Quovadx, Inc. Stock Option Agreement (Incentive Stock Option or Nonstatutory Stock Option)
Exhibit 10.2
Executive Grant
Quovadx, Inc.
2006 Equity Incentive Plan
(Incentive Stock Option or Nonstatutory Stock Option)
Pursuant to your Stock Option Grant Notice (“Grant Notice”) and this Stock Option Agreement,
Quovadx, Inc. (the “Company”) has granted you an option under its 2006 Equity Incentive Plan (the
“Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your Grant
Notice at the exercise price indicated in your Grant Notice. Defined terms not explicitly defined
in this Stock Option Agreement but defined in the Plan shall have the same definitions as in the
Plan.
The details of your option are as follows:
1. Vesting. Subject to the limitations contained herein and in the Plan, your option
will vest as follows:
(a) In General. Your option will vest as provided in the Vesting Schedule set forth in your
Grant Notice, provided that vesting will cease upon the termination of your Continuous Service.
(b) Change in Control. If a Change in Control occurs and if, within three months before and
twelve (12) months after, the effective time of such Change in Control, your Continuous Service
terminates due to (i) an involuntary termination (excluding death or Disability) without Cause, or
(ii) a voluntary termination for Good Reason, then, subject to your compliance with the
provisions of your employment agreement and you executing and not revoking a separation agreement
and general release of claims in a form satisfactory to the Company, your option shall become
fully vested and exercisable upon the later of (A) the date your Continuous Service terminates, or
(B) the date such Change in Control is consummated, provided that your option has not previously
expired or terminated prior to the date such acceleration would occur under this paragraph.
For purposes of this Subsection 1(b), “Cause” has the meaning given in your written employment
agreement with the Company OR, in the absence of a written employment agreement, “Cause”
means a termination by the Company because of any one of the following events: (i) Your breach of
your employment agreement that results in material injury to the Company which, if capable of cure,
has not been cured by you within thirty (30) days after receipt by you of written notice from the
Company’s chief executive officer (the “CEO”) of such breach; (ii) your misconduct, fraud,
dishonesty, or malfeasance that results in material injury to the Company; (iii) your willful or
intentional failure to (a) perform your duties under your employment agreement, (b) follow the
reasonable and legal direction of the CEO, or (c) follow the policies, procedures, and rules of the
Company (provided that, for any such failure listed in
-1-
this sub-section (iii), the CEO shall first give you written notice setting forth with specificity
the reasons that the CEO believes you are failing, and thirty (30) days to cure such failure); or
(iv) your conviction of, or plea of nolo contendre to, a felony. For purposes of this Agreement,
your failure to achieve certain results, such as those set forth in a business plan of the Company,
that is not the result of your demonstrating willful and deliberate dereliction of duty shall not
constitute Cause.
For purposes of this Subsection 1(b), “Good Reason” has the meaning given in your written
employment agreement with the Company OR, in the absence of a written employment agreement,
“Good Reason” means the occurrence of any of the following: (i) the Company, without your written
consent, (a) takes any action which results in the reduction of your then current title, duties, or
responsibilities, other than a reduction or change required by applicable law or listing
requirements, (b) reduces your then current base salary or target bonus other than a one-time
reduction of not more than 10% that also is applied to substantially all executive officers of the
Company, (c) reduces the benefits to which you are entitled on the effective date of your
employment agreement, unless a similar reduction is made for substantially all other executive
officers, or (d) relocates you to a facility or a location more than 75 miles from your then
present location, (ii) a successor to the Company fails to assume your employment agreement in
writing upon becoming a successor or assignee of the Company, or (iii) the Company breaches your
employment agreement and such breach results in material injury to you; provided, however, that if
the event that potentially constitutes Good Reason is capable of cure, Good Reason only shall exist
if the Company has not cured such event within thirty (30) days after receipt by the CEO of written
notice from you describing why you believe Good Reason exists.
