EXHIBIT 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT (this "Agreement"), dated May 13, 2005, to be effective
February 1, 2005 (the "Effective Date"), is being entered into by and between
National Health Partners, Inc., an Indiana corporation with its principal place
of business at 000 Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, XX 00000 (the "Company"),
and Xxxxx X. Xxxxxxx (the "Employee").
WITNESSETH:
WHEREAS, the Company desires to secure the employment of the Employee
as the Chief Executive Officer of the Company in accordance with the provisions
of this Agreement; and
WHEREAS, the Employee desires and is willing to be so employed by the
Company.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Employment Term. This Agreement shall remain in force and effect for
a term commencing on the Effective Date hereof and expiring on the fifth (5th)
anniversary hereof (the "Initial Term"), or until the employment relationship is
terminated pursuant to Section 4 hereof. Upon the expiration of the Initial
Term, this Agreement will be renewed automatically for successive one-year
periods (each, a "Renewal Term"), unless sooner terminated in accordance with
the provisions of Section 4 or unless the Company or the Employee gives written
notice of non-renewal ("Non-Renewal Notice") to the other at least three (3)
months prior to the date on which the Employee's employment would otherwise end.
2. Duties; Exclusive Services and Best Efforts.
(a) Duties. Employee shall hold the position of Chief Executive
Officer and shall have such responsibilities, duties and authority consistent
with such position as may from time to time be determined by the Company's board
of directors, including those set forth in Exhibit A attached hereto.
(b) Dedicated Services and Best Efforts. The Employee agrees to
devote his best efforts, energies and skill to the faithful, competent and
diligent discharge of the duties and responsibilities attributable to his
position and to this end, will devote his fulltime attention to the business and
affairs of the Company. The Employee also agrees that he shall not take personal
advantage of any business opportunities directly relevant to the present
business and products of the Company that arise during his employment that may
benefit the Company. All material facts regarding such opportunities must be
promptly reported to the Company's board of directors for its consideration. In
addition, the Company acknowledges and agrees that the Employee shall be
permitted to engage in and pursue such contemporaneous activities and interests
as the Employee may desire, for personal profit or otherwise, provided such
activities do not interfere with the Employee's performance of his duties and
obligations hereunder.
3. Compensation. On and after the commencement of Employee's
employment, the Employee shall receive, for all services rendered to the Company
hereunder, the following:
(a) Base Salary. Beginning on the Effective Date, the Employee shall
be entitled to an annual base salary equal to $231,000. The Employee's annual
base salary shall be payable in equal installments in accordance with the
Company's general salary payment policies but no less frequently than monthly.
On January 1 of each year remaining of the Initial Term, Employee's salary shall
be increased by the greater of: (i) 10%, (ii) the Consumer Price Index for all
items for the 12-months ended December 31st of the immediately preceding year,
or (iii) such amount as shall be determined by the board of directors in its
sole discretion.
(b) Annual Bonus. In addition to base salary, the Employee shall
receive an annual bonus ("Annual Bonus") in such amount as shall be determined
by the board of directors in its sole discretion. The Annual Bonus, if any,
shall be paid by the Company to the Employee within 10 business days of the date
the Company's Annual Report on Form 10-K or Form 10-KSB, as the case may be, for
the fiscal year to which the Annual Bonus relates is filed with the United
States Securities and Exchange Commission ("SEC"), or, if the Company is not
subject to the SEC reporting requirements, within 10 business days of the
delivery to the Company of the Company's audited financial statements for the
fiscal year to which the Annual Bonus relates by the Company's independent
accountant.
(c) Incentive Compensation. The Employee will be eligible for awards
from the Company's incentive compensation plans, including without limitation,
any stock incentive plans applicable to high level executives of the Company, in
accordance with the terms thereof and on a basis commensurate with his position
and responsibilities. Any such compensation shall be determined by the Company
in its sole discretion. Nothing herein shall effect any rights or obligations of
the Employee or the Company created pursuant to any stock option plan or stock
option agreement between the parties hereto.
(d) Stock Option. Upon execution of this Agreement, the Company
shall deliver to the Employee an option to acquire 2,500,000 shares of the
Company's common stock, $0.001 par value per share (the "Common Stock"), in the
form attached hereto as Exhibit B.
