0000075252FALSE00000752522022-03-012022-03-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 1, 2022
Owens & Minor, Inc.
(Exact name of registrant as specified in its charter)
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Virginia | 001-09810 | | 54-1701843 |
(State or other jurisdiction of incorporation or organization) | (Commission
File Number) | | (I.R.S. Employer Identification No.) |
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9120 Lockwood Boulevard, | Mechanicsville | Virginia | 23116 |
(Address of principal executive offices) | | | (Zip Code) |
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Post Office Box 27626, Richmond, Virginia | | | 23261-7626 |
(Mailing address of principal executive offices) | | | (Zip Code) |
Registrant’s telephone number, including area code (804) 723-7000
Securities registered pursuant to Section 12(b) of the Act: | | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
| Common Stock, $2 par value per share | | OMI | | New York Stock Exchange |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):
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☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
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Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On March 1, 2022, the Our People & Culture Committee of the Board of Directors (the “Committee”) of Owens & Minor, Inc. (the “Company”) approved a Form of Restricted Stock Agreement (the “Restricted Stock Agreement”), a Form of Restricted Stock Unit Award Agreement (the “RSU Agreement”) and a Form of 2022 Performance Stock Unit Award Agreement (the “PSU Agreement” and collectively with the Restricted Stock Agreement and RSU Agreement, the “Award Agreements”) for issuance of equity incentive awards under the Company’s 2018 Stock Incentive Plan (as amended, the “Plan”).
Pursuant to the Plan and the Award Agreements, the Committee may grant shares of common stock to our directors, executive officers and other eligible participants subject to vesting conditions, including time-based conditions and performance-based conditions. Generally, under the terms of the Award Agreements, unvested shares are forfeited if an awardee’s employment with the Company is terminated prior to vesting; provided, that unvested shares may vest pro rata in the event of a not for cause termination of employment or termination of employment as a result of retirement, death or disability. Additionally, the Restricted Stock Agreement and RSU Agreement provide for “double-trigger” full vesting in the event of a Change in Control (as defined in the Plan) and subsequent qualifying termination of employment. Unvested performance shares generally fully vest at the target level in the event of a Change in Control.
This summary of the Award Agreements is qualified in its entirety by the specific language of the Award Agreements which are filed as Exhibits to this Report.
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Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits.
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| 10.1 | | |
| 10.2 | | |
| 10.3 | | |
| 104 | | Cover Page Interactive Data File (the cover page iXBRL tags are embedded in the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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| | | | | | OWENS & MINOR, INC. |
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Date: March 1, 2022 | | | | By: | | /s/ Nicholas J. Pace |
| | | | | | Name: | | Nicholas J. Pace |
| | | | | | Title: | | Executive Vice President, General Counsel and Corporate Secretary |
OWENS & MINOR, INC.
Restricted Stock Agreement
THIS RESTRICTED STOCK AGREEMENT (the “Agreement”) dated ___Grant Date___ between OWENS & MINOR, INC., a Virginia corporation (the "Company"), and _Participant Name___ ("Participant"), is made pursuant and subject to the provisions of the Company's 2018 Stock Incentive Plan (as amended, the "Plan"). All capitalized terms used herein that are not otherwise defined shall have the same meaning given to them in the Plan.
W I T N E S S E T H:
1.Restricted Stock Grant. Pursuant to the provisions of the Plan, on __Grant Date__________ (the “Date of Grant”), the Company granted to Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, a Stock Award of __# Shs Granted____ shares of Common Stock (the “Restricted Stock”).
2.Terms and conditions. The shares of Restricted Stock evidenced hereby are subject to the following terms and conditions:
(a)Vesting. The shares of Restricted Stock shall be subject to the following restrictions from the Date of Grant until that portion of shares of Restricted Stock vests in accordance with the Vesting Table below (at which time that portion of the Restricted Shares shall no longer be subject to such restrictions) or until the lapse of restrictions as provided in subsection 2(d) hereof (such period being referred to herein as the (the “Restricted Period”)):
(i)Participant shall not be entitled to receive the certificate or certificates evidencing the Restricted Stock;
(ii)Shares of Restricted Stock may not be sold, transferred, assigned, pledged, conveyed, hypothecated or otherwise disposed of; and
(iii)Shares of Restricted Stock may be forfeited immediately as provided in subsection 2(d) hereof.
Vesting Table
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| Vesting Dates | Percentage Vesting |
On the date listed below which is closest to the one year anniversary of the grant date on or after such anniversary date and annually thereafter on said date: •February 15 •May 15 •August 15 •November 15 | Vesting Date on or after*: •First Anniversary – 34% •Second Anniversary – 33% •Third Anniversary – 33%
*(rounded up to the nearest whole share) |
Notwithstanding the foregoing, Participant shall be entitled to vote the shares of Restricted Stock and receive dividends thereon while the Restricted Stock is outstanding to the extent herein set forth. Any stock dividends or other shares of Company stock or other property issued in respect of Restricted Stock, including without limitation, shares issued in connection with stock splits and recapitalizations, will be subject to the same restrictions applicable to the Restricted Stock with respect to which such dividends were credited. Any cash dividends paid in respect of Restricted Stock will be accumulated and paid, without interest, if and at the time of vesting (i.e., expiration of the Restricted Period) or, if earlier, the lapse of restrictions with respect to the Restricted Stock with respect to which the dividends were credited; provided, however, no cash dividends will be paid with respect to any Restricted Stock that does not vest and is forfeited.
