Exhibit 10.2
INNOSERV TECHNOLOGIES, INC.-Registered Trademark-
STOCK OPTION AGREEMENT
This Agreement is made as of the 11th day of December, 1996, by and between
INNOSERV Technologies, Inc., a California corporation (the "Company"), and
Xxxxxxx X. Xxxx, the ("Optionee").
WHEREAS, Optionee's employment agreement letter (the "Employment
Agreement") with the Company provides for a grant of options to purchase
150,000 shares of common stock of the Company pursuant to the "Company's
Stock Incentive Plan" at fair market value on the date of his employment;
WHEREAS, there are insufficient shares of common stock of the Company
available for grant under the Company's 1992 Incentive Stock Option Plan to
grant options to purchase 150,000 shares, notwithstanding the Stock Option
Agreement between Optionee and the Company dated as of 27 December, 1995
("Initial Grant") purporting to evidence the grant of options in such amount,
and therefore 150,000 shares of the previously purported grants have been
rescinded;
WHEREAS, the Optionee and the Company desire to enter into the
agreements set forth herein to evidence the grant of the same number of
options as the number of such rescinded option share grant, at the same
exercise price and the same vesting terms, on the terms and conditions set
forth herein and the board of directors of the Company (the "Board of
Directors") has authorized the grant to Optionee pursuant to Optionee's
Employment Agreement and as a matter of separate inducement in connection
with Optionee's engagement with the Company and not in lieu of any salary or
other compensation for his or her services, of an option (the "Option") to
purchase shares of common stock, par value $.01 per share (the "Common
Stock"), of the Company on the terms and conditions set forth herein.
NOW, THEREFORE, IT IS AGREED:
Section 1. SHARES OPTIONED. Optionee may purchase all or any part
of an aggregate of 150,000 shares of Common Stock, subject to the terms and
conditions hereinafter set forth. The Company and the Optionee hereby agree
that the Stock Option Agreement between Optionee and the Company dated as of
27 December, 1995, to the extent it granted an option to purchase 150,000
shares of common stock, is hereby terminated and of no force and effect.
This Option is not intended to be an incentive stock option under Section 422
of the Internal Revenue Code of 1986 (the "Code").
Section 2. OPTION PRICE. The shares subject to this Option may be
purchased at the price of $3.625 per share (which is the fair market value of
the Common Stock on the date of the Initial Grant), on the terms and
conditions set forth herein. "Fair market value" shall be equal to the
closing price per share of Common Stock on the business day immediately
preceding the date of grant as reported in the Wall Street Journal, Southwest
Edition, or, if no closing price was so reported for such immediately
preceding business day, the closing price for the next preceding day for
which a closing price was reported, provided however, that the Board of
Directors may utilize such other listing or reporting service or valuation
method as, in its judgment, provides an accurate index of the fair market
value of the Common Stock.
Section 3. WHEN OPTION MAY BE EXERCISED. This option, shall become
exercisable in installments on the anniversaries of the date of Optionee's
Initial Grant of 27 December, 1995 indicated in the following table as to the
number of shares set forth opposite said anniversaries, and each installment
shall remain exercisable as to all of the shares indicated until and
including the tenth anniversary of the date thereof, subject to the
provisions of Section 5 and 6 hereof. Shares as to which this Option becomes
exercisable pursuant to the foregoing provision may be purchased at any time
thereafter prior to the expiration or termination of this Option.
Anniversary of the Date
of the Initial Grant Number of Shares
----------------------- ----------------
First 50,000
Second 50,000
Third 50,000
Section 4. NON-TRANSFERRABILITY OF OPTION. This Option may be
exercised during the life of the Optionee only by the Optionee and may not be
assigned, transferred, pledged, hypothecated, sold or otherwise disposed of
in whole or in part, either voluntarily or involuntarily whether by operation
of law or otherwise. In the event of the Optionee's death prior to the full
exercise of this Option, this Option may be transferred by will or the laws
of descent and distribution and may be exercised by the Optionee's
transferees by will or by the laws of descent and distribution. Upon any
attempt to transfer this Option otherwise than by will or the laws of descent
and distribution, or to assign, pledge, hypothecate or otherwise dispose of
this Option, or upon the levy of any execution, attachment or similar process
upon this Option, this Option shall immediately terminate and become null and
void.
Section 5. TERMINATION OF EMPLOYMENT. If the Optionee ceases to be
employed by the Company, except in the case of termination of employment
resulting from death or disability (as defined in Section 105(d)(4) of the
Code), this Option shall expire three months after such cessation of
employment and during such period this Option shall be exercisable only as to
those shares, if any, with respect to which the Optionee could have exercised
this Option as of the last date of his or her employment, provided however,
that all rights under this Option shall expire in any event on the date
specified in Section 3 hereof.
Section 6. DEATH OR DISABILITY OF THE OPTIONEE. If the Optionee should
die or become disabled (within the meaning of Section 105(d)(4) of the Code)
while employed by the Company or within any three month period after
termination of his or her employment, Optionee, or in the case of death, the
person or persons to whom Optionee's rights under the Option shall pass by
will or the laws of descent and distribution, shall have the right, at any
time within 12 months after the date of Optionee's termination of employment,
to exercise this Option as to those shares, if any, with respect to which
Optionee could have exercised this Option as of the date of Optionee's
termination of employment; provided, however, that all rights under this
Option shall expire in any event on the date specified in Section 3 hereof.