(e) Benefits Plans. The Employee shall be eligible to participate in
any and all employee welfare and health benefit plans, including, but not
limited to: (i) health, (ii) medical, (iii) dental, (iv) alternative care, (v)
chiropractic, and (vi) mental health plans; and other employee benefit plans,
including, but not limited to, life insurance and qualified pension plans that
may be established by the Company from time to time for the benefit of other
Company employees of comparable status. To the extent the Company does not make
available to Employee participation in any of the plans described in items (i)
through (vi) above, the Company shall reimburse Employee for all out-of-pocket
expenses reasonably incurred by Employee in connection with obtaining the
services customarily available under such plans. In addition, the Company will
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provide Employee with the maximum allowable level of disability insurance, such
amount to be not less than 65% of the Employee's annual salary. The Company will
also acquire a universal life insurance policy in the amount of $1,000,000 for
the benefit of Employee and his designated beneficiary. If the Company is unable
to obtain the policy, the Company shall pay to the Employee a post-tax amount
equal to the cost of the premium for which Employee would be obligated to pay
were the Employee to obtain such a policy himself. The Employee shall be
required to comply with the conditions attendant to coverage by such preceding
plans and policies and shall comply with and be eligible for benefits only in
accordance with the terms and conditions of such plans as they may be amended
from time to time.
(f) Vacation. The Employee shall be eligible for six (6) weeks of
paid vacation each year of his employment hereunder. The Employee shall be
permitted to carry over and accrue unused vacation time for a period of up to
two (2) years. Except as required by applicable law, in no event shall the
Employee be entitled to receive any cash compensation in lieu of unused vacation
time.
(g) Expenses. Subject to and in accordance with the Company's
policies and procedures and, upon presentation of itemized accounts, the
Employee shall be reimbursed by the Company for reasonable and necessary
business-related expenses incurred by the Employee on behalf of the Company.
(h) Deductions from Salary and Benefits. The Company will withhold
from any salary or benefits payable to the Employee all federal, state, local,
and other taxes and other amounts as required by law, rule or regulation.
4. Termination. This Agreement may be terminated by either the Employee
or the Company at any time, subject only to the provisions of this Section 4.
(a) Voluntary Termination. If Employee terminates his own
employment, the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay Employee
all salary, benefits, stock, bonuses, reimbursable expenses and all other
compensation owing to Employee through the effective date of termination.
Employee shall also be entitled to any benefits and reimbursement owed in
accordance with Sections 3(e) & (g). Employee's obligations under Sections 5, 7
and 8 hereof shall survive the termination of Employee's employment, and
Employee shall remain bound thereby. In the case of voluntary termination,
Employee shall be given the option of assuming the disability and health
insurance with no lapse in coverage.
(b) Death. This Agreement shall terminate on the date of the
Employee's death, in which event all salary, benefits, stock, bonuses,
reimbursable expenses and all other compensation owing to the Employee through
the date of the Employee's death shall be paid to his estate.
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(c) Disability. If, during the term of this Agreement, in the
reasonable opinion of at least three (3) licensed medical specialists who
specialize in the diagnosed form of disability, the Employee, because of
physical or mental illness or incapacity or disability, shall become unable to
perform, with reasonable accommodation, substantially all of the duties and
services required of him under this Agreement for a period of 180 days during
any 12-month period, the Company may, upon at least 10 days prior written notice
given at any time after the expiration of such 180-day period, notify the
Employee of its intention to terminate this Agreement as of the date set forth
in the notice. In the event a determination is made that such a disability
exists and the Employee disagrees with the determination, Employee may request a
review of the determination by independent licensed medical specialists, the
reasonable costs of which shall be paid by the Company. If the licensed medical
specialists are unable to reach a consensus that a such a disability exists,
then the Company and the Employee shall settle the dispute in accordance with
the provisions of Section 10 hereof. In the event of the Employee's termination,
the Employee shall be entitled to receive all salary, benefits, stock, bonuses,
reimbursable expenses and all other compensation owing to the Employee through
the date of termination. The Company shall have no further obligation or
liability to the Employee. The Employee's obligations under Sections 5, 7 and 8
hereof shall survive the termination of Employee's employment, and Employee
shall remain bound thereby.
(d) Termination by Employer for Cause. This Agreement may be
terminated by the Company for "Cause" at any time. Upon such termination for
"Cause", the Company shall be released from any and all further obligations
under this Agreement, except that the Company shall be obligated to pay the
Employee all salary, benefits, stock, bonuses, reimbursable expenses and all
other compensation owing to the Employee through the effective date of such
termination. The Employee shall also be entitled to any benefits and
reimbursement owed in accordance with Sections 3(e) & (g). The Employee's
obligations under Sections 5, 7 and 8 hereof shall survive the termination of
Employee's employment, and Employee shall remain bound thereby.
