INCENTIVE STOCK OPTION AGREEMENT
WITNESSETH:
RECITALS
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A. The Board of Directors of the Company has adopted
the Company's 1991 Restated Stock Option Plan (as amended and
restated through March 29, 1995) (the "Plan") for the purpose of
attracting and retaining the services of selected key employees
(including officers and directors), and consultants and other
independent contractors who contribute to the financial success
of the Company or its parent or subsidiary corporations.
B. Optionee is an employee who is to render valuable
services to the Company or its parent or subsidiary corporations,
and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the
Company's grant to Optionee of an option intended as an
"incentive stock option" within the meaning of that term under
Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
C. Capitalized terms not otherwise defined herein
shall have the same meaning as assigned to them under the Plan.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms
and conditions set forth in this Agreement, the Company hereby
grants to Optionee, as of the grant date (the "Grant Notice"), a
stock option to purchase up to that number of shares of the
Company's Common Stock (the "Optioned Shares") as is specified in
the Grant Notice. The Optioned Shares shall be purchasable from
time to time during the option term at the option price per share
(the "Option Price") specified in the Grant Notice.
2. Option Term. This option shall have a maximum
term of ten (10) years measured from the Grant Date and shall
accordingly expire at the close of business on the expiration
date (the "Expiration Date") specified in the Grant Notice,
unless sooner terminated in accordance with Paragraph 5 or
Paragraph 6.
3. Option Nontransferable; Exception. This option
shall be neither transferable nor assignable by Optionee other
than by will or by the laws of descent and distribution and may
be exercised, during Optionee's lifetime, only by Optionee.
4. Dates of Exercise. This option shall become
exercisable for the Optioned Shares in one or more installments
as is specified in the Grant Notice. As the option becomes
exercisable in one or more installments, the installments shall
accumulate and the option shall remain exercisable for such
installments until the Expiration Date or the sooner termination
of the option term under Paragraph 5 or Paragraph 6 of this
Agreement.
5. Accelerated Termination of Option Term. The
option term specified in Paragraph 2 shall terminate (and this
option shall cease to be exercisable) prior to the Expiration
Date should one of the following provisions become applicable:
(i) Except as otherwise provided in subparagraph (ii)
or (iii) below, should Optionee cease to remain in Service,
then the period for exercising this option shall be reduced
to a three (3)-month period commencing with the date of such
cessation of Service, but in no event shall this option be
exercisable at any time after the Expiration Date. Upon the
expiration of such three (3)-month period or (if earlier)
upon the Expiration Date, this option shall terminate and
cease to be outstanding.
(ii) Should Optionee die while this option is
outstanding, then the personal representative of the
Optionee's estate or the person or persons to whom the
option is transferred pursuant o the Optionee's will or in
accordance with the law of descent and distribution shall
have the right to exercise this option. Such right shall
lapse and this option shall cease to be exercisable upon the
earlier of (A) the expiration of the twelve (12) month
period measured from the date of Optionee's death or (B) the
Expiration Date. Upon the expiration of such twelve (12)
month period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding.
(iii) Should Optionee become permanently disabled and
cease by reason thereof to remain in Service, then the
Optionee shall have a period of twelve (12) months
(commencing with the date of such cessation of Service)
during which to exercise this option, but in no event shall
this option be exercisable at any time after the Expiration
Date. Optionee shall be deemed to be permanently disabled
if Optionee is, by reason of any medically determinable
physical or mental impairment expected to result in death or
to be of continuous duration of not less than twelve (12)
consecutive months or more, unable to perform his/her usual
duties for the Company or the parent or subsidiary
corporation retaining his/her services. Upon the expiration
of such limited period of exercisability or (if earlier)
upon the Expiration Date, this option shall terminate and
cease to be outstanding.
(iv) During the limited period of exercisability
applicable under subparagraphs (i), (ii) or (iii) above,
this option may be exercised for any or all of the Optioned
Shares for which this option is, at the time of the
Optionee's cessation of Service, exercisable in accordance
with the exercise schedule specified in the Grant Notice and
the provisions of Paragraph 6 of this Agreement.
(v) For purposes of this Paragraph 5 and for all other
purposes under this Agreement:
(1) The Optionee shall be deemed to remain in
Service for so long as the Optionee continues to render
periodic services to the Company or any parent or
subsidiary corporation, as an Employee of the Company.
