<PAGE> 1
As filed with the Securities and Exchange Commission on April 8, 1999
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM S-8
REGISTRATION STATEMENT
Under
The Securities Act of 1933
---------------
QUADRAMED CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 68-0316252
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
</TABLE>
1003 WEST CUTTING BOULEVARD
RICHMOND, CALIFORNIA 94804
(Address of principal executive offices) (Zip Code)
QUADRAMED CORPORATION 1996 STOCK INCENTIVE PLAN
CABOT MARSH CORPORATION 1997 INCENTIVE STOCK OPTION PLAN
PYRAMID HEALTH GROUP, INC. 1997 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
PYRAMID HEALTH SOLUTIONS, INC. 1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
HOSPITAL CORRESPONDENCE CORPORATION 1995 STOCK OPTION PLAN AND 1996 EMPLOYEE AND
CONSULTANT STOCK OPTION PLAN
CODEMASTER CORPORATION 1998 EXECUTIVE STOCK OPTION PLAN
IMN LLC 1995 CLASS C UNIT OPTION PLAN
THE COMPUCARE COMPANY 1997 STOCK COMPENSATION PLAN
SPECIAL OPTION GRANTS TO MESSRS. HURD, MEHTA, PATEL, DEVITT AND AHEARN
AND TO MS. PAPPAS PURSUANT TO WRITTEN COMPENSATION AGREEMENTS
---------------
JAMES D. DURHAM
CHIEF EXECUTIVE OFFICER
QUADRAMED CORPORATION
1003 WEST CUTTING BOULEVARD
RICHMOND, CALIFORNIA 94804
(510) 620-2340
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================
Title of Amount Proposed Maximum Proposed Maximum Amount of
Securities to to be Offering Price Aggregate Registration
be Registered Registered(1) per Share Offering Price Fee
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
QuadraMed Corporation
1996 Stock Incentive Plan
Common Stock, $0.01 par value 1,230,698 shares $4.31(2) $5,304,308(2) $1,474.60
Cabot Marsh Corporation
1997 Incentive Stock Option Plan
Common Stock, $0.01 par value 14,775 shares $22.81(3) $337,017.75(3) $93.69
Pyramid Health Group, Inc.
1997 Employee and Consultant
Stock Option Plan
Common Stock, $0.01 par value 19,930 shares $9.63(3) $191,926(3) $53.36
Pyramid Health Solutions, Inc.
1996 Employee and Consultant
Stock Option Plan
Common Stock, $0.01 par value 137,680 shares $6.60(3) $908,688(3) $252.62
Hospital Correspondence Corporation
1995 Stock Option Plan
Common Stock, $0.01 par value 31,461 shares $3.76(3) $118,293.36(3) $32.89
Hospital Correspondence Corporation
1996 Employee and Consultant
Stock Option Plan
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 56,495 shares $8.30(3) $468,908.50(3) $130.36
CodeMaster Corporation
1998 Executive Stock Option Plan
Common Stock, $0.01 par value 110,544 shares $8.34(3) $927,966.78(3) $256.30
IMN LLC
1995 Class C Unit Option Plan
Common Stock, $0.01 par value 77,500 shares $25.81(3) $2,000,275(3) $556.08
The Compucare Company 52,937 shares $14.39(3) $761,763 $211.77
1997 Stock Compensation Plan
Common Stock, $0.01 par value
Special Option Grants Pursuant
to Written Compensation Agreements
Common Stock, $0.01 par value
Mr. Hurd 50,000 shares $23.44 (4) $1,172,000(4) $325.82
Mr. Mehta 150,000 shares $23.44 (4) $3,516,000(4) $977.45
Mr. Patel 40,000 shares $23.44 (4) $937,600(4) $260.65
Mr. DeVitt 30,000 shares $23.44 (4) $703,200(4) $195.49
Mr. Ahearn 100,000 shares $16.625(4) $1,662,500(4) $462.18
Ms. Pappas 50,000 shares $23.44 (4) $1,172,000(4) $325.82
Aggregate Filing Fee: $5,609.08
================================================================================================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the QuadraMed Corporation 1996
Stock Incentive Plan, the Cabot Marsh Corporation 1997 Incentive Stock
Option Plan, the Pyramid Health Group, Inc. 1997 Employee and Consultant
Stock Option Plan, the Pyramid Health Solutions, Inc. 1996 Employee and
Consultant Stock Option Plan, the Hospital Correspondence Corporation 1995
Stock Option Plan and 1996 Employee and Consultant Stock Option Plan, the
CodeMaster Corporation 1998 Executive Stock Option Plan, the IMN LLC 1995
Class C Unit Option Plan, the Compucare Company 1997 Stock Compensation
Plan, and the options granted to Messrs. Hurd, Mehta, Patel, DeVitt and
Ahearn and to Ms. Pappas pursuant to Written Compensation Agreements (the
"Individual Options") by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the
Registrant's receipt of consideration which results in an increase in the
number of the outstanding shares of Common Stock of QuadraMed Corporation.
(2) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended the ("1933 Act"), on the basis of the
average of the high and low selling prices per share of Common Stock of
QuadraMed Corporation on April 6, 1999, as reported by the Nasdaq National
Market.
(3) Calculated solely for purposes of this offering under Rule 457(h) of the
Securities Act of 1933, as amended, on the basis of the weighted average
exercise price of the outstanding options.
(4) Calculated solely for purposes of this offering under Rule 457(h) of the
1933 Act on the basis of the exercise price of each of the Individual
Options.
<PAGE> 3
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
QuadraMed Corporation (the "Registrant") hereby incorporates by reference
into this Registration Statement the following documents previously filed with
the Securities and Exchange Commission (the "SEC"):
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 filed with the SEC on March 31, 1999; and
(b) The Registrant's Registration Statement No. 00-021031 on Form 8-A
filed with the SEC on July 17, 1996 pursuant to Section 12 of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), in which
there is described the terms, rights and provisions applicable to the
Registrant's outstanding Common Stock.
All reports and definitive proxy or information statements filed pursuant
to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act after the date of this
Registration Statement and prior to the filing of a post-effective amendment
which indicates that all securities offered hereby have been sold or which
deregisters all securities then remaining unsold shall be deemed to be
incorporated by reference into this Registration Statement and to be a part
hereof from the date of filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein 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 subsequently filed
document which also is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such 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.
Item 6. Indemnification of Directors and Officers
The Registrant's Certificate of Incorporation provides that its directors
will not be liable to the Registrant or its stockholders for monetary damages
for breaches of fiduciary duty to the fullest extent permitted by Delaware law.
This provision is intended to allow the Registrant's directors the benefit of
Delaware General Corporation Law, which provides that directors of Delaware
corporations may be relieved of monetary liability for breaches of their
fiduciary duty of care except under certain circumstances, including breach of
the duty of loyalty, acts or omissions not in good faith or involving
intentional misconduct or known violation of law, or any transaction from which
the director derived an improper personal benefit.
The Registrant will enter into separate indemnification agreements with
each of the directors and executive officers whereby the Registrant will agree,
among other things, to indemnify them against certain liabilities that may arise
by reason of their status or service as directors or executive officers to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified.
Item 7. Exemption from Registration Claimed
Not Applicable.
Item 8. Exhibits
<PAGE> 4
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-021031
on Form 8-A, including the exhibits thereto, which is
incorporated herein by reference pursuant to Item 3(b).
5.1 Opinion and consent of Brobeck, Phleger & Harrison LLP.
5.2 Opinion and consent of Zevnik Horton Guibord McGovern Palmer
& Fognani, L.L.P.
23.1(A) Consent of Arthur Andersen LLP, Independent Public Accountants.
23.1(B) Consent of Deloitte & Touche LLP, Independent Auditor.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 QuadraMed Corporation 1996 Stock Incentive Plan.
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.5* Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change in Control).
99.6* Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Corporate Transaction).
99.7* Form of Notice of Grant of Automatic Stock Option (Initial Grant).
99.8* Form of Notice of Grant of Automatic Stock Option (Annual Grant).
99.9* Form of Automatic Stock Option Agreement.
99.10* Form of Stock Issuance Agreement.
99.11* Form of Addendum to Stock Issuance Agreement (Involuntary
Termination Following Change in Control).
99.12* Form of Addendum to Stock Issuance Agreement (Involuntary
Termination Following Corporate Transaction).
99.13 Cabot Marsh Corporation 1997 Incentive Stock Option Plan.
99.14 Form of Grant of Incentive Stock Option (Cabot Marsh 1997 Plan).
99.15 Pyramid Health Group, Inc. 1997 Employee and Consultant Stock
Option Plan.
99.16 Form of Acknowledgement by Optionee and stock option terms
(Pyramid Health Group 1997 Plan).
99.17 Pyramid Health Solutions, Inc. 1996 Employee and Consultant
Stock Option Plan.
99.18 Form of Acknowledgement by Optionee and stock option terms
(Pyramid Health Solutions 1996 Plan).
99.19 Hospital Correspondence Corporation 1995 Stock Option Plan.
99.20 Hospital Correspondence Corporation 1996 Employee and
Consultant Stock Option Plan.
99.21 Form of Acknowledgement by Optionee and stock option terms
(Hospital Correspondence 1995 and 1996 Plans).
99.22 CodeMaster Corporation 1998 Executive Stock Option Plan.
99.23 Form of Exercise Notice (CodeMaster 1998 Plan).
99.24 Form of Stock Buy-Back Agreement (CodeMaster 1998 Plan)
99.25 IMN LLC 1995 Class C Unit Option Plan.
99.26 Form of Unit Option Agreement (IMN 1995 Plan).
99.27 The Compucare Company 1997 Stock Compensation Plan.
99.28 Form of Incentive Stock Option Agreement (the Compucare
Company 1997 Stock Compensation Plan).
99.29 Form of Written Compensation Agreement.
99.30 Form of Notice of Grant of Stock Option (Pursuant to Written
Compensation Agreement).
99.31 Form of Stock Option Agreement (Pursuant to Written
Compensation Agreement).
99.32 Form of Stock Option Assumption Agreement.
</TABLE>
* Exhibits 99.2 through 99.12 are incorporated herein by reference to
Exhibits 99.2 through 99.12, respectively, to Registrant's Registration
Statement No. 333-16385 on Form S-8, filed with the Commission on November 15,
1996.
II-2
<PAGE> 5
Item 9. Undertakings
A. The undersigned 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 1933 Act, (ii) to reflect in the prospectus any facts or events
arising after the effective date of this 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 this
Registration Statement and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in this
Registration Statement or any material change to such information in this
Registration Statement; provided, however, that clauses (1)(i) and (1)(ii) shall
not apply if the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the 1934 Act that are
incorporated by reference into this Registration Statement; (2) that for the
purpose of determining any liability under the 1933 Act each such post-effective
amendment 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; and (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 QuadraMed
Corporation 1996 Stock Incentive Plan, the Cabot Marsh Corporation 1997
Incentive Stock Option Plan, the Pyramid Health Group, Inc. 1997 Employee and
Consultant Stock Option Plan, the Pyramid Health Solutions, Inc. 1996 Employee
and Consultant Stock Option Plan, the Hospital Correspondence Corporation 1995
Stock Option Plan or 1996 Employee and Consultant Stock Option Plan, the
CodeMaster Corporation 1998 Executive Stock Option Plan the IMN LLC 1995 Class C
Unit Option Plan, the Compucare Company 1997 Stock Compensation Plan or upon the
expiration of the Individual Options.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the 1933 Act, each filing of the Registrant's
annual report pursuant to Section 13(a) or Section 15(d) of the 1934 Act that is
incorporated by reference into this 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 for liabilities arising under the 1933 Act
may be permitted to directors, officers, or controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that, in the opinion of the SEC, such indemnification is
against public policy as expressed in the 1933 Act, and is, therefore,
unenforceable. In the event that a claim for indemnification 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 1933 Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 the City of Richmond, State of California on this 8th day of
April, 1999.
QUADRAMED CORPORATION
By: /s/ JAMES D. DURHAM
---------------------------------
James D. Durham
Chairman of the Board,
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS:
That the undersigned officers and directors of QuadraMed Corporation, a
Delaware corporation, do hereby constitute and appoint James D. Durham and Keith
M. Roberts, each one of them, the lawful attorneys-in-fact and agents with full
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, and any one of them, determine may
be necessary or advisable or required to enable said corporation to comply with
the Securities Act of 1933, as amended, and any rules or regulations or
requirements of the Securities and Exchange Commission in connection with this
Registration Statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the power and authority to sign the
names of the undersigned officers and directors in the capacities indicated
below to this Registration Statement, to any and all amendments, both
pre-effective and post-effective, and supplements to this Registration
Statement, and to any and all instruments or documents filed as part of or in
conjunction with this Registration Statement or amendments or supplements
thereof, and each of the undersigned hereby ratifies and confirms that all said
attorneys and agents, or any one of them, shall do or cause to be done by virtue
hereof. This Power of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ James D. Durham Chairman of the Board and April 8, 1999
- ------------------------------- Chief Executive Officer
James D. Durham (Principal Executive Officer)
/s/ Keith M. Roberts General Counsel & Chief Financial April 8, 1999
- ------------------------------- Officer and Assistant Secretary
Keith M. Roberts (Principal Financial Officer)
/s/ Bernie J. Murphy Vice President, Finance and Chief April 8, 1999
- ------------------------------- Accounting Officer (Principal
Bernie J. Murphy Accounting Officer)
</TABLE>
II-4
<PAGE> 7
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Albert L. Greene Director April 8, 1999
- -------------------------------
Albert L. Greene
/s/ Kenneth E. Jones Director April 8, 1999
- -------------------------------
Kenneth E. Jones
/s/ Thomas F. McNulty Director April 8, 1999
- -------------------------------
Thomas F. McNulty
/s/ Joan P. Neuscheler Director April 8, 1999
- -------------------------------
Joan P. Neuscheler
Director April 8, 1999
- -------------------------------
Cornelius T. Ryan
</TABLE>
II-5
<PAGE> 8
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
EXHIBITS
TO
FORM S-8
UNDER
SECURITIES ACT OF 1933
QUADRAMED CORPORATION
<PAGE> 9
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
4 Instruments Defining Rights of Stockholders. Reference is
made to Registrant's Registration Statement No. 00-021031
on Form 8-A, including the exhibits thereto, which is
incorporated herein by reference pursuant to Item 3(b).
5.1 Opinion and consent of Brobeck, Phleger & Harrison LLP.
5.2 Opinion and consent of Zevnik Horton Guibord McGovern Palmer
& Fognani, L.L.P.
23.1(A) Consent of Arthur Andersen LLP, Independent Public Accountants.
23.1(B) Consent of Deloitte & Touche LLP, Independent Auditor.
23.2 Consent of Brobeck, Phleger & Harrison LLP is contained in
Exhibit 5.
24.0 Power of Attorney. Reference is made to page II-4 of this
Registration Statement.
99.1 QuadraMed Corporation 1996 Stock Incentive Plan.
99.2* Form of Notice of Grant of Stock Option.
99.3* Form of Stock Option Agreement.
99.4* Form of Addendum to Stock Option Agreement (Limited Stock
Appreciation Right).
99.5* Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Change in Control).
99.6* Form of Addendum to Stock Option Agreement (Involuntary
Termination Following Corporate Transaction).
99.7* Form of Notice of Grant of Automatic Stock Option (Initial Grant).
99.8* Form of Notice of Grant of Automatic Stock Option (Annual Grant).
99.9* Form of Automatic Stock Option Agreement.
99.10* Form of Stock Issuance Agreement.
99.11* Form of Addendum to Stock Issuance Agreement (Involuntary
Termination Following Change in Control).
99.12* Form of Addendum to Stock Issuance Agreement (Involuntary
Termination Following Corporate Transaction).
99.13 Cabot Marsh Corporation 1997 Incentive Stock Option Plan.
99.14 Form of Grant of Incentive Stock Option (Cabot Marsh 1997 Plan).
99.15 Pyramid Health Group, Inc. 1997 Employee and Consultant Stock
Option Plan.
99.16 Form of Acknowledgement by Optionee and stock option terms
(Pyramid Health Group 1997 Plan).
99.17 Pyramid Health Solutions, Inc. 1996 Employee and Consultant
Stock Option Plan.
99.18 Form of Acknowledgement by Optionee and stock option terms
(Pyramid Health Solutions 1996 Plan).
99.19 Hospital Correspondence Corporation 1995 Stock Option Plan.
99.20 Hospital Correspondence Corporation 1996 Employee and
Consultant Stock Option Plan.
99.21 Form of Acknowledgement by Optionee and stock option terms
(Hospital Correspondence 1995 and 1996 Plans).
99.22 CodeMaster Corporation 1998 Executive Stock Option Plan.
99.23 Form of Exercise Notice (CodeMaster 1998 Plan).
99.24 Form of Stock Buy-Back Agreement (CodeMaster 1998 Plan)
99.25 IMN LLC 1995 Class C Unit Option Plan.
99.26 Form of Unit Option Agreement (IMN 1995 Plan).
99.27 The Compucare Company 1997 Stock Compensation Plan.
99.28 Form of Incentive Stock Option Agreement (the Compucare
Company 1997 Stock Compensation Plan).
99.29 Form of Written Compensation Agreement.
99.30 Form of Notice of Grant of Stock Option (Pursuant to Written
Compensation Agreement).
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
Number Exhibit
- ------ -------
<S> <C>
99.31 Form of Stock Option Agreement (Pursuant to Written
Compensation Agreement).
99.32 Form of Stock Option Assumption Agreement.
</TABLE>
* Exhibits 99.2 through 99.12 are incorporated herein by reference to
Exhibits 99.2 through 99.12, respectively, to Registrant's Registration
Statement No. 333-16385 on Form S-8, filed with the Commission on November 15,
1996.
<PAGE> 1
EXHIBIT 5.1
April 8, 1999
QuadraMed Corporation
1003 West Cutting Boulevard
Richmond, California 94804
Re: Registration Statement for Offering of an Aggregate of
1,728,198 Shares of Common Stock
Ladies and Gentlemen:
We have acted as counsel to QuadraMed Corporation, a Delaware corporation
(the "Company"), in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of (i)
an additional 1,230,698 shares of the Company's common stock (the "Common
Stock") for issuance under the Company's 1996 Stock Incentive Plan (the "1996
Plan"), (ii) 77,500 shares of the Common Stock for issuance under the IMN LLC
1995 Class C Unit Option Plan, as such Plan has been assumed by the Company (the
"Assumed IMN Option Plan") and (iii) 420,000 shares of the Common Stock under
the special option grants made pursuant to written compensation agreements with
Messrs. Hurd, Mehta, Patel, DeVitt and Ahearn and with Ms. Pappas (the
"Individual Options").
This opinion is being furnished in accordance with the requirements of Item
8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the establishment and
amendment of the 1996 Plan, the assumption of the Assumed IMN Option Plan and
the implementation of the Individual Options. Based on such review, we are of
the opinion that, if, as and when the shares of the Common Stock are issued and
sold (and the consideration therefor received) pursuant to (a) the provisions of
option agreements duly authorized under the 1996 Plan, the Assumed IMN Option
Plan and the Individual Options, and in accordance with the Registration
Statement, or (b) duly authorized direct stock issuances in accordance with the
1996 Plan and in accordance with the Registration Statement, such shares will be
duly authorized, legally issued, fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5 to the
Registration Statement.
This opinion letter is rendered as of the date first written above, and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above, and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
1996 Plan, the Assumed IMN Option Plan, the Individual Options or the shares of
the Common Stock issuable under such plans or options.
Very truly yours,
/s/ Brobeck, Phleger & Harrison LLP
-----------------------------------
BROBECK, PHLEGER & HARRISON LLP
<PAGE> 1
EXHIBIT 5.2
OPINION AND CONSENT OF ZEVNIK HORTON GUIDBORD MCGOVERN PALMER & FOGNANI, L.L.P.
April 8, 1999
QuadraMed Corporation
1003 West Cutting Boulevard, 2nd Floor
Richmond, California 94804
Re: Registration Statement for Offering of
an Aggregate of 423,822 Shares of Common Stock
Ladies and Gentlemen:
This opinion is delivered to QuadraMed Corporation, a Delaware corporation
(the "Company"), in connection with the registration on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended, of (i)
14,775 shares of the Company's common stock (the "Common Stock") for issuance
under the Cabot Marsh Corporation 1997 Incentive Stock Option Plan, (ii) 19,930
shares of Common Stock for issuance under the Pyramid Health Group, Inc. 1997
Employee and Consultant Stock Option Plan, (iii) 137,680 shares of Common Stock
for issuance under the Pyramid Health Solutions, Inc. 1996 Employee and
Consultant Stock Option Plan, (iv) 31,461 shares of Common Stock for issuance
under the Hospital Correspondence Corporation 1995 Stock Option Plan, (v) 56,495
shares of Common Stock for issuance under the Hospital Correspondence
Corporation 1996 Employee and Consultant Option Plan, (vi) 110,544 shares of
Common Stock for issuance under the CodeMaster Corporation 1998 Executive Stock
Option Plan and (vii) 52,937 shares of Common Stock for issuance under The
Compucare Company 1997 Stock Compensation Plan (collectively, the "Assumed
Option Plans").
This opinion is being furnished in accordance with the requirements of Item
8 of Form S-8 and Item 601(b)(5)(i) of Regulation S-K.
We have reviewed the Company's charter documents and the corporate
proceedings taken by the Company in connection with the assumption of the
Assumed Option Plans. Based on such review, we are of the opinion that, if, as
and when the shares of the Common Stock are issued and sold (and the
consideration therefor received) pursuant to the provisions of option agreements
duly authorized under the Assumed Option Plans and in accordance with the
Registration Statement, such shares will be duly authorized, legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion letter as Exhibit 5.2 to the
Registration Statement.
This opinion letter is rendered as of the date first written above, and we
disclaim any obligation to advise you of facts, circumstances, events or
developments which hereafter may be brought to our attention and which may
alter, affect or modify the opinion expressed herein. Our opinion is expressly
limited to the matters set forth above, and we render no opinion, whether by
implication or otherwise, as to any other matters relating to the Company, the
Assumed Option Plans or the shares of the Common Stock issuable under such
plans.
Very truly yours,
/s/ Zevnik Horton Guibord McGovern
Palmer & Fognani, L.L.P.
----------------------------------
ZEVNIK HORTON GUIBORD MCGOVERN
PALMER & FOGNANI, L.L.P.
<PAGE> 1
EXHIBIT 23.1(A)
CONSENT OF ARTHUR ANDERSEN LLP, INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-8 of our report dated February 17, 1999 included in
QuadraMed Corporation's Form 10-K for the year ended December 31, 1998 and to
all references to our Firm included in this registration statement. It should
be noted that we have not audited any financial statements of the company
subsequent to December 31, 1998 or performed any audit procedures subsequent to
the date of our report.
/s/ Arthur Andersen LLP
-----------------------
ARTHUR ANDERSEN LLP
San Jose, California
April 8, 1999
<PAGE> 1
EXHIBIT 23.1(B)
CONSENT OF DELOITTE & TOUCHE LLP, INDEPENDENT AUDITORS
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
QuadraMed Corporation on Form S-8 of our report dated April 25, 1997 (relating
to the consolidated statements of operations, shareholder's equity, and cash
flows of FRA Acquisitions, Inc. and subsidiary for the year ended December 31,
1996, not presented or incorporated by reference separately herein) appearing
in the Annual Report on Form 10-K of QuadraMed Corporation for the year ended
December 31, 1998.
/s/ Deloitte & Touche LLP
Los Angeles, California
April 8, 1999
<PAGE> 1
EXHIBIT 99.1
QUADRAMED CORPORATION
1996 STOCK INCENTIVE PLAN
ARTICLE ONE
GENERAL PROVISIONS
I. PURPOSE OF THE PLAN
This 1996 Stock Incentive Plan is intended to promote the
interests of QuadraMed Corporation, a Delaware corporation, by providing
eligible persons with the opportunity to acquire a proprietary interest, or
otherwise increase their proprietary interest, in the Corporation as an
incentive for them to remain in the service of the Corporation.
Capitalized terms shall have the meanings assigned to such terms
in the attached Appendix.
II. STRUCTURE OF THE PLAN
A. The Plan shall be divided into five separate equity programs:
(i) the Discretionary Option Grant Program under which
eligible persons may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock,
(ii) the Salary Investment Option Grant Program under
which eligible employees may elect to have a portion of their base
salary invested each year in special option grants,
(iii) the Stock Issuance Program under which eligible
persons may, at the discretion of the Plan Administrator, be issued
shares of Common Stock directly, either through the immediate purchase
of such shares or as a bonus for services rendered the Corporation (or
any Parent or Subsidiary),
(iv) the Automatic Option Grant Program under which
eligible non-employee Board members shall automatically receive option
grants at periodic intervals to purchase shares of Common Stock, and
(v) the Director Fee Option Grant Program under which
non-employee Board members may elect to have all or any portion of their
annual retainer fee otherwise payable in cash applied to a special
option grant.
B. The provisions of Articles One and Seven shall apply to all
equity programs under the Plan and shall govern the interests of all persons
under the Plan.
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III. ADMINISTRATION OF THE PLAN
A. Prior to the Section 12 Registration Date, the Discretionary
Option Grant and Stock Issuance Programs shall be administered by the Board.
Beginning with the Section 12 Registration Date, the Board shall have the
authority to administer the Discretionary Option Grant and Stock Issuance
Programs with respect to Section 16 Insiders but may delegate such authority in
whole or in part to the Primary Committee. The Board or the Primary Committee
shall have the sole and exclusive authority to exercise all discretionary
functions under the Salary Investment Option Grant Program.
B. Administration of the Discretionary Option Grant and Stock
Issuance Programs with respect to all other persons eligible to participate in
those programs may, at the Board's discretion, be vested in the Primary
Committee or a Secondary Committee, or the Board may retain the power to
administer those programs with respect to all such persons. The members of the
Secondary Committee may be Board members who are Employees eligible to receive
discretionary option grants or direct stock issuances under the Plan or any
other stock option, stock appreciation, stock bonus or other stock plan of the
Corporation (or any Parent or Subsidiary).
C. Members of the Primary Committee or any Secondary Committee
shall serve for such period of time as the Board may determine and may be
removed by the Board at any time. The Board may also at any time terminate the
functions of any Secondary Committee and reassume all powers and authority
previously delegated to such committee.
D. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority (subject
to the provisions of the Plan) to establish such rules and regulations as it may
deem appropriate for proper administration of the Discretionary Option Grant,
Salary Investment Option Grant and Stock Issuance Programs and to make such
determinations under, and issue such interpretations of, the provisions of such
programs and any outstanding options or stock issuances thereunder as it may
deem necessary or advisable. Decisions of the Plan Administrator within the
scope of its administrative functions under the Plan shall be final and binding
on all parties who have an interest in the Discretionary Option Grant, Salary
Investment Option Grant and Stock Issuance Programs under its jurisdiction or
any option or stock issuance thereunder.
E. Service on the Primary Committee or the Secondary Committee
shall constitute service as a Board member, and members of each such committee
shall accordingly be entitled to full indemnification and reimbursement as Board
members for their service on such committee. No member of the Primary Committee
or the Secondary Committee shall be liable for any act or omission made in good
faith with respect to the Plan or any option grants or stock issuances under the
Plan.
F. Administration of the Automatic Option Grant and Director Fee
Option Grant Programs shall be self-executing in accordance with the terms of
those programs, and no Plan Administrator shall exercise any discretionary
functions with respect to any option grants or stock issuances made under those
programs.
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IV. ELIGIBILITY
A. The persons eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs are as follows:
(i) Employees,
(ii) non-employee members of the Board or the board of
directors of any Parent or Subsidiary, and
(iii) consultants and other independent advisors who
provide services to the Corporation (or any Parent or Subsidiary).
B. Only Employees who are Section 16 Insiders or other highly
compensated individuals shall be eligible to participate in the Salary
Investment Option Grant Program.
C. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority to determine,
(i) with respect to the option grants under the Discretionary Option Grant
Program, which eligible persons are to receive option grants, the time or times
when such option grants are to be made, the number of shares to be covered by
each such grant, the status of the granted option as either an Incentive Option
or a Non-Statutory Option, the time or times when each option is to become
exercisable, the vesting schedule (if any) applicable to the option shares and
the maximum term for which the option is to remain outstanding and (ii) with
respect to stock issuances under the Stock Issuance Program, which eligible
persons are to receive stock issuances, the time or times when such issuances
are to be made, the number of shares to be issued to each Participant, the
vesting schedule (if any) applicable to the issued shares and the consideration
for such shares.
D. The Plan Administrator shall have the absolute discretion
either to grant options in accordance with the Discretionary Option Grant
Program or to effect stock issuances in accordance with the Stock Issuance
Program.
E. The individuals who shall be eligible to participate in the
Automatic Option Grant Program shall be limited to (i) those individuals serving
as non-employee Board members on the Underwriting Date who have not previously
received a stock option grant from the Corporation, (ii) those individuals who
first become non-employee Board members after the Underwriting Date, whether
through appointment by the Board or election by the Corporation's stockholders,
and (iii) those individuals who continue to serve as non-employee Board members
at one or more Annual Stockholders Meetings held after the Underwriting Date. A
non-employee Board member who has previously been in the employ of the
Corporation (or any Parent or Subsidiary) shall not be eligible to receive an
option grant under the Automatic Option Grant Program at the time he or she
first becomes a non-employee Board member, but shall be eligible to receive
periodic option grants under the Automatic Option Grant Program while he or she
continues to serve as a non-employee Board member.
F. All non-employee Board members shall be eligible to
participate in the Director Fee Option Grant Program.
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V. STOCK SUBJECT TO THE PLAN
A. The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock initially reserved for issuance over the term of the Plan shall not exceed
2,388,297 shares. Such authorized share reserve is comprised of (i) the number
of shares which remained available for issuance, as of the Plan Effective Date,
under the Predecessor Plan as last approved by the Corporation's stockholders,
including the shares subject to the outstanding options which were incorporated
into the Plan and the additional shares which would have been available for
future grant(1), (ii) an additional increase of 783,653 shares authorized by the
Board and approved by the stockholders prior to the Section 12 Registration
Date, (iii) an additional increase of 90,165 shares effective as of January 2,
1997, pursuant to the annual automatic share increase provided for by Section
V.B. of this Article One, (iv) an additional increase of 750,000 shares approved
by the Board in 1997 and approved by the Corporation's stockholders at the 1998
Annual Meeting, (v) additional increases of 179,741 and 300,957 shares effective
as of January 2, 1998 and January 2, 1999, respectively, pursuant to the annual
automatic share increase provided for by Section V.B. of this Article One.
B. The number of shares of Common Stock available for issuance
under the Plan shall automatically increase on the first trading day of each
calendar year during the term of the Plan, beginning with the 1997 calendar
year, by an amount equal to one and one-half percent (1.5%) of the shares of
Common Stock outstanding on the last trading day of the immediately preceding
calendar year. No Incentive Options may be granted on the basis of the
additional shares of Common Stock resulting from such annual increases.
C. No one person participating in the Plan may receive options,
separately exercisable stock appreciation rights and direct stock issuances for
more than 500,000(2) shares of Common Stock in the aggregate per calendar year,
beginning with the 1997 calendar year.
D. Shares of Common Stock subject to outstanding options
(including options incorporated into this Plan from the Predecessor Plan) shall
be available for subsequent issuance under the Plan to the extent those options
expire or terminate for any reason prior to exercise in full. Unvested shares
issued under the Plan and subsequently cancelled or repurchased by the
Corporation, at the original issue price paid per share, pursuant to the
Corporation's repurchase rights under the Plan shall be added back to the number
of shares of Common Stock reserved for issuance under the Plan and shall
accordingly be available for reissuance through one or more subsequent option
grants or direct stock issuances under the Plan. However, should the exercise
price of an option under the Plan be paid with shares of Common Stock or should
shares of Common Stock otherwise issuable under the Plan be withheld by the
Corporation in satisfaction of the withholding taxes incurred in connection with
the exercise of an option or the vesting of a stock issuance under the Plan,
then the number of shares of Common Stock available for issuance under the Plan
shall be reduced by the gross
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(1) Estimated to be 585,738 shares of Common Stock as of June 28, 1996.
(2) In July 1997 the Board increased this maximum limit from 200,000
shares to 500,000 shares and the stockholders approved that increase at the 1998
Annual Stockholders Meeting.
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number of shares for which the option is exercised or which vest under the stock
issuance, and not by the net number of shares of Common Stock issued to the
holder of such option or stock issuance.
E. If any change is made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the maximum number and/or class of securities issuable
under the Plan, (ii) the number and/or class of securities for which any one
person may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances under this Plan per calendar year, (iii) the
number and/or class of securities for which grants are subsequently to be made
under the Automatic Option Grant Program to new and continuing non-employee
Board members, (iv) the number and/or class of securities and the exercise price
per share in effect under each outstanding option under the Plan and (v) the
number and/or class of securities and price per share in effect under each
outstanding option incorporated into this Plan from the Predecessor Plan. Such
adjustments to the outstanding options are to be effected in a manner which
shall preclude the enlargement or dilution of rights and benefits under such
options. The adjustments determined by the Plan Administrator shall be final,
binding and conclusive.
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ARTICLE TWO
DISCRETIONARY OPTION GRANT PROGRAM
I. OPTION TERMS
Each option shall be evidenced by one or more documents in the
form approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document evidencing
an Incentive Option shall, in addition, be subject to the provisions of the Plan
applicable to such options.
A. EXERCISE PRICE.
1. The exercise price per share shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall, subject to the provisions of Section I of
Article Six and the documents evidencing the option, be payable in one or more
of the forms specified below:
(i) cash or check made payable to the Corporation,
(ii) shares of Common Stock held for the requisite period
necessary to avoid a charge to the Corporation's earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date,
or
(iii) to the extent the option is exercised for vested
shares, through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable written
instructions to (a) a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to the Corporation,
out of the sale proceeds available on the settlement date, sufficient
funds to cover the aggregate exercise price payable for the purchased
shares plus all applicable Federal, state and local income and
employment taxes required to be withheld by the Corporation by reason of
such exercise and (b) the Corporation to deliver the certificates for
the purchased shares directly to such brokerage firm in order to
complete the sale.
Except to the extent such sale and remittance procedure is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
B. EXERCISE AND TERM OF OPTIONS. Each option shall be exercisable
at such time or times, during such period and for such number of shares as shall
be determined by the Plan Administrator and set forth in the documents
evidencing the option. However, no option shall have a term in excess of ten
(10) years measured from the option grant date.
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C. EFFECT OF TERMINATION OF SERVICE.
1. The following provisions shall govern the exercise of
any options held by the Optionee at the time of cessation of Service or death:
(i) Any option outstanding at the time of the Optionee's
cessation of Service for any reason shall remain exercisable for such
period of time thereafter as shall be determined by the Plan
Administrator and set forth in the documents evidencing the option, but
no such option shall be exercisable after the expiration of the option
term.
(ii) Any option exercisable in whole or in part by the
Optionee at the time of death may be subsequently exercised by the
personal representative of the Optionee's estate or by the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution.
(iii) Should the Optionee's Service be terminated for
Misconduct, then all outstanding options held by the Optionee shall
terminate immediately and cease to be outstanding.
(iv) During the applicable post-Service exercise period,
the option may not be exercised in the aggregate for more than the
number of vested shares for which the option is exercisable on the date
of the Optionee's cessation of Service. Upon the expiration of the
applicable exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Service,
terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares.
2. The Plan Administrator shall have complete discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:
(i) extend the period of time for which the option is to
remain exercisable following the Optionee's cessation of Service from
the limited exercise period otherwise in effect for that option to such
greater period of time as the Plan Administrator shall deem appropriate,
but in no event beyond the expiration of the option term, and/or
(ii) permit the option to be exercised, during the
applicable post-Service exercise period, not only with respect to the
number of vested shares of Common Stock for which such option is
exercisable at the time of the Optionee's cessation of Service but also
with respect to one or more additional installments in which the
Optionee would have vested had the Optionee continued in Service.
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D. STOCKHOLDER RIGHTS. The holder of an option shall have no
stockholder rights with respect to the shares subject to the option until such
person shall have exercised the option, paid the exercise price and become a
holder of record of the purchased shares.
E. REPURCHASE RIGHTS. The Plan Administrator shall have the
discretion to grant options which are exercisable for unvested shares of Common
Stock. Should the Optionee cease Service while holding such unvested shares, the
Corporation shall have the right to repurchase, at the exercise price paid per
share, any or all of those unvested shares. The terms upon which such repurchase
right shall be exercisable (including the period and procedure for exercise and
the appropriate vesting schedule for the purchased shares) shall be established
by the Plan Administrator and set forth in the document evidencing such
repurchase right.
F. LIMITED TRANSFERABILITY OF OPTIONS. During the lifetime of the
Optionee, Incentive Options shall be exercisable only by the Optionee and shall
not be assignable or transferable other than by will or by the laws of descent
and distribution following the Optionee's death. However, a Non-Statutory Option
may, in connection with the Optionee's estate plan, be assigned in whole or in
part during the Optionee's lifetime to one or more members of the Optionee's
immediate family or to a trust established exclusively for one or more such
family members. The assigned portion may only be exercised by the person or
persons who acquire a proprietary interest in the option pursuant to the
assignment. The terms applicable to the assigned portion shall be the same as
those in effect for the option immediately prior to such assignment and shall be
set forth in such documents issued to the assignee as the Plan Administrator may
deem appropriate.
II. INCENTIVE OPTIONS
The terms specified below shall be applicable to all Incentive
Options. Except as modified by the provisions of this Section II, all the
provisions of Articles One, Two and Seven shall be applicable to Incentive
Options. Options which are specifically designated as Non-Statutory Options when
issued under the Plan shall not be subject to the terms of this Section II.
A. ELIGIBILITY. Incentive Options may only be granted to
Employees.
B. EXERCISE PRICE. The exercise price per share shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the option grant date.
C. DOLLAR LIMITATION. The aggregate Fair Market Value of the
shares of Common Stock (determined as of the respective date or dates of grant)
for which one or more options granted to any Employee under the Plan (or any
other option plan of the Corporation or any Parent or Subsidiary) may for the
first time become exercisable as Incentive Options during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become exercisable
for the first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
D. 10% STOCKHOLDER. If any Employee to whom an Incentive Option
is granted is a 10% Stockholder, then the exercise price per share shall not be
less than one hundred
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ten percent (110%) of the Fair Market Value per share of Common Stock on the
option grant date, and the option term shall not exceed five (5) years measured
from the option grant date.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction, each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of the Corporate Transaction, become
fully exercisable with respect to the total number of shares of Common Stock at
the time subject to such option and may be exercised for any or all of those
shares as fully-vested shares of Common Stock. However, an outstanding option
shall not so accelerate if and to the extent: (i) such option is, in connection
with the Corporate Transaction, either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof), (ii) such option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
option shares at the time of the Corporate Transaction and provides for
subsequent payout in accordance with the same vesting schedule applicable to
such option or (iii) the acceleration of such option is subject to other
limitations imposed by the Plan Administrator at the time of the option grant.
The determination of option comparability under clause (i) above shall be made
by the Plan Administrator, and its determination shall be final, binding and
conclusive.
B. All outstanding repurchase rights shall also terminate
automatically, and the shares of Common Stock subject to those terminated rights
shall immediately vest in full, in the event of any Corporate Transaction,
except to the extent: (i) those repurchase rights are to be assigned to the
successor corporation (or parent thereof) in connection with such Corporate
Transaction or (ii) such accelerated vesting is precluded by other limitations
imposed by the Plan Administrator at the time the repurchase right is issued.
C. Immediately following the consummation of the Corporate
Transaction, all outstanding options shall terminate and cease to be
outstanding, except to the extent assumed by the successor corporation (or
parent thereof).
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments to reflect such Corporate Transaction shall also be made
to (i) the exercise price payable per share under each outstanding option,
provided the aggregate exercise price payable for such securities shall remain
the same, (ii) the maximum number and/or class of securities available for
issuance over the remaining term of the Plan and (iii) the maximum number and/or
class of securities for which any one person may be granted stock options,
separately exercisable stock appreciation rights and direct stock issuances
under the Plan per calendar year.
E. The Plan Administrator shall have full power and authority to
grant options under the Discretionary Option Grant Program which will
automatically accelerate in the event the Optionee's Service subsequently
terminates by reason of an Involuntary Termination
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within a designated period (not to exceed eighteen (18) months) following the
effective date of any Corporate Transaction in which those options are assumed
or replaced and do not otherwise accelerate. Any options so accelerated shall
remain exercisable for fully-vested shares until the earlier of (i) the
expiration of the option term or (ii) the expiration of the one (1)-year period
measured from the effective date of the Involuntary Termination. In addition,
the Plan Administrator may provide that one or more of the Corporation's
outstanding repurchase rights with respect to shares held by the Optionee at the
time of such Involuntary Termination shall immediately terminate, and the shares
subject to those terminated repurchase rights shall accordingly vest in full.
F. The Plan Administrator shall have full power and authority to
grant options under the Discretionary Option Grant Program which will
automatically accelerate in the event the Optionee's Service subsequently
terminates by reason of an Involuntary Termination within a designated period
(not to exceed eighteen (18) months) following the effective date of any Change
in Control. Each option so accelerated shall remain exercisable for fully-vested
shares until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (1)-year period measured from the effective date of the
Involuntary Termination. In addition, the Plan Administrator may provide that
one or more of the Corporation's outstanding repurchase rights with respect to
shares held by the Optionee at the time of such Involuntary Termination shall
immediately terminate, and the shares subject to those terminated repurchase
rights shall accordingly vest in full.
G. The portion of any Incentive Option accelerated in connection
with a Corporate Transaction or Change in Control shall remain exercisable as an
Incentive Option only to the extent the applicable One Hundred Thousand Dollar
limitation is not exceeded. To the extent such dollar limitation is exceeded,
the accelerated portion of such option shall be exercisable as a Non-Statutory
Option under the Federal tax laws.
H. The outstanding options shall in no way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
IV. CANCELLATION AND REGRANT OF OPTIONS
The Plan Administrator shall have the authority to effect, at any time
and from time to time, with the consent of the affected option holders, the
cancellation of any or all outstanding options under the Discretionary Option
Grant Program (including outstanding options incorporated from the Predecessor
Plan) and to grant in substitution new options covering the same or different
number of shares of Common Stock but with an exercise price per share based on
the Fair Market Value per share of Common Stock on the new grant date.
V. STOCK APPRECIATION RIGHTS
A. The Plan Administrator shall have full power and authority to
grant to selected Optionees tandem stock appreciation rights and/or limited
stock appreciation rights.
B. The following terms shall govern the grant and exercise of
tandem stock appreciation rights:
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(i) One or more Optionees may be granted the right,
exercisable upon such terms as the Plan Administrator may establish, to
elect between the exercise of the underlying option for shares of Common
Stock and the surrender of that option in exchange for a distribution
from the Corporation in an amount equal to the excess of (a) the Fair
Market Value (on the option surrender date) of the number of shares in
which the Optionee is at the time vested under the surrendered option
(or surrendered portion thereof) over (b) the aggregate exercise price
payable for such shares.
(ii) No such option surrender shall be effective unless it
is approved by the Plan Administrator, either at the time of the actual
option surrender or at any earlier time. If the surrender is so
approved, then the distribution to which the Optionee shall be entitled
may be made in shares of Common Stock valued at Fair Market Value on the
option surrender date, in cash, or partly in shares and partly in cash,
as the Plan Administrator shall in its sole discretion deem appropriate.
(iii) If the surrender of an option is not approved by the
Plan Administrator, then the Optionee shall retain whatever rights the
Optionee had under the surrendered option (or surrendered portion
thereof) on the option surrender date and may exercise such rights at
any time prior to the later of (a) five (5) business days after the
receipt of the rejection notice or (b) the last day on which the option
is otherwise exercisable in accordance with the terms of the documents
evidencing such option, but in no event may such rights be exercised
more than ten (10) years after the option grant date.
C. The following terms shall govern the grant and exercise of
limited stock appreciation rights:
(i) One or more Section 16 Insiders may be granted limited
stock appreciation rights with respect to their outstanding options.
(ii) Upon the occurrence of a Hostile Take-Over, each
individual holding one or more options with such a limited stock
appreciation right shall have the unconditional right (exercisable for a
thirty (30)-day period following such Hostile Take-Over) to surrender
each such option to the Corporation, to the extent the option is at the
time exercisable for vested shares of Common Stock. In return for the
surrendered option, the Optionee shall receive a cash distribution from
the Corporation in an amount equal to the excess of (A) the Take-Over
Price of the shares of Common Stock which are at the time vested under
each surrendered option (or surrendered portion thereof) over (B) the
aggregate exercise price payable for such shares. Such cash distribution
shall be paid within five (5) days following the option surrender date.
(iii) Stockholder approval of the Plan and any amendments
thereto shall constitute pre-approval of the grant of each such limited
stock appreciation right and the subsequent exercise of such right in
accordance
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with the terms and provisions of this Section V.C. No additional
approval or consent of the Plan Administrator or the Board shall be
required in connection with such option surrender and cash distribution.
(iv) The balance of the option (if any) shall remain
outstanding and exercisable in accordance with the documents evidencing
such option.
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ARTICLE THREE
SALARY INVESTMENT OPTION GRANT PROGRAM
I. OPTION GRANTS
The Primary Committee shall have the sole and exclusive authority
to determine the calendar year or years (if any) for which the Salary Investment
Option Grant Program is to be in effect and to select the Section 16 Insiders
and other highly compensated Employees eligible to participate in the Salary
Investment Option Grant Program for those calendar year or years. Each selected
individual who elects to participate in the Salary Investment Option Grant
Program must, prior to the start of each calendar year of participation, file
with the Plan Administrator (or its designate) an irrevocable authorization
directing the Corporation to reduce his or her base salary for that calendar
year by an amount not less than Ten Thousand Dollars ($10,000.00) nor more than
Fifty Thousand Dollars ($50,000.00). The Primary Committee shall have complete
discretion to determine whether to approve the filed authorization in whole or
in part. To the extent the Primary Committee approves the authorization, the
individual who filed that authorization shall be granted an option under the
Salary Investment Grant Program on or before the last trading day in January for
the calendar year for which the salary reduction is to be in effect. All grants
under the Salary Investment Option Grant Program shall be at the sole discretion
of the Primary Committee.
