market Value” has the meaning specified in the Plan, except as expressly set forth herein.
(j) “Good Reason” shall mean a material reduction in the Optionee’s compensation below the amount of compensation in effect on the date of this Agreement which is not cured within thirty (30) days following the Company’s or its subsidiary’s, as applicable, receipt of written notice from such Optionee describing the event constituting Good Reason.
(k) “MOIC” shall mean the multiple of Blackstone’s aggregate invested equity capital in the Company since its initial investment in the Company through the date of determination as determined by the Board based on an analysis provided by the Company’s management. It being understood that the invested capital on the date hereof equals $792 million.
(l) “Option” has the meaning specified in Section 2 of this Agreement.
(m) “Option Price” has the meaning specified in Section 2 of this Agreement.
(n) “Option Shares” has the meaning specified in Section 2 of this Agreement.
(o) “Stockholders Agreement” shall mean that certain stockholders agreement applicable to the Optionee, as amended from time to time.
(p) “Termination for Cause” shall mean the termination by the Company of Optionee’s employment with the Company as a result of (i) the Optionee’s willful and continued failure to substantially perform Optionee’s duties (other than any such failure resulting from the Optionee’s Disability or any such failure subsequent to the Optionee being delivered notice of the Company’s intent to terminate the Optionee’s employment without Cause), (ii) conviction of, or a plea of nolo contendere to, (A) a felony (other than traffic-related) under the laws of the United States or any state thereof or any similar criminal act in a jurisdiction outside the United States or (B) a crime involving moral turpitude that could be injurious to the Company or its reputation, (iii) the Optionee’s willful malfeasance or willful misconduct which is materially and demonstrably injurious to the Company, or (iv) any act of fraud by the Optionee in the performance of the Optionee’s duties.
(a) Unless terminated as hereinafter provided, the Option shall vest and become exercisable in four annual installments, each covering 25% of the Option Shares, following the end of the 2012 fiscal year and each of the three succeeding fiscal years if the audited consolidated financial results for the Company for such fiscal year demonstrate that the EBITDA for such year equaled or exceeded the annual EBITDA amount set forth in the Company’s budget for such year as approved by the Board. For each such fiscal year, the annual EBITDA set forth in the budget shall be subject to adjustment during such fiscal year to reflect acquisitions or dispositions of businesses if the Board in its discretion deems such adjustment necessary.
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Notwithstanding the foregoing, (i) Option Shares that do not vest and become exercisable in any of the four fiscal years described in the preceding paragraph because the actual EBITDA in such year did not equal or exceed the EBITDA in the budget for such year shall nevertheless become exercisable and vest following the last such fiscal year if (x) the aggregate actual EBITDA achieved during such four fiscal years equals or exceeds the aggregate EBITDA in the budgets for such four fiscal years, and (y) the actual EBITDA achieved in the fourth such fiscal year equals or exceeds the EBITDA in the budget for such year; and (ii) in the event that, during the four fiscal years described in the preceding paragraph, Blackstone sells all or a portion of its interest in the Company and realizes a MOIC of 2.25x or greater, all Option Shares not already vested and exercisable hereunder shall thereupon become vested and exercisable.
(b) The Optionee shall be entitled to the privileges of ownership with respect to Option shares purchased and delivered to Optionee upon the exercise of all or part of this Option, subject to Section 8 hereof.
(c) For each of the fiscal years described in paragraph (a) above, vesting of the applicable installment of Option Shares shall be deemed to occur, if the financial condition described in paragraph (a) is met, on the day on which the Company publicly releases the audited financial results for such fiscal year or, if no such public release is made, on the day on which the Company receives the opinion of its auditors on the financial statements for such fiscal year. The actual EBITDA referred to above achieved in any fiscal year shall be determined from the audited financial statements of the Company by the Chief Financial Officer of the Company, and any such determination that is reviewed and approved by the Board shall be final and binding on Optionee for all purposes under this Agreement.
6. Notice of Exercise; Payment.
(a) To the extent then exercisable, the Option may be exercised in whole or in part by written notice to the Company stating the number of Option Shares for which the Option is being exercised and the intended manner of payment. The date of such notice shall be the exercise date. Payment equal to the aggregate Option Price of the Option Shares being purchased pursuant to an exercise of the Option must be tendered in full with the notice of exercise to the Company in one or a combination of the following methods as specified by the Optionee in the notice of exercise: (i) cash in the form of currency or check or by wire transfer as directed by the Company, (ii) provided that the shares of the Company’s common stock (“Shares”) are traded on an established securities market, through the surrender to the Company of Shares owned by the Optionee for at least six months as valued at their Fair Market Value on the date of exercise, (iii) through net exercise, using Shares to be acquired upon exercise of the Option, such Shares being valued at their Fair Market Value (which for such purpose shall have the meaning set forth in the Stockholders Agreement) on the date of exercise, or (iv) through such other form of consideration as is deemed acceptable by the Board.
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(b) As soon as practicable upon the Company’s receipt of the Optionee’s notice of exercise and payment, the Company shall direct the due issuance of the Option Shares so purchased.
(c) As a further condition precedent to the exercise of this Option in whole or in part, the Optionee shall comply with all regulations and the requirements of any regulatory authority having control of, or supervision over, the issuance of the shares of common stock and in connection therewith shall execute any documents which the Board shall in its sole discretion deem necessary or advisable.
