EXHIBIT
10.7
▇▇▇▇▇ MEDICAL CORP.
P.O. BOX 1500
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
__________________
__________________
__________________
Re: Non-Qualified Stock Option ---- shares of Common Stock
------------------------------------------------------
Dear Mr. _____________:
The Board of Directors of the ▇▇▇▇▇ Medical Corp., a Delaware Corporation
(the "Company"), today, pursuant to the 1998 Non-Qualified Stock Option Plan of
the Company (the "Plan"), granted you a non-qualified stock option, which is
evidenced hereby, to purchase _____ shares of the Company's common stock, $.01
par value ("Common Stock"), at the price of _______ per share (the fair market
value of the stock on the date hereof),exercisable (subject to Section 8 hereof)
as follows:
_______ shares not earlier than February 17,
1999 and not later than February 16, 2003;
an additional ________ shares not earlier than
February 17, 2000 and not later than February
16, 2003;
an additional ____shares not earlier than
February 17, 2001 and not later than February
16, 2003, and
an additional ____ shares not earlier than
February 17, 2002 and not later than February
16, 2003;
provided, however, that, notwithstanding the above, this option shall (subject
-------- -------
to Section 9 hereof) become exercisable in full on the occurance of a Change of
Control and Position (as defined in the Plan).
Pursuant to the Plan which governs this option, it is subject to all the
terms and conditions of the Plan, and to the following terms and conditions:
1. Section 16(b) The following provisions of this paragraph are applicable
----------------
only if this option is being granted to an officer of the Company subject to
Section 16 of the Securities Exchange Act of 1934: The grant of this option and
the acquisition pursuant to the option of the shares issuable on its exercise
were approved by the Board of Directors of the Company on February 17, 1998, and
neither such grant nor acquisition constitutes or will constitute an intra-plan
transfer involving an issuer equity securities fund, or a cash distribution
funded by a volitional disposition of an issuer equity security. Accordingly,
the Company intends that such grant and acquisition
42
are exempt from Section 16(b) of the Securities Exchange Act of 1934, pursuant
to Rule 16(b)-3(d)(1) thereunder.
2. Exercise; Payment The holder of an option may exercise his or her
--------------------
option by delivering to the Company written notice, substantially in the form of
Exhibit A, of the number of shares with respect to which option rights are to
be exercised together with full payment of the purchase price of the such
shares. In addition, the holder of this option shall pay all withholding taxes
when due by reason of said exercise. In both cases (at the election of the
holder of the option) payment may be made either (x) in cash, (y) in Common
Stock, or (z) by a combination of cash and Common Stock. If payment, in whole
or part, is made in Common Stock, it shall be valued by the Committee at 100% of
its fair market value on the close of business on the date prior to the date of
payment. Common Stock used for payment must have been held by the optionee for
at least six months. Upon receipt by the Chief Financial Officer of the Company
of payment in full, the option holder shall be deemed the holder of record of
the Common Stock issuable upon such exercise, notwithstanding that certificates
representing such Common Stock shall not be actually delivered to the option
holder at that time.
3. No Transfer Neither this option nor any right under this option may be
--------------
assigned, alienated, pledged, attached, sold or otherwise transferred or
encumbered by the holder of this option other than by will or the laws of
descent and distribution and may be exercised during his or her lifetime only by
the optionee.
4. Termination of Optionee's Employment (a) If the holder of an option
---------------------------------------
dies during the period of his or her employment by the Company, the number of
shares for which the option was exercisable as of the date of death may be
exercised by the option holder's personal representative, or transferee entitled
to acquire the right to exercise the option by will or pursuant to the laws of
descent and distribution, until the earlier of the date upon which his or her
option expires or ninety days following the date of death.
(b) If the employment of the option holder is terminated by the option
holder by reason of his or her permanent disability, or terminated by the
Company for any reason (except culpable cause, that is, an intentional material
breach of by the option holder of his or her duties as an employee of the
Company), the number of shares for which the option was exercisable as of the
date of termination may be exercised by the option holder until the earlier of
the date upon which his or her option expires or ninety days following the date
of such termination.
(c) If the option holder terminates his or her employment with the Company
for any reason other than permanent disability, the number of shares for which
the option was exercisable as of the date of termination may be exercised by the
option holder until the earlier of the date upon which his or her option expires
or ten days following the date of such termination.
(d) If the employment of the option holder is terminated by the Company by
reason of culpable cause (that is, an intentional material breach by the option
holder of his or her duties as an employee of the Company), this option, and all
rights thereunder, shall terminate.
43
5. No Right to Continued Employment Term as Officer No obligation, express
---------------------------------------------------
or implied, to continue the option holder as an officer or employee of the
Company, or for the option holder to continue to remain as an officer or
employee, arises from the grant of this option.
