Exhibit 4.2
ACCESS HEALTH, INC.
STOCK OPTION AGREEMENT
I. NOTICE OF STOCK OPTION ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
You have been granted an option to purchase Common Stock of Access
Health, Inc., a Delaware corporation (the "Company"), subject to the terms and
conditions of this Option Agreement, as follows:
Grant Number 000455
-----------
Date of Grant 05/01/97
-----------
Vesting Commencement Date 05/01/98
-----------
Exercise Price per Share $ 14,375
-----------
Total Number of Shares Granted 33,000
-----------
Total Exercise Price $474,375.00
-----------
Type of Option: NSO
-----------
Term/Expiration Date 05/01/07
-----------
Vesting Schedule:
This Option shall be exercisable cumulatively to the extent of
one-fifth of the total number of shares subject to the Option on the Vesting
Commencement Date set forth above and an additional one-fifth of the total
shares subject to the Option at the end of each 12-month period thereafter.
Notwithstanding the foregoing the Option shall become fully exercisable
in the event of any of the following (1) the stockholders of the Company approve
a merger or consolidation of the Company with any other corporation or entity,
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation, or the stockholders
of the Company approve a plan of complete liquidation of the Company or an
agreement for the sale or disposition by the Company of all or substantially all
the Company's assets, except a sale to an entity of which at least fifty percent
(50%) of the total voting power represented by the voting securities of such
entity are held by stockholders of the Company at the time of such sale, (ii)
the acquisition by a Person as beneficial owner (as such terms are defined in
the Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Company representing fifty percent (50%) or more of the total
voting power represented by the Company's then outstanding voting securities, or
1999) a majority of the Board of Directors of the Company in office at the
beginning of any twenty-four (24) month period is replaced during the course of
such twenty-four (24) month period other than by voluntary resignation of
individual directors in the ordinary course of business and such replacement was
not initiated by the Board of Directors of the Company as
Page 10 of 17 Pages
constituted at the beginning of such twenty-four (24) month period and as
changed during such period to add directors approved by the incumbent Board of
Directors.
Termination Period:
This Option may be exercised to the extent exercisable or the date of
termination for one (1) year after the date of termination of employment or
consulting relationship, or such longer period as may be applicable upon death
or Disability of Optionee as provided in Sections 8 and 9 of this Agreement, but
in no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Definitions. As used herein, the following definitions shall
apply:
(a) "Administrator" means the Board or any of its
Committees, which Committees shall be constituted to satisfy Applicable Laws.
(b) "Applicable Law" means the legal requirements
relating to the administration of stock option plans under U. S. state corporate
laws, U.S. federal and state securities laws, the Code and the applicable laws
of any foreign country or jurisdiction where Options are, or will be, granted
under the Plan.
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as
amended.
(e) "Committee" means a Committee appointed by the Board.
(f) "Common Stock" means the Common Stock of the Company.
(g) "Consultant" means any person, including an advisor,
engaged by the Company to render services and who is compensated for such
services.
(h) "Director" means a member of the Board.
(i) "Disability" means total and permanent disability as
defined in Section 22(c)(3) of the Code.
(j) "Employee" means any person employed by the Company.
(k) "Fair Market Value" means, as of any date, the
closing sales price (or the closing bid, if no sales were reported) as quoted on
such exchange or system for the last market trading day prior to the time of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable.
(l) "Nonstatutory Stock Option" means an Option not
intended to qualify as an incentive stock option within the meaning of Section
422 of the Code.
(m) "Officer" means a person who is an officer of the
Company within the meaning of Section 16 of the Securities Exchange Act of 1934,
as amended.
(n) "Share" means a share of the Common Stock, as
adjusted in accordance with Section 11 of this Agreement.
2. Grant of Option. The Administrator hereby grants to the
Optionee named in the Notice of Grant attached as Part I of this Agreement (the
"Optionee"), an option (the "Option") to purchase a number of Shares, as set
forth in the Notice of Grant, at the exercise price per share set forth in the
Notice of Grant (the "Exercise Price").
Page 11 of 17 Pages
This Option is not intended to qualify as an Incentive Stock Option
under Section 422 of the Code.
3. Exercise of Option.
(a) Right to Exercise. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant and
the applicable provisions of this Option Agreement. In the event of Optionee's
death, disability or other termination of Optionee's employment or consulting
relationship, the exercisability of the Option is governed by the applicable
provisions of this Option Agreement and any employment agreement between
Optionee and the Company.
(b) Method of Exercise. This Option is exercisable by delivery
of an exercise notice, in the form attached as Exhibit A (the "Exercise
Notice"), which shall state the election to exercise the Option, the number of
Shares in respect of which the Option is being exercised (the "Exercised
Shares"), and such other representations and agreements as may be required by
the Company pursuant to the provisions of the Plan. The Exercise Notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The Exercise Notice shall be accompanied by
payment of the aggregate Exercise Price as to all Exercised Shares. This Option
shall be deemed to be exercised upon receipt by the Company of such fully
executed Exercise Notice accompanied by such aggregate Exercise Price.
No Shares shall be issued pursuant to the exercise of this Option
unless such issuance and exercise complies with all relevant provisions of law
and the requirements of any stock exchange or quotation service upon which the
Shares are then fisted. Assuming such compliance, for income tax purposes the
Exercised Shares shall be considered transferred to the Optionee on the date the
Option is exercised with respect to such Exercised Shares.
