O.A. EXHIBIT 7.1
OPTION AGREEMENT
This Option Agreement (the "Agreement") is made as of the 4th day of
June, 1992, by and between Intermedics Inc., a Delaware corporation (the
"Company") and Xxxxx X. Xxxxxxxxxx (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Company is the owner and holder of Four Hundred Forty-Seven
Thousand Eight Hundred Thirty-Six (447,836) shares of common stock of Xxxxxx
International, Inc., a Texas corporation (the "Xxxxxx shares");
WHEREAS, the Optionee desires an option to purchase the Xxxxxx shares;
and
WHEREAS, the Company is willing to grant the Optionee an option to
purchase the Xxxxxx Shares as an inducement to continue employment with the
Company;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
SECTION 1. GRANT OF OPTION. The company hereby grants to the Optionee
the option (the "Option") to purchase the Xxxxxx Shares at the exercise price of
$16.11 per share (the "Option Price") on the terms and conditions set forth in
this Agreement.
SECTION 2. OPTIONEE'S COVENANTS. The Optionee agrees:
(a} to remain in the employ of and to render to the Company services for
a period of four (4) years from the date of this Agreement, provided that the
Company shall be under no obligation to retain the Optionee in its employ;
(b) not to become an employee, agent, officer, director, partner, or
owner of any business which manufactures or markets any medical device which is
in competition with any medical device manufactured or marketed by the Company
without the prior written consent of the Company. This covenant shall remain in
effect while the Optionee is employed by the Company and for a period of two (2)
years thereafter; and
(c) not to disclose or use any trade secrets, confidential or
proprietary information relating to the Company which is not generally known,
cannot be readily ascertained from inspection of the Company's products and
which has been expressly or implicitly protected from unrestricted use by
persons not
associated with the Company.
SECTION 3. EXERCISE OF OPTION AND PAYMENT OF OPTION PRICE.
(a) Subject to the fulfillment by the Optionee of the conditions set
forth in Section 2(a), twenty-five percent (25%) of the Option shall become
vested and exercisable on each anniversary of the date of this Agreement in
which the Optionee is employed by the Company. On the fourth anniversary date of
this Agreement, this Option shall be fully vested and exercisable if the
Optionee has been in continuous employment by the Company for a period of four
(4) years from the effective date of this Agreement. This option shall terminate
on the tenth anniversary date of this Agreement.
(b) On exercise of this Option in whole or in part, the Optionee shall
deliver to the Company an executed and completed "Notice of Exercise of Option"
in the form attached to this Agreement and the Option Price for any portion of
the Option being exercised.
(c) The Optionee shall be entitled to accumulate and carry over any
unexercised portion of the Option to any subsequent period, provided that at the
time of exercise of such portion of the Option, the Optionee shall meet all
conditions required by this Agreement.
(d) Notwithstanding subsection 3 (a) or any other provision in this
Agreement to the contrary, the Optionee's employment by Company shall not be a
condition to exercise this Option in whole or in part to the extent such Option
is vested on the date exercised.
SECTION 4.ACCELERATED VESTING. The entire number of Xxxxxx Shares then
subject to the Option shall become immediately vested and exercisable in the
event of:
(a) approval by the Board of Directors of Xxxxxx International, Inc.
