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EXHIBIT 99.2
MARINER HEALTH GROUP, INC.
Non-Qualified Stock Option Agreement
This Non-Qualified Stock Option Agreement dated as of October 3, 1997
(the "Agreement") by and between Mariner Health Group, Inc., a Delaware
corporation (the "Company") with a principal place of business in New London,
Connecticut, and Xxxxxx X. Xxxxxxxxx (the "Optionee"):
WITNESSETH:
WHEREAS, the Compensation Committee (the "Committee") of the Board of
Directors (the "Board") has authorized the grant of stock options upon certain
terms and conditions set forth below;
WHEREAS, the grant of stock options pursuant to this Agreement, is
contemplated by Section 4(g) of the Optionee's Employment Agreement dated as of
September 12, 1997 (the "Employment Agreement") by and among the Company, Prism
Health Group, Inc. and the Optionee (capitalized terms used in this Agreement,
unless otherwise defined in this Agreement, shall have the respective meaning
ascribed to them in the Employment Agreement).
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements herein contained, the Company and the parties hereto
agree as follows:
1. Grant. The Company does hereby grant to the Optionee an option (the
"Option") to purchase from the Company 100,000 shares of its Common Stock
("Stock") upon the terms and conditions set forth herein.
2. Option Exercise Prices. This Option may be exercised at the option
price of $16.25 per share of Stock, subject to adjustment as provided herein.
3. Term and Exercisability of Option. This Option shall become
exercisable on the fifth (5th) anniversary of the date of this Agreement, unless
the following conditions are satisfied (in which case the specified portion of
this Option shall become exercisable on the date specified for the specified
portion of this Option):
(a) (i) the Company's EPS for the year ending December 31,
1998 is at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised from time to time) and (ii) the Optionee and/or
the Company meet such other objectives for such fiscal year as are
agreed to by the Optionee and the CEO, in which case 20,000 shares of
Stock subject to the Option shall become exercisable at the time the
Company's earnings for such year are announced publicly.
(b) (i) the Company's EPS for the year ending December 31,
1999 is at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised from time to time) and (ii) the Optionee and/or
the Company meet such other objectives for such fiscal year as are
agreed to by the Optionee and the CEO, in which case 20,000 shares of
Stock subject to the Option shall become exercisable at the time the
Company's earnings for such year are announced publicly.
(c) (i) the Company's EPS for the year ending December 31,
2000 is at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and
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revised from time to time) and (ii) the Optionee and/or the Company
meet such other objectives for such fiscal year as are agreed to by the
Optionee and the CEO, in which case 20,000 shares of Stock subject to
the Option shall become exercisable at the time the Company's earnings
for such year are announced publicly.
(d) (i) the Company's EPS for the year ending December 31,
2001 is at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised from time to time) and (ii) the Optionee and/or
the Company meet such other objectives for such fiscal year as are
agreed to by the Optionee and the CEO, in which case 20,000 shares of
Stock subject to the Option shall become exercisable at the time the
Company's earnings for such year are announced publicly.
(e) (i) the Company's EPS for the year ending December 31,
2002 is at least equal to such per share amount set forth either in the
Company's budget for such period as set by the Board and/or in
consensus analysts expectations for such period (in each case as
reviewed and revised from time to time) and (ii) the Optionee and/or
the Company meet such other objectives for such fiscal year as are
agreed to by the Optionee and the CEO, in which case 20,000 shares of
Stock subject to the Option shall become exercisable at the time the
Company's earnings for such year are announced publicly.
Not later than thirty (30) days after the beginning of each fiscal year
during the period beginning January 1, 1998 and ending December 31, 2002, the
Company shall provide the Executive with the aforementioned EPS target of the
Company with respect to such fiscal year.
If either (x) the Company terminates the Executive's employment at any
time during a period commencing with a Change in Control (as defined in the
Employment Agreement) and ending one year from such Change in Control pursuant
to the provisions of Section 5(b) (without Cause) of the Employment Agreement,
or (y) the Executive terminates his employment at any time during a period
commencing with a Change in Control and ending one year from such Change in
Control pursuant to the provisions of Section 5(c) of the Employment Agreement
because of a Material Breach or Section 5(d) (for Good Reason) of the Employment
Agreement, all outstanding shares of Stock subject to this Option at the time of
such termination which have not yet vested at the time of such termination shall
immediately be fully vested and shall immediately become exercisable in full.
Such right to exercise the Option is subject to Sections 5 and 6 hereof, as
appropriate, if the Optionee ceases to be employed by the Company and any
present or future parent or subsidiary of the Company ("Related Corporations").
4. Method of Exercise. To the extent that the right to purchase shares
of Stock has accrued hereunder, this Option may be exercised from time to time
by written notice to the Company in the form attached hereto, stating the number
of shares with respect to which this Option is being exercised, accompanied by
payment in full of the option price for the number of shares to be delivered. As
soon as practicable after its receipt of such notice, the Company shall, without
transfer or issue tax to the Optionee (or other person entitled to exercise
these options), deliver to the Optionee (or other person entitled to exercise
this Option), at the principal executive offices of the Company or such other
place as shall be mutually acceptable, a certificate or certificates for such
shares out of theretofore authorized but unissued shares or reacquired shares of
its Stock as the Company may elect; provided, however, that the time of such
delivery may be postponed by the Company for such period as may be required for
it with reasonable diligence to comply with any applicable requirements of law.
