STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of March 31, 1995 by and among Horizon
Healthcare Corporation, a Delaware corporation ("Acquiror"), and Continental
Medical Systems, Inc., a Delaware corporation (the "Company").
WHEREAS, concurrently with the execution and delivery of this Agreement,
Acquiror, the Company, CMS Merger Corporation ("Merger Sub") are entering
into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger
Agreement"), which provides, among other things, upon the terms and
subject to the conditions thereof, for the merger of Merger Sub into the
Company (the "Merger"); and
WHEREAS, as a condition to Acquiror's willingness to enter into the
Merger Agreement, Acquiror has requested that the Company agree, and the
Company has so agreed, to grant to Acquiror an option with respect to certain
shares of the Company's common stock, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, to induce Acquiror to enter into the Merger Agreement,
and in consideration of the mutual covenants and agreements set forth herein
and in the Merger Agreement, the parties hereto agree as follows:
1. GRANT OF OPTION. The Company hereby grants Acquiror an irrevocable
option (the "Company Option") to purchase from the Company upon original issue
up to a number of shares of common stock, par value $.01 per share ("Company
Common Stock"), of the Company equal to 15% of the number of shares of Common
Stock outstanding on date of this Agreement, subject to adjustment as
provided in Section 11 (such shares being referred to herein as the "Company
Shares") in the manner set forth below at an exercise price of $13.00 per
Company Share (the "Exercise Price"), payable in cash in accordance with
Section 4 hereof. Notwithstanding the foregoing, in no event shall the
number of shares for which the Company Option is exercisable exceed 15% of
the number of issued and outstanding Company Shares. Capitalized terms used
herein but not defined herein shall have the meanings set forth in the Merger
Agreement.
2. EXERCISE OF OPTION. The Company Option may be exercised by Acquiror,
in whole or in part, at any time or from time to time after the Merger
Agreement becomes terminable by Acquiror under circumstances that would, if
the Merger Agreement were terminated as a result thereof, entitle Acquiror to
Expenses (as defined in the Merger Agreement) under Section 8.05(c) of the
Merger Agreement, any event by which the Merger Agreement becomes so
terminable by Acquiror being referred to herein as a "Trigger Event." The
Company shall notify Acquiror promptly in writing of the occurrence of any
Trigger Event, it being understood that the giving of such notice by the
Company shall not be a condition to the right of Acquiror to exercise the
Company Option. If Acquiror wishes to exercise the Company Option, Acquiror
shall deliver to the Company a written notice (an "Exercise Notice")
specifying the total number of Company Shares
it wishes to purchase. Each closing of a purchase of Company Shares (a
"Closing") shall occur at a place, on a date and at a time designated by
Acquiror in an Exercise Notice delivered at least two business days prior to
the date of the Closing. The Company Option shall terminate upon the earlier
of: (i) the Effective Time; (ii) the termination of the Merger Agreement
pursuant to Section 8.01 thereof (other than upon or during the continuance
of a Trigger Event); or (iii) 180 days following any termination of the
Merger Agreement upon or during the continuance of a Trigger Event (or if, at
the expiration of such 180 day period the Company Option cannot be exercised
by reason of any applicable judgment, decree, order, law or regulation, ten
business days after such impediment to exercise shall have been removed or
shall have become final and not subject to appeal, but in no event under this
clause (iii) later than December 31, 1996). Notwithstanding the foregoing,
the Company Option may not be exercised if Acquiror is in material breach of
any of its material representations or warranties, or in material breach of
any of its covenants or agreements, contained in this Agreement or in the
Merger Agreement. Upon the giving by Acquiror to the Company of the Exercise
Notice and the tender of the applicable aggregate Exercise Price, Acquiror
shall be deemed to be the holder of record of the Company Shares issuable
upon such exercise, notwithstanding that the stock transfer books of the
Company shall then be closed or that certificates representing such Company
Shares shall not then be actually delivered to Acquiror.
