Exhibit 10.12
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1999 STOCK PLAN
NON-QUALIFIED STOCK OPTION CONTRACT
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The parties to this Non-Qualified Stock Option Contract are MedSource
Technologies, Inc., a Delaware corporation (the "Company"), and ___________ (the
"Optionee"). Each capitalized term used but not defined herein shall have the
meaning assigned to it in the Company's 1999 Stock Plan (the "Plan").
The parties agree as follows:
1. The Company, in accordance with the allotment made by the
Administrators and subject to the terms and conditions of the Plan, hereby
grants to the Optionee an option to purchase an aggregate of _____ shares of
Common Stock at an exercise price of $_____ per share, such exercise price being
at least equal to the fair market value of such shares of Common Stock on the
date hereof.
2. (a) The term of this option shall be 10 years from the date hereof,
subject to earlier termination as provided in this Contract and the Plan. This
option shall vest as to 25% of the total number of shares of Common Stock
subject hereto on the first anniversary of the date hereof and as to an
additional 25% of such total number of shares on each of the next three
anniversaries of the date hereof.
(b) If the Optionee's termination of employment with the Company
or any of its Subsidiaries or a Parent occurs by reason of the Optionee's death
or Disability (i) less than six months before the first anniversary of the date
hereof, then this option shall vest as to one-half of the total number of shares
of Common Stock (rounded up to the nearest whole share) that would otherwise
have vested on the first anniversary of the date hereof if the Optionee had
continued to be employed by the Company, any of its Subsidiaries or a Parent,
(ii) less than six months before the second anniversary of the date hereof,
then, in addition to the number of shares of Common Stock as to which this
option is then otherwise vested, this option shall vest as to one-half of the
total number of shares of Common Stock (rounded up to the nearest whole share)
that would otherwise have vested on the second anniversary of the date hereof if
the Optionee had continued to be employed by the Company, any of its
Subsidiaries or a Parent, (iii) less than six months before the third
anniversary of the date hereof, then, in addition to the number of shares of
Common Stock as to which this option is then otherwise vested, this option shall
vest as to one-half of the total number of shares of Common Stock (rounded up to
the nearest whole share) that would otherwise have vested on the third
anniversary of the date hereof if the Optionee had continued to be employed by
the Company, any of its Subsidiaries or a Parent or (iv) less than six
months before the fourth anniversary of the date hereof, then, in addition to
the number of shares of Common Stock as to which this option is
then otherwise vested, this option shall vest as to one-half of the total number
of shares of Common Stock (rounded up to the nearest whole share) that would
otherwise have vested on the fourth anniversary of the date hereof if the
Optionee had continued to be employed by the Company, any of its Subsidiaries or
a Parent.
(c) Immediately prior to the consummation of a Transaction (as
defined herein) in which the holders of shares of Common Stock would receive as
consideration in exchange for their shares of Common Stock, either (x)
securities of an unaffiliated entity that are listed on the New York Stock
Exchange, Inc., the American Stock Exchange LLC or The NASDAQ Stock Market's
National Market that represent more than 50% of the total consideration to be
received by the holders of shares of Common Stock in such Transaction (as
determined by the Administrators) or (y) cash that represents more than 50% of
the total consideration to be received by the holders of shares of Common Stock
in such Transaction (as determined by the Administrators), then this option
shall vest (if less than one-half of the shares of Common Stock subject hereto
are not already vested) as to the excess, if any, of that number of shares of
Common Stock equal to one-half of the total number of shares of Common Stock
subject hereto over the total number of shares of Common Stock already vested at
that time. If, following any Transaction (whether or not the stockholders of the
Company receive cash as set forth above), the Company, any Subsidiary or a
Parent terminates the Optionee's employment without Cause, then this option
shall vest as of the date of termination of employment as to that number of
shares of Common Stock equal to the lesser of (i) one-half of the total number
of shares of Common Stock subject hereto and (ii) the total number of unvested
shares of Common Stock as of the date of termination.
(d) The right to purchase shares of Common Stock under this option
shall be cumulative, so that if the full number of shares purchasable in a
period shall not be purchased, the balance may be purchased at any time or from
time to time thereafter, but not after the expiration of the term of this option
as herein provided and as provided in the Plan.
