Exhibit 10.1
Form of Stock Appreciation Rights Agreement under the Amended and Restated 1996
Equity Incentive Plan.
TRIPATH IMAGING, INC.
AMENDED AND RESTATED
1996 EQUITY INCENTIVE PLAN
Stock Appreciation Rights Agreement
     TriPath Imaging, Inc. (the “Company”) hereby grants to you (the “Grantee”)
the following Stock Appreciation Rights (the “SARs”):
Name of Grantee:
SARs Subject to this Grant:
Grant Date:
Exercisability Schedule and Exercise Price:

  •   _________ SARs shall become exercisable on December 31, 20___, with an
Exercise Price equal to $  per share;     •   _________ SARs shall become
exercisable on ____________, 20___, with an Exercise Price equal to $  per
share;     •   _________ SARs shall become exercisable on ____________, 20___,
with an Exercise Price equal to $  per share; and     •   _________ SARs shall
become exercisable on ____________, 20___, with an Exercise Price equal to
$  per share;

Expiration Date: The date ten years after the Grant Date.
By your signature and the signature of the Company’s representative below, you
and the Company agree that this Grant is governed by the terms of the Company’s
Amended and Restated 1996 Equity Incentive Plan (the “Plan”) and this Stock
Appreciation Rights Agreement (this “Agreement”), which includes the
incorporated terms and conditions attached to and made a part of this Agreement.

         
GRANTEE:
  TriPath Imaging, Inc.
 
       
 
  By:    
 
       
Print Name ___________________________________
      Print Name: _____________________________
Address: _____________________________________
      Title: ___________________________________
_____________________________________________
       

 

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TriPath Imaging, Inc.
Stock Appreciation Rights Agreement
Under the Amended and Restated 1996 Equity Incentive Plan
     THIS STOCK APPRECIATION RIGHTS AGREEMENT (the “Agreement”) is made as of
this ______ day of ____________, 20___ by and between TriPath Imaging, Inc., a
Delaware Corporation (hereinafter referred to as the “Company”), and
____________ (hereinafter referred to as “Grantee”).
     1.  Grant of Rights.
          (a) The Company hereby grants to Grantee the number of stock
appreciation rights (“SARs,” and each individually a “SAR”), subject to the
terms and conditions of the Plan, as stated on the cover page to this Agreement.
          (b) Subject to the provisions of paragraph 2 hereof, each SAR shall
entitle Grantee to receive from the Company, upon exercise of such SAR, shares
of common stock of the Company (“Common Stock”) with an aggregate Fair Market
Value (defined below) equal to the amount by which the Fair Market Value of a
share of Common Stock on the Exercise Date (defined below) exceeds the
Applicable Exercise Price (defined below).
          (c) The “Applicable Exercise Price” means the exercise price stated on
the cover page to this Agreement that is applicable to the SAR being exercised.
          (d) The “Fair Market Value” of a share of Common Stock as of a given
date shall be (i) the closing price of a share of Common Stock on the last
trading date prior to such date on the principal exchange or automated quotation
system on which shares of Common Stock are then trading, if any, or if shares
were not traded on such date, then on the closest preceding date on which a
trade occurred or (ii) if the Common Stock is not publicly traded, the Fair
Market Value of a share of Common Stock as determined by the Board of Directors
in good faith, in compliance with applicable, statutory and regulatory
guidelines.
     2.  Terms and Limitations; Method of Exercise.
          (a) The SARs granted hereunder shall become exercisable in accordance
with the schedule on the cover page to this Agreement. After the SARs become
exercisable, subject to the provisions of paragraph 5 hereof, the SARs shall
continue to be exercisable for the duration of the Exercise Period (defined
below).

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          (b) Grantee may exercise his SARs in whole or in part at any time
during the Exercise Period by providing written notification (the “Notice”) to
the Company in the form of Attachment A of such exercise, which Notice shall set
forth the number of SARs Grantee elects to exercise and the Applicable Exercise
Price(s). Such exercise shall be effective as of the close of business on the
date the Notice is received by the Company or as of the close of business on the
next Business Day if the date the Notice is received is not a Business Day (the
“Exercise Date”). For the purposes of this Agreement, a “Business Day” shall be
any day on which the New York Stock Exchange is open for trading.
          (c) Subject to the provisions of paragraph 4 hereof, all SARs granted
to Grantee hereunder must be exercised beginning on the date the SARs become
exercisable and prior to the expiration of the SARs (the “Exercise Period”). Any
SAR outstanding at the end of the Exercise Period shall be terminated.
     3.  Payment Upon Exercise of SARs.
          (a) Upon Grantee’s exercise of some or all of the SARs granted
hereunder, the Company shall promptly deliver to Grantee, in certificated or
uncertificated form, the aggregate number of shares of Common Stock necessary to
settle his or her exercise of SARs under paragraph 1(b) hereof.
          (b) No fraction of a share of Common Stock shall be deliverable upon
exercise of a SAR. The Company shall not pay cash or any other consideration in
lieu of fractional shares.
          (c) Grantee shall pay to the Company, or make provision satisfactory
to the Company for payment of, any taxes required by law to be withheld with
respect to the exercise of the SARs. The Committee may, in its discretion,
require any other Federal or state taxes imposed on the issuance of the shares
upon such exercise to be paid by Grantee. In the Committee’s discretion, such
tax obligations may be paid in whole or in part in shares of Common Stock,
including shares retained from the exercise of SARs, valued at their Fair Market
Value on the Exercise Date. The Company and its Affiliates may, to the extent
permitted by law, deduct any such tax obligations from any payment of any kind
otherwise due to Grantee.
          (d) It shall be a condition to Grantee’s right to exercise the SARs
hereunder that the Company may, in its discretion, require (a) that the Common
Stock reserved for issue upon the exercise of the SARs shall have been duly
listed, upon official notice of issuance, upon any national securities exchange
or automated quotation system on which the Common Stock be listed or quoted,
(b) that either (i) a registration statement under the Securities Act of 1933,
as amended, with respect to said shares shall be in effect, or (ii) in the
opinion of counsel for the Company the proposed purchase shall be exempt from
registration under said Act and Grantee shall have made such undertakings and

