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EXHIBIT 10.8
QUEST MEDICAL, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), effective as of ____________, 199__,
is made and entered into by and between Quest Medical, Inc., a Texas
corporation (the "Corporation"), and _________________________ (the
"Participant").
WITNESSETH:
WHEREAS, the Corporation has implemented the Quest Medical, Inc. 1995
Stock Option Plan (the "Plan"), which was adopted by the Corporation's Board of
Directors (the "Board") and approved by the Corporation's shareholders, and
which provides for the grant of stock options to selected officers or key
employees of the Corporation or its Subsidiaries to purchase shares of Common
Stock, $.05 par value, of the Corporation (the "Common Stock");
WHEREAS, in the case of grants to officers and directors who are
subject to Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), the stock options provided for under the Plan are
intended to comply with the requirements of Rule 16b-3 under the Exchange Act.
WHEREAS, the Stock Option Committee (the "Committee") appointed by the
Board has selected the Participant to participate in the Plan and has awarded
the non-qualified stock option herein described (the "Option") to the
Participant; and
WHEREAS, the parties hereto desire to evidence in writing the terms
and conditions of the Option.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, and as an inducement to the
Participant to continue as an employee of the Corporation or its Subsidiary and
to promote the success of the business of the Corporation and its Subsidiaries,
the parties hereby agree as follows:
1. Grant of Option. The Corporation hereby grants to the
Participant, upon the terms and subject to the conditions, limitations and
restrictions set forth in the Plan and in this Agreement, the Option to acquire
________ shares of Common Stock, at an exercise price per share of $________,
effective as of the date of this Agreement (the "Award Date"). The Participant
hereby accepts the Option from the Corporation.
2. Vesting. The shares of Common Stock subject to the Option
shall vest ratably in ________ equal annual increments commencing on the first
anniversary of the Award Date. Notwithstanding the preceding sentence, the
Option shall immediately vest in full as to all shares of Common Stock subject
hereto upon any "Sale of the Corporation." A "Sale of the Corporation" shall
occur if the Corporation engages in a merger, consolidation, recapitalization,
reorganization or sale, lease or transfer of all or substantially all of the
Corporation's assets and
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the Corporation or its stockholders or affiliates immediately before such
transaction beneficially own, immediately after or as a result of such
transaction, equity securities of the surviving or acquiring corporation or
such corporation's parent corporation possessing less than fifty-one percent
(51%) of the voting power of the surviving or acquiring corporation or such
corporation's parent corporation, provided that a Sale of the Corporation shall
not be deemed to occur upon any public offering or series of such offerings of
securities of the Corporation or its affiliates that results in any such change
in beneficial ownership.
3. Exercise. In order to exercise the Option with respect to any
vested shares of Common Stock hereunder, the Participant shall provide written
notice to the Corporation at its principal executive office. At the time of
exercise, the Participant shall pay to the Corporation the Option price per
share set forth in Section 1 times the number of vested shares as to which the
Option is being exercised. The Participant shall make such payment by
delivering (a) cash, (b) a check, (c) at the Committee's option, previously
owned shares of Common Stock having a Fair Market Value on the date immediately
preceding the exercise date equal to the aggregate exercise price or (d) at the
Committee's option, any other consideration that the Committee determines is
consistent with the Plan and applicable law. If the Option is exercised in
full, the Participant shall surrender this Agreement to the Corporation for
cancellation. If the Option is exercised in part, the Participant shall
surrender this Agreement to the Corporation so that the Corporation may make
appropriate notation hereon or cancel this Agreement and issue a new agreement
representing the unexercised portion of the Option.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, the Option may be
exercised by a broker-dealer acting on behalf of the Participant if (a) the
broker-dealer has received from the Participant or the Corporation a fully- and
duly-endorsed agreement evidencing such option, together with instructions
signed by the Participant requesting the Corporation to deliver the shares of
Common Stock subject to such option to the broker-dealer on behalf of the
Participant and specifying the account into which such shares should be
deposited, (b) adequate provision has been made with respect to the payment of
any withholding taxes due upon such exercise, and (c) the broker-dealer and the
Participant have otherwise complied with Section 220.3(e)(4) of Regulation T,
12 CFR Part 220, or any successor provision.
4. Who May Exercise. The Option shall be exercisable during the
lifetime of the Participant only by the Participant. To the extent exercisable
after the Participant's death, the Option shall be exercised only by the
Participant's representatives, executors, successors or beneficiaries.
