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EXHIBIT 10.40
[OFFICERS/EMPLOYEES/CONSULTANTS]
RENAL CARE GROUP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
XXXXXXX XXXXX, M.D.
THIS AGREEMENT is made as of the Date of Grant, by RENAL CARE GROUP,
INC., a corporation organized and existing under the laws of the State of
Delaware (the "Company"), to XXXXXXX XXXXX, M.D. (the "Optionee").
Upon and subject to the Additional Terms and Conditions attached hereto
and incorporated herein by reference as part of this Agreement, the Company
hereby awards as of the Date of Grant to Optionee an option (the "Option"), as
described below, to purchase the Option Shares.
A. DATE OF GRANT: May 27, 1998.
B. TYPE OF OPTION: Non-Qualified Stock Option.
C. EXERCISE PRICE PER SHARE: $33.00.
D. OPTION SHARES: 125,000 shares of the Company's Common Stock,
$.01 par value.
E. VESTING SCHEDULE:
The Vesting Schedule shall be as follows:
Schedule Percentage of Option Shares Vested
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Date of Grant 20%
1st anniversary of 40%
the Date of Grant
2nd anniversary of 60%
the Date of Grant
3rd anniversary of 80%
the Date of Grant
4th anniversary of 100%
the Date of Grant
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F. EXPIRATION DATE: This Option may be exercised at any time
after the Date of Grant through 5:00 p.m., Nashville,
Tennessee time, on the 10th anniversary of the Date of Grant,
provided that this Option may be exercised as to no more than
the vested Option Shares, determined pursuant to the Vesting
Schedule or as modified as provided herein.
IN WITNESS WHEREOF, the Company has executed this Agreement the 1st day
of June, 1998.
RENAL CARE GROUP, INC.
By: /s/ Xxx X. Xxxxxx
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Xxx X. Xxxxxx, President
ATTEST:
/s/ Xxxxxx Xxxxx
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Xxxxxx Xxxxx, Secretary
OPTIONEE:
/s/ Xxxxxxx Xxxxx, M.D.
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WITNESS:
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ADDITIONAL TERMS AND CONDITIONS
RENAL CARE GROUP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
FOR XXXXXXX XXXXX, M.D.
1. Exercise of Option. This Option may be exercised in whole or in
part, but in no less than one hundred (100) share lots, by written notice, in
substantially the form as Exhibit 1 hereto, directed to the Secretary of the
Company at its principal place of business, accompanied by payment of the
Exercise Price for the number of shares purchased. Payment shall be made in
cash, by check, or in shares of Common Stock already held by the Optionee
prior to the exercise of the Option. In the event that all or part of the
Exercise Price is paid in shares of Common Stock, the value of such shares
shall be equal to the Fair Market Value of such shares on the date of exercise
of the Option, and the Optionee shall deliver to the Company a certificate or
certificates for such shares.
2. Issuance of Option Shares. Upon a valid exercise of this Option,
the Company shall, or shall direct its transfer agent to, make delivery of the
Option Shares as soon as reasonably possible; provided, however, that the
Company shall not be required to issue or deliver any certificates for Option
Shares pursuant to this Option prior to (a) the completion of any registration
or qualification of such shares under any federal or state law, or any ruling
or regulation of any governmental body which the Board shall, in its sole
discretion, determine to be necessary or advisable, and/or (b) the Optionee
making at the time of exercise any reasonable representations and warranties
requested by the Company in order to qualify the issuance of the Option Shares
for exemptions from registration under state or federal securities laws. The
Option Shares issued on the exercise of this Option, when paid for as herein
provided, will be fully paid and non-assessable.