Termination for "Cause" shall mean and be limited to the following
conduct of the Employee:
(i) Breach of any material provision of this Employment
Agreement by the Employee if not reasonably cured within two (2) weeks after
receiving written notice thereof;
(ii) Intentional misconduct as an employee of the Company,
including but not limited to, any intentional misappropriation of funds or
property of the Company, any intentional attempt to obtain any personal profit
from any transaction in which the Employee has an interest that is materially
adverse to the Company, any intentional breach of the duty of care or loyalty
owed by the Employee to the Company, or any other intentional act or intentional
omission of the Employee that substantially impairs the Company's ability to
conduct its ordinary business in its usual manner;
(iii) Material neglect or refusal to perform the duties set
forth in Section 2(a) of this Agreement if not reasonably cured within two (2)
weeks after receiving notice thereof;
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(iv) Conviction of a felony or plea of guilty or nolo contendere
to a felony;
(v) Intentional acts of dishonesty by the Employee having a
material adverse effect on the Company, including any intentional act or
intentional omission that subjects the Company to public scandal or ridicule, or
that causes the Company to be sanctioned by a governmental authority as a result
of a violation of governmental regulations; and
(vi) Intentional disclosure or use of material confidential
information of the Company, other than as specifically authorized and required
in the performance of the Employee's duties, having a material adverse effect on
the Company.
(e) Termination by Employer Without Cause. Upon termination of this
Agreement without Cause: (i) the Company shall be released from any and all
further obligations under this Agreement, and (ii) the Company shall pay to the
Employee the full annual base salary that would otherwise have been paid to the
Employee during the remainder of the Initial Term, (iii) the Employee shall be
immediately entitled to two (2) years' annual base salary, calculated at the
highest annual base salary rate as determined in accordance with Section 3(a) of
this Agreement, and (iv) the Employee shall be immediately entitled to all
benefits, stock, bonuses, reimbursable expenses and all other compensation to
which Employee would have been entitled had the Employee been employed by the
Company during the remainder of the Initial Term.
(f) Termination by the Employee for Good Reason. Upon termination of
this Agreement for Good Reason: (i) the Company shall be released from any and
all further obligations under this Agreement, (ii) the Company shall pay to the
Employee the full annual base salary that would otherwise have been paid to the
Employee during the remainder of the Initial Term, (iii) the Employee shall be
immediately entitled to two (2) years' annual base salary, calculated at the
highest annual base salary rate as determined in accordance with Section 3(a) of
this Agreement, and (iv) the Employee shall be immediately entitled to all
benefits, stock, bonuses, reimbursable expenses and all other compensation to
which Employee would have been entitled had the Employee been employed by the
Company during the remainder of the Initial Term. Termination for "Good Reason"
shall mean, without the express written consent of the Employee, the occurrence
of any of the following events:
(i) assignment to the Employee of any duties inconsistent in any
material respect with the Employee's position (including titles and reporting
relationships), authority, duties or responsibilities as set forth in Section
2(a), or any other action by the Company that results in a significant
diminution in such position, authority, duties or responsibilities;
(ii) any failure by the Company to comply with any of the
material provisions of this Agreement;
(iii) the delivery to the Employee by the Company of a
Non-Renewal Notice pursuant to Section 1 hereof; or
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(iv) any "Change in Control."
"Change in Control" shall mean the first to occur of any of the following
events:
(a) any "person" (as defined in Section 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), excluding for
this purpose: (i) the Company or any subsidiary of the Company, or (ii) any
employee benefit plan of the Company or any subsidiary of the Company, or any
person or entity organized, appointed or established by the Company for or
pursuant to the terms of any such plan that acquires beneficial ownership of
voting securities of the Company, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly of
securities of the Company representing more than 30% of the combined voting
power of the Company's then outstanding securities; provided, however, that no
Change in Control will be deemed to have occurred as a result of a change in
ownership percentage resulting solely from an acquisition of securities by the
Company;
(b) persons who, as of the Effective Date, constitute the board of
directors (the "Incumbent Directors") cease for any reason, including without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority thereof, provided that any person
becoming a director of the Company subsequent to the Effective Date shall be
considered an Incumbent Director if such person's election or nomination for
election was approved by a vote of at least 50% of the Incumbent Directors; but
provided further, that any such person whose initial assumption of office is in
connection with an actual or threatened election contest relating to the
election of members of the board of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a "person" (as defined in
Section 13(d) and 14(d) of the Exchange Act) other than the board of directors,
including by reason of agreement intended to avoid or settle any such actual or
threatened contest or solicitation, shall not be considered an Incumbent
Director;
