STOCK OPTION AGREEMENT dated as of May 6, 2005 between New York Health Care,
Inc., a New York corporation (the "Company"), and Xxxxxx X. X'Xxxxxxx
("Optionee").
Recital
The Company desires to grant to Optionee an non-qualified Stock Option (the
"Option") to purchase 100,000 shares ("Option Shares") of the Company's common
stock, par value $.01 per share (the "Stock"), upon the terms provided for in
this Agreement.
Accordingly, in consideration of the mutual covenants hereinafter set forth and
for other good and valuable consideration, the sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. In recognition for Optionee's valuable service to the Company as its
Chief Executive Officer and President and Chief Executive Officer of its
subsidiary, the BioBalance Corporation, the Compensation Committee of the
Company's Board of Directors (the "Committee") has granted the Option to
Optionee, effective as of the date of this Agreement, to purchase at any time
commencing on the date of this Agreement, all or any of the Option Shares at an
exercise price of $0.80 per share. The Option is intended to be a non-qualified
stock option, i.e., the Option is not intended to be, nor is it, an incentive
stock option as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
2. The Option and all rights of the Optionee hereunder shall terminate on
May 6, 2015 subject to earlier termination as provided in paragraph 5 hereof
(the "Expiration Date"). On or prior to the Expiration Date, the Option shall be
exercisable subject to the following terms:
(a) Optionee may exercise the Option with respect to all or any part
of the Option Shares by giving the Company written notice of such exercise, as
provided in paragraph 4 hereof. Such notice shall specify the number of shares
as to which the Option is being exercised and shall be accompanied by payment in
full in cash of an amount equal to the exercise price per Option Share
multiplied by the number of Option Shares as to which the Option is being
exercised. Payment of the exercise price of such Option Shares may also be made
by the Company, at its option, retaining from the Option Shares to be delivered
upon exercise of the Option that number of Option Shares having a fair market
value on the date of exercise (a s determined by Board of Directors or
Committee) equal to the exercise price of the number of Option Shares as to
which the Optionee exercises the Option or, subject to the requirements of
Regulation T (as in effect from time to time) under the Securities Exchange Act
of 1934, as amended , by giving irrevocable instructions to a stockbroker to
promptly deliver to the Company full payment for the Option Shares with respect
to which the Option is exercised from the proceeds of the stockbroker's sale of
or loan against such Option Shares.
(b) As soon as practicable after receipt of the notice of exercise
and payment of the exercise price for the number of Option Shares specified in
such notice of exercise, the Company shall deliver to the Optionee at the
principal office of the Company or at such other place as may be mutually
acceptable to the Company and the Optionee, a certificate or certificates for
such shares; provided, however, that the time of such delivery may be postponed
by the Company for such period of time as the Company may require to comply with
any law or regulation applicable to the issuance or transfer of shares. If the
Optionee fails for any reason to accept delivery of all or any of the number of
Option Shares specified in such notice of exercise upon tender of delivery
thereof, his right to purchase such undelivered Option Shares may be terminated
by the Company by notice in writing to the Optionee and refund of any payment of
the exercise price.
(c) Prior to or concurrently with delivery by the Company to the
Optionee of a certificate(s) representing such shares, the Optionee shall (i)
upon notification of the amount due, pay promptly any amount necessary to
satisfy applicable federal, state or local tax requirements, and (ii) if such
shares are not then registered under the Securities Act of 1933, sign and
deliver to the Company an investment letter confirming that such shares are
being purchased for investment and not with a view to the distribution thereof,
and the Optionee shall give such other assurances and take such other action as
the Company shall require to secure compliance with any federal or state
securities law applicable to the issuance of the Option Shares; provided that
the out-of-pocket expense of such compliance shall be borne by the Company,
other than fees of Optionee's counsel and advisors
4. Any notice to the Company provided for in the Option shall be addressed
to the Company at its principal office, in care of its Secretary, with a
separate copy addressed to the Company's Chief Financial Officer, and any notice
to the Optionee shall be addressed to him at his address now on file with the
Company, or to such other address as either may last have designated to the
other by notice as provided herein. Any notice so addressed shall be deemed to
be given on the fourth business day after mailing, by registered or certified
mail, return receipt requested, at a post office or branch post office within
the United States.
