Exhibit 10.6
INSIGHT HEALTH SERVICES HOLDINGS CORP.
2001 STOCK OPTION PLAN
InSight Health Services Holdings Corp., a Delaware corporation (the
"Company"), sets forth herein the terms of the InSight Health Services Holdings
Corp. 2001 Stock Option Plan (the "Plan") as follows:
1. PURPOSE
The Plan is to replace all of the stock option plans maintained by
InSight Health Services Corp. (the "Seller") prior to the consummation of the
merger (the "Merger") contemplated in the Agreement and Plan of Merger, dated as
of June ___, 2001, by and among the Company, JWCH Merger Corp. and the Seller
(the "Merger Agreement"), and to provide incentives for the individuals who
receive stock options hereunder to maximize the growth and success of the
Company and its subsidiaries.
2. ADMINISTRATION
The Plan shall be administered by the Board of Directors ("Board") of
the Company, unless and to the extent the Board determines to delegate the
administration of the Plan to the Compensation Committee ("Committee") of the
Board. The Board shall have the full power and authority to take all actions,
and to make all determinations required or provided for under the Plan or any
Option Agreement (as defined below) entered into hereunder, and all such other
actions and determinations not inconsistent with the specific terms and
provisions of the Plan deemed by the Board to be necessary or appropriate to the
administration of the Plan or any option granted pursuant to the Plan (the
"Option") or Option Agreement entered into hereunder. The interpretation and
construction by the Board of any provision of the Plan or of any Option granted
or Option Agreement entered into hereunder shall be final, binding and
conclusive.
3. STOCK SUBJECT TO THE PLAN
The stock that may be issued pursuant to Options granted under the Plan
shall be shares of common stock, par value $0.001 per share, of the Company
("Common Stock"), which shares may be treasury shares or authorized but unissued
shares. The number of shares of Common Stock that may be issued pursuant to
Options granted under the Plan shall not exceed in the aggregate [175,990]
shares, which number of shares is subject to adjustment as hereinafter provided
in Section 13 below.
4. GRANT OF OPTIONS
Subject to the terms and conditions hereof, as of the Effective Time
(as defined in the Merger Agreement), the individuals listed on Exhibit A hereto
(each an "Optionee") shall receive the number of options set forth opposite
their name on such list.
5. EFFECTIVE DATE AND TERM OF THE PLAN
The Plan shall be effective as of the Effective Time and shall continue
in effect for a term of ten (10) years from such date (the "Term"). Any Options
outstanding under the Plan on such date shall continue to be exercisable
pursuant to their terms, except as otherwise provided herein.
6. OPTION AGREEMENTS
All Options granted pursuant to the Plan shall be evidenced by an
Option Agreement in the form attached hereto as Exhibit B (the "Option
Agreement").
7. OPTION PRICE
The exercise price of each share of Common Stock subject to an Option
(the "Option Price") shall be as set forth on Exhibit A attached hereto.
8. EXERCISE OF OPTIONS
(a) Option Exercise. Each Option shall be exercisable, in whole or
in part, at any time and from time to time during the Term, by delivering
written notice to the Company on any business day, at its principal office,
addressed to the attention of the Corporate Secretary, which notice shall
specify the number of shares with respect to which the Option is being
exercised, and shall be accompanied by payment in full of the Option Price of
the shares for which the Option is being exercised. The minimum number of shares
of Common Stock with respect to which an Option may be exercised, in whole or in
part, at any time shall be the lesser of 100 shares or the maximum number of
shares available for purchase under the Option at the time of exercise. Payment
of the Option Price for the shares of Common Stock purchased pursuant to the
exercise of an Option shall be made (i) in cash or in cash equivalents; (ii)
with the consent of the Board, through the tender to the Company of shares of
Common Stock, which shares shall be valued, for purposes of determining the
extent to which the Option Price has been paid thereby, at their Fair Market
Value (as defined below) on the date of exercise; or (iii) by such other method
or methods as the Board may from time to time authorize. Promptly after the
exercise of an Option and the payment in full of the Option Price of the shares
of Common Stock covered thereby, the individual exercising the Option (the
"Optionee") shall be entitled to the issuance of a Common Stock certificate or
certificates evidencing the Optionee's ownership of such shares. Not later than
the Effective Time, each Optionee shall execute the stockholders agreement by
and among the Company and the stockholders named therein (the "Stockholders
Agreement"), and pursuant thereto, the Option and the Common Stock underlying
the Option shall be subject to the terms of the Stockholders Agreement. An
individual holding or exercising an Option shall have none of the rights of a
stockholder until the shares of Common Stock covered thereby are fully paid and
issued to the Optionee, and except as provided in Section 13 below, no
adjustment shall be made for dividends or other rights for which the record date
is prior to the date of such issuance. "Fair Market Value" means the value of
each share of Common Stock, as determined by the Board in good faith.