3. CONDITIONS TO CLOSING. The obligation of the Company to issue the
Company Shares to Acquiror hereunder is subject to the conditions, which
(other than the conditions described in clauses (i), (iii) and (iv) below)
may be waived by the Company in its sole discretion, that (i) all waiting
periods, if any, under the HSR Act, applicable to the issuance of the Company
Shares hereunder shall have expired or have been terminated; (ii) the Company
Shares shall have been approved for listing on the NYSE upon official notice
of issuance; (iii) all consents, approvals, orders or authorizations of, or
registrations, declarations or filings with, any Governmental Entity, if any,
required in connection with the issuance of the Company Shares hereunder
shall have been obtained or made, as the case may be; and (iv) no preliminary
or permanent injunction or other order by any court of competent jurisdiction
prohibiting or otherwise restraining such issuance shall be in effect.
4. CLOSING. At any Closing, (a) the Company will deliver to Acquiror or
its designee a single certificate in definitive form representing the number
of the Company Shares designated by Acquiror in its Exercise Notice, such
certificate to be registered in the name of Acquiror and to bear the legend
set forth in Section 12, and (b) Acquiror will deliver to the Company the
aggregate price for the Company Shares so designated and being purchased by
wire transfer of immediately available funds or certified check or bank
check. The Company shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates
under this Section 4 in the name of Acquiror or its designee.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Acquiror that (a) the Company has taken all
necessary corporate action to authorize and reserve for issuance and to
permit it to issue, upon exercise of the Company Option, and at all times
from the date hereof through the expiration of the Company Option will have
reserved, a number
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of authorized and unissued Company Shares equal to 15% of the number of
Company Shares issued and outstanding on the date hereof, such amount being
subject to adjustment as provided in Section 11, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable, (b) upon delivery of the
Company Shares to Acquiror upon the exercise of the Company Option, Acquiror
will acquire the Company Shares free and clear of all claims, liens, charges,
encumbrances and security interests of any nature whatsoever, and (c) none of
the Company, any of its affiliates or anyone acting on its or their behalf
has issued, sold or offered any security of the Company to any person under
circumstances, or taken any other action, that would cause the issuance and
sale of the Option Shares, as contemplated by this Agreement, to be subject
to the registration requirements of the Securities Act as in effect on the
date hereof and, assuming the representations of Acquiror contained in
Section 6(c) are true and correct, the issuance, sale and delivery of the
Option Shares hereunder upon exercise of the Company Option will be exempt
from the registration and prospectus delivery requirements of the Securities
Act, as in effect on the date hereof.
6. REPRESENTATIONS AND WARRANTIES OF ACQUIROR. Acquiror represents and
warrants to the Company that any Company Shares acquired upon exercise of the
Company Option will be acquired for Acquiror's own account, and will not be,
and the Company Option is not being, acquired by Acquiror with a view to the
distribution thereof in violation of any applicable provision of the
Securities Act.
7. CERTAIN REPURCHASES.
(a) ACQUIROR PUT. At the request of Acquiror by written notice at
any time during which the Company Option is exercisable pursuant to Section 2
(the "Repurchase Period"), the Company (or any successor entity thereof)
shall repurchase from Acquiror all or any portion of the Company Option, at
the price set forth in subparagraph (i) below, or, at the request of Acquiror
by written notice at any time prior to December 31, 1995 (provided that such
date shall be extended to March 31, 1996 under the circumstances where the
date after which either party may terminate the Merger Agreement pursuant to
Section 8.01(e) of the Merger Agreement has been extended to March 31, 1996),
the Company (or any successor thereto) shall repurchase from Acquiror all or
any portion of the Company Shares purchased by Acquiror pursuant to the
Company Option, at the price set forth in subparagraph (ii) below:
(i) (A) the difference between
(x) the "Market/Offer Price" for shares of Company
Common Stock as of the date Acquiror gives notice of its
intent to exercise its rights under this Section 7 (defined
as the higher of (1) the highest price per share offered as
of such date pursuant to any tender or exchange offer or
other Competing Transaction (as defined in the Merger
Agreement) that was made prior to such date and not
terminated or withdrawn as of such date (the "Offer Price")
and (2)
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the Fair Market Value of the Company Stock as of such date
(the "Market Price")); and
(y) the Exercise Price,
multiplied by
(B) the number of Company Shares purchasable pursuant to the
Company Option (or portion thereof with respect to which
Acquiror is exercising its rights under this Section 7), but
only if the Market/Offer Price is greater than the Exercise
Price;
(ii) the product of (x) the sum of (A) the Exercise Price paid
by Acquiror for the Company Shares acquired pursuant to the Company
Option and (B) the difference between the Market/Offer Price and the
Exercise Price, but only if the Market/Offer Price is greater than
the Exercise Price, and (y) the number of Company Shares so purchased.
