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EXHIBIT 10.2
LIFEQUEST MEDICAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
This Agreement dated December 27, 1996, is entered into between LifeQuest
Medical, Inc., a Delaware corporation (the "Company"), and X. X. Xxxxx
("Optionee").
Recitals
A. The Company (or its affiliate) and Optionee have entered into an
Employment Agreement of even date herewith (the "Employment Agreement"), and
the Company (or its affiliate) desires to have Optionee remain in its employ,
encourage the stock ownership of Optionee and increase the Optionee's
proprietary interest in the Company.
B. The Company desires to grant to Optionee an option to purchase up
to 60,000 shares of Common Stock, $.001 par value ("Common Stock"), of the
Company.
Agreements
In consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. Grant of Option. Subject to the terms and conditions set forth in
this Agreement, the Company hereby grants to Optionee the option to purchase,
during the period commencing on the date of this Agreement and ending December
31, 2006, at an exercise price equal to the Closing Sales Price (as defined
below) per share, up to, but not exceeding in the aggregate, 60,000 shares of
Common Stock, $.001 par value ("Common Stock"), of the Company (such option is
hereinafter called the "Option"). The Closing Sales Price shall be the average
of the closing bid and asked prices, in the Over-the-Counter market as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System, on the Closing Date as defined in the Plan of Merger and Acquisition
Agreement executed simultaneously herewith.
2. Non-Qualified Status. The Option is intended to be a non-qualified
stock option which does not satisfy the requirements of Section 422A of the
Internal Revenue Code of 1986, as amended. The Option is granted outside of
and therefore shall not be subject to the terms and provisions of the Company's
1989 Stock Option Plan, as amended.
3. Vesting of Option. The Option evidenced hereby may be exercised
from time to time as to the following number of shares, on a cumulative basis
(as to options to purchase shares not previously exercised), upon or after the
satisfaction of the following conditions:
(a) 10,000 shares on each of the following dates if the Optionee
is employed by the Company on such date:
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(i) December 31, 1997;
(ii) December 31, 1998; and
(iii) December 31, 1999.
(b) Achievement of the following annual milestones according to
the level of gross sales of the products marketed by Val-U-
Med, Inc. less sales returns, discounts, taxes and bad debts
written off ("Net Sales") as calculated according to the
historical accounting practices of the Company; if the
Optionee is employed by the Company on such date:
(i) Upon the close of business for 1997, either:
(1) 10,000 shares if Net Sales exceed $6,200,000;
(2) 7,500 shares if Net Sales exceed $5,400,000;
(3) 5,000 shares if Net Sales exceed $4,600,000; or
(4) 0 shares if Net Sales do not exceed $4,600,000.
(ii) Upon the close of business for 1998, either:
(1) 10,000 shares if Net Sales exceed $13,400,000;
(2) 7,500 shares if Net Sales exceed $11,700,000;
(3) 5,000 shares if Net Sales exceed $10,000,000; or
(4) 0 shares if Net Sales do not exceed $10,000,000.
(iii) Upon the close of business for 1999, either:
(1) 10,000 shares if Net Sales exceed $21,000,000;
(2) 7,500 shares if Net Sales exceed $18,400,000;
(3) 5,000 shares if Net Sales exceed $15,800,000; or
(4) 0 shares if Net Sales do not exceed $15,800,000.
4. Adjustment. In the event that Net Sales (including any adjustment
pursuant to this Section 4) exceed $6,200,000 in 1997, $13,400,000 in 1998, or
$21,000,000 in 1999 (in such event, any such year referred to as an "Excess
Year"), and in the event that Net Sales (including any adjustment pursuant to
this section 4) are less than such amounts in 1998 or 1999 (in such event, any
such year referred to as a "Deficient Year"), the amount of such excess in any
Excess Year shall be added to the amount of Net Sales in each of the Deficient
Years, in order of the occurrence of such Deficient Years, in determining the
exercisability of options under section 3(b).
