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Exhibit 10.6
QK HEALTHCARE, INC.
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this_____day of_____________, 2000, by and between QK
HEALTHCARE, INC., a Delaware corporation (the "Corporation"), and
_____________________(the "Employee").
1. Grant of Option. Subject to the terms and conditions set forth in this
Agreement and the QK Healthcare, Inc. 2000 Stock Option Plan ( the "Plan"), the
Corporation hereby grants to the Employee the option (the "Option") to purchase
from the Corporation, during the term set forth in Section 2 below, an aggregate
of ________________ shares ("Option Shares") of the Corporation's common stock,
par value $.001 per share (the "Common Stock"), at a price of $__________ per
share, such price being not less than l00% of the Fair Market Value of the
Common Stock on the date of this Agreement; provided, however, that if the
Employee owns, immediately prior to the grant of the Option Shares, stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Corporation (a "Ten Percent Owner"), such price shall be at least
110% of the Fair Market Value of the Common Stock on the date of this Agreement.
This Option is intended to be an "incentive stock option" as defined in Section
422(b) of the Internal Revenue Code. The Option hereby granted shall expire 30
days after the delivery of this Agreement to the Employee unless the Employee
signs and returns this Agreement to the Corporation within such 30 days. Unless
otherwise defined herein, capitalized terms used herein shall have the same
meaning as provided in the Plan.
2. Term. This Option shall commence on the date of this Agreement and
shall terminate in accordance with the provisions of Section 8 below.
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3. Exercise.
(a) Upon execution of this Agreement, this Option shall be fully vested
and may be exercised prior to termination of this Agreement, except as such
periods may be extended pursuant to Section 4(a) below.
(b) During the lifetime of the Employee, this Option may be exercised
only by the Employee. Following the death of the Employee, this Option may be
exercised by the Employee's legatee(s), heir(s), or personal representative(s)
(collectively, "Legal Representative") during the periods and in the manner set
forth in Sections 3(c) and 4(a) below.
(c) The Employee (or in the case of the Employee's death, his Legal
Representative) may exercise this Option by giving written notice of exercise of
the Option to the Corporation at its then principal office on the form annexed
as Exhibit A to this Agreement. Such notice shall state the number of whole
shares with respect to which this Option is being exercised and shall be
accompanied by the full purchase price for such shares, payable either: (i) in
cash or certified or bank cashier's check, (ii) by transfer to the Corporation
by the Employee or his Legal Representative of Common Stock of the Corporation
owned by the Employee having a Fair Market Value as of the date the Option is
exercised equal to such purchase price, or (iii) by a combination of (i) and
(ii).
4. Limitations on Exercise.
(a) Except as provided in subsections (i) - (iii) below, this Option
cannot be exercised unless the Employee is then employed by the Corporation.
(i) Within 3 months after the Employee's retirement (at the normal
retirement date prescribed from time to time under any policy of the Corporation
then in effect, or at any other
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date with the consent of the Corporation) from or termination of employment, for
reason other than Cause (except as provided in subsection 4(a)(ii) and 4(a)(iii)
below), with the Corporation, the Employee may exercise this Option to the
extent of the number of shares that he shall have been entitled to purchase on
the date of such retirement or termination of employment.
(ii) Within 12 months after the Employee shall cease to be employed by
the Corporation because of disability (within the meaning of Section 22(e)(3) of
the Internal Revenue Code), the Employee may exercise this Option to the extent
of the number of shares that he shall have been entitled to purchase on the date
his employment terminated.
(iii) Within 36 months after the Employee dies: (A) while he is employed
by the Corporation, (B) within 3 months after his retirement pursuant to
subsection (i) above, or (C) within 12 months after his employment ceases due to
disability pursuant to subsection (ii) above, this Option shall be exercisable
by the Legal Representative, to the extent of the number of shares that the
holder shall have been entitled to purchase on the date of his death.
