Document:

ex10_3.htm

Exhibit 10.3

 

Option No. V01230

Vascular Solutions, Inc.

Non-Qualified Stock Option Agreement

This Option Agreement, made April 22, 2011 between Vascular Solutions, Inc., a Minnesota corporation (the "Company") and John Erb ("Optionee").

The Company has adopted the Vascular Solutions, Inc. Stock Option and Stock Award Plan (the "Plan") which permits issuance of stock options for the purchase of shares of Common Stock, $.01 par value, of the Company, and the Company has taken all necessary actions to grant the following option pursuant and subject to the terms of the Plan, as follows:

1.           The Company grants as of the date of this Agreement, as a matter of separate agreement and not in lieu of salary or other compensation for services rendered, the right and option (hereinafter called the "Option") to purchase all or any part of an aggregate of 20,000 shares of Common Stock, $.01 par value, at the option price of $11.72 per share on the terms and conditions herein set forth and subject to all provisions of the Plan.  It is understood and agreed that the option price is not less than the per share fair market value of such shares on the date this Option was granted.  The Company intends that this Option shall not qualify as an incentive stock option governed by the provisions of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").  A copy of the Plan will be furnished upon request of the Optionee.

2.           This Option shall in all events terminate at the close of business April 22, 2021 (the "Termination Date"), or such shorter period as is prescribed herein, and, further, may be exercised during the option period only as follows:

	
On or after May 22, 2011

	
4%

	
On or after June 22, 2011

	
2%

	
On or after the 22nd day of each succeeding month

	
2%

Such installments shall cumulate and, if in any period the full amount purchasable in such period is not purchased, the shares not purchased shall be purchasable in any subsequent period during the term of this Option.  The Optionee shall not have any of the rights of a shareholder with respect to the Common Stock subject to this Option until such shares shall be issued to the Optionee upon the due exercise of this Option.

Notwithstanding the vesting schedule above, the entire Option shall become immediately exercisable upon a Change in Control (as defined below) of the Company and shall terminate if not exercised 30 days following the date of a Change in Control of the Company.  The Company shall notify the Optionee in writing of the acceleration within 10 days of the Change in Control.

  

  

  

(a)  A "Change in Control" shall mean:

	
  

	
(A)

	
A change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whether or not the Company is then subject to such reporting requirement;

	
  

	
(B)

	
Any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) (other than any employee benefit plan of the Company or any entity which reports beneficial ownership of the Company’s outstanding securities on Schedule 13G pursuant to Rule 13d-1 under the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities;

	
  

	
(C)

	
The Continuing Directors (as defined below) cease to constitute a majority of the Company's Board of Directors; provided that such change is the direct or indirect result of a proxy fight and contested election or elections for positions on the Board of Directors;

	
(D)  

	
The shareholders of the Company approve: (1) any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of Company stock would be converted into cash, securities, or other property, other than a merger of the Company in which shareholders immediately prior to the merger have the same proportionate ownership of stock of the surviving corporation immediately after the merger; (2) any sale, lease, exchange, or other transfer (in one transaction or a series of related transactions) of all or substantially all of the assets of the Company; or (3) any plan of liquidation or dissolution of the Company; or

	
(E)  

	
The majority of the Continuing Directors (as defined below) determine in their sole and absolute discretion that there has been a Change in Control of the Company.

	
(b)

	
"Continuing Director" shall mean any person who is a member of the Board of Directors of the Company, while such person is a member of the Board of Directors, who is not an Acquiring Person (as defined herein) or an Affiliate or Associate (as defined herein) of an Acquiring Person, or a representative of an Acquiring Person or any such Affiliate or Associate, and who:

  

  

  

	
  

	
(A)

	
was a member of the Board of Directors on the date of this Agreement as first written above; or

	
  

	
(B)

	
subsequently becomes a member of the Board of Directors, if such person's initial nomination for election or initial election to the Board of Directors is recommended or approved by a majority of the Continuing Directors.  For purposes of this Section, "Acquiring Person" shall mean any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) who or which, together with all Affiliates and Associates of such person, is the "beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or indirectly, of securities of the Company representing fifty percent (50%) or more of the combined voting power of the Company's then outstanding securities, but shall not include the Company, any subsidiary of the Company, or any employee benefit plan of the Company, or of any subsidiary of the Company, or any entity holding shares of common stock organized, appointed, or established for, or pursuant to the terms of, any such plan; and "Affiliate" and "Associate" shall have the respective meanings described to such terms in Rule 12b-2 promulgated under the Exchange Act.

