EXHIBIT 10.19
OPTION TO ACQUIRE SHARES
OF COMMON STOCK OF NATIONAL HEALTH PARTNERS, INC.
WHEREAS, National Health Partners, Inc., an Indiana corporation (the
"Company"), and Xxxxx X. Xxxxxx ("Holder") entered into an employment
arrangement on August 15, 2005 pursuant to which the Holder agreed to be
employed by the Company in partial consideration for which the Company agreed to
grant the Holder an option to acquire shares of the Company's common stock,
$.001 par value per share ("Common Stock"); and
WHEREAS, the Company wishes to grant this option to the Holder in
satisfaction of its obligation to provide the Holder with such an option.
NOW, THEREFORE, in consideration of the foregoing, the agreement set
forth below and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound
hereby, the parties hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Holder on the date
hereof (the "Grant Date") an option (this "Option") to purchase 1,000,000 shares
("Shares") of Common Stock, on the terms and subject to the conditions set forth
herein.
2. Term of Option. This option shall have a maximum term of ten (10)
years measured from the Grant Date (the "Expiration Date") and shall accordingly
expire at 5:00 p.m. eastern standard time on the Expiration Date.
3. Right to Exercise. This Option may be exercised in whole or in part
in accordance with the following schedule:
(i) 250,000 shares on or after February 1, 2006;
(ii) 250,000 shares on or after February 1, 2007;
(iii) 250,000 shares on or after February 1, 2008; and
(iv) 250,000 shares on or after February 1, 2009.
4. Exercise Price. The exercise price per Share ("Exercise Price") at
which this Option may be exercised shall be forty cents ($.40) per Share.
5. Method of Exercise.
(a) This Option shall be exercised by execution and delivery
of the Notice of Exercise attached hereto as Appendix A ("Notice of Exercise")
or any other written notice approved for such purpose by the Company that shall
state the election of the Holder to exercise this Option, the number of Shares
in respect of which this Option is being exercised, and such other
representations and agreements as to the holder's investment intent with respect
to such Shares as may be required by the Company. The Notice of Exercise shall
be accompanied by payment of the Exercise Price. This Option shall be deemed to
be exercised upon receipt by the Company of the Notice of Exercise accompanied
by payment of the Exercise Price.
(b) No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and such exercise shall comply with all relevant
provisions of applicable law, including the requirements of any stock exchange
upon which the Shares may then be listed. Assuming such compliance, for income
tax purposes the Shares shall be considered transferred to the Holder on the
date on which this Option is exercised with respect to such Shares.
(c) This Option may not be exercised for a fractional Share or
scrip representing a fractional Share. In lieu of any fractional Share to which
the Holder would otherwise be entitled, the Company shall make a cash payment
equal to the Exercise Price multiplied by such fraction.
(d) In no event may this Option be exercised after the
Expiration Date.
6. Methods of Payment. Shares of Common Stock purchased upon the
exercise of this Option may be paid for as follows:
(a) in cash or by check, payable to the order of the Company;
(b) if the shares of Common Stock underlying the Option are
registered under the Securities Act of 1933, as amended (the "Securities Act"),
by: (i) delivery by the Holder to the Company of an irrevocable and
unconditional undertaking by a creditworthy broker to deliver promptly to the
Company sufficient funds to pay the exercise price and any required tax
withholding, or (ii) delivery by the Holder to the Company of a copy of
irrevocable and unconditional instructions to a creditworthy broker to deliver
promptly to the Company the exercise price and any required tax withholding;
(c) if the shares of Common Stock underlying the Option are
registered under the Securities Act, by delivery of such shares of Common Stock
owned by the Holder valued at their Fair Market Value (as defined below),
provided: (i) such method of payment is then permitted under applicable law,
(ii) such shares of Common Stock have been owned by the Holder at least six
months prior to the date of such delivery, and (iii) such shares of Common Stock
are not subject to any repurchase, forfeiture, unfulfilled vesting or other
similar requirements or restrictions;
(d) by reducing the number of shares of Common Stock otherwise
issuable under this Option to the Holder upon the exercise of this Option by a
number of shares of Common Stock having a Fair Market Value equal to such
aggregated exercise price; provided, however, that such method of payment is
then permitted under applicable law;
(e) to the extent permitted by applicable law and by the board
of directors of the Company (the "Board"), in its sole discretion, by: (i)
delivery of a promissory note of the Holder to the Company on terms determined
by the Board, or (ii) payment of such other lawful consideration as the Board
may determine; or
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(f) by any combination of the above permitted forms of
payment.
