Exhibit 10.8

 

Execution Version

 

RTI SURGICAL HOLDINGS, INC.

 

STAND ALONE NONQUALIFIED STOCK OPTION AGREEMENT

FOR

TERRY M. RICH

1.Grant of Option.  RTI SURGICAL HOLDINGS, INC., a Delaware corporation (the
“Company”) hereby grants, as of November 29, 2019 (“Date of Grant”), as an
inducement to accept an offer of employment, to Terry M. Rich (the “Optionee”)
an option (the “Option”) to purchase up to 188,397 shares of the Company’s
common stock (the “Shares”) (rounded to the nearest whole number), which is
equal to (x) $262,500 divided by (y) the volume weighted average price per share
of the Company’s common stock on the Nasdaq Stock Market for thirty days ending
on the closing of the market on the Date of Grant, as set forth on Schedule 1
attached to this Agreement (the “Exercise Price”) multiplied by (z) 1.5.  The
Option shall be subject to the terms and conditions set forth herein and the
Employment Agreement between the Company and the Optionee, dated November 25,
2019 (the “Employment Agreement”).  The Option is a non-qualified stock option
and not an incentive stock option under Section 422 of the Internal
Revenue  Code of 1986, as amended (the “Code”).

2.Definitions.  Unless otherwise provided herein, terms used herein that are
defined in the Employment Agreement and not defined herein shall have the
meanings attributed thereto in the Employment Agreement.

3.Exercise Schedule.  Except as otherwise provided in Sections 6 or 9 of this
Agreement, or in the Employment Agreement, the Option is exercisable in
installments as provided below, which shall be cumulative.  To the extent that
the Option has become exercisable with respect to a number of Shares as provided
below, the Option may thereafter be exercised by the Optionee, in whole or in
part, at any time or from time to time prior to the expiration of the Option as
provided herein.  The following table indicates each date (the “Vesting Date”)
upon which the Optionee shall be entitled to exercise the Option with respect to
the number of Shares granted as indicated beside the date, provided that the
Continuous Service of the Optionee continues through and on the applicable
Vesting Date:

 

Number of Shares

 

Vesting Date

0

 

 

Any date prior to the first anniversary of the Grant Date.

1/3 of the Restricted Stock

 

 

First anniversary of the Date of Grant.

1/8 of the Restricted Stock

 

Quarterly beginning on the fifteenth month following the Date of Grant.

 

Except as otherwise specifically provided herein or in the Employment Agreement,
there shall be no proportionate or partial vesting in the periods prior to each
Vesting Date, and all vesting shall occur only on the appropriate Vesting
Date.  Upon the termination of the Optionee’s Continuous Service, any unvested
portion of the Option shall terminate and be null and void.

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4.Method of Exercise.  The vested portion of this Option shall be exercisable in
whole or in part in accordance with the exercise schedule set forth in Section 3
hereof by written notice which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder’s investment intent with
respect to such Shares as may be required by the Company pursuant to the
provisions of the Employment Agreement.  Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Secretary of the Company.  The written notice shall be accompanied by payment of
the Exercise Price.  This Option shall be deemed to be exercised after both (a)
receipt by the Company of such written notice accompanied by the Exercise Price
and (b) arrangements that are satisfactory to the Compensation Committee of the
Board of Directors of the Company (the “Committee”) in its sole discretion have
been made for Optionee’s payment to the Company of the amount, if any, that is
necessary to be withheld in accordance with applicable Federal or state
withholding requirements.  No Shares shall be issued pursuant to the Option
unless and until such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares then may be traded.

5.Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:  (a) cash;
(b) check; or (c) to the extent permitted by the Committee, with Shares owned by
the Optionee, or the withholding of Shares that otherwise would be delivered to
the Optionee as a result of the exercise of the Option; or (d) such other
consideration or in such other manner as may be determined by the Committee in
its absolute discretion.

6.Termination of Option.  

(a)General.  Any unexercised portion of the Option shall automatically and
without notice terminate and become null and void at the time of the earliest to
occur of the following:

(i)three (3) months after the date on which the Optionee’s service with the
Company is terminated other than by reason of (A) by the Company or a
Company-related entity for Cause (as defined in the Employment Agreement ), (B)
a Disability of the Optionee as determined by a medical doctor satisfactory to
the Committee, (C) the death of the Optionee, (D) Optionee’s Retirement (as
defined below) or (E) by the Optionee without Good Reason before December 1,
2022 (as defined in the Employment Agreement);

(ii)immediately upon the termination of the Optionee’s service with the Company
(A) by the Company or a Company-related entity for Cause or (B) by the Optionee
without Good Reason before December 1, 2022;

(iii)twelve (12) months after the date on which the Optionee’s service with the
Company and/or any Company-related entity is terminated by the Optionee on
account of his Retirement (as defined below);

(iv)twelve months after the date on which the Optionee’s service with the
Company and/or any Company-related entity is terminated by reason of a
Disability as determined by a medical doctor satisfactory to the Committee;

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(v)twelve months after the date of termination of the Optionee’s service with
the Company and/or any Company-related entity by reason of the death of the
Optionee; or

(vi)the tenth (10th) anniversary of the date as of which the Option is granted.

