1
Exhibit 10.10
TIME VESTING STOCK OPTION AGREEMENT
TIME VESTING STOCK OPTION AGREEMENT (this "Agreement"), dated as of
___________ by and between Maxxim Medical, Inc., a Texas corporation (the
"Company"), and _________________ (the "Executive"), who is presently a
________________ of the Company.
WHEREAS, pursuant to the Maxxim Medical, Inc. 1999 Stock Incentive
Plan (the "Plan"), the Committee (as defined in the Plan) has decided to award
Options (as defined below) on the terms and conditions set forth in this
Agreement.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms shall
have the meanings ascribed to them below. Any capitalized term used in this
Agreement and not defined herein shall have the meaning ascribed to it in the
Plan.
"Acquisition" shall have the meaning set forth in Section 5.3.
"Agreement" shall have the meaning set forth in the preamble hereto.
"Common Stock" shall mean the Common Stock, par value $0.001 per
share, of the Company, subject to adjustment pursuant to the third paragraph of
Section 3 of the Plan, under certain circumstances.
"Company" shall have the meaning set forth in the preamble hereto.
"Executive" shall have the meaning set forth in the preamble hereto.
"Exercise Price" shall have the meaning set forth in Section 2.2.
"Grant Date" shall have the meaning set forth in Section 2.1.
"IRR Vesting" shall have the meaning set forth in Section 2.3.
"Options" shall have the meaning set forth in Section 2.1.
"Plan" shall have the meaning set forth in the recitals hereof.
In addition, certain other terms used herein have definitions
otherwise ascribed to them herein.
2
2. Grant and Terms of Options.
2.1. Grant of Options. The Company hereby grants to the Executive as
of ____________ (the "Grant Date") ______ Nonqualified Stock Options (the
"Options") each to purchase one share of Common Stock per Option on the terms
and conditions set forth below, and in reliance upon the representations and
covenants of the Executive set forth below. Unless sooner exercised or
forfeited as provided for in the Plan or this Agreement, the Options shall
expire on the tenth anniversary of the date of this Agreement.
2.2. Exercise Price. The exercise price of the Options is $26.00 per
share of Common Stock subject thereto (the "Exercise Price").
2.3. Exercisability. The Options shall vest and become exercisable
according to the following schedule:
Years of Employment
Since the Grant Date Vested Percentage
-------------------- -----------------
Less than 1 year 0%
At least 1 year, but less than 2 years 20%
At least 2 years, but less than 3 years 40%
At least 3 years, but less than 4 years 60%
At least 4 years, but less than 5 years 80%
5 years or more 100%
; provided, however, that the Options shall vest and become exercisable prior
thereto upon FPC (as defined in the Stockholders' Agreement) having received
cash proceeds from the sale or other disposition of its common equity in the
Company (which cash proceeds shall be deemed to include the fair market value
of freely tradeable marketable securities to the extent the FPC entities
actually distribute such freely tradeable marketable securities to their equity
holders as a distribution of capital, such fair market value to be determined
as of the date of such distribution), as well as cash dividends, cash returns
on capital or other cash distributions as a stockholder such that it has
received a return of the full amount of its aggregate investment in the common
equity of the Company, plus a 30% annualized internal rate of return on its
aggregate investment in the common equity of the Company (calculated in the
good faith judgment of the Committee) calculated from the date each such
investment was made through the date of each such sale, disposition or
distribution (the "IRR Vesting").
Options that have become exercisable shall remain exercisable until
they terminate as set forth in this Agreement or the Plan.
-2-
3
3. Plan Shares. The Executive shall not be permitted to sell,
assign, transfer, pledge or otherwise encumber any Plan Shares or Options,
except as provided in the Plan or, in the case of Plan Shares, as provided in
Sections 2.3, 2.4 and 2.5 of the Stockholders' Agreement. Any transfer of Plan
Shares otherwise permitted pursuant to this Agreement shall remain subject to
the terms of the Stockholders' Agreement, and shall not be permitted other than
in accordance with the terms thereof, notwithstanding any provision of this
Agreement that would otherwise permit such transfer.
4. Executive's Representations, Warranties and Agreements. In
connection with the exercise of any Options, the Executive shall make to the
Company (i) representations, warranties and agreements in writing that such
Executive is acquiring the shares of Common Stock without a view to the
distribution thereof and (ii) any other representations that the Committee may
reasonably deem appropriate.
5. Successors.
5.1. This Agreement is personal to the Executive and, without the
prior written consent of the Company, shall not be assignable by the Executive
otherwise than (a) by will or the laws of descent and distribution, or (b)
pursuant to a gift to the Executive's spouse, children, grandchildren or other
living descendants, whether directly or indirectly or by means of a trust,
partnership, limited liability company or otherwise, in each case, subject to
the restrictions of the Stockholders' Agreement. This Agreement shall inure to
the benefit of and be enforceable by the Executive's legal representatives.
