Exhibit 10.16
INSIGHT HEALTH SERVICES CORP.
1997 MANAGEMENT STOCK OPTION PLAN
STOCK OPTION AGREEMENT
AGREEMENT is dated as of November 7, 1997 ("Grant Date") between INSIGHT
HEALTH SERVICES CORP., a Delaware corporation ("Corporation") and
___________________ ("Optionee").
The Board of Directors of the Corporation ("Board") has adopted the 1997
Management Stock Option Plan ("Plan") of the Corporation for the purpose of
advancing the interests of the Corporation by providing certain individuals with
an opportunity to develop a proprietary interest in the Corporation, which will
thereby create strong performance incentives for such individuals to maximize
the growth and success of the Corporation and its subsidiaries and will
encourage such individuals to remain in the employ of the Corporation or any of
its subsidiaries.
The Optionee is a full time employee of the Corporation or its
subsidiaries, and this Agreement is executed pursuant to, and is intended to
carry out the purposes of, the Plan in connection with the grant by the
Corporation of a stock option to the Optionee.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. Subject to and upon the terms and conditions set
forth in this Agreement and the Plan, a copy of which is attached hereto, the
Corporation hereby grants to the Optionee, as of the Grant Date, a stock option
("Option") to purchase up to _____________________________________ (__________)
shares ("Option Shares") of the common stock, par value $0.001 per share, of the
Corporation ("Common Stock") from time to time during the Option Period (as
defined below) at the price of $8.375 per share ("Option Price").
2. OPTION PERIOD. The Option shall be exercisable only during the Option
Period. Subject to Section 4, upon the termination of the Optionee's
employment, the Option shall terminate three (3) months after the date of such
termination of employment. In addition, upon the Expiration Date (as defined
below), the Option shall cease to be exercisable and have no further force or
effect whatsoever.
3. VESTING AND EARLY TERMINATION.
(a) The Option shall vest and become exercisable with respect to
fifty percent (50%) of the Option Shares in equal increments on each of the
first three anniversary dates of the Grant Date and until fully vested, so long
as continuously during such time period the Optionee remains an employee of the
Corporation or any of its subsidiaries;
(b) The Option shall vest and become exercisable with respect to the
other fifty percent (50%) of the Option Shares in equal increments on each of
the seventh, eighth and ninth anniversary dates of the Grant Date and until
fully vested, so long as continuously during such time period the Optionee
remains an employee of the Corporation or any of its subsidiaries; provided,
however, that such vesting shall be accelerated in the following circumstances:
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(i) if, as of any day ("1998 Target Date") from and including
November 7, 1998 to and including December 7, 1998, the Average Stock Price (as
defined below) for all trading days in the preceding thirty (30) days equals or
exceeds $11.25 per share ("1998 Target Price"), the portion of the Option which
otherwise vests on the seventh anniversary of the Grant Date shall instead vest
and become exercisable as of the 1998 Target Date;
(ii) if, as of any day ("1999 Target Date") from and including
November 7, 1999 to and including December 7, 1999, the Average Stock Price for
all trading days in the preceding thirty (30) days equals or exceeds $15.25 per
share ("1999 Target Price"), the portion of the Option which otherwise vests on
the eighth anniversary of the Grant Date, as well as the portion of the Option,
if any, the vesting of which did not accelerate pursuant to clause (i) above,
shall vest and become exercisable as of the 1999 Target Date; and
(iii) if, as of any day ("2000 Target Date") from and including
November 7, 2000 to and including December 7, 2000, the Average Stock Price for
all trading days in the preceding thirty (30) days equals or exceeds $20.00 per
share ("2000 Target Price"), the portion of the Option which otherwise vests on
the ninth anniversary of the Grant Date, as well as the portion of the Option,
if any, the vesting of which did not accelerate pursuant to clauses (i) or (ii)
above, shall vest and become exercisable as of the 2000 Target Date;
(iv) (a) if there is a Change of Control pursuant to Section
13 of the Plan; (b) as required pursuant to Section 12(c) of the Plan; or (c) if
the Optionee's employment with the Corporation or any of its subsidiaries is
terminated other than (1) due to the Optionee's death, (2) for cause (as defined
in the Optionee's Executive Employment Agreement (as defined below)) or (3)
voluntarily other than as a result of a change of control (as defined in the
Optionee's Executive Employment Agreement);
(v) "Average Stock Price" means, for the period in
question, the average of the closing prices of the Corporation's Common Stock
on all domestic securities exchanges on which such Common Stock may at the
time be listed, or, if there have been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such Common Stock is not
so listed, the average of the representative bid and asked prices quoted on
the Nasdaq Stock Market as of 4:00 PM., New York time, on such day, or, if on
any day such Common Stock is not quoted on the Nasdaq Stock Market, the
average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation
Bureau, Incorporated, or any similar successor organization. If at any time
such Common Stock is not listed on any domestic securities exchange or quoted
on Nasdaq or the domestic over-the-counter market, the Average Stock Price
shall be the fair market value thereof determined by the Committee.
