INTERWEST HOME MEDICAL, INC.
STOCK OPTION AGREEMENT
This Agreement is entered into this 1st day of April, 1997, by and between
Interwest Home Medical, Inc., a Utah corporation ("Corporation") and Xxxxxx X.
Xxxxxx (the " Director").
Recitals
WHEREAS, Director is a non-employee director of the Corporation; and
WHEREAS, the Corporation has previously granted Director stock options
under the Corporation's 1995 Non-Employee Director Stock Option Plan; and
WHEREAS, the Board of Directors has determined that in lieu of granting
the Corporation's non-employee directors additional options under the 1995
Non-Employee Director Stock Option Plan, it would be in the best interests of
the Corporation to grant its non-employee directors the grant of option provided
for in this Stock Option Agreement; and
WHEREAS, the purpose of granting this option to Director is to promote the
success of the Corporation and to advance the interests of the Corporation by
providing an additional means, through the grant of this stock option, to
motivate, retain and reward Director with an incentive for high levels of
individual performance and improved financial performance of the Corporation;
and
WHEREAS, the Board of Directors has granted the option provided for herein
in accordance with Rule 16b-3(d)(i) promulgated under the Securities Exchange
Act of 1934, as amended (the "Act"); and
WHEREAS, the grant of the option provided for herein, and the exercise of
such options, shall be exempt from Section 16(b) of the Act;
NOW THEREFORE, it Is agreed as follows:
Agreement
1. Grant of Option. Subject to the terms and conditions of this Agreement,
the Corporation hereby grants to the Director, the option ("Option") to purchase
from the Corporation up to an aggregate of 40,000 Shares ("Option Shares"), from
time to time, at a price of $4.00 per Share ("Exercise Price"). The Option shall
vest in three installments each of which shall entitle the Director to Option
Shares. This Option shall vest as follows:
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Vesting Date Number of Shares
------------------- ---------------
March 31, 1998 13,333
March 31, 1999 13,333
March 31, 2000 13,334
2. NSO. The Option, granted hereunder shall be deemed to be a
Non-Statutory Stock Option ("NSO'"). The Option may be exercised only to the
extent it has vested. The Option may be exercised only to the extent it has
vested.
3. Exercise of Option. The Option granted herein expires on March 31, 2002
and must be exercised, if at all, on or before March 31, 2002.
3.1. Manner of Exercise. This Option may be exercised in whole or in
part by delivery to the Corporation, from time to time, of a written notice
signed by the Director, specifying the number of Option Shares that the Director
then desires to purchase, together with: (i) cash, certified check, or bank
draft payable to the order of the Corporation or (ii) other form of payment
acceptable to the Board of Directors, for an amount equal to the Exercise Price
of such Shares. Director may make payment of all or a portion of the Exercise
Price in installments and in such event, the Director shall deliver a promissory
note, in form satisfactory to the Board of Directors, for the deferred portion
of the exercise price secured by a pledge, also in form satisfactory to the
Board of Directors, of the Shares purchased by such exercise of the Option. The
Director may pay all or a portion of the Exercise Price, and/or the tax
withholding liability with respect to the exercise of the Option either by
surrendering shares of stock already owned by Director or by withholding Option
Shares, provided that the Board determines that the fair market value of such
surrendered stock or withheld Option Shares is equal to the corresponding
portion of such Exercise Price and/or tax withholding liability, as the case may
be, to be paid for therewith.
3.2. Certificates. Promptly after any exercise in whole or in part
of the Option by the Director, the Corporation shall deliver to the Director a
certificate or certificates for the number of Option Shares with respect to
which the Option was so exercised, registered in the Director's name.
4. Restriction on Transferability. This Option is not transferable by the
Director otherwise than by testamentary will or the laws of descent and
distribution and, during the Director's lifetime, may be exercised only by the
Director or the Director's guardian or legal representative. Except as permitted
by the preceding sentence, neither this Option nor any of the rights and
privileges conferred thereby shall be transferred, assigned, pledged, or
hypothecated in any way (whether by operation of law or otherwise), and no such
option, right, or privilege shall be subject to execution, attachment, or
similar process. Upon any attempt to transfer this Option, or of any right or
privilege conferred thereby, contrary to the provisions hereof, or upon the levy
of any attachment or similar process upon such option,
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right, or privilege, this Option and any such rights and privileges shall
immediately become null and void.
5. Exercise in Event of Death or Disability. Whenever the word "Director"
is used in any provision of this Agreement under circumstances when the
provision should logically be construed to apply to the Director's guardian,
legal representative, executor, administrator, or the person or persons to whom
the Option may be transferred by testamentary will or by the laws of descent and
distribution, the word "Director" shall be deemed to include such person or
persons.
6. No Rights As Shareholder Prior To Exercise. The Director shall not, by
virtue hereof, be entitled to any rights of a shareholder in the Corporation,
either at law or equity. The rights of the Director are limited to those
expressed in this Option and are not enforceable against the Corporation except
to the extent set forth herein.
7. Registration of Option Shares. The Option Shares have not been
registered with the Securities and Exchange Commission. The Company shall use
its best efforts to register the Options Shares on Form S-8 with the Securities
and Exchange Commission as soon as practical.
