OPTION AGREEMENT
THIS AGREEMENT, made as of this 19th day of July 2000, between Xxxxx Xxxxxxxxxx
whose principle place of business is 000 X Xxxxxxxxx Xxxxxxxxx, Xxxxx 000,
Xxxxxxxxx Xxxxx, XX 00000 and Oak Tree Medical Systems Inc, 0000 Xxxxx Xxxxxxx
Xxxxxxxx, XX 00000 ("the Company").
W I T N E S S E T H:
WHEREAS, the Board of Directors of the Company believes that the
interests of the Company will be advanced by granting an incentive to the
Optionee by providing him with the opportunity to purchase shares of the
Company's Common Stock, par value $.01 per share ("Common Stock"), on terms
which will give him a more direct and continuing interest in the future success
of the Company's business;
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:
1. Grant of Options. Subject to all terms and conditions of this Agreement,
the Company hereby grants to the Optionee the right and option (the "Option") to
purchase all or any part of an aggregate of Two hundred and fifty thousand
(250,000) shares. The first 100,000 registered cashless options will have an
exercise price of $0.60. The next 50,000 options will have an exercise price at
$2.25 and an additional 50,000 options with an exercise price of $3.00. The
final 50,000 options will have an exercise price of $6.00 per share thus
totaling 250,000 registered cashless options.
2. Expiration. The Options may not be exercised after July 1, 2001 (the
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"Expiration Date").
3. Exercise of Option. The Option may be exercised, in whole or in part, at
any time prior to the Expiration Date or the earlier termination of the Option.
If the Option is not exercised to the maximum extent permissible, it shall be
exercisable, in whole or in part, with respect to all Shares not so purchased at
any time prior to the Expiration Date or the earlier termination of the Option.
4. Payment of Purchase Price Upon Exercise. The Option granted under this
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Agreement may be exercised in whole or in part by the Optionee's delivering or
mailing to the Company at its principal office, or such other place as the
Company may designate, written notice of exercise duly signed by the Optionee.
Such exercise shall be effective upon
(a) receipt of such written notice by the Company and (b) cashless exercise
based upon the price on the date of notice of intent to exercise such options.
5. Issuance and Delivery. The Optionee's written notice to the Company
shall state the number of Shares with respect to which the Option is being
exercised and specify a date, not less than five (5) or more than fifteen (15)
days after the date of the mailing of such notice, on which the Shares will be
taken and payment made therefore. On the date specified in the notice of
exercise, the Company shall deliver, or cause to be delivered, to the Optionee
(or his personal representative, as the case may be) stock certificates for the
number of Shares with respect to which the Option is being exercised, against
receipt of payment therefore. Certificates evidencing the Shares issued upon
exercise of the Option may contain such legends reflecting any restrictions upon
transfer of the Shares evidenced thereby as in the opinion of counsel to the
Company may be necessary for the lawful and proper issuance of such
certificates. Delivery of the Shares may be made at the office of the Company or
at the office of a transfer agent appointed for the transfer of shares of Common
Stock.
6. Transferability. The Option shall not be transferable otherwise than by
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will or by the laws of descent and distribution. The Option shall not be
subject, in whole or in part, to attachment, execution or levy of any kind.
7. No Rights as a Shareholder. Neither the Optionee nor his legal
representative shall be, nor have any of the rights or privileges of, a
shareholder of the Company in respect of any of the Shares, unless and until
certificates representing such Shares shall have been issued and delivered to
the Optionee (or his legal representative).
8. Adjustment. (a) In case, prior to the expiration of the Option by
exercise or by its terms, the Company shall issue any shares of its Common Stock
as a stock dividend or subdivide the number of outstanding shares of Common
Stock into a greater number of shares, then, in either of such cases, the
purchase price per share of the Shares issuable upon exercise of the Option in
effect at the time of such action shall be proportionately reduced and the
number of Shares at that time purchasable pursuant to the Option shall be
proportionately increased; and conversely, in the event the Company shall
contract the number of outstanding shares of Common Stock by combining such
shares into a smaller number of shares, then, in such case, the purchase price
per share of the Shares issuable upon exercise of the Option in effect at the
time of such action shall be proportionately increased and the number of Shares
at that time purchasable pursuant to Option shall be proportionately decreased.
Any dividend paid or distributed upon the Common Stock in stock of any other
class of securities convertible into shares of Common Stock shall be treated as
a dividend paid in Common Stock to the extent that shares of Common Stock are
issuable upon the conversion thereof.
