NON-STATUTORY STOCK OPTION AGREEMENT
THIS AGREEMENT is entered into and effective as of March 4, 1997, by
and between LifeRate Systems, Inc., a Minnesota corporation. (the "Company") and
APF, LLC, an Oregon limited liability company (the "Holder").
A. The Company, the Holder and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, M.D. have entered into
an agreement, dated the date hereof, pursuant to which, among other things such
parties have agreed to certain modifications to the "CORIS" Computer Software
Purchase Agreement, dated July 2, 1995, among such parties.
B. The Company has agreed to grant the option set forth herein in
consideration for services that Furnary has provided to the Company since July
2, 1995.
Accordingly, the parties hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Holder the right,
privilege, and option (the "Option") to purchase from the Company, at any time
on or before March 25, 2007, Five Hundred Fifty Thousand (550,000) fully paid
and nonassessable shares of the Company's Common Stock, no par value (such class
of stock being hereinafter referred to as the "Common Stock" and such shares of
Common Stock as may be acquired upon exercise hereof being hereinafter referred
to as the "Option Shares") at an exercise price equal to $2.625 per share,
subject to adjustment as provided in Section 4 ("Option Exercise Price"). The
Option is not intended to be an "incentive stock option," as that term is used
in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").
2. Exercise. The rights represented by this Option may be exercised by
the Holder, in whole or in part (but not as to a fractional share of Common
Stock), by written notice of exercise delivered to the Company at the principal
office of the Company in Minneapolis, Minnesota (Attention: Chief Executive
Officer), and upon payment to it, by cash, certified check or bank draft, of the
Option Exercise Price for such shares. In addition, the Holder may elect to pay
the full purchase price, in whole or in part, by delivery of a Broker Exercise
Notice. For purposes of this Agreement, a "Broker Exercise Notice" shall mean a
written notice from the Holder to the Company at its principal executive office
in Minneapolis, Minnesota (Attention: Chief Executive Officer), pursuant to
which the Holder irrevocably elects to exercise all or any portion of this
Option and irrevocably directs the Company to deliver the Holder's stock
certificates to be issued to the Holder upon such Option exercise directly to a
broker or dealer. A Broker Exercise Notice must be accompanied by or contain
irrevocable instructions to the broker or dealer (i) to promptly sell a
sufficient number of shares of such Common Stock or to loan the Holder a
sufficient amount of money to pay the aggregate Option Exercise Price and, if
not otherwise satisfied by the Holder, to fund any related employment and
withholding tax obligations due upon such exercise, and (ii) to promptly remit
such sums to the Company upon the broker's or dealer's receipt of the stock
certificates. Notwithstanding the foregoing, however, the Company shall not be
required to deliver any certificates for the Option Shares, except in accordance
with the provisions and subject to the limitations of Section 6 below.
3. Covenants of the Company. The Company covenants and agrees that all
Option Shares that may be issued upon the exercise of this Option will, upon
issuance, be duly authorized and issued, fully paid and nonassessable. The
Company further covenants and agrees that until expiration of this Option, the
Company will at all times have authorized, and reserved for the purpose of
issuance or transfer upon exercise of this Option, a sufficient number of shares
of Common stock to provide for the exercise of this Option.
4. Anti-Dilution Provisions; Adjustment of Option Exercise Price. The
foregoing provisions are, however, subject to the following:
(a) The Option Exercise Price shall be subject to adjustment
from time to time as hereinafter provided. Upon each adjustment of the
Option Exercise Price, the Holder of this Option shall thereafter be
entitled to purchase, at the Option Exercise Price resulting from such
adjustment, the number of shares obtained by multiplying the Option
Exercise Price in effect immediately prior to such adjustment by the
number of shares purchasable pursuant hereto immediately prior to such
adjustment and dividing the product thereof by the Option Exercise
Price resulting from such adjustment.
