Exhibit 10.32

 

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 10th day of
February, 2003. This option is being issued outside of the 1996 Stock Option
Plan (the “Plan”) of Daou Systems, Inc., a Delaware corporation (the
“Corporation”), however, any terms not defined in this Agreement will have the
meanings ascribed to such terms in the Plan. The Committee administering the
Plan has selected Daniel J. Malcolm (the “Optionee”) to receive the following
grant of a non-statutory stock option (“Stock Option”) to purchase shares of the
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

   100,000

Date of Grant

   February 10, 2003

Exercise Price Per Share

   $0.28

Expiration Date

   February 10, 2013

 

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,
and (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) 100,000 Shares

 

(i) The Shares subject to the Stock Option will vest in thirty-six equal
increments on the monthly anniversary of the date of grant through February 10,
2006.

 

(ii) 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), then 100% of the Shares will vest. For
purposes of this Option Agreement, “change in control” means that:

 

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(1) 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

 

(2) 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

 

(3) all or substantially all of the assets of the Corporation are sold,
liquidated or distributed.

 

(iii) If at any time prior to July 24, 2004, Optionee’s employment with the
corporation is terminated by the corporation without “Cause” or by Optionee for
Good Reason as those terms are defined in the Employment Agreement, then
Optionee may exercise the Stock Option as to one hundred percent (100%) of the
remaining 100,000 Shares which are not otherwise vested on the date of the
termination.

 

(iv) In the event Optionee’s employment is terminated for any reason other than
as defined in Section 4(a)(iii) of this Agreement, any Stock Option described in
Section 4(a) of this Option Agreement not vested as of the date of the
termination will not vest. Any Stock Option described in this Section 4(a) of
this Agreement that is vested as of the date of such termination may be
exercised in accordance with Section 6 of this Agreement.

 

(b) 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.

 

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(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.

 

(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 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.

 

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OPTIONEE

     

DAOU SYSTEMS, INC.,

a Delaware corporation

   

/s/    DANIEL J. MALCOLM

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      By:  

/s/    NEIL R. CASSIDY

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    Daniel J. Malcolm           Neil R. Cassidy            

Its:

  Chief Financial Officer and EVP

 

 

 

 

 

 

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