EXHIBIT 10.4
OPTION TO ACQUIRE SHARES
OF COMMON STOCK OF NATIONAL HEALTH PARTNERS, INC.
WHEREAS, National Health Partners, Inc., an Indiana corporation (the
"Company"), and Xxxxx X. Xxxxxxx ("Holder") are parties to that certain
Employment Agreement, dated May 13, 2005 (the "Employment Agreement"), pursuant
to which the Holder agreed to be employed by the Company pursuant to the terms
and conditions of the Employment Agreement in partial consideration for which
the Company agreed to grant the Holder an option to acquire shares of the
Company's common stock, $.001 par value per share ("Common Stock"); and
WHEREAS, the Company wishes to grant this option to the Holder in
satisfaction of its obligation to provide the Holder with such an option.
NOW, THEREFORE, in consideration of the foregoing, the agreement set
forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Holder on the date
hereof (the "Grant Date") an option (this "Option") to purchase 2,500,000 shares
("Shares") of Common Stock, on the terms and subject to the conditions set forth
herein.
2. Term of Option. This option shall have a maximum term of ten (10)
years measured from the Grant Date (the "Expiration Date") and shall accordingly
expire at 5:00 p.m. eastern standard time on the Expiration Date.
3. Right to Exercise. This Option may be exercised in whole or in part
in accordance with the following schedule:
(i) 625,000 shares on or after the Grant Date;
(ii) 625,000 shares on or after February 1, 2006;
(iii) 625,000 shares on or after February 1, 2007; and
(iv) 625,000 shares on or after February 1, 2008.
4. Exercise Price. The exercise price per Share ("Exercise Price") at
which this Option may be exercised shall be forty cents ($.40) per Share.
5. Method of Exercise.
(a) This Option shall be exercised by execution and delivery
of the Notice of Exercise attached hereto as Appendix A ("Notice of Exercise")
or any other written notice approved for such purpose by the Company that shall
state the election of the Holder to exercise this Option, the number of Shares
in respect of which this Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company. The Notice of Exercise shall
be accompanied by payment of the Exercise Price. This Option shall be deemed to
be exercised upon receipt by the Company of the Notice of Exercise accompanied
by payment of the Exercise Price.
(b) No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares may then be listed. Assuming such compliance, for income
tax purposes the Shares shall be considered transferred to the Holder on the
date on which this Option is exercised with respect to such Shares.
(c) This Option may not be exercised for a fractional Share or
scrip representing a fractional Share. In lieu of any fractional Share to which
the Holder would otherwise be entitled, the Company shall make a cash payment
equal to the Exercise Price multiplied by such fraction.
(d) In no event may this Option be exercised after the
Expiration Date.
6. Methods of Payment. Shares of Common Stock purchased upon the
exercise of an Option may be paid for as follows:
(a) in cash or by check, payable to the order of the Company;
(b) if the shares of Common Stock underlying the Option are
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by: (i) delivery by the Holder to the Company of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax
withholding, or (ii) delivery by the Holder to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company the exercise price and any required tax withholding;
(c) if the shares of Common Stock underlying the Option are
registered under the Securities Act, by delivery of such shares of Common Stock
owned by the Holder valued at their Fair Market Value (as defined below),
provided: (i) such method of payment is then permitted under applicable law,
(ii) such shares of Common Stock have been owned by the Holder at least six
months prior to the date of such delivery, and (iii) such shares of Common Stock
are not subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements or restrictions;
(d) by reducing the number of shares of Common Stock otherwise
issuable under this Option to the Holder upon the exercise of this Option by a
number of shares of Common Stock having a Fair Market Value equal to such
aggregated exercise price; provided, however, that such method of payment is
then permitted under applicable law;
(e) to the extent permitted by applicable law and by the board
of directors of the Company (the "Board"), in its sole discretion, by: (i)
delivery of a promissory note of the Holder to the Company on terms determined
by the Board, or (ii) payment of such other lawful consideration as the Board
may determine; or
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(f) by any combination of the above permitted forms of
payment.