(2) The Optionee shall be deemed to be an
Employee of the Company and to continue in the
Company's employ for so long as the Optionee remains in
the employ of the Company or one or more of its parent
or subsidiary corporations. An Optionee shall continue
to be an Employee of the Company during a leave of
absence approved by the Board of Directors; provided,
however, that such leave of absence does not exceed 90
days in which case the Optionee shall cease to be an
Employee unless the Optionee's right to reemployment
after such period is guaranteed by statute or contract.
(3) A corporation shall be considered to be a
subsidiary corporation of the Company if it is a member
of an unbroken chain of corporations beginning with the
Company, provided each such corporation in the chain
(other than the last corporation) owns, at the time of
determination, stock possessing 50% or more of the
total combined voting power of all classes of stock in
one of the other corporations in such chain.
(4) A corporation shall be considered to be a
parent corporation of the Company if it is a member of
an unbroken chain ending with the Company, provided
each such corporation in the chain (other than the
Company) owns, at the time of determination, stock
possessing 50% or more of the total combined voting
power of all classes of stock in one of the other
corporations in such chain.
6. Acceleration of Option.
A. Upon the first occurrence of any of the following
events (each an "Acceleration Event"):
(i) the merger, consolidation or reorganization of the
Company into or with another corporation or other legal
person, if as a result of such merger, consolidation or
reorganization less than 60% of the combined voting power of
the then-outstanding securities of such corporation or
person immediately after such transaction are held in the
aggregate by the holders of Voting Stock (as that term is
hereafter defined) of the Company immediately prior to such
transaction by reason of their ownership of voting stock of
the Company;
(ii) the sale or transfer by the Company of all or
substantially all of its assets to another corporation or
other legal person, if as a result of such sale or transfer
less than 60% of the combined voting power of the then-
outstanding securities of such corporation or person
immediately after such sale or transfer is held in the
aggregate by the holders of Voting Stock of the Company
immediately prior to such sale or transfer by reason of
their ownership of voting stock of the Company;
(iii) the filing of a report on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report),
each as promulgated pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), disclosing that
any person (as the term "person" is used in Section 13(d)(3)
or Section 14(d)(2) of the Exchange Act) has become the
beneficial owner (as the term "beneficial owner" is defined
under Rule 13d-3 or any successor rule or regulation
promulgated under the Exchange Act) of securities
representing more than 50% of the combined voting power of
the then-outstanding securities entitled to vote generally
in the election of directors of the Company ("Voting
Stock");
(iv) if during any period of two consecutive years,
individuals who, at the beginning of such period constituted
the directors of the Company, cease for any reason to
constitute a majority thereof (unless the election, or the
nomination for election by the Company's shareholders, of
each director of the Company first elected during such
period was approved by a voter of at least two-thirds of the
directors then still in office who were directors of the
Company at the beginning of any such period; or
(v) the occurrence of any other event or series of
events, which event or series of events, in the opinion of
the Board, will, or is likely to, if carried out, result in
a change of control of the Company;
then the exercisability of this option shall, to the extent it is
not otherwise at the time fully exercisable, be automatically
accelerated so that such option shall immediately become fully
exercisable with respect to the Optioned Shares and may be
exercised for all or any portion of such shares.
B. This Agreement shall not in any way affect the
right of the Company to adjust, reclassify, reorganize or
otherwise make changes in its capital or business structure or to
merge, consolidate, dissolve, liquidate or sell or transfer all
or any part of its business or assets.
7. Adjustment in Optioned Shares. In the event any
change is made to the Common Stock issuable under the Plan by
reason of any (i) Acceleration Event or (ii) stock split, stock
dividend, combination of shares, exchange of shares, or other
change affecting the outstanding Common Stock as a class without
receipt of consideration, appropriate adjustments shall be made
to (i) the class and/or number of Optioned Shares subject to his
option and (ii) the Option Price payable per share in order to
reflect such change and thereby preclude a dilution or
enlargement of benefits hereunder. In the event of any such
Acceleration Event, the Plan Administrator may provide in
substitution for any or all outstanding options under the Plan
such alternative consideration as it may in good faith determine
to be equitable under the circumstances and may require in
connection therewith the surrender of all options so replaced.
The purpose of the foregoing provisions shall be to preclude the
enlargement or dilution of rights and benefits under the
outstanding options.
8. Privilege of Stock Ownership. The holder of this
option shall not have any of the rights of a shareholder with
respect to the Optioned Shares until such individual shall have
exercised the option and paid the Option Price.
