STOCK OPTION AGREEMENT FOR THE YEAR BEGINNING 9/1/96
PURSUANT TO AN EMPLOYMENT AGREEMENT BETWEEN
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ AND CYCLO3PSS MEDICAL SYSTEMS, INC.
THIS AGREEMENT is effective as of the 31st day of August, 1996 (the "Grant
Date"), by and between CYCLO3PSS MEDICAL SYSTEMS, INC. (the "Company") and ▇▇▇▇
▇.
▇▇▇▇▇▇▇▇ (the "0ptionee");
WITNESSETH:
WHEREAS, 0ptionee is the President and CEO of the Company, and the Company
and its board of directors consider it desirrable and in its best interests that
Optionee be given an inducement to remain in the Company's employ and to acquire
a proprietary interest in the Company, and an added incentive to advance the
interests of the Company by possessing an option to purchase shares of the
Company's common stock (the "Stock"), and
WHEREAS, the compensation committee of the Board of Directors of the
Company (the "Committee" and the Board of Directors of the Company has
authorized the grant to Optionee of a stock option authorizing 0ptionee to
purchase shares of common stock of the Company (the "Common Stock"); and
WHEREAS, the Company and 0ptionee wish to further confirm and outline the
terms and conditions of the option;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, it is hereby agreed between the parties hereto as follows:
1. Grand of Option. Subject to the terms, restrictions, limitations and
conditions stated herein and in the prospectus and the registration statement to
be filed registering the shares underlying this option, the Company hereby
grants to the 0ptionee an option (the "Option") to purchase all or any part of
100,000 post-split shares (after the 1:5 reverse stock split approved on August
26, 1993 and effective September 8 1993) of common stock of the Company (the
"Shares" ).
2. Term and Exercise of Option. Subject to the provisions of this
Agreement: (a) This option may be exercised by the optionee at any
time during the 0ption
Period, as defined in Section 4 hereof which provides that none of the
Options granted herein will be exercisable until August 31 1997. At that
date, all of the options granted herein will then be exersisable unless
the optionee's employment with the Company has terminated prior to' p
August 31, 1997, in which event the number of options exercisable will be
reduced by 8,333 shares for each month or part thereof between the date of
termination and August 31, 1997. However, the intervenin death of 0ptionee
before August 31, 1997 will remove this continued employment condition
from all options granted herein.
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(b) Subject to Section 7 hereof, the Option may be exercised with
respect the exercisable portion thereof at any time after August 3 l, 1997
and prior to the expiration date by the delivery to the Company, at its
principal place of business, of:
(i) a written notice of exercise in substantially the form attached hereto
as Exhibit 1 , which shall be actually delivered to the Company no earlier
than thirty (30) days and no later than ten ( 10) days prior to the date
upon which Optionee desires to exercise all or a portion of 0ption;
(ii) payment to the Company of the Exercise Price, defined in Section 3
below,multiplied by the nurmber of shares being purchased (the "Purchase
Price") in the manner provided in Subsection (c) hereof; and
(iii) payment of all withholding tax obligations, if any, (whether
federal, state or local) imposed by reason of the exercise of the Option.
Upon receipt of such notice, receipt of payment in full of the Purchase
Price, and receipt of payment of any withholding tax obligations due, the
Company shall cause to be issued an unrestricted certificate representing
the Shares purchased.
(c) The Purchase Price and withholding tax obligations, if any,
shall be paid in full upon the exercise of an Option and no Shares shall
be issued or delivered until full payment therefor has been made. Payment
of the Purchase Price for Shares purchased pursuant to the exercise of an
Option and any tax withholding obligations shall be made:
(i) in cash or by certified check;or
(ii) by delivery to the Company of a number of shares of common stock of
the Company which have been owned by the optionee for at least six months
prior to the date of the Option's exercise and which have a fair market
value on the date of exercise, as determined by the Compensation Committee
in its sole discretion, which is either equal to or which in combination
with cash is equal to the purchase price; or
(iii) by receipt of the purchase price in cash from a broker, dealer or
other "creditor" as defined by Regulation "T" issued by the Board of
Governors of the Federal Reserve System following delivery by the optionee
to the committee of instructions regarding delivery to such broker, dealer
or other "creditor"of that number of shares of common stock with respect
to which the Option is exercised.
.
3. Exercise Price. The exercise price for each share of Common Stock for
which the 0ption is exercised shall be $ 1.07 per share subject to adjustment as
set forth in Section 7 hereof
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(the "Exercise Price"). Said Exercise Price is not less than l00% of the
fair market value of such stock as of the date of action by the Compensation
Committee.
4. Term and Termination of 0ption. Except as otherwise provided herein,
the term of the option (the "Option Period") shall commence three years after
the Grant Date, provided that the Optionee continues to serve as an employee of
the Company for at least three (3) years after the Grant Date, and shall
terminate on the eighth anniversary of the Grant Date. Upon expiration of the
Option Period this Option, and all unexercised rights granted to Optionee
hereunder, shall terminate and thereafter be null and void.
