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EXHIBIT 10.5(i)
GRANT OF STOCK OPTIONS
UNDER THE
CRYSTAL MEDICAL PRODUCTS, INC. STOCK OPTION PLAN
This Grant is delivered by Crystal Medical Products, Inc. (the
"Company") to Marvin Sears ("Sears"), its Executive Vice President and Chief
Scientific Officer, as of September 1, 1998 (the "Grant Date").
WHEREAS, the Company's Board of Directors (the "Board"), has
adopted, subject to shareholder approval, the Crystal Medical Products, Inc.
Stock Option Plan (the "Plan"); and
WHEREAS, the Plan provides that officers and key employees of
the Company may be granted options for the purchase of shares of the Company's
common stock, $.01 par value ("Company Stock"), in accordance with the terms and
provisions of the Plan; and
WHEREAS, the Board considers Sears eligible for a grant of
options under the Plan, and has determined that it would be in the best
interests of the Company to grant options to him;
NOW, THEREFORE, the parties hereto, intending to be legally
bound, agree as follows:
1. GRANT OF OPTIONS.
Subject to the terms and conditions set forth herein, the Company, with
the approval and at the direction of the Board, hereby grants to Sears, as of
the Grant Date, options for a total of 500,000 shares, consisting of one (1)
incentive stock option to purchase up to 83,335 shares of Company Stock (Option
No. 1) and five (5) incentive stock options to purchase up to 83,333 shares of
Company Stock per Option (Option Nos. 2 through 6), at a price of $1.00 per
share (the fair market value as of the Grant Date). (Option Nos. 1 through 6
shall be collectively referred to as the "Options". The shares of Company Stock
purchasable upon exercise of each Option shall be collectively referred to as
the "Option Shares".) The Options are intended to qualify as incentive stock
options under Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
2. EXERCISABILITY OF OPTIONS.
Subject to the limitations provided herein, the Options shall become
exercisable as follows:
Option No. 1: on and after January 31, 1999
Option No. 2: on and after January 31, 2000
Option No. 3: on and after January 31, 2001
Option No. 4: on and after January 31, 2002
Option No. 5: on and after January 31, 2003
Option No. 6: on and after January 31, 2004
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The Board may accelerate the exercise date of any Option at any time
and for any reason, including, but not limited to, a "change in control" (as
defined in the Plan). In addition, if Sears ceases to be employed by the Company
(i) after a public offering, and within five (5) years of the Grant Date, due to
death, disability or termination by the Company for any reason other than cause,
or (ii) five (5) or more years after the Grant Date for any reason, the exercise
date of any Option that is not otherwise exercisable shall be accelerated to the
date Sears' employment terminates. If the aggregate fair market value (as of the
Grant Date) of Option Shares as to which Options are exercisable for the first
time in any calendar year is deemed to exceed $100,000, then the Options, as to
the excess, shall be treated as nonqualified stock options, not intended to
qualify under Section 422 of the Code.
3. TERMINATION OF OPTIONS.
All exercisable options shall terminate unless exercised before the
earliest of the following dates:
(a) August 31, 2008;
(b) Ninety (90) days after Sears ceases to be employed by the
Company for any reason other than death or disability (as
defined in the Plan);
(c) One year after termination of Sears' employment due to death
or disability;
(d) One year after Sears' death if he dies within ninety (90) days
of termination of his employment.
4. EXERCISE OF OPTIONS.
Sears may exercise any of the Options with respect to all or any part
of the Option Shares then exercisable by giving the Board written notice of
intent to exercise specifying: the Option being exercised; the number of shares
as to which the Option is exercised; and the date to complete the exercise (the
"Notice").
Provided full payment therefor has been received and all legal
requirements applicable to the issuance or transfer of such shares have been
complied with to its satisfaction, the Board, on the exercise date specified in
the Notice, or as soon thereafter as practicable, shall cause to be delivered to
Sears certificate(s) for the Option Shares then being purchased. Such
certificate(s) may be for authorized and unissued or reacquired shares of
Company Stock.
5. SHAREHOLDERS' AGREEMENT; OTHER INSTRUMENTS.
As a condition to the delivery of any Option Shares to be distributed
to him, Sears agrees to execute any shareholders' agreement and such other
documents and instruments required by applicable federal and state securities
laws or which the Board deems appropriate or desirable.
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6. FAIR MARKET VALUE.
As used herein, the "fair market value" of an Option Share as of the
Grant Date shall be the value as determined by the valuation of Howard Lawson &
Co. attached hereto.
7. NONTRANSFERABILITY OF OPTIONS.
Options granted hereunder shall not be transferable by Sears except by
will or the laws of descent and distribution. If Sears dies, his personal
representative or any other person entitled to succeed his rights may exercise
such rights upon satisfactory proof to the Company of the right to receive the
Option under Sears' will or the applicable laws of descent and distribution. Any
other attempt by Sears to alienate, assign, pledge, hypothecate or otherwise
dispose of any of the Options, or the levy of any attachment, execution or
similar process upon the rights conferred hereunder, shall terminate such
Options.
8. STOCKHOLDER RIGHTS.
Sears shall have the rights and privileges of a stockholder of the
Company with respect to any Option Share only after exercise of the Option with
respect thereto and delivery of such Option Share pursuant to Section 4 hereof.
9. EMPLOYMENT NOT AFFECTED.
Neither the granting of the Options, nor their exercise, shall be
construed as granting Sears any right to continuing employment with the Company.
10. AMENDMENT OF GRANT.
The Board may amend this Grant at any time if it determines, in its
sole discretion, that such amendment is necessary or advisable in light of any
modification of the Code (or the Treasury Regulations promulgated thereunder),
any federal or state securities law or any other law or regulation which applies
to the Options. Other amendments to the Grant may be made only in a writing
signed by the Company and Sears.
11. NOTICE.
Any notice required hereunder or under the Plan shall be sent to the
appropriate party, at the address indicated below, by hand delivery or certified
mail -
to the Company's Board: Board of Directors
Crystal Medical Products, Inc.
Attention: Herbert Lotman, Chairman
321 Spruce Street
525 Bank Towers
Scranton, PA 18503
copies to: George Ginader, CPA
Ginader Jones & Co.
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321 Spruce Street
525 Bank Towers
Scranton, PA 18503
and
John W. Pelino, Esq
Pelino & Lentz, P.C.
One Liberty Place - 32nd Floor
1650 Market Street
Philadelphia, PA 19103-7393
to Sears: Marvin Sears
952 Pond Meadow Road
Westbrook, CT 06498-0551
12. INCORPORATION OF PLAN BY REFERENCE.
These Options are granted pursuant to the terms of the Plan (which is
incorporated herein by reference), and the Options shall in all respects be
subject to, and interpreted in accordance with, the Plan, including, but not
limited to, its provisions relating to adjustments of and changes to the stock
of the Company, change in control and public offering. The Board shall interpret
and construe the Plan and this Grant instrument, and its interpretations and
determinations shall be binding and conclusive on Sears.
13. GOVERNING LAW.
The validity, construction, interpretation and effect of this
instrument shall be exclusively governed by and determined in accordance with
the law of the Commonwealth of Pennsylvania, except to the extent preempted by
federal law.
IN WITNESS HEREOF, the parties hereto have executed this
instrument as of the day and year first written above.
CRYSTAL MEDICAL PRODUCTS, INC.
By: /s/ Herbert Lotman, Chairman
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Accepted and Agreed To By:
/s/ Marvin Sears
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Marvin Sears
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