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Exhibit 10.1(b)
FORM OF
QUALITY CARE SOLUTIONS, INC.,
A NEVADA CORPORATION
1996 AMENDED AND RESTATED STOCK OPTION PLAN
STOCK OPTION AGREEMENT
Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[INSERT OPTIONEE'S NAME AND ADDRESS]
The undersigned Optionee has been granted an Option to purchase Common
Stock of the Company, subject to the terms and conditions of the Plan and this
Option Agreement, as follows:
Grant Number
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Date of Grant
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Vesting Commencement Date
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Exercise Price per Share $
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Total Number of Shares Granted
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Total Exercise Price $
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Type of Option: ___ Incentive Stock Option
(Check One) ___ Nonstatutory Stock Option
Term/Expiration Date:
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Vesting Schedule:
This Option shall be exercisable, in whole or in part, according to the
following vesting schedule:
[PROVIDE ]
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Termination Period:
This Option shall be exercisable for three months after Optionee ceases
to be a Service Provider. Upon Optionee's death or Disability, this Option may
be exercised for one year after Optionee ceases to be a Service Provider. In no
event may Optionee exercise this Option after the Term/Expiration Date as
provided above.
II. AGREEMENT
1. Grant of Option. The Plan Administrator of the Company hereby
grants to the Optionee named in the Notice of Grant (the "Optionee"), an option
(the "Option") to purchase the number of Shares set forth in the Notice of
Grant, at the exercise price per Share set forth in the Notice of Grant (the
"Exercise Price"), and subject to the terms and conditions of the Plan, which is
incorporated herein by reference. Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock
Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option
as defined in Section 422 of the Code. Nevertheless, to the extent that it
exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated
as a Nonstatutory Stock Option ("NSO").
2. Exercise of Option.
a. Right to Exercise. This Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
with the applicable provisions of the Plan and this Option Agreement.
b. Method of Exercise. This Option shall be exercisable by
delivery of an exercise notice in the form attached as Exhibit A (the "Exercise
Notice") which shall state the election to exercise the Option, the number of
Shares with respect to which the Option is being exercised, and such other
representations and agreements as may be required by the Company. The Exercise
Notice shall be accompanied by payment of the aggregate Exercise Price as to all
Exercised Shares. This Option shall be deemed to be exercised upon receipt by
the Company of such fully executed Exercise Notice accompanied by the aggregate
Exercise Price.
No Shares shall be issued pursuant to the exercise of an
Option unless such issuance and such exercise complies with Applicable laws.
Assuming such compliance, for income tax purposes the Shares shall be considered
transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Optionee's Representations. In the event the Shares have not
been registered under the Securities Act of 1933, as amended, at the time this
Option is exercised, the Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver to
the Company his or her Investment Representation Statement in the form attached
hereto as Exhibit B.
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4. Lock-Up Period. Optionee hereby agrees that, if so requested
by the Company or any representative of the underwriters (the "Managing
Underwriter") in connection with any registration of the offering of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any Shares or other securities of the Company during the
180-day period (or such other period as may be requested in writing by the
Managing Underwriter and agreed to in writing by the Company) (the "Market
Standoff Period") following the effective date of a registration statement of
the Company filed under the Securities Act. Such restriction shall apply only to
the first registration statement of the Company to become effective under the
Securities Act that includes securities to be sold on behalf of the Company to
the public in an underwritten public offering under the Securities Act. The
Company may impose stop-transfer instructions with respect to securities subject
to the foregoing restrictions until the end of such Market Standoff Period.
5. Method of Payment. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election of
the Optionee:
a. cash or check;
b. consideration received by the Company under a formal
cashless exercise program adopted by the Company in connection with the Plan; or
c. surrender of other Shares which, (i) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
more than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
6. Restrictions on Exercise. This Option may not be exercised
until such time as the Plan has been approved by the shareholders of the
Company, or 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 Law.
7. Transferability of Option. Without the express written consent
of the Administrator, 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 the Plan and this
Option Agreement shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee.
8. Term of Option. This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term only
in accordance with the Plan and the terms of this Option.
9. Tax Consequences. Set forth below is a brief summary as of the
date of this Option of some of the federal tax consequences of exercise of this
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
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a. Exercise of ISO. If this Option qualifies as an ISO, there
will be no regular federal income tax liability upon the exercise of the Option,
although the excess, if any, of the Fair Market Value of the Shares on the date
of exercise over the Exercise Price will be treated as an adjustment to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.
b. Exercise of Nonstatutory Stock Option. There may be a regular
federal income tax liability upon the exercise of a Nonstatutory Stock Option.
