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EXHIBIT 10.3
MAI SYSTEMS CORPORATION
STOCK OPTION AGREEMENT
MAI SYSTEMS CORPORATION, a Delaware corporation (the "Company"), hereby grants
to Xxxxx Xxxxxxx (the "Optionee") an option to purchase a total of 30,000 shares
of Common Stock (the "Shares") of the Company, at the price set forth herein,
and in all respects subject to the terms, conditions, and provisions of this
Agreement and of the Company's 1993 Stock Option Plan (the "Plan") which was
incorporated into and approved as part of the Company's Plan of Reorganization,
approved by the Bankruptcy Court, and which is attached as Exhibit "A" and is
incorporated herein by this reference. Terms defined in the Plan shall have the
same meanings herein.
1. NATURE OF THE OPTION. This Option is intended to be and is a
Nonstatutory Stock Option and is not intended to be an Incentive Stock Option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. THE DATE OF GRANT AND TERM OF THE OPTION. This Option is
granted on September 12, 1997. The term of the Option is ten years from the date
of grant and this Option may not, in any event, be exercised later than
September 12, 2007. If the Option is not exercised within ten years of the date
of grant, it will expire and terminate.
3. OPTION EXERCISE PRICE. The Option exercise price is $3.50 per
share, which price is not less than eighty-five percent (85%) of the Fair Market
Value of a share of Common Stock on the date this Option was granted.
4. EXERCISE OF THE OPTION. This Option shall be exercisable
during its term only in accordance with the terms, conditions, and provisions of
the Plan and this Agreement as follows:
(a) RIGHT TO EXERCISE. This Option shall vest and be
exercisable, cumulatively, as follows:
Date Number of Shares
---- ----------------
After February 10, 1998 10,000
After February 10, 1999 10,000
After February 10, 2000 10,000
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Total 30,000
(b) METHOD OF EXERCISE. The Optionee shall purchase a minimum of
at least 100 shares per transaction concerning the exercise of the Option. This
Option shall be exercisable by actual receipt by the Company of written notice
provided by the Optionee which shall state the election to exercise this Option,
the number of whole Shares in respect to which this Option is being exercised,
and such other representations and agreements as to the Optionee's investment
intent with respect to such Shares as may be required by the Company hereunder
or pursuant to the provisions of the Plan. Such written notice shall be signed
by the Optionee and shall be delivered in person or by certified mail return
receipt requested to the then current President or Chief Financial Officer of
the Company or any other person as may be designated by the
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Company. The written notice shall be accompanied by payment of the purchase
price for the number of Shares in respect to which this Option shall be
exercised. Payment of the purchase price shall be by check payable to the order
of the Company, outstanding shares of Common Stock duly endorsed to the Company
(which shares shall be valued at their Fair Market Value as of the day preceding
the day of such exercise), or any combination of the foregoing.
Unless otherwise determined by the Board of Directors of the
Company, the Company may arrange for the simultaneous exercise and sale of
Shares through the cooperation of broker-dealers which finance "same day" sales.
The certificate(s) for the Shares as to which the Option shall be
exercised shall be registered in the name of the Optionee and shall be legended
as set forth in the Plan or as required under applicable regulatory, state or
federal law.
(c) FURTHER RESTRICTIONS ON THE EXERCISE OF THE OPTION. This
Option shall not be exercised if the issuance of the Shares upon such exercise
would constitute a violation of any applicable federal or state securities law
or laws or regulations. As a condition to the exercise of this Option, the
Company may require the Optionee to make any representation, warranty or
certification to the Company as may be required by any applicable law or
regulation or by the Plan. There shall be no exercise of any fractional shares
concerning the Option.
(d) ADJUSTMENT UPON CHANGE OF CAPITALIZATION. Appropriate
adjustment shall be made in the number, exercise price and class of shares of
stock subject to the Option in the event of a stock dividend, stock split,
reverse stock split, recapitalization, combination, reclassification, or like
change in the capital structure of the Company.
5. TERMINATION OF STATUS AS AN EMPLOYEE. If the Optionee ceases
to serve as an Employee for any reason other than death or for Cause (as defined
in the Plan) and thereby terminates his status as an Employee, the Optionee
shall have the right to exercise this Option at any time within one hundred and
eighty (180) days following the date of such termination, to the extent that the
Optionee was entitled to exercise the Option at the date of such termination,
but in no event after the expiration of the term of the Option set forth in
Section 2 hereof.
If the Optionee ceases to serve as an Employee due to death, this
Option may be exercised at any time within one hundred and eighty (180) days
following the date of death by the Optionee's executor or administrator or the
person or persons who shall have acquired the Option by bequest or inheritance
but only to the extent the Optionee was entitled to exercise this option at the
date of death. To the extent that the Optionee was not entitled to exercise the
Option at the date of termination or death, or to the extent the Option is not
exercised within the time specified herein, this Option shall terminate.
Notwithstanding the foregoing, this Option shall not be exercisable after the
expiration of the term set forth in Section 2 hereof. If the Optionee ceases to
serve as an Employee due to termination of his employment by the Company for
Cause (as defined in the Plan), this Option shall cease to be exercisable ten
(10) days following the date the notice of such termination is delivered to the
Optionee.
6. NONTRANSFERABILITY OF THE OPTION. This Option may not be
sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any
manner either voluntarily or involuntarily by operation of law, other than by
will or by the laws of descent or distribution, and may be exercised during the
lifetime of the Optionee only by such Optionee. Subject to the foregoing and the
terms of the Plan, the terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
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7. CONTINUATION OF EMPLOYMENT. Neither this Plan nor any Option
granted hereunder shall confer upon any Optionee any right to continue in the
employment of the Company or any of its Subsidiaries or limit in any respect the
right of the Company to discharge the Optionee at any time, with or without
cause and with or without notice.
8. WITHHOLDING TAX LIABILITY. The Optionee understands and agrees
that the Company may be required to withhold part or all of the Optionee's
regular compensation to pay any taxes required to be withheld under federal,
state, or local law as a result of the exercise of this Option, and that if such
regular compensation is insufficient, the Company may require the Optionee, as a
condition of exercise of this Option, to pay in cash the amount of such
withholding tax liability.
9. THE PLAN. This Option is subject to, and the Company and the
Optionee expressly agree to be bound by, all of the terms and conditions of the
Plan as it may be amended from time to time in accordance with the terms
thereof, provided that no such amendment shall deprive the Optionee, without his
written consent, of this Option or any rights hereunder. Pursuant to the Plan,
the Committee appointed by the Board of Directors of the Company to administer
the Plan is authorized to adopt rules and regulations not materially
inconsistent with the Plan as it shall deem appropriate and proper. If questions
arise as to the intent, meaning or application of the provisions of this Option
Agreement or of the Plan, such questions shall be decided by Committee in its
sole discretion, and any such decision shall be conclusive and binding on the
Optionee. A copy of the Plan in its present form is available for inspection
during regular business hours by the Optionee or the persons entitled to
exercise this Option at the Company's principal office.
MAI SYSTEMS CORPORATION
Dated: March 13, 1998 By: /s/ XXXXXX X. XXXX
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President and Chief Executive Officer
Dated: March 12, 1998 By: /s/ XXXXX X. XXXXXXX
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Optionee
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