5. Rights as Shareholders. Until the stock certificates reflecting the
Shares accruing to the Optionee upon exercise of the Option are issued to the
Optionee, the Optionee shall have no rights as a shareholder with respect to
such Shares. The Company shall make no adjustment for any dividends,
distributions or other rights on or with respect to Shares purchased pursuant to
the Option for which the record date is prior to the issuance of that stock
certificate.
6. Restriction on Transfer of Option. The Option evidenced hereby is
nontransferable other than by last will and testament or the laws of descent and
distribution, and, shall be exercisable during the lifetime of the Optionee only
by the Optionee (or in the event of his disability, by his personal
representative) and after his death, only by his personal representative.
7. Change in Capitalization, Change in Control, etc. If the number of
shares of the Common Stock of the Company shall be increased or reduced by a
stock split (other than the 1:5 reverse stock split approved on 8/26/93 and
effective 9/8/93 which has already been given effect herein), payment of a stock
dividend, a subdivision or combination of shares, reclassification, merger or
consolidation, or similar capital adjustment, an appropriate adjustment shall be
made by the Committee in the number and kind of shares as to which the Option,
or the portion thereof then unexercised, shall be or become exercisable, to the
end that the Optionee's proportionate interest shall be maintained as before the
change in the total price applicable to the unexercisable portion of the Option
and with a corresponding adjustment in the Exercise Price. All adjustments made
by the Committee under this Section shall be conclusive.
If the Company shall be the surviving corporation in any merger or
consolidation, recapitalization, reclassification of shares or similar
reorganization, an appropriate adjustment shall be made with respect to the
Shares so that the Optionee shall be entitled to purchase at the same times and
upon the same terms and conditions as are then provided by this Agreement, the
number and class of securities to which a holder of the number of Shares subject
to the Agreement at the time of the transaction would have been entitled to
receive as a result of such transaction, with any corresponding adjustment made
to the Exercise Price.
In the event of (a) a dissolution or liquidation of the Company; (b) a
merger of the Company into another corporation, or any consolidation, share
exchange, combination, reorganization, or like transaction in which the Company
is not the survivor; (c) a sale or transfer (other than as security for the
Company's obligations) of at least a majority if the assets of the Company; or
(d) a sale or transfer of 50% or more of the issued and outstanding shares of
Common Stock by the holders thereof in a single transaction or in a series of
related transactions,
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the 0ption shall become immediately exercisable as to all Shares subject thereto
to the extent it has not already become so. The Company shall use its best
efforts to provide Optionee with written notice of such transaction at least
thirty (30) days prior to the date of its consummation
8. Legend on Stock Certificates. Until and unless the registration
statement to be filed .which is intended to register the shares to be issued
pursuant to the exercise of the options granted herein is effective,
Certificates evidencing Common Stock to be distributed pursuant to the Agreement
and the Plan shall, to the extent appropriate at the time, have noted
conspicuously on the certificates an appropriate restrictive legend which is
intended to give all persons full notice of the existence of any conditions,
restrictions, rights and obligations related to the free transferability of the
shares issued.
9. Governing Laws. This Agreement shall be construed, administered and
enforced according to the laws of the State of Utah; provided, however, no
option may be exercised except in the reasonable judgment of the Board of
Directors, in compliance with exemptions under applicable state securities laws
of the state in which the Optionee resides, and/or any other applicable
securities laws.
10. Successors. This Agreement shall be binding upon and insure to the
benefits of the heirs, legal representatives, successors and permitted assigns
of the parties.
1l. Notice. Except as otherwise specified herein, all notices and other
communications under this Agreement shall be in writing and shall deemed to have
been given if personally delivered or if sent by registered or certified United
States mail, return receipt requested, postage prepaid, addressed to the
proposed recipient at the last known address of the recipient. Any party may
designate any other address to which notices shall be sent by giving notice of
the address to the other parties in the same manner as provided herein.
12. Severabitity. In the event that any one or more of the provisions or
portion thereof contained in this Agreement shall for any reason be held to be
invalid, illegal or unenforceable in any respect, the same shall not invalidate
or otherwise affect any other provisions of this Agreement, and this Agreement
shall be construed as if the invalid, illegal or unenforceable provision or
portion thereof had never been contained herein.
l3. Entire Agreement. Subject to the terms and conditions of the Plan, this
Agreement expresses the entire understanding and agreement of the parties. This
Agreement may be executed in two or more counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same
instruments.
14. Violation. Any transfer, pledge, sale, assignment, or hypothecation of
the Option or any portion thereof shall be a violation of the terms of this
Agreement and shall be void without effect.
l5. Headings. Paragraph headings used herein are for convenience of
reference only and shall not be considered in construing this Agreement.
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16. Specific Performance. In the event of any actual or threatened default
in, or breach of, any of the terms, conditions and provisions of this Agreement,
the party or parties who are thereby aggrieved shall have the right to specific
performance and injunction in addition to any and all other rights and remedies
at law or in equity, and all such rights and remedies shall be cumulative.
17. No Emplyment Rights Created. Neither the establishment of the Plan nor
the grant of the option hereunder shall be construed as giving the Optionee the
right to continued employment with the Company or a subsidiary.
IN WITNESS WHEREOF, the parties have executed and sealed this Agreement on
the day and year first set forth above.
CYCLO3PSS MEDICAL SYSTEMS, INC.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
OPTIONEE:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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