The Optionee will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former Employee, the Company will be required to withhold from
Optionee's compensation or collect from Optionee and pay to the applicable
taxing authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise, and may refuse to honor the exercise and refuse
to deliver Shares if such withholding amounts are not delivered at the time of
exercise.
c. Disposition of Shares. In the case of an NSO, if Shares are
held for at least one year, any gain realized on disposition of the Shares will
be treated as long-term capital gain for federal income tax purposes if the
Optionee has a timely election under Section 83b of the Code. In the case of an
ISO, if Shares transferred pursuant to the Option are held for at least one year
after exercise and of at least two years after the Date of Grant, any gain
realized on disposition of the Shares will also be treated as long-term capital
gain for federal income tax purposes. If Shares purchased under an ISO are
disposed of within one year after exercise or two years after the Date of Grant,
any gain realized on such disposition will be treated as compensation income
(taxable at ordinary income rates) to the extent of the difference between the
Exercise Price and the lesser of (1) the Fair Market Value of the Shares on the
date of exercise, or (2) the sale price of the Shares. Any additional gain will
be taxed as capital gain, short-term or long-term depending on the period that
the ISO Shares were held.
d. Notice of Disqualifying Disposition of ISO Shares. If the
Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise
disposes of any of the Shares acquired pursuant to the ISO on or before the
later of (1) the date two years after the Date of Grant, or (2) the date one
year after the date of exercise, the Optionee shall immediately notify the
Company in writing of such disposition. Optionee agrees that Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee.
10. Entire Agreement; Governing Law. The Plan is incorporated herein by
reference. The Plan and this Option 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 Company and Optionee with
respect to the subject matter hereof, and may not be modified adversely to the
Optionee's interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not
the choice of law rules of Arizona.
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11. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND
AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS
EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A
SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL
NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE, SUBJECT TO ANY EMPLOYMENT AGREEMENT, OR IN THE CASE OF AN OUTSIDE
DIRECTOR, SUBJECT TO THE COMPANY'S BYLAWS AND APPLICABLE LAW.
12. Forfeiture For Fraud, Unlawful Competition and Other Acts.
a. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THE PLAN OR IN
THIS AGREEMENT, ALL OPTION AND OTHER RIGHTS WITH RESPECT TO ALL STOCK OPTIONS
GRANTED TO OPTIONEE HEREUNDER BUT NOT YET EXERCISED SHALL IMMEDIATELY TERMINATE
AND BE NULL AND VOID IF: (i) OPTIONEE'S EMPLOYMENT BY THE COMPANY OR STATUS AS A
SERVICE PROVIDER IS TERMINATED FOR CAUSE UNDER THE TERMS OF A WRITTEN EMPLOYMENT
AGREEMENT OR; (ii) IN THE ABSENCE OF AN EMPLOYMENT AGREEMENT, THE ADMINISTRATOR
DETERMINES THAT THE OPTIONEE ENGAGED IN ILLEGAL ACTS, FRAUD, OR OTHER WILLFUL
MISCONDUCT DETRIMENTAL TO THE COMPANY, INCLUDING VIOLATION OF THE COMPANY'S
INSIDER TRADING POLICY; (iii) OPTIONEE SOLICITS ANY EMPLOYEE OF THE COMPANY TO
TERMINATE HIS EMPLOYMENT; (iv) OPTIONEE SOLICITS BUSINESS FROM ANY OF THE
COMPANY'S CUSTOMERS FOR AND ON BEHALF OF ANY OF THE COMPANY'S COMPETITORS OR
ENGAGES IN OTHER COMPETITIVE CONDUCT IN VIOLATION OF OPTIONEE'S CONTRACTUAL
OBLIGATIONS TO THE COMPANY, INCLUDING BUT NOT LIMITED TO A VIOLATION OF ANY
VALID NON-COMPETITION, NON-DISCLOSURE, NON-SOLICITATION OR OTHER WRITTEN
AGREEMENT; OR (v) OPTIONEE FAILS TO ASSIGN TO THE COMPANY ANY PATENT, COPYRIGHT,
TRADEMARK OR OTHER INTELLECTUAL PROPERTY RIGHT IN VIOLATION OF ANY OF THE
COMPANY'S POLICIES OR ANY AGREEMENT BETWEEN THE COMPANY AND OPTIONEE. THE ACTS
OR CIRCUMSTANCES DESCRIBED IN THE PRECEDING SENTENCE SHALL BE REFERRED TO AS
"EVENTS OF FORFEITURE."
b. THE OPTIONEE MAY BE RELEASED FROM OPTIONEE'S OBLIGATIONS
UNDER THIS SECTION 12 ONLY IF THE ADMINISTRATOR DETERMINES, IN ITS SOLE
DISCRETION, THAT SUCH A RELEASE IS IN THE BEST INTERESTS OF THE COMPANY. ALL
DETERMINATIONS BY THE ADMINISTRATOR
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MADE PURSUANT TO THIS SECTION 12 SHALL BE SUBJECT TO BINDING AND NONAPPEALABLE
ARBITRATION IN ACCORDANCE WITH SECTION 13.
