<PAGE> 1
As filed with the Securities and Exchange Commission on February 15, 1996
Registration No. 33-
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933
QUEST MEDICAL, INC.
(Exact Name of Registrant as Specified in Its Charter)
TEXAS 75-1646002
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE ALLENTOWN PARKWAY
ALLEN, TEXAS 75002
(214) 390-9800
(Address, including Zip Code, and Telephone Number, including Area
Code, of Registrant's Principal Executive Offices)
QUEST MEDICAL, INC. 1995 STOCK OPTION PLAN,
QUEST MEDICAL, INC.
SALES AND MARKETING EMPLOYEES
STOCK OPTION PLAN AND
HEATON STOCK OPTION PLAN
(Full Title of Plans)
THOMAS C. THOMPSON COPY TO:
PRESIDENT AND CHIEF EXECUTIVE OFFICER KENNETH G. HAWARI, ESQ.
QUEST MEDICAL, INC. HUGHES & LUCE, L.L.P.
ONE ALLENTOWN PARKWAY 1717 MAIN STREET, SUITE 2800
ALLEN, TEXAS 75002 DALLAS, TEXAS 75201
(214) 390-9800
(Name, Address, and Telephone Number,
including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
<TABLE>
==========================================================================================================
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) FEE
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.05
par value 441,900 $12.32 $5,444,208 $1,878
- ----------------------------------------------------------------------------------------------------------
Common Stock
Rights( 3) N/A N/A N/A N/A
==========================================================================================================
</TABLE>
(1) Of the shares of Common Stock to be registered hereby, 386,000 shares are
being registered under the Quest Medical, Inc. 1995 Stock Option Plan,
25,000 shares under the Quest Medical, Inc. Sales and Marketing Employees
Stock Option Plan and 30,900 shares under the Heaton Stock Option Plan.
The original amount of shares of Common Stock issuable under Quest Medical,
Inc. 1995 Stock Option Plan and the Heaton Stock Option Plan was 250,000
and 30,000 shares, respectively. Pursuant to certain adjustment provisions
of such plans, the number of shares of Common Stock issuable under the
Quest Medical, Inc. 1995 Stock Option Plan and the Heaton Stock Option Plan
has increased by 136,000 and 900 shares, respectively. In addition, this
registration statement also includes an indeterminate number of additional
shares of Common Stock that may be issued if certain adjustment provisions
of the Quest Medical, Inc. 1995 Stock Option Plan become operative.
(2) Estimated solely for the purpose of calculating the registration fee on the
basis of the average of the high and low price paid per share of Common
Stock, as reported on the Nasdaq National Market on February 9, 1996, in
accordance with Rule 457(h) promulgated under the Securities Act of 1933,
as amended.
(3) Prior to the occurrence of certain events the Common Stock Rights will not
be traded separately from the Common Stock.
Page 1 of 21 sequentially numbered pages.
The Index to Exhibits is on page 7.
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
The following documents heretofore filed with the Securities and Exchange
Commission (the "Commission") by Quest Medical, Inc. (the "Registrant") are
incorporated by reference in this Registration Statement:
(a) Annual Report on Form 10-KSB for the fiscal year ended December
31, 1994, which contains audited financial statements of the Registrant for the
Registrant's last completed fiscal year for which such statements have been
filed (the "1994 Form 10-KSB").
(b) All reports filed by the Registrant pursuant to Sections 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
since the 1994 Form 10-KSB.
(c) The description of the Registrant's Common Stock and Common Stock
Rights set forth in the Registrant's Registration Statement on Form SB-2, dated
September 28, 1995 (Commission File Number 33-62991), including any amendment
or report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment to this Registration Statement which indicates that
all of the shares of Common Stock offered have been sold or which deregisters
all of such shares then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such documents (such documents, and the documents enumerated
above, being hereinafter referred to as "Incorporated Documents").
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein or in any other subsequently filed
Incorporated Document modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Registration Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
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<PAGE> 3
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Consistent with the Texas Business Corporation Act, the Registrant's
Articles of Incorporation include a provision limiting director liability to
the Company or its shareholders for monetary damages arising from certain acts
or omissions in the director's capacity as a director. In addition, the
Company maintains insurance on behalf of its directors and executive officers
insuring them against any liability asserted against them in their capacities
as directors or officers or arising out of such status.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
The Exhibits to this Registration Statement are listed in the Index to
Exhibits on page II-6 of this Registration Statement, which Index is
incorporated herein by reference.
ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Exchange Act that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post- effective amendment shall be deemed to
be a new registration statement to
II-2
<PAGE> 4
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The Registrant hereby undertakes that for purposes of determining
any liability under the Securities Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification by the Registrant for liabilities
arising under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the provisions described in
Item 6, or otherwise, the Registrant has been advised that in the opinion of
the Commission such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification by the Registrant against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Allen, Texas, on February 14, 1996.
QUEST MEDICAL, INC.
By: /s/ Thomas C. Thompson
------------------------------------
Thomas C. Thompson
President, Chief Executive Officer
and Director
(Principal Executive Officer)
POWER OF ATTORNEY
We, the undersigned officers and directors of Quest Medical, Inc., hereby
severally constitute and appoint Thomas C. Thompson and F. Robert Merrill III,
and each of them singly, our true and lawful attorneys with full power to them,
and each of them singly, to sign for us and in our names in the capacities
indicated below, the Registration Statement on Form S-8 filed herewith and any
and all amendments (including post-effective amendments) to the Registration
Statement, and generally to do all things in our name and behalf in the
capacities indicated below to enable Quest Medical, Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements to
the Securities and Exchange Commission, hereby ratifying and confirming our
signatures as they may be signed by our attorneys, or any of them, to said
Registration Statement and any and all amendments thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Thomas C. Thompson President, Chief Executive Officer February 14, 1996
---------------------------- and Director
Thomas C. Thompson (Principal Executive Officer)
/s/ F. Robert Merrill III Senior Vice President-Finance, February 14, 1996
---------------------------- Chief Financial Officer,
F. Robert Merrill III Treasurer and Secretary
(Principal Financial and Accounting Officer)
</TABLE>
II-4
<PAGE> 6
<TABLE>
<S> <C> <C>
/s/ Linton E. Barbee Director February 14, 1996
----------------------------------
Linton E. Barbee
/s/ Robert C. Eberhart, Ph.D. Director February 14, 1996
----------------------------------
Robert C. Eberhart, Ph.D.
/s/ John A. Gula Director February 14, 1996
----------------------------------
John A. Gula
/s/ Hugh M. Morrison Director February 14, 1996
----------------------------------
Hugh M. Morrison
/s/ Michael J. Torma, M.D. Director February 14, 1996
----------------------------------
Michael J. Torma, M.D.
</TABLE>
II-5
<PAGE> 7
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Sequentially
Exhibit Number Exhibit Numbered Page
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
4.1 Rights Agreement between Quest Medical, Inc. and MTrust
Corp. N.A., as Rights Agent dated October 12, 1989,
filed as an exhibit to the Registrant's Registration
Statement on Form SB-2 dated September 28, 1995,
Commission File Number 33-62991 and incorporated herein
by reference
4.2 Amendment of Rights Agreement between Quest Medical,
Inc. and KeyCorp Shareholder Services, Inc., as Rights
Agent dated February 9, 1995, filed as an exhibit to the
Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 1994 and incorporated herein by
reference -
4.3 Quest Medical, Inc. 1995 Stock Option Plan, filed as an
exhibit to the Registrant's Registration Statement on
Form SB-2 dated September 28, 1995, Commission File No.
33-62991 and incorporated herein by reference -
4.4 Quest Medical, Inc. Sales and Marketing Employees Stock
Option Plan 8
4.5 Heaton Stock Option Plan 14
5.1 Opinion of Hughes & Luce, L.L.P. 20
23.1 Consent of Hughes & Luce, L.L.P.
(Contained in Exhibit 5.1) 20
23.2 Consent of Ernst & Young LLP 21
24.1 Power of Attorney (Contained at page II-4) -
</TABLE>
II-6
<PAGE> 1
EXHIBIT 4.4
QUEST MEDICAL, INC.
SALES AND MARKETING EMPLOYEES
STOCK OPTION PLAN
1. Purpose of the Plan. This Plan shall be known as the Quest
Medical, Inc. Sales and Marketing Employees Stock Option Plan. The purpose of
the Plan is to attract and retain the best available personnel for positions of
substantial responsibility and to provide incentives to such personnel to
promote the success of the business of Quest Medical, Inc. and its
subsidiaries.
The options granted under this Plan are not intended to qualify as
"incentive stock options" under the Internal Revenue Code of 1986, as amended
from time to time.
2. Definitions. As used herein, the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the
Corporation.
(b) "Common Stock" shall mean the Common Stock, $.05 par value
per share, of the Corporation. Except as otherwise provided herein, all
Common Stock issued pursuant to the Plan shall have the same rights as all
other issued and outstanding shares of Common Stock, including but not
limited to voting rights, the right to dividends, if declared and paid, and
the right to pro rata distributions of the Corporation's assets in the
event of liquidation.
