THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE CORPORATION AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
FORM OF
NONSTATUTORY STOCK OPTION AGREEMENT
-EMPLOYEE-
-DIRECTOR-
This Stock Option Agreement is made and entered into this ____ day of,___,
______, pursuant to the DAOU SYSTEMS, INC. 1996 Stock Option Plan (the "PLAN").
Any terms not defined in this Agreement will have the meanings ascribed to such
terms in the Plan. The Committee administering the Plan has selected ________
____________________________________________________________ (the "OPTIONEE") to
receive the following grant of a nonstatutory stock option ("STOCK OPTION") to
purchase shares of the common stock of DAOU SYSTEMS, INC., a California
corporation (the "CORPORATION"), on the terms and conditions set forth below to
which Optionee accepts and agrees:
1. Stock Options Granted:
Number of Shares Subject to Option_______________
Date of Grant_______________
Vesting Commencement Date_______________
Exercise Price Per Share_______________
Expiration Date_______________
2. The Stock Option is granted pursuant to the Plan to purchase the
number of shares of authorized but unissued common stock of the
Corporation specified in SECTION 1 (the "SHARES"). The Stock Option
will expire, and all rights to exercise it will terminate on the
earliest of: (a) the date provided below in SECTIONS 5 AND 6, (b) the
Expiration Date, and (c) such earlier date as provided in the Plan.
The number of shares subject to the Stock Option granted pursuant to
this Agreement will be adjusted as provided in the Plan. This Stock
Option is intended by the Corporation and the Optionee to be a
Nonstatutory Stock Option and does not qualify for any special tax
benefits to the Optionee and is not subject to Section 7 of the Plan.
3. The Stock Option will be exercisable in all respects in
accordance with the terms of the Plan which are incorporated herein by
this reference. Optionee acknowledges having received and read a copy
of the Plan. All shares of the Corporation's common stock issued
pursuant to the exercise of this Stock Option
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will be subject to the Corporation's Right of Repurchase and Right of
First Refusal as set forth in Sections 11 and 12 of the Plan.
4. Optionee will have the right to exercise the Stock Option in
accordance with the following schedule:
1. The Stock Option may not be exercised in whole or in part at
any time prior to the end of the first full year following the
Vesting Commencement Date.
2. Optionee may exercise the Stock Option as to 20% of the
Shares at the end of the first full year following the Vesting
Commencement Date.
3. Optionee may exercise the Stock Option as to an additional
20% of the Shares at the end of each full year thereafter
following the Vesting Commencement Date.
4. If at any time after the end of the first full year
following the Vesting Commencement Date a change in control (as
defined in the following sentence) occurs, then Optionee may
exercise the Stock Option as to 70% of the Shares which are not
otherwise vested on the date of the change in control. For
purposes of this SECTION 4, "change in control" means any person
becoming the beneficial owner (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of more than 50% of the
Common Stock of the Corporation outstanding at such time, without
the prior approval of the Board, but does not include any changes
in ownership upon any firm commitment underwritten offering of
its securities to the general public.
5. The right to exercise the Stock Option will be cumulative.
Optionee may buy all, or from time to time any part, of the
maximum number of shares which are exercisable under the Stock
Option, but in no case may Optionee exercise the Stock Option
with regard to a fraction of a share, or for any share for which
the Stock Option is not exercisable.
5. The Stock Option will lapse and becomes unexercisable in full on
the earliest of the following events:
1. the first anniversary of the Optionee's death, as provided
below in SECTION 6;
2. the first anniversary of the date the Optionee ceases to be
an Employee due to total and permanent disability, as provided
below in SECTION 6;
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3. the date otherwise provided below in SECTION 6, unless the
Committee otherwise extends such period before the applicable
expiration date;
4. the date provided in Section 9 of the Plan for a transaction
described in such Section; or
5. the date the Optionee files or has filed against him or her
a petition in bankruptcy.
6. If Optionee ceases to be an Employee for any reason other than
his or her death or disability, the Optionee will have the right,
subject to the other provisions of this Agreement, to exercise the
Stock Option for 30 days after his or her termination of employment,
but not beyond the otherwise applicable term of the Option and only to
the extent that on such date of termination of employment the
Optionee's right to exercise such Option had vested, and at the end of
such 30-day period the Stock Option will expire, and all rights to
exercise it will terminate.