The option price shall be paid, at the election of the Optionee, (i) in cash or
by check; (ii) by delivery of shares of the Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise to the option
price; (iii) by delivery of an assignment satisfactory in form and substance to
the Company of a sufficient
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amount of the proceeds from the sale of the Stock and an instruction to the
broker or selling agent to pay that amount to the Company; or (iv) by any
combination of the foregoing. If the Optionee (or other person entitled to
exercise this Option) fails to pay for and accept delivery of all of the shares
specified in such notice upon tender of delivery thereof, his right to exercise
this Option with respect to such shares not paid for may be terminated by the
Company.
5. Termination of Employment. Unless otherwise provided herein, if the
Optionee ceases to be employed by the Company and all Related Corporations for
any reason (including death or disability or termination for Cause as defined in
Section 5(a) of the Employment Agreement), no further installments of this
Option shall become exercisable after the date of termination of his employment
by the Company, and this Option shall terminate no later than the earlier of (a)
one year after the date of termination of his employment and (b) the Option's
specified expiration date. In such a case, the Optionee's only rights hereunder
shall be those which are properly exercised by the Optionee or the Optionee's
legal representative before the termination of this option.
6. Effect of Termination. At the expiration of the period provided in
Section 5 or the scheduled expiration date, whichever is the earlier, this
Option shall terminate and the only rights hereunder shall be those as to which
this Option were properly exercised before such termination.
7. Non-assignability. This Option shall not be assignable or
transferable by the Optionee except by will or by the laws of descent and
distribution. During the life of the Optionee, this Option shall be exercisable
only by the Optionee.
8. Compliance with Securities Act. The Company shall not be obligated
to sell or issue any shares of Stock or other securities pursuant to the
exercise of this Option unless the shares of Stock or other securities with
respect to which this Option are being exercised are at that time effectively
registered or exempt from registration under the Securities Act of 1933, and
applicable state securities laws. In the event shares of Stock or other
securities shall be issued which shall not be so registered, the Optionee hereby
represents, warrants and agrees that he will receive such shares or other
securities for investment and not with a view to their resale or distribution,
and will execute an appropriate investment letter satisfactory to the Company
and its counsel.
9. Legends. The Optionee hereby acknowledges that, if required by law,
the stock certificate representing the Stock will bear a legend setting forth
certain restrictions on its transferability.
10. No Rights as Stockholder until Exercise. The Optionee shall have no
rights as a stockholder with respect to this Option until such time as the
Optionee has exercised this Option by delivering a notice of exercise and has
paid in full the purchase price for the shares so exercised in accordance with
Section 4. Except as is expressly provided herein with respect to certain
changes in the capitalization of the Company, no adjustment shall be made for
dividends or similar rights for which the record date is prior to such date of
exercise.
11. Equitable Adjustment. In the event of any stock dividend,
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, spin-off, combination, repurchase, or share exchange, or other
similar corporate transaction or event, then the Company shall make such
equitable changes or adjustments as are necessary or appropriate to (a) the
number and kind of shares of Stock issued or issuable in respect of outstanding
Options or (b) the exercise price.
12. Effect Upon Employment. Nothing in this Option shall be construed
to impose any obligation upon the Company to retain the Optionee in its employ.
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13. Time for Acceptance. Unless the Optionee shall evidence his
acceptance of this Option by execution of this Agreement within ten (10) days of
the Effective Time, this Option and this Agreement shall be null and void.
14. Withholding Taxes. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this Option, or in connection with the transfer of, or the
lapse of restrictions on, any Stock or other property acquired pursuant to this
Option, the Optionee hereby agrees that the Company or any Related Corporation
may withhold from the Optionee's wages or other remuneration the appropriate
amount of tax. At the discretion of the Company or Related Corporation, the
amount required to be withheld may be withheld in cash from such wages or other
remuneration or in kind from the Stock or other property otherwise deliverable
to the Optionee on exercise of this Option. The Optionee further agrees that, if
the Company or any Related Corporation does not withhold an amount from the
Optionee's wages or other remuneration sufficient to satisfy the withholding
obligation of the Company or Related Corporation, the Optionee will make
reimbursement on demand, in cash, for the amount withheld.
15. Provision of Documentation to Optionee. By signing this Agreement
the Optionee acknowledges receipt of a copy of this Agreement.
16. General Provisions.
(a) Amendment; Waivers. This Agreement contains the full and complete
understanding and agreement of the parties hereto as to the subject matter
hereof and may not be modified or amended, nor may any provision hereof be
waived, except by a further written agreement duly signed by each of the
parties. The waiver by either of the parties hereto of any provision hereof in
any instance shall not operate as a waiver of any other provision hereof or in
any other instance.
(b) Binding Effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective heirs, executors,
administrators, representatives, successors and assigns.
(c) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflicts of laws thereof.
(d) Construction. The titles of the sections of this Agreement are
included for convenience only and shall not be construed as modifying or
affecting their provisions; the masculine gender shall include both sexes; the
singular shall include the plural and the plural the singular unless the context
otherwise requires. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Employment Agreement.
(e) Notices. Any notice in connection with this Agreement shall be
deemed to have been properly delivered if it is in writing and is delivered in
hand or sent by mail to the party addressed as follows, unless another address
has been substituted by notice so given:
To the Optionee: To his address as set forth in the Employment Agreement.
To the Company: Mariner Health Group, Inc.
000 Xxxxxx X'Xxxxx Xxxxx
Xxx Xxxxxx, XX 00000
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its officer thereunto duly authorized, and its corporate seal to be
affixed as of the date set forth below.
MARINER HEALTH GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx
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Title: Vice President
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ACCEPTANCE
I hereby accept the foregoing Options in accordance with its terms and
conditions set forth in this Agreement.
October 3, 1997 /s/ Xxxxxx X. Xxxxxxxxx
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Date Signature of Optionee
Xxxxxx X. Xxxxxxxxx