3. This option shall be exercised by giving written notice to the Company
at its then principal office, currently 110 Cheshire Lane, Suite 100,
Minneapolis, Minnesota 55305, Attention: Chief Financial Officer, stating that
the Optionee is exercising the option hereunder, specifying the number of shares
being purchased and accompanied by payment in full of the aggregate purchase
price therefore (a) in cash or by certified check, (b) with the consent of the
Company, with previously acquired shares of Common Stock that are fully paid,
vested, transferrable and have been held by the Optionee for the requisite
period to avoid a charge to the Company's earnings for financial accounting
purposes, or (c) with the consent of the Company, with a combination of the
foregoing.
4. The Company (or a Parent or a Subsidiary) may withhold cash and/or
shares of Common Stock to be issued to the Optionee in the amount that the
Company determines is necessary to satisfy its obligation to withhold taxes or
other amounts incurred by reason of the grant, exercise or disposition of this
option or the disposition of the underlying shares of
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Common Stock. Alternatively, the Company may require the Optionee to pay the
Company such amount and the Optionee agrees to pay such amount to the Company in
cash, promptly upon demand.
5. (a) The Optionee represents and warrants that any and all shares of
Common Stock purchased by the Optionee pursuant to the exercise of this option
will be acquired for the Optionee's own account and not with a view to, or for
resale in connection with, any distribution or public offering thereof within
the meaning of the Securities Act and such shares may not be disposed of except
in compliance with all federal and state securities laws. Notwithstanding any
other provisions of this agreement to the contrary, the Company shall not be
required to sell or issue any shares of Common Stock pursuant to this option if
the sale or issuance of such shares would constitute a violation of any
provision of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations. The
Company may require that the Optionee deliver at the time of each exercise of
the option and as a condition to exercise of the option, a further written
representation that the shares of Common Stock being acquired upon exercise
shall be acquired by the Optionee solely for investment and will not be sold or
transferred without registration or an exemption from registration under the
Securities Act and applicable state securities laws and regulations, including
compliance with all requirements for such exemption. The Company may also
require that the Optionee deliver other written representations that will permit
the Company to comply with federal and applicable state securities laws in
connection with the issuance of the shares, including representations as to the
knowledge and experience in financial and business matters of the Optionee and
the Optionee's ability to bear the economic risk of the Optionee's investment.
The Company may require that the Optionee obtain a "purchaser representative" as
that term is defined in applicable federal and state securities laws, prior to
the sale or issuance of such shares.
The Optionee shall have no right to require the Company, and the Company
shall have no obligation, to register the issuance or sale of any security
acquired pursuant to the exercise of the Option granted by this agreement under
the Securities Act or under any other law or regulation.
(b) The Optionee acknowledges and agrees that in any event or
series of events set forth in Section 11(b) of the Plan (a "Transaction"),
unless other provision is made therefor in such Transaction, (x) the Company (or
its designee) shall have the right (but not the obligation) to purchase all
options that are vested prior to the closing of such Transaction for an amount
equal to the excess, if any, of the aggregate amount that would have been
received in such Transaction by the Optionee with respect to the shares of
Common Stock subject to the vested portion of this option, determined as if the
Optionee had exercised such vested portion immediately prior to such
Transaction, over the aggregate exercise price therefor, which excess may be
paid in cash or the property to be received by owners of Common Stock in such
Transaction and (y) the rights of the Optionee with respect to the unvested
portion of this option shall be cancelled. Prior to a Transaction, the Company
may, in its discretion, notify the Optionee of such proposed purchase by sending
to the Optionee written notice of such proposed Transaction. The notice may set
forth a date by which the Company shall close such purchase and shall contain
such other information as the Company, in its discretion, believes is necessary
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to close such purchase at or prior to consummation of such Transaction.
6. (a) Upon any termination of the Optionee's employment with the Company
or any of its Subsidiaries or a Parent by reason of the Optionee's death or
Disability or by such employer without Cause, then the Optionee may exercise the
option to the extent vested (whether or not otherwise exercisable) during the
period beginning on the effective date of such termination and ending 90 days
after such date.
(b) The right to purchase shares under this option shall terminate
immediately upon the termination of the Optionee's employment with the Company,
any of its Subsidiaries or a Parent for any reason not previously specified in
this paragraph 6 (including, without limitation, (i) for Cause or (ii) without
the consent of the Company), but the option granted hereunder shall not be
affected by a change in status of the Optionee so long as the Optionee continues
to be an employee of the Company, any of its Subsidiaries or a Parent
(regardless of having changed from one to the other or having been transferred
from one entity to the other).