(c) "Committee" shall mean the committee described in Section
17 that administers the Plan.
(d) "Corporation" shall mean Quest Medical, Inc., a Texas
corporation.
(e) "Date of Grant" shall mean the date on which an Option is
granted pursuant to this Plan or, if the Committee so determines, the date
specified by the Committee as the date the award is to be effective.
(f) "Disinterested Director" shall mean a director who is not,
during the one year prior to service as an administrator of the Plan, or
during such service, granted or awarded an Option pursuant to the Plan or
any other plan of the Corporation or any of its affiliates.
(g) "Employee" shall mean any officer or other key employee of
the Corporation or one of its Subsidiaries.
(h) "Fair Market Value" shall mean the closing sale price (or
average of the quoted closing bid and asked prices if there is no closing
sale price reported) of the Common Stock on the date specified as reported
by NASDAQ or by the principal
1
<PAGE> 2
national stock exchange on which the Common Stock is then listed. If there
is no reported price information for the Common Stock, the Fair Market
Value will be determined by the Committee, in its sole discretion. In
making such determination, the Committee may, but shall not be obligated
to, commission and rely upon an independent appraisal of the Common Stock.
(i) "Option" shall mean a stock option granted pursuant to
Section 6 of this Plan.
(j) "Optionee" and "Participant" shall each mean an individual
who receives an Option pursuant to this Plan.
(k) "Plan" shall mean the Quest Medical, Inc. Sales and
Marketing Stock Option Plan, as amended from time to time.
(l) "Subsidiary" shall mean any now existing or hereinafter
organized or acquired company of which more than fifty percent (50%) of the
issued and outstanding voting stock is owned or controlled directly or
indirectly by the Corporation or through one or more Subsidiaries of the
Corporation.
3. Term of Plan. The Plan was adopted by the Board to be effective
as of December 8, 1994. The Plan shall continue in effect until terminated
pursuant to Section 17(a).
4. Shares Subject to the Plan. Subject to adjustment as provided in
Section 16 hereof, the aggregate number of shares of Common Stock issuable upon
the exercise of Options pursuant to this Plan shall be 25,000 shares; provided,
however, that on January 1 of each year (commencing on January 1, 1996), the
aggregate number of shares of Common Stock then issuable upon the exercise of
Options shall be increased by the same percentage that the total number of
issued and outstanding shares of Common Stock increased from the preceding
January 1 to the following December 31 (if such percentage is positive). For
example, if the total number of issued and outstanding shares of Common Stock
on January 1, 1996 were 5,000,000, the total number of issued and outstanding
shares of the Corporation on December 31, 1996 were 5,500,000, and the
aggregate number of shares of Common Stock then issuable upon the exercise of
Options pursuant to this Plan were 25,000, the aggregate number of shares of
Common Stock issuable under the Plan effective January 1, 1997 would be 27,500
(a 10% increase). Shares issuable upon the exercise of Options may either be
authorized but unissued shares or treasury shares. The Corporation shall,
during the term of this Plan, reserve and keep available a number of shares of
Common Stock sufficient to satisfy the requirements of the Plan. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, then the shares that were subject thereto shall, unless the
Plan shall have terminated, become immediately available for the grant of
additional Options under this Plan, subject to the limitations set forth above.
In addition, for purposes of calculating the aggregate number of shares that
may be issued under this Plan, only the net shares issued (including the
shares, if any, withheld for tax withholding requirements) shall be counted
when shares of Common Stock are used as full or partial payment for shares
issued upon exercise of an Option. Shares tendered by
2
<PAGE> 3
a Participant as payment for shares issued upon such exercise shall be
available for reissuance under the Plan.
5. Eligibility. Options may be granted under Section 6 of the Plan
to such Employees of the Corporation or its Subsidiaries as shall be determined
by the Committee.
6. Grant of Options. The Committee shall determine the number of
shares of Common Stock to be offered from time to time pursuant to Options
granted hereunder and shall grant Options under the Plan. The grant of Options
shall be evidenced by Option agreements containing such terms and provisions as
are approved by the Committee and executed on behalf of the Corporation by an
appropriate officer.
7. Time of Grant of Options. The date of grant of an Option under
the Plan shall be the date on which the Committee awards the Option or, if the
Committee so determines, the date specified by the Committee as the date the
award is to be effective. Notice of the grant shall be given to each
Participant to whom an Option is granted promptly after the date of such grant.
8. Price. The Option price for each share of Common Stock subject to
an Option (the "Exercise Price") granted pursuant to Section 6 of the Plan
shall be determined by the Committee at the Date of Grant; provided, however,
that the Exercise Price for any Option shall not be less than 100% of the Fair
Market Value of the Common Stock at the Date of Grant.