1. For purposes of this SECTION 6, the employment relationship
will be treated as continuing intact while the Optionee is an
active employee of the Corporation or any Affiliate, or is on
military leave, sick leave, or other bona fide leave of absence
to be determined in the sole discretion of the Committee.
2. If Optionee dies while an Employee, or after ceasing to be
an Employee but during the period while he or she could have
exercised an Option under the preceeding sub-Sections (a) or (b),
the Option granted to the Optionee may be exercised, to the
extent it has vested at the time of death and subject to the
Plan, at any time within 12 months after the Optionee's death, by
the executors or administrators of his or her estate or by any
person or persons who acquire the Option by will or the laws of
descent and distribution, but not beyond the otherwise applicable
term of the Option.
3. If Optionee ceases to be an Employee due to becoming totally
and permanently disabled within the meaning of Section 22(e)(3)
of the Code, the Stock Option may be exercised to the extent it
has vested at the time of cessation and, subject to the Plan, at
any time within 12 months after the Optionee's termination of
employment, but not beyond the otherwise applicable term of the
Stock Option.
7. The Optionee agrees to comply with all laws, rules, and
regulations applicable to the grant and exercise of the Stock Option
and the sale or other disposition of the common stock of the
Corporation received pursuant to the
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exercise of such Stock Option.
8. The Stock Option will not become exercisable unless and until the
shares exercisable under the Stock Option have been qualified under
the California Corporate Securities Law of 1968 pursuant to a permit
application filed with the California Department of Corporations or
unless the exercise is otherwise exempt from the qualification
requirements of such law. The Stock Option is conditioned upon the
Optionee's representation, which Optionee hereby confirms as of the
date of this Agreement and which Optionee must confirm as of the date
of any exercise of all or any part of the Stock Option, that:
1. Optionee understands that both this Stock Option and any
shares purchased upon its exercise are securities, the issuance
of which require compliance with state and Federal securities
laws;
2. Optionee understands that neither the Options nor the Shares
have been registered under the Securities Act of 1933 (the "ACT")
in reliance upon a specific exemption contained in the Act which
depends upon Optionee's bona fide investment intention in
acquiring these securities; that Optionee's intention is to hold
these securities for Optionee's own benefit for an indefinite
period; that Optionee has no present intention of selling or
transferring any part thereof (recognizing that the Stock Option
is not transferable) and that certain restrictions may exist on
transfer of the shares issued upon exercise of the Stock Option;
3. Optionee understands that the Shares issued upon exercise of
this Stock Option, in addition to other restrictions on transfer,
must be held indefinitely unless subsequently registered under
the Act, or unless an exemption from registration is available;
that Rule 701 and Rule 144, two exemptions from registration
which may be available, are only available after the satisfaction
of certain conditions and require the presence of a U.S. public
market for such Shares; that no certainty exists that a U.S.
public market for the shares will exist, and that otherwise
Optionee may have to sell the Shares pursuant to another
exemption from registration which exemption may be difficult to
satisfy; and
4. The Corporation will not be under any obligation to issue
any Shares upon the exercise of this Stock Option unless and
until the Corporation has determined that:
(i) it and Optionee have taken all actions required to register
such Shares under the Securities Act, or to perfect an exemption from the
registration requirements thereof;
(ii) any applicable listing requirement of any stock exchange on
which
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such Shares are listed has been satisfied; and
(iii) all other applicable provisions of state and federal
law have been satisfied.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has executed this Stock
Option Agreement, in the case of the Corporation by its duly authorized officer,
as of the date and year written above.
OPTIONEE DAOU SYSTEMS, INC.,
a California corporation
By:
------------------------------------ -----------------------------------
(signature) (signature)
Its:
------------------------------------- ---------------------------------
(Type or Print Name)
Address:
---------------------------
---------------------------
---------------------------
[SIGNATURE PAGE TO DAOU SYSTEMS, INC.
NONSTATUTORY STOCK OPTION AGREEMENT]
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