EXECUTIVE AGREEMENT
EXECUTIVE AGREEMENT dated as of ______________, 1997 among
Diagnostics Holding, Inc., a Delaware corporation (the "Company"),
and ("Executive").
Pursuant to the Company's 1997 Executive Stock Purchase and Option
Plan (the "1997 Plan"), the Company and Executive desire to enter into
an agreement pursuant to which Executive will purchase, and the Company
will sell, <> shares of Class L Common and [COMMON] shares of
Common. In addition, the Company desires to grant to Executive options
to acquire shares of Common, which options shall be divided
into three grants, two grants for shares of Common which will
be based on performance targets and will have different exercise prices
(the "Target Options") and one grant for shares of Common which
will be subject to time vesting (the "Time Option"). The Target Options
and the Time Option are hereinafter referred to individually as an
"Option" and collectively as the "Options". All shares of Common Stock
now or hereafter acquired by Executive pursuant to the 1997 Plan are
referred to herein as the "Executive Stock."
The parties hereto agree as follows:
STOCK AND OPTION PROVISIONS
1. Purchase and Sale of Stock.
(A) Upon execution of this Agreement, Executive will purchase,
andthe Company will sell, <> shares of Class L Common at a price of
$44.00 per share and [COMMON] shares of Common at a price of $4.00
per share (collectively, the "Purchased Stock"). The Company will
deliver to Executive a copy of, and a receipt for, the certificate
representing such Class L Common and such Common, and Executive will
deliver to the Company a certified check or wire transfer of funds
in the amount of $. Such shares of Class L Common and Common
shall be fully vested immediately upon issuance.
(B) 83(b) Election. Within 30 days after the date
hereof, Executive will make an effective election with the Internal
Revenue Service under Section 83(b) of the Internal Revenue Code and the
regulations promulgated thereunder.
(C) (Representations and Warranties. In connection
with the purchase and sale of the Purchase Stock hereunder, Executive
represents and warrants to the Company that:
(I) The Purchased Stock to be acquired by Executive
pursuant to this Agreement will be acquired for Executive's own
account and not with a view to, or intention of, distribution
thereof in violation of the Securities Act of 1933, as amended
(the "1933 Act"), or any applicable state securities laws, and
the Purchased Stock will not be disposed of in contravention of
the 1933 Act or any applicable state securities laws.
(II) Executive is sophisticated in financial matters
and is able to evaluate the risks and benefits of the investment
in the Purchase Stock.
(III) Executive is able to bear the economic risk of
his investment in the Purchase Stock for an indefinite period of
time because the Purchased Stock has not been registered under the
1933 Act and, therefore, cannot be sold unless subsequently
registered under the 1933 Act or an exemption from such
registration is available.
(IV) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions
of the offering of Purchased Stock and has had full access to such
other requested.
(V) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement
by Executive does not and will not conflict with, violate or cause
a breach of any agreement, contract or instrument to which Executive
is a party or any judgment, order or decree to which Executive is
subject.
(D) Acknowledgment. As an inducement to the Company to sell
the Purchased Stock to Executive, as a condition thereto, Executive
acknowledges and agrees that neither the issuance of the Purchased Stock
to Executive nor any provision contained herein shall entitle Executive
to remain in the employment of the Company and its Subsidiaries or
affect the right of the Company to terminate Executive's employment at
any time for any reason.
(E) (1997 Plan Acknowledgment. The Company and Executive
acknowledge and agree that this Agreement has been executed and
delivered, and the Purchased Stock has been issued hereunder, in
connection with and as part of the compensation and incentive
arrangements between the Company and Executive.
2. Stock Options.
(A) Target Option Grants. The Company hereby grants to Executive,
pursuant to the Plan, the Target Options to purchase (A)
shares of Common (the "Tranche I Options"), with an exercise price of
$7.00 (the "Tranche I Price"), and (B) shares of Common (the
"Tranche II Options") with an exercise price of $16.00 the "Tranche II
Price"). The shares issued upon exercise of the Tranche I Options or
the Tranche II Options are referred to herein as the ("Target Option
Shares"). The number of Target Option Shares, the Tranche I Price, and
the Tranche II Price will be equitably adjusted for any stock split,
stock dividend, reclassification or recapitalization of the Company
which occurs subsequent to the date of this Agreement. The Target
Options will expire (the "Expiration Date") on the earlier of the tenth
anniversary of the date hereof or the date of termination of Executive's
employment with the Company or a Subsidiary for any reason (the
"Termination Date"), provided that Executive will have 30 days after the
Expiration Date to exercise the Target Options with respect to the
Target Option Shares which are then exercisable pursuant to the terms of
the 1997 Plan.
