STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT is made and entered into this 7th day of May,
2004 by and between Critical Home Care, Inc., a Nevada corporation (the
"Company") and Xxxxxxxx Xxxxxxx ("Executive").
W I T N E S E T H :
WHEREAS, Executive is a key employee of the Company;
WHEREAS, the Board of Directors ("Board") of the Company believes it is in
the best interests of Company and its shareholders to grant Executive options to
acquire voting common stock of the Company pursuant to and in accordance with
the terms of this Agreement;
NOW, THEREFORE, in consideration of the above premises, Company and
Executive agree as follows:
1. Grant of Stock Options. Subject to the terms and conditions set forth in
this Agreement, Executive is hereby granted six (6) separate stock options
("Option" or "Options") to acquire up to four million (4,000,000) shares
("Option Shares") of Company voting common stock as set forth below.
Number of Shares Subject to the Option
Option #1 500,000
Option #2 500,000
Option #3 500,000
Option #4 500,000
Option #5 1,000,000
Option #6 1,000,000
2. Exercise Price. The exercise price ("Exercise Price") under each Option
shall be $.25 per Option Share.
3. Vesting of Options. The Options may not be exercised until such time
that the Options become vested. Except as otherwise provided herein, the Options
shall vest, and be exercisable by Executive, as follows ("Vesting Date"):
Option #1 If the Company's Adjusted EBITDA (as hereinafter defined) for
fiscal year 2006 is equal to or exceeds Ten Million Seven
Hundred Thousand ($10,700,000) Dollars, then Option #1 shall
immediately vest in its entirety.
Option #2 If the Company's Adjusted EBITDA for fiscal year 2006 is equal
to or exceeds Eleven Million ($11,000,000) Dollars, then Option
#2 shall immediately vest in its entirety.
Option #3 If the Company's Adjusted EBITDA for fiscal year 2007 is equal
to or exceeds Thirteen Million Five Hundred Thousand
($13,500,000) Dollars, then Option #3 shall immediately vest in
its entirety.
Option #4 If the Company's Adjusted EBITDA for fiscal year 2007 is equal
to or exceeds Fourteen Million ($14,000,000) Dollars, then
Option #4 shall immediately vest in its entirety.
Option #5 If the Company's Adjusted EBITDA for fiscal year 2008 is equal
to or exceeds Seventeen Million Five Hundred Thousand
($17,500,000) Dollars, then Option #5 shall immediately vest in
its entirety.
Option #6 If the Company's EBITDA for fiscal year 2008 is equal to or
exceeds Eighteen Million Five Hundred Thousand ($18,500,000)
Dollars, then Option #6 shall immediately vest in its entirety.
Notwithstanding the foregoing, all unvested Options (that have otherwise been
terminated under Section 6(b)) shall immediately vest and be fully exercisable
by Executive if (a) Executive's employment with the Company is terminated by the
Company for any reason other than For Cause (as defined in the Employment
Agreement between the Company and Executive, "Employment Agreement); (b)
Executive terminates his employment with the Company for Good Reason (as defined
herein); or (c) the Company undergoes a Change of Control (as defined in the
Company's 2002 Stock Option Plan). For this purpose, Good Reason means (i) the
removal of Executive, without his consent, from any positions or offices held by
Executive or the failure of Executive to be elected to the Board of Directors or
the assignment to Executive, without his consent, of any duties or
responsibilities that are inconsistent in any material and negative respect with
his positions in the Corporation; or (ii) any material breach of this Agreement
by the Corporation that is not cured within thirty (30) days after receipt of
written notice from the Executive, which shall include, without limitation, any
reduction in the Executive's Base Salary.
4. Exercise of Options. Except as otherwise provided in this Agreement,
Executive may exercise a vested Option with respect to all or part of the Option
Shares subject to such Option as follows:
(a) As long as Executive is employed by the Company, then Executive may
exercise a vested Option any time following the Vesting Date for such
Option;
(b) If Executive's employment with the Company is terminated for any
reason, then Executive (or the personal representative of his estate)
may exercise a vested Option at any time during the one (1) year
period following the date of Executive's termination of employment.