(c) consummation of a reorganization, merger or consolidation, or
sale or other disposition of at least 80% of the assets of the Company; or
(d) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
5. Non-Competition and Business Opportunities.
(a) Non-Competition. The Employee agrees that during the period of
his employment hereunder and for a period of one (1) year thereafter, the
Employee will not directly or indirectly: (i) market, sell or perform services
such as are offered or conducted by the Company, its affiliates and subsidiaries
during the period of his employment, to any customer or client of the Company,
or "Prospective Customer" or client of the Company; or (ii) engage, directly or
indirectly, whether as principal or as agent, officer, director, employee,
consultant, shareholder, or otherwise, alone or in association with any other
person, corporation or other entity, in any "Competing Business". For the
purpose of this Section 5(a) "Prospective Customer" shall mean any person with
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whom the Company during the 12 months preceding the date of the Employee's
termination of employment hereunder has entered into formal negotiations for a
contract and/or has indicated in any written documentation an intent to do
business with the Company. For purposes of this Section 5(a), the term
"shareholder" shall exclude Employee to the extent the Employee owns less than
ten percent (10%) of any public company's outstanding Common Stock. For the
further purposes of this Agreement, the term "Competing Business" shall mean all
activities and services similar to those conducted or provided by the Company in
connection with the Company's CARExpress Health Savings Network. Due to the
nature of the markets served and the products and services to be developed and
marketed by the Company that are intended to be available on a national basis,
the restrictions set forth in this Section 5(a) cannot be limited to a specific
geographic area within the United States.
(b) Business Opportunities. The Employee agrees that during the
period of his employment hereunder, the Employee will not take personal
advantage of any business opportunities that are similar or substantially
similar to the present business of the Company. In addition, all material facts
regarding any such business opportunities must be promptly and fully disclosed
by the Employee to the board of directors as soon as the Employee becomes aware
of any opportunity, and in no event later than forty-eight (48) hours after
learning of such opportunity. Business opportunities covered by this Section
5(b) shall include, but are not limited to, opportunities directly relating to
any activities or services similar to those conducted or provided by the Company
in connection with the Company's CARExpress Health Savings Network.
(c) Non-Solicitation. The Employee agrees that during the period of
employment hereunder and for a period of one (1) year thereafter, the Employee
will not request or otherwise attempt to induce or influence, directly or
indirectly, any present customer, distributor or supplier, or Prospective
Customer, distributor or supplier, of the Company, or other persons sharing a
business relationship with the Company to cancel, to limit or postpone their
business with the Company, or otherwise take action that might be to the
material disadvantage of the Company. The Employee agrees that during the period
of employment hereunder and for a period of one (1) year thereafter, Employee
will not hire or solicit for employment, directly or indirectly, or induce or
actively attempt to influence, hire or solicit, any employee, agent, officer,
director, contractor, consultant or other business associate of the Company to
terminate his or her employment or discontinue such person's consultant,
contractor or other business association with the Company.
(d) Nondisparagement. Each of the Employee and the Company (for
purposes hereof, the Company shall mean only the executive officers and
directors thereof and not any other employees) agrees not to make any public
statements that disparage the other party, or in the case of the Company, its
respective affiliates, employees, officers, directors, products or services.
Notwithstanding the foregoing, statements made in the course of sworn testimony
in administrative, judicial or arbitral proceedings (including, without
limitation, depositions in connection with such proceedings) shall not be
subject to this Section 5(d).
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(e) Scope. The parties hereto agree that, due to the nature of the
Company's business, the duration and scope of the non-competition and
non-solicitation provisions set forth above are reasonable. In the event that
any court determines that the duration or the geographic scope, or both, are
unreasonable and that such provisions are to that extent unenforceable, the
parties hereto agree that such provisions shall remain in full force and effect
for the greatest time period and in the greatest area that would not render it
unenforceable. The parties intend that the non-competition and non-solicitation
provisions herein shall be deemed to be a series of separate covenants, one for
each and every county of each and every state of the United States of America
and each and every political subdivision of each and every country outside the
United States of America where this provision is intended to be effective. The
Employee agrees that damages are an inadequate remedy for any breach of such
provisions and that the Company shall, whether or not it is pursuing any
potential remedies at law, be entitled to seek in any court of competent
jurisdiction, equitable relief in the form of preliminary and permanent
injunctions without bond or other security upon any actual or threatened breach
of either of these competition provisions.
6. Representations and Warranties of the Employee. The Employee hereby
represents and warrants to the Company as follows: (i) the Employee has the
legal capacity and unrestricted right to execute and deliver this Agreement and
to perform all of his obligations hereunder, and (ii) the execution and delivery
of this Agreement by the Employee and the performance of his obligations
hereunder will not violate or be in conflict with any fiduciary or other duty,
instrument, agreement, document, arrangement, or other understanding to which
Employee is a party or by which he is or may be bound or subject.
7. Disclosure of Innovations; Assignment of Ownership of Innovations;
Protection of Confidential Information. Employee hereby represents and warrants
to the Company that Employee understands that the Company's business consists of
the performance of activities and provision of services in connection with the
Company's CARExpress Health Savings Network and any other healthcare benefits
network or healthcare savings program of the Company, and that Employee may have
access to or acquire information with respect to Confidential Information (as
defined below), including software, processes and methods, development tools,
scientific, technical and/or business innovations.
