Exhibit 10.1

 

DIPLOMAT PHARMACY, INC.

Form of Stock Option Award Agreement (Performance-Based)

Under 2014 Omnibus Incentive Plan

 

Grantee:

Grant Date:

Number of Option Shares:

Exercise Price per Option Share:

 

1.                                      Grant of Option.

 

(a)           Initial Grant.  Pursuant to the Diplomat Pharmacy, Inc. 2014
Omnibus Incentive Plan (the “Plan”), effective as of the Grant Date set forth
above, Diplomat Pharmacy, Inc. (the “Company”) grants to the Grantee identified
above an option (the “Option”) to purchase up to (but not in excess of)        
shares of the Company’s common stock, no par value (the “Initial Option
Shares”), at the Exercise Price per Option Share set forth above, on the terms
and subject to the conditions set forth in this Stock Option Award Agreement
(this “Agreement”) and in the Plan. The Option is intended to be a Non-qualified
Stock Option. Capitalized terms not defined in this Agreement have the meanings
ascribed to such terms in the Plan.

 

(b)           Performance Adjustment to Initial Option Shares.  The Initial
Option Shares shall be earned and adjusted as follows:

 

(i)            Revenues.

 

(a)           The Company’s revenue performance goal for the year ended
December 31,       is $              (the “Revenue Performance Goal”).

 

(b)           The Grantee will earn    % of the Initial Option Shares if the
Company’s revenue is    % or more of the Revenue Performance Goal.

 

(c)           The Grantee will earn    % of the Initial Option Shares if the
Company’s revenue is    % of the Revenue Performance Goal.

 

(d)           The Grantee will earn between    % and    % of the Initial Option
Shares if the Company’s revenue is more than    % and less than    % of the
Revenue Performance goal, with a linear increase in shares based on such
performance.

 

(e)           The Grantee will forfeit    % of the Initial Option Shares if the
Company’s revenue is less than    % of the Revenue Performance Goal.

 

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(ii)           Adjusted EBITDA.

 

(a)           The Company’s Adjusted EBITDA performance goal for the year ended
December 31,       (to be calculated in the same manner as in the Diplomat
Pharmacy, Inc. Annual Performance Bonus Plan for the same performance year) is
$              (the “Adjusted EBITDA Performance Goal”).

 

(b)           The Grantee will earn    % of the Initial Option Shares if the
Company’s Adjusted EBITDA is    % or more of the Adjusted EBITDA Performance
Goal.

 

(c)           The Grantee will earn    % of the Initial Option Shares if the
Company’s Adjusted EBITDA is    % of the Adjusted EBITDA Performance Goal.

 

(d)           The Grantee will earn between    % and    % of the Initial Option
Shares if the Company’s Adjusted EBITDA is more than    % and less than    % of
the Adjusted EBITDA Performance goal, with a linear increase in shares based on
such performance.

 

(e)           The Grantee will forfeit    % of the Initial Option Shares if the
Company’s Adjusted EBITDA is less` than    % of the Adjusted EBITDA Performance
Goal.

 

The Board or Compensation Committee shall round, up or down to the nearest whole
number, the number of earned Initial Option Shares and the percentage
achievement of the Revenue Performance Goal and Adjusted EBTIDA Performance
Goal, in its sole discretion provided that it calculates such measures
consistently for all Options with Grant Dates in the same year.

 

Following the Determination Date (defined below), the earned Initial Options
Shares shall be referred to as the “Option Shares.”

 

(c)           Timing of Adjustment Determination.  The adjustments specified in
Section 1(b) will be determined as of the earlier of (i) the date the Company
files its Annual Report on Form 10-K for the year ended December 31,     , which
includes the audited financial statements for such year, with the Securities and
Exchange Commission and (ii) if the filing contemplated by (i) is not made by
March 31,       , the date the Audit Committee of the Board of Directors of the
Company approves the financial statements of the Company for the year ended
December 31,       (such actual date, the “Determination Date”).

