EXHIBIT 4.2
GOHEALTH.MD, INC.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (this "Agreement") is made and entered into
as of this 27th day of August, 1999, by and between GOHEALTH.MD, INC., a
Delaware corporation (the "Company"), and Xxxxxx Xxxx ("Optionee").
Background
The Company desires to grant Optionee an option to purchase shares of
common stock of the Company.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and other good and valuable consideration, including the
consideration set forth in the Consulting Agreement, the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, it is agreed as
follows:
1. Non-Qualified Stock Options to Purchase Shares.
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(a) Number of Option Shares and Exercise Price. The Company
hereby grants to the Optionee non-qualified stock options (the "Options"), to
purchase the following number of shares of the Company's common stock, par value
$0.001 per share (the "Option Shares"):
(i) 150,000 shares of common stock, with an exercise
price of $1.00 per share.
(b) Exercise Period. The Options shall be exercisable, in
whole or in part, at any time and from time to time during the period commencing
on the date hereof, and ending on August 27, 2009 (the "Exercise Period").
2. Manner of Exercise and Terms of Payment.
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(a) The Options may be exercised in whole or in part, subject
to the limitations set forth in this Agreement, upon delivery to the Company of
timely written notice of exercise, accompanied by full payment of the Option
Price for the Option Shares with respect to which the Options are exercised. The
exercise price may be paid, in the Optionee's discretion, (i) by delivering a
certified check or wire transfer of immediately available funds to the order of
the Company for the entire exercise price, or (ii) in accordance with provisions
of subparagraph 2(b), hereof, or (iii) by any combination thereof determined by
the Optionee. The person entitled to the shares so purchased shall be treated
for all purposes as the holder of such shares as of the close of business on the
date of exercise and certificates for the shares of stock so purchased shall be
delivered to the person so entitled within a reasonable time, not exceeding
thirty (30) days, after such exercise. Unless this Option has expired, a new
Option of like tenor and for
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such number of shares as the holder of this Option shall direct, representing in
the aggregate the right to purchase a number of shares with respect to which
this Option shall not have been exercised, shall also be issued to the holder of
this Option within such time.
(b) In addition to and without limiting the right of the
Optionee under any other terms set forth herein, the Optionee shall have, upon
written request by the Optionee delivered or transmitted to the Company together
with this Option, the right (the "Conversion Right") to require the Company to
convert this Option into shares of Common Stock as follows: upon exercise of the
Conversion Right, the Company shall deliver to the Optionee (without payment by
the Optionee of any Exercise Price) that number of shares of Common Stock that
is equal to the quotient obtained by dividing (x) the value of the Option at the
time the Conversion Right is exercised (determined by subtracting the aggregate
Exercise Price in effect immediately prior to the exercise of the Conversion
Right from the aggregate Fair Market Value of the shares of Common Stock
issuable upon exercise of the Option immediately prior to the exercise of the
Conversion Right) by (y) the current Fair Market Value of one share of Common
Stock (determined as provided in paragraph 11(c) below) immediately prior to the
exercise of the Conversion Right. The Conversion Right may be exercised by the
Optionee by surrender of this Option at the principal office of the Company,
together with a written statement specifying that the Optionee thereby intends
to exercise the Conversion Right. Certificates for shares of common Stock
issuable upon exercise of the Conversion Right shall be delivered to the
Optionee promptly following the Company's receipt of this Option together with
the aforesaid written statement.
3. Rights as Stockholder. Optionee or a permitted transferee of the
Options shall have no rights as a stockholder of the Company with respect to any
shares of common stock subject to such Options prior to his exercise of the
Options.
4. Adjustment of Purchase Price and Number of Shares. The number and
kind of securities purchasable upon the exercise of this Option and the exercise
price shall be subject to adjustment from time to time, as provided in Schedule
A attached hereto.
5. Investment Representation.
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(a) Optionee represents and warrants to the Company that
Optionee is acquiring these Options and the Option Shares for Optionee's own
account for the purpose of investment and not with a view toward resale or other
distribution thereof in violation of the 1933 Act. Optionee acknowledges that
the effect of the representations and warranties is that the economic risk of
the investment in the Options and Option Shares must be borne by the Optionee
for an indefinite period of time. This representation and warranty shall be
deemed to be a continuing representation and warranty and shall be in full force
and effect upon such exercise of the Options granted hereby.
