TRI-ISTHMUS GROUP, INC. OPTION GRANT AGREEMENT
Exhibit 10.2
This Option Grant Agreement (this “Option Agreement”) is entered into as of October 10, 2007
(the “Date of Grant”), by and between Xxxxxx X. Xxxxx (“Optionee”) and Tri-Isthmus Group, Inc. (the
“Company”). Capitalized terms not otherwise defined herein shall have the meanings assigned to
such terms in Section 13 of this Option Agreement.
1. Grant of Option. The Company hereby grants to Optionee an option (the “Option”) to
purchase the number of shares of the Company’s Common Stock set forth below (the “Option Shares”),
at the exercise price set forth below, subject to the terms and conditions of the Plan and this
Option Agreement, and upon the occurrence of certain specified events, as follows:
Exercise Price Per Share |
0.3125 | ||||
Total Number of Option Shares Granted |
600,000 | ||||
Total Exercise Price |
$ | 187,500 | |||
Type of Option: |
Incentive Stock Option | ||||
Term/Expiration Date: |
7 years from Date of Grant | ||||
This Option is intended to qualify as an Incentive Stock Option as defined in Section 422(b)
of the Code; provided, however, the Company has not made, and will not be deemed to make hereby,
any representations or warranties to Optionee with respect to such qualification.
2. Vesting Schedule. Optionee’s Option to purchase up to six hundred thousand
(600,000) Option Shares shall vest incrementally as follows: (1) the option to purchase up to one
hundred fifty thousand (150,000) Option Shares shall vest immediately on the Date of Grant; (2) the
option to purchase up to one hundred fifty thousand (150,000) Option Shares shall vest on the first
anniversary of the Date of Grant; and (3) the option to purchase the remaining three hundred
thousand (300,000) Option Shares shall vest on the second anniversary of the Date of Grant.
3. Exercise of Option.
(a) Right to Exercise; Term of Option. Generally, this Option shall be
exercisable by Optionee with respect to any or all vested Option Shares from the time such
Option Shares vest (in accordance with the vesting schedule in Section 2) until the
seventh anniversary of the Date of Grant (the “Term”), subject to the terms and conditions
set forth in the Plan and this Option Agreement.
(b) Method of Exercise. This Option shall be exercisable by written notice (in
substantially the form attached hereto as Exhibit A) which shall state the election
to exercise the Option, the number of Option Shares in respect of which the Option is being
exercised, and such other representations and agreements as to the Optionee’s investment
intent with respect to the Option Shares. Such written notice shall be signed by the
Optionee and shall be delivered in person or by certified mail to the Secretary of the
Company. The written notice shall be accompanied by payment of the aggregate exercise price
for the Option Shares in respect of which the Option is being exercised, payable in the
manner set forth in Section 4.
(c) Date of Exercise, Transfer. This Option shall be deemed to be exercised
upon receipt by the Company of such written notice accompanied by the aggregate exercise
price of the
Option Shares in respect of which the Option is being exercised. Assuming compliance
with all other provisions of this Option Agreement, for income tax purposes the Option
Shares shall be considered transferred to the Optionee on the date on which the Option is
exercised with respect to such Option Shares.
4. Payment of Aggregate Exercise Price.
(a) Method of Payment. Payment of the aggregate exercise price for the Option
Shares in respect of which the Option is being exercised shall become immediately due upon
exercise of this Option and shall be payable:
(i) in cash or check made payable to the Company;
(ii) in shares of Common Stock held for the requisite period necessary to avoid
a charge to the Company’s earnings for financial reporting purposes and valued at
Fair Market Value on the date in which this Option is exercised; or
(iii) through a special sale and remittance procedure pursuant to which the
Optionee shall concurrently provide irrevocable instructions (i) to a
Company-designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable for
the purchased shares plus all applicable federal, state and local income and
employment taxes required to be withheld by the Company by reason of such exercise
and (ii) to the Company to deliver the certificates for the purchased shares
directly to such brokerage firm in order to complete the sale.
(b) Taxes. The Optionee shall, upon notification of the amount due (if any) as
a result of the exercise of the Option and prior to or concurrent with delivery of the
certificate representing the Option Shares, pay to the Company the amounts necessary to
satisfy applicable federal, state and local tax withholding requirements.