(a) Disclosure of Innovations. Employee agrees to disclose in
writing to the Company all inventions, improvements and other innovations of any
kind materially relevant to the Company's present business and the CARExpress
product line that Employee may make, conceive, develop or reduce to practice,
alone or jointly with others, during the term of Employee's employment with the
Company, whether or not such inventions, improvements or other innovations are
related to and grow out of Employee's work for the Company and whether or not
they are eligible for patent, copyright, trademark, trade secret or other legal
protection ("Innovations"). Examples of Innovations shall include, but are not
limited to, discoveries, research, inventions, formulas, techniques, processes,
know-how, marketing plans, new product plans, production processes, advertising,
packaging and marketing techniques and improvements to computer hardware or
software.
(b) Assignment of Ownership of Innovations. Employee agrees that all
Innovations will be the sole and exclusive property of the Company and Employee
hereby assigns all of Employee's rights, title or interest in the Innovations
and in all related patents, copyrights, trademarks, trade secrets, rights of
priority and other proprietary rights to the Company. At the Company's request
and expense, during and after the period of Employee's employment with the
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Company, Employee will assist and cooperate with the Company in all respects and
will execute documents, and, subject to Employee's reasonable availability, give
testimony and take further acts requested by the Company to obtain, maintain,
perfect and enforce for the Company patent, copyright, trademark, trade secret
and other legal protection for the Innovations. Employee hereby appoints an
authorized officer of the Company as Employee's attorney-in-fact to execute
documents on his behalf for this purpose.
(c) Protection of Confidential Information of the Company. Employee
understands that Employee's work as an employee of the Company creates a
relationship of trust and confidence between Employee and the Company. During
and after the period of Employee's employment with the Company, Employee will
not use or disclose or allow anyone else to use or disclose any Confidential
Information relating to the Company, its products, services, suppliers or
customers except as may be necessary in the performance of Employee's work for
the Company or as may be specifically authorized in advance by appropriate
officers of the Company. "Confidential Information" shall include, but not be
limited to, information consisting of research and development, patents,
trademarks and copyrights and applications thereof, technical information,
computer programs, software, methodologies, innovations, software tools,
know-how, knowledge, designs, drawings, specifications, concepts, data, reports,
processes, techniques, documentation, pricing, marketing plans, customer and
prospect lists, trade secrets, financial information, salaries, business
affairs, suppliers, profits, markets, sales strategies, forecasts, employee
information and any other information not available to the general public,
whether written or oral, which Employee knows or has reason to know the Company
would like to treat as confidential for any purpose, such as maintaining a
competitive advantage or avoiding undesirable publicity. Employee will keep
Confidential Information secret and will not allow any unauthorized use of the
same, whether or not any document containing it is marked as confidential. These
restrictions, however, will not apply to Confidential Information that has
become known to the public generally through no fault or breach of Employee's or
that the Company regularly gives to third parties without restriction on use or
disclosure.
8. Company Property. All records, files, lists, including computer
generated lists, drawings, documents, software, documents, equipment, models,
binaries, object modules, libraries, source code and similar items relating to
the Company's business that the Employee shall prepare or receive from the
Company and all Confidential Information shall remain the Company's sole and
exclusive property ("Company Business Property"). Upon termination of this
Agreement, the Employee shall promptly return to the Company all property of the
Company in his possession, including Company Business Property. The Employee
further represents that he will not copy or cause to be copied, or print out or
cause to be printed out, any Company Business Property other than as
specifically authorized and required in the performance of the Employee's
duties. The Employee additionally represents that, upon termination of his
employment with the Company, he will not retain in his possession any such
Company Business Property.
9. Cooperation. The Employee and Company agree that during the term of
Employee's employment they shall, at the request of the other Party, render all
assistance and perform all lawful acts that each Party considers necessary or
advisable in connection with any litigation involving either Party or any
director, officer, employee, shareholder, agent, representative, consultant,
client, or vendor of the Company.
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10. Employment Dispute Settlement Procedure / Waiver of Rights.
(a) The Employee and the Company each agree that, in the event
either party (or its representatives, successors or assigns) brings an action in
a court of competent jurisdiction relating to the Employee's recruitment,
employment with, or termination of employment from the Company, each party in
such action agrees to waive his, her or its right to a trial by jury, and
further agrees that no demand, request or motion will be made for trial by jury.
