Exhibit 10.5
EXHIBIT A
DIRECTOR STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement"), made this ____ day
of _______, ____, by and between Lab Holdings, Inc. ("LHI") and
____________ ______________________ (the "Grantee") evidences the
grant, by LHI, of a Stock Option (the "Option") to the Grantee
effective on __________, ____, (the "Date of Grant") and the Grantee's
acceptance of the Option in accordance with the provisions of the Lab
Holdings, Inc. 1997 Directors' Stock Option Plan (the "Plan"). LHI
and the Grantee agree as follows:
1. Shares Optioned and Option Price. The Grantee shall have an
option to purchase ________ shares of LHI common stock, par value
$1.00 per share, for $_________ per share, subject to the terms and
conditions of this Agreement and of the Plan, the provisions of which
are hereby incorporated herein by reference. The shares subject to
the Option are not, nor are they intended to be, Incentive Stock
Option (ISO) shares as described in section 422 of the Internal
Revenue Code of 1986, as amended.
2. Vesting. Except as otherwise provided in section 3 below or
in the Plan, this Option shall be deemed vested with respect to the
number of shares described in section 1 as follows: (a) the right to
purchase one-third of the number of shares described in section 1
shall first be vested on the first anniversary of the Date of Grant,
(b) the right to purchase one-half of the remaining number of unvested
shares shall first be vested on the second anniversary of the Date of
Grant, and (c) the right to purchase the balance of the unvested
shares shall first be vested on the third anniversary of the Date of
Grant. Notwithstanding the foregoing provisions of this section 2, if
the Grantee's term as a Director of LHI terminates on account of his
death, the Option shall be deemed vested as to all shares described in
section 1 hereof as of the date of death.
3. Exercise Period. Except as otherwise provided in the Plan,
the Option may be exercised from time to time with respect to all or
any number of the then vested but unexercised shares on any regular
business day of LHI at its then executive offices, until the earliest
to occur of the following dates:
(a) the tenth anniversary of the Date of Grant;
(b) subject to subsection (c) next below, the date which is ninety (90)
days after the date the Grantee's term as a Director of LHI terminates, except
that such date shall be the date which is twelve (12) months after the Grantee's
death, if death occurs while the Grantee is a Director of LHI or within ninety
(90) days thereafter; provided however, if the term of a director does not
continue due to the terms of any plan or arrangement involving any merger,
consolidation or other event specified in Section 6.8, 6.9 or 6.10 of the Plan
or if the director is not elected to continue in office for three years
following such an event or is removed without cause from such office within
three years following such an event, then all options that are exercisable at
the time of such event or that become exercisable due to such event shall not
expire until the earlier of (a) twelve months following the date of death of the
director or (b) the end of the original term of the option regardless of the
date of termination of an Option holder's term as a Director.
provided, however, that if the Option is exercised after the
Grantee's term as a Director has terminated for any reason,
it may be exercised only to the extent vested on the date
such term as a Director terminated.
4. Exercise.
(a) During the period that the Option is
exercisable, it may be exercised in full or in part by
the Grantee or his guardian, assignee or legal
representative, and, in the event of the Grantee's
death, by the person or persons to whom the Option was
transferred by assignment, will or the laws of descent
and distribution, by delivering or mailing written
notice of the exercise to the Secretary of LHI. The
written notice shall be signed by the person entitled
to exercise the Option and shall specify the address
and Social Security number of such person. If any
person other than the Grantee purports to be entitled
to exercise all or any portion of the Option, the
written notice shall be accompanied by proof,
satisfactory to the Secretary of LHI, of that
entitlement.
(b) Subject to the provisions of subsection (c)
hereof, the written notice shall be accompanied by full
payment of the exercise price for the shares as to
which the Option is exercised either (i) in cash or
cash equivalents, (ii) in shares of LHI common stock
evidenced by certificates either endorsed or with stock
powers attached transferring ownership to LHI, with an
aggregate Fair Market Value (as defined in the Plan)
equal to said exercise price on the date the written
notice is received by the Secretary, or (iii) in any
combination of cash or cash equivalents and such
shares; provided that any shares of LHI common stock
tendered in payment of all or any part of the exercise
price must, if they are shares acquired by the Grantee
through an exercise of the Option, have been owned for
more than six (6) months prior to the subject Option
exercise.
