INCENTIVE STOCK OPTION AGREEMENT, made as of the 21st day of July, 1995
between Primedex Health Systems, Inc. (the "Company") and Steven R. Hirschtick,
an employee of the Company (the "Optionee").
NOW, THEREFORE, the Company and the Optionee by his acceptance of the grant
of this Incentive Stock option ("ISO") agree as follows:
1. Grant of Option.
The Company hereby grants to the Optionee as a separate inducement and
agreement in connection with his employment by the Company and not in lieu of
any salary or other remuneration for services, an ISO to purchase on the terms
and conditions hereinafter set forth and subject to the provisions of the
Company's Incentive Stock Option Plan (the "Plan"), the provisions and
definitions of which are hereby incorporated by reference herein, all or any
part of an aggregate of 400,000 shares of Common Stock of the Company (either
unissued or treasury), $.01 par value (the "Shares" or the "Common Stock").
2. Term of Option.
The ISO granted hereunder shall, notwithstanding anything to the contrary
contained herein or in the Plan, expire no later than July 21, 2000 (the
"Termination Date").
3. Termination of Employment.
Upon termination of employment of the Optionee with the Company and all
subsidiary corporations and parent corporations, any ISO previously granted to
the Optionee shall, to the extent not theretofore exercised, terminate and
become null and void, except that:
(a) if the Optionee shall die, or become totally and permanently disabled
(as described in Section 105(d)(4) of the Internal Revenue Code of 1986, as
amended from time to time-the "Code"), while in the employ of the Company or any
such corporation at a time when the Optionee was entitled to exercise the ISO as
herein provided, in case of death the legal representative of the Optionee, or
such person who acquired the ISO by bequest or inheritance or by reason of death
of the Optionee, or in the case of total and permanent disability the Optionee,
may, not later than one (1) year from the date of death or total and permanent
disability, exercise the ISO in respect of any or all of the total number of
shares of Common Stock as shall have been subject to the ISO and as shall not
have been previously purchased by the Optionee; and
(b) if the employment of the Optionee to whom such ISO shall have been
granted shall terminate by reason of the Optionee's retirement (at such age or
upon such conditions as shall be specified by the Committee or by the Board of
Directors) or dismissal by the Company other than for cause (as defined below),
and while the Optionee is entitled to exercise the ISO as herein provided, the
Optionee shall have the right to exercise the ISO granted hereunder, to the
extent of the number of shares of Common Stock subject to the ISO which were
purchasable by him at the date of termination of his employment, at any time up
to and including three (3) months after the date of such termination of
employment.
If the Optionee voluntarily terminates his employment, or is discharged for
cause, the ISO granted hereunder shall forthwith terminate with respect to any
unexercised portion thereof.
If the ISO granted hereunder shall be exercised by the legal representative
of a deceased optionee or former Optionee, or by a person who acquired the ISO
granted hereunder by bequest or inheritance or by reason of the death of the
Optionee, written notice of such exercise shall be accompanied by a certified
copy of letters testamentary or equivalent proof of the right of such legal
representative or other person to exercise the ISO.
For the purpose of this Agreement, "for cause" shall mean, as determined by
the Committee or the Board of Directors; (a) Optionee's conviction of, or a plea
of nolo contendere or its equivalent with respect to, a felony involving fraud
or dishonesty or any other crime for which a term of imprisonment in excess of
one (1) year could be imposed; or (b) Optionee's material breach of any of the
terms or conditions of an Employment Agreement in effect between the Optionee
and the Company or a subsidiary corporation or parent corporation of the Company
which material breach is not cured within ninety (90) days after receipt of
written notice from such employee corporation to the Optionee.
For the purpose of this Agreement, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on a leave of absence taken
with the consent of the corporation by which such individual was employed, or is
on active military service, and is determined to be an "employee" for purposes
of the exercise of the ISO, the Optionee shall not be entitled to exercise the
ISO during such period and while the employment relationship is treated as
continuing intact unless the Optionee shall have obtained the prior written
consent of such corporation, which consent shall be signed by the Chairman of
the Board, the President, a senior vice-president or other duly authorized
officer of such corporation.
A termination of employment shall not be deemed to occur by reason of (i)
the transfer of the Optionee from employment by the Company to employment by a
subsidiary corporation or a parent corporation of the Company or (ii) the
transfer of the Optionee from employment by a subsidiary corporation or a parent
corporation of the Company to employment by the Company or by another subsidiary
corporation or parent corporation of the Company.
4. Term of ISO; Limitations on the Right of Exercise.
The Optionee may exercise the ISO in full for the aggregate number of
shares of Common Stock subject to the ISO, but only after he has been an
employee of the Company including any subsidiary corporation and parent
corporation of the Company (during the time such entity was a subsidiary or
parent of the Company) for a period of at least one (1) year (the "minimum
employment").