(B) Time Option Grant. The Company hereby grants to Executive,
pursuant to the Plan, the Time Option to purchase shares of
Common Stock ("Time Option Shares"), at a price per share of $4.00 (the
"Option Price"). The Option Price and the number of Time Option Shares
will be equitably adjusted for any stock split, stock dividend,
reclassification or recapitalization of the Company which occurs
subsequent to the date of this reement. The Time Option will expire
on the Expiration Date, provided that Executive will have 30 days after
the Expiration Date to exercise the Time Option with respect to the
percentage of Time Option Shares as determined pursuant to the terms of
the 1997 Plan.
(C) Securities Laws Restrictions. Executive represents that when
Executive exercises the Options he will be purchasing Executive Stock
for Executive's own account and not on behalf of others. Executive
understands and acknowledges that federal and state securities laws
govern and restrict Executive's right to offer, sell or otherwise
dispose of any Executive Stock unless Executive's offer, sale or other
disposition thereof is registered under the 1933 Act and state
securities laws or, in the opinion of the Company's counsel, such offer,
sale or other disposition is exempt from registration thereunder.
Executive agrees that he will not offer, sell or otherwise dispose of
any Executive Stock in any manner which would: (i) require the Company
to file any registration statement (or similar filing under state law)
with the Securities and Exchange Commission or to amend or supplement
any such filing or (ii) violate or cause the Company to violate the 1933
Act, the rules and regulations promulgated thereunder or any other state
or federal law. Executive further understands that the certificates for
any Executive Stock Executive purchases will bear the legend set forth
in Paragraph 5 her eof or such other legends as the Company deems
necessary or desirable in connection with the 1933 Act or other rules,
regulations or laws.
(D) Non-Transferability of Option. The Options are personal to
Executive and are not transferable by Executive. Only Executive or his
estate or heirs is entitled to exercise the Options.
3. Repurchase Option. In the event that Executive is no longer
employed by the Company or any of its Subsidiaries for any reason (the
date of such termination being referred to herein as the "Termination
Date"), the Executive Stock, whether held by Executive, or one or more
Permitted Transferees (as defined in Paragraph 4 below), will be subject
to repurchase by the Company and the Investors (solely at their option)
pursuant to the terms and conditions set forth in the 1997 Plan (the
"Repurchase Option").
4. Restrictions on Transfer.
(A) Transfer of Executive Stock. Without the express written
consent of the Company to transfers of Executive Stock in accordance
with the terms of this Agreement, Executive will not sell, pledge or
otherwise transfer any interest in any shares of Executive Stock, except
pursuant to (i) the provisions of Paragraphs 2, 3 and 7 hereof, (ii) the
provisions of Paragraph 4(b) below, (iii) pursuant to the Registration
Agreement, dated as of December 20, 1994, as amended, among the Company
and its stockholders or (iv) pursuant to the provisions of the 1997
Plan.
(B) Certain Permitted Transfers. The restrictions contained in
this Paragraph 4 will not apply with respect to transfers of Executive
Stock pursuant to applicable laws of descent and distribution, provided
that the restrictions contained in this Paragraph 4 will continue to be
applicable to the Executive Stock after any such transfer and the
transferees of such Executive Stock shall agree in writing to be bound
by the provisions of this Agreement. Any transferee of Executive Stock
pursuant to a transfer in accordance with the provisions of this
Paragraph 4(b) is herein referred to as a "Permitted Transferee." Upon
the transfer of Executive Stock pursuant to this Paragraph 4(b), the
Permitted Transferee(s) will deliver a written notice (the "Transfer
Notice") to the Company. The Transfer Notice will disclose in
reasonable detail the identity of the Permitted Transferee(s).
5. Additional Restrictions on Transfer.
(A) The certificates representing the Executive Stock will bear
the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN
EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, CERTAIN REPURCHASE OPTIONS AND
CERTAIN OTHER AGREEMENTS SET FORTH IN AN EXECUTIVE AGREEMENT
BETWEEN THE ISSUER (THE "COMPANY") AND A CERTAIN EMPLOYEE OF
THE COMPANY DATED AS OF ________________, 1997, A COPY OF
WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY'S
PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE."