(b)Custody of Shares of Restricted Stock. Certificates representing the shares of Restricted Stock shall be issued in Participant’s name but shall be held by the Company (or its transfer agent) during the applicable Restricted Period. The Company’s Secretary and its General Counsel shall serve as attorney-in-fact for Participant during the applicable Restricted Period with full power and authority in Participant’s name to assign and convey to the Company any shares of Restricted Stock that Participant forfeits under subsection 2(d) hereof. Each certificate representing shares of Restricted Stock may bear a legend referring to the risk of forfeiture of the shares and stating that such shares are nontransferable until all restrictions have been satisfied and the legend has been removed.
(c)Distribution of Restricted Stock. If Participant remains in the continuous employment of the Company or an Affiliate during the applicable Restricted Period and otherwise does not forfeit such shares pursuant to subsection 2(d) hereof, all restrictions applicable to the shares of Restricted Stock hereunder shall lapse upon expiration of the applicable Restricted Period and a certificate or certificates representing the shares of Common Stock that were granted to Participant in the form of shares of Restricted Stock shall be delivered to Participant.
(d)Lapse of Restrictions or Forfeiture.
(i)Pro Rata Portion. As used in this Agreement, “Pro Rata Portion” means the number yielded by applying the following formula: The number of shares of Restricted Stock originally granted pursuant to this Agreement multiplied by a fraction, the numerator of which is the number of months (including any fractions of a month) Particiant was employed by the Company or its Affiliate after the Date of Grant and the denominator of which is the total number of months in the vesting period, minus the number of shares with respect to which all restrictions lapsed prior to the termination of Participant’s employment and rounded to the nearest whole number. Application of the formula to determine Pro Rata Portion is illustrated in the following hypothetical example:
Participant receives a grant of 100 shares of Restricted Stock on March 1, 2022. Participant’s first vesting occurs on May 15, 2023, and 34 shares vest. On Sept 15, 2023, eighteen and one-half months after the Date of Grant, Participant elects to retire. The retirement qualifies under subsection 2.d.(iv), below, and, thus, the restrictions on a Pro Rata Portion of the individual’s unvested shares lapse. The Pro Rata Portion is:
(100 [shares granted] x 18.5/38.5) – 34 [shares vested before retirement] = 14
(ii)Death. If Participant’s employment with the Company and its Affiliates is terminated before the expiration of the applicable Restricted Period by reason of Participant’s death, all restrictions applicable to the shares of Restricted Stock that have not lapsed previously shall immediately lapse on the date of Participant’s death and the certificate or certificates representing the shares of Common Stock shall be delivered to Participant’s estate.
(iii)Disability. If Participant’s employment with the Company or its Affiliate is terminated before the expiration of the applicable Restricted Period by reason of Participant’s “total and permanent disability” (as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”)), all restrictions applicable to a Pro Rata Portion of the shares of Restricted Stock that have not lapsed previously shall lapse. The certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after termination of Participant’s employment as described herein, and the remaining shares shall be forfeited immediately and all rights of Participant to such remaining shares shall terminate immediately without further obligation on the part of the Company.
(iv)Retirement. If Participant’s employment with the Company or its Affiliate is terminated before the expiration of the applicable Restricted Period by reason of retirement (defined below), all restrictions on a Pro Rata Portion of the shares of Restricted Stock that have not lapsed previously shall lapse. For purposes of this Section 2(d)(iv), retirement shall mean severance from the employment of the Company or its Affiliate, other than for cause (as defined below), (i) after completing a minimum of five (5) continuous years of active employment by the Company or its Affiliate immediately preceding Participant’s retirement; and (ii) at or after the attainment of age 55 and after completing a number of years of service (the total years of “Credited Service” attributable to Participant as of the date of termination, as such term is defined in the Owens & Minor 401(k) Savings and Retirement Plan, as amended, whether or not Participant participates in such plan) that, when added to Participant’s age at the time of severance from employment, equals at least 65 or (iii) at or after the attainment of age 65.
(v)Termination of Employment by Company or Affiliate.
(a)With Cause. If the Company or an Affiliate terminates Participant’s employment with the Company or its Affiliate with “cause,” all shares of Restricted Stock with respect to which all restrictions have not lapsed previously shall be forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company. For purposes of this Agreement, “cause” means: (i) misappropriation, theft or embezzlement of funds or property from the Company or an Affiliate or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or an Affiliate, (ii) conviction of, or entry of a plea of “nolo contendere” with respect to, a felony which, in the reasonable opinion of the Company, is likely to cause material harm to the Company’s or an Affiliate’s business, customer or supplier relations, financial condition or prospects, (iii) violation of the Company’s Code of Honor or any successor code of conduct, or refusal to sign an acknowledgement to abide by the same; (iv) violation of any material law or regulation to the detriment of the Company or any Affiliate; (v) engagement in conduct that results in monetary, reputational, or other injury to the Company or an Affiliate, or that would be likely to result in such injury to the Company or an Affiliate if the Participant were to continue to be employed by the Company or an Affiliate; or (vi) failure to substantially perform or meet the Company or an Affiliate’s performance expectations with regard to the duties of Participant’s job (other than by reason of illness or temporary disability, regardless of whether such temporary disability is or becomes a total and permanent disability (as defined in paragraph 2(d)(ii) above), or by reason of approved leave of absence).