9. Manner of Exercising Option.
A. In order to exercise this option with respect to
all or any part of the Optioned Shares for which this option is
at the time exercisable, Optionee (or in the case of exercise
after Optionee's death, Optionee's executor, administrator, heir
or legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the
Company a notice of exercise (the "Notice of Exercise")
in substantially the form of Exhibit B to the Grant
Notice.
(ii) Pay the aggregate Option Price for the
purchased shares in one or more of the following
alternative forms:
1. full payment in cash or check;
2. full payment in shares of Common Stock
of the Company which have been owned by the
Optionee (i) more than one year if previously
acquired upon exercise of an incentive stock
option or (ii) more than six months if previously
acquired otherwise at Fair Market Value on the
Exercise Date (as such terms are defined below);
3. full payment in a combination of (i)
shares of Common stock of the Company which have
been owned by the Optionee (a) more than one year
if previously acquired upon exercise of an
incentive stock option or (b) more than six months
if previously acquired otherwise at Fair Market
Value on the Exercise Date and (ii) cash or check;
4. payment effected through a broker-dealer
sale and remittance procedure pursuant to which
the Optionee (i) shall provide irrevocable written
instructions to the designated broker-dealer to
effect the immediate sale of the purchased shares
and remit to the Company, out of the sale
proceeds, an amount equal to the aggregate Option
Price payable for the purchased shares plus
interest at the applicable federal rate from the
date of exercise to the date of payment plus all
applicable Federal and State income and employment
taxes required to be withheld by the Company by
reason of such purchase and (ii) shall provide
written directives to the Company to deliver the
certificates for the purchased shares directly to
such broker-dealer, in order to complete the sale
transaction <F1>;
[FN]
<F1> If the Optionee is at the time subject to the short-swing
profit restrictions of the Federal securities laws, the special
sale and remittance procedure may be utilized to the extent, that
such utilization (i) would not otherwise result in a violation of
such restrictions or (ii) is, if the Optionee is a non-employee,
permissible under applicable regulations of the Federal Reserve
Board.
5. payment with any other property
acceptable to the Plan Administrator which has a
fair market value on the Exercise Date equal to
the option price and serves as valid consideration
for issuance of the Corporation's Common Stock
under Delaware law; or
6. any other form which the Plan
Administrator may, in its discretion, approve at
the time of exercise in accordance with the
provisions of Paragraph 15 of this Agreement.
B. For purposes of this Agreement, the Fair Market
Value of a share of Common Stock on any relevant date shall be
determined in accordance with subparagraphs (i) through (iii)
below, and the Exercise Date shall be the date on which the
executed Notice of Exercise is delivered to the Company. Except
to the extent the sale and remittance procedure of clause (ii) 4
is utilized, payment of the Option Price for the purchase shares
must accompany the Exercise Notice.
(i) if the Common Stock is not on the date in question
listed or admitted to trading on any stock exchange, but is
traded in the over-the-counter market, the Fair Market Value
shall be the mean between the highest bid and lowest asked
prices (or if such information is available, the closing
selling price) per share of Common Stock on such date in the
over-the-counter market, as such prices are reported by the
National Association of Securities Dealers through its
NASDAQ system or any successor system. If there are no
reported bid and asked prices (or closing selling price) for
the common stock on the date in question, then the mean
between the highest bid and lowest asked prices (or closing
selling price) on the last preceding date for which such
quotations exist shall be determinative of Fair Market
Value.
(ii) If the Common stock is on the date in question
listed or admitted to trading on any stock exchange, then
the Fair Market Value shall be the closing selling price per
share of Common Stick on such date on the stock exchange
determined by the Plan Administrator to be the primary
market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such
exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market
Value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
(iii) If the Common Stock is on the date in question
neither listed or admitted to trading on any stock exchange
nor traded in the over-the-counter market, then the Fair
Market Value shall be determined by the Plan Administrator
after taking into account such factors as the Plan
Administrator shall deem appropriate.
C. As soon after the Exercise Date as practical, the
Company shall mail or deliver to Optionee or to the other person
or persons exercising this option a certificate or certificates
representing the shares so purchased and paid for, with the
appropriate legends affixed thereto.
D. In no event may this option be exercised for any
fractional shares.
10. Compliance with Laws and Regulations.
A. The exercise of this option and the issuance of
Optioned Shares upon such exercise shall be subject to compliance
by the Company and the Optionee with all applicable requirements
of law relating thereto and with all applicable regulations of
any stock exchange on which shares of the Company Common Stock
may be listed at the time of such exercise and issuance.
