Exhibit 10.22

 

ORPHAN MEDICAL, INC.
NON-INCENTIVE STOCK OPTION AGREEMENT

 

This NON-INCENTIVE STOCK OPTION AGREEMENT (the “Agreement”) is made this
              day of               ,              , by and between Orphan
Medical, Inc., a Delaware corporation (the “Company”) and              , an
individual resident of               (“Employee”).

 

1.                                       Grant of Option.  The Company hereby
grants Employee the option (the “Option”) to purchase all or any part of an
aggregate of               shares (the “Shares”) of Common Stock of the Company
at the exercise price of $              per share according to the terms and
conditions set forth in this Agreement and in the Orphan Medical, Inc. 2004
Stock Incentive Plan (the “Plan”).  The Option will not be treated as an
incentive stock option within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”).  The Option is issued under the Plan and
is subject to its terms and conditions.  A copy of the Plan will be furnished
upon request of Employee.

 

The Option shall terminate at the close of business ten years from the date
hereof.

 

2.                                       Vesting of Option Rights.

 

(A)                                  EXCEPT AS OTHERWISE PROVIDED IN THIS
AGREEMENT, THE OPTION MAY BE EXERCISED BY EMPLOYEE IN ACCORDANCE WITH THE
FOLLOWING SCHEDULE:

 

On or after each of
the following dates

 

Percent of Shares
with respect to which
the Option is exercisable

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(B)                                 DURING THE LIFETIME OF EMPLOYEE, THE OPTION
SHALL BE EXERCISABLE ONLY BY EMPLOYEE AND SHALL NOT BE ASSIGNABLE OR
TRANSFERABLE BY EMPLOYEE, OTHER THAN BY WILL OR THE LAWS OF DESCENT AND
DISTRIBUTION.  NOTWITHSTANDING THE FOREGOING, THE OPTION MAY BE EXERCISED AS TO
100% OF THE SHARES OF COMMON STOCK OF THE COMPANY FOR WHICH THE OPTION WAS
GRANTED ON THE DATE OF A “CHANGE OF CONTROL”, AS HEREINAFTER DEFINED.  A “CHANGE
OF CONTROL” SHALL MEAN ANY OF THE FOLLOWING: (I) A PUBLIC ANNOUNCEMENT THAT ANY
PERSON HAS ACQUIRED OR HAS THE RIGHT TO ACQUIRE BENEFICIAL OWNERSHIP OF 51% OR
MORE OF THE THEN OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY AND, FOR THIS
PURPOSE, THE TERMS “PERSON” AND “BENEFICIAL OWNERSHIP” SHALL HAVE THE MEANINGS
PROVIDED IN SECTION 13(D) OF THE SECURITIES EXCHANGE ACT OF 1934 OR RELATED
RULES PROMULGATED BY THE SECURITIES AND EXCHANGE COMMISSION; (II) THE
COMMENCEMENT OF OR PUBLIC ANNOUNCEMENT OF AN INTENTION TO MAKE A TENDER OR
EXCHANGE OFFER FOR 51% OR MORE OF THE THEN

 

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outstanding shares of the common stock of the Company; (iii) a sale of all or
substantially all of the assets of the Company; or (iv) The Board of Directors
of the Company, in its sole and absolute discretion, determines that there has
been a sufficient change in the stock ownership of the Company to constitute a
change in control of the Company.

 

3.                                       Exercise of Option after Death or
Termination of Employment.  The Option shall terminate and may no longer be
exercised if Employee ceases to be employed by the Company or its affiliates,
except that:

 

(A)                                  IF EMPLOYEE’S EMPLOYMENT SHALL BE
TERMINATED FOR ANY REASON, VOLUNTARY OR INVOLUNTARY, OTHER THAN FOR “CAUSE” (AS
DEFINED IN SECTION 3(E)) OR EMPLOYEE’S DEATH OR DISABILITY (WITHIN THE MEANING
OF SECTION 22(E)(3) OF THE CODE), EMPLOYEE MAY AT ANY TIME WITHIN A PERIOD OF
THREE (3) MONTHS AFTER SUCH TERMINATION EXERCISE THE OPTION TO THE EXTENT THE
OPTION WAS EXERCISABLE BY EMPLOYEE ON THE DATE OF THE TERMINATION OF EMPLOYEE’S
EMPLOYMENT.