5. Expiration of Option. The Option shall expire, and shall not
be exercisable with respect to any vested shares of Common Stock hereunder as
to which the Option has not been exercised, on the first to occur of: (a) the
tenth anniversary of the Award Date; or (b) 90 days after any termination of
the Participant's employment with the Corporation for any reason other than
death (or within twelve months after any such death); provided, however, that
(i) if the Participant is terminated for dishonesty or other acts detrimental
to the interests of the Corporation or its
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Subsidiaries, or (ii) if Participant competes with the Corporation or its
Subsidiaries or solicits the Corporation's or the Subsidiaries' employees to
leave the employ of the Corporation or the Subsidiaries, the Committee may, by
written notice to the Participant, immediately terminate the Option. The
Option shall expire, and shall not be exercisable, with respect to any unvested
shares of Common Stock hereunder, immediately upon the termination of the
Participant's employment with the Corporation for any reason, including death.
6. Tax Withholding. Any provision of this Agreement to the
contrary notwithstanding, the Corporation may take such steps as it deems
necessary or desirable for the withholding of any taxes that it is required by
law or regulation of any governmental authority, federal, state or local,
domestic or foreign, to withhold in connection with any of the shares of Common
Stock subject hereto.
7. Dilution. The number of shares of Common Stock subject to the
Option and the Option price therefor set forth in Section 1 shall be subject to
adjustment for any Dilutive Event. A "Dilutive Event" shall include any of the
following events that results in dilution to the shares of Common Stock
acquired or acquirable upon exercise of the Option: any increase or decrease
in the shares of Common Stock or any other capital stock of the Corporation or
any change or exchange of any such securities for a different number or kind of
securities, any of which results from one or more stock splits, reverse stock
splits, stock dividends, recapitalizations, reorganizations or other corporate
actions with a similar effect. A "Dilutive Event" shall not include, however,
among other things: (i) the issuance or exercise of options granted pursuant
to the Plan; or (ii) any issuance of capital stock by the Corporation for fair
market value or any issuance or grant to any person or entity of any right to
subscribe for or to purchase any capital stock or securities convertible into
any capital stock of the Corporation for fair market value.
8. Transfer of Option. The Participant shall not, directly or
indirectly, sell, transfer, pledge, encumber or hypothecate ("Transfer") the
Option or the rights and privileges pertaining thereto other than by will or
the laws of descent and distribution. Any permitted transferee to whom the
Participant shall Transfer the Option pursuant to this Section 8 shall agree to
be bound by this Agreement. The Option is not liable for or subject to, in
whole or in part, the debts, contracts, liabilities or torts of the
Participant, nor shall it be subject to garnishment, attachment, execution,
levy or other legal or equitable process.
9. Certain Legal Restrictions. The Corporation shall not be
obligated to sell or issue any shares of Common Stock upon the exercise of the
Option or otherwise unless the issuance and delivery of such shares shall
comply with all relevant provisions of law and other legal requirements
including, without limitation, any applicable federal or state securities laws
and the requirements of any stock exchange upon which shares of the Common
Stock may then be listed. As a condition to the exercise of the Option or the
sale by the Corporation of any additional shares of Common Stock to the
Participant, the Corporation may require the Participant to make such
representations and warranties as may be necessary to assure the availability
of an exemption from the registration requirements of applicable federal or
state securities laws. The Corporation shall not be liable for refusing to
sell or issue any shares if the Corporation cannot obtain authority from the
appropriate regulatory bodies deemed by the Corporation to be necessary to
lawfully sell or issue such shares. In addition, the Corporation shall have no
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obligation to the Participant, express or implied, to list, register or
otherwise qualify any of the Participant's shares of Common Stock. The shares
of Common Stock issued upon the exercise of the Option may not be transferred
except in accordance with applicable federal or state securities laws. At the
Corporation's option, the certificate evidencing shares of Common Stock issued
to the Participant may be legended as follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY
NOT BE SOLD, ASSIGNED, TRANSFERRED OR PLEDGED EXCEPT IN COMPLIANCE
WITH THE REQUIREMENTS OF SUCH ACT AND THE APPLICABLE SECURITIES LAWS
OF ANY STATE OR OTHER JURISDICTION.
Any Common Stock issued pursuant to the exercise of Options granted
pursuant to this Agreement to a person who would be deemed an officer or
director of the Corporation under Rule 16b-3 shall not be transferred until at
least six months have elapsed from the date of grant of such Option to the date
of disposition of the Common Stock underlying such Option.
10. Plan Incorporated. The Participant accepts the Option herein
subject to all the provisions of the Plan, which are incorporated herein,
including the provisions that authorize the Committee to administer and
interpret the Plan and that provide that the Committee's decisions,
determinations and interpretations with respect to the Plan are final and
conclusive on all persons affected thereby. Except as otherwise set forth in
this Agreement, terms defined in the Plan have the same meanings herein.