(a) After the Optionee’s termination due to the Optionee’s death or Disability, all vested Option Shares shall remain exercisable until the lesser of (i) one (1) year following the Optionee’s date of termination or (ii) the remaining term of the Option; provided, however, that it shall be a condition to the exercise of the Option in the event of the Optionee’s death that the Person exercising the Option shall (i) have agreed in a form satisfactory to the Company to be bound by the provisions of this Agreement and the Stockholders Agreement and (ii) comply with all regulations and the requirements of any regulatory authority having control of, or supervision over, the issuance of the shares of common stock and in connection therewith shall execute any documents which the Board shall in its sole discretion deem necessary or advisable. All unvested Option Shares shall remain outstanding for the twelve (12) month period following the date of such termination by reason of death or Disability. To the extent an event or financial result described in Section 4(a) occurs during such twelve (12) month period that would cause some or all of such unvested Option Shares to become vested (a “Post-Termination Vesting Event”), the appropriate number of Option Shares will vest as of such Post-Termination Vesting Event, and remain exercisable for twelve (12) months following such Post-Termination Vesting Event (but not beyond the remaining term of the Option); provided that the occurrence of a Post-Termination Vesting Event as described in the first paragraph of Section 4(a) during such twelve month period shall result in the vesting only of the installment of Option Shares subject to vesting in the calendar year during which (or after which but before the vesting date for such year) the Optionee’s death or Disability occurred. On the twelve (12) month anniversary of the date of termination of employment by reason of death or Disability, all remaining unvested Option Shares will be forfeited;
(b) After the Optionee’s termination by the Company without Cause or by the Optionee for Good Reason, all vested Option Shares shall remain exercisable until the lesser of (i) ninety (90) calendar days following the Optionee’s date of termination or (ii) the remaining term of the Option. All unvested Option Shares shall remain outstanding for the twelve (12) month period following the date of such termination by the Company without Cause or by the Optionee for Good Reason. To the extent a Post-Termination Vesting Event occurs within such twelve (12) month period, the appropriate number of Option Shares will vest as of such Post-Termination Vesting Event, and remain exercisable for ninety (90) calendar days following such Post-Termination Vesting Event (but not beyond the remaining term of the Option); provided that the occurrence of a Post-Termination Vesting Event as described in the first paragraph of Section 4(a) during such twelve month period shall result in the vesting only of the installment of Option Shares subject to vesting in the calendar year during which (or after which but before the vesting date for such year) the Optionee’s termination by the Company without Cause or by the Optionee for Good Reason occurred. On the twelve (12) month anniversary of the date of termination of employment by reason of termination by the Company without Cause or by the Optionee with Good Reason, all remaining unvested Option Shares will be forfeited;
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(c) The date of the Optionee’s Termination for Cause, upon which all vested and unvested Option Shares will be forfeited immediately and terminate;
(d) After the Optionee’s termination without Good Reason, all unvested Option Shares will be forfeited immediately and terminate and all vested Option Shares shall remain exercisable until the lesser of (i) ninety (90) calendar days following the Optionee’s date of termination or (ii) the remaining term of the Option; or
(e) Ten (10) years from the Effective Date.
Notwithstanding the foregoing, in all termination events other than a termination of the Optionee’s employment for Cause, if the last day to exercise vested Option Shares occurs after the date on which the Company’s common stock is publicly traded on a national stock exchange and during a lock-up period or securities law blackout period, the otherwise applicable post-termination Option exercise period shall continue, but not beyond the remaining term of the Option, until thirty (30) calendar days after the first day when the terminating Optionee is no longer precluded from selling stock acquired upon exercise of Options for either of such reasons. Notwithstanding anything to the contrary herein, nothing herein shall prohibit the Optionee from exercising his or her vested Options through net exercise, using Shares to be acquired upon exercise of the Option, during any lock-up or securities law blackout period to the extent not prohibited by law.
In the event that the Optionee’s employment is terminated in the circumstances described in Section 7(c) hereof, this Agreement shall terminate at the time of such termination notwithstanding any other provision of this Agreement and the Optionee’s Option will cease to be exercisable to the extent exercisable as of such termination and will not be or become exercisable after such termination. The Optionee shall be deemed to be an employee of the Company or any Subsidiary if on a leave of absence approved in writing by the Board or the Chief Executive Officer of the Company to the extent consistent with Section 409A of the Code.
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(a) The Board shall make or provide for such substitution or adjustments in the number of Option Shares covered by this Option, in the Option Price applicable to such Option, and in the kind of shares covered thereby and/or such other equitable substitution or adjustments as the Board may determine to prevent dilution or enlargement of the Optionee’s rights that otherwise would result from (i) any stock dividend, extraordinary cash-dividend, stock split, combination of shares, recapitalization, or other change in the capital structure of the Company, (ii) any merger, consolidation, spin-off, split-off, spin-out, split-up, reclassification, reorganization, partial or complete liquidation, or other distribution of assets or issuance of rights or warrants to purchase securities, or (iii) any other corporate transaction or event having an effect similar to any of the foregoing
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(b) To the extent that any equity securities of any member of the Company’s controlled group become publicly traded, at such time all Options shall be exchanged, in a manner consistent with Sections 409A and 424 of the Code, for options with the same intrinsic value in the publicly-traded entity, and all Shares shall be exchanged for shares of common stock with the same aggregate value of the publicly-traded entity.
19. Governing Law. The interpretation, performance, and enforcement of this Agreement shall be governed by the laws of the State of New York, without giving effect to the principles of conflict of laws thereof and all parties, including their successors and assigns, consent to the jurisdiction of the state and federal courts of New York.
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DJO GLOBAL, INC.: |
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XXXXXX XXXXXXX |
Executive Vice President, General Counsel and Secretary |
I hereby agree to be bound by the terms of the Plan, this Agreement and the Stockholder’s Agreement. I hereby further agree that all the decisions and determinations of the Board shall be final and binding.
OPTIONEE: |
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