Section 7. LEAVE OF ABSENCE. Military or sick leave shall not be
considered a termination of employment for any purpose under this Agreement
unless such a period exceeds 90 days and the Optionee's right to
re-employment is not guaranteed either by statute or by contract, in which
case the employment relationship shall be deemed to have terminated on the
91st day of such leave.
Section 8. EXERCISE OF OPTION. This Option or any portion thereof may
be exercised by written notice delivered to the Company at its principal
offices 30 days prior to exercise, setting forth the number of shares with
respect to which the Option is being exercised and the total purchase price,
accompanied by full payment of the purchase price, in the form of a personal
check (or certified or cashier's check, if required by the Company) or cash;
provided, however, that the Board of Directors, in their absolute discretion,
may allow Optionee to surrender shares of stock of the Company of the class
subject to this Option in payment of such price. Any such shares shall be
valued at the fair market value of such stock on the date of such exercise.
If the Company is required to withhold on account of any present or future
federal or state tax imposed as a result of such exercise, the notice of
exercise shall be accompanied by personal check (or certified or cashier's
check, if required by the Company) made payable to the order of the Company
or cash in payment of the amount of such withholding. Upon receipt of notice
and payment as aforesaid, the Company shall promptly make arrangement for the
issuance to Optionee of the number of shares as to which this Option is
exercised.
Section 9. PARENT, SUBSIDIARY OR SUCCESSOR OF THE COMPANY. All
references herein to the Company shall be deemed to include any parent or
subsidiary of the Company (as defined in Section 425 of the Code) unless the
context shall otherwise require or indicate.
Section 10. FRACTIONAL SHARES. Notwithstanding any other provisions
herein to the contrary, the Optionee shall in no event be entitled to
exercise this Option for any fractional shares and any such fractional
interests shall be disregarded.
Section 11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. If the number
of shares of Common Stock outstanding are increased, decreased or exchanged
for or converted into cash, property or a different number or kind of
securities, or if cash, property or securities are distributed in respect of
such outstanding securities, in either case as a result of a reorganization,
merger, consolidation, recapitalization, restructuring, reclassification
dividend (other than a regular, quarterly cash dividend) or other
distribution, stock split, reverse stock split or the like, or if
substantially all of the property and assets of the Company are sold, then
unless the terms of such transaction shall provide otherwise, the Board of
Directors shall make appropriate and proportionate adjustments in the number
and type of shares or other securities or cash or other property that may be
acquired pursuant to this Option.
Section 12. SUBSTITUTION OR ACCELERATION AND TERMINATION OF OPTION UNDER
CERTAIN CIRCUMSTANCES. Upon the dissolution or liquidation of the Company,
or upon a reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company is not the surviving
corporation or sale of substantially all of the property of the Company to
another corporation, this Option shall terminate, unless, in connection with
any such transaction, provision shall have been made in writing for the
substitution of Options. As used herein, "substitution of options" shall
mean either the issuance of a new option in exchange for this Option by the
surviving corporation or its parent or subsidiary as such terms are defined
in Section 425 of the Code in such form and on such terms and conditions that
the substituted options shall meet the requirements of Section 425 of the
Code. A substitute option may not be less favorable to the Optionee than
this Option, except to the extent to qualify the same under Section 425 of
the Code.
In the event that the provision is not so made for the substitution of
options in connection with any such transaction, exercisability of this
Option shall become accelerated and the Optionee shall have the right,
immediately prior to or concurrently with such transaction, to exercise this
Option to the full extent theretofore not exercised, regardless of any
installment provisions for the exercise of such option rights which may be
provided in Section 3 hereof.
Section 13. RIGHTS IN SHARES BEFORE ISSUANCE AND DELIVERY. Neither
Optionee nor his or her transferees by will or the laws of descent and
distribution shall be, or have any rights or privileges of, a shareholder of
the Company with respect to any share issuable upon exercise of its Option,
unless and until certificates representing such shares have been issued and
delivered.
Section 14. NOTICES. Any notice to be given to the Company shall be
addressed to the Company in care of its Secretary at its principal office, or
at such other address as the Company may hereinafter designate in writing to
the Optionee, and any notice to the Optionee shall be addressed to him or her
at the address given beneath his or her signature hereto, or at such other
address as the Optionee may hereafter designate in writing to the Company.
Any such notice shall have been deemed duly given when enclosed in a properly
sealed envelope or wrap and addressed as aforesaid, registered or certified,
and deposited, postage and registration or certification fee prepaid, in a
post office or a branch post office regularly maintained due the United
States Government.
Section 15. LAWS APPLICABLE TO CONSTRUCTION. This Agreement has been
executed and delivered the day and year first written above at Arlington,
Texas and this agreement shall be construed and enforced in accordance with
the laws of the State of California.
Section 16. EFFECTIVE DATE. This Agreement shall be effective as of the
effective date and time of the Registration Statement on Form S-8 registering
the Shares issuable pursuant hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
INNOSERV TECHNOLOGIES, INC.
By: /s/ XXXXXX X. XXXXX
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Name: Xxxxxx X. Xxxxx
Title: Chairman
OPTIONEE
By: /s/ XXXXXXX X. XXXX
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Name: Xxxxxxx X. Xxxx
Title: President & CEO
Address:
0000 Xxxxx Xxxx Xx.
Xxxxxxxxx, Xx 00000
Social Security Number:
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