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EXHIBIT 10.7
QK HEALTHCARE, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT made as of the_________day of _____________, 1999 by and
between QK HEALTHCARE, INC., a Delaware corporation (the "Corporation") and
______________________ (the "Optionee")
WITNESSETH:
WHEREAS, the Optionee is a ____________ to the Corporation and the
Corporation desires to afford the Optionee the opportunity to acquire, or
enlarge, his or her stock ownership in the Corporation so that the Optionee may
have a direct proprietary interest in the Corporation's success; and
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained, the parties hereto hereby agree as follows:
1. Grant of Stock Option. Pursuant to the provisions of the QK
Healthcare, Inc. 2000 Stock Option Plan (the "Plan"), the Corporation hereby
grants to the Optionee, subject to the terms and conditions of the Plan and
subject further to the terms and conditions set forth herein, a non-qualified
stock option entitling the Optionee, during the period set forth in Article 2 of
this Agreement, to purchase from the Corporation up to, but not exceeding in the
aggregate, ______ shares of the Corporation's Common Stock, $.001 par value (the
"Option Shares"), at a price per share of $_____ (the "Option"). The Option
hereby granted shall expire 30 days after delivery of this Agreement to the
Employee unless the employee signs and returns this Agreement to the Corporation
within such 30 days. The Option is granted effective as of the date hereof (the
"Date of Option Grant"). Unless otherwise defined herein, capitalized terms used
herein shall have the same meaning as provided in the Plan.
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2. Term of the Option. The Option shall terminate in accordance with
the provisions of Section 8 below.
3. Exercise of the Option.
(a) Right to Exercise. Subject to the other terms of this Agreement
regarding the exercisability of this option, the Option shall be immediately
vested and fully exercisable upon execution of this Agreement.
(b) Method of Exercise. The Option may be exercised only by written
notice to the Corporation in the form attached hereto as Exhibit A, signed by
the Optionee and delivered in person or by certified or registered mail, return
receipt requested, to the President of the Corporation, or other authorized
representative of the Corporation, prior to the termination of the Option as set
forth in paragraph 2 above, accompanied by full payment of the exercise price
for the number of Option Shares being purchased in a form permitted under the
terms of the Plan.
(c) Withholding. At the time the Option is exercised, in whole or in
part, or at any time thereafter as requested by the Corporation, the Optionee
shall make adequate provision for the federal and state tax withholding
obligations of the Corporation, if any, which arise in connection with the
Option, including, without limitation, obligations arising upon: (i) the
exercise, in whole or in part, of the Option, (ii) the transfer, in whole or in
part, of any Option Shares acquired on exercise of the Option, (iii) the
operation of any law or regulation providing for the imputation of interest, or
(iv) the lapsing of any restriction with respect to any Option Shares acquired
on exercise of the Option.
4. Restrictions on Grant of the Option and Issuance of Shares. The
grant of the Option and the issuance of the Option Shares upon exercise of the
Option shall be subject to
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compliance with all applicable requirements of federal or state law with respect
to such securities. The Option may not be exercised if the issuance of Option
Shares upon such exercise would constitute a violation of any applicable federal
or state securities laws or other law or regulation. In addition, the Option may
not be exercised unless (a) a registration statement under the Securities Act of
1933, as amended, and any applicable state "Blue Sky" laws shall at the time of
exercise of the Option be in effect with respect to the Option Shares issuable
upon exercise of the Option or (b) in the opinion of legal counsel to the
Corporation, the Option Shares issuable upon exercise of the Option may be
issued in accordance with the terms of an applicable exemption from such
registration requirements. As a condition to exercise of the Option, the
Optionee shall satisfy any qualifications that may be necessary or appropriate
to evidence compliance with any applicable law or regulation and to make any
representation or warranty with respect thereto, as requested by the
Corporation.
5. Non-Transferability of the Option. The Option may be exercised
during the lifetime of the Optionee only by the Optionee and may not be assigned
or transferred in any manner except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order, as set forth
in the Plan.
6. Non-Transferability of the Option Shares.
(a) Option Shares received upon exercise of this Option in whole or
part shall not be transferred within 39 months from the date of this Agreement,
except as provided herein and in Section 6(b) and Section 6(c) below.