(b) In case, prior to the expiration of this Option by exercise or by
its terms, there shall be a recapitalization, whether by reorganization,
reclassification or otherwise of the capital of the Company, or the Company or a
successor corporation shall be consolidated or merge with or convey all or
substantially all of its or of any successor corporation's property and assets
to any other corporation or corporations (any such corporation being included
within the meaning of the term "successor corporation" in the event of any
consolidation or merger of any such corporation with, or the sale of all or
substantially all of the property of any such corporation to, another
corporation or corporations), in exchange for stock or securities of a successor
corporation, the Optionee shall thereafter have the right to purchase upon the
terms and conditions and during the time specified in this Option, in lieu of
the Shares theretofore purchasable upon the exercise of this Option, the kind
and amount of shares of stock and other securities receivable upon such
recapitalization or consolidation, merger or conveyance by a holder of the
number of shares of Common Stock which the Optionee might have purchased
immediately prior to such recapitalization or consolidation, merger or
conveyance.
9. Sale of the Company. (a) Notwithstanding any provision in this
Agreement to the contrary, in the event of a Sale of the Company (as defined in
paragraph (b) below), the Option, at the election of the Company, shall be
terminated and the Optionee shall receive an amount in cash equal to the
difference between the purchase price in effect at the time of such Sale of the
Company and the Fair Market Value (as defined in paragraph (b) below) of the
Shares subject to the then remaining unexercised portion of the Option.
(b) For purposes of this Section 9 the following terms shall have
the indicated meanings:
(i) "Sale of the Company" means a Change of Control of the
Company (as defined in clause (ii) below) or a sale of all or substantially all
of the assets of the Company in a single transaction or a series of related
transactions.
(ii) "Fair Market Value" per share on any given date means the
average of the closing prices of the sales of the Common Stock on all securities
exchanges on which such stock may at the time be listed, or, if there have been
no sales on any such exchange on any day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on any
day the Common Stock is not so listed, the average of the representative bid and
asked prices quoted on the NASDAQ Stock Market as of 4:00 P.M., New York time,
or, if on any day the Common Stock is not quoted on the NASDAQ Stock Market, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization. If at any time the Common
Stock is not listed or quoted, the Fair Market Value per share shall be
determined by the Board of Directors of the Company in good faith based on such
factors as the members thereof, in the exercise of their business judgment,
consider relevant.
10. Compliance with Law and Regulations. The Option and the obligation of
the Company to sell and deliver Shares hereunder shall be subject to all
applicable federal and state laws, rules and regulations and to such approvals
by any governmental or regulatory agency as may be required. The Company shall
not be required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock exchange on which the Common Stock may then
be listed and (ii) the completion of any registration or qualification of such
Shares under any federal or state law, or any rule or regulation of any
government body which the Board of Directors of the Company shall, in its sole
discretion, determine to be necessary or advisable. Moreover, the Option may not
be exercised if its exercise or the receipt of Shares pursuant thereto, would be
contrary to applicable law.
11. Investment Representation. The Board of Directors of the Company may
require the Optionee to furnish to the Company, prior to the issuance of any
Shares upon the exercise of any Option, an agreement (in such form as the Board
of Directors may specify) in which the Optionee represents that the Shares
acquired by the Optionee upon exercise are being acquired for investment and not
with a view to the sale or distribution thereof.
12. Continued Services. Neither this Agreement nor any Option granted
hereunder shall confer upon the Optionee any right to continue to render
services to the Company or any subsidiary of the Company, or limit in any
respect the right of the Company, the Board of Directors of the Company, or any
subsidiary of the Company to terminate the services of the Optionee at any time.
13. Notices. Any notice hereunder to the Company shall be addressed to it
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at its offices. Attention Xxxxx Xxxxxxx, 0000 Xxxxx Xxxxxxx Xxxxxxxx, XX 00000
14. Governing Law. This Agreement shall be interpreted, and the rights and
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liabilities of the parties hereto determined, in accordance with the internal
laws of the State of New York, without regard to the conflicts of law principles
thereof.
15. Counterparts. This Agreement may be executed in two counterparts each
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of which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the undersigned have signed this Agreement as of
the date and year first above written.
Oak Tree Medical Systems, Inc. Xxxxx Xxxxxxxxxx
By: /s/ Xxxxx Xxxxxxx By: /s/ Xxxxx Xxxxxxxxxx
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Xxxxx Xxxxxxx, CFO Xxxxx Xxxxxxxxxx
