10.14
INSIGHT HEALTH SERVICES CORP.
1998 EMPLOYEE STOCK OPTION PLAN
STOCK OPTION AGREEMENT
AGREEMENT is dated as of __________, ("Grant Date") between INSIGHT
HEALTH SERVICES CORP., a Delaware corporation ("Corporation") and __________
("Optionee").
The Board of Directors of the Corporation ("Board") has adopted the 1998
Employee Stock Option Plan ("Plan") of the Corporation for the purpose of
advancing the interests of the Corporation by providing certain individuals
an inducement essential to enter into executive employment agreements with
the Corporation and 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 $12.57 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 thirty (30) days 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. The Option Shares shall vest at the
rate of __________ Option Shares each month commencing on the Grant Date for a
period of three (3) years 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:
(i) if there is a Change of Control pursuant to Section 13 of the
Plan; or
(ii) if the Optionee's employment with the Corporation is
terminated pursuant to either sections 4.01, 4.02, 4.04, 4.05 or 4.06 of the
Executive Employment Agreement (as defined below).
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If the Optionee's employment terminates prior to the end of such three
(3) year period, other than pursuant to sections 4.01, 4.02, 4.04, 4.05 and
4.06 of the Executive Employment Agreement, 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.
4. DEATH OR DISABILITY OF AN OPTIONEE. If the Optionee's employment
with the Corporation is terminated pursuant to sections 4.01 or 4.02 of the
Executive Employment Agreement, then the Optionee, or 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, 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 and warrants that the Optionee is
an accredited investor as defined in Regulation D under the Securities Act of
1933, as amended ("1933 Act") and understands that, in connection with
complying with California law, the Corporation (i) may issue Option Shares to
no more than thirty-five (35) purchasers in connection with an offering of
such Option Shares, excluding accredited investors and certain other persons
as provided under California law, (ii) the Optionee is not included in the
foregoing thirty-five (35) purchaser number and (iii) the Corporation is
granting the Option pursuant to this Agreement in part in reliance on
Optionee's representations made herein.
(b) 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
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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 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.
(c) 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
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.
(d) 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.
(e) 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.
(f) 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."
(g) 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,
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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 Optionee and the Corporation dated May 18,
1998, as it may be amended from time to time.
(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" Xxxxxxx X. Xxxxx, Co-Chairman of the
Compensation Committee
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