8. Anti-Dilution Provisions. The number and kind of Shares purchasable
upon the exercise of this Option and the exercise price shall be subject to
adjustment from time to time as follows:
8.1. In case the Corporation shall (i) pay a dividend or make a
distribution on the outstanding Shares payable in Shares, (ii) subdivide the
outstanding Shares into a greater number of Shares, (iii) combine the
outstanding Shares into a lesser number of Shares, or (iv) issue by
reclassification of the Shares any Shares of the Corporation, the Director shall
thereafter be entitled, upon exercise, to receive the number and kind of shares
which, if this Option had been exercised immediately prior to the happening of
such event, the Director would have owned upon such exercise and been entitled
to receive upon such dividend, distribution, subdivision, combination, or
reclassification.
8.2. In case the Corporation shall consolidate or merge into or with
another corporation, or in case the Corporation shall sell or convey to any
other person or persons all or substantially all the property of the
Corporation, the Director shall thereafter be entitled, upon exercise, to
receive the kind and amount of shares, other securities, cash, and property
receivable upon such consolidation, merger, sale, or conveyance by a holder of
the number of Shares which might have been purchased upon exercise of this
Option immediately prior to such consolidation, merger, sale, or conveyance, and
shall have no other conversion rights. In any such event, effective provision
shall be made, in the certificate or articles of incorporation of the resulting
or surviving corporation, in any contracts of sale and conveyance, or otherwise
so that, so far as appropriate and as nearly
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as reasonably may be, the provisions set forth herein for the protection of the
rights of the Director shall thereafter be made applicable.
8.3. Whenever the number of Shares purchasable upon exercise of this
Option is adjusted pursuant to this Section, the exercise price per Share shall
be adjusted simultaneously by multiplying that exercise price per Share in
effect immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon exercise of this Option
immediately prior to such adjustment, and of which the denominator shall be the
number of Shares so purchasable immediately after such adjustment, so that the
aggregate exercise price of this Option remains the same.
8.4. The existence of the Option shall not affect in any way the
right or power of the Corporation or its shareholders to make or authorize any
adjustments, recapitalization, reorganization, or other changes in the
Corporation's capital structure or its business, or any merger or consolidation
of the Corporation, or any issue of bonds, debentures, preferred shares with
rights greater than or affecting the Shares, or the dissolution or liquidation
of the Corporation, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
9. Termination of Status as Director. If Director's services as a member
of the Board of Directors terminate by reason of death, disability or voluntary
resignation from the Board, the Option granted hereby shall immediately become
exercisable and shall remain exercisable for two years after the date of such
termination. If Director's services as a member of the Board of Directors
terminate for any other reason, any portion of an Option granted pursuant to
this Plan which is not then exercisable, shall terminate and any portion of such
Option which is then exercisable may be exercised within a period of one year
after the date of such termination.
10. Notices. Any notices permitted or required under this Agreement shall
be deemed given upon the date of personal delivery or 48 hours after deposit in
the United States mail, postage fully prepaid, return receipt requested,
addressed to the Corporation at its principal placement of business and to
Director at his residence.
11. Miscellaneous
11.1. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Utah.
11.2. Titles and Captions. All section titles or captions contained in this
Agreement are for convenience only and shall not be deemed part of the context
nor effect the interpretation of this Agreement.
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. 11.3. Entire Agreement. This Agreement contains the entire understanding
between and among the parties and supersedes any prior understandings and
agreements among them respecting the subject matter of this Agreement.
11.4. Binding Agreement. This Agreement shall be binding upon the heirs,
executors, administrators, successors and assigns of the parties hereto.
11.5. Computation of Time. In computing any period of time pursuant
to this Agreement, the day of the act, event or default from which the
designated period of time begins to run shall be included, unless it is a
Saturday, Sunday, or a legal holiday, in which event the period shall begin to
run on the next day which is not a Saturday, Sunday, or legal holiday. In the
event that the last day of any period falls on a Saturday, Sunday or legal
holiday, such period shall run until the end of the next day thereafter which is
not a Saturday, Sunday, or legal holiday.
11.6. Pronouns and Plurals. All pronouns and any variations thereof
shall be deemed to refer to the masculine, feminine, neuter, singular, or plural
as the identity of the person or persons may require.
11.7. Arbitration. If at any time during the term of this Agreement
any dispute, difference, or disagreement shall arise upon or in respect of the
Agreement, and the meaning and construction hereof, every such dispute,
difference, and disagreement shall be referred to a single arbiter agreed upon
by the parties, or if no single arbiter can be agreed upon, an arbiter or
arbiters shall be selected in accordance with the rules of the American
Arbitration Association and such dispute, difference, or disagreement shall be
settled by arbitration in accordance with the then prevailing commercial rules
of the American Arbitration Association, and judgment upon the award rendered by
the arbiter may be entered in any court having jurisdiction thereof.
11.8. Presumption. This Agreement or any section thereof shall not
be construed against any party due to the fact that said Agreement or any
section thereof was drafted by said party.
11.9. Further Action. The parties hereto shall execute and deliver
all documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of the Agreement.
11.10. Parties in Interest. Nothing herein shall be construed to be
to the benefit of any third party, nor is it intended that any provision shall
be for the benefit of any third party.
11.11. Savings Clause. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this
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Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.
11.12. Representation by Counsel. The Director represents that
he/she has been advised that he is not being represented in this transaction by
the corporation's attorneys and that the Director has been advised to seek
separate legal counsel for advice in this matter.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above-written.
Interwest Home Medical, Inc. Director
By /s/ Xxxxx X. Xxxxxxxx /s/ Xxxxxx X. Xxxxxx
--------------------------------- ----------------------------
Xxxxx X. Xxxxxxxx, President Xxxxxx X. Xxxxxx
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