(b) Except as provided in this Section 4, if and whenever the
Company shall issue or sell any shares of its Common Stock for a
consideration per share less than $2.625 (the "Anti-Dilution Trigger
Price"), then, forthwith upon such issue or sale, the Option Exercise
Price shall be reduced to the price (calculated to the nearest cent)
determined by dividing (x) an amount equal to the sum of (1) the number
of shares of Common Stock outstanding immediately prior to such issue
or sale multiplied by the then existing Option Exercise Price and (2)
the consideration, if any, received by the Company upon such issue or
sale, by (y) an amount equal to the sum of (1) the number of shares of
Common Stock outstanding immediately prior to such issue or sale and
(2) the number of shares of Common Stock thus issued or sold. Solely
for purposes of (x)(1) and (y)(1) above, the term "Common Stock
outstanding" shall include those shares of Common Stock issuable upon
exercise of this Option.
(c) Notwithstanding any other provisions of this Section 4,
the Option Exercise Price shall not be adjusted in the case of issuance
by the Company of (A) shares of Common Stock issued upon exercise of
any warrants or options to purchase Common Stock outstanding on the
date hereof as listed on Schedule 1 hereto, (B) options to purchase
shares of Common Stock of the Company (including shares of Common Stock
issued upon the exercise thereof) granted or to be granted pursuant to
the Company's 1993 Stock Option Plan, as such plan is in effect on the
date hereof or as may be amended by the Board of Directors, (C) shares
of Common Stock issued upon exercise of this Option, (D) up to
2,500,000 shares of Common Stock issued within four (4) months of the
date hereof in the Company's private placement which is contemplated to
be commenced within 60 days hereafter and is expected to raise
approximately $5,000,000 or (E) shares issuable to The Atlanta
Cardiology Group, P.C. under a certain Convertible Subordinated Note in
the principal amount of $2,250,000 to be issued by the Company on or
about the date hereof.
(d) No adjustment of the Option Exercise Price, however, shall
be made in an amount less than 0.1% of the Option Exercise Price in
effect on the date of such adjustment, but any such lesser adjustment
shall be carried forward and shall be made at the time and together
with the next subsequent adjustment which, together with any such
adjustment so carried forward, shall be an amount equal to or greater
than 0.1% of the Option Exercise Price then in effect.
(e) For the purposes of this Section 4, the following
provisions (1) to (4), inclusive, shall also be applicable:
(1) In case at any time the Company shall grant
(whether directly or by assumption in a merger or otherwise)
any rights to subscribe for or to purchase, or any options for
the purchase of, (a) Common Stock or (b) any obligations or
any shares of stock or other securities of the Company which
are convertible into, or exchangeable for, Common Stock (any
of such obligations or shares of stock or other securities
being hereinafter called "Convertible Securities") whether or
not such rights or options or the right to convert or exchange
any such Convertible Securities are immediately exercisable,
and the price per share for which Common Stock is issuable
upon the exercise of such rights or options or upon conversion
or exchange of such Convertible Securities (determined by
dividing (x) the total amount, if any, received or receivable
by the Company as consideration for the granting of such
rights or options, plus the minimum aggregate amount of
additional consideration payable to the Company upon the
exercise of such rights or options, plus, in the case of such
Convertible Securities, the minimum aggregate amount of
additional consideration, if any, payable upon the issue of
such Convertible Securities and upon the conversion or
exchange thereof, by (y) the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or
options or upon the conversion or exchange of all such
Convertible Securities issuable upon the exercise of such
rights or options) shall be less than the Anti-Dilution
Trigger Price, then the total maximum number of shares of
Common Stock issuable upon the exercise of such rights or
options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the
exercise of such rights or options shall (as of the date of
granting of such rights or options) be deemed to have been
issued for such price per share. Except as provided in Section
4(h) below, no further adjustments of the Option Exercise
Price shall be made upon the actual issue of such Common Stock
or of such Convertible Securities upon exercise of such rights
or options or upon the actual issue of such Common Stock upon
conversion or exchange of such Convertible Securities.