2. Number of Shares and Exercise Price. The number of shares of Common Stock subject
to your option and your exercise price per share referenced in your Grant Notice may be adjusted
from time to time for Capitalization Adjustments.
3. Method of Payment. Payment of the exercise price is due in full upon exercise of
all or any part of your option. You may elect to make payment of the exercise price in cash or by
check or in any other manner permitted by your Grant Notice, which may include one or more of the
following:
(a) Bank draft or money order payable to the Company.
(b) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve
Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check)
by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to
the Company from the sales proceeds.
(c) In the Company’s sole discretion at the time your option is exercised and provided that at
the time of exercise the Common Stock is publicly traded and quoted regularly in The Wall Street
Journal, by delivery to the Company (either by actual delivery or attestation) of already-owned
shares of Common Stock either that you have held for the period required to
-2-
avoid a charge to the Company’s reported earnings (generally six (6) months) or that you did
not acquire, directly or indirectly from the Company, that are owned free and clear of any liens,
claims, encumbrances or security interests, and that are valued at Fair Market Value on the date of
exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you
exercise your option, shall include delivery to the Company of your attestation of ownership of
such shares of Common Stock in a form approved by the Company. Notwithstanding the foregoing, you
may not exercise your option by tender to the Company of Common Stock to the extent such tender
would violate the provisions of any law, regulation or agreement restricting the redemption of the
Company’s stock.
(d) By a “net exercise” arrangement pursuant to which the Company will reduce the number of
shares of Common Stock issued upon exercise of your option by the largest whole number of shares
with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that
the Company shall accept a cash or other payment from you to the extent of any remaining balance of
the aggregate exercise price not satisfied by such reduction in the number of whole shares to be
issued; provided further, however, that shares of Common Stock will no longer be outstanding under
your option and will not be exercisable thereafter to the extent that (1) shares are used to pay
the exercise price pursuant to the “net exercise,” (2) shares are delivered to you as a result of
such exercise, and (3) shares are withheld to satisfy tax withholding obligations.
4. Whole Shares. You may exercise your option only for whole shares of Common Stock.
5. Securities Law Compliance. Notwithstanding anything to the contrary contained
herein, you may not exercise your option unless the shares of Common Stock issuable upon such
exercise are then registered under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and issuance would be exempt from
the registration requirements of the Securities Act. The exercise of your option also must comply
with other applicable laws and regulations governing your option, and you may not exercise your
option if the Company determines that such exercise would not be in material compliance with such
laws and regulations.
6. Term. You may not exercise your option before the commencement or after the
expiration of its term. The term of your option commences on the Date of Grant and expires upon
the earliest of the following:
(a) three (3) months after the termination of your Continuous Service for any reason other
than your Disability or death, provided, however, that (i) if during any part of such three (3)
month period your option is not exercisable solely because of the condition set forth in Section 5,
your option shall not expire until the earlier of the Expiration Date or until it shall have been
exercisable for an aggregate period of three (3) months after the termination of your Continuous
Service and (ii) if (x) you are a Non-Exempt Employee, (y) you terminate your Continuous Service
within six (6) months after the Date of Grant specified in your Grant Notice, and (z) you have
vested in a portion of your option at the time of your termination of Continuous Service, your
option shall not expire until the earlier of (A) the later of the date that is seven (7)
-3-
months after the Date of Grant specified in your Grant Notice or the date that is three (3)
months after the termination of your Continuous Service or (B) the Expiration Date;
(b) twelve (12) months after the termination of your Continuous Service due to your
Disability;
(c) eighteen (18) months after your death if you die either during your Continuous Service or
within three (3) months after your Continuous Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the
day before the seventh (7th) anniversary of the Date of Grant.
