STOCK OPTION AGREEMENT
(Non-employee Director)
WITNESSETH:
RECITALS
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 a non-employee Director of the Company 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 of a non-qualified stock
option.
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 wet forth in this Agreement, the Company hereby
grants to Optionee, as of the grant date (the "Grant Date")
specified in the accompanying Notice of Grant of Stock Option
(the "Grant Notice"), a stock option to purchase up to that
number of shares of the Company's Common Stock (the "Optionee
Shares") as is specified in the Grant Notice. The Optionee
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 7.
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 Optionee 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 to 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 Optionee
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, whether as an Employee, a non-employee member
of the board of directors, or an independent contractor or
consultant.
(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.
(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 (such 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 of 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 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 Optionee 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 Optionee 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 Optionee 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 Optionee 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 Optionee 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 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 purchased 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 Stock 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 Administrators 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
Optionee 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's 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 binding 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 Optionee 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. Satisfaction of Tax withholding.
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.
19. Tax Withholding.
A. 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.
B. Optionee may elect to have the Company withhold
from the shares of Common Stock acquired under this option one or
more of such shares with an aggregate Fair Market Value equal to
the designated percentage (any multiple of 5% up to 100% as
specified by the Optionee) of the Federal and State income taxes
incurred in connection with the acquisition of such shares. In
lieu of the direct withholding provisions of this Subparagraph B,
Optionee may also hereby elect to deliver shares of Company Stock
to the Company in satisfaction of the Federal and State tax
liability incurred in connection with the exercise of this
option.
C. Each such tax withholding election shall be
subject to the following terms and conditions:
(i) The election must be made on or before the date
the amount of the Federal and State income tax liability
incurred in connection with the acquisition of the shares is
determined (the "Tax Determination Date").
(ii) The election shall be irrevocable.
(iii) The election shall be subject to the approval
of the Plan Administrator, and no shares of Common Stock
shall be accepted in satisfaction of the applicable taxes
except to the extent the election is approved by the Plan
Administrator.
(iv) The shares of Common Stock to be withheld pursuant
to the election shall be valued on the Tax Determination
Date in accordance with the Fair Market Value provisions of
Paragraph 9.B.
(v) In no event may be Optionee's requested
withholding exceed the dollar amount of the Federal and
State income taxes incurred in connection with the
acquisition of Common Stock under this option.
D. If Optionee is a Section 16(b) Insider at the time
the election is to be made, then the following limitations, in
addition to the provisions of Subparagraph B. above, shall also
be applicable.
(i) The election may only be made with respect to
shares of Common Stock acquired hereunder after this option
has been outstanding for a period of at least six (6) months
after the Grand Date.
(ii) The election must be made either (A) six (6)
months or more prior to the Tax Determination Date or (B)
concurrently with the exercise of the option during any
quarterly "window" period beginning on the third (3rd)
business day following the date of public release of the
Company's quarterly or annual summary statement of sales and
earnings and ending on the twelfth (12th) business day
following such release date.
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 ______________,
19__ 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:
___________________________