(b) Prior to such time as the Option Shares have been
registered under the 1933 Act, the Company shall place a legend on each
certificate for the Option Shares issued pursuant hereto, or any certificate
issued in exchange therefore, stating that such securities are not registered
under the 1933 Act and state securities laws and setting forth or referring to
the restriction on transferability and sale thereof imposed by the 1933 Act or
any applicable state securities law, and that the holder thereof agrees to be
bound by such restrictive legend.
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6. Exercisability. The Options shall be exercisable only by Optionee
during his lifetime or by his assigns, heirs, executors or administrators, as
the case may be. Any assignment hereof shall be in compliance with applicable
securities laws. The Options granted hereunder and the registration rights may
be assigned together only, but may not be separately assigned.
7. Piggyback Registrations.
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(a) Right to Piggyback. At any time after the first to occur
of the date (i) a registration statement covering the Initial Public Offering of
the Company's securities shall become effective or (ii) upon the Company
becoming a reporting company under Section 12 of the Securities Act of 1934, as
amended whenever the Company proposes to register any of its securities under
the 1933 Act (other than a registration on Form S-4 or S-8 or such replacement
form), and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company will give
prompt written notice to the Optionee and will include in such Piggyback
Registration, subject to the allocation provisions below, all Registrable
Securities of Optionee with respect to which the Company has received written
requests for inclusion within fifteen (15) days after the Company's mailing of
such notice.
(b) Piggyback Expenses. In all Piggyback Registrations, the
Company will pay all of the Registration Expenses.
(c) Priority on Registrations. If a Piggyback Registration is
initiated as an underwritten primary or secondary registration on behalf of the
Company or holders of the Company's securities, and the managing underwriters
advise the Company in writing that in their reasonable opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in such offering, at a price reasonably related to fair value, the
Company may limit the number of Registrable Securities included in such
registration.
(d) Selection of Underwriters. If any Piggyback Registration
is underwritten, the selection of investment banker(s) and manager(s) and the
other decisions regarding the underwriting arrangements for the offering will be
made by the Company.
(e) Continuing Obligations. The Company's agreements with
respect to the registration of the Option Shares in this Section 8 shall
continue in effect regardless of the exercise and surrender of the Option.
8. Registration Procedures.
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Whenever the Optionee has requested that any Registrable
Securities be registered pursuant to Section 7 of this Agreement, the Company
will, as expeditiously as possible:
(a) prepare and file with the Securities and Exchange
Commission a registration statement with respect to such Registrable Securities
and use its best reasonable efforts to cause such registration statement to
become effective as promptly as practical;
(b) prepare and file with the Securities and Exchange
Commission such 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 a period of not less than 90 days;
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(c) furnish to each Selling Holder such reasonable number of
copies of such registration statement, each amendment and supplement thereto and
the prospectus included in such registration statement (including each
preliminary prospectus and any term sheet associated therewith), and such other
documents as such Optionee may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by each seller;
(d) use its best reasonable efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
states as the managing underwriter(s) may reasonably request, or if the offering
is not underwritten in New York, New Jersey and Pennsylvania.
(e) notify each Selling Holder at any time when a prospectus
relating thereto is required to be delivered under the 1933 Act within the
period that the Company is required to keep the registration statement effective
of the happening of any event as a result of which the prospectus included in
such registration statement, together with any associated term sheet, contains
an untrue statement of a material fact or omits and fact necessary to make the
statement therein not misleading, and, at the request of any such seller, the
Company will prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statement therein not misleading;
(f) cause all such Registrable Securities to be listed or
included on each national securities exchange, if any, or on the NASDAQ Stock
Market, on which the other outstanding shares of Common Stock of the Company are
then listed;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including an
underwriting agreement in customary form) and take such other customary actions
as may be reasonably necessary to expedite or facilitate the disposition of such
Registrable Securities;
(i) obtain a "comfort" letter addressed to the Company from
its independent public accountants in customary form and covering such matters
of the type customarily covered by "comfort" letters; and
(j) make available for inspection by the Optionee, any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller, or any underwriter, 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
such seller or any such underwriter, attorney, accountant or agent in connection
with such registration statement.
