EXHIBIT 10.3
NQO AGREEMENT
(FOR DIRECTORS)
THIS AGREEMENT is entered into as of the Grant Date (as defined in
paragraph 1) by and between the Participant and Microtek Medical Holdings, Inc.
(the "Company");
WITNESSETH THAT:
WHEREAS, the Company maintains the 1999 Long-Term Incentive Plan (the
"Plan"), which is incorporated into and forms a part of this Agreement, and the
Participant has been selected by the Board to receive an Non-Qualified Stock
Option Award under the Plan;
NOW, THEREFORE, IT IS AGREED, by and between the Company and the
Participant, as follows:
1. TERMS OF AWARD. The following terms used in this Agreement shall have
the meanings set forth in this paragraph 1:
(a) The "Participant" is ___________.
(b) "Grant Date" is ___________.
(c) The number of "Covered Shares" shall be ___________ shares of Stock.
(d) The "Exercise Price" is $___________ per share.
Other terms used in this Agreement are defined pursuant to paragraph 8 or
elsewhere in this Agreement.
2. AWARD AND EXERCISE PRICE. This Agreement specifies the terms of the
option (the "Option") granted to the Participant to purchase the number of
Covered Shares of Stock at the Exercise Price per share as set forth in
paragraph 1. The Option is not intended to constitute an "incentive stock
option" as that term is used in Code Section 422.
3. DATE OF EXERCISE. Subject to the limitations of this Agreement, the
Option shall be exercisable on a cumulative basis according to the following
schedule, with respect to each installment shown in the schedule on and after
the "Vesting Date" (defined as set forth below) applicable to such installment:
------------------------------------------------------------ ---------------------------------------------------------
VESTING DATE
APPLICABLE TO
INSTALLMENT INSTALLMENT
------------------------------------------------------------ ---------------------------------------------------------
All Covered Shares Grant Date
------------------------------------------------------------ ---------------------------------------------------------
An installment shall not become exercisable on the otherwise applicable Vesting
Date if the Participant's Date of Termination (as defined in the Plan) occurs on
or before such Vesting Date. Notwithstanding the foregoing provisions of this
paragraph 3, the Option shall become exercisable with respect to all of the
Covered Shares (to the extent it is not then otherwise exercisable) upon a
Change of Control (as defined in the Plan), except that it shall not become
exercisable (a) if the exercisability of this Option would result in an "excess
parachute payment" within the meaning of Section 280G of the Code as determined
by the Board based on information available to it at said time, (b) if following
such Change of Control this Option shall remain in effect in accordance with its
terms (subject to such adjustments as may be made in accordance with Section
4.2(c) of the Plan), or (c) if the Company exercises its rights under the
following sentence. The Company shall have the right, exercisable in the sole
discretion of the Company by notice to Participant upon or in anticipation of
any merger of the Company with or into another corporation or exchange of
outstanding capital stock of the Company for capital stock of another
corporation, to require Participant to purchase, within ten days from the date
of such notice, all or any portion of the remaining Shares which are subject to
this Option and which the Participant shall not have previously purchased in
accordance with this Option to the extent Participant shall desire to do so in
the manner otherwise provided in this Option, and this Option shall terminate as
to any shares not so purchased as of the date which is ten days after the date
of such notice from the Company to Participant.
4. EXPIRATION. The Option shall not be exercisable after the Company's
close of business on the Expiration Date (or, if the Expiration Date is not a
date in which the Company is open for business, the next regular business day of
the Company). The "Expiration Date" shall be earliest to occur of:
(a) the five-year anniversary of the Grant Date; or
(b) the one-year anniversary of the date the Participant no longer serves
as a director of the Company.
5. METHOD OF OPTION EXERCISE. Subject to this Agreement and the Plan, the
Option may be exercised in whole or in part by filing a written notice with the
Secretary of the Company or his designee at its corporate headquarters prior to
the Company's close of business on the Expiration Date. Such notice shall
specify the number of shares of Stock which the Participant elects to purchase,
and shall be accompanied by payment of the Exercise Price for such shares of
Stock indicated by the Participant's election. Payment shall be by cash or by
check payable to the Company. Except as otherwise provided by the Board, (i) all
or a portion of the Exercise Price may be paid by the Participant by delivery of
shares of Stock owned by the Participant and acceptable to the Board having an
aggregate Fair Market Value (valued as of the date of exercise) that is equal to
the amount of cash that would otherwise be required; and (ii) the Participant
may pay the Exercise Price by authorizing a third party to sell shares of Stock
(or a sufficient portion of the shares) acquired upon exercise of the Option and
remit to the Company a sufficient portion of the sale proceeds to pay the entire
Exercise Price and any tax withholding resulting from such exercise. The Option
shall not be exercisable if and to the extent the Company determines that such
exercise would violate applicable state or Federal securities laws or the rules
and regulations of any securities exchange on which the Stock is traded. If the
Company makes such a determination, it shall use all reasonable efforts to
obtain compliance with such laws, rules or regulations. In making any
determination hereunder, the Company may rely on the opinion of counsel for the
Company. Any certificate representing shares of Stock issued upon exercise of
this Option shall contain such legends as the Company shall in its discretion
require.