For the purpose of this Agreement, "Fair Market Value" shall mean:
(i) If the Common Stock is admitted to quotation on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the Fair Market Value on any given date shall be the average of the
highest bid and lowest ask prices of the Common Stock as reported for such date
or, if no bid and ask prices were reported for such date, for the last day
preceding such date for which such prices were reported;
(ii) If the Common Stock is admitted to trading on a
United States national securities exchange or the NASDAQ National Market System,
the Fair Market Value on any given date shall be the closing price reported for
the Common Stock on such exchange or system for such date or, if no sales were
reported for such date, for the last day preceding such date for which a sale
was reported;
(iii) If the Common Stock is traded in the
over-the-counter market and not on NASDAQ, the NASDAQ National Market System or
any United States national securities exchange, the Fair Market Value on any
given date shall be the average of the mean between the last bid and ask prices
per share as reported by the National Quotation Bureau, Inc. or an equivalent
generally accepted reporting service for such date or, or if not so reported,
the average of the closing bid and ask prices of the Common Stock for such date
as furnished to the Company by any member of the National Association of
Securities Dealers, Inc. selected by the Company for that purpose; or
(iv) If the Fair Market Value of the Common Stock
cannot be determined on the basis previously set forth in this definition on the
date that the Fair Market Value is to be determined, the Board shall in good
faith determine the Fair Market Value of the Common Stock on such date.
The delivery of certificates representing the shares of Common Stock to
be purchased pursuant to the exercise of this Option will be contingent upon
receipt from the Holder (or a purchaser acting in his stead in accordance with
the provisions of this Option) by the Company of the full purchase price for the
Shares and the fulfillment of any other requirements contained in this Option or
imposed by applicable law.
7. Registration Rights. The Company covenants and agrees as follows:
7.1 For the purpose of this Section 7, the following definitions
shall apply:
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(a) "Person" shall mean an individual, partnership (general or
limited), corporation, limited liability company, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
(b) "Register," "registered," and "registration" shall refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or order of
effectiveness of such registration statement or document.
(c) "Registration Statement" shall mean any registration
statement of the Company filed with the SEC pursuant to the provisions of
Section 7.2, but excluding registration statements on SEC Forms S-4, S-8 or any
similar or successor forms, that covers the resale of the Restricted Stock on an
appropriate form then permitted by the SEC to be used for such registration and
the sales contemplated to be made thereby under the Securities Act, or any
similar rule that may be adopted by the SEC, and all amendments and supplements
to such registration statement, including any pre- and post- effective
amendments thereto, in each case including the prospectus contained therein, all
exhibits thereto and all materials incorporated by reference therein.
(d) "Restricted Stock" shall mean: (i) all of the Shares, and
(ii) any additional shares of Common Stock of the Company issued or issuable
after the date hereof in respect of any of the foregoing securities, by way of a
stock dividend or stock split; provided that, as to any particular shares of
Restricted Stock, such securities shall cease to constitute Restricted Stock
when (x) a Registration Statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of thereunder, (y) such securities are permitted to be
transferred pursuant to Rule 144 (or any successor provision to such rule) under
the Securities Act, or (z) such securities are otherwise freely transferable to
the public without further registration under the Securities Act.
(e) "Selling Stockholders" shall mean the Holder and any of
his or her respective successors and assigns.
7.2. Registration of the Restricted Stock.
(a) In the event the Holder's employment with the Company is
terminated under Section 4(e) or (f) of the Employment Agreement, the Company
shall use its reasonable best efforts to prepare and file with the SEC, within
180 days of the date of termination of the Holder's employment with the Company
(the "Target Filing Date"), a Registration Statement under the Act to permit the
public sale of the Restricted Stock purchased hereby, and to cause such
Registration Statement to be declared effective as soon as reasonably
practicable thereafter. The Holder shall furnish such information as may be
reasonably requested by the Company in order to include such Restricted Stock in
such Registration Statement. If the Holder decides not to include all of his
Restricted Stock in any Registration Statement thereafter filed by the Company,
the Holder shall nevertheless continue to have the right to include any
Restricted Stock in any subsequent Registration Statement or Registration
Statements as may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein. In the event
that any registration pursuant to this Section 7.2(a) is terminated or
withdrawn, the Company shall use its reasonable best efforts to prepare and file
with the SEC, within 180 days thereafter, a Registration Statement under the
Securities Act of 1933, as amended, to permit the public sale of the Restricted
Stock purchased hereby.