(b)Without Cause. Except as set forth below in connection with a Change in Control, if Participant’s employment with the Company or its Affiliate is terminated by the Company or an Affiliate without “cause,” all restrictions on a Pro Rata Portion of shares of Restricted Stock that have not lapsed previously shall lapse. The certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after termination of Participant’s employment, and the remaining shares of Restricted Stock for which all restrictions have not lapsed previously shall be forfeited immediately and all rights of Participant to such shares of Common Stock shall terminate immediately without further obligation on the part of the Company.
(vi)Termination of Employment by Participant. If Participant resigns from employment with the Company and its Affiliates before the expiration of the applicable Restricted Period, without regard to the reason for such resignation (other than death, disability or retirement as provided in subsections (ii), (iii) and (iv) above), all of the shares of Restricted Stock with respect to which all restrictions have not lapsed previously shall be
forfeited immediately and all rights of Participant to such shares shall terminate immediately without further obligation on the part of the Company.
(vii)Change in Control.
(a)If, upon a Change in Control, (i) the Restricted Stock is assumed by, or a substitute award granted by, the surviving entity (together with its Related Entities, the “Surviving Entity”) in the Change in Control (such assumed or substituted award to be of the same type of award as this Restricted Stock with a value as of the Control Change Date substantially equal to the value of this Restricted Stock) and (ii) within 24 months following the Control Change Date, Participant’s employment with the Surviving Entity is terminated by the Surviving Entity without Cause (defined below), all restrictions applicable to the shares of Restricted Stock that have not lapsed previously shall immediately lapse on the date of employment termination and the certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after termination of Participant’s employment.
(b)For purposes of this subsection 2(d)(vi), “Cause” shall mean (i) the willful and continued failure by Participant to substantially perform his or her duties with the Surviving Entity (other than any such failure resulting from Participant’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Participant by the Surviving Entity, which demand specifically identifies the manner in which the Surviving Entity believes that Participant has not substantially performed his or her duties, or (ii) the willful engaging by Participant in conduct which is demonstrably and materially injurious to the Surviving Entity, monetarily or otherwise. For purposes of this paragraph, no act, or failure to act, on Participant’s part shall be deemed "willful" unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Surviving Entity.
(c) If, upon a Change in Control, the Restricted Stock is not assumed by, or a substitute award granted by, the Surviving Entity in the Change in Control as provided in subsection 2(d)(vi)(a) above, all restrictions applicable to the shares of Restricted Stock that have not lapsed previously shall immediately lapse on the Control Change Date and the certificate or certificates representing the shares of Common Stock upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after the Control Change Date if Participant remains employed with the Company or an Affiliate as of the Control Change Date.
3.Acceptance of Agreement. Notwithstanding anything herein to the contrary, in order for the Award to become effective, the Participant must acknowledge acceptance of this Agreement no later than sixty (60) days following the date of grant. If the Agreement is not accepted within 60 days, the entire Award will be forfeited and cancelled without any consideration thereof, except as otherwise determined in the Committee’s sole and absolute discretion.
4.Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.
5.No Right to Continued Employment. The grant of Restricted Stock hereunder does not confer upon Participant any right with respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate Participant’s employment at any time.
6.Change in Capital Structure. The terms of this award shall be adjusted as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization.
7.Withholding. The Participant may be required to pay to the Company and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the Restricted Stock, their grant or vesting or any payment or transfer with respect to the Restricted Stock and to take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such withholding taxes. Any withholding tax obligations required hereunder shall be satisfied by withholding or reducing the number of shares of Common Stock, as determined by the Company, otherwise issuable to Participant upon the settlement of the Restricted Stock (i.e., “Net Shares” election).
8.Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.
9.Participant Bound by Plan. Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.
10.Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees and personal representatives of Participant and the successors of the Company.
11.Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Acceptance of this Agreement as set forth in Section 3 above shall be deemed the Participant’s execution of this Agreement.
[signature page follows]
IN WITNESS WHEREOF, OWENS & MINOR, INC. has caused this Agreement to be signed by a duly authorized officer and Participant has affixed his or her signature hereto.
OWENS & MINOR, INC.
By: _________________________________
Edward A. Pesicka
President & Chief Executive Officer
PARTICIPANT
____________________________________
[Participant Name]
OWENS & MINOR, INC.
RESTRICTED STOCK UNIT AWARD AGREEMENT
This RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Agreement”) dated [Grant Date], between OWENS & MINOR, INC., a Virginia corporation (the "Company"), and [Participant Name] ("Participant"), is made pursuant and subject to the provisions of the Company's 2018 Stock Incentive Plan (as amended, the "Plan"). All capitalized terms used herein that are not otherwise defined shall have the same meaning given to them in the Plan.
W I T N E S S E T H:
1.Restricted Stock Unit Award Grant. Pursuant to the provisions of the Plan, on [Grant Date] (the “Date of Grant”), the Company granted to Participant, subject to the terms and conditions of the Plan and subject further to the terms and conditions herein set forth, a Stock Unit Award covering [# of shares] shares of Common Stock (the “RSUs”). Upon fulfillment of the conditions described in subsection 2(a) below, each RSU shall vest and entitle the Participant to receive one share of the Company’s Common Stock.
2.Terms and conditions. The RSUs evidenced hereby are subject to the following terms and conditions:
(a)Vesting. The RSUs shall be subject to the following restrictions from the Date of Grant until the RSUs vest in accordance with the Vesting Table below (at which time that portion of the RSUs shall no longer be subject to such restrictions) or until the lapse of restrictions as provided in subsection 2(d) hereof (such period being referred to herein as the (the “Restricted Period”)):
(i)Participant shall not be entitled to receive any of the shares of Common Stock covered by the RSUs;
(ii)The RSUs may not be sold, transferred, assigned, pledged, conveyed, hypothecated or otherwise disposed of; and
(iii)The RSUs may be forfeited immediately as provided in subsection 2(d) hereof.