2
(b) Withholding. The Company shall have the right to withhold, or
require an Optionee to remit to the Company, an amount sufficient to satisfy any
applicable federal, state, local or foreign withholding tax requirements imposed
with respect to the exercise of the Options. Subject to the consent of the Board
which may be withheld in its sole and absolute discretion, and to the extent
permissible under applicable tax, securities, and other laws, an Optionee may
(a) have shares of Common Stock otherwise issuable to the Optionee hereunder
withheld, or (b) tender to the Company previously acquired shares of Common
Stock, having a Fair Market Value sufficient to satisfy all or part of the
Optionee's federal, state and local tax obligations associated with the exercise
of the Options.
9. TRANSFERABILITY OF OPTIONS
During the lifetime of an Optionee, only such Optionee (or, in the
event of legal incapacity or incompetency, the Optionee's guardian or legal
representative) may exercise an Option. No Option shall be assignable or
transferable by the Optionee to whom it is granted, other than by will, the laws
of descent and distribution, or pursuant to a qualified domestic relations order
as defined in section 414 of the Internal Revenue Code of 1986, as amended (the
"Code"), and no Option shall be pledged or hypothecated (by operation of law or
otherwise), or subject to execution, attachment or similar process.
10. TERMINATION OF EMPLOYMENT
Upon the termination of the employment of an Optionee for any reason,
any Option granted to an Optionee pursuant to the Plan shall terminate on the
earlier to occur of (i) the expiration of the Term and (ii) a Change in Control
(as defined below). For purposes hereof, a "Change in Control" shall be deemed
to have occurred if (i) any person, or any two or more persons acting as a
group, and all affiliates of such person or persons (a "Group"), who prior to
such time beneficially owned less than 50% of the then outstanding capital stock
of the Company, shall acquire shares of the Company's capital stock in one or
more transactions or series of transactions, including by merger, and after such
transaction or transactions such person or Group and affiliates beneficially own
50% or more of the Company's outstanding capital stock, or (ii) the Company
shall sell all or substantially all of its assets to any Group which,
immediately prior to the time of such transaction, beneficially owned less than
50% of the then outstanding capital stock of the Company.
11. REQUIREMENTS OF LAW
Violations of Law. The Company shall not be required to sell or issue
any shares of Common Stock under any Option if the sale or issuance of such
shares would constitute a violation by the Optionee or the Company of any
provisions of any law or regulation of any governmental authority, including
without limitation any federal or state securities laws or regulations.
Specifically in connection with the Securities Act of 1933, as amended (the
"1933 Act"), upon exercise of any Option, unless a registration statement under
the 1933 Act is in effect with respect to the shares of Common Stock covered by
such Option, the Company shall not be required to sell or issue such shares
unless the Board has received evidence satisfactory to it that the holder of
such Option may acquire such shares pursuant to an exemption from registration
under the 1933 Act. Any
3
determination in this connection by the Board shall be final, binding and
conclusive. The Company may, but shall in no event be obligated to, register any
securities covered hereby pursuant to the 1933 Act, provided that the Company
will use its reasonable best efforts to comply with any available exemption from
registration and qualification of the shares of Common Stock that may be
acquired under the Option, pursuant to applicable federal and state securities
laws.
12. AMENDMENT AND TERMINATION OF THE PLAN
The Board may, at any time and from time to time, amend or terminate
the Plan, provided that no such amendment or termination may adversely affect
any rights or obligations under any Option theretofore granted under the Plan,
without the consent of the holder of any such Option.
13. EFFECT OF CHANGES IN CAPITALIZATION
(a) Changes in Common Stock. If the outstanding shares of Common
Stock are increased or decreased or changed into or exchanged for a different
number or kind of shares or other securities of the Company by reason of any
recapitalization, reclassification, stock split-up, combination of shares,
exchange of shares, stock dividend or other distribution payable in capital
stock, or other increase or decrease affecting such outstanding shares generally
that is effected without receipt of consideration by the Company, occurring
after the effective date of the Plan, the number and kind of shares for the
purchase of which Options may be granted under the Plan shall be adjusted
proportionately and accordingly by the Board. In addition, the number and kind
of shares for which Options are outstanding shall be adjusted proportionately
and accordingly so that the proportionate ownership interest of the holder of
the Option immediately following such event shall, to the extent practicable, be
the same as immediately prior to such event. Any such adjustment in outstanding
Options shall not change the aggregate Option Price payable with respect to
shares subject to the unexercised portion of the Option outstanding but shall
include a corresponding proportionate adjustment in the Option Price per share.