9. Indemnification.
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(a) The Company hereby indemnifies, to the extent permitted by
law, each Holder and their respective officers, directors, employees and agents,
if any, and each person who controls any of them within the meaning of the 1933
Act (each, an "indemnified Party") against all losses, claims, damages,
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liabilities and expenses arising out of or resulting from any untrue or alleged
untrue statement of material fact contained in any registration statement,
prospectus or preliminary prospectus or associated term sheet or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances in which made except insofar as the same are caused by or
contained in any information furnished in writing to the Company by such
Indemnified Party expressly for use therein or by any Indemnified Party's
failure to deliver a copy of the registration statement or prospectus or any
amendments or supplements thereto after the Company has furnished such
Indemnified Party with a sufficient number of copies of the same. In connection
with an underwritten offering, the Company will indemnify the underwriters,
their officers and directors, and each person who controls such underwriters
(within the meaning of the 0000 Xxx) to the same extent as provided above with
respect to the indemnification of any Indemnified Party.
(b) In connection with any registration statement in which a
Selling Holder is participating, each such Holder will furnish to the Company in
a timely manner in writing such information as is reasonably requested by the
Company for use in any such registration statement or prospectus and will
indemnify, to the extent permitted by law, the Company, its directors and
officers and each person who controls the Company (within the meaning of the
0000 Xxx) against any losses, claims, damages, liabilities and expenses
resulting from any untrue or alleged untrue statement of material fact or any
omission or alleged omission of a material fact required to be stated in the
registration statement or prospectus or any amendment thereof or supplement
thereto or necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or omission is contained in information so
furnished in writing by such Holder specifically for use in preparing the
registration statement. Notwithstanding the foregoing, the liability of a
Selling Holder under this Section 9(b) shall be limited to an amount equal to
the net proceeds actually received by the Selling Holder from the sale of
Registrable Securities covered by the registration statement.
(c) Any person entitled to indemnification hereunder will (i)
give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification and (ii) unless in such indemnifying party's counsel
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. Any failure to give prompt notice shall
deprive a party of its right to indemnification hereunder only to the extent
that such failure shall have adversely affected the indemnifying party. If the
defense of any claim is assumed, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). An indemnifying party who is not entitled, or
elects not, to assume the defense of a claim will not be obligated to pay the
fees and expenses or more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable
judgement of any indemnified party's counsel a conflict of interest exists
between such indemnified party and any other of such indemnifying parties with
respect to such claim.
10. Participation in Underwritten Registrations.
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The Optionee may not participate in any underwritten registration
hereunder unless he (i) agrees to sell his securities on the basis provided in
any underwriting arrangements approved by the persons entitled hereunder to
approve such arrangements under Section 7(e), and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such underwriting arrangements.
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11. Definitions.
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(a) The term "Additional Shares of Capital Stock" shall mean
all shares of Capital Stock issued by the Company, except those shares of Common
Stock of the Company issuable upon the exercise of this Option or any other
shares of Common Stock issued to the Optionee.
(b) The term "Capital Stock" shall mean the Company's common
stock, and any other stock of any class, whether now or hereafter authorized,
which has the right to participate in the distribution of earnings and assets of
the Company without limit as to amount or percentage.
(c) The term "Fair Market Value" per share of Common Stock as
to any date shall mean the average of the daily closing prices (as such term is
hereinafter defined) immediately prior to such date; provided, however, that in
the event the Fair Market Value of the Common Stock is determined during a
period following the announcement by the Company of (i) a dividend or
distribution on the Common stock payable in shares of Common Stock or securities
convertible into Common Stock, or (ii) any subdivision, combination or
reclassification of Common Stock and prior to the expiration of 30 consecutive
Trading days after the ex-dividend date for such dividend or distribution, or
the record date for such subdivision, combination or reclassification, then and
in each such case, the Fair Market Value shall be appropriately adjusted to
reflect the Fair Market Value equivalent of the Common Stock. The "closing
price" for each day shall be the last quoted price, or if not so reported by the
National Association of Securities Dealers, Inc. Automated Quotations System or
such other system then in use, or, if on any such date the security is not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the security
selected by the Board of Directors of the Company. If the Common Stock in not
publicly held or so listed and traded, "Fair market Value" shall mean the fair
value of the Common Stock as determined in good faith by the Board of Directors
of the Company whose determination shall be conclusive and shall be described in
a statement filed with the Optionee. The term "Trading Day" shall mean a day on
which the securities exchange or automated quotation system on which the Common
Stock is listed or admitted to listing is open for the transaction of business
or, if the Common Stock is not listed or admitted to trading on any securities
exchange or automated quotations system, a business day.
(d) The term "Initial Public Offering" means the first public
offering under the 1933 Act of any of the Company's equity securities.