3.           This Option shall terminate and may no longer be exercised if the Optionee ceases to serve as a director or consultant to the Company or its subsidiaries for any reason, except that:

	
  

	
(a)  In the event that the Optionee shall cease to serve as a director or consultant to the Company or its subsidiaries, if any, for any reason other than the Optionee's gross and willful misconduct or death or disability, the Optionee shall have the right to exercise this Option at any time within three months after such termination of services to the extent of the full number of shares the Optionee was entitled to purchase under this Option on the date of termination;

	
  

	
(b)  In the event that the Optionee shall cease to serve as a director or consultant to the Company or its subsidiaries, if any, by reason of the Optionee's gross and willful misconduct during the course of services, including but not limited to wrongful appropriation of funds of the Company or the commission of a gross misdemeanor or felony, this Option shall be terminated as of the date of the misconduct; and

  

  

  

	
  

	
(c)  In the event that the Optionee shall die while serving as a director or consultant  to the Company or any subsidiary or within three (3) months after termination of services for any reason other than gross and willful misconduct, or become disabled (within the meaning of Section 22(e)(3) of the Code) while serving as a director or consultant  to the Company or a subsidiary, if any, and the Optionee shall not have fully exercised this Option, this Option may be exercised at any time within twelve months after the Optionee's death or such disability by the personal representatives, administrators, or, if applicable, guardian of the Optionee or by any person or persons to whom this Option is transferred by will or the applicable laws of descent and distribution to the extent of the full number of shares the Optionee was entitled to purchase under this Option on the date of death, disability or termination of services, if earlier; provided, however, that this Option may not be exercised to any extent by anyone after the Termination Date.

4.           The exercise of this Option is contingent upon receipt from the Optionee (or other person exercising this Option pursuant to subsection (c) of Section 3 above) of a representation that, at the time of such exercise, it is the Optionee's then intention to acquire the shares being purchased for investment and not with a view to distribution thereof; provided however, that the receipt of this representation shall not be required upon exercise of this Option in the event that, at the time of such exercise, the shares subject to this Option shall have been and shall continue to be registered under the Securities Act of 1933, as amended.  The certificates for shares so issued for investment may be restricted by the Company as to transfer unless such shares are first registered under the Securities Act of 1933 or the Company receives advice of counsel satisfactory to it that registration under such Act is not required.

This Option shall not be exercisable until and unless:  (i) the Shares underlying this Option have been registered under the Securities Act of 1933 and applicable state securities laws, or (ii) upon determination of the Board of Directors of the Company that the shares can be issued to the Optionee upon exercise in compliance with an available exemption from registration under applicable federal and state securities laws.

5.           Subject to the foregoing, this 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, accompanied by payment of the purchase price.  Payment of the purchase price shall be made by certified or bank cashier's check payable to the Company, or by tender of shares of the Company's Common Stock, previously owned by the Optionee for at least six months, having a fair market value on the date of exercise equal to the exercise price of this Option, or a combination of cash and shares equal to such exercise price.

6.           This Agreement shall not confer on the Optionee any right with respect to continuance of any relationship with the Company or any subsidiary of the Company, nor will it interfere in any way with the right of the Company to terminate such consulting services or relationship at any time.  Neither the Optionee nor the Optionee's legal representative, legatees or distributees, as the case may be, will be or will be deemed to be the holder of any shares subject to this Option unless and until this Option has been exercised and the purchase price of the shares purchased has been paid.

  

  

  

7.           This Option may not be transferred, except by will or the laws of descent and distribution to the extent provided in subsection (c) of Section 3.

8.           If there shall be any change in the stock subject to this Option through merger, consolidation, reorganization, recapitalization, stock dividend, stock split or other change in the corporate structure of the Company, appropriate adjustments shall be made by the Company in the number of shares and the price per share of the shares subject to this Option in order to prevent dilution or enlargement of option rights granted hereunder.

9.           The Company shall at all times during the term of this Option reserve and keep available such number of shares in the Company as will be sufficient to satisfy the requirements of this Agreement.

10.         This Agreement and the Plan contain all of the terms governing this grant, and the Plan and this Agreement are intended to be complete, final and conclusive.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the date and year first above written.

 

	  	VASCULAR SOLUTIONS, INC.	 
	  	 	  	 
	  	By:	 	 
	  	 	
Howard C. Root, CEO

	 
	  	 	  	 
	  	 	  	 
	
 

	 	
John Erb, Optioneeex10_1.htm

Exhibit 10.1

April 21, 2011

TERM SHEET: KEIP AND EMPLOYEE AGREEMENTS

   

1.             (A)          Management Participants.    The 10 KEIP participants (the “Management Participants”), excluding the top five executives (specifically Mike Edwards, Scott Henry, Michele Cloutier, James Frering and Rosalind Thompson) (collectively, “Senior Management Participants”), will be paid a bonus of 40% of their base compensation that was in effect on the Petition Date if:

(1)           the Debtors achieve the following benchmarks (the “Incentives”): (a) the Debtors enter into real estate lease amendments after the Petition Date and before May 31, 2011 that provide at least $10 million of annualized rent reductions for each of 2011 and 2012 (excluding any rent reductions allocable to store closings) or (b) the Debtors implement non-headcount annualized cost reductions associated with either contract rejection or renegotiation (excluding the real estate lease amendments above and any rejections of contracts or leases associated with any closing stores) of $10 million by June 30, 2011; and