5. Exercise of Option. The Option shall be exercised by Optionee's
delivery of written notice to the Company setting forth the number of shares
with respect to which the Option is to be exercised and the address to which
the certificates representing shares of Common Stock issuable upon the exercise
of the Option shall be mailed. In order to be effective, such written notice
shall be accompanied, at the time of its actual receipt by the Company, by
payment of the option price of such shares, which payment shall be made by
check in an amount equal to the option price of such shares. As promptly as
practicable after the receipt by the Company of (a) such written
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notice from Optionee setting forth the number of shares with respect to which
the Option is to be exercised and (b) payment of the option price of such
shares in the form required by the foregoing provisions, the Company shall
deliver to Optionee certificates representing the number of shares with respect
to which the Option has been so exercised, such certificates to be registered
in the name of Optionee. Delivery of such certificates shall be considered to
have been made when such certificates shall have been mailed, postage prepaid,
to Optionee at the address specified for such purpose in such written notice
from Optionee to the Company.
6. Early Forfeiture of Option. If, before the expiration of the
Option, Optionee breaches, or does not perform any of his obligations under,
any material provision of any confidentiality agreement or non-competition
agreement now or hereafter in effect between Optionee and the Company, and such
breach or non-performance continues for a period 30 days after written notice
thereof is given by the Company to Optionee, then, in such event, any
unexercised portion of the Option shall automatically be forfeited by Optionee
and the Option shall terminate and become of no further effect.
7. Transferability of Option. The Option shall not be transferable by
Optionee except through his last will and testament or under the laws of
descent and distribution, and shall be exercisable, during his lifetime, only
by him. Any assignment or transfer of the Option except through his last will
and testament or under the laws of descent and distribution, whether
voluntarily or involuntarily, by operation of law or otherwise, shall not vest
in the assignee or transferee any interest or rights whatsoever, but
immediately upon such assignment or transfer the Option shall terminate and
become of no further effect.
8. Termination of Employment or Death of Optionee. The Option granted
to Optionee shall terminate on the earlier of the date of the expiration of the
Option or upon severance of the employment relationship between the Company and
Optionee for any reason, for or without cause. If Optionee shall die while in
the employ of the Company and before the date of expiration of his Option, his
Option shall terminate on the earlier of the date of expiration or one year
following the date of death. After the death of Optionee, his executor,
administrator or any person or persons to whom his Option may be transferred by
will or by the laws of descent and distribution, shall have the right, at any
time prior to its termination, to exercise his Option to the extent Optionee
could have exercised it had he lived and remained in the employ of the Company.
9. No Rights as Stockholder. Optionee shall not have rights as a
stockholder with respect to shares covered by the Option until the date of
issuance of a stock certificate for such shares; and, except as otherwise
provided in Section 10 hereof, no adjustment for dividends or otherwise shall
be made if the record date therefor is prior to the date of issuance of such
certificate.
10. Changes in the Company's Capital Structure. The existence of the
Option shall not affect in any way the right or power of the Company to make or
authorize any or all adjustments, recapitalization, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any
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issuance of bonds, debentures, preferred or prior preference stock ahead or
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding, whether of a
similar character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of Common Stock outstanding, without
receiving compensation therefor in money, services or property, then (a) the
number, class and per share price of shares of stock subject to the Option
hereunder shall be appropriately adjusted in such a manner as to entitle
Optionee to receive upon exercise of the Option, for the same aggregate cash
consideration, the same total number and class of shares as he would have
received had he exercised the Option in full immediately prior to the event
requiring the adjustment; and (b) the number and class of shares then reserved
for issuance under this Agreement shall be adjusted by substituting for the
total number and class of shares of Common Stock then reserved that number and
class of shares of stock that would have been received by the owner of an equal
number of outstanding shares of each class of Common Stock as the result of the
event requiring the adjustment.
