EXHIBIT 99.4
AMENDED AND RESTATED STOCK OPTION AGREEMENT
This Amended and Restated Stock Option Agreement is made as of the 26th
day of November, 2001, by and between Endocare, Inc., a Delaware corporation
(the "Company") and Xxxx X. Xxxxxxxxxx ("Optionee").
RECITALS
Whereas, on June 25, 2001 the Company granted Optionee a non-statutory
stock option to purchase up to 300,000 shares of the Company's common stock with
an exercise price of $13.75 per share (the "Option") and executed a Stock Option
Agreement dated June 25, 2001 evidencing the other terms of the Option (the
"Original Option Agreement").
Whereas, in accordance with the terms of the Original Option Agreement,
50,000 of the shares subject to the Option were to vest upon the earlier of (i)
Optionee's continuation in service through June 25, 2006 or (ii) Optionee's
attainment during Optionee's period of service of the performance-based
objective to be mutually agreed upon between Optionee and the Company within
ninety (90) days of the vesting commencement date specified in the Original
Option Agreement for the Option, which performance objective was to be set forth
on Exhibit B to the Original Option Agreement (the "Performance Objective").
Whereas, the Company and Optionee previously agreed to extend the period
for determination of the Performance Objective beyond the 90 days following the
vesting commencement date specified in the Original Option Agreement.
Whereas, on November 26, 2001, the Company and Optionee agreed that the
Performance Objective would be Optionee's attainment of the following two
objectives (i) the closing of the secondary offering of 4,000,000 shares of the
Company's common stock that closed on November 21, 2001 and (ii) Optionee's
continuation in the Company's employ through November 26, 2002.
Whereas, on November 26, 2001, the Company and Optionee additionally
agreed that the Performance Objective would be waived upon the occurrence of any
termination of Optionee's employment that was either (i) without cause or (ii)
an involuntary termination.
Now, therefore, in consideration of the mutual promises and covenants
set forth herein, the Company and Optionee agree that the Original Option
Agreement shall be amended and restated as follows:
ENDOCARE, INC.
AMENDED AND RESTATED STOCK OPTION AGREEMENT
Unless otherwise defined herein, the capitalized terms used herein shall
have the defined meanings in the attached Appendix.
I. NOTICE OF STOCK OPTION XXXXX
Xxxx X. Xxxxxxxxxx
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You have been granted an option to purchase Common Stock of the Company,
subject to the terms and conditions of this Option Agreement and Compensation
Agreement attached hereto as Exhibit A, as follows:
Grant Number
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1.
Date of Grant June 25, 2001
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Vesting Commencement Date June 25, 2001
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Exercise Price Per Share $13.75
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Total Number of Shares Granted 300,000
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Total Exercise Price $4,125,000
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Type of Option Incentive Stock Option
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X Nonstatutory Stock Option
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Term/Expiration Date June 24, 2011
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Nonstatutory Stock Option. This Option is a nonstatutory stock option and is not
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.
Vesting Schedule:
This Option may be exercised, in whole or in part, in accordance with
the following schedule:
62,500 of the Shares subject to the Option shall vest upon Optionee's
completion of twelve (12) months of Service measured from the Vesting
Commencement Date and an additional one thirty-sixth (1/36) of 187,500 of the
Shares subject to the Option shall vest upon Optionee's completion of each
additional month of Service over the thirty-six (36) month period measured from
the first anniversary of the Vesting Commencement Date.
The remaining 50,000 of the Shares subject to the Option shall vest upon
the earlier of (i) Optionee's continuation in Service through June 25, 2006 or
(ii) Optionee's attainment during Optionee's period of Service of the
performance-based objective set forth on Exhibit B to this Option Agreement.
In no event shall the Option become exercisable for any additional
Option Shares following Optionee's cessation of Service.
For purposes of this Option Agreement, "Service" shall mean the
Optionee's performance of services for the Company (or any Parent or Subsidiary)
in the capacity of an Employee, Director or Consultant.
