EXHIBIT 10.88
COMMUNITY HEALTH COMPUTING CORP.
--------------------------------
STOCK OPTION PLAN (1995)
------------------------
1. PURPOSE OF THE PLAN.
-------------------
This Stock Option Plan (1995) (the "Plan") is intended to promote the
growth of the Company by attracting and motivating officers, employees and other
persons whose efforts are deemed worthy of encouragement through the incentive
effects of stock options.
2. DEFINITIONS.
-----------
As used herein, the following definitions shall apply:
(a) "ADAC" shall mean ADAC Laboratories, a California corporation.
----
(b) "BOARD" shall mean the Committee if one has been appointed or, if no
-----
Committee has been appointed, the Board of Directors of the Company.
(c) "CAUSE" shall mean any of the following: (a) gross and willful
-----
failure, after 30 days' written warning, to discharge the normal employment
duties required of the employee, (b) theft or other misappropriation of Company
property, trade secrets or other intellectual property rights and use thereof
for non-employee purposes or (c) commission of a crime such that the Company's
reputation with its customers is materially damaged. Becoming fully or
partially disabled shall not be deemed "Cause" herein.
(d) "CHC" shall mean Community Health Computing Corp., a Delaware
---
corporation.
(e) "CHANGE OF CONTROL" shall occur upon the earliest to occur of any
-----------------
of the following events: (i) a majority of CHC's Board of Directors does not
consist of persons who were members of the Board of Directors of ADAC
Laboratories ("ADAC") on July 1, 1995, but only if such event occurs within a
period of less than six months; (ii) any "person" or "group" (as defined in or
pursuant to Sections 13(d) and 14(d) of the Securities Act of 1934, as amended,
(the "Exchange Act"), becomes the "beneficial owner" (as defined in Rule 13(d)
promulgated under the Exchange Act) directly or indirectly of securities of the
corporation representing 40% or more of the voting power of the common stock
outstanding which votes generally for the election of directors; or (iii) the
corporation or any of its subsidiaries sells, through merger, assignment or
otherwise, in one or more transactions, other than in the ordinary course of
business, assets constituting two-thirds (2/3) in value of the total assets of
the Corporation. The value
Stock Option Plan (1995)
Community Health Computing Corp.
of such assets, for purposes of this section, shall be determined by the Board
of Directors and shall be consistent with the values applicable to the asset
sale transaction.
(f) "CODE" shall mean the Internal Revenue Code, the rules and regulations
----
promulgated thereunder and the interpretations thereof, all as from time to time
in effect.
(g) "COMMITTEE" shall mean the Committee appointed by the Board of
---------
Directors in accordance with Section 3(a) below, if one is appointed.
(h) "COMMON STOCK" shall mean the Common Stock of the Company.
------------
(i) "COMPANY" shall mean Community Health Computing Corp., a Delaware
-------
corporation.
(j) "COMPENSATION PACKAGE" shall mean base salary, cash incentive bonuses
--------------------
and the value of all other readily-measurable non-cash perquisites
received during the prior calendar year.
(k) "CONSULTANT" shall mean any person who is engaged by the Company or
----------
any Parent or Subsidiary of the Company to render consulting or advisory
services, whether or not compensation is paid to such individual.
(l) "CONTINUOUS STATUS" shall mean the absence of any interruption or
-----------------
termination of service as an Employee, Consultant or other person providing
services on a regular basis to the Company or its Parent or any Subsidiary.
Continuous Status shall not be considered interrupted in the case of sick leave,
military leave, or any other leave of absence approved by the Board, provided
that either such leave is for a period of not more than ninety (90) days or
reemployment upon the expiration of such leave is provided or guaranteed by
contract or statute.
(m) "DIRECTOR" shall mean any person serving on the Board of Directors.
--------
(n) "EMPLOYEE" shall mean any person, including Officers and Directors,
--------
employed by the Company or its Parent or any Subsidiary of the Company.
(o) "FAIR MARKET VALUE" shall mean the average of the closing bid and
-----------------
asked prices of a share of Common Stock, as reported by The Wall Street Journal
(or, if not reported, as otherwise quoted by
2
Stock Option Plan (1995)
Community Health Computing Corp.
the National Association of Securities Dealers through NASDAQ), on the date of
the grant of the Option, or, if the Common Stock is listed on the NASDAQ
National Market System or is listed on a national stock exchange, the closing
price on such System or such exchange on the date of the grant of an Option, as
reported in The Wall Street Journal. In the event the Common Stock is not traded
publicly, the Fair Market Value on the date of the grant of an Option shall be
determined, in good faith, by the Board or the Committee and such determination
shall be conclusive for all purposes. The Board or Committee shall take into
account such factors affecting value as it, in its sole and absolute discretion,
may deem relevant.
(p) "FAIR MARKET VALUE OF CHC" shall mean and be determined by the
------------------------
following formula: (a) the net income before interest expense and federal
income taxes based on net income ("EBIT") of CHC for the four fiscal quarters
ending immediately prior to a Change of Control divided by the EBIT of ADAC and
all of its subsidiaries (including CHC) for the four fiscal quarters ending
immediately prior to a Change of Control, the result of which shall be
multiplied by (b) the market capitalization of ADAC on the date of the Change of
Control. For purposes of this section, "market capitalization" shall mean the
per share closing price of ADAC Common Stock multiplied by the weighted average
number of Common and Common-equivalent shares outstanding as of the fiscal
quarter ending immediately preceding the determination date.
(q) "FAIR MARKET VALUE PER CHC SHARE" shall be determined by first
-------------------------------
subtracting from the Fair Market Value of CHC the aggregate liquidation
preferences of all issued and outstanding shares of CHC convertible preferred
stock and then dividing the result by the number of all issued and outstanding
shares of CHC Common Stock; provided, however, that at the election of CHC, the
aggregate liquidation preferences of such convertible preferred stock shall not
be subtracted from the Fair Market Value of CHC, and the Fair Market Value of
CHC shall be divided by the sum of (a) the number of the issued and outstanding
shares of CHC Common Stock and (b) the number of shares of CHC Common Stock into
which all issued and outstanding shares of convertible preferred stock of CHC
may be converted.
(r) "INCENTIVE OPTION" shall mean an option described in Section 422 of
----------------
the Code. To qualify for favorable tax treatment provided by an incentive
option, the shares purchased upon exercise must be held for a period of two (2)
years from the date of the option grant and for a period of one (1) year after
the shares are transferred to Optionee.
3
Stock Option Plan (1995)
Community Health Computing Corp.
(s) "NET INTRINSIC VALUE" of an Option shall mean the difference between (a)
-------------------
the Fair Market Value per CHC Share and (b) the Option exercise price,
multiplied by the number of shares represented by the Unvested Portion of an
Option.
(t) "NON-QUALIFIED OPTION" shall mean an option other than an Incentive
--------------------
Option, the exercise of which generally results in an immediate taxable event.
(u) "OFFICER" shall mean any person, which may include a Director, employed
-------
by the Company or its Parent or any Subsidiary of the Company who
has been elected an officer by the respective Board of Directors.
(v) "OPTIONS" shall mean stock options issued pursuant to the Plan. Options
-------
may be either "Incentive Options," which are defined as Options intended to meet
the requirements of Section 422 of the Code, or "Nonqualified Options," which
are defined as Options not intended to meet such requirements of the Code.
(w) "OPTION AGREEMENT" shall mean the written agreement setting forth the
----------------
terms and conditions of an Option.
(x) "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
--------------
(y) "OPTIONEE" shall mean a person who receives an Option.
--------
(z) "PARENT" shall mean a "parent corporation," whether now or hereafter
-------
existing, as defined in Section 424(e) of the Code.
(aa) "PARTICIPANT" shall mean a person to whom an Option has been granted.