Notwithstanding the preceding sentence, the Optionee may sell up to 10% of the
total number of the Option Shares granted to the Optionee pursuant to this
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Option during each fiscal quarter beginning with the 24th month after the date
of this Agreement. The provisions of this Section 6(a) shall survive any
termination of this Agreement.
(b) If, during the term of this Agreement: (i) the Optionee dies, (ii)
the Optionee becomes disabled (within the meaning of Section 22(e)(3) of the
Internal Revenue Code), (iii) the Optionee is terminated without Cause or (iv)
there is a Change of Control, the restrictions on resale of the Option Shares
set forth in Section 6(a) above shall terminate as of the date of the applicable
event.
(c) Notwithstanding Section 6(a) above, in the event the Corporation
files a Registration Statement on Form S-3 or any successor or similar
short-form registration statement with respect to shares of Common Stock owned
by the Glenn Nussdorf Trust, the Stephen Nussdorf Trust and the Arlene Nussdorf
Trust (the "Selling Shareholders"), the Optionee shall have the right to sell
the same percentage of the Optionee's Option Shares as the Selling Shareholders
are selling of their shares of Common Stock pursuant to such registration
statement. The Corporation shall pay all registration expenses incurred in a
filing a Registration Statement on Form S-3 except underwriting discounts and
commissions and expenses of Optionee's legal counsel.
(d) Notwithstanding Section 6(a) above, if the Corporation files a
Registration Statement on Form S-3 or any other similar short-form registration
statement with respect to shares of Common Stock to be sold by the Corporation
within 36 months of the Corporation's initial public offering, the Optionee
shall have the right to sell up to 25% of the Optionee's aggregate initial
Option Shares pursuant to the registration statement. This right shall be
limited to the extent that the managing underwriter determines that the
inclusion of such additional shares will interfere with the orderly sale of the
underwritten Common Stock at a price range acceptable to the Corporation. The
Corporation shall pay all registration expenses incurred in filing a
Registration Statement on Form S-3 except underwriting discounts and commissions
and the expenses of Optionee's legal counsel.
7. Assumption of Options. Subject to the provisions of Section 8, upon
consolidation of the Corporation into a new entity, or merger, acquisition, or
reorganization of the Corporation into or with one or more other corporations,
the surviving, resulting or acquiring corporation, as the case may be, or a
parent or subsidiary corporation of such corporation, may (but shall not be
obligated to) substitute a new Option for this Option, or may (but shall not be
obligated to) assume this Option, if:
(a) the Optionee is then retained as an employee/consultant by such
surviving, resulting or acquiring corporation, or a parent or subsidiary
corporation of such corporation;
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(b) the excess of the aggregate Fair Market Value of the shares subject
to the Option immediately after the substitution or assumption over the
aggregate Option price of such shares does not exceed the excess of the
aggregate Fair Market Value of the Option Shares immediately before such
substitution or assumption over the aggregate purchase price of the Option
Shares; and
(c) the new option or the assumption of this Option does not give the
Employee additional benefits that the Employee did not have under this Option,
as determined in accordance with Section 424(a) of the Internal Revenue Code
8. Termination. This Agreement (other than Sections 5, 6(a) and 17), the
Option, and all of the rights hereunder shall terminate upon the first to occur
of the following events:
(a) Immediately upon: (i) termination of the Optionee's employment for
Cause by the Corporation or (ii) termination of the Optionee's consulting
agreement for Cause by the Corporation.
(b) Thirty-six months after the Optionee's termination by the Corporation
without Cause of employment with the Corporation or with a corporation or a
parent or subsidiary corporation of such corporation issuing or assuming a stock
option in a transaction to which Section 7 of this Agreement applies;
(c) Thirty six months after (i) the Optionee voluntarily terminates his
or her employment with the Corporation or (ii) the Optionee voluntarily
terminates his or her consulting agreement with the Corporation;
(d) Thirty-six months after: (i) the retirement of the Optionee; (ii) the
termination of employment with the Corporation on account of
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disability (within the meaning of Section 22(e)(3) of the Internal Revenue
Code), or with a corporation or a parent or subsidiary corporation of such
corporation issuing or assuming a stock option in a transaction to which Section
7 of this Agreement applies; or (iii) the death of the Optionee while an
employee of the Corporation; or
(e) Ten years after the date of this Agreement.