II. OPTION TERMS
Each option shall be a Non-Statutory Option evidenced by one or
more documents in the form approved by the Plan Administrator; provided,
however, that each such document shall comply with the terms specified below.
A. EXERCISE PRICE.
1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. NUMBER OF OPTION SHARES. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the dollar amount of the approved reduction in the
Optionee's base salary for the calendar year, and
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B is the Fair Market Value per share of Common Stock on the
option grant date.
C. EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable in a series of twelve (12) successive equal monthly installments
upon the Optionee's completion of each calendar month of Service in the calendar
year for which the salary reduction is in effect. Each option shall have a
maximum term of ten (10) years measured from the option grant date.
D. EFFECT OF TERMINATION OF SERVICE. Should the Optionee cease
Service for any reason while holding one or more options under this Article
Three, then each such option shall remain exercisable, for any or all of the
shares for which the option is exercisable at the time of such cessation of
Service, until the earlier of (i) the expiration of the ten (10)-year option
term or (ii) the expiration of the three (3)-year period measured from the date
of such cessation of Service. Should the Optionee die while holding one or more
options under this Article Three, then each such option may be exercised, for
any or all of the shares for which the option is exercisable at the time of the
Optionee's cessation of Service (less any shares subsequently purchased by
Optionee prior to death), by the personal representative of the Optionee's
estate or by the person or persons to whom the option is transferred pursuant to
the Optionee's will or in accordance with the laws of descent and distribution.
Such right of exercise shall lapse, and the option shall terminate, upon the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the three
(3)-year period measured from the date of the Optionee's cessation of Service.
However, the option shall, immediately upon the Optionee's cessation of Service
for any reason, terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee
remains in Service, each outstanding option held by such Optionee under this
Salary Investment Option Grant Program shall automatically accelerate so that
each such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. Each such
outstanding option shall be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and shall remain exercisable for the
fully-vested shares until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Service.
B. In the event of a Change in Control while the Optionee remains
in Service, each outstanding option held by such Optionee under this Salary
Investment Option Grant Program shall automatically accelerate so that each such
option shall immediately become fully exercisable with respect to the total
number of shares of Common Stock at the time subject to such option and may be
exercised for any or all of those shares as fully-vested shares of Common Stock.
The option shall remain so exercisable until the earlier or (i) the expiration
of the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of the Optionee's cessation of Service.
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C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Salary Investment Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to the surrendered option
(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. Stockholder approval of the Plan and any amendments
thereto shall constitute pre-approval of the grant of each such option surrender
right and the subsequent exercise of such right in accordance with the terms and
provisions of this Section III.C. No additional approval or consent of the Plan
Administrator or the Board shall be required in connection with such option
surrender and cash distribution.
D. The grant of options under the Salary Investment Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under the Salary
Investment Option Grant Program shall be the same as the terms in effect for
option grants made under the Discretionary Option Grant Program.
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ARTICLE FOUR
STOCK ISSUANCE PROGRAM
I. STOCK ISSUANCE TERMS
Shares of Common Stock may be issued under the Stock Issuance
Program through direct and immediate issuances without any intervening option
grants. Each such stock issuance shall be evidenced by a Stock Issuance
Agreement which complies with the terms specified below.
A. PURCHASE PRICE.
1. The purchase price per share shall be fixed by the Plan
Administrator, but shall not be less than one hundred percent (100%) of the Fair
Market Value per share of Common Stock on the issuance date.
2. Subject to the provisions of Section I of Article
Seven, shares of Common Stock may be issued under the Stock Issuance Program for
any of the following items of consideration which the Plan Administrator may
deem appropriate in each individual instance:
(i) cash or check made payable to the Corporation, or
(ii) past services rendered to the Corporation (or any
Parent or Subsidiary).
B. VESTING PROVISIONS.
1. Shares of Common Stock issued under the Stock Issuance
Program may, in the discretion of the Plan Administrator, be fully and
immediately vested upon issuance or may vest in one or more installments over
the Participant's period of Service or upon attainment of specified performance
objectives. The elements of the vesting schedule applicable to any unvested
shares of Common Stock issued under the Stock Issuance Program, namely:
(i) the Service period to be completed by the Participant
or the performance objectives to be attained,
(ii) the number of installments in which the shares are to
vest,
(iii) the interval or intervals (if any) which are to
lapse between installments, and
(iv) the effect which death, Permanent Disability or other
event designated by the Plan Administrator is to have upon the vesting
schedule,
shall be determined by the Plan Administrator and incorporated into the Stock
Issuance Agreement.
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2. Any new, substituted or additional securities or other
property (including money paid other than as a regular cash dividend) which the
Participant may have the right to receive with respect to the Participant's
unvested shares of Common Stock by reason of any stock dividend, stock split,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration shall be issued subject to (i) the same vesting
requirements applicable to the Participant's unvested shares of Common Stock and
(ii) such escrow arrangements as the Plan Administrator shall deem appropriate.
3. The Participant shall have full stockholder rights with
respect to any shares of Common Stock issued to the Participant under the Stock
Issuance Program, whether or not the Participant's interest in those shares is
vested. Accordingly, the Participant shall have the right to vote such shares
and to receive any regular cash dividends paid on such shares.
4. Should the Participant cease to remain in Service while
holding one or more unvested shares of Common Stock issued under the Stock
Issuance Program or should the performance objectives not be attained with
respect to one or more such unvested shares of Common Stock, then those shares
shall be immediately surrendered to the Corporation for cancellation, and the
Participant shall have no further stockholder rights with respect to those
shares. To the extent the surrendered shares were previously issued to the
Participant for consideration paid in cash or cash equivalent (including the
Participant's purchase-money indebtedness), the Corporation shall repay to the
Participant the cash consideration paid for the surrendered shares and shall
cancel the unpaid principal balance of any outstanding purchase-money note of
the Participant attributable to the surrendered shares.
5. The Plan Administrator may in its discretion waive the
surrender and cancellation of one or more unvested shares of Common Stock which
would otherwise occur upon the cessation of the Participant's Service or the
non-attainment of the performance objectives applicable to those shares. Such
waiver shall result in the immediate vesting of the Participant's interest in
the shares of Common Stock as to which the waiver applies. Such waiver may be
effected at any time, whether before or after the Participant's cessation of
Service or the attainment or non-attainment of the applicable performance
objectives.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. All of the Corporation's outstanding repurchase/cancellation
rights under the Stock Issuance Program shall terminate automatically, and all
the shares of Common Stock subject to those terminated rights shall immediately
vest in full, in the event of any Corporate Transaction, except to the extent
(i) those repurchase/cancellation rights are to be assigned to the successor
corporation (or parent thereof) in connection with such Corporate Transaction or
(ii) such accelerated vesting is precluded by other limitations imposed in the
Stock Issuance Agreement.
B. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase/cancellation rights remain outstanding under the
Stock Issuance Program, to provide
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that those rights shall automatically terminate in whole or in part, and the
shares of Common Stock subject to those terminated rights shall immediately
vest, in the event the Participant's Service should subsequently terminate by
reason of an Involuntary Termination within a designated period (not to exceed
eighteen (18) months) following the effective date of any Corporate Transaction
in which those repurchase/cancellation rights are assigned to the successor
corporation (or parent thereof).
C. The Plan Administrator shall have the discretionary authority,
exercisable either at the time the unvested shares are issued or any time while
the Corporation's repurchase/cancellation rights remain outstanding under the
Stock Issuance Program, to provide that those rights shall automatically
terminate in whole or in part, and the shares of Common Stock subject to those
terminated rights shall immediately vest, in the event the Participant's Service
should subsequently terminate by reason of an Involuntary Termination within a
designated period (not to exceed eighteen (18) months) following the effective
date of any Change in Control.
III. SHARE ESCROW/LEGENDS
Unvested shares may, in the Plan Administrator's discretion, be
held in escrow by the Corporation until the Participant's interest in such
shares vests or may be issued directly to the Participant with restrictive
legends on the certificates evidencing those unvested shares.
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ARTICLE FIVE
AUTOMATIC OPTION GRANT PROGRAM
I. OPTION TERMS
A. GRANT DATES. Option grants shall be made on the dates
specified below:
1. Each individual serving as a non-employee Board member
on the Underwriting Date shall automatically be granted at that time a
Non-Statutory Option to purchase 10,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary and has not previously received a stock option grant from
the Corporation.
2. Each individual who is first elected or appointed as a
non-employee Board member at any time after the Underwriting Date shall
automatically be granted, on the date of such initial election or appointment, a
Non-Statutory Option to purchase 10,000 shares of Common Stock, provided that
individual has not previously been in the employ of the Corporation or any
Parent or Subsidiary.
3. On the date of each Annual Stockholders Meeting held
after the Underwriting Date, each individual who is to continue to serve as an
Eligible Director, whether or not that individual is standing for re-election to
the Board at that particular Annual Meeting, shall automatically be granted a
Non-Statutory Option to purchase 4,000 shares of Common Stock, provided such
individual has served as a non-employee Board member for at least six (6)
months. There shall be no limit on the number of such 4,000-share option grants
any one Eligible Director may receive over his or her period of Board service,
and non-employee Board members who have previously been in the employ of the
Corporation (or any Parent or Subsidiary) or who have otherwise received a stock
option grant from the Corporation prior to the Underwriting Date shall be
eligible to receive one or more such annual option grants over their period of
continued Board service.
B. EXERCISE PRICE.
1. The exercise price per share shall be equal to one
hundred percent (100%) of the Fair Market Value per share of Common Stock on the
option grant date.
2. The exercise price shall be payable in one or more of
the alternative forms authorized under the Discretionary Option Grant Program.
Except to the extent the sale and remittance procedure specified thereunder is
utilized, payment of the exercise price for the purchased shares must be made on
the Exercise Date.
C. OPTION TERM. Each option shall have a term of ten (10) years
measured from the option grant date.
D. EXERCISE AND VESTING OF OPTIONS. Each option shall be
immediately exercisable for any or all of the option shares. However, any shares
purchased under the option shall be subject to repurchase by the Corporation, at
the exercise price paid per share, upon the Optionee's cessation of Board
service prior to vesting in those shares. Each initial 10,000-share
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<PAGE> 20
grant shall vest, and the Corporation's repurchase right shall lapse, as
follows: (i) one-third of the option shares shall vest upon the Optionee's
completion of one (1) year of Board service measured from the option grant date
and (ii) the balance of the option shares shall vest in a series of twenty-four
(24) successive equal monthly installments upon the Optionee's completion of
each additional month of Board service over the twenty-four (24)-month period
measured from the first anniversary of such grant date. Each annual 4,000-share
grant shall vest, and the Corporation's repurchase right shall lapse, in a
series of 12 successive equal monthly installments over the optionee's period of
Board service measured from the grant date.
E. TERMINATION OF BOARD SERVICE. The following provisions shall
govern the exercise of any options held by the Optionee at the time the Optionee
ceases to serve as a Board member:
(i) The Optionee (or, in the event of Optionee's death,
the personal representative of the Optionee's estate or the person or
persons to whom the option is transferred pursuant to the Optionee's
will or in accordance with the laws of descent and distribution) shall
have a twelve (12)-month period following the date of such cessation of
Board service in which to exercise each such option.
(ii) During the twelve (12)-month exercise period, the
option may not be exercised in the aggregate for more than the number of
vested shares of Common Stock for which the option is exercisable at the
time of the Optionee's cessation of Board service.
(iii) Should the Optionee cease to serve as a Board member
by reason of death or Permanent Disability, then all shares at the time
subject to the option shall immediately vest so that such option may,
during the twelve (12)-month exercise period following such cessation of
Board service, be exercised for all or any portion of those shares as
fully-vested shares of Common Stock.
(iv) In no event shall the option remain exercisable after
the expiration of the option term. Upon the expiration of the twelve
(12)-month exercise period or (if earlier) upon the expiration of the
option term, the option shall terminate and cease to be outstanding for
any vested shares for which the option has not been exercised. However,
the option shall, immediately upon the Optionee's cessation of Board
service for any reason other than death or Permanent Disability,
terminate and cease to be outstanding to the extent the option is not
otherwise at that time exercisable for vested shares.
II. CORPORATE TRANSACTION/CHANGE IN CONTROL/HOSTILE TAKE-OVER
A. In the event of any Corporate Transaction, the shares of
Common Stock at the time subject to each outstanding option but not otherwise
vested shall automatically vest in full so that each such option shall,
immediately prior to the effective date of the Corporate
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<PAGE> 21
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to such option and may be exercised for all or any portion of
those shares as fully-vested shares of Common Stock. Immediately following the
consummation of the Corporate Transaction, each automatic option grant shall
terminate and cease to be outstanding, except to the extent assumed by the
successor corporation (or parent thereof).
B. In connection with any Change in Control, the shares of Common
Stock at the time subject to each outstanding option but not otherwise vested
shall automatically vest in full so that each such option shall, immediately
prior to the effective date of the Change in Control, become fully exercisable
for all of the shares of Common Stock at the time subject to such option and may
be exercised for all or any portion of those shares as fully-vested shares of
Common Stock. Each such option shall remain exercisable for such fully-vested
option shares until the expiration or sooner termination of the option term or
the surrender of the option in connection with a Hostile Take-Over.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each of
his or her outstanding automatic option grants. The Optionee shall in return be
entitled to a cash distribution from the Corporation in an amount equal to the
excess of (i) the Take-Over Price of the shares of Common Stock at the time
subject to each surrendered option (whether or not the Optionee is otherwise at
the time vested in those shares) over (ii) the aggregate exercise price payable
for such shares. Such cash distribution shall be paid within five (5) days
following the surrender of the option to the Corporation. Stockholder approval
of the Plan and any amendments thereto shall constitute pre-approval of the
grant of each such option surrender right and the subsequent exercise of such
right in accordance with the terms and provisions of this Section II.C. No
additional approval or consent of the Plan Administrator or the Board shall be
required in connection with such option surrender and cash distribution.
D. Each option which is assumed in connection with a Corporate
Transaction shall be appropriately adjusted, immediately after such Corporate
Transaction, to apply to the number and class of securities which would have
been issuable to the Optionee in consummation of such Corporate Transaction had
the option been exercised immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share under each outstanding option, provided the aggregate exercise price
payable for such securities shall remain the same.
E. The grant of options under the Automatic Option Grant Program
shall in no way affect the right of the Corporation to adjust, reclassify,
reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its
business or assets.
III. REMAINING TERMS
The remaining terms of each option granted under the Automatic
Option Grant Program shall be the same as the terms in effect for option grants
made under the Discretionary Option Grant Program.
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ARTICLE SIX
DIRECTOR FEE OPTION GRANT PROGRAM
I. OPTION GRANTS
Each non-employee Board member may elect to apply all or any
portion of the annual retainer fee otherwise payable in cash for his or her
service on the Board to the acquisition of a special option grant under this
Director Fee Option Grant Program. Such election must be filed with the
Corporation's Chief Financial Officer prior to first day of the calendar year
for which the annual retainer fee which is the subject of that election is
otherwise payable. Each non-employee Board member who files such a timely
election shall automatically be granted an option under this Director Fee Option
Grant Program on the first trading day in January in the calendar year for which
the annual retainer fee which is the subject of that election would otherwise be
payable.
II. OPTION TERMS
Each option shall be a Non-Statutory Option governed by the terms
and conditions specified below.
A. EXERCISE PRICE.
1. The exercise price per share shall be thirty-three and
one-third percent (33-1/3%) of the Fair Market Value per share of Common Stock
on the option grant date.
2. The exercise price shall become immediately due upon
exercise of the option and shall be payable in one or more of the alternative
forms authorized under the Discretionary Option Grant Program. Except to the
extent the sale and remittance procedure specified thereunder is utilized,
payment of the exercise price for the purchased shares must be made on the
Exercise Date.
B. NUMBER OF OPTION SHARES. The number of shares of Common Stock
subject to the option shall be determined pursuant to the following formula
(rounded down to the nearest whole number):
X = A / (B x 66-2/3%), where
X is the number of option shares,
A is the portion of the annual retainer fee subject to the
non-employee Board member's election, and
B is the Fair Market Value per share of Common Stock on the
option grant date.
C. EXERCISE AND TERM OF OPTIONS. The option shall become
exercisable for fifty-percent (50%) of the option shares upon the Optionee's
completion of six (6) months of Board service in the calendar year for which his
or her election under this Director Fee Option
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Grant Program is in effect, and the balance of the option shares shall become
exercisable in a series of six (6) successive equal monthly installments upon
the Optionee's completion of each additional month of Board service during that
calendar year. Each option shall have a maximum term of ten (10) years measured
from the option grant date.
D. TERMINATION OF BOARD SERVICE. Should the Optionee cease Board
service for any reason (other than death or Permanent Disability) while holding
one or more options under this Director Fee Option Grant Program, then each such
option shall remain exercisable, for any or all of the shares for which the
option is exercisable at the time of such cessation of Board service, until the
earlier of (i) the expiration of the ten (10)-year option term or (ii) the
expiration of the three (3)-year period measured from the date of such cessation
of Board service. However, each option held by the Optionee under this Director
Fee Option Grant Program at the time of his or her cessation of Board service
shall immediately terminate and cease to remain outstanding with respect to any
and all shares of Common Stock for which the option is not otherwise at that
time exercisable.
E. DEATH OR PERMANENT DISABILITY. Should the Optionee's service
as a Board member cease by reason of death or Permanent Disability, then each
option held by such Optionee under this Director Fee Option Grant Program shall
immediately become exercisable for all the shares of Common Stock at the time
subject to that option, and the option may be exercised for any or all of those
shares as fully-vested shares until the earlier of (i) the expiration of the ten
(10)-year option term or (ii) the expiration of the three (3)-year period
measured from the date of such cessation of Board service.
Should the Optionee die after cessation of Board service but
while holding one or more options under this Director Fee Option Grant Program,
then each such option may be exercised, for any or all of the shares for which
the option is exercisable at the time of the Optionee's cessation of Board
service (less any shares subsequently purchased by Optionee prior to death), by
the personal representative of the Optionee's estate or by the person or persons
to whom the option is transferred pursuant to the Optionee's will or in
accordance with the laws of descent and distribution. Such right of exercise
shall lapse, and the option shall terminate, upon the earlier of (i) the
expiration of the ten (10)-year option term or (ii) the three (3)-year period
measured from the date of the Optionee's cessation of Board service.
III. CORPORATE TRANSACTION/CHANGE IN CONTROL
A. In the event of any Corporate Transaction while the Optionee
remains a Board member, each outstanding option held by such Optionee under this
Director Fee Option Grant Program shall automatically accelerate so that each
such option shall, immediately prior to the effective date of the Corporate
Transaction, become fully exercisable with respect to the total number of shares
of Common Stock at the time subject to such option and may be exercised for any
or all of those shares as fully-vested shares of Common Stock. Each such
outstanding option shall be assumed by the successor corporation (or parent
thereof) in the Corporate Transaction and shall remain exercisable for the
fully-vested shares until the earlier of (i) the expiration of the ten (10)-year
option term or (ii) the expiration of the three (3)-year period measured from
the date of the Optionee's cessation of Board service.
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<PAGE> 24
B. In the event of a Change in Control while the Optionee remains
in Service, each outstanding option held by such Optionee under this Director
Fee Option Grant Program shall automatically accelerate so that each such option
shall immediately become fully exercisable with respect to the total number of
shares of Common Stock at the time subject to such option and may be exercised
for any or all of those shares as fully-vested shares of Common Stock. The
option shall remain so exercisable until the earlier or (i) the expiration of
the ten (10)-year option term or (ii) the expiration of the three (3)-year
period measured from the date of the Optionee's cessation of Service.
C. Upon the occurrence of a Hostile Take-Over, the Optionee shall
have a thirty (30)-day period in which to surrender to the Corporation each
outstanding option granted him or her under the Director Fee Option Grant
Program. The Optionee shall in return be entitled to a cash distribution from
the Corporation in an amount equal to the excess of (i) the Take-Over Price of
the shares of Common Stock at the time subject to each surrendered option
(whether or not the Optionee is otherwise at the time vested in those shares)
over (ii) the aggregate exercise price payable for such shares. Such cash
distribution shall be paid within five (5) days following the surrender of the
option to the Corporation. Stockholder approval of the Plan and any amendments
thereto shall constitute pre-approval of the grant of each such option surrender
right and the subsequent exercise of such right in accordance with the terms and
provisions of this Section III.C. No additional approval or consent of the Plan
Administrator or the Board shall be required in connection with such option
surrender and cash distribution.
D. The grant of options under the Director Fee Option Grant
Program shall in no way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.
IV. REMAINING TERMS
The remaining terms of each option granted under this Director
Fee Option Grant Program shall be the same as the terms in effect for option
grants made under the Discretionary Option Grant Program.
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ARTICLE SEVEN
MISCELLANEOUS
I. FINANCING
The Plan Administrator may permit any Optionee or Participant to
pay the option exercise price under the Discretionary Option Grant Program or
the purchase price of shares issued under the Stock Issuance Program by
delivering a full-recourse, interest bearing promissory note payable in one or
more installments. The terms of any such promissory note (including the interest
rate and the terms of repayment) shall be established by the Plan Administrator
in its sole discretion. In no event may the maximum credit available to the
Optionee or Participant exceed the sum of (i) the aggregate option exercise
price or purchase price payable for the purchased shares plus (ii) any Federal,
state and local income and employment tax liability incurred by the Optionee or
the Participant in connection with the option exercise or share purchase.
II. TAX WITHHOLDING
A. The Corporation's obligation to deliver shares of Common Stock
upon the exercise of options or the issuance or vesting of such shares under the
Plan shall be subject to the satisfaction of all applicable Federal, state and
local income and employment tax withholding requirements.
B. The Plan Administrator may, in its discretion, provide any or
all holders of Non-Statutory Options or unvested shares of Common Stock under
the Plan (other than the options granted or the shares issued under the
Automatic Option Grant or Director Fee Option Grant Program) with the right to
use shares of Common Stock in satisfaction of all or part of the Taxes incurred
by such holders in connection with the exercise of their options or the vesting
of their shares. Such right may be provided to any such holder in either or both
of the following formats:
Stock Withholding: The election to have the Corporation
withhold, from the shares of Common Stock otherwise issuable upon the exercise
of such Non-Statutory Option or the vesting of such shares, a portion of those
shares with an aggregate Fair Market Value equal to the percentage of the Taxes
(not to exceed one hundred percent (100%)) designated by the holder.
Stock Delivery: The election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such holder
(other than in connection with the option exercise or share vesting triggering
the Taxes) with an aggregate Fair Market Value equal to the percentage of the
Taxes (not to exceed one hundred percent (100%)) designated by the holder.
III. EFFECTIVE DATE AND TERM OF THE PLAN
A. The Plan became effective on June 26, 1996, the Plan Effective
Date and was subsequently approved by the Corporations's stockholders. However,
the Salary Investment
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<PAGE> 26
Option Grant Program shall not be implemented until such time as the Primary
Committee may deem appropriate. Options may be granted under the Discretionary
Option Grant or Automatic Option Grant Program at any time on or after the Plan
Effective Date.
B. The Plan shall serve as the successor to the Predecessor Plan,
and no further option grants or direct stock issuances shall be made under the
Predecessor Plan after the Section 12 Registration Date. All options outstanding
under the Predecessor Plan on the Section 12 Registration Date shall be
incorporated into the Plan at that time and shall be treated as outstanding
options under the Plan. However, each outstanding option so incorporated shall
continue to be governed solely by the terms of the documents evidencing such
option, and no provision of the Plan shall be deemed to affect or otherwise
modify the rights or obligations of the holders of such incorporated options
with respect to their acquisition of shares of Common Stock.
C. One or more provisions of the Plan, including (without
limitation) the option/vesting acceleration provisions of Article Two relating
to Corporate Transactions and Changes in Control, may, in the Plan
Administrator's discretion, be extended to one or more options incorporated from
the Predecessor Plan which do not otherwise contain such provisions.
D. The Plan shall terminate upon the earliest to occur of (i) May
25, 2006, (ii) the date on which all shares available for issuance under the
Plan shall have been issued as fully-vested shares or (iii) the termination of
all outstanding options in connection with a Corporate Transaction. Upon such
plan termination, all outstanding option grants and unvested stock issuances
shall thereafter continue to have force and effect in accordance with the
provisions of the documents evidencing such grants or issuances.
IV. AMENDMENT OF THE PLAN
A. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no such
amendment or modification shall adversely affect the rights and obligations with
respect to stock options or unvested stock issuances at the time outstanding
under the Plan unless the Optionee or the Participant consents to such amendment
or modification. In addition, certain amendments may require stockholder
approval pursuant to applicable laws or regulations.
B. Options to purchase shares of Common Stock may be granted
under the Discretionary Option Grant and Salary Investment Option Grant Programs
and shares of Common Stock may be issued under the Stock Issuance Program that
are in each instance in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under those
programs shall be held in escrow until there is obtained stockholder approval of
an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such excess
issuances are made, then (i) any unexercised options granted on the basis of
such excess shares shall terminate and cease to be outstanding and (ii) the
Corporation shall promptly refund to the Optionees and the Participants the
exercise or purchase price paid for any excess shares issued under the Plan and
held in escrow, together with interest (at the applicable Short Term Federal
Rate) for the period the
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shares were held in escrow, and such shares shall thereupon be automatically
cancelled and cease to be outstanding.
V. USE OF PROCEEDS
Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.
VI. REGULATORY APPROVALS
A. The implementation of the Plan, the granting of any stock
option under the Plan and the issuance of any shares of Common Stock (i) upon
the exercise of any granted option or (ii) under the Stock Issuance Program
shall be subject to the Corporation's procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the stock
options granted under it and the shares of Common Stock issued pursuant to it.
B. No shares of Common Stock or other assets shall be issued or
delivered under the Plan unless and until there shall have been compliance with
all applicable requirements of Federal and state securities laws, including the
filing and effectiveness of the Form S-8 registration statement for the shares
of Common Stock issuable under the Plan, and all applicable listing requirements
of any stock exchange (or the Nasdaq National Market, if applicable) on which
Common Stock is then listed for trading.
VII. NO EMPLOYMENT/SERVICE RIGHTS
Nothing in the Plan shall confer upon the Optionee or the
Participant any right to continue in Service for any period of specific duration
or interfere with or otherwise restrict in any way the rights of the Corporation
(or any Parent or Subsidiary employing or retaining such person) or of the
Optionee or the Participant, which rights are hereby expressly reserved by each,
to terminate such person's Service at any time for any reason, with or without
cause.
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<PAGE> 28
APPENDIX
The following definitions shall be in effect under the Plan:
A. AUTOMATIC OPTION GRANT PROGRAM shall mean the automatic option grant
program in effect under the Plan.
B. BOARD shall mean the Corporation's Board of Directors.
C. CHANGE IN CONTROL shall mean a change in ownership or control of the
Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly by any person
or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common
control with, the Corporation), of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities pursuant to a tender or exchange
offer made directly to the Corporation's stockholders which the Board
does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time the Board
approved such election or nomination.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Corporation's common stock.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total combined voting
power of the Corporation's outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
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<PAGE> 29
G. CORPORATION shall mean QuadraMed Corporation, a Delaware corporation,
and its successors.
H. DIRECTOR FEE OPTION GRANT PROGRAM shall mean the special stock option
grant in effect for non-employee Board members under Article Six of the Plan.
I. DISCRETIONARY OPTION GRANT PROGRAM shall mean the discretionary
option grant program in effect under the Plan.
J. ELIGIBLE DIRECTOR shall mean a non-employee Board member eligible to
participate in the Automatic Option Grant Program in accordance with the
eligibility provisions of Article One.
K. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
L. EXERCISE DATE shall mean the date on which the Corporation shall have
received written notice of the option exercise.
M. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the
Nasdaq National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as such
price is reported by the National Association of Securities Dealers on
the Nasdaq National Market or any successor system. If there is no
closing selling price for the Common Stock on the date in question, then
the Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(ii) If the Common Stock is at the time listed on any
Stock Exchange, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question on the Stock
Exchange determined by the Plan Administrator to be the primary market
for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in question, then the
Fair Market Value shall be the closing selling price on the last
preceding date for which such quotation exists.
(iii) For purposes of any option grants made on the
Underwriting Date, the Fair Market Value shall be deemed to be equal to
the price per share at which the Common Stock is to be sold in the
initial public offering pursuant to the Underwriting Agreement.
(iv) For purposes of any option grants made prior to the
Underwriting Date, the Fair Market Value shall be determined by the Plan
Administrator, after taking into account such factors as it deems
appropriate.
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<PAGE> 30
N. HOSTILE TAKE-OVER shall mean the acquisition, directly or indirectly,
by any person or related group of persons (other than the Corporation or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Corporation) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation's
outstanding securities pursuant to a tender or exchange offer made directly to
the Corporation's stockholders which the Board does not recommend such
stockholders to accept.
O. INCENTIVE OPTION shall mean an option which satisfies the
requirements of Code Section 422.
P. INVOLUNTARY TERMINATION shall mean the termination of the Service of
any individual which occurs by reason of:
(i) such individual's involuntary dismissal or discharge
by the Corporation for reasons other than Misconduct, or
(ii) such individual's voluntary resignation following (A)
a change in his or her position with the Corporation which materially
reduces his or her level of responsibility, (B) a reduction in his or
her level of compensation (including base salary, fringe benefits and
participation in any corporate-performance based bonus or incentive
programs) by more than fifteen percent (15%) or (C) a relocation of such
individual's place of employment by more than fifty (50) miles, provided
and only if such change, reduction or relocation is effected by the
Corporation without the individual's consent.
Q. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee or Participant, any unauthorized use
or disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional misconduct
by such person adversely affecting the business or affairs of the Corporation
(or any Parent or Subsidiary) in a material manner. The foregoing definition
shall not be deemed to be inclusive of all the acts or omissions which the
Corporation (or any Parent or Subsidiary) may consider as grounds for the
dismissal or discharge of any Optionee, Participant or other person in the
Service of the Corporation (or any Parent or Subsidiary).
R. 1934 ACT shall mean the Securities Exchange Act of 1934, as amended.
S. NON-STATUTORY OPTION shall mean an option not intended to satisfy the
requirements of Code Section 422.
T. OPTIONEE shall mean any person to whom an option is granted under the
Discretionary Option Grant, Salary Investment Option Grant, Automatic Option
Grant or Director Fee Option Grant Program.
U. PARENT shall mean any corporation (other than the Corporation) in an
unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty
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percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
V. PARTICIPANT shall mean any person who is issued shares of Common
Stock under the Stock Issuance Program.
W. PERMANENT DISABILITY OR PERMANENTLY DISABLED shall mean the inability
of the Optionee or the Participant to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment expected
to result in death or to be of continuous duration of twelve (12) months or
more. However, solely for purposes of the Automatic Option Grant, Salary
Investment Option Grant and Director Fee Option Grant Programs, Permanent
Disability or Permanently Disabled shall mean the inability of the non-employee
Board member to perform his or her usual duties as a Board member by reason of
any medically determinable physical or mental impairment expected to result in
death or to be of continuous duration of twelve (12) months or more.
X. PLAN shall mean the Corporation's 1996 Stock Incentive Plan, as set
forth in this document.
Y. PLAN ADMINISTRATOR shall mean the particular entity, whether the
Primary Committee, the Board or the Secondary Committee, which is authorized to
administer the Discretionary Option Grant, Salary Investment Option Grant and
Stock Issuance Programs with respect to one or more classes of eligible persons,
to the extent such entity is carrying out its administrative functions under
those programs with respect to the persons under its jurisdiction.
Z. PLAN EFFECTIVE DATE shall mean June 26, 1996, the date on which the
Plan was adopted by the Board.
AA. PREDECESSOR PLAN shall mean the Corporation's pre-existing Stock
Option Plan in effect immediately prior to the Plan Effective Date hereunder.
BB. PRIMARY COMMITTEE shall mean the committee of two (2) or more
non-employee Board members appointed by the Board to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to Section
16 Insiders and to administer the Salary Investment Option Grant Program with
respect to all eligible individuals.
CC. SALARY INVESTMENT OPTION GRANT PROGRAM shall mean the salary
investment option grant program in effect under the Plan.
DD. SECONDARY COMMITTEE shall mean a committee of two (2) or more Board
members appointed by the Board to administer the Discretionary Option Grant and
Stock Issuance Programs with respect to eligible persons other than Section 16
Insiders.
EE. SECTION 12 REGISTRATION DATE shall mean the date on which the Common
Stock is first registered under Section 12(g) of Section 16 of the 1934 Act.
FF. SECTION 16 INSIDER shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of the
1934 Act.
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<PAGE> 32
GG. SERVICE shall mean the performance of services for the Corporation
(or any Parent or Subsidiary) by a person in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor, except to the extent otherwise specifically provided in the documents
evidencing the option grant or stock issuance.
HH. STOCK EXCHANGE shall mean either the American Stock Exchange or the
New York Stock Exchange.
II. STOCK ISSUANCE AGREEMENT shall mean the agreement entered into by
the Corporation and the Participant at the time of issuance of shares of Common
Stock under the Stock Issuance Program.
JJ. STOCK ISSUANCE PROGRAM shall mean the stock issuance program in
effect under the Plan.
KK. SUBSIDIARY shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations beginning with the Corporation, provided
each corporation (other than the last corporation) in the unbroken chain owns,
at the time of the determination, stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
LL. TAKE-OVER PRICE shall mean the greater of (i) the Fair Market Value
per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest reported
price per share of Common Stock paid by the tender offeror in effecting such
Hostile Take-Over. However, if the surrendered option is an Incentive Option,
the Take-Over Price shall not exceed the clause (i) price per share.
MM. TAXES shall mean the Federal, state and local income and employment
tax liabilities incurred by the holder of Non-Statutory Options or unvested
shares of Common Stock in connection with the exercise of those options or the
vesting of those shares.
NN. 10% STOCKHOLDER shall mean the owner of stock (as determined under
Code Section 424(d)) possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Corporation (or any Parent
or Subsidiary).
OO. UNDERWRITING AGREEMENT shall mean the agreement between the
Corporation and the underwriter or underwriters managing the initial public
offering of the Common Stock.
PP. UNDERWRITING DATE shall mean October 9, 1996, the date on which the
Underwriting Agreement was executed and priced in connection with an initial
public offering of the Common Stock.
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EXHIBIT 99.13
CABOT MARSH CORPORATION
1997 INCENTIVE STOCK OPTION PLAN
1. Purpose. The purpose of the 1997 Incentive Stock Option Plan (the
"Plan") of Cabot Marsh Corporation (the "Corporation") is to assist the
Corporation in attracting and retaining employees of outstanding competence by
providing an incentive which permits those employees responsible for the
Corporation's growth to share directly in that growth and to further the
identity of their interests with those of the stockholders of the Corporation.
2. Administration of the Plan. The Plan shall be administered by a
Committee (the "Committee") appointed by the Board of Directors (the "Board") of
the Corporation and consisting of not less than three members of the Board. The
Board shall also appoint the Chairman of the Committee.
The Committee shall have authority in its discretion, but subject to the
provisions of the Plan and the restrictions of the Internal Revenue Code, and
Regulations promulgated thereunder regarding incentive stock options, to (a)
determine the terms of all options granted under the Plan including, without
limitation: (i) the purchase price of the common stock covered by each option,
which shall not be less than the fair market value of such stock on the date of
grant, (ii) subject to the approval of the Board, the employees to whom, and the
time or times at which, options shall be granted, (iii) when an option can be
exercised and whether in whole or in installments, and (iv) the number of shares
covered by each option; and (b) to interpret the Plan and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
The Committee's determination on the foregoing matters shall be conclusive. All
determinations of the Committee shall be made by not less than a majority of its
members. The Committee may designate the Secretary or any employee of the
Corporation to assist the Committee in the administration of the Plan.
3. Stock Available. The stock subject to the Plan shall be authorized
but unissued or treasury shares of common stock of the Corporation. The amount
of such common stock which is hereby reserved for issuance and authorized to be
issued pursuant to the Plan is 100,000 shares. The total number of such shares,
however, shall be subject to adjustment in accordance with Section 11 of this
Plan. Except as provided in Section 9 hereof, if any option granted under this
Plan shall expire, terminate or be canceled, for any reason, without having been
exercised in full, the corresponding number of unpurchased shares which were
reserved for issuance upon exercise thereof shall again be available for the
purposes of this Plan.
4. Time of Granting of Options. The effective date of the granting of an
option (the "Granting Date"), shall be the date specified by the Committee in
its determination or designation relating to the award of such option, whereupon
a written option agreement shall promptly be executed and delivered by or on
behalf of the Corporation and the grantee, provided that such grant of an option
shall expire if a written option agreement is not signed by such grantee and
returned to the Corporation within 30 days from the Granting Date.
5. Eligibility. Options may be granted only to key employees (which
term shall be deemed to include officers but not directors who are not
employees) who on the
<PAGE> 2
Granting Date are in the employ of the Corporation or any of its future
subsidiary companies, as defined in Section 425 of the Internal Revenue Code as
the same shall be amended from time to time. Options may be granted to eligible
employees whether or not they hold or have held options under the Plan. However,
no option may be granted under this Plan to an otherwise eligible employee if,
at the time the option would have been granted but for this provision, such
employee owns stock of the Corporation possessing more than ten (10%) percent of
the total combined voting power of all classes of stock of the Corporation or
its subsidiaries unless the price per share of such option is not less than one
hundred ten (110%) percent of the fair market value of the Corporation's common
stock on the Granting Date and, the provisions of Section 8a hereof
notwithstanding, the term thereof shall be no greater than five (5) years after
the Granting Date.
6. Option Prices. The option price or prices per share to be specified
in each option agreement will be determined by the Committee, but shall not be
less than the fair market value of the Corporation's common stock on the
Granting Date, as determined by the Committee in accordance with Internal
Revenue Code provisions and regulations from time to time in effect with respect
to incentive stock options.
7. Limitations on Amount of Options. The aggregate fair market value
(determined as of the Granting Date) of the stock for which any eligible
employee may be granted options in any calendar year (under this Plan and all
other incentive stock option plans of the Corporation or its subsidiaries) shall
not exceed $100,000.00, plus any unused limit carry-over to such year as
provided in Section 422A(c)(4) of the Internal Revenue Code as the same shall be
amended from time to time.
8. Terms of Options.
a. Required Provisions. Each option granted under the Plan shall
be nontransferable, may be exercised during the lifetime of the grantee only by
him while he remains in the employ of the Corporation or a subsidiary or within
sixty (60) days of the termination of such employment for any reason. In the
case of the death of the grantee during his employment, the option may be
exercised by his executor or other duly appointed personal representative of his
estate. Each option shall expire at the earliest of (i) the expiration of the
option in accordance with its terms but in no event later than ten years after
the Granting Date, (ii) sixty (60) days after the termination of employment of
the grantee for any reason (except in the event of death), or (iii) six months
after death of the grantee by his duly appointed executor or personal
representative. Each option shall by its terms comply with the specific
requirement of Section 422A(b)(7) of the Internal Revenue Code (which prevents
the exercise of such incentive stock option while there are "outstanding" within
the meaning of Section 422A(c)(7) of the Internal Revenue Code, certain other
incentive options granted by the Corporation to such employee).
b. Other Provisions. Each option agreement (and amendments
thereof) may contain such terms and provisions consistent with the requirements
of this Plan, as the Committee in its discretion shall determine including such
terms and provisions as shall be requisite to cause the options to qualify as
"incentive" stock options under Section 422A of the Internal Revenue Code of
1954, as amended. Option agreements need not be identical.
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<PAGE> 3
9. Purchases of Options and Underlying Common Stock by the Corporation.
With the approval of the Board, and in accordance with the recommendation of the
Committee, any option agreement may provide that the holder thereof shall be
obligated, upon written notice from the Corporation, to sell to the Corporation
all or any part of the option (to the extent specified in the option agreement
and consented to by the Committee) at a cash price equal in value to the excess
of the fair market value of each share of common stock covered by the option or
portion thereof purchased (such fair market value to be determined as of the
date of such written notice) over the option price; provided, however, that such
purchase shall be subject to the condition that the purchase shall not violate
the terms of any agreement to which the Corporation is or may hereafter become a
party and shall be permitted by law. With similar approval and authorization,
any option agreement may provide that upon written notice from the Corporation
the optionee shall be obligated to sell to the Corporation and the Corporation
shall have the right to purchase any shares of common stock issued upon exercise
of any option at the fair market value of such shares as of the date of such
written notice. Shares of common stock reserved for issuance upon exercise of
options so purchased and shares of stock so purchased shall not again be
available for the purposes of the Plan.
10. Medium of Payment. The option price specified in the Plan shall be
payable either in United States dollars or, with the consent of the Committee,
with stock of the Corporation.
11. Adjustments Upon Changes in Capitalization. Notwithstanding any
other provision of the Plan, the option agreements may contain such provision as
the Committee shall determine to be appropriate for the adjustment of the number
and class of shares subject to each outstanding option and the option prices in
the event of changes in the outstanding common stock of the Corporation by
reason of stock dividends, stock splits, recapitalization, mergers,
consolidations, combinations or exchanges of shares, split-ups, split-offs,
spin-offs, liquidations or other similar changes in capitalization, or any
distribution to common stockholders other than cash dividends, and in the event
of any such change in the outstanding common stock of the Corporation, the
aggregate number and class of shares available under the Plan and the maximum
number of shares as to which options may be granted to any individual shall be
appropriately adjusted by the Committee.
12. Termination and Amendment. The Plan shall terminate on, and no
Option shall be granted thereunder after, ____________, 2007. The Board may also
terminate the Plan or make such modifications or amendments thereof as it shall
deem advisable, including such modifications or amendments as it shall deem
advisable in order to cause the stock options to qualify as "incentive stock
options" under Section 422A of the Internal Revenue Code or to conform to any
change in any law or regulation applicable thereto; provided, however, that the
Board may not, without further approval by the holders of a majority of the
outstanding stock of the Corporation having general voting power: (a) increase
the maximum number of shares for which options may be granted under the Plan in
the aggregate, (b) change the provisions of the Plan regarding the option price
to be specified in each option agreement, (c) lengthen the period during which
options may be granted or remain outstanding, or (d) enlarge the requirements as
to the class of employees eligible to receive options. Nothing herein contained
shall, however, be deemed to prevent the Committee from authorizing amendments
of outstanding options including the reduction of the option prices (or the
granting of new options at lower prices upon
3
<PAGE> 4
cancellation of outstanding options), so long as all options granted outstanding
at any one time shall not call for issuance of more shares of common stock than
those provided for in Section 3 and so long as the provisions of any amended
option would have been permissible under the Plan if such option had been
originally granted as of the date of such amendment. No termination,
modification or amendments of the Plan may, without the consent of the employee,
adversely affect the rights of such employee under an option previously granted
to him.
13. Government and Other Regulations and Restrictions. The obligation of
the Corporation to issue common stock upon execution of an option agreement
shall be subject to all applicable laws, rules and regulations and to such
approvals by governmental agencies as may be required. Shares of common stock
acquired pursuant to the Plan shall not be sold, transferred or otherwise
disposed of unless and until either (a) such shares shall have been registered
by the Corporation under the Securities Act of 1933, as amended (the "Securities
Act"), (b) the Corporation shall have received either a "no action" letter from
the Securities and Exchange Commission or an opinion of counsel acceptable to
the Corporation to the effect that such sale, transfer or disposition of the
shares is made pursuant to Rule 144 of the General Rules and Regulations
promulgated under the Securities Act, as the same may from time to time be in
effect, and the Corporation shall have received an opinion of counsel acceptable
to the Corporation to such effect. In the event that at the time an option is
exercised there shall not be on file with the Securities and Exchange Commission
an effective Registration Statement under the Securities Act covering the shares
of common stock to be issued pursuant thereto the Corporation's obligation to
deliver the shares are subject to the further condition that the employee will
execute and deliver to the Corporation an undertaking in form and substance
satisfactory to the Corporation that (i) it is his intention to acquire and hold
such shares for investment and not for the resale or distribution thereof (ii)
the shares will not be sold without registration or exemption from the
requirement of registration under the Securities Act, and (iii) he will
indemnify the Corporation for any costs, liabilities and expenses which it may
sustain by reason of any violation of the Securities Act, or any other law
regulating the sale or purchase of securities occasioned by any act on his part
with respect to such shares. The Corporation may require that any certificate or
certificates evidencing shares issued pursuant to the Plan bear a restrictive
legend intended to effect compliance with the Securities Act or any other
applicable regulatory measures, and stop transfer instructions may be given with
respect to the certificates representing the shares may be given to the transfer
agent.
14. Registration of Shares. The Corporation may but shall be under no
obligation to register any shares of common stock under the Securities Act.
However, an option agreement may make appropriate and reasonable provision for
the registration of common stock acquired thereunder. The Corporation, at its
election, may undertake to pay all fees and expenses of each such registration,
other than an underwriter's commission, if any.
15. No Rights in Common Stock. No employee shall have any interest in or
be entitled to any voting rights or dividends or other rights or privileges of
stockholders of the Corporation with respect to any shares of common stock
unless, and until, shares of common stock are actually issued to such employee
following exercise of an option and then only from the date the employee becomes
the record owner thereof.
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<PAGE> 5
16. Successors. The provisions of the Plan shall be binding upon and
inure to the benefit of all successors of any person receiving common stock of
the Corporation pursuant to the Plan, including, without limitation, the estate
of such person and the executors, administrators or trustees thereof, the heirs
and legatees of such person, and any receiver, trustee in bankruptcy or
representative of creditors of such person.
17. Corporation's Right to Terminate Employment. Nothing contained in
the Plan or in any Purchase Agreement shall confer upon any employee a right to
continue in the employ of the Corporation or any of its subsidiaries or
interfere in any way with the right of the Corporation or any of its
subsidiaries to terminate the employment of any employee at any time, with or
without cause.