If your option is an Incentive Stock Option, note that to obtain the federal income tax
advantages associated with an Incentive Stock Option, the Code requires that at all times beginning
on the date of grant of your option and ending on the day three (3) months before the date of your
option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of
your death or your permanent and total disability, as defined in Section 22(e) of the Code. The
Company has provided for extended exercisability of your option under certain circumstances for
your benefit but cannot guarantee that your option will necessarily be treated as an Incentive
Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or
Director after your employment terminates or if you otherwise exercise your option more than three
(3) months after the date your employment with the Company or an Affiliate terminates.
7. Exercise.
(a) You may exercise the vested portion of your option during its term by delivering a Notice
of Exercise (in a form designated by the Company) together with the exercise price to the Secretary
of the Company, or to such other person as the Company may designate, during regular business
hours, together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any exercise of your option,
the Company may require you to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by reason of (1) the exercise of
your option, (2) the lapse of any substantial risk of forfeiture to which the shares of Common
Stock are subject at the time of exercise, or (3) the disposition of shares of Common Stock
acquired upon such exercise.
(c) If your option is an Incentive Stock Option, by exercising your option you agree that you
will notify the Company in writing within fifteen (15) days after the date of any disposition of
any of the shares of the Common Stock issued upon exercise of your option that occurs within two
(2) years after the date of your option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your option.
-4-
8. Transferability.
(a) Restrictions on Transfer. Your option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during your lifetime only by you;
provided, however, that the Board may, in its sole discretion, permit you to transfer your option
in a manner consistent with applicable tax and securities laws upon your request.
(b) Domestic Relations Orders. Notwithstanding the foregoing, your option may be transferred
pursuant to a domestic relations order; provided, however, that if your option is an Incentive
Stock Option, your option shall be deemed to be a Nonstatutory Stock Option as a result of such
transfer.
(c) Beneficiary Designation. Notwithstanding the foregoing, you may, by delivering written
notice to the Company, in a form provided by or otherwise satisfactory to the Company, designate a
third party who, in the event of your death, shall thereafter be entitled to exercise your option.
9. Option not a Service Contract. Neither the Plan nor this Agreement confer upon
you the right to continue providing services to the Company or an Affiliate, nor do they interfere
in any way with your right or the Company’s right to terminate your service at any time, with or
without cause.
10. Withholding Obligations.
(a) At the time you exercise your option, in whole or in part, or at any time thereafter as
requested by the Company, you hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for (including by means of a
“cashless exercise” pursuant to a program developed under Regulation T as promulgated by the
Federal Reserve Board to the extent permitted by the Company), any sums required to satisfy the
federal, state, local and foreign tax withholding obligations of the Company or an Affiliate, if
any, which arise in connection with the exercise of your option.
(b) Upon your request and subject to approval by the Company, in its sole discretion, and
compliance with any applicable legal conditions or restrictions, the Company may withhold from
fully vested shares of Common Stock otherwise issuable to you upon the exercise of your option a
number of whole shares of Common Stock having a Fair Market Value, determined by the Company as of
the date of exercise, not in excess of the minimum amount of tax required to be withheld by law (or
such lower amount as may be necessary to avoid variable award accounting). If the date of
determination of any tax withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of the Code, covering
the aggregate number of shares of Common Stock acquired upon such exercise with respect to which
such determination is otherwise deferred, to accelerate the determination of such tax withholding
obligation to the date of exercise of your option. Notwithstanding the filing of such election,
shares of Common Stock shall be withheld solely from fully vested shares of Common Stock determined
as of the date of exercise of your option that are otherwise issuable to you upon such exercise. Any adverse consequences to you
arising in connection with such share withholding procedure shall be your sole responsibility.
-5-
(c) You may not exercise your option unless the tax withholding obligations of the Company
and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your option when
desired even though your option is vested, and the Company shall have no obligation to issue a
certificate for such shares of Common Stock or release such shares of Common Stock from any escrow
provided for herein unless such obligations are satisfied.
11. Notices. Any notices provided for in your option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or, in the case of notices delivered by
mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid,
addressed to you at the last address you provided to the Company.
12. Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated and
adopted pursuant to the Plan. In the event of any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan shall control.
-6-