3. Termination of Employment or Death.
(a) In the event of a termination of Optionee's employment
or consulting services for any reason (other than a termination of an Optionee
employee by his or her death or disability), (i) except as provided in clause
(ii) of this sentence this Option shall
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terminate as of the day of notice of such termination by either party, but in
no event later than the Expiration Date, and (ii) any unexercised portion of
this Option which is otherwise exercisable on the date of termination may be
exercised by Optionee at any time within three (3) months following the date
of such termination, unless Optionee dies during such three (3) month period,
but in no event later than the Expiration Date. If Optionee is an employee,
whether military, government or other service by Optionee or other leave of
absence granted to Optionee shall constitute such a termination shall be
determined in each case by the Board at its discretion, and any determination
by the Board shall be final and conclusive. If the Board determines that such
absence does not constitute such a termination, however, Optionee may exercise
his or her option only with the consent of the Board.
(b) If Optionee is an employee, upon termination of
Optionee's employment with the Company (including its subsidiaries) as result
of a permanent disability (as defined by Section 22(e)(3) of the Code), (i)
except as provided in clause (ii) of this sentence, this Option shall
terminate and be unexercisable on the date of such termination, but in no
event later than the Expiration Date, and (ii) any unexercised portion of this
Option which is otherwise exercisable on the date of such termination may be
exercised by Optionee at any time within six (6) months following the date of
such termination, unless Optionee dies during such six (6) month period, but
in no event later than the Expiration Date.
(c) If Optionee is an employee, upon termination of his or
her employment by the Company without Cause, if there is a written employment
agreement between Optionee and the Company, this Option shall cease to vest in
accordance with the Vesting Schedule regardless of any salary continuation
specified by such employment agreement as a result of such termination. Upon
termination of his or her employment with the Company, (i) except as provided
in clause (ii) of this sentence, this Option shall terminate and be
unexercisable as to unvested options on the date of termination, but in no
event later than the Expiration Date, and (ii) any unexercised portion of this
Option which is otherwise exercisable as of such termination date may be
exercised by Optionee at any time within three (3) months following such
termination date, unless Optionee dies during such three (3) month period such
option may be exercised pursuant to subparagraph (d) below, but in no event
later than the Expiration Date. If there is no
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written employment agreement between Optionee and the Company, upon
termination of his or her employment by the Company without Cause any
unexercised portion of this Option shall terminate in accordance with Section
3(a) above, but in no event later than the Expiration Date.
(d) If Optionee dies, (i) except as provided in clause (ii)
of this sentence, this Option shall terminate and be unexercisable on the date
of death, and (ii) any unexercised portion of this Option, if otherwise
exercisable at the date of death, may be exercised by his or her personal
representatives, heirs, or legatees at any time prior to the expiration of one
(1) year after the date of Optionee's death, but in no event later than the
Expiration Date.
4. Full Information. Optionee represents that he or she is familiar
with the business and affairs of the Company and realizes that the receipt of
the Option and Option Shares is a speculative investment and that any possible
profit therefrom is uncertain. Optionee further represents that he or she has
had the opportunity to ask questions of and receive answers from the Company
and any person acting on its behalf and to obtain all information available
with respect to the Company and its affairs, and has received all information
and data with respect to the Company that he or she has requested and which he
or she has deemed relevant in connection with his or her receipt of the Option
and the Option Shares subject to the Option.
5. No Rights in Option Stock. Optionee shall have no rights as a
stockholder with respect to any of the Option Shares prior to the date of
issuance to the Optionee of a certificate or certificates for such shares.
Optionee shall have no rights with respect to such shares not expressly
conferred by this Agreement.
6. Stock Reserved. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of the Common
Stock as will be sufficient to satisfy the requirements of this Agreement, and
shall pay all original issue taxes on the exercise of this Option, and all
other fees and expenses necessarily incurred by the Company in connection
therewith.
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7. Nonassignability. This Option shall not be encumbered or
transferred in whole or in part except by will or the laws of descent and
distribution and is exercisable during the lifetime of the Optionee only by
the Optionee.
8. No Employment. This Agreement shall not give Optionee a right to
employment by, or membership on the board of directors of, the Company or its
subsidiaries.
9. Non-Qualified Option. It is the intent of the parties hereto that
this Option be a non-qualified stock option and subject to all of the
applicable provisions of the Internal Revenue Code of 1986, as amended. The
Company recognizes that the Optionee may be subject to restrictions regarding
his or her right to trade Common Stock under applicable securities laws.