18. Action by Corporation and the Board. Neither the adoption of the
Plan by the shareholders nor the issuance of common stock pursuant thereto shall
impair the right of the Corporation, its stockholders or the Board to make or
effect any adjustments, recapitalizations or other change in the common stock
referred to in Section 11, any change in the Corporation's business, any
issuance of debt obligations or stock by the Corporation or any grant of options
on stock of the Corporation, or any other incentive compensation arrangement.
19. Reliance on Reports. Each member of the Board and of the Committee
shall be fully justified in relying or acting in good faith upon any reports or
other information furnished in connection with the Plan by any person or
persons. In no event shall any person who is or shall have been a member of the
Board or of the Committee be liable for any determination made or other action
taken or any omission to act in reliance upon any such report or information or
for any action taken or failure to act, if in good faith.
20. Pronouns. Masculine pronouns and other words of masculine gender
shall refer to both men and women.
21. Effective Date of Plan. The Plan shall become effective on the date
the Plan is adopted by the stockholders of the Corporation, but not sooner than
____________, 1997.
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EXHIBIT 99.14
FORM OF GRANT OF INCENTIVE STOCK OPTION
(CABOT MARCH 1997 PLAN)
CABOT MARSH CORPORATION
INCENTIVE STOCK OPTION PLAN
GRANT OF INCENTIVE STOCK OPTION
Date of Grant: _______________
THIS GRANT, dated as of the date of grant first stated above (the "Date of
Grant"), is delivered by Cabot Marsh Corporation, a Delaware corporation (the
"Corporation") to (the "Grantee"), who is an employee or officer of the
Corporation.
WHEREAS, the Board of Directors of the Corporation (the "Board")
on ________________, 199_, adopted, with subsequent stockholder approval, the
Cabot Marsh Corporation Incentive Stock Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting of incentive stock options by a
committee to be appointed by the Board (the "Committee") to officers and key
employees of the Corporation to purchase shares of the Common Stock of the
Corporation (the "Stock"), in accordance with the terms and provisions thereof;
and
WHEREAS, the Committee considers the Grantee to be a person who is eligible
for a grant of incentive stock options under the Plan, and has determined that
it would be in the best interest of the Corporation to grant the incentive stock
options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. Grant of Option. Subject to the terms and conditions hereinafter set
forth, the Corporation, with approval and at the direction of the Committee,
hereby grants to the Grantee, as of the Date of Grant, an option to purchase up
to ___________ shares of Stock at a price of $________ per share, the current
fair market value. Such option is hereinafter referred to as the "Option" and
the shares of stock purchasable upon exercise of the Option are hereinafter
sometimes referred to as the "Option Shares." The Option is intended by the
parties hereto to be, and shall be treated as, an incentive stock option (as
such term is defined under Section 422 of the Internal Revenue Code of 1986).
2. Installment Exercise. Subject to such further limitations as are
provided herein, the Option shall become exercisable in three (3) installments,
the Grantee having the right hereunder to purchase from the Corporation the
following number of Option Shares upon exercise of the Option, on and after the
following dates, in cumulative fashion:
<PAGE> 2
(a) on and after the second anniversary of the Date of Grant, up to
one-third (ignoring fractional shares) of the total number of Option Shares;
(b) on and after the third anniversary of the Date of Grant, up to an
additional one-third (ignoring fractional shares) of the total number of Option
Shares; and
(c) on and after the fourth anniversary of the Date of Grant, the
remaining Option Shares.
3. Termination of Option.
(a) The Option and all rights hereunder with respect thereto, to the
extent such rights shall not have been exercised, shall terminate and become
null and void after the expiration of five (5) years from the Date of Grant (the
"Option Term").
(b) Upon the occurrence of the Grantee's ceasing for any reason to be
employed by the Corporation (such occurrence being a "termination of the
Grantee's employment"), the Option, to the extent not previously exercised and
still outstanding and exercisable, shall terminate and become null and void
sixty (60) days following the termination of the Grantee's employment, except in
a case where the termination of the Grantee's employment is by reason of death.
Upon a termination of the Grantee's employment by reason of death, the
Option may be exercised, but only to the extent that the Option was outstanding
and exercisable on the date of death, not later than six months after the
Grantee's death. In no event, however, shall any such period extend beyond the
Option Term.
(c) In the event of the death of the Grantee, the Option may be
exercised by the Grantee's executor or other duly appointed legal
representative(s), but only to the extent that the Option would otherwise have
been exercisable by the Grantee.
(d) Notwithstanding any other provisions set forth herein or in the
Plan, if the Grantee shall (i) commit any act of malfeasance or wrongdoing
affecting the Corporation, (ii) breach any covenant not to compete, or
employment contract with the Corporation, or (iii) engage in conduct that would
warrant the Grantee's discharge for cause (excluding general dissatisfaction
with the performance of the Grantee's duties, but including any act of
disloyalty or any conduct clearly tending to bring discredit upon the
Corporation), any unexercised portion of the Option shall immediately terminate
and be void.
4. Exercise of Options.
(a) The Grantee may exercise the Option with respect to all or any
part of the number of Option Shares then exercisable hereunder by giving the
Secretary of the Corporation written notice of intent to exercise. The notice of
exercise shall specify the number
2.
<PAGE> 3
of Option Shares as to which the Option is to be exercised and the date of
exercise thereof, which date shall be at least five days after the giving of
such notice unless an earlier time shall have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Grantee of the option price
for the Option Shares purchased shall be made on or before the exercise date
specified in the notice of exercise, or, with the prior written consent of the
Committee, in whole or in part through the surrender of previously acquired
shares of Stock at their fair market value on the exercise date.
On the exercise date specified in the Grantee's notice or as soon
thereafter as is practicable, the Corporation shall cause to be delivered to the
Grantee, a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Stock or reacquired Stock, as the
Corporation may elect) upon full payment for such Option Shares. The obligation
of the Corporation to deliver Stock shall, however, be subject to the condition
that if at any time the Committee shall determine in its discretion that the
listing, registration or qualification of the Option or the Option Shares upon
any securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with the Option or the issuance or purchase of
Stock thereunder, the Option may not be exercised in whole or in part unless
such listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
(c) If the Grantee fails to pay for any of the Option Shares
specified in such notice or fails to accept delivery thereof, the Grantee's
right-to purchase such Option Shares may be terminated by the Corporation. The
date specified in the Grantee's notice as the date of exercise shall be deemed
the date of exercise of the Option, provided that payment in full for the Option
Shares to be purchased upon such exercise shall have been received by such date.
5. Adjustment of and Changes in Stock of the Corporation. In the event of
a reorganization, recapitalization, change of shares, stock split, spin-off,
stock dividend, reclassification, subdivision or combination of shares, merger,
consolidation, rights offering, or any other change in the corporate structure
or shares of capital stock of the Corporation, the Committee shall make such
adjustment as it deems appropriate in the number and kind of shares of Stock
subject to the Option or in the option price; provided, however, that no such
adjustment shall give the Grantee any additional benefits under the Option.
6. No Rights of Stockholders. Neither the Grantee nor any legal
representative shall be, or shall have any of the rights and privileges of, a
stockholder of the Corporation with respect to any shares of Stock purchasable
or issuable upon the exercise of the Option, in whole or in part, prior to the
date of exercise of the Option.
7. Non-Transferability of Option. The Option hereunder shall be
exercisable only by the Grantee or any guardian or legal representative of the
Grantee, and the Option shall
3.
<PAGE> 4
not be transferable, nor shall the Option be subject to attachment, execution or
other similar process. In the event of (a) any attempt by the Grantee to
alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except
as provided for herein, or (b) the levy of any attachment, execution or similar
process upon the rights or interest hereby conferred, the Corporation may
terminate the Option by notice to the Grantee and it shall thereupon become null
and void.
8. Employment Not Affected. The granting of the Option or its exercise
shall not be construed as granting to the Grantee any right with respect to
continuance of employment. Except as may otherwise be limited by a written
agreement between the Corporation and the Grantee, the right of the Corporation
to terminate at will the Grantee's employment with it at any time (whether by
dismissal, discharge, retirement or otherwise) is specifically reserved by the
Corporation.
9. Amendment of Option. The Option may be amended by the Board or the
Committee at any time (i) if the Board or the Committee determines, in its sole
discretion, that amendment is necessary or advisable in the light of any
addition to or change in the Internal Revenue Code of 1986 or in the regulations
issued thereunder, or any federal or state securities law or other law or
regulation, which change occurs after the Date of Grant and by its terms applies
to the Option; or (ii) other than in the circumstances described in clause (i),
with the consent of the Grantee.
10. Notice. Any notice to the Corporation provided for in this instrument
shall be addressed to it in care of its Secretary at its executive offices at 40
Bethlehem Plaza, Bethlehem, Pennsylvania 18018-5705, and any notice to the
Grantee shall be addressed to the Grantee at the current address shown on the
payroll records of the Corporation. Any notice shall be deemed to be fully given
if and when properly addressed and posted by registered or certified mail,
postage prepaid.
11. Incorporation of Plan by Reference. The Option is granted pursuant to
the terms of the Plan, the terms of which are incorporated herein by reference,
and the Option shall in all respects be interpreted in accordance with the Plan.
The Committee shall interpret and construe the Plan and this instrument, and its
interpretations and determinations shall be conclusive and binding on the
parties hereto and any other person claiming an interest hereunder, with respect
to any issue arising hereunder or thereunder.
12. Governing Law. The validity, construction, interpretation and effect
of this instrument shall exclusively be governed by and determined in accordance
with the law of the State of Pennsylvania, except to the extent preempted by
federal law, which shall to the extent govern.
4.
<PAGE> 5
13. Investment Representation. The Grantee acknowledges and agrees that it
is his or her intention to acquire and hold the Option Shares for investment and
not for the resale or distribution thereof and that Grantee will not resell the
shares without registration or exemption from the requirements of registration
under any state or Federal securities laws.
IN WITNESS WHEREOF, the Corporation has caused its duly authorized officers
to execute and attest this Grant of Incentive Stock Option, and to apply the
corporate seal hereto, and the Grantee has placed his or her signature hereon,
effective as of the Date of Grant.
CABOT MARSH CORPORATION
By:
----------------------------------
Joseph J. Russo, President
ATTEST:
- -------------------------------------
Secretary
ACCEPTED AND AGREED TO
By:
---------------------------------
, Grantee
5.
<PAGE> 1
EXHIBIT 99.15
PYRAMID HEALTH GROUP
1997 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
<PAGE> 2
PHG 1997 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
PYRAMID HEALTH GROUP
1997 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of the 1997 Employee and Consultant
Stock Option Plan are:
a. To further the growth, development and financial success of
Pyramid Health Group, a Delaware corporation, by providing certain employees who
have been given responsibility for the management, administration and/or other
substantial responsibilities of the Company's business affairs, with additional
incentives to enlarge their proprietary interests in the Company, to increase
their efforts on the Company's behalf and to continue their association with the
Company, and by rewarding such Employees for exceptional and profit-producing
services to the Company; and
b. To increase the interests of selected consultants in the
Company's success through their participation in the growth in value of the
Common Stock of the Company.
2. PLAN STRUCTURE. Options granted under the Plan may be Incentive Stock
Options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder, or may be Nonstatutory Stock
Options.
3. CERTAIN DEFINITIONS. As used herein, the following definitions shall
apply:
ADMINISTRATOR" means the Board or any of its Committees appointed
pursuant to Section 5 of the Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE," solely for the purposes of this Plan, shall mean:
engagement in any willful misconduct or conduct that is
grossly negligent in the performance of Optionee's duties or obligations as an
Employee or Consultant with the Company; or
PHG Proprietary & Confidential Page 1
<PAGE> 3
conviction of a violation of any federal or state laws involving
moral turpitude or a felony; or
willful violation of any of the Company's material rules,
policies, procedures or other standards of conduct or performance; or
failure to follow a reasonable and lawful directive of the
Company's Board of Directors or an authorized officer of the Company, following
notice that such failure shall constitute grounds for termination for Cause; or
violation of any or all terms and conditions of any
confidentiality, nondisclosure, employment or noncompete agreements between
Optionee and the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
e. "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with Section 5.a of the Plan.
f. "COMMON STOCK" means the Common Stock of the Company.
"COMPANY" means Pyramid Health Group, a Delaware corporation.
"CONSULTANT" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services other than
as an Employee and is compensated for such services, and any director of the
Company whether compensated for such services or not.
"CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of the employment relationship by the Company or any
Parent or Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of:
i. sick leave;
ii. military leave;
iii. any other leave of absence approved by the Board,
provided that such leave is for a period of not more than ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute; or
iv. in the case of transfers between locations of the
Company or between the Company, its Parent, its Subsidiaries or its successor.
The written agreement evidencing a Nonstatutory Stock
Option may provide that an Optionee's Continuous Status as an Employee shall not
be deemed interrupted to the extent that the Optionee becomes a Consultant.
"EMPLOYEE" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
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<PAGE> 4
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined by the Board, either:
i. if the Company's securities are traded on a national
securities exchange or on the National Association of Securities Dealers
Automated Quotation System (or similar successor system), on the basis of the
reported closing sales price on such date; or
ii. in the absence of such a reported sales price, on the
basis of such evidence as the Board deems appropriate in its sole discretion. In
the case of an Incentive Stock Option, it will be determined without reference
to any restriction other than one that, by its terms, will never lapse.
"INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
"NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as
an Incentive Stock Option.
"OPTION" means a stock option granted pursuant to the Plan.
"OPTIONED STOCK" means the Common Stock subject to an Option.
"OPTIONEE" means an Employee or Consultant who receives an Option.
"PARENT" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
"PLAN" means this Pyramid Health Group 1997 Employee and Consultant
Stock Option Plan.
"SHARE" means a share of the Common Stock.
"SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
"TEN PERCENT SHAREHOLDER" means any person who owns (after taking
into account the constructive ownership rules of Section 424(d) of the Code)
more than ten percent (10%) of the stock of the Company or of any of its Parents
or Subsidiaries.
STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is one million two hundred thousand (1,200,000) shares of Common
Stock. The shares may be authorized, but unissued, or reacquired Common Stock.
If an Option should expire or become unexercisable for any reason without having
been exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grants under the Plan.
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<PAGE> 5
ADMINISTRATION OF THE PLAN.
a. PROCEDURE.
i. ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options to Employees who are also officers or
Directors of the Company, the Plan shall be administered by (A) the Board, or
(B) a Committee designated by the Board to administer the Plan, which Committee
shall be constituted in such a manner as to satisfy the legal requirements
relating to the administration of Incentive Stock Option plans, if any, of
California and federal corporate and securities laws and of the Code (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase or decrease the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan.
ii. MULTIPLE ADMINISTRATIVE BODIES. The Plan may be
administered by different bodies with respect to Directors, non-director
officers and Employees who are neither Directors nor officers.
iii. ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
Employees. With respect to grants of Options to Employees or Consultants who are
neither directors nor officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the legal requirements relating to
the administration of Incentive Stock Option plans, if any, of California and
federal corporate and securities laws and of the Code. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time, the Board may increase or decrease the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
applicable laws.
iv. MEETINGS/ACTIONS. The Administrator shall hold
meetings at such times and places as it may determine. Acts of a majority of the
Administrator at a meeting at which a quorum is present, or actions approved in
writing by all members of the Administrator, shall be the valid acts of the
Administrator.
b. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
to select the officers, Consultants and Employees to whom
Options may from time to time be granted hereunder;
to determine whether and to what extent Options are granted
hereunder;
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<PAGE> 6
to determine the number of shares of Common Stock to be covered
by each such award granted hereunder;
to approve forms of agreement for use under the Plan;
to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, the share price and any restriction or limitation, or waiver or forfeiture
restrictions regarding any Option or other award and/or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator
shall determine, in its sole discretion;
to determine whether, to what extent and under what
circumstances, Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
Optionee (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period); and
to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option shall have declined since the date the Option was granted.
c. EFFECT OF COMMITTEE'S DECISION. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.
ELIGIBILITY.
Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees.
Each Option shall be designated in the written option agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For this purpose, Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares shall
be determined as of the time the Option with respect to such Shares is granted.
The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without Cause.
In considering and selecting Optionees to whom options shall be
granted and the number of Shares to be covered thereby, the Administrator may
consider the nature of services
5
<PAGE> 7
rendered by an Optionee, an Optionee's present and potential contributions to
the success of the Company, and such other factors as the Administrator in its
discretion shall deem relevant.
In the event that the Company acquires another entity, the
Committee may authorize the issuance of Options ("Substitute Options") to
individuals performing services for the acquired entity in substitution of
Options previously granted to those individuals by the acquired entity upon such
terms and conditions as the Committee shall determine, taking into account the
conditions of Code Section 424(a) in the case of a Substitute Option that is
intended to be an Incentive Stock Option.
TERM OF PLAN.
a. The Plan shall become effective as of March 31, 1997, the date
the Board approved this Plan, provided this Plan is approved by the holders of a
majority of the Company's common stock, in accordance with the provisions of
Code Section 422, within twelve (12) months before or after the date of its
adoption by the Board. If the Plan is not approved by the shareholders within
that time period, the Plan and all Options issued under the Plan will terminate.
Any Shares acquired by reason of the exercise of Options before the shareholders
have approved the Plan will not be counted in determining whether approval has
been obtained. The approval by the shareholders must relate to:
(i) The class of individuals entitled to receive Incentive
Stock Options; and
(ii) The aggregate number of shares of Common Stock that
may be issued under the Plan, except as may be adjusted pursuant to Section 13
of this Plan.
If either of those items are changed, the approval of the
shareholders must again be obtained.
b. This Plan shall terminate on the tenth (10th) anniversary of
the date of its adoption, unless terminated sooner under Section 15 of the Plan,
except with respect to Options then outstanding; or unless terminated sooner
under Section 13 of the Plan.
TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who is a Ten Percent Shareholder, the term
of the Option shall be no more than five (5) years from the date of grant.
OPTION EXERCISE PRICE AND CONSIDERATION.
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<PAGE> 8
a. The per share exercise price for the Shares to be issued
pursuant to the exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:
i. In the case of an Incentive Stock Option
(1) if granted to an Employee who, before the
grant of such Incentive Stock Option, would be a Ten Percent Shareholder, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.
(2) if granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
ii. In the case of a Nonstatutory Stock Option
(1) if granted to a person who, at the time of
the grant of such Option, is a Ten Percent Shareholder, the per Share exercise
price shall be no less than 110% of the Fair Market Value per Share on the date
of grant.
(2) if granted to any person other than those
described in subparagraph 9.ii.(1) above, the per Share exercise price shall be
no less than 85% of the Fair Market Value per Share on the date of grant.
b. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be set forth in
the Option, and may consist entirely of (1) cash, (2) check, (3) promissory
note, (4) other Shares, (5) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(6) by delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the Optionee to take and pay for the Shares not more than
twelve months after the date of delivery of the subscription agreement, (7) any
combination of the foregoing methods of payment, or (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted under
applicable laws. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration may
be reasonably expected to benefit the Company.
10. EXERCISE OF OPTION.
7
<PAGE> 9
PROCEDURE FOR EXERCISE. Any Option granted hereunder shall vest
and be exercisable at such times and under such conditions as set forth in the
Option, and as shall be permissible under the terms of the Plan, provided that
no option shall become exercisable at a rate slower than 20% per year from the
grant date. An Option may not be exercised for a fraction of a Share. An Option
shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company. Except as set
forth in Section 13 of this Plan, Options are exercisable only to the extent of
vested Shares as determined in accordance with the underlying Option. Full
payment may, as authorized by the Administrator, consist of any consideration
and method of payment allowable under Section 9.b of the Plan.
TERMINATION OF EMPLOYMENT. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee, the
Optionee shall be entitled to exercise the Option for such period of time as is
specified in the Option, which shall be not less than thirty (30) days nor more
than ninety (90) days from the date of such termination. Notwithstanding the
preceding sentence, the Option shall no longer be exercisable if such
termination is for Cause. To the extent that Optionee was not entitled to
exercise the Option at the time of termination, or if Optionee does not exercise
such Option to the maximum extent so entitled, the Option shall terminate.
DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section
10.b above, in the event of termination of an Optionee's Consulting relationship
or Continuous Status as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within six (6) months from the date of such termination (but in no event later
than the expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within up to six (6) months following the
date of death (but in no event later than the expiration date of the term of
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee was entitled to exercise the Option at the
date of death. To the extent that Optionee was not entitled to exercise the
Option at the date of death, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
BUYOUT PROVISIONS. The Administrator may at any time offer to buy
out for a payment in cash or Shares, an Option previously granted, based on such
terms and conditions as the Administrator shall establish and communicate to the
Optionee at the time that such offer is made.
8
<PAGE> 10
REPURCHASE OPTION. Any Option Agreement may grant the Company a
repurchase option for any Shares purchased under the exercise of an Option. The
repurchase price and repurchase option term shall be on such terms and
conditions as set forth in the Option Agreement. Except with respect to grants
to officers, directors, and consultants, the repurchase right must satisfy the
conditions of either Subparagraph (i) or (ii) below.
(i) The requirements of this Subparagraph (i) are:
The repurchase price is not less than the Fair Market
Value on the date of the exercise of the Option, or the date of termination of
employment if the Option is exercised after termination of Optionee's
employment with the Company;
The Company's right to repurchase the shares must be
exercised within ninety (90) days of the date of the exercise of the Option, or
the date of termination of employment if the Option is exercised after
termination of Optionee's employment with the Company;
The Company must pay the purchase price in cash, check or
cancellation of the purchase money indebtedness for the shares; and
The Company's purchase right terminates if and when its
Common Stock becomes publicly traded.
The requirements of this Subparagraph (ii) are:
The repurchase price is the exercise price of the Option;
The Company's right to repurchase at the exercise price
lapses at the rate of at least twenty percent (20%) per year over five (5) years
from the date the Option was granted.
The repurchase right must be exercised within ninety (90)
days of the date of the exercise of the Option, or the date of termination of
employment if the Option is exercised after termination of Optionee's employment
with the Company; and
The purchase price must be paid in the form of cash, check,
or cancellation of the purchase money indebtedness for the Shares.
g. DECREASE IN AVAILABLE SHARES. Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.
11. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
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<PAGE> 11
12. STOCK WITHHOLDING TO SATISFY TAX WITHHOLDING OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy tax withholding
obligations as provided in this paragraph. When an Optionee incurs tax liability
in connection with the exercise of an Option, which tax liability is subject to
tax withholding under applicable tax laws, and the Optionee is obligated to pay
the Company an amount required to be withheld, the Fair Market Value of the
Shares to be withheld, if applicable, shall be determined on the date that the
amount of tax will be withheld is to be determined (the "Tax Date"). All
elections by an Optionee to have Shares withheld for this purpose shall be made
in writing in a form acceptable to the Administrator and shall be subject to the
following restrictions:
a. the election must be made on or prior to the applicable Tax
Date;
b. once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
c. all elections shall be subject to the consent or disapproval
of the Administrator;
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
a. Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Administrator, whose determination in that
respect shall be final. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.
b. Upon the dissolution, liquidation or sale of all or
substantially all of the business, properties and assets of the Company, or upon
any reorganization, merger, or consolidation in which the Company does not
survive, or upon any reorganization, merger or consolidation in which the
Company does survive and the Company's shareholders have the opportunity to
receive cash, and or securities of another corporation or other property in
exchange for their capital stock of the Company, the Plan and each outstanding
Option shall terminate; provided, that in such event:
in its sole and absolute discretion, the surviving
corporation in any reorganization, merger or consolidation may, but shall not be
obligated to, tender to any Optionee
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<PAGE> 12
of the Plan an option or options to purchase shares of the surviving
corporation, and such new option or options shall contain such terms and
provisions as shall be required to substantially preserve the rights and
benefits of any Option then outstanding under the Plan and, if accepted by the
Optionee, such new option shall replace the Option under the Plan; or
each Optionee who is not tendered an option by the
surviving corporation in accordance with all of the terms of clause 13.b.i.
above or who does not accept any such substituted option which is so tendered,
shall have the right until ten (10) days before the effective date of such
dissolution, liquidation, reorganization, merger or consolidation to exercise,
in whole or in part, any un-expired Option issued to the Optionee, provided the
Optionee is capable of exercising such Option (i.e., the Option is vested), and
provided that the Option was not forfeited due to termination for Cause under
Section 10(b).
c. The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
14. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
A. AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Section 422 of the Code (or
any other applicable law or regulation, including the requirements of the NASD
or an established stock exchange), the Company shall obtain shareholder approval
of any Plan amendment in such a manner and to such a degree as required by
applicable law. Any amendment to the Plan that by law does not require
shareholder approval may be approved by the Board of Directors alone.
B. EFFECT OF AMENDMENT OR TERMINATION. Notwithstanding the
provisions of Section 13 of this Plan, any such amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
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<PAGE> 13
CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned laws.
INDEMNIFICATION. To the maximum extent permitted by law, the Company shall
indemnify each member of the Committee, the Administrator and of the Board, as
well as any other employee of the Company with duties under this Plan, against
expenses and liabilities (including any amount paid in settlement) reasonably
incurred by the individual in connection with any claims against the individual
by reason of the performance of those duties under this Plan, unless the losses
are due to the individual's gross negligence or lack of good faith. The Company
will have the right to select counsel and to control the prosecution or defense
of the suit. The Company will not be required to indemnify any person for any
amount incurred through any settlement unless the Company consents in writing to
the settlement.
INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
AGREEMENTS. Options shall be evidenced by written agreements in such
form as the Board shall approve from time to time.
INFORMATION TO OPTIONEES. To the extent necessary to comply with applicable
law, the Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, copies of all annual reports
and other information which are provided to all shareholders of the Company. The
Company shall not be required to provide such information if the issuance of
Options under the Plan is limited to key employees whose duties in connection
with the Company assure their access to equivalent information.
SHAREHOLDER RIGHTS. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.
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<PAGE> 14
CONSENT OF OPTIONEE. Every Optionee who accepts an Option under the Plan
shall be bound by the terms and conditions of the Plan and his or her acceptance
thereof may be made only by his or her execution of an Option Agreement within
the time period set forth in such Option Agreement
FINANCIAL STATEMENTS. To the extent necessary to comply with applicable
law, the Company shall provide a copy of its financial statements to each
Optionee no less frequently than annually.
FILING FEE. The Company must pay the filing fee computed under Section
25608(y) of the California General Corporation Law within thirty (30) days after
the initial issuance of any security under the Plan.
EQUAL VOTING RIGHTS. To the extent necessary to comply with applicable law,
the Shares issued under the Plan must have equal voting rights, within the
meaning of Section 260.140.1 of the Corporate Securities Rules of the California
Corporations Commissioner.
* * *
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<PAGE> 1
EXHIBIT 99.16
FORM OF ACKNOWLEDGEMENT BY OPTIONEE
AND STOCK OPTION TERMS
(PYRAMID HEALTH GROUP 1997 PLAN)
Optionee acknowledges and agrees that the vesting of shares pursuant to the
Notice of Stock Option Grant is earned only by continuing service as an Employee
or Consultant at the will of the Company (not through the act of being hired or
being granted this Option). Optionee further acknowledges and agrees that this
Option, the Plan which is incorporated herein by reference, the transactions
contemplated hereunder and the vesting schedule set forth herein do not
constitute an express or implied promise of continued engagement as an Employee
or Consultant for the vesting period, for any period, or at all, and shall not
interfere with Optionee's right or the Company's right to terminate Optionee's
employment or consulting relationship at any time, with or without Cause.
Optionee acknowledges receipt of a copy of the applicable Plan (a copy of which
is attached hereto as Exhibit 1) and represents that Optionee is familiar with
the terms and provisions thereof, and hereby accepts this Option subject to all
of the terms and provisions thereof. Optionee has reviewed the Plan and this
Option Agreement in their entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option and fully understands all provisions
of the Option. Optionee hereby agrees to accept as final all decisions or
interpretations of the Board or of the Committee upon any questions arising
under the Plan. Optionee further agrees to notify the Company upon any change in
the residence address indicated below, or any premature disposition of Incentive
Stock Option shares.
This Acknowledgement is executed by Optionee this _______ day of _________,
19__, to be considered effective as of the Grant Date of the Option.
OPTIONEE Residence:
- ---------------------------------- -----------------------------------
(Signature) (Street)
- ---------------------------------- -----------------------------------
(Print Name) (City, State, Zip)
<PAGE> 2
1. Principal Terms. On the terms and conditions set forth above under the
heading "Notice of Stock Option Grant" and the terms set forth below in
this Agreement, the Company grants to the Optionee on the Date of Grant
the Option to purchase at the Exercise Price the total number of Shares
set forth above. This Option is granted pursuant to the Pyramid Health
Solutions, Inc. 1996 Employee and Consultant Stock Option Plan, as
designated above, and the Optionee acknowledges having received a copy
of the applicable plan. The provisions, including the definitions, of
the applicable plan are incorporated into this Agreement by this
reference.
A. Exercise Price. The Exercise Price set forth above is not less
than the fair market value per share of Common Stock on the Date of
Grant, as determined by the Administrator; provided, however, in the
event Optionee is a Ten Percent Shareholder immediately before the Date
of Grant, said exercise price is not less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the Date of
Grant as determined by the Board.
B. Term. The term of this Option commences on the Date of Grant and
shall terminate as set forth above. Notwithstanding the foregoing, in no
event may this Option be exercised more than ten (10) years from the
Date of Grant, and this Option may be exercised during such term only in
accordance with the Plan and the terms of this Option. However, in the
case of an Option granted to an Optionee who, at the time the Option is
granted, is an employee and is a Ten Percent Shareholder, the term of
the Option shall be no more than five (5) years from the Date of Grant.
C. Vesting/Exercise.
i. The Option shall vest as set forth above. The Option may
only be exercised for Vested Shares. The Option may be exercised
pursuant to the terms of Section 3 below only as to whole shares; no
fractional shares may be purchased.
ii. In the event of Optionee's termination, disability or
death, the exercise rights of Optionee are also subject to Section 9
(termination), Section 10 (disability), and Section 11 (death).
iii. In no event may this Option become exercisable as an
Incentive Stock Option at a time or times which, when this Option is
aggregated with all other incentive stock options granted to Optionee by
the Company or any Parent or Subsidiary, would result in Shares having
an aggregate fair market value (determined for each Share as of the date
of grant of the option covering such share) in excess of $100,000
becoming first available for purchase upon exercise of one or more
incentive stock options during any calendar year. All such shares in
excess of the $100,000 limit shall automatically be treated as
Nonstatutory Stock Options.
2. Nature of the Option. If Optionee is an Employee of the Company, and
this Option was granted under the Pyramid Health Solutions, Inc. 1996
Employee and Consultant Stock Option Plan, this Option may be either a
Nonstatutory Stock Option, or an Incentive Stock Option as designated on
page 1 of this Stock Option Agreement. If Optionee is a Consultant to
the Company, this Option shall be a Nonstatutory Stock Option.
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<PAGE> 3
3. Method of Exercise. This Option shall be exercisable by written notice
using a copy of the form attached as Exhibit 2, "Form of Notice of
Exercise of Stock Option." The Notice of Exercise shall state the
election to exercise the Option, the number of Shares in respect of
which the Option is being exercised, and such other representations and
agreements as to the Optionee's investment intent with respect to such
Shares as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by Optionee and shall be
delivered in person or by certified mail to the Chief Financial Officer
of the Company. The written notice shall be accompanied by payment of
the Exercise Price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the
Exercise Price. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or a duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock notwithstanding the exercise of
the Option. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option.
No shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which
the Shares may then be listed.
4. Investment Representations; Restrictions on Transfer. By receipt of this
Option, by its execution, and by its exercise in whole or in part,
Optionee represents to the Company the following:
A. Optionee understands that this Option and any Shares purchased
upon its exercise are securities, the issuance of which requires
compliance with Federal and state securities laws.
B. Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
securities. Optionee is acquiring these securities for investment for
Optionee's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
C. Optionee acknowledges and understands that the securities that
may be acquired upon the exercise of the Option constitute "restricted
securities" under the Securities Act and must be held indefinitely
unless they are subsequently registered under the Securities Act or an
exemption from such registration requirements is available. Optionee
further acknowledges and understands that the Company is under no
obligation to register the securities. Optionee understands that the
certificate evidencing the securities will be imprinted with a legend
which prohibits the transfer of the securities unless they are
registered or such registration is not required in the opinion of
counsel satisfactory to the Company, and any other legend required under
applicable federal or state securities laws.
D. In connection with any possible subsequent underwritten public
offering by the Company of the Company's securities, Optionee agrees:
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<PAGE> 4
i. not to sell, make short sale of, loan, grant any options
for the purchase of, or otherwise dispose of any shares of Common Stock
of the Company held by Optionee (except traded shares Optionee purchased
in the open market and those shares included in the registration)
without the prior written consent of the Company and the underwriters
managing such underwritten public offering of the Company's securities
for one hundred eighty (180) days from the effective date of such
registration, and
ii. to execute any agreement reflecting Section 4.E.i above
as may be requested by the underwriters at the time of the public
offering.
5. Method of Payment. Payment of the purchase price shall be made by
personal check or cashier's check. If the Company's stock is publicly
traded, all or part of the Purchase Price and any withholding taxes may
be paid by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to
sell or margin Shares and to deliver all or part of the sales or margin
proceeds to the Company.
6. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation,
including any rule under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G") as promulgated by the Federal Reserve
Board.
7. Share Repurchase Option. In the event the Optionee acquires Shares upon
exercise of the Option, the Company shall have the right to reacquire
the Shares under the terms and subject to the conditions set forth in
this Section 7, subject to applicable restrictions under state or
federal law ("Share Repurchase Option").
A. Exercise of Share Repurchase Option. Except as provided in
Section 8 below, the Company may exercise the Share Repurchase Option by
written notice to the Optionee or the Optionee's legal representative no
later than ninety (90) days after either the termination of the
Optionee's employment or rendering of other services to the Company, or
after the Company has received actual notice of exercise of Option by
the Optionee.
B. Payment for Shares and Return of Shares. Payment by the Company
to the Optionee or the Optionee's legal representative shall be made in
cash or check within ninety (90) days after the date of the mailing of
the written notice of exercise of the Share Repurchase Option and
receipt of the Optionee's Option Share certificate(s); For purposes of
the foregoing, cancellation of any promissory note of the Optionee of
the Company shall be treated as payment to the Optionee in cash to the
extent of the unpaid principal and any accrued interest cancelled. The
repurchase price per Option Share being purchased by the Company shall
be the higher of the original purchase price or Fair Market Value on the
date of the exercise of the Option, or the date of termination of
employment if the Option is exercised after termination of Optionee's
employment with the Company.
C. Early Termination of Share Repurchase Option. The other
provisions of Section 8 notwithstanding, the Share Repurchase Option
shall terminate and be of no further force and
4
<PAGE> 5
effect upon the existence of a firm underwritten public offering of the
Company's Common Stock.
D. Legends. The Company may place a legend or legends referencing
the Share Repurchase Option on any shares subject to the Share
Repurchase Option.
8. Termination of Status as an Employee. In the event of termination of
Optionee's Continuous Status as an Employee or agreement to provide
services as a consultant to the Company:
A. If that the Optionee's termination was not for Cause:
i. Optionee shall have thirty (30) days after such
termination date (but not later than expiration of the Option term) to
exercise this Option, and then the exercise can be only to the extent
that Optionee was entitled to exercise it at the date of such
termination (i.e., vested Options).
ii. To the extent that Optionee was not entitled to exercise
this Option on the date of such termination, this Option shall terminate
as to those non-vested Options, and the non-vested Options, if any,
shall be forfeited to the Plan.
iii. To the extent Optionee does not exercise this Option
within the time period specified above, then any unexercised Option
shares, if any, shall be forfeited to the Plan.
iv. Solely for purposes of Sections 8, 9, 10, and 11,
Optionee's Continuous Status as an Employee shall not be deemed
interrupted to the extent that Optionee serves as a Consultant (except
for the purposes of exercising an Incentive Stock Option) nor to be
deemed interrupted while Optionee is on a bona fide leave of absence,
provided that the leave of absence was approved by the Company in
writing and is not greater than ninety (90) days, unless reinstatement
was guaranteed by law or contract. The foregoing shall not be deemed to
require continued crediting of service for vesting purposes during a
leave of absence. Instead, Optionee shall continue to vest during a
leave of absence only to the extent expressly required by the terms of
such leave or by applicable law (as determined by the Company).
B. Should the Optionee's termination be for Cause, then this Option
shall terminate upon the date of the termination of Optionee's
Continuous Status as an Employee or agreement to provide services as a
consultant, and all Option shares, vested or unvested, shall be
forfeited to the Plan.
9. Disability of Optionee. Notwithstanding the provisions of Section 8
above, in the event of termination of Optionee's Continuous Status as an
Employee or Consultant as a result of Optionee's permanent and total
disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within six (6) months from the date of termination of
employment or consulting relationship (but in no event later than the
date of expiration of the Term of this Option as set forth on the first
page of this Stock Option Agreement), exercise this Option to the extent
Optionee was entitled to exercise it at the date of such termination. To
the extent that Optionee was not entitled to exercise the Option at the
date of death, or if
5
<PAGE> 6
Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
10. Death of Optionee. In the event of the death of an Optionee, the Option
may be exercised, at any time within up to six (6) months following the
date of death (but in no event later than the expiration date of the
term of Option as set forth in the Option Agreement), by the Optionee's
estate or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent the Optionee was entitled
to exercise the Option at the date of death. To the extent that Optionee
was not entitled to exercise the Option at the date of death, or if
Optionee does not exercise such Option to the extent so entitled within
the time specified herein, the Option shall terminate.
11. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee.
The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.
12. Early Disposition of Stock. In the event that this Option is an
Incentive Stock Option, Optionee understands that, if Optionee disposes
of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were
transferred to Optionee, whichever is later, Optionee will be treated
for federal income tax purposes as having received ordinary income at
the time of such disposition in an amount generally measured as the
excess of (i) the lower of the fair market value of the Shares at the
date of disposition or the fair market value of the Shares at the
exercise date over (ii) the price paid for the Shares. Any gain
recognized on such a premature sale of the Shares in excess of the
amount treated as ordinary income will be capital gain. Optionee hereby
agrees to notify the Company in writing within thirty (30) days after
the date of any such disposition.
13. Taxation Upon Exercise of Option. If the Option is a Nonstatutory
Option, Optionee understands that, upon exercise of this Option,
Optionee will generally recognize income for tax purposes in an amount
equal to the excess of the then fair market value of the Shares over the
Exercise Price. If Optionee is an Employee and this Option is an
Incentive Stock Option, Optionee understands that, upon exercise of this
Option, Optionee will generally recognize income for purposes of the
alternative minimum tax in amount equal to the excess of the then fair
market value of the Shares over the exercise price.
14. Tax Consequences. The Optionee understands that any of the foregoing
references to taxation are based on federal income tax laws and
regulations now in effect. The Optionee has reviewed with the Optionee's
own tax advisors the federal, state, local and foreign tax consequences
of the transactions contemplated by this Agreement. The Optionee is
relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. The Optionee
understands that the Optionee (and not the Company) shall be responsible
for the Optionee's own tax liability that may arise as a result of the
transactions contemplated by this Agreement. The Optionee hereby
authorizes the Company to make appropriate arrangements for any
withholding of tax liability which may be required under applicable law
in connection with the exercise of this Option.
6
<PAGE> 7
A.
LIST OF EXHIBITS:
1. Copy of applicable plan
2. Form of Notice of Exercise of Stock Option
7
<PAGE> 1
EXHIBIT 99.17
PYRAMID HEALTH SOLUTIONS, INC.
1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
PHS 1996 Employee and Consultant Stock Option Plan
1. PURPOSES OF THE PLAN. The purposes of the 1996 Employee and Consultant
Stock Option Plan are:
a. To further the growth, development and financial success of
Pyramid Health Solutions, Inc., a California corporation, by providing certain
employees who have been given responsibility for the management, administration
and/or other substantial responsibilities of the Company's business affairs,
with additional incentives to enlarge their proprietary interests in the
Company, to increase their efforts on the Company's behalf and to continue their
association with the Company, and by rewarding such Employees for exceptional
and profit-producing services to the Company; and
b. To increase the interests of selected consultants in the
Company's success through their participation in the growth in value of the
Common Stock of the Company.
2. PLAN STRUCTURE. Options granted under the Plan may be Incentive Stock
Options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder, or may be Nonstatutory Stock
Options.
3. CERTAIN DEFINITIONS. As used herein, the following definitions shall
apply:
ADMINISTRATOR" means the Board or any of its Committees appointed pursuant
to Section 5 of the Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE," solely for the purposes of this Plan, shall mean:
engagement in any willful misconduct or conduct that is grossly negligent
in the performance of Optionee's duties or obligations as an Employee or
Consultant with the Company; or
PHS PROPRIETARY & CONFIDENTIAL PAGE 1
<PAGE> 2
conviction of a violation of any federal or state laws involving moral
turpitude or a felony; or
willful violation of any of the Company's material rules, policies,
procedures or other standards of conduct or performance; or
failure to follow a reasonable and lawful directive of the Company's Board
of Directors or an authorized officer of the Company, following notice that such
failure shall constitute grounds for termination for Cause; or
violation of any or all terms and conditions of any confidentiality,
nondisclosure, employment or noncompete agreements between Optionee and the
Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
e. "COMMITTEE" means the Committee appointed by the Board of Directors in
accordance with Section 5.a of the Plan.
f. "COMMON STOCK" means the Common Stock of the Company.
"COMPANY" means Pyramid Health Solutions, Inc., a California corporation.
"CONSULTANT" means any person, including an advisor, who is engaged by the
Company or any Parent or Subsidiary to render services other than as an Employee
and is compensated for such services, and any director of the Company whether
compensated for such services or not.
"CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any interruption or
termination of the employment relationship by the Company or any Parent or
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of:
i. sick leave;
ii. military leave;
iii. any other leave of absence approved by the Board, provided that
such leave is for a period of not more than ninety (90) days, unless
reemployment upon the expiration of such leave is guaranteed by contract or
statute; or
iv. in the case of transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries or its successor.
The written agreement evidencing a Nonstatutory Stock Option may
provide that an Optionee's Continuous Status as an Employee shall not be deemed
interrupted to the extent that the Optionee becomes a Consultant.
"EMPLOYEE" means any person, including officers and directors, employed by
the Company or any Parent or Subsidiary of the Company. The payment of a
Director's fee by the Company shall not be sufficient to constitute "employment"
by the Company.
2
<PAGE> 3
PHS 1996 Employee and Consultant Stock Option Plan
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined by the Board, either:
i. if the Company's securities are traded on a national securities
exchange or on the National Association of Securities Dealers Automated
Quotation System (or similar successor system), on the basis of the reported
closing sales price on such date; or
ii. in the absence of such a reported sales price, on the basis of
such evidence as the Board deems appropriate in its sole discretion. In the case
of an Incentive Stock Option, it will be determined without reference to any
restriction other than one that, by its terms, will never lapse.
"INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.
"NONSTATUTORY STOCK OPTION" means an Option not intended to qualify as an
Incentive Stock Option.
"OPTION" means a stock option granted pursuant to the Plan.
"OPTIONED STOCK" means the Common Stock subject to an Option.
"OPTIONEE" means an Employee or Consultant who receives an Option.
"PARENT" means a "parent corporation," whether now or hereafter existing,
as defined in Section 424(e) of the Code.
"PLAN" means this Pyramid Health Solutions, Inc. 1996 Employee and
Consultant Stock Option Plan.
"SHARE" means a share of the Common Stock.
"SUBSIDIARY" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code.
"TEN PERCENT SHAREHOLDER" means any person who owns (after taking into
account the constructive ownership rules of Section 424(d) of the Code) more
than ten percent (10%) of the stock of the Company or of any of its Parents or
Subsidiaries.
STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of the
Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is eight hundred thousand (800,000) shares of Common Stock. The
shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grants under the Plan.
3
<PAGE> 4
PHS 1996 Employee and Consultant Stock Option Plan
ADMINISTRATION OF THE PLAN.
a. PROCEDURE.
i. ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS. With
respect to grants of Options to Employees who are also officers or Directors of
the Company, the Plan shall be administered by (A) the Board, or (B) a Committee
designated by the Board to administer the Plan, which Committee shall be
constituted in such a manner as to satisfy the legal requirements relating to
the administration of Incentive Stock Option plans, if any, of California and
federal corporate and securities laws and of the Code (the "Applicable Laws").
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time the Board may
increase or decrease the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and thereafter directly administer the Plan.
ii. MULTIPLE ADMINISTRATIVE BODIES. The Plan may be administered by
different bodies with respect to Directors, non-director officers and Employees
who are neither Directors nor officers.
iii. ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER EMPLOYEES.
With respect to grants of Options to Employees or Consultants who are neither
directors nor officers of the Company, the Plan shall be administered by (A) the
Board or (B) a Committee designated by the Board, which Committee shall be
constituted in such a manner as to satisfy the legal requirements relating to
the administration of Incentive Stock Option plans, if any, of California and
federal corporate and securities laws and of the Code. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time, the Board may increase or decrease the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
applicable laws.
iv. MEETINGS/ACTIONS. The Administrator shall hold meetings at such
times and places as it may determine. Acts of a majority of the Administrator at
a meeting at which a quorum is present, or actions approved in writing by all
members of the Administrator, shall be the valid acts of the Administrator.
b. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan and
in the case of a Committee, the specific duties delegated by the Board to such
Committee, the Administrator shall have the authority, in its discretion:
to select the officers, Consultants and Employees to whom Options may from
time to time be granted hereunder;
to determine whether and to what extent Options are granted hereunder;
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PHS 1996 Employee and Consultant Stock Option Plan
to determine the number of shares of Common Stock to be covered by each
such award granted hereunder;
to approve forms of agreement for use under the Plan;
to determine the terms and conditions, not inconsistent with the terms of
the Plan, of any award granted hereunder (including, but not limited to, the
share price and any restriction or limitation, or waiver or forfeiture
restrictions regarding any Option or other award and/or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator
shall determine, in its sole discretion;
to determine whether, to what extent and under what circumstances, Common
Stock and other amounts payable with respect to an award under this Plan shall
be deferred either automatically or at the election of the Optionee (including
providing for and determining the amount, if any, of any deemed earnings on any
deferred amount during any deferral period); and
to reduce the exercise price of any Option to the then current Fair Market
Value if the Fair Market Value of the Common Stock covered by such Option shall
have declined since the date the Option was granted.
c. EFFECT OF COMMITTEE'S DECISION. All decisions, determinations and
interpretations of the Administrator shall be final and binding on all Optionees
and any other holders of any Options.