 

(B)                                 IF EMPLOYEE’S EMPLOYMENT IS TERMINATED FOR
CAUSE, THE OPTION SHALL BE TERMINATED AS OF THE DATE OF THE ACT GIVING RISE TO
SUCH TERMINATION.

 

(C)                                  IF EMPLOYEE SHALL DIE WHILE THE OPTION IS
STILL EXERCISABLE ACCORDING TO ITS TERMS OR IF EMPLOYMENT IS TERMINATED BECAUSE
EMPLOYEE HAS BECOME DISABLED (WITHIN THE MEANING OF SECTION 22(E)(3) OF THE
CODE) WHILE IN THE EMPLOY OF THE COMPANY AND EMPLOYEE SHALL NOT HAVE FULLY
EXERCISED THE OPTION, SUCH OPTION MAY BE EXERCISED AT ANY TIME WITHIN 12 MONTHS
AFTER EMPLOYEE’S DEATH OR DATE OF TERMINATION OF EMPLOYMENT FOR DISABILITY BY
EMPLOYEE, PERSONAL REPRESENTATIVES OR ADMINISTRATORS OR GUARDIANS OF EMPLOYEE,
AS APPLICABLE OR BY ANY PERSON OR PERSONS TO WHOM THE OPTION IS TRANSFERRED BY
WILL OR THE APPLICABLE LAWS OF DESCENT AND DISTRIBUTION, TO THE EXTENT OF THE
FULL NUMBER OF SHARES EMPLOYEE WAS ENTITLED TO PURCHASE UNDER THE OPTION ON (I)
THE EARLIER OF THE DATE OF DEATH OR TERMINATION OF EMPLOYMENT OR (II) THE DATE
OF TERMINATION FOR SUCH DISABILITY, AS APPLICABLE.

 

(D)                                 NOTWITHSTANDING THE ABOVE, IN NO CASE MAY
THE OPTION BE EXERCISED TO ANY EXTENT BY ANYONE AFTER THE TERMINATION DATE OF
THE OPTION.

 

(E)                                  “CAUSE” SHALL MEAN (I) THE WILLFUL AND
CONTINUED FAILURE BY EMPLOYEE SUBSTANTIALLY TO PERFORM HIS OR HER DUTIES AND
OBLIGATIONS (OTHER THAN ANY SUCH FAILURE RESULTING FROM HIS OR HER INCAPACITY
DUE TO PHYSICAL OR MENTAL ILLNESS), (II) EMPLOYEE’S CONVICTION OR PLEA BARGAIN
OF ANY FELONY OR GROSS MISDEMEANOR INVOLVING MORAL TURPITUDE, FRAUD OR
MISAPPROPRIATION OF FUNDS OR (III) THE WILLFUL ENGAGING BY EMPLOYEE IN
MISCONDUCT WHICH CAUSES SUBSTANTIAL INJURY TO THE COMPANY OR ITS AFFILIATES, ITS
OTHER EMPLOYEES OR THE EMPLOYEES OF ITS AFFILIATES OR ITS CLIENTS OR THE CLIENTS
OF ITS AFFILIATES, WHETHER MONETARILY OR OTHERWISE.  FOR PURPOSES OF THIS
PARAGRAPH, NO ACTION OR FAILURE TO ACT ON EMPLOYEE’S PART SHALL BE CONSIDERED
“WILLFUL” UNLESS DONE OR OMITTED TO BE DONE, BY EMPLOYEE IN BAD FAITH AND
WITHOUT REASONABLE BELIEF THAT HIS OR HER ACTION OR OMISSION WAS IN THE BEST
INTERESTS OF THE COMPANY.

 

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4.                                       Method of Exercise of Option.  Subject
to the foregoing, the Option may be exercised in whole or in part from time to
time by serving written notice of exercise on the Company at its principal
office within the Option period.  The notice shall state the number of Shares as
to which the Option is being exercised and shall be accompanied by payment of
the exercise price.  Payment of the exercise price shall be made in cash
(including bank check, personal check or money order payable to the Company).

 

5.                                       Miscellaneous.

 

(A)                                  PLAN PROVISIONS CONTROL.  IN THE EVENT THAT
ANY PROVISION OF THE AGREEMENT CONFLICTS WITH OR IS INCONSISTENT IN ANY RESPECT
WITH THE TERMS OF THE PLAN, THE TERMS OF THE PLAN SHALL CONTROL.