For the purpose of this Agreement, "Fair Market Value" shall mean:
(i) If the Common Stock is admitted to quotation on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ"), the Fair Market Value on any given date shall be the average of the
highest bid and lowest ask prices of the Common Stock as reported for such date
or, if no bid and ask prices were reported for such date, for the last day
preceding such date for which such prices were reported;
(ii) If the Common Stock is admitted to trading on a
United States national securities exchange or the NASDAQ National Market System,
the Fair Market Value on any given date shall be the closing price reported for
the Common Stock on such exchange or system for such date or, if no sales were
reported for such date, for the last day preceding such date for which a sale
was reported;
(iii) If the Common Stock is traded in the
over-the-counter market and not on NASDAQ, the NASDAQ National Market System or
any United States national securities exchange, the Fair Market Value on any
given date shall be the average of the mean between the last bid and ask prices
per share as reported by the National Quotation Bureau, Inc. or an equivalent
generally accepted reporting service for such date or, or if not so reported,
the average of the closing bid and ask prices of the Common Stock for such date
as furnished to the Company by any member of the National Association of
Securities Dealers, Inc. selected by the Company for that purpose; or
(iv) If the Fair Market Value of the Common Stock
cannot be determined on the basis previously set forth in this definition on the
date that the Fair Market Value is to be determined, the Board shall in good
faith determine the Fair Market Value of the Common Stock on such date.
The delivery of certificates representing the shares of Common Stock to
be purchased pursuant to the exercise of this Option will be contingent upon
receipt from the Holder (or a purchaser acting in his stead in accordance with
the provisions of this Option) by the Company of the full purchase price for the
Shares and the fulfillment of any other requirements contained in this Option or
imposed by applicable law.
7. Rights of Stockholder. The Holder shall not have any stockholder
rights with respect to any Shares until such Holder shall have exercised this
Option, paid the Exercise Price and become a holder of record of the purchased
Shares.
8. Adjustment of Exercise Price and Number of Shares. The number and
kind of securities purchasable upon exercise of this Option and the Exercise
Price shall be subject to adjustment from time to time as follows:
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(a) Subdivisions, Combinations and Other Issuances. If the
Company shall at any time prior to the expiration of this Option subdivide its
Common Stock, by split-up or otherwise, or combine its Common Stock, or issue
additional shares of its Common Stock or any preferred stock as a dividend with
respect to any shares of its Common Stock, then the number of Shares issuable on
the exercise of this Option shall forthwith be proportionately increased in the
case of a subdivision or stock dividend, or proportionately decreased in the
case of a combination. Appropriate adjustments shall also be made to the
Exercise Price, but the aggregate purchase price payable for the total number of
Shares purchasable under this Option (as adjusted) shall remain the same. Any
adjustment under this Section 8(a) shall become effective at the close of
business on the date the subdivision or combination becomes effective, or as of
the record date of such dividend, or in the event that no record date is fixed,
upon the making of such dividend.
(b) Reclassification, Reorganization and Consolidation. In the
case of any reclassification, capital reorganization or change in the Common
Stock of the Company (other than as a result of a subdivision, combination or
stock dividend provided for in Section 8(a) above), then, as a condition of such
reclassification, reorganization or change, lawful provision shall be made, and
duly executed documents evidencing the same from the Company or its successor
shall be delivered to the Holder, so that the Holder shall have the right at any
time prior to the expiration of this Option to purchase, at a total price equal
to that payable upon the exercise of this Option, the kind and amount of shares
of stock and other securities and property receivable in connection with such
reclassification, reorganization or change by a holder of the same number of
shares of Common Stock as were purchasable by the Holder immediately prior to
such reclassification, reorganization or change. In any such case, appropriate
provisions shall be made with respect to the rights and interest of the Holder
so that the provisions hereof shall thereafter be applicable with respect to any
shares of stock or other securities and property deliverable upon exercise
hereof, and appropriate adjustments shall be made to the Exercise Price payable
hereunder, provided the aggregate purchase price shall remain the same.
