Common use of Option to Purchase Option Shares Clause in Contracts

Option to Purchase Option Shares. (a) On or before the fifth anniversary of the Closing Date, Holdings shall have the right, but not the obligation, to purchase from Seller and to require Seller to sell to Holdings (such right, the "Option"), from time to time, all or any portion of the Option Shares by delivering a written notice (the "Option Notice") to the Seller setting forth the number of Option Shares to be purchased. (b) The purchase price for the Option Shares (the "Option Shares Purchase Price") shall be an amount equal to the product of: (1) Six Hundred Percent (600%) of the Net Income Before Taxes of the Business for the calendar year immediately preceding the date the Option Notice is given by Buyer, less all Indebtedness of Buyer on the date the Option Notice is given; and (2) the percentage of outstanding share capital of the Company represented by the Option Shares covered by the Option Notice (the "Minority Share Percentage"). (c) The Option Shares Purchase Price with respect to any exercise, once determined, shall be payable to the Seller as follows: (i) If the Option Shares Closing (as defined in Section 3.6(f) below) occurs on or before April 1, 2004, one-quarter (1/4) of such Option Shares Purchase Price shall be paid on each of April 1, 2004, April 1, 2005, April 1, 2006 and April 1, 2007; (ii) If the Option Shares Closing occurs after April 1, 2004 but on or before April 1, 2005, one-third (1/3) of such Option Shares Purchase Price shall be paid on each of April 1, 2005, April 1, 2006 and April 1, 2007; (iii) If the Option Shares Closing occurs after April 1, 2005 but on or before April 1, 2006, one-half (1/2) of such Option Shares Purchase Price shall be paid each of April 1, 2006 and April 1, 2007; (iv) If the Option Shares Closing occurs after April 1, 2006 but on or before April 1, 2007, all of such Option Shares Purchase Price shall be paid on April 1, 2007; and (v) If the Option Shares Closing occurs after April 1, 2007, all of such Option Shares Purchase Price shall be paid at the Option Shares Closing. (d) Upon delivery of an Option Notice, Buyer shall also prepare and deliver to Seller a certificate setting forth the amount and method of calculating the Option Shares Purchase Price (the "Option Shares Purchase Price Certificate"). (e) The Option Shares Purchase Price shall be paid in immediately available cash funds expressed in U.S. Dollars, or upon agreement between the Parties, in Stonepath Shares or a combination thereof. Any portion of the Option Shares Purchase Price paid in Stonepath Shares shall be valued on each of the due dates of the Options Shares Purchase Price at the average closing price of such stock on the Principal Exchange for the five (5) Trading Days immediately preceding the third Trading Day preceding the respective due dates that payments for the Option Shares are required to be made. (f) In the event that Holdings delivers the Option Notice, a closing of the purchase and sale of the Option Shares (the "Option Shares Closing") shall be held within fifteen (15) days after the date the Seller has received the Option Notice. At Option Shares Closing, Buyer shall deliver to Seller the Option Shares Purchase Price in such form as determined pursuant to subsection (e) of this Section 3.6 and Seller shall deliver to Buyer the following: (i) Certificates representing the Option Shares covered by the Option Notice, duly endorsed by Seller or accompanied by duly executed instruments of transfer; (ii) A certificate signed by Seller to the effect that in the event that any portion of the Option Shares Purchase Price is being paid in shares of Stonepath's common stock, that (1) Seller understands that the sale of such shares to Seller has not been registered under the Securities Act or the securities laws of any other jurisdiction and that such shares may not be resold without such registration or an exemption therefrom, (2) Seller shall not resell such shares in the absence of such registration or an exemption therefrom, and (3) Seller is acquiring such shares for investment purposes only and not with the view to the distribution thereof.