-----------
(ab) "PLAN" shall mean this Stock Option Plan (1995).
----
(ac) "SHARE" shall mean a share of Common Stock of the Company, as may be
-----
adjusted in accordance with Section 6 below.
(ad) "SUBSIDIARY" shall mean a "subsidiary corporation" of the Company,
----------
whether now or hereafter existing, as defined in Section 424(f) of the Code.
(ae) "UNVESTED PORTION" of an Option shall mean that portion of an Option
----------------
to purchase CHC Common Stock which the Optionee is not then entitled to
exercise.
4
Stock Option Plan (1995)
Community Health Computing Corp.
3. ADMINISTRATION OF THE PLAN.
--------------------------
(a) BY THE BOARD OF DIRECTORS OR BY THE COMMITTEE. The Plan shall be
---------------------------------------------
administered by the Board of Directors or, if appointed by the Board, by a
Committee of two or more directors; provided, however, if the Company shall have
registered a class of equity securities pursuant to Section 12 of the Securities
Exchange Act of 1934, and a grant is to be made to an officer or director, then
such grant shall be determined shall be determined by the Board of Directors, if
each member is a "disinterested" person as defined under Rule 16b-3 of the
Securities Exchange Act of 1934, or by a Committee of two or more directors,
each of whom shall be "disinterested" as defined in Rule 16b-3 under the
Securities Exchange Act of 1934. The Board and the Committee shall have full
authority to administer the Plan, including authority to interpret and construe
any provision of the Plan and to adopt such rules and regulations for
administering the Plan as it may deem necessary in order to comply with the
requirements of the Plan, or in order that any Option that is intended to be an
Incentive Option will be classified as an incentive stock option under the Code,
or in order to conform to any regulation or to any change in any law or
regulation applicable thereto. The Board of Directors may reserve to itself any
of the authority granted to the Committee as set forth herein, and it may
perform and discharge all of the functions and responsibilities of the Committee
at any time that a duly constituted Committee is not appointed and serving.
(b) ACTIONS OF THE BOARD AND THE COMMITTEE. All actions taken and all
--------------------------------------
interpretations and determinations made by the Board or by the Committee in good
faith (including determinations of Fair Market Value, Fair Market Value of CHC
and Fair Market Value per CHC Share) shall be final and binding upon all
Participants, the Company and all other interested persons. No member of the
Board or the Committee shall be personally liable for any action, determination
or interpretation made in good faith with respect to the Plan, and all members
of the Board or the Committee shall, in addition to their rights as directors,
be fully protected by the Company with respect to any such action, determination
or interpretation.
(c) POWERS OF THE BOARD AND THE COMMITTEE. Subject to the provisions
-------------------------------------
of the Plan, the Board and, if appointed, the Committee shall have the
authority, in their discretion:
(i) to determine, upon review of the relevant information, Fair
Market Value for purposes of grants of Options, Fair Market Value of CHC
and Fair Market Value per CHC Share;
5
Stock Option Plan (1995)
Community Health Computing Corp.
(ii) to determine the persons to whom Options shall be granted, the time or
times at which Options shall be granted, the number of shares to be
represented by each Option, the vesting thereof and the exercise price per
share; (iii) to interpret the Plan; (iv) to adopt, amend, and rescind rules
and regulations relating to the Plan; (v) to determine whether an Option
granted shall be an Incentive Option or a Nonqualified Option and to
determine the terms and provisions of each Option granted (which need not
be identical) and, with the consent of the holder thereof, to modify or
amend each Option, including reductions in the exercise price thereof; (vi)
to accelerate or defer (with the consent of the Optionee) the exercise date
of any Option; (vii) to authorize any person to execute on behalf of the
Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (viii) to make all other determina
tions deemed necessary or advisable for the administration of the Plan.
4. ELIGIBILITY AND PARTICIPATION.
-----------------------------
(a) ELIGIBILITY. Grants of Options may be made to any Employee or
-----------
Consultant (which may include Officers and/or Directors) of the Company or of
its Parent or Subsidiary, or any independent contractor, vendor, supplier or any
other person providing services to the Company or a Parent or Subsidiary whose
efforts are deemed worthy of encouragement by the Board; provided, however, an
Incentive Option may only be granted to an Employee.
(b) PARTICIPATION BY DIRECTOR. Members of the Board who are either
-------------------------
eligible for Options or have been granted Options may vote on any matters
affecting the administration of the Plan or the grant of any Options pursuant to
the Plan, except that no such member shall act upon the granting of an Option to
himself, but any such member may be counted in determining the existence of a
quorum at any meeting of the Board and may be counted as part of an action by
unanimous written consent during or with respect to which action is taken to
grant Options to him.
5. EXERCISE PRICE; CONSIDERATION; AND FORM OF OPTION AGREEMENT.
-----------------------------------------------------------
(a) EXERCISE PRICE. The exercise price of any Incentive Option shall be
--------------
not less than one hundred percent (100%) of Fair Market Value on the date of the
grant of the Option. The exercise price of a Nonqualified Option shall not be
less than eighty-five percent (85%) of Fair Market Value on the date of the
grant of the Option. If an Incentive Option is granted to an Optionee who then
owns stock possessing more than 10% of the total combined voting
6
Stock Option Plan (1995)
Community Health Computing Corp.
power of all classes of stock of the Company or its Parent or any Subsidiary,
the exercise price of such Incentive Option shall be at least one hundred ten
percent (110%) of Fair Market Value on the date of the grant of such Option.
(b) CONSIDERATION. The exercise price shall be paid in full, at the time
-------------
of exercise of the Option, by personal or bank cashier's check or in such other
form of lawful consideration as the Board of Directors or the Committee may
approve from time to time, including, without limitation, the transfer of
outstanding shares of Common Stock as provided in Section 7(c) or the Op
tionee's promissory note in form satisfactory to the Company and bearing
interest at a rate of not less than 6% per annum.
(C) FORM OF OPTION AGREEMENT. Each Option shall be evidenced by an Option
------------------------
Agreement specifying the number of shares which may be purchased upon exercise
of the Option and containing such terms and provisions as the Board or the
Committee may determine, subject to the provisions of the Plan.
6. SHARES OF COMMON STOCK SUBJECT TO THE PLAN.
------------------------------------------
(a) NUMBER. The aggregate number of shares of Common Stock subject to
------
Options which may be granted under the Plan shall be 1,000,000, subject to
adjustment as hereinbelow provided. To the extent any Option granted under the
Plan shall expire or terminate unexercised or for any reason become
unexercisable, the shares subject to such Option shall thereafter be available
for future grants under the Plan.
(B) CAPITAL CHANGES. Except as hereinafter provided, no adjustment shall
---------------
be made in the number of shares of Common Stock issued to a Participant, or in
any other rights of the Participant upon exercise of an Option, by reason of any
dividend, distribution or other right granted to shareholders for which the
record date is prior to the date of exercise of the Participant's Option. In
the event any change is made to the shares of Common Stock (whether by reason of
a merger, consolidation, reorganization, recap italization, stock dividend,
stock split, combination of shares, exchange of shares, change in corporate
structure or otherwise), appropriate adjustments shall be made in: (i) the
number of shares of Common Stock theretofore made subject to Options, and in the
exercise price of such shares; and (ii) the aggregate number of shares which may
be made subject to Options. If any of the foregoing adjustments shall result in
a fractional share, the fraction shall be disregarded, and the Company shall
have no obligation to make any cash or other payment with respect to such a
fractional share.
7
Stock Option Plan (1995)
Community Health Computing Corp.