(2) In case the Company shall issue or sell (whether
directly or by assumption in a merger or otherwise) any
Convertible Securities, whether or not the rights to exchange
or convert thereunder are immediately exercisable, and the
price per share for which Common Stock is issuable upon such
conversion or exchange (determined by dividing (x) the total
amount received or receivable by the Company as consideration
for the issue or sale of such Convertible Securities, plus the
minimum aggregate amount of additional consideration, if any,
payable to the Company upon the conversion or exchange
thereof, by (y) the total maximum number of shares of Common
Stock issuable upon the conversion or exchange of all such
Convertible Securities) shall be less than the Anti-Dilution
Trigger Price, then the total maximum number of shares of
Common Stock issuable upon conversion or exchange of all such
Convertible Securities shall (as of the date of the issue or
sale of such Convertible Securities) be deemed to be
outstanding and to have been issued for such price per share,
provided that (a) except as provided in Section 4(h) below, no
further adjustments of the Option Exercise Price shall be made
upon the actual issue of such Common Stock upon conversion or
exchange of such Convertible Securities, and (b) if any such
issue or sale of such Convertible Securities is made upon
exercise of any rights to subscribe for or to purchase or any
option to purchase any such Convertible Securities for which
adjustments of the Option Exercise Price have been or are to
be made pursuant to other provisions of this Section 4, no
further adjustment of the Option Exercise Price shall be made
by reason of such issue or sale.
(3) In case any shares of Common Stock or Convertible
Securities or any rights or options to purchase any such
Common Stock or Convertible Securities shall be issued or sold
for cash, the consideration received therefor shall be deemed
to be the amount received by the Company therefor, without
deducting therefrom any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be
issued or sold for a consideration other than cash, the amount
of the consideration other than cash received by the Company
shall be deemed to be the fair value of such consideration as
determined by the Board of Directors of the Company, without
deducting therefrom any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith. In case any shares of Common Stock or
Convertible Securities or any rights or options to purchase
such Common Stock or Convertible Securities shall be issued in
connection with any merger or consolidation in which the
Company is the surviving corporation, the amount of
consideration therefor shall be deemed to be the fair value as
determined by the Board of Directors of the Company of such
portion of the assets and business of the non-surviving
corporation or corporations as such Board shall determine to
be attributable to such Common Stock, Convertible Securities,
rights or options, as the case may be. In the event of any
consolidation or merger of the Company in which the Company is
not the surviving corporation or in the event of any sale of
all or substantially all of the assets of the Company for
stock or other securities of any other corporation, the
Company shall be deemed to have issued a number of shares of
its Common Stock for stock or securities of the other
corporation computed on the basis of the actual exchange ratio
on which the transaction was predicated and for a
consideration equal to the fair market value on the date of
such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment
of the Option Exercise Price, the determination of the number
of shares of Common Stock issuable upon conversion immediately
prior to such merger, conversion or sale, for purposes of
Section 4(i) below, shall be made after giving effect to such
adjustment of the Option Exercise Price.
(4) In case the Company shall take a record of the
holders of its Common Stock for the purpose of entitling them
(a) to receive a dividend or other distribution payable in
Common Stock or in Convertible Securities, or in any rights or
options to purchase any Common Stock or Convertible
Securities, or (b) to subscribe for or purchase Common Stock
or Convertible Securities, then the date of such record shall
be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other
distribution or the date of the granting of such rights of
subscription or purchase, as the case may be.