5. Restrictions on Exercise. This Option may not be exercised if the issuance of such
Option Shares upon such exercise or the method of payment of consideration for such shares would
constitute a violation of any applicable federal or state securities or other law or regulation,
including any rule under Part 207 of Title 12 of the Code of Federal Regulations as promulgated by
the Federal Reserve Board.
6. Limited Transferability of Option. This Option shall be exercisable only by the
Optionee during his lifetime and shall not be assignable or transferable, other than by will or by
the applicable laws of inheritance and as permitted under the Code following the Optionee’s death.
The terms and conditions of this Option Agreement, including (without limitation) the limited time
period during which this Option may be exercised following the Optionee’s death, shall be binding
upon the executors, administrators, heirs, successors and permitted assigns of the Optionee.
7. Effect of Termination or Death. The following provisions shall govern the exercise
of this Option at or after the time of cessation of Service or death of the Optionee:
(a) Should the Optionee cease to remain in Service for any reason other than death,
Disability or Misconduct, then the Optionee shall have a period of three (3) months
following the date of such cessation of Service during which to
exercise this Option as to shares that vested on or prior to the date of cessation. Upon such cessation of Service,
this Option shall immediately
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terminate and cease to be outstanding with respect to any and all Option Shares which
are not, at the time, vested.
(b) Should Optionee’s Service terminate by reason of Disability while holding this
Option, the vesting of this Option will thereupon accelerate and all of the unvested Option
Shares subject thereto will immediately vest and become exercisable. The Optionee shall
have a period of twelve (12) months following the date of such termination of Service during
which to exercise this Option.
(c) If the Optionee dies while holding this Option, the vesting set forth in
Section 2 will thereupon accelerate and all of the unvested Option Shares subject
thereto will immediately vest and become exercisable. The personal representative of the
Optionee’s estate or the person or persons to whom this Option is transferred pursuant to
the Optionee’s will or the applicable laws of inheritance shall have a period of twelve (12)
months following the date of the Optionee’s death to exercise this Option.
(d) Under no circumstances, however, shall this Option be exercisable after the
expiration of the Term.
(e) Upon the expiration of the applicable exercise period or (if earlier) upon the
expiration of the Term, this Option shall terminate and cease to be outstanding for any
vested Option Shares for which this Option has not been exercised.
(f) Should Optionee’s Service be terminated for Misconduct or should the Optionee
otherwise engage in Misconduct while holding this Option Agreement, then the Option and this
Option Agreement (whether any or all Option Shares are vested or not) shall terminate
immediately and cease to remain outstanding.
8. Changes in Capital Structure. The Optionee agrees and acknowledges that the
Company shall have the right at any time and from time to time after the date of this Option
Agreement to authorize additional classes or series of capital stock, some of which may entitle the
holders thereof to greater rights than the holders of the Common Stock into which this Option is
convertible, and to issue shares thereunder, subject only to the limits imposed by applicable laws.
9. Tax Consequences. The grant and/or exercise of the Option will have federal and
state income tax consequences. THE OPTIONEE SHOULD CONSULT A TAX ADVISOR UPON THE GRANT OF THE
OPTION AND BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES ACQUIRED UPON EXERCISE.
10. Entire Agreement; Governing Law. This Option Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and supersede in their entirety
all prior undertakings and agreements of the Company and Optionee with respect to the subject
matter hereof, and this Option Agreement may not be amended except by means of a writing signed by
the Company and Optionee. This Option Agreement is governed by Delaware law except for that body
of law pertaining to conflict of laws.