(c) In lieu of payment of the exercise price by
way of delivery of certificate(s) evidencing shares of
LHI common stock, the Grantee may furnish a notarized
statement reciting the number of shares being purchased
under the Option and the number of LHI shares owned by
the Grantee which could be freely delivered as payment;
provided that if the certificate refers to any shares
acquired through an exercise of the Option, then such
shares must have been owned for more than six (6)
months prior to the subject Option exercise in order to
be considered eligible to be freely delivered as
payment. If the Grantee furnishes such a statement in
payment of the exercise price, he will be issued a
certificate for new shares representing the number of
shares as to which the Option is exercised, less the
number of shares described in the notarized statement
as constituting payment under the Option.
(d) In the event the Grantee pays the Option
exercise price by delivery of a notarized statement of
ownership, as described in subsection (c) next above,
the number of shares remaining subject to the Option
shall be reduced not only by the number of new shares
issued upon exercise of the Option but also by the
number of previously owned shares listed on the
notarized statement of ownership and deemed to be
surrendered as payment of the exercise price.
(e) The written notice of exercise will be
effective and the Option shall be deemed exercised to
the extent specified in the notice on the date that the
written notice (together with required accompaniments
respecting payment of the exercise price) is received
by the Secretary of LHI at its then executive offices
during regular business hours.
5. Transfer of Shares; Tax Withholding. As soon as
practicable after receipt of an effective written notice of
exercise and full payment of the exercise price as provided
in section 4 above, the Secretary of LHI shall cause
ownership of the appropriate number of shares of LHI common
stock to be transferred to the person or persons exercising
the Option by having a certificate or certificates for such
number of shares registered in the name of such person or
persons and shall have each certificate delivered to the
appropriate person. Each such certificate shall bear a
legend describing the restrictions imposed by securities
laws, as described in section 7 below, to the extent
applicable. Notwithstanding the foregoing, if LHI or a
Subsidiary requires reimbursement of any tax required by law
to be withheld with respect to shares of LHI common stock,
the Secretary shall not transfer ownership of shares until
the required payment is made; provided that in lieu of
payment in cash of the taxes required by law to be withheld,
the Grantee may pay such taxes by surrendering his right to
exercise a portion of the Option equal in value to the
amount of said taxes; the Grantee would then receive a
certificate for the number of shares otherwise issuable
pursuant to the Grantee's exercise of the Option, reduced by
a number of shares with an aggregate Fair Market Value equal
to the amount of said taxes, which latter number of shares
would be deemed purchased pursuant to the exercise of the
Option and, thus, no longer available under the Plan.
6. Binding Effect. The terms of this Option shall be
binding upon the executors, administrators, heirs,
successors, and assigns of the Grantee.
7. Requirements of Law. This Option may not be
exercised if the issuance of shares of LHI common stock upon
such exercise would constitute a violation of any applicable
federal or state securities or other law or valid
regulation. The Grantee, as a condition to his exercise of
this Option, shall represent to LHI that the shares of LHI
common stock to be acquired by exercise of this Option are
being acquired for investment and not with a present view to
distribution or resale, unless counsel for LHI is then of
the opinion that such a representation is not required under
the Securities Act of 1933 or any other applicable law,
regulation, or rule of any governmental agency.
IN WITNESS WHEREOF, LHI, by its duly authorized
officer, and the Grantee have signed this Agreement as of
the date first above written.
LAB HOLDINGS, INC.
By:___________________________
______________________________
Grantee
The Grantee acknowledges receipt of copies of the Plan
and the Prospectus, dated ________________________,
respecting the Plan. The Grantee represents that (s)he is
familiar with the terms and provisions of the Plan and such
Prospectus. The Grantee hereby accepts this Option subject
to all the terms and provisions of the Plan, including but
not limited to Section 6 ("Terms and Conditions") and
Section 7 ("Adjustments in Event of Changes in
Capitalization") thereof. The Grantee hereby agrees to
accept as binding, conclusive, and final all decisions and
interpretations of the Board of Directors respecting any
questions arising under the Plan.
Date: ________________
Grantee