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(b) In the event that any registration pursuant to Section
7.2(a) shall be, in whole or in part, an underwritten public offering of Common
Stock on behalf of the Company, all Selling Stockholders proposing to distribute
their Restricted Stock through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. If the managing underwriter
thereof advises the Company in writing that in its opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such offering within a price range
acceptable to the Company, the Company shall include in such registration: (i)
first, the securities the Company proposes to sell, and (ii) second, the
Restricted Stock and any other registrable securities eligible and requested to
be included in such registration to the extent that the number of shares to be
registered under this clause (ii) will not, in the opinion of the managing
underwriter, adversely affect the offering of the securities pursuant to clause
(i). In such a case, shares shall be registered pro rata among the holders of
such Restricted Stock and registrable securities on the basis of the number of
shares eligible for registration that are owned by all such holders and
requested to be included in such registration.
(c) Notwithstanding anything to the contrary contained herein,
the Company's obligations in Sections 7.2(a) and (b) above shall extend only to
the inclusion of the Restricted Stock in a Registration Statement. The Company
shall have no obligation to assure the terms and conditions of distribution, to
obtain a commitment from an underwriter relative to the sale of the Restricted
Stock or to otherwise assume any responsibility for the manner, price or terms
of the distribution of the Restricted Stock.
(d) The Company shall have the right to terminate or withdraw
any registration initiated by it under this Section 7.2 prior to the
effectiveness of such registration without thereby incurring liability to the
holders of the Restricted Stock, regardless of whether any holder has elected to
include securities in such registration. The Registration Expenses (as defined
in Section 7.5) of such withdrawn registration shall be borne by the Company in
accordance with Section 7.4 hereof.
7.3. Registration Procedures. Whenever it is obligated to
register any Restricted Stock pursuant to this Section 7, the Company shall:
(a) prepare and file with the SEC a Registration Statement
with respect to the Restricted Stock in the manner set forth in Section 7.2
hereof and use its reasonable best efforts to cause such Registration Statement
to become effective as promptly as possible and to remain effective until the
earlier of: (i) the sale of all shares of Restricted Stock covered thereby, (ii)
the availability under Rule 144 for the Selling Stockholder to immediately,
freely resell without restriction all Restricted Stock covered thereby, or (iii)
one (1) year from the effective date of the first Registration Statement filed
by the Company with the SEC pursuant to this Section 7 or, with respect to any
subsequent Registration Statement, 180 days from the effective date of such
Registration Statement;
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(b) prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to such Registration Statement and
the prospectus used in connection therewith as may be necessary to keep such
Registration Statement effective for the period specified in Section 7.3(a)
above and to comply with the provisions of the Act with respect to the
disposition of all Restricted Stock covered by such Registration Statement in
accordance with the intended method of disposition set forth in such
Registration Statement for such period;
(c) furnish to the Selling Stockholders such number of copies
of the Registration Statement and the prospectus included therein (including
each preliminary prospectus) as such person may reasonably request in order to
facilitate the public sale or other disposition of the Restricted Stock covered
by such Registration Statement;
(d) use its reasonable best efforts to register or qualify the
Restricted Stock covered by such Registration Statement under the state
securities laws of such jurisdictions as any Selling Stockholder shall
reasonably request; provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each Selling
Stockholder participating in such underwriting shall also enter into and perform
its obligations under such an agreement, as described in Section 7.2(b);
(f) immediately notify each Selling Stockholder at any time
when a prospectus relating thereto is required to be delivered under the Act of
the happening of any event as a result of which the prospectus contained in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required or necessary to be
stated therein in order to make the statements contained therein not misleading
in light of the circumstances under which they were made. The Company will use
reasonable efforts to amend or supplement such prospectus in order to cause such
prospectus not to include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made;
(g) prepare and file with the SEC such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statements as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement;
(h) make available for inspection by any Selling Stockholder
and any attorney, accountant or other agent retained by any Selling Stockholder,
all financial and other records, pertinent corporate documents and properties of
the Company, and cause the Company's officers and directors to supply all
information reasonably requested by any Selling Stockholder, attorney,
accountant or agent in connection with such Registration Statement; provided,
however, that such Selling Stockholder, underwriter, attorney or accountant
shall agree to hold in confidence and trust all information so provided;
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(i) use its reasonable best efforts to list the Restricted
Stock covered by such Registration Statement on each exchange or automated
quotation system on which similar securities issued by the Company are then
listed (with the listing application being made at the time of the filing of
such Registration Statement or as soon thereafter as is reasonably practicable);
(j) notify each Selling Stockholder of any threat by the SEC
or state securities commission to undertake a stop order with respect to sales
under the Registration Statement; and
(k) cooperate in the timely removal of any restrictive legends
from the shares of Restricted Stock in connection with the resale of such shares
covered by an effective Registration Statement.