7. EXERCISE OF STOCK OPTIONS.
-------------------------
(a) TIME OF EXERCISE. Subject to the provisions of the Plan, including
----------------
without limitation Section 7(d) and Section 8, the Board or the Committee, in
its discretion, shall determine the time when an Option, or a portion of an
Option, shall become exercisable, and the time when an Option, or a portion of
an Option, shall expire; provided, however, that (i) each Option shall expire,
to the extent not exercised, no later than the tenth anniversary of the date on
which it was granted; and (ii) any Incentive Option granted to any person who
owns shares possessing more than 10% of the total combined voting power or value
of all classes of stock of the Company or of its Parent or a Subsidiary shall
have a term of not to exceed five (5) years. Such time or times shall be set
forth in the Option Agreement evidencing such Option.
(b) NOTICE OF EXERCISE. An Optionee electing to exercise an Option shall
------------------
give written notice to the Company, as specified by the Option Agreement, of
his/her election to purchase a specified number of shares, such notice shall be
accompanied by the instrument evidencing such Option and any other documents
required by the Company, and shall tender the exercise price of the shares
optionee has elected to purchase. If the notice of election to exercise is
given by the executor or administrator of a deceased Participant, or by the
person(s) to whom the Option has been transferred by the participant's will or
the applicable laws of descent and distribution, the Company will be under no
obligation to deliver shares pursuant to such exercise unless and until the
Company is satisfied that the person(s) giving such notice is or are entitled to
exercise the Option.
(c) EXCHANGE OF OUTSTANDING STOCK. The Board, in its sole discretion, may
-----------------------------
permit an Optionee to surrender to the Company shares of Common Stock of the
Company or any Parent previously acquired by the Optionee at least six (6)
months prior to such surrender as part or full payment for the exercise of an
Option. Such surrendered shares shall be valued at their Fair Market Value on
the date of exercise of the Option.
(d) TERMINATION OF CONTINUOUS STATUS BEFORE EXERCISE. If a Participant's
------------------------------------------------
Continuous Status with the Company or its Parent or any Subsidiary shall cease
for any reason (other than the Participant's death, retirement or disability as
provided below), any Option then held by the Participant or his/her estate, to
the extent then exercisable, shall remain exercisable after such cessation of
the Continuous Status for a period of three (3) months commencing upon the date
of such cessation (or such longer period
8
Stock Option Plan (1995)
Community Health Computing Corp.
as the Board may allow, either in the form of Option Agreement or by Board
action). If the Option is not exercised during this period it shall be deemed to
have been forfeited and be of no further force or effect. Notwithstanding the
exercise period hereinabove described, if the holder of an Option is terminated
for "Cause" (as hereinabove defined), the Board shall have the authority, by
notice to the holder of an Option, to immediately terminate such Option,
effective on the date of termination, and such Option shall no longer be
exercisable to any extent whatsoever.
(e) DEATH. If a Participant dies at a time when he is entitled to exercise
-----
an Option, then at any time or times within twelve (12) months after his/her
death (or such further period as the Board may allow) such Option may be
exercised, as to all or any of the shares which the Participant was entitled to
purchase immediately prior to his/her death (i) by his/her executor or
administrator or the person(s) to whom the Option is transferred by will or the
applicable laws of descent and distribution or (ii) his designated beneficiary,
and except as so exercised such Option will expire at the end of such period.
In no event, however, may any Option be exercised after the expiration of its
term.
(f) RETIREMENT AND DISABILITY. If a Participant retires from service at
-------------------------
age 65 or older or retires at less than age 65 with the consent of the Board of
Directors or becomes disabled (within the meaning of Section 105(d)(4) of the
Code) at a time when he is entitled to exercise an Option, then, at any time or
times within three (3) months of the date of such retirement or within twelve
(12) months of the date of such disability, he may exercise such Option as to
all or any of the shares which he was entitled to purchase under such Option
immediately prior to such retirement or disability. Except as so exercised,
such Option shall expire at the end of such period. In no event, however, may
any Option be exercised after the expiration of its term.
(g) DISPOSITION OF TERMINATED STOCK OPTIONS. Any shares of Common Stock
---------------------------------------
subject to Options which have been terminated as provided above shall not
thereafter be eligible for purchase by the Participant but shall again be
available for grant by the Board to other Participants.
9
Stock Option Plan (1995)
Community Health Computing Corp.
8. SPECIAL PROVISIONS RELATING TO INCENTIVE OPTIONS.
-------------------------------------------------
The Company shall not grant Incentive Options under the Plan to any Optionee
to the extent that the aggregate Fair Market Value (determined as of the date of
grant) of the Common Stock covered by such Incentive Options which are
exercisable for the first time during any calendar year, when combined with the
aggregate Fair Market Value of all stock covered by Incentive Options granted to
such Optionee after December 31, 1986 by the Company, its Parent or a Subsidiary
thereof which are exercisable for the first time during the same calendar year,
exceeds $100,000. Incentive Options shall be granted only to persons who, on the
date of grant, are Employees of the Company or its Parent or a Subsidiary of the
Company.
9. NO CONTRACT OF EMPLOYMENT.
--------------------------
Unless otherwise expressed in a writing signed by an authorized officer of
the Company, all Employees of the Company are hired for an unspecified period of
time and are considered to be "at-will employees." Nothing in this Plan shall
confer upon any Participant the right to continue in the employ of the Company,
its Parent or any Subsidiary, nor shall it limit or restrict in any way the
right of the Company, its Parent or any such Subsidiary to discharge the
Participant at any time for any reason whatsoever, with or without Cause.
10. NO RIGHTS AS A SHAREHOLDER.
--------------------------
A Participant shall have no rights as a shareholder with respect to any
shares of Common Stock subject to an Option.
11. NONTRANSFERABILITY OF OPTIONS; DEATH OF PARTICIPANT.
---------------------------------------------------
No Option acquired by a Participant under the Plan shall be assignable or
transferable by a Participant, other than by will or the laws of descent and
distribution, and such Options are exercisable, during his lifetime, only by
Optionee; provided, however, that any option agreement issued under the Plan may
provide for the designation of a beneficiary of the Optionee (which may be an
individual or trustee) who may exercise the Option after the Optionee's death
and enjoy the economic benefits thereof, subject to the consent of Optionee's
spouse where required by law. Subject to Section 7(e), in the event of
Optionee's death, the Option may be exercised by the personal representative of
the Participant's estate or, if no personal representative has been appointed,
by the successor(s) in interest determined under the Participant's will or under
the applicable laws of descent and distribution.
10
Stock Option Plan (1995)
Community Health Computing Corp.
Participants's will or under the applicationable lawas of descent and
distribution.
12. LIQUIDATION OF THE COMPANY. In the event of a proposed dissolution or
--------------------------
liquidation of the Company, the Option shall terminate immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his Option as to all or any part of the Shares
covered by an Option, including Shares as to which the Option would not
otherwise be exercisable.
13. CHANGES OF CONTROL; OTHER EVENTS. In the event of a proposed sale of all
--------------------------------
or substantially all of the assets of the Company (other than a sale or transfer
to a subsidiary or parent corporation of the Company), the merger or
consolidation of the Company with or into another corporation in a transaction
in which the Company does not survive (other than a reincorporation to another
state), or a Change in Control as defined in Section 2(e) hereof, Options
granted under the Plan may provide for certain rights of the Option holder or,
if exercised, the shareholder. Furthermore, upon the occurrence of any such
event (and except as stated to the contrary in any Option Agreement granted
under the Plan), all Options shall vest immediately and may be fully exercised
without regard to the normal vesting schedules. Should an Option so become
immediately exercisable, the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of not less than ten (10) nor more than
sixty (60) days from the date of such notice and, if such Option shall not be
exercised, the Option shall terminate upon the expiration of such period and be
of no further force or effect.
