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NONTRANSFERABLE
NON-QUALIFIED STOCK OPTION AGREEMENT dated as of [
,
] between Osteotech, Inc., and Richard W. Bauer (the
“Optionee”, which term as used herein shall be deemed
to include any successor to the Optionee by will or by the laws of
descent and distribution, unless the context shall otherwise
require.)
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WHEREAS,
pursuant to the Company’s 1991 Stock Option Plan (the
“1991 Plan”) the Board of Directors of the Company
approved the issuance to the Optionee, effective as the date set
forth above, of a non-qualified option to purchase up to an
aggregate of [
] shares of Common Stock, $.01 par value (the “Common
Stock”), of the Company at a price (the “Option
Price”) of $[
] per share, upon the terms and conditions hereinafter
stated.
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NOW,
THEREFORE, in consideration of the mutual premises and undertakings
hereinafter set forth, the parties hereto agree as
follows:
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1.
Option; Option Price . The Company hereby grants to the
Optionee the option (the “Option”) to purchase, subject
to the terms and conditions of this Agreement, [________] shares of
Common Stock at an exercise price per share equal to the Option
Price. The Option is not qualified for Federal income tax purposes
as an “incentive stock option” within the meaning of
Section 422A of the Internal Revenue Code of 1986, as amended (the
“Code”).
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2.
Term . The term (the “Option Term”) of the
Option shall commence on the date of this Agreement and shall
expire at 5:00 p.m. local time at the location of the
Company’s principal executive offices (“local
time”) on the tenth anniversary of such date, unless the
Option shall have been terminated earlier in accordance with the
terms hereof:
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3.
Time of Exercise . Unless accelerated in the
discretion of the Company or as otherwise provided herein, the
Option shall become exercisable as to a specified percentage of the
shares subject thereto, determined based on the period of
continuous employment of the Optionee through the applicable date
below, as follows:
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SHARES FOR WHICH OPTION IS
EXERCISABLE
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DATE
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PERCENTAGE
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NUMBER
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[1st
anniversary of grant date]
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25%
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[
]
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[2nd
anniversary of grant date]
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25%
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[
]
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[3rd
anniversary of grant date]
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25%
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[
]
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[4th
anniversary of grant date]
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25%
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[
]
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4.
Termination of Option . (a) The unexercised portion of the
Option issued under this Agreement shall automatically terminate
and shall become null and void and be of no further force or effect
upon the first to occur of the following:
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(i)
the expiration of the Option Term;
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(ii)
The expiration of 12 months from the date of an Involuntary
Termination provided, however, that the Option may be exercised
only to the extent that the Optionee had the right to exercise such
Option as of the date of termination of employment;
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(iii)
the expiration of three (3) months from the date of the termination
of the Optionee’s employment by the Company or any of its
subsidiaries, unless such termination is an Involuntary Termination
or a Termination of Association provided, however, that the Option
may be exercised only to the extent that the Optionee had the right
to exercise such Option as of the date of termination of
employment;
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(iv)
upon the date of a Termination of Association;
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(v)
the effective date of a corporate transaction as defined in Section
10 of the 1991 Plan to which Section 10 of the 1991 Plan relating
to assumptions and substitutions of Options does not apply;
provided , however , that an Optionee’s right
to exercise any Option outstanding prior to such effective date
shall in all events be suspended during the period commencing 10
days prior to the proposed effective date of such corporate
transaction and ending on either the actual effective date of such
corporate transaction or upon receipt of notice from the Company
that such corporate transaction will not in fact occur;
and
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(vi)
except to the extent permitted by Section 10 of the 1991 Plan, the
date on which such Option or any part thereof or right or privilege
relating thereto is transferred (otherwise than by will or the laws
of descent or distribution), assigned, pledged, hypothecated,
attached or otherwise disposed of by the Optionee.
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(b)
As used in this Agreement, the following definitions
apply:
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Termination
for Exceptional Cause shall mean :
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(i)
the Optionee’s willful misconduct with respect to the
business and affairs of the Company or any subsidiary
thereof;
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(ii)
the Optionee’s gross neglect of duties or failure to act
which materially and adversely affects the business or affairs of
the Company or any subsidiary thereof; or
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(iii)
the Employee’s commission of an act involving embezzlement or
fraud or conviction for any felony.
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“
Involuntary Termination ” means a termination caused
by death or total disability, or by
retirement.
“
Termination of Association ” shall mean a Termination
for Exceptional Cause and/or a termination by the Company
attributable to a material breath by the Optionee of an agreement
with the Company or a subsidiary thereof. The Board of Directors of
the Company shall have the power to determine what constitutes a
Termination of Association and the date upon which such Termination
of Association occurs. Any such determination shall be final,
conclusive and binding upon the
Optionee.
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(c)
In the event of the dissolution or liquidation of the Company, or
reorganization, merger or consolidation in which the Company is not
the surviving company, a sale of all or substantially all of the
assets of the Company to another person or entity, or a
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transaction in which all of the
stockholders of the Company exchange their Common Stock for cash
and/or securities, the provisions of Section 10 of the 1991 Plan
(or similar successor provisions thereof) shall
apply.
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5.
Procedure for Exercise . (a) The Option may be exercised, in
whole or part (for the purchase of whole shares only), by delivery
of a written notice (the “Notice”) from the Optionee to
the Secretary of the Company, which Notice shall:
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(i)
state that the Optionee elects to exercise the Option;
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(ii)
state the number of shares with respect to which the Optionee is
exercising the Option (the “Optioned
Shares”);
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(iii)
state the method of payment for the Optioned Shares pursuant to
Section 5(b);
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(iv)
in the event that the Option shall be exercised by any person other
than the Optionee pursuant to Section 4(a)(ii), include appropriate
proof of the right of such person to exercise the
option;
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(v)
state the date upon which the Optionee desires to consummate the
purchase of the Optioned Shares (which date must be prior to the
termination of the Option and within 30 days of the date of
delivery of the Notice); and
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(vi)
include any representation of the Optionee required pursuant to
Section 8(b) hereof.
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(b)
Payment of the Option Price for the Optioned Shares shall be made
in cash or by personal or certified check.
(c)
The Company shall be entitled to require as a condition of delivery
of the Optioned Shares that the Optionee remit or, in appropriate
cases, agree to remit when due, an amount in cash sufficient to
satisfy all current or estimated future Federal, state and local
withholding tax and employment tax requirements relating
hereto.
(d)
Within 30 days of the exercise of the Option, the Optionee shall
deliver to the Company a copy of any election filed by the Optionee
with the Internal Revenue Service under Section 83(b) of the
Code.
6.
No Rights as Stockholder; No Rights to Employment
.
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