(b) The Option shall not be exercised in whole or in part until the
Corporation has effected any of the following conditions that the Board of
Directors of the Corporation ("Board"), in its discretion, determines at the
time of exercise of the Option to be necessary or desirable as a condition of,
or in connection with, the issuance and purchase of shares under this Option:
(i) the listing, registration or qualification of the Corporation or of
the shares subject to this Option upon any securities exchange or under any
federal or state laws;
(ii) the giving of any investment representation by the Employee or his
Legal Representative;
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(iii) the notation of any restriction on transfer on the certificate or
certificates representing such shares; or
(iv) the execution and delivery by the Employee of a "lock-up" or
similar agreement in the form requested by the Corporation's underwriter from
time to time.
5. Delivery of Option Shares. As soon as possible after receipt by the
Corporation of a notice of exercise hereunder, of payment therefor, and of
evidence of compliance with any conditions that may be required by the Board
under Section 4, the Corporation shall deliver to the Employee, or to his Legal
Representative, as the case may be, one or more certificate(s) for the number of
shares with respect to which this Option shall have been so exercised. No shares
shall be delivered pursuant to any exercise hereto until the requirements of
such laws and regulations as may be deemed by the Board to be applicable thereto
are satisfied.
6. Restrictions upon Transfer.
(a) This Agreement and the Option granted hereunder shall not be
assignable or transferable otherwise than by will or the laws of descent and
distribution. In the event of any attempt to assign or to transfer this
Agreement or the Option or any of the rights hereunder other than by will or the
laws of descent and distribution, whether voluntarily or involuntarily, by
operation of law or otherwise, this Agreement and the Option granted hereunder
shall thereupon immediately terminate and be of no further force or effect and
no interest or right hereunder shall vest in any other person.
(b) Nothing in this Agreement shall be construed in limitation of any
restrictions upon transfer of the Option Shares contained elsewhere, including
any restrictions that may be contained in the Certificate of Incorporation or
the By-Laws of the Corporation.
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(c) Nothing in this Agreement shall be construed as a modification of any
existing agreements with respect to the gift, sale, purchase, transfer, pledge,
hypothecation, or other disposition or encumbrance of Option Shares between the
parties to this Agreement, or between or among either or both of the parties to
this Agreement and one or more persons not party to this Agreement.
(d) 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(e) and Section 6(f) below.
Notwithstanding the preceding sentence, the Employee may sell up to 10% of the
total number of the Option Shares granted to the Employee pursuant to this
Option during each fiscal quarter beginning with the 24th month after the date
of this Agreement. The provisions of this Section 6(d) shall survive any
termination of this Agreement.
(e) If, during the term of this Agreement: (i) the Employee dies, (ii)
the Employee becomes disabled, (iii) the Employee 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(d) above shall terminate as of the date of the
applicable event.
(f) Notwithstanding Section 6(d) 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 Xxxxx Xxxxxxxx Trust, the Xxxxxxx Xxxxxxxx Trust and the Xxxxxx Xxxxxxxx
Trust (the "Selling Shareholders"), the Employee shall have the right to sell
the same percentage of the Employee'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
filing a Registration Statement on Form S-3 except underwriting discounts and
commissions and the expenses of Employee's legal counsel.
(g) Notwithstanding Section 6(d) 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 on Optionee's legal counsel.
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7. Assumption of Options. Subject to the provisions of Section 8, upon
dissolution or liquidation of the Corporation, or 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 Employee is then employed by such surviving, resulting or
acquiring corporation, or a parent or subsidiary corporation of such
corporation;
(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 6(a), 6(d) and 17
hereof), the Option, and all of the rights hereunder shall terminate upon the
first to occur of the following events:
(a) Immediately upon the Employee's termination for Cause of employment
with the Corporation;
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(b) Three months after the Employee'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) Ninety days after the Employee voluntarily terminates his or
her employment with the Corporation;
(d) Thirty-six months after the Employee dies: (i) while an employee,
(ii) within three months after termination of employment on account of
retirement or (iii) within twelve months after termination of employment on
account of his disability (within the meaning of Section 22(e)(3) of the
Internal Revenue Code) 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; or
(e) Ten years after the date of this Agreement, provided, however, that
with respect to a Ten Percent Owner, five years after the date of this
Agreement.