(e) The term "Registrable Securities" means (i) the Common
Stock issuable upon the exercise of the Options and (ii) any securities issued
or to be issued with respect to the securities referred to above by way of a
stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have been effectively registered under the 1933 Act and
disposed of in accordance with the registration statement covering them.
(f) The term "Registration Expenses" means all expenses
incident to the Company's performance of or compliance with this Agreement,
including without limitation all registration and filing fees, fees and expenses
of compliance with securities or blue sky laws (in such states reasonably
determined by the Company), printing expenses, messenger and delivery expenses,
expenses and fees for listing the securities to be registered on exchanges or
electronic quotation systems on which similar
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securities issued by the Company are then listed, and fees and disbursements of
counsel for the Company (but not Optionee's counsel) and of all independent
certified public accountants, underwriters (other than Underwriting Commissions)
and other persons retained by the Company.
(g) The term "Underwriting Commissions" means all underwriting
discounts or commissions relating to the sale of securities of the Company.
12. Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the U.S. Securities and
Exchange Commission (the "SEC") which may permit the sale of the Options or the
shares underlying the Options to the public without registration, at any time
after the first to occur of the date (i) a registration statement under the
Securities Act covering the Initial Public Offering of the Company's securities
shall become effective, or (ii) upon the Company becoming a reporting company
under Section 12 of the Securities Exchange Act of 1934, as amended, the Company
agrees to: (a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the 1933 Act; (b) file with the SEC in
a timely manner all reports and other documents required of the Company under
the 1993 Act and the Securities Exchange Act of 1934, as amended; and (c)
furnish to Optionee upon its written request a written statement by the Company
as to its compliance with the public information requirements of Rule 144 and a
copy of the most recent annual or quarterly report of the Company.
13. Miscellaneous.
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(a) Termination of Other Agreements. This Agreement sets forth
the entire understanding of the parties hereto with respect to the rights to the
registration of capital stock of the Company and supercedes all prior
arrangements or understandings among the parties regarding such matters.
(b) Notices. Any notices required hereunder shall be deemed to
be given upon the earlier of the date when received at, or (i) the third
business day after the date when sent by certified or registered mail, (ii) the
next business day after the date sent by guaranteed overnight courier, or (iii)
the date sent by telecopier or delivered by hand, in each case, to the addresses
set forth below:
If to the Company: GoHealth.MD, Inc.
0000 Xxxxxxxxxx Xxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: President
If to the Optionee: Xxxxxx Xxxx
0000 Xxxxxxxx
Xxxxxx, XX 00000
or to such other addresses as the parties may specify in writing.
(c) Amendments and Waivers. The provisions of this Agreement
may be amended or terminated unless in a writing signed by the Optionee and the
Company.
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(d) Binding Effect. This Agreement will bind and inure to the
benefit of the respective successors (including any successor resulting from a
merger or similar reorganization), assigns, heirs, and personal representatives
of the parties hereto.
(e) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey.
(f) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be considered to be an original instrument
and to be effective as of the date first written above. Each such copy shall be
deemed an original, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart.
(g) Interpretation. Unless the context of this Agreement
clearly requires otherwise, (a) references to the plural include the singular,
the singular the plural, the part the whole, (b) references to one gender
include all genders, (c) "or" has the inclusive meaning frequently identified
with the phrase "and/or" and (d) "including" has the inclusive meaning
frequently identified with the phrase "but not limited to." The section and
other headings contained in this Agreement are for reference purposes only and
shall not control or affect the construction of the Agreement or the
interpretation thereof in any respect.
IN WITNESS WHEREOF, the undersigned have executed, or have caused this
Agreement to be executed, as of the day and year first above written.
