ORION HEALTHCORP Exhibit 10.7


    

      ORION
        HEALTHCORP, INC.

      


      STOCK
        OPTION AGREEMENT

      (Incentive
        Stock Option)

      


      


      THIS
        OPTION AGREEMENT
        (the
“Agreement”)
        is
        entered into as of the 17th day of June, 2005, by and between
        ORION HEALTHCORP, INC.,
        a
        Delaware corporation (the “Company”),
        and
        the employee designated below (the “Optionee”).

       

      W I T N E S S E T H:

      


      WHEREAS,
        the
        Orion
        HealthCorp, Inc. 2004 Incentive Plan (the “Plan”)
        was
        adopted by the Company on September 7, 2004, and was subsequently approved
        by
        the Company’s stockholders; 

       

      WHEREAS,
        the
        Company considers Optionee’s employment important to the growth and success of
        the Company; and

       

      WHEREAS,
        the
        Company desires to grant Optionee options to purchase shares of Common Stock
        as
        an inducement for Optionee to continue in employment with the
        Company;

       

      NOW,
        THEREFORE,
        the
        parties agree as follows:

       

      


      
        	Employee/Optionee: 	 	_____________
	 	 	 
	Total Number of
                Shares:	 	_____________
                Shares
	 	 	 
	Option Exercise
                Price:	 	$ .84 Per
                Share
	 	 	 
	Date of Grant:	 	June 17,
                2005
	
              	 	 
	Vesting Schedule:	 	% of Shares	Vesting Date
	 	 	25%	June 17, 2006
	 	 	25%	June 17, 2007
	 	 	25%	June 17, 2008
	 	 	25%	June 17,
                2009


      

       


      
        	
                1.

              	
                Grant
                  of Option.

              


      

       

      
        	
                1.1

              	
                Option.
                  An
                  option to purchase shares of the Company’s Class A Common Stock is hereby
                  granted to the Optionee (the “Option”).

              


      

       

      
        	
                1.2

              	
                Number
                  of Shares.
                  The number of shares that the Optionee can purchase upon exercise
                  of the
                  Option and the dates upon which the Option can first be exercised
                  are set
                  forth above.

              


      

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

      
        	
                1.3

              	
                Option
                  Exercise Price.
                  The price the Optionee must pay to exercise the Option (the “Option
                  Exercise Price”)
                  is set forth above.

              


      

       

      
        	
                1.4

              	
                Date
                  of Grant.
                  The date the Option is granted (the “Date
                  of Grant”)
                  is set forth above.

              


      

       

      
        	
                1.5

              	
                Type
                  of Option.
                  The
                  Option is intended to qualify as an Incentive Stock Option (“ISO”) within
                  the meaning of Section 422 of the Internal Revenue Code of 1986,
                  as
                  amended from time to time, or any successor provision thereto (the
                  “Code”), and
                  shall be so construed; provided, however, that nothing in this
                  Agreement
                  shall be interpreted as a representation, guarantee or other undertaking
                  on the part of the Company that the Option is or will be determined
                  to be
                  an ISO within the meaning of Section 422 of the Code. To the extent
                  this
                  Option does not qualify and is not treated as an ISO, it will be
                  treated
                  as a nonqualified stock option.

              


      

       

      
        	
                1.6

              	
                Construction.
                  This Agreement shall be construed in accordance and consistent
                  with, and
                  subject to, the provisions of the Plan (the provisions of which
                  are
                  incorporated herein by reference) and, except as otherwise expressly
                  set
                  forth herein, the capitalized terms used in this Agreement shall
                  have the
                  same definitions as set forth in the
                  Plan.

              


      

       

      
        	
                1.7

              	
                Condition.
                  The Option is conditioned on the Optionee’s execution of this Agreement.
                  If this Agreement is not executed by the Optionee, it may be canceled
                  by
                  the Company.

              


      

       

      
        	
                2.

              	
                Duration.

              


      

       

      The
        Option shall be exercisable to the extent and in the manner provided herein
        for
        a period of [ten (10) years] from the Grant Date (the “Exercise
        Term”);
        provided, however, that the Option may be earlier terminated as provided
        in
Section
        1.7
        and
Section
        5
        hereof.

       

      
        	
                3.

              	
                Vesting.