(B) No holder of Executive Stock may sell, transfer or dispose of
any Executive Stock (except pursuant to an effective registration
statement under the Securities Act of 1933) without first delivering to
the Company an opinion of counsel reasonably acceptable in form and
substance to the Company (which counsel shall be reasonably acceptable
to the Company) that registration under the 1933 Act is not required in
connection with such transfer.
6. Definition of Executive Stock. For all purposes of this
Agreement, Executive Stock will continue to be Executive Stock in the
hands of any holder other than Executive (except for the Company and
purchasers pursuant to an offering registered under the 1933 Act or
purchasers pursuant to a Rule 144 transaction), and each such other
holder of Executive Stock will succeed to all rights and obligations
attributable to Executive as a holder of Executive Stock hereunder.
Executive Stock will also include shares of the Company's capital stock
issued with respect to shares of Executive Stock by way of a stock
split, stock dividend or other recapitalization.
7. Sale of the Company.
(A) If the Board and the holders of a majority of the shares of
Common Stock then outstanding approve a sale of all or substantially all
of the Company's assets determined on a consolidated basis or a sale of
all or substantially all of the Company's outstanding capital stock
(whether by merger, recapitalization, consolidation, reorganization,
combination or otherwise) to any Independent Third Party or group of
Independent Third Parties (collectively an "Approved Sale"), each holder
of Executive Stock will vote for, consent to and raise no objections
against such Approved Sale. If the Approved Sale is structured as (i) a
merger or consolidation, each holder of Executive Stock will waive any
dissenters rights, appraisal rights or similar rights in connection with
such merger or consolidation or (ii) a sale of stock, each holder of
Executive Stock will agree to sell all of his shares of Executive Stock
and rights to acquire shares of Executive Stock on the terms and
conditions approved by the Board and the holders of a majority of the
Common Stock then outstanding. Each holder of Executive Stock will take
all necessary or desirable actions in connection with the consummation
of the Approved Sale as requested by the Company.
(B) The obligations of the holders of Common Stock with respect to
the Approved Sale of the Company are subject to the satisfaction of the
following conditions: (i) upon the consummation of the Approved Sale,
each holder of Common Stock will receive the same form of consideration
and the same portion of the aggregate consideration that such holders of
Common Stock would have received if such aggregate consideration had
been distributed by the Company in complete liquidation pursuant to the
rights and preferences set forth in the Company's Certificate of
Incorporation as in effect immediately prior to such Approved Sale; (ii)
if any holders of a class of Common Stock are given an option as to the
form and amount of consideration to be received, each holder of such
class of Common Stock will be given the same option; and (iii) each
holder of then currently exercisable rights to acquire shares of a class
of Common Stock will be given an opportunity to exercise such rights
sale as holders of such class of Common Stock.
(C) If the Company or the holders of the Company's securities
enter into any negotiation or transaction for which Rule 506 (or any
similar rule then in effect) promulgated by the Securities Exchange
Commission may be available with respect to such negotiation or
transaction (including a merger, consolidation or other reorganization),
the holders of Executive Stock will, at the request of the Company,
appoint a purchaser representative (as such term is defined in Rule 501)
reasonably acceptable to the Company. If any holder of Executive Stock
appoints a purchaser representative designated by the Company, the
Company will pay the fees of such purchaser representative, but if any
holder of Executive Stock declines to appoint the purchaser
representative designated by the Company such holder will appoint
another purchaser representative, and such holder will be responsible
for the fees of the purchaser representative so appointed.
(D) Executive and the other holders of Executive Stock (if any)
will bear their pro-rata share (based upon the number of shares sold) of
the costs of any sale of Executive Stock pursuant to an Approved Sale to
the extent such costs are incurred for the benefit of all holders of
Common Stock and are not otherwise paid by the Company or the acquiring
party. Costs incurred by Executive and the other holders of Executive
Stock on their own behalf will not be considered costs of the
transaction hereunder.
(E) The provisions of this Paragraph 7 will terminate upon
completion of the initial public offering of the Common Stock.
8. Public Offering. In the event that the Board and the holders
of a majority of the shares of Common Stock then outstanding approve an
initial public offering and sale of Common Stock (a "Public Offering")
pursuant to an effective registration statement under the Securities Act
of 1933, as amended, the holders of Executive Stock will take all
necessary or desirable actions in connection with the consummation of
the Public Offering. In the event that such Public Offering is an
underwritten offering and the managing underwriters advise the Company
in writing that in their opinion the Common Stock structure will
adversely affect the marketability of the offering, each holder of
Executive Stock will consent to and vote for a recapitalization,
reorganization and/or exchange of the Common Stock into securities that
the managing underwriters, the Board and holders of a majority of the
shares of Common Stock then outstanding find acceptable and will take
all necessary or desirable actions in connection with the consummation
of the recapitalization, reorganization and/or exchange.