Vesting Table
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| Vesting Dates | Percentage Vesting |
On the date listed below which is closest to the one year anniversary of the grant date on or after such anniversary date and annually thereafter on said date: •February 15 •May 15 •August 15 •November 15 | Vesting Date on or after*: •First Anniversary – 34% •Second Anniversary – 33% •Third Anniversary – 33%
*(rounded up to the nearest whole share) |
Participant shall not be entitled to vote the shares of Common Stock covered by the RSUs that remains subject to the restrictions set forth above. Notwithstanding any of the foregoing, Participant shall be entitled to receive dividends on the shares of Common Stock covered by the RSUs, while the RSUs are outstanding, to the extent herein set forth. Any stock dividends or other shares of Company stock or other property issued in respect of the number of shares of Common Stock covered by the RSUs, including without limitation, shares issued in connection with stock splits and recapitalizations, will be subject to the same restrictions applicable to the RSUs with respect to which such dividends are credited. Any cash dividends paid in respect of the shares of Common Stock covered by the RSUs will be accumulated and paid, without interest, upon vesting (i.e., expiration of the Restricted Period) or, if earlier, the lapse of restrictions with respect to the RSUs with respect to which the dividends are
credited; provided, however, no stock dividends or other shares of Company stock or other property or cash dividends will be paid with respect to any RSUs that do not vest and are forfeited.
(b)Shares of Common Stock Covered by the RSUs. Certificates representing the shares of Common Stock covered by the RSUs shall not be issued in Participant’s name until the time of expiration of the Restricted Period or, if earlier, the lapse of restrictions with respect to the RSUs, prior to forfeiture of the RSUs.
(c)Distribution of Shares of Common Stock. If Participant remains in the continuous employment of the Company or an Affiliate during the applicable Restricted Period and otherwise does not forfeit such RSUs pursuant to subsection 2(d) hereof, all restrictions applicable to the RSUs hereunder shall lapse upon expiration of the applicable Restricted Period and a certificate or certificates representing the shares of Common Stock covered by such RSUs shall be issued to Participant no later than 30 days after the expiration of the applicable Restricted Period (along with any stock dividends or other shares of Company stock or other property or cash dividends that are payable thereon with respect to such RSUs).
(d)Lapse of Restrictions or Forfeiture.
(i)Pro Rata Portion. As used in this Agreement, “Pro Rata Portion” means the number yielded by applying the following formula: The number of RSUs originally granted pursuant to this Agreement multiplied by a fraction, the numerator of which is the number of months (including any fractions of a month) Particiant was employed by the Company or its Affiliate after the Date of Grant and the denominator of which is the total number of months in the vesting period, minus the number of RSUs with respect to which all restrictions lapsed prior to the termination of Participant’s employment and rounded to the nearest whole number. Application of the formula to determine Pro Rata Portion is illustrated in the following hypothetical example:
Participant receives a grant of 100 RSUs on March 1, 2022. Participant’s first vesting occurs on May 15, 2023, and 34 shares vest. On Sept 15, 2023, eighteen and one-half months after the Date of Grant, Participant elects to retire. The retirement qualifies under subsection 2.d.(iv), below, and, thus, the restrictions on a Pro Rata Portion of the individual’s unvested RSUs lapse. The Pro Rata Portion is:
(100 [shares granted] x 18.5/38.5) – 34 [shares vested before retirement] = 14
(ii)Death. If Participant’s employment with the Company or its Affiliate is terminated before the expiration of the applicable Restricted Period by reason of Participant’s death, all restrictions applicable to the RSUs that have not lapsed previously shall immediately lapse on the date of Participant’s death, and the certificate or certificates representing the shares of Common Stock covered by such RSUs shall be issued to Participant’s estate no later than 30 days after Participant’s death.
(iii)Disability. If Participant’s employment with the Company or its Affiliate is terminated before the expiration of the applicable Restricted Period by reason of Participant’s “total and permanent disability” (as such term is defined in Section 22(e)(3) of the Internal Revenue Code of 1986, as amended (the “Code”)), all restrictions applicable to a Pro Rata Portion of the RSUs that have not lapsed previously shall lapse. The certificate or certificates representing the shares of Common Stock covered by the RSUs upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after termination of Participant’s employment as described herein, and the remaining RSUs shall be forfeited immediately and all rights of Participant to such remaining RSUs shall terminate immediately without further obligation on the part of the Company.
(iv)Retirement. If Participant’s employment with the Company or its Affiliate is terminated before the expiration of the applicable Restricted Period by reason of retirement (defined below), all restrictions on a Pro Rata Portion of the RSUs that have not lapsed
previously shall lapse. For purposes of this Section 2(d)(iv), retirement shall mean severance from the employment of the Company or its Affiliate, other than for cause (as defined below), (i) after completing a minimum of five (5) continuous years of active employment by the Company or its Affiliate immediately preceding Participant’s retirement; and (ii) at or after the attainment of age 55 and after completing a number of years of service (the total years of “Credited Service” attributable to Participant as of the date of termination, as such term is defined in the Owens & Minor 401(k) Savings and Retirement Plan, as amended, whether or not Participant participates in such plan) that, when added to Participant’s age at the time of severance from employment, equals at least 65 or (iii) at or after the attainment of age 65.
(v)Termination of Employment by Company or Affiliate.
