Document:

Exhibit 10.5

 

AGA
MEDICAL HOLDINGS, INC.

2006
EQUITY INCENTIVE PLAN

 

Non-Statutory
Stock Option

 

Section 1.              Grant of Option.

 

(a)           This certificate evidences a
non-statutory stock option (this “Stock Option”) granted by AGA Medical
Holdings, Inc.,  a Delaware
corporation (the “Company”), on [·], to [·]
(the “Participant”), an employee of the Company, pursuant to the Company’s
2006 Equity Incentive Plan (as from time to time in effect, the “Plan”).  Under this Stock Option, the Participant may
purchase, in whole or in part, on the terms herein provided, a total of [·]
shares of Class B Common Stock of the Company (the “Shares”) at
$2.75 per Share, which is not less than the fair market value of the Shares on
the date of grant of this Stock Option. 
The latest date on which this Stock Option, or any part thereof, may be
exercised is [·] (the “Final Exercise Date”).  The Stock Option evidenced by this
certificate is intended to be, and is hereby designated, a non-statutory
option, that is, an option that does not qualify
as an incentive stock option as defined in Section 422.

 

(b)           This Stock Option shall be
exercisable, if at all, in the following cumulative installments prior to the
Final Exercise Date:

 

as to
[·] Shares on and after [·];

as to an additional [·] Shares
on and after [·]; and

as to an additional [·]
Shares on and after [·]; and

as to an additional [·]
Shares on and after [·]; and

as to an additional [·]
Shares on and after [·].

 

This Stock Option may
become exercisable earlier if so determined by the Administrator in its sole
discretion or in the circumstances described in Section 7(a)(3) of
the Plan, where applicable.  For the
avoidance of doubt, however, the occurrence of a public offering of the common
stock of the Company (whether or not a Qualified Public Offering) shall not
result in an acceleration of the exercisability of this Stock Option except as
the Administrator may otherwise determine in its sole discretion.

 

Notwithstanding the
foregoing, upon termination of the Participant’s Employment, any portion of
this Stock Option that is not then exercisable shall immediately expire and the
remainder of this Stock Option, if any, will remain exercisable for three
months (unless termination of the Participant’s Employment resulted from
reasons that in the determination of the Administrator cast such discredit on
the Participant as to justify immediate forfeiture of this Stock Option (“Cause”),
in which case this entire Stock Option shall immediately expire and no portion
thereof shall remain exercisable); provided,
that  any portion of this Stock Option
held by the Participant immediately prior to the Participant’s death, to the
extent then exercisable, will remain exercisable for one year following the
Participant’s death; further provided,
that in no event shall any portion of this Stock Option be exercisable after
the Final Exercise Date.

 

Section 2.              Exercise of Stock Option.

 

Each election to exercise
this Stock Option shall be in writing, signed by the Participant or the
Participant’s executor or administrator or the person or persons to whom this
Stock Option is transferred by will or the applicable laws of descent and
distribution (collectively, the “Option Holder”), and received by the
Company at its principal office, accompanied by this certificate and payment in
full as provided in the Plan.  Subject to
the further terms and conditions provided in the Plan, the purchase price may
be paid as follows:  (i) by delivery
of cash or check acceptable to the Administrator; (ii) upon and following
an initial public offering of the Company, through a broker-assisted exercise
program acceptable to the Administrator; or (iii) through any combination
of the foregoing.  In the event that this
Stock Option is exercised by an Option Holder other than the Participant, the
Company will be under no obligation to deliver Shares hereunder unless and
until it is satisfied as to the authority of the Option Holder to exercise this
Stock Option.

 

Section 3.              Notice of Disposition.

 

The person exercising
this Stock Option shall notify the Company when making any disposition of the
Shares acquired upon exercise of this Stock Option, whether by sale, gift or
otherwise.  No disposition of the Shares
that does not comply with Section 6(a)(9) and Exhibit B of the
Plan shall be permitted.

 

Section 4.              Restrictions on Transfer of
Shares; Repurchase Rights.