(b) The parties hereto further agree that, in the event that either
seeks relief in a court of competent jurisdiction for a dispute covered by this
Agreement, any other agreement between the Employee and the Company, or that
relates to the Employee's recruitment, employment with or termination of
employment from the Company, the defendant or third-party defendant in such
action may, at any time within 60 days of the service of the complaint,
third-party complaint or cross-claim upon such party, at his, her or its option,
require all or part of the dispute to be arbitrated by a group of persons
consisting of three (3) arbitrators in accordance with the rules of the American
Arbitration Association. The parties agree that the option to arbitrate any
dispute is governed by the Federal Arbitration Act. The parties understand and
agree that, if the other party exercises his, her or its option, any dispute
arbitrated will be heard solely by the arbitrators, and not by a court. The
first arbitrator shall be chosen by the Company, the second arbitrator shall be
chosen by the Employee, and the third arbitrator shall be chosen by the American
Arbitration Association in accordance with such association's rules. Judgment
upon the award rendered, however, may be entered in any court of competent
jurisdiction. The cost of such arbitration shall be borne equally by the
parties.
(c) This dispute resolution agreement will cover all matters
directly or indirectly related to the Employee's recruitment, employment or
termination of employment by the Company; including, but not limited to, claims
involving laws against discrimination whether brought under federal and/or state
law and/or local law, and/or claims involving co-employees but excluding
Worker's Compensation Claims. Nothing contained in this Section 10 shall limit
the right of the Company to enforce by court injunction or other equitable
relief the Employee's obligations under Sections 5, 7 and 8 hereof.
11. Attorney's Fees.
(a) In the event of any dispute arising out of or under this
Agreement or the Employee's employment with the Company, if the arbitrator or
court of competent jurisdiction, whichever is hearing the matter, determines
that the Employee has prevailed on the issues in the arbitration or court
proceeding, as the case may be, the Company shall, upon presentment of
appropriate documentation, at the Employee's election, pay or reimburse the
Employee for all reasonable legal and other professional fees, costs of
arbitration and other reasonable expenses incurred in connection therewith by
the Employee.
(b) The Company shall promptly pay the Employee's reasonable costs
of entering into this Agreement, including the reasonable fees and expenses of
his counsel and other professionals, up to a maximum of $10,000 (based on such
counsel's and professionals' standard hourly rates). The Company shall gross up
for tax purposes any deemed income to the Employee arising pursuant to the
payments provided under this Section 11(b) so that the economic benefit is the
same to the Employee as if such payments were provided on a non-taxable basis to
the Employee.
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12. Choice of Law and Jurisdiction. This Agreement shall be construed
and interpreted under, and the rights of the parties determined in accordance
with, the laws of the Commonwealth of Pennsylvania. Each of the parties hereto
hereby irrevocably consents and submits to the exclusive jurisdiction of the
state and federal courts of the Commonwealth of Pennsylvania in connection with
any suit, action, or other proceeding concerning this Agreement or enforcement
of Sections 5, 7 and 8 hereof. The Employee waives and agrees not to assert any
defense that the court lacks jurisdiction, venue is improper, inconvenient forum
or otherwise. The Employee agrees to accept service of process by certified mail
at the Employee's last known address.
13. Successors and Assigns. Neither this Agreement, nor any of the
Employee's rights, powers, duties or obligations hereunder, may be assigned by
the Employee. This Agreement shall be binding upon and inure to the benefit of
the Employee and his heirs and legal representatives and the Company and its
successors. Successors of the Company shall include, without limitation, any
company, individual, group, association, partnership, firm, venture or other
entity or party acquiring, directly or indirectly, all or substantially all of
the assets of the Company, whether by merger, consolidation, purchase, lease or
otherwise. Any such successor referred to in this paragraph shall thereafter be
deemed "the Company" for the purpose hereof. All covenants and restrictions upon
the Employee hereunder, including, but not limited to, Sections 5, 7 and 8
hereof, are specifically assignable by the Company.
14. Waiver. Any waiver or consent from the Company with respect to any
term or provision of this Agreement or any other aspect of the Employee's
conduct or employment shall be effective only in the specific instance and for
the specific purpose for which given and shall not be deemed, regardless of
frequency given, to be a further or continuing waiver or consent. The failure or
delay of the Company at any time or times to require performance of, or to
exercise any of its powers, rights or remedies with respect to any term or
provision of this Agreement or any other aspect of the Employee's conduct or
employment (except as otherwise expressly provided herein) shall in no manner
affect the Company's right at a later time to enforce any such term or
provision.
15. Notices. All notices, requests, demands, and other communications
hereunder must be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class,
registered mail, return receipt requested, postage and registry fees prepaid, to
the applicable party and addressed as follows:
If to the Company:
-----------------
National Health Partners, Inc.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Board of Directors
11
With a copy to:
--------------
Xxxxx Xxxxxx LLP
000 Xxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx, Esquire
If to the Employee:
------------------
Xxxxx X. Xxxxxxx
c/o National Health Partners, Inc.
