EXHIBIT 10.3
NONQUALIFIED STOCK OPTION AGREEMENT
This AGREEMENT , entered into
and effective as of the
day of
,
, by and between Health Fitness Corporation (the
“Company”) and
(the “Optionee”).
RECITALS
A. The Optionee on the date
hereof is a nonemployee of the Company or subsidiary of the
Company.
B. The Company has adopted the
2005 Stock Option Plan (the “Plan”), authorizing the
Board of Directors of the Company, or a committee as provided for
in the Plan (the Board or such a committee to be referred to as the
“Committee”), to grant stock options to eligible
employees and directors of the Company.
C. The Company desires to give
the Optionee an inducement to acquire a proprietary interest in the
Company and an added incentive to advance the interests of the
Company by granting to the Optionee an option to purchase shares of
common stock of the Company.
AGREEMENTS
Accordingly, the parties hereto agree
as follows:
ARTICLE I. GRANT OF OPTION
The Company hereby grants to the
Optionee on the date set forth above (the “Date of
Grant”) the right, privilege and option (the
“Option”) to purchase
(
) shares (subject to adjustment as provided in Article VIII
hereof) (the “Option Shares”) of the Company’s
common stock, $.01 par value (the “Common Stock”),
according to the terms and subject to the conditions hereinafter
set forth and as set forth in the Plan. The Option is a
nonqualified stock option and will not be treated as an incentive
stock option, as that term is used in Section 422 of the
Internal Revenue Code (the “Code”) and the regulations
issued thereunder.
ARTICLE II. OPTION EXERCISE PRICE
The per share price to be paid by the
Optionee in the event of an exercise of the Option shall be
$_________, which has been determined to be not less than the fair
market value of the Company’s Common Stock at the Date of
Grant.
ARTICLE III. DURATION OF OPTION AND
EXERCISABILITY
A. Initial Period of
Exercisability . The Option shall fully vest, or be fully
exercisable in _____ installments, on the Date of Grant. In no
event shall this Option be exercisable after, and this
1
Option
shall become void and expire as to all unexercised Option Shares
at, 5.00 p.m. (Central time) on ____________ (the “Expiration
Date”).
B. Termination of
Nonemployee . In the event the Optionee’s affiliation
with the Company terminates (within the meaning of Section 424(f)
of the Code) for any reason other than for “cause,”
this Option shall remain exercisable until the Expiration Date but
only to the extent that the Option was exercisable on the date of
termination but had not previously been exercised. In the event the
Optionee is terminated for “cause,” this Option shall
immediately terminate on the date of such termination and shall be
of no further force or effect. As used herein, “cause”
shall mean fraud, misrepresentation, theft or embezzlement of
Company assets or material and intentional violations of law or
Company policies.
C. Change in Control
.
(i) For purposes of this
Section III.C., the term “Change in Control” shall
have the meaning set forth in Section 11 of the Plan.
(ii) If any events constituting a
Change in Control of the Company shall occur, the Optionee shall be
entitled to receive option rights covering shares of the surviving
or acquiring entity in the same proportion, at an equivalent price,
and subject to the same conditions as this Option; provided,
however, that the Committee may, at its sole discretion, provide
for the acceleration of the right to exercise this Option prior to
the anticipated effective date of the Change in Control or take any
other action as it may deem appropriate to further the purposes of
the Plan or protect the interests of the Optionee; provided,
however, that if, with respect to the Optionee, acceleration of the
vesting of this Option as provided herein (which acceleration could
be deemed a payment within the meaning of Section 280G(b)(2)
of the Code) together with any other payments which the Optionee
has the right to receive from the Company or any corporation which
is a member of an “affiliated group” (as defined in
Section 1504(a) of the Code without regard to Section 1504(b) of
the Code) of which the Company is a member, would constitute a
“parachute payment” (as defined in
Section 280G(b)(2) of the Code), the payments to the Optionee
as set forth herein shall be reduced to the largest amount as will
result in no portion of such payments being subject to the excise
tax imposed by Section 4999 of the Code
ARTICLE IV. MANNER OF OPTION EXERCISE
A. Notice . This Option may be
exercised by the Optionee in whole or in part from time to time,
subject to the conditions contained in the Plan and herein, by
delivery, in person or by registered mail, to the Company at its
principal executive office (Attention: Secretary), of a written
notice of exercise. Such notice shall be in a form satisfactory to
the Committee, shall identify the Option, shall specify the number
of Option Shares with respect to which the Option is being
exercised, and shall be signed by the person or persons so
exercising the Option. Such notice shall be accompanied by payment
in full of the total purchase price of the Option Shares purchased.
In the event that the Option is being exercised, as provided by the
Plan, by the Optionee’s heir(s) or legal representative(s),
the notice shall be accompanied by appropriate proof of right of
such person or persons to exercise the Option. As soon as
practicable after the effective exercise of the Option,
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the
Optionee (or the Optionee’s heir(s) or legal
representative(s) in the event of death or Disability) shall be
recorded on the stock transfer books of the Company as the owner of
the Option Shares purchased, and the Company shall deliver to the
Optionee (or the Optionee’s heir(s) or legal
representative(s)) one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer
documentary stamp taxes shall be paid by the Company.
B. Payment . At the time
of exercise, the Optionee may pay the total purchase price of the
shares to be purchased (i) in cash, (ii) by transfer from
the Optionee to the Company of previously acquired shares of Common
Stock, (iii) through the withholding of shares of Stock from
the number of shares otherwise issuable upon the exercise of the
Option ( e.g ., a net share settlement), or (iv) by a
combination thereof; provided, however, that the Optionee may not
pay any portion of the purchase price through a net share
settlement unless and until the shareholders of the Company have
approved an amendment to the Plan that authorizes such payment
option. In the event the Optionee elects to pay the purchase price
in whole or in part with previously acquired shares of Common Stock
or through a net share settlement, the Fair Market Value of the
shares delivered or withheld shall equal the total exercise price
for the shares being purchased in such manner. The Committee may
reject the Optionee’s election to pay all or part of the
purchase price under this Option with previously acquired shares of
Common Stock and may require such purchase price to be paid
entirely in cash if, in the sole discretion of the Committee,
payment in previously acquired shares would cause the Company to be
required to recognize a charge to earnings in connection therewith.
For purposes of this Agreement, (a) “previously acquired
shares” shall include shares of Common Stock of the Company
that are already owned b
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