EXHIBIT 10.13
VITAL IMAGES, INC.
STOCK OPTION ADJUSTMENT AGREEMENT
THIS AGREEMENT is dated [INSERT RECORD DATE], 1997, and is entered
into by and between Vital Images, Inc., a Minnesota corporation (the "Company"),
and Xxxxxx Xxxxx (the "Optionee").
WHEREAS, the Background and Purpose of this Agreement are as follows:
(a) Vital Images, Inc. (the "Company") has entered into that certain
Distribution Agreement, dated as of ___________, 1997 (the "Distribution
Agreement"), between the Company and Bio-Vascular, Inc., a Minnesota
corporation ("Bio-Vascular"), pursuant to which Bio-Vascular will
distribute (the "Distribution") all of the outstanding shares of the
Company's common stock to Bio-Vascular's shareholders of record on the
Record Date (as defined in the Distribution Agreement). In connection with
the Distribution, each holder of an option to purchase Bio-Vascular common
stock (a "Bio-Vascular Option") as of the Record Date will be entitled to
retain such Bio-Vascular Option, provided that such Bio-Vascular Option
will be adjusted to reflect the Distribution (an "Adjusted Bio-Vascular
Option"). In addition, as of the Record Date, each holder of a Bio-Vascular
Option will also be entitled to receive an option to purchase Company
common stock that will be adjusted to reflect the Distribution (an
"Adjusted Company Option").
(b) Pursuant to the terms and conditions of the applicable plans or
agreements under which the Bio-Vascular Options were initially granted, the
exercise price and number of shares covered by each Adjusted Bio-Vascular
Option, as well as the exercise price and number of shares covered by each
Adjusted Company Option, will be determined according to a formula, set
forth in the Employee Benefits Agreement entered into between Bio-Vascular
and the Company, that is based on the relative fair market trading values
of Bio-Vascular common stock and Company common stock during the first five
trading days following the Distribution Date (as defined in the
Distribution Agreement). Pursuant to this formula, these adjustments will
be made in such a manner that the aggregate "intrinsic value," or
difference between fair market value and exercise price, of the Adjusted
Bio-Vascular Option and Adjusted Company Option will equal the pre-
Distribution "intrinsic value" of the Bio-Vascular Option with respect to
which the adjustment and grant were made.
(c) In order to ensure that each Adjusted Company Option is granted
without any additional benefit not provided by the Bio-Vascular Option with
respect to which it is granted, Adjusted Company Options will be granted
under the terms of a corresponding "mirror" plan or agreement of the
Company. With respect to Bio-Vascular Options granted under the Stock
Option Agreement by and between Bio-Vascular and the Optionee dated
December 18, 1995 (the "Bio-Vascular Xxxxx Option Agreement"), this Vital
Images, Inc. Xxxxx Option Adjustment Agreement by and between the Company
and the Optionee (the "Xxxxx Adjustment Agreement") will serve as such a
"mirror" agreement.
WHEREAS, the Board of Directors of the Company and the Bio-Vascular
Committee (as defined in Section 10 hereof) will reasonably cooperate and
communicate with each other to promote the purposes of the Xxxxx Adjustment
Agreement.
STOCK OPTION ADJUSTMENT AGREEMENT
Page 2
NOW, THEREFORE, it is hereby agreed:
1. Grant of Option. Subject to the terms and conditions herein stated, the
Company hereby grants to the Optionee an option to purchase all or any part
of 100,000 shares of common stock of the Company at a per share price equal
to the fair market value of the Stock as of the date of grant of the option
represented by this Xxxxx Adjustment Agreement (as determined by the Board
of Directors of the Company).
2. Exercisability. This Option shall be exercisable only if the Distribution
occurs, and only on or after the Distribution Date. Assuming the
Distribution occurs on or before October 25, 1997, the Option shall be
exercisable and shall expire according to the following schedule:
I. II. III.
Date Option Becomes
Exercisable as to Shares in Date of Expiration as to Shares
Number of Shares Column I in Column I
----------------- --------------------------- -------------------------------
20,000 Distribution Date 10/25/03
20,000 10/25/97 10/25/04
20,000 10/25/98 10/25/05
20,000 10/25/99 10/25/06
20,000 10/25/00 10/25/07
This Option shall remain exercisable as set forth above, unless this option
has expired or terminated earlier in accordance with the provisions hereof,
and Shares as to which this Option becomes exercisable may be purchased at
any time prior to the expiration of this Option with respect to such
Shares.
Notwithstanding the foregoing, in the event the Optionee's employment or
other service with the Employer (as defined in Section 10 hereof) and all
of its Subsidiaries is terminated by reason of the Optionee's resignation
or removal, this option shall expire and terminate as to all portions
hereof which have not become exercisable as of the date of such resignation
or removal; provided, however, that the transfer by the Optionee of
employment or other service from one Employer or its Subsidiaries to the
other Employer or its Subsidiaries will not be deemed to constitute a
termination of employment or other service for purposes of this Xxxxx
Adjustment Agreement.