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agreements with the Company as the Company may reasonably require, and (c) that
such other steps, if any, as counsel for the Company shall deem necessary to
comply with any law, rule or regulation applicable to the issue of such shares
by the Company shall have been taken by the Company or Grantee, or both. Grantee
understands that the Company is under no obligation to register for resale the
Common Stock issued upon exercise of a SAR, and the certificates representing
Common Stock issued upon exercise of SARs may contain such legends as counsel
for the Company shall deem necessary to comply with any applicable law, rule or
regulation.
     4.  Expiration of SARs. Except as otherwise extended by the Board in
accordance with Internal Revenue Code section 409A:
          (a) If Grantee’s status as an employee or consultant of (i) the
Company, (ii) an Affiliate, or (iii) a corporation (or parent or subsidiary
corporation of such corporation) issuing or assuming an SAR in a transaction to
which section 424(a) of the Code applies, is terminated for cause Grantee may
exercise the rights that were available to Grantee at the time of such
termination only within 10 days from the date of termination;
          (b) If such status is terminated for reason other than for cause or by
retirement at normal retirement age, Grantee’s rights hereunder may be exercised
within three months from the date of termination.
          (c) If Grantee’s employment is terminated because of disability
(within the meaning of section 22(e)(3) of the Code), such rights may be
exercised within 12 months from the date of termination.
          (d) Upon the death of Grantee, his or her Designated Beneficiary shall
have the right, at any time within 12 months after the date of death, to
exercise in whole or in part any rights that were available to Grantee at the
time of death.
          (e) For purposes of this paragraph, if Grantee is on military leave,
approved sick leave, or other bona fide leave of absence, his or her employment
will be treated as continuing throughout the period of absence if (i) such
period does not exceed 90 days or (ii), if longer, so long as Grantee’s right to
reemployment is guaranteed either by statute or by written agreement with the
Company; otherwise, Grantee’s employment will be deemed to have terminated for
cause on the 91st day of such absence.
          (f) Notwithstanding the foregoing provisions of this paragraph 4, no
rights under this SAR may be exercised after the Expiration Date stated on the
cover page to this Agreement.

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     5.  Nature of Rights. Grantee shall have no rights as a shareholder with
respect to the SARs granted hereunder. The SARs shall be used solely as a device
for the measurement and determination of the amount to be paid to Grantee upon
their exercise. The SARs shall not constitute or be treated as property or as a
trust fund of any kind. Grantee’s rights under this Agreement are limited to the
right to receive payments in Common Stock as herein provided. No dividend
equivalents with respect to the SARs granted under this Agreement will be paid
to Grantee.
     6.  No Transfer of SARs. The SARs are not transferable by Grantee otherwise
than to the extent permitted by the Plan, and are exercisable, during Grantee’s
lifetime, only by Grantee or Grantee’s immediate transferee as permitted by the
Plan. The naming of a Designated Beneficiary does not constitute a transfer.
     7.  Amendments. The Board may at any time or times amend the Plan, the SARs
granted hereunder, or this Agreement for the purpose of satisfying the
requirements of any changes in applicable laws or regulations or for any other
purpose which at the time may be permitted by law. No termination, amendment of
the Plan, amendment of the SARs or this Agreement shall, without Grantee’s
consent, materially adversely affect Grantee’s rights under the SARs or this
Agreement. Notwithstanding the foregoing, this Agreement shall be amended as
required by Section 11(e) below to the extent required by regulatory or
statutory guidance.
     8.  Recapitalization, Mergers, Etc. As provided in the Plan, in the event
of corporate transactions affecting the Company’s outstanding Common Stock, the
number and kind of shares subject to the SARs and the exercise price hereunder
shall be equitably adjusted. If such transaction involves a consolidation or
merger of the Company with another entity, the sale, lease or exchange of all or
substantially all of the assets of the Company or a reorganization or
liquidation of the Company, then in lieu of the foregoing, the Committee shall
upon written notice to Grantee provide that the SARs shall terminate on a date
not less than 20 days after the date of such notice unless theretofore
exercised. In connection with such notice, the Committee shall accelerate or
waive any deferred exercise period.
     9.  Rights as Employee. Grantee (if an employee) is an employee-at-will
unless, and only to the extent, provided in a separate written agreement
executed by the chief executive officer of the Company or his duly authorized
designee, and neither the Plan nor the grant of this SAR shall be deemed to give
Grantee the right to continued employment or to limit the right of the Company
to discharge Grantee at any time.
     10. Plan Incorporated by Reference. The SARs are issued pursuant to the
terms of the Plan and may be amended as provided in the Plan. Capitalized terms
used and not otherwise defined in this certificate have the meanings given to
them in the Plan. This Agreement does not set forth all of the terms and

