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EXHIBIT 10.5
QK HEALTHCARE, INC.
INCENTIVE STOCK OPTION AGREEMENT
AGREEMENT made this_____day of_____________, 1999 , 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. 1999 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) Prior to termination of this Agreement, this Option may be exercised
and shall vest in the installments and during the periods set forth on Exhibit A
to 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 B 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 12 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, 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 12 months after the Employee dies: (A) while he is employed
by the Corporation, (B) within 12 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 two years from the date of this Agreement or one
year from the date the Option Shares are delivered to the Employee, without the
express written consent of the Corporation. The provisions of this Section 6(d)
shall survive any termination of this Agreement.
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
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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 18),
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;
(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) Twelve months after the retirement of the Employee or after the death
of the Employee: (i) while an employee, (ii) within 12 months after termination
of employment on account of retirement or (iii) within twelve months after
termination of employment on account of his Disability 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;
(d) 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; or
(e) The expiration of the period for exercise of this Option set forth on
Exhibit A.
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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. Cancellation of Options. In its sole discretion, the Board may, in
cases involving a serious breach of conduct by an Employee or former Employee,
or activity of a former Employee in competition with the business of the
Corporation, cancel any Option, whether vested or not, in whole or in part.
11. 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 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.
12. 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
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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 result of the event
requiring adjustment. Any adjustment so made shall be final and binding on the
Employee.
13. Change in Control.
(a) In the event of a Change in Control, the Option will become
immediately vested and 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, irrespective of the original vesting
schedule set forth in Exhibit A hereto, provided, however, that any such
acceleration and 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 13(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
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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
13(a) shall be of no effect.
14. 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.
15. 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.
16. 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.
17. 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
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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.
18. 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 one year immediately
following the termination of the Employee's employment for any reason whatsoever
other than termination by the Corporation 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
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(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.
(c) The covenants in this Section 18 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 18:
(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 18
shall be construed as an agreement independent of any other provision in this
Agreement, that the
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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 one year
following termination of the Employee's employment stated at the beginning of
this Section 18, during which the agreements and covenants of the Employee made
in this Section 18 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 18.
19. General Provisions.
(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
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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 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
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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
The Option shall be exercisable in installments as follows:
(a) The Employee may exercise the Option for up to twenty-five
percent (25%) of the total number of Option Shares granted on or after
the first anniversary of the date of this Agreement.
(b) The Employee may exercise the Option for up to fifty
percent (50%) of the total number of Option Shares granted on or after
the second anniversary of the date of this Agreement.
(c) The Employee may exercise the Option for up to
seventy-five percent (75%) of the total number of Option Shares granted
on or after the third anniversary of the date of this Agreement.
(d) The Employee may exercise the Option for up to one hundred
percent (100%) of the total number of Option Shares granted on or after
the fourth anniversary of the date of this Agreement.
Name of Employee:
Date of Grant:
No. of Option Shares Granted:
Exercise Price: :
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QK HEALTHCARE, INC.
EXHIBIT B
INCENTIVE STOCK OPTION AGREEMENT
Form of Exercise
The undersigned employee of QK Healthcare, Inc. (the "Corporation"),
pursuant to the the QK Healthcare, Inc. 1999 Stock Option Plan (the "Plan"), and
pursuant to an Incentive Stock Option Agreement dated ___________, 1999, 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:____________________