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6. WITHHOLDING. All deliveries and distributions under this Agreement are
subject to withholding of all applicable taxes. Any exercise of the Option shall
be subject to the Participant's payment to the Company of an amount sufficient
to satisfy any federal, state and local tax withholding requirements. At the
election of the Participant, and subject to the approval of the Board, such
withholding obligations may be satisfied through the surrender of shares of
Stock which the Participant already owns, or to which the Participant is
otherwise entitled under the Plan.
7. TRANSFERABILITY. Except as otherwise provided in this paragraph 7, the
Option is not transferable other than as designated by the Participant by will
or by the laws of descent and distribution, and during the Participant's life,
may be exercised only by the Participant. However, the Participant, with the
approval of the Board (which shall be in the Board's sole discretion), may
transfer the Option for no consideration to or for the benefit of the
Participant's Immediate Family (including, without limitation, to a trust for
the benefit of the Participant's Immediate Family or to a partnership or limited
liability company for one or more members of the Participant's Immediate
Family), subject to such limits as the Board may establish, and the transferees
shall remain subject to all the terms and conditions applicable to the Option
prior to such transfer. The foregoing right to transfer the Option shall apply
to the right to consent to amendments to this Agreement and, in the discretion
of the Board, shall also apply to the right to transfer ancillary rights
associated with the Option. The term "Immediate Family" shall mean the
Participant's spouse, parents, children, stepchildren, adoptive relationships,
sisters, brothers and grandchildren (and, for this purpose, shall also include
the Participant).
8. DEFINITIONS. Except where the context clearly implies or indicates the
contrary, a word, term, or phrase used in the Plan is similarly used in this
Agreement.
9. HEIRS AND SUCCESSORS. This Agreement shall be binding upon, and inure to
the benefit of, the Company and its successors and assigns. If any rights
exercisable by the Participant or benefits deliverable to the Participant under
this Agreement have not been exercised or delivered, respectively, at the time
of the Participant's death, such rights shall be exercisable by the Designated
Beneficiary, and such benefits shall be delivered to the Designated Beneficiary,
in accordance with the provisions of this Agreement and the Plan. The
"Designated Beneficiary" shall be the beneficiary or beneficiaries designated by
the Participant in a writing filed with the Board in such form and at such time
as the Board shall require. If a deceased Participant fails to designate a
beneficiary, or if the Designated Beneficiary does not survive the Participant,
any rights that would have been exercisable by the Participant and any benefits
distributable to the Participant shall be exercised by or distributed to the
legal representative of the estate of the Participant. If a deceased Participant
designates a beneficiary but the Designated Beneficiary dies before the
Designated Beneficiary's exercise of all rights under this Agreement or before
the complete distribution of benefits to the Designated Beneficiary under this
Agreement, then any rights that would have been exercisable by the Designated
Beneficiary shall be exercised by the legal representative of the estate of the
Designated Beneficiary, and any benefits distributable to the Designated
Beneficiary shall be distributed to the legal representative of the estate of
the Designated Beneficiary.
10. ADMINISTRATION. The authority to manage and control the operation and
administration of this Agreement shall be vested in the Board, and the Board
shall have all powers with respect to this Agreement as it has with respect to
the Plan. Any interpretation of the Agreement by the Board and any decision made
by it with respect to the Agreement is final and binding on all persons.
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11. PLAN GOVERNS. Notwithstanding anything in this Agreement to the
contrary, the terms of this Agreement shall be subject to the terms of the Plan,
a copy of which may be obtained by the Participant from the office of the
Secretary of the Company; and this Agreement is subject to all interpretations,
amendments, rules and regulations promulgated by the Board from time to time
pursuant to the Plan.
12. NOT AN EMPLOYMENT CONTRACT. The Option will not confer on the
Participant any right with respect to continuance of employment or other service
with the Company or any Related Company, nor will it interfere in any way with
any right the Company or any Related Company would otherwise have to terminate
or modify the terms of such Participant's employment or other service at any
time.
13. NOTICES. Any written notices provided for in this Agreement or the Plan
shall be in writing and shall be deemed sufficiently given if either hand
delivered or if sent by fax or overnight courier, or by postage paid first class
mail. Notices sent by mail shall be deemed received three business days after
mailed but in no event later than the date of actual receipt. Notices shall be
directed, if to the Participant, at the Participant's address indicated by the
Company's records, or if to the Company, at the Company's principal executive
office.
14. FRACTIONAL SHARES. In lieu of issuing a fraction of a share upon any
exercise of the Option resulting from an adjustment of the Option pursuant to
paragraph 4.2(c) of the Plan or otherwise, the Company will be entitled to pay
to the Participant an amount equal to the fair market value of such fractional
share.
15. NO RIGHTS AS SHAREHOLDER. The Participant shall not have any rights of
a shareholder with respect to the shares subject to the Option, until a stock
certificate has been duly issued following exercise of the Option as provided
herein.
16. AMENDMENT. This Agreement may be amended by written agreement of the
Participant and the Company, without the consent of any other person.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and the
Company has caused these presents to be executed in its name and on its behalf,
all as of the Grant Date.
PARTICIPANT
________________________________________
MICROTEK MEDICAL HOLDINGS, INC.
By: ____________________________________
Its: ___________________________________
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