5.2. This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
5.3. The Company shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise (an "Acquisition"))
to all or substantially all of the business and/or assets of the Company
expressly to assume and to agree to perform this Agreement in the same manner
and to the same extent that the Company would have been required to perform
this Agreement if no such succession had taken place (or by substituting for
such Options new options, based upon the stock of such successor, having an
aggregate spread between the Fair Market Value of the underlying stock and the
Exercise Price thereof, and the same term, immediately after such substitution,
equal to the spread on, the term of, and such other terms equivalent to such
Options immediately before such substitution); provided, however, that the
Company or such successor may, at its option, at the time of or promptly after
such Acquisition, terminate all of its obligations hereunder with respect to
the Options by paying to the Executive or the Executive's successors or assigns
an amount equal to the product of (i) the number of Options and (ii) the Fair
Market Value per share of the shares underlying such Options at the time of
such Acquisition less the amount of such Options' Exercise Price (but not in
excess of such Fair Market Value per share), in either case, in exchange for
the Executive's Options. As used in this Agreement, the "Company" shall mean
both the Company as defined above and any such successor that assumes and
agrees to perform this Agreement, by operation of law or otherwise.
-3-
4
6. Miscellaneous.
6.1. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without regard to the
principles of conflicts of law thereof. The captions of this Agreement are not
part of the provisions hereof and shall have no force or effect. Except as
otherwise provided in the Plan, this Agreement may not be amended or modified
except by a written agreement executed by the parties hereto or their
respective successors and legal representatives.
6.2. All notices and other communications under this Agreement shall
be in writing and shall be given by hand delivery to the other party or by
registered or certified mail, return receipt requested, postage prepaid,
addressed if to the Executive, at the address set forth on the signature page
hereto, and if to the Company: 00000 00xx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx
00000, Attn: Corporate Secretary, or to such other addresses as either party
furnishes to the other in writing in accordance with this Section 6.2. Notices
and communications shall be effective when actually received by the addressee.
6.3. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
6.4. No later than the date as of which an amount first becomes
includible in the gross income of the Executive for federal income tax purposes
with respect to any Options, the Executive shall pay to the Company, or if
appropriate, any of its Affiliates, or make arrangements satisfactory to the
Committee regarding the payment of, any United States federal, state or local
or foreign taxes of any kind required by law to be withheld with respect to
such amount. If approved by the Committee, withholding obligations may be
settled with Common Stock, including Common Stock that is part of the Award
that gives rise to the withholding requirement. The obligations of the Company
under the Plan shall be conditional on such payment or arrangements, and the
Company and its Affiliates shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to the Executive.
The Committee may establish such procedures as it deems appropriate, including
making irrevocable elections, for the settlement of withholding obligations
with Common Stock.
6.5. The Executive's or the Company's failure to insist upon strict
compliance with any provision of, or to assert any right under, this Agreement
shall not be deemed to be a waiver of such provision or right or of any other
provision of or right under this Agreement.
6.6. The Options are granted pursuant to the Plan, which is
incorporated herein by reference, and the Options shall, except as otherwise
expressly provided herein, be governed by the terms thereof. The Executive
hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all
the terms and provisions thereof. The Executive and the Company each
acknowledges that this Agreement (together with the Stockholders' Agreement,
the Plan and the other agreements referred to herein and therein) constitutes
the entire agreement and supersedes all other agreements and understandings,
both written and oral, among the parties or either of them, with respect to the
subject matter hereof, including the Investor Participation Agreement, by and
among Fox Xxxxx Medic Acquisition Corporation, a Texas corporation, the
Executive and certain other Stockholders of the Company, dated June 13, 1999,
as amended.
-4-
5
6.7. In connection with (a) the cash out of a Stock Option pursuant to
Section 5(g) of the Plan, or (b) the payment of the Exercise Price of a Stock
Option with fully vested Common Stock pursuant to Section 5(d) of the Plan at
any time following the date on which the Participant first becomes entitled to
exercise such Participant's Put Right (as defined in the Stockholders'
Agreement), but provided that the Participant does not actually exercise the
Put Right, the procedural protection with respect to the determination of Fair
Market Value that is set forth in the definition of "Fair Market Value" in the
Stockholders' Agreement shall be deemed to apply to the definition of "Fair
Market Value" as set forth in the Plan. If the Executive exercises his or her
right to pay the Exercise Price in full or in part in the form of fully vested
Common Stock pursuant to Section 5(d) of the Plan in connection with an
exercise of such Executive's Put Right, Fair Market Value for purposes of this
Agreement shall be equal to the Fair Market Value as determined under the
Stockholders' Agreement in connection with such Put Right.1
6.8. The Company and the Participant shall from time to time execute
and deliver all such further documents and do all such acts and things as may
be reasonably required to carry out effectively or better evidence or perfect
the full intent and meaning of this Agreement, including without limitation
obtaining the ratification and approval of the Committee of this Award.
---------------
1 Only in initial grants.
-5-
6
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
MAXXIM MEDICAL, INC.
By:
-------------------------------
Name:
Title:
-------------------------------
Executive:
Address:
-6-