6. No Fractional Shares No fractional shares shall be issued upon the
-----------------------
exercise of an option. With respect to any fraction of a share otherwise
issuable upon any exercise hereof, the Company shall pay to the option holder an
amount in cash equal to the fair value of such fraction.
7. No Rights as Shareholders The option holder shall not, by virtue
----------------------------
thereof, be entitled to any rights of a shareholder in the Company, either at
law or equity, and the rights of the option holder are limited to those provided
by this Plan and (to the extant consistent therewith) those expressed in the
option.
8. No "Section 162(m) Payment" Notwithstanding anything to the contrary in
------------------------------
this option, it shall not become exercisable to the extent that, and so long as,
an exercise (when aggregated with all other option exercises of the option
holder subject to the Section 162(m) provisions hereinafter referred to) would,
pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended,
limit the amount deductible by the Company as compensation for federal income
tax purposes.
9. No "Parachute Payment" Notwithstanding anything to the contrary in this
-------------------------
option, it shall not become exercisable to the extent that, and so long as, an
exercise (when aggregated with any other payment which would be subject to the
"parachute payment" provisions hereinafter referred to) would cause a "parachute
payment" under Section 280G of the Internal Revenue Code of 1986, as amended.
10. Securities Act Restrictions The Company may require an option holder,
-------------------------------
and the option holder's legal representative, heir, legatee, or distributee, as
a condition of any exercise of the Option, to give written assurance
satisfactory to the Company that the shares are being acquired for investment
only, with no view to the distribution, and that any subsequent resale thereof
will be made pursuant to an effective and current registration statement under
the Securities Act of 1933, or pursuant to an exemption from registration under
said Act, and all certificates representing the shares subject to options shall
bear the following legend:
The shares represented by this certificate have not
been registered under the Securities Act of 1933.
Said shares have been acquired for investment, and
may not be sold, transferred or assigned except
pursuant to an effective registration statement for
said shares under said Act or an opinion of the
Company's counsel that such registration is not
required under said Act.
44
The Plan governing this option is available at the Company's offices
for your inspection. This option is limited and conditioned as provided in the
Plan, and as provided in this option.
Very truly yours,
▇▇▇▇▇ MEDICAL CORP.
By:__________________________
▇▇▇▇ ▇. ▇▇▇▇,
President
ACCEPTED,
IN ACCORDANCE WITH ABOVE:
________________________
__________________
Social Security No. ________________
45
EXHIBIT A
---------
NOTICE OF EXERCISE OF NON-QUALIFIED STOCK OPTION
------------------------------------------------
▇▇▇▇▇ MEDICAL CORP.
P.O. Box 1500
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-1500
Date of Exercise: _________________________
This constitutes notice under my Non-Qualified Stock Option that I elect to
exercise it by purchasing shares of Common Stock, $.01 par value, of ▇▇▇▇▇
MEDICAL CORP. as follows:
Grant Date: _______
Exercise Price: _______
Total Number of Shares
Granted Under Option: _______ shares
Available to
Exercise at Present Date: _______ shares
Less Previously Exercised: _______ shares
Total Presently Exercisable: _______ shares
Present Exercise: _______ shares
Purchase Price - Check #: $______
Please register and send the share
certificate to me at the
following address:
46
The following is applicable only if the offer and sale of securities under
said option and resale of the securities issuable on exercise of said option are
not subject to an effective registration statement under the Securities Act of
1933: I am familiar with the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to reach
an informed and knowledgeable decision to acquire the Company's stock on this
option exercise. The Company has provided me with the opportunity to obtain such
information, including its most recent Form 10-K, subsequent Form 10-Qs and
Form-8-Ks and its most recent proxy statement. I am purchasing (or, if I am the
legal representative of the original option holder's estate, the estate is
purchasing) the stock for my own (or said estate's) account for investment
purposes only and not with a view to, or for the resale in connection with, any
distribution thereof. I understand that (a) said stock has not been registered
under the Securities Act of 1933, in reliance upon an exemption registration
which depends upon, among other things, the bona fide nature of said investment
intent, (b) said stock must be held indefinitely unless subsequently registered
under the Securities Act of 1933 or an exemption from registration is available,
(c) the Company is under no obligation to register said stock, and (d) the
certificate evidencing said stock will be imprinted with a legend which
prohibits the transfer of said stock unless they are so registered or such
registration is not required in the opinion of counsel for the Company. In
addition, I understand that my (or said estate's) exercise of the option has tax
consequences, and I have consulted my (or said estate's) tax advisor, and not
relied on the Company, regarding the tax consequences.
Very truly yours,
________________________________
(Signature)
________________________________
(Print Name)
47
