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EXHIBIT 10.10
UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
AGREEMENT FOR INCENTIVE STOCK OPTION AWARD PROGRAM
INCENTIVE STOCK OPTION
MAY 14, 1997
The Board of Directors (the "Board") of Universal Standard Medical
Laboratories, Inc. (the "Company"), or the Stock Option Committee thereof (the
"Committee") designated by the Board to administer the Universal Standard
Medical Laboratories, Inc. 1992 Stock Option Plan (the "Plan"), hereby grants
to ▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "Grantee") a stock option (the "Option"), pursuant to the
Plan and the Incentive Stock Option Award Program (the "ISOAP"). The Option is
subject in all respects to the Plan. Certain capitalized terms used in this
agreement (the "Agreement") which are not defined herein have the meanings
indicated for such terms of the Plan.
1. Stock Option. The Option entitles the Grantee to purchase up to 40,000
shares (the "Option Shares") of the Company's Common Stock, no par value (the
"Common Stock"), at an option price per share of $3.14 (the "Option Price"),
subject to the terms and conditions of this Agreement. The Option is intended
to be an Incentive Stock Option.
2. (a) Exercisability. Any portion of this Option which vests and becomes
exercisable as provided in Section 2(b) may be exercised and Option Shares may
be purchased pursuant thereto at any time and from time to time thereafter;
provided that the Grantee may not, without the written consent of the
Committee, exercise this Option in a manner which results in a limitation on
the Company's annual tax deduction for compensation payments to the Grantee
pursuant to the $1 million per person limitation on annual compensation
deductions under Section 162(m) of the Code. The Option Price for Option
Shares shall be paid in full in cash or by check by the Grantee at the time of
the delivery of Option Shares, or, at the written election of the Grantee,
payment may be made by (i) delivery to the Company of outstanding shares of
Common Stock, (ii) retention by the Company of one or more of vested Option
Shares or (iii) any combination of cash, check, the Grantee's delivery of
outstanding Shares and retention by the Company of one or more of such Option
Shares.
(b) Vesting/Exercisability. The Grantee may only exercise his Option to
purchase Option Shares to the extent that the Option has vested and become
exercisable with respect to such Option Shares. One half of the Option Shares
shall be designated as the Turnaround Incentive Options and will vest on June
30, 1997 if the required goals, as set forth below, are attained by such date.
One half of the Option Shares shall be designated as the High Growth Incentive
Options and will vest on December 31, 1997 if the required goals, as set forth
below, are attained by such date.
(i) Turnaround Incentive Options. (A) 3,500 shares of the
Turnaround Incentive Options will vest if the Company's consolidated net loss
per share is ($.04) or less for the
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three months ended March 31, 1997 (the "First Quarter Corporate Objective").
If the First Quarter Corporate Objective is not met, 7,000 shares of the
Turnaround Incentive Options will vest if the Company's Consolidated net
earnings per share is $0 or more for the three months ended June 30, 1997 (the
"Second Quarter Corporate Objective"). If the First Quarter Corporate
Objective is met, 3,500 shares of the Turnaround Incentive Options will vest
if the Second Quarter Corporate Objective is met.
(B) 3,500 shares of the Turnaround Incentive Options will vest if the
Company's consolidated net earnings per share for its managed care division is
($.07) or more for the three months ended March 31, 1997 (the "First Quarter
Managed Care Division Objective"). If the First Quarter Managed Care
Division Objective is not met, 7,000 shares of the Turnaround Incentive Options
will vest if the Company's consolidated net loss per share for its managed care
division is ($.09) or more for the three months ended June 30, 1997 (the
"Second Quarter Managed Care Division Objective"). If the First Quarter
Corporate Objective is met, 3,500 shares of the Turnaround Incentive Options
will vest if the Second Quarter Managed Care Division Objective is met.
(C) 6,000 shares of the Turnaround Incentive Options will vest if the
Grantee meets the Grantee's individual goals set forth in Exhibit A (the
"Individual Goals"), by the date set forth in Exhibit A, or June 30, 1997, if
no date is set forth in Exhibit A. However, if the Grantee fails to meet
his/her Individual Goals, he/she will forfeit the right to any Turnaround
Incentive Options that may have vested through the attainment of the Corporate
Objectives or Managed Care Division Objectives unless otherwise approved by the
Committee.
(ii) High Growth Incentive Options. A number of High Growth
Incentive Options equal to the number of Turnaround Incentive Options which
vested as described in Section 2(b)(i) above, or if no Turnaround Incentive
Options vested, then, if the Grantee attains all of his/her Individual Goals by
December 31, 1997, one half of the High Growth Incentive Options, will vest if
the Company's consolidated net earnings per share for the year ended December
31, 1997 is $.10 or more.
(iii) Time Vesting. Subject to the Grantee's continued employment
with the Company as of any such date, Turnaround Incentive Options which vested
on June 30, 1997, and High Growth Incentive Options which vested on December
31, 1997, will become exercisable in increments of 25% per annum on each
anniversary of the date on which the option first vested, beginning June 30,
1998. All vested Option Shares which have not yet become exercisable will
expire if the Grantee's employment with the Company terminates prior to the
date on which such Option Shares become exercisable. To the extent not
exercised, exercisable Option Shares shall accumulate and the Grantee may
exercise them thereafter in whole or in part. All unvested Turnaround
Incentive Options expire on June 30, 1997 and all unvested High Growth
Incentive Options expire on December 31, 1998, except as otherwise determined
by the Committee.