9. Rights upon Termination. Upon termination of this Agreement, this
Option shall terminate and shall no longer be exercisable by the Employee or his
Legal Representative.
10. No Rights as Stockholder.
(a) The Employee shall have none of the rights of a stockholder with
respect to any of the Option Shares until this Option shall have been exercised
in whole or in part and until such
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shares shall have been issued to the Employee. The Employee shall not have
voting or other rights with respect to the Option Shares prior to the delivery
to him of such shares.
(b) Nothing in the Plan or this Agreement shall affect in any way the
rights or powers of the Corporation, or any of the directors or stockholders of
any of such corporation, to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Corporation's capital
structure or business, or any merger or consolidation of the Corporation, or any
issue of bonds, debentures, preferred or prior preference stocks or other
classes of securities ahead of or affecting the Common Stock or the rights
thereof, or the dissolution or liquidation of the Corporation, or any sale or
transfer of all or any part of the Corporation's assets or business, or any
grant of Options to purchase securities of the Corporation otherwise than under
the Plan, or to effect any other corporate act or proceeding, whether of a
similar character or otherwise.
11. 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 Employee 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 Employee, 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
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result of the event requiring adjustment. Any adjustment so made shall be final
and binding on the Employee.
12. Change in 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 12(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 12(a) shall be of no effect.
13. No Liability. Neither any officer or employee of the Corporation, nor
any member of the Board, nor the Corporation shall be liable for any action or
determination made in good faith in respect of this Option.
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14. Reservation. The Corporation agrees, at all times during the term of
this Option, to reserve and keep available such number of shares of the Common
Stock as will be sufficient to satisfy the requirements of this Option and shall
pay all original issue taxes, if any, with respect to issuance of shares
hereunder and all other fees and expenses necessarily incident thereto.
15. No Rights to Continued Employment. Nothing in the Plan, or in this
Agreement, shall confer on the Employee, nor imply in favor of the Employee, any
right to continue in the employ of the Corporation, or its subsidiaries, or
prevent, or in any way impair the right of the employer to terminate the
employment of the Employee at any time, with or without Cause, and with or
without notice.
16. Tax Consequences and Withholding. The Employee agrees that the
Corporation is not responsible for the tax consequences to him of the granting
of this Option or its subsequent exercise by the Employee, and that it is the
responsibility of the Employee to consult with his personal tax advisor
regarding all matters with respect to the tax consequences of the granting of
this Option and its exercise by the Employee. The Employee hereby authorizes the
Corporation to withhold from the Option Shares to Employee, pursuant to the
exercise of the Option, that number of Option Shares to be issued that would
satisfy the Corporation's tax withholding requirements in respect of the
Employee, unless the Employee pays an equivalent amount to the Corporation at or
prior to the delivery of the Option shares.
17. Non-Competition Agreement.
(a) The Employee shall not, during the period of the Employee's
employment by or with the Corporation, and for a period of six months
immediately following the termination of the Employee's employment for any
reason whatsoever other than termination by the Corporation
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without cause, directly or indirectly, for the Employee 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 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 Employee 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 Employee 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 damage that could be caused to the Corporation for
which the Corporation would have no other adequate remedy, the Employee agrees
that the foregoing covenants may be enforced by the Corporation in the event of
breach by the Employee, by injunctions and restraining orders.
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(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 Employee acknowledges that the covenants in this Section 17: (i)
are agreed to by the Employee 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 Employee 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 Employee 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 Employee's employment stated at the
beginning of this Section 17, during which the agreements and covenants of the
Employee made in this Section 17 shall be effective, shall be computed by
excluding from such computation any time during which the Employee is in
violation of any provision of this Section 17.
18. General Provisions.
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(a) No Waiver. Waiver of any provision of this Agreement, in whole or in
part, in any one instance shall not constitute a waiver of any other provision
in the same instance, nor any waiver of the same provision in another instance,
but each provision shall continue in full force and effect with respect to any
other then-existing or subsequent breach.