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conditions of the Plan, which are incorporated herein by reference. The
Committee administers the Plan and its determinations regarding the operation of
the Plan are final and binding. Copies of the Plan may be obtained upon written
request without charge from the Corporate Counsel of the Company.
     11. Miscellaneous.
          (a) Severability; Governing Law. If any provisions of this Agreement
shall be determined to be illegal or unenforceable by any court of law, the
remaining provisions shall be severable and enforceable in accordance with their
terms. This Agreement shall be governed by, and construed in accordance with,
the internal laws of Delaware without giving effect to the principles of the
conflicts of laws thereof.
          (b) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and their respective heirs, executors,
administrators, successors and permitted assigns.
          (c) Notices. All notices required or permitted hereunder shall be in
writing and be effective upon personal delivery, upon deposit with the United
States Post Office, by registered or certified mail, postage prepaid, or upon
deposit with a recognized express overnight courier service, addressed, if to
the Company, to its principal executive office at the time, Attention:
President, and if to Grantee, to the address shown beneath his or her signature
on the signature page of this Agreement, or at such other address or addresses
as either party shall designate to the other in accordance with this
Section 11(c).
          (d) Waivers. Any provision contained in this Agreement may be waived,
either generally or in any particular instance, by the Board or by Grantee, but
no such waiver by the Board shall operate to the detriment of Grantee without
Grantee’s consent.
          (e) Statutory Requirements and Subsequent Amendment. This Agreement
and the grant of any SAR hereunder is intended to be exempt from the
requirements of the American Jobs Creation Act, specifically with respect to the
definition of deferred compensation and the provisions of section 409A of the
Code. To the extent required by subsequent guidance, whether statutory or
regulatory, the Company and Grantee agree that any SAR granted hereunder may be
modified, rescinded or substituted by the Company with an award of comparable
economic value as required to maintain the exemption from the provisions of
section 409A of the Code.
          (f) Administration. The Committee shall have full authority and
discretion to decide all matters relating to the administration and
interpretation of this Agreement. The Committee shall have full power and
authority to pass and decide upon cases in conformity with the objectives of
this Agreement under such rules as the Board of the Company may establish. Any
decision made or action taken by the Company, the Board, or the Committee
arising out of, or in connection with, the administration, interpretation, and
effect of this Agreement

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shall be at their absolute discretion and will be conclusive and binding on all
parties. No member of the Board, the Committee, or employee of the Company shall
be liable for any act or action hereunder, whether of omission or commission, by
the recipient or by any agent to whom duties in connection with the
administration of this Agreement have been delegated in accordance with the
provision of this Agreement.

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Attachment A
Notice of Exercise of Stock Appreciation Rights
(To be completed and signed only on exercise of SARs)
     I hereby exercise stock appreciation rights (“SARs”) granted by TriPath
Imaging, Inc. (the “Company”) to me on ____________, subject to all the terms
and provisions thereof as contained in the Stock Appreciation Rights Agreement
of the same date signed by me concerning such SARs (the “Agreement”) and in the
Company’s Amended and Restated 1996 Equity Incentive Plan referred to therein
(the “Plan”), and notify you of my desire, pursuant to the Grant, to exercise
the number of SARs with the exercise prices set forth below:
     ____________ SARs with an Exercise Price of $______   per share
     ____________ SARs with an Exercise Price of $  ______ per share (if
applicable)
     ____________ SARs with an Exercise Price of $  ______ per share (if
applicable)
     ____________ SARs with an Exercise Price of $  ______ per share (if
applicable)
     I understand that all taxes relating to the exercise of these SARs are my
responsibility alone, and have sought advice from my tax advisor as I determined
appropriate.
     I hereby confirm to the Company each of my representations, covenants and
agreements in the Agreement.
     All capitalized terms in this Notice of Stock Appreciation Rights Exercise
have the meanings set forth in the Agreement or in the Plan, as the case may be.

     
DATED: __________________
   
 
   
 
  Signature:
 
   
 
   
 
  Name: _________________________________

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