ELIGIBILITY.
Nonstatutory Stock Options may be granted to Employees and Consultants.
Incentive Stock Options may be granted only to Employees.
Each Option shall be designated in the written option agreement as either
an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options designated as Incentive Stock
Options are exercisable for the first time by any Optionee during any calendar
year (under all plans of the Company or any Parent or Subsidiary) exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.
For this purpose, Incentive Stock Options shall be taken into account in the
order in which they were granted, and the Fair Market Value of the Shares shall
be determined as of the time the Option with respect to such Shares is granted.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his right or the Company's right to terminate
his employment or consulting relationship at any time, with or without Cause.
In considering and selecting Optionees to whom options shall be granted and
the number of Shares to be covered thereby, the Administrator may consider the
nature of services
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PHS 1996 Employee and Consultant Stock Option Plan
rendered by an Optionee, an Optionee's present and potential contributions to
the success of the Company, and such other factors as the Administrator in its
discretion shall deem relevant.
In the event that the Company acquires another entity, the Committee may
authorize the issuance of Options ("Substitute Options") to individuals
performing services for the acquired entity in substitution of Options
previously granted to those individuals by the acquired entity upon such terms
and conditions as the Committee shall determine, taking into account the
conditions of Code Section 424(a) in the case of a Substitute Option that is
intended to be an Incentive Stock Option.
TERM OF PLAN.
a. The Plan shall become effective as of May 22, 1996, the date the Board
approved this Plan, provided this Plan is approved by the holders of a majority
of the Company's common stock, in accordance with the provisions of Code Section
422, within twelve (12) months before or after the date of its adoption by the
Board. If the Plan is not approved by the shareholders within that time period,
the Plan and all Options issued under the Plan will terminate. Any Shares
acquired by reason of the exercise of Options before the shareholders have
approved the Plan will not be counted in determining whether approval has been
obtained. The approval by the shareholders must relate to:
(i) The class of individuals entitled to receive Incentive Stock
Options; and
(ii) The aggregate number of shares of Common Stock that may be issued
under the Plan, except as may be adjusted pursuant to Section 13 of this Plan.
If either of those items are changed, the approval of the shareholders must
again be obtained.
b. This Plan shall terminate on the tenth (10th) anniversary of the date
of its adoption, unless terminated sooner under Section 15 of the Plan, except
with respect to Options then outstanding; or unless terminated sooner under
Section 13 of the Plan.
TERM OF OPTION. The term of each Option shall be the term stated in the
Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who is a Ten Percent Shareholder, the term
of the Option shall be no more than five (5) years from the date of grant.
OPTION EXERCISE PRICE AND CONSIDERATION.
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PHS 1996 Employee and Consultant Stock Option Plan
a. The per share exercise price for the Shares to be issued pursuant to
the exercise of an Option shall be such price as is determined by the
Administrator, but shall be subject to the following:
i. In the case of an Incentive Stock Option
(1) if granted to an Employee who, before the grant of such
Incentive Stock Option, would be a Ten Percent Shareholder, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on
the date of grant.
(2) if granted to any other Employee, the per Share exercise
price shall be no less than 100% of the Fair Market Value per Share on the date
of grant.
ii. In the case of a Nonstatutory Stock Option
(1) if granted to a person who, at the time of the grant of such
Option, is a Ten Percent Shareholder, the per Share exercise price shall be no
less than 110% of the Fair Market Value per Share on the date of grant.
(2) if granted to any person other than those described in
subparagraph 9.ii.(1) above, the per Share exercise price shall be no less than
85% of the Fair Market Value per Share on the date of grant.
b. The consideration to be paid for the Shares to be issued upon exercise
of an Option, including the method of payment, shall be set forth in the Option,
and may consist entirely of (1) cash, (2) check, (3) promissory note, (4) other
Shares, (5) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or loan proceeds required to pay the exercise price, (6) by
delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the Optionee to take and pay for the Shares not more than
twelve months after the date of delivery of the subscription agreement, (7) any
combination of the foregoing methods of payment, or (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted under
applicable laws. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration may
be reasonably expected to benefit the Company.
10. EXERCISE OF OPTION.
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PHS 1996 Employee and Consultant Stock Option Plan
PROCEDURE FOR EXERCISE. Any Option granted hereunder shall vest and be
exercisable at such times and under such conditions as set forth in the Option,
and as shall be permissible under the terms of the Plan, provided that no option
shall become exercisable at a rate slower than 20% per year from the grant date.
An Option may not be exercised for a fraction of a Share. An Option shall be
deemed to be exercised when written notice of such exercise has been given to
the Company in accordance with the terms of the Option by the person entitled to
exercise the Option and full payment for the Shares with respect to which the
Option is exercised has been received by the Company. Except as set forth in
Section 13 of this Plan, Options are exercisable only to the extent of vested
Shares as determined in accordance with the underlying Option. Full payment may,
as authorized by the Administrator, consist of any consideration and method of
payment allowable under Section 9.b of the Plan.
TERMINATION OF EMPLOYMENT. In the event of termination of an Optionee's
consulting relationship or Continuous Status as an Employee, the Optionee shall
be entitled to exercise the Option for such period of time as is specified in
the Option, which shall be not less than thirty (30) days nor more than ninety
(90) days from the date of such termination. Notwithstanding the preceding
sentence, the Option shall no longer be exercisable if such termination is for
Cause. To the extent that Optionee was not entitled to exercise the Option at
the time of termination, or if Optionee does not exercise such Option to the
maximum extent so entitled, the Option shall terminate.
DISABILITY OF OPTIONEE. Notwithstanding the provisions of Section 10.b
above, in the event of termination of an Optionee's Consulting relationship or
Continuous Status as an Employee as a result of his total and permanent
disability (as defined in Section 22(e)(3) of the Code), Optionee may, but only
within six (6) months from the date of such termination (but in no event later
than the expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.
DEATH OF OPTIONEE. In the event of the death of an Optionee, the Option may
be exercised, at any time within up to six (6) months following the date of
death (but in no event later than the expiration date of the term of Option as
set forth in the Option Agreement), by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent the Optionee was entitled to exercise the Option at the date of
death. To the extent that Optionee was not entitled to exercise the Option at
the date of death, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
BUYOUT PROVISIONS. The Administrator may at any time offer to buy out for a
payment in cash or Shares, an Option previously granted, based on such terms and
conditions as the Administrator shall establish and communicate to the Optionee
at the time that such offer is made.
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PHS 1996 Employee and Consultant Stock Option Plan
REPURCHASE OPTION. Any Option Agreement may grant the Company a repurchase
option for any Shares purchased under the exercise of an Option. The repurchase
price and repurchase option term shall be on such terms and conditions as set
forth in the Option Agreement. Except with respect to grants to officers,
directors, and consultants, the repurchase right must satisfy the conditions of
either Subparagraph (i) or (ii) below.
(i) The requirements of this Subparagraph (i) are:
The repurchase price is not less than the Fair Market Value on the date of
the exercise of the Option, or the date of termination of employment if the
Option is exercised after termination of Optionee's employment with the Company;
The Company's right to repurchase the shares must be exercised within
ninety (90) days of the date of the exercise of the Option, or the date of
termination of employment if the Option is exercised after termination of
Optionee's employment with the Company;
The Company must pay the purchase price in cash, check or cancellation of
the purchase money indebtedness for the shares; and
The Company's purchase right terminates if and when its Common Stock
becomes publicly traded.
The requirements of this Subparagraph (ii) are:
The repurchase price is the exercise price of the Option;
The Company's right to repurchase at the exercise price lapses at the rate
of at least twenty percent (20%) per year over five (5) years from the date the
Option was granted.
The repurchase right must be exercised within ninety (90) days of the date
of the exercise of the Option, or the date of termination of employment if the
Option is exercised after termination of Optionee's employment with the Company;
and
The purchase price must be paid in the form of cash, check, or cancellation
of the purchase money indebtedness for the Shares.
g. DECREASE IN AVAILABLE SHARES. Exercise of an Option in any manner
shall result in a decrease in the number of Shares which thereafter may be
available, both for purposes of the Plan and for sale under the Option, by the
number of Shares as to which the Option is exercised.
11. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
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PHS 1996 Employee and Consultant Stock Option Plan
12. STOCK WITHHOLDING TO SATISFY TAX WITHHOLDING OBLIGATIONS. At the discretion
of the Administrator, Optionees may satisfy tax withholding obligations as
provided in this paragraph. When an Optionee incurs tax liability in connection
with the exercise of an Option, which tax liability is subject to tax
withholding under applicable tax laws, and the Optionee is obligated to pay the
Company an amount required to be withheld, the Fair Market Value of the Shares
to be withheld, if applicable, shall be determined on the date that the amount
of tax will be withheld is to be determined (the "Tax Date"). All elections by
an Optionee to have Shares withheld for this purpose shall be made in writing in
a form acceptable to the Administrator and shall be subject to the following
restrictions:
a. the election must be made on or prior to the applicable Tax Date;
b. once made, the election shall be irrevocable as to the particular
Shares of the Option as to which the election is made;
c. all elections shall be subject to the consent or disapproval of the
Administrator;
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
a. Subject to any required action by the shareholders of the Company, the
number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but as to which no Options have yet been granted or which have been
returned to the Plan upon cancellation or expiration of an Option, as well as
the price per share of Common Stock covered by each such outstanding Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Administrator, whose determination in that respect shall be
final. Except as expressly provided herein, no issuance by the Company of shares
of stock of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock subject to an Option.
b. Upon the dissolution, liquidation or sale of all or substantially all
of the business, properties and assets of the Company, or upon any
reorganization, merger, or consolidation in which the Company does not survive,
or upon any reorganization, merger or consolidation in which the Company does
survive and the Company's shareholders have the opportunity to receive cash, and
or securities of another corporation or other property in exchange for their
capital stock of the Company, the Plan and each outstanding Option shall
terminate; provided, that in such event:
in its sole and absolute discretion, the surviving corporation in
any reorganization, merger or consolidation may, but shall not be obligated to,
tender to any Optionee
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PHS 1996 Employee and Consultant Stock Option Plan
of the Plan an option or options to purchase shares of the surviving
corporation, and such new option or options shall contain such terms and
provisions as shall be required to substantially preserve the rights and
benefits of any Option then outstanding under the Plan and, if accepted by the
Optionee, such new option shall replace the Option under the Plan; or
each Optionee who is not tendered an option by the surviving
corporation in accordance with all of the terms of clause 13.b.i. above or who
does not accept any such substituted option which is so tendered, shall have the
right until ten (10) days before the effective date of such dissolution,
liquidation, reorganization, merger or consolidation to exercise, in whole or in
part, any un-expired Option issued to the Optionee, provided the Optionee is
capable of exercising such Option (i.e., the Option is vested), and provided
that the Option was not forfeited due to termination for Cause under Section
10(b).
c. The grant of an Option pursuant to the Plan shall not affect in any
way the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure or to merge or
consolidate or to dissolve, liquidate, sell or transfer all or any part of its
business or assets.
14. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
a. AMENDMENT AND TERMINATION. The Board may at any time amend, alter,
suspend or discontinue the Plan, but no amendment, alteration, suspension or
discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Section 422 of the Code (or
any other applicable law or regulation, including the requirements of the NASD
or an established stock exchange), the Company shall obtain shareholder approval
of any Plan amendment in such a manner and to such a degree as required by
applicable law. Any amendment to the Plan that by law does not require
shareholder approval may be approved by the Board of Directors alone.
b. EFFECT OF AMENDMENT OR TERMINATION. Notwithstanding the provisions of
Section 13 of this Plan, any such amendment or termination of the Plan shall not
affect Options already granted and such Options shall remain in full force and
effect as if this Plan had not been amended or terminated, unless mutually
agreed otherwise between the Optionee and the Board, which agreement must be in
writing and signed by the Optionee and the Company.
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PHS 1996 Employee and Consultant Stock Option Plan
CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the rules and regulations promulgated thereunder, and the requirements
of any stock exchange upon which the Shares may then be listed, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance. As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned laws.
INDEMNIFICATION. To the maximum extent permitted by law, the Company shall
indemnify each member of the Committee, the Administrator and of the Board, as
well as any other employee of the Company with duties under this Plan, against
expenses and liabilities (including any amount paid in settlement) reasonably
incurred by the individual in connection with any claims against the individual
by reason of the performance of those duties under this Plan, unless the losses
are due to the individual's gross negligence or lack of good faith. The Company
will have the right to select counsel and to control the prosecution or defense
of the suit. The Company will not be required to indemnify any person for any
amount incurred through any settlement unless the Company consents in writing to
the settlement.
INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
AGREEMENTS. Options shall be evidenced by written agreements in such form
as the Board shall approve from time to time.
INFORMATION TO OPTIONEES. To the extent necessary to comply with applicable
law, the Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, copies of all annual reports
and other information which are provided to all shareholders of the Company. The
Company shall not be required to provide such information if the issuance of
Options under the Plan is limited to key employees whose duties in connection
with the Company assure their access to equivalent information.
SHAREHOLDER RIGHTS. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.
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PHS 1996 Employee and Consultant Stock Option Plan
CONSENT OF OPTIONEE. Every Optionee who accepts an Option under the Plan
shall be bound by the terms and conditions of the Plan and his or her acceptance
thereof may be made only by his or her execution of an Option Agreement within
the time period set forth in such Option Agreement
FINANCIAL STATEMENTS. To the extent necessary to comply with applicable
law, the Company shall provide a copy of its financial statements to each
Optionee no less frequently than annually.
FILING FEE. The Company must pay the filing fee computed under Section
25608(y) of the California General Corporation Law within thirty (30) days after
the initial issuance of any security under the Plan.
EQUAL VOTING RIGHTS. To the extent necessary to comply with applicable law,
the Shares issued under the Plan must have equal voting rights, within the
meaning of Section 260.140.1 of the Corporate Securities Rules of the California
Corporations Commissioner.
* * *
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EXHIBIT 99.18
FORM OF ACKNOWLEDGEMENT BY OPTIONEE
AND STOCK OPTION TERMS
(PYRAMID HEALTH SOLUTIONS 1996 PLAN)
<PAGE> 2
ACKNOWLEDGEMENT BY OPTIONEE
Optionee acknowledges and agrees that the vesting of shares pursuant to the
Notice of Stock Option Grant is earned only by continuing service as an Employee
or Consultant at the will of the Company (not through the act of being hired or
being granted this Option). Optionee further acknowledges and agrees that this
Option, the Plan which is incorporated herein by reference, the transactions
contemplated hereunder and the vesting schedule set forth herein do not
constitute an express or implied promise of continued engagement as an Employee
or Consultant for the vesting period, for any period, or at all, and shall not
interfere with Optionee's right or the Company's right to terminate Optionee's
employment or consulting relationship at any time, with or without Cause.
Optionee acknowledges receipt of a copy of the applicable Plan (a copy of which
is attached hereto as Exhibit 1) and represents that Optionee is familiar with
the terms and provisions thereof, and hereby accepts this Option subject to all
of the terms and provisions thereof. Optionee has reviewed the Plan and this
Option Agreement in their entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option and fully understands all provisions
of the Option. Optionee hereby agrees to accept as final all decisions or
interpretations of the Board or of the Committee upon any questions arising
under the Plan. Optionee further agrees to notify the Company upon any change in
the residence address indicated below, or any premature disposition of Incentive
Stock Option shares.
This Acknowledgement is executed by Optionee this _______ day of _________,
19__, to be considered effective as of the Grant Date of the Option.
OPTIONEE Residence:
- ----------------------------------- ----------------------------------------
(Signature) (Street)
- ----------------------------------- ----------------------------------------
(Print Name) (City, State, Zip)
<PAGE> 3
1. Principal Terms. On the terms and conditions set forth above under the
heading "Notice of Stock Option Grant" and the terms set forth below in
this Agreement, the Company grants to the Optionee on the Date of Grant the
Option to purchase at the Exercise Price the total number of Shares set
forth above. This Option is granted pursuant to the Pyramid Health
Solutions, Inc. 1996 Employee and Consultant Stock Option Plan, as
designated above, and the Optionee acknowledges having received a copy of
the applicable plan. The provisions, including the definitions, of the
applicable plan are incorporated into this Agreement by this reference.
A. Exercise Price. The Exercise Price set forth above is not less than
the fair market value per share of Common Stock on the Date of Grant, as
determined by the Administrator; provided, however, in the event Optionee is a
Ten Percent Shareholder immediately before the Date of Grant, said exercise
price is not less than one hundred ten percent (110%) of the fair market value
per share of Common Stock on the Date of Grant as determined by the Board.
B. Term. The term of this Option commences on the Date of Grant and shall
terminate as set forth above. Notwithstanding the foregoing, in no event may
this Option be exercised more than ten (10) years from the Date of Grant, and
this Option may be exercised during such term only in accordance with the Plan
and the terms of this Option. However, in the case of an Option granted to an
Optionee who, at the time the Option is granted, is an employee and is a Ten
Percent Shareholder, the term of the Option shall be no more than five (5) years
from the Date of Grant.
C. Vesting/Exercise.
i. The Option shall vest as set forth above. The Option may only be
exercised for Vested Shares. The Option may be exercised pursuant to the terms
of Section 3 below only as to whole shares; no fractional shares may be
purchased.
ii. In the event of Optionee's termination, disability or death, the
exercise rights of Optionee are also subject to Section 9 (termination), Section
10 (disability), and Section 11 (death).
iii. In no event may this Option become exercisable as an Incentive
Stock Option at a time or times which, when this Option is aggregated with all
other incentive stock options granted to Optionee by the Company or any Parent
or Subsidiary, would result in Shares having an aggregate fair market value
(determined for each Share as of the date of grant of the option covering such
share) in excess of $100,000 becoming first available for purchase upon exercise
of one or more incentive stock options during any calendar year. All such shares
in excess of the $100,000 limit shall automatically be treated as Nonstatutory
Stock Options.
2. Nature of the Option. If Optionee is an Employee of the Company, and
this Option was granted under the Pyramid Health Solutions, Inc. 1996 Employee
and Consultant Stock Option Plan, this Option may be either a Nonstatutory Stock
Option, or an Incentive Stock
2
<PAGE> 4
Option as designated on page 1 of this Stock Option Agreement. If Optionee is a
Consultant to the Company, this Option shall be a Nonstatutory Stock Option.
3. Method of Exercise. This Option shall be exercisable by written notice
using a copy of the form attached as Exhibit 2, "Form of Notice of Exercise of
Stock Option." The Notice of Exercise shall state the election to exercise the
Option, the number of Shares in respect of which the Option is being exercised,
and such other representations and agreements as to the Optionee's investment
intent with respect to such Shares as may be required by the Company pursuant to
the provisions of the Plan. Such written notice shall be signed by Optionee and
shall be delivered in person or by certified mail to the Chief Financial Officer
of the Company. The written notice shall be accompanied by payment of the
Exercise Price. This Option shall be deemed to be exercised upon receipt by the
Company of such written notice accompanied by the Exercise Price. Until the
issuance (as evidenced by the appropriate entry on the books of the Company or a
duly authorized transfer agent of the Company) of the stock certificate
evidencing such Shares, no right to vote or receive dividends or any other
rights as a shareholder shall exist with respect to the Optioned Stock
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued) such stock certificate promptly upon exercise of the Option.
No shares will be issued pursuant to the exercise of an Option unless such
issuance and such exercise shall comply with all relevant provisions of law and
the requirements of any stock exchange upon which the Shares may then be listed.
4. Investment Representations; Restrictions on Transfer. By receipt of
this Option, by its execution, and by its exercise in whole or in part, Optionee
represents to the Company the following:
A. Optionee understands that this Option and any Shares purchased
upon its exercise are securities, the issuance of which requires compliance with
Federal and state securities laws.
B. Optionee is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the securities. Optionee is
acquiring these securities for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act").
C. Optionee acknowledges and understands that the securities that
may be acquired upon the exercise of the Option constitute "restricted
securities" under the Securities Act and must be held indefinitely unless they
are subsequently registered under the Securities Act or an exemption from such
registration requirements is available. Optionee further acknowledges and
understands that the Company is under no obligation to register the securities.
Optionee understands that the certificate evidencing the securities will be
imprinted with a legend which prohibits the transfer of the securities unless
they are registered or such registration is not required in the opinion of
counsel satisfactory to the Company, and any other legend required under
applicable federal or state securities laws.
3
<PAGE> 5
D. In connection with any possible subsequent underwritten public
offering by the Company of the Company's securities, Optionee agrees:
i. not to sell, make short sale of, loan, grant any options for
the purchase of, or otherwise dispose of any shares of Common Stock of the
Company held by Optionee (except traded shares Optionee purchased in the open
market and those shares included in the registration) without the prior written
consent of the Company and the underwriters managing such underwritten public
offering of the Company's securities for one hundred eighty (180) days from the
effective date of such registration, and
ii. to execute any agreement reflecting Section 4.E.i above as
may be requested by the underwriters at the time of the public offering.
5. Method of Payment. Payment of the purchase price shall be made by
personal check or cashier's check. If the Company's stock is publicly traded,
all or part of the Purchase Price and any withholding taxes may be paid by the
delivery (on a form prescribed by the Company) of an irrevocable direction to a
securities broker approved by the Company to sell or margin Shares and to
deliver all or part of the sales or margin proceeds to the Company.
6. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule under
Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
promulgated by the Federal Reserve Board
7. Share Repurchase Option. In the event the Optionee acquires Shares
upon exercise of the Option, the Company shall have the right to reacquire the
Shares under the terms and subject to the conditions set forth in this Section
7, subject to applicable restrictions under state or federal law ("Share
Repurchase Option").
A. Exercise of Share Repurchase Option. Except as provided in
Section 8 below, the Company may exercise the Share Repurchase Option by written
notice to the Optionee or the Optionee's legal representative no later than
ninety (90) days after either the termination of the Optionee's employment or
rendering of other services to the Company, or after the Company has received
actual notice of exercise of Option by the Optionee.
B. Payment for Shares and Return of Shares. Payment by the Company
to the Optionee or the Optionee's legal representative shall be made in cash or
check within ninety (90) days after the date of the mailing of the written
notice of exercise of the Share Repurchase Option and receipt of the Optionee's
Option Share certificate(s); For purposes of the foregoing, cancellation of any
promissory note of the Optionee of the Company shall be treated as payment to
the Optionee in cash to the extent of the unpaid principal and any accrued
interest cancelled. The repurchase price per Option Share being purchased by the
Company shall be the higher of the original purchase price or Fair Market Value
on the date of the exercise of the Option, or the date of termination of
employment if the Option is exercised after termination of Optionee's employment
with the Company .
4
<PAGE> 6
C. Early Termination of Share Repurchase Option. The other
provisions of Section 8 notwithstanding, the Share Repurchase Option shall
terminate and be of no further force and effect upon the existence of a firm
underwritten public offering of the Company's Common Stock.
D. Legends. The Company may place a legend or legends referencing
the Share Repurchase Option on any shares subject to the Share Repurchase
Option.
8. Termination of Status as an Employee. In the event of termination of
Optionee's Continuous Status as an Employee or agreement to provide services as
a consultant to the Company:
A. If that the Optionee's termination was not for Cause:
i. Optionee shall have thirty (30) days after such termination
date (but not later than expiration of the Option term) to exercise this Option,
and then the exercise can be only to the extent that Optionee was entitled to
exercise it at the date of such termination (i.e., vested Options).
ii. To the extent that Optionee was not entitled to exercise
this Option on the date of such termination, this Option shall terminate as to
those non-vested Options, and the non-vested Options, if any, shall be forfeited
to the Plan.
iii. To the extent Optionee does not exercise this Option within
the time period specified above, then any unexercised Option shares, if any,
shall be forfeited to the Plan.
iv. Solely for purposes of Sections 8, 9, 10, and 11, Optionee's
Continuous Status as an Employee shall not be deemed interrupted to the extent
that Optionee serves as a Consultant (except for the purposes of exercising an
Incentive Stock Option) nor to be deemed interrupted while Optionee is on a bona
fide leave of absence, provided that the leave of absence was approved by the
Company in writing and is not greater than ninety (90) days, unless
reinstatement was guaranteed by law or contract. The foregoing shall not be
deemed to require continued crediting of service for vesting purposes during a
leave of absence. Instead, Optionee shall continue to vest during a leave of
absence only to the extent expressly required by the terms of such leave or by
applicable law (as determined by the Company).
B. Should the Optionee's termination be for Cause, then this Option
shall terminate upon the date of the termination of Optionee's Continuous Status
as an Employee or agreement to provide services as a consultant, and all Option
shares, vested or unvested, shall be forfeited to the Plan.
9. Disability of Optionee. Notwithstanding the provisions of Section 8
above, in the event of termination of Optionee's Continuous Status as an
Employee or Consultant as a result of Optionee's permanent and total disability
(as defined in Section 22(e)(3) of the Code), Optionee may, but only within six
(6) months from the date of termination of employment or consulting relationship
(but in no event later than the date of expiration of the Term of this Option as
set forth on the first page of this Stock Option Agreement), exercise this
5
<PAGE> 7
Option to the extent Optionee was entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of death, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.
10. Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised, at any time within up to six (6) months following the
date of death (but in no event later than the expiration date of the term of
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee was entitled to exercise the Option at the
date of death. To the extent that Optionee was not entitled to exercise the
Option at the date of death, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
11. Non-Transferability of Option. This Option may not be transferred in
any manner otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of Optionee.
12. Early Disposition of Stock. In the event that this Option is an
Incentive Stock Option, Optionee understands that, if Optionee disposes of any
Shares received under this Option within two (2) years after the date of this
Agreement or within one (1) year after such Shares were transferred to Optionee,
whichever is later, Optionee will be treated for federal income tax purposes as
having received ordinary income at the time of such disposition in an amount
generally measured as the excess of (i) the lower of the fair market value of
the Shares at the date of disposition or the fair market value of the Shares at
the exercise date over (ii) the price paid for the Shares. Any gain recognized
on such a premature sale of the Shares in excess of the amount treated as
ordinary income will be capital gain. Optionee hereby agrees to notify the
Company in writing within thirty (30) days after the date of any such
disposition.
13. Taxation Upon Exercise of Option. If the Option is a Nonstatutory
Option, Optionee understands that, upon exercise of this Option, Optionee will
generally recognize income for tax purposes in an amount equal to the excess of
the then fair market value of the Shares over the Exercise Price. If Optionee is
an Employee and this Option is an Incentive Stock Option, Optionee understands
that, upon exercise of this Option, Optionee will generally recognize income for
purposes of the alternative minimum tax in amount equal to the excess of the
then fair market value of the Shares over the exercise price.
14. Tax Consequences. The Optionee understands that any of the foregoing
references to taxation are based on federal income tax laws and regulations now
in effect. The Optionee has reviewed with the Optionee's own tax advisors the
federal, state, local and foreign tax consequences of the transactions
contemplated by this Agreement. The Optionee is relying solely on such advisors
and not on any statements or representations of the Company or any of its
agents. The Optionee understands that the Optionee (and not the Company) shall
be responsible for the Optionee's own tax liability that may arise as a result
of the transactions contemplated by this Agreement. The Optionee hereby
authorizes the Company to make
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<PAGE> 8
appropriate arrangements for any withholding of tax liability which may be
required under applicable law in connection with the exercise of this Option.
A.
LIST OF EXHIBITS:
1. Copy of applicable plan
2. Form of Notice of Exercise of Stock Option
7
<PAGE> 9
FORM OF NOTICE OF EXERCISE OF
STOCK OPTION
DATE: ________________________________
TO: PYRAMID HEALTH SOLUTIONS, INC.
C/O CHIEF FINANCIAL OFFICER
101 Main Street, Suite 200
Seal Beach, CA 90740
FROM: __________________________________ ("Optionee")
RE: Exercise of Stock Option By Optionee Named Above
In accordance with the terms of my Stock Option Agreement numbered__________,
and dated ______, ______, I hereby exercise my option to purchase ________
Shares at $_____ per share (total exercise price of $______), effective today.
The option price and number of shares to be purchased was determined in
accordance with the provisions of my aforementioned Stock Option Agreement.
Unless a different form of payment is agreed to by the parties, attached is a
check payable to Pyramid Health Solutions, Inc. for the total exercise price of
the Shares being purchased. The undersigned confirms the representations made in
Section 4 of the Stock Option Agreement.
If the Option is a Nonstatutory Option, Optionee understands that, upon exercise
of this Option, Optionee will generally recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the Shares over the
exercise price. If Optionee is an Employee and this Option is an Incentive Stock
Option, Optionee understands that, upon exercise of this Option, Optionee will
generally recognize income for purposes of the alternative minimum tax in amount
equal to the excess of the then fair market value of the Shares over the
exercise price at the time of exercise.
The Optionee understands that any of the foregoing references to taxation are
based on federal income tax laws and regulations now in effect. The Optionee has
reviewed with the Optionee's own tax advisors the federal, state, local and
foreign tax consequences of the transactions contemplated by this Agreement. The
Optionee is relying solely on such advisors and not on any statements or
representations of the Company or any of its agents. The Optionee understands
that the Optionee (and not the Company) shall be responsible for the Optionee's
own tax liability that may arise as a result of the transactions contemplated by
this Stock Option Agreement. The Optionee hereby authorizes the Company to make
appropriate arrangements for any withholding of tax liability which may be
required under applicable law in connection with the grant or exercise of this
Option.
8
<PAGE> 10
Optionee is familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act of 1933, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from Pyramid Health Solutions, Inc. thereof, in a non-public
offering subject to the satisfaction of certain conditions. Rule 701 provides
that if the issuer qualifies under Rule 701 at the time of exercise of the
Option by the Optionee, such exercise will be exempt from registration under the
Securities Act of 1933. In the event the Company later becomes subject to the
reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, ninety (90) days thereafter the securities exempt under Rule 701 may be
resold, subject to the satisfaction of certain conditions specified by Rule 144,
including among other things: (i) the sale being made through a broker in an
unsolicited "broker's transaction" or in transactions directly with a market
maker (as said term is defined under the Securities Exchange Act of 1934); and
additionally, in the case of an affiliate, (ii) the availability of certain
public information about the Company, and the amount of securities being sold
during any three month period not exceeding the limitations specified in Rule
144(e), if applicable.
In the event that the Option granted does not qualify under Rule 701 at the time
of exercise of the Option, then the securities may be resold in certain limited
circumstances, subject to the provisions of Rule 144, which requires among other
things: (i) the availability of certain public information about the Company;
(ii) the resale occurring not less than one year after the party has purchased,
and made full payment for, within the meaning of Rule 144, the securities to be
sold; and (iii) additionally, in the case of an affiliate, or of a non-affiliate
who has held the securities less than two years, the sale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market maker (as said term is defined under the Securities Exchange Act of
1934) and the amount of securities being sold during any three month period not
exceeding the specified limitations stated in Rule 144, if applicable.
Please prepare the stock certificate in the following name(s). (Note, if the
stock is to be registered in a name other than Optionee's name, the Company's
approval for said other person's ownership is required.
---------------------------------
---------------------------------
---------------------------------
Sincerely,
- ---------------------------------
(Signature)
- ---------------------------------
(Print or Type Name)
9
<PAGE> 1
EXHIBIT 99.19
HOSPITAL CORRESPONDENCE CORPORATION
<PAGE> 2
1995 STOCK OPTION PLAN
1. DESCRIPTION OF PLAN. This is the 1995 Stock Option Plan, dated January
26, 1995 (the "Plan"), of Hospital Correspondence Corporation, a California
corporation (the "Company"). Under this Plan, certain employees of the Company,
to be selected as set forth below, may be granted options ("Options") to
purchase shares of the common stock of the Company ("Common Stock"). For
purposes of this Plan, the term "subsidiary" shall have the same meaning as
"subsidiary corporation" as such term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code"), where the Company is the
"employer corporation." It is intended that the Options under this Plan will
either qualify for treatment as incentive stock options under Section 422 of the
Code and be designated "Incentive Stock Options" or not qualify for such
treatment and be designated "Nonqualified Stock Options."
2. PURPOSE OF PLAN. The purpose of the Plan is to further the growth,
development and financial success of the Company by providing additional
incentives to key employees by assisting them to acquire shares of Common Stock
and to benefit directly from the Company's growth, development and financial
success.
3. ELIGIBILITY. The persons who shall be eligible to receive grants of
Options under this Plan shall be the officers and key employees of the Company
or any of its subsidiaries, those directors of the Company who are also key
employees or consultants or advisers with important business relationships with
the Company; provided that bona fide services shall be rendered to the Company
by such adviser or consultant and such services shall not have been in
connection with the offer and sale of securities in a capital-raising
transaction. Non-employees shall not be eligible to receive incentive stock
options. A person who holds an Option is herein referred to as an "Optionee."
More than one Option may be granted to any one Optionee. Notwithstanding the
foregoing, the Board of Directors of the Company (the "Board") may at any time
or from time to time designate one or more directors of the Company as
ineligible for selection as Optionees in the Plan for any period or periods of
time.
The aggregate fair market value (determined as of the time an Option is
granted) of the Common Stock with respect to which Incentive Stock Options are
exercisable for the first time by any Optionee in any calendar year under this
Plan and any other incentive stock option plans (which qualify under Section 422
of the code) of the Company or any affiliate shall not exceed $100,000.
4. ADMINISTRATION. The Plan shall be administered by a committee (the
"Committee") to be composed of not less than two members of the Board of
Directors of the Company (the "Board"). Members of the Committee shall be
appointed, both initially and as vacancies occur, by the Board, to serve at the
pleasure of the Board. If no Committee has been selected, the entire Board shall
serve as the Committee. The Committee shall meet at such times and places as it
determines and may meet through a telephone conference call. A majority of its
members shall constitute a quorum, and the
<PAGE> 3
decision of a majority of those present at any meeting at which a quorum is
present shall constitute the decision of the Committee. A memorandum signed by
all of its members shall constitute the decision of the Committee without
necessity, in such event, for holding an actual meeting.
The Committee is authorized and empowered to administer the Plan and,
subject to the Plan (i) to select the Optionees, to specify the number of shares
of Common Stock with respect to which Options are granted to each Optionee, to
specify the Option Price and the terms of the Options and in general to grant
Options; (ii) to determine the dates upon which Options shall be granted and the
terms and conditions thereof in a manner consistent with this Plan, which terms
and conditions need not be identical as to the various Options granted; (iii) to
determine which Options are to be Incentive Stock Options and which Options are
to be Nonqualified Stock Options; (iv) to interpret the Plan; (v) to prescribe,
amend and rescind rules relating to the Plan; (vi) to determine the rights and
obligations of Optionees under the Plan; and (vii) to accelerate the time during
which an Option may be exercised (but not reduce the time of exercise for
Options which have vested), notwithstanding the provisions in the Option
Agreement (as defined in Section 12 hereof) stating the time during which it may
be exercised. The Board, and not the Committee, is authorized and empowered to
determine whether any shares of Common Stock subject to repurchase by the
Company or its nominees at the greater of cost or fair market value as provided
in Section 18 hereof will be repurchased by the Company. The interpretation and
construction by the Committee of any provision of the Plan or of any Option
granted under it shall be final. No member of the Committee shall be liable for
any action or determination made in good faith with respect to the Plan or any
Option granted under it.
5. SHARES SUBJECT TO THE PLAN. The number of shares of Common Stock which
may be purchased pursuant to the exercise of Options granted under the Plan
shall not exceed 200,000 shares of the Company subject to adjustment as provided
in Section 10 hereof to reflect all stock splits, stock dividends or similar
capital changes. Upon the expiration or termination for any reason of an
outstanding Option which shall not have been exercised in full or in the event
that any shares of Common Stock acquired pursuant to the Plan are reacquired by
the Company, any shares of Common Stock then remaining unissued (i) which shall
have been reserved for issuance upon such exercise or (ii) the shares
reacquired, subject to compliance with the California Corporate Securities Law
of 1968, as the case may be, shall again become available for the granting of
additional Options under the Plan.ERROR! BOOKMARK NOT DEFINED.
6. OPTION PRICE. Except as provided in Section 10 or Section 11 hereof, the
purchase price per share (the "Option Price") of the shares of Common Stock
underlying each Option shall not be less than 85 percent of the fair market
value of such shares on the date of grant of the Option and, solely with respect
to any Incentive Stock Option, shall be not less than 100 percent of the fair
market value of such shares on the grant of the Incentive Stock Option;
provided, however, that if the Optionee is a 10-percent stockholder of the
Company (as defined in Code Section 422(b)(6)) at the
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<PAGE> 4
time such Incentive Stock Option is granted, the Option Price shall be not less
than 110 percent of said fair market value. Such fair market value shall be
determined by the Board (i) if the Company's securities are traded on a national
securities exchange or on the National Association of Securities Dealers
Automated Quotation System (or a similar successor system), on the basis of the
reported closing sales price on such date or, in the absence of a reported sales
price on such date, on the basis of the average of the reported closing bid and
asked price on such date, and (ii) in the absence of both a reported sales price
and a reported bid and asked price under clause (i), the Board shall determine
such fair market value on the basis of such evidence as it deems appropriate in
its sole discretion.
7. EXERCISE OF OPTIONS. Subject to all other provisions of this Plan, each
Option shall be exercisable for the full number of shares of Common Stock
subject thereto, or any part thereof, in such installments and at such intervals
as the Committee may determine in granting such Option, provided that no Option
may be exercisable subsequent to its termination date. Each Option shall
terminate and expire, and shall no longer be subject to exercise, as the
Committee may determine in granting such Option, but in no event later than ten
(10) calendar years from the date of grant thereof. The Option shall be
exercised by the Optionee by giving written notice to the Company specifying the
number of full shares to be purchased and accompanied by payment of the full
purchase price therefor in cash, by check or in such other form of lawful
consideration (including promissory notes with interest at 10 percent or such
other rate, at least sufficient, as determined by the Internal Revenue Service,
to avoid the application of imputed interest) as the Committee may approve from
time to time, including without limitation and in the sole discretion of the
Committee, the assignment and transfer by the Optionee to the Company of
outstanding shares of Common Stock theretofore held by the Optionee in a manner
intended to comply with the provisions of Rule l6b-3 under the Securities and
Exchange Act of 1934.
8. ISSUANCE OF COMMON STOCK. The Company's obligation to issue shares of
its Common Stock upon exercise of an Option is expressly conditioned upon the
completion by the Company of any registration or other qualification of such
shares under any state and/or federal law or rulings and regulations of any
government regulatory body and the making of such investment representations or
other representations and undertakings by the Optionee (or his legal
representative, heir or legatee, as the case may be) in order to comply with the
requirements of any exemption from any such registration or other qualification
of such shares which the Company in its sole discretion shall deem necessary or
advisable. Such required representations and undertakings may include
representations and agreements that such Optionee (or his legal representative,
heir or legatee): (a) is purchasing such shares for investment and not with any
present intention of selling or otherwise disposing thereof, and (b) agrees to
have a legend placed upon the face and reverse of any certificates evidencing
such shares (or, if applicable, an appropriate data entry made in the ownership
records of the Company) setting forth (i) any representations and undertakings
which such Optionee has given to the Company or a reference thereto, and (ii)
that, prior to effecting any sale
4
<PAGE> 5
or other disposition of any such shares, the Optionee must furnish to the
Company an opinion of counsel, satisfactory to the Company and its counsel, to
the effect that such sale or disposition will not violate the applicable
requirements of state and federal laws and regulatory agencies.
9. NONTRANSFERABILITY. Unless provided to the contrary in the Option
Agreement, no Option shall be assignable or transferable. During the lifetime of
an Optionee, any Option granted to him or her shall be exercisable only by him
or her. After the death of an Optionee, the Option granted to him or her (if so
transferable) may be exercised, prior to its termination as provided in Section
13(b) hereof only by his or her legal representative, his or her legatee or a
person who acquired the right to exercise the Option by reason of the death of
the Optionee.
10. RECAPITALIZATION, REORGANIZATION, MERGER OR CONSOLIDATION. If the
outstanding shares of Common Stock of the Company are increased, decreased or
exchanged for different securities through a reorganization, merger,
consolidation, recapitalization, reclassification, stock split, stock dividend
or like capital adjustment, a proportionate adjustment shall be made (a) in the
aggregate number of shares of Common Stock which may be purchased pursuant to
the exercise of Options, as provided in Section 5 hereof, and (b) in the number,
price, and kind of shares subject to any outstanding Option granted under the
Plan.
Upon the dissolution or liquidation of the Company or upon any
reorganization, merger or consolidation in which the Company does not survive,
the Plan and each outstanding Option shall terminate; provided that in such
event: (a) each Optionee who is not tendered an option by the surviving
corporation in accordance with all of the terms of provision (b) immediately
below or who does not accept any such substituted option which is so tendered,
shall have the right until 30 days before the effective date of such
dissolution, liquidation, reorganization, merger or consolidation in which the
Company is not the surviving corporation, to exercise, in whole or in part, any
unexpired Option or Options issued to him which said Optionee is then capable of
exercising pursuant to the provisions of said Option and of Section 7 above,
provided, however, that should the Board so elect in its sole and absolute
discretion that all Optionees may be given, upon at least 30 days notice (x) the
option to exercise, in whole or in part, any unexpired Option, without regard to
said installment provisions or (y) the option to surrender such Option or
Options to the Company for a price (which may be payable, in the sole discretion
of the Committee, in cash or in securities of the Company or in a combination of
both), equal to the difference between the aggregate exercise price of the
Option or Options without regard to said installment provisions and the
aggregate fair market value (as determined in the manner provided in Section 6
hereof) of the shares subject to such Option or Options on the date one day
before the effective date of such dissolution, liquidation, reorganization,
merger or consolidation; or (b) upon at least 30 days notice in its sole and
absolute discretion, the surviving corporation may, but shall not be so
obligated, tender to any Optionee an option or options to purchase shares of the
surviving corporation, and such new option or options shall contain such terms
and
5
<PAGE> 6
provisions as shall be required to substantially preserve the rights and
benefits of any Option then outstanding under the Plan.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
hereinbefore expressly provided in this Section 10, an Optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class, and the number or price of shares of
Common Stock subject to any Option shall not be affected by, and no adjustment
shall be made by reason of, any dissolution, liquidation, reorganization, merger
or consolidation, or any issuance by the Company of shares of stock of any
class, or rights to purchase or subscribe for stock of any class or securities
convertible into shares of stock of any class.
The grant of an Option under the Plan shall not affect in any way the
right or power of the Company to make adjustments, reclassifications or changes
in its capital or business structures or to merge, consolidate, dissolve, or
liquidate or to sell or transfer all or any part of its business or assets.
11. SUBSTITUTE OPTIONS. If the Company at any time should succeed to the
business of another corporation through a merger or consolidation, or through
the acquisition of stock or assets of such corporation or its subsidiaries,
Options may be granted under the Plan to option holders of such corporation or
its subsidiaries, in substitution for options to purchase stock of such
corporation held by them at the time of succession. The Board, in its sole and
absolute discretion, shall determine the extent to which such substitute Options
shall be granted (if at all), the person or persons to receive such substitute
Options (who need not be all option holders of such corporation), the number of
Options to be received by each such person, the Option Price of such Option
(which may be determined without regard to Section 6 hereof) and the terms and
conditions of such substitute Options; provided, however, that the Option Price
of each such substituted Option which is an Incentive Stock Option shall be an
amount such that, in the sole and absolute judgment of the Board (and in
compliance with Section 424(a) of the Code), the economic benefit provided by
such Option is not greater than the economic benefit represented by the option
in the acquired corporation as of the date of the Company's acquisition of such
corporation. Notwithstanding anything to the contrary herein, no Option shall be
granted, nor any action taken, permitted or omitted, which would cause the Plan,
or any Options granted hereunder as to which Rule 16b-3 under the Securities
Exchange Act of 1934, as amended, may apply, not to comply with such Rule.
12. OPTION AGREEMENT. Each Option granted under the Plan shall be evidenced
by a written stock option agreement ("Option Agreement") executed by the Company
and accepted by the Optionee, which (a) shall contain each of the provisions and
agreements herein specifically required to be contained therein, (b) shall
indicate
6
<PAGE> 7
whether such Option is to be an Incentive Stock Option or an Nonqualified Stock
Option, and if an Incentive Stock Option shall contain terms and conditions
permitting such Option to qualify for treatment as an incentive stock option
under Section 422 of the Code, (c) may contain the agreement of the Optionee to
resell any Common Stock issued pursuant to the exercise of Options granted under
the Plan to the Company for a price equal to the fair market value of such
Common Stock (determined in the manner set forth in Section 6 hereof), and (d)
may contain such other terms and conditions as the Committee deems desirable and
which are not inconsistent with the Plan.
13. TERMINATION OF OPTIONS. Each Option granted under the Plan shall set
forth a termination date thereof, which, with respect to Incentive Stock
Options, shall be not later than ten years from the date such Option is granted,
unless the Optionee is a 10-percent stockholder of the Company (as described in
Section 422(b)(6) of the Code) at the time such Option is granted, in which case
the Option shall terminate no later than five years from the date of the grant
thereof and which, with respect to Nonqualified Stock Options, shall not be
later than ten years from the date such Option is granted. In any event, all
Options shall terminate and expire upon the first to occur of the following
events:
(a) the expiration of three months from the date of an
Optionee's termination of employment (other than by reason of death),
except that if an Optionee is then disabled (within the meaning of
Section 22(e)(3) of the Code), the expiration of one year from the date
of such Optionee's termination of employment; or
(b) the expiration of one year from the date of the death of
an Optionee if his death occurs (i) while he is employed, or (ii) not
later than three months after he has ceased to be employed, by the
Company or any of its subsidiaries in a capacity in which he would be
eligible to receive grants of Options under the Plan; or
(c) the termination of the Option pursuant to Section 10 of
the Plan; or
(d) the termination date set forth in the Option Agreement.