9. Vesting. Each Option award under the Plan shall vest in
accordance with the vesting provisions set forth in the applicable Option
agreement. The Committee may, but shall not be required to, permit
acceleration of vesting upon any sale of the Corporation or similar
transaction. A Participant's Option agreement may contain such additional
provisions with respect to vesting as the Committee shall specify.
10. Exercise. A Participant may pay the Exercise Price of the shares
of Common Stock as to which an Option is being exercised by the delivery of (a)
cash, (b) check, (c) at the Committee's option, previously owned shares of
Common Stock having a Fair Market Value on the date immediately preceding the
exercise date equal to the Exercise Price or (d) at the Committee's option, any
other consideration that the Committee determines is consistent with the Plan's
purpose and applicable law. If the shares to be purchased are covered by an
effective registration statement under the Securities Act of 1933, as amended,
any Option granted under the Plan may be exercised by a broker-dealer acting on
behalf of an Optionee if (a) the broker-dealer has received from the Optionee
or the Corporation a fully- and duly-endorsed agreement evidencing such Option,
together with instructions signed by the Optionee requesting the Corporation to
deliver the shares of Common Stock subject to such Option to the broker-dealer
on behalf of the Optionee and specifying the account into which such shares
should be deposited, (b) adequate provision has been made with respect to the
payment of any withholding taxes due upon such exercise, and (c) the
broker-dealer and the Optionee have otherwise complied with Section 220.3(e)(4)
of Regulation T, 12 CFR Part 220, or any successor provision.
3
<PAGE> 4
11. Option Financing. Upon the exercise of any Option granted under
the Plan, the Corporation may, but shall not be required to, make financing
available to the Participant for the purchase of shares of Common Stock
pursuant to such Option on such terms as the Committee shall specify.
12. Withholding of Taxes. The Committee shall make such provisions
and take such steps as it may deem necessary or appropriate for the withholding
of any taxes that the Corporation is required by any law or regulation of any
governmental authority to withhold in connection with any Option including, but
not limited to, withholding the issuance of all or any portion of the shares of
Common Stock subject to such Option until the Participant reimburses the
Corporation for the amount it is required to withhold with respect to such
taxes, cancelling any portion of such issuance in an amount sufficient to
reimburse the Corporation for the amount it is required to withhold or taking
any other action reasonably required to satisfy the Corporation's withholding
obligation.
13. Conditions Upon Issuance of Shares. The Corporation shall not be
obligated to sell or issue any shares upon the exercise of any Option granted
under the Plan unless the issuance and delivery of shares shall comply with all
provisions of applicable federal and state securities laws and the requirements
of NASDAQ or any stock exchange upon which shares of the Common Stock may then
be listed.
As a condition to the exercise of an Option, the Corporation may
require the person exercising the Option to make such representations and
warranties as may be necessary to assure the availability of an exemption from
the registration requirements of applicable federal and state securities laws.
The Corporation shall not be liable for refusing to sell or issue
any shares covered by any Option if the Corporation cannot obtain authority
from the appropriate regulatory bodies deemed by the Corporation to be
necessary to lawfully sell or issue such shares. In addition, the Corporation
shall have no obligation to any Participant, express or implied, to list,
register or otherwise qualify the shares of Common Stock covered by any Option.
No Participant will be, or will be deemed to be, a holder of any
Common Stock subject to an Option unless and until such Participant has
exercised his or her Option and paid the purchase price for the subject shares
of Common Stock. Each Option under this Plan shall be transferable only by
will or the laws of descent and distribution and shall be exercisable during
the Participant's lifetime only by such Participant.
14. Restrictions on Shares. Shares of Common Stock issued pursuant to
the Plan shall be subject to restrictions on transfer under applicable federal
and state securities laws. The Board may impose such additional restrictions
on the ownership and transfer of shares of Common Stock issued pursuant to the
Plan as it deems desirable; any such restrictions shall be set forth in any
Option agreement entered into hereunder.
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<PAGE> 5
15. Modification of Options. At any time and from time to time, the
Committee may execute an instrument providing for modification, extension or
renewal of any outstanding Option, provided that no such modification,
extension or renewal shall impair the Option without the consent of the holder
of the Option.