For purposes of this Agreement, “Retirement” shall mean the date on which the
Optionee voluntarily terminates his service with the Company and the
Company-related entities on or after both (A) attaining age sixty (60) and (B)
completing at least five (5) years of service with the Company and/or its
Company-related entitites.

(b)Cancellation.  To the extent not previously exercised, (i) the Option shall
terminate immediately in the event of (A) the liquidation or dissolution of the
Company, or (B) any reorganization, merger, consolidation or other form of
corporate transaction in which the Company does not survive or the Shares are
exchanged for or converted into securities issued by another entity, or an
affiliate of such successor or acquiring entity, unless the successor or
acquiring entity, or an affiliate thereof, assumes the Option or substitutes an
equivalent option or right, and (ii) the Committee in its sole discretion may by
written notice (“Cancellation Notice”) cancel, effective upon the consummation
of any transaction that constitutes a Change in Control, the Option (or portion
thereof) that remains unexercised on such date.  The Committee shall give
written notice of any proposed transaction referred to in this Section 6(b) a
reasonable period of time prior to the closing date for such transaction (which
notice may be given either before or after approval of such transaction), in
order that the Optionee may have a reasonable period of time prior to the
closing date of such transaction within which to exercise the Option if and to
the extent that it then is exercisable (including any portion of the Option that
may become exercisable upon the closing date of such transaction).  The Optionee
may condition his exercise of the Option upon the consummation of a transaction
referred to in this Section 6(b).

7.Transferability.  Unless otherwise determined by the Committee, the Option
granted hereby is not transferable other than by will or under the applicable
laws of descent and distribution, and during the lifetime of the Optionee the
Option shall be exercisable only by the Optionee, or the Optionee’s guardian or
legal representative.  In addition, the Option shall not be assigned,
negotiated, pledged or hypothecated in any way (whether by operation of law or
otherwise), and the Option shall not be subject to execution, attachment or
similar process.  Upon any attempt to transfer, assign, negotiate, pledge or
hypothecate the Option, or in the event of any levy upon the Option by reason of
any execution, attachment or similar process contrary to the provisions hereof,
the Option shall immediately become null and void.  The terms of this Option
shall be binding upon the executors, administrators, heirs, successors and
assigns of the Optionee.  

8.No Rights of Stockholders.  Neither the Optionee nor any personal
representative (or beneficiary) shall be, or shall have any of the rights and
privileges of, a stockholder of the Company with respect to any Shares
purchasable or issuable upon the exercise of the Option, in whole or in part,
prior to the date on which the Shares are issued.

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9.Acceleration of Exercisability of Option.  

(a)Acceleration Upon Certain Terminations or Cancellations of Option.  This
Option shall become immediately fully exercisable in the event that, prior to
the termination of the Option pursuant to Section 6 hereof, (i) the Option is
terminated pursuant to Section 6(b)(i) hereof, or (ii) the Company exercises its
discretion to provide a cancellation notice with respect to the Option pursuant
to Section 6(b)(ii) hereof.

Additionally, if the Optionee is terminated by the Company without Cause, or the
Optionee terminates his employment for Good Reason prior to December 1, 2022,
this Option shall become immediately fully exercisable.

 

(b)Acceleration Upon Change in Control.  This Option shall become immediately
fully exercisable in the event that, prior to the termination of the Option
pursuant to Section 6 hereof, and during the Optionee’s service with the Company
and/or a Company-related entity, there is a Change in Control.

(c)Exception to Acceleration Upon Change in Control.  Notwithstanding the
foregoing, if in the event of a Change in Control the successor company assumes
or substitutes for the Option, the vesting of the Option shall not be
accelerated as described in Section 9(b).  For the purposes of this paragraph,
the Option shall be considered assumed or substituted for if following the
Change in Control the Option or substituted option confers the right to
purchase, for each Share subject to the Option immediately prior to the Change
in Control, on substantially the same vesting and other terms and conditions as
were applicable to the Option immediately prior to the Change in Control, the
consideration (whether stock, cash or other securities or property) received in
the transaction constituting a Change in Control by holders of Shares for each
Share held on the effective date of such transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares); provided, however, that if
such consideration received in the transaction constituting a Change in Control
is not solely common stock of the successor company or its parent or subsidiary,
the Committee may, with the consent of the successor company, or its parent or
subsidiary, provide that the consideration to be received upon the exercise or
vesting of the Option will be solely common stock of the successor company or
its parent or subsidiary substantially equal in fair market value to the per
share consideration received by holders of Shares in the transaction
constituting a Change in Control.  The determination of such substantial
equality of value of consideration shall be made by the Committee in its sole
discretion and its determination shall be conclusive and binding.

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10.Clawback.