The termination of employment of an Optionee by death or otherwise shall
not accelerate or otherwise affect the number of shares with respect to which an
Option may be exercised, and the Option may only be exercised with respect to
that number of shares which could have been purchased under the Option had the
Option been exercised by the Optionee on the date of such termination.
14. WITHHOLDING OF TAXES. The Company or any applicable subsidiary or parent
may deduct and withhold from the wages, salary, bonus and other income paid by
the Company or such subsidiary or parent to the Optionee the requisite tax upon
the
7
<PAGE> 8
amount of taxable income, if any, recognized by the Optionee in connection with
the exercise in whole or in part of any Option or the sale of Common Stock
issued to the Optionee upon the exercise of an Option, all as may be required
from time to time under any federal or state tax laws and regulations. This
withholding of tax shall be made from the Company's (or such subsidiary's or
parent's) concurrent or next payment of wages, salary, bonus or other income to
the Optionee or by payment to the Company (or such subsidiary or parent) by the
Optionee of the required withholding tax, as the Committee may determine.
15. EFFECTIVENESS AND TERMINATION OF PLAN. The Plan shall be effective on
the earlier of the date on which it is adopted by the Board or the date on which
it is approved by the stockholders; provided, however, that (a) the Plan is
approved by the stockholders of the Company, within 12 months before or after
the date of adoption by the Board, (b) no Option shall be exercised pursuant to
the Plan until the Plan has been approved by the stockholders of the Company,
(c) all Options which have been or may be granted under the Plan prior to
stockholder approval shall be expressly conditioned upon such stockholder
approval, and (d) no Option may be granted hereunder on or after that date which
is ten years from the effective date of the Plan. The Plan shall terminate when
all shares of Common Stock which may be issued hereunder have been so issued;
provided, however, that the Board may in its absolute discretion terminate the
Plan at any time. No such termination, other than as provided for in Section 10
hereof, shall in any way affect any Option then outstanding.
16. TIME OF GRANTING OPTIONS. The date of and Option grant shall, for all
purposes, be the date on which the Committee makes the determination granting
such Option. Notice of the determination shall be given to each Optionee to whom
an Option is so granted within a reasonable time after the date of such
grant.ERROR! BOOKMARK NOT DEFINED.
17. AMENDMENT OF PLAN. The Board may make such amendments to the Plan and,
with the consent of each Optionee affected, make such changes in the terms and
conditions of granted Options as it shall deem advisable. Such amendments and
changes shall include, but not be limited to, acceleration of the time at which
an Option may be exercised, but may not, without the approval of the
stockholders (a) increase the maximum number of shares subject to Incentive
Stock Options, except pursuant to Section 10 hereof, (b) decrease the Option
Price requirement contained in Section 6 hereof (except as contemplated by
Section 11), (c) change the designation of the class of employees eligible to
receive Incentive Stock Options, (d) modify the limits set forth in Section 3
hereof regarding the value of Common Stock for which any Optionee may be granted
Incentive Stock Options, unless the provisions of Section 422(b)(8) of the Code
are likewise modified or (e) in any manner materially increase the benefits
accruing to participants under the Plan, or otherwise modify the Plan such that
it fails to meet the requirements of Rule 16b-3 of the Securities and Exchange
Commission for the exemption of the acquisition, cancellation, expiration or
surrender of Options from the operation of Section 16(b) of the Securities
Exchange Act of 1934.
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<PAGE> 9
18. REPURCHASE OF STOCK. At the discretion of the Committee, any Option may
provide that the Company and its assignees shall have the right, in its sole and
absolute discretion, to repurchase any shares of Common Stock issued on exercise
of such Option on such terms as the Committee deems desirable at time of
issuance of such Option provided that with respect to an employee whose
employment has terminated for any reason, such repurchase right, with respect to
any shares which have vested, must be at not less than the greater of fair
market value (as determined pursuant to Section 6 hereof) or the purchase price
initially paid for such shares, must be exercised by the Company and its assigns
as to all of such shares and must be paid in cash. The consummation of such
repurchase must occur within 90 days of the date on which the Company elects to
exercise its option to purchase.
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<PAGE> 10
19. NOT AN EMPLOYMENT AGREEMENT. Nothing contained in the Plan or in any
Option Agreement shall confer on any Optionee any right to be continued in the
employ of the Company or one of its subsidiaries or limit the ability of the
Company or any of its subsidiaries to terminate, with or without cause, in its
sole discretion, the employment of any Optionee.
20. TRANSFERS AND LEAVES OF ABSENCE. For purposes of the Plan, (a) a
transfer of an Optionee's employment, without an intervening period, among the
Company, a subsidiary and a parent shall not be deemed a termination of
employment and (b) an Optionee who is granted in writing a leave of absence
shall be deemed to have remained in the employ of the Company (or a subsidiary
or parent, whichever is applicable) during such leave of absence.
21. GOVERNING LAW. This Plan and any Option granted pursuant to this Plan
shall be construed under and governed by the laws of the State of California.
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<PAGE> 1
EXHIBIT 99.20
HOSPITAL CORRESPONDENCE CORPORATION
1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
<PAGE> 2
HCC 1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
HOSPITAL CORRESPONDENCE CORPORATION
1996 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN
1. PURPOSES OF THE PLAN. The purposes of the 1996 Employee and
Consultant Stock Option Plan are:
a. To further the growth, development and financial success of
Hospital Correspondence Corporation, a California corporation, by providing
certain employees who have been given responsibility for the management,
administration and/or other substantial responsibilities of the Company's
business affairs, with additional incentives to enlarge their proprietary
interests in the Company, to increase their efforts on the Company's behalf and
to continue their association with the Company, and by rewarding such Employees
for exceptional and profit-producing services to the Company; and
b. To increase the interests of selected consultants in the
Company's success through their participation in the growth in value of the
Common Stock of the Company.
2. PLAN STRUCTURE. Options granted under the Plan may be Incentive Stock
Options, as determined by the Administrator at the time of grant of an option
and subject to the applicable provisions of Section 422 of the Code, as amended,
and the regulations promulgated thereunder, or may be Nonstatutory Stock
Options.
3. CERTAIN DEFINITIONS. As used herein, the following definitions shall
apply:
"ADMINISTRATOR" means the Board or any of its Committees
appointed pursuant to Section 5 of the Plan.
"BOARD" means the Board of Directors of the Company.
"CAUSE," solely for the purposes of this Plan, shall mean:
engagement in any willful misconduct or conduct that is
grossly negligent in the performance of Optionee's duties or
obligations as an Employee or Consultant with the Company;
or
conviction of a violation of any federal or state laws
involving moral turpitude or a felony; or
willful violation of any of the Company's material rules,
policies, procedures or other standards of conduct or
performance; or
PCC Proprietary & Confidential Page 1
<PAGE> 3
failure to follow a reasonable and lawful directive of the
Company's Board of Directors or an authorized officer of the
Company, following notice that such failure shall constitute
grounds for termination for Cause; or
violation of any or all terms and conditions of any
confidentiality, nondisclosure, employment or noncompete
agreements between Optionee and the Company.
"CODE" means the Internal Revenue Code of 1986, as amended.
e. "COMMITTEE" means the Committee appointed by the Board of
Directors in accordance with Section 5.a of the Plan.
f. "COMMON STOCK" means the Common Stock of the Company.
"COMPANY" means Hospital Correspondence Corporation, a California
corporation.
"CONSULTANT" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services other than
as an Employee and is compensated for such services, and any director of the
Company whether compensated for such services or not.
"CONTINUOUS STATUS AS AN EMPLOYEE" means the absence of any
interruption or termination of the employment relationship by the Company or any
Parent or Subsidiary. Continuous Status as an Employee shall not be considered
interrupted in the case of:
i. sick leave;
ii. military leave;
iii. any other leave of absence approved by the Board,
provided that such leave is for a period of not more than ninety (90) days,
unless reemployment upon the expiration of such leave is guaranteed by contract
or statute; or
iv. in the case of transfers between locations of the
Company or between the Company, its Parent, its Subsidiaries or its successor.
The written agreement evidencing a Nonstatutory Stock
Option may provide that an Optionee's Continuous Status as an Employee shall not
be deemed interrupted to the extent that the Optionee becomes a Consultant.
"EMPLOYEE" means any person, including officers and directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient to constitute
"employment" by the Company.
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<PAGE> 4
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FAIR MARKET VALUE" means, as of any date, the value of Common Stock
determined by the Board, either:
i. if the Company's securities are traded on a national
securities exchange or on the National Association of Securities Dealers
Automated Quotation System (or similar successor system), on the basis of the
reported closing sales price on such date; or
ii. in the absence of such a reported sales price, on the
basis of such evidence as the Board deems appropriate in its sole discretion. In
the case of an Incentive Stock Option, it will be determined without reference
to any restriction other than one that, by its terms, will never lapse.
"INCENTIVE STOCK OPTION" means an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
"NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
"OPTION" means a stock option granted pursuant to the Plan.
"OPTIONED STOCK" means the Common Stock subject to an Option.
"OPTIONEE" means an Employee or Consultant who receives an
Option.
"PARENT" means a "PARENT CORPORATION," whether now or hereafter
existing, as defined in Section 424(e) of the Code.
"PLAN" means this Hospital Correspondence Corporation 1996
Employee and Consultant Stock Option Plan.
"SHARE" means a share of the Common Stock.
"SUBSIDIARY" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.
"TEN PERCENT SHAREHOLDER" means any person who owns (after
taking into account the constructive ownership rules of Section 424(d) of the
Code) more than ten percent (10%) of the stock of the Company or of any of its
Parents or Subsidiaries.
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<PAGE> 5
4. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 13 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is five hundred thousand (500,000) shares of Common Stock. The
shares may be authorized, but unissued, or reacquired Common Stock. If an Option
should expire or become unexercisable for any reason without having been
exercised in full, the unpurchased Shares which were subject thereto shall
become available for future grants under the Plan.
5. ADMINISTRATION OF THE PLAN.
a. PROCEDURE.
i. ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS.
With respect to grants of Options to Employees who are also officers or
Directors of the Company, the Plan shall be administered by (A) the Board, or
(B) a Committee designated by the Board to administer the Plan, which Committee
shall be constituted in such a manner as to satisfy the legal requirements
relating to the administration of Incentive Stock Option plans, if any, of
California and federal corporate and securities laws and of the Code (the
"Applicable Laws"). Once appointed, such Committee shall continue to serve in
its designated capacity until otherwise directed by the Board. From time to time
the Board may increase or decrease the size of the Committee and appoint
additional members thereof, remove members (with or without cause) and appoint
new members in substitution therefor, fill vacancies, however caused, and remove
all members of the Committee and thereafter directly administer the Plan.
ii. MULTIPLE ADMINISTRATIVE BODIES. The Plan may be
administered by different bodies with respect to Directors, non-director
officers and Employees who are neither Directors nor officers.
iii. ADMINISTRATION WITH RESPECT TO CONSULTANTS AND OTHER
Employees. With respect to grants of Options to Employees or Consultants who are
neither directors nor officers of the Company, the Plan shall be administered by
(A) the Board or (B) a Committee designated by the Board, which Committee shall
be constituted in such a manner as to satisfy the legal requirements relating to
the administration of Incentive Stock Option plans, if any, of California and
federal corporate and securities laws and of the Code. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time, the Board may increase or decrease the
size of the Committee and appoint additional members thereof, remove members
(with or without cause) and appoint new members in substitution therefor, fill
vacancies, however caused, and remove all members of the Committee and
thereafter directly administer the Plan, all to the extent permitted by the
applicable laws.
iv. MEETINGS/ACTIONS. The Administrator shall hold
meetings at such times and places as it may determine. Acts of a majority of the
Administrator at a meeting at which a quorum is present, or actions approved in
writing by all members of the Administrator, shall be the valid acts of the
Administrator.
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<PAGE> 6
b. POWERS OF THE ADMINISTRATOR. Subject to the provisions of the
Plan and in the case of a Committee, the specific duties delegated by the Board
to such Committee, the Administrator shall have the authority, in its
discretion:
to select the officers, Consultants and Employees to whom Options
may from time to time be granted hereunder;
to determine whether and to what extent Options are granted
hereunder;
to determine the number of shares of Common Stock to be covered
by each such award granted hereunder;
to approve forms of agreement for use under the Plan;
to determine the terms and conditions, not inconsistent with the
terms of the Plan, of any award granted hereunder (including, but not limited
to, the share price and any restriction or limitation, or waiver or forfeiture
restrictions regarding any Option or other award and/or the shares of Common
Stock relating thereto, based in each case on such factors as the Administrator
shall determine, in its sole discretion;
to determine whether, to what extent and under what
circumstances, Common Stock and other amounts payable with respect to an award
under this Plan shall be deferred either automatically or at the election of the
Optionee (including providing for and determining the amount, if any, of any
deemed earnings on any deferred amount during any deferral period); and
to reduce the exercise price of any Option to the then current
Fair Market Value if the Fair Market Value of the Common Stock covered by such
Option shall have declined since the date the Option was granted.
C. EFFECT OF COMMITTEE'S DECISION. All decisions, determinations
and interpretations of the Administrator shall be final and binding on all
Optionees and any other holders of any Options.
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<PAGE> 7
6. ELIGIBILITY.
a. Nonstatutory Stock Options may be granted to Employees and
Consultants. Incentive Stock Options may be granted only to Employees.
b. Each Option shall be designated in the written option
agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.
However, notwithstanding such designations, to the extent that the aggregate
Fair Market Value of the Shares with respect to which Options designated as
Incentive Stock Options are exercisable for the first time by any Optionee
during any calendar year (under all plans of the Company or any Parent or
Subsidiary) exceeds $100,000, such excess Options shall be treated as
Nonstatutory Stock Options. For this purpose, Incentive Stock Options shall be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares shall be determined as of the time the Option with respect
to such Shares is granted.
c. The Plan shall not confer upon any Optionee any right with
respect to continuation of employment or consulting relationship with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate his employment or consulting relationship at any time, with or
without Cause.
In considering and selecting Optionees to whom options shall be
granted and the number of Shares to be covered thereby, the Administrator may
consider the nature of services rendered by an Optionee, an Optionee's present
and potential contributions to the success of the Company, and such other
factors as the Administrator in its discretion shall deem relevant.
In the event that the Company acquires another entity, the Committee
may authorize the issuance of Options ("Substitute Options") to individuals
performing services for the acquired entity in substitution of Options
previously granted to those individuals by the acquired entity upon such terms
and conditions as the Committee shall determine, taking into account the
conditions of Code Section 424(a) in the case of a Substitute Option that is
intended to be an Incentive Stock Option.
7. TERM OF PLAN.
a. The Plan shall become effective as of December 30, 1996, the
date the Board approved this Plan, provided this Plan is approved by the holders
of a majority of the Company's common stock, in accordance with the provisions
of Code Section 422, within twelve (12) months before or after the date of its
adoption by the Board. If the Plan is not approved by the shareholders within
that time period, the Plan and all Options issued under the Plan will terminate.
Any Shares acquired by reason of the exercise of Options before the shareholders
have approved the Plan will not be counted in determining whether approval has
been obtained. The approval by the shareholders must relate to:
6
<PAGE> 8
(i) The class of individuals entitled to receive Incentive
Stock Options; and
(ii) The aggregate number of shares of Common Stock that
may be issued under the Plan, except as may be adjusted pursuant to Section 13
of this Plan.
If either of those items are changed, the approval of the
shareholders must again be obtained.
b. This Plan shall terminate on the tenth (10th) anniversary of
the date of its adoption, unless terminated sooner under Section 15 of the Plan,
except with respect to Options then outstanding; or unless terminated sooner
under Section 13 of the Plan.
8. TERM OF OPTION. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that the term shall be no more than ten
(10) years from the date of grant thereof. However, in the case of an Incentive
Stock Option granted to an Optionee who is a Ten Percent Shareholder, the term
of the Option shall be no more than five (5) years from the date of grant.
9. OPTION EXERCISE PRICE AND CONSIDERATION.
a. The per share exercise price for the Shares to be issued
pursuant to the exercise of an Option shall be such price as is determined by
the Administrator, but shall be subject to the following:
i. In the case of an Incentive Stock Option
(1) if granted to an Employee who, before the
grant of such Incentive Stock Option, would be a Ten Percent Shareholder, the
per Share exercise price shall be no less than 110% of the Fair Market Value per
Share on the date of grant.
(2) if granted to any other Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share on
the date of grant.
ii. In the case of a Nonstatutory Stock Option
(1) if granted to a person who, at the time of the
grant of such Option, is a Ten Percent Shareholder, the per Share exercise price
shall be no less than 110% of the Fair Market Value per Share on the date of
grant.
(2) if granted to any person other than those
described in subparagraph 9.ii.(1) above, the per Share exercise price shall be
no less than 85% of the Fair Market Value per Share on the date of grant.
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<PAGE> 9
b. The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be set forth in
the Option, and may consist entirely of (1) cash, (2) check, (3) promissory
note, (4) other Shares, (5) delivery of a properly executed exercise notice
together with irrevocable instructions to a broker to promptly deliver to the
Company the amount of sale or loan proceeds required to pay the exercise price,
(6) by delivering an irrevocable subscription agreement for the Shares which
irrevocably obligates the Optionee to take and pay for the Shares not more than
twelve months after the date of delivery of the subscription agreement, (7) any
combination of the foregoing methods of payment, or (8) such other consideration
and method of payment for the issuance of Shares to the extent permitted under
applicable laws. In making its determination as to the type of consideration to
accept, the Administrator shall consider if acceptance of such consideration may
be reasonably expected to benefit the Company.
10. EXERCISE OF OPTION.
a. PROCEDURE FOR EXERCISE. Any Option granted hereunder shall
vest and be exercisable at such times and under such conditions as set forth in
the Option, and as shall be permissible under the terms of the Plan, provided
that no option shall become exercisable at a rate slower than 20% per year from
the grant date. An Option may not be exercised for a fraction of a Share. An
Option shall be deemed to be exercised when written notice of such exercise has
been given to the Company in accordance with the terms of the Option by the
person entitled to exercise the Option and full payment for the Shares with
respect to which the Option is exercised has been received by the Company.
Except as set forth in Section 13 of this Plan, Options are exercisable only to
the extent of vested Shares as determined in accordance with the underlying
Option. Full payment may, as authorized by the Administrator, consist of any
consideration and method of payment allowable under Section 9.b of the Plan.
b. TERMINATION OF EMPLOYMENT. In the event of termination of an
Optionee's consulting relationship or Continuous Status as an Employee, the
Optionee shall be entitled to exercise the Option for such period of time as is
specified in the Option, which shall be not less than thirty (30) days nor more
than ninety (90) days from the date of such termination. Notwithstanding the
preceding sentence, the Option shall no longer be exercisable if such
termination is for Cause. To the extent that Optionee was not entitled to
exercise the Option at the time of termination, or if Optionee does not exercise
such Option to the maximum extent so entitled, the Option shall terminate.
c. DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 10.b above, in the event of termination of an Optionee's Consulting
relationship or Continuous Status as an Employee as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within six (6) months from the date of such termination (but in no
event later than the expiration date of the term of such Option as set forth in
the Option Agreement), exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of
8
<PAGE> 10
termination, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
d. DEATH OF OPTIONEE. In the event of the death of an Optionee,
the Option may be exercised, at any time within up to six (6) months following
the date of death (but in no event later than the expiration date of the term of
Option as set forth in the Option Agreement), by the Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent the Optionee was entitled to exercise the Option at the
date of death. To the extent that Optionee was not entitled to exercise the
Option at the date of death, or if Optionee does not exercise such Option to the
extent so entitled within the time specified herein, the Option shall terminate.
e. BUYOUT PROVISIONS. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.
REPURCHASE OPTION. Any Option Agreement may grant the Company a
repurchase option for any Shares purchased under the exercise of an Option. The
repurchase price and repurchase option term shall be on such terms and
conditions as set forth in the Option Agreement. Except with respect to grants
to officers, directors, and consultants, the repurchase right must satisfy the
conditions of either Subparagraph (i) or (ii) below.
(i) The requirements of this Subparagraph (i) are:
The repurchase price is not less than the Fair
Market Value on the date of the exercise of the
Option, or the date of termination of employment if
the Option is exercised after termination of
Optionee's employment with the Company;
The Company's right to repurchase the shares must
be exercised within ninety (90) days of the date of
the exercise of the Option, or the date of
termination of employment if the Option is
exercised after termination of Optionee's
employment with the Company;
The Company must pay the purchase price in cash,
check or cancellation of the purchase money
indebtedness for the shares; and
The Company's purchase right terminates if and when
its Common Stock becomes publicly traded.
The requirements of this Subparagraph (ii) are:
The repurchase price is the exercise price of the Option;
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<PAGE> 11
The Company's right to repurchase at the exercise
price lapses at the rate of at least twenty percent
(20%) per year over five (5) years from the date
the Option was granted.
The repurchase right must be exercised within
ninety (90) days of the date of the exercise of the
Option, or the date of termination of employment if
the Option is exercised after termination of
Optionee's employment with the Company; and
The purchase price must be paid in the form of
cash, check, or cancellation of the purchase money
indebtedness for the Shares.
g. DECREASE IN AVAILABLE SHARES. Exercise of an Option in any
manner shall result in a decrease in the number of Shares which thereafter may
be available, both for purposes of the Plan and for sale under the Option, by
the number of Shares as to which the Option is exercised.
11. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
12. STOCK WITHHOLDING TO SATISFY TAX WITHHOLDING OBLIGATIONS. At the
discretion of the Administrator, Optionees may satisfy tax withholding
obligations as provided in this paragraph. When an Optionee incurs tax liability
in connection with the exercise of an Option, which tax liability is subject to
tax withholding under applicable tax laws, and the Optionee is obligated to pay
the Company an amount required to be withheld, the Fair Market Value of the
Shares to be withheld, if applicable, shall be determined on the date that the
amount of tax will be withheld is to be determined (the "Tax Date"). All
elections by an Optionee to have Shares withheld for this purpose shall be made
in writing in a form acceptable to the Administrator and shall be subject to the
following restrictions:
a. the election must be made on or prior to the applicable Tax
Date;
b. once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
c. all elections shall be subject to the consent or disapproval
of the Administrator;
13. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.
a. Subject to any required action by the shareholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option, and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no
10
<PAGE> 12
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the
Administrator, whose determination in that respect shall be final. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.
b. Upon the dissolution, liquidation or sale of all or
substantially all of the business, properties and assets of the Company, or upon
any reorganization, merger, or consolidation in which the Company does not
survive, or upon any reorganization, merger or consolidation in which the
Company does survive and the Company's shareholders have the opportunity to
receive cash, and or securities of another corporation or other property in
exchange for their capital stock of the Company, the Plan and each outstanding
Option shall terminate; provided, that in such event:
in its sole and absolute discretion, the surviving
corporation in any reorganization, merger or consolidation may, but shall not be
obligated to, tender to any Optionee of the Plan an option or options to
purchase shares of the surviving corporation, and such new option or options
shall contain such terms and provisions as shall be required to substantially
preserve the rights and benefits of any Option then outstanding under the Plan
and, if accepted by the Optionee, such new option shall replace the Option under
the Plan; or
each Optionee who is not tendered an option by the
surviving corporation in accordance with all of the terms of clause 13.b.i.
above or who does not accept any such substituted option which is so tendered,
shall have the right until ten (10) days before the effective date of such
dissolution, liquidation, reorganization, merger or consolidation to exercise,
in whole or in part, any un-expired Option issued to the Optionee, provided the
Optionee is capable of exercising such Option (i.e., the Option is vested), and
provided that the Option was not forfeited due to termination for Cause under
Section 10(b).
c. The grant of an Option pursuant to the Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structure or to merge or consolidate or to dissolve, liquidate, sell or transfer
all or any part of its business or assets.
11
<PAGE> 13
14. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be the date on which the Administrator makes the determination
granting such Option, or such other date as is determined by the Administrator.
Notice of the determination shall be given to each Employee or Consultant to
whom an Option is so granted within a reasonable time after the date of such
grant.
15. AMENDMENT AND TERMINATION OF THE PLAN.
a. AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or discontinuation shall be made which would impair the rights of any Optionee
under any grant theretofore made, without his or her consent. In addition, to
the extent necessary and desirable to comply with Section 422 of the Code (or
any other applicable law or regulation, including the requirements of the NASD
or an established stock exchange), the Company shall obtain shareholder approval
of any Plan amendment in such a manner and to such a degree as required by
applicable law. Any amendment to the Plan that by law does not require
shareholder approval may be approved by the Board of Directors alone.
b. EFFECT OF AMENDMENT OR TERMINATION. Notwithstanding the
provisions of Section 13 of this Plan, any such amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.
16. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. As a condition to the exercise of an Option, the Company may
require the person exercising such Option to represent and warrant at the time
of any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any of
the aforementioned laws.
INDEMNIFICATION. To the maximum extent permitted by law, the Company
shall indemnify each member of the Committee, the Administrator and of the
Board, as well as any other employee of the Company with duties under this Plan,
against expenses and liabilities (including any amount paid in settlement)
reasonably incurred by the individual in connection with any claims against the
individual by reason of the performance of those duties under this Plan, unless
the losses are due to the individual's gross negligence or lack of good faith.
The Company will have the right to select counsel and to control the prosecution
or defense of the suit. The Company will not be required to
12
<PAGE> 14
indemnify any person for any amount incurred through any settlement unless the
Company consents in writing to the settlement.
13
<PAGE> 15
INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.
AGREEMENTS. Options shall be evidenced by written agreements in such
form as the Board shall approve from time to time.
INFORMATION TO OPTIONEES. To the extent necessary to comply with
applicable law, the Company shall provide to each Optionee, during the period
for which such Optionee has one or more Options outstanding, copies of all
annual reports and other information which are provided to all shareholders of
the Company. The Company shall not be required to provide such information if
the issuance of Options under the Plan is limited to key employees whose duties
in connection with the Company assure their access to equivalent information.
SHAREHOLDER RIGHTS. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 13 of the Plan.
CONSENT OF OPTIONEE. Every Optionee who accepts an Option under the
Plan shall be bound by the terms and conditions of the Plan and his or her
acceptance thereof may be made only by his or her execution of an Option
Agreement within the time period set forth in such Option Agreement
FINANCIAL STATEMENTS. To the extent necessary to comply with applicable
law, the Company shall provide a copy of its financial statements to each
Optionee no less frequently than annually.
FILING FEE. The Company must pay the filing fee computed under Section
25608(y) of the California General Corporation Law within thirty (30) days after
the initial issuance of any security under the Plan.
EQUAL VOTING RIGHTS. To the extent necessary to comply with applicable
law, the Shares issued under the Plan must have equal voting rights, within the
meaning of Section 260.140.1 of the Corporate Securities Rules of the California
Corporations Commissioner.
* * *
<PAGE> 1
EXHIBIT 99.21
FORM OF ACKNOWLEDGEMENT BY OPTIONEE AND STOCK OPTION TERMS
(HOSPITAL CORRESPONDENCE CORPORATION 1995 AND 1996 PLAN)
ACKNOWLEDGEMENT BY OPTIONEE
Optionee acknowledges and agrees that the vesting of shares pursuant to the
Notice of Stock Option Grant is earned only by continuing service as an Employee
or Consultant at the will of the Company (not through the act of being hired or
being granted this Option). Optionee further acknowledges and agrees that this
Option, the Plan which is incorporated herein by reference, the transactions
contemplated hereunder and the vesting schedule set forth herein do not
constitute an express or implied promise of continued engagement as an Employee
or Consultant for the vesting period, for any period, or at all, and shall not
interfere with Optionee's right or the Company's right to terminate Optionee's
employment or consulting relationship at any time, with or without Cause.
Optionee acknowledges receipt of a copy of the applicable Plan (a copy of which
is attached hereto as Exhibit 1) and represents that Optionee is familiar with
the terms and provisions thereof, and hereby accepts this Option subject to all
of the terms and provisions thereof. Optionee has reviewed the Plan and this
Option Agreement in their entirety, has had an opportunity to obtain the advice
of counsel prior to executing this Option and fully understands all provisions
of the Option. Optionee hereby agrees to accept as final all decisions or
interpretations of the Board or of the Committee upon any questions arising
under the Plan. Optionee further agrees to notify the Company upon any change in
the residence address indicated below, or any premature disposition of Incentive
Stock Option shares.
This Acknowledgement is executed by Optionee this _______ day of _________,
1997, to be considered effective as of the Grant Date of the Option.
OPTIONEE Residence:
- ---------------------------------- -----------------------------------
(Signature) (Street)
- ---------------------------------- -----------------------------------
(Print Name) (City, State, Zip)
<PAGE> 2
1. Principal Terms. On the terms and conditions set forth above under the
heading "Notice of Stock Option Grant" and the terms set forth below in
this Agreement, the Company grants to the Optionee on the Date of Grant
the Option to purchase at the Exercise Price the total number of Shares
set forth above. This Option is granted pursuant to the Hospital
Correspondence Corporation 1995 Stock Option Plan or Hospital
Correspondence Corporation 1996 Employee and Consultant Stock Option
Plan, as designated above, and the Optionee acknowledges having received
a copy of the applicable plan. The provisions, including the
definitions, of the applicable plan are incorporated into this Agreement
by this reference.
A. Exercise Price. The Exercise Price set forth above is not less
than the fair market value per share of Common Stock on the Date of
Grant, as determined by the Administrator; provided, however, in the
event Optionee is a Ten Percent Shareholder immediately before the Date
of Grant, said exercise price is not less than one hundred ten percent
(110%) of the fair market value per share of Common Stock on the Date of
Grant as determined by the Board.
B. Term. The term of this Option commences on the Date of Grant and
shall terminate as set forth above. Notwithstanding the foregoing, in no
event may this Option be exercised more than ten (10) years from the
Date of Grant, and this Option may be exercised during such term only in
accordance with the Plan and the terms of this Option. However, in the
case of an Option granted to an Optionee who, at the time the Option is
granted, is an employee and is a Ten Percent Shareholder, the term of
the Option shall be no more than five (5) years from the Date of Grant.
C. Vesting/Exercise.
i. The Option shall vest as set forth above. The Option may
only be exercised for Vested Shares. The Option may be exercised
pursuant to the terms of Section 3 below only as to whole shares; no
fractional shares may be purchased.
ii. In the event of Optionee's termination, disability or
death, the exercise rights of Optionee are also subject to Section 9
(termination), Section 10 (disability), and Section 11 (death).
iii. In no event may this Option become exercisable as an
Incentive Stock Option at a time or times which, when this Option is
aggregated with all other incentive stock options granted to Optionee by
the Company or any Parent or Subsidiary, would result in Shares having
an aggregate fair market value (determined for each Share as of the date
of grant of the option covering such share) in excess of $100,000
becoming first available for purchase upon exercise of one or more
incentive stock options during any calendar year. All such shares in
excess of the $100,000 limit shall automatically be treated as
Nonstatutory Stock Options.
2. Nature of the Option. If Optionee is an Employee of the Company, and
this Option was granted under the Hospital Correspondence Corporation
1995 Stock Option Plan, this Option is a Nonstatutory Stock Option. If
Optionee is an Employee of the Company, and this Option was granted
under the Hospital Correspondence Corporation 1996 Employee
2
<PAGE> 3
and Consultant Stock Option Plan, this Option may be either a
Nonstatutory Stock Option, or an Incentive Stock Option as designated on
page 1 of this Stock Option Agreement. If Optionee is a Consultant to
the Company, this Option shall be a Nonstatutory Stock Option.
3. Method of Exercise. This Option shall be exercisable by written notice
using a copy of the form attached as Exhibit 2, "Form of Notice of
Exercise of Stock Option." The Notice of Exercise shall state the
election to exercise the Option, the number of Shares in respect of
which the Option is being exercised, and such other representations and
agreements as to the Optionee's investment intent with respect to such
Shares as may be required by the Company pursuant to the provisions of
the Plan. Such written notice shall be signed by Optionee and shall be
delivered in person or by certified mail to the Chief Financial Officer
of the Company. The written notice shall be accompanied by payment of
the Exercise Price. This Option shall be deemed to be exercised upon
receipt by the Company of such written notice accompanied by the
Exercise Price. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or a duly authorized transfer agent of
the Company) of the stock certificate evidencing such Shares, no right
to vote or receive dividends or any other rights as a shareholder shall
exist with respect to the Optioned Stock notwithstanding the exercise of
the Option. The Company shall issue (or cause to be issued) such stock
certificate promptly upon exercise of the Option.
No shares will be issued pursuant to the exercise of an Option unless
such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which
the Shares may then be listed.
4. Investment Representations; Restrictions on Transfer. By receipt of this
Option, by its execution, and by its exercise in whole or in part,
Optionee represents to the Company the following:
A. Optionee understands that this Option and any Shares purchased
upon its exercise are securities, the issuance of which requires
compliance with Federal and state securities laws.
B. Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
securities. Optionee is acquiring these securities for investment for
Optionee's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act").
C. Optionee acknowledges and understands that the securities that
may be acquired upon the exercise of the Option constitute "restricted
securities" under the Securities Act and must be held indefinitely
unless they are subsequently registered under the Securities Act or an
exemption from such registration requirements is available. Optionee
further acknowledges and understands that the Company is under no
obligation to register the securities. Optionee understands that the
certificate evidencing the securities will be imprinted with a legend
which prohibits the transfer of the securities unless they are
3
<PAGE> 4
registered or such registration is not required in the opinion of
counsel satisfactory to the Company, and any other legend required under
applicable federal or state securities laws.
D. In connection with any possible subsequent underwritten public
offering by the Company of the Company's securities, Optionee agrees:
i. not to sell, make short sale of, loan, grant any options
for the purchase of, or otherwise dispose of any shares of Common Stock
of the Company held by Optionee (except traded shares Optionee purchased
in the open market and those shares included in the registration)
without the prior written consent of the Company and the underwriters
managing such underwritten public offering of the Company's securities
for one hundred eighty (180) days from the effective date of such
registration, and
ii. to execute any agreement reflecting Section 4.E.i above
as may be requested by the underwriters at the time of the public
offering.
5. Method of Payment. Payment of the purchase price shall be made by
personal check or cashier's check. If the Company's stock is publicly
traded, all or part of the Purchase Price and any withholding taxes may
be paid by the delivery (on a form prescribed by the Company) of an
irrevocable direction to a securities broker approved by the Company to
sell or margin Shares and to deliver all or part of the sales or margin
proceeds to the Company.
6. Restrictions on Exercise. This Option may not be exercised if the
issuance of such Shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation,
including any rule under Part 207 of Title 12 of the Code of Federal
Regulations ("Regulation G") as promulgated by the Federal Reserve
Board.
7. Share Repurchase Option. In the event the Optionee acquires Shares upon
exercise of the Option, the Company shall have the right to reacquire
the Shares under the terms and subject to the conditions set forth in
this Section 7, subject to applicable restrictions under state or
federal law ("Share Repurchase Option").
A. Exercise of Share Repurchase Option. Except as provided in
Section 8 below, the Company may exercise the Share Repurchase Option by
written notice to the Optionee or the Optionee's legal representative no
later than ninety (90) days after either the termination of the
Optionee's employment or rendering of other services to the Company, or
after the Company has received actual notice of exercise of Option by
the Optionee.
B. Payment for Shares and Return of Shares. Payment by the Company
to the Optionee or the Optionee's legal representative shall be made in
cash or check within ninety (90) days after the date of the mailing of
the written notice of exercise of the Share Repurchase Option and
receipt of the Optionee's Option Share certificate(s); For purposes of
the foregoing, cancellation of any promissory note of the Optionee of
the Company shall be treated as payment to the Optionee in cash to the
extent of the unpaid principal and any accrued interest cancelled. The
repurchase price per Option Share being purchased by the Company shall
be the higher of the original purchase price or Fair Market Value on the
date of the
4
<PAGE> 5
exercise of the Option, or the date of termination of employment if the
Option is exercised after termination of Optionee's employment with the
Company.
C. Early Termination of Share Repurchase Option. The other
provisions of Section 8 notwithstanding, the Share Repurchase Option
shall terminate and be of no further force and effect upon the existence
of a firm underwritten public offering of the Company's Common Stock.
D. Legends. The Company may place a legend or legends referencing
the Share Repurchase Option on any shares subject to the Share
Repurchase Option.
8. Termination of Status as an Employee. In the event of termination of
Optionee's Continuous Status as an Employee or agreement to provide
services as a consultant to the Company:
A. If that the Optionee's termination was not for Cause:
i. Optionee shall have thirty (30) days after such
termination date (but not later than expiration of the Option term) to
exercise this Option, and then the exercise can be only to the extent
that Optionee was entitled to exercise it at the date of such
termination (i.e., vested Options).
ii. To the extent that Optionee was not entitled to exercise
this Option on the date of such termination, this Option shall terminate
as to those non-vested Options, and the non-vested Options, if any,
shall be forfeited to the Plan.
iii. To the extent Optionee does not exercise this Option
within the time period specified above, then any unexercised Option
shares, if any, shall be forfeited to the Plan.
iv. Solely for purposes of Sections 8, 9, 10, and 11,
Optionee's Continuous Status as an Employee shall not be deemed
interrupted to the extent that Optionee serves as a Consultant (except
for the purposes of exercising an Incentive Stock Option) nor to be
deemed interrupted while Optionee is on a bona fide leave of absence,
provided that the leave of absence was approved by the Company in
writing and is not greater than ninety (90) days, unless reinstatement
was guaranteed by law or contract. The foregoing shall not be deemed to
require continued crediting of service for vesting purposes during a
leave of absence. Instead, Optionee shall continue to vest during a
leave of absence only to the extent expressly required by the terms of
such leave or by applicable law (as determined by the Company).
B. Should the Optionee's termination be for Cause, then this Option
shall terminate upon the date of the termination of Optionee's
Continuous Status as an Employee or agreement to provide services as a
consultant, and all Option shares, vested or unvested, shall be
forfeited to the Plan.
9. Disability of Optionee. Notwithstanding the provisions of Section 8
above, in the event of termination of Optionee's Continuous Status as an
Employee or Consultant as a result of Optionee's permanent and total
disability (as defined in Section 22(e)(3) of the Code),
5
<PAGE> 6
Optionee may, but only within six (6) months from the date of
termination of employment or consulting relationship (but in no event
later than the date of expiration of the Term of this Option as set
forth on the first page of this Stock Option Agreement), exercise this
Option to the extent Optionee was entitled to exercise it at the date of
such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of death, or if Optionee does not
exercise such Option to the extent so entitled within the time specified
herein, the Option shall terminate.
10. Death of Optionee. In the event of the death of an Optionee, the
Option may be exercised, at any time within up to six (6) months
following the date of death (but in no event later than the expiration
date of the term of Option as set forth in the Option Agreement), by the
Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance, but only to the extent the Optionee
was entitled to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the date of
death, or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.
11. Non-Transferability of Option. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution
and may be exercised during the lifetime of Optionee only by Optionee.
The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of Optionee.
12. Early Disposition of Stock. In the event that this Option is an
Incentive Stock Option, Optionee understands that, if Optionee disposes
of any Shares received under this Option within two (2) years after the
date of this Agreement or within one (1) year after such Shares were
transferred to Optionee, whichever is later, Optionee will be treated
for federal income tax purposes as having received ordinary income at
the time of such disposition in an amount generally measured as the
excess of (i) the lower of the fair market value of the Shares at the
date of disposition or the fair market value of the Shares at the
exercise date over (ii) the price paid for the Shares. Any gain
recognized on such a premature sale of the Shares in excess of the
amount treated as ordinary income will be capital gain. Optionee hereby
agrees to notify the Company in writing within thirty (30) days after
the date of any such disposition.
13. Taxation Upon Exercise of Option. If the Option is a Nonstatutory
Option, Optionee understands that, upon exercise of this Option,
Optionee will generally recognize income for tax purposes in an amount
equal to the excess of the then fair market value of the Shares over the
Exercise Price. If Optionee is an Employee and this Option is an
Incentive Stock Option, Optionee understands that, upon exercise of this
Option, Optionee will generally recognize income for purposes of the
alternative minimum tax in amount equal to the excess of the then fair
market value of the Shares over the exercise price.
14. Tax Consequences. The Optionee understands that any of the foregoing
references to taxation are based on federal income tax laws and
regulations now in effect. The Optionee has reviewed with the Optionee's
own tax advisors the federal, state, local and foreign tax consequences
of the transactions contemplated by this Agreement. The Optionee is
relying solely on such advisors and not on any statements or
representations of the Company or any
6
<PAGE> 7
of its agents. The Optionee understands that the Optionee (and not the
Company) shall be responsible for the Optionee's own tax liability that
may arise as a result of the transactions contemplated by this
Agreement. The Optionee hereby authorizes the Company to make
appropriate arrangements for any withholding of tax liability which may
be required under applicable law in connection with the exercise of this
Option.
A.
LIST OF EXHIBITS:
1. Copy of applicable plan
2. Form of Notice of Exercise of Stock Option
7
<PAGE> 1
EXHIBIT 99.22
CODEMASTER CORPORATION
1998 EXECUTIVE STOCK OPTION PLAN
1. PURPOSE. CodeMaster Corporation, a California corporation (the
"Corporation") hereby establishes the CodeMaster Corporation 1998 Executive
Stock Option Plan (the "Plan"). The purposes of the Plan are to: (1) offer
competitive levels of contingent incentive compensation related to long-term
corporate financial performance to certain eligible employees and directors of
the Corporation who, in the judgment of the Board of Directors of the
Corporation ("Board"), have provided substantial services to the Corporation or
have the capability of making substantial contributions to the success of the
Corporation; and (2) provide an incentive to attract and retain such employees
for continuous employment with the Corporation.
2. DEFINITIONS.
a. "Board" shall mean the Board of Directors of the
Corporation or, where appropriate, the Committee.
b. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
c. "Common Stock" shall mean the voting common stock (no
par value) of the Corporation.
d. "Committee" shall mean the Committee appointed by the
Board in accordance with Section 4 of the Plan.
<PAGE> 2
e. "Continuous Employment" shall mean the employment of the
Employee with the Corporation, any Parent or Subsidiary of the Corporation, any
successor, or any corporation or Parent or Subsidiary of any corporation which
assumes an Option pursuant to the provisions of Code Section 424(a), which
employment is not interrupted or terminated. An Employee's employment shall not
be considered interrupted or terminated in the case of (1) any leave of absence
approved by the Corporation or (2) transfers between locations of the
Corporation or between the Corporation, its Parent, any Subsidiary, any
successor, or any corporation or Parent or Subsidiary of any corporation which
assumes the Option pursuant to the provisions of Code Section 424(a). A leave of
absence approved by the Corporation shall include sick leave, military leave, or
any other personal leave approved by an authorized representative of the
Corporation. No such leave of absence may exceed ninety (90) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract,
including the Corporation's policies. If reemployment upon expiration of a leave
of absence approved by the Corporation is not so guaranteed, on the ninety-first
(91st) day of such leave any Incentive Stock Option held by the Optionee shall
cease to be treated as an Incentive Stock Option and shall be treated as a
Non-Qualified Stock Option.
f. "Corporation" shall mean CodeMaster Corporation, a
California corporation.
g. "Date of Grant" shall mean the date upon which the Board
grants, pursuant to the Plan, to an Eligible Employee an Option with respect to
a specific number of Shares.
h. "Eligible Employee" shall mean an Employee, or, in the
case of the grant of a non-qualified stock option, a non-employee member of the
Board who meets the
<PAGE> 3
requirements of Section 5 as eligible to receive a grant of an Option under the
Plan.
i. "Employee" shall mean an individual (other than a
director of the Corporation) employed (within the meaning of Code Section 3401
and the Treasury Regulations issued thereunder) by the Corporation on the Date
of Grant.
j. "Fair Market Price" shall mean, in the absence of an
established market for the Common Stock, the fair market value of a Share,
within the meaning of Section 422(b)(4) of the Code, as determined in good faith
by the Board as of a specified date.
k. "Incentive Stock Option" and "ISO" shall mean an Option
granted under the Plan which (i) is designated by the Board as an "Incentive
Stock Option" or "ISO" and is intended to qualify as such under the provisions
of Section 422 of the Code, and (ii) complies with the provisions of Section 8
of the Plan.
l. "Non-Qualified Stock Option" and "NQSO" shall mean an
Option granted under the Plan which (i) is designated by the Board as a
"Non-Qualified Stock Option" or "NQSO," and (ii) complies with the provisions of
Section 9 of the Plan.
m. "Option" shall mean an option to purchase one or more
Shares pursuant to the terms and conditions of the Plan and an Option Agreement
pursuant to which such Option is granted, and shall be one of two kinds: (i)
"Incentive Stock Options" ("ISOs") which shall comply with Section 8 of the
Plan, and (ii) "Non-Qualified Stock Options" ("NQSOs") which shall comply with
Section 9 of the Plan. The Corporation intends that the ISOs shall meet all of
the requirements of Section 422 of the Code and the Treasury Regulations issued
thereunder applicable to Incentive Stock Options, and that NQSOs are not
required to meet all of such requirements.
n. "Option Agreement" shall mean a written agreement
entered into
<PAGE> 4
between an Eligible Employee and the Corporation pursuant to which an Option is
granted and setting forth the Option Price, number of Shares, and other terms
and conditions governing the Option and its exercise by the Optionee. The Board
shall establish the terms and conditions of each Option Agreement, subject to
the provisions of Section 8 (relating to ISOs) and Section 9 (relating to
NQSOs).
o. "Option Price" shall mean the purchase price per Share,
as determined by the Board as of the Date of Grant for which an Option may be
exercised (pursuant to the terms of the Plan and the Option Agreement).
p. "Optionee" shall mean an Eligible Employee who is
granted an Option or, in the event of such Eligible Employee's death, the
Eligible Employee's executor, administrator, or such other person or persons who
is or are entitled to exercise the Option pursuant to the terms and conditions
of the Plan and Option Agreement.
q. "Parent" shall mean a parent corporation, whether now or
hereafter existing, as defined in Code Section 424(e).
r. "Plan" shall mean this CodeMaster Corporation 1998
Executive Stock Option Plan.
s. "Purchase Price" shall mean the Option Price times the
whole number of Shares with respect to which an Option is exercised, which
amount shall be paid to the Corporation, upon exercise of the Option, by the
Optionee in accordance with the terms and conditions of this Plan and the Option
Agreement.
t. "Share" or "Shares" shall mean a share or shares of
Common Stock, adjusted in accordance with Section 11 of the Plan (if
applicable).