(c) Notice of Adjustment. When any adjustment is required to
be made in the number or kind of shares purchasable upon exercise of this Option
or in the Exercise Price, the Company shall promptly notify the Holder of such
event and of the number of shares of Common Stock or other securities or
property thereafter purchasable upon exercise of this Option.
(d) No Impairment. The Company and the Holder will not, by any
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company or the Holder,
respectively, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 8 and in the taking of all such action as may
be necessary or appropriate in order to protect the rights or the Company and
the Holder against impairment.
9. Termination of Option.
(a) Termination by Death. If Xxxxxx's employment by, or other
relationship with, the Company terminates by reason of death, this Option may
thereafter be exercised, in whole or in part to the extent exercisable on the
date of such termination of employment, by the legal representative or legatee
of the Holder until the earlier of the date that is 90 days after the date of
such termination of employment or the Expiration Date.
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(b) Termination by Reason of Disability or Retirement.
(i) Disability. If Xxxxxx's employment by, or other
relationship with, the Company terminates by reason of disability as set forth
in Section 22(e)(3) of the Internal Revenue Code ("Disability"), this Option may
thereafter be exercised, in whole or in part to the extent exercisable on the
date of such termination of employment, until the earlier of the date that is 90
days after the date of such termination of employment or the Expiration Date.
(ii) Retirement. If Xxxxxx retires in good standing
from active employment or service with the Company in accordance with the
retirement policies of the Company then in effect ("Retirement"), this Option
may thereafter be exercised, in whole or in part to the extent exercisable on
the date of such termination of employment, until the earlier of the date that
is 90 days after the date of such termination of employment or the Expiration
Date.
(iii) Disability and Retirement Determination. The
Board shall have sole authority and discretion to determine whether the Holder's
employment or services has been terminated by reason of Disability or
Retirement.
(c) Termination for Cause. If the Holder's employment by, or
other relationship with, the Company terminates for "Cause," this Option shall
immediately terminate and be of no further force and effect; provided, however,
that the Board may, in its sole discretion, provide that this Option may be
exercised until the earlier of the date that is 90 days after the date of such
termination of employment or the Expiration Date.
Termination for "Cause" shall mean and be limited to the following
conduct of the Holder: (i) Intentional misconduct as an employee of the Company,
including but not limited to any intentional misappropriation of funds or
property of the Company, any intentional attempt to obtain any personal profit
from any transaction in which the Holder has an interest that is materially
adverse to the Company, any intentional breach of the duty of care or loyalty
owed by the Holder to the Company, or any other intentional act or intentional
omission of the Holder that substantially impairs the Company's ability to
conduct its ordinary business in its usual manner; (ii) Material neglect or
refusal to perform Xxxxxx's duties as an employee of the Company if not
reasonably cured within two (2) weeks after receiving notice thereof; (iii)
Conviction of a felony or plea of guilty or nolo contendere to a felony; (iv)
Intentional acts of dishonesty by the Holder as an employee of the Company
having a material adverse effect on the Company, including any intentional act
or intentional omission that subjects the Company to public scandal or ridicule,
or that causes the Company to be sanctioned by a governmental authority as a
result of a violation of governmental regulations; and (v) Intentional
disclosure or use of material confidential information of the Company, other
than as specifically authorized and required in the performance of Xxxxxx's
duties as an employee of the Company, having a material adverse effect on the
Company.
