Exhibit 10.4

 

MEDIFAST, INC.

 

2012 SHARE INCENTIVE PLAN

 

NON-QUALIFIED STOCK OPTION

 

Medifast, Inc. (the “Company”) has granted you a Non-Qualified Stock Option (the
“Option”) under the Medifast, Inc. 2012 Share Incentive Plan (the “Plan”). The
terms of the grant are set forth in the Non-Qualified Stock Option Award
Agreement provided to you (the “Agreement”). The following provides a summary of
the key terms of the grant; however, you should read the entire Agreement, along
with the terms of the Plan, to fully understand the grant.

 

SUMMARY OF NON-QUALIFIED STOCK OPTION AWARD

 

Participant: [___________________]     Date of Grant:
[                  ],[                  ]     Vesting Schedule: [________]    
Exercise Price Per Share: $[________]     Total Number of Options Granted:
 [               ]     Term/Expiration Date:   [______]
Years  ([____________],[______])

 

The above is a summary description of certain provisions of the Agreement and is
not intended to be complete. In the event any aspect of this summary conflicts
with the terms of the Agreement, the terms of the Agreement shall govern.

 

 

 

 

MEDIFAST, INC.

 

2012 SHARE INCENTIVE PLAN

 

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

 

This NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (the “Agreement”), dated as of
[_____________],[______] (the Date of Grant”), is delivered by Medifast, Inc.
(the “Company”) to [________________] (the “Participant”).

 

RECITALS

 

A.           The Medifast, Inc. 2012 Share Incentive Plan (the “Plan”) provides
for the grant of options to purchase shares of common stock of the Company. The
Company has decided to make a stock option award as an inducement for the
Participant to promote the best interests of the Company and its stockholders.

 

B.           The Plan is administered and interpreted by the Compensation
Committee of the Board of Directors of the Company (the “Board”) (or a
subcommittee thereof), or such other committee of the Board (including, without
limitation, the full Board) to which the Board has delegated power to act under
or pursuant to the provisions of the Plan (the “Committee”). The Committee may
delegate authority to one or more subcommittees as it deems appropriate. If a
subcommittee is appointed, all references in this Agreement to the “Committee”
shall be deemed to refer to the committee.

 

NOW, THEREFORE, the parties to this Agreement, intending to be legally bound
hereby, agree as follows:

 

1.          Grant of Option. Subject to the terms and conditions set forth in
this Agreement and in the Plan, the Company hereby grants to the Participant a
Non-Qualified Stock Option (the “Option”) to purchase [_____] shares of common
stock of the Company (“Shares”) at an exercise price of $[____] per Share.

 

The Option shall become vested and exercisable according to Paragraph 2 below.

 

2.          Vesting. The Option shall become vested and exercisable, according
to the following vesting schedule, if the Participant continues to be employed
by, or provide service to, the Company from the Date of Grant until the
applicable vesting date:

 

Vesting Date   # of Option Vested [                      ],[               ]  
[           ]

 

The vesting of the Option shall be cumulative, but shall not exceed 100% of the
shares subject to the Option granted above. If the foregoing schedule would
produce fractional shares, the portion of the Option that vests shall be rounded
down to the nearest whole share.

 

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3.          Term of Option.

 

(a)          The Option shall have a term of 10 years from the Date of Grant and
shall terminate at the expiration of that period, unless it is terminated at an
earlier date pursuant to the provisions of this Agreement or the Plan.

 

(b)          Unless a later termination date is provided for in a
Company-sponsored plan, policy or arrangement, or any agreement to which the
Company is a party, the Option shall automatically terminate upon the happening
of the first of the following events:

 

(i)          The expiration of the 10 year term from the date of grant;

 

(ii)         The expiration of the one (1) year period after the Participant
ceases to be employed by, or provide service to, the Company on account of the
Participant’s death or Disability; or

 

(iii)        The date on which the Participant ceases to be employed by, or
provide services to, the Company on account of a termination by the Company for
Cause. In addition, notwithstanding the prior provisions of this Paragraph 3, if
the Company determines that the Participant has engaged in conduct that
constitutes Cause at any time while the Participant is employed by, or providing
services to, the Company or after the Participant’s termination of employment or
services, the Option shall terminate as of the date on which such Cause first
occurred.

 

Notwithstanding the foregoing, in no event may the Option be exercised after the
date that is immediately before the tenth anniversary of the Date of Grant. Any
portion of the Option that is not vested and exercisable at the time the
Participant ceases to be employed by, or provide service to, the Company shall
immediately terminate.

 

(c)          For the purposes of this Agreement, the following terms shall have
the meanings set forth below:

 

(i)          “Disability” shall mean a Participant’s becoming disabled within
the meaning of the Company’s long-term disability plan applicable to the
Participant, or as otherwise determined by the Committee.

 

(ii)         “Cause” shall mean, except to the extent specified otherwise by the
Committee or as defined in any other agreement between the Participant and the
Company, a finding by the Committee that the Participant has (i) been convicted
of a felony or crime involving moral turpitude; (ii) engaged in willful and
continued negligence in the performance of the duties assigned to the
Participant by the Company, after the Participant has received notice of and
failed to cure such negligence; or (iii) breached any written confidentiality,
noncompetition or nonsolicitation agreement between the Participant and the
Company.

