EXHIBIT 10.2
FORM OF NONQUALIFIED STOCK OPTION AGREEMENT
THIS NONQUALIFIED STOCK OPTION AGREEMENT, dated this day of , 2004
between QUALITY SYSTEMS, INC., a California corporation (hereinafter referred to
as the "Company"), and , an employee, director or consultant 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 1998 Stock Option Plan (the "Plan"). Terms not otherwise defined
herein shall have the meaning given them under 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 the
Plan) 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 2(k) of the
Plan as of the date hereof. The purchase price of stock acquired pursuant to an
Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised, (ii) at the
discretion of the Board or the Committee (as defined in Section 2 of the Plan),
either at the time of the grant or exercise of the Option, by delivering to the
Company other shares of Common Stock of the Company (provided that the shares
have been held for the period required to avoid a charge to the Company's
reported earnings), (iii) at the discretion of the Board or the Committee,
either at the time of the grant or exercise of the Option, by delivering to the
Company all or any part of an Option granted under this Plan for a cashless
exercise (provided that such cashless exchange will not result in a charge to
the Company's reported earnings), or (iv) by tendering any other form of legal
consideration that may be acceptable to the Board.
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 fifth 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:
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Date Installments First Percent of Option Shares
Become Exerciseable Subject to Installment
----------------------- ------------------------
[date] 25%
[date] 25%
[date] 25%
[date] 25%
Once the Option granted hereunder becomes exercisable, 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 granted hereunder. Except as provided in Section 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,
director or consultant 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 Section 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. Nothwithstanding the foregoing, an
Option granted to an Optionee who is not subject to Section 16 of the Exchange
Act on the date of the grant may not be transferable except by will or by the
laws of descent and distribution, unless otherwise permitted by the Board, and
shall be exercisable during the lifetime of the person to whom the Option is
granted only by such person or, subsequent to any permitted transfer, only by a
permitted transferee. 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 or Relationship as a Director or
Consultant Other than by Disability or Death. In the event that an Optionee's
Continuous Status as an Employee, Director or Consultant is terminated either by
the voluntary resignation by the Optionee or for cause by the Company, all
Options granted to the Optionee shall terminate immediately. In the event an
Optionee's Continuous Status as an Employee, Director or Consultant is
terminated without cause by the Company, the Optionee may exercise his or her
Option (to the extent that the Optionee was entitled to exercise it at the date
of termination) but only within such period of time ending on the earlier of (i)
the date thirty (30) days after the termination of the Optionee's Continuous
Status as an Employee, Director or Consultant, or (ii) the expiration of the
term of the Option. If, after termination, the Optionee does not exercise his or
her Option as set forth in this Section 5(a), the Option shall terminate.
(b) Disability of Optionee. In the event an Optionee's Continuous
Status as an Employee, Director or Consultant terminates as a result of the
Optionee's disability, the Optionee may exercise his or
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her Option (to the extent that the Optionee was entitled to exercise it at the
date of termination), but only within such period of time ending on the earlier
of (i) the date three hundred sixty-five (365) days following such termination,
or (ii) the expiration of the term of the Option as set forth herein. If, after
termination, the Optionee does not exercise his or her Option as set forth in
this Section 5(b), the Option shall terminate.
(c) Death of Optionee. In the event of the death of an Optionee during, or
within a period specified in the Option after the termination of, the Optionee's
Continuous Status as an Employee, Director or Consultant, the Option may be
exercised (to the extent the Optionee was entitled to exercise the Option at the
date of death) by the Optionee's estate, by a person who acquired the right to
exercise the Option by bequest or inheritance, or by a person designated to
exercise the option upon the Optionee's death pursuant to the Plan, but only
within the period ending on the earlier of (i) the date three hundred sixty-five
(365) days following the date of death, or (ii) the expiration of the term of
such Option as set forth in the Option Agreement. If, after death, the Option is
not exercised as set forth in this Section 5(c), the Option shall terminate.
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 the acquiring 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
(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 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
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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. Method of Exercising Option.
Subject to the terms and conditions of this Agreement, this Option
may be exercised by written notice to the Company - attention Corporate
Secretary, at its administrative office in the State of California, which
presently is located at 00000 Xxx Xxxxxx Xxx., 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 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 Committee, certificates for
shares of Common Stock of the Company having an aggregate fair market value
(determined in accordance with Section 2(k) of the Plan) equal to, the full
purchase price of such shares (or such other consideration permitted under
Section 2 or under the Plan), 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 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.
8. General.
(a) The granting of the Option hereunder shall not impose any
obligation on the Company to continue utilizing the services of the Optionee as
an employee, director or consultant; nor shall it impose any obligation on the
Optionee to exercise this Option.
(b) This Agreement and the Plan 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. In the event of any conflict between the terms of this Agreement
and the Plan, the terms of the Plan shall govern.
(c) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of California.
(d) 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.
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IN WITNESS WHEREOF, the Company has caused this 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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`Optionee"
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