Except as provided herein, if the Company is merged or consolidated with
another corporation or if the Company is liquidated or sells or otherwise
disposes of substantially all its assets while the Option remains unexercised
under this Agreement, (x) subject to the provisions of clause (z) below, after
the effective date of such merger, consolidation, liquidation, sale or other
disposition, as the case may be, Optionee shall be entitled, upon exercise of
the Option, to receive, in lieu of shares of Common Stock, the number and class
or classes of shares of such stock or other securities or property to which
Optionee would have been entitled if, immediately prior to such merger,
consolidation, liquidation, sale or other disposition, Optionee had been the
holder of record of a number of shares of Common Stock equal to the number of
shares as to which the Option shall be so exercised; (y) the limitations set
forth in paragraph 3 hereof may be waived by the Company, in its sole
discretion, so that the Option, from and after a date prior to the effective
date of such merger, consolidation, liquidation, sale or other disposition, as
the case may be, shall be exercisable in full; and (z) the Option may be
canceled by the Company as of the effective date of any such merger,
consolidation, liquidation, sale or other disposition, provided that (i) notice
of such cancellation shall be given to Optionee and (ii) Optionee shall have
the right to exercise the Option in full (without regard to any limitations set
forth in paragraph 3 hereof) during a period set by the Company preceding the
effective date of such merger, consolidation, liquidation, sale or other
disposition and, provided further, that in the event the Option may not be
exercised in full under applicable securities laws without registration of the
shares of Common Stock issuable on exercise of the Option, the Company may
limit the exercise of the Option to such number of shares of Common Stock, if
any, as may be issued without such registration, the method of choosing the
number of shares of Common Stock for which the Option may be exercised to be
solely within the discretion of the Company.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash
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or property, or for labor or services either upon direct sale or upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall be made
with respect to, the number, class or price of shares of Common Stock then
subject to the Option.
11. Requirements of Law. The Company shall not be required to sell or
issue any shares under the Option if the issuance of such shares shall
constitute or result in a violation by Optionee or the Company of any provision
of any law, statute or regulation of any governmental authority. Specifically,
in connection with any applicable statute or regulation relating to the
registration of securities, upon exercise of the Option, the Company shall not
be required to issue such shares unless the Company has received evidence
satisfactory to it to the effect that Optionee will not transfer such shares
except in accordance with applicable law, including receipt of an opinion of
counsel satisfactory to the Company to the effect that any proposed transfer
complies with applicable law. The Company may, but shall in no event be
obligated to, register any shares covered hereby pursuant to applicable
securities laws of any county or political subdivision thereof. In the event
the shares issuable on exercise of the Option are not so registered, the
Company may imprint on the certificate evidencing such shares any legend that
counsel for the Company considers necessary or advisable to comply with
applicable law. The Company shall not be obligated to take any other
affirmative action in order to cause the exercise of the Option or the issuance
of shares pursuant to the Option to comply with any law or regulation of any
governmental authority.
12. Notices. Every notice or other communication relating to this
Agreement shall be in writing, and shall be mailed to or delivered to the party
for whom it is intended at such address as may from time to time be designated
by such party in a notice mailed or delivered to the other party as herein
provided, provided that, unless and until some other address be so designated,
all notices or communications by Optionee to the Company shall be mailed or
delivered to the Company at:
LifeQuest Medical, Inc.
0000 XxXxxxxxxx Xxxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: President
and all notices or communications by the Company to Optionee may be given to
Optionee personally or may be mailed to him at:
X. X. Xxxxx
000 Xxxx Xxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
13. Employment Agreement. The granting of the Option shall not
diminish or impair the rights and responsibilities of Optionee and the Company
under the Employment Agreement or any confidentiality or non-competition
agreement in effect between the Optionee and the Company. Optionee and the
Company agree that the granting of the Option pursuant to this Agreement
constitutes full satisfaction of any
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and all obligations of the Company contained in the Employment Agreement with
respect to the granting of stock options, and Optionee hereby forever releases
any claims with respect to such obligations of the Company (and its affiliate)
under the Employment Agreement.
This Agreement is effective as of the date first written above.
LIFEQUEST MEDICAL, INC.
By: /s/ XXXXXXX X. XXXXX
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Xxxxxxx X. Xxxxx,
President and Chief Executive Officer
/s/ X. X. XXXXX
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X. X. Xxxxx
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