(a)With Cause. If the Company or an Affiliate terminates Participant’s employment with the Company or its Affiliate with “cause,” all RSUs with respect to which all restrictions have not lapsed previously shall be forfeited immediately and all rights of Participant to shares of Common Stock covered by such RSUs shall terminate immediately without further obligation on the part of the Company. For purposes of this Agreement, “cause” means: (i) misappropriation, theft or embezzlement of funds or property from the Company or an Affiliate or securing or attempting to secure personally any profit in connection with any transaction entered into on behalf of the Company or an Affiliate, (ii) conviction of, or entry of a plea of “nolo contendere” with respect to, a felony which, in the reasonable opinion of the Company, is likely to cause material harm to the Company’s or an Affiliate’s business, customer or supplier relations, financial condition or prospects, (iii) violation of the Company’s Code of Honor or any successor code of conduct, or refusal to sign an acknowledgement to abide by the same; (iv) violation of any material law or regulation to the detriment of the Company or any Affiliate; (v) engagement in conduct that results in monetary, reputational, or other injury to the Company or an Affiliate, or that would be likely to result in such injury to the Company or an Affiliate if the Participant were to continue to be employed by the Company or an Affiliate; or (vi) failure to substantially perform or meet the Company or an Affiliate’s performance expectations with regard to the duties of Participant’s job (other than by reason of illness or temporary disability, regardless of whether such temporary disability is or becomes a total and permanent disability (as defined in paragraph 2(d)(ii) above), or by reason of approved leave of absence).
(b)Without Cause. Except as set forth below in connection with a Change in Control, if Participant’s employment with the Company or its Affiliate is terminated by the Company or an Affiliate without “cause,” all restrictions on a Pro Rata Portion of the RSUs that have not lapsed previously shall lapse. The certificate or certificates representing the shares of Common Stock covered by the RSUs with respect to which the restrictions have lapsed shall be issued to Participant no later than 30 days after termination of Participant’s employment, and the remaining shares of Common Stock covered by the RSUs for which all restrictions have not lapsed previously shall be forfeited immediately and all rights of Participant to such shares of Common Stock shall terminate immediately without further obligation on the part of the Company.
(vi)Termination of Employment by Participant. If Participant resigns from employment with the Company and its Affiliates before the expiration of the applicable Restricted Period, without regard to the reason for such resignation (other than death, disability or retirement as provided in subsections (ii), (iii) and (iv) above), all of the RSUs with respect to which all restrictions have not lapsed previously shall be forfeited immediately and all rights of Participant to the shares of Common Stock covered by such RSUs shall terminate immediately without further obligation on the part of the Company.
(vii)Change in Control.
(a)If, upon a Change in Control, (i) the RSUs are assumed by, or a substitute award granted by, the surviving entity (together with its Related Entities, the “Surviving Entity”) in the Change in Control (such assumed or substituted award to be of the same type of award as this Stock Unit Award with a value as of the Control Change Date substantially equal to the value of this Stock Unit Award) and (ii) within 24 months following the Control Change Date, Participant’s employment with the Surviving Entity is terminated by the Surviving Entity without Cause (defined below), all restrictions applicable to the RSUs that have not lapsed previously shall immediately lapse on the date of employment termination and the certificate or certificates representing the shares of Common Stock covered by the RSUs upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after termination of Participant’s employment.
(b)For purposes of this subsection 2(d)(vi), “Cause” shall mean (i) the willful and continued failure by Participant to substantially perform his or her duties with the Surviving Entity (other than any such failure resulting from Participant’s incapacity due to physical or mental illness) after a written demand for substantial performance is delivered to Participant by the Surviving Entity, which demand specifically identifies the manner in which the Surviving Entity believes that Participant has not substantially performed his or her duties, or (ii) the willful engaging by Participant in conduct which is demonstrably and materially injurious to the Surviving Entity, monetarily or otherwise. For purposes of this paragraph, no act, or failure to act, on Participant’s part shall be deemed "willful" unless done, or omitted to be done, not in good faith and without reasonable belief that the action or omission was in the best interest of the Surviving Entity.
(c)If, upon a Change in Control, the RSUs are not assumed by, or a substitute award granted by, the Surviving Entity in the Change in Control as provided in subsection 2(d)(vi)(a) above, all restrictions applicable to the RSUs that have not lapsed previously shall immediately lapse on the Control Change Date and the certificate or certificates representing the shares of Common Stock covered by the RSUs upon which the restrictions have lapsed shall be issued to Participant no later than 30 days after the Control Change Date if Participant remains employed with the Company or an Affiliate as of the Control Change Date.
3.Acceptance of Agreement. Notwithstanding anything herein to the contrary, in order for the Award to become effective, the Participant must acknowledge acceptance of this Agreement no later than sixty (60) days following the date of grant. If the Agreement is not accepted within 60 days, the entire Award will be forfeited and cancelled without any consideration thereof, except as otherwise determined in the Committee’s sole and absolute discretion.
4.Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.
5.No Right to Continued Employment. The grant of RSUs hereunder does not confer upon Participant any right with respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate Participant’s employment at any time.
6.Change in Capital Structure. The terms of this award shall be adjusted as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization.
7.Withholding. The Participant may be required to pay to the Company, and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the RSUs, their grant or vesting or any payment or transfer with respect to the RSUs and to
take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such withholding taxes. Any withholding tax obligations required hereunder shall be satisfied by withholding or reducing the number of RSUs, as determined by the Company, otherwise issuable to Participant upon the settlement of the RSUs (i.e., “Net Shares” election).