As used herein, the "Fair Market Value" of any share shall be the average
of the daily closing sales price for such share on the New York Stock
Exchange (the "NYSE") during the ten NYSE trading days prior to the fifth
NYSE trading day preceding the date such is to be determined.
Notwithstanding any provision to the contrary in this Agreement, Acquiror
may not exercise its rights pursuant to Section 7(a) in a manner that would
result in the cash payment to Acquiror of an aggregate amount under this
Section 7(a) of more than $30 million, less the amount, if any, of the
Termination Fee paid to Acquiror pursuant to Section 8.05(c) of the Merger
Agreement; PROVIDED, HOWEVER, that nothing in this sentence shall limit
Acquiror's ability to exercise the Company Option in accordance with its
terms.
(b) PAYMENT AND REDELIVERY OF COMPANY OPTION OR SHARES. If
Acquiror exercises its rights under this Section 7, the Company shall, within
five business days thereafter, pay the required amount to Acquiror in
immediately available funds and Acquiror shall surrender to the Company the
Company Option or the certificates evidencing the Company Shares purchased by
Acquiror pursuant thereto, and Acquiror shall warrant that it owns the
Company Option or such shares and that the Company Option or such shares are
then free and clear of all liens, claims, damages, charges and encumbrances
of any kind or nature whatsoever.
(c) PROHIBITION OF REPURCHASE. After delivery by Acquiror of a
notice of repurchase by the Company, the Company shall, to the extent that
the Company is prohibited under any applicable law or regulation from
repurchasing the Company Option and/or the Company Shares in full in
accordance with this Section 7, the Company shall immediately so notify
Acquiror and, thereafter, shall deliver to Acquiror from time to time,
promptly and in any event within five business days following the lapse of
any such prohibition, the repurchase price for that portion of the Company
Option or the Company Shares, as the case may be, determined pursuant to
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Section 7(a), with respect to which Acquiror has delivered such notice of
repurchase (the "Repurchase Price") that it is no longer prohibited from
delivering; PROVIDED, HOWEVER, that, if the Company at any time after
delivery by Acquiror of a notice of repurchase pursuant to Section 7(a) is
prohibited under applicable law or regulation from delivering to Acquiror the
Repurchase Price in full (and the Company hereby undertakes to use all
reasonable efforts to obtain all required regulatory and legal approvals and
to file any required notices as promptly as practicable in order to
accomplish such repurchase), then Acquiror may to that extent revoke its
notice of repurchase of the Company Option or the Company Shares, as the case
may be, whereupon the Company, in addition to paying such portion of the
Repurchase Price as it is permitted to pay, promptly upon Acquiror's
surrender pursuant to Section 7(b) shall promptly deliver to Acquiror, to the
extent theretofore surrendered by Acquiror pursuant to Section 7(b), (a) a
certificate for the Company Shares that Company is then so prohibited from
repurchasing or (b) a new Company Option evidencing the right of Acquiror to
purchase that number of shares of Company Common Stock obtained by
multiplying the number of shares of Company Common Stock for which the
surrendered Company Option was exercisable at the time of delivery of the
notice of repurchase by a fraction, the numerator of which is the Repurchase
Price less the portion thereof theretofore delivered to Acquiror and the
denominator of which is the Repurchase Price.