(b) Reorganization in Which the Company Is the Surviving
Corporation. If the Company shall be the surviving corporation in any
reorganization, merger, or consolidation of the Company with one or more other
corporations, any Option theretofore granted pursuant to the Plan shall pertain
to and apply to the securities to which a holder of the number of shares of
Common Stock subject to such Option would have been entitled immediately
following such reorganization, merger, or consolidation, with a corresponding
proportionate adjustment of the Option Price per share so that the aggregate
Option Price thereafter shall be the same as the aggregate Option Price of the
shares remaining subject to the Option immediately prior to such reorganization,
merger, or consolidation.
(c) Reorganization in Which the Company Is Not the Surviving
Corporation; Sale of Assets or Stock. Upon the dissolution or liquidation of the
Company, or upon a merger, consolidation or reorganization of the Company with
one or more other corporations in which the Company is not the surviving
corporation, or upon a sale of substantially all of the assets of the Company to
another corporation, or upon any transaction (including, without limitation, a
merger or reorganization in which the Company is the surviving corporation)
approved by the Board which results in any person or entity owning 80% or more
of the combined voting power of all classes of
4
stock of the Company, the Plan and all Options outstanding hereunder shall
terminate, except to the extent provision is made in writing in connection with
such transaction for the continuation of the Plan and/or the assumption of the
Options theretofore granted, or for the substitution for such Options of new
options covering the stock of a successor corporation, or a parent or subsidiary
thereof, with appropriate adjustments as to the number and kind of shares and
Option Prices, to preserve the then excess, if any, of the aggregate Fair Market
Value of the shares subject to Options over the purchase price for the shares
under the Options, in which event the Plan and Options theretofore granted shall
continue in the manner and under the terms so provided. The Board shall send
written notice of an event that will result in such a termination to all
individuals who hold Options not later than the time at which the Company gives
notice thereof to its stockholders.
(d) Adjustments. Adjustments under this Section 13 related to
stock or securities of the Company shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. No
fractional shares of Common Stock or units of other securities shall be issued
pursuant to any such adjustment, and any fractions resulting from any such
adjustment shall be eliminated in each case by rounding downward to the nearest
whole share or unit.
(e) No Limitations on the Company. The grant of an Option pursuant
to the Plan shall not affect or limit 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, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or assets. In
addition, the Options hereunder, including the effect of this Section 13, are
subject to the Stockholders Agreement among the Company and its stockholders.
14. DISCLAIMER OF RIGHTS
No provision in the Plan or in any Option granted or Option Agreement
entered into pursuant to the Plan shall be construed to confer upon any
individual the right to remain in the employ of the Company or any subsidiary of
the Company, or to interfere in any way with the right and authority of the
Company or any subsidiary of the Company either to increase or decrease the
compensation of any individual at any time, or to terminate any employment or
other relationship between any individual and the Company or any subsidiary of
the Company.
15. GOVERNING LAW
The validity, interpretation and effect of the Plan, and the rights of
all persons hereunder, shall be governed by and determined in accordance with
the laws of the State of Delaware, other than the choice of law rules thereof.
16. HEADINGS
The headings herein are for convenience only and shall not be used in
interpreting the Plan.
5
EXHIBIT A
Name Number of Options Granted Option Price
- ---- ------------------------- ------------
Steven T. Plochocki 52,500 $8.37
Thomas V. Croal 52,500 $8.37
Michael A. Boylan 46,990 $8.37
Michael S. Madler 24,000 $8.37
EXHIBIT B
INSIGHT HEALTH SERVICES HOLDINGS CORP.
2001 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
AGREEMENT is dated as of June __, 2001 between InSight Health
Services Holdings Corp., a Delaware corporation ("Company"), and
____________________ ("Optionee"). This Agreement shall become effective as of
the Effective Time.
The stockholders and the Board of Directors of the Company ("Board")
have adopted the InSight Health Services Holdings Corp. 2001 Stock Option Plan
("Plan") of the Company for the purpose of advancing the interests of the
Company by providing certain individuals with an opportunity to develop a
proprietary interest in the Company, which will thereby create strong
performance incentives for such individuals to maximize the growth and success
of the Company and its subsidiaries and will encourage such individuals to
remain in the employ of the Company or any of its subsidiaries.