14. AMENDMENTS; DISCONTINUATION OF PLAN.
-----------------------------------
The Board may from time to time alter, amend, suspend or discontinue the
Plan, including, where applicable, any modifications or amendments as it shall
deem advisable for any reason, including satisfying the requirements of any law
or regulation or any change thereof; provided, however, that no such action
shall adversely affect the rights and obligations of any holder of an Option
then outstanding under the Plan; and provided further, that no such action
shall, without the approval of the shareholders of the Company, (a) materially
increase the maximum number of shares of Common Stock that may be made subject
to Options (unless necessary to effect the adjustments required by Section
6(b)), (b) materially increase the benefits accruing to Participants under the
11
Stock Option Plan (1995)
Community Health Computing Corp.
Plan, or (c) materially lessen the requirements as to eligibility for
participation in the Plan. No such amendment shall materially adversely affect
the rights of any Participant under any Option previously granted without such
Participant's prior consent.
15. REGISTRATION OF OPTIONED SHARES.
-------------------------------
The Options shall not be exercisable unless the purchase of such Optioned
Shares is pursuant to an applicable effective registration statement under the
Securities Act of 1933, as amended, or unless, in the opinion of counsel to the
Company, the proposed purchase of such Optioned Shares would be exempt from the
registration requirements of the Securities Act of 1933, as amended.
16. WITHHOLDING TAXES; SATISFIED BY WITHHOLDING OPTIONED SHARES.
-----------------------------------------------------------
(a) GENERAL. The Company, its Parent or any Subsidiary may take such
-------
steps as it may deem necessary or appropriate for the withholding of any taxes
which the Company, its Parent or any Subsidiary is required by law or regulation
of any governmental authority, whether Federal, state or local, do mestic or
foreign, to withhold in connection with any Option including, but not limited
to, requiring the Optionee to pay such tax at the time of exercise or the
withholding of issuance of shares of Common Stock to be issued upon the exercise
of any Option until the Participant reimburses the Company for the amount the
Company is required to withhold with respect to such taxes, or, at the Company's
sole discretion, cancelling any portion of such issuance of Common Stock in any
amount sufficient to reimburse itself for the amount it is required to so
withhold.
(b) SATISFYING TAXES BY WITHHOLDING OPTIONED SHARES. Option Agreements
-----------------------------------------------
under the Plan may, at the discretion of the Board, contain a provision to the
effect that all Federal and state taxes required to be withheld or collected
from an Optionee upon exercise of an Option may be satisfied by the withholding
of a sufficient number of exercised Option Shares which, valued at Fair Market
Value on the date or exercise, would be equal to the total withholding
obligation of the Optionee for the exercise of such Option; provided, however,
that if the Company is a corporation any of whose outstanding securities are
then registered under the Securities Exchange Act of 1934, no person who is an
"officer" of the Company as such term is defined in Rule 3b-2 under the
Securities Exchange Act of 1934 may elect to satisfy the withholding of Federal
and state taxes upon the exercise of an Option by the withholding of Optioned
Shares unless such election is made
12
Stock Option Plan (1995)
Community Health Computing Corp.
either (i) at least six months prior to the date that the exercise of the Option
becomes a taxable event or (ii) during any of the periods beginning on the third
business day following the date on which the Company issues a news release
containing the operating results of a fiscal quarter or fiscal year and ending
on the twelfth business day following such date. Such election shall be deemed
made upon receipt of notice thereof by an officer of the Company, by mail,
personal delivery or by facsimile message, and shall (unless notice to the
contrary is provided to the Company) be operative for all Option exercises which
occur during the twelve-month period following election.
17. EFFECTIVE DATE AND TERM OF PLAN.
-------------------------------
The Plan is effective as of the date of adoption by the Board and Options
may be granted at any time on or after such date; provided, however, that (i)
the Plan shall terminate if the shareholders of the Company do not approve and
adopt it within twelve (12) months of such date and (ii) no Option shall be
effective unless an appropriate qualification or other approval of the Plan is
received, if necessary, from any state securities law adminis trator who may
have jurisdiction with respect thereto. No Options shall be granted subsequent
to ten (10) years after the effective date of the Plan; however, Options
outstanding subsequent to ten years after the effective date of the Plan shall
continue to be governed by the provisions of the Plan until exercised or
terminated in accordance with the Plan or the respective Option Agreements.
ADOPTED BY THE BOARD OF DIRECTORS
AND SOLE SHAREHOLDER ON
July 12, 1995
13
COMMUNITY HEALTH COMPUTING CORP.
--------------------------------
STOCK OPTION AGREEMENT
----------------------
UNDER
-----
STOCK OPTION PLAN (1995)
------------------------
THIS STOCK OPTION AGREEMENT is issued to the Optionee herein-below set
forth pursuant to the Stock Option Plan (1995) (the "Plan") of Community Health
Computing Corp., a Delaware corporation (the "Company").
1. OPTIONEE; BASIC TERMS. The Optionee is hereby granted an option to
---------------------
purchase the number of fully paid and non-assessable shares of the Common Stock
of the Company at the option price set forth in Section 1.B. below, subject to
the following additional terms and conditions:
A. DEFINITIONS.
-----------
(i) "ADAC" shall mean ADAC Laboratories, a California
corporation.
(ii) "Cause" shall mean any of the following: (a) gross and
willful failure, after 30 days' written warning, to discharge the normal
employment duties required of the employee, (b) theft or other misappropriation
of Company property, trade secrets or other intellectual property rights and use
thereof for non-employee purposes or (c) commission of a crime such that the
Company's reputation with its customers is materially damaged. Becoming fully or
partially disabled shall not be deemed "Cause" herein.
(iii) "CHC" shall mean Community Health Computing Corp., a
Delaware corporation.
(iv) "Change of Control" shall occur upon the earliest to occur
of any of the following events: (i) a majority of CHC's Board of Directors does
not consist of persons who were members of the Board of Directors of ADAC on
July 1, 1995, but only if such event occurs within a period of less than six
months; (ii) any "person" or "group" (as defined in or pursuant to Sections
13(d) and 14(d) of the Securities Act of 1934, as amended, (the "Exchange Act"),
becomes the "beneficial owner" (as defined in Rule 13(d) promulgated under the
Exchange Act) directly or indirectly of securities of the Company representing
40% or more of the voting power of the common stock outstanding which votes
generally for the election of directors; or (iii) the Company or any of its
subsidiaries sells, through merger, assignment or otherwise, in one or more
transactions, other than in the ordinary course of business, assets constituting
two-thirds (2/3) in value of the total assets of the Company. The value of such
assets, for purposes of this section, shall be determined by the Board of
Directors and shall be consistent with the values applicable to the asset sale
transaction.
Stock Option Agreement
Community Health Computing Corp.
(v) "Code" shall mean the Internal Revenue Code of 1986, and as
amended from time to time.
(vi) "Compensation Package" shall mean base salary, cash
incentive bonuses and the value of all other readily measurable non-cash
perquisites received during the prior calendar year.
(vii) "Fair Market Value of CHC" shall mean and be determined by
the following formula: (a) the net income before interest expense and federal
income taxes based on net income ("EBIT") of CHC for the four fiscal quarters
ending immediately prior to a Change of Control divided by the EBIT of ADAC and
all of its subsidiaries (including the Company) for the four fiscal quarters
ending immediately prior to a Change of Control, the result of which shall be
multiplied by (b) the "Market Capitalization" of ADAC on the date of the Change
of Control. For purposes of this section, Market Capitalization shall mean the
per share closing price of ADAC Common Stock multiplied by the weighted average
number of Common and Common-equivalent shares outstanding as of the fiscal
quarter ending immediately preceding the determination date.