 

(a)           Transfer Restrictions.  If at the time this Stock Option is exercised
the Company or any of its stockholders is a party to any agreement restricting
the transfer of any outstanding shares of the Company’s common stock, the
Administrator may provide that this Stock

 

1

 

Option may be exercised
only if the Shares so acquired are made subject to the transfer restrictions
set forth in that agreement (or if more than one such agreement is then in
effect, the agreement or agreements specified by the Administrator).  Without limiting the generality of the
foregoing or of Section 7 below, the Participant expressly acknowledges
that any Shares acquired upon exercise of this Stock Option are subject to the
provisions of Section 6(a)(9) and Exhibit B of the Plan.

 

(b)           Repurchase Rights.  Each Share acquired upon exercise of this
Stock Option shall be subject to the provisions of this Section 4(b), and
the Participant, by exercising this Stock Option, agrees to take such actions
then or thereafter as the Administrator may from time to time require to
effectuate or facilitate the administration of this Section 4(b).

 

(i)            Upon termination of the Participant’s
Employment for any reason (including, without limitation, as a result of death,
disability, incapacity, retirement, resignation, or dismissal with or without
Cause) at any time prior to a Qualified Public Offering, the Company shall have
the right and option, but not the obligation, (the “Repurchase Right”)
to purchase from the Participant or such other person as then holds Shares
acquired upon exercise of this Stock Option, or any of them, any or all of the
Shares acquired upon exercise of this Stock Option.  If the Company exercises the Repurchase Right
it shall pay the holder as the purchase price for any Share so purchased an
amount (the “Purchase Price”) equal to the fair market value of such
Share (determined as hereinafter provided) as of the date of such repurchase; provided, that if termination of Employment was for Cause,
the Purchase Price shall equal the lower of such fair market value or the
exercise price paid upon exercise of this Stock Option for such Shares pursuant
to Section 2 above.  For the
purposes of this Section 4(b), the “fair market value” of a Share on any
date shall equal its fair market value determined in good faith by the
Administrator on a basis consistent with the manner of determining the fair
market value of the common stock of the Company for purposes of offering such
common stock to equity investors.

 

(ii)           The Company may exercise the
Repurchase Right described in Section 4(b)(i) above as to any Share
by giving the holder of the Share a written notice of election to purchase at
any time after the later of (A) the date of the termination of the
Participant’s Employment, or (B) the date on which such Share is acquired
upon exercise of this Stock Option, but not later than the date which falls
seven months after the later of (A) and (B).  Any such notice of election shall specify the
number of Shares to be purchased and the Purchase Price for such Shares.  The closing for the purchase by the Company
of such Shares pursuant to the provisions of this Section 4(b) will take
place at the offices of the Company on the date specified in such written
notice, which date shall be a business day not later than sixty (60) days after
the date such notice is given.  At such
closing, the holder of the Share or Shares to be repurchased shall deliver such
Shares, duly endorsed for transfer, against payment in full (in cash or by
certified or official bank check) of the Purchase Price therefor.

 

(v)             In the event that
the Company chooses not to exercise its Repurchase Right under this Section 4(b),
the Shares subject to the Repurchase Right shall thereafter cease to be subject
thereto.

 

(vi)          In order to
facilitate the repurchase by the Company of Shares acquired upon exercise of
this Stock Option, the stock certificates representing the Shares shall, for so
long as such Shares are subject to repurchase pursuant to this Section 4(b),
remain in the custody of the Company.

 

Section 5.              Withholding; Agreement to Provide
Security.

 

If at the time this Stock
Option is exercised the Administrator determines that under applicable law and
regulations it could be liable for the withholding of any federal or state tax
upon exercise or with respect to a disposition of any Shares acquired upon
exercise of this Stock Option, this Stock Option may not be exercised unless
the person exercising this Stock Option remits to the Company any amounts
determined by the Company to be required to be withheld upon exercise (or makes
other arrangements satisfactory to the Company for the payment of such taxes)
and gives such security as the Company deems adequate to meet its potential
liability for the withholding of tax upon a disposition of the Shares and
agrees to augment such security from time to time in any amount reasonably
determined by the Company to be necessary to preserve the adequacy of such
security.

 

Section 6.              Nontransferability of Stock
Option.

 

This Stock Option is not transferable by the Participant otherwise than
by will or the laws of descent and distribution and is exercisable during the
Participant’s lifetime only by the Participant.

 

Section 7.              Provisions of the Plan.