5. This Option shall terminate in the event of a termination of employment
or death of the Optionee as follows:
(a) If the Optionee's employment with the Company is terminated
voluntarily by the Optionee, or for cause, then this Option shall expire
forthwith. Except as provided in Subsections (b) and (c) below, if such
employment shall terminate for any other reason, then the Option may be
exercised at any time within three months after such termination, subject to the
provisions of subparagraph (d) below.
(b) If the Optionee dies while employed by the Company or within
three months after the termination of his employment other than voluntarily by
the Optionee or for cause, then and in that event the Option, subject to the
provisions of subparagraph (d) below, may be exercised by the estate of the
Optionee or by a person who acquired the right to exercise this Option by
bequest or inheritance or by reason of the death of the Optionee, at any time
within one year after such death.
(c) If the Optionee ceases employment with the Company because of
permanent and total disability (within the meaning of Section 22(e)(3) of the
Code) while employed by the Company, then this Option, subject to the provisions
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of subparagraph (d) below, may be exercised at any time within one year after
such termination of employment due to disability.
(d) This Option may not be exercised in the event of termination of
employment of the Optionee, except to the extent that the Optionee was entitled
to exercise this Option at the time of such termination or death, and in any
event may not be exercised after the expiration of this Option.
(e) For the purposes of this paragraph, the employment relationship
of the Optionee with the Company will be treated as continuing intact while the
Optionee is on sick leave or other bona fide leave of absence, if such leave
does not exceed 90 days or, if longer, so long as the Optionee's right to
re-employment is guaranteed either by statute or by contract. A leave of absence
or an interruption in service authorized by the Board of Directors of the
Company shall not be deemed an interruption of employment.
6. In the event of any change in the Company's Common Stock subject to the
Option, by reason of any stock dividend, split-up, merger, consolidation, or
exchange of shares, spin-off, liquidation or the like, such adjustment shall be
made in the number of shares subject to the option and the price per share as
the Committee or the Board of Directors shall, in its sole judgment, deem
appropriate to give proper effect to such event.
7. The Option is not transferable and may not be exercised by any person
other than the Optionee, except by will or by the laws of descent and
distribution. Except for transfers resulting from the death of the Optionee or
exercises by the executor or administrator or other authorized representative of
the of the estate of the Optionee , in the event of any attempt by the Optionee
to transfer, assign, pledge, hypothecate or otherwise dispose of the Option or
of any right hereunder, or in the event of the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred, the Company may
terminate the Option by notice to the Optionee and it shall thereupon become
null and void.
8. In the event that any question or controversy shall arise with respect
to the nature, scope or extent of any one or more rights conferred by the
Option, or any provision of this Agreement, including whether and when a change
of control has occurred or is about to occur, the determination in good faith by
the Board of Directors of the Company (as constituted at the time of such
determination) of the rights of the Optionee shall be conclusive, final and
binding upon the Optionee and upon any other person who shall assert any right
pursuant to this Option.
9. The Optionee shall have no rights of a stockholder with respect to the
shares covered by the Option until he or she becomes the holder of record of
such shares. All shares issued upon exercise of the Option shall be fully paid
and non-assessable.
10. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators, successors
and assigns.
11. This Agreement shall governed by and construed in accordance with the
internal substantive law of the State of New York without giving effect to the
choice of law rules
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IN WITNESS WHEREOF, the parties hereto have caused this agreement to be
executed as of the day and year first written above.
NEW YORK HEALTH CARE, INC.
By: /s/ Xxxx Xxxxxxxx
--------------------
Its Chairman (Authorized Signatory)
OPTIONEE:
/s/ Xxxxxx X. X'Xxxxxxx
-----------------------
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SUBSCRIPTION FORM
(To Be Executed Only Upon Exercise of Option)
The undersigned, holder of an option pursuant to the Incentive Stock
Option Agreement between New York Health Care, Inc. and ___________ dated as of
__________, 20__ (the "Agreement") hereby irrevocably exercises his option
thereunder to purchase the number of shares of common stock of New York Health
Care, Inc. specified below and herewith makes payment therefore, all at the
price and on the terms and conditions specified in the Agreement.
Dated:______, 20__
Number of Shares: _____
Exercise Price: $_____
Signature of Optionee:____________________
Name: ______________________________
Address:__________________________________
Social Security Number:_________________________________
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