3. Exercise of Option. This Option may be exercised by delivering ten (10)
days prior written notice to the Company, stating the number of shares of
common stock with respect to which this Option is being exercised, together
with payments of the purchase price of the shares. Such purchase price
shall be payable in cash, by certified or bank cashier's check, or by such
other method as the Company in its sole discretion may accept. Not less
than twenty-five (25) shares of the common stock as to which this Option is
exercisable may be purchased at any one time unless the number of shares
purchased is the total number remaining to be purchased under this Option.
4. Nontransferability; Death of Optionee. This Option shall not be
transferable except by Will or by the laws of descent and distribution and
shall be exercisable only by the Optionee during the
STOCK OPTION ADJUSTMENT AGREEMENT
Page 3
Optionee's lifetime. If the Optionee dies during the term of this Xxxxx
Adjustment Agreement, this Option shall expire six months after the
Optionee's death. After the Optionee's death but before such expiration,
the persons to whom the Optionee's rights under this Option shall have
passed by Will or by the applicable laws of descent and distribution shall
have the right to exercise this Option to the extent that the Optionee had
the right to do so as of the date of his death.
5. Privilege of Stock Ownership. The Optionee shall have no rights as a
stockholder with respect to the shares of common stock subject to this
Option until the date of issuance of certificates representing the shares
to the Optionee.
6. Notification of Sale. The Optionee, or any person acquiring shares upon
exercise of this Option, shall notify the Company prior to any sale or
disposition of such shares.
7. Changes in Capital Structure. In the event of changes in the outstanding
common stock of the Company by reason of any stock dividend, split-up,
recapitalization, combination or exchange of shares, merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, or similar corporate event, an appropriate adjustment shall be
made in the number and kind of shares which the Optionee shall receive upon
exercising this Option and with respect to the aggregate price to be paid
upon such exercise.
8. Restriction on Issuing Shares. The exercise of this Option shall be subject
to the condition that if any time the Company determines in its discretion
that (a) the satisfaction of withholding tax or other withholding
liabilities, or (b) the listing, registration or qualification of any of
the shares of common stock deliverable upon exercise of this Option upon
any securities exchange or pursuant to any state or federal law, or (c) the
consent or approval of any regulatory body is necessary or desirable as a
condition of, or in connection with, the exercise of this Option or in
connection with the delivery or purchase of the common stock, then in any
such event, exercise of this Option shall not be effective unless such
withholding, listing, registration, qualification, consent or approval
shall have been effected or obtained to the satisfaction of the Company.
9. Investment Purpose. No shares of common stock of the Company shall be
issued to the Optionee under this Xxxxx Adjustment Agreement unless and
until there has been compliance, in the opinion of the counsel to the
Company, with all applicable legal requirements, including without
limitation those related to securities laws and stock exchange listing
requirements. As a condition of the issuance of any shares of common stock
to the Optionee, the Company may require the Optionee to (a) represent that
the shares are being acquired for investment and not for resale and to make
such other representations as the Company shall deem necessary or
appropriate to qualify the issuance of the shares as exempt from the
provisions of the Securities Act of 1933, as amended, and any other
applicable securities laws, and (b) represent that the Optionee will not
dispose of the shares acquired pursuant to this Xxxxx Adjustment Agreement
in violation of the provisions of the Securities Act of 1933, as amended,
or any other applicable securities laws. The Optionee hereby acknowledges
that any stock certificate representing shares of common stock issued
pursuant to this Xxxxx Adjustment Agreement will bear a legend or legends
making appropriate reference to the restrictions imposed under applicable
securities laws and this Xxxxx Adjustment Agreement.
10. Definitions. Except as otherwise set forth herein, the following terms
will have the meanings set forth below, unless the context clearly
otherwise requires:
STOCK OPTION ADJUSTMENT AGREEMENT
Page 4
(a) "Bio-Vascular Committee" means the group of individuals
administering the Bio-Vascular Xxxxx Option Agreement.
(b) "Employer" means the Company if the Optionee renders employment or
other services to the Company or any Subsidiary of the Company and means
Bio-Vascular if the Optionee renders employment or other services to Bio-
Vascular or any Subsidiary of Bio-Vascular.
(c) "Subsidiary" means (i) when used in reference to the Company, any
entity that is directly or indirectly controlled by the Company or any
entity in which the Company has a significant equity interest, as
determined by the Board of Directors of the Company or (ii) when used in
reference to Bio-Vascular, any entity that is directly or indirectly
controlled by Bio-Vascular or any entity in which Bio-Vascular has a
significant equity interest as determined by the Board of Directors or Bio-
Vascular.
IN WITNESS WHEREOF, the parties hereto have executed this Xxxxx Adjustment
Agreement as of [RECORD DATE], 1997.
VITAL IMAGES, INC.
By:
----------------------
Chairman of the Board
"OPTIONEE"
------------------------
Xxxxxx Xxxxx