Termination Period:
To the extent vested, this Option may be exercised for ninety (90) days
after termination of the Optionee's Service for any reason other than death or
Disability. However, if the Optionee's Service terminates due to the death or
Disability of the Optionee, this Option may be exercised for the time periods
specified below. In no event shall this Option be exercised later than the
Term/Expiration Date specified above.
In the event that Optionee's Service as an Employee, Consultant or
Director terminates as a result of the Optionee's Disability, the Optionee may
exercise his Option at any time within twelve (12) months from the date of such
termination, but only to the extent that Optionee was entitled to exercise it at
the date of such termination (but in no event later than the expiration of the
term of such Option as set forth in the Notice of Grant). If, at the date of
termination, the Optionee is not entitled to exercise the Option for all the
Shares, then the Option shall immediately terminate with respect to the Shares
covered by the unexercisable portion of such Option. If, after the date of
Optionee's termination, the Optionee does not, within the time specified in the
Option, exercise his or her Option for all the Shares for which that Option is
exercisable on such termination date, then the Option shall terminate with
respect to those remaining Shares.
2.
In the event that Optionee's Service as an Employee, Consultant or
Director terminates as a result of the Optionee's death, the Option may be
exercised at any time within twelve (12) months following the date of death (but
in no event later than the expiration of the term of such Option as set forth in
the Notice of Grant), by the Optionee's estate nor by a person who acquired the
right to exercise the Option by bequest or inheritance, but only to the extent
that the Optionee was entitled to exercise the Option at the date of death. If,
at the time of death, the Optionee was not entitled to exercise the Option for
all the Shares, then the Option shall immediately terminate with respect to the
Shares covered by the unexercisable portion of such Option. If, after Optionee's
death, the Optionee's estate or a person who acquired the right to exercise the
Option by bequest or inheritance does not, within the time specified in the
Option, exercise the Option for all the Shares for which that Option is
exercisable on the date of Optionee' death, then the Option shall terminate with
respect to those remaining Shares.
II. AGREEMENT
1. Grant of Option. The Company hereby grants to the Optionee named
in the Notice of Grant attached as Part I of this Option Agreement (the
"Optionee") an option (the "Option") to purchase the number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price").
2. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the other applicable provisions of this Option Agreement. In the event of
Optionee's death, Disability or other termination of Optionee's Service, the
exercisability of the Option is governed by the applicable provisions of this
Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit C (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 Secretary 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. The Option may not be exercised for a fraction of
a Share.
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 or quotation service 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. The inability of the Company to
obtain authority from any regulatory body having jurisdiction, which authority
is deemed by the Company's counsel to be necessary to the lawful issuance and
sale of any Shares hereunder, shall relieve the Company of any liability in
respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.
3. Rights as a Stockholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Exercised Shares, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock certificate
is issued.
4. 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
3.
(b) check; or
(c) delivery of a properly executed exercise notice together
with such other documentation as the Company and the broker, if applicable,
shall require to effect an exercise of the Option and delivery to the Company of
the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) have been owned by the
Optionee for more than six (6) months on the date of surrender and (ii) have a
Fair Market Value on the date of surrender equal to the aggregate Exercise Price
of the Exercised Shares.
5. Limited Transferability of Option. This Option shall be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, this Option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more Family Members of the Optionee or to a trust
established for the exclusive benefit of one or more such Family Members. The
assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the Option pursuant to such assignment. The terms
applicable to the assigned portion shall be the same as those in effect for this
Option immediately prior to such assignment.
For purposes of this Section 5, a "Family Member" shall be limited to
the Optionee's children, stepchildren, grandchildren, parents, stepparents,
grandparents, spouse, former spouse, siblings, nieces, nephews, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law,
including adoptive relationships, a trust in which any of the foregoing
individuals have more than a fifty percent (50%) beneficial interest, a
foundation in which any of the foregoing individuals (or the Optionee) control
the management of assets, and any other entity in which any of the foregoing
individuals (or Optionee) own more than fifty percent (50%) of the voting
interests.