 

2.             Term of Option.  The Option shall expire on the ten year
anniversary of the Grant Date (the “Expiration Date”), subject to earlier
expiration (i) in the event of a Change in Control as provided in Paragraph 4
below, or (ii) following termination of the Grantee’s employment with the
Company or a Subsidiary as provided in Paragraph 6 below.

 

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3.             Normal Vesting.   Grantee may exercise the Option only if and to
the extent that the Option has become earned and vested. For this purpose and
except as provided in Paragraphs 4  and 6  below, the Option shall become vested
as to 25% of the Option Shares on the Determination Date and each of the first,
second and third anniversaries of the Determination Date, provided that the
Option shall cease vesting upon termination of Grantee’s employment with the
Company or a Subsidiary for any reason whatsoever and the portion of the Option
scheduled to vest on any such vesting date shall vest only if Grantee has
remained continuously employed by the Company or a Subsidiary from the Grant
Date to such vesting date.

 

4.             Accelerated Vesting upon Change in Control.  Notwithstanding
Paragraph 3 above, if there is a Change in Control and if Grantee has remained
continuously employed from the Grant Date to the date of the Change in Control,
any then earned but unvested portion of the Option shall automatically become
vested 10 days prior to the Change in Control. Except as otherwise provided by
the Committee at the time of a Change in Control, any portion of the Option that
has not, prior to or in connection with the Change in Control, either been
exercised or (pursuant to Paragraph 12 of the Plan) cancelled in exchange for a
cash payment equal to the fair value of the Option shall terminate, expire and
be forfeited and of no further force or affect upon closing of the Change in
Control.

 

5.             Procedure for Exercise and Payment of Exercise Price.  Grantee
may exercise all or any portion of the Option, to the extent it is vested and
outstanding, at any time prior to its expiration, by (i) delivering a properly
executed written notice of exercise to the Company, in such form as shall be
approved by the Company, specifying the number of Option Shares to be purchased,
and (ii) paying to the Company the aggregate Exercise Price of the Option Shares
to be purchased. Grantee shall pay the aggregate Exercise Price of the Option
Shares to be purchased on exercise of the Option (i) by payment of such
aggregate Exercise Price in cash or by certified or bank cashier’s check payable
to the order of the Company, (ii) by delivery of irrevocable instructions to a
stockbroker to sell immediately some or all of the Option Shares acquired by
exercise of the Option and to promptly deliver to the Company an amount of the
sale proceeds sufficient to pay the aggregate Exercise Price, or (iii) in the
discretion of the Committee, by such other cashless means authorized by
Paragraph 6(g) of the Plan.

 

6.             Termination of Employment.  Upon termination of Grantee’s
employment with the Company or a Subsidiary for any reason, vesting of the
Option shall terminate and any portion of the Option that is unearned or
unvested at the time of termination of Grantee’s employment with the Company or
a Subsidiary shall expire, terminate and be forfeited and of no further force or
effect. If the Company or a Subsidiary terminates Grantee’s employment for
Cause, any portion of the Option which is vested at the time of such termination
shall also expire, terminate and be forfeited and of no further force or effect.
If Grantee’s employment with the Company or a Subsidiary terminates due to the
death or Disability of Grantee, any portion of the Option that is vested on the
date of such termination may be exercised only during the one year period
following such termination, but in no event after the Expiration Date. If
Grantee’s employment with Company or a Subsidiary terminates for any reason
other than death, Disability or Cause, any portion of the Option that is vested
on the date of such termination may be exercised only during the 90 day period
following such termination, but in no event after the Expiration Date.