7.4. Delay of Registration.
No Selling Stockholder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 7.4.
7.5 Expenses.
(a) For the purposes of this Section 7.5, the term
"Registration Expenses" shall mean: all expenses incurred by the Company in
complying with Section 7.2, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, reasonable fees and
disbursements of a single special counsel for the Selling Stockholders, fees
under state securities laws, fees of the National Association of Securities
Dealers, Inc., fees and expenses of listing shares of Restricted Stock on any
securities exchange or automated quotation system on which the Company's shares
are listed and fees of transfer agents and registrars. The term "Selling
Expenses" shall mean: all underwriting discounts and selling commissions
applicable to the sale of Restricted Stock and all accountable or
non-accountable expenses paid to any underwriter in respect of such sale.
(b) Except as otherwise provided herein, the Company will pay
all Registration Expenses in connection with the Registration Statements filed
pursuant to Section 7.2. All Selling Expenses in connection with any
Registration Statements filed pursuant to Section 7.2 shall be borne by the
Selling Stockholders pro rata on the basis of the number of shares registered by
each Selling Stockholder whose shares of Restricted Stock are covered by such
Registration Statement, or by such persons other than the Company (except to the
extent the Company may be a seller) as they may agree.
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7.6. Obligations of the Selling Stockholders.
(a) In connection with each registration hereunder, each
Selling Stockholder shall furnish to the Company in writing such information
with respect to it and the securities held by it and the proposed distribution
by it, as shall be reasonably requested by the Company in order to assure
compliance with applicable federal and state securities laws as a condition
precedent to including the Selling Stockholder's Restricted Stock in the
Registration Statement. Each Selling Stockholder shall also promptly notify the
Company of any changes in such information included in the Registration
Statement or prospectus as a result of which there is an untrue statement of
material fact or an omission to state any material fact required or necessary to
be stated therein in order to make the statements contained therein not
misleading in light of the circumstances under which they were made.
(b) In connection with the filing of the Registration
Statement, each Selling Stockholder shall furnish to the Company in writing such
information and affidavits as the Company reasonably requests for use in
connection with such Registration Statement or prospectus.
(c) In connection with each registration pursuant to this
Section 7, each Selling Stockholder agrees that it will not effect sales of any
Restricted Stock until notified by the Company of the effectiveness of the
Registration Statement, and thereafter will suspend such sales after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update a Registration Statement or prospectus. At the end
of any period during which the Company is obligated to keep a Registration
Statement current, each Selling Stockholder shall discontinue sales of
Restricted Stock pursuant to such Registration Statement upon receipt of notice
from the Company of its intention to remove from registration the Restricted
Stock covered by such Registration Statement which remains unsold, and each
Selling Stockholder shall notify the Company of the number of shares registered
which remain unsold immediately upon receipt of such notice from the Company.
7.7. Information Blackout and Holdbacks.
(a) At any time when a Registration Statement effected
pursuant to Section 7.2 is effective, upon written notice from the Company to
the Holder that the Company has determined in good faith that the sale of
Restricted Stock pursuant to the Registration Statement would require disclosure
of non-public material information, the Holder shall suspend sales of Restricted
Stock pursuant to such Registration Statement until such time as the Company
notifies the Holder that such material information has been disclosed to the
public or has ceased to be material, or that sales pursuant to such Registration
Statement may otherwise be resumed.