(2)           either (a) the Court enters an order approving a sale of substantially all of the Debtors’ assets as a going concern which sale must be consummated within 60 days thereafter or (b) the Court enters an order confirming a plan of reorganization resulting in an ongoing business including the continued operation of substantially all of the Debtors’ current remaining stores which plan must go effective within 30 days thereafter, which sale or plan must be supported by the Committee in the Committee’s sole discretion and may be withheld for any reason (such sale or plan that satisfies the requirements of this paragraph 1(A)(2), subject to the Committee’s approval as set forth herein, is hereinafter a “Qualifying Transaction”); and

(3)           the Qualifying Transaction must be approved by order of the Court entered no later than November 16, 2011.

2.            (A)           Senior Management Participants.  Senior Management Participants are eligible to receive payments under the KEIP as follows:

(1)           (a)           75% of their base salary that was in effect as of the Petition Date if the Debtors achieve the Incentives, the Qualifying Transaction is approved by an order of the Court entered no later than August 15, 2011, and the Qualifying Transaction is consummated within the timeframes set forth in paragraph (1)(A)(2); or

                (b)           55% of their base salary that was in effect as of the Petition Date if the Debtors achieve the Incentives, the Qualifying Transaction is approved by an order of the Court entered no later than November 16, 2011 and the Qualifying Transaction is consummated within the timeframes set forth in paragraph (1)(A)(2).

(2)           If a Qualifying Transaction results in value (as defined below) available for distribution to general unsecured creditors (after payment of all secured, administrative and priority claims), Senior Management Participants would receive an additional bonus in accordance with the following schedule:

 

	
  

	
(a)

	
value of $73 million, but less than $85 million, an extra 75% of their base compensation; or

	
  

	
(b)

	
value of $85 million, but less than $95 million, an extra 100% of their base compensation; or

	
  

	
(c)

	
value of $95 million or more, an extra 125% of their base compensation.

 

(i)            In order to constitute “value” under paragraph 2(A)(1)(a)-(c) above,  the Committee would consider (a) cash; (b) securities in a company, other than reorganized Borders, all of which shall be acceptable to the Committee in its absolute and sole discretion, (c) a note payable from a payor all of which shall be acceptable to the Committee in its absolute and sole discretion, or (d) potentially equity securities in reorganized Borders if the valuation were acceptable to the Committee in its absolute and sole discretion, including, without limitation, the terms and valuation of such securities.  The Debtors and Senior Management Participants waive any right to ask any court to review any determination by the Committee with respect to value.  Such value thresholds shall not include any funds that may be recovered from any avoidance actions or any other litigation claims or causes of action. 

  

  

  

 

(3)           All bonuses that may be earned under the KEIP shall only be payable and deemed an allowed claim upon the consummation of the Qualifying Transaction.

(4)           No payments will be made under the KEIP for any liquidation or any going out of business sales at the majority of the Debtors’ stores, or any plan confirmation by cram down or otherwise, or approval of a sale, over the objection of the Committee.

(5)           In order for a KEIP participant to be entitled to any payments hereunder, the participant must be an employee in good standing on the date the Qualifying Transaction is approved by the Court and on the date the transaction is consummated unless the employee was terminated between the date of Court approval of the Qualifying Transaction and the consummation thereof other than for cause.

(6)           The Debtors and Senior Management Participants waive the right to seek court review of any decision by the Committee to object to any proposed Qualifying Transaction. 

 

3.          Employment agreements.  The Debtors’ request to assume the employment agreements of Scott Henry, Michele Cloutier, Jason Cline and Glen Tomaszewski, will be withdrawn and the employment agreements will not be assumed.  These individuals will receive part or all (depending on the person) of their respective pre-petition bonus money provided for in their pre-petition agreements in the following dollar amounts: Henry, $100,000; Cloutier, $100,000; Cline, $75,000; Tomaszewski, $100,000, payable as follows:  half paid 30 days after the entry of the court order approving of this compensation program and the other half paid 90 days after the entry of the court order approving of this compensation program.   In order for each of these individuals to be entitled to their pre-petition bonus as set forth in this paragraph, the individual must be an employee in good standing on the date the payment is due.

 

 4.           Other compensation arrangements.   If any portion of the KEIP is paid to the Senior Management Participants or the Management Participants, they waive their right to seek or request payment of any other form of bonus, severance pay, change of control or other termination benefits.  If no awards provided for under the KEIP are paid for any reason, the Debtors reserve their right to seek court approval of a severance program for these 15 individuals only to the extent that could be allowed pursuant to section 503(c)(2) of the Bankruptcy Code, and the Committee reserves its right to object to any such severance plan proposal.

 

 

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