7. (a) The Optionee acknowledges the time and expense incurred by the
Company and its Subsidiaries (collectively, the "Companies") in connection with
developing proprietary and confidential information in connection with their
respective businesses and operations. The Optionee agrees that he will not
divulge, communicate or use to the detriment of the Companies or for the benefit
of any other person, firm or entity, or misappropriate in any way, any
confidential information or trade secrets relating to the Companies or any of
their respective businesses including, without limitation, financial condition,
operations or prospects, business strategies, operating plans, acquisition
strategies, pro forma financial information, market analyses, acquisition terms
and conditions, personnel information, trade processes, manufacturing methods,
know-how, customer lists and relationships, supplier lists, or other non-public
proprietary and confidential information relating to the Companies.
(b) For so long as the Optionee is an employee of any of the
Companies and for a period of one year thereafter, the Optionee shall not,
directly or indirectly, for himself or on behalf of any other person, firm or
entity, employ, engage or retain any person who at any time during the preceding
12-month period shall have been an employee of any of the Companies or contact
any supplier, customer or employee of any of the Companies for the purpose of
soliciting or diverting any such supplier, customer or employee from the
Companies or otherwise interfering with the business relationship of the
Companies with any of the foregoing.
(c) For so long as the Optionee is an employee of any of the
Companies and for a period of one year thereafter, the Optionee shall not,
directly or indirectly, engage in, or serve as a principal, partner, joint
venturer, member, manager, trustee, agent, stockholder, director, officer or
employee of, or consultant or advisor to, or in any other capacity, or in any
manner own, control, manage, operate, or otherwise participate, invest, or have
any interest in, or be connected with, any person, firm or entity that engages
in, directly or indirectly, any activity that is the same as, similar to or
competitive with, the business of the Companies as then conducted in the United
States; provided, however, that, notwithstanding the foregoing, the
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Optionee may own up to 3% of the voting securities of any publicly-traded
company.
(d) The Optionee acknowledges and agrees that the agreements in this
paragraph 7 are reasonable and necessary for the protection of the Companies and
are an essential inducement to the Company's entering into this agreement
whereby the Optionee is receiving substantial benefits. Accordingly, the
Optionee shall be bound by the provisions hereof to the maximum extent permitted
by law, it being the intent and spirit of the parties that the foregoing shall
be fully enforceable. However, the parties further agree that, if any of the
provisions hereof shall for any reason be held to be excessively broad as to
duration, geographical scope, property or subject matter, such provision shall
be construed by limiting and reducing it so as to be enforceable to the extent
compatible with the applicable law as it shall herein pertain.
(e) The Optionee acknowledges and agrees that the services to be
rendered by the Optionee to the Companies are of a unique nature and that it
would be difficult or impossible to replace such services and that by reason
thereof the Optionee agrees and consents that if he violates the provisions of
this paragraph 7, the Company, in addition to any other rights and remedies
available under this agreement or otherwise, shall be entitled to an injunction
to be issued or specific enforcement to be required (without the necessity of
any bond) restricting the Optionee from committing or continuing any such
violation.
8. The Optionee hereby represents and warrants to the Company that, unless
a registration statement under the Securities Act with respect to the shares of
Common Stock to be received upon an exercise of this option is effective and
current at the time of exercise of this option, the shares of Common Stock to be
issued upon the exercise of this option will be acquired by the Optionee for the
Optionee's own account, for investment only and not with a view to the resale or
distribution thereof. In any event, the Optionee shall notify the Company of any
proposed resale of the shares of Common Stock issued to him upon exercise of
this option. Any subsequent resale or distribution of shares of Common Stock by
the Optionee shall be made only pursuant to (a) a registration statement under
the Securities Act which is effective and current with respect to the sale of
shares of Common Stock being sold, or (b) a specific exemption from the
registration requirements of the Securities Act, but in claiming such exemption,
the Optionee shall, prior to any offer of sale or sale of such shares of Common
Stock, provide the Company (unless waived by the Company) with a favorable
written opinion of counsel satisfactory to the Company, in form, substance and
scope satisfactory to the Company, as to the applicability of such exemption to
the proposed sale or distribution. Such representations and warranties shall
also be deemed to be made by the Optionee upon each exercise of this option.