("Xxxxxx") of a merger or consolidation of Xxxxxx with, or into, another
corporation as a result of which Xxxxxx is not the surviving corporation;
provided that the Option is exercised before the earlier of one hundred eighty
(180) days after the effective date of the merger or consolidation or the
expiration date of the Option;
(b) approval by the Board of Directors of Xxxxxx of the sale by Xxxxxx
of all or substantially all of its assets, provided that the Option is exercised
before the date the sale is consummated;
(c) approval by the Board of Directors of Xxxxxx of the
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spin-off of substantial assets or a subsidiary of Xxxxxx in a distribution to
the shareholders of Xxxxxx; provided that the Option is exercised prior to the
record date for determining shareholders of Xxxxxx entitled to participate in
the spin-off;
(d) approval by the Board of Directors of Xxxxxx of (i) the sale of a
subsidiary contributing revenues in excess of twenty-five percent (25%) of net
revenues of Xxxxxx and consolidated companies, (ii) the sale of substantially
all of the assets of a subsidiary contributing revenues in excess of twenty-five
percent (25%) of net revenue of Xxxxxx and consolidated companies, or (iii) the
public offering of the securities of a subsidiary, coupled with a resolution
adopted by the Board of Directors of Xxxxxx within twelve (12) months of the
close of any such sale or public offering resolving to purchase shares of Xxxxxx
with a substantial portion of the proceeds of such sale or public offering to
the shareholders of Xxxxxx (as used herein, "substantial" means fifty percent
(50%) or more of the proceeds); provided that the Option is exercised within
twenty-one (21) days of adoption of a resolution authorizing the purchase of
shares of the Company or prior to the record date for determining shareholders
of Xxxxxx entitled to participate in distribution to shareholders, as
applicable, respectively;
(e) the commencement of a tender offer for more than fifty percent (50%)
of the shares of common stock of Xxxxxx;
(f) approval by the Board of Directors of Xxxxxx of the liquidation or
dissolution of Xxxxxx; provided that the Option is exercised before the
effective date of such liquidation or dissolution; and
(g) termination of the Optionee's employment with the Company unless
such termination is by the Company for Cause or by the Optionee other than for
Good Reason.
(i) Termination of the Optionee's employment by the Company for "Cause"
shall mean termination:
(aa) upon the willful and continued failure by the Optionee to
substantially perform his duties with the Company (other than any such failure
resulting from his incapacity due to physical or mental illness) after a written
demand for substantial performance is delivered to the Optionee by the Board of
Directors of the Company, which demand specifically identifies the manner in
which the Board of Directors believes that the Optionee has not substantially
performed his duties, or
(bb) the willful engaging by the Optionee in conduct
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which is demonstrably and materially injurious to the Company, monetarily or
otherwise.
(ii) The Optionee shall be entitled to terminate his employment for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean, without his
express consent, the occurrence of any of the following circumstances:
(aa) the assignment to the Optionee of any duties inconsistent
with the position in the Company that the Optionee held immediately prior to the
effective date of this Agreement or a significant adverse alteration in the
nature or status of the Optionee's responsibilities or the conditions of his
employment from those in effect immediately prior to the effective date of this
Agreement;
(bb) a reduction by the Company in the Optionee's annual base
salary in effect immediately prior to the effective date of this Agreement or as
the same may be increased from time to time, except for across the board salary
reductions similarly affecting all management personnel of the Company;
(cc) the relocation of the Company's offices at which the
Optionee is principally employed immediately prior to the effective date of this
Agreement to a location more than one hundred (100) miles from Angleton, Texas;
(dd) the failure by the Company to continue in effect any
material compensation or benefit plan in which the Optionee participates
immediately prior to the effective date of this Agreement; provided, however,
the Optionee acknowledges that this Option is granted in lieu of the Optionee's
participation in a long term incentive cash plan which the Company intends to
implement to replace management's participation in the PSP and the Optionee
further acknowledges that he shall have no right to participate in such long
term incentive cash plan or the PSP until after the fourth anniversary date of
this Agreement; or
(ee) the failure by the Company to pay the Optionee any portion
of his current compensation. The Optionee's right to terminate his employment
pursuant to this subsection shall not be affected by his incapacity due to
physical or mental illness. The Optionee's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
(iii) Any purported termination of the Optionee's employment by the
Company or by the Optionee shall be communicated by written notice to the other
party indicating the specific termination provision relied upon and shall set
forth in reasonable detail the facts and circumstances claimed
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to provide a basis for termination of employment under the provision so
indicated. The Option shall cease and terminate aa to any Xxxxxx Shares not
exercised before the end of the periods specified in subsections 4(a), (b), (c),
(d), (e), and (f). The parties acknowledge that the Company has no obligation or
duty to notify the Optionee of any event described in subsections 4(a), (b),
(c), (d}, (e), or (f).