(f) In case the Company shall (i) declare a dividend upon the
Common Stock payable in Common Stock (other than a dividend declared to
effect a subdivision of the outstanding shares of Common Stock, as
described in Section 4(g) below) or Convertible Securities, or in any
rights or options to purchase any Common Stock or Convertible
Securities, or (ii) declare any other dividend or make any other
distribution upon the Common Stock payable otherwise than out of
earnings or earned surplus, then thereafter the Holder upon the
conversion hereof will be entitled to receive the number of shares of
Common Stock issuable upon exercise of this Option, and, in addition
and without payment therefor, each dividend described in clause (i)
above and each dividend or distribution described in clause (ii) above
which such holder would have received by way of dividends or
distributions if continuously since the Holder became the record holder
of this Option the Holder (x) had been the record holder of the number
of shares of Common Stock then received, and (y) had retained all
dividends or distributions in stock or securities (including Common
Stock or Convertible Securities, or in any rights or options to
purchase any Common Stock or Convertible Securities) payable in respect
of such Common Stock or in respect of any stock or securities paid as
dividends or distributions and originating directly or indirectly from
such Common Stock. For the purposes of the foregoing a dividend or
distribution other than in cash shall be considered payable out of
earnings or earned surplus only to the extent that such earnings or
surplus are charged an amount equal to the fair value of such dividend
or distribution as determined by the Board of Directors of the Company.
(g) In case the Company shall at any time subdivide its
outstanding shares of Common Stock into a greater number of shares, the
Option Exercise Price in effect immediately prior to such subdivision
shall be proportionately reduced, and conversely, in case the
outstanding shares of Common Stock of the Company shall be combined
into a smaller number of shares, the Option Exercise Price in effect
immediately prior to such combination shall be proportionately
increased.
(h) If (i) the purchase price provided for in any right or
option referred to in clause (1) of Section 4(e), or (ii) the
additional consideration, if any, payable upon the conversion or
exchange of Convertible Securities referred to in clause (1) or clause
(2) of Section 4(e), or (iii) the rate at which any Convertible
Securities referred to in clause (1) or clause (2) of Section 4(e) are
convertible into or exchangeable for Common Stock, shall change at any
time (other than under or by reason of provisions designed to protect
against dilution), the Option Exercise Price then in effect hereunder
shall forthwith be increased or decreased to such Option Exercise Price
as would have obtained had the adjustments made upon the issuance of
such rights, options or Convertible Securities been made upon the basis
of (a) the issuance of the number of shares of Common Stock theretofore
actually delivered upon the exercise of such options or rights or upon
the conversion or exchange of such Convertible Securities, and the
total consideration received therefor, and (b) the issuance at the time
of such change of any such options, rights, or Convertible Securities
then still outstanding for the consideration, if any, received by the
Company therefor and to be received on the basis of such changed price;
and on the expiration of any such option or right or the termination of
any such right to convert or exchange such Convertible Securities, the
Option Exercise Price then in effect hereunder shall forthwith be
increased to such Option Exercise Price as would have obtained had the
adjustments made upon the issuance of such rights or options or
Convertible Securities been made upon the basis of the issuance of the
shares of Common Stock theretofore actually delivered (and the total
consideration received therefor) upon the exercise of such rights or
options or upon the conversion or exchange of such Convertible
Securities. If the purchase price provided for in any right or option
referred to in clause (1) of Section 4(e), or the rate at which any
Convertible Securities referred to in clause (1) or clause (2) of
Section 4(e) are convertible into or exchangeable for Common Stock,
shall decrease at any time under or by reason of provisions with
respect thereto designed to protect against dilution, then in case of
the delivery of Common Stock upon the exercise of any such right or
option or upon conversion or exchange of any such Convertible Security,
the Option Exercise Price then in effect hereunder shall forthwith be
decreased to such Option Exercise Price as would have obtained had the
adjustments made upon the issuance of such right, option or Convertible
Security been made upon the basis of the issuance of (and the total
consideration received for) the shares of Common Stock delivered as
aforesaid.