Executive (or the personal representative of his estate) shall exercise an
Option by delivering written notice of such exercise ("Exercise Notice") to the
Board. The Exercise Notice shall specify the Option being exercised and the
number of Option Shares being purchased, and shall be accompanied with payment
in full for the Option Shares being acquired.
5. Adjusted EBITDA. For purposes of this Agreement, the term "Adjusted
EBITDA" means the Company's earnings before interest, taxes, depreciation and
amortization (including any write down of goodwill) as determined by the
Company's independent certified public account using generally accepted
accounting principles, plus the amount of compensation expense deducted by the
Company on account of the issuance of any stock (including restricted stock) or
the issuance or exercise of any stock options (including the Options), warrants
or similar instruments that can be converted into common stock of the Company.
6. Termination of Options.
(a) Vested Options shall terminate and expire if Executive (or the
personal representative of his estate) fails to timely exercise such
vested Options as provided under this Agreement;
(b) Unvested Options shall terminate and expire as follows:
(i) If the Company fails to achieve the EBIDTA target set forth in
Section 3 above with respect to such Option;
(ii) If Executive voluntarily terminates his employment with the
Company for any reason other than for Good Reason; or
(iii)If Executive's employment with the Company is terminated by the
Company for Cause (as defined in the Employment Agreement).
7. Changes in Capitalization. Subject to any required action by the
stockholders of the Company, the number of Option Shares covered by the Options,
as well as the Exercise Price, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Stock of the Company
resulting from a stock split, reverse stock split, stock dividend, combination,
recapitalization or reclassification of the Stock, or any other increase or
decrease in the number of issued shares of Stock effected without receipt of
consideration by the Company. Such adjustment shall be made in good faith by the
Board, whose determination in that respect shall be final, binding and
conclusive.
8. Withholding. As a condition to the exercise of an Option, Executive
shall remit to the Company such payment as requested by the Company in order to
allow the Company to remit all federal, state and local withholding taxes
required with respect to the exercise of the Option. The Executive hereby
further agrees that the Company may, at its option, deduct from his salary,
bonus and/or any other payment of any kind due to the Executive, the amount of
any federal, state or local taxes required by law to be withheld with respect to
the exercise of the Option.
9. Registration of Option Shares. Company agrees to use its best efforts to
file and cause to become effective within six (6) months following Executive's
exercise of an Option registration statements under the Securities Act of 1933
registering the Option Shares acquired by Executive for public resale.
10. Counterparts. This Agreement may be executed in one or more
counterparts, each counterpart of which will be regarded for all purposes as an
original.
11. Governing Law. This Agreement, including the validity hereof and the
rights and obligations of the parties hereunder and all amendments and
supplements hereof and all waivers and consents hereunder, shall be construed in
accordance with and governed by the domestic substantive laws of the State of
Florida without giving effect to any choice of law or conflicts of law provision
or rule that would cause the application of the domestic substantive laws of any
other jurisdiction.
12. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes any
and all other previous or contemporaneous communications, representations,
understandings, agreements, negotiations and discussions, either oral or
written, between the parties. There are no oral or other agreements
representations or understandings of the parties not expressly set forth herein.
13. Amendment of Agreement. This Agreement may be altered or amended in any
of its provisions only by the mutual written agreement of the Executive and an
officer duly appointed by resolution of the Board.
14. Waiver. The waiver of a breach of any provision of this Agreement by
any party shall not operate or be construed as a waiver of any subsequent
breach. Each and every right, remedy and power granted herein to any party or
allowed by law or equity shall be cumulative and not exclusive of any other.
15. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
16. Interpretation of Agreement. Where appropriate in this Agreement, words
used in the singular shall include the plural, and words used in the masculine
shall include the feminine and neuter. All headings which are used in this
Agreement are for the convenience of the reader only and shall not be used to
limit or construe any of the provisions hereof.
The parties hereto have executed this Agreement on the date first written
above.
"COMPANY"
CRITICAL HOME CARE, INC., a Nevada corporation
By:/s/ Xxxxx Xxxxxx
-------------------
Xxxxx Xxxxxx
Its:President
"EXECUTIVE"
/s/Xxxxxxxx Xxxxxxx
_____________________________________________________
Xxxxxxxx Xxxxxxx