9. Change of Control
(a) In the event of a Change in Control, the Option will be exercisable
for a period of 30 days or such longer or shorter period as the Board may
prescribe immediately prior to such scheduled consummation of such Change of
Control, provided, however, that any such exercise of options during the notice
period shall be (i) conditioned upon the consummation of the Change of Control
and (ii) effective only immediately before the consummation of such Change of
Control. Upon consummation of a Change of Control, the Plan and all outstanding
options shall terminate.
(b) Notwithstanding Section 9(a), to the extent a provision is made in
writing in connection with such Change of Control for the continuation of the
Plan and assumption of the Options granted under the Plan or for the
substitution for such Options of new options covering the stock of a successor
company, or a parent or subsidiary thereof, with appropriate adjustments as to
the number and kinds of shares or units and exercise prices pursuant to Section
7 above, then the Plan and Options theretofore granted shall continue in the
manner and under the terms so provided, and the acceleration and termination
provisions set forth in Section 9(a) shall be of no effect.
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10. Adjustment of Shares. The Option Shares are shares of the Common
Stock as constituted on the date of this Agreement. Except to the extent such a
change would cause compensation payable to the Optionee to fail to satisfy
Section 162 of the Internal Revenue Code of 1986, as amended, if the Corporation
shall effect a subdivision, consolidation or reclassification of shares or other
capital readjustment or recapitalization, the payment of a stock dividend or
other increase or reduction in the number of shares of Common Stock outstanding
without receiving compensation therefor in money, services or property, then the
number, class and per share price of the Option Shares shall be appropriately
adjusted in such a manner as to entitle the Optionee, upon exercise of the
Option to receive the same aggregate cash consideration, the same total number
and class of shares as he or she would have received as a result of the event
requiring adjustment. Any adjustment so made shall be final and binding on the
Optionee.
11. Rights as a Stockholder. The Optionee shall have no rights as a
stockholder with respect to any shares of Common Stock covered by the Option
until the date of the issuance of a certificate or certificates for the shares
for which the Option has been exercised. No adjustment shall be made for
dividends or distributions or other rights for which the record date is prior to
the date such certificate or certificates are issued, except as provided in
Section 10 above.
12. Binding Effect. This Option Agreement shall inure to the benefit of
the successors and assigns of the Corporation and be binding upon the Optionee
and the Optionee's heirs, executors, administrators, successors and assigns.
13. Termination or Amendment. The Board may terminate or amend the Plan
and may amend this Option at any time, provided, however, that no such
termination or amendment
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may adversely affect the Option or any unexercised portion thereof without the
consent of the Optionee unless such amendment is required to enable the Option
to qualify as an incentive stock option.
14. Integrated Agreement. This Option Agreement and the Plan constitute
the entire understanding and agreement of the Optionee and the Corporation with
respect to the subject matter contained herein and therein, and there are no
agreements, understandings, restrictions, representations, or warranties among
the Optionee and the Corporation other than those as set forth or provided for
herein and therein. To the extent contemplated herein and therein, the
provisions of the Option Agreement and the Plan shall survive any exercise of
the Option and shall remain in full force and effect.
15. Applicable Law. This Option Agreement shall be governed by the laws
of the State of New York.
16. Subject to Plan. Except as may be specifically set forth herein,
the rights of the Optionee are subject to all of the terms and conditions of the
Plan, the provisions of which are hereby incorporated by reference herein. The
Optionee hereby acknowledges receipt of a copy of the Plan and agrees to by
bound by all terms and provisions thereof and further agrees to accept as
binding, conclusive and final all decisions or interpretations of the Board upon
any questions arising under this Option Agreement or the Plan.