(vi) The 1998 Target Price, the 1999 Target Price and the 2000
Target Price shall be increased or decreased, as applicable, to account for any
stock split, stock dividend, merger, reorganization, recapitalization or other
business combination effectuated after the Grant Date.
(c) If the Optionee's employment terminates prior to the ninth
anniversary date of the Grant Date (i) due to the Optionee's death, (ii) for
cause (as defined in the Optionee's Executive Employment Agreement (as defined
below)) or (iii) voluntarily other than as a result of a change of control (as
defined in the Optionee's Executive Employment Agreement), and the Option has
not vested with respect to all Option Shares as of such date, then the vested
Option Shares shall be fixed at such time and should the calculation result in
a fractional share, it shall be rounded down to the nearest whole number of
shares.
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4. DEATH OF AN OPTIONEE. If the Optionee's employment with the
Corporation is terminated as a result of the Optionee's death then the executors
or administrators of the Optionee's estate or the Optionee's heirs or legatees
(as the case may be) shall have the right to exercise the Option only with
respect to Option Shares theretofor vested, unless earlier terminated in
accordance with its terms. In the event of such termination, the period for
exercising the Option shall be a period of twelve (12) months commencing with
the date of such termination of employment, provided that in no event shall the
Option be exercisable at any time after the Expiration Date.
5. TIMING AND METHOD OF EXERCISE. In order to exercise the Option with
respect to all or any part of the Option Shares for which the Option is at the
time exercisable, the Optionee (or in the case of exercise after the Optionee's
death, the Optionee's executor, administrator, heir or legatee, as the case may
be) must comply with the provisions of Section 6(a) of the Plan. A form of
exercise notice is attached hereto as Exhibit A.
6. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall inure
to the benefit of, and be binding upon, the successors, administrators, heirs,
devisees, legal representatives and permitted assigns of the Optionee and the
successors and assigns of the Corporation.
7. LIABILITY OF THE CORPORATION. The inability of the Corporation,
despite its best efforts, to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and
sale of any Common Stock pursuant to the Option shall relieve the Corporation of
any liability in respect of the non-issuance or sale of the Common Stock as to
which such approval shall not have been obtained, but shall not otherwise
relieve the Corporation of its liability hereunder.
8. CONSTRUCTION. This Agreement and the Option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the express terms and provisions of the Plan.
9. GOVERNING LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the state of Delaware.
10. WARRANTIES AND OBLIGATIONS OF THE OPTIONEE.
(a) The Optionee represents, warrants and agrees that the Optionee
will acquire and hold the Option Shares for the Optionee's own account for
investment and not with the view to the resale or distribution thereof, except
for resales or distributions in accordance with federal and state securities
laws, and that the Optionee will not, at any time or times, directly or
indirectly, offer, sell, distribute, pledge or otherwise grant a security
interest in or otherwise dispose of or transfer all, any portion of or any
interest in, any Option Shares (or solicit an offer to buy, take in pledge or
otherwise acquire or receive, all or any portion thereof), except pursuant to
either (i) a Registration Statement on an appropriate form under the Securities
Act of 1933, as amended ("1933 Act"), which Registration Statement has become
effective and is current with respect to the shares being offered or sold, or
(ii) a specific exemption from the registration requirements of the 1933 Act,
the availability of which exemption shall be the subject matter of an opinion of
counsel reasonably acceptable to the Corporation that no registration under the
1933 Act is required with respect to such offer, sale, distribution, pledge,
grant or other disposition or transfer.