Accordingly, the Optionee may want to consider making an election to be taxed
upon exercise of this Option under Section 83(b) of the Code. The Optionee
shall have sole discretion to make such an election and shall be solely
responsible for complying with the Code and all relevant rules and regulations
in connection with such election. The Optionee shall provide written notice to
the Company of such election immediately after making such election.
10. Share Adjustments. If the Company's outstanding shares of Common
Stock are increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split, combination of shares, stock
dividend, or transaction having similar effect, the Board shall
proportionately and appropriately adjust the number and kind of shares that
are subject to this Option and the Exercise Price Per Share, without any
change in the aggregate price to be paid therefor upon exercise of this
Option.
11. Changes in Control.
(a) Change in Control. Subject to Section 12, in the event
that a Change in Control shall occur, then (i) this Option (whether vested or
not vested) shall automatically become one hundred percent (100%) vested
immediately, and (ii) no other terms, conditions, restrictions or limitations
shall be imposed upon this Option after such
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date, and in no circumstance shall this Option be forfeited on or after such
date.
(b) Automatic Acceleration and Cash-Out. Subject to Section
12, upon a Change in Control that results directly or indirectly in the Common
Stock (or the stock of any successor the Company received in exchange for
Common Stock) ceasing to be publicly traded on a national securities market at
any time, (i) this Option shall automatically become one hundred percent
(100%) vested immediately with respect to the Option Shares, (ii) no other
terms, conditions, restrictions or limitations shall be imposed upon this
Option after such date, and in no circumstance shall this Option be forfeited
on or after such date, and (iii) this Option shall be valued and cashed out on
the basis of the Change in Control Price.
(c) Section 16 Insider. Notwithstanding anything herein to
the contrary, if the Optionee is subject to the reporting requirements of
Section 16 of the Exchange Act with respect to the Company, and on the date of
the Change in Control this Option has not been outstanding for a period of at
least six months from the Date of Grant, the Optionee shall not be paid the
consideration described in this Section 11 above until the first day next
following the end of such six-month period.
12. Modification, Extension and Renewal. The Board may modify, renew
or accept the surrender of this Option, including the acceleration or waiver
of any vesting or other restrictions or limitations, or the conversion of this
Option (with appropriate adjustments) to be applicable to the securities of
any successor corporation to the Company or parent of any such successor, and
the Board may authorize new options in substitution for the Option. Any
substituted, modified or converted options may bear such different or
additional terms and conditions as the Board shall deem appropriate. The
determination of the Board as to the terms of any of the foregoing may be made
without regard to whether a Change in Control has or has not occurred (or
whether the Board has determined that any event shall not be considered to be
a Change in Control) and shall be conclusive and binding notwithstanding the
provisions hereof regarding exercisability. Any fractional shares resulting
from any of the foregoing adjustments under this Section shall be disregarded
and eliminated. However, no modification of this Option shall, without the
consent of
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the Optionee, adversely affect the rights or obligations of the Optionee with
respect to this Option.
13. Administration. This Agreement shall be administered, construed
and interpreted by the Board.
14. Definitions.
"Board" means the Board of Directors of the Company.
