EXHIBIT 10.5
HORIZON MEDICAL PRODUCTS, INC.
XXXXXXXX X. XXXX
STOCK OPTION AGREEMENT
OCTOBER 21, 2003
THIS STOCK OPTION AGREEMENT ("Agreement") evidences that, subject to the
following terms and conditions, on October 21, 2003 (the "Grant Date"), Horizon
Medical Products, Inc., a Georgia corporation (the "Company"), granted to
Xxxxxxxx X. Xxxx (the "Optionee") a stock option (the "Option") for the purchase
of five hundred thousand (500,000) shares of the Company's common stock (the
"Stock"), at an option price of ninety-one cents ($0.91) per share (the "Option
Price"), which is the closing price of the Company's common stock on the
American Stock Exchange on October 21, 2003. This Option has been granted under
the Company's Stock Incentive Plan ("Plan") and is subject to the provisions of
the Plan.
SECTION 1. DEFINITIONS. For purposes of this Agreement, the following terms are
defined as set forth below:
(a) "Board" means the Board of Directors of the Company.
(b) "Subordinated Notes" means the presently outstanding
subordinated notes in the principal amount of $14,835,000.00 issued March 16,
2002 by the Company.
(c) "Sale of the Company" means (i) a sale of all or substantially
all of the assets of the Company for cash or stock, or (ii) a merger or
consolidation of the Company with another entity for cash or stock where the
shareholders of the Company immediately after such merger or consolidation own
thirty-five percent (35%) or less of the stock of the surviving entity, or (iii)
a sale of a majority of the issued and outstanding stock of the Company for cash
or stock.
SECTION 2. STOCK OPTION. The Option shall be subject to the following terms and
conditions.
(a) Term. The Option shall (subject to Section 2(b)) be
exercisable for a period of ten (10) years following Grant Date.
(b) Vesting. Optionee's right to exercise this Option shall vest,
if at all, and this Option shall be exercisable in full, at any time during the
period that Employee is employed by the Company or, if Optionee's employment
with the Company is terminated by the Company without cause under his Employment
Agreement, during the period that expires on the later of July 31, 2007 or
eighteen (18) months after the last day of the stated term of his employment
under any Employment Agreement between Optionee and the Company, upon the Sale
of the Company, but only if prior to the Sale of the Company, the due date for
the principal repayment of the Subordinated Notes has been extended from March
16, 2004 to July 16, 2005 pursuant to the provisions of that certain Amendment
No. 1 to Note Purchase Agreement dated October 21, 2003 among the Company,
ComVest Venture Partners, L.P., and Medtronic, Inc.
(c) Method of Exercise. Subject to the provisions of this Section
2, the Option may be exercised, to the extent exercisable, in whole or in part,
at any time during the Option term by giving written notice of exercise to the
Company at its home office in Manchester, Georgia specifying the number of
shares of Stock subject to the Option to be purchased. Such notice shall be
accompanied by payment in full of the purchase price by cash or certified or
bank check or such other instrument as the Company may accept, plus such sum, if
any, as the Company deems necessary to satisfy Optionee's withholding and other
tax obligations resulting from any compensation attributable to such exercise of
the Option.
(d) Non-Transferability of Option. The Option shall not be
transferable by the Optionee other than by will or by the laws of descent and
distribution, and the Option shall be exercisable, during the Optionee's
lifetime, only by the Optionee or by the guardian or legal representative of the
Optionee, it being understood that the term "Optionee" include the guardian and
legal representative of the Optionee and any person to whom the Option is
transferred by will or the laws of descent and distribution.
SECTION 3. ADMINISTRATION.
This Agreement shall be administered by the Board. The Board shall have
the authority to interpret the terms and provisions of this Agreement.
The Board may act only by an affirmative vote of at least two-thirds
(2/3) of the members of the Board then in office, except that the Board through
any such action may authorize any one or more of their number or any officer of
the Company to execute and deliver documents on behalf of the Board. All
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decisions made by the Board pursuant to the provisions of this Agreement
shall be final and binding on all persons, including the Company and the
Optionee.
SECTION 4. ADJUSTMENTS.
In the event of any merger, reorganization, consolidation,
recapitalization (including, but not limited to, the issuance of common stock or
any securities convertible into common stock in exchange for securities of the
Company), stock dividend, stock split or reverse stock split, extraordinary
distribution with respect to the Stock or other similar change in corporate
structure affecting the Stock, the Board shall make a corresponding substitution
or adjustment in the number of shares or other property subject to this Option
and Option Price of the shares and other property subject to this Option as may
be determined to be reasonable, fair, and equitable under the circumstances;
provided, however, that the number of shares subject to the Option always shall
be rounded to the next whole number.
SECTION 5. GENERAL PROVISIONS.
(a) Compliance with Laws.
(1) The Option shall not be exercised and no related
share certificates shall be issued if the Board reasonably determines that such
exercise or such issuance would violate any approval, consent, registration, or
other bona fide requirement of any stock exchange upon which the securities of
the Company may then be listed, the Securities and Exchange Commission or other
governmental authority having jurisdiction over the exercise of the Option or
the issuance of shares.
(2) Certificates representing the Stock transferred upon
the exercise of the Option may at the discretion of the Company bear a legend to
the effect that such Stock has not been registered under the 1933 Act or any
applicable state securities law and that such Stock cannot be sold or offered
for sale in the absence of an effective registration statement as to such Stock
under the 1933 Act and any applicable state securities law or an opinion in form
and substance satisfactory to the Company of legal counsel satisfactory to the
Company that such registration is not required.
(b) Beneficiary. Optionee shall have the right to designate a
beneficiary to whom Optionee's rights under this Agreement shall pass at
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Optionee's death and to change such designation from time to time in a letter,
or letters, delivered to the Board at any time before his death.
(c) Severability. If any provisions of this Agreement shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions of this Agreement or the subject agreement.
(d) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
(e) Merger Clause. This Agreement supersedes any and all
understandings between the Company and the Optionee with respect to the Option,
and, except as otherwise provided herein, this Agreement may be amended only in
writing signed by the Company and the Optionee.
(f) Headings. The headings in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
thereof.
HORIZON MEDICAL PRODUCTS, INC.
By: /s/ Xxxxxx Xxxxxx
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Its: President
PLEASE INDICATE YOUR UNDERSTANDING AND ACCEPTANCE OF THE FOREGOING BY SIGNING
AND RETURNING A COPY OF THIS AGREEMENT.
I hereby acknowledge receipt of the Option granted on the Option Date, which has
been granted to me under this Agreement. I further agree to conform to all of
the terms and conditions of the Option as set forth in this Agreement.
OPTIONEE:
/s/ Xxxxxxxx Xxxx
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Xxxxxxxx X. Xxxx
Date: October 21, 2003
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