The Optionee is a full time employee of the Company or its
subsidiaries, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the grant by the Company
of a stock option to the Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and conditions
set forth in this Agreement and the Plan, the Company hereby grants to the
Optionee, as of the Effective Time, a stock option ("Option") to purchase up to
_____ shares ("Option Shares") of the common stock, par value $0.001 per share,
of the Company ("Common Stock") from time to time during the Option Period at
the price of $8.37 per share ("Option Price").
2. Option Period. The Option shall be exercisable only during the
Option Period. In addition, upon the Expiration Date, the Option shall cease to
be exercisable and have no further force or effect whatsoever.
3. Vesting and Exercisability. The Option shall be vested and
exercisable as of the Effective Time.
4. Termination of Employment. Upon termination of the Optionee's
employment with the Company, the Option granted herein shall be treated in
accordance with the Plan.
5. Timing and Method of Exercise. In order to exercise the Option
with respect to all or any part of the Option Shares for which the Option is at
the time exercisable, the Optionee (or in the case of exercise after the
Optionee's death, the Optionee's executor, administrator, heir or legatee, as
the case may be) must comply with the provisions of Section 8 of the Plan. A
form of exercise notice is attached hereto as Exhibit A.
6. Termination of Existing Options. Immediately prior to the
Effective Time, the stock options set forth on Exhibit B granted to the Optionee
pursuant to any of the Company's stock option plans and any stock option
agreement entered into in connection therewith shall be terminated in their
entirety and be of no further force and effect. In addition, the Optionee
irrevocably waives any and all rights and benefits the Optionee has thereunder.
7. Stockholders Agreement. Not later than the Effective Time, the
Optionee hereby agrees to execute the stockholders agreement by and among the
Company and the parties named therein (the "Stockholders Agreement"), and
pursuant thereto, the Option and the Common Stock underlying the Option shall be
subject to the terms of the Stockholders Agreement.
8. Successors and Assigns. The provisions of this Agreement shall
inure to the benefit of, and be binding upon, the successors, administrators,
heirs, devisees, legal representatives and permitted assigns, in each case,
subject to the Stockholders Agreement, of the Optionee and the successors and
assigns of the Company.
9. Liability of the Company. The inability of the Company,
despite its best efforts, to obtain approval from any regulatory body having
authority deemed by the Company to be necessary to the lawful issuance and sale
of any Common Stock pursuant to the Option shall relieve the Company of any
liability in respect of the non-issuance or sale of the Common Stock as to which
such approval shall not have been obtained.
10. Construction. This Agreement and the Option evidenced hereby
are made and granted pursuant to the Plan and are in all respects limited by and
subject to the express terms and provisions of the Plan.
11. Governing Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of Delaware.
12. Warranties and Obligations of the Optionee.
(a) The Optionee represents, warrants and agrees that the
Optionee will acquire and hold the Option Shares for the Optionee's own account
for investment and not with the view to the resale or distribution thereof,
except for resales or distributions in accordance with federal and state
securities laws, and that the Optionee will not, at any time or times, directly
or indirectly, offer, sell, distribute, pledge or otherwise grant a security
interest in or otherwise dispose of or transfer all, any portion of or any
interest in, any Option Shares (or solicit an offer to buy, take in pledge or
otherwise acquire or receive, all or any portion thereof), except pursuant to
either (i) a Registration Statement on an appropriate form under the Securities
Act of 1933, as amended ("1933 Act"), which Registration Statement has become
effective and is current with respect to the shares being offered or sold, or
(ii) a specific exemption from the registration requirements of the 1933 Act,
the availability of which exemption shall be the subject matter of an opinion of
counsel reasonably acceptable to the Company that no registration
2
under the 1933 Act is required with respect to such offer, sale, distribution,
pledge, grant or other disposition or transfer.
(b) The Optionee acknowledges that the Optionee understands
that (i) the Option has been granted and the shares to be sold to the Optionee
upon exercise of the Option will be sold to the Optionee pursuant to an
exemption from the registration requirements in the 1933 Act until such time as
the Company shall file a Registration Statement under the 1933 Act which has
become effective and is current with respect to the shares being offered or sold
and in this connection the Company is relying in part on the representations set
forth in this Agreement; (ii) such shares must be held indefinitely unless they
are registered or an exemption from registration becomes available under the
1933 Act and the securities laws of any state; (iii) the Company is under no
obligation to register such shares or to comply with any exemption from such
registration, including those portions of Rule 144 under the 1933 Act to be
complied with by the Company; (iv) if Rule 144 is available for sales of such
shares, and there is no assurance that the Optionee will ever be able to sell
under Rule 144, such sales in reliance upon Rule 144 may be made only after the
shares have been held for the requisite holding period and then only in limited
amounts in accordance with the conditions of that Rule, all of which must be
met; and (v) the Optionee must, therefore, continue to bear the economic risks
of the investment in such shares for an indefinite period of time after the
exercise of the Option.