000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
16. Severability. In the event that any one or more of the provisions
of this Agreement shall be held to be invalid, illegal or unenforceable, the
validity, legality or enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
17. Headings. The descriptive headings of the several paragraphs of
this Agreement are inserted for convenience of reference only and shall not
constitute a part of this Agreement.
18. Entire Agreement and Amendments. This Agreement, including all
Exhibits that form a part hereof, contains the entire agreement of the parties
concerning the Employee's employment and all promises, representations,
understandings, arrangements and prior agreements on such subject are merged
herein and superseded hereby. The provisions of this Agreement may not be
amended, modified, repealed, waived, extended or discharged except by an
agreement in writing signed by the party against whom enforcement of any
amendment, modification, repeal, waiver, extension or discharge is sought. No
person acting other than pursuant to a resolution of the board of directors
shall have authority on behalf of the Company to agree to amend, modify, repeal,
waive, extend or discharge any provision of this Agreement or anything in
reference thereto or to exercise any of the Company's rights to terminate or to
fail to extend this Agreement.
19. Survival. The Employee's obligations under Paragraphs 5, 7 and 8
shall survive and continue pursuant to the terms and conditions of this
Agreement following specific termination.
20. Understanding. The Employee represents and agrees that he fully
understands his rights to discuss all aspects of this Agreement with his private
attorney, that to the extent he desires, he availed himself of this right, that
he has carefully read and fully understands all of the provisions of this
Agreement, that he is competent to execute this Agreement, that his decision to
execute this Agreement has not been obtained by any duress, and that he freely
and voluntarily enters into this Agreement, and that he has read this document
in its entirety and fully understands the meaning, intent, and consequences of
this Agreement.
21. 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.
12
22. Injunctive Relief. The Employee and Company hereby agree and
acknowledge that in the event of a breach or threatened breach of this Agreement
by the Employee or Company, the Company or the Employee, respectively, may
suffer irreparable harm and monetary damages alone would not adequately
compensate the Company or the Employee, respectively. Accordingly, the Company
and the Employee will therefore be entitled to injunctive relief to enforce this
Agreement.
[Remainder of page intentionally left blank]
13
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and attested by its duly authorized officers, and the Employee has set
his hand, all as of the day and year first above written.
NATIONAL HEALTH PARTNERS, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------
Xxxxx X. Xxxxx
Chief Financial Officer
EMPLOYEE
/s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
14
Exhibit A
---------
FORM OF OPTION TO ACQUIRE SHARES
OF COMMON STOCK OF NATIONAL HEALTH PARTNERS, INC.
WHEREAS, National Health Partners, Inc., an Indiana corporation (the
"Company"), and [_____________] ("Holder") are parties to that certain
Employment Agreement, dated [_________, _____] (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, $.001 par value per share ("Common Stock"); and
WHEREAS, the Company wishes to grant this option to the Holder in
satisfaction of its obligation to provide the Holder with such an option.
NOW, THEREFORE, in consideration of the foregoing, the agreement set
forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Holder on the date
hereof (the "Grant Date") an option (this "Option") to purchase [__________]
shares ("Shares") of Common Stock, on the terms and subject to the conditions
set forth herein.
2. Term of Option. This option shall have a maximum term of ten (10)
years measured from the Grant Date (the "Expiration Date") and shall accordingly
expire at 5:00 p.m. eastern standard time on the Expiration Date.
3. Right to Exercise. This Option may be exercised in whole or in part
at any time after the Grant Date.
4. Exercise Price. The exercise price per Share ("Exercise Price") at
which this Option may be exercised shall be forty cents ($.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
(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;
2
(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:
(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.
3
(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 X-0, X-0 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
ninety (90) 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.
(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)
4
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;
(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;
5
(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, directors and employees 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;
(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
6
(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.
(a) Failure to File Registration Statement. The Company and the
Selling Stockholders agree that the Selling Stockholders may suffer damages if
the Registration Statement is not filed on or prior to the Target Filing Date
and maintained in the manner contemplated herein. The Company and the Selling
Stockholders further agree that it would not be feasible to ascertain the extent
of such damages with precision. Accordingly, if the Registration Statement is
not filed on or prior to the Target Filing Date, the Company shall pay in cash
or in shares of Common Stock (at the Holder's option) as liquidated damages for
such failure and not as a penalty to the Selling Stockholders, a one-time fee
equal to $20,000 and an additional fee of $10,000 at the end of each subsequent
month during which the Registration Statement is not filed (collectively, the
"Late Filing Damages"). Any payments to be made to the Selling Stockholders
pursuant to this Section 7.4(a) shall be due and payable within 5 business days
of any demand therefor by the Selling Stockholders. The parties agree that the
Late Filing Damages represent a reasonable estimate on the part of the parties,
as of the date of this Agreement, of the amount of damages that may be incurred
by the Selling Stockholders if the Registration Statement is not filed on or
prior to the Target Filing Date. If the Holder elects to receive payment of the
Late Filing Damages in shares of Common Stock, such shares of Common Stock shall
be valued at their Fair Market Value on the date of demand of such Late Filing
Damages.