GOHEALTH.MD, INC. OPTIONEE
By: /s/ Xxxxxxx X. Xxxxxx /s/ Xxxxxx Xxxx
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Xxxxxxx X. Xxxxxx Xxxxxx Xxxx
Chief Executive Officer
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SCHEDULE A
Adjustment of Purchase Price and Number of Shares
1. Adjustment. The number and kind of securities purchasable upon the exercise
of this Option and the Exercise Price shall be subject to adjustment from
time to time upon the happening of certain events as follows:
(a) Reclassification, Consolidation or Merger. At any time while this
Option remains outstanding and unexpired, in case of (i) any
reclassification or change of outstanding securities issuable upon
exercise of this Option (other than a change in par value, or from par
value to no par value per share, or from no par value per share to par
value or as a result of a subdivision or combination of outstanding
securities issuable upon the exercise of this Option), (ii) any
consolidation or merger of the Company with or into another
corporation (other than a merger with another corporation in which the
Company is a continuing corporation and which does not result in any
reclassification or change, other than a change in par value, or from
par value to no par value per share, or from no par value per share to
par value, or as a result of a subdivision or combination of
outstanding securities issuable upon the exercise of this Option), or
(iii) any sale or transfer to another corporation of the property of
the Company as an entirety or substantially as an entirety, the
Company, or such successor or purchasing corporation, as the case may
be, shall without payment of any additional consideration therefor,
execute a new Option providing that the holder of this Option shall
have the right to exercise such new Option (upon terms not less
favorable to the holder than those then applicable to this Option) and
to receive upon such exercise, in lieu of each share of Common Stock
theretofore issuable upon exercise of this Option, the kind and amount
of shares of stock, other securities, money or property receivable
upon such reclassification, change, consolidation, merger, sale or
transfer. Such new Option shall provide for adjustments which shall be
as nearly equivalent as may be practicable to the adjustments provided
for in this Section 1 of Schedule A. The provisions of this subsection
1(a) shall similarly apply to successive reclassifications, changes,
consolidations, mergers, sales and transfers.
(b) Subdivision or Combination of Shares. If the Company at any time while
this Option remains outstanding and unexpired, shall subdivide or
combine its Capital Stock, the Exercise Price shall be proportionately
reduced, in case of subdivision of such shares, as of the effective
date of such subdivision, or, if the Company shall take a record of
holders of its Capital Stock for the purpose of so subdividing, as of
such record date, whichever is earlier, or shall be proportionately
increased, in the case of combination of such shares, as of the
effective date of such combination, or, if the Company shall take a
record of holders of its Capital Stock for the purpose of so
combining, as of such record date, whichever is earlier.
(c) Stock Dividends. If the Company at any time while this Option is
outstanding and unexpired shall pay a dividend in shares of, or make
other distribution of shares of, its Capital Stock, then the Exercise
Price shall be adjusted, as of the date the Company shall take a
record of the holders of its Capital Stock for the purpose of
receiving such dividend or other distribution (or if no such record is
taken, as at the date of such payment or other distribution), to that
price determined by multiplying the exercise price in effect
immediately prior to such payment or other distribution by a fraction
(a) the numerator of which shall be the total number of shares of
Capital Stock outstanding immediately prior to such dividend or
distribution, and (b) the denominator of which shall be the total
number of shares of Capital Stock outstanding immediately after such
dividend or distribution. The provisions of this
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subsection 1(c) shall not apply under any of the circumstances for
which an adjustment is provided in subsection 1(a) or 1(b).
(d) Liquidating Dividends, Etc. If the Company at any time while this
Option is outstanding and unexpired makes a distribution of its assets
to the holders of its Capital Stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of
earnings or surplus legally available for dividends under applicable
law or any distribution to such holders made in respect of the sale of
all or substantially all of the Company's assets (other than under the
circumstances provided for in the foregoing subsections (a) through
(c)), the holder of this Option shall be entitled to receive upon the
exercise hereof, in addition to the shares of Common Stock receivable
upon such exercise, and without payment of any consideration other
than the exercise price, an amount in cash equal to the value of such
distribution per share of Common Stock multiplied by the number of
shares of Common Stock which, on the record date for such
distribution, are issuable upon exercise of this Option (with no
further adjustment being made following any event which causes a
subsequent adjustment in the number of shares of Common Stock issuable
upon the exercise hereof), and an appropriate provision therefor
should be made a part of any such distribution. The value of a
distribution which is paid in other than cash shall be determined in
good faith by the Board of Directors.
2. Notice of Adjustments. Whenever any of the exercise price or the number of
shares of Common Stock purchasable under the terms of this Option at that
exercise price shall be adjusted pursuant to Section 1 hereof, the Company
shall promptly make a certificate signed by its President or a Vice
President and by its Treasurer or Assistant Treasurer or its Secretary or
Assistant Secretary, setting forth in reasonable detail the event requiring
the adjustment, the amount of the adjustment, the method by which such
adjustment was calculated (including a description of the basis on which
the Company's Board of Directors made any determination hereunder), and the
exercise price and number of shares of Common Stock purchasable at that
exercise price after giving effect to such adjustment, and shall promptly
cause copies of such certificate to be mailed (by first class and postage
prepaid ) to the registered holder of this Option.
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