<PAGE> 5
u. "Subsidiary" shall mean a subsidiary corporation,
whether now or hereafter existing, as defined in Code Section 424(f).
3. EFFECTIVE DATE. This Plan was adopted by the Board on February
1, 1998 and shall become effective on that date. The Board may, in its
discretion, make grants of Options to Eligible Employees as of that date,
subject, however, to the approval of the Plan by the shareholders of the
Corporation.
4. ADMINISTRATION.
a. The Plan shall be administered by the Board, until such
time as the Board delegates the administration of the Plan to the Committee, as
provided in Subsection 4.e of the Plan.
b. Subject to the provisions of the Plan and, in the case
of a Committee, the specific duties delegated by the Board to the Committee, and
subject to the approval of any relevant authorities, including the approval of
any stock exchange upon which the Common Stock is listed, the Board or
Committee, as the case may be, shall have the authority, in its discretion, from
time to time, to determine:
(1) The Fair Market Price of the Common Stock in
accordance with Section 2.j. of the Plan;
(2) The Eligible Employees to whom Options shall be
granted or awarded pursuant to the Plan, but subject to the conditions of
Section 5 of the Plan;
(3) The number of Shares to be optioned to an
Eligible Employee;
<PAGE> 6
(4) Whether and to what extent an Optionee may use
already-owned Shares to exercise an Option;
(5) The restrictions to be imposed on each Share
acquired by an Optionee upon exercise of an Option;
(6) Whether an Option is an Incentive Stock Option
or a Non-Qualified Stock Option, which shall be designated in the Option
Agreement;
(7) The Option Price to be paid by an Optionee for
each Share acquired upon exercise of an Option, which (in the case of an ISO)
shall not be less than 100% of the Fair Market Price on the Date of Grant of the
ISO, but which (in the case of a NQSO) shall be determined by the Board in its
complete discretion; provided, however, that with respect to any NQSO granted
pursuant to the California securities law exemption under California
Corporations Code Section 25102(o) (or its successor provision) the Option Price
shall not be less than eighty-five (85%) of the Fair Market Price on the Date of
Grant of the NQSO;
(8) The period within which each Option can be
exercised and the other terms and conditions of each Option Agreement, which,
however, shall be in accordance with the provisions of this Plan (the terms and
provisions of any Option granted to an Eligible Employee need not be identical
with those of any other Option previously or subsequently granted to the same or
another Eligible Employee, but rather shall be determined in the sole discretion
of the Board); and
(9) Whether to reduce the Option Price of any Option
to the then-current Fair Market Price if the Fair Market Price is less than the
Option Price of such Option.
c. The Board shall construe and interpret the Plan and each
Option granted
<PAGE> 7
under it, and (if it deems necessary) shall establish, amend, and revoke rules
and regulations relating to the administration of the Plan. The Board, in the
exercise of these powers, shall determine all questions of policy and expediency
that may arise, may correct any defect, or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement in a manner and to the
extent it shall deem necessary or expedient to make the Plan or Option Agreement
fully effective, subject, however, to the requirements of the Code and Treasury
Regulations relating to such Option and Option Agreement.
d. The Board may authorize the cancellation of any
previously granted Option and the grant of any new Option or Options, with the
consent of the Optionee.
e. The Board, by resolution, may delegate the
administration of the Plan or any part thereof, to a committee ("Committee")
composed solely of two or more members of the Board. Members of the Committee
shall serve at the pleasure of the Board, and the Board may, from time to time,
remove (with or without cause) members from, or add members to, the Committee.
Vacancies on the Committee shall be filled by the Board. If administration of
the Plan is delegated to the Committee, the Committee shall have, in connection
with the administration of the Plan, the powers theretofore possessed by the
Board, subject, however, to such resolutions, not inconsistent with the
provisions of the Plan as, from time to time, may be adopted by the Board. The
Board at any time, by resolution, may revoke such delegation and revest in the
Board all or any part of the administration of the Plan.
f. No Option may be granted under the Plan later than ten
(10) years from the date of the adoption of the Plan by the Board, as stated
herein, or, if earlier, the date the Plan is approved by the shareholders of the
Corporation.
<PAGE> 8
g. Decisions and determinations of the Board or Committee
on all matters relating to the Plan shall be in its sole discretion and shall be
conclusive. No member of the Board or Committee shall be liable for any action
or determination made in good faith with respect to the Plan, any Option
Agreement, or any Option granted under the Plan.
5. ELIGIBILITY. An Option shall be granted pursuant to the Plan
only to an Employee or, in the case of a Non-Qualified Stock Option (but not an
Incentive Stock Option), a Non-Employee member of the Board who: (a) in the
judgment of the Board, has provided substantial services to the Corporation or
has the capability of making a substantial contribution to the success of the
Corporation, and (b) is designated by resolution of the Board to receive the
grant of an Option under the Plan. An Employee or, in the case of a
Non-Qualified Stock Option, Board member, who meets the requirements set forth
in the preceding sentence is referred to herein as an Eligible Employee.
In designating the Eligible Employees to whom Options shall be granted
under the Plan, the number of Shares exercisable pursuant to such Option, the
Option Price, and the other restrictions, limitations, and conditions of such
Option, the Board shall consider any factors it deems relevant, including the
Employee's functions, responsibilities, value of services to the Corporation,
and past and potential contributions to the Corporation's profitability and
growth.
6. STOCK. The Shares of Common Stock subject to each Option granted
under the Plan shall be Shares of the Corporation's authorized but unissued or
reacquired Common Stock. The maximum aggregate number of Shares which may be
issued upon the exercise of all Options
<PAGE> 9
granted to Eligible Employees under this Plan shall not exceed Five Hundred
Thousand (500,000). The number of Shares subject to Options outstanding under
the Plan at any time may not exceed the number of Shares remaining available for
issuance. In the event that any outstanding Option for any reason expires or is
terminated, the Shares allocable to the unexercised portion of such Option may
again be subjected to another subsequently granted Option.
The limitations established by this Section 6 shall be subject to
adjustment upon the occurrence of the events specified and in the manner
provided in Section 11 hereof.
7. GRANTS OF OPTIONS. The Board may, from time to time, and subject
to the provisions of the Plan and such other terms and conditions as the Board
may prescribe, grant to any Eligible Employee (a) an Incentive Stock Option, or
(b) a Non-Qualified Stock Option, or (c) both an Incentive Stock Option and a
Non-Qualified Stock Option to purchase such number of Shares as the Board shall
determine in its sole discretion. Each Option granted pursuant to this Plan,
including each distinct type of Option (i.e., Incentive Stock Option or
Non-Qualified Stock Option), shall be subject to all of the terms and conditions
of the Plan relating to that type of Option and of a separate Option Agreement,
entered into by and between the Corporation and the Eligible Employee to whom
the Option is granted, which shall specify the number of Shares subject to the
Option, the Option Price, and all of the other terms and conditions of the
Option.
8. INCENTIVE STOCK OPTIONS. The grant of an Incentive Stock Option
shall be evidenced by a written Option Agreement, executed by the Optionee and
the Corporation, stating that the Option is an Incentive Stock Option, the
number of Shares subject to such Incentive
<PAGE> 10
Stock Option, and in such form as the Board shall, from time to time, determine.
Each Incentive Stock Option and Option Agreement setting forth all of the terms
and conditions of the Incentive Stock Option granted thereby shall comply with
and be subject to all of the following terms and conditions:
a. Designate Option As Incentive Stock Option. The Option
Agreement shall state that the Option is an Incentive Stock Option, within the
meaning of the Plan and Section 422 of the Code.
b. Date of Grant. The Date of Grant of each Option shall be
stated in the Option Agreement.
c. Number of Shares. The Option Agreement shall state the
number of Shares to which it pertains and shall provide for the adjustment
thereof in accordance with the provisions of Section 11 hereof.
d. Option Price. The Option Agreement shall state the
Option Price, which shall not be less than one hundred percent (100%) of the
Fair Market Price (as determined by the Board in accordance with Section 2.j.
and agreed to by the Optionee) on the Date of Grant of the ISO.
e. Medium and Time of Payment. The Option Agreement shall
provide that the Purchase Price shall be payable by the Optionee in full in
United States dollars upon the Optionee's exercise of the Option; provided,
however, that, with the consent of the Board, or, if provided in the Option
Agreement, the Purchase Price may be paid by the Optionee in any combination of:
(1) cash; (2) valid check; (3) surrender to the Corporation of Shares
already-owned by the Optionee for more than six (6) months and in good form for
transfer, so long as the sum of
<PAGE> 11
the cash or other consideration so paid plus the Fair Market Price at the date
of exercise times the number of Shares surrendered equals the Purchase Price;
(4) a full recourse promissory note in a form satisfactory to the Board, bearing
interest on the unpaid principal balance at the "Applicable Federal Rate" as
defined in Section 1274(d) of the Code, executed by the Optionee and made
payable to the Corporation, provided, however, that no Share shall be issued to
the Optionee until such promissory note has been paid in full; or (5)
consideration received by the Corporation under a formal cashless exercise
program adopted by the Corporation in connection with the Plan (but only if the
Corporation, in its sole discretion, chooses to establish such a cashless
exercise program).
f. Term and Exercise of Options; Nontransferability of
Options. The Option Agreement shall state the time or times when or upon what
conditions the Option shall first be exercisable by the Optionee. The Option
shall be vested and exercisable (to the extent not already or fully exercised)
in full or in part in accordance with the vesting schedule approved by the Board
and set forth in the Option Agreement or in any other written agreement entered
into by and between the Corporation and the Optionee; provided, however, that
the Option shall be vested and exercisable at the rate of at least twenty-five
percent (25%) at the end of each anniversary date beginning with the first
anniversary date of the Date of Grant of Option subject to Optionee's Continuous
Employment on such dates.
(1) Notwithstanding any other provision of this Plan
or the Option Agreement to the contrary, an Option granted under this Plan shall
not be exercisable (and such Option shall terminate) upon the first to occur of
the following times:
(a) Upon the expiration of ten (10) years
(or, five (5) years for a ten percent (10%) owner, in accordance with Section
8.l) from the Date of Grant of the
<PAGE> 12
Option;
(b) Upon the expiration of three (3) months
following the date of the Eligible Employee's termination of Continuous
Employment other than by reason of death or disability, as defined in Code
Section 22(e)(3));
(c) Upon the expiration of one (1) year from
the date of the Eligible Employee's termination of Continuous Employment by
reason of death or disability (as defined in Code Section 22(e)(3));
(d) Upon its exercise in full; or
(e) As specified in Section 11.
(2) During the lifetime of the Optionee, unless
sooner terminated pursuant to the provisions of Subsection 8.f(1), the Option
shall be exercisable only by the Eligible Employee and shall not be assignable
or transferable. In the event of the Eligible Employee's death, the Option shall
not be transferable by the Eligible Employee other than by will or the laws of
descent and distribution, and shall be exercisable, if at all, in the manner
provided in Subsection 8.h.
(3) Subject to the foregoing provisions of this
Subsection 8.f., the Optionee shall exercise an Option in the following manner:
(a) The Optionee shall deliver a written
Exercise Notice to the Secretary of the Corporation stating that a specified
Option is being exercised with respect to a specified number of Shares;
(b) Unless otherwise permitted by the Board
or otherwise specified in an Option Agreement, in accordance with Subsection 8.e
hereof, the full Purchase Price
<PAGE> 13
shall be paid in cash (United States dollars) by cashier's check at the time of
the exercise of the Option; and
(c) As soon as practicable after receipt of
such Exercise Notice and payment, the Corporation shall deliver to the Optionee
a certificate or certificates evidencing the Shares issued on exercise of the
Option. No rights with respect to such Shares shall exist until the certificate
or certificates are actually issued by the Corporation.
g. Termination of Continuous Employment Other Than By
Reason of Death or Disability. The Option Agreement shall provide that upon the
termination of the Eligible Employee's Continuous Employment, for any reason
other than by reason of the Eligible Employee's death or disability (as defined
in Code Section 22(e)(3)), the Option granted pursuant to the Option Agreement
may be exercised by the Eligible Employee (or Optionee with respect to such
Eligible Employee), subject to the restrictions of Subsection 8.f hereof, at any
time within three (3) months after such Eligible Employee's termination of
Continuous Employment, to the extent that, on the date of such Eligible
Employee's termination of Continuous Employment, the Eligible Employee's right
to exercise such Option had accrued and was vested pursuant to the terms of the
Option Agreement and had not previously been exercised.
h. Death or Disability of Optionee. The Option Agreement
shall provide that upon termination of the Eligible Employee's Continuous
Employment by reason of his or her death or disability (as defined in Code
Section 22(e)(3)), the Option granted pursuant to such Option Agreement shall be
exercisable, subject to the restrictions in Subsection 8.f hereof, to the extent
that, at the date of such Eligible Employee's death or termination of Continuous
Employment due to disability (as defined in Code Section 22(e)(3)), whichever is
applicable, the Eligible
<PAGE> 14
Employee's right to exercise such Option had accrued and was vested pursuant to
the terms of the Option Agreement and had not previously been exercised, at any
time within one (1) year after the Eligible Employee's termination of Continuous
Employment by reason of death or disability (as defined in Code Section
22(e)(3)), as the case may be, by the executors or administrators of the
Eligible Employee's estate or by any other person or persons who acquired the
Option from the Eligible Employee by will or the laws of descent and
distribution.
i. Rights as a Stockholder. The Option Agreement shall
provide that an Optionee shall have no rights as a stockholder of the
Corporation with respect to any Shares subject to an Option until the date of
the issuance of a stock certificate for such Shares pursuant to the exercise of
such Option. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 11.
j. Modification, Extension and Renewal of Options. Subject
to the terms and conditions and within the limitations of the Plan, the Board
may modify, extend or renew outstanding Options, or accept the exchange of
outstanding Options (to the extent not theretofore exercised) for the granting
of new Options in substitution therefor. Notwithstanding the foregoing, however,
no modification, extension, or renewal of an Option shall, without the consent
of the Optionee, alter or impair any rights or obligations under any Option to
such Optionee, and in the case of an ISO, any such modification, extension, or
renewal shall comply with Code Section 422.
k. Maximum Amount of Incentive Stock Option. To the extent
that the aggregate fair market value (determined on the Date of Grant of the
Option) of Common Stock of the Corporation with respect to which one or more
Incentive Stock Options (determined without
<PAGE> 15
regard to the application of this Subsection 8.k) are exercisable for the first
time by any Optionee during any calendar year (under all plans of the
Corporation and any Parent or Subsidiary of the Corporation) exceeds $100,000,
such Options shall, in accordance with Section 422(d) of the Code, be treated as
Options which are not Incentive Stock Options, and shall, instead, be treated as
Non-Qualified Stock Options for all purposes of this Plan and the Option
Agreement. For purposes of this Subsection 8.k., Incentive Stock Options shall
be taken into account in the order in which they were granted.
l. Grants To Ten Percent (10%) Owners. No Incentive Stock
Option or Non-Qualified Stock Option shall be granted to any owner of ten
percent (10%) or more of the total combined voting power of all classes of stock
of the Corporation or of its Parent or Subsidiary, if any, unless (i) the
Incentive Stock Option has an Option Price which is not less then one hundred
and ten percent (110%) of the Fair Market Price (as determined by the Board in
accordance with Section 2.j. and agreed to by the Optionee) on the Date of Grant
of the ISO or NQSO; and (ii) the Incentive Stock Option has a term of not more
than five (5) years.
m. Other Provisions. The Option Agreement shall contain
such other provisions not inconsistent with the terms of the Plan, including,
without limitation, restrictions upon the exercise of the Option, as the Board
shall deem advisable.
n. Rule 16b-3. Options granted to persons subject to
Section 16(b) of the Securities Exchange Act of 1934 must comply with Rule 16b-3
and shall contain such additional conditions or restrictions as may be required
thereunder to qualify for the maximum exemption from Section 16 of the Exchange
Act with respect to Plan transactions.
o. Financial Statements. The Administrator shall provide
Optionees
<PAGE> 16
financial statements (within the meaning of California Code of Regulations
Section 260.140.46) of the Corporation at least annually.
p. CodeMaster Corporation Stock Buy-back Agreement. The
Optionee, as a condition of exercise of the Option, shall agree to sign the
CodeMaster Corporation Stock Buy-Back Agreement ("Stock Buy-Back Agreement"),
and all Shares purchased by the Optionee upon exercise of the Option shall be
subject to the provisions of the Stock Buy-Back Agreement; a copy of the Stock
Buy-Back Agreement shall be incorporated as an exhibit to the Option Agreement.
The Stock Buy-Back Agreement shall provide the Corporation the right to
repurchase Shares acquired by the Optionee upon exercise of an Option by reason
of the Optionee's termination of Continuous Employment. The per-Share repurchase
price shall not be less than the greater of (i) the fair market value per Share
(as determined in the Stock Buy-Back Agreement) on the date of the Eligible
Employee's termination of Continuous Employment, or (ii) the per-Share purchase
price paid by the Optionee upon purchase of the Optionee's Shares upon exercise
of the Option. The repurchase price shall be paid by the Corporation in cash or
cancellation of purchase money indebtedness within ninety (90) days of the
Eligible Employee's termination of Continuous Employment (or in the case of
Shares issued upon exercise of the Option after the date of the Employee's
termination of Continuous Employment, within ninety (90) days of such exercise
of the Option). In the case of Shares acquired upon exercise of an Option by an
officer or director of the Corporation, the Stock Buy-Back Agreement may impose
additional or greater restrictions. In all events, the Corporation's repurchase
right and the requirement to enter into the Stock Buy-Back Agreement as a
condition to Option exercise shall terminate when the Corporation's Shares
become publicly traded.
<PAGE> 17
q. Only Employees. Only Eligible Employees who are
employees of the Corporation (as opposed to Non-Employee members of the Board)
are eligible to receive a grant of an Incentive Stock Option under this plan.
r. Employment at Will/Confidentiality. Each Option
Agreement shall provide that the
Employee=s employment with the Company is Aat will@ and that the Employee=s
employment with the Company may be terminated at any time by the Employee with
or without notice and may be terminated at any time by the Company with or
without notice, and with or without cause. Each Option Agreement shall also
provide that each Employee shall at all times during and after the Employee=s
employment with the Company maintain strict confidentiality of Company and third
party information. No Employee shall use, except for the benefit of the Company,
or disclose in writing, orally, or otherwise to any person, firm, or
corporation, without written authorization of the Board, any Confidential
Information of the Company. "Confidential Information" includes Company
proprietary information, technical data, trade secrets or know-how, including
but not limited to, research, product plans, products, services, customer lists,
customers, markets, software, developments, inventions, processes, formulas,
technology, designs, drawings, engineering, hardware configuration information,
marketing, finances, or other business information, whether disclosed to the
Employee directly or indirectly in writing, orally, or by drawings or
observation. "Confidential Information" does not include any of the foregoing
items which has become publicly known and made generally available through no
wrongful act of an Employee.
No Employee shall, at any time during and after the Employee=s
employment with the Company, disclose confidential or proprietary information
obtained by the Company from third
<PAGE> 18
parties, except as necessary for carrying out Company work, consistent with the
Company's agreement with such third parties. This Plan and all related documents
are Confidential Information.
9. TERMS AND CONDITIONS OF NON-QUALIFIED STOCK OPTIONS. The grant
of a Non-Qualified Stock Option shall be evidenced by a written Option
Agreement, executed by the Optionee and the Corporation, stating that the Option
is a Non-Qualified Stock Option, the number of Shares subject to such
Non-Qualified Stock Option, and in such form as the Board shall, from time to
time, determine. Each such Non-Qualified Stock Option and Option Agreement
setting forth all of the terms and conditions of the Non-Qualified Stock Option
granted thereby shall comply with and be subject to all of the following terms
and conditions:
a. Designate Option As Non-Qualified Stock Option. The
Option Agreement granting the Non-Qualified Stock Option shall state that the
Option is a Non-Qualified Stock Option, and that such Option is not and does not
qualify as an Incentive Stock Option, within the meaning of this Plan and
Section 422 of the Code.
b. Other Terms. In all other respects, the terms and
conditions of the Non-Qualified Stock Option and the Option Agreement granting
such Option shall be identical to the terms and conditions set forth in Section
8, with the following exceptions:
(1) The Option Price of each Non-Qualified Stock
Option shall be established by the Board and shall be set forth in the Option
Agreement; however, unlike the Option Price of an Incentive Stock Option, which
shall be no less than the Fair Market Price (as determined by the Board and
agreed to by the Optionee) on the Date of Grant, the Option Price of a
<PAGE> 19
Non-Qualified Stock Option shall be determined by the Board in its complete
discretion; provided, however, that with respect to any NQSO granted pursuant to
the California securities law exemption under California Corporations Code
Section 25102(o) (or its successor provision) the Option Price shall not be less
than eighty-five (85%) of the Fair Market Price on the Date of Grant of the
NQSO.
(2) The provisions of Subsection 8.k shall not apply
with respect to a Non-Qualified Stock Option granted under the Plan.
(3) The Board may include different conditions and
restrictions in the Option Agreement granting a Non-Qualified Stock Option than
those it includes in an Option Agreement granting an Incentive Stock Option.
(4) A Non-Qualified Stock Option may be granted to
an Eligible Employee who is either an Employee of the Corporation or a member of
the Board, and, in the case of an Eligible Employee who is a non-Employee Board
member, all references in the Plan shall be construed so that Continuous
Employment or termination of Continuous Employment shall respectively include
such Board member=s continuous service as a member of the Board or the
termination of such service as a member of the Board.
In all other respects the provisions of Section 8. shall apply with
respect to Non-Qualified Stock Options granted under the Plan (and with respect
to the Option Agreements granting such Non-Qualified Stock Options), and such
provisions, with the exceptions noted in this Section 9, are hereby incorporated
into this Section 9 and shall be construed consistent with the intent for such
provisions to apply to Non-Qualified Stock Options granted under the Plan.
<PAGE> 20
10. TERM OF PLAN. Options may be granted pursuant to the Plan until
the termination of the Plan on January 31, 2008, which shall not be a date later
than ten (10) years from the date the Plan is approved by the Shareholders or
the date the Plan is adopted, whichever is earlier.
11. RECAPITALIZATION/MERGER. Subject to any required action by the
stockholders of the Corporation, the number of Shares covered by this Plan (as
provided in Section 6), the number of Shares subject to each outstanding Option,
and the Option Price thereof shall be proportionately adjusted for any increase
or decrease in the number of issued Shares of Common Stock resulting from a
stock split, reverse stock split, stock dividend, recapitalization, or
reclassification of the Corporation's Common Stock, or any other increase or
decrease in the number of such Shares of Common Stock effected without receipt
of consideration by the Corporation. To the extent that the foregoing
adjustments relate to stock or securities of the Corporation, such adjustments
shall be made by the Board, whose determination in that respect shall be final,
binding, and conclusive.
Subject to any required action by the stockholders of the Corporation,
in the event of the proposed dissolution or liquidation of the Corporation, the
Board shall notify the Optionee at least fifteen (15) days prior to such
proposed action. The Board, in its sole discretion, may (but shall not be
required to) accelerate the vesting and exercisability of any Option in such
event. To the extent it has not been previously exercised, the Option will
terminate immediately prior to the consummation of such proposed action.
Subject to any required action by the stockholders of the Corporation,
(1) if the
<PAGE> 21
Corporation shall be the surviving corporation in any merger, consolidation, or
other reorganization, each outstanding Option shall pertain and apply to the
securities and any other consideration to which a holder of the number of Shares
subject to the Option would have been entitled; and (2) if the Corporation is
not the surviving corporation in any merger, consolidation, or other
reorganization to which the Corporation is a party, or the merger is a reverse
merger in which the Corporation is the surviving corporation but more than 50%
of its Common Stock is transferred to a person or persons different from the
person or persons who held such Common Stock immediately before such merger,
then the agreement of merger, consolidation, or reorganization shall provide
that the surviving corporation or its Parent corporation shall assume or
substitute the Option; provided, however, that in the event that the surviving
corporation or its Parent corporation refuses to assume or substitute the
Option, the Optionee shall fully vest in and have the right to exercise the
Option as to all of the Shares subject to the Option, including Shares as to
which it would not otherwise be vested or exercisable. If an Option becomes
fully vested and exercisable in lieu of assumption or substitution pursuant to
the preceding sentence, the Board shall notify the Optionee in writing or
electronically that the Option shall be fully vested and exercisable for a
period of fifteen (15) days from the date of such notice, and the Option shall
terminate upon the expiration of such period.
Except as hereinabove expressly provided in this Section 11, the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or any other
increase or decrease in the number of shares of stock of any class or by reason
of any dissolution, liquidation, merger, or consolidation or spin-off of assets
or stock of another corporation, and any issue by the Corporation of shares of
stock of any class or securities
<PAGE> 22
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of Shares subject to the Option.
The grant of an Option pursuant to the Plan shall not affect in any way
the right or power of the Corporation to make adjustments, reclassifications,
reorganizations or changes of its capital, including but not limited to issuance
of stock of any class, or debt, or business structure or to merge or consolidate
or to dissolve, liquidate, sell or transfer all or any part of its business or
assets.
12. SECURITIES LAW REQUIREMENTS. No Option shall be granted under
this Plan, and no Shares shall be issued by the Corporation upon the exercise of
any Option granted under this Plan unless and until the Corporation has
determined that:
a. The Corporation and the Optionee have taken all actions
required to register the Shares under the Securities Act of 1933 and under
California law or perfect an exemption from the registration requirements
thereof;
b. Any applicable listing requirement of any stock exchange
on which the Common Stock of the Corporation is listed has been satisfied;
c. Any other applicable provision of state or federal law
has been satisfied, including the provisions of the Securities Exchange Act of
1934 and the rules and regulations promulgated thereunder;
d. The Optionee has represented that the Option and all
Shares acquired thereunder are acquired for investment for the Optionee's own
account, not as a nominee or agent, and not with a view to, or for resale in
connection with, any distribution thereof; and
e. The Optionee has represented that any Shares acquired
pursuant to the
<PAGE> 23
exercise of an Option shall be subject to all of the restrictions set forth in
the Option Agreement, including but not limited to those provided for in the
Stock Buy-Back Agreement, and any restrictions imposed by state and federal
securities law.
13. AMENDMENT OF THE PLAN. The Board may, insofar as permitted by
law, from time to time, with respect to any Option Shares which have not yet
been granted, suspend or discontinue the Plan or revise or amend it in any
respect whatsoever except that, without approval of a majority of the
stockholders of the Corporation, no such revision or amendment shall:
a. Increase the number of Shares subject to the Plan; or
b. Amend this Section 13 to defeat its purpose.
14. APPLICATION OF FUNDS. The proceeds received by the Corporation
from the sale of Common Stock pursuant to the exercise of an Option will be used
for general corporate purposes.
15. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option
shall impose no obligation upon the Optionee to exercise such Option.
16. WITHHOLDING AND PAYMENT OF TAXES. Whenever the Corporation
proposes to deliver Shares upon an Optionee's exercise of an Option, or whenever
an Optionee disposes of Shares acquired upon exercise of an Option, the
Corporation shall have the right to require the Optionee who is to receive the
Shares, or who disposes of Shares, to remit to the
<PAGE> 24
Corporation, prior to the delivery of any certificate or certificates for such
Shares, or upon disposition of Shares, as the case may be, or to withhold from
any payment by the Corporation to the Optionee, including but not limited to any
payment of other compensation or any payment made pursuant to the Stock Buy-Back
Agreement, such amounts as the Corporation deems necessary to satisfy any
federal, state and/or local withholding tax requirements, including, but not
limited to, income tax and FICA withholding. The Optionee shall be personally
obligated to pay any and all taxes of any kind which may be imposed on or result
from the grant of the Option, the exercise of the Option, and the disposition of
Shares (in accordance with the Stock Buy-Back Agreement) acquired upon exercise
of the Option, or the ownership of the Option (or Shares acquired thereunder) at
death.
17. APPROVAL OF STOCKHOLDERS. This Plan and any amendments described
in Section 13 hereof shall be subject to approval by affirmative vote of the
holders of a majority of all of the outstanding Shares of Common Stock,
immediately following (but in no event later than twelve (12) months after) the
adoption of the Plan or any of such amendments.
<PAGE> 1
EXHIBIT 99.23
FORM OF EXERCISE NOTICE
(CODEMASTER 1998 PLAN)
CODEMASTER CORPORATION
1998 EXECUTIVE STOCK OPTION PLAN
EXERCISE NOTICE
CodeMaster Corporation
312 Lincoln Street
Santa Cruz, CA 95060
Attention: Secretary
Ladies & Gentlemen:
1. EXERCISE OF OPTION. Effective as of today, ____________________,
______, the undersigned ("Optionee") hereby elects to exercise the Optionee's
option ("Option") to purchase ___________ shares of the Common Stock (the
"Shares") of CodeMaster Corporation (the "Corporation") under and pursuant to
the CodeMaster Corporation 1998 Executive Stock Option Plan, as amended (the
"Plan") and the CodeMaster Corporation - Incentive -Non-Qualified Stock Option
Agreement dated _________, _____ (the "Option Agreement").
2. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Corporation or of a duly authorized transfer agent of the Corporation), no right
to vote or receive dividends or any other rights as a shareholder of the
Corporation shall exist with respect to the Shares acquired upon exercise of the
Option, notwithstanding the exercise of the Option. The Corporation shall issue
(or cause to be issued) such stock certificate promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as
provided in Section 11 of the Plan.
3. STOCK BUY-BACK AGREEMENT. The Shares acquired upon exercise of the
Option may not be sold or otherwise transferred, except as provided in the
CodeMaster Corporation "Stock Buy-Back Agreement." The Stock Buy-Back Agreement
also provides for an optional repurchase of the Shares upon Optionee's
termination of employment with the Corporation, any parent or subsidiary of the
Corporation, or any corporation or parent or subsidiary of a corporation which
assumes the Corporation's obligations and rights under the Stock Buy-Back
Agreement and, in the event of the Optionee's death, provides the Optionee or
his or her legal successors the right to put the Optionee's shares to the
Corporation. The Optionee shall execute the Stock Buy-Back Agreement as a
condition to the issuance of the Shares acquired upon exercise of the Option.
4. REPRESENTATIONS OF THE OPTIONEE. The Optionee acknowledges that the
Optionee has received, read and understood the Plan, the Option Agreement, the
Investment Representation Statement, a copy of which is attached hereto as
Exhibit "A" and by this reference incorporated
<PAGE> 2
herein, and the Stock Buy-Back Agreement, and the Optionee agrees to abide by
and be bound by their terms and conditions.
The Board of Directors of the Corporation has determined and the
Corporation and Optionee agree that the current fair market value of the Shares
is ______________________ Dollars ($__________), as of _______________, and each
of the Corporation and Optionee agrees to adopt this value in any tax return or
other document or report reflecting the fair market value.
5. TAX CONSULTATION. The Optionee understands that the Optionee may
suffer adverse tax consequences as a result of the Optionee's purchase or
disposition (pursuant to the Stock Buy-Back Agreement) of the Shares. The
Optionee represents that the Optionee has consulted with any tax consultants the
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that the Optionee is not relying on the Corporation for any tax
advice.
6. RESTRICTIVE LEGENDS, REFUSAL TO TRANSFER AND STOP-TRANSFER ORDERS.
(a) Legends. The Optionee understands and agrees that the Corporation
shall cause the legends set forth below or legends substantially equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the
Shares, together with any other legends that may be required by the Corporation
or by state or federal securities laws:
"The transfer, sale, assignment, hypothecation, encumbrance, or alienation
of the Shares represented by this certificate is restricted by the
CodeMaster Corporation Stock Buy-Back Agreement, dated ____________,
including all amendments thereto. In addition to imposing restrictions on
transfer of the Shares, the Stock Buy-Back Agreement provides the
Corporation the option to repurchase these Shares upon the holder's
termination of employment (for any reason) with the Corporation. A copy of
the Stock Buy-Back Agreement is available for inspection during business
hours at the principal executive offices of the Corporation and is
incorporated by reference and made a part of this certificate."
"The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended ("Act"), or under any applicable
state law. They may not be sold, transferred, pledged, or otherwise
disposed of without either (1) registration under the Act and qualification
under any applicable state securities laws, or (2) an opinion satisfactory
to the Corporation that the Shares are exempt from such registration and
qualification."
(b) Refusal to Transfer. The Corporation shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of this Agreement or the
Stock Buy-Back Agreement or (ii) to treat as owner of such Shares or to
accord the right to vote or pay dividends to any purchaser or other
transferee to whom such Shares shall have been so transferred.
<PAGE> 3
(c) Stop Transfer Notices. Optionee agrees that, in order to ensure
compliance with the restrictions referred to herein, the Corporation may
issue appropriate "stop transfer" instructions to its transfer agent, if
any, and that, if the Corporation transfers its own securities, it may make
appropriate notations to the same effect in its own records.
7. SUCCESSORS AND ASSIGNS. The Corporation may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Corporation. Subject
to the restrictions on transfer set forth herein and in the Stock Buy-Back
Agreement, this Agreement shall be binding upon the Optionee and his or her,
executors, personal representatives, trustees, administrators, heirs, successors
and assigns.
8. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by the Optionee or by the Corporation forthwith to
the Corporation's Board of Directors or the Committee thereof that administers
the Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Board or Committee shall be final and
binding on the Corporation and the Optionee.
9. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of California excluding that
body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
10. NOTICES. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, with postage and fees
prepaid, addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
11. FURTHER INSTRUMENTS. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
12. DELIVERY OF PAYMENT. The Optionee herewith delivers to the Corporation
the full Purchase Price as defined in the Plan and Option Agreement for the
Shares.
13. ENTIRE AGREEMENT. The Plan, Option Agreement, and Stock Buy-Back
Agreement are incorporated herein by this reference. This Agreement, the Plan,
the Option Agreement, the Investment Representation Statement, and the Stock
Buy-Back Agreement, constitute the entire agreement of the parties with respect
to the subject matter hereof and supersede in their entirety all prior
undertakings and agreements of the Corporation and Optionee with respect to the
subject matter hereof.
Submitted by: Accepted by:
<PAGE> 4
<TABLE>
<S> <C>
CODEMASTER
OPTIONEE: CORPORATION
By:
- ------------------------------------- -----------------------------------
(Signature) Christopher B. Schofield, President
Address:
By:
- ------------------------------------- -----------------------------------
Carol E. Locke, Secretary
- -------------------------------------
- ------------------------------------- Address:
312 Lincoln Street
Santa Cruz, CA 95060
</TABLE>
<PAGE> 5
EXHIBIT "A"
INVESTMENT REPRESENTATION STATEMENT
[See Exhibit D of main Agreement]
<PAGE> 1
EXHIBIT 99.24
CODEMASTER CORPORATION
STOCK BUY-BACK AGREEMENT
This CodeMaster Corporation Stock Buy-Back Agreement (the "Agreement")
is entered into this _____ day of _____________, _____ by and between CodeMaster
Corporation, a California corporation (the "Corporation"), and
_______________________ (the "Optionee") with reference to the following:
A. Effective this date, the Optionee exercised an option ("Option")
granted to ___________________ ("Employee") pursuant to the CodeMaster
Corporation 1998 Executive Stock Option Plan ("Plan") and the CodeMaster
Corporation __________________ Stock Option Agreement by and between the
Employee and the Corporation and dated ________________ ("Option Agreement") to
purchase ________ shares of the Common Stock of the Corporation ("Shares"), said
Shares being hereinafter referred to as "Option Shares" or "Option Share" as the
context requires.
B. In accordance with the provisions of the Plan and the Option
Agreement, the above-referenced Option Shares shall be held by the Optionee
subject to the restrictions and pursuant to all of the terms and conditions of
this Agreement.
In consideration of the foregoing and the mutual covenants of the
parties herein, the Corporation and the Optionee hereby agree as follows:
<PAGE> 2
1. SALE AND PURCHASE OF STOCK. In accordance with the terms of the
Plan and Option Agreement, the Corporation hereby sells to the Optionee, and the
Optionee hereby purchases from the Corporation, __________ (____) Option Shares
at a price of __________ ($________) per Share, for an aggregate purchase price
of __________________________ Dollars ($________). Payment of the purchase price
for the Option Shares shall be made in accordance with the terms of the Plan and
the Option Agreement.
2. VALUE OF THE OPTION SHARES. The Board of Directors of the
Corporation has determined (and the Corporation and the Optionee agree) that on
the date of execution of this Agreement the fair market value of the Option
Shares is _________________________ Dollars ($__________) (or $________ per
Share), and each of the Corporation and the Optionee agrees to adopt this value
in any tax return or other document or report reflecting the fair market value
of the Option Shares.
3. RESTRICTIONS ON TRANSFER OF THE SHARES. Other than as
contemplated in Section 4 hereof, the Option Shares are not transferable by the
Optionee, voluntarily or by operation of law, except with the express written
consent of the Corporation and, then, only under circumstances that the
transferee executes an agreement in the same form as this Agreement. Any
purported transfer of the Shares or any interest therein by the Optionee, other
than as aforesaid, shall be null and void and shall not be recognized for any
purpose whatsoever by the Corporation.
4. REPURCHASE OF SHARES BY THE CORPORATION UPON THE EMPLOYEE'S
TERMINATION OF CONTINUOUS EMPLOYMENT.
<PAGE> 3
a. If the Employee's "Continuous Employment," as defined in
Subsection 4.e below, terminates or has terminated for any reason, with or
without cause, including the death or disability of the Employee, and whether
before or after execution of this Agreement, (such termination of the Employee's
Continuous Employment being hereinafter referred to as a "Termination Event"),
then all of the Optionee's Option Shares shall be subject to the following
purchase option and (if applicable) put option provisions:
(1) Upon the occurrence of a Termination Event with
respect to the Employee, the Corporation shall have the option (but not the
obligation) to purchase all of the Optionee's Option Shares. This purchase
option shall be exercisable by the Corporation by delivering a written notice to
the Optionee within sixty (60) days after the Termination Event (or, in the case
Optionee acquires Option Shares upon exercise of the Option after the
Termination Event, within sixty (60) days after such exercise of the Option). If
this purchase option is so exercised by the Corporation, the Optionee (or, in
the event of the Employee's death, the Employee's executor, personal
representative, trustee, or other legal representative, as the case may be),
hereinafter the "Seller," shall be obligated to sell to the Corporation all of
the Optionee's Option Shares at the purchase price determined in Subsection 4.b
and pursuant to the terms and provisions of Subsections 4.c and 4.d.
(2) If the Termination Event occurs by reason of the
Employee's death, and the Corporation does not exercise the purchase option
granted pursuant to Subsection 4.a, then the Seller shall have the right (but
shall not be obligated) to put (sell) all of the Optionee's Option Shares to the
Corporation. This put option shall be exercisable by the Seller by delivering a
written notice to the Corporation within one fifteen (15) days after the
expiration of the sixty (60)-day period described in Section 4.a(1). If this put
option is exercised by the Seller, the Corporation
<PAGE> 4
shall be obligated to purchase all of the Optionee's Option Shares from the
Seller, at the purchase price determined in Subsection 4.b, and pursuant to the
terms and conditions of Subsections 4.c and 4.d.
b. The price per Share to be paid by the Corporation for
the Optionee's Option Shares pursuant to this Section 4 shall be equal to the
"Fair Market Value Per Share" of the issued and outstanding Shares as of the
date of the Termination Event. The Fair Market Value Per Share of the issued and
outstanding Shares shall be equal to the greater of the per-Share price
determined in the following paragraph (1) or the per-Share price determined in
the following paragraph (2):
(1) The per-Share price paid by the Optionee upon
purchase of the Optionee's Option Shares as provided in Section 1; or
(2) Ten and thirty-seven hundredths (10.37) times
the annual earnings of the Corporation, divided by the number of outstanding
Shares of the Common Stock of the Corporation. For this purpose, the annual
earnings of the Corporation shall be equal to the average annual earnings of the
Corporation, determined on an accrual basis by the Corporation's accountants,
over the three-calendar-year period ending on the last day of the calendar year
immediately
<PAGE> 5
preceding the year in which the Corporation's purchase option (or, if
applicable, the Seller's put option) is exercised by delivery of written notice
as provided in Subsection 4.a; provided, however, that if such written notice is
dated after July 1 of the year such option is exercised, then the average annual
earnings of the Corporation shall be determined over the period which includes
the two calendar years ending with the last day of the calendar year immediately
preceding the calendar year in which such option is exercised, and the calendar
year in which the option is exercised with the Corporation's earnings for such
year annualized based on the Corporation's earnings for the calendar months of
such year preceding the month in which such option is exercised. The annual
earnings of the Corporation shall be determined based upon the customary
principles and practices followed by the Corporation in the preparation of its
financial statements; provided, however, that if the Corporation is not a C
corporation there shall be subtracted from the Corporation's annual earnings
hypothetical corporate taxes at the assumed rate of forty percent (40%) of the
Corporation's pre-tax income.
The purchase price for the Optionee's Option Shares shall be the price
per-Share, as determined above in this Subsection 4.b, multiplied by the number
of such Optionee's Option Shares being purchased.
c. Payment by the Corporation for the Optionee's Option
Shares hereunder (where applicable) shall be made in cash or cancellation of
purchase money indebtedness within thirty (30) days after the expiration of the
sixty (60)-day period described in Section 4.a(1).
d. As a condition to the Corporation's obligation to make
the payment of the purchase price called for hereunder for the Optionee's Option
Shares, the Seller shall execute and deliver to the Corporation all necessary
assignments and documents of transfer necessary to reassign and transfer the
Optionee's Option Shares to the Corporation or to its designee.
e. "Continuous Employment" shall mean the employment of the
Employee with the Corporation, any parent or subsidiary of the Corporation, any
successor of the Corporation, or any corporation or parent or subsidiary of any
corporation which assumes the Option in a
<PAGE> 6
transaction to which Section 424(a) of the Internal Revenue Code of 1986, as
amended ("Code") applies (such entities being individually and collectively
referred to herein as "Employer"), which employment is not interrupted or
terminated. The Employee's employment shall not be considered interrupted or
terminated in the case of (1) any leave of absence approved by the Employer or
(2) transfers between locations of the Employer. A leave of absence approved by
the Employer shall include sick leave, military leave, or any other personal
leave approved by an authorized representative of the Employer. No such leave of
absence may exceed ninety (90) days, unless reemployment upon expiration of such
leave is guaranteed by statute or contract, including the Employer's policies.
5. SECURITIES ACT REPRESENTATION OF THE OPTIONEE; CERTIFICATE
LEGEND. The Optionee hereby represents to the Corporation that the Optionee is
purchasing the Option Shares for investment, and not with a view to the
distribution or resale thereof. The Optionee agrees that the certificate
representing the Optionee's Option Shares shall contain one or more legends
restricting transfer thereof under applicable securities laws, and shall contain
a legend referring to this Agreement and to the fact that the Shares are subject
to this Agreement and are not, subject to the provisions of this Agreement,
transferable by the Optionee.
6. DESIGNATION OF BENEFICIARY. The Employee may at any time
designate a beneficiary to receive payment for the Optionee's Option Shares in
the event of the Employee's death. Such designation shall be in writing, signed
by the Employee, and delivered to the Corporation. Such designation may be
revoked at any time in writing by the Employee, in which case a new designation
may be made.
<PAGE> 7
7. RIGHT OF CORPORATION TO TERMINATE EMPLOYMENT. Nothing contained
in this Agreement shall interfere in any way with the right of the Corporation
to terminate the employment of the Employee at any time, with or without cause,
for any reason.
8. CHANGES IN STOCK. In the event that the Corporation declares a
stock dividend, or if by reason of a stock split, reverse stock split, stock
dividend, recapitalization, reclassification, or otherwise, the Option Shares of
the Optionee are exchanged for or supplemented by other or additional shares of
capital stock of the Corporation, then and in such event, the Optionee agrees
that such additional or other shares of capital stock of the Corporation shall
be subject to all of the terms and provisions of this Agreement.
9. TAX WITHHOLDING. If, in the opinion of counsel or accountants to
the Corporation, any amounts are required to be withheld by the Corporation
under applicable Federal, state or local withholding tax requirements in
connection with the Optionee's purchase or the disposition of such Option
Shares, then and in such event the Optionee agrees to promptly pay to or
reimburse the Corporation for any such taxes payable or paid by it in connection
with such purchase or disposition of such Shares, and the Optionee agrees that
the Corporation shall have the right to withhold such taxes from payments made
or to be made by it to the Employee, including but not limited to other
compensation paid or payable to the Employee by the Corporation and any such
payments made or to be made by the Corporation pursuant to this Agreement, all
as the Corporation deems appropriate, and the Optionee agrees to make any such
payments and hereby authorizes the Corporation to withhold such taxes as deemed
appropriate by the Corporation. The
<PAGE> 8
Optionee shall be personally liable for any and all taxes of any kind which may
be imposed on or result from the purchase or sale of Shares pursuant to this
Agreement, or the ownership of Shares at death.
10. ARBITRATION. Any dispute arising between the parties under this
Agreement or with respect to the terms and conditions of this Agreement, to the
parties' rights under this Agreement, or to the interpretation, application,
enforceability, or validity thereof, shall be resolved by arbitration at San
Jose, California in accordance with the provisions of Section 1280 et seq. of
the California Code of Civil Procedure. The arbitrator or arbitrators shall be
selected by mutual agreement of the parties, and if no agreement can be reached,
by a court of law having competent jurisdiction over the dispute.