8.Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date hereof and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date hereof.
9.Participant Bound by Plan. Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.
10.Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees and personal representatives of Participant and the successors of the Company.
11.Signature in Counterparts. This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. Acceptance of this Agreement as set forth in Section 3 above shall be deemed the Participant’s execution of this Agreement.
[signature page follows]
IN WITNESS WHEREOF, OWENS & MINOR, INC. has caused this Agreement to be signed by a duly authorized officer and Participant has affixed his or her signature hereto.
OWENS & MINOR, INC.
By: _________________________________
Edward A. Pesicka
President & Chief Executive Officer
PARTICIPANT
____________________________________
[Participant Name]
OWENS & MINOR, INC.
2022 PERFORMANCE STOCK UNIT AWARD AGREEMENT
THIS 2022 PERFORMANCE STOCK UNIT AWARD AGREEMENT (“Agreement”) dated as of Grant Date between Owens & Minor, Inc., a Virginia corporation (the “Company”), and Participant Name (“Participant”) is made pursuant to and subject to the provisions of the Company's 2018 Stock Incentive Plan (as amended, the “Plan”). All capitalized terms used in this Agreement that are not otherwise defined shall have the same meanings given to them in the Plan.
1.Grant of Performance Stock Unit Award. In accordance with the Plan, on Grant Date (the “Date of Grant”), the Company granted to the Participant, subject to the terms and conditions of the Plan and the terms and conditions set forth in this Agreement, __# Shs Granted____ shares of performance-based stock units (“PSUs”) as more particularly described herein and subject to the requirements of Section 2. The Participant will earn the PSUs to the extent that the requirements of Section 2 are satisfied. The Company will issue shares of Common Stock in accordance with Section 3 of this Agreement in settlement of the PSUs, if any, that the Participant earns in accordance with Section 2.
2.Earning PSUs. Subject to the other provisions of this Agreement, this Section 2 determines the number of PSUs that the Participant may earn under this Agreement.
(a)Initial Aggregate Adjusted EPS Payout Performance
(i) Step No. 1. Determine the Initial Aggregate Adjusted EPS achieved for the Performance Period.
(ii)Step No. 2. Determine the Aggregate Adjusted EPS Payout Percentage achieved for the Performance Period from the chart below that correlates to the Aggregate Adjusted EPS actually achieved. For purposes of determining the level of achievement and/or the Aggregate Adjusted EPS Payout Performance, if Aggregate Adjusted EPS is achieved at a level between Threshold and Target or between Target and Maximum, as the case may be, the level of performance will be determined based on a straight-line interpolation of the achievement levels and/or Aggregate Adjusted EPS Payout Percentages between Threshold and Target and Target and Maximum, as applicable (rounded down to the nearest hundredth of a percent). If Aggregate Adjusted EPS is achieved at Threshold or below, the Aggregate Adjusted EPS Payout Percentage shall be zero percent (0%). If Aggregate Adjusted EPS is achieved at Maximum or greater, the Aggregate Adjusted EPS Payout Percentage shall be two hundred percent (200%).
| | | | | | | | | | | |
| Initial Aggregate Adjusted EPS Payout Performance |
| Threshold | Target | Maximum |
Initial Aggregate Adjusted EPS Goal Cumulative Performance Period | [____] | [____] | [____] |
| Initial Aggregate Adjusted EPS Payout Percentage | 0% | 100% | 200% |
(b) Relative TSR Adjustment
(i) Step No. 1. Calculate the Total Shareholder Return (“TSR”) of the Company relative to the Russell 3000 Medical Equipment and Services Sector Index for the Performance Period. For purposes of calculating the TSR:
(a) The applicable composition of the Russell 3000 Medical Equipment and Services Sector Index shall be the companies included in such index at the beginning of the Performance Period (the “TSR Index”) adjusted pursuant to subsection (b), below.
(b) Changes in the composition of the Russell 3000 Medical Equipment and Services Sector Index during the Performance Period will be accounted for as follows: those companies acquired, taken private, or de-listed, if any, will be removed
from the TSR Index; those companies filing bankruptcy, if any, will remain at the bottom of the TSR Index.
(c) The share price used for calculation of the TSR performance will be an average of the share price for the 20 trading days preceding the beginning of the Performance Period and the end of the Performance Period.
(d) Dividends will be considered as reinvested at the ex-dividend date.
(ii) Step No. 2. Multiply the Initial Aggregate Adjusted EPS Payout Percentage by the Relative TSR Modifier to obtain the Total Payout Percent. For purposes of determining the level of achievement between Threshold and Target or between Target and Maximum, as the case may be, the level of performance will be determined based on a straight-line interpolation of the achievement levels between Threshold and Target and Target and Maximum, as applicable (rounded down to the nearest hundredth of a percent).
| | | | | | | | | | | |
| Relative TSR Modifier |
| Threshold | Target | Maximum |
Company TSR relative to the Russell 3000 Medical Equipment and Services Sector Index TSR Cumulative for the Performance Period | <= 25th percentile | 50th percentile | >= 75th percentile |
| Relative TSR Modifier | 75% payout | 100% | 125% payout |
(iii)Step No. 3. Subject to the other provisions of this Agreement, the number of PSUs earned by the Participant shall be the Target Shares multiplied by the Initial Aggregate Adjusted EPS Payout Percentage determined in Step 2 (a) above, multiplied by the Relative TSR Modifier determined in Step 2 (b) above, which in no case may exceed 200% of the original Target Shares.
