Chronimed Inc. Incentive Stock Option Agreement with John Doe under 2001 Stock Incentive Plan

Summary

Chronimed Inc. grants John Doe the option to purchase up to 1,000 shares of company stock at $5.00 per share under its 2001 Stock Incentive Plan. The agreement sets out specific conditions and timelines for when the options become exercisable, based on share price performance and anniversaries of the agreement. The option is only exercisable while John Doe remains employed, with certain exceptions for disability or death. The agreement also limits transferability and clarifies that employment is not guaranteed by this grant.

EX-10.1 3 c71940exv10w1.txt FORM OF INCENTIVE STOCK OPTION AGREEMENT EXHIBIT 10.1 CHRONIMED INC. INCENTIVE STOCK OPTION AGREEMENT UNDER THE 2001 STOCK INCENTIVE PLAN (STOCK USE PERMITTED UNDER CERTAIN CONDITIONS) Between: CHRONIMED Inc. (the "Company") and JOHN DOE (the "Employee"), dated __________ The Company hereby grants to the Employee an option (the "Option") under the CHRONIMED Inc. 2001 Stock Incentive Plan (the "Plan") to purchase 1,000 shares (the "Shares") of the Company's Common Stock under the following terms and conditions set forth below. The terms and conditions applicable to the Option are as follows: 1. Incentive Stock Option - The Option shall be an Incentive Stock Option, as defined in the Plan. 2. Purchase Price - The purchase price of the Shares shall be $5.00 per share, which is not less than the fair market value of the Common Stock on the date of this Agreement. 3. Period of Exercise - The Option will expire on the earlier of (i) the seventh anniversary of this Agreement, or, (ii) the date five years after the last date on which the Option fully vests under subsections (a) through (h) below (the "Expiration Date"). The Option may be exercised only while the Employee is actively employed by the Company (or a Subsidiary Corporation or Parent Corporation, if any, of the Company) and as provided in Section 6, dealing with termination of employment. Notwithstanding anything any other provision under this Agreement or the Plan, this Option may not be exercised prior to the six month anniversary of this Agreement. The Employee may exercise the Option in the amounts and in accordance with the conditions set forth below: (a) If for five days during any consecutive 30-day period ending on or before the first anniversary of this Agreement, the Fair Market Value of the Shares has been equal to or greater than $6.00 per share (the "20% Acceleration Trigger") then, on the first day following the 20% Acceleration Trigger, this Option shall become exercisable as to 200 Shares. (b) If on the first anniversary of this Agreement, the 20% Acceleration Trigger has not occurred, this Option shall become exercisable as to 200 Shares. (c) If for five days during any consecutive 30-day period ending on or before the third anniversary of this Agreement, the Fair Market Value of the Shares has been equal to or greater than $8.00 per share (the "60% Acceleration Trigger") then, on the first day following the 60% Acceleration Trigger, this Option shall become exercisable for up to 600 Shares, inclusive of any previously exercisable Options. 1 (d) If on the second anniversary of this Agreement, the 60% Acceleration Trigger has not occurred, this Option shall become exercisable for up to 400 Shares, inclusive of previously exercisable Options. (e) If on the third anniversary of this Agreement, the 60% Acceleration Trigger has not occurred, this Option shall become exercisable for up to 600 Shares, inclusive of previously exercisable Options. (f) If for five days during any consecutive 30-day period ending on or before the fifth anniversary of this Agreement, the Fair Market Value of the Shares has been equal to or greater than $10.00 per share (the "100% Acceleration Trigger") then, on the first day following the 100% Acceleration Trigger, this Option shall become exercisable as to 1,000 Shares. (g) If on the fourth anniversary of this Agreement, the 100% Acceleration Trigger has not occurred, this Option shall become exercisable for up to 800 Shares, inclusive of previously exercisable Options. (h) If on the fifth anniversary of this Agreement, the 100% Acceleration Trigger has not occurred, this Option shall become exercisable for up to 1,000 Shares. 4. $100,000 Limitation - Notwithstanding anything to the contrary contained herein, if the total Fair Market Value (determined as of the date of grant of an option) of shares of stock with respect to which this Option and any other incentive stock options granted after December 31, 1995 by the Company (or any Subsidiary Corporations or Parent Corporations) becomes exercisable for the first time during any calendar year exceeds $100,000, such option(s) shall be treated as a Nonstatutory Option. The preceding sentence shall be applied by taking options into account in the order in which they were granted. 