(viii)"Fair Market Value per CHC Share" shall be determined by
first subtracting from the Fair Market Value of CHC the aggregate liquidation
preferences of all issued and outstanding shares of the Company's convertible
preferred stock and then dividing the result by the number of all issued and
outstanding shares of the Company's Common Stock; provided, however, that at the
election of the Company, the aggregate liquidation preferences of such
convertible preferred stock shall not be subtracted from the Fair Market Value
of CHC, and the Fair Market Value of CHC shall be divided by the sum of (a) the
number of the issued and outstanding shares of the Company's Common Stock and
(b) the number of shares of the Company's Common Stock into which all issued and
outstanding shares of convertible preferred stock of the Company may be
converted.
(ix) "Incentive Option" shall mean an option described in
Section 422 of the Code. To qualify for favorable tax treatment provided by an
incentive option, the shares purchased upon exercise must be held for a period
of two (2) years from the date of the option grant and for a period of one (1)
year after the shares are transferred to Optionee.
(x) "Net Intrinsic Value" of an Option shall mean the
difference between (a) the Fair Market Value per CHC Share and (b) the Option
exercise price, multiplied by the number of shares represented by the Unvested
Portion of an Option.
2
Stock Option Agreement
Community Health Computing Corp.
(xi) "Non-Qualified Option" shall mean an option other than an
Incentive Option, the exercise of which generally results in an immediate
taxable event.
(xii) "Unvested Portion" of an Option shall mean that portion of
an Option which the Optionee is not then entitled to exercise.
(xiii) Unless otherwise indicated, all capitalized terms set
forth in this Agreement shall have the meaning provided to them under the Plan,
a copy of which Optionee acknowledges having received.
B. GRANT OF OPTION.
---------------
(i) This stock option is granted to _______________
("Optionee").
(ii) The Company hereby grants to the Optionee an option (the
"Option") to purchase ____________ shares of the Common Stock of the Company,
upon the terms and conditions set forth below. The date of grant of the Option
is __________ __, 19__ (the "Grant Date").
(iii) The exercise and purchase price ("Purchase Price") per
share is $____________.
(iv) This Option is intended to be a(n):
/__/ Incentive Option (to be received only by employees of
---------
the Company).
/__/ Non-Qualified Option.
(v) The Optionee is a(n) (if applicable, check more than one):
/__/ Employee /__/ Officer /__/ Other Person
providing
services
/__/ Director /__/ Consultant
C. DURATION OF OPTION.
------------------
Except as provided below, this Option shall expire on December
31, 1997. In the event, however, that the Company determines that Optionee's
employment is to be terminated for Cause (as such term is defined herein), any
right of Optionee to exercise the Options shall expire automatically on the date
that the Company notifies Optionee of such determination (the "Early Expiration
Date").
3
Stock Option Agreement
Community Health Computing Corp.
D. PURCHASE PRICE.
--------------
The Purchase Price for the shares subject to the Option is $.66
per share.
2. EXERCISABILITY. Subject to Section 6 regarding termination of
-------------- ---------
Optionee's employment, consulting or other relationship with the Company and
Section 13.B regarding Incentive Options, this Option shall become exercisable
- ------------
in one or more installments (to the nearest whole number), in the percentages
and on and after the dates set forth below:
CUMULATIVE
% OF OPTION PERCENTAGE
DATE SHARES EXERCISABLE AVAILABLE
---- -------------------- -----------
January 21, 1996 50% 50%
July 21, 1996 50% 100%
3. METHOD OF EXERCISE AND PAYMENT.
------------------------------
A. EXERCISE. This Option may be exercised from time to time, in
--------
whole or in part, to the extent exercisable, only by delivery to an officer of
the Company of the original of this Option with an appropriate Notice of
Exercise duly signed by the holder, together with the full purchase price of the
shares purchased pursuant to the exercise of the Option; provided, however, that
this Option may not be exercised if such exercise would violate any law or
governmental order or regulation. If the offer and sale of the shares subject
to the Option has not been registered under the Securities Act of 1933, as
amended (the "Act"), Optionee shall deliver to the Company, at the time of
exercise, appropriate investment representation substantially as set forth below
in this Agreement unless, in the opinion of counsel for the Company, the shares
issued would not be deemed "restricted securities" within the meaning of such
Act or the rules and regulations promulgated thereunder. Payment for the shares
purchased pursuant to any exercise shall be made in full at the time of such
exercise in cash or by check payable to the order of the Company or, if approved
by the Board of Directors, payable in Common Stock of the Company or its Parent
corporation (as such term is defined in the Plan) already owned by the Optionee
for a period of six (6) months prior to such exercise, valued as of the date of
exercise of the Option by the Board of Directors or, if approved by the Board of
Directors, by a promissory note payable to the order of the Company. If a
promissory note is tendered, such note shall bear interest at an interest rate
determined by, and shall be subject to such terms and conditions as are
prescribed by, the Board as set forth in the form of promissory note then
utilized under the Plan.
4
Stock Option Agreement
Community Health Computing Corp.
B. WITHHOLDING. Optionee agrees to have withheld from any
-----------
remuneration payable to him by the Company and/or to pay to the Company, at the
time of exercise of the Option, an amount which is required to be withheld or
paid pursuant to any Federal, State or local tax or revenue laws or regulations,
as may be determined by the Company. If approved in advance by the Board of
Directors, the Optionee may satisfy such tax withholding by instructing the
Company to withhold such number of option shares exercised which, when valued at
fair market value as determined by the Board of Directors on the date of
Exercise, equal the total tax obligations required to be withheld.
4. NON-TRANSFERABILITY. This Option shall not be transferred, sold,
-------------------
pledged, assigned, hypothecated, or disposed of in any manner by Optionee other
than by will or the laws of descent and distribution to the extent hereinafter
set forth. This Option may be exercised during the holder's lifetime only by
the holder hereof or, upon the holder's legal incapacity to act on his/her own
behalf, by the holder's conservator or other lawful representative. The Option
shall be null and void and without effect upon any attempted assignment or
transfer, except as hereinabove provided, including without limitation, any
purported assignment, whether voluntary or by operation of law, pledge,
hypothecation or other disposition contrary to the provisions hereof, or levy of
execution, attachment, trustee process or similar process, whether legal or
equitable, upon the Option.
5. TERMINATION. To the extent that this Option shall not have been
-----------
exercised in full prior to its termination or expiration date, whichever shall
be sooner, it shall terminate and become void and of no effect.
6. CESSATION OF CONTINUOUS STATUS -- TERMINATION, RETIRE MENT, DEATH OR
--------------------------------------------------------------------
DISABILITY; TERMINATION "FOR CAUSE." If the Optionee shall voluntarily or
- ------------------------------------
involuntarily cease his/her Continuous Status (as such term is defined in the
Plan) (hereinafter referred to as a "Termination"), the Option shall terminate
forthwith, except that the Optionee shall have three (3) months (or such longer
period as the Board may approve) following the Termination to exercise this
Option or any portion thereof which the Optionee could have exercised on the
date of Termination; provided, however, that if the Termination is due to (i)
retirement by the Optionee on or after attaining the age of sixty-five (65)
years, (ii) the disability of the Optionee or (iii) the death of the Optionee,
the Optionee or the representative of the estate of the Optionee shall have the
privilege of exercising the entire unexercised vested portion of this Option,
provided that such exercise be accomplished (a) prior to the expiration of this
Option and (b) either within three (3) months of the Optionee's retirement,
within twelve (12) months of the Optionee's disability, or within twelve (12)
months after the date of death of the Optionee,
5
Stock Option Agreement
Community Health Computing Corp.
as the case may be. Notwithstanding any of the foregoing, if the Termination is
for Cause (as such term is defined herein) or Optionee breaches (before or after
termination) any of his duties under this Agreement, the existence of which
shall be determined by the Board of Directors or any Committee established to
administer the Plan (such decision to be made by the Board or Committee in its
sole discretion and which determination shall be conclusive), this Option shall
terminate immediately upon the Termination and the Optionee in such event shall
have no right after such Termination to exercise any unexercised Option which
he/she might have exercised on or prior to the Termination.