(d) Other Termination. If the Holder's employment by, or other
relationship with, the Company terminates for any reason other than death,
Disability, Retirement or for Cause, this Option may thereafter be exercised, in
whole or in part to the extent exercisable on the date of such termination of
employment, until the earlier of the date that is 90 days after the date of such
termination of employment (unless otherwise extended by the Board to a later
date) or the Expiration Date.
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(e) Transfer and Leave of Absence. For purposes of this
Option, the following events shall not be deemed a termination of employment:
(i) a transfer of employment between any of the Company, a parent, a subsidiary
or any other affiliate of the Company, and (ii) an approved leave of absence for
military service or sickness, or for any other purpose approved by the Board, if
the Holder's right to re-employment is guaranteed by a statute, by contract or
under the policy pursuant to which the leave of absence was granted, or if the
Board otherwise so provides in writing.
10. Investment Intent.
(a) The Holder of this Option, by acceptance hereof,
acknowledges that this Option and the Shares to be issued upon exercise hereof
(collectively, the "Securities") are being acquired for the Holder's own account
for investment purposes only and not with a view to, or with any present
intention of, distributing or reselling any of such Securities. The Holder
acknowledges and agrees that the Securities have not been registered under the
Securities Act or under any state securities laws, and that the Securities may
not be, directly or indirectly, sold, transferred, offered for sale, pledged,
hypothecated or otherwise disposed of without registration under the Securities
Act and registration or qualification under applicable state securities laws,
except pursuant to an available exemption from such registration. The Holder
also acknowledges and agrees that neither the Securities Exchange Commission
("SEC") nor any securities commission or other governmental authority has: (i)
approved the transfer of the Securities or passed upon or endorsed the merits of
the transfer of the Securities; or (ii) confirmed the accuracy of, determined
the adequacy of, or reviewed this Option. The Holder has such knowledge,
sophistication and experience in financial, tax and business matters in general,
and investments in securities in particular, that it is capable of evaluating
the merits and risks of this investment in the Securities, and the Holder has
made such investigations in connection herewith as it deemed necessary or
desirable so as to make an informed investment decision without relying upon the
Company for legal or tax advice related to this investment.
(b) The certificates evidencing any Shares issued upon the
exercise of this Option shall have endorsed thereon (except to the extent that
the restrictions described in any such legend are no longer applicable) the
following legend, appropriate notations thereof will be made in the Company's
stock transfer books, and stop transfer instructions reflecting these
restrictions on transfer will be placed with the transfer agent of the Shares.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO REGISTRATION
UNDER THE SECURITIES ACT AND REGISTRATION OR QUALIFICATION UNDER
APPLICABLE STATE SECURITIES LAWS, OR PURSUANT TO AN AVAILABLE EXEMPTION
THEREFROM. NO TRANSFER OF THE SECURITIES REPRESENTED HEREBY MAY BE MADE
IN THE ABSENCE OF SUCH REGISTRATION OR QUALIFICATION UNLESS THERE SHALL
HAVE BEEN DELIVERED TO THE ISSUER A WRITTEN OPINION OF UNITED STATES
COUNSEL OF RECOGNIZED STANDING, IN FORM AND SUBSTANCE SATISFACTORY TO
THE ISSUER, TO THE EFFECT THAT SUCH TRANSFER MAY BE MADE WITHOUT
REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT AND
REGISTRATION OR QUALIFICATION UNDER APPLICABLE STATE SECURITIES LAWS.
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11. Covenants of the Company. The Company covenants and agrees that the
Shares have been duly authorized and, when issued and paid for in accordance
with the terms of this Agreement, will be validly issued, fully paid and
non-assessable shares of Common Stock with no personal liability resulting
solely from the ownership of such shares and will be free and clear of all
liens, charges, restrictions, claims and encumbrances imposed by or through the
Company.
12. Replacement of Option. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Option and, in the case of loss, theft or destruction, on delivery of an
indemnity agreement reasonably satisfactory in form and substance to the Company
or, in the case of mutilation, on surrender and cancellation of this Option, the
Company at its expense shall execute and deliver, in lieu of this Option, a new
Option of like tenor and amount.