(b) Failure of Registration Statement to be Declared Effective.
The Company and the Selling Stockholders agree that the Selling Stockholders may
suffer damages if the Registration Statement is not declared effective by the
SEC on or prior to the ninetieth (90th) day following the Target Filing Date
(the "Effectiveness Deadline"). The Company and the Selling Stockholders further
agree that it would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if the Registration Statement is not declared effective
by the SEC prior to the Effectiveness Deadline, the Company shall pay in cash or
in shares of Common Stock (at the Holder's option) as liquidated damages for
such failure and not as a penalty to the Selling Stockholders, an amount equal
to $30,000 and an additional fee of $20,000 at the end of each subsequent month
during which the Registration Statement is not declared effective (collectively,
the "Non-Effectiveness Damages"). Payments to be made to the Selling
Stockholders pursuant to this Section 7.4(b) shall be due and payable within 5
business days of any demand therefor by the Selling Stockholders. The parties
agree that the Non-Effectiveness Damages represent a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of damages
that may be incurred by the Selling Stockholders if the Registration Statement
is not declared effective on or prior to the ninetieth (90th) day following the
Target Filing Date. If the Company elects to pay the Non-Effectiveness Damages
in shares of Common Stock, such shares of Common Stock shall be valued at their
Fair Market Value on the date of demand of such Non-Effectiveness Damages.
7
(c) 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.
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.
8
(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.
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.
9
(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.
(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
10
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:
(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.
11
(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. 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.
(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.
12
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.
11. 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.
12. 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.
13. 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:
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.
13
14. 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.
15. 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.
16. 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.
17. 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.
18. 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.
19. 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.
[Remainder of page intentionally left blank]
14
IN WITNESS WHEREOF, the Company and Holder have caused this Option to
be executed this [___] day of [__________], [_____].
National Health Partners, Inc.
By: [___________________________]
Name:
Title:
AGREED AND ACCEPTED:
By: [_____________________________]
Name:
Title:
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)
Exhibit B
---------
DUTIES AND RESPONSIBILITIES OF THE
CHIEF EXECUTIVE OFFICER OF NATIONAL HEALTH PARTNERS, INC.
Overview
--------
The Chief Executive Officer ("CEO") of National Health Partners, Inc.
(the "Company") shall be responsible for implementing the strategic goals and
objectives of the Company and providing the Company with direction and
leadership toward the achievement of its mission, strategy, philosophy, and
annual goals and objectives. The CEO shall report to the board of directors of
the Company (the "Board") and shall oversee the President of the Company.
Duties and Responsibilities
---------------------------
The specific duties and responsibilities of the CEO shall include, but
not be limited to, the following:
(i) Establish overall strategic objectives and business plans in accordance
with Board directives and the Company's charter and bylaws, make recommendations
to the Board regarding policies, procedures, organizational structure and
general supervision of the Company to implement such objectives and plans, and
take all steps necessary to ensure the implementation of such objectives and
plans.
(ii) Support the operation and administration of the Board by advising and
informing the Board of the Company's business and affairs, recommending to the
Board the appointment of senior management of the Company and ensuring that all
matters requiring Board consideration or approval are provided to the Board in a
timely fashion.
(iii) Recommend an annual budget to the Board for approval, prudently manage
the Company's resources within those budgetary guidelines, direct and coordinate
activities designed to maximize the Company's profits and return on capital, and
review financial statements and results of operations to evaluate achievement of
strategic objectives and business plans.
(iv) Oversee the management and employees of the Company, including managing
the human resources of the Company, delegating authority to subordinates,
establishing and enforcing performance standards, conducting performance
reviews, setting employee compensation, and hiring and firing employees.
(v) Oversee the design, marketing, promotion, delivery and quality of the
Company's products and services, execute contracts and commitments relating to
such products and services as authorized by the Board or within established
policies, coordinate the Company's operations among its divisions and
departments, and evaluate and supervise strategic acquisitions of companies,
businesses and assets and strategic joint ventures determined to be in the
Company's best interests.
(vi) Ensure that the Company and its mission, products and services are
consistently and accurately presented to shareholders, and oversee the creation
and implementation of policies and procedures designed to ensure that employees
of the Company act in accordance with prudent and commonly accepted business
practices and ethical principles of the highest standard.