(b) Designation of Beneficiary. Subject to the rules and regulations of
the Board, the Employee may designate a beneficiary or beneficiaries and may
change such designation from time to time by filing a written designation of
beneficiary with the Board on a form prescribed by it. No such designation shall
be effective unless filed prior to the death of the Employee.
(c) Notice. Any notice required or permitted under this Agreement shall
be given in writing by delivery in hand or by postage prepaid, United States
certified mail, return receipt requested, as follows: to the Corporation
(Attention: Vice President-Administration), at 0000 Xxxxx Xxxxxx, Xxxxxxxxxx,
Xxx Xxxx 00000 or at such other address as the Corporation, by notice to the
Employee, may designate in writing from time to time; and to the Employee, at
the address specified below, or at such other address as the Employee, by notice
to the Corporation, may designate in writing from time to time. Notice shall be
effective upon receipt.
(d) Miscellaneous. This Agreement: (i) may be executed in any number of
counterparts, each of which, when executed by both parties to this Agreement
shall be deemed to be an original, and all of which counterparts together shall
constitute one and the same instrument; (ii) shall be governed by and construed
under the laws of the State of New York applicable to contracts made, accepted,
and performed wholly within New York, without application of principles of
conflicts of laws; (iii) constitutes the entire agreement of the parties with
respect to its subject matter, except as set forth in Section l of this
Agreement, superseding
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all prior oral and written communications, proposals, negotiations,
representations, understandings, courses of dealing, agreements, contracts, and
the like between the parties in such respect; (iv) may be amended, modified, or
terminated, and any right under this Agreement may be waived in whole or in
part, only by a writing signed by both parties; except that no termination,
modification or amendment shall affect the rights of the Employee without the
Employee's consent; (v) contains headings only for convenience, which headings
do not form part, and shall not be used in construction, of this Agreement; and
(vi) shall bind and inure to the benefit of the parties and their respective
legal representatives, successors and assigns, except that no party may delegate
any of its obligations under this Agreement or assign this Agreement, without
the prior written consent of the other party, or unless permitted in Section
3(b) of this Agreement.
(e) Availability of Equitable Relief. The obligations imposed by this
Agreement are unique. Breach of any of such obligations would injure the parties
to this Agreement; such injury is likely to be difficult to measure; and
monetary damages, even if ascertainable, are likely to be inadequate
compensation for such injury. Therefore, the parties to this Agreement
acknowledge and agree that protection of the respective interests in this
Agreement would require equitable relief, including specific performance and
injunctive relief, in addition to any other remedy or remedies that the parties
may have at law or under this Agreement, including, without limitation,
entitlement to reimbursement by the breaching party or parties of the legal fees
and expenses of the injured party or parties prevailing in any such suit.
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
QK HEALTHCARE, INC.
By:_____________________________
EMPLOYEE
By:_____________________________
Address_________________________
SS No.__________________________
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QK HEALTHCARE, INC.
EXHIBIT A
INCENTIVE STOCK OPTION AGREEMENT
Form of Exercise
The undersigned employee of QK Healthcare, Inc. (the "Corporation"),
pursuant to the QK Healthcare, Inc. 2000 Stock Option Plan (the "Plan"), and
pursuant to an Incentive Stock Option Agreement dated , 2000, hereby agrees to
purchase from the Corporation shares of common stock, par value $.001 per share
("Stock"), at a purchase price of $_____ per share.
EMPLOYEE:__________________________________________________________________
First Middle Last
(Print name exactly as it will appear on your stock certificate)
Social Security Number: ________________________
Address: ____________________________________________________________________
The undersigned employee has delivered the following consideration to the
Corporation in exchange for the Stock:
(1) $____in cash or by certified or Bank cashier's check;
and/or
(2) _________ shares of the Corporation's common stock, par value
$.001 per share, having a Fair Market Value (as defined in the
Plan)of $_________as of _____________.
______________________________
Employee Signature
Date:____________________