11. Miscellaneous.
(a) The Option herein is intended to be a non-qualified
stock option under applicable tax laws, and it is not to be
characterized or treated as an incentive stock option under such laws.
(b) The granting of the Option herein shall impose no
obligation upon the Participant to exercise the Option or any part
thereof. Nothing herein contained shall affect the right of the
Corporation to terminate the Participant at any time, with or without
cause, or shall be deemed to create any rights to employment on the
part of the Participant.
(c) The rights and obligations arising under this
Agreement are not intended to and do not affect the employment
relationship that otherwise exists between the Corporation and the
Participant, whether such employment relationship is at will or
defined by an employment contract. Moreover, this Agreement is not
intended to and does not amend any existing employment contract
between the Corporation and the Participant; to the extent there is a
conflict between this Agreement and such an employment contract, the
employment contract shall govern and take priority.
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(d) Neither the Participant nor any person claiming under
or through the Participant shall be or shall have any of the rights or
privileges of a stockholder of the Corporation in respect of any of
the shares issuable upon the exercise of the Option herein unless and
until certificates representing such shares shall have been issued and
delivered to the Participant or such Participant's agent.
(e) Any notice to be given to the Corporation under the
terms of this Agreement or any delivery of the Option herein to the
Corporation shall be addressed to the Corporation at its principal
executive offices, and any notice to be given to the Participant shall
be addressed to the Participant at the address set forth beneath his
or her signature hereto, or at such other address for a party as such
party may hereafter designate in writing to the other. Any such
notice shall be deemed to have been duly given if mailed, postage
prepaid, addressed as aforesaid.
(f) Subject to the limitations herein on the
transferability by the Participant of the Option and any shares of
Common Stock, this Agreement shall be binding upon and inure to the
benefit of the representatives, executors, successors or beneficiaries
of the parties hereto.
(g) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF
THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND
THE UNITED STATES, AS APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF
LAWS PROVISIONS THEREOF.
(h) If any provision of this Agreement is declared or
found to be illegal, unenforceable or void, in whole or in part, then
the parties shall be relieved of all obligations arising under such
provision, but only to the extent that it is illegal, unenforceable or
void, it being the intent and agreement of the parties that this
Agreement shall be deemed amended by modifying such provision to the
extent necessary to make it legal and enforceable while preserving its
intent or, if that is not possible, by substituting therefor another
provision that is legal and enforceable and achieves the same
objectives.
(i) All section titles and captions in this Agreement are
for convenience only, shall not be deemed part of this Agreement, and
in no way shall define, limit, extend or describe the scope or intent
of any provisions of this Agreement.
(j) The parties shall execute all documents, provide all
information, and take or refrain from taking all actions as may be
necessary or appropriate to achieve the purposes of this Agreement.
(k) This Agreement constitutes the entire agreement among
the parties hereto pertaining to the subject matter hereof and
supersedes all prior agreements and understandings pertaining thereto.
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(l) No failure by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this
Agreement or to exercise any right or remedy consequent upon a breach
thereof shall constitute waiver of any such breach or any other
covenant, duty, agreement or condition.
(m) This Agreement may be executed in counterparts, all
of which together shall constitute one agreement binding on all the
parties hereto, notwithstanding that all such parties are not
signatories to the original or the same counterpart.
(n) At any time and from time to time the Committee may
execute an instrument providing for modification, extension, or
renewal of any outstanding option, provided that no such modification,
extension or renewal shall (i) impair the option in any respect
without the consent of the holder of the option or (ii) conflict with
the provisions of Rule 16b-3. Except as provided in the preceding
sentence, no supplement, modification or amendment of this Agreement
or waiver of any provision of this Agreement shall be binding unless
executed in writing by all parties to this Agreement. No waiver of
any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision of this Agreement
(regardless of whether similar), nor shall any such waiver constitute
a continuing waiver unless otherwise expressly provided.
(o) In addition to all other rights or remedies available
at law or in equity, the Corporation shall be entitled to injunctive
and other equitable relief to prevent or enjoin any violation of the
provisions of this Agreement.
(p) The Participant's spouse joins this Agreement for the
purpose of agreeing to and accepting the terms of this Agreement and
to bind any community property interest he or she has or may have in
the Option, any vested portion or any unvested portion of the Option,
any shares of Common Stock acquired upon exercise of the Option and
any other shares of Common Stock held by the Participant.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
CORPORATION:
Quest Medical, Inc.
By: _________________________________
Name: _________________________________
Title: _________________________________
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PARTICIPANT:
_______________________________________
Name: ______________________________
Address: ______________________________
______________________________
______________________________
PARTICIPANT'S SPOUSE:
_______________________________________
Name: _________________________________
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