16. Effect of Change in Stock Subject to the Plan. In the event that
each of the outstanding shares of Common Stock (other than shares held by
dissenting stockholders) shall be changed into or exchanged for a different
number or kind of shares of stock of the Corporation or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise), or in the
event a stock split or stock dividend shall have occurred, then the Corporation
may either (a) substitute for each share of Common Stock then subject to
Options or available for Options the number and kind of shares of stock into
which each outstanding share of Common Stock (other than shares held by
dissenting stockholders) shall be so changed or exchanged, or the number of
shares of Common Stock as is equitably required in the event of a stock split
or stock dividend, together with an appropriate adjustment of the Exercise
Price, or (b) cancel all such Options as of the effective date of any merger,
consolidation, recapitalization, reclassification, split-up or combination of
shares by giving written notice to each holder thereof or his personal
representatives of its intention to do so and by permitting the exercise of all
such Options, without regard to determinations of periods or installments of
exercisability during the thirty (30) day period immediately preceding such
effective date. The Committee may, but shall not be required to, provide
additional anti-dilution protection to a Participant under the terms of the
Participant's Option agreement or otherwise.
17. Administration.
(a) Notwithstanding anything to the contrary herein, the Plan
shall be administered by the Board, if each member is a Disinterested
Director, or by a committee of two or more Disinterested Directors
appointed by the Board (the group responsible for administering the Plan is
referred to herein as the "Committee"). Options may be granted under
Section 6 only by majority agreement of the members of the Committee.
Subject to the limitations and qualifications set forth in this Plan, the
Committee shall also determine the number of Options to be granted, the
number of shares subject to each Option grant, the exercise price or prices
of each Option, the vesting and exercise period of each Option, whether an
Option may be exercised as to less than all of the Common Stock subject
thereto, and such other terms and conditions of each Option, if any, as are
consistent with the provisions of this Plan. Except with respect to
Section 17(b) of this Plan, the Committee shall have complete authority to
construe, interpret and administer the provisions of this Plan and the
provisions of the Option agreements entered into hereunder; to prescribe,
amend and rescind rules and regulations pertaining to this Plan; to suspend
or discontinue this Plan; and to make all other determinations necessary or
deemed advisable in the administration of the Plan. The determinations,
interpretations and constructions made by the Committee shall be final and
conclusive. No member of the Committee shall be liable for any action
taken, or failed to be taken, made in good faith relating to the Plan or
any award thereunder, and the members of the Committee
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<PAGE> 6
shall be entitled to indemnification and reimbursement by the Corporation
in respect of any claim, loss, damage or expense (including attorneys'
fees) arising therefrom to the fullest extent permitted by law.
(b) Members of the Committee shall be specified by the Board,
and shall consist solely of Disinterested Directors. Disinterested
Directors shall not be eligible to receive Options to purchase Common Stock
pursuant to Section 6 of this Plan.
18. Continued Employment Not Presumed. Nothing in this Plan or any
document describing it nor the grant of any Option shall give any Participant
the right to continue in the employment of the Corporation or affect the right
of the Corporation to terminate the employment of any such person with or
without cause.
19. GOVERNING LAW. THE PLAN SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF STATE OF TEXAS AND THE UNITED STATES, AS
APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
20. Severability of Provisions. If any provision of this Plan is
determined to be invalid, illegal or unenforceable, such invalidity, illegality
or unenforceability shall not affect the remaining provisions of the Plan, but
such invalid, illegal or unenforceable provision shall be fully severable, and
the Plan shall be construed and enforced as if such provision had never been
inserted herein.
6
<PAGE> 1
EXHIBIT 4.5
HEATON STOCK OPTION PLAN
Effective Date of Grant Expiration Date
- ----------------------- ---------------
July 22, 1993 July 22, 2003
TO: Don Heaton ("Optionee")
WHEREAS, Quest Medical, Inc., (the "Company") wishes to recognize the
contributions of the Optionee to the Company and to encourage the Optionee's
sense of proprietorship in the Company by owning the Common Stock, par value
$.05 per share (the "Common Stock"), of the Company;
WHEREAS, the Company and the Optionee are parties to an employment
Agreement and Agreement regarding Competition dated as of July 22, l993 (the
"Employment Agreement");
NOW, THEREFORE, in consideration of the mutual agreements and covenants
contained herein and in the Employment Agreement, the Company hereby grants to
the Optionee a stock option to purchase up to a total of 30,000 shares of the
Common Stock at a price per share of $3.75 (the "Option Price") on the terms
and conditions and subject to the restrictions set forth in this Agreement.
l. TERM OF OPTION. The term of this option shall expire ten years from the
Effective Date of Grant, or on the date set forth in the upper right hand
corner on page l of this Agreement, except as such term may be otherwise
shortened by the other provisions of this Agreement.