 

This Stock Option is
subject to the provisions of the Plan, which are incorporated herein by
reference.  A copy of the Plan as in
effect on the date of the grant of this Stock Option has been furnished to the
Participant.  By exercising all or any
part of this Stock Option, the 

 

2

 

Participant agrees to be
bound by the terms of the Plan and this certificate.  All initially capitalized terms used herein
will have the meaning specified in the Plan (including without limitation Exhibit B
thereof), unless another meaning is specified herein.

 

IN WITNESS WHEREOF, the
Company has caused this instrument to be executed by its duly authorized officer.

 

 

	
   

  	
   

  	
  AGA MEDICAL HOLDINGS,
  INC.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
						

 

3Exhibit 10.6

 

AGA
Medical Holdings, Inc.

2008
Equity Incentive Plan

 

Stock Option Award Agreement

 

THIS
AWARD AGREEMENT, effective the Grant Date specified below, represents the grant
of [a nonqualified/an incentive] stock
option (“Option”) by AGA Medical Holdings, Inc. (the “Company”), to the
Participant named below, pursuant to the provisions of the AGA Medical Holdings, Inc.
2008 Equity Incentive Plan (the “Plan”). 
Capitalized terms herein shall have the definitions as set forth in the
Plan.

 

The
Plan provides a complete description of the terms and conditions governing this
Option. If there is any inconsistency between the terms of this Award Agreement
and the terms of the Plan, the Plan’s terms shall completely supersede and
replace the conflicting terms of this Award Agreement. All capitalized terms
shall have the meanings ascribed to them in the Plan, unless specifically set
forth otherwise herein. The parties hereto agree as follows:

 

1.             Grant of
Option.

 

a.                                       Grant Information.
The individual named below has been selected to be a Participant in the Plan
and receive [a nonqualified/an incentive]
stock option grant, as specified below:

 

	
  Participant:

  	
  [·]

  
	
   

  	
   

  
	
  Grant Date:

  	
  [·]

  
	
   

  	
   

  
	
  Final Exercise Date:

  	
  [·] 

  
	
   

  	
   

  
	
  Number of Shares Covered by this Option:

  	
  [·]

  
	
   

  	
   

  
	
  Option Price:

  	
  $[·]

  

 

b.                                      Grant of Option.
The Company hereby grants to the Participant an Option to purchase the number
of Shares set forth above, at the stated Option Price, which is not less than
the Fair Market Value of a Share on the Grant Date, in the manner and subject
to the terms and conditions of the Plan and this Award Agreement.

 

c.                                       Option Term.
This Option will begin as of the Grant Date detailed above and shall expire on
the Final Exercise Date detailed above (“Option Term”), unless sooner terminated
in accordance with the terms of this Award Agreement. If this Option is
designated as an ISO, this Option shall be subject to any applicable
limitations on its term as imposed under the Plan or the Code and any
applicable regulations.

 

1

 

d.                                      Vesting Period.
This Option does not provide Participant with any rights or interests therein
until it vests and becomes exercisable in accordance with the following
schedules, provided Participant’s Employment with the Company, its Affiliates,
and/or its Subsidiaries continues through the applicable date(s):

 

Portion of Option Vested and
Exercisable:

 

As to [·]
Option shares on and after [·];

As to an additional [·]
Option shares on and after [·];
and

As to an additional [·]
Option shares on and after [·];
and

As to an additional [·]
Option shares on and after [·].

 

The
Option may become exercisable earlier if so determined by the Committee in its
sole discretion or in the circumstances described in Section 14 of the
Plan, where applicable. For the avoidance of doubt, however, the occurrence of
any public offering of the Company shall not result in an acceleration of the
exercisability of this Option except as the Committee may otherwise determine
in its sole discretion.

 

Notwithstanding
the foregoing, upon termination of the Participant’s Employment, any portion of
this Option that is not then exercisable shall immediately expire and the
remainder of this Option, if any, will remain exercisable for three months;
provided that any portion of this Option shall immediately expire and no
portion thereof shall remain exercisable in the event the termination of the
Participant’s Employment resulted from Cause; provided that any portion of this
Option held by the Participant immediately prior to the Participant’s death, to
the extent not exercised or not then exercisable, will become and/or remain
exercisable for one year following the Participant’s death; further
provided, that the entire portion of this Option held by the Participant
immediately prior to the termination of the Participant’s Employment due to
Disability, to the extent not exercised, will become and/or remain exercisable
for three years following the Participant’s termination of Employment due to
Disability; further provided, that in no event shall any portion of this Option
be exercisable after the Final Exercise Date.

