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EXHIBIT 10.3
NONQUALIFIED STOCK OPTION AGREEMENT
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THIS NONQUALIFIED STOCK OPTION AGREEMENT, dated this day of ,
between QUALITY SYSTEMS, INC., a California corporation (hereinafter referred
to as the "Company"), and , an employee or non-employee director 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 1989 Stock Option Plan (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
Paragraph 7 hereof) on the terms and conditions herein set forth.
2. PURCHASE PRICE.
The purchase price of the Common Stock covered by the Option shall be $ per
share, representing percent ( %) of the fair market value of the shares
as determined pursuant to Section 5 of the Plan as of the date hereof. The
purchase price of the Common Stock as to which the Option shall be exercised
shall be paid in full at the time of exercise in cash or by certified check or
by bank draft; or, with the consent of the Company's Board of Directors or
Stock Option Committee for the Plan, (i) by delivery of shares of Common Stock
of the Company already owned by the Optionee which shall be deemed to have a
value per share equal to the fair market value per share of such shares
determined in accordance with Section 5 of the Plan, or (ii) any combination of
cash and shares of Common Stock as permitted by clause (i) of this sentence.
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
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:
Date Installments First Percent of Option Shares
Become Exercisable Subject to Installment
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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. Except as provided in
Paragraph 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 or non-employee director 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 Internal Revenue Code of 1986, as amended (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 Paragraph 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 EXCEPT UPON DEATH OR DISABILITY. In
the event that the Optionee shall cease to be employed by, or cease to be a
director of, the Company or a parent or subsidiary corporation of the Company
(or a corporation or a parent or subsidiary corporation of a corporation
issuing or assuming an incentive option to which Section 425(a) of the Code
applies), for any reason other than death or disability (within the meaning of
Section 105(d)(4) of the code) (hereinafter "disability"), this Option shall
terminate immediately and become void and of no effect; provided, however, that
the Optionee shall have the right to exercise this Option, but only with
respect to the number of shares which the Optionee was entitled to purchase
under this Agreement immediately prior to such cessation, at any time within
one (1) month after such cessation, but in no event later than the date of
expiration of the option period set forth in Paragraph 3 above, if the
termination of the Optionee's position as an employee or director, as the case
may be, was due to his or her voluntary resignation or to termination by the
Company for cause (as determined in the sole judgment of the Company).
Notwithstanding the provisions of the foregoing sentence, if the Optionee's
employment or position with the Company or any parent or subsidiary corporation
is terminated by the Company or the parent or subsidiary without cause, this
Option shall terminate immediately and become void and of no effect; provided,
however, that the Optionee shall have the right to exercise
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this Option at any time within three (3) months after such termination,
but in no event later than the date of expiration of the option period set
forth in Paragraph 3 above, but the number of shares purchasable upon such
exercise of the Option shall not in any case exceed the number which could have
been purchased if the Optionee had exercised the Option immediately prior to
such termination.
(B) TERMINATION OF EMPLOYMENT UPON DEATH OR DISABILITY. In the
event that the Optionee shall cease to be employed by, or to be a director of,
the Company or any of its subsidiaries by reason of death or disability and
shall not have fully exercised his or her Option granted hereunder, such Option
may be exercised, but only with respect to the number of shares which the
Optionee could have purchased had the Optionee exercised this Option as of the
date of his or her cessation of employment or his position as a director (as
the case may be), at any time within twelve (12) months after the Optionee's
cessation of employment or as a director as a result of such death or
disability, but in any event no later than the date or expiration of the Option
period, by the Optionee or, in the event of death, by the executors or
administrators of the Optionee's estate or by any person or persons who shall
have acquired the Option directly from the Optionee by bequest or inheritance.
At the end of such twelve (12) month period, the Option, to the extent it
remains unexercised, shall terminate and become void and of no effect.
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
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(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 Option 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 immediately and 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.
7. ADJUSTMENTS.
The number and class of shares subject to this Option, and the purchase price
per share (but not the total purchase price), and the minimum number of shares
as to which this Option may be exercised at any one time, shall all be
proportionately adjusted in the event of any change or increase or decrease in
the number of issued shares of Common Stock in the Company, without receipt of
consideration by the Company, which results from a split-up or consolidation of
shares, payment of a share divided (in excess of two percent), a
recapitalization, a combination of shares or other like capital adjustment, or
a reincorporation of the Company, so that, upon exercise of this Option, the
Optionee shall receive the number and class of shares he or she would have
received had he or she been the holder of the number of shares of Common Stock
in the Company, for which this Option is being exercised, on the date of such
change or increase or decrease in the number of issued shares of Common Stock
in the Company. Subject to any required action by its shareholders, if the
Company shall be a surviving entity in any reorganization, merger or
consolidation (other than in a "reverse merger" in which more than 50% of the
Company's voting shares are converted into cash, property or the securities of
another entity), this Option shall be proportionately adjusted so as to apply
to the securities or other rights or property to which the holder of the number
of shares of Common Stock in the Company subject to this Option would have been
entitled. Adjustments under this paragraph shall be made by the Board of
Directors whose determination with respect thereto shall be final and
conclusive. No fractional share shall be issued under this Option or upon any
such adjustment.
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8. METHOD OF EXERCISING OPTION.
Subject to the terms and conditions of this Option 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 Xxxx 00xx Xxxxxx,
Xxxxx 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 or persons 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 Stock Option Committee, certificates for shares of Common
Stock of the Company having an aggregate fair market value (determined in
accordance with Section 5 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
as provided above 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 or her.
9. 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 or directorship of the
Optionee; nor shall it impose any obligation on the Optionee to exercise this
Option.
(c) This Agreement embodies the entire agreement of the parties,
and supersedes any and all other prior or contemporaneous agreements, whether
written or oral, between the parties hereto, with respect to the subject matter
hereof.
(d) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of California.
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(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.
IN WITNESS WHEREOF, the Company has caused this Option 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:
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"Company"
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Address:
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"Optionee"
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