The ISO granted hereunder shall be exercisable during a period of five (5)
years from the date of grant of the ISO.
To the extent that the ISO is not exercised within the period of
exercisability specified above, it shall expire as to the then unexercised part.
If the ISO granted hereunder shall terminate prior to the Termination Date, the
Committee or the Board of Directors shall have the right to use the Common Stock
as to which such ISO shall not have been exercised to grant one or more
additional ISO's to any eligible employee under the Plan.
In no event shall the ISO granted hereunder be exercised for a fraction of
a share.
5. Nontransferability.
The ISO granted hereunder shall not be transferable otherwise than by will
or the laws of descent and distribution, arid shall be exercisable, during the
lifetime of the holder, only by such holder, or, if the holder is incompetent,
then by a committee of his person and property or by his other legal
representative who has been judicially appointed as such.
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6. Purchase Price and Payment.
(a) The price for each share of Common Stock purchasable under the ISO
granted hereunder shall be $.125.
The Company shall cause stock certificates representing tie shares of
Common Stock purchased under the ISO granted hereby to be issued only when it
shall have received the full purchase price for the Common Stock in cash, by
certified check or bank draft.
Upon the exercise of the ISO granted hereunder and upon payment of the
purchase price therefor, a certificate or certificates for the shares of Common
Stock as to which the ISO has been exercised shall be issued by the Company in
the name of the person exercising the ISO and shall be delivered to or upon the
order of such person or persons.
The Company may endorse such legend or legends upon the certificates of
shares of Common Stock issued upon exercise of the ISO granted hereunder, and
the Committee or the Board of Directors may issue such "stop transfer"
instructions to its transfer agent in respect of such shares of Common Stock, as
the Committee or the Board of Directors, in its discretion, determines to be
necessary or appropriate (i) to prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, or (ii) to
implement the provisions of any agreement between the Company and the Optionee
with respect to such shares of Common Stock.
The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of the shares of Common Stock, as well as all fees and
expenses necessarily incurred by the Company in connection with such issuance or
transfer, except fees and expenses which may be necessitated by the filing or
amending of a Registration Statement under the Securities Act of 1933, which
fees and expenses shall be borne by the recipient of the shares of Common Stock
unless such Registration Statement has been filed by the Company for its own
corporate purposes (and the Company so states) in which event the recipient of
the shares of Common Stock shall bear only such fees and expenses as are
attributable solely to the inclusion of such shares of Common Stock in the
Registration Statement.
Anything to the contrary herein contained notwithstanding, the Company
agrees on an annual basis commencing at such time as its audited financial
statements are available for the fiscal year ending October 31, 1995, at its
sole expense, to file a Registration Statement on Form S-8 under the Securities
Act of 1933 with the Securities and Exchange Commission and to file any
necessary amendments thereto through July 21, 2000 and while this ISO is
outstanding in whole or in part or any of the shares of Common Stock purchased
upon exercise thereof are beneficially owned by the Optionee and may not
otherwise be sold publicly (including sales pursuant to Rule 144), and to use
its best efforts to obtain effectiveness thereof so as to permit public offer
and sale of the shares of Common Stock underlying this ISO.
All shares of Common Stock issued as provided herein shall be fully paid
and non-assessable to the extent permitted by law.
(b) Anti-Dilution. The ISO granted pursuant to this agreement shall
continue notwithstanding any change or exchange of the shares of Common Stock
into or for a different number and/or kind of common shares of the Company or of
a corporation or other entity which succeeds to the business of the Company or
becomes its parent or subsidiary, whether or not such change or exchange results
from a recapitalization, stock split, split-up, split-off, combination of
shares, exchange of shares, issuance of rights to subscribe, change in capital
structure, reorganization, corporate merger, consolidation or separation, stock
dividends or liquidation, provided however, that the ISO, if still outstanding,
shall terminate if and when the business conducted by the Company (or any
successor to the Company) is substantially terminated or dissolved upon its
liquidation. In the event of such a change or exchange, an
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appropriate adjustment shall be made in the number and/or kind of shares subject
to option and/or in their per-share option price, and that in the event of a
transaction to which Section 424(a) of the Internal Revenue Code (or successor
provision of law) is applicable, the foregoing shall be accomplished thereunder
by assumption of the ISO or by the substitution of another incentive stock
option. In no case shall the making of any change, exchange, substitution or
assumption or related adjustment give the Optionee additional benefits which he
did not have under the old option, and the excess of the aggregate fair market
value of the shares subject to the Option immediately after any such change,
exchange, substitution and/or adjustment shall not be greater than such excess
of the fair market value of the Common Stock subject to the ISO immediately
before. Adjustment of the number of shares subject to the ISO shall not make the
ISO become exercisable as to a fractional share. Subject to the foregoing
limitations, the terms of any such adjustment shall be determined by the
Committee or the Board of Directors and such determination made in good faith
shall be final, provided that if pursuant to said Section 424(a) another
corporation or other successor assumes the ISO or substitutes another option,
its determination of the terms made in good faith shall be final.