8. VOTING OF SHARES. Following the date hereof and prior to the fifth
anniversary of the date hereof (the "Expiration Date"), Acquiror shall vote
any shares of capital stock of the Company acquired by Acquiror pursuant to
this Agreement ("Restricted Shares") or otherwise beneficially owned (within
the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act") by Acquiror on each matter submitted to
a vote of stockholders of the Company for and against such matter in the same
proportion as the vote of all other stockholders of the Company are voted
(whether by proxy or otherwise) for and against such matter.
9. RESTRICTIONS ON TRANSFER.
(a) RESTRICTIONS ON TRANSFER. Prior to the Expiration Date, Acquiror
shall not, directly or indirectly, by operation of law or otherwise, sell,
assign, pledge, or otherwise dispose of or transfer any Restricted Shares
beneficially owned by Acquiror, other than (i) pursuant to Section 7 or (ii)
in accordance with Section 9(b) or Section 10.
(b) PERMITTED SALES. Following the termination of the Merger
Agreement, Acquiror shall be permitted to sell any Restricted Shares
beneficially owned by it if such sale is made pursuant to a tender or
exchange offer that has been approved or recommended, or otherwise determined
to be fair to and in the best interests of the stockholders of the the
Company, by a majority of the members of the Board of Directors of the
Company, which majority shall include a majority of directors who were
directors prior to the announcement of such tender or exchange offer.
10. REGISTRATION RIGHTS. Following the termination of the Merger
Agreement, Acquiror may by written notice (the "Registration Notice") to the
the Company request the Company to register under the Securities Act all or
any part of the Restricted Shares beneficially owned by
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Acquiror (the "Registrable Securities") pursuant to a bona fide firm
commitment underwritten public offering in which Acquiror and the
underwriters shall effect as wide a distribution of such Registrable
Securities as is reasonably practicable and shall use all reasonable efforts
to prevent any Person (including any Group) and its affiliates from
purchasing through such offering Restricted Shares representing more than 1%
of the outstanding shares of common stock of the Company on a fully diluted
basis (a "Permitted Offering"). The Registration Notice shall include a
certificate executed by Acquiror and its proposed managing underwriter, which
underwriter shall be an investment banking firm of nationally recognized
standing (the "Manager"), stating that (i) they have a good faith intention
to commence promptly a Permitted Offering and (ii) the Manager in good faith
believes that, based on the then prevailing market conditions, it will be
able to sell the registrable Securities at a per share price equal to at
least 80% of the then Fair Market Value of such shares. The Company (and/or
any Person designated by the Company) shall thereupon have the option
exercisable by written notice delivered to Acquiror within ten business days
after the receipt of the Registration Notice, irrevocably to agree to
purchase all or any part of the Registrable Securities for cash at a price
(the "Option Price") equal to the product of (i) the number of Registrable
Securities and (ii) the then Fair Market Value of such shares. Any such
purchase of Registrable Securities by the Company (or its designee) hereunder
shall take place at a closing to be held at the principal executive offices
of the Company or at the offices of its counsel at any reasonable date and
time designated by the Company and/or such designee in such notice within 20
business days after delivery of such notice. Any payment for the shares to
be purchased shall be made by delivery at the time of such closing of the
Option Price in immediately available funds.
If the Company does not elect to exercise its option pursuant to this
Section 10 with respect to all Registrable Securities, it shall use all
reasonable efforts to effect, as promptly as practicable, the registration
under the Securities Act of the unpurchased Registrable Securities; PROVIDED,
HOWEVER, that (i) Acquiror shall be entitled to more than an aggregate of two
effective registration statements hereunder and (ii) the Company will not be
required to file any such registration statement during any period of time
(not to exceed 40 days after such request in the case of clause (A) below or
90 days in the case of clauses (B) and (C) below) when (A) the Company is in
possession of material non-public information which it reasonably believes
would be detrimental to be disclosed at such time, and in the opinion of
counsel to the Company, such information would have to be disclosed if a
registration statement were filed at that time; (B) the Company is required
under the Securities Act to include audited financial statements for any
period in which registration statement and such financial statements are not
yet available for inclusion in such registration statement; or (C) the
Company determines, in its reasonable judgment, that such registration would
interfere with any financing, acquisition or other material transaction
involving the Company or any of its affiliates. The Company shall use
reasonable efforts to cause any Registrable Securities registered pursuant to
this Section 10 to be qualified for sale under the securities or Blue Sky
laws of such jurisdictions as Acquiror may reasonably request and shall
continue such registration or qualification in effect in such jurisdiction;
PROVIDED, HOWEVER, that the Company shall not be required to qualify to do
business in, or consent to general service of process in, any jurisdiction by
reason of this provision.