2. EXERCISE OF OPTION.
a. Exercise. Except as otherwise provided in this Agreement,
this option shall only become exercisable after one year of continued service
with the Company immediately following the Effective Date of Grant in the
installments set forth below. Each installment shall include the number of
shares and shall become exercisable (in whole or in part) upon and after the
dates set forth below.
<TABLE>
<CAPTION>
Date Shares
---- ------
<S> <C>
One year from the Effective one-half of the number
Date of Grant of shares subject to the option
Two years from the Effective one-half of the number
Date of Grant of shares subject to the option
</TABLE>
The installments shall be exercisable as to any or all shares covered by an
installment, at any time or times after an installment becomes exercisable and
until expiration or termination of this
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<PAGE> 2
option; provided, however, that the option may not be exercised as to less than
1,000 shares at any one time (or the remaining shares then purchasable under
the option, if less than 1,000 shares).
b. Method of Exercise. This option may be exercised only by
written notice (the "Exercise Notice") by the Optionee to the Company at its
principal executive office. The Exercise Notice shall be deemed given when
deposited in the U.S. mails, postage prepaid, addressed to the Company at its
principal executive office, or if given other than by deposit in the U.S.
mails, when delivered in person to an officer of the Company at that office.
The date of exercise of the option (the "Exercise Date") shall be the date of
the postmark if the notice is mailed or the date received if the notice is
delivered other than by mail. The Exercise Notice shall state the number of
shares in respect of which the option is being exercised and, if the shares for
which the option is being exercised are to be evidenced by more than one stock
certificate, the denominations in which the stock certificates are to be
issued. The Exercise Notice shall be signed by the Optionee and shall include
the complete address of such person, together with such person's social
security number.
This option may be exercised either by tendering cash in the amount of the
Option Price or, with the Company's consent, by tendering shares of Common
Stock (which may include shares previously acquired upon exercise of part of
the option). The Exercise Notice shall be accompanied by payment of the
aggregate option Price of the shares purchased by cash, a certified cashiers
check or, at the Company's option, by delivery of shares of Common Stock having
a Fair Market Value on the date immediately preceding the exercise date equal
to the Option Price.
If the shares to be purchased are covered by an effective registration
statement under the Securities Act of 1933, as amended, the option may be
exercised by a broker-dealer acting on behalf of an Optionee if (a) the
broker-dealer has received from the Optionee or the Company a fully- and
duly-endorsed agreement evidencing such option, together with instructions
signed by the Optionee requesting the Company to deliver the shares of Common
Stock subject to such option to the broker-dealer on behalf of the Optionee and
specifying the account into which such shares should be deposited; (b) adequate
provision has been made with respect to the payment of any withholding taxes
due upon such exercise, and (c) the broker-dealer and the Optionee have
otherwise complied with Section 220.3(e)(4) of Regulation T, 12 CFR Part 220,
or any successor provision.
The certificates for shares of Common Stock as to which this option shall
have been so exercised shall be registered in the name of the Optionee and
shall be delivered to the Optionee at the address specified in the Exercise
Notice. In the case of the exercise of the option by an Optionee who is
employed by the Company on the Exercise Date, the Optionee in exercising such
option shall make payment or other arrangements (including, but not limited to,
requesting that the Company withhold shares of Common Stock that were to be
issued to the Optionee upon such exercise) satisfactory to the Company for
withholding federal and state taxes, if applicable, with respect to the shares
acquired upon exercise of the option. In the case of options exercised when
the Optionee is no longer employed by the Company, such option exercise shall
be valid
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only if accompanied by payment or other arrangement satisfactory to the Company
with respect to the Company's obligations, if any, to withhold federal and
state taxes with respect to the exercise of the option. In the event the
person exercising the option is a transferee of the Optionee by will or under
the laws of descent and distribution, the Exercise Notice shall be accompanied
by appropriate proof of the right of such transferee to exercise this Option.
3. TERMINATION OF OPTION.
a. Optionee's Death. In the event of the Optionee's death, the
option may be exercised by the Optionee's estate, personal representative or
beneficiary to the fullest extent that the Optionee was entitled to exercise
the same at any time within the one-year period commencing on the day next
following the Optionee's death. After the Optionee's death, this option shall
be exercisable only by the executor or administrator of the Optionee's estate,
or if the Optionee's estate is not in administration, by the person or persons
to whom the Optionee's rights shall have passed by the Optionee's will or under
the laws of descent and distribution of the state where the Optionee was
domiciled at the date of death.
