Exhibit 10.28
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.
DAOU Systems, Inc.
EXECUTIVE STOCK OPTION AGREEMENT
(Non-Statutory)
This Executive Stock Option Agreement is made and entered as of the 13th
day of December, 2001. This option is being issued outside of the 1996 Stock
Option Plan (the "Plan") of DAOU Systems, Inc., a Delaware corporation (the
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"Corporation"), however, any terms not defined in this Agreement will have the
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meanings ascribed to such terms in the Plan. The Committee administering the
Plan has selected Xxxx Xxxxxxx (the "Optionee") to receive the following grant
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of a non-statutory stock option ("Stock Option") to purchase shares of the
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common stock of the Corporation on the terms and conditions set forth below to
which Optionee accepts and agrees:
1. Stock Option Granted:
Number of Shares Subject to Option 25,000
Date of Grant December 13, 2001
Exercise Price Per Share $1.00
Expiration Date December 13, 2011
2. The Stock Option is granted to purchase up to 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,
or (b) the Expiration Date. 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
Non-Statutory Stock Option and does not qualify for any special tax benefits to
the Optionee.
3. Except as otherwise set forth herein, the Stock Option will be exercisable
in all respects in accordance with the terms of the Plan as they relate to
Non-Statutory Stock Option which are
incorporated herein by this reference. Optionee acknowledges having received and
read a copy of the Plan.
4. Optionee will have the right to exercise the Stock Option in accordance
with the following schedule:
(a) 12,500 Shares subject to the Stock Option will vest on the sooner of
(a) the first date following ten (10) consecutive trading days during which the
Common Stock trades at a value of at least $2.50 per Share as adjusted for any
stock combination, stock dividend, stock split or other recapitalization event
occurring with respect to the Company's Common Stock (a "Recapitalization"); or
(b) five (5) years from the grant date.
(b) 12,500 Shares subject to the Stock Options will vest on the sooner of
(a) the first date following ten (10) consecutive trading days during which the
Common Stock trades at a value of at least $5.00 per Share as adjusted for any
Recapitalization; or (b) five (5) years from the grant date.
(c) If the Company enters into a binding agreement during the time that
Optionee is employed by the Company that results in a change in control (as
defined in the following sentence) in which the shareholders will receive at
least $2.50 per share in cash or other consideration, then the Shares set forth
in Section 4(a) will vest. If the Company enters into a binding agreement that
results in a change in control in which the shareholders will receive at least
$5.00 per share in cash or other consideration, then the shares set forth in
Sections 4(a) and (b) will vest. For purposes of this Option Agreement, "change
in control" means that:
(i) any individual, partnership, firm, corporation, association,
trust, unincorporated organization or other entity or person, or any syndicate
or group deemed to be a person under Section 14(d)(2) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), is or becomes the "beneficial
owner" (as defined in Rule 13d-3 of the General Rules and Regulations under the
Exchange Act), directly or indirectly, of securities of the Corporation
representing fifty percent (50%) or more of the combined voting power of the
Corporation's then outstanding securities entitled to vote in the election of
directors of the Corporation; or
(ii) there occurs a reorganization, merger, consolidation or other
corporate transaction involving the Corporation ("Transaction"), in each case,
with respect to which the stockholders of the Corporation immediately prior to
such Transaction do not, immediately after the Transaction, own more than fifty
percent (50%) of the combined voting power of the Corporation or other
corporation resulting from such Transaction; or
(iii) all or substantially all of the assets of the Corporation are
sold, liquidated or distributed.
(d) In the event that Optionee's employment with the Corporation is
terminated without "Cause" pursuant to the terms of Optionee's Employment
Agreement with the Corporation, dated as of October 2, 2000 (the "Employment
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Agreement") (which terms are incorporated by this reference) on or before
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December 13, 2004, the Stock Option will not expire
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unless and until the Expiration Date defined in Section 1 of this Agreement, and
until such time shall vest in accordance with Sections 4(a) and (b) above.
(e) In the event Optionee's employment is terminated for any reason other
than as defined in Section 4(d) of this Agreement, any Stock Option described in
Section 4(a) or (b) of this Option Agreement not vested as of the date of the
termination will not vest. Any Stock Option described in this Section 4 that is
vested as of the date of such termination may be exercised in accordance with
Section 6 of this Agreement.
(f) 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:
(a) the first anniversary of the Optionee's death, as provided below in
Section 6;
(b) 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;
(c) the date otherwise provided below in Section 6, unless the Committee
otherwise extends such period before the applicable expiration date;
(d) the date provided in Section 9 of the Plan for a transaction described
in such Section; or
(e) the date the Optionee files or has filed against him a petition in
bankruptcy.
6. If Optionee ceases to be an Employee for any reason other than that
described in this Section 6, Optionee will have the right, subject to the other
provisions of this Agreement, to exercise the Stock Option for the term of the
Option but only to the extent that on the date of termination the Optionee's
right to exercise such Option had vested, and at the end of such period the
Stock Option will expire, and all rights to exercise it will terminate.
(a) 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.
(b) If Optionee dies while an Employee, or after ceasing to be an Employee
but during the period while he could have exercised an Option under the
preceding sub-Sections, 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 twelve (12) months after the Optionee's death, by the executors or
administrators of his 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.
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(c) If Optionee ceases to be an Employee due to becoming totally and
permanently disabled within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986, 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
twelve (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
exercise of such Stock Option.
8. 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:
(a) 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;
(b) any applicable listing requirement of any stock exchange on which such
Shares are listed has been satisfied; and
(c) all other applicable provisions of state and federal law have been
satisfied.
9. Optionee acknowledges that the tax effect of the exercise of this Stock
Option and the sale of the underlying Shares is complicated, that Optionee has
consulted with his own professional advisor which respect to all tax matters
relating to this Stock Option and the exercise and sale of the Shares and has
not relied on any assurances or representations of the Corporation as to such
matters.
10. The Shares have not been registered and, therefore, they may not be sold,
pledged, hypothecated, or otherwise transferred unless they are registered under
the Securities Act of 1933, as amended, and applicable state securities laws or
an exemption from such registration is available.
11. A legend will be placed on any certificate evidencing the Shares in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE STATE
SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH
SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED AT ANY TIME WHATSOEVER, EXCEPT UPON DELIVERY TO THE
COMPANY OF AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED FOR SUCH TRANSFER AND/OR THE SUBMISSION
TO THE COMPANY OF SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT ANY SUCH TRANSFER WILL NOT BE IN VIOLATION
OF THE SECURITIES ACT OF 1933, AS AMENDED, AND/OR
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APPLICABLE STATE SECURITIES LAWS AND/OR ANY RULE OR REGULATION
PROMULGATED THEREUNDER.
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 Delaware corporation
/s/ Xxxx Xxxxxxx /s/ Xxxxx X. Xxxxxxx
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Xxxx Xxxxxxx By: Xxxxx X. Xxxxxxx
Its: President and Chief Executive Officer
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