An example is provided in Exhibit A to this Agreement.
“Adjusted EPS” shall mean that term (also referred to as Adjusted Earnings Per Share) as presented in the Company’s Consolidated Statement of Operations (unaudited) attached to the press release furnished under Item 2.02 of the Company's Current Report on Form 8-K furnished to Securities Exchange Commission in connection with reporting the Company's full year adjusted earnings for a fiscal year, adjusted further as approved by the Board of Directors and/or the Committee, to eliminate or exclude the effects of unusual or non-recurring items, including but not limited to, the effect of accounting changes; tangible and intangible asset impairment charges; fees, expenses and charges associated with debt and/or equity financing transactions, merger and acquisition activity (including the purchase or sale of a business unit or its assets and any post transaction-related claims, litigation or settlement charges); exit and realignment activities; gains/losses from asset sales not made in the ordinary course of business; regulatory or law changes; retirement plan gains/losses; gains/losses or charges associated with material litigation, regulatory, tax or insurance settlements; pandemics, natural disaster or similar events; and fluctuations in commodity prices or currency exchange rates.
“Aggregate Adjusted EPS” shall mean the sum of the Adjusted EPS for the fiscal years ending December 31 during the Performance Period.
“Performance Period” means fiscal years 2022 through 2024 (January 1, 2022 – December 31, 2024).
“Target Shares” means the number of PSUs set forth in Section 1 of this Agreement, as may be adjusted from time to time in accordance with Section 10.
(b)Effect of Termination Prior to Determination of Earned PSUs. Except as provided in subparagraphs (c), (d) and (e), no PSUs will be earned if the Participant’s employment with, and service to, the Company and its Affiliates terminates or is terminated for
any reason before the later to occur of (i) the date the earned PSUs are certified by the Committee as provided in Section 3(b), or (ii) if the Committee has not certified the number of earned PSUs as required by Section 3(b), then March 15, 2025 (such later date to occur being referred to as the “Measurement Date”).
(c)Death or Disability. This subparagraph (c) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates before the Measurement Date, on account of the Participant’s death or permanent and total disability (as defined in Section 22(e)(3) of the Code). In the event of the Participant’s death prior to the Measurement Date, the number of PSUs earned by the Participant shall equal the number determined in accordance with subparagraph (a). In the event the Participant’s employment terminates before the Measurement Date due to permanent and total disability, the number of PSUs earned by the Participant shall equal the number determined in accordance with subparagraph (a) multiplied by a fraction. The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month Performance Period (including any period that the Participant was absent from work for illness, injury or short-term disability, with Company or Affiliate approval, prior to termination of employment) and the denominator shall be 36.
(d)Retirement. This subparagraph (d) applies if the Participant’s employment with, and service to, the Company and its Affiliates terminates before the Measurement Date on account of the Participant’s retirement (defined below). In the event of the Participant’s retirement before the Measurement Date, the number of PSUs earned by the Participant shall equal the number determined in accordance with subparagraph (a) multiplied by a fraction. The numerator of the fraction shall be the number of whole months that the Participant was employed by, or providing services to, the Company or an Affiliate during the 36-month Performance Period and the denominator shall be 36. For purposes of this Agreement, retirement means severance from the employment of the Company (i) after completing a minimum of five (5) continuous years of active employment by the Company or its Affiliate immediately preceding Participant’s retirement; and (ii) at or after the attainment of age 55 and after completing that number of years of service with the Company that, when added to Participant’s age at the time of severance from employment, equals at least 65 or (iii) at or after the attainment of age 65.
(e)Change in Control. The Participant will earn the number of PSUs equal to Target Shares if there is a Change in Control before the Measurement Date.
(f)Adjustment for Strategic Transactions. In the event that the Company completes an acquisition, merger, divestiture or other strategic transaction (each a “Strategic Transaction”) during the Performance Period that the Committee believes in its sole discretion may have a material impact on the Company’s Adjusted EPS or Company’s TSR for the Performance Period, the Committee may, in its sole discretion without the consent or agreement of the Participant, (i) amend this Agreement to increase or decrease the Aggregated Adjusted EPS goal, change the Relative TSR Modifier or amend any other term or provision of this Agreement to take into account the expected impact of the Strategic Transaction, or (ii) cancel in its entirety this Agreement and reissue this award with modified terms and conditions to take into account the Strategic Transaction.
3.Settlement of PSUs. The PSUs will be settled in accordance with this Section 3.
(a)Administration of Award. The Committee shall administer this Agreement in accordance with the terms of the Plan. This Agreement is intended to comply both by its terms and in its operation with the applicable provisions of the Code in order to make it as tax-efficient for the Company as possible.
(b)Committee Certification. As soon as practicable after December 31, 2024 (but no later than March 15, 2025), the Committee will determine the Initial Aggregate Adjusted EPS
Payout Percentage, the Relative TSR Modifier, and resulting number of PSUs that are earned under the provisions of Section 2. The Committee’s determination shall be set forth in writing, as part of the minutes of a meeting of the Committee, by unanimous consent or otherwise. Notwithstanding the preceding sentences, a written determination of the Committee shall not be required in the case of PSUs that are earned pursuant to the provisions of Section 2(e).
(c)Earned PSUs. As soon as practicable after the Committee’s certification under subparagraph (b) (but no later than March 15, 2025), the PSUs will be adjusted to reflect the number of PSUs earned by the Participant. The earned PSUs shall be promptly settled in shares of Common Stock that are not subject to further restrictions. If the PSUs are earned pursuant to the provisions of Section 2(e), the number of shares of such PSUs to be issued under Section 2(e) shall be settled in shares of Common Stock that are not subject to further restrictions and shall be issued to the Participant on the Control Change Date.