"Change in Control" means a change in control of the Company
of a nature that would be required to be reported (assuming such event has not
been "previously reported") in response to Item 1(a) of a Current Report on
Form 8-K pursuant to Section 13 or 15(d) of the Exchange Act; provided that,
without limitation, a Change in Control shall also be deemed to have occurred
at such time as:
(i) any "person" within the meaning of Section
14(d) of the Exchange Act, other than the Company, a Subsidiary, or
any employee benefit plan(s) sponsored by the Company or any
Subsidiary, is or has become the "beneficial owner," as defined in
Rule l3d-3 under the Exchange Act, directly or indirectly, of 25% or
more of the combined voting power of the outstanding securities of
the Company ordinarily having the right to vote at the election of
directors;
(ii) individuals who constitute the Board immediately
prior to any meeting of stockholders (the "Incumbent Board") have
ceased for any reason to constitute at least a majority thereof after
such shareholder meeting, provided that any person becoming a
director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of at least three-quarters (3/4)
of the directors comprising the Incumbent Board (either by a specific
vote or by approval of the proxy statement of the Company in which
such person is named as a nominee for director without objection to
such nomination) shall be, for purposes of this Agreement, considered
as though such person were a member of the Incumbent Board;
(iii) upon approval by the Company's stockholders
of a reorganization, merger, share exchange or
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consolidation, other than one with respect to which those persons who
were the beneficial owners, immediately prior to such reorganization,
merger, share exchange or consolidation, of outstanding securities of
the Company ordinarily having the right to vote in the election of
directors own, immediately after such transaction, more than 75% of
the outstanding securities of the resulting corporation ordinarily
having the right to vote in the election of directors; or
(iv) upon approval by the Company's stockholders of
a complete liquidation and dissolution of the Company or the sale or
other disposition of all or substantially all of the assets of the
Company other than to a Subsidiary.
Notwithstanding the occurrence of any of the foregoing, the
Board may determine, if it deems it to be in the best interest of the Company,
that an event or events otherwise constituting a Change in Control shall not
be so considered. Such determination shall be effective if it is made by the
Board prior to the occurrence of an event that otherwise would be or probably
will lead to a Change in Control or after such event if made by the Board a
majority of which is composed of directors who were members of the Board
immediately prior to the event that otherwise would be or probably will lead
to a Change in Control. Upon such determination, such event or events shall
not be deemed to be a Change in Control for any purposes hereunder, including
but not limited to, Section 12.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the Common Stock, $.01 par value, of
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder.
"Fair Market Value" means the closing price of the shares of
Common Stock on a national securities exchange on the day on which such value
is to be determined or, if no shares were traded on such day, on the next
preceding day on which shares were traded, as reported by the National
Quotation Bureau, Inc. or other national quotation service. If the shares are
not traded on an exchange but are
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traded in the over-the-counter market, on the day on which such value is to be
determined or, if such "asked" price is not available, the last sales price on
such day or, if no shares were traded on such day, on the next preceding day
on which the shares were traded, as reported by the National Association of
Securities Dealers Automatic Quotation System (NASDAQ) or other national
quotation service.
"Subsidiary" means any corporation that qualifies as a
subsidiary of a corporation under the definition of "subsidiary corporation"
contained in Section 424(f) of the Code.
* * * * *
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[OFFICERS/EMPLOYEES/CONSULTANTS]
EXHIBIT 1
NOTICE OF EXERCISE OF
STOCK OPTION TO PURCHASE
COMMON STOCK OF
RENAL CARE GROUP, INC.
Name:
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Address:
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Date:
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Renal Care Group, Inc.
Attention: [Secretary]
0000 Xxxx Xxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Re: Exercise of Non-Qualified Stock Option
Ladies and Gentlemen:
Subject to acceptance hereof in writing by Renal Care Group, Inc.
(the "Company"), I hereby give at least ten days but not more than thirty (30)
days prior notice of my election to exercise options granted to me to purchase
_____________ shares of Common Stock of the Company under the Renal Care
Group, Inc. Non-Qualified Stock Option Agreement granted on
______________________, ______. The purchase shall take place as of
______________________, ______ (the "Exercise Date").
On or before the Exercise Date, I will pay the applicable purchase
price by delivery of a certified check for $__________ for the full purchase
price payable to the order of Renal Care Group, Inc.
The required federal, state and local income tax withholding, if any,
on the exercise of the option shall be paid on or before the Exercise Date.
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I hereby reaffirm that the representations made in Additional Terms
and Conditions of the Agreement are true and correct as of the date of
exercising this Option.
As soon as the stock certificate is registered in my name, please
deliver it to me at the above address.
Very truly yours,
AGREED TO AND ACCEPTED:
RENAL CARE GROUP, INC.
By:
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Title:
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Number of Shares Exercised:
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Number of Shares Remaining:
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Date:
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