Nothing herein shall be construed as requiring the Company to register the
shares subject to this option under the Securities Act or to keep any
registration statement effective or current.
9. Notwithstanding anything herein to the contrary, if at any time the
Administrators determine, in their sole discretion, that the listing or
qualification of the shares of Common Stock subject to this option on any
securities exchange, NASDAQ or under any applicable law, or the consent or
approval, or filing with, of any governmental agency or regulatory body, is
necessary
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or desirable as a condition to, or in connection with, the granting of an option
or the issue of shares of Common Stock hereunder, this option may not be
exercised in whole or in part unless such filing, listing, qualification,
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Administrators.
10. The Company may endorse such legend or legends upon the
certificates for shares of Common Stock issued upon exercise of this option and
may issue such "stop transfer" instructions to its transfer agent in respect of
such shares as it determines, in its discretion, to be necessary or appropriate
to (a) prevent a violation of, or to perfect an exemption from, the registration
requirements of the Securities Act or any applicable state securities law, or
(b) implement the provisions of the Plan or this Contract or any other agreement
between the Company and the Optionee with respect to such shares of Common
Stock.
11. Nothing in the Plan or herein shall confer upon the Optionee any
right to continue as a director of the Company or in the employ, or as a
consultant to, of the Company, any Parent or any of its Subsidiaries, or
interfere in any way with any right of the Company, any Parent or its
Subsidiaries to terminate any such relationship at any time for any reason
whatsoever without liability to the Company, any Parent or any of its
Subsidiaries.
12. Prior to or simultaneously with the grant of this option, the
Optionee has executed the Stockholders Agreement in the form annexed hereto as
Exhibit A. The Optionee hereby agrees to execute any "lock-up" or similar
agreement that an underwriter of any public offering of the Company's securities
might request to restrict the transfer by the Optionee of shares of Common Stock
owned or which may become owned by the Optionee for a period of time not to
exceed 30 days prior to, nor 270 days following, the effective date of such
public offering. The Optionee agrees to maintain the confidentiality of any
information provided to him or learned by him by reason of, as result of, or in
connection with, holding an option or owing shares in the Company.
13. The Company and the Optionee are subject to and bound by all of the
terms and conditions of the Plan, a copy of which is attached hereto and made a
part hereof. In the event of a conflict between the terms of this Contract and
the terms of the Plan, the terms of the Plan shall govern.
14. The Optionee represents and agrees that he will comply with all
applicable laws relating to the Plan and the grant and exercise of this option
and the disposition of the shares of Common Stock acquired upon exercise of the
option, including without limitation, federal and state securities and "blue
sky" laws.
15. This option is not transferable by the Optionee and may be
exercised (a) during the lifetime of the Optionee, only by the Optionee and (b)
after the death of the Optionee, only by the personal representative of the
Optionee's estate.
16. This Contract shall be binding upon and inure to the benefit of any
successor or assign of the Company and to the personal representative of the
Optionee's estate.
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17. This Contract shall be governed by, and construed and enforced in
accordance with, the laws of the State of Delaware, without regard to the
conflict of law that would defer to the substantive laws of another
jurisdiction.
18. The invalidity, illegality or unenforceability of any term or
provision herein shall not affect the validity, legality or enforceability of
any other term or provision, all of which shall be valid, legal and enforceable
to the fullest extent permitted by applicable law. This Contract shall not be
construed or interpreted with any presumption against the Company by reason of
the Company causing this Contract to be drafted.
19. This Contract (together with the Plan) constitutes the entire
agreement and understanding between the parties with respect to the subject
matter hereof and supersedes any prior and/or contemporaneous agreements or
understandings with respect thereto (whether written or oral), all of which are
merged herein. This Contract may not be amended or modified except by an
instrument in writing signed by the parties hereto, and no term or provision
hereof may be waived by any party except by an instrument in writing signed by
such party. Notwithstanding the foregoing, the Optionee agrees that the Company
may amend the Plan and the options granted to the Optionee under the Plan,
subject to the limitations contained in the Plan.
[The next page is the signature page]
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The parties have executed and delivered this Non-Qualified Stock Option
Contract as of the date first written above.
MEDSOURCE TECHNOLOGIES, INC.
By:____________________________
Name: Richard J. Effress
Title: Chairman of the Board
_______________________________
Name:_________________
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