              


      

       

      The
        Option shall fully vest, and may be exercised, with respect to the shares
        of
        Stock, on or after the date or dates set forth above, subject to earlier
        vesting
        of the Option as provided in Section
        8
        and
        subject to earlier termination of the Option as expressly provided in this
        Agreement or in the Plan. 
        The
        right to purchase the shares as they become vested shall be cumulative and
        shall
        continue during the Exercise Term unless sooner terminated as provided herein.
        Notwithstanding
        the foregoing, if the Optionee is a non-exempt employee for purposes of the
        Fair
        Labor Standards Act of 1938 (“FLSA”),
        the
        Optionee may not exercise any Option (even if the Option is otherwise vested)
        prior to the date that is six (6) months after the Date of Grant unless the
        Optionee’s employment has terminated due to death, disability, or retirement or
        unless a Covered Transaction has occurred after the Date of Grant.

       

      
        	
                4.

              	
                Manner
                  of Exercise and Payment.

              


      

       

      
        	
                4.1

              	
                Delivery.
                  To exercise the Option, the Optionee must deliver a completed copy
                  of the
                  Option
                  Exercise Form,
                  attached hereto as Exhibit
                  A (or
                  such other form as designated by the Company from time to time),
                  to the
                  address indicated on such form or such other address designated
                  by the
                  Company from time to time. The Option may be exercised in whole
                  or in part
                  with respect to the vested shares; provided, however, the Company
                  may
                  establish a minimum number of shares (e.g., 100) for which an Option
                  may
                  be exercised at a particular time. Within thirty (30) days of delivery
                  of
                  the Option Exercise Form, the Company shall deliver certificates
                  evidencing the shares or shall enter the Optionee’s name as a stockholder
                  of record on the books of the Company, free and clear of all liens,
                  security interests, or pledges or other claims or charges, but
                  subject to
                  the any other requirements or restrictions provided in the Plan
                  and
                  provided in Section 7 of this Agreement. Contemporaneously with
                  the
                  delivery of the Option Exercise Form, Optionee shall tender the
                  Option
                  Exercise Price to the Company, by cash, check, wire transfer or
                  such other
                  method of payment (e.g., an approved cashless exercise program
                  or delivery
                  of, or attestation to, shares of Stock already owned by the Optionee
                  for
                  six months or such other period required by the Administrator)
                  as may be
                  acceptable to the Administrator pursuant to the Plan and any procedures
                  or
                  policies as adopted from time to
                  time.

              


      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

      
        	
                4.2

              	
                No
                  Rights as Stockholder.
                  The Optionee shall not be deemed to be the holder of, or to have
                  any of
                  the rights of a holder with respect to any Shares subject to the
                  Option
                  until (i) the Option shall have been exercised pursuant to the
                  terms of
                  this Agreement and the Optionee shall have paid the full purchase
                  price
                  for the number of Shares in respect of which the Option was exercised,
                  and
                  (ii) the Company shall have issued the Shares to or on behalf of
                  the
                  Optionee and the Optionee’s name shall have been entered as a stockholder
                  of record on the books of the Company, whereupon the Optionee shall
                  have
                  full voting and other ownership rights with respect to such
                  Shares.

              


      

       

      
        	
                5.

              	
                Termination
                  of Employment.

              


      

       

      Except
        as
        provided below in Section 8, if the Optionee’s Employment with the Company is
        terminated by the Company or by the Optionee for any reason, all outstanding
        unvested portions of the Option shall expire immediately. Any portion of
        the
        Option that is vested as of the date of termination of Employment shall remain
        exercisable at any time prior to the end of the Exercise Term or for 120
        days
        after the date of termination of Employment (1 year after the termination
        of
        Employment if due to death), whichever period is shorter. To the extent the
        Option is exercised more than 90 days after the date of termination of
        Employment, the Option shall cease to be an ISO and shall be considered a
        non-incentive stock opton. Notwithstanding the above, the vested portion
        of the
        Option will expire upon the Optionee’s termination of Employment if the
        Committee in its sole discretion determines that the termination of Optionee’s
        Employment has resulted from reasons which cast such discredit on the Optionee
        to justify immediate termination of the Option.

       

      
        	
                6.

              	
                Nontransferability.

              


      

       

      The
        Option shall not be transferable other than by will or by the laws of descent
        and distribution, and during the lifetime of the Optionee, the Option shall
        be
        exercisable only by the Optionee. 

       

      
        	
                7.

              	
                Restrictions
                  on the Option and the
                  Shares.