7. STOCK SPLITS AND CAPITAL ADJUSTMENTS. If, prior to the complete
------------------------------------
exercise of this Option, there shall be declared and paid a stock dividend upon
the Common Stock of the Company or if such stock shall be split up, converted,
exchanged or reclassified, this Option, to the extent that it has not been
exercised, shall entitle the Optionee, upon the future exercise of this Option,
to such number and kind of securities or other property, subject to the terms of
the Option, to which the Optionee would be entitled had he/she actually owned
the stock subject to the unexercised portion of the Option at the time of the
occurrence of such stock dividend, split up, conversion, exchange,
reclassification or substitution; and the aggregate purchase price upon the
future exercise of the Option shall be the same as if shares of Common Stock of
the Company originally optioned were being purchased as provided herein.
8. CHANGE IN CONTROL PROVISIONS.
----------------------------
A. UPON A CHANGE OF CONTROL OF THE COMPANY, THE FOLLOWING EVENT
------------------------------------------------------------
SHALL OCCUR:
- -----------
The Company shall become obligated to pay to Optionee a sum equal to
the Net Intrinsic Value of the Unvested Portion of his or her Option, but
subject to the following terms and conditions: Such sum shall be paid to
Optionee, with interest thereon at a rate of 6% per annum, immediately upon the
earliest to occur of the following events: (a) Optionee has completed 12
additional consecutive months of employment (commencing from the date of the
Change of Control); (b) Optionee's employment is terminated by the Company or
its parent corporation for any reason other than Cause; (c) Optionee's
Compensation Package is reduced; (d) Optionee's duties or responsibilities are
materially reduced in scope or importance or (e) Optionee's place of employment
is changed to a location in excess of ten miles beyond Optionee's then-existing
place of employment. Pending a determination of Optionee's entitlement to such
sum, it shall be retained by the Company in a separate segregated trust or
escrow account at a bank or other Federally-insured savings institution and
shall be unavailable for use or borrowing by the Company or its affiliates.
6
Stock Option Agreement
Community Health Computing Corp.
B. UPON A CHANGE OF CONTROL OF EITHER CHC OR ADAC, THE FOLLOWING
-------------------------------------------------------------
EVENT SHALL OCCUR:
- -----------------
Each person who owns shares of Company Common Stock as a result of the
exercise of an Option (an "Exchanging Shareholder") may elect to exchange such
shares for that number of shares of ADAC Common Stock having a market value
equal to the Fair Market Value per CHC Share multiplied by the number of shares
of the Company's Common Stock being tendered for exchange. The market value of
a share of ADAC Common Stock shall be based upon such share's closing price on
the date of the Change of Control; provided, however, that if ADAC Common Stock
is not publicly traded on such date, or if on such date ADAC has been merged
with another entity or 80% or more of its assets or shares have been sold to
another entity which is, in each such case, owned or controlled by persons other
than ADAC's previous shareholders, the Exchanging Shareholder may elect to
deliver his or her shares of Company Common Stock to ADAC or to the Company in
consideration for cash equal to the Fair Market Value per CHC Share multiplied
by the number of Company shares being tendered for exchange. In order to
facilitate such exchange of shares, ADAC hereby agrees to prepare and file with
the Securities and Exchange Commission, and to use its best efforts to cause to
become effective, a Registration Statement on Form S-3 (or similar form having
the same economic effects) covering all ADAC shares exchanged for Company Common
Stock, and to maintain its effectiveness for a period of two years; all fees
and expenses incurred in connection therewith shall be borne by ADAC; and the
selling shareholders and ADAC shall enter into an appropriate indemnification
agreement whereby ADAC shall indemnify the selling shareholders against any
losses and expenses which may be incurred as a result of ADAC including any
statement or representation in the Registration Statement which is materially
false or misleading or omitting to include therein any statement the omission of
which results in the Registration Statement being false or misleading in any
material respect.
9. RESTRICTIONS ON TRANSFER OF STOCK -- RIGHT OF FIRST REFUSAL.
-----------------------------------------------------------
A. RESTRICTIONS. Optionee agrees that he/she will not, directly or
------------
indirectly, sell, pledge, give, bequeath, transfer, assign or dispose
(collectively, a "transfer") of any Common Stock (or any interest therein),
acquired pursuant to the exercise of the Option, except as permitted by this
Agreement, or as may be specifically authorized by the Board of Directors of the
Company in its sole discretion, or in accordance with the following: If
Optionee shall have received a bona fide arms' length written offer (a "Bona
Fide Offer") which Optionee desires to accept from an independent party
unrelated to Optionee (the "Third Party") for the purchase of such Common Stock,
such Option Holder shall give a notice in writing (the "Sale Notice") to the
Company setting forth
7
Stock Option Agreement
Community Health Computing Corp.
the material facts concerning the proposed transfer, including the name and
address of the Third Party and the price and terms of the Bona Fide Offer and be
accompanied by a copy of the Bona Fide Offer. Upon the giving of the Sale
Notice, the Company or its assignee shall have the right to purchase all of the
Common Stock specified in the Sale Notice, said right to be exercised no later
than 30 business days after the giving of such Sale Notice or, if later, 15 days
after the determination of the fair market value (as defined below) of any non-
cash consideration offered by the Third Party by giving written notice of the
Company's (or its assignee's) election to purchase all of such Common Stock.
Upon receipt of such notice from the Company, the Company shall be obligated to
purchase, and such Optionee shall be obligated to sell to the Company such
Common Stock at the price and terms indicated in the Bona Fide Offer and the
closing of the purchase by the Company shall be held as soon as reasonably
practicable and, if the consideration offered by the Third Party in the Bona
Fide Offer consists of property other than cash, then the Company shall pay for
the Common Stock in cash in an amount equal to the fair market value of such
consideration.
If the Company does not elect to purchase all of such Common Stock,
Optionee thereafter, at any time within a period of thirty (30) days from the
giving of said Sale Notice, may transfer all (but not less than all) of such
Common Stock to the Third Party at the price and terms contained in the Bona
Fide Offer, and the Third Party and such Common Stock shall thereafter be
subject to and be bound by all of the provisions of this Agreement and, as a
condition precedent to the completion of such transfer of Common Stock to such
Third Party, shall execute and deliver to the Company a written acknowledgement
to such effect in form and substance reasonably satisfactory to the Company,
except that the Company shall not be entitled to the "call" rights set forth in
this Section with respect to the shares of Common Stock acquired by the Third
Party; provided, however, that in the event Optionee has not so transferred said
Common Stock to the Third Party within said 30-day period, then said Common
Stock thereafter shall continue to be subject to all of the restrictions
contained in this Agreement.
For purposes of this Section, "fair market value" of non-cash
consideration means the cash-equivalent value of the non-cash consideration as
determined in good faith by the Board of Directors of the Company. Upon
delivery of notice of such fair market value to Optionee (which shall indicate,
in a general fashion, the factors considered by the Board in determining such
amount), such Optionee shall have ten business days in which to notify the
Company in writing of any disagreement. If written notice is given of a
disagreement, the Company and Optionee shall mutually agree upon an independent
appraiser experienced in making valuations of such sort which shall make a
determination of the fair market value of the non-cash consideration. Such
determination shall be final,
8
Stock Option Agreement
Community Health Computing Corp.
binding and non-appealable upon the Company and Optionee. The cost and expenses
incurred in connection with the determination made by the independent appraiser
shall be borne (i) by the Company if the independent appraiser makes a higher
determination of fair market value than the Board of Directors of the Company,
or (ii) by Optionee if the independent appraiser makes the same or a lower
determination of such fair market value.