4.Recoupment Policy. Notwithstanding any other provision in this Agreement to the contrary, the PSUs and any dividends related to either granted under this Agreement are subject to recoupment by the Company in accordance with the Company’s Policy on Recoupment of Executive Incentive Compensation in effect on the date of this Agreement, as such policy is interpreted and applied by the Company’s Board of Directors.
5.Acceptance of Agreement. Notwithstanding anything herein to the contrary, in order for the Award to become effective, the Participant must acknowledge acceptance of this Agreement no later than sixty (60) days following the date of grant. If the Agreement is not accepted within sixty (60) days, the entire Award will be forfeited and cancelled without any consideration thereof, except as otherwise determined in the Committee’s sole and absolute discretion.
6.Nontransferability. The PSUs are nontransferable except by will or by the laws of descent and distribution.
7.Shareholder Rights; Dividends. Except as otherwise specifically provided herein, the Participant shall not have any rights as a shareholder of the Company with respect to the PSUs. Upon the issuance of shares of Common Stock in settlement of the earned PSUs, the Participant shall have all of the rights of a shareholder of the Company with respect to those shares, including the right to vote the shares; provided, that the right to receive dividends shall be controlled by Section 15 hereof. Stock received as a dividend on, or in connection with a stock split of any shares of Common Stock issued in settlement of the earned PSUs shall be subject to the same vesting restrictions as the earned PSUs. The Participant’s right to receive any extraordinary dividends or distributions with respect to earned PSUs shall be at the sole discretion of the Committee, but in the event of any such extraordinary event, the Committee shall take action appropriate to preserve the value of, and to prevent the unintended enhancement of value in, such earned PSUs.
8.Withholding. The Participant may be required to pay to the Company, and the Company shall have the right and is hereby authorized to withhold, any applicable withholding taxes in respect of the PSUs, their grant or vesting or any payment or transfer with respect to the PSUs and to take such action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such withholding taxes. Any withholding tax obligations required hereunder shall be satisfied by withholding or reducing the number of PSUs, as determined by the Company, otherwise issuable to Participant upon the settlement of the PSUs (i.e., “Net Shares” election).
9.No Right to Continued Employment. The award and settlement of the PSUs does not give Participant any right with respect to continuance of employment by the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate his or her employment at any time.
10.Change in Capital Structure. The number of PSUs and the performance criteria in Section 2 (or, after any settlement of the PSUs) shall be adjusted as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock split-ups subdivisions or consolidations of shares, other similar changes in capitalization or such other events as are described in the Plan.
11.Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia.
12.Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the Date of Grant and the provisions of this Agreement, the provisions of the Plan shall govern. All references herein to the Plan shall mean the plan as in effect on the Date of Grant.
13.Participant Bound by Plan. Participant hereby acknowledges that a copy of the Plan has been made available to him or her and he or she agrees to be bound by all the terms and provisions of the Plan.
14.Binding Effect. Subject to the limitations stated herein and in the Plan, this Agreement shall be binding upon Participant and his or her successors in interest and the successors of the Company.
15. Dividend Equivalents. Any dividends that would have been paid on any earned PSUs prior to settlement if the earned PSUs had been actual shares of Common Stock outstanding during the period from the Date of Grant through the date of issuance of the Common Stock upon settlement of the PSUs shall be accumulated without interest by the Company and paid to Participant at settlement. No dividends will be paid on the PSUs if the PSUs were not earned and issued hereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.
OWENS & MINOR, INC.
By: _________________________________
Edward A. Pesicka
President & Chief Executive Officer
By: __________________________________
Participant Name
Exhibit A
Example of Earned PSU Award
rTSR modifier using Russell 3000 Medical Equipment and Services Sector Index
1.Determine Initial Aggregate Adjusted EPS Payout Performance
| | | | | | | | | | | |
| Initial Aggregate Adjusted EPS Payout Performance |
| Threshold | Target | Maximum |
Initial Aggregate Adjusted EPS Goal Cumulative Performance Period | [____] | [____] | [____] |
| Initial Aggregate Adjusted EPS Payout Percentage | 0% | 100% | 200% |
Example: OMI aggregate adjusted EPS over the 3-year Performance Period (1/1/2022 – 12/31/2024) is: [____]
–[____]- [____] spread = [____], actual example of [____] is [____] over the target, which is [____] [____]) of the spread from Target to Maximum, resulting in a [____] of target payout
2.Determine Relative TSR Performance
| | | | | | | | | | | |
| Relative TSR Modifier |
| Threshold | Target | Maximum |
Company TSR relative to the Russell 3000 Medical Equipment and Services Sector Index TSR Cumulative for the Performance Period | <= 25th percentile | 50th percentile | >= 75th percentile |
| Relative TSR Modifier | 75% payout | 100% | 125% payout |
Example: OMI TSR over the 3-year Performance Period (1/1/2022 – 12/31/2024) is measured as a percentile of the Index TSR results, with the start and end points of the Performance Period each determined as the stock price over the prior 20 trading days.
–Example: [____] percentile achievement = [____] modifier
3.Determine PSU award
Example: Multiply the result from steps 1 and 2, for a combined multiplier, in this case of [____] of target ([____]). If initial PSU grant was [____] PSUs, final award will be [____] or [____] shares.
Please reference the entire grant agreement for detailed terms and conditions, this is an example only.