 

(B)                                 NO RIGHTS OF STOCKHOLDERS.  NEITHER
EMPLOYEE, EMPLOYEE’S LEGAL REPRESENTATIVE NOR A PERMISSIBLE ASSIGNEE OF THIS
OPTION SHALL HAVE ANY OF THE RIGHTS AND PRIVILEGES OF A STOCKHOLDER OF THE
COMPANY WITH RESPECT TO THE SHARES, UNLESS AND UNTIL SUCH SHARES HAVE BEEN
ISSUED IN THE NAME OF EMPLOYEE, EMPLOYEE’S LEGAL REPRESENTATIVE OR PERMISSIBLE
ASSIGNEE, AS APPLICABLE.

 

(C)                                  NO RIGHT TO EMPLOYMENT.  THE GRANT OF THE
OPTION SHALL NOT BE CONSTRUED AS GIVING EMPLOYEE THE RIGHT TO BE RETAINED IN THE
EMPLOY OF, OR AS GIVING A DIRECTOR OF THE COMPANY OR AN AFFILIATE (AS DEFINED IN
THE PLAN) THE RIGHT TO CONTINUE AS A DIRECTOR OF THE COMPANY OR AN AFFILIATE
WITH, THE COMPANY OR AN AFFILIATE, NOR WILL IT AFFECT IN ANY WAY THE RIGHT OF
THE COMPANY OR AN AFFILIATE TO TERMINATE SUCH EMPLOYMENT OR POSITION AT ANY
TIME, WITH OR WITHOUT CAUSE.  IN ADDITION, THE COMPANY OR AN AFFILIATE MAY AT
ANY TIME DISMISS EMPLOYEE FROM EMPLOYMENT, OR TERMINATE THE TERM OF A DIRECTOR
OF THE COMPANY OR AN AFFILIATE, FREE FROM ANY LIABILITY OR ANY CLAIM UNDER THE
PLAN OR THE AGREEMENT.  NOTHING IN THE AGREEMENT SHALL CONFER ON ANY PERSON ANY
LEGAL OR EQUITABLE RIGHT AGAINST THE COMPANY OR ANY AFFILIATE, DIRECTLY OR
INDIRECTLY, OR GIVE RISE TO ANY CAUSE OF ACTION AT LAW OR IN EQUITY AGAINST THE
COMPANY OR AN AFFILIATE.  THE OPTION GRANTED HEREUNDER SHALL NOT FORM ANY PART
OF THE WAGES OR SALARY OF EMPLOYEE FOR PURPOSES OF SEVERANCE PAY OR TERMINATION
INDEMNITIES, IRRESPECTIVE OF THE REASON FOR TERMINATION OF EMPLOYMENT.  UNDER NO
CIRCUMSTANCES SHALL ANY PERSON CEASING TO BE AN EMPLOYEE OF THE COMPANY OR ANY
AFFILIATE BE ENTITLED TO ANY COMPENSATION FOR ANY LOSS OF ANY RIGHT OR BENEFIT
UNDER THE AGREEMENT OR PLAN WHICH SUCH EMPLOYEE MIGHT OTHERWISE HAVE ENJOYED BUT
FOR TERMINATION OF EMPLOYMENT, WHETHER SUCH COMPENSATION IS CLAIMED BY WAY OF
DAMAGES FOR WRONGFUL OR UNFAIR DISMISSAL, BREACH OF CONTRACT OR OTHERWISE.  BY
PARTICIPATING IN THE PLAN, EMPLOYEE SHALL BE DEEMED TO HAVE ACCEPTED ALL THE
CONDITIONS OF THE PLAN AND THE AGREEMENT AND THE TERMS AND CONDITIONS OF ANY
RULES AND REGULATIONS ADOPTED BY THE COMMITTEE AND SHALL BE FULLY BOUND THEREBY.

 

(D)                                 GOVERNING LAW.  THE VALIDITY, CONSTRUCTION
AND EFFECT OF THE PLAN AND THE AGREEMENT, AND ANY RULES AND REGULATIONS RELATING
TO THE PLAN AND THE AGREEMENT, SHALL BE DETERMINED IN ACCORDANCE WITH THE
INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.