(i) If any capital reorganization or reclassification of the
capital stock of the Company, or consolidation or merger of the Company
with another corporation, or the sale of all or substantially all of
its assets to another corporation shall be effected in such a way that
holders of Common Stock shall be entitled to receive stock, securities
or assets with respect to or in exchange for Common Stock, then, as a
condition of such reorganization, reclassification, consolidation,
merger or sale, lawful and adequate provision shall be made whereby the
Holder of this Option shall thereafter have the right to receive upon
the basis and upon the terms and conditions specified herein and in
lieu of the shares of the Common Stock of the Company immediately
theretofore receivable upon the exercise of this Option, such shares of
stock, securities or assets as may be issued or payable with respect to
or in exchange for a number of outstanding shares of such Common Stock
equal to the number of shares of such stock immediately theretofore
receivable upon the exercise of this Option had such reorganization,
reclassification, consolidation, merger or sale not taken place, plus
all dividends unpaid and accumulated or accrued thereon to the date of
such reorganization, reclassification, consolidation, merger or sale,
and in any such case appropriate provision shall be made with respect
to the rights and interests of the Holder of this Option to the end
that the provisions hereof (including without limitation provisions for
adjustments of the Option Exercise Price and of the number of shares
receivable upon the exercise of the this Option) shall thereafter be
applicable, as nearly as may be in relation to any shares of stock,
securities or assets thereafter receivable upon the exercise of this
Option. The Company shall not effect any such consolidation, merger or
sale, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such
consolidation or merger or the corporation purchasing such assets shall
assume by written instrument executed and mailed to the Holder of this
Option, at the last addresses of such holders appearing on the books of
the Company, the obligation to deliver to the Holder such shares of
stock, securities or assets as, in accordance with the foregoing
provisions, the Holder may be entitled to receive.
(j) Upon any adjustment of the Option Exercise Price, then and
in each case the Company shall give written notice thereof, by
first-class mail, postage prepaid, addressed to the Holder of this
Option, which shall state the Option Exercise Price resulting from such
adjustment and the increase or decrease, if any, in the number of
shares receivable at such price upon the exercise of this Option,
setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based, and which notice shall be
certified by a nationally recognized firm of independent auditors
(which may be the Company's independent auditors).
(k) In case at any time:
(1) the Company shall declare any cash dividend on
its Common Stock;
(2) the Company shall pay any dividend payable in
stock upon its Common Stock or make any distribution (other
than regular cash dividends) to the holders of its Common
Stock;
(3) the Company shall offer for subscription pro rata
to the holders of its Common Stock any additional shares of
stock of any class or other rights;
(4) there shall be any capital reorganization, or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sales of all
or substantially all of its assets to, another corporation; or
(5) there shall be a voluntary or involuntary
dissolution, liquidation or winding up of the Company;
then, in any one or more of said cases, the Company shall give
written notice, by first-class mail, postage prepaid, addressed to the
Holder at the addresses of such holders as shown on the books of the
Company, of the date on which (a) the books of the Company shall close
or a record shall be taken for such dividend, distribution or
subscription rights, or (b) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up
shall take place, as the case may be. Such notice shall also specify
the date as of which the holders of Common Stock of record shall
participate in such dividend, distribution or subscription rights, or
shall be entitled to exchange their Common Stock for securities or
other property deliverable upon such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation, or winding up,
as the case may be. Such written notice shall be given at least twenty
(20) days prior to the action in question and not less than twenty (20)
days prior to the record date or the date on which the Company's
transfer books are closed in respect thereto.
(l) If any event occurs as to which in the opinion of the
Board of Directors of the Company the other provisions of this Section
4 are not strictly applicable or if strictly applicable would not
fairly protect the rights of the Holder in accordance with the
essential intent and principles of such provisions, then the Board of
Directors shall make an adjustment in the application of such
provisions, in accordance with such essential intent and principles, so
as to protect such rights as aforesaid.
(m) As used in this Section 4 the term "Common Stock" shall
mean and include the Company's presently authorized Common Stock and
shall also include any capital stock of any class of the Company
hereafter authorized which shall not be limited to a fixed sum or
percentage in respect of the rights of the holders thereof to
participate in dividends or in the distribution of assets upon the
voluntary or involuntary liquidation, dissolution or winding up of the
Company; provided that the shares receivable pursuant to exercise of
this Option shall include shares designated as Common Stock of the
Company as of the date of issuance of this Option, or, in case of any
reclassification of the outstanding shares thereof, the stock,
securities or assets provided for in Section 4(i) above.