B. In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such
representations in writing as may be requested by the Company in
order for it to comply with the applicable requirements of
Federal and State securities laws.
11. Successors and Assigns. Except to the extent
otherwise provided in Paragraph 3 or 6, the provision of this
Agreement shall inure to the benefit of, and be biding upon, the
successors, administrators, heirs, legal representatives and
assigns of Optionee and the successors and assigns of the
Company.
12. Liability of Company.
A. If the Optioned Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common
Stock which may without shareholder approval be issued under the
Plan, then this option shall be void with respect to such excess
shares, unless shareholder approval of an amendment sufficiently
increasing the number of shares of Common Stock issuable under
the Plan is obtained in accordance with the provisions of Article
Four Section III of the Plan.
B. The inability of the Company to obtain approval
from any regulatory body having authority deemed by the Company
to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Company of any
liability with respect to the non-issuance or sale of the Common
Stock as to which such approval shall not have been obtained.
The Company, however, shall use its best efforts to obtain all
such approvals.
13. No Employment or Service Contract. Nothing in
this Agreement or in the Plan shall confer upon the Optionee any
right to continue in the service of the Company (or any parent or
subsidiary corporation of the Company employing or retaining
Optionee) for any period of specific duration or interfere with
or otherwise restrict in any way the rights of the Optionee,
which rights are hereby expressly reserved by each, to terminate
Optionee's Service at any time for any reason whatsoever, with or
without cause.
14. Notices. Any notice required to be given or
delivered to the Company under the terms of this Agreement shall
be in writing and addressed to the Company in care of the
Corporate Secretary at its principal corporate offices. Any
notice required to be given or delivered to Optionee shall be in
writing and addressed to Optionee at the address indicated below
Optionee's signature line on the Grant Notice. All notices shall
be deemed to have been given or delivered upon personal delivery
or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.
15. Loans. The Plan Administrator may, in its
absolute discretion and without any obligation to do so, assist
the Optionee in the exercise of this option by (i) authorizing
the extension of a loan to the Optionee from the Company or (ii)
permitting the Optionee to pay the option price for the purchased
Common Stock in installments over a period of years. The terms
of any such loan or installment method of payment (including the
interest rate, the requirements for collateral and the terms of
repayment) shall be established by the Plan Administrator in its
sole discretion.
16. Construction. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and
are in all respects limited by and subject to the express terms
and provisions of the Plan. All decisions of the Plan
Administrator with respect to any question or issue arising under
the Plan or this Agreement shall be conclusive and binding on all
persons having an interest in this option.
17. Governing Law. The interpretation, performance,
and enforcement of this Agreement shall be governed by the laws
of the State of California without resort to that State's
conflict-of-laws rules.
18. Tax Withholding.
A. Optionee hereby agrees to make appropriate
arrangements with the Company or parent or subsidiary corporation
employment Optionee for the satisfaction of any Federal, State or
local income tax withholding requirements and Federal social
security employee tax requirements applicable to the exercise of
this option.
B. The Company's obligation to deliver shares of
common stock and/or cash upon the exercise of this option or any
related stock appreciation right shall be subject to the
satisfaction of all applicable Federal, State and local income
and employment tax withholding requirements.
COMPLETE WITH DOCUMENT WHEN EXERCISING AN OPTION
FOR FULLY VESTED SHARES
NOTICE OF EXERCISE OF STOCK OPTION
I hereby notify Quantum Health Resources, Inc. (the
"Company") that I elect to purchase _________ shares of Common
Stock of the Company (the "Purchased Shares") pursuant to that
certain option (the "Option") granted to me on _______________,
199__ to purchase up to _______ shares of the Company's Common
Stock at an option of $__________ per share (the "Option Price")
the fair market value of a share of the Company's Common Stock as
of the date hereof.
Concurrently with the delivery of this Exercise Notice
to the Secretary of the Company, I hereby pay to the Company the
Option Price for the Purchased Shares in accordance with the
provisions of my agreement with the Company evidencing the Option
and shall deliver whatever additional documents may be required
by such agreement as a condition for exercise.
_________________________ _____________________________
Date Optionee
Address:_____________________
_____________________________
Print name in exact manner
it is to appear on the
stock certificate: _____________________________
Address to which certificate
is to be sent, if different
from address above: _____________________________
_____________________________
_____________________________
Social Security Number: _____________________________