 

(E)                                  SEVERABILITY.  IF ANY PROVISION OF THE
AGREEMENT IS OR BECOMES OR IS DEEMED TO BE INVALID, ILLEGAL OR UNENFORCEABLE IN
ANY JURISDICTION OR WOULD DISQUALIFY THE AGREEMENT UNDER ANY

 

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law deemed applicable by the Committee (as defined in the Plan), such provision
shall be construed or deemed amended to conform to applicable laws, or if it
cannot be so construed or deemed amended without, in the determination of the
Committee, materially altering the purpose or intent of the Plan or the
Agreement, such provision shall be stricken as to such jurisdiction or the
Agreement, and the remainder of the Agreement shall remain in full force and
effect.

 

(F)                                    NO TRUST OR FUND CREATED.  NEITHER THE
PLAN NOR THE AGREEMENT SHALL CREATE OR BE CONSTRUED TO CREATE A TRUST OR
SEPARATE FUND OF ANY KIND OR A FIDUCIARY RELATIONSHIP BETWEEN THE COMPANY OR ANY
AFFILIATE AND EMPLOYEE OR ANY OTHER PERSON.

 

(G)                                 HEADINGS.  HEADINGS ARE GIVEN TO THE
SECTIONS AND SUBSECTIONS OF THE AGREEMENT SOLELY AS A CONVENIENCE TO FACILITATE
REFERENCE.  SUCH HEADINGS SHALL NOT BE DEEMED IN ANY WAY MATERIAL OR RELEVANT TO
THE CONSTRUCTION OR INTERPRETATION OF THE AGREEMENT OR ANY PROVISION THEREOF.

 

(H)                                 CONDITIONS PRECEDENT TO ISSUANCE OF SHARES. 
SHARES SHALL NOT BE ISSUED PURSUANT TO THE EXERCISE OF THE OPTION UNLESS SUCH
EXERCISE AND THE ISSUANCE AND DELIVERY OF THE APPLICABLE SHARES PURSUANT THERETO
SHALL COMPLY WITH ALL RELEVANT PROVISIONS OF LAW, INCLUDING, WITHOUT LIMITATION,
THE SECURITIES ACT OF 1933, AS AMENDED, THE EXCHANGE ACT OF 1934, AS AMENDED,
THE RULES AND REGULATIONS PROMULGATED THEREUNDER, THE REQUIREMENTS OF ANY
APPLICABLE STOCK EXCHANGE OR THE NASDAQ NATIONAL MARKET AND THE DELAWARE GENERAL
CORPORATION LAW.  AS A CONDITION TO THE EXERCISE OF THE PURCHASE PRICE RELATING
TO THE OPTION, THE COMPANY MAY REQUIRE THAT THE PERSON EXERCISING OR PAYING THE
PURCHASE PRICE REPRESENT AND WARRANT THAT THE SHARES ARE BEING PURCHASED ONLY
FOR INVESTMENT AND WITHOUT ANY PRESENT INTENTION TO SELL OR DISTRIBUTE SUCH
SHARES IF, IN THE OPINION OF COUNSEL FOR THE COMPANY, SUCH A REPRESENTATION AND
WARRANTY IS REQUIRED BY LAW.

 

(I)                                     WITHHOLDING.  IN ORDER TO PROVIDE THE
COMPANY WITH THE OPPORTUNITY TO CLAIM THE BENEFIT OF ANY INCOME TAX DEDUCTION
WHICH MAY BE AVAILABLE TO IT UPON THE EXERCISE OF THE OPTION AND IN ORDER TO
COMPLY WITH ALL APPLICABLE FEDERAL OR STATE INCOME TAX LAWS OR REGULATIONS, THE
COMPANY MAY TAKE SUCH ACTION AS IT DEEMS APPROPRIATE TO INSURE THAT, IF
NECESSARY, ALL APPLICABLE FEDERAL OR STATE PAYROLL, WITHHOLDING, INCOME OR OTHER
TAXES ARE WITHHELD OR COLLECTED FROM EMPLOYEE.

 

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IN WITNESS WHEREOF, the Company and Employee have executed this Agreement on the
date set forth in the first paragraph.

 

 

 

ORPHAN MEDICAL, INC.

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

[EMPLOYEE]

 

 

 

 

 

 

Name:

 

 

 

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