(a)The Company may:  (x) cause the cancellation of the Option, (y) require
reimbursement with respect to the Option, and (z) effect any other right of
recoupment of equity or other compensation provided under this Agreement or
otherwise in accordance with any Company policies generally applicable to the
Company’s officers and/or directors that currently exist or that may from time
to time be adopted or modified in the future by the Company to the extent
required to comply with applicable law (each, a “Clawback Policy”), provided
that the following conditions are satisfied: (1) there is an accounting
restatement of the Company’s financial statements or results; and (2) the
restatement results from a noncompliance by the Company with any requirements
under or related to the federal securities laws that is material, injurious to
the Company or was the result of actions with bad intent.  In such an event, the
claw back will be in an amount of up to the total economic gain from any
stock-based grants within the five-year period preceding the restatement.  By
accepting the Option, the Optionee agrees to be bound to any existing or future
Clawback Policy adopted by the Company, or any amendments that may from time to
time be made to the Clawback Policy in the future by the Company, as required to
comply with applicable laws or stock exchange requirements, and is further
agreeing that all of the Optionee’s equity awards may be unilaterally amended by
the Company, without the Optionee’s consent, to the extent that the Company in
its discretion determines to be necessary or appropriate to comply with any
Clawback Policy to the extent required to comply with applicable laws or stock
exchange requirements.  

(b)If the Optionee, without the consent of the Company, while employed by or
providing services to the Company or after termination of such employment or
service:  (i) violates a non-competition, non-solicitation or non-disclosure
covenant or agreement or (ii) violates the Company’s Corporate Governance
Guidelines, Code of Conduct and Ethics, Code of Ethics for the Chief Executive
Officer and Senior Financial Officer or any other corporate governance materials
specified by the SEC or exchange on which common stock of the Company is listed,
then, if, but only if, the violation set forth in (i) or (ii) above is both
material and materially injurious to the Company:  (1) any outstanding, unvested
or vested (but only if vesting occurs within nine months of date of the
violation), unearned or earned (but only if earned within nine months of the
date of the violation) portion of the Option may, at the Committee’s discretion,
be canceled and (2) the Committee, in its discretion, may require the Optionee
or other person to whom any payment has been made or shares or other property
have been transferred in connection with the Option to forfeit and pay over to
the Company, on demand, all or any portion of the gain (whether or not taxable)
realized upon the exercise of the Option.  For the avoidance of doubt, this
Section 10(b) clawback is only intended for material violations that are
materially injurious to the Company and that are volitional or grossly negligent
in nature.

 

11.No Right to Continued Employment.  Neither the Option nor this Agreement
shall confer upon the Optionee any right to continued employment or service with
the Company.

12.Law Governing.  This Agreement shall be governed in accordance with and
governed by the internal laws of the State of Delaware.

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13.Interpretation / Provisions of Employment Agreement Control.  This Agreement
is subject to all the terms, conditions and provisions of the Employment
Agreement.   If and to the extent that this Agreement conflicts or is
inconsistent with the terms, conditions and provisions of the Employment
Agreement, the Employment Agreement shall control, and this Agreement shall be
deemed to be modified accordingly.  The Optionee accepts the Option subject to
all of the terms and provisions of the Employment Agreement and this
Agreement.  The undersigned Optionee hereby accepts as binding, conclusive and
final all decisions or interpretations of the Committee upon any questions
arising under this Agreement and any related provisions of the Employment
Agreement, unless shown to have been made in an arbitrary and capricious manner.

14.Notices.  Any notice under this Agreement shall be in writing and shall be
deemed to have been duly given when delivered personally or when deposited in
the United States mail, registered, postage prepaid, and addressed, in the case
of the Company, to the Company’s Secretary at 520 Lake Cook Road, Suite 315,
Deerfield, Illinois 60015, or if the Company should move its principal office,
to such principal office, and, in the case of the Optionee, to the Optionee’s
last permanent address as shown on the Company’s records, subject to the right
of either party to designate some other address at any time hereafter in a
notice satisfying the requirements of this Section.

[Signature page follows]

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the 29th
day of November, 2019.

 

 

 

 

COMPANY:

 

 

 

RTI SURGICAL HOLDINGS, INC.  

 

 

By:  

 

 

 

 

Name: Camille I. Farhat

 

 

 

Title: President and Chief Executive Officer

 

The Optionee acknowledges receipt of a copy of the Employment Agreement and
represents that he has reviewed the provisions of the Employment Agreement and
this Option Agreement in their entirety, is familiar with and understands their
terms and provisions, and hereby accepts this Option subject to all of the terms
and provisions of the Employment Agreement and the Option Agreement.  The
Optionee further represents that he has had an opportunity to obtain the advice
of counsel prior to executing this Option Agreement.

 

Dated:

 

 

OPTIONEE:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Terry M. Rich

 

 

 

 

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Schedule 1

 

exercise Price

 

Closing Price Per Share

$2.09

 

 

Initials:

RTI SURGICAL HOLDINGS, INC.:_____

RECIPIENT: