EXHIBIT 10.1
FORM OF INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT, dated this ____ day of ______,
____, between QUALITY SYSTEMS, INC., a California Corporation (hereinafter
referred to as the "Company"), and _______________, an employee of the Company,
its parent or one or more of its subsidiaries (hereinafter referred to as the
"Optionee"), is made with reference to the following facts:
The Company desires, by affording the Optionee an opportunity to purchase
shares of Common Stock, $0.01 par value, in the Company (hereinafter called
"Common Stock"), as hereinafter provided, to carry out the purpose of the
Company's 1998 Stock Option Plan (the "Plan"). Terms not otherwise defined
herein shall have the meaning given them under the Plan.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants hereinafter set
forth, and for other good and valuable consideration, the parties hereto have
agreed, and do hereby agree, as follows:
1. Grant of Option.
The Company hereby irrevocably grants to the Optionee the right and
option (hereinafter called the "Option") to purchase all or any part of an
aggregate of ______ shares (such number being subject to adjustment as provided
in the Plan) on the terms and conditions herein set forth. The Option granted
herein is intended to be an "incentive option" within the meaning of the Plan
and Section 422A of the Internal Revenue Code of 1986, as amended (the "Code").
2. Purchase Price.
The purchase price of the Common Stock covered by the Option shall
be $_____ per share, representing one hundred percent (100%) of the fair market
value of the shares as determined pursuant to Section IV of the Plan as of the
date hereof. The purchase price of stock acquired pursuant to an Option shall be
paid, to the extent permitted by applicable statutes and regulations, either (i)
in cash at the time the Option is exercised, (ii) at the discretion of the Board
or the Committee, either at the time of the grant or exercise of the Option, by
delivering to the Company other shares of Common Stock of the Company (provided
that the shares have been held for the period required to avoid a charge to the
Company's reported earnings), (iii) at the discretion of the Board or the
Committee, either at the time of the grant or exercise of the Option, by
delivering to the Company all or any part of an Option granted under this Plan
for a cashless exercise (provided that such cashless exchange will not result in
a charge to the Company's reported earnings), or (iv) by tendering any other
form of legal consideration that may be acceptable to the Board.
3. Term of Option.
The term of the Option shall commence on the date hereof and all
rights to purchase Shares hereunder shall cease at 11:59 P.M. on the day before
the fifth anniversary of the date hereof, subject to earlier termination as
provided herein. Except as may otherwise be provided in this Agreement, options
granted hereunder shall become exercisable in cumulative installments as
follows:
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Date Installments First Percent of Option Shares
Become Exercisable Subject to Installment
----------------------- ------------------------
[date] 25%
[date] 25%
[date] 25%
[date] 25%
Once an installment of the Option granted hereunder becomes exercisable
for the first time, the shares subject thereto will be purchasable thereafter by
the Optionee at any time in whole, or from time-to-time in part, prior to the
expiration or earlier termination of the Option granted hereunder. Except as
provided in Section 5 hereof, the Option may not be exercised at any time unless
the Optionee shall have been continuously, from the date hereof to the date of
the exercise of the Option, an employee of the Company, its parent, if any, or
of one or more of its subsidiaries or a corporation or a parent or subsidiary of
a corporation issuing or assuming an option to which Section 425(a) of the Code
applies. The holder of the Option shall not have any of the rights of a
shareholder with respect to the shares covered by the Option as to any shares of
Common Stock not actually issued and delivered to such holder.
4. Non-Transferability.
The Option shall not be transferable otherwise than by will or the
laws of descent and distribution, and the Option may be exercised, during the
lifetime of the Optionee, only by the Optionee. More particularly (but without
limiting the generality of the foregoing), the Option may not be assigned,
transferred (except as provided in Section 5 hereof), pledged or hypothecated in
any way, shall not be assignable by operation of law and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.
5. Termination of Employment.
(a) Termination of Employment Other than by Disability or Death. In
the event that an Optionee's Continuous Status as an Employee is terminated
either by the voluntary resignation by the Optionee or for cause by the Company,
all Options granted to the Optionee shall terminate immediately. In the event an
Optionee's Continuous Status as an Employee is terminated without cause by the
Company, the Optionee may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of termination) but only within
such period of time ending on the earlier of (i) the date thirty (30) days after
the termination of the Optionee's Continuous Status as an Employee, or (ii) the
expiration of the term of the Option as set forth herein. If, after termination,
the Optionee does not exercise his or her Option as set forth in this Section
5(a), the Option shall terminate.
(b) Disability of Optionee. In the event an Optionee's Continuous
Status as an Employee terminates as a result of the Optionee's disability, the
Optionee may exercise his or her Option (to the extent that the Optionee was
entitled to exercise it at the date of termination), but only within such period
of time ending on the earlier of (i) the date three hundred sixty-five (365)
days following such termination, or (ii) the expiration of the term of the
Option as set forth herein. If, after termination, the Optionee does not
exercise his or her Option as set forth in this Section 5(b), the Option shall
terminate.
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(c) Death of Optionee. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, the Option may be exercised (to the extent the
Optionee was entitled to exercise the Option at the date of death) by the
Optionee's estate, by a person who acquired the right to exercise the Option by
bequest or inheritance, or by a person designated to exercise the option upon
the Optionee's death pursuant to the Plan, but only within the period ending on
the earlier of (i) the date three hundred sixty-five (365) days following the
date of death, or (ii) the expiration of the term of such Option as set forth
herein. If, after death, the Option is not exercised as set forth in this
Section5(c), the Option shall terminate.
6. Other Expirations.
In addition to any other event causing an expiration or termination
of this Option, this Option shall expire and all rights to purchase the Common
Stock shall cease (to the extent not theretofore terminated or expired as herein
provided) upon the effective date of (i) the dissolution or liquidation of the
Company, or (ii) a merger, consolidation, acquisition of property or shares,
separation or reorganization of the Company with one or more entities, corporate
or otherwise, as a result of which the Company is not the surviving entity, or
(iii) a "reverse merger" in which the Company is a surviving entity but more
than 50% of its voting shares are converted into cash, property or the
securities of another entity, or (iv) a sale of substantially all of the
property or shares of the Company to another entity, corporate or otherwise;
provided, however, that the Company may, in its discretion, and immediately
prior to any such transaction, cause a new option to be substituted for this
Option or cause this Option to be assumed by an employer entity or a parent or
subsidiary of such entity; and such new option shall apply to all shares issued
in addition to or substitution, replacement or modification of the shares
theretofore covered by such option; provided that:
(a) 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 shall not be more than the excess of the
aggregate fair market value of all shares subject to the option immediately
before such substitution or assumption over the aggregate option price of such
shares; and
(b) The new option or the assumption of the existing option shall
not give the Optionee additional benefits which he or she did not have under the
old option prior to such assumption; and
(c) An appropriate adjustment of the original option price shall be
made among original shares subject to the option and any additional shares or
shares issued in substitution, replacement or modification thereof.
If no provision is made for the continuance of the Plan and the
assumption of this Option, or the substitution of new options for this Option as
hereinabove provided, then the Company shall cause written notice to be given to
the Optionee of the proposed transaction not less than thirty (30) days prior to
the anticipated effective date thereof, and at the sole option and discretion of
the Company's Board of Directors, this Option, if not already fully exercisable,
may thereupon become fully exercisable, in which event the Optionee shall have
the right to exercise this Option at any time prior to the effective date of the
proposed transaction. The failure of the Company to give the written notice
specified hereinabove shall not affect the validity, nor shall it be a basis for
delaying or restraining the consummation, of any such transaction.
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7. Method of Exercising Option.
Subject to the terms and conditions of this Agreement, this Option
may be exercised by written notice to the Company, at its administrative office
in the State of California, which presently is located at 00000 Xxx Xxxxxx
Xxxxxx, Xxx. 000, Xxxxxx, Xxxxxxxxxx 00000. Such notice shall state the election
to exercise the Option and the number of shares in respect of which it is being
exercised and shall be signed by the person so exercising the Option. Such
notice shall be accompanied by payment in cash, certified check or bank draft in
the amount of, or with the prior consent of the Board of Directors or the
Committee, certificates for shares of Common Stock of the Company having an
aggregate fair market value (determined in the manner provided in Section 2(k)
of the Plan) equal to, the full purchase price of such shares, and the Company
shall deliver a certificate or certificates representing the shares subject to
such exercise as soon as practicable after the notice shall be received. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the person or persons so
exercising the Option and shall be delivered to or upon the written order of the
person or persons exercising the Option. In the event the Option shall be
exercised by any person or persons other than the Optionee in accordance with
the terms hereof, such notice shall be accompanied by appropriate proof of the
right of such person or persons to exercise the Option. All shares that shall be
purchased upon the exercise of the Option as provided herein shall be fully paid
and non-assessable. The holder of this Option shall not be entitled to the
privileges of share ownership as to any shares of Common Stock not actually
issued and delivered to him.
8. General.
(a) The Company shall at all times during the term of the Option
reserve and keep available such number of shares of Common Stock as will be
sufficient to satisfy the requirements of this Option Agreement, shall pay all
original issue and transfer taxes with respect to the issue and transfer of
shares pursuant hereto and all other fees and expenses necessarily incurred by
the Company in connection therewith, and will from time to time use its best
efforts to comply with all laws and regulations, which, in the opinion of
counsel for the company, shall be applicable thereto.
(b) The granting of the Option hereunder shall not impose any
obligation on the Company to continue the employment of the Optionee; nor shall
it impose any obligation on the Optionee to exercise this Option.
(c) This Agreement and the Plan contain the entire agreement of the
parties, and supersede any and all other prior or contemporaneous agreements,
whether written or oral, between the parties hereto, with respect to the subject
matter hereof. The Plan shall govern any Option granted hereunder. In the event
of any conflict between the terms of this Agreement and the Plan, the terms of
the Plan shall govern.
(d) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of California.
(e) The Company may require, as a condition precedent to the
Company's obligation to sell and issue, and the Optionee's right to purchase,
shares of common stock of the Company on exercise of this Option, that the
Optionee shall certify, in writing, that he or she is acquiring such shares for
investment and not with a view or the intent to sell or redistribute such
shares.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed by its officers thereunto duly authorized, and the Optionee has
hereunto set his or her hand, all as of the day and year first above written.
QUALITY SYSTEMS, INC.
By:
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Title: Chief Financial Officer
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"Company"
-----------------------
-----------------------
"Optionee"
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