13. Notices. All notices hereunder shall be sufficiently given for all
purposes hereunder if in writing and delivered personally, sent by documented
overnight delivery service or, to the extent receipt is confirmed, telecopy,
telefax or other electronic transmission service to the appropriate address or
number as set forth below:
If to the Company:
------------------
National Health Partners, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
If to the Holder:
-----------------
To the address specified for Holder in the Company's
records.
14. Amendment and Waiver. This Option may not be amended, modified or
supplemented except by an instrument or instruments in writing signed by the
party against whom enforcement of any such amendment, modification or supplement
is sought. The parties hereto entitled to the benefits of a term or provision
may waive compliance with any obligation, covenant, agreement or condition
contained herein. Any agreement on the part of a party to any such waiver shall
be valid only if set forth in an instrument or instruments in writing signed by
the party against whom enforcement of any such waiver is sought. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty, covenant or agreement contained
herein.
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15. Headings; Definitions. The section headings contained in this
Option are inserted for convenience of reference only and will not affect the
meaning or interpretation of this Option. All references to sections contained
herein mean sections of this Option unless otherwise stated. All capitalized
terms defined herein are equally applicable to both the singular and plural
forms of such terms.
16. Successors and Assigns. This Option shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, provided, however, that no party hereto may assign its rights or
delegate its obligations under this Option without the express prior written
consent of the other party hereto. Nothing in this Option is intended to confer
upon any person not a party hereto (and their successors and assigns) any
rights, remedies, obligations or liabilities under or by reason of this Option.
17. Severability. If any provision of this Option or the application
thereof to any person or circumstance is held to be invalid or unenforceable to
any extent, the remainder of this Option shall remain in full force and effect
and shall be reformed to render this Option valid and enforceable while
reflecting to the greatest extent permissible the intent of the parties.
18. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania, without regard to
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
19. Counterparts. This Agreement may be executed and delivered by
facsimile in two or more counterparts, each of which shall be deemed to be an
original, but all of which together shall constitute one and the same agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the Company and Holder have caused this Option to
be executed this 15th day of August, 2005.
National Health Partners, Inc.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------
Xxxxx X. Xxxxxxx
Chief Executive Officer
AGREED AND ACCEPTED:
By: /s/ Xxxxx X. Xxxxxx
---------------------------
Xxxxx X. Xxxxxx
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APPENDIX A
NOTICE OF EXERCISE
To: National Health Partners, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Chief Financial Officer
(1) The undersigned hereby elects to purchase _____________ shares of
Common Stock of the Company pursuant to the terms of the attached Option, and
tenders herewith payment of the purchase price for such shares in full in
accordance with the terms of the Option in the following manner (please check
one or more of the following choices):
/ / in cash or by check;
/ / an irrevocable and unconditional undertaking by a creditworthy
broker to deliver sufficient funds to pay the exercise price
and any required tax withholding;
/ / a copy of irrevocable and unconditional instructions to a
creditworthy broker to deliver the exercise price and any
required tax withholding;
/ / a promissory note;
/ / a reduction of the number of shares of Common Stock otherwise
issuable under the Option by a number of shares of Common
Stock having a Fair Market Value equal to such aggregated
exercise price; or
/ / the following consideration: _______________________________.
(2) In exercising the Option, the undersigned hereby confirms and
acknowledges that the shares of Common Stock to be issued upon conversion
thereof are being acquired solely for the account of the undersigned for
investment purposes only (unless such shares are subject to resale pursuant to
an effective registration statement or an exemption from registration under
applicable federal and state securities laws), and that the undersigned will not
offer, sell or otherwise dispose of any such shares of Common Stock except under
circumstances that will not result in a violation of the Securities Act or any
state securities laws.
(3) Terms not otherwise defined in this Notice of Exercise shall have
the meanings ascribed to such terms in the attached Option.
(4) Please issue a certificate or certificates representing said shares
of Common Stock in the name of the undersigned.
__________________________
__________________________ __________________________
(Date) (Signature)