(b) Notwithstanding any other provision of this Section 7, the
Holder shall not effect any public sale or distribution (including sales
pursuant to Rule 144 under the Securities Act), if and when available, of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the thirty (30) days prior to the
commencement of any primary offering to be undertaken by the Company of shares
of its unissued Common Stock ("Primary Offering"), which may also include other
securities, and ending one hundred twenty (120) days after completion of any
such Primary Offering, unless the Company, in the case of a non-underwritten
Primary Offering, or the managing underwriter, in the case of an underwritten
Primary Offering, otherwise agree.
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7.8. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted
by law, each Selling Stockholder, such Selling Stockholder's respective
partners, officers, directors, underwriters and each Person who controls any
Selling Stockholder (within the meaning of the Securities Act) against all
losses, claims, damages, liabilities and expenses caused by (i) any untrue
statement of or alleged untrue statement of material fact contained in the
Registration Statement, prospectus or preliminary prospectus or any amendment or
supplement thereto, (ii) any omission of or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement ("Violations"); provided, however, that the indemnity agreement
contained in this Section 7.8(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Company, which consent shall not be
unreasonably withheld, nor shall the Company be liable for any loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Selling Stockholder, partner, officer, director, underwriter or controlling
person of such Selling Stockholder.
(b) To the extent permitted by law, each Selling Stockholder
shall indemnify and hold harmless the Company, each of its directors, its
officers and each person, if any, who controls the Company within the meaning of
the Securities Act, any underwriter and any other Selling Stockholder selling
securities under such registration statement or any of such other Selling
Stockholder's partners, directors or officers or any person who controls such
Selling Stockholder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer, controlling
person, underwriter or other such Selling Stockholder, or partner, director,
officer or controlling person of such other Selling Stockholder, may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation: (i) occurs in reliance
upon and in conformity with written information furnished by such Selling
Stockholder under an instrument duly executed by such Selling Stockholder for
use in connection with such registration, (ii) occurs as a result of any failure
to deliver a copy of the prospectus relating to such Registration Statement, or
(iii) occurs as a result of any disposition of the Restricted Stock in a manner
that fails to comply with the permitted methods of distribution identified
within the Registration Statement.
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(c) Any Person entitled to indemnification hereunder shall:
(i) give prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification (provided that the failure to give
prompt notice shall not impair any Person's right to indemnification hereunder
to the extent such failure has not prejudiced the indemnifying party), and (ii)
unless in such indemnified party's reasonable judgment a conflict of interest
between such indemnified and indemnifying parties may exist with respect to such
claim, permit such indemnifying party to assume the defense of such claim with
counsel reasonably satisfactory to the indemnified party. If such defense is
assumed, the indemnifying party shall not be subject to any liability for any
settlement made by the indemnified party without its consent (but such consent
shall not be unreasonably withheld). An indemnifying party who is not entitled
to, or elects not to, assume the defense of a claim shall not be obligated to
pay the fees and expenses of more than one counsel for all parties indemnified
by such indemnifying party with respect to such claim, unless in the reasonable
judgment of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) If the indemnification provided for in this Section 7.8 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the violation(s) described in Section
7.8(a) that resulted in such loss, claim, damage or liability, as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided, however, that in no
event shall any contribution by a Selling Stockholder hereunder exceed the net
proceeds from the offering received by such Selling Stockholder.
(e) The indemnification provided for under this Section 7
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director or controlling
Person of such indemnified party and shall survive the transfer of securities.
The Company also agrees to make such provisions as are reasonably requested by
any indemnified party for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Rights of Stockholder. The Holder shall not have any stockholder
rights with respect to any Shares until such Holder shall have exercised this
Option, paid the Exercise Price and become a holder of record of the purchased
Shares.
9. Adjustment of Exercise Price and Number of Shares. The number and
kind of securities purchasable upon exercise of this Option and the Exercise
Price shall be subject to adjustment from time to time as follows:
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(a) Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Option subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or any preferred stock as a dividend with
respect to any shares of its Common Stock, then the number of Shares issuable on
the exercise of this Option shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
Exercise Price, but the aggregate purchase price payable for the total number of
Shares purchasable under this Option (as adjusted) shall remain the same. Any
adjustment under this Section 9(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In the
case of any reclassification, capital reorganization or change in the Common
Stock of the Company (other than as a result of a subdivision, combination or
stock dividend provided for in Section 9(a) above), then, as a condition of such
reclassification, reorganization or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Option to purchase, at a total price equal
to that payable upon the exercise of this Option, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization or change. In any such case, appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Exercise Price payable
hereunder, provided the aggregate purchase price shall remain the same.