6. 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.
7. Tax Consequences. Some of the federal and Delaware tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
(a) Exercising the Option. The Optionee may incur regular
federal tax liability upon exercise of the Option. The Optionee will be treated
as having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Exercised Shares on
the date of exercise over their aggregate Exercise Price. If the Optionee is an
Employee or a former Employee, the Company will be required to withhold from his
or her compensation or collect from Optionee and pay to the applicable taxing
authorities an amount in cash equal to a percentage of this compensation income
at the time of exercise, and may refuse to honor the exercise and refuse to
deliver Shares if such withholding amounts are not delivered at the time of
exercise.
(b) Disposition of Shares. If the Optionee holds the Shares
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes.
8. Adjustment in Option Shares. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company's receipt of
consideration, appropriate adjustments shall be made to (i) the number and/or
class of securities subject to this Option and (ii) the Exercise Price in order
to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
9. Extraordinary Events.
4.
(a) The Option shall terminate upon the occurrence of any of
the following events ("Extraordinary Events"):
(i) The dissolution, liquidation, or sale of all (or
substantially all) of the assets of the Company;
(ii) Any reorganization, merger, or consolidation in
which the Company does not survive;
(iii) The acquisition by any person or group (as defined
in Section 13D of the Exchange Act) of beneficial ownership of more than fifty
percent (50%) of the Company Stock; or
(iv) Any reorganization, merger, or consolidation in
which the Company does survive but the Shares outstanding immediately preceding
the transaction are converted by virtue of the transaction into other property,
whether in the form of securities, cash, or otherwise. However, in no case will
an Extraordinary Event be deemed to have occurred as a result of a sale of stock
to the Company or to a holding company established by the Company.
(b) If an Extraordinary Event occurs, the Option shall become
fully exercisable and Optionee shall have the right to exercise any unexpired
portion of the Option prior to the Extraordinary Event, however, the
effectiveness of any such exercise shall be:
(i) Conditioned upon:
(A) The Extraordinary Event actually occurring;
and
(B) The Company's receipt of the notice of
exercise within the time period established by the
Company; and
(ii) Delayed until immediately prior to the
Extraordinary Event.
10. Entire Agreement; Governing Law. This Option Agreement and the
Compensation Agreement attached hereto as Exhibit A 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
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 agreement is governed by Delaware law except for that
body of law pertaining to conflict of laws.
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5.
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 the this Option Agreement. Optionee has reviewed
this Option Agreement in its entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Option Agreement and fully understands
all provisions of the Option Agreement. Optionee hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Company
upon any questions relating to the Option Agreement. Optionee further agrees to
notify the Company upon any change in the residence address indicated below.
OPTIONEE: ENDOCARE, INC,
/s/ Xxxx X. Xxxxxxxxxx By: /s/ Xxxx X. Xxxxx
Signature Title: CEO
Date: November 26, 2001 Date: November 26, 2001
Address:
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CONSENT OF SPOUSE
The undersigned spouse of Optionee has read and hereby approves the
terms and conditions of this Option Agreement. In consideration of the Company's
granting his or her spouse the right to purchase Shares as set forth in this
Option Agreement, the undersigned hereby agrees to be irrevocably bound by the
terms and conditions of this Option Agreement and further agrees that any
community property interest shall be similarly bound. The undersigned hereby
appoints the undersigned's spouse as attorney-in-fact for the undersigned with
respect to any amendment or exercise of rights under this Option Agreement.
_____________________________________
Spouse of Optionee
Date: _________________, 2001
EXHIBIT A
COMPENSATION AGREEMENT
[See Exhibit 99.3 to this Registration Statement]
EXHIBIT B
PERFORMANCE OBJECTIVE
The Performance Objective will be satisfied upon Optionee's attainment
of the following two objectives (i) the closing of the secondary offering of
4,000,000 shares of the Company's common stock that closed on November 21, 2001
and (ii) Optionee's continuation in the Company's employ through November 26,
2002.