The arbitrator shall have no authority to award or assess punitive or
exemplary damages against either party.
The Optionee shall pay the portion of the costs of such arbitration
equal to the filing fee the Optionee would have paid to file a civil court case,
and the Corporation shall pay the balance of such costs; provided, however, that
the Optionee may unilaterally elect to pay one-half of such costs, and to have
the Corporation pay the other one-half of such costs. Each party shall pay for
its own attorneys' fees.
The prevailing party in any such arbitration may file the award as a
judgment in the Superior Court of the State of California in and for the County
of Santa Clara or other city wherein the principal offices of the Corporation
are then located or where one or more of the parties to the arbitration resides,
as the case may be.
<PAGE> 9
11. LIMITATION ON PURCHASE BY CORPORATION. Notwithstanding anything
to the contrary in this Agreement, the Corporation shall not make any purchase
of Option Shares pursuant to this Agreement if it is prohibited from doing so
under the General Corporation Law of California.
12. EFFECT OF S CORPORATION STATUS. The Optionee acknowledges that
the Corporation is an S corporation under the Internal Revenue Code, and
Optionee may have taxable income allocated to him, her or it as an S corporation
shareholder, with respect to which no cash distribution is made with which to
pay such taxes. Optionee further acknowledges that the Corporation is under no
obligation to make distributions to pay such taxes, unless otherwise agreed in
writing. Optionee agrees to execute any and all consents and forms required by
the Corporation, as may be necessary to maintain the status of the Corporation
as an S corporation.
13. TERMINATION. This Agreement may only be amended, altered or
terminated with the written approval of Optionee and CodeMaster Corporation;
provided, however, that this Agreement and the repurchase portion of the
Corporation shall automatically terminate on the date the stock of the
Corporation is publicly traded or in the event of the dissolution of the
Corporation.
<PAGE> 10
IN WITNESS WHEREOF, the Corporation and the Optionee have entered into
this Agreement effective as of the day and year first above written.
THE "CORPORATION" THE "OPTIONEE"
CODEMASTER CORPORATION
By: ____________________________ __________________________________
Christopher B. Schofield,
President
__________________________________
[Name of the Optionee]
By: ___________________________
Carol E. Locke,
Secretary
<PAGE> 1
EXHIBIT 99.25
IMN LLC
1995 CLASS C UNIT OPTION PLAN
ARTICLE I
NAME AND PURPOSE
1.1 NAME. The name of the Plan is the IMN LLC 1995 Class C Unit Option Plan
("Plan").
1.2 PURPOSE. The purposes of the Plan are (a) to permit Employees to share
in the growth and prosperity of the Company by encouraging Class C Unit
ownership by Employees, and (b) to enable the Company to obtain and
retain skilled Employees.
ARTICLE II
DEFINITIONS
2.1 "BOARD" means the Board of Directors of the Company.
2.2 "CLASS C UNITS" means the Class C Non-Voting, Non-Transferable Units of
ownership interest issued by the Company.
2.3 "CODE" means the Internal Revenue Code of 1986, as amended.
2.4 "COMMITTEE" means the Board or a committee or subcommittee of the Board
appointed by the Board to administer this Plan.
2.5 "COMPANY" means IMN LLC, a Texas limited liability company.
2.6 "EMPLOYEE" means any person employed on a full-time basis by the Company
at anytime during the term of this Plan.
2.7 "FAIR MARKET VALUE" means, with respect to a Class C Unit, the fair
market value of the Class C Unit as determined by the Committee in good
faith.
2.8 "OPTION" means any option to purchase Class C Units granted pursuant to
Section 5.1.
2.9 "PARTICIPANT" means any Employee selected to participate in the Plan
pursuant to Article III.
2.10 "PLAN" means the IMN LLC 1995 Class C Unit Option Plan, as it may be
amended from time to time.
2.11 "PUBLIC TRADING" means, with respect to the Class C Units, the listing
or admission to unlisted trading privileges of the Class C Units on a
national securities exchange or the reporting of bid and ask quotations
with respect to the Class C Units on the National Association of
Securities Dealers Automated Quotation System ("NASDAQ").
<PAGE> 2
2.12 "UNITS" means any of the Units of ownership interest of any class issued
from time to time by the Company.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 ELIGIBILITY. Every Employee is eligible to become a Participant.
3.2 PARTICIPATION. The Committee, subject to the restrictions set forth in
Section 16.1 of the Regulations of the Company, may select Employees and
members of the Board to participate in the Plan from time to time.
ARTICLE IV
SHARES SUBJECT TO PLAN
4.1 AGGREGATE SHARES SUBJECT. The Committee may not grant Options under this
Plan for more than 500,000 Class C Units.
4.2 INDIVIDUAL LIMITATIONS. The Committee may not grant Options under this
Plan to any one Participant for more than 150,000 Class C Units.
4.3 EXPIRED BENEFITS. If any outstanding Option expires, terminates or is
forfeited, the Committee may again award an Option with respect to the
Class C Unit allocable to the expired, terminated or forfeited Option.
ARTICLE V
OPTIONS
5.1 GRANT. The Committee may grant Options to any Participant. The Committee
may not grant any Options to purchase Class C Units for less than the
Fair Market Value as of the date of grant. In all other respects, the
Committee will determine the terms and conditions of any Option grant,
including the number of Class C Units subject to such Options, the date
or dates on which the Options become exercisable, either wholly or in
part, and the expiration date of the Options. Each Option must be
evidenced by a written agreement between the Company and the Participant
that sets forth the terms and conditions of the Option. Option
agreements need not be identical. A Participant to whom an Option is
granted will not be deemed the holder of any Class C Units subject to
the Option until the Class C Units are fully paid, and issued and
delivered to him following exercise of the Option.
5.2 EXCHANGE. The Committee may grant Options to a Participant holding
unexercised outstanding Options, or unexercised outstanding Options
granted under any other option plan of the Company, on the condition
that the Participant surrenders for cancellation
2
<PAGE> 3
some or all of those outstanding options. Any such new Options will be
treated in all respects under the Plan as newly granted Options.
5.3 SUBSTITUTION. The Committee may grant Options from time to time in
substitution for similar rights held by employees of another business
association who become Employees as a result of a merger or
consolidation of the other business association with the Company, the
acquisition by the Company of the assets of the other business
association, or the acquisition by the Company of stock of the other
business association as the result of which the other business
association becomes a subsidiary of the Company.
ARTICLE VI
ADMINISTRATION
6.1 ADMINISTRATION. The Committee will administer this Plan. The Committee
may act either through majority vote of the Committee at a meeting for
which a quorum is present, or through the written consent of a majority
of the members of the Committee in lieu of a meeting. The Committee may
designate Employees to assist the Committee in the administration of the
Plan and may grant authority to such persons to execute any and all
agreements contemplated by this Plan and any other documents reasonably
required to implement the Plan.
6.2 DISCRETIONS AND AUTHORITY. Subject to the express limitations set forth
in this Plan, the Committee, in its sole and absolute discretion, may
take any and all actions necessary, advisable or appropriate to
implement the Plan and may make any and all determinations deemed
appropriate for the administration of the Plan, including actions and
determinations with respect to (a) the types and amounts of Options to
be granted or awarded to Participants or to any particular Participant,
(b) the terms and conditions of all Options, (c) amounts payable, if
any, by a Participant in connection with the grant, award or receipt of
any Option, (d) restrictions on transfer of any Option by a Participant,
and (e) the circumstances under which any Option may expire or terminate
or be forfeited.
6.3 PAYMENT. Payment in full for the number of shares purchased under any
Option must be made to the Company at the time of such exercise. The
Committee may provide that any Option by its terms may permit a
Participant to elect any or all of the following alternative settlement
methods: (a) cash equal to the excess of the value of one Class C Unit
over the option or purchase price times the number of Class C Units as
to which the award is exercised; (b) the number of full Class C Units
having an aggregate value not greater than the cash amount calculated
under alternative (a); or (c) any combination of cash and Class C Units
having an aggregate value not greater than the cash amount calculated
under alternative (a).
6.4 RULES. The Committee may make such rules and regulations and establish
such procedures as it deems appropriate for the administration of the
Plan.
3
<PAGE> 4
6.5 INTERPRETATION. In the event of a disagreement as to the interpretation
of the Plan, any rule, regulation or procedure under the Plan, or as to
any right or obligation arising from or related to the Plan, the
decision of the Committee will be final and binding.
6.6 LEGAL REQUIREMENTS. The Committee will cause the Plan, and any grants or
awards of Options, to comply with all applicable laws.
ARTICLE VII
PUTS AND CALLS; ADJUSTMENTS
7.1 PUTS AND CALLS. The Committee may agree to purchase any Unit issued
pursuant to the Plan from a Participant, and the Committee may require
any Participant to sell or surrender to the Company any Units or any
Options issued pursuant to this Plan, at times and subject to such terms
and conditions, as are determined by the Committee. The purchase price
for any Class C Units purchased at the election of the Participant,
however, may not exceed the Fair Market Value of the Units as of the
date of the purchase.
7.2 ADJUSTMENTS. The Committee may make, and may enter into agreements to
make, appropriate adjustments to the kind and maximum number of Class C
Units subject to the Plan and the kind and number of Class C Units and
price per share of stock subject to each outstanding Option, upon the
occurrence of (a) Unit dividends, (b) any merger with respect to the
Company, (c) any extraordinary dividend or distribution by the Company,
or (d) the public announcement of an intent to commence Public Trading
of the Class C Units. No fractional Class C Units will be issued under
the Plan on account of any such adjustment, and rights to Class C Units
always will be limited after such an adjustment to the lower full Class
C Unit.
ARTICLE VIII
MISCELLANEOUS
8.1 CONTINUATION OF EMPLOYMENT. Neither this Plan nor any Option granted
under this Plan confers upon any Employee any right to continue in the
employment of the Company or limits the right of the Company to
terminate an Employee's employment at will at any time.
8.2 WITHHOLDING. If the Company is required to withhold any taxes in
connection with an Option, and a Participant is obligated to pay to the
Company any or all of the amount required to be withheld, the Committee
may permit the Participant to satisfy the withholding obligation, in
whole or in part, either (i) by having the Company withhold from any
Class C Units to be issued Class C Units with a Fair Market Value
sufficient to satisfy the withholding amount due, or (ii) by delivering
to the Company sufficient Class C Units to satisfy the withholding
amount due.
8.3 EFFECTIVE DATE. This Plan is adopted by the Board and is effective as of
January 5, 1995.
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8.4 LIABILITY. No member of the Board or the Committee, or any officer or
employee of the Company, will be personally liable for any action,
omission or determination made in good faith or upon the advice of
counsel in connection with the Plan or any Option granted under the
Plan.
ARTICLE IX
AMENDMENT AND TERMINATION
9.1 AMENDMENT. The Committee may amend the Plan from time to time as it
deems appropriate. The Committee may not amend the Plan to change the
number of Class C Units subject to the Plan.
9.2 TERM. The Committee may terminate the Plan at any time. No termination
will deprive Participants of their rights with respect to outstanding
Options.
IMNLLC
By: _____________________________________
Joe D. Whisenhunt, Sr., President
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EXHIBIT 99.26
UNIT OPTION AGREEMENT
This Unit Option Agreement (this "Agreement"), is entered into as of
___________, 1997 by and between IMNLLC, a Texas limited liability company (the
"Company"), and _____________, an employee (the "Employee") of the Company.
The Company desires to provide the Employee an opportunity to purchase
its Class C Non-Voting Non-Transferable Units of ownership interest in the
Company (the "Class C Units") in order to carry out the purposes of the
Company's 1995 Class C Unit Option Plan (the "1995 Plan").
The parties agree as follows:
1. GRANT. The Company grants to the Employee the right (the
"Options") to purchase 50,000 Class C Units (the "Option Units") on the terms
and conditions set forth in this Agreement.
2. PURCHASE PRICE. The Purchase Price for the Option Units (the
"Purchase Price") will be $10.00 per Class C Unit.
3. EXERCISE.
(a) Options may be exercised, from time to time, as to any
or all of the Option Units which are then vested. Options may not be exercised
unless and until they are vested.
(b) Options may not be exercised as to less than 1,000
Option Units at any one time. Unless the Exercise Notice specifies otherwise,
the earliest vested Options will be exercised first.
(c) During the lifetime of the Employee, only the Employee
may exercise the Options. After the death of the Employee, the Options may be
exercised only by the personal representative of the Employee or the Employee's
successor by will or the laws of descent and distribution
4. VESTING.
(a) The Options will vest in accordance with the following
schedule:
(i) when net income of the Company is equal to or
greater than $1.00: 20% (i.e. 10,000)
(ii) when net income of the Company is equal to or
greater than $1,000,000.00: 40% (i.e. 20,000)
(iii) when net income of the Company is equal to or
greater than $5,000,000.00: 60% (i.e. 30,000)
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(iv) when net income of the Company is equal to or
greater than $10,000,000.00: 80% (i.e. 40,000);
and
(v) when net income of the Company is equal to or
greater than $15,000,000.00: 100% (i.e. 50,000)
(b) Notwithstanding Section 4(a), all Options will vest
immediately upon (i) the death of the Employee, (ii) the permanent disability of
the Employee (as determined by the Board of Directors of the Company), (iii)
upon the circumstances described in Section 10(b), or (iv) if Whisenhunt
Investments, Inc., Joe D. Whisenhunt, Jr. or Joe D. Whisenhunt, Sr. or their
heirs, assigns or affiliates or entities controlled by them do not own or
control a majority of the Class A Units of the Company.
5. EXPIRATION. The right to exercise the Options expires on the
earliest of (i) the 90th calendar day after the resignation or the termination
of the employment of the Employee, other than as a consequence of the events
described in Section 4(b) or upon expiration of the term of Employee's
Employment Agreement with the Company of even date, or (ii) the tenth
anniversary of the date of this Agreement.
6. FORFEITURE. If the Employee resigns or his employment is
terminated (other than as a consequence of any of the events described in
Section 4(b) or upon expiration of the term of Employee's Employment Agreement
with the Company of even date), the Employee will forfeit all unvested Options.
7. NOTICE OF EXERCISE; PAYMENT AND DELIVERY.
(a) The Options may be exercised by delivery of a written
notice (the "Exercise Notice") to the Company, signed by the person exercising
the Options and specifying the number of Options which are to be exercised.
(b) Each Exercise Notice must be accompanied by payment (by
check payable to the order of the Company) of the full Purchase Price for the
Option Units and all withholding taxes required to be collected by the Company
under Federal, State, or local law as a result of the exercise ("Withholding
Taxes").
(c) The Company will deliver a certificate representing the
Option Units purchased within thirty (30) days after receipt of the notice and
full payment of the Purchase Price and Withholding Taxes. Unless otherwise
requested by the person exercising the Options, the certificate for the Option
Units purchased will be registered in the name of the Employee and will be
delivered to the Employee at the Employee's address then listed on the books and
records of the Company.
8. PAYMENT WITH UNITS. Payment of any or all of the Purchase Price
and Withholding Taxes may be made with Class C Units, in which event the
certificates evidencing the Class C Units so to be used must accompany the
Exercise Notice and must be duly endorsed or accompanied by duly executed stock
powers to transfer the same to the Company. In lieu of using outstanding Class C
Units to pay the Purchase Price and Withholding Taxes, Class C Units as to which
the Options are then being exercised may be used, in which case the Exercise
Notice
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must include a statement directing the Company to withhold so many of the Option
Units that would otherwise have been delivered upon that exercise of this Option
as equals the number of Option Units that would have been transferred to the
Company if the Purchase Price and Withholding Taxes had been paid with
outstanding Class C Units. The Company will have no obligation to accept Class C
Units in payment of the Purchase Price if the Company is then prohibited from
purchasing or acquiring Class C Units thus tendered to it.
9. NON-TRANSFERABILITY. Unless specifically permitted by the
Committee, the Options may not be assigned, transferred, pledged or hypothecated
in any way, will not be assignable by operation of law, and will not be subject
to execution, attachment or similar process (each, a "Transfer"), other than by
will or the law of descent and distribution. Any attempted Transfer will be null
and void and without effect.
10. ADJUSTMENTS.
(a) If any Option is exercised subsequent to any dividend,
split, reverse split, combination or exchange of Class C Units, or any
recapitalization or reorganization occurring after the date of this Agreement,
as a result of which (i) units of any class shall be issued in respect of
outstanding Class C Units or (ii) Class C Units are changed into the same or a
different number of units of the same or another class or classes, the Employee
will receive, for the aggregate price paid upon such exercise, the aggregate
number of the class of units which, if Class C Units had been purchased at the
date hereof for the same aggregate price (on the basis of the price per share
set forth in Paragraph 2 hereof) and had not been disposed of, such person or
persons would be holding, at the time of such exercise, as a result of such
purchase and all such share dividends, splitups, combinations or exchanges of
shares, recapitalizations or reorganizations. No fractional unit will be issued
upon any such exercise and the aggregate Purchase Price will be appropriately
reduced to reflect any fractional unit not issued.
(b) Upon (i) the dissolution or liquidation of the Company,
or (ii) a merger or consolidation of the Company as a result of which the Class
C Units are changed into or exchanged for cash, property or securities not of
the Company's issue, all Options will immediately vest unless provision is made
in connection with such transaction for the assumption of the Options, or the
substitution for the Options of options covering the securities of a successor
employer corporation, or a parent or subsidiary thereof, with appropriate
adjustments as to the number and kind of securities and prices.
11. GENERAL. The Company will at all times during the term of the
Options reserve and keep available Class C Units sufficient to satisfy the
requirements of this Option Agreement. The Company will pay all original issue
and transfer taxes with respect to, and all other fees and expenses incurred by
the Company in connection with, the issuance of Option Units.
12. MISCELLANEOUS.
(a) The Options are not intended to be incentive stock
options as defined in Section 422 of the Internal Revenue Code.
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(b) The Employee will not have any of the rights of a member
with respect to the Option Units until delivery of the Option Units certificates
in accordance with Section 7(c) and execution by the Employee of the Amended and
Restated Regulations of the Company, whereby the Employee agrees to be bound by
all of the terms and provisions thereof.
(c) Nothing in this Option Agreement effects the rights and
obligations of the Employee and Company pursuant to the Employment Agreement of
even date between the parties.
IN WITNESS WHEREOF, this Option Agreement is entered into by the
Employee and by the Company as of the date first above written.
IMNLLC
By: _____________________________________
Joe D. Whisenhunt, Sr., President
_________________________________________
[Optionee]
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EXHIBIT 99.27
THE COMPUCARE COMPANY
1997 STOCK COMPENSATION PLAN
ARTICLE I
PURPOSES
The Plan is intended to assist The Compucare Company and its Affiliates
in recruiting and retaking individuals with ability and initiative by enabling
such persons to participate in the future success of the Company and its
Affiliates and to associate their interests with those of the Company and its
shareholders. The Plan is intended to permit the grant of both Options
qualifying under Section 422 of the Code ("incentive stock options") and Options
not so qualifying, and the grant of SARs and Stock Awards. No Option that is
intended to be an Incentive Stock Option shall be invalid for failure to qualify
as an Incentive Stock Option. The proceeds received by the Company from the sale
of Common Stock pursuant to this Plan shall be used for general corporate
purposes.
ARTICLE II
DEFINITIONS
2.1. Affiliate means any "subsidiary" or "parent" company (within the meaning
of Section 424 of the Code) of the Company.
2.2. Agreement means a written agreement (including any amendment or
supplement thereto) between the Company and a Participant specifying the
terms and conditions of a Stock Award, Option or SAR granted to such
Participant.
2.3. Board means the Board of Directors of the Company.
2.4. Change of Control means:
(a) a "person" or "group" (which terms, shall have the meaning they
have when used in Section 13(d) of the Exchange Act) (other than
the Company, any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, any corporation
owned directly or indirectly, by the shareholders of the Company
in substantially the same proportions as their ownership of
voting securities of the Company or, Morgan Stanley Capital
Partners III, L.P., or Morgan Stanley Venture Capital Fund II,
L.P.) becomes (other than solely by reason of a repurchase of
voting securities by the Company), the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the combined
voting power of the Company's then total outstanding voting
securities;
(b) the Company consolidates with or merges with or into another
corporation or partnership or conveys, transfers or leases, in
any transaction or series of transactions, all or substantially
all of its assets to any corporation or partnership
<PAGE> 2
(other than Morgan Stanley Capital Partners III, L.P. or Morgan
Stanley Venture Capital Fund II, L.P.), or any corporation or
partnership consolidates with or merges with or into the
Company, in any event pursuant to a transaction us which the
outstanding voting stock of the Company is reclassified or
changed into or exchanged for cash, securities or other
property, other than any such transaction where (i) the
outstanding voting securities of the Company are changed into or
exchanged for voting securities of the saving corporation and
(ii) the persons who ware the beneficial owners of the Company's
voting securities immediately prior to such transaction
beneficially own immediately after such transaction 50% or more
of the total outstanding voting power of the surviving
corporation, or the Company is liquidated or dissolved or adopts
a plan of liquidation or dissolution.
2.5. Code means the Internal Revenue Code of 1986, and any amendments
thereto.
2.6. Committee means the Committee appointed by the Board to administer the
Plan, or if no such Committee is appointed, the full Board shall serve
as the Committee.
2.7. Common Stock means the common stock, $.01 par value, of the Company.
2.8. Company means The Compucare Company, a Delaware corporation.
2.9. Consultant means any person performing consulting or advisory services
for the Company or any Affiliate, with or without compensation, to whom
the Committee chooses to grant a Stock Award. Option, or SAR in
accordance with the Plan.
2.10. Corresponding SAR means an SAR that is granted in relation to a
particular Option and that can be exercised only upon the surrender to
the Company, unexercised, of that portion of the Option to which the SAR
relates.
2.11. Director means a member of the Company's Board of Directors.
2.12. Disability shall have the my provided for in Section 22(e)(3) of the
Code or any successor statute thereto.
2.13. Fair Market Value means, on any given date, the current fair market
value of the shares of Common Stock as determined pursuant to subsection
(a) or (b) below.
(a) While the Company is a Non-Public Company, Fair Market Value
shall be determined by the Committee using any reasonable method
in good faith.
(b) While the Company is a Public Company, Fair Market Value shall
be determined as follows: (i) if the Common Stock is traded on
the National Market System or listed on a national securities
exchange, the closing price of the Common Stock on the
determination date, or, if there are no sales on such date, then
on the next preceding date on which there were sales of Common
Stock (ii) the Common Stock is not traded on the National Market
System or listed on a national securities exchange, the closing
price last reported by the National Association of Securities
Dealers, Inc. for the over-the-counter market on the
determination date,
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or, if no sales are reported on such date, then on the next
preceding date on which there where such quotations.
(c) Notwithstanding subsections (a) and (b) of this Section, in all
cases, Fair Market Value shall not be less than the par value of
the Common Stock.
(d) For purposes of this Section, the term "Public Company" means
the Company subsequent to the effective date of the Plan, sells
securities pursuant to an effective registration statement on
Form S-1 filed pursuant to the Securities Act of 1933, as
amended and the term "Non-Public Company" means the Company has
not subsequent to the effective date of the Plan sold securities
pursuant to an effective registration statement on Form S-1
filed pursuant to the Securities Act of 1993, as amended.
2.14. Initial Value means, with respect to an SAR, the Fair Market Value of
one share of Common Stock on the date of grant.
2.15. Incentive Stock Option means an Option qualifying for special tax
treatment under Section 422 of the Code.
2.16. Nonqualified Stock Option means an option which is not an Incentive
Stock Option.
2.17. Option means a stock option that is either a Nonqualified Stock Option
or Incentive Stock Option that entitles the holder to purchase from the
Company a stated number of shares of Common Stock at the price set forth
in an Agreement.
2.18. Optionee means the employee, Director or Consultant to whom an Option is
granted.
2.19. Participation means an employee of the Company or an Affiliate, a
Director or a Consultant who satisfies the requirements of Article IV
and is selected by the Committee to receive a Stock Award, Opinion, SAR
or a combination thereof.
2.20. Plan means this The Compucare Company 1997 Stock Compensation Plan.
2.21. SAR means a stock appreciation right that in accordance with the terms
of an Agreement entitles the holder to receive, with respect to each
share of Common Stock encompassed by the exercise of such SAR, the
amount determined by the Committee and specified in an Agreement. In the
absence of such a determination, the holder shall be entitled to
receive, with respect to such share of Common Stock encompassed by the
exercise of such SAR, the excess of its Fair Market Value on the date of
exercise over the Initial Value. References to "SARs" include both
Corresponding SARs and SARs granted independently of Options, unless the
context requires otherwise.
2.22. Stock Award means Common Stock awarded to a Participant under Article
VIII.
2.23. Stockholder means the holder of Common Stock issued under the Plan as a
result of exercise of an Option or SAR or grant of a Stock Award.
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2.24. Termination of Employment means with respect to an individual the last
to occur of termination of an employee's employment unto the Company and
its Affiliates, the termination of a Director's membership on the Board
and the termination of a Consultant's consulting relationship with the
Company and its Affiliates.
2.25. Ten Percent Shareholder means any individual owning more than ten
percent (10%) of the total combined voting power of all classes of stock
of the Company or of an Affiliate. An individual shall be considered to
own any voting stock owned (directly or indirectly) by or for his
brothers, sisters, spouse, ancestors or lineal descendants and shall be
considered to own proportionately any voting stock owned (directly or
indirectly) by or for a company, partnership, estate or trust of which
such individual is a shareholder, partner or beneficiary.
ARTICLE III
ADMINISTRATION
The Board shall have authority to grant Stock Awards, Options and SARs
upon such terms (not inconsistent with the provisions of this Plan) as the Board
may consider appropriate. Such terms may include conditions (in addition to
those contained in this Plan) on the exercisability of all or any part of an
Option or SAR or on the transferability or forfeitability of a Stock Award.
Notwithstanding any such conditions, the Board may, in its discretion,
accelerate the time at which any Option or SAR may be exercised, or the time at
which a Stock Award may become transferable or nonforfeitable or the time at
which may be settled. The Committee shall have complete authority to interpret
all provisions of this Plan, to prescribe the form of Agreements; to adopt,
amend, and rescind rules and regulations pertaining to the administration of the
Plan; and to make all other terminations necessary or advisable for the
administration of this Plan. The express grant in the Plan of any specific power
to the Committee shall not be construed as limiting any power or authority of
the Committee; provided that the Committee may not exercise any right or power
reserved to the Board. Any decision made, or action taken, by the Board or the
Committee or in connection with the administration of this Plan shall be final
and conclusive on all persons having an interest in the Plan. No member of the
Board or the Committee shall be liable for any act done in good faith with
respect to this Plan or any Agreement, Option, SAR, Stock Award. All expenses of
administering this Plan shall be borne by the Company.
The Committee, in its discretion, may delegate to one or more officers
of the Company, all or part of the Committee's authority and duties with respect
to grants and awards to individuals.
ARTICLE IV
ELIGIBILITY
Any employee of the Company or an Affiliate (including a company that
becomes an Affiliate after adoption of this Plan), a Director or a Consultant to
the Company or an Affiliate (including a company that becomes an Affiliate after
the adoption of this Plan) is eligible to
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participate in this Plan if the Board, in its sole discretion determines that
such person has contributed significantly or can be expected to contribute
significantly to the profits or growth of the Company or an Affiliate. Only
employees of the Company or an Affiliate are eligible to receive Incentive Stock
Options.
ARTICLE V
STOCK SUBJECT TO PLAN
5.1. Shares Issued. Upon the award of shares of Common Stock pursuant to a
Stock Award the Company may issue shares of authorized but unissued
Common Stock or shares of previously issued Common Stock that has been
reacquired by the Company. Upon the exercise of any Option or SAR the
Company may deliver to the Participant (or the Participant's broker if
the Participant so directs), shares of authorized but unissued Common
Stock or shares of previously issued Common Stock that has been
reacquired by the Company.
5.2. Aggregate Limit. The maximum aggregate number of shares of Common Stock
that may be issued under this Plan pursuant to the exercise of SARs and
Options and the grant of Stock Awards is two million nine hundred
seventy-five thousand (2,975,000) shares. The maximum aggregate number
of shares that may be issued under this Plan shall be subject to
adjustment as provided in Article X.
5.3. Reallocation of Shares. If an Option is terminated, in whole or in part,
for any reason other than its exercise or the exercise of a
Corresponding SAR that is settled with Common Stock, the number of
shares of Common Stock allocated to the Option or portion thereof may be
reallocated to other Options, SARs and Stock Awards to be granted under
this Plan. If an SAR is terminated, in whole or in part, for any reason
other than its exercise or the exercise of a related Option, the number
of shares of Common Stock allocated to the SAR or portion thereof may be
reallocated to other Options, SARs and Stock Awards to be gusted under
this Plan.
ARTICLE VI
OPTIONS
6.1. Award. In accordance with the provisions of Article IV, the Board will
designate each individual to whom an Option is to be granted and will
specify the number of shares of Common Stock covered by such awards. The
Option Agreement shall specify whether the Option is an Incentive Stock
Option or Nonqualified Stock Option, the vesting schedule applicable to
such Option and any other terms of such Option. An individual must be an
employee of the Company or the Affiliate to be eligible to be granted an
Incentive Stock Option.
6.2. Option Price. The exercise price per share for Common Stock subject to
an Option shall be determined by the Board on the date of grant;
provided, however, that the exercise price per share for Common Stock
for an Option that is an Incentive Stock Option shall
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not be less than one hundred percent (100%) of the Fair Market Value on
the date the Option is granted. Notwithstanding the preceding sentence,
the exercise price per share for Common Stock subject to an Option that
is an Incentive Stock Option granted to an individual who is or is
deemed to be a Ten Percent Shareholder on the date such option is
granted, shall not be less than one hundred ten percent (110%) of the
Fair Market Value on the date the Option is granted.
6.3. Maximum Option Period. The maximum period in which an Option may be
exercised shall be determined by the Board on the date of grant, except
that no Option that is an Incentive Stock Option shall be exercisable
after the expiration of ten years from the date such Option was granted.
In the case of an Incentive Stock Option that is granted to a
Participant who is or is deemed to be a Ten Percent Shareholder on the
date of grant, such Option shall not be exercisable after the expiration
of five years from the date of grant. The terms of any Option that is an
Incentive Stock Option may provide that it is exercisable for a period
less than such maximum period.
6.4. Maximum Value of Options which are Incentive Stock Options. To the
extent that the aggregate Fair Market Value of the Common Stock with
respect to which incentive Stock Options granted to any person are
exercisable for the first time during any calendar year (under all stock
option plans of the Company or any of its Affiliates) exceeds $100,000,
the Options are not Incentive Stock Options. For purposes of this
section, the Fair Market Value of the Common Stock will be determined as
of the time the Incentive Stock Option with respect to the Common Stock
is granted. This paragraph will be applied by taking Incentive Stock
Options into account in the order in which they are granted.
6.5. Nontransferability. Except as provided in Section 6.6, each Option
granted under this Plan shall be nontransferable except by will or by
the laws of descent and distribution. In the event of any such transfer,
the Option and any Corresponding SAR that relates to such Option must be
transferred to the same person or persons or entity or entities. Except
to the extent an Option is transferred in accordance with Section 6.6,
during the lifetime of the Participant to whom the Option is granted,
the Option may be exercised only by the Participant. No right or
interest of a Participant in any Option shall be liable for, or subject
to, any lien, obligation, or liability of such Participant.
6.6. Transferable Options. Section 6.5 to the contrary notwithstanding, if
the Agreement so provides, an Option that is not an Incentive Stock
Option may be transferred by a Participant to the Participant's
children, grandchildren, spouse, one or more trusts for the benefit of
such family members or a partnership in which such family members are
the only partners; prodded, however, that Participant may not receive
any consideration for the transfer. The holder of an Option transferred
pursuant to this section shall be bound by the same terms and conditions
that governed the Option during the period that it was held by the
Participant. In the event of any such transfer, the Option and any
Corresponding SAR that relates to such Option must be transferred to the
same person or persons or entity or entities.
6.7. Vesting and Termination of Employment. Except as provided in an Option
Agreement, the following rules shall apply:
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(a) Options will vest as provided in the Option Agreement. An Option
will be fully vested upon the occurrence of a Change of Control
prior to the Participant's Termination of Employment. An Option
will be exercisable only to the extent that it is vested on the
date of exercise. Vesting of an Option will cease on the date of
the Optionee's Termination of Employment and the Option will be
exercisable only to the extent the Option is vested on the date
of Termination of Employment.
(b) If the Optionee's Termination of Employment is for reason of
death or Disability, the right to exercise the Option (to the
extent vested) will expire on the earlier of (i) one (1) year
after the date of the Optionee's Termination of Employment, or
(ii) the expiration date under the terms of the Agreement. Until
the expiration date, the Optionee's heirs, legatees or legal
representative may exercise the Option, except to the extent the
Option was previously transferred pursuant to Section 6.6.
(c) If the Optionee's Termination of Employment is by reason of the
Optionee's retirement from service of the Company and its
Affiliates on or after the attainment of age sixty-two (62), the
right to exercise the Option (to the extent that it is vested)
will expire on the earlier of (i) three (3) years after the date
of the Optionee's Termination of Employment, or (ii) the
expiration date under the terms of the Agreement.
(d) If the Optionee's Termination of Employment is for any reason
other than death, Disability or retirement, the right to
exercise the Option (to the extent that it is vested) will
expire on the earlier of (i) three (3) months after the date of
the Optionee's Termination of Employment, or (ii) the expiration
date under the terms of the Agreement. However, if the Option
would then expire during the Pooling Period and the Common Stock
received upon the exercise of the Option would be subject to the
Pooling Period transfer restrictions, then the right to exercise
the Option will expire ten (l0) calendar days after the end of
the Pooling Period. "Pooling Period" means the period in which
proper is subject to restrictions on transfer in compliance with
the "Pooling of Interests Accounting" rules set forth in the
Securities and Exchange Commission Accounting Series Releases
130 and 135. If Termination of Employment is for a reason other
than the Optionee's death, disability or retirement and the
Option holder dies after his or her Temptation of Employment but
before the right to exercise the Option has expired, the flight
to exercise the Option shall expire on the earlier of (i) one
(1) year after the date of the Optionee's Termination of
Employment, or (ii) the date the Option expires under the terms
of the Agreement, and until expiration, the Optionee's heirs,
legatees or legal representative may exercise the Option, except
to the extent the Option was previously transferred pursuant to
Section 6.6.
6.8. Forfeiture for Cause. Notwithstanding any provision of the Plan to the
contrary, unless provided otherwise in an Option Agreement, all
unexercised Options granted to an Optionee whose Termination of
Employment is for "cause" shall terminate and be forfeited by the
Optionee. A termination of Employment shall be for cause if it is by
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reason of (i) conduct related to the Optionee's service to the Company
or an Affiliate for which either criminal or civil penalties aghast the
Optionee may be sought, (ii) material violation of Company policies, or
(iii) disclosing or misusing any confidential information or material
concerning the Company or Affiliate. An Optionee may be released from
the forfeiture provisions of this section if the Committee (or its duly
appointed agent) determines in its sole discretion that such action is
in the best interests of the Company.
6.9. Employee Status. For purposes of determining the applicability of
Section 422 of the Code (relating to incentive stock options), or in the
event that the terms of any Option provide that it may be exercised only
during employment or within a specified period of time after Termination
of Employment, the Committee may decide to what extent leaves of absence
for governmental or military senate, illness, temporary disability, or
other reasons shall not be deemed interruptions of continuous
employment.
6.10. Exercise. The Option holder must provide written notice to the Secretary
of the Company of the exercise of Options and the number of Options
exercised. Subject to the provisions of this Plan and the applicable
Agreement, an Option may be exercised to the extent vested in whole at
any time or in part from time to time at such times and in compliance
with such requirements as the Committee shall determine. An Option
granted under this Plan may be exercised with respect to any number of
whole shares less than the full number for which the Option could be
exercised. A partial exercise of an Option shall not affect the right to
exercise the Option from time to time in accordance with this Plan and
the applicable Agreement with respect to the remaining shares subject to
the Option. An Option may not be exercised with respect to fictional
shares of Common Stock. The exercise of an Option shall result in the
termination of any Corresponding SAR to the extent of the number of
shares with respect to which the Option is exercised.
6.11. Payment. Unless otherwise provided by the Agreement, payment of the
Option price shall be made in cash or a cash equivalent acceptable to
the Committee. Unless otherwise provided by the Agreement, payment of
all or part of the Option price may also be made by surrendering shares
of Common Stock to the Company that have been held for at least six (6)
months prior to the date of exercise. If Common Stock is used to pay all
or part of the Option price, the sum of the cash or cash equivalent and
the Fair Market Value (determined of the day preceding the date of
exercise) of the shares surrendered must nor be less than the Option
price of the shares for which the Option is being exercised. The
Committee may approve payment of the exercise price by a broker-dealer
or by the Option holder with cash advanced by the broker-dealer if the
exercise notice is accompanied by the Option holders written irrevocable
instructions to deliver the Common Stock acquired upon exercise of the
Option to the broker-dealer.
6.12. Shareholder Rights. No Participant shall have any rights as a
shareholder with respect to shares subject to his Option until the date
of exercise of such Option.
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6.13. Stock Certificate Legends. The Company may require that certificates
evidencing shares of Common Stock; purchased upon the exercise of
Incentive Stock Option issued under the Plan be endorsed with a legend
in substantially the following form:
The shares evidenced by this certificate may not be sold
or transferred prior to ________, 19__, in the absence of a
written statement from the Company to the effect that the
Company is aware of the facts of such sale or transfer.
The blank contained in this legend shall be filled in with the date that is the
later of (i) one year and one day after the date of the exercise of such
Incentive Stock Option or (ii) two years and one day after the grant of such
Incentive Stock Option. Upon delivery to the Company, at its principal executive
office, of a written statement to the effect that such shares have been sold or
transferred prior to such date, the Company does hereby agree to promptly
deliver to the transfer agent for such shares a written statement to the effect
that the Company is award of the fact of such sale or transfer.
6.14. Disposition of Stock. A Participant shall notify the Company of any sale
or other disposition of Common Stock acquired pursuant to an Incentive
Stock Option if such sale or disposition occurs (i) within two years of
the grant of an Option or (ii) within one year of the issuance of the
Common Stock to the Participant. Such notice shall be in writing and
directed to the Secretary of the Company.
ARTICLE VII
SRS
7.1. Award. In accordance with the provisions of Article IV, the Board will
designate each individual to whom SARs are to be granted and will
specify the number of shares covered by such awards. In addition no
Participant may be granted Corresponding SARs (under all Incentive Stock
Option plans of the Company and its Affiliates) that are related to
Incentive Stock Options which are first exercisable in any calendar year
for stock having an aggregate Fair Market Value (determined as of the
date the related Option is granted) that exceeds $100,000.
7.2. Magnum SAR Period. The maximum period in winch an SAR may be exercised
shall be determined by the Board on the date of grant, except that no
Corresponding SAR that is related to an Incentive Stock Option shall be
exercisable after the expiration of ten years from the date such related
Option was granted. In the case of a Corresponding SAR that is related
to an Incentive Stock Option granted to a Participant who is or is
deemed to be a Ten Percent Shareholder, such Corresponding SAR shall not
be exercisable after the expiration of five years from the date such
related Option was granted. The terms of any Corresponding SAR that is
related to an Incentive Stock Option may provide that it is exercisable
for a period less than such maximum period.
7.3. Nontransferability. Except as provided in Section 7.4, each SAR granted
under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. In the
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event of any such transfer, a Corresponding SAR and the related Option
must be transferred to the same person or persons or entity or entities.
During the lifetime of the Participant to whom the SAR is granted, the
SAR may be exercised only by the Participant. No right or interest of a
Participant in any SAR shall be liable for, or subject to, any lien,
obligation, or liability of such Participant.
7.4. Transferable SARs. Section 7.3 to the contrary notwithstanding, if the
Agreement so provides, a SAR may be transferred by a Participant to the
children, grandchildren, spouse, one or more trusts for the benefit of
such family members or a partnership in which such family members are
the only partners; provided, however, that Participant may not receive
any consideration for the transfer. In the event of any such transfer, a
Corresponding SAR and the related Option must be transferred to the same
person or person or entity or entities. The holder of an SAR transferred
pursuant to this section shall be bound by the same terms and conditions
that governed the SAR during the period that it was held by the
Participant.
7.5. Exercise. Subject to the provisions of this Plan and the applicable
Agreement, an SAR may be exercised in whole at any time or in part from
time to time at such times and in compliance with such requirements as
the Committee shall determine; provided, however, that a Corresponding
SAR that is related to an Incentive Stock Option may be exercised only
to the extent that the related Option is exercisable and only when the
Fair Market Value exceeds the option price of the related Option. An SAR
granted under this Plan may be exercised with respect to any number of
whole shares less than the bill number for which the SAR could be
exercised. A partial exercise of an SAR shall not affect the right to
exercise the SAR From time to time in accordance with this Plan and the
applicable Agreement with respect to the remaining shares subject to the
SAR. The exercise of a Corresponding SAR shall result in the termination
of the related Option to the extent of the number of shares with respect
to which the SAR is exercised.
7.6. Employee Status. If the terms of any SAR provide that it may be
exercised only during employment or within a specified period of time
after Termination of Employment, the Committee may decide to what extent
leaves of absence for governmental or military service, illness,
temporary disability or other reasons shall not be deemed interruptions
of continuous employment.
7.7. Settlement. At the Committee's discretion, the amount payable as a
result of the exercise of an SAR may be settled in cash, Common Stock or
a combination of cash and Common Stock. No fractional share will be
deliverable upon the exercise of an SAR but a cash payment will be made
in lieu thereof.
7.8. Shareholder Rights. No Participant shall, as a result of receiving an
SAR award, have any rights as a shareholder of the Company or any
Affiliate until the date that the SAR is exercised and then only to the
extent that the SAR is settled by the issuance of Common Stock.
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ARTICLE VIII
STOCK AWARDS
8.1. Award. In accordance with the provisions of Article IV, the Board will
designate each individual to whom a Stock Award is to be made and will
specify the number of shares of Common Stock covered by such awards.
8.2. Vesting. The Board, on the date of the award, may prescribe that a
Participant's rights in the Stock Award shall be forfeitable or
otherwise restricted for a period of time or subject to such conditions
as may be set forth in the Agreement.
8.3. Performance Objectives. In accordance with Section 8.2, the Board may
prescribe that Stock Awards will become vested or transferable or both
based on objectives such as, but not limited to, the Companies, an
Affiliate's or an operating unit's return on equity, earnings per share,
total earnings, earnings growth, return on capital, return on assets, or
Fair Market Value. If the Board, on the date of award, prescribes that a
Stock Award shall become nonforfeitable and transferable only upon the
attainment of performance objectives, the shares subject to such Stock
Award shall become nonforfeitable and transferable only to the extent
that the Committee certifies that such objectives have been achieved.
8.4. Stock Legends and Related Matters.
(a) The Committee, on behalf of the Company, may endorse such legend
or legends upon the certificates representing the shares of
Common Stock and may issue such "stop transfer" instructions as
it determines to be necessary or appropriate to (i) prevent a
violation of, or to perfect an exemption from, the registration
requirements of the Securities Act of 1933, as amended (the
"Securities Act"), or (ii) implement the provisions of any
agreement between the Company or an Affiliate and the
Participant with respect to such shares.
(b) The Committee may require that a Participant, as a condition to
receipt of a particular award, execute and deliver to the
Company a written statement, in form satisfactory to the
Committee, in which the Participant represents and warrants that
the shares are being acquired for such person's own account, for
investment only and not with a view to the resale or
distribution thereof. The Participant shall, at the request of
the Committee, be required to represent and warrant in writing
that, to the extent permitted by the terms of the award, any
subsequent resale or distribution of Shares by the Participant
shall be made only pursuant to either (i) a Registration
Statement on an appropriate form under the Securities Act, which
Registration Statement has become effective and is current with
regard to the shares being sold, or (ii) a specific exemption
from the registration requirements of the Securities Act, but in
claiming such exemption the Participant shall, prior to any
offer of sale or sale of such shares, obtain a prior favorable
written opinion of counsel, in form and substance satisfactory
to counsel for the Company, as to the application of such
exemption thereto.
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The Committee may delay any award, issuance or delivery
of shares of Common Stock if it determines that listing,
registration or qualification of the shares or the consent or
approval of any governmental regulatory body is necessary or
desirable as a condition of or in connection with, the sale or
purchase of shares under the Plan, until such listing,
registration, qualification, consent or approval shall have been
effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.
8.5. Employee Status. In the event that the terms of any Stock Award
provide that shares may become transferable and nonforfeitable thereunder only
after completion of a specified period of employment, the Committee may decide
in each case to what extent leaves of absence for governmental or military
service, illness, temporary disability, or other reasons shall not be deemed
interruptions of continuous employment.
8.6. Nontransferability. Except as provided in Section 8.7, Stock Awards
granted under this Plan shall be nontransferable except by will or by the laws
of descent and distribution. No right or interest of a Participant in a Stock
Award shall be liable for, or subject to, any lien, obligation, or liability of
such Participant.
8.7. Transferals Stock Awards. Section 8.6 to the contrary
notwithstanding if the Award so provides, a Stock Award may be transferred by a
Participant to the children, grandchildren, spouse, one or more trusts for the
benefit of such family members or a partnership in which such family members are
the only partners; provided, however, that Participant may not receive any
consideration for the transfer. The holder of a Stock Award transferred pursuant
to this section shall be bound bar the same terms and conditions that governed
the Incentive Award during the period that it was held by the Participant.