B. PERMISSIBLE TRANSFERS TO RELATED TRANSFEREES. Notwithstanding
--------------------------------------------
anything to the contrary contained above in this Section, Optionee may transfer
such Optionee's Common Stock without restriction to such Optionee's Related
Transferees (as defined herein), provided that each such Related Transferee
shall first execute a written consent in form and substance reasonably
satisfactory to the Company to be bound by all of the provisions of this
Agreement. The "Related Transferees" of an Optionee shall consist of Optionee's
spouse, Optionee's adult children, trusts established solely for the benefit of
Optionee's spouse or Optionee's minor children and, in the event of death,
Optionee's personal representatives (in their capacities as such), estate and
named beneficiaries. In the event of any transfer by an Optionee to a Related
Transferee of all or any part of such Optionee's Common Stock (or in the event
of any subsequent transfer by any such Related Transferee to another Related
Transferee of the original Optionee), such Related Transferee(s) shall receive
and hold said Common Stock subject to the terms of this Agreement and the rights
and obligations hereunder, and such Related Transferee shall be deemed to be an
Optionee for the purposes of this Agreement. There shall be no further transfer
of such Common Stock by a Related Transferee except between and among such
Related Transferees, the Optionee to whom such Related Transferee is related and
the other Related Transferees of such Optionee, or except as permitted by this
Agreement.
10. COMPANY'S "CALL" OPTIONS.
------------------------
A. COMPANY'S "CALL" OPTION. Upon the (i) voluntary or involuntary
-----------------------
termination of Optionee's employment with the Company for any reason or (ii)
death of Optionee, (collectively a "Callable Event"), subject to the provisions
of Section 11 and this Section, the Company may, at its option, exercisable by
----------
written notice (a "Call Notice") delivered to such Optionee within 90 days after
the applicable Callable Event (or, in the event the applicable Callable Event is
the death of an Optionee, within 30 days after the appointment and qualification
of the deceased Optionee's personal representative, if later), elect to
purchase, and, upon the giving of such Call Notice, the Company shall be
obligated to purchase and such Optionee (or, as applicable, the Related
Transferee or Optionee's personal representative) (the "Seller") shall be
obligated to sell, all or any portion of the shares of Company Common Stock
theretofore acquired by such Optionee (and his Related
9
Stock Option Agreement
Community Health Computing Corp.
Transferees, if any) pursuant to the exercise of Options hereunder and owned at
the time of the Call Purchase Event at a per share purchase price equal to the
Fair Market Value per CHC Share. The Company need not treat all option holders
of the Company in a similar manner, and may exercise its call rights hereunder,
partially or fully, with respect to some optionees and not others, and for any
reason it deems appropriate.
B. DEFINITIONS OF FAIR MARKET VALUE PER CHC SHARE. For purposes of
----------------------------------------------
this Section, the term "Fair Market Value per CHC Share" shall be based upon the
definition thereof set forth in Section 1.A(viii) hereof; provided, however,
that for purposes of this Section 10 only, the Board of Directors of the Company
shall not be bound by such definition if it determines, in good faith, that to
do so would result in a per share valuation that would not reflect the true fair
market value of the Company's Common Stock.
C. CLOSING TERMS. The closing for all purchases and sales of Common
-------------
Stock provided for in this Section 10 shall be at the principal executive
offices of the Company as soon as reasonably practicable after the giving of
the Call Notice. The purchase price for the purchase and sale of Common Stock
pursuant to the provisions hereof shall be paid in cash, by certified or
official bank check. The Seller of shares of Common Stock sold pursuant to this
Section shall cause such shares to be delivered to the Company at the closing
free and clear of all liens, charges or encumbrances of any kind. Such Seller
shall take such action as the Company shall request as necessary to transfer the
shares to the Company, free and clear of all liens, charges and encumbrances
incurred, voluntarily or involuntarily, by or through Seller.
11. TERMINATION AND LAPSE OF CERTAIN RIGHTS AND RESTRICTIONS.
--------------------------------------------------------
A. The Company's right of first refusal upon any proposed transfer
set forth in Section 9 and the Company's call rights set forth in Section 10
--------- ----------
shall lapse and be of no further effect with respect to shares of the Common
Stock acquired by an Optionee pursuant to the exercise of Options hereunder upon
the earlier to occur of: (i) the completion of the first underwritten,
registered public offering of Common Stock of the Company; or (ii) the
consummation of a sale of substantially all of the assets of the Company and its
subsidiaries taken as a whole or a sale of substantially all of the outstanding
shares of capital stock of the Company.
12. COMPLIANCE WITH SECURITIES LAWS.
-------------------------------
A. POSTPONE ISSUANCE. Notwithstanding any provision of this Option
-----------------
to the contrary, the Company may postpone the issuance and delivery of shares of
Company Common Stock upon any exercise of this Option until one of the following
conditions shall be met:
10
Stock Option Agreement
Community Health Computing Corp.
(i) The shares with respect to which such Option has been
exercised are at the time of the issue of such shares effectively registered
under applicable Federal and state securities laws now in force or hereafter
enacted or amended; or
(ii) Counsel for the Company shall have given an opinion that
registration of such shares under applicable Federal and state securities laws,
as now in force or hereafter enacted or amended, is not required.
B. INVESTMENT REPRESENTATION. In the event that for any reason the
-------------------------
shares to be issued upon exercise of the Option shall not be effectively
registered under the Securities Act of 1933 (the "1933 Act"), upon any date on
which the Option is exercised in whole or in part, the Company shall be under no
further obligation to issue shares covered by the Option unless the Optionee
shall give a written representation to the Company, in form satisfactory to the
Company, that such person is acquiring the shares issued pursuant to such
exercise of the Option for investment and not with a view to, or for sale in
connection with, the distribution of any such shares, and that he/she will make
no transfer of the same except in compliance with the 1933 Act and the rules and
regulations promulgated thereunder and then in force, and in such event the
Company may place an "investment legend" upon any certificate for the shares
issued by reason of such exercise.
C. DISPOSITION OF STOCK ACQUIRED UPON EXERCISE. In addition to the
-------------------------------------------
other restrictions provided in this Agreement, Optionee agrees that prior to
making any disposition or transfer of any Common Stock acquired pursuant to the
exercise of this option Optionee shall give twenty (20) days' prior written
notice to the Company describing the manner of such proposed transfer. Optionee
further agrees that he/she will not effect such proposed transfer until either
(i) Optionee has provided to the Company, if so requested by the Company, an
opinion of counsel reasonably satisfactory in form and substance to the Company
that such proposed transfer is exempt from registration under the 1933 Act and
any applicable state securities laws, or (ii) a registration statement under the
1933 Act covering such proposed disposition has been filed by the Company
(although the Company is under no obligation to file any registration statement)
under the 1933 Act and has become effective and compliance with applicable state
securities laws has been effected. The Company agrees that it will respond as
promptly as reasonably practicable to any notice of sale given hereunder.
D. NO TRADING MARKET; NO REGISTRATION OBLIGATION. Each Optionee
---------------------------------------------
acknowledges that no trading market for the Company's Common Stock exists and,
as a result, Optionee may be unable to sell any of the Common Stock acquired
upon the exercise of the
11
Stock Option Agreement
Community Health Computing Corp.
Options for the foreseeable future. Further, the Company has no obligation to
register any of such Common Stock.