 

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4.          Exercise Procedures

 

(a)          Subject to the provisions of Paragraphs 2 and 3 above, the
Participant may exercise part or all of the vested Option by giving the Company
written notice of intent to exercise in the manner provided in this Agreement,
specifying the number of Shares as to which the Option is to be exercised. At
such time as the Committee shall determine, the Participant shall pay the
exercise price (i) in cash, or (ii) by such other method as the Company may
approve. The Company may impose from time to time such limitations as it deems
appropriate on the use of Shares of the Company to exercise the Option.

 

(b)          The obligation of the Company to deliver Shares upon exercise of
the Option shall be subject to all applicable laws, rules, and regulations and
such approvals by governmental agencies as may be deemed appropriate by the
Company, including such actions as Company counsel shall deem necessary or
appropriate to comply with relevant securities laws and regulations.

 

(c)          All obligations of the Company under this Agreement shall be
subject to the rights of the Company as set forth in the Plan to withhold
amounts required to be withheld for any taxes, if applicable. Subject to
Committee approval, the Participant may elect to satisfy any tax withholding
obligation of the Company with respect to the Option by having Shares withheld
up to an amount that does not exceed the minimum applicable withholding tax rate
for federal (including FICA), state and local tax liabilities.

 

5.          Change in Control. The provisions of the Plan applicable to a Change
in Control or other corporate transaction (as described in Sections 8 and 9 of
the Plan) shall apply to the Option.

 

6.          Restrictions on Exercise. Except as the Company may otherwise permit
pursuant to the Plan, only the Participant may exercise the Option during the
Participant’s lifetime and, after the Participant’s death, the Option shall be
exercisable (subject to the limitations specified in the Plan) solely by the
legal representatives of the Participant, or by the person who acquires the
right to exercise the Option by will or by the laws of descent and distribution,
to the extent that the Option is vested and exercisable pursuant to this
Agreement.

 

7.          Adjustments. The provisions of the Plan applicable to Adjustments
(as described in Section 4 of the Plan) shall apply to the Option.

 

8.          Grant Subject to Plan Provisions. This grant is made pursuant to the
Plan, the terms of which are incorporated herein by reference, and in all
respects shall be interpreted in accordance with the Plan. The grant and
exercise of the Option are subject to interpretations, regulations and
determinations concerning the Plan established from time to time by the
Committee in accordance with the provisions of the Plan, including, but not
limited to, provisions pertaining to (i) rights and obligations with respect to
withholding taxes, (ii) the registration, qualification or listing of the
Shares, (iii) changes in capitalization of the Company and (iv) other
requirements of applicable law. The Committee shall have the authority to
interpret and construe the Option pursuant to the terms of the Plan, and its
decisions shall be conclusive as to any questions arising hereunder.

 

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9.          No Employment or Other Rights. The grant of the Option shall not
confer upon the Participant any right to be retained by or in the employ or
service of the Company and shall not interfere in any way with the right of the
Company to terminate the Participant’s employment or service at any time. The
right of the Company to terminate at will the Participant’s employment or
service at any time for any reason is specifically reserved.

 

10.         No Shareholder Rights. Neither the Participant, nor any person
entitled to exercise the Participant’s rights in the event of the Participant’s
death, shall have any of the rights and privileges of a shareholder with respect
to the Shares subject to the Option, until certificates for Shares have been
issued upon the exercise of the Option.

 

11.         Assignment and Transfers. Except as the Committee may otherwise
permit pursuant to the Plan, the rights and interests of the Participant under
this Agreement may not be sold, assigned, encumbered or otherwise transferred
except, in the event of the death of the Participant, by will or by the laws of
descent and distribution. In the event of any attempt by the Participant to
alienate, assign, pledge, hypothecate, or otherwise dispose of the Option or any
right hereunder, except as provided for in this Agreement, or in the event of
the levy or any attachment, execution or similar process upon the rights or
interests hereby conferred, the Company may terminate the Option by notice to
the Participant, and the Option and all rights hereunder shall thereupon become
null and void. The rights and protections of the Company hereunder shall extend
to any successors or assigns of the Company and to the Company’s parents,
subsidiaries, and affiliates. This Agreement may be assigned by the Company
without the Participant’s consent.

 

12.         Applicable Law. The validity, construction, interpretation and
effect of this Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, without giving effect to the conflicts of
laws provisions thereof.

 

13.         Notice. Any notice to the Company provided for in this Agreement
shall be addressed to the Company in care of the Committee, and any notice to
the Participant shall be addressed to such Participant at the current address
shown on the payroll of the Company, or to such other address as the Participant
may designate to the Company in writing. Any notice shall be delivered by hand,
sent by telecopy or enclosed in a properly sealed envelope addressed as stated
above, deposited, postage prepaid, in a post office regularly maintained by the
United States Postal Service.

 

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IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Agreement, and the Participant has executed this Agreement,
effective as of the Date of Grant.

 

  Medifast, Inc.       By:           Name:           Title:  

 

I hereby accept the Option described in this Agreement, and I agree to be bound
by the terms of the Plan and this Agreement. I hereby further agree that all the
decisions and determinations of the Committee shall be final and binding.

 

  Participant:           Date:  

 

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