b. Suspension of Option. The Company may suspend for a reasonable
period or periods the time during which this option may be exercised if, in the
opinion of the Company, such suspension is required to enable the Company to
remain in compliance with regulatory requirements relating to the issuance of
shares of Common Stock subject to this option. The option is subject to the
requirement that, if at any time the Company shall determine, in its
discretion, that the listing, registration or qualification of the shares of
common stock subject to the option upon any securities exchange or under any
state or federal law, or the consent or approval of any government regulatory
body, is necessary or desirable as a condition of, or in connection with, the
granting or exercise of the option or the issue or purchase of shares under the
option, the option may not be exercised in whole or in part until such listing,
registration, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company. The Company
shall be under no obligation to effect or obtain any such listing,
registration, qualification, consent or approval if the Company shall
determine, in its discretion, that such action would not be in the best
interest of the Company. The Company shall not be liable for damages due to a
delay in the delivery or issuance of any stock certificates for any reason
whatsoever, including, but not limited to, a delay caused by listing,
registration or qualification of the shares of Common Stock subject to an
option upon any securities exchange or under any federal or state law or the
effecting or obtaining of any consent or approval of any governmental body with
respect to the granting or exercise of the option or the issue or purchase of
shares under the option.
4. NO RIGHTS AS SHAREHOLDER. Neither the Optionee nor any person claiming
under or through the Optionee shall be or have any rights or privileges of a
shareholder of the Company in respect of any of the shares issuable upon the
exercise of the option, unless and until certificates representing such shares
shall have been issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company).
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5. STATE AND FEDERAL SECURITIES REGULATION. Optionee hereby represents that
if he exercises this option, then any purchases of stock hereunder shall be for
investment purposes and not with a view of resale or distribution. In
addition, no shares shall be issued by the Company upon the exercise of this
option unless and until (a) any then- applicable requirements of state and
federal laws and regulatory agencies shall have been fully complied with to the
satisfaction of the Company and its counsel, and (b) if requested to do so by
the Company, the person exercising the option shall execute and deliver to the
Company a letter of investment intent in such form and substance as the Company
may require unless the issuance and sale of the stock have been registered
under the Securities Act. If shares are issued upon exercise of an option
without registration under the Securities Act, subsequent registration of such
shares shall automatically relieve the purchaser thereof of any investment
restrictions or representations made upon the exercise of such option.
6. ADMINISTRATION. The Option and this Agreement shall be administered by the
Company's Stock Option Committee or in the absence thereof, by the Company's
Board of Directors. The Committee shall have complete authority to construe,
interpret and administer this Agreement and to make all other determinations
necessary or deemed advisable in the administration of this Agreement. The
determinations, interpretations and constructions made by the Committee shall
be final and conclusive.
7. WITHHOLDING OF TAXES. The Company may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding of any taxes
which the Company is required by any law or regulation of any governmental
authority, whether federal, state or local, domestic or foreign, to withhold in
connection with any option, including, but not limited to, the withholding of
the issuance of all or any portion of the shares of Common Stock subject to the
option until the Optionee reimburses the Company for the amount the Company is
required to withhold with respect to such taxes, canceling any portion of the
issuance in an amount sufficient to reimburse the Company for the amount it is
required to so withhold, or taking any other action reasonably required to
satisfy the withholding obligation of the Company.
8. CONTINUED EMPLOYMENT NOT PRESUMED. Nothing in this Agreement or any
document describing it nor the grant of an option shall give the Optionee the
right to continue in employment with the Company or affect the right of the
Company to terminate the employment of the Optionee with or without cause.
9. DILUTION OR OTHER ADJUSTMENTS. In the event that there is any change in
the Common Stock subject to this Agreement or subject to the option granted
hereunder as the result of any stock dividend on, dividend of or stock split or
stock combination of, or any like change in, stock of the same class or in the
event of any change in the capital structure of the Company, the board of
Directors or the Committee shall make such adjustments with respect to the
Option as it deems appropriate to prevent dilution or enlargement of option
rights.
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10. RESTRICTIONS ON ISSUANCE OF SHARES.
(a) The Company shall not be obligated to sell or issue any shares
upon the exercise of the option granted under this Agreement unless:
(i) the shares with respect to which such option is being
exercised have been registered under applicable federal securities laws or
are exempt from such registration;
(ii) the prior approval of such sale or issuance has been
obtained from any state regulatory body having jurisdiction; and
(iii) in the event the Common Stock has been listed on any
exchange, the shares with respect to which such option is being exercised
have been duly listed on such exchange in accordance with the procedure
specified therefor.