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(iv) Death or Disability; Change of Control. The Option shall
become exercisable (A), with respect to all of the vested Option Shares,
automatically upon the death or permanent disability (as determined by the
Board or the Committee) of the Grantee and (B), with respect to all unexpired
Option Shares, automatically upon a Change of Control. For purposes hereof, a
"Change of Control" shall mean the sale of all or substantially all of the
assets of the Company to an unaffiliated third-party; the merger or
consolidation of the Company with an unaffiliated third-party in which the
Company is not the surviving corporation; or the acquisition or control in
excess of 51% of the Company's Common Stock on a fully-diluted basis by any
person or group of persons (as defined in Section 13(d) of the Securities
Exchange Act of 1934) (other than WestSphere Capital Associates, L.P. and its
affiliates). Notwithstanding the foregoing, the Option shall not vest and
become automatically exercisable as described in Section 2(b)(iv)(B) without
the written consent of the Committee, to the extent such acceleration of
vesting would result, when taken in the aggregate with all other payments from
the Company, in the payment by such Grantee of any excise tax provided for in
Sections 280G and 4999 of the Code.
(v) Termination of Employment. The Grantee shall have the right to
exercise all unexercised Options which have vested as of the Grantee's
Termination Date (as defined in the Plan) for a period of three (3) months
following such Termination Date or such longer period as may be provided in the
Plan or as the Committee may approve in its sole discretion in connection with
such termination; provided, that the Option shall not be exercisable after its
expiration pursuant to Section 7.
(vi) All calculations of net earnings (loss) per share required by
this Agreement shall be as determined by the Chief Financial Officer of the
Company. If there shall be any disputes as to such calculations, the
determination of the Committee as to the net earnings (loss) per share amounts
shall be final and binding on the Grantee.
3. Transferability of this Option.
(a) Except in the case of death or permanent disability of the Grantee,
this Option shall not be transferable.
(b) The Company may assign its rights and delegate its duties under this
Agreement.
4. Conformity with Plan. The Grantee's Option is intended to conform in
all respects with, and is subject to all applicable provisions of the Plan,
which is incorporated herein by reference. Inconsistencies between this
Agreement and the Plan shall be resolved in accordance with the terms of the
Plan. By executing and returning the enclosed copy of this Agreement, the
Grantee acknowledges his receipt of the Plan and agrees to be bound by all of
the other terms of the Plan.
5. Employment. Notwithstanding any contrary oral representations or
promises made to Grantee prior to or after the date hereof, Grantee and the
Company acknowledge Grantee's
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employment with the Company and its subsidiaries is and will continue to be
subject to the willingness of each to continue such employment and nothing
herein confers any right or obligation on Grantee to continue in the employ of
the Company or its subsidiaries or shall affect in any way Grantee's right or
the right of the Company or its subsidiaries to terminate Grantee's employment
at any time, for any reason, with or without cause.
6. Share Legends. At the sole discretion of the Committee, all
certificates representing any Option Shares subject to the provisions of this
Agreement shall have endorsed thereon the following legend:
"THE SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAW."
7. Expiration. The Option shall expire at 5:00 p.m., New York time, on
the tenth anniversary of the date hereof. In the event that the Grantee shall
cease to be employed by the Company or its subsidiaries for any reason, all
Option Shares which shall not have vested and become exercisable prior thereto
pursuant to Section 2 shall automatically terminate.
8. Further Actions. The parties agree to execute such further instruments
and to take such further actions as may reasonably be required to carry out the
intent of this Agreement.
9. Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the Company and, subject to the
restrictions on transfer herein set forth, be binding upon Grantee's heirs,
executors, administrators, successors and assigns.
10. Governing Law. This Agreement and all documents contemplated hereby,
and all remedies in connection therewith and all questions or transactions
relating thereto, shall be construed in accordance with and governed by the
laws of the State of Michigan.
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Please execute the extra copy of this Agreement in the space below and
return it to the Secretary of the Company to confirm your understanding and
acceptance of the agreements contained in this letter.
Very truly yours,
UNIVERSAL STANDARD MEDICAL
LABORATORIES, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Chief Executive Officer
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The undersigned hereby acknowledges having read this Agreement, the Plan,
and the other enclosures to this Agreement, and hereby agrees to be bound by
all provisions set forth herein and in the Plan.
GRANTEE:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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(Signature)
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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(Please print name)
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NOTICE OF EXERCISE OF INCENTIVE
STOCK OPTION GRANTED UNDER THE
UNIVERSAL STANDARD MEDICAL LABORATORIES, INC.
INCENTIVE STOCK OPTION AWARD PROGRAM
President
Universal Standard Medical
Laboratories, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
An Option was granted to me on May 14, 1997 to purchase up to 40,000
shares of Universal Standard Medical Laboratories, Inc. (the "Company") Common
Stock at a price of $3.14 per share (the "Option").
I hereby elect to exercise the Option with respect to ______ shares (the
"Exercise Shares"). Payment of the exercise price of $______ ($3.14 multiplied
by the number of Exercise Shares, referred to herein as the "Exercise Price")
is being made as follows:
[ ] A. Cash or check delivered with this notice.
[ ] B. Certificates representing shares of Common Stock
having a Fair Market Value on the date of delivery of this
notice equal to the Exercise Price.
[ ] C. The Company is directed to retain shares from the
number of Exercise Shares having a Fair Market Value on the
date of delivery of this notice equal to the Exercise Price.
[ ] D. A combination of A, B and/or C above, having a value
equal to the Exercise Price, as follows: ________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
The stock certificate for the shares acquired upon exercise should be
issued to:
(name)_______________________________
(address)____________________________
_____________________________________
Social Security No.)_________________
Dated: ____________________, ____ _________________________________
(print name)_____________________