5. Transferability - This Option is not transferable except as permitted under the Plan, or by will or the laws of descent and distribution, and may be exercised during the lifetime of the Employee only by him. 6. Termination of Employment - In the event that employment of the Employee with the Company and any Subsidiary Corporations of the Company is terminated, the Option may be exercised (only to the extent exercisable at the date of termination of employment) by the Employee within three months after the date of termination; provided, however, that: (a) If the Employee's employment is terminated because employee is disabled within the meaning of Internal Revenue Code ss. 422, the Employee shall have one year rather than three months to exercise the Option (only to the extent exercisable at the date of termination of employment). (b) If the Employee dies, the Option may be exercised (only to the extent exercisable by the Employee at the date of death) by Employee's legal representative or by a person who acquired the right to exercise such option by bequest or inheritance or by reason of the death of the Employee, but the Option must be exercised within one year after the date of the Employee's death. (c) If the Employee's employment is terminated for "cause" (as defined in this Section 6), this Option shall terminate immediately. The term "cause" as used in this Section 6, means: (i) Employee's conviction of a felony which would materially damage the reputation of the Company, (ii) a material misappropriation by Employee of the Company's property or other material acts of dishonesty by Employee against the Company or (iii) Employee's gross negligence or willful misconduct in the performance of Employee's duties, which has a material adverse effect on the Company. (d) Notwithstanding the foregoing, in no event (including disability or death of the Employee) may this Option be exercised after the Expiration Date. 2 7. No Guarantee of Employment - This Agreement shall in no way restrict the right of the Company or any Subsidiary Corporation to terminate Employee's employment at any time. 8. Investment Representation - The Company will require an investment representation from Employee, a restrictive legend on certificates issued for the Shares and a stop order with the Company's transfer agent if a registration statement under applicable securities laws is not in effect with respect to the Shares issued at the time Employee exercises the Option. 9. Method of Exercise; Use of Common Stock - The Option may be exercised, subject to the terms and conditions of this Agreement, by written notice to the Company. The notice shall be in the form attached to this Agreement and will be accompanied by payment (in such form as the Company may specify) of the full purchase price of the Shares to be issued, and in the event of an exercise under the terms of paragraph 6(b) hereof, appropriate proof of the right to exercise the Option. The Company will issue and deliver certificates representing the number of Shares purchased under the Option, registered in the name of the Employee (or other purchaser under paragraph 6(b) hereof) as soon as practicable after receipt of the notice. When exercising this Option Employee may make payment either in money or by tendering unencumbered shares of the Common Stock owned by the Employee, or by a combination of the two; provided, however, that (a) shares of the Common Stock may be utilized only if, at the time of exercise, the Common Stock is publicly traded, either on a stock exchange or nationally or locally over the counter, and (b) the right to pay in the form of the Common Stock can be utilized only twice in any calendar year. Where shares of Common Stock are employed to pay all or part of the exercise price, the shares of said Common Stock shall be valued at their Fair Market Value at the time of payment. 10. Withholding - In any case where withholding is required or advisable under federal, state or local law in connection with any exercise by Employee hereunder, the Company is authorized to withhold appropriate amounts from amounts payable to Employee, or may require Employee to remit to the Company an amount equal to such appropriate amounts. 11. Adjustment Event - The terms of this Agreement are subject to modification upon the occurrence of certain events as described in Section 8.2 of the Plan. 12. Incorporation of Plan - This Agreement is made pursuant to the provisions of the Plan, which Plan is incorporated by reference herein. Terms used herein shall have the meaning employed in the Plan, unless the context clearly requires otherwise. In the event of a conflict between the provisions of the Plan and the provisions of this Agreement, the provisions of the Plan shall govern. CHRONIMED INC.: By ________________________________ Chairman and Chief Executive Officer EMPLOYEE: - ---------------------------------- 3 CHRONIMED INC. NOTICE OF EXERCISE OF INCENTIVE STOCK OPTION ISSUED UNDER THE 2001 STOCK INCENTIVE PLAN To: CHRONIMED INC. 10900 Red Circle Drive Minnetonka, MN 55343 I hereby exercise my Option dated _______________ to purchase __________ shares of Common Stock of the Company at the option exercise price of $_________ per share. Enclosed is a certified or cashier's check in the total amount of $_________, or payment in such other form as the Company has specified. I request that my shares be issued to me as follows: - -------------------------------------------------------------------------------- (Print your name in the form in which you wish to have the shares registered) - -------------------------------------------------------------------------------- (Social Security Number) - -------------------------------------------------------------------------------- (Street and Number) - -------------------------------------------------------------------------------- (City) (State) (Zip Code) Dated: _______________, 20___. Signature: ----------------------------- Printed Name: ------------------------- 4