Additionally, the Performance Objective will be waived upon the
occurrence of either of the following events that takes place on or prior to
November 26, 2002 during Optionee's period of continued service: (i) a without
Cause termination of Optionee's employment or (ii) an Involuntary Termination of
Optionee's employment.
For purposes of the Performance Objective, the following definitions
shall be in effect:
"Cause" means the termination of the Optionee's employment for any of
the following reasons: (i) Optionee's commission of a felony or his embezzlement
of the Company's funds, (ii) a material breach by Optionee of his obligations
under any employment agreement between the Company and Optionee (or any other
proprietary information agreement in effect between the Company and Optionee)
which has a material adverse effect upon the Company, (iii) any intentional
misconduct by Optionee which has a materially adverse effect upon the Company's
business or reputation, (iv) Optionee's continued and willful failure to perform
substantially the duties, functions and responsibilities of his executive
position (other than by reason of physical or mental illness or injury) after
(A) written notice from the Board to the Optionee in which there is specifically
identified the manner in which the Board believes that Optionee has not
substantially performed his duties and (B) the Optionee is provided with a
reasonable cure period of not less than thirty (30) days or (v) a material
breach by Optionee of any of Optionee's fiduciary obligations as an officer of
the Company which has a material adverse effect upon the Company's business or
reputation.
"Involuntary Termination" means the termination of the Optionee's
employment which occurs by reason of any of the following: (i) the involuntary
termination of Optionee's employment by the Company other than a termination for
Cause or (ii) Optionee's voluntary resignation within ninety (90) days following
(A) a material reduction in the scope of his duties and responsibilities or the
level of management to which he reports, (B) a reduction in his level of base
salary or (C) a relocation of his principal place of employment by more than
fifty (50) miles. Involuntary Termination shall also include the termination of
Optionee's employment by reason of death or disability.
EXHIBIT C
EXERCISE NOTICE
APPENDIX
The following definitions shall be in effect under the Option Agreement:
A. "CODE" means the Internal Revenue Code of 1986, as amended.
B. "COMMON STOCK" means the common stock of the Company.
C. "COMPANY" means Endocare, Inc., a Delaware corporation.
D. "CONSULTANT" means any person, including an advisor, engaged by the
Company or a Parent or Subsidiary to render services in a non-employee
capacity and who is compensated for such services.
E. "DIRECTOR" means a member of the Board.
F. "DISABILITY" means total and permanent disability as defined in Code
Section 22(e)(3).
G. "EMPLOYEE" means any person, including Officers and Directors, employed
by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.
H. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
I. "FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined as follows:
(i) If the Common Stock is admitted to trading
or listed on a national securities exchange, Fair Market Value shall be
the last reported sale price regular way, or if no such reported sale
takes place on that day, the average of the last reported bid and ask
prices regular way, in either case on the principal national securities
exchange on which the Common Stock is admitted to trading or listed.
(ii) If not admitted to trading or listed on any
national securities exchange, Fair Market Value shall be the last sale
price on that day of the Common Stock reported on the Nasdaq National
Market or the Nasdaq SmallCap Market ("Nasdaq Stock Market") or, if no
such reported sale takes place on that day, the average of the closing
bid and ask prices on that day.
(iii) If not included on the Nasdaq Stock Market,
Fair Market Value shall be the average of the closing bid and ask prices
of the Common Stock on that day reported by the Nasdaq electronic
bulletin board, or any comparable system on that day.
(iv) If the Common Stock is not included on the
Nasdaq electronic bulletin board or any comparable system, Fair Market
Value shall be the closing bid and ask prices on that day as furnished
by any member of the National Association of Securities Dealers, Inc.
selected from time to time by the Company for that purpose.
J. "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.
K. "OPTION AGREEMENT" means this Stock Option Agreement.
L. "PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
M. "SHARE" means a share of the Common Stock.
N. "SUBSIDIARY" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code.