E. LEGEND ON CERTIFICATES. Each stock certificate of the Company
----------------------
issued to represent any of the shares of Common Stock acquired pursuant to the
exercise of Options shall bear the following (or substantially equivalent)
legends on the face or reverse side thereof:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY JURISDICTION. SUCH SECURITIES MAY NOT
BE OFFERED, SOLD, OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED
EXCEPT PURSUANT TO (I) A REGISTRATION STATEMENT WITH RESPECT TO SUCH
SECURITIES THAT IS EFFECTIVE UNDER SUCH ACT OR APPLICABLE STATE
SECURITIES LAW, OR (II) ANY EXEMPTION FROM REGISTRATION UNDER SUCH
ACT, OR APPLICABLE STATE SECURITIES LAW, RELATING TO THE DISPOSITION
OF SECURITIES, INCLUDING RULE 144, PROVIDED AN OPINION OF COUNSEL IS
FURNISHED, REASONABLY SATISFACTORY IN FORM AND SUBSTANCE TO THE
COMPANY, THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT AND/OR APPLICABLE STATE SECURITIES LAW IS AVAILABLE.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED,
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS
SUCH TRANSFER COMPLIES WITH THE PROVISIONS OF A STOCK OPTION
AGREEMENT TO WHICH THE HOLDER HEREOF IS A PARTY, A COPY OF WHICH IS ON
FILE AT THE OFFICE OF THE COMPANY.
Any stock certificate issued at any time in exchange or substitution for any
certificate bearing such legends (except a new certificate issued upon the
completion of a public distribution of Common Stock represented thereby) shall
also bear such (or substantially equivalent) legends, unless the Common Stock
represented by such certificate is no longer subject to the provisions of this
Agreement and in the opinion of counsel for the Company the Common Stock
represented thereby need no longer be subject to restrictions pursuant to the
1933 Act or applicable state securities law. The Company shall not be required
to transfer on its books any certificate for Common Stock in violation of the
provisions of this Agreement. The failure of the Company to affix such a legend
to the certificate shall not release or waive Optionee's obligations under this
Agreement.
12
Stock Option Agreement
Community Health Computing Corp.
13. SPECIAL RULES REGARDING INCENTIVE OPTIONS.
-----------------------------------------
A. NOTICE OF TRANSFER. If this Option is an Incentive Option, the
------------------
Optionee hereby agrees to notify the Company in writing within three (3) days
after any sale, transfer or other disposition of shares acquired upon the
exercise of this Option which occurs within either twelve (12) months following
the date of exercise or twenty-four (24) months following the date of grant.
B. $100,000 PER YEAR EXERCISE LIMIT. If this Option is an Incentive
--------------------------------
Option, it shall be exercisable in accordance with the above schedule set forth
in Section 2 hereof, but in no event shall it be exercised to the extent that
---------
the aggregate fair market value of Common Stock covered by such Option which is
exercisable for the first time during any calendar year, when combined with the
aggregate fair market value of all stock covered by incentive stock options (as
defined in the Code) granted to Optionee after December 31, 1986 by the Company,
its parent or a subsidiary of the Company which are exercisable for the first
time during the same calendar year, exceeds $100,000.
14. NO AGREEMENT OF EMPLOYMENT. Neither the grant of this Option nor this
--------------------------
Agreement shall be deemed to create any agreement with, or obligation by, the
Company to employ the Optionee for any period of time, it being understood that
employment is strictly "at will" in the absence of any written agreement to the
contrary and, in the absence of such written agreement, such person may be
terminated by the Company at any time, with or without cause.
15. ASSIGNMENT OF INVENTIONS, ETC.; NON-DISCLOSURE OF CONFIDENTIAL
---------------------------------------------------------------
INFORMATION. As further consideration for the issuance of the Option, the
- -----------
Optionee, if he is an employee of the Company, agrees as follows:
A. ASSIGNMENT OF INVENTIONS. Any and all trade secrets, inventions
------------------------
and proprietary information which either (i) relates at the time of conception
or reduction to practice to the Company or its business, or actual or
demonstrably anticipated research or development of the Company or (ii) results
from any work performed by the Optionee for the Company is hereby assigned to,
and shall become the absolute property of, the Company and shall at all times
and for all purposes be regarded as acquired and held by the Optionee in a
fiduciary capacity for the sole benefit of the Company, and the Optionee agrees
that, upon request, he will promptly make all disclosures, execute all
assignments, instruments and papers, and perform all acts whatsoever necessary
or desired by the Company to vest and confirm in it, its successors, assigns and
nominees, all rights created or contemplated by this subparagraph A and which
may be necessary or desirable to enable the Company, its successors, assigns,
and nominees to secure and enjoy the full benefits and advantages thereof.
13
Stock Option Agreement
Community Health Computing Corp.
B. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The Optionee shall
-----------------------------------------
not, during his employment by the Company or at any time thereafter, directly or
indirectly use, divulge, furnish or make accessible to anyone other than the
Company, its directors and officers other than in the regular course of the
business of the Company or any of its subsidiaries, any knowledge or information
with respect to (i) confidential, secret or proprietary plans, data (including
cost data), specifications, procedures and techniques, methods, inventions,
software, firmware, source codes, technology, "knowhow," or other similar
material or data relating to the business, products, services (whether existing
or under development) or activities of the Company or its subsidiaries, (ii)
any confidential business plans or surveys of the Company or its subsidiaries,
(iii) any other confidential or secret aspect of the business, products,
services or activities of the Company or its subsidiaries, or (iv) any customer
usages and requirements or any customer lists of the Company or its
subsidiaries. The Optionee shall not, upon leaving the employ of the Company,
without the prior written consent of an executive officer of the Company, take
with him any data, customer lists, reports, studies, compilations, business
plans, presentations/proposals, letters, memoranda, notes or other writings or
documents whatever, or copies thereof, which reflect or deal with any of the
confidential information described in this Section.
C. REMEDIES. The Optionee acknowledges that a breach of the
--------
provisions of this Agreement will cause the Company irreparable injury for
which the Company cannot be reasonably or adequately compensated in damages. The
Company shall, therefore, be entitled, in addition to all other remedies
available to it, to injunctive and/or other equitable relief to prevent a breach
of this Agreement, or any part of it, and to secure its enforcement.
16. SUBJECT TO PLAN. This Option is issued subject and pursuant to the
---------------
provisions of the Plan, receipt of a copy of which the holder acknowledges. A
determination of the Board of Directors or the Committee established pursuant to
the Plan as to any questions which may arise with respect to the interpretation
of the provisions of this Option and of the Plan shall be final. The Board of
Directors or the Committee may authorize and establish such rules and
regulations, and revisions thereof, not inconsistent with the provisions of the
Plan, as it may deem advisable. Any provision hereof which is contrary to the
terms and conditions of the Plan shall be superseded and governed by the Plan.
17. SEVERABILITY. If any condition, term or provision of this Agreement
------------
is determined by a court to be illegal or in conflict with any law, state or
Federal, the validity of the remaining portions or provisions shall not be
affected, and the rights and obligations of the parties shall be construed and
14
Stock Option Agreement
Community Health Computing Corp.
enforced as if this Agreement did not contain the particular condition, term or
provision determined to be unenforceable.
18. ENTIRE AGREEMENT; GOVERNING LAW. This Agreement contains the entire
-------------------------------
understanding and agreement between the parties hereto respecting the within
subject matter, and there are no representations, agreements, arrangements or
understandings, oral or written, between the parties hereto relating to the
subject matter of this Agreement that are not fully expressed herein. The
Company is a Delaware corporation, and this Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
WITNESS the signature of its duly authorized officer of the Company as of
the date of grant hereof.
COMMUNITY HEALTH COMPUTING OPTIONEE:
CORP.
______________________________
By ____________________________ Signature
Title: ________________________ ______________________________
Print Name
______________________________
Street Address
______________________________
City, State, Zip Code
______________________________
Social Security No.
*IF you have any "Inventions" to except from Section 15, you must IDENTIFY ALL
SUCH INVENTIONS below, or, if the statement is not applicable, you must write
NONE below.
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
15