 

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7.             Non-Transferability of Option.  The Option is personal to
Grantee. Unless permitted otherwise in the discretion of the Committee, the
Option is not transferable by Grantee (other than by will or the laws of descent
and distribution) and, during Grantee’s lifetime, only Grantee (or his guardian
or legal representative) may exercise the Option. In the event of Grantee’s
death, the Option may be exercised (i) by the executor or administrator of
Grantee’s estate or the person or persons to whom Grantee’s rights under the
Option shall pass by will or the laws of descent and distribution, and (ii) to
the extent and during the period Grantee was allowed to exercise the Option at
the date of Grantee’s death.

 

8.             Restrictive Covenants; Compensation Recovery.  By signing this
Agreement, Grantee acknowledges and agrees that the Option, Initial Option
Shares and the Option Shares (and any stock or stock-based award previously
granted by the Company or a Subsidiary to Grantee under the Plan or otherwise)
shall (i) be subject to forfeiture as a result of Grantee’s violation of any
agreement with the Company or a Subsidiary regarding non-competition,
non-solicitation, confidentiality, non-disparagement, inventions and/or similar
restrictive covenants (the “Restrictive Covenants Agreement”), and (ii) be
subject to forfeiture and/or recovery under any compensation recovery policy
that may be adopted from time to time by the Company or any of its Subsidiaries.
For avoidance of doubt, compensation recovery rights to the Initial Option
Shares or Option Shares or other shares of Company stock (including shares of
stock acquired under previously granted stock-based awards) shall extend to the
proceeds realized by Grantee due to sale or other transfer of such stock.
Grantee’s prior execution of the Restrictive Covenants Agreement was a material
inducement for the Company’s grant of the Option under this Agreement.

 

9.             Conformity with Plan.  The Option is intended to conform in all
respects with and is subject to all applicable provisions of the Plan, which is
incorporated herein by reference. Any inconsistencies between the provisions of
this Agreement and the Plan shall be resolved in accordance with the provisions
of the Plan.

 

10.          Rights as a Participant.  Nothing contained in this Agreement shall
(i) interfere with or limit in any way the right of the Company or a Subsidiary
to terminate Grantee’s employment at any time and for any or no reason,
(ii) confer upon Grantee any right to be selected again as a Plan Participant,
or (iii) require or permit any adjustment to the number of Option Shares or to
the Exercise Price upon or as a result of the occurrence of any subsequent event
(except as provided in Paragraph 13 of the Plan).

 

11.          Withholding of Taxes.  Any income or employment tax required to be
withheld upon exercise of the Option shall be paid by Grantee to the Company or
a Subsidiary (whichever is the employer of Grantee), or the Company or a
Subsidiary (whichever is the employer of Grantee) may withhold such tax from the
cash compensation otherwise payable to Grantee. Alternatively, Grantee may pay
any such withholding tax (i) by delivery of irrevocable instructions to a
stockbroker to sell immediately some or all of the Option Shares acquired by
exercise of the Option and to promptly deliver to the Company an amount of the
sale proceeds sufficient to pay the withholding tax due on exercise of the
Option, or (ii) such other cashless means as may be permitted under law and in
the discretion of the Committee.

 

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12.          Resale Restrictions.  The Company currently has an effective
registration statement on file with the Securities and Exchange Commission with
respect to the Option Shares. The Company currently intends to maintain this
registration, but has no obligation to do so. If the registration ceases to be
effective, Grantee will not be able to sell or transfer Option Shares issued to
Grantee upon exercise of the Option unless an exemption from registration under
applicable securities laws is available. Grantee agrees that any resale by
Grantee of Option Shares acquired upon exercise of the Option shall comply in
all respects with the requirements of all applicable securities laws, rules and
regulations (including, without limitation, the provisions of the Securities Act
of 1933, as amended, the Exchange Act, and the respective rules and regulations
promulgated thereunder) and any other law, rule or regulation applicable
thereto, as such laws, rules and regulations may be amended from time to time.
The Company shall not be obligated to issue the Option Shares or permit their
resale if such issuance or resale would violate any such requirements.