(c) The Optionee acknowledges that the Optionee has had the
opportunity to ask questions of, and receive answers from, the officers and
representatives of the Company concerning all material information concerning
the Company and the terms and conditions of the transactions in which the
Optionee is acquiring the Option and may subsequently acquire Option Shares. The
Optionee further acknowledges that the Optionee understands that the Company may
use the proceeds from the exercise of the Option for general corporate purposes.
(d) Immediately prior to the exercise of all or any portion
of the Option, the Optionee shall deliver to the Company a signed statement, in
a form satisfactory to the Company, confirming that each of the representations,
warranties, acknowledgments and agreements contained in this Section is true as
to the Optionee as of the date of such exercise.
(e) The Optionee understands that all certificates
representing shares transferred pursuant to this Agreement, unless made pursuant
to an appropriate Registration Statement under the 1933 Act, will bear the
following restrictive legend:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be transferred or hypothecated without prior
registration under said Act or an exemption therefrom
established to the satisfaction of the issuer."
(f) If the legal counsel of the Company, at the request of
the Company, advises it that registration under the 1933 Act of the shares
deliverable upon the exercise of the
3
Option is required prior to delivery thereof, or that listing of such shares on
any exchange is required prior to delivery thereof, the Company shall not be
required to issue or deliver such shares unless and until such legal counsel
shall advise that such registration and/or listing has been completed and is
then effective, or is not required.
13. Severability. In the event that any provision of this
Agreement is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
14. Definitions. Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Plan. For purposes of
interpreting this Agreement, the following definitions shall also apply:
(a) "Effective Time" shall have the meaning set forth in the
Agreement and Plan of Merger, by and among InSight Health Services Holdings
Corp., JWCH Merger Corp. and InSight Health Services Corp.
(b) "Expiration Date" means, unless earlier terminated
pursuant to the terms of this Agreement or the Plan, the day immediately
preceding the tenth anniversary of the Effective Time.
(c) "Option Period" means the period commencing at the
Effective Time and, unless earlier terminated in accordance with Section 4,
ending on the close of business on the Expiration Date.
4
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate on its behalf and the Optionee has also executed this
Agreement in duplicate, all as of the date first above written.
INSIGHT HEALTH SERVICES HOLDINGS
CORP.
By:
--------------------------------
Name:
Title:
OPTIONEE
----------------------------------
EXHIBIT A
Form of Stock Option Exercise Notice
Optionee Information:
Name: __________________ Social Security Number: ____ - ___ - _____
Address: __________________ Employee Number: __________________
__________________
Option Information:
Date of Grant of Option: __________________
Exercise Price per Share: $ 8.37
Total number of shares of Common Stock of the
Company covered by the Option: _________ shares
Exercise Information:
Number of shares of Common Stock of the Company for which Option is being
exercised now:
_______ (hereinafter referred to as "Purchased Shares")
Form of payment enclosed (CHECK ALL THAT APPLY):
/ / Check for $ _____ made payable to InSight Health Services Holdings
Corp.
/ / Certificate(s) for ___ shares of Common Stock of the Company that I
have owned for at least six months. (These shares will be valued as of
the date when this notice is received by the Company.)
/ / Attestation Form covering _____ shares of Common Stock of the Company
(These shares will be valued as of the date when this notice is
received by the Company.)
Names in which the Purchased Shares should be registered (YOU MUST CHECK ONE):
/ / In my name only
/ / In the name of my spouse and myself as joint tenants with the right of
survivorship. My spouse's name is: ___________________. I agree to seek
the consent of my spouse to the extent required by the Company to
enforce the foregoing.
The certificate(s) of the Purchased Shares shall be sent to the following
address:
____________________
____________________
____________________
I hereby acknowledge that I am acquiring the Purchased Shares subject to all
terms and conditions of the InSight Health Services Holdings Corp. 2001 Stock
Option Plan Stock Option Agreement dated June ___, 2001.
______________, ___________
Place Date
___________________________
Name:
EXHIBIT B
Plan Number of Options Terminated Option Price
---- ---------------------------- ------------