(c) Notice of Adjustment. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of this Option
or in the Exercise Price, the Company shall promptly notify the Holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Option.
(d) No Impairment. The Company and the Holder will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company or the Holder,
respectively, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 9 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights or the Company and
the Holder against impairment.
10. Termination of Option.
(a) Termination by Death. If Xxxxxx's employment by, or other
relationship with, the Company terminates by reason of death, this Option may
thereafter be exercised in whole or in part by the legal representative or
legatee of the Holder at any time prior to the Expiration Date.
(b) Termination by Reason of Disability or Retirement.
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(i) Disability. If Xxxxxx's employment by, or other
relationship with, the Company terminates by reason of disability as set forth
in Section 22(e)(3) of the Internal Revenue Code ("Disability"), this Option may
thereafter be exercised in whole or in part at any time prior to the Expiration
Date.
(ii) Retirement. If Xxxxxx retires in good standing
from active employment or service with the Company in accordance with the
retirement policies of the Company then in effect ("Retirement"), this Option
may thereafter be exercised in whole or in part at any time prior to the
Expiration Date.
(iii) Disability and Retirement Determination. The
Board shall have sole authority and discretion to determine whether a
Participant's employment or services has been terminated by reason of Disability
or Retirement.
(c) Termination for Cause. If a Participant's employment by,
or other relationship with, the Company terminates for "Cause," this Option
shall immediately terminate and be of no further force and effect; provided,
however, that the Board may, in its sole discretion, provide that this Option
may be exercised until the earlier of the date that is 90 days after the date of
such termination of employment or the Expiration Date. "Cause" shall have the
meaning ascribed to such term in Section 4(d) of the Employment Agreement.
(d) Other Termination. Unless otherwise determined by the
Board, if a Participant's employment by, or other relationship with, the Company
terminates for any reason other than death, Disability, Retirement or for Cause,
this Option may thereafter be exercised in whole or in part at any time prior to
the Expiration Date.
(e) Transfer and Leave of Absence. For purposes of this
Option, the following events shall not be deemed a termination of employment:
(i) a transfer of employment between any of the Company, a parent, a subsidiary
or any other affiliate of the Company, and (ii) an approved leave of absence for
military service or sickness, or for any other purpose approved by the Board, if
the Holder's right to re-employment is guaranteed by a statute, by contract or
under the policy pursuant to which the leave of absence was granted, or if the
Board otherwise so provides in writing.
11. Investment Intent.
(a) The Holder of this Option, by acceptance hereof,
acknowledges that this Option and the Shares to be issued upon exercise hereof
(collectively, the "Securities") are being acquired for the Holder's own account
for investment purposes only and not with a view to, or with any present
intention of, distributing or reselling any of such Securities. The Holder
acknowledges and agrees that the Securities have not been registered under the
Securities Act or under any state securities laws, and that the Securities may
not be, directly or indirectly, sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act and registration or qualification under applicable state securities laws,
except pursuant to an available exemption from such registration. The Holder
also acknowledges and agrees that neither the Securities Exchange Commission
("SEC") nor any securities commission or other governmental authority has: (i)
approved the transfer of the Securities or passed upon or endorsed the merits of
the transfer of the Securities; or (ii) confirmed the accuracy of, determined
the adequacy of, or reviewed this Option. The Holder has such knowledge,
sophistication and experience in financial, tax and business matters in general,
and investments in securities in particular, that it is capable of evaluating
the merits and risks of this investment in the Securities, and the Holder has
made such investigations in connection herewith as it deemed necessary or
desirable so as to make an informed investment decision without relying upon the
Company for legal or tax advice related to this investment.
