Exhibit 10.2
OPTION AGREEMENT TO PURCHASE
STOCK
THIS OPTION AGREEMENT TO PURCHASE
STOCK ( “Option Agreement” ) is made and entered
into as of the 15 th day of August, 2005 by and between
TRANSCEND SERVICES, INC., a Delaware corporation (the
“Company” ), and SUSAN McGROGAN, an individual
resident of the State of Florida ( “McGrogan”
).
W
I T N
E S S E T H
:
WHEREAS, the Company has previously
issued in favor of McGrogan that certain Promissory Note dated
January 31, 2005 (the “Note” ) in the
original principal amount of $3,500,000; and
WHEREAS, the Company desires to
grant to McGrogan and McGrogan desires to receive certain options
to purchase shares of the Company’s common stock, par value
$0.05 per share (the “Stock” ) subject to the
terms and conditions set forth herein.
NOW, THEREFORE, for and in
consideration of the premises and the mutual covenants and
agreements contained herein and other good and valuable
consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereto covenant and agree as
follows:
ARTICLE I
GRANT OF OPTION
The Company hereby irrevocably
grants to McGrogan four (4) options (each an
“Option” and collectively
“Options” ) to purchase shares of the Stock in
accordance with the schedule set forth below and subject to the
conditions set forth in this Agreement. The number of shares of
Stock to be acquired upon the exercise of each Option is determined
in Article V below.
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Effective Date of
Exercise
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Notice Period
Commencement
Date
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Total
Exercise
Price
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Cash
Consideration
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Amount
Applied in
Reduction of
Note Principal
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Option #1
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August 15, 2005
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immediately
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$
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200,000
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$
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100,000
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$
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100,000
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Option #2
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February 15,
2006
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February 1, 2006
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$
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200,000
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$
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100,000
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$
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100,000
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Option #3
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August 15,
2006
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August 1,
2006
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$
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200,000
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$
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100,000
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$
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100,000
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Option #4
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February 15, 2007
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January 31,
2007
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$
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200,000
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$
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100,000
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$
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100,000
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1
ARTICLE II
EXERCISE PRICE
The total exercise price for all
shares acquired for each Option (the “Exercise
Price” ) shall be Two Hundred Thousand Dollars
($200,000). The Exercise Price for each Option shall be comprised
of: (i) the sum of One Hundred Thousand Dollars ($100,000) in
cash (the “Cash Portion” ) payable in
immediately available funds on the Effective Date of Exercise and
(ii) a reduction in the amount of One Hundred Thousand Dollars
($100,000) of the outstanding principal balance of the
Note.
ARTICLE III
EXERCISE OF OPTION
Each Option shall be exercisable by
McGrogan, in whole but not in part, on the effective date of
exercise (the “Effective Date of Exercise” ) set
forth for such Option in the schedule in Article I above. Any
Option not exercised by 5:00 p.m. on the Effective Date of Exercise
shall no longer be exercisable and shall lapse. The lapse of any
individual Option shall not affect McGrogan’s ability to
exercise any subsequent Option.
ARTICLE IV
MANNER OF EXERCISE
The exercise of each Option shall be
by written notice delivered to the Company in the form of
Exhibit A attached hereto (the “Written
Notice” ) together with tender of the Cash Portion. The
Written Notice of McGrogan’s intent to exercise any Option
must be delivered to the Company during the Option Notice Period
for such Option. The “Option Notice Period” with
respect to any Option shall mean the period beginning at 8:00 a.m.
Eastern Time on the notice period commencement date (the
“Notice Period Commencement Date” ) set forth
for such Option in the schedule shown in Article I above and ending
at 5:00 p.m. Eastern Time on the Effective Date of Exercise for
such Option.
ARTICLE V
DETERMINATION OF NUMBER OF SHARES
PURCHASED
DELIVERY OF THE
STOCK
Upon the timely exercise by McGrogan
of any Option in accordance with the terms and conditions set forth
herein, including without limitation payment by McGrogan of the
Cash Portion of the Exercise Price for such Option, the Company
shall deliver to McGrogan within five (5) trading days after
the Effective Date of Exercise for such Option a number of shares
(the “Purchased Shares” ) of the Stock
determined by dividing the Total Exercise Price for such Option by
one hundred and ten percent (110%) of the average closing
price per share of the Stock on the National Association of Stock
Dealers Automatic Quotation System (NASDAQ) for
2
the ten (10) trading days immediately prior
to the Effective Date of Exercise. The Average Closing Price shall
be determined by adding up the closing prices and dividing the sum
total by ten (10).
All certificates representing the Purchased
Shares shall bear the following restrictive legend:
“THE SECURITIES EVIDENCED
HEREBY WERE ISSUED AND SOLD WITHOUT REGISTRATION UNDER THE FEDERAL
SECURITIES ACT OF 1933, AS AMENDED (THE “FEDERAL ACT”),
OR THE SECURITIES LAWS OF ANY STATE, IN RELIANCE UPON CERTAIN
EXEMPTIVE PROVISIONS OF SAID ACTS. SAID SEC