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The registration rights set forth in this Section 10 are subject to the
condition that Acquiror shall provide the Company with such information with
respect to such holder's Registrable Securities, the plans for the
distribution thereof, and such other information with respect to such holder
as, in the reasonable judgment of counsel for the Company, is necessary to
enable the Company to include in such registration statement all material
facts required to be disclosed with respect to a registration thereunder.
A registration effected under this Section 10 shall be effected at the
Company's expense, except for underwriting discounts and commissions and the
fees and the expenses of counsel to Acquiror, and the Company shall provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection
with underwritten public offerings as such underwriters may reasonably
require. In connection with any such registration, the parties agree (i) to
indemnify each other and the underwriters in the customary manner, (ii) to
enter into an underwriting agreement in form and substance customary for
transactions of such type with the Manager and the other underwriters
participating in such offering and (iii) to take all further actions which
shall be reasonably necessary to effect such registration and sale
(including, if the Manager deems it necessary, participating in road-show
presentations).
The Company shall be entitled to include (at its expense) additional
shares of its common stock in a registration effected pursuant to this
Section 10 only if and to the extent the Manager determines that such
inclusion will not adversely affect the prospects for success of such
offering.
11. ADJUSTMENT UPON CHANGES IN CAPITALIZATION. Without limiting any
restriction on the Company contained in this Agreement or in the Merger
Agreement, in the event of any change in Company Common Stock by reason of
stock dividends, splitups, mergers (other than the Merger),
recapitalizations, combinations, exchange of shares or the like, the type and
number of shares or securities subject to the Company Option, and the
purchase price per share provided in Section 1, shall be adjusted
appropriately to restore to Acquiror its rights hereunder, including the
right to purchase from the Company (or its successors) shares of Company
Common Stock representing 15% of the outstanding Company Common Stock for the
aggregate Exercise Price calculated as of the date of this Agreement as
provided in Section 1.
12. RESTRICTIVE LEGENDS. Each certificate representing shares of
Company Common Stock issued to Acquiror hereunder shall include a legend in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE. SUCH
SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT, DATED
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AS OF MARCH 31, 1995, A COPY OF WHICH MAY BE OBTAINED FROM
THE ISSUER UPON REQUEST.
It is understood and agreed that: (i) the reference to the resale
restrictions of the Securities Act in the above legend shall be removed by
delivery of substitute certificate(s) without such reference if Acquiror
shall have delivered to the Company a copy of a letter from the staff of the
Securities and Exchange Commission, or an opinion of counsel, in form and
substance satisfactory to the Company, to the effect that such legend is not
required for purposes of the Securities Act; (ii) the reference to the
provisions to this Agreement in the above legend shall be removed by delivery
of substitute certificate(s) without such reference if the shares have been
sold or transferred in compliance with the provisions of this Agreement and
under circumstances that do not require the retention of such reference; and
(iii) the legend shall be removed in its entirety if the conditions in the
preceding clauses (i) and (ii) are both satisfied. In addition, such
certificates shall bear any other legend as may be required by law.
Certificates representing shares sold in a registered public offering
pursuant to Section 10 shall not be required to bear the legend set forth in
this Section 12.