7. Method of-Exercise.
The ISO shall be exercisable only by delivery of written notice to the
Secretary of the Company at the Company's offices in Los Angeles, California,
prior to the expiration of the ISO as specified in paragraphs 2 and 3 hereof.
Such notice shall state the election to exercise the ISO, and the number of
Shares in respect of which it is being exercised, and shall be signed by the
person or persons so exercising such ISO. The date the Company receives written
notice shall be the exercise date. In the event the ISO shall be exercised
pursuant to the provisions of paragraph 3 hereof by a person or persons other
than the Optionee, such notice shall be accompanied by proof satisfactory to the
Company of the right of such person or persons to exercise the ISO. The Company
shall issue and deliver, upon receipt of notice and payment in full of the
purchase price for the Shares as to which the ISO is being exercised, a
certificate or certificates representing such number of shares to which the
Optionee is entitled to receive under the Plan.
8. Miscellaneous.
(a) The Optionee shall not sell, assign, transfer, pledge, encumber or
otherwise dispose of this ISO. This ISO shall only be transferable pursuant to
the laws of descent and distribution and therefore may only be exercised by the
Optionee, or in the event of his death, by his executor, administrator, personal
representative, heirs or legatees.
(b) Any notice given pursuant to this Agreement by the Company or by the
Optionee shall be in writing and shall be deemed to have been duly given if
delivered by hand or by telecopy, or mailed by certified or registered mail,
return receipt requested:
If to the Company
Primedex Health Systems, Inc.
1516 Cotner Avenue
Los Angeles, California 90025
Attention: President
If to the Optionee
Steven R. Hirschtick
6301 Vista del Mar
Playa del Rey, California 90293
or to such other address as either party shall designate by written notice,
similarly given, to the other party.
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(c) Subject to the restrictions on transfer included herein, all the
covenants and provisions of this Agreement by or for the benefit of the Company
or the Optionee shall bind and inure to the benefit of their respective
successors and assigns hereunder.
(d) The Company will not merge or consolidate with or into, or sell,
transfer or lease all or substantially all of its property to, any other
corporation unless the successor, transferee or lessee corporation, as the case
may be (if not the Company), shall expressly assume the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Company.
(e) All statements contained in any schedule, exhibit, certificate or other
instrument delivered by or on behalf of the parties hereto, or in connection
with the transactions contemplated by this Agreement, shall be deemed to be
representations and warranties hereunder. Notwithstanding any investigations
made by or on behalf of the parties to this Agreement, all representations,
warranties and agreements made by the parties to this Agreement or pursuant
hereto shall survive, except that, if a party hereto has or, with the exercise
of due care would have, actual knowledge at the date hereof of facts which would
constitute a breach of the representations and warranties contained herein, such
breaches shall be deemed waived by such party if such party consummates the
transactions contemplated by this Agreement.
(f) This Agreement shall be deemed to be a contract made under the laws of
the State of New York and for all purposes shall be construed in accordance with
the internal laws of said State.
(g) Nothing contained in this Agreement shall be construed to give to any
person or corporation other than the Company and the Optionee any legal or
equitable right, remedy or claim under this Agreement, and this Agreement shall
be for the sole and exclusive benefit of the Company and the Optionee.
(h) Each of the parties acknowledges and agrees that in the event of any
breach of this Agreement by it, the other party would be irreparably harmed and
could not be made whole by monetary damages. Each party accordingly agrees to
waive the defense in any action for specific performance that a remedy at law
would be adequate and that the other party, in addition to any other remedy to
which it may be entitled at law or in equity, shall be entitled to compel
specific performance of this Agreement in any action instituted in the United
States District Court for the Central District of California, or, in the event
said Court would not have jurisdiction for such action, in any court of the
United States or any state thereof having subject matter jurisdiction for such
action. Each party consents to personal jurisdiction in any such action brought
in the United States District Court for the Central District of California to
service of process upon it in the manner set forth in Section 8(b) hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the date and year first above written.
PRIMEDEX HEALTH SYSTEMS, INC.
By: /s/ Howard Berger, M.D.
Howard Berger, M.D.,
Chief Financial Officer
/s/ Steven R. Hirschtick
Steven R. Hirschtick ("Optionee")