 

2.             Exercise.
This Option shall be exercisable when and to the extent vested in accordance
with Section 1. Each election to exercise this Option shall be in writing,
signed by the Participant or the Participant’s executor or administrator or the
person or persons to whom this Option is transferred by will or the applicable
laws of descent and distribution (collectively, the “Option Holder”), and received
by the Company at its principal office, accompanied by this certificate and
payment in full as provided in the Plan. Each election to exercise this Option
shall also be subject to the applicable provisions of the Company’s Securities
Trading Policy as amended from time to time. 
Subject to the further terms and conditions provided in the Plan, the
Option Price may be paid as follows: (a) by delivery of cash or check
acceptable to the Committee; (b) in Shares having a Fair Market Value
equal to the aggregate Option Price for the Shares being purchased; provided
that such Shares have been held by the Participant for no less than six months
(or such other period as established from time to time by the Committee); (c) partly
in cash and partly in such Shares; (d) if there is a public market for the
Shares at such time, through delivery of irrevocable instructions to a broker
to sell Shares obtained upon the exercise of the Option and to deliver promptly
to the Company an amount out of proceeds of such sale equal to the aggregate
Option Price for the Shares being purchased; or (e) through net settlement
in Shares. In the event this Option is exercised by an Option Holder other than
the Participant, the Company will be under no obligation to deliver Shares hereunder
unless and until it is satisfied as to the authority of the Option Holder to
exercise this Option.

 

3.             Notice of
Disposition. The person exercising this Option shall notify the
Company when making any disposition of the Shares acquired upon exercise of
this Option, whether by sale, gift, or otherwise.

 

4.             Restrictions on Transfer of Shares. If at the time this
Option is exercised the Company or any of its stockholders is a party to any
agreement restricting the transfer of any outstanding Shares, the Committee may
provide that this Option may be exercised only if the Shares so acquired are
made subject to the transfer restrictions set forth in that agreement (or if
more than one such agreement is then effect, the agreement or agreements
specified by the Committee).

 

5.             Nontransferability.
This Option may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by the laws of descent and
distribution, except as provided in the Plan. No assignment or transfer of the
Option, whether voluntary or involuntary, by operation of law or otherwise,
except by will or the laws of descent and distribution or as otherwise required
by applicable law, shall vest in the assignee or transferee any interest
whatsoever.

 

2

 

6.             Administration.
This Agreement and the rights of the Participant hereunder are subject to all
the terms and conditions of the Plan, as the same may be amended from time to
time, as well as to such rules and regulations as the Committee may adopt
for administration of the Plan. It is expressly understood that the Committee
is authorized to administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of which
shall be binding upon the Participant. Any inconsistency between the Agreement
and the Plan shall be resolved in favor of the Plan.

 

7.             Tax
Consequences. Set forth below is a brief summary of certain United
States federal tax consequences of exercise of the Option and disposition of
the Shares under the laws in effect as of the Grant Date for informational
purposes only. This summary does not address specific state,
local, or foreign tax consequences that may be applicable to Participant.
Participant is responsible for consulting a tax adviser as to the applicable
tax laws of the jurisdiction(s) in which Participant resides or may be
subject to tax before exercising the Option or disposing of the Shares.  This summary does not constitute tax or legal
advice.  Participant understands that
this summary is necessarily incomplete, and the tax laws and regulations are
subject to change.

 

a.                                       Exercise of ISO.
If the Option qualifies as an ISO, there will be no regular federal income tax
liability upon the exercise of the Option, although the excess, if any, of the
Fair Market Value of the Shares on the date of exercise over the Option Price
will be treated as an adjustment to the alternative minimum tax for federal tax
purposes and may subject Participant to the alternative minimum tax in the year
of exercise.

 

b.                                      Exercise of Nonqualified Stock Option.
If the Option does not qualify as an ISO, there may be a regular federal income
tax liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Option Price. If Participant is an employee or former
employee of the Company, the Company will be required to withhold from
Participant’s compensation or collect from Participant and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.