SECTION 5. DEATH OF OPTIONEE. In the event of the Optionee's death prior
to the expiration of this Agreement, the Option may be exercised as to the
number of shares vested on the date of Optionee's death, within one (l) year
after the Optionee's death, but no later than ten (10) years from the date of
this Agreement, by the executors or administrators of the Optionee's estate or
by any person or persons who acquire this Option directly from the Optionee's
estate by bequest or inheritance.
SECTION 6. NONTRANSFERABILITY OF OPTION. This Option is not transferable
by the Optionee otherwise than by will or under the laws of descent and
distribution.
SECTION 7. RECAPITALIZATION. The number of shares covered by this
Option, and the price per share thereof, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Xxxxxx common stock
resulting from a subdivision or consolidation of shares subject to the dividend
or stock split (but only on the shares subject to the Option) or any other
increase or decrease in the number of such shares affected without receipt of
consideration by the Company.
If Xxxxxx shall be the surviving corporation of any merger or
consolidation, the Option shall pertain to and apply to the securities to which
a holder of the number of shares subject to the Option would have been entitled.
In the event of a change in the Xxxxxx Shares as presently constituted
which is limited to a change of all of its authorized shares with par value into
the same number of shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be Xxxxxx Shares under
this Option.
SECTION 8. RIGHTS AS A SHAREHOLDER. The Optionee shall have no rights as
a shareholder with respect to the Xxxxxx Shares covered by this Option until the
date of the transfer and issuance of a stock certificate to him for such shares.
No adjustment shall be made for dividends or distributions or other rights for
which the record date is prior to the date such stock certificate is transferred
and issued, except as otherwise provided in Section 7.
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SECTION 9. FEDERAL SECURITIES LAWS.
(a) The Optionee represents and warrants that he understands that the
Xxxxxx Shares have not been registered under the Securities Act of 1933, as
amended (the "Act"), and that such shares may not be freely tradable and must be
held indefinitely until such time, if any, as the Xxxxxx Shares are either
registered under the Act or transfer may be made pursuant to an exemption from
such registration as is accorded by said Act or the rules and regulations
promulgated thereunder.
(b) The Optionee further represents and warrants that the Xxxxxx Shares
are being acquired for his own account for investment and not with a view to the
distribution thereof, except in the event the Xxxxxx Shares subject to this
Option are registered under the Act or in the event of a resale of such shares
without such registration would otherwise be permissible in the opinion of
counsel for Xxxxxx.
SECTION 10. EARLY TERMINATION OF OPTION. Notwithstanding Subsection 3(a)
or any other provision of this Agreement to the contrary, in the event the
Xxxxxx Shares trade at an average of less than fifty percent (50%) of the Option
Price for a period of ninety (90) consecutive days during the term of this
Agreement, either party may elect to terminate this Agreement effective upon
notice to the other party.
SECTION 11. SECTION HEADINGS. The descriptive headings of this Agreement
have been inserted for convenience only and shall not be deemed to limit or
otherwise affect the construction of any provision thereof.
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provision of this Agreement shall be deemed prohibited or invalid under such
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, and such prohibition or invalidity shall not
invalidate the remainder of such provision or the other provisions of thin
Agreement.
IN WITNESS WHEREOF, the parties have hereunto set their hand on the day
and year first written above.
COMPANY:
INTERMEDICS INC.
XXXXX XXXXXX /s/
Xxxxx X. Xxxxxx
Chairman, President
and Chief Executive Officer
OPTIONEE:
XXXXX X. XXXXXXXXXX /s/
Xxxxx X. Xxxxxxxxxx
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NOTICE OF EXERCISE OF OPTION
To: Intermedics Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxx 00000
Attention: President
The undersigned, pursuant to the Option Agreement dated May ____, 1992,
by and between Intermedics Inc. and Xxxxx X. Xxxxxxxxxx, hereby exercises his
option to the extent of _________ shares of Xxxxxx International, Inc. common
stock as provided therein.
The Option Price for such shares is enclosed by check made
payable to Intermedics Inc. in the amount of $______________.
The undersigned requests that the Xxxxxx Shares to be transferred
pursuant to the exercise of the Option be issued in his name and delivered to
him as set forth below.
Dated: _________________
Xxxxx X. Xxxxxxxxxx
____________________
Address
____________________
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