Stock Option Agreement ("Agreement") is made and
entered into as of the date set forth below, by and between HEARTLAND,
INC., a Maryland corporation (the "Company"), and
Terry Lee ("Optionee")
consideration of the covenants herein set forth, the parties hereto agree as
2. Acknowledgements. The
Board has authorized the granting to Optionee of a stock option
("Option") to purchase shares of common stock of the Company
("Stock") upon the terms and conditions hereinafter stated and
pursuant to an exemption from registration under the Securities Act of 1933,
amended (the "Securities Act") provided by Section 4(2)
Price. Company hereby grants to Optionee the right to purchase,
upon and subject to the terms and conditions herein stated, the number of shares
of Stock set forth in Section 1(c) above (the "Shares") for
cash (or on a cashless basis) at the price per Share set forth in
Section 1(d) above (the "Exercise Price"); which vest quarterly
on a pro-rata basis over a period of five years commencing on the date
hereof. In the event that the Optionee is terminated for Cause, upon
death or disability as set forth in Section 4.2 of Employment Agreement entered
by and between the Company and Optionee dated June __, 2007 (the
“Employment Agreement”) or the Optionee terminates the
Employment Agreement, then the Option shall terminate. All shares
issued upon exercise of the Option shall be affixed with a legend stating that
they are restricted.
of Option; Continuation of Service. This Option shall expire, and
all rights hereunder to purchase the Shares shall terminate, five (5) years
the date hereof unless the Optionee is terminated for Cause pursuant to Section
4 of the Employment Agreement entered by and between the Company and Optionee
dated June 27, 2007.
5. Exercise. This
Option shall be exercised by delivery to the Company of (a) written notice
exercise stating the number of Shares being purchased (in whole shares only)
such other information set forth on the form of Notice of Exercise attached
hereto as Appendix A, (b) a check or cash in the amount of the Exercise
Price of the Shares covered by the notice (or such other consideration as has
been approved by the Board of Directors) and (c) a written investment
representation as provided for in Section 9 hereof.
Option shall not be assignable or transferable and shall be exercisable only
Optionee during his or her lifetime.
time, the Optionee may, in his sole discretion, exercise this Option in whole
in part and, in lieu of making the cash payment otherwise contemplated to be
made to the Company upon such exercise in payment of the Exercise Price, elect
instead to receive upon such exercise the "Net Number" of shares of Common
determined according to the following formula:
Number = (A x B) - (A x C)
purposes of the foregoing formula:
total number of shares with respect to which this Warrant is then being
closing sale price of the shares of common stock (as reported by Bloomberg)
the date immediately preceding the date of Notice of Exercise.
Exercise Price then in effect at the time of such exercise.
Rights as Shareholder. Optionee shall have no rights as a
shareholder with respect to the Shares covered by any installment of this Option
until the effective date of issuance of the Shares following exercise of this
Option, and no adjustment will be made for dividends or other rights for which
the record date is prior to the date such stock certificate or certificates
7. Recapitalization. Subject
to any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the Exercise Price thereof, shall be proportionately
adjusted for any increase or decrease in the number of issued shares resulting
from a subdivision or consolidation of shares.
to any required action by the shareholders of the Company, if the Company shall
be the surviving entity in any merger or consolidation, this Option thereafter
shall pertain to and apply to the securities to which a holder of Shares equal
to the Shares subject to this Option would have been entitled by reason of
merger or consolidation, and the installment provisions of Section 5 shall
continue to apply. This Option is subject to the Change of Control
provision set forth in section 1.6 of the Employment Agreement.
event of a change in the shares of the Company as presently constituted, which
is limited to a change of all of its authorized Stock without par value into
same number of shares of Stock with a par value, the shares resulting from
such change shall be deemed to be the Shares within the meaning of this
extent that the foregoing adjustments relate to shares or securities of the
Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as hereinbefore
expressly provided, Optionee shall have no rights by reason of any subdivision
or consolidation of shares of Stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock
any class, and the number and price of Shares subject to this Option shall
be affected by, and no adjustments shall be made by reason of, any dissolution,
liquidation, merger, consolidation or sale of assets or capital stock, or any
issue by the Company of shares of stock of any class or securities convertible
into shares of stock of any class.
of this Option shall not affect in any way the right or power of the Company
make adjustments, reclassifications, reorganizations or changes in its capital
or business structure or to merge, consolidate, dissolve or liquidate or to
or transfer all or any part of its business or assets.
Intent; Restrictions on Transfer.
represents and agrees that if Optionee exercises this Option in whole or in
part, Optionee will in each case acquire the Shares upon such exercise for
purpose of investment and not with a view to, or for resale in connection with,
any distribution thereof; and that upon such exercise of this Option in whole
in part, Optionee shall furnish to the Company a written statement to such
effect, satisfactory to the Company in form and substance.
further represents that Optionee has had access to the financial statements
books and records of the Company, has had the opportunity to ask questions
the Company concerning its business, operations and financial condition, and
obtain additional information reasonably necessary to verify the accuracy of
and until the Shares represented by this Option are registered under the
Securities Act, all certificates representing the Shares and any certificates
subsequently issued in substitution therefor and any certificate for any
securities issued pursuant to any stock split, share reclassification, stock
dividend or other similar capital event shall bear legends in substantially
SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES
ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS
ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD,
TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION
UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS
PURSUANT TO EXEMPTIONS THEREFROM.
SECURITIES ARE SUBJECT TO RESTRICTIONS SET FORTH IN THE EMPLOYMENT AGREEMENT
ENTERED BY AND BETWEEN THE COMPANY AND THE HOLDER DATED JUNE 27, 2007 AND
THEREFORE MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN
ABSENCE OF A LEGAL OPINION STATING THAT SUCH RESTRICTIONS SET FORTH IN SUCH
EMPLOYMENT AGREEMENT ENTERED BY AND BETWEEN THE COMPANY AND THE HOLDER DO NOT
PREVENT THE HOLDER FROM SELLING DISPOSING OF SUCH SECURITIES.
such other legend or legends as the Company and its counsel deem necessary
appropriate. Appropriate stop transfer instructions with respect to the Shares
have been placed with the Company's transfer agent.
9. Notices. Any
notice required to be given pursuant to this Option shall be in writing and
shall be deemed to be delivered upon receipt or, in the case of notices by
Company, five (5) days after deposit in the U.S. mail, postage prepaid,
addressed to Optionee at the address last provided by Optionee.
Law. This Option has been granted, executed and delivered in the
State of New York, and the interpretation and enforcement shall be governed
the laws thereof and subject to the exclusive jurisdiction of the courts
Witness Whereof, the parties hereto have executed this Option as of the
date first above written.
a Maryland corporation
hereby given pursuant to Section 5 of my Stock Option Agreement that I elect
purchase the number of shares set forth below at the exercise price set forth
my option agreement:
Option Agreement dated: ____________
"Cash Exercise" with respect to _________________ Option Shares;
"Cashless Exercise" with respect to _______________ Option
event of a Cash Exercise, a check in the amount of the aggregate price of the
shares being purchased is attached.
confirm that such shares are being acquired by me for my own account for
investment purposes, and not with a view to, or for resale in connection with,
any distribution thereof. I will not sell or dispose of my Shares in violation
of the Securities Act of 1933, as amended, or any applicable federal or state
securities laws. Further, I understand that the exemption from taxable income
the time of exercise is dependent upon my holding such stock for a period of
least one year from the date of exercise and two years from the date of grant
understand that the certificate representing the Option Shares will bear a
restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.