17. Non-Competition Agreement.
(a) The Optionee shall not, during the period of the Optionee's
employment or consulting arrangement by or with the Corporation, and for a
period of six months immediately
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following the termination of the Optionee's employment or consulting arrangement
for any reason whatsoever other than the termination by Corporation without
Cause, directly or indirectly, for the Optionee or on behalf of or in
conjunction with any other person, persons, corporation, partnership,
corporation or business of whatever nature:
(i) engage, as an officer, director, stockholder, owner, partner, joint
venturer, or in a managerial, consulting or advisory capacity, whether as an
employee, independent contractor, consultant or advisor, or as a sales
representative, in any business which offers any services or products in direct
competition with the Corporation within the United States of America ("USA");
(ii) call upon any person who is, at that time, within the USA, an
employee of the Corporation in a managerial capacity for the purpose or with the
intent of enticing such employee away from or out of the employ of the
Corporation;
(iii) call upon any person or entity which is, at that time, or which has
been, within one (1) year prior to that time, a client of the Corporation within
the USA for the purpose of soliciting or selling products or services in direct
competition with the Corporation within the USA; or
(iv) induce or attempt to induce any person known by the Optionee to be a
customer, supplier, or business relation of the Corporation to cease doing
business with the Corporation or in any way interfere with the relationship
between the Corporation and any person known by the Optionee to be a customer,
supplier, licensee, or business relation of the Corporation.
(b) Because of the difficulty of measuring economic losses to the
Corporation as a result of a breach of the foregoing covenants, and because of
the immediate and irreparable
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damage that could be caused to the Corporation for which the Corporation would
have no other adequate remedy, the Optionee agrees that the foregoing covenants
may be enforced by the Corporation in the event of breach by the Optionee, by
injunctions and restraining orders.
(c) The covenants in this Section 17 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any
other covenant. Moreover, in the event any court of competent jurisdiction shall
determine that the scope, time or territorial restrictions set forth are
unreasonable, then it is the intention of the parties that such restrictions be
enforced to the fullest extent which the court deems reasonable, and this
Agreement shall thereby be reformed.
(d) The Optionee acknowledges that the covenants in this Section 17: (i)
are agreed to by the Optionee as an inducement for and in consideration of the
Corporation's entering into this Agreement; and (ii) contain limitations as to
time, geographic area and scope of activity to be restrained that are reasonable
and do not impose a greater restraint than is necessary to protect the goodwill
or other business interests of Corporation.
(e) The Optionee agrees that all of the covenants in this Section 17
shall be construed as an agreement independent of any other provision in this
Agreement, that the Corporation shall be the beneficiary of and have the right
to enforce such covenants, and that the existence of any claim or cause of
action of the Optionee against the Corporation, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Corporation of such covenants. It is specifically agreed that the period of six
months following termination of the Optionee's employment or consulting
arrangement stated at the beginning of this Section 17, during which the
agreements and covenants of the Optionee made in this Section 17 shall be
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effective, shall be computed by excluding from such computation any time during
which the Optionee is in violation of any provision of this Section 17.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
QK HEALTHCARE, INC.
By:_____________________________________
Name:
Title:
OPTIONEE
_______________________________________
Address:_______________________________
S.S. No._______________________________
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QK HEALTHCARE, INC.
EXHIBIT A
Form of Exercise
The undersigned, pursuant to the QK Healthcare, Inc. 2000 Stock Option
Plan (the "Plan") and pursuant to a Non-Qualified Stock Option Agreement
dated_______________, 2000, hereby agrees to purchase from the QK Healthcare,
Inc.(the "Corporation") __________ shares of Common Stock, par value $.001 per
share ("Common Stock"), at a purchase price of $_____ per share.
OPTIONEE:____________________________________________________________
First Middle Last
(Print name exactly as it will appear on your stock certificate.)
Social Security Number:____________________________________________________
Address:___________________________________________________________________
___________________________________________________________________________
The undersigned has delivered the following consideration to the
Corporation in exchange for Common Stock:
(1) $___________ in cash or by certified or cashier's check; and/or
(2) __________ shares of the Corporation's Common Stock, having a fair
market value equal in amount to the exercise price of the options being
exercised.
OPTIONEE
By:_____________________________________
Date:____________________