INTEGRATED HEALTH SERVICES, INC.
STOCK OPTION AGREEMENT
AGREEMENT made as of the 27th day of November, 1995, by and between
Integrated Health Services, Inc., a Delaware corporation (the "Corporation"),
and Xxxx X. Xxxxxxxxx (the "Optionee").
W I T N E S S E T H:
WHEREAS, the Corporation desires to grant to the Optionee, subject to
approval by the stockholders of the Corporation, and the Optionee desires to
accept, an option to purchase shares of common stock, $.001 par value, of the
Corporation (the "Common Stock") upon the terms and conditions set forth in this
agreement.
NOW, THEREFORE, the parties hereto agree as follows:
(1) Grant. The Corporation hereby grants to the Optionee, subject to approval
by the stockholders of the Corporation, an option to purchase 50,000 shares of
Common Stock, at a purchase price per share of $20.88. This option is intended
to be treated as an option which does not qualify as an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
(2) Restrictions on Exercisability. Except as specifically provided otherwise
herein, the option will become fully exercisable upon the completion of one year
of continuous service as an employee and/or director of the Corporation
following the date hereof. No shares of Common Stock may be purchased hereunder
unless the Optionee shall have remained an employee or director of the
Corporation for at least one year from the date hereof. Unless sooner
terminated, the option will expire if and to the extent it is not exercised
within ten years from the date hereof.
(3) Exercise. The option may be exercised in whole or in part in accordance
with the above schedule by delivering to the Secretary of the Corporation (a) a
written notice specifying the number of shares to be purchased, and (b) payment
in full of the exercise price, together with the amount, if any, deemed
necessary by the Corporation to enable it to satisfy any income tax withholding
obligations with respect to the exercise (unless other arrangements acceptable
to the Corporation are made for the satisfaction of such withholding
obligations). The exercise price shall be payable in cash or by bank or
certified check. The Corporation may (in its sole and absolute discretion)
permit all or part of the exercise price to be paid with previously-owned shares
of Common Stock, or in installments (together with interest) evidenced by the
Optionee's secured promissory note.
(4) Rights as Stockholder. No shares of Common Stock shall be sold or
delivered hereunder until full payment for such shares has been made (or, to the
extent payable in installments, provided for). The Optionee shall have no rights
as a stockholder with respect to any shares covered by the option until a stock
certificate for such shares is issued to the Optionee. Except as otherwise
provided herein, no adjustment shall be made for dividends or distributions of
other rights for which the record date is prior to the date such stock
certificate is issued.
(5) Nontransferability. The option is not assignable or transferable except
upon the Optionee's death to a beneficiary designated by the Optionee or by the
Optionee's will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code. During an Optionee's
lifetime, the option may be exercised only by the Optionee or the Optionee's
guardian or legal representative.
(6) Termination of Service or Death. If the Optionee ceases to be an employee
and a director of the Corporation for any reason other than death, then, unless
sooner terminated under the terms hereof, the option will terminate on the date
six months after the date of the Optionee's termination of service
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as an employee and a director. If the Optionee's service as an employee and a
director is terminated by reason of the Optionee's death, then, unless sooner
terminated under the terms hereof, the option will terminate on the date one
year after the date of death.
(7) Compliance With Securities Laws. Notwithstanding anything herein to the
contrary, the option may not be exercised if in the opinion of counsel to the
Corporation, such exercise and/or issuance would result in a violation of
federal or state securities laws.
(8) Change in Control; Capital Changes.
(A) If any event constituting a "Change in Control of the Corporation" shall
occur, the option shall, unless sooner terminated under the terms hereof,
immediately become exercisable. A "Change in Control of the Corporation" shall
be deemed to occur if (i) there shall be consummated (x) any consolidation or
merger of the Corporation in which the Corporation is not the continuing or
surviving corporation or pursuant to which shares of the Corporation's Common
Stock would be converted into cash, securities or other property, other than a
merger of the Corporation in which the holders of the Corporation's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Corporation, or (ii) the stockholders of the Corporation shall approve any plan
or proposal for liquidation or dissolution of the Corporation, or (iii) any
person (as such term is used in Section 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), shall become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
20% or more of the Corporation's outstanding Common Stock other than pursuant to
a plan or arrangement entered into by such person and the Corporation, or (iv)
during any period of two consecutive years, individuals who at the beginning of
such period constitute the entire Board of Directors of the Corporation shall
cease for any reason to constitute a majority thereof unless the election, or
the nomination for election by the Corporation's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.
(B) In the event of any stock split, stock dividend or similar transaction
which increases or decreases the number of outstanding shares of Common Stock,
the number and option exercise price per share of Common Stock which may be
purchased under this agreement shall be adjusted automatically to the nearest
whole share (disregarding any fractional shares) to reflect such transaction. In
the case of a merger, consolidation or similar transaction which results in a
replacement of the Corporation's Common Stock and stock of another corporation
but does not constitute a Change in Control of the Corporation, the Corporation
will make a reasonable effort, but shall not be required, to replace this option
with comparable options to purchase the stock of such other corporation, or will
provide for immediate maturity of this option in which case to the extent this
option is not exercisable within the time period specified by the Board of
Directors it shall terminate.
9. No Rights to Continue Service. Nothing in this agreement shall give the
Optionee any right to continue in the service of the Corporation, or interfere
in any way with the right of the Corporation to terminate the service of the
Optionee.
10. Administration. The Compensation and Stock Option Committee of the Board
of Directors of the Corporation will have full power and authority to interpret
and apply the provisions of this agreement and act on behalf of the Corporation
in connection with this agreement, and the decision of the Compensation and
Stock Option Committee of the Board of Directors of the Corporation as to any
matter arising under this agreement shall be binding and conclusive as to all
persons.
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11. Miscellaneous.
(a) This agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and permitted assigns.
(b) This agreement shall be governed by and construed in accordance with the
laws of the State of Delaware. This agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and may not be
modified except by written instrument executed by the parties.
IN WITNESS WHEREOF, this agreement has been executed as of the date first
above written.
INTEGRATED HEALTH SERVICES, INC.
By: /s/ Xxxx Xxxxx
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/s/ Xxxx X. Xxxxxxxxx
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Xxxx X. Xxxxxxxxx
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