13. Arbitration.
a. Any controversy, claim or dispute arising out of or
relating to this Option Agreement or the Option, or any act or occurrence
relating to the foregoing, or any decision of the Administrator relating to an
option or its forfeiture shall be determined and resolved by binding arbitration
in accordance with Title IX of The United States Code and The Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association ("AAA")
in effect on the date the arbitration is commenced in accordance herewith. In
the event of any inconsistency between such Rules of the AAA and the terms of
this Agreement, this Agreement shall supersede the Rules of the AAA. Judgment
upon any award rendered in the arbitration may be entered in any court having
jurisdiction and shall be final, binding, non-appealable and conclusive. The
provisions of this Agreement shall govern the rights of all parties hereto,
including but not limited to any party claiming for or on behalf of Optionee,
including Optionee's heirs, successors, assigns, personal representatives and
bankruptcy trustees.
b. Any party may commence arbitration by serving upon all
other parties a written demand for arbitration sent by Certified Mail, Return
Receipt Requested to the Company at its principal place of business or to the
Optionee at his/her residence address as reflected in the records of the
Company, by Certified Mail, Return Receipt Requested to the AAA Office in
Phoenix, Arizona, or in the absence of such an office, to the AAA Region in
which Arizona is located.
c. The AAA shall administer the arbitration. The AAA shall
appoint a single arbitrator to conduct the arbitration within thirty (30) days
of the AAA's receipt of a demand for arbitration in accordance with this Section
13. The arbitrator shall, by virtue of background, similar experience, be
knowledgeable in matters pertaining to stock option agreements and employment
relationships. There shall be no right of discovery in connection with the
arbitration except in accordance with the AAA's Rules. Not earlier than thirty
(30) nor more than forty-five (45) days after appointment, the arbitrator shall
conduct a preliminary hearing in accordance with the AAA "Guidelines for
Expediting Large, Complex Commercial Arbitrations." Not less than five (5) days
prior to the preliminary hearing, all parties to the arbitration shall serve
upon all other parties to the arbitration a written list of witnesses and
exhibits to be used in the arbitration hearing. Except for good cause shown, no
witness or exhibit may be utilized at the arbitration hearing other than those
set forth on such list.
d. The arbitrator shall receive evidence in a single hearing
which shall be conducted in Phoenix, Arizona, unless the arbitrator determines
by written application of a party that such location would represent an
unreasonable hardship and that the hearing should be conducted in another
location. The hearing shall be commenced not more than sixty (60) days after the
appointment of the arbitrator.
e. The arbitrator shall award reasonable attorneys fees and
costs in favor of the prevailing party. The arbitrator shall issue a final award
not more than twenty (20) days
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following the conclusion of the hearing. The arbitrator shall have the power to
hear and decide, by documents only or with the hearing (at the arbitrator's sole
discretion) any pre-hearing motions which are in the nature of pre-trial motions
to dismiss or for summary judgment. The arbitrator shall be entitled to receive
reasonable compensation at an hourly rate to be established by agreement between
the arbitrator and the AAA.
14. Acceleration of Vesting; Change of Control. In the event
of a merger of the Company with or into another corporation, or the sale of
substantially all of the assets of the Company, each outstanding Option and
Stock Purchase Right shall be assumed or an equivalent option or right
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option or Stock Purchase Right, unless the
agreement pertaining to the merger or sale provides expressly to the contrary,
the Optionee shall fully vest in and have the right to exercise the Option or
Stock Purchase Right as to all of the Optioned Stock, including Shares as to
which it would not otherwise be vested or exercisable. If an Option or Stock
Purchase Right becomes fully vested and exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Administrator shall
notify the Optionee in writing or electronically that the Option or Stock
Purchase Right shall be fully exercisable for a period of fifteen (15) days from
the date of such notice, and the Option or Stock Purchase Right shall terminate
upon the expiration of such period. For the purposes of this Section 14, the
Option or Stock Purchase Right shall be considered assumed if, following the
merger or sale of assets, the option or right confers the right to purchase or
receive, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right immediately prior to the merger or sale of assets, the
consideration (whether stock, cash, or other securities or property) received in
the merger or sale of assets by holders of Common Stock for each Share held on
the effective date of the transaction (and if holders were offered a choice of
consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received
in the merger or sale of assets is not solely common stock of the successor
corporation or its Parent, the Administrator may, with the consent of the
successor corporation, provide for the consideration to be received upon the
exercise of the Option or Stock Purchase Right, for each Share of Optioned Stock
subject to the Option or Stock Purchase Right, to be solely common stock of the
successor corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the merger or sale of
assets. The provisions of this Section 14 shall not be deemed to supersede or
delineate any rights to accelerated vesting granted by any Employment Agreement.
Optionee acknowledges receipt of a copy of the Plan and
represents that he or she 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 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 binding, conclusive and final all decisions or interpretations of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further agrees to notify the Company upon any change in the residence address
indicated below.
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15. Applicability of Drag Along Rights. Prior to an Initial
Public Offering, all Shares of Common Stock of the Company issued pursuant to
the exercise of an Option shall be subject to the provisions of Section 6.2 of
the Stockholders Agreement.
OPTIONEE: QUALITY CARE SOLUTIONS, INC.,
a Nevada corporation
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Signature By
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Print Name Title
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Residence Address
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