(b) The Optionee acknowledges that the Optionee understands that (i)
the Option has been granted and the shares to be sold to the Optionee upon
exercise of the Option will be sold to the Optionee pursuant to an exemption
from the registration requirements in the 1933 Act until such time as the
Corporation shall file a Registration Statement under the 1933 Act which has
become effective and is current with respect to the shares being offered or sold
and in this connection the Corporation is relying in part on
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the representations set forth in this Agreement; (ii) such shares must be
held indefinitely unless they are registered or an exemption from
registration becomes available under the 1933 Act and the securities laws of
any state; (iii) the Corporation is under no obligation to register such
shares or to comply with any exemption from such registration, including
those portions of Rule 144 under the 1933 Act to be complied with by the
Corporation; (iv) if Rule 144 is available for sales of such shares, and
there is no assurance that the Optionee will ever be able to sell under Rule
144, such sales in reliance upon Rule 144 may be made only after the shares
have been held for the requisite holding period and then only in limited
amounts in accordance with the conditions of that Rule, all of which must be
met; and (v) the Optionee must, therefore, continue to bear the economic
risks of the investment in such shares for an indefinite period of time after
the exercise of the Option.
(c) The Optionee acknowledges that the Optionee has had the
opportunity to ask questions of, and receive answers from, the officers and
representatives of the Corporation concerning all material information
concerning the Corporation and the terms and conditions of the transactions in
which the Optionee is acquiring the Option and may subsequently acquire Option
Shares. The Optionee further acknowledges that the Optionee understands that
the Corporation may use the proceeds from the exercise of the Option for general
corporate purposes.
(d) Immediately prior to the exercise of all or any portion of the
Option, the Optionee shall deliver to the Corporation a signed statement, in a
form satisfactory to the Corporation, confirming that each of the
representations, warranties, acknowledgments and agreements contained in this
Section is true as to the Optionee as of the date of such exercise.
(e) The Optionee understands that all certificates representing
shares transferred pursuant to this Agreement, unless made pursuant to an
appropriate Registration Statement under the 1933 Act, will bear the following
restrictive legend:
"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be transferred or
hypothecated without prior registration under said Act or an exemption
therefrom established to the satisfaction of the issuer."
(f) If the legal counsel of the Corporation, at the request of the
Corporation, advises it that registration under the 1933 Act of the shares
deliverable upon the exercise of the Option is required prior to delivery
thereof, or that listing of such shares on any exchange is required prior to
delivery thereof, the Corporation shall not be required to issue or deliver such
shares unless and until such legal counsel shall advise that such registration
and/or listing has been completed and is then effective, or is not required.
11. SEVERABILITY. In the event that any provision of this Agreement is
found to be invalid or otherwise unenforceable under any applicable law, such
invalidity or unenforceability shall not be construed as rendering any other
provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
12. DEFINITIONS. Capitalized terms used but not defined herein shall have
the meanings ascribed to them in the Plan. For purposes of interpreting this
Agreement, the following definitions shall also apply:
(a) "Executive Employment Agreement" means that Executive Employment
Agreement between the Optionee and the Corporation dated _______________, 199__,
as it may be amended from time to time.
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(b) "Exercise Date" means the date on which the Corporation receives
written notice of the exercise of the Option together with payment of the Option
Price for the purchased Option Shares.
(c) "Exercise Price" means the Option Price multiplied by the number
of purchased Option Shares.
(d) "Expiration Date" means, unless earlier terminated pursuant to
the terms of this Agreement or the Plan, the day immediately preceding the tenth
anniversary of the Grant Date.
(e) "Option Period" means the period commencing on the Grant Date
and, unless earlier terminated in accordance with Section 3 or 4, ending on the
close of business on the Expiration Date.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed in duplicate on its behalf and the Optionee has also executed this
Agreement in duplicate, all as of the date first above written.
OPTIONEE INSIGHT HEALTH SERVICES CORP.
By:
- ------------------------- ----------------------------------
[Optionee Name] Leonard H. Habas, Co-Chairman of the
Compensation Committee
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