(n) No fractional shares of Common Stock shall be issued upon
conversion pursuant to this Section 4, but, instead of any fraction of
a share which would otherwise be issuable, the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the same
fraction of the market price per share of Common Stock as of the close
of business on the day of conversion. "Market price" shall mean if the
Common Stock is traded on a securities exchange or the Nasdaq National
Market, the closing price of the Common Stock on such exchange or the
Nasdaq National Market, or, if the Common Stock is otherwise traded in
the over-the-counter market, the closing bid price, in each case
averaged over a period of twenty (20) consecutive business days prior
to the date as of which "market price" is being determined. If at any
time the Common Stock is not traded on an exchange or the Nasdaq
National Market, or otherwise traded in the over-the-counter market,
the "market price" shall be deemed to be the higher of (i) the book
value thereof as determined by any firm of independent public
accountants of recognized standing selected by the Board of Directors
of the Company as of the last day of any month ending within sixty (60)
days preceding the date as of which the determination is to be made, or
(ii) the fair value thereof determined in good faith by the Board of
Directors of the Company as of a date which is within fifteen (15) days
of the date as of which the determination is to be made.
5. No Rights as Shareholder. This Option shall not entitle the Holder
to any voting rights or other rights as a shareholder of the Company
6. Securities Laws Restrictions. The Holder, by acceptance hereof,
represents and warrants that (a) it is acquiring this Option for its own account
for investment purposes only and not with a view to its resale or distribution
and (b) it has no present intention to resell or otherwise dispose of all or any
part of this Option. Other than pursuant to registration under federal and state
securities laws or an exemption from such registration, the availability of
which the Company shall determine in its sole discretion, (y) the Company will
not accept the exercise of this Option or issue certificates for Option Shares
and (z) neither this Option nor any Option Shares may be sold, pledged, assigned
or otherwise disposed of (whether voluntarily or involuntarily). The Company may
condition such issuance or sale, pledge, assignment or other disposition on the
receipt from the party to whom this Option is to be so transferred or to whom
Option Shares are to be issued or so transferred of any representations and
agreements requested by the Company in order to permit such issuance or transfer
to be made pursuant to exemptions from registration under federal and applicable
state securities laws. Each certificate representing the Option (or any part
thereof) and any Option Shares shall be stamped with appropriate legends setting
forth these restrictions on transferability. The Holder, by acceptance hereof,
agrees to give written notice to the Company before exercising or transferring
this Option or transferring any Option Shares of the Holder's intention to do
so, describing briefly the manner of any proposed exercise or transfer. Within
thirty (30) days after receiving such written notice, the Company shall notify
the Holder as to whether such exercise or transfer may be effected.
7. Registration Rights. The Company shall register the issuance of the
Option Shares under the Securities Act of 1933, as amended, on a registration
statement on Form S-8 (or any comparable successor form) within ninety (90) days
of the date hereof.
8. Nontransferability. This Option may not be transferred or assigned
by the Holder, either voluntarily or involuntarily, except by will or otherwise
under the laws of descent and distribution; provided, however, that if the rules
applicable to the use of a registration statement on Form S-8 (or any comparable
successor form) are hereafter amended to permit the transferablity of options
registered on a Form S-8 (or any comparable successor form), this Option shall
become transferable to the extent permitted by the rules then applicable to the
use of Form S-8 (or any comparable successor form) and any other applicable
federal or state securities laws or regulations. Any transfer of this Option
other than in accordance with this Agreement shall be null and void.
9. Amendment. Neither this Option nor any term hereof may be changed,
waived, discharged or terminated orally but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective the day and year first above written.
LIFERATE SYSTEMS, INC.
By_____________________________________
Its____________________________________
APF, LLC
By_____________________________________
Its____________________________________