If the shares to be issued upon the exercise of the option are intended to be
issued by the Company in reliance upon the exemptions from the registration
requirements of applicable federal securities laws, the Optionee, if so
requested by the Company, shall furnish to the Company such evidence and
representations, including an opinion of counsel, satisfactory to it, as the
Company may reasonably request.
(b) The option shall not be transferable by the Optionee other than by
will or the laws of descent and distribution or pursuant to a qualified
domestic relations orders as defined by the Code or Title I of the Employee
Retirement Income Security Act, or the rules thereunder.
11. GOVERNING LAW. This Agreement has been executed in, and shall be deemed to
be performable in, Dallas, Dallas County, Texas. The parties agree that this
Agreement shall be governed by and construed in accordance with the laws of the
State of Texas. The parties further agree that the courts of the State of
Texas, and any courts whose jurisdiction is derivative on the jurisdiction of
the courts of the State of Texas, shall have personal jurisdiction over all
parties to this Agreement.
12. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the parties pertaining to the precise subject matter contained in it and
supersedes all prior and contemporaneous agreements, representations and
understandings of the parties. No supplement, modification or amendment of
this Agreement shall be binding unless executed in writing by the party to be
charged therewith. No waiver of any of the provisions of this Agreement shall
be deemed, or shall constitute a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
13. DUPLICATE ORIGINALS. Duplicate originals of this document shall be
executed by both the Company and the Optionee, each of which shall retain one
duplicate original.
14. NOTICE. Other than any Exercise Notice, any notice required or permitted
to be given under this Agreement shall be in writing and delivered in person or
sent by registered or certified
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mail, return receipt requested, first-class postage prepaid, (i) if to the
Optionee, at the address shown on the books and records of the Company, or (ii)
if to the Company, at 4103 Billy Mitchell Drive, Dallas, Texas 75244,
Attention: President, or any other address that may be given by either party to
the other party by notice pursuant to this Section. Any notice, if sent by
registered or certified mail, shall be deemed to have been given at the time of
mailing.
QUEST MEDICAL, INC.
By: /s/ F. Robert Merrill
-----------------------------------
Title: Secretary
ACCEPTED:
DON HEATON /s/ Don Heaton
---------------------
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EXHIBIT 5.1
[Hughes & Luce, L.L.P. Letterhead]
February 14, 1996
Quest Medical, Inc.
One Allentown Parkway
Allen, Texas 75002
Re: Registration Statement on Form S-8 for the Quest Medical, Inc.
1995 Stock Option Plan, the Quest Medical, Inc. Sales and
Marketing Employees Stock Option Plan and the Heaton Stock
Option Plan (collectively, the "Plans")
Ladies and Gentlemen:
We have acted as special counsel to Quest Medical, Inc., a Texas
corporation (the "Company"), in connection with the registration under the
Securities Act of 1933, as amended, of 441,900 shares (and, in addition, an
indeterminate number of additional shares if certain adjustment provisions of
the Company's 1995 Stock Option Plan become operative) (the "Shares") of the
Company's common stock, $.05 par value per share, issuable under the Plans.
The Shares are being registered pursuant to a registration statement on Form
S-8 to be filed with the Securities and Exchange Commission on or about
February 14, 1996 (the "Registration Statement").
In connection with this opinion, we have examined such documents and
records of the Company and such statutes, regulations and other instruments and
certificates as we have deemed necessary or advisable for the purposes of this
opinion. We have assumed that all signatures on all documents presented to us
are genuine, that all documents submitted to us as originals are accurate and
complete and that all documents submitted to us as copies are true and correct
copies of the originals thereof. We have also relied upon such certificates of
public officials, corporate agents and officers of the Company and such other
certifications with respect to the accuracy of material factual matters
contained therein which were not independently established.
Based on the foregoing, we are of the opinion that the Shares will be, if
and when issued and paid for pursuant to the Plans, validly issued, fully paid
and nonassessable, assuming the Company maintains an adequate number of
authorized but unissued shares of common stock available for such issuance, and
further assuming that the consideration received by the Company for the Shares
exceeds the par value thereof.
We consent to the use of this opinion as an exhibit to the Registration
Statement.
Very truly yours,
/s/ Hughes & Luce, L.L.P.
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EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement
on Form S-8 of our report dated April 1, 1995, with respect to the consolidated
financial statements of Neuromed, Inc. included in the Current Report (Form 8-K)
dated March 31, 1995 of Quest Medical, Inc. and our report dated February 24,
1995 with respect to the consolidated financial statements of Quest Medical,
Inc. incorporated by reference in the Quest Medical, Inc. Annual Report on Form
10-KSB for the year ended December 31, 1994.
ERNST & YOUNG LLP
Dallas, Texas
February 14, 1996