11. Warranties, Representations and Covenants. The undersigned Optionee warrants and
represents that he: (a) has received, read and understood the Option Agreement and the Plan and
agrees to abide by and be bound by its terms and conditions, (b) is acquiring such shares of Common
Stock for his own account for investment and not for resale or with a view to distribution thereof
in violation of the Securities Act of 1933, as amended, and the regulations promulgated thereunder
(the “Securities Act”);
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and (c) is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under
the Securities Act. The undersigned’s financial condition is such that he is able to bear the risk
of holding such securities for an indefinite period of time and the risk of loss of its entire
investment. The undersigned has sufficient knowledge and experience in investing in companies
similar to the Company so as to be able to evaluate the risks and merits of its investment in the
Company. Optionee hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Plan Administrator upon any questions relating to the Plan or this Option
Agreement. Optionee further agrees to notify the Company upon any change in the residence address
indicated below. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT 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 OPTION AGREEMENT SHALL CONFER UPON OPTIONEE ANY RIGHT
WITH RESPECT TO CONTINUATION OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH
OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE OPTIONEE’S EMPLOYMENT AT ANY TIME, WITH OR
WITHOUT CAUSE.
12. Relation to Other Benefits; Termination of Employment. Any economic or other
benefit to the Optionee under this Option Agreement will not be taken into account in determining
any benefits to which the Optionee may be entitled under any profit-sharing, retirement or similar
benefit or compensation plan maintained by the Company and will not affect the amount of any life
insurance coverage available to any beneficiary under any life insurance plan covering employees of
the Company. No provision of this Option Agreement will limit in any way whatsoever any right that
the Company may otherwise have to terminate the employment or adjust the compensation of the
Optionee at any time.
13. Certain Definitions. For purposes of this Option Agreement, the following terms
shall have the following meanings:
(a) “Board” shall mean the Company’s Board of Directors.
(b) “Code” shall mean the Internal Revenue Code of 1986, as amended.
(c) “Committee” shall mean a committee of two or more Board members appointed by the Board to
exercise one or more administrative functions under the Plan.
(d) “Common Stock” shall mean the Company’s common stock, par value $0.01 per share.
(e) “Disability” shall mean the inability of the Optionee, in the opinion of a qualified
physician acceptable to the Company, to perform the major duties of the Optionee’s position with
the Company because of the sickness or injury of the Optionee.
(f) “Fair Market Value” per share of Common Stock on any relevant date shall be determined in
accordance with the following provisions:
(i) If the Common Stock is at the time traded on the NASDAQ National Market, then the
Fair Market Value shall be the closing sales price per share of Common Stock on the date in
question, as such price is reported by the National Association of Securities Dealers on the
NASDAQ National Market. If there is no closing sales price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing sales price on the last
preceding date for which such quotation exists.
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(ii) If the Common Stock is at the time listed on any Stock Exchange, then the Fair
Market Value shall be the closing sales price per share of Common Stock on the date in
question on the Stock Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing sales price for the Common Stock on
the date in question, then the Fair Market Value shall be the closing sales price on the
last preceding date for which such quotation exists.
(iii) If the Common Stock is at the time neither listed on any Stock Exchange nor
traded on the NASDAQ National Market, then the Fair Market Value shall be determined by the
Plan Administrator after taking into account such factors as the Plan Administrator shall
deem appropriate.
(g) “Misconduct” shall mean the commission of any act of fraud, embezzlement or dishonesty by
Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade
secrets of the Company (or any Parent or Subsidiary), or any other intentional misconduct by
Optionee which has a material adverse effect on the business or affairs of the Company (or any
Parent or Subsidiary). The foregoing definition shall not be deemed to be inclusive of all the
acts or omissions which the Company (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of Optionee in the Service of the Company (or any Parent or Subsidiary).
(h) “Parent” shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company if each of such corporations (other than the Company) owns, at
the time of the determination, stock possessing fifty percent (50%) or more of the total combined
voting power of all classes of stock in one of the other corporations in such chain.
(i) “Plan” shall mean the Company’s 2001 Stock Option/Stock Issuance Plan.
(j) “Plan Administrator” shall mean either the Board or the Committee acting in its capacity
as administrator of the Plan.
(k) “Service” shall mean the services provided to the Company (or any Parent or Subsidiary) by
Optionee pursuant to the Employment Agreement between Optionee and Company dated October 10, 2007.
(l) “Stock Exchange” shall mean the American Stock Exchange or the New York Stock Exchange.
(m) "Subsidiary” shall mean any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of such corporations other than the last
corporation in the such chain owns, at the time of the determination, stock possessing 50 percent
or more of the total combined voting power of all classes of stock in one of the other corporations
in such chain.