9. Termination of Provisions Relating to Executive Stock. The
provisions of Paragraphs 3 and 4, and the rights of Executive under
Paragraph 7 of the Plan, will terminate upon the first to occur of (i)
an Approved Sale, or (ii) (A) the Company (or its successor as a result
of merger, consolidation, reorganization or sale) becoming a reporting
company under the Securities Exchange Act of 1934 as a result of the
registration of its common equity securities thereunder and (B) the
Investors and their affiliates collectively ceasing to own at least 50%
of the aggregate number of shares of Common Stock that they own on the
date hereof (as adjusted for stock splits, stock dividends and
recapitalization and for exchanges in connection with a merger,
consolidation, reorganization or sale).
MISCELLANEOUS PROVISIONS
10. Notices. Any notice provided for in this Agreement must be in
writing and must be personally delivered, received by certified mail,
service, to the Investors at the addresses indicated in the Company's
records and to the other recipients at the address indicated below:
To the Company:
Diagnostics Holding Inc.
c/o Bain Capital, Inc.
Two Xxxxxx Place
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx Xxxxxx
To Executive:
[CITY]
or such other address or to the attention of such other person as the
recipient party shall have specified by prior written notice to the
sending party. Any notice under this Agreement will be deemed to have
been given when so delivered or mailed.
11. Severability. Whenever possible each provision of this
Agreement will be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Agreement is
held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality
or unenforceability will not affect any other provision or the
effectiveness or validity of any provision in any other jurisdiction,
and this Agreement will be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.
12. Complete Agreement. This Agreement embodies the complete
agreement and understanding among the parties and supersedes and
preempts any prior understandings, agreements or representations by or
among the parties, written or oral, which may have related to the
subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in separate
counterparts, each of which will be deemed to be an original and all of
which taken together will constitute one and the same agreement.
14. Successors and Assigns. This Agreement is intended to bind
and inure to the benefit of and be enforceable by Executive, the
Company, the Investors and their respective successors and assigns,
provided that
Executive may not assign any of his rights or obligations, except as
expressly provided by the terms of this Agreement.
15. Governing Law. The corporate law of Delaware will govern all
issues concerning the relative rights of the Company and its
stockholders. All other issues concerning the enforceability, validity
and binding effect of this Agreement will be governed by and construed
in accordance with the laws of the State of Illinois, without giving
effect to any choice of law or conflict of law provision or rule
(whether of the State of Illinois or any other jurisdiction) that would
cause the application of the law of any jurisdiction other than the
State of Illinois.
16. Remedies. The parties hereto agree and acknowledge that
money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party hereto will have the
right to injunctive relief, in addition to all of its other rights and
remedies at law or in equity, to enforce the provisions of this
Agreement.
17. Effect of Transfers in Violation of Agreement. The Company
will not be required (a) to transfer on its books any shares of Executive
Stock which have been sold or transferred in violation of any of the
provisions set forth in this Agreement or (b) to treat as owner of such
shares, to accord the right to vote as such owner or to pay dividends to
any transferee to whom such shares have been transferred in violation of
this Agreement.
18. Amendments and Waivers. Any provision of this Agreement may
be amended or waived only with the prior written consent of the Company,
Executive and the Investors who hold 70% of the Common Stock held by the
Third Party Beneficiaries. The parties hereto acknowledge and agree
that the Investors are third party beneficiaries of this Agreement.
This Agreement will inure to the benefit of and be enforceable
by the Investors and their respective successors andassigns.
19. Diagnostics Holding, Inc. 1997 Executive Stock Purchase and
Option Plan. The grant of Options and issuance of Executive Stock
hereunder is pursuant to, and subject to all the terms and conditions
of, the Company's 1997 Executive Stock Purchase and Option Plan (the
"1997 Plan"), attached hereto as Exhibit A. Capitalized terms defined
in the 1997 Plan and otherwise not defined herein are used herein as
therein defined.
* * * * *
IN WITNESS WHEREOF, the parties have executed this Agreement on the
day and year first above written.
Diagnostics Holding, Inc.
By:_______________________________
Title:
Participant's Signature:
__________________________________
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