8.8. Shareholder Rights. Prior forfeiture (in accordance with the
applicable Agreement) and while the shares of Common Stock grated pursuant to
the Stock Award may be forfeited or are nontransferable, a Participant will have
all rights of a shareholder with respect to a Stock Award, including the right
to receive dividends and vote the shares; provided, however, that during such
period (i) a Participant may not sell, transfer, pledge, exchange, hypothecate,
or otherwise dispose of shares of Common Stock granted pursuant to a Stock
Award, (ii) the Company shall retain custody of the certificates evidencing
shares of Common Stock granted pursuant to a Stock Award, and (iii) the
Participant will deliver to the Company a stock power, endorsed in blank, with
respect to each Stock Award. The limitations set forth in the preceding sentence
shall not apply after the shares of Common Stock granted under the Stock Award
are transferable and are no longer forfeitable.
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ARTICLE IX
STOCK REPURCHASE RIGHTS
9.1. Shares Subject to Repurchase Rights. Except as otherwise provided in the
Agreement for the Option, SAR or Stock Award, the repurchase rights
provided in this Article IX shall apply to all shares of the Common
Stock of the Company issued under the Plan as a result of an exercise of
an Option or SAR or grant of a Stock Award.
9.2. Voluntary Transfers. No Stockholder and no transferee of such
Stockholder's shares under Section 9.6 may sell, assign, transfer,
exchange, encumber or otherwise dispose of any shares of Common Stock or
any interest therein now held or hereafter acquired by such Stockholder
without first giving written notice thereof to the Company identifying
the proposed transferee, the number of shares of Common Stock, the
purchase price and the term of the proposed transaction (a ".Bona Fide
Offer"), and offering the shares to the Company for purchase as
hereinafter provided. For a period of one hundred twenty (120) days from
its receipt of such notice, the Company shall have the right (but not
the obligation) to purchase all or any part of the shares offered.
If the Company does not elect to purchase within the prescribed tune period all
of the shares of Common Stock covered by the Bona Fine Offer, then the Bona Fide
Offer may be accepted in whole (but not in part) with respect to the shares not
purchased by the Company, and the Company shall provide the Stockholder tenth
notice that the transfer of such shares is authorized in accordance with the
price and terms specified in the notice within spay (60) days after the receipt
of such authorization. If the shares of Common Stock the transfer of which is
approved are not so transferred within such sixty day (60) day period, there the
shares shall again be subject to the terms of this Article. The Board may, in
its discretion, condition a transfer on the transferee's execution an agreement
providing for a similar right of first refusal by the Company.
9.3. Death of the Participant. In the event of the death of Participant, his
executors or administrators and each transferee of the Participant's
shares shall within ninety (90) days after the date of death give
written notice thereof to the Company. Within one hundred twenty (120)
days after receipt of the written notice, the Company may elect to
purchase all the shares of Common Stock owned on the date by the
Stockholder, including Common Stock transferred by the Stockholder to a
revocable trust, Common Stock held on behalf of the Stockholder, by a
transferee under Section 9.6 or by the executor, administrator or
trustee of the Stockholders estate upon the death of the Stockholder. If
the Company does not elect to purchase the Common Stock, the shares may
be retained by the estate of the Participant or by such other
transferees subject to all the Company's continuing rights under this
Article IX. If the Participant (or the Participant's transferee) has
outstanding vested Options to purchase Common Stock at the time of the
Participant's death, then with respect to those shares of Common Stock
subject to the outstanding Options, the one hundred twenty (120) day
period in which the Company may elect to purchase the Common Stock shall
not begin until the Options are exercised or expire.
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9.4. Termination of Employment of the Participant. If a Participant, for any
reason other than the Participant's death, with or without cause, incurs
a Termination of Employment, then within one hundred twenty (120) days
of the date of such cessation of employment, the Company may elect to
purchase as hereinafter provided any or all of the shares of Common
Stock by giving written notice thereof to the Stockholder. If the
Participant (or the Participant's transferee) has outstanding vested
Options to purchase Common Stock at the time he or she terminates
employment, the one hundred twenty (120) day period in which the Company
may elect to purchase the Common Stock shall not begin until the Options
are exercised or expire. Failure of the Company to elect to purchase the
shares of Common Stock under this Section shall not affect its rights to
purchase the same shares of Common Stock under Sections 9.2 or 9.5 in
the event of a proposed sale, assignment, transfer, exchange,
encumbrance, pledge or other disposition by the Stockholder. If the
Participant dies during the one hundred twenty (120) day period in which
the Board has the right to elect to purchase the Common Stock under this
Section 9.4 and the Board has yet to give notice as to its
determination, the election period of the Board shall terminate upon
receipt of notice of the Participant's death, the Company shall retain
its rights to purchase the same shares of Common Stock under Section
9.3.
9.5. Transfers by Operation of Law. In the event that a Stockholder (i) files
a voluntary petition under any bankruptcy or insolvency law or a
petition for the appointment of a receiver or makes an assignment for
the benefit of creditors, or (ii) is subjected involuntarily to such a
petition or assignment or to an attachment or other legal or equitable
interest with respect to his shares of Common Stock and such involuntary
petition or assignment or attachment is not discharged within sixty (60)
days after its date, or (iii) is subject to a transfer of his shares of
Common Stock by operation of law, the Company shall have the right to
elect to purchase any or all of the shares of Common Stock which are
owned by the Stockholder (or acquired pursuant to the exercise of an
outstanding Option) as if the Stockholder had incurred a Termination of
Employment under Section 9.4. Failure of the Company to elect to
purchase the Common Stock under this Section shall not affect its right
to purchase the sane shares under Section 9.2 in the event of a proposed
sale, assignment, transfer, exchange, encumbrance or other disposition
by the Stockholder. If the Stockholder dies during the One hundred
twenty (120) day period in which the Board has the right to elect to
purchase the Common Stock under this Section 9.5 and the Board has yet
to give notice as to its determination, the election period of the Board
shall terminate upon receipt of notice of the Stockholder's death; the
Company shall retain its rights to purchase the same shares of Common
Stock under Section 9.3.
9.6. Exceptions to Restrictions. Except as provided above, these restrictions
shall be inapplicable to:
(a) Transfers of Common Stock to the children, grandchildren,
spouse, one or more trusts for the benefit of such family member
or a partnership in which such family members are the only
partners,
(b) Transfers of Common Stock between a Stockholder and his guardian
or conservator, and
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(c) Transfers of the Common Stock of a deceased Stockholder to his
executors or administrators or to trustees under his or her will
subject to the application of Section 9.3;
provided, that such Common Stock in the hands of each such transferee
shall remain subject to this Article IX.
9.7. Purchase Price and Payment.
(a) The purchase price per share of Common Stock which the Company
elects to purchase hereunder shall be the lesser of (i) the
price proposed by the transferee pursuant to the notice
specified in Section 9.2 if the purchase is a result of a notice
of a Bona Fide Offer or (ii) the fad market value of shares of
Common Stock subject to this Article IX. The fair market value
of the shares of Common Stock subject to a purchase right under
this Article IX shall be detached by the Board, which shall use
such method or methods and consider such factors as it deems
appropriate. The Company may, but shall not be required to, rely
on a fair market value determination made by the Board not more
than one year prior to the date of purchase by the Company. The
fair market value determined by the Board shall be binding on
all holders of Common Stock subject to this Article IX.
(b) The Company shall generally pay the purchase price of the Common
Stock in cash or by certified or bank checks. However, if the
Company shall, in the opinion of the Board, be unable or
believes it to be undesirable to pay in cash in full the
purchase price of the Common Stock, the Company shall have the
right to pay all or a portion of the purchase price in
substantially equal installments with interest at a rate
determined by the Board, but no less than else applicable
Federal Rate for mid-term loans on the determination date, due
and fully payable in no more than four years and secured by an
the Common Stock purchased by the Company. If payment is made in
installments, the first payment shall be due on the closing date
and the red payments plus accrued interest shall be due on each
of the first through fourth anniversary dates of the closing
date, respectively. Furthermore, if the purchase is a result of
a notice of a Bona Fide Offer under Section 9.2, the Company may
elect to make payments to the Stockholder in the same manner and
according to the same terms as the terms specified in the notice
of Bona Fide Offer transfer given by the Stockholder to the
Company
(c) The closing of the purchase of Common Stock by the Company shall
be on a date mutually agreeable to the Stockholder and the
Company within sixty (60) days from the date of receipt of the
Company's notice of intent to purchase the shares.
9.8. Tenders. Except as expressly provided herein, in all circumstances where
the Company may elect purchase shares of Common Stock the Company in its
sole discretion may elect to authorize the Transfer of all or any part
of the shares purchased. All shares of Common Stock which the Company
his elected to purchase hereunder shall be tendered to the Company, or
to the assignees designated by it in accordance with Section 9.13, at
the principal office of the Company at a reasonable date and time
specified by it (in any
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event within the latest of sixty (60) days from the Companies election),
by delivery of certificates representing such shares endorsed in blank
and in proper form for transfer against payment of the purchase price in
cash or by certified or bank checks, or upon such terms as are
applicable under Section 9.7.
9.9. Rights of the Stockholder. If the Company exercises its rights to
purchase the Common Stock of the Stockholder under this Article IX, the
Stockholder (i) shall continue to be entitled to notice of any meeting
of Stockholders and to vote such Common Stock for any purpose until the
closing date under Section 7 and (ii) shall be entitled to the payment
of dividends or other distributions declared on the Common Stock until
the date as of which the fair market value of the Common Stock is
determined under Section 7.
9.10. Waiver on Disposition of Common Stock. From time to time the Company by
action of the Board may waive its rights hereunder either generally or
with respect to one or more specific transfers which have been proposed,
attempted or made. A waiver with respect to one or more transfers shall
not affect the Companies rights with respect to other shares of Common
Stock subject to this Article IX.
9.11. Legend on Certificates. Each certificate of Common Stock subject to this
Article IX shall bear on its face the following legend;
The shares represented by this certificate are subject
to restrictions on transfer, a copy of the terms of which will
be furnished by the Company to the holder of this certificate
upon written request and without charge.
9.12. Changes in the Companies Structure. If during the term of the Company's
repurchase rights under this Article IX the Company shall effect a
subdivision or consolidation of shares or other capital readjustment,
the payment of a stock dividend, or other increase or reduction of the
number of shares of the Common Stock outstanding applicable to all
holders of the Common Stock pro rata, without receiving compensation
therefor in money, services or properly, then (i) in the event of an
increase in the number of shares of Common Stock outstanding, the number
of shares then subject to this Article IX shall be proportionately
increased, and (ii) in the event of a reduction in the number of such
shares of Common Stock outstanding, the number of shares then subject to
this Article IX shall be proportionately reduced
9.13. Rights Not Transferable. Except as provided herein, the Company's rights
under the Article IX are not transferable. No assignment or transfer of
the Company's rights under the Article IX whether voluntary or
involuntary, by operation of law or otherwise, shall vest in the
assignee or transferee any Interest or right herein whatsoever; upon the
attempt to enter into any such assignment or transfer the rights of the
Company hereunder shall terminate and become of no farther elect whether
the Company is otherwise entitled to such rights at the time
Notwithstanding the above, if the Company is merged into or consolidated
with another company under circumstances where the Company is not the
surviving company, or if the Company is liquidated, or sells or
otherwise disposes of substantially all of its assets to another
company, the successor company shall assume all
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rights and liabilities of the Company under this Article IX. The Company
shall also have the right to assign its purchase rights under the
Article IX to any affiliated company, including any parent or subsidiary
company.
9.14. Transfers in Violation of Repurchase Rights. If any transfer of shares
of Common Stock is made or attempted contrary to the provisions of this
Article IX or if shares of Common Stock are not offered to the Company
as required by this Article IX, the Company shall have the right to
purchase those shares from the owner thereof or his transferees at any
time before or after the transfer, as hereinafter provided. In addition
to any other legal or equitable remedies which it may have, the Company
may enforce its rights by action for specific performance (to the extent
permitted by law) and may refuse to recognize any transferee as one of
its shareholders for any purpose, including without limitation for
purposes of dividend and voting rights, until compliance with all
applicable provisions of this Article IX has occurred.
9.15. Parties. Except as provided in the Participants' Agreements, the
repurchase rights of this Article IX shall be binding upon the Company
and the Participants and their heirs, representatives, successors and
assigns.
9.16. Notices. All notices and elections hereunder shall be in writing and
shall be delivered or sent by registered or certified mail, postage
prepaid. If notice is to be given to the Company, such notice shall be
delivered or mailed to the Secretary of the Company.
If notice is to be given to the Stockholder, such notice shall be
delivered or mailed to his or her most recent address as listed in the
books and records of the Company.
All notices shall be Treated as received on the earlier of the date of
delivery or the fiRh business day after big deposited postage prepaid in
the United States mails.
9.17. Termination of Repurchase Rights. The repurchase rights of the Company
under this Article IX shall terminate upon the announcement by the
Company's Board that the Companies Common Stock has commenced to be
traded on an established securities market.
ARTICLE X
CHANGE IN CAPITAL STRUCTURE
(a) The existence of outstanding Options shall not affect in any way
the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Companies capital
structure or its business, or any merger or consolidation of the
Company, or any issuance of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the
Company, or any sale or transfer of all or any part of its
assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
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(b) If the Company shall elect a subdivision or consolidation of
shares or other capital readjustment, the payment of a stock
dividend, or other increase or reduction of the number of shares
of the Common Stock outstanding, without receiving compensation
therefore m money, services or property, then (i) the number,
class, and per share price of shares of Common Stock subject to
outstanding Options, SARs and Stock Awards hereunder shall be
appropriately adjusted in such a manner as to entitle an
optionee to receive upon exercise of an Option or an SAR or the
receipt of a Stock Award, for the same aggregate cash
consideration, the same total number and class of shares as he
would have received had the optionee exercised his or her Option
or SAR or received his or her Stock Award in full immediately
prior to the event requiring the adjustment; and (ii) the number
and class of shares then reserved for issuance under the Plan
shall be adjusted by substituting for the total number and class
of shares of Common Stock then reserved that number and class of
shares of Common Stock that would have been received by the
owner of an equal number of outstanding shares of each class of
Common Stock as the result of the event requiring the
adjustment.
(c) After a merger of one or more corporations into the Company or
after a consolidation of the Company and one or more
corporations in which the Company shall be the surviving
company, each holder of an Option or an SAR shall, at no
additional cost, be entitled upon exercise of such Option or SAR
to receive (subject to any required action by stockholders) in
lieu of the number and class of shares as to which such Option
or SAR shall then be so exercisable, the number and class of
shares of stock or other securities to which such Option holder
would have been entitled pursuant to the terms of the agreement
of merger or consolidation if, immediately prior to such merger
or consolidation, such Option holder had been the holder of
record of the number and class of shares of Common Stock equal
to the number and class of shares to which such Option or SAR
shall be so exercised.
(d) If the Company is merged into or consolidated with another
company under circumstances where the Company is not the
surviving company, or if the Company is liquidated or sells or
otherwise disposes of substantially all of its assets to another
company while unexercised Options or SARs or unvested Stock
Awards remain outstanding under the Plan, unless provisions are
made in connection with such transaction for the continuance of
the Plan and/or the assumption or substitution of such Options
or SARs with new options, stock appreciation rights covering the
stock of the successor company, or parent or subsidiary thereof,
with appropriate adjustments as to the number and kind of shares
and prices, then all outstanding Options, SARs and Stock Awards
shall be vested as of the effective date of any such merger,
consolidation, liquidation, or sale (the "corporate event").
(e) Except as previously expressly provided, neither the issuance by
the Company of shares of stock of any class, or securities
convertible unto shares of stock of any class, for cash or
property, or for labor or services either upon direct sale or
upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of
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shares or obligations of the Company convertible into such shares or
other securities, nor the increase or decrease of the number of
authorized shares of stock, nor the addition or deletion of classes of
stock, shall affect, and no adjustment by reason thereof shall be made
with respect to, the number, class or price of shares of Common Stock
then subject to outstanding Options.
(f) Adjustment under the preceding provisions of this section will
be made by the Committee, whose determination as to what
adjustments will be made and the extent thereof will be final,
binding, and conclusive. No fractional interest will be issued
under the Plan on account of any such adjustment. No adjustment
will be made in a manner that causes an Incentive Stock Option
to fail to continue to qualify as an Incentive Stock Option
under the Code.
(g) The Board may make Stock Awards and may grant Options and SARs
in substitution for performance shares, phantom shares, stock
awards, stock options, stock appreciation rights, or similar
awards held by an individual who becomes an employee of the
Company or an Affiliate in connection with a transaction
described in paragraph (c) of this Article X. Notwithstanding
any provision of the Plan (other than the limitation of Section
5.2), the terms of such substituted Stock Awards or Option or
SAR grants shall be as the Board, in its discretion, determines
is appropriate.
ARTICLE XI
COMPLIANCE WITH LAW AND
APPROVAL OF REGULATORY BODIES
No Option or SAR shall be exercisable, no Common Stock shall be issued,
no certificates for shares of Common Stock shall be delivered, and no payment
shall be made under this Plan except in compliance with all applicable federal
and state laws and regulations (including, without limitation, withholding tax
requirements), any listing agreement to which the Company is a party, and the
rules of all domestic stock exchanges on which the Companies shares may be
listed. The Company shall have the right to rely on an opinion of its counsel as
to such compliance. Any share certificate issued to evidence Common Stock when a
Stock Award is granted or for which an Option or SARs is exercised may bear such
legends and statements as the Committee may deem advisable to assure compliance
ninth federal and state laws and regulations. No Option or SAR shall be
exercisable, no Stock Award shall be granted, no Common Stock shall be issued,
no certificate for shares shall be delivered, and no payment shall be made under
this Plan until the Company has obtained such consent or approval as the
Committee may deem advisable from regulatory bodies having jurisdiction over
such matters.
ARTICLE XII
GENERAL PROVISIONS
12.1. Effect on Employment and Service. Neither the adoption of this Plan, its
operation, nor any documents describing or referring to this Plan (or
any part thereof) shall confer upon
19
<PAGE> 20
any individual any right to continue in the employ or service of the
Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate or in any way affect any right and power of the
Company or an Affiliate to terminate the employment or service of any
individual at any time with or without assigning a reason therefor.
12.2. Unfunded Plan. The Plan, insofar as it provides for grants, shall be
unfunded, and the Company shall not be required to segregate any assets
that may at any time be represented by grants under this Plan. Any
liability of the Company to any person with respect to any grant under
this Plan shall be based solely upon any contractual obligations that
may be created pursuant to this Plan. No such obligation of the Company
shall be deemed to be secured by any pledge of, or other encumbrance on,
any property of the Company.
12.3. Rules of Construction. Headings are given to the articles and sections
of this Plan solely as a convenience to facilitate reference. The
reference to any statute, regulation, or other provision of law shall be
construed to refer to any amendment to or successor of such provision of
law.
12.4. Choice Of Law. The Plan and all Agreements entered into under the Plan
shall be interpreted under the law of the state of Delaware.
ARTICLE XIII
AMENDMENT
The Board may amend or terminate this Plan from time to time; provided,
however, that no amendment may become effective until shareholder approval is
obtained if the amendment increases the aggregate number of shares of Common
Stock that may be issues under the Plan. No amendment shall without a
Participant's consent, adversely affect any rights of such Participant under any
outstanding Stock Award, Option or SAR outstanding at the time such amendment is
made.
ARTICLE XIV
EFFECTIVE DATE OF PLAN, DURATION OF PLAN
(a) The Plan became effective as of September _________, 1997 upon
adoption by the Board, subject to approval within one (1) year by the holders of
a majority of the shares of Common Stock.
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<PAGE> 21
(b) Unless previously terminated, the Plan will terminate ten (10) years
after the earlier of (i) the date the Plan is adopted by the Board, or (ii) the
date the Plan is approved by the shareholders except that Options, SARs and
Stock Awards that are granted under the Plan prior to its termination will
continue to be administered under the terms of the Plan until the Options
terminate or are exercised. Notwithstanding termination of the Plan, the
Company's rights under Article IX shall continue in full force and elect.
Date: ______________, 1997 THE COMPUCARE COMPANY
By:_________________________________
Title:______________________________
21
<PAGE> 1
EXHIBIT 99.28
INCENTIVE STOCK OPTION AGREEMENT
THE COMPUCARE COMPANY
1997 STOCK COMPENSATION PLAN
Russell C. Odom (the "Optionee") is granted, effective as of October 20,
1998 (the "Option Grant Date"), options (the "Options") to purchase shares of
common stock, $0.01 par value, of The Compucare Company (the "Option Shares")
pursuant to the 1997 Stock Compensation Plan (the "Plan") of The Compucare
Company (the "Company"). The Options are subject to the terms and conditions set
forth below and in the Plan, which is attached to and made a part of this Stock
Option Agreement (the "Agreement"). Capitalized terms used in the Agreement have
the same meaning as defined in the Plan.
1. Exercise Price: $2.85 per Option Share.
2. Number of Option Shares: 5,000.
3. Type of Option:
Incentive Stock Option (i.e., an option which is an incentive stock
option under Section 422 of the Internal Revenue Code).
4. Vesting:
The Options will become vested in accordance with the following
schedule:
On October 20, 1999 - 1,250 OPTION SHARES.
On the first day of each month, beginning November 1, 1999 -
104 OPTION SHARES. On October 1, 2002 - 110 OPTION SHARES.
These Options become vested in full upon a Change in Control (as defined
in Section 2.4 of the Plan) prior to the Optionee's termination of employment.
Vesting of Options ceases upon termination of employment.
5. Exercise of Option: Exercise must be made by delivery to the Company at
its principal executive office of a notice signed by the Optionee that states
the number of shares to be purchased and is accompanied by payment of the
Exercise Price for the shares to be purchased. The Exercise Price may be paid
with existing shares of Common Stock of the Company as provided by Section 6.1l
of the Plan.
6. Registration Under Federal And State Securities Laws: These Options may
not be exercised and the Company is not required to deliver shares of Common
Stock unless such shares have been registered under Federal and applicable state
securities laws, or are then exempt from such registration requirements.
<PAGE> 2
7. Forfeiture of Options: These Options are subject to forfeiture in
accordance with Section 6.8 of the Plan.
8. Repurchase Rights: The shares of Common Stock acquired upon exercise of
this Option me subject to repurchase rights on behalf of the Company as provided
by Article IX of the Plan.
9. Transferability of Option: These Options are not transferable pursuant
to Section 6.6 of the Plan.
10. Expiration Date: The Options are subject to the expiration rules of
Section 6.7 of the Plan. In general, the options expire three months after
termination of employment, except if the Optionee terminates employment by
reason of death or disability, the Options expire one year after termination of
employment and if the Optionee terminates employment by reason of retirement on
or after age 62, the Options expire three years after termination of employment.
Subject to earlier termination as provided its this Agreement and the Plan, the
Options expire on October 20, 2008, the tenth Adversary of the date of grant,
unless earlier exercised.
The Corporation by its duly-authorized officer agrees to the terms and
conditions of this Agreement.
The Compucare Company
By:______________________________________
Title: Chairman and CEO
The Optionee accepts the Option subject to the terms and conditions of
the Plan and this Agreement.
_____________________________ ____________________
Optionee's Signature Date
The undersigned spouse of the Optionee hereby acknowledges and agrees to
the Company's rights of repurchase as provided in Article IX of the Plan.
_____________________________ ____________________
Spouse's Signature Date
2
<PAGE> 1
EXHIBIT 99.29
COMPENSATION AGREEMENT
This Agreement is made as of the _______ day of ___________, 199___ by
and between QuadraMed Corporation, a Delaware corporation (the "Corporation"),
and _____________________ ("Optionee").
W I T N E S S E T H
WHEREAS, in consideration for services performed by Optionee, the
Corporation granted Optionee a stock option on _________________, 1998, to
purchase ___________ shares of the Corporation's Common Stock (the "Option")
upon the terms and conditions set forth in the documentation evidencing such
Option.
NOW, THEREFORE, in consideration of the above premises, the parties
hereto agree as follows:
1. The Corporation and Optionee acknowledge and agree that the
Option is granted solely as compensation for services rendered the Corporation
by Optionee and not for any capital-raising purposes or in connection with any
capital-raising activities.
2. The Option shall not be transferable or assignable except in
connection with Optionee's death.
3. This Agreement is intended to constitute a written compensation
contract within the meaning of Rule 405 of Regulation C of the Rule promulgated
under the Securities Act of 1933, as amended.
4. This Agreement is intended solely to memorialize the agreement
and understanding which exists between Optionee and the Corporation concerning
the grant of the Option. Nothing herein or in the documentation evidencing the
Option is intended to provide Optionee with the right to remain in the
Corporation's service for any specific period, and Optionee's services may be
terminated at any time by the Corporation, for any reason, with or without
cause.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the date first above written.
OPTIONEE QUADRAMED CORPORATION
By:______________________________________
Title:___________________________________
__________________________
<PAGE> 1
EXHIBIT 99.30
[PURSUANT TO WRITTEN
COMPENSATION AGREEMENT]
QUADRAMED CORPORATION
NOTICE OF GRANT OF STOCK OPTION
Notice is hereby given of the following option grant (the "Option") to
purchase shares of the Common Stock of QuadraMed Corporation (the
"Corporation"):
Optionee: ___________________________________________________
Grant Date: _________________________________________________
Vesting Commencement Date: __________________________________
Exercise Price: _____________________________________________
Number of Option Shares: ____________________________________
Expiration Date: ____________________________________________
Type of Option: Non-Statutory Stock Option
Exercise Schedule: The Option shall become exercisable with respect to
twenty-five percent (25%) of the Option Shares upon Optionee's
completion of one (1) year of Service measured from the Vesting
Commencement Date and shall become exercisable for the balance of the
Option Shares in thirty-six (36) successive equal monthly installments
upon Optionee's completion of each additional month of Service over the
thirty-six (36)-month period measured from the first anniversary of the
Vesting Commencement Date. In no event shall the Option become
exercisable for any additional Option Shares after Optionee's cessation
of Service.
Optionee agrees to be bound by the terms of the Option as set forth in
the Stock Option Agreement attached hereto as Exhibit A.
No Employment or Service Contract. Nothing in this Notice or in the
attached Stock Option Agreement shall confer upon Optionee any right to continue
in Service for any period of specific duration or interfere with or otherwise
restrict in any way the rights of the Corporation (or any Parent or Subsidiary
employing or retaining Optionee) or of Optionee, which rights are hereby
expressly reserved by each, to terminate Optionee's Service at any time for any
reason, with or without cause.
<PAGE> 2
Definitions. All capitalized terms in this Notice shall have the meaning
assigned to them in this Notice or in the attached Stock Option Agreement.
2
<PAGE> 3
Date: ________________________, 199
QUADRAMED CORPORATION
By:______________________________________
Title:___________________________________
_________________________________________
_____________, OPTIONEE
Address:_________________________________
_________________________________________
ATTACHMENTS
EXHIBIT A - STOCK OPTION AGREEMENT
3
<PAGE> 1
EXHIBIT 99.31
[PURSUANT TO WRITTEN COMPENSATION AGR.]
QUADRAMED CORPORATION
STOCK OPTION AGREEMENT
RECITALS
A. The Board has deemed it appropriate to grant Optionee an option
to purchase shares of Common Stock of the Corporation.
B. Optionee is to render valuable services to the Corporation or
its Parent or Subsidiary corporations, and this Agreement is executed in
connection with the Corporation's grant of an option to Optionee.
C. The granted option is issued to Optionee in compensation for the
services which Optionee is to render the Corporation and not for any
capital-raising purposes or in connection with any capital-raising activities.
D. The granted option is a stock option which does not meet the
requirements of Section 422 of the Internal Revenue Code, as amended.
E. All capitalized terms in this Agreement shall have the meaning
assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to Optionee, as
of the Grant Date, an option to purchase up to the number of Option Shares
specified in the Grant Notice. The Option Shares shall be purchasable from time
to time during the option term specified in Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a maximum term of ten (10)
years measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date, unless sooner terminated in accordance with
Paragraph 5 or 6.
3. LIMITED TRANSFERABILITY. This option shall generally be neither
transferable nor assignable by Optionee other than by will or by the laws of
descent and distribution following Optionee's death and may be exercised, during
Optionee's lifetime, only by Optionee. However, this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established for the exclusive benefit of one or more such family
members. The assigned portion
1.
<PAGE> 2
shall be exercisable only by the person or persons who acquire a proprietary
interest in the option pursuant to such assignment. The terms applicable to the
assigned portion shall be the same as those in effect for this option
immediately prior to such assignment and shall be set forth in such documents
issued to the assignee as the Board may deem appropriate.
4. DATES OF EXERCISE. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. CESSATION OF SERVICE. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(i) Should Optionee cease to remain in Service for
any reason (other than death, Permanent Disability or
Misconduct) while this option is outstanding, then Optionee
shall have a period of three (3) months (commencing with the
date of such cessation of Service) during which to exercise this
option, but in no event shall this option be exercisable at any
time after the Expiration Date.
(ii) If Optionee dies while this option is
outstanding, then the personal representative of Optionee's
estate or the person or persons to whom the option is
transferred pursuant to Optionee's will or in accordance with
the laws of descent and distribution shall have the right to
exercise this option. Such right shall lapse, and this option
shall cease to be outstanding, upon the earlier of (A) the
expiration of the twelve (12)- month period measured from the
date of Optionee's death or (B) the Expiration Date.
(iii) Should Optionee cease Service by reason of
Permanent Disability while this option is outstanding, then
Optionee shall have a period of twelve (12) months (commencing
with the date of such cessation of Service) during which to
exercise this option. In no event shall this option be
exercisable at any time after the Expiration Date.
(iv) During the limited period of post-Service
exercisability, this option may not be exercised in the
aggregate for more than the number of vested Option Shares for
which the option is exercisable at the time of Optionee's
cessation of Service. Upon the expiration of such limited
exercise period or (if earlier) upon the Expiration Date, this
option shall terminate and cease to be outstanding for any
vested Option Shares for which the option has not been
exercised. However, this option shall, immediately upon
Optionee's cessation of Service for any reason, terminate and
cease to be outstanding with respect to any
2.
<PAGE> 3
Option Shares in which Optionee is not otherwise at that time
vested or for which this option is not otherwise at that time
exercisable.
(v) Should Optionee's Service be terminated for
Misconduct, then this option shall terminate immediately and
cease to remain outstanding.
6. SPECIAL ACCELERATION OF OPTION.
(a) This option, to the extent outstanding at the time of a
Corporate Transaction but not otherwise fully exercisable, shall automatically
accelerate so that this option shall, immediately prior to the effective date of
the Corporate Transaction, become exercisable for all of the Option Shares at
the time subject to this option and may be exercised for any or all of those
Option Shares as fully-vested shares of Common Stock. No such acceleration of
this option, however, shall occur if and to the extent: (i) this option is, in
connection with the Corporate Transaction, either to be assumed by the successor
corporation (or parent thereof) or to be replaced with a comparable option to
purchase shares of the capital stock of the successor corporation (or parent
thereof) or (ii) this option is to be replaced with a cash incentive program of
the successor corporation which preserves the spread existing on the unvested
Option Shares at the time of the Corporate Transaction (the excess of the Fair
Market Value of those Option Shares over the aggregate Exercise Price payable
for such shares) and provides for subsequent pay-out in accordance with the same
option exercise/vesting schedule set forth in the Grant Notice. The
determination of option comparability under clause (i) shall be made by the
Board, and such determination shall be final, binding and conclusive.
(b) Immediately following the Corporate Transaction, this
option shall terminate and cease to be outstanding, except to the extent assumed
by the successor corporation (or parent thereof) in connection with the
Corporate Transaction.
(c) If this option is assumed in connection with a Corporate
Transaction, then this option shall be appropriately adjusted, immediately after
such Corporate Transaction, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to the Exercise
Price, provided the aggregate Exercise Price shall remain the same.
(d) This Agreement shall not in any way affect the right of
the Corporation to adjust, reclassify, reorganize or otherwise change its
capital or business structure or to merge, consolidate, dissolve, liquidate or
sell or transfer all or any part of its business or assets.
7. ADJUSTMENT IN OPTION SHARES. Should any change be made to the
Common Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Corporation's receipt of
consideration, appropriate adjustments shall be made to (i) the total number
3.
<PAGE> 4
and/or class of securities subject to this option and (ii) the Exercise Price in
order to reflect such change and thereby preclude a dilution or enlargement of
benefits hereunder.
8. STOCKHOLDER RIGHTS. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
9. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect to all or
any part of the Option Shares for which this option is at the time exercisable,
Optionee (or any other person or persons exercising the option) must take the
following actions:
(i) Execute and deliver to the Corporation a Notice
of Exercise for the Option Shares for which the option is
exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation;
(B) a promissory note payable to the
Corporation, but only to the extent authorized by the
Board in accordance with Paragraph 13;
(C) shares of Common Stock held by Optionee
(or any other person or persons exercising the option)
for the requisite period necessary to avoid a charge to
the Corporation's earnings for financial reporting
purposes and valued at Fair Market Value on the Exercise
Date; or
(D) to the extent the option is exercised
for vested Option Shares, through a special sale and
remittance procedure pursuant to which Optionee (or any
other person or persons exercising the option) shall
concurrently provide irrevocable written instructions
(I) to a Corporation-designated brokerage firm to effect
the immediate sale of the purchased shares and remit to
the Corporation, out of the sale proceeds available on
the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased
shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by
the Corporation by reason of such exercise and (II) to
the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in
order to complete the sale transaction.
4.
<PAGE> 5
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise
Price must accompany the Notice of Exercise delivered to the Corporation
in connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option
(if other than Optionee) have the right to exercise this option.
(iv) Make appropriate arrangements with the
Corporation (or Parent or Subsidiary employing or retaining
Optionee) for the satisfaction of all Federal, state and local
income and employment tax withholding requirements applicable to
the option exercise.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other person or
persons exercising this option) a certificate for the purchased Option Shares,
with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
10. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of the
Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the Nasdaq
National Market, if applicable) on which the Common Stock may be listed for
trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain approval from
any regulatory body having authority deemed by the Corporation to be necessary
to the lawful issuance and sale of any Common Stock pursuant to this option
shall relieve the Corporation of any liability with respect to the non-issuance
or sale of the Common Stock as to which such approval shall not have been
obtained. The Corporation, however, shall use its best efforts to obtain all
such approvals.
11. SUCCESSORS AND ASSIGNS. Except to the extent otherwise provided
in Paragraphs 3 and 6, the provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Corporation and its successors and assigns
and Optionee, Optionee's assigns and the legal representatives, heirs and
legatees of Optionee's estate.
12. NOTICES. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated below Optionee's signature line on the
5.
<PAGE> 6
Grant Notice. All notices shall be deemed effective upon personal delivery or
upon deposit in the U.S. mail, postage prepaid and properly addressed to the
party to be notified.
13. FINANCING. The Board may, in its absolute discretion and without
any obligation to do so, permit Optionee to pay the Exercise Price for the
purchased Option Shares by delivering a full-recourse promissory note payable to
the Corporation. The terms of any such promissory note (including the interest
rate, the requirements for collateral and the terms of repayment) shall be
established by the Board in its sole discretion.
14. CONSTRUCTION. All decisions of the Board with respect to any
question or issue arising under this Agreement shall be conclusive and binding
on all persons having an interest in this option.
15. GOVERNING LAW. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of California
without resort to that State's conflict-of-laws rules.
16. LEAVE OF ABSENCE. The following provisions shall apply upon the
Optionee's commencement of an authorized leave of absence:
(a) The exercise schedule in effect under the Grant Notice
shall be frozen as of the first day of the authorized leave, and this option
shall not become exercisable for any additional installments of the Option
Shares during the period Optionee remains on such leave.
(b) Should Optionee resume active Employee status within
sixty (60) days after the start date of the authorized leave, Optionee shall,
for purposes of the exercise schedule set forth in the Grant Notice, receive
Service credit for the entire period of such leave. If Optionee does not resume
active Employee status within such sixty (60)-day period, then no Service credit
shall be given for the entire period of such leave.
(d) In no event shall this option become exercisable for any
additional Option Shares or otherwise remain outstanding if Optionee does not
resume Employee status prior to the Expiration Date of the option term.
6.
<PAGE> 7
EXHIBIT I
NOTICE OF EXERCISE
I hereby notify QuadraMed Corporation (the "Corporation") that I elect
to purchase ___________ shares of the Corporation's Common Stock (the "Purchased
Shares") at the option exercise price of $_____________________ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
on ___________________________, 199__.
Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise. Alternatively, I may utilize the special broker-dealer sale and
remittance procedure specified in my agreement to effect payment of the Exercise
Price.
___________________________, 199
Date
Optionee
Address:_________________________________
_________________________________________
Print name in exact manner
it is to appear on the
stock certificate: _________________________________________
Address to which certificate
is to be sent, if different
from address above: _________________________________________
_________________________________________
Social Security Number: _________________________________________
Employee Number: _________________________________________
_________________________________________
<PAGE> 8
APPENDIX
The following definitions shall be in effect under the Agreement:
A-1
<PAGE> 9
A. AGREEMENT shall mean this Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CODE shall mean the Internal Revenue Code of 1986, as amended.
D. COMMON STOCK shall mean the Corporation's common stock.
E. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Corporation's outstanding securities are transferred to a person or
persons different from the persons holding those securities immediately
prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete liquidation or
dissolution of the Corporation.
F. CORPORATION shall mean QuadraMed Corporation, a Delaware
corporation.
G. EMPLOYEE shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
H. EXERCISE DATE shall mean the date on which the option shall have
been exercised in accordance with Paragraph 9 of the Agreement.
I. EXERCISE PRICE shall mean the exercise price per share as
specified in the Grant Notice.
J. EXPIRATION DATE shall mean the date on which the option expires
as specified in the Grant Notice.
K. FAIR MARKET VALUE per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as the price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market
Value shall be the closing selling price on the last preceding date for
which such quotation exists.
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<PAGE> 10
(ii) If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price
per share of Common Stock on the date in question on the Stock Exchange
determined by the Board to be the primary market for the Common Stock,
as such price is officially quoted in the composite tape of transactions
on such exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such
quotation exists.
L. GRANT DATE shall mean the date of grant of the option as
specified in the Grant Notice.
M. GRANT NOTICE shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
N. MISCONDUCT shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any other intentional misconduct by Optionee adversely
affecting the business or affairs of the Corporation (or any Parent or
Subsidiary) in a material manner. The foregoing definition shall not be deemed
to be inclusive of all the acts or omissions which the Corporation (or any
Parent or Subsidiary) may consider as grounds for the dismissal or discharge of
Optionee or any other individual in the Service of the Corporation (or any
Parent or Subsidiary).
O. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.
P. NOTICE OF EXERCISE shall mean the notice of exercise in the form
attached hereto as Exhibit I.
Q. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
R. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
S. PARENT shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
T. PERMANENT DISABILITY shall mean the inability of Optionee to
engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which is expected to result in death
or has lasted or can be expected to last for a continuous period of twelve (12)
months or more.
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<PAGE> 11
U. SERVICE shall mean the Optionee's performance of services for
the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
V. STOCK EXCHANGE shall mean the American Stock Exchange or the New
York Stock Exchange.
W. SUBSIDIARY shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
4
<PAGE> 1
EXHIBIT 99.32
QUADRAMED CORPORATION
STOCK OPTION ASSUMPTION AGREEMENT
_______________ PLAN
OPTIONEE: <<Employee>>
STOCK OPTION ASSUMPTION AGREEMENT effective as of the ____th day
of __________, _____ by Quadramed Corporation, a Delaware corporation
("Quadramed").
WHEREAS, the undersigned individual ("Optionee") holds one or
more outstanding options to purchase shares of the common stock of
______________, Inc., a ____________ corporation ("Target"), which were granted
to Optionee under the ______________, Inc. _______________ Plan (the "Plan") and
are each evidenced by the following agreement between Target and Optionee: a
Stock Option Agreement (the "Option Agreement").
WHEREAS, Target has been acquired by Quadramed through the merger
of Target with and into Quadramed (the "Merger") pursuant to the Amended and
Restated Agreement and Plan of Reorganization dated ___________, ______ by and
between Quadramed and Target (the "Reorganization Agreement").
WHEREAS, the provisions of the Reorganization Agreement require
Quadramed to assume all obligations of Target under all outstanding options
under the Plan at the consummation of the Merger and to issue to the holder of
each outstanding option an agreement evidencing the assumption of such option.
WHEREAS, pursuant to the provisions of the Reorganization
Agreement, the exchange ratio (the "Exchange Ratio") in effect for the Merger is
_________ of a share of Quadramed common stock ("Quadramed Stock") for each
outstanding share of Target common stock ("Target Stock").
WHEREAS, this Agreement is effective as of the consummation of
the Merger (the "Effective Time") in order to reflect certain adjustments to
Optionee's outstanding options under the Plan which have become necessary by
reason of the assumption of those options by Quadramed in connection with the
Merger.
NOW, THEREFORE, it is hereby agreed as follows:
<PAGE> 2
1. The number of shares of Target Stock subject to the options held by
Optionee immediately prior to the Effective Time (the "Target Options") and the
exercise price payable per share are set forth in Exhibit(s) A hereto. Quadramed
hereby assumes, as of the Effective Time, all the duties and obligations of
Target under each of the Target Options. In connection with such assumption, the
number of shares of Quadramed Stock purchasable under each Target Option hereby
assumed and the exercise price payable thereunder have been adjusted to reflect
the Exchange Ratio. Accordingly, the number of shares of Quadramed Stock subject
to each Target Option hereby assumed shall be as specified for that option in
attached Exhibit(s) A, and the adjusted exercise price payable per share of
Quadramed Stock under the assumed Target Option shall also be as indicated for
that option in attached Exhibit(s) A.
2. The intent of the foregoing adjustments to each assumed Target Option
is to assure that the spread between the aggregate fair market value of the
shares of Quadramed Stock purchasable under each such option and the aggregate
exercise price as adjusted pursuant to this Agreement will, immediately after
the consummation of the Merger, be not less than the spread which existed,
immediately prior to the Merger, between the then aggregate fair market value of
the Target Stock subject to the Target Option and the aggregate exercise price
in effect at such time under the Option Agreement. Such adjustments are also
intended to preserve, immediately after the Merger, on a per share basis, the
same ratio of exercise price per option share to fair market value per share
which existed under the Target Option immediately prior to the Merger. Such
adjustments are also intended to preserve, to the extent applicable, the
Incentive Stock Option status of the assumed Target Options.
3. The following provisions shall govern each Target Option hereby
assumed by Quadramed:
(a) Unless the context otherwise requires, all references in
each Option Agreement and in the Plan (as incorporated into such Option
Agreement) (i) to the "Company" shall mean Quadramed, (ii) to "Stock"
shall mean shares of Quadramed Stock, (iii) to the "Board" shall mean
the Board of Directors of Quadramed and (iv) to the "Committee" shall
mean the Compensation Committee of the Quadramed Board of Directors.
(b) The grant date and the expiration date of each assumed
Target Option and all other provisions which govern either the exercise
or the termination of the assumed Target Option shall remain the same as
set forth in the Option Agreement applicable to that option, and the
provisions of the Option Agreement shall accordingly govern and control
Optionee's rights under this Agreement to purchase Quadramed Stock.
2.
<PAGE> 3
(c) Pursuant to the terms of the Option Agreement, none of your
options assumed by Quadramed in connection with the transaction will
terminate and cease to outstanding upon the consummation of the Merger.
Each Target Option shall be assumed by Quadramed as of the Effective
Time. Each such assumed Target Option shall thereafter continue to vest
for any remaining unvested shares of Quadramed Stock subject to that
option in accordance with the same installment vesting schedule in
effect under the applicable Option Agreement immediately prior to the
Effective Time; provided, however, that the number of shares subject to
each such installment shall be adjusted to reflect the Exchange Ratio.
(d) For purposes of applying any and all provisions of the
Option Agreement and the Plan relating to Optionee's status as an
employee or a consultant of Target, Optionee shall be deemed to continue
in such status as an employee or a consultant for so long as Optionee
renders services as an employee or a consultant to Quadramed or any
present or future Quadramed subsidiary. Accordingly, the provisions of
the Option Agreement governing the termination of the assumed Target
Options upon Optionee's cessation of service as an employee or a
consultant of Target shall hereafter be applied on the basis of
Optionee's cessation of employee or consultant status with Quadramed and
its subsidiaries, and each assumed Target Option shall accordingly
terminate, within the designated time period in effect under the Option
Agreement for that option, following such cessation of service as an
employee or a consultant of Quadramed and its subsidiaries.
(e) The adjusted exercise price payable for the Quadramed Stock
subject to each assumed Target Option shall be payable in any of the
forms authorized under the Option Agreement applicable to that option.
For purposes of determining the holding period of any shares of
Quadramed Stock delivered in payment of such adjusted exercise price,
the period for which such shares were held as Target Stock prior to the
Merger shall be taken into account.
(f) In order to exercise each assumed Target Option, Optionee
must deliver to Quadramed a written notice of exercise in which the
number of shares of Quadramed Stock to be purchased thereunder must be
indicated. The exercise notice must be accompanied by payment of the
adjusted exercise price payable for the purchased shares of Quadramed
Stock and should be delivered to Quadramed at the following address:
Quadramed Corporation
1003 West Cutting Boulevard
Richmond, California 94804
Attention: Option Plan Administrator
3.
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4. Except to the extent specifically modified by this Option Assumption
Agreement, all of the terms and conditions of each Option Agreement as in effect
immediately prior to the Merger shall continue in full force and effect and
shall not in any way be amended, revised or otherwise affected by this Stock
Option Assumption Agreement.
IN WITNESS WHEREOF, Quadramed Corporation has caused this Stock Option
Assumption Agreement to be executed on its behalf by its duly-authorized officer
as of the ___th day of ________, ______.
QUADRAMED CORPORATION
By:
----------------------------------
Corporate Secretary
ACKNOWLEDGMENT
The undersigned acknowledges receipt of the foregoing Stock
Option Assumption Agreement and understands that all rights and liabilities with
respect to each of his or her Target Options hereby assumed by Quadramed are as
set forth in the Option Agreement, the Plan and such Stock Option Assumption
Agreement.
------------------------------------
<<EMPLOYEE>>, OPTIONEE
DATED: __________________, __________
4.