13. BINDING EFFECT; NO ASSIGNMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Except as
expressly provided for in this Agreement, neither this Agreement nor the
rights or the obligations of either party hereto are assignable, except by
operation of law, or with the written consent of the other party. Nothing
contained in this Agreement, express or implied, is intended to confer upon
any person other than the parties hereto and their respective permitted
assigns any rights or remedies of any nature whatsoever by reason of this
Agreement. Any Restricted Shares sold by a party in compliance with the
provisions of Section 10 shall, upon consummation of such sale, be free of
the restrictions imposed with respect to such shares by this Agreement,
unless and until such party shall repurchase or otherwise become the
beneficial owner of such shares, and any transferee of such shares shall not
be entitled to the registration rights of such party.
14. SPECIFIC PERFORMANCE. The parties hereby acknowledge and agree that
the failure of the Company to perform its agreement and covenants hereunder
will cause irreparable injury to Acquiror for which damages, even if
available, will not be an adequate remedy. Accordingly, the Company hereby
consents to the issuance of injunctive relief by any court of competent
jurisdiction to compel performance of the Company's obligations and to the
granting by any such court of the remedy of specific performance of its
obligations hereunder.
15. ENTIRE AGREEMENT. This Agreement and the Merger Agreement
(including the exhibits and schedules thereto) constitute the entire
agreement of the parties, and supersedes all prior agreements and
undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
16. FURTHER ASSURANCES. Each party will execute and deliver all such
further documents and instruments and take all such further action as may be
necessary in order to consummate the transactions contemplated hereby.
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17. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of the other
provisions of this Agreement, which shall remain in full force and effect.
If any court or other competent authority holds any provisions of this
Agreement to be null, void or unenforceable, the parties hereto shall
negotiate in good faith the execution and delivery of an amendment to this
Agreement in order, as nearly as possible, to effectuate, to the extent
permitted by law, the intent of the parties hereto with respect to such
provision and the economic effects thereof. If for any reason any such court
or regulatory determines that Acquiror is not permitted to acquire, or the
Company is not permitted to repurchase pursuant to Section 7, the full number
of shares of Company Common Stock provided in Section 1 hereof (as the same
may be adjusted), it is the express intention of the Company to allow
Acquiror to acquire or to require the Company to repurchase such lesser
number of shares as may be permissible, without any amendment or modification
hereof. Each party agrees that, should any court or other competent
authority hold any provision of this Agreement or part hereof to be null,
void or unenforceable, or order any party to take any action inconsistent
herewith, or not take any action required herein, the other party shall not
be entitled to specific performance of such provision or part hereof or to
any other remedy, including without limitation money damages, for breach
hereof or of any other provision of this Agreement or part hereof as the
result of such holding or order.
18. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given in the manner provided in the Merger
Agreement.
19. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware, regardless of the laws
that might otherwise govern under applicable principles of conflicts of law.
20. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
21. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.
22. EXPENSES. Except as otherwise expressly provided herein or in the
Merger Agreement, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses.
23. AMENDMENTS; WAIVER. This Agreement may be amended by the parties
hereto and the terms and conditions hereof may be waived only by an
instrument in writing signed on behalf of each of the parties hereto or, in
the case of a waiver, by an instrument signed on behalf of the party waiving
compliance.
24. EXTENSION OF TIME PERIODS. The time periods for exercise of certain
rights under Sections 2, 6 and 7 shall be extended (i) to the extent
necessary to obtain all regulatory approvals
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for the exercise of such rights, and for the expiration of all statutory
waiting periods and (ii) to the extent necessary to avoid any liability under
Section 16(b) of the Exchange Act by reason of such exercise.
25. REPLACEMENT OF COMPANY OPTION. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction)
of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first
above written.
HORIZON HEALTHCARE CORPORATION
By /s/ NEAL ELLIOTT
_____________________________________
Neal Elliott
Chairman of the Board and President
CONTINENTAL MEDICAL SYSTEMS, INC.
By /s/ ROCCO A. ORTENZIO
_____________________________________
Rocco A. Ortenzio
Chairman of the Board and
Chief Executive Officer
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