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IN WITNESS WHEREOF, the Company and Optionee have each caused this Option Agreement to be
executed as of the Date of Grant.
| THE COMPANY: | ||||||
| TRI-ISTHMUS GROUP, INC. | ||||||
| By: | |
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| Its: | Chief Executive Officer | |||||
| OPTIONEE: | ||||||
| Signature | ||||||
| Print Name | ||||||
| Residence Address | ||||||
| Area Code/Telephone Number | ||||||
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Exhibit A to Option Grant Agreement
EXERCISE NOTICE
Attention: Secretary
1. Exercise of Option. Effective as of today, ___, 20___, the undersigned
(“Purchaser”) hereby elects to purchase ___ shares (the “Option Shares”) of the Common Stock of
Tri-Isthmus, Inc. (the “Company”) under and pursuant to the Option Grant Agreement dated October
10, 2007 (the “Option Agreement”). The exercise price for the Option Shares shall be $0.3125 per
share, as specified in the Option Agreement.
2. Delivery of Payment.
The undersigned Purchaser (check one and complete):
herewith encloses the cash or a certified or cashier’s check (drawn in favor of the
Company) in the amount of $ in payment of the aggregate exercise price.
elects to make payment by delivering a number of shares of Common Stock held by
Purchaser for the requisite period necessary to avoid a charge to the Company’s earnings for
financial reporting purposes and valued at a Fair Market Value on the date in which this
Option is exercised equal to the aggregate exercise price of $ in accordance with
the provisions of Section 4(a)(ii) of the Option Agreement, and includes
certificates and such other documentation necessary to effect such transfer, including, but
not limited to, a duly authorized stock power in balnk.
herewith encloses a copy of the applicable broker instructions set forth in
Section 4(a)(iii) of the Option Agreement.
3. Representations of Purchaser. Purchaser hereby represents and warrants as follows:
(a) Purchaser acknowledges that he has received, read and understood the Option
Agreement and the Plan and agrees to abide by and be bound by its terms and conditions.
(b) Purchaser is acquiring such shares of Common Stock for its own account for
investment and not for resale or with a view to distribution thereof in violation of the
Securities Act of 1933, as amended, and the regulations promulgated thereunder (the
“Securities Act”); and
(c) Purchaser is an “accredited investor” as defined in Rule 501 of Regulation D
promulgated under the Securities Act. The undersigned’s financial condition is such that he
is able to bear the risk of holding such securities for an indefinite period of time and the
risk of loss of its entire investment. The undersigned has sufficient knowledge and
experience in investing in
companies similar to the Company so as to be able to evaluate the risks and merits of
its investment in the Company.
4. Rights as Shareholder. The Purchaser shall not be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any Option Shares for which such Option is
exercised, including, but not limited to, rights to vote or to receive dividends, unless and until
the Purchaser has satisfied all requirements for exercise of the Option pursuant to its terms, the
certificates evidencing such Option Shares have been issued and the Purchaser has become a record
holder of such Option Shares. A share certificate for the number of Option Shares so acquired
shall be issued to the Purchaser as soon as practicable after exercise of the Option. No
adjustment will be made for a dividend or other right for which the record date is prior to the
date on which all the conditions set forth above are satisfied, except.
5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser’s purchase or disposition of the Option Shares. Purchaser
represents that Purchaser has consulted with any tax consultant or consultants Purchaser deems
advisable in connection with the purchase or disposition of the Option Shares and that Purchaser is
not relying on the Company for any tax advice.
6. Entire Agreement; Governing Law. The Option Agreement is incorporated herein by
reference. This Exercise Notice and the Option Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof,
and this Exercise Notice may not be amended except by means of a writing signed by the Company and
Purchaser. This Exercise Notice is governed by Delaware law except for that body of law pertaining
to conflict of laws.
| Submitted by: | Accepted by: | |||||||
| PURCHASER: | THE COMPANY: | |||||||
| TRI-ISTHMUS GROUP, INC. | ||||||||
| By: |
|
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| Its: | ||||||||
Print Name |
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| Address: | Address: | |||||||