4. Method of Payment. Payment of the aggregate Exercise Price shall be
by any of the following or a combination thereof at the election of the
Optionee:
(a) cash; or
(b) check; or
(c) delivery of a properly executed exercise notice
together with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or
(d) surrender of other Shares which (i) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee for
mom than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.
5. Non-Transferability of Option. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be, exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option Agreement shall be binding, upon the
executors, administrators, heirs, successors and assigns of Optionee.
6. Term of Option. This Option may be exercised only within the
terms set out in the Notice of Grant, and may be exercised during such term only
in accordance with the terms of this Option Agreement.
7. Termination of Employment. Upon termination of an Optionee's
status as an Employee or Consultant (other than as a result of the Optionee's
death or Disability), the Optionee may exercise his or her Option, but only
within one (1) year of the last month of payments made by the Company to
Optionee in connection with termination of such status ("Termination Payment
Date") and only to the extent that the Optionee was entitled to exercise it at
the date of such Termination Payment Date (and in no event later than the
expiration of the term of such Option as set forth in this Agreement). To the
extent that Optionee was not entitled to exercise an Option at the date of such
Termination Payment Date, and to the extent that the Optionee does not exercise
such Option (to
Page 12 of 17 Pages
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate. For purposes of this Section 7, an Optionee's change in status
from: (i) Employee to Consultant, (ii) Consultant to Employee, or (iii) Employee
or Consultant to Officer shall not, unless otherwise specified by the
Administrator, be considered a termination of status as an Employee or
Consultant.
8. Disability of Optionee. Upon termination of an Optionee's
status as an Employee or Consultant as a result of the Optionee's Disability,
the Optionee, may exercise his or her Option, but only within one (1) year of
the last month of payments made by the Company to Optionee in connection with
termination of such status ("Disability Termination Date") and only to the
extent that the Optionee was entitled to exercise it at the date of such
Disability Termination Date (and in no event later than the expiration of the
term of such Option as set forth in this Agreement). To the extent that Optionee
was not entitled to exercise an Option at the date of such Disability
Termination Date, and to the extent that the Optionee does not exercise such
Option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
9. Death of Optionee. In the event of an Optionee's death, the
Optionee's estate or a person who acquired the right to exercise the deceased
Optionee's Option by bequest or inheritance may exercise the Option, but only
within one (1) year of such date and only to the extent that the Optionee was
entitled to exercise it at the date of death (and in no event later than the
expiration of the term of such Option as set forth in this Agreement). To the
extent that Optionee was not entitled to exercise an Option at the date of
death, and to the extent that the Optionee's estate or a person who acquired the
right to exercise such Option does not exercise such Option (to the extent
otherwise so entitled) within the time specified herein, the Option shall
terminate.
10. Adjustment Upon Changes in Capitalization, Dissolution, Merger
or Asset Sale.
(a) Changes in Capitalization. Subject to any required action
by the stockholders of the Company, the number of shares of Common Stock covered
by the Option, as well as the price per share of Common Stock covered by each
such outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company,
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected without receipt of consideration."
Such adjustment shall be made by the Board whose determination in that respect
shall be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to the Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company. the Administrator shall notify the
Optionee at least fifteen (15) days prior to the effective date of such proposed
transaction. The Administrator may, in the exercise of its sole discretion,
declare that the Option shall terminate as of a date determined by the
Administrator and give the Optionee the right to exercise his or her Option as
to all or any part of the optioned stock, including Shares which would not
otherwise be exercisable. To the extent it has not been previously exercised,
the Option will terminate immediately prior to the consummation of such proposed
action.
(c) Merger or Asset Sale. In the event of a merger of the
Company with or into another corporation, or the sale of substantially all of
the assets of the Company, the Option will be assumed or an equivalent option or
right substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation.
11. Tax Consequences. Some of the federal and state tax
consequences relating to this Option, as of the date of this Option, are set
forth below. THIS SUMMARY IS NECESSARILY INCOMPLETE AND THE TAX LAWS AND
REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISER
BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.
Page 13 of 17 Pages
(a) Exercising the Nonqualified Stock Option ("NSO"). This
Option does not qualify as an ISO. As a consequence, the optionee may incur
regular federal income tax and state income tax liability upon exercise. The
Optionee, will be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the fair market value
of the Exercised Shares on the date of exercise over their aggregate Exercise
Price. If the Optionee is an employee, the Company will be required to withhold
from his or her compensation or collect from Optionee and pay to the applicable
taxing authorities an amount equal to a percentage of this compensation income
at the time of exercise.
(b) Disposition of Shares. If the Optionee holds NSO Shares
for at least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes.
By your signature and the signature of the Company's representative
below, you and the Company agree that this Option is granted and governed by the
terms and conditions of this Option Agreement. Optionee has reviewed this Option
Agreement in its entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option Agreement and fully understands all
provisions of the Option Agreement. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon
any questions relating to the Option Agreement.
OPTIONEE: ACCESS HEALTH, INC.
/s/ By: /s/
------------------------------- --------------------------
Signature
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: President
------------------------------- --------------------------
Print Name
Page 14 of 17 Pages