12
(b) The certificates evidencing any Shares issued upon the
exercise of this Option shall have endorsed thereon (except to the extent that
the restrictions described in any such legend are no longer applicable) the
following legend, appropriate notations thereof will be made in the Company's
stock transfer books, and stop transfer instructions reflecting these
restrictions on transfer will be placed with the transfer agent of the Shares.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION
THEREFROM. NO TRANSFER OF THE SECURITIES REPRESENTED HEREBY MAY BE MADE
IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION UNLESS THERE SHALL
HAVE BEEN DELIVERED TO THE ISSUER A WRITTEN OPINION OF UNITED STATES
COUNSEL OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
12. Covenants of the Company. The Company covenants and agrees that the
Shares have been duly authorized and, when issued and paid for in accordance
with the terms of this Agreement, will be validly issued, fully paid and
non-assessable shares of Common Stock with no personal liability resulting
solely from the ownership of such shares and will be free and clear of all
liens, charges, restrictions, claims and encumbrances imposed by or through the
Company.
13. Replacement of Option. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Option and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense shall execute and deliver, in lieu of this Option, a new
Option of like tenor and amount.
14. Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telefax or other electronic transmission service to the appropriate address or
number as set forth below:
13
If to National Health Partners:
National Health Partners, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
If to the Holder:
To that address indicated in Section 15 of the
Employment Agreement.
15. Amendment and Waiver. This Option may not be amended, modified or
supplemented except by an instrument or instruments in writing signed by the
party against whom enforcement of any such amendment, modification or supplement
is sought. The parties hereto entitled to the benefits of a term or provision
may waive compliance with any obligation, covenant, agreement or condition
contained herein. Any agreement on the part of a party to any such waiver shall
be valid only if set forth in an instrument or instruments in writing signed by
the party against whom enforcement of any such waiver is sought. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty, covenant or agreement contained
herein.
16. Headings; Definitions. The section headings contained in this
Option are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Option. All references to sections contained
herein mean sections of this Option unless otherwise stated. All capitalized
terms defined herein are equally applicable to both the singular and plural
forms of such terms.
17. Successors and Assigns. This Option shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that no party hereto may assign its rights or
delegate its obligations under this Option without the express prior written
consent of the other party hereto. Nothing in this Option is intended to confer
upon any person not a party hereto (and their successors and assigns) any
rights, remedies, obligations or liabilities under or by reason of this Option.
18. Severability. If any provision of this Option or the application
thereof to any person or circumstance is held to be invalid or unenforceable to
any extent, the remainder of this Option shall remain in full force and effect
and shall be reformed to render this Option valid and enforceable while
reflecting to the greatest extent permissible the intent of the parties.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
20. Counterparts. This Agreement may be executed and delivered by
facsimile in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same agreement.
14
IN WITNESS WHEREOF, the Company and Holder have caused this Option to
be executed this 13th day of May, 2005.
National Health Partners, Inc.
By: /s/ Xxxxx X. Xxxxx
---------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
AGREED AND ACCEPTED:
/s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
15
APPENDIX A
NOTICE OF EXERCISE
To: National Health Partners, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
(1) The undersigned hereby elects to purchase _____________ shares of
Common Stock of the Company pursuant to the terms of the attached Option, and
tenders herewith payment of the purchase price for such shares in full in
accordance with the terms of the Option in the following manner (please check
one or more of the following choices):
[ ] in cash or by check;
[ ] an irrevocable and unconditional undertaking by a
creditworthy broker to deliver sufficient funds to pay the
exercise price and any required tax withholding;
[ ] a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver the exercise price and any
required tax withholding;
[ ] a promissory note;
[ ] a reduction of the number of shares of Common Stock otherwise
issuable under the Option by a number of shares of Common
Stock having a Fair Market Value equal to such aggregated
exercise price; or
[ ] the following consideration: ________________________________.
(2) In exercising the Option, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon conversion
thereof are being acquired solely for the account of the undersigned for
investment purposes only (unless such shares are subject to resale pursuant to
an effective Registration Statement), and that the undersigned will not offer,
sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act or any
state securities laws.
(3) Terms not otherwise defined in this Notice of Exercise shall have
the meanings ascribed to such terms in the attached Option.
(4) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned.
____________________________
__________________________ _____________________________
(Date) (Signature)