 

c.                                       Disposition of Shares.
In the case of a Nonqualified Stock Option, if the Shares are held for more
than one year after the date of exercise, any gain realized on disposition of
the Shares will be treated as long-term capital gain for federal income tax
purposes. In the case of an ISO, if Shares transferred pursuant to the Option
are held for more than one year after the date of exercise and are disposed of
more than two years after the Grant Date, any gain realized on disposition of
the Shares will also be treated as long-term capital gain for federal income
tax purposes. If Shares purchased under an ISO are disposed of before the end
of either of the two holding periods, Participant will recognize ordinary
income at the time of the disposition in an amount equal to the excess of: (i) the
Fair Market Value of the Shares on the exercise date, over (ii) the lower
of the Option Price and the sale price. Any additional gain recognized upon the
disqualifying disposition will be capital gain, which will be long-term if the
Shares have been held for more than one year following the exercise date of the
Option.

 

d.                                      Notice of Disqualifying Disposition of ISO
Shares. If the Option granted to the
Participant herein is an ISO, and if Participant sells or otherwise disposes of
any of the Shares acquired pursuant to the ISO on or before the later of: (i) the
date two years after the Grant Date, or (ii) the date one year after the
date of exercise, Participant shall immediately notify the Company in writing
of such disposition. Participant agrees that Participant may be subject to
income tax withholding by the Company on the compensation income recognized by
Participant from the early disposition by payment in cash or out of current
earnings paid to Participant.

 

8.             Miscellaneous.

 

a.                                       This
Award Agreement does not confer upon the Participant any right to continuation
of Employment by the Company, nor shall this Award Agreement interfere in any
way with the Company’s right to terminate the Participant’s Employment at any
time.

 

b.                                      The
Participant shall have no rights as a stockholder of the Company with respect
to the Shares subject to this Award Agreement until such time as the purchase
price has been paid, and the Shares have been issued and delivered to the
Participant.

 

3

 

c.                                       With
the approval of the Board, the Committee may terminate, amend, or modify the
Plan; provided, however, that no such termination, amendment, or modification
of the Plan may in any way adversely affect the Participant’s rights under this
Award Agreement.

 

d.                                      The
Company shall have the authority to deduct or withhold, or require the
Participant to remit to the Company, an amount sufficient to satisfy federal,
state, and local taxes (including Participant’s FICA obligation) required by
law to be withheld with respect to any provision of this Agreement.

 

e.                                       This
Award Agreement shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.

 

f.                                         To
the extent not preempted by federal law, this Award Agreement shall be governed
by, and construed in accordance with, the laws of the State of Minnesota.

 

g.                                      All
obligations of the Company under the Plan and this Award Agreement, with
respect to the Option, shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.

 

h.                                      The
provisions of this Award Agreement are severable and if any one or more
provisions are determined to be illegal or otherwise unenforceable, in whole or
in part, the remaining provisions shall nevertheless be binding and
enforceable.

 

i.                                          In
the event there is any change in the Company’s Shares through the declaration
of stock dividends or through recapitalization resulting in stock split-ups or
through merger, consolidation, exchange of Shares, or otherwise, the number and
class of Shares subject to this Option, as well as the Option Price, may be
equitably adjusted by the Committee, in its sole discretion, to prevent
dilution or enlargement of rights.

 

j.                                          By
accepting this Option or other benefit under the Plan, the Participant and each
person claiming under or through the Participant shall be conclusively deemed
to have indicated their acceptance and ratification of, and consent to, any
action taken under the Plan by the Company, the Board, or the Committee.

 

k.                                       The
Participant, every person claiming under or through the Participant, and the
Company hereby waive to the fullest extent permitted by applicable law any
right to a trial by jury with respect to any litigation directly or indirectly
arising out of, under, or in connection with, the Plan or this Award Agreement
issued pursuant to the Plan.

 

l.                                          If
the Participant does not sign and return this Award Agreement to AGA Medical
Corporation, Attn:  Legal Department,
5050 Nathan Lane North, Plymouth, MN 55442 within 30 days of the Grant Date set
forth in Section 1a, then this Agreement and the Option it conveys shall
be forfeited, null and void.

 

IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed
effective as of date(s) indicated below.

 

	
   

  	
  AGA Medical Holdings, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
  Participant

  

 

4

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00169-of-00352.parquet"}]]