 

13.          Consent to Transfer of Personal Data.  In administering this
Agreement and the Plan, or to comply with applicable legal, regulatory, tax or
accounting requirements, it may be necessary for the Company to transfer certain
Grantee personal data to a Subsidiary, or  to outside service providers, or to
governmental agencies. By signing this Agreement and accepting the award of the
Option, Grantee consents, to the fullest extent permitted by law, to the use and
transfer, electronically or otherwise, of Grantee’s personal data to such
entities for such purposes.

 

14.          Consent to Electronic Delivery.  In lieu of receiving documents in
hard copy paper format, Grantee agrees, to the fullest extent permitted by law,
to accept electronic delivery of any documents that the Company may be required
to deliver (including, but not limited to, prospectuses, prospectus supplements,
grant or award notifications and agreements, account statements, annual and
quarterly reports, and all other agreements, documents, forms and
communications) in connection with the Option and any other prior or future
incentive award or program made or offered by the Company, a Subsidiary and
their predecessors or successors. Electronic delivery of a document to Grantee
may be via a Company or Subsidiary email system or by reference to a location on
a Company or Subsidiary intranet site to which Grantee has access.

 

15.          No Ownership of Option Shares Until Exercise.  Prior to the
Grantee’s exercise of the Option and purchase of the Option Shares, the Grantee
shall not possess any incidents of ownership of the Option Shares, including
voting or dividend rights.

 

16.          Notices.  Any and all notices, designations, consents, offers,
acceptances and any other communications provided for herein shall be given in
writing and shall be delivered either personally or by registered or certified
mail, postage prepaid, which shall be addressed, in the case of the Company, to
the Chief Financial Officer of the Company at the principal office of the
Company and, in the case of the Grantee, to the Grantee’s address appearing on
the books of the Company or to such other address as may be designated in
writing by the Grantee.

 

17.          Successors.  The terms of this Agreement shall be binding upon and
inure to the benefit of the Company, its successors and assigns, and of the
Grantee and the beneficiaries, executors, administrators, heirs and successors
of the Grantee.

 

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18.          Invalid Provision.  The invalidity or unenforceability of any
particular provision hereof shall not affect the other provisions hereof, and
this Agreement shall be construed in all respects as if such invalid or
unenforceable provision had been omitted.

 

19.          Modifications.  Except as provided in the Plan, no change,
modification or waiver of any provision of this Agreement shall be valid unless
the same is in writing and signed by the parties hereto.

 

20.          Entire Agreement.  This Agreement and the Plan contain the entire
agreement and understanding of the parties hereto with respect to the subject
matter contained herein and therein and supersede all prior communications,
representations and negotiations in respect thereto.

 

21.          Governing Law.  This Agreement and the rights of the Grantee
hereunder shall be governed, construed, and administered in accordance with and
governed by the laws of the State of Michigan (regardless of the laws that might
otherwise govern under applicable principles of conflicts of laws of such
jurisdiction or any other jurisdiction).

 

22.          Headings.  The headings of the Paragraphs hereof are provided for
convenience only and are not to serve as a basis for interpretation or
construction, and shall not constitute a part, of this Agreement.

 

23.          Counterparts.  This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.

 

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24.          Committee Determinations Final and Binding.  The Committee shall
have final authority to interpret and construe the Plan and this Agreement and
to make any and all determinations thereunder, and its decision shall be binding
and conclusive upon the Grantee and his/her legal representative in respect of
any questions arising under the Plan or this Agreement.

 

 

Very Truly Yours,

 

 

 

Diplomat Pharmacy, Inc.

 

 

 

 

 

By

 

 

 

 

 

Name:

 

 

Its:

 

 

The undersigned hereby acknowledges having read this Agreement and the Plan and
agrees to be bound by all provisions set forth herein and in the Plan.

 

 

Dated as of:

 

 

GRANTEE:

 

 

 

 

 

 

 

Name:

 

 

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