              


      

       

      The
        Option may not be exercised at any time unless, in the opinion of counsel
        for
        the Company, the issuance and sale of the shares issued upon such exercise
        is
        exempt from registration under the Securities Act of 1933, as amended, or
        any
        other applicable federal or state securities law, rule or regulation, or
        the
        shares have been duly registered under such laws. Unless the shares have
        been
        registered under all applicable laws, the Optionee shall represent, warrant
        and
        agree, as a condition to the exercise of the Option, that the shares are
        being
        purchased for investment only and without a view to any sale or distribution
        of
        such shares and that such shares shall not be transferred or disposed of
        in any
        manner without registration under such laws, unless it is the opinion of
        counsel
        for the Company that such a disposition is exempt from such registration.
        The
        Optionee acknowledges that an appropriate legend giving notice of the foregoing
        restrictions shall appear conspicuously on all certificates evidencing the
        shares issued upon the exercise of the Option. 

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

      
        	
                8.

              	
                Effect
                  of a Covered
                  Transaction.

              


      

       

      Upon
        the
        effective date of a Covered Transaction (as defined in the Plan), the Option,
        to
        the extent not already vested as of such date, shall become vested and
        exercisable. The Option shall be assumed, shall terminate, or shall otherwise
        be
        adjusted as provided by the Administrator in accordance with Section 7 of
        the
        Plan.

       

      
        	
                9.

              	
                No
                  Right to Continued Employment.

              


      

       

      Nothing
        in this Agreement or the Plan shall be interpreted or construed to confer
        upon
        the Optionee any right with respect to continuance of Employment by the Company,
        nor shall this Agreement or the Plan interfere in any way with the right
        of the
        Company to terminate the Optionee’s Employment at any time.

       

      
        	
                10.

              	
                Adjustments.

              


      

       

      In
        the
        event of a change in capitalization of the Company, the Company may make
        appropriate adjustments to the number and class of Shares or other stock
        or
        securities subject to the Option and the purchase price for such Shares or
        other
        stock or securities. The Company’s adjustment shall be final, binding and
        conclusive for all purposes this Agreement.

       

      
        	
                11.

              	
                Withholding
                  of Taxes.

              


      

       

      
        	
                11.1

              	
                The
                  Company shall have the right to deduct from any distribution of
                  cash to
                  the Optionee an amount equal to the federal, state and local income
                  taxes
                  and other amounts as may be required by law to be withheld (the
                  “Withholding
                  Taxes”)
                  with respect to the Option. If the Optionee is entitled to receive
                  shares
                  of Stock upon exercise of the Option, the Optionee shall pay the
                  Withholding Taxes (if any) to the Company in cash prior to the
                  issuance of
                  such shares. In satisfaction of the Withholding Taxes, the Optionee
                  may
                  make a written election to have withheld a portion of the shares
                  issuable
                  to him or her upon exercise of the Option, having an aggregate
                  Fair Market
                  Value equal to the minimum required Withholding Taxes, provided
                  that, if
                  the Optionee may be subject to liability under Section 16(b) of
                  the
                  Exchange Act, the election must comply with the requirements applicable
                  to
                  share transactions by such
                  Optionee.

              


      

       

      
        	
                11.2

              	
                If
                  the Optionee makes a disposition, within the meaning of Section
                  424(c) of
                  the Code and regulations promulgated thereunder, of any share or
                  shares
                  issued to him pursuant to his exercise of the ISO within the two-year
                  period commencing on the day after the Grant Date or within the
                  one-year
                  period commencing on the day after the date of transfer of such
                  share or
                  shares to the Optionee pursuant to such exercise, the Optionee
                  shall,
                  within ten (10) days of such disposition, notify the Company thereof,
                  by
                  delivery of written notice to the Company at its principal executive
                  office.

              


      

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      

      
        	
                12.

              	
                Modification
                  of Agreement.

              


      

       

      Except
        as
        expressly provided in this Agreement and in the Plan, this Agreement may
        be
        modified, amended, suspended or terminated, and any terms or conditions may
        be
        waived, only by a written instrument executed by the parties
        hereto.

       

      
        	
                13.

              	
                Severability.

              


      

       

      Should
        any provision of this Agreement be held by a court of competent jurisdiction
        to
        be unenforceable or invalid for any reason, the remaining provisions of this
        Agreement shall not be affected by such holding and shall continue in full
        force
        in accordance with their terms.

       

      
        	
                14.

              	
                Governing
                  Law.

              


      

       

      The
        validity, interpretation, construction and performance of this Agreement
        shall
        be governed by the laws of the State of Delaware without giving effect to
        the
        conflicts of laws principles thereof.

       

      
        	
                15.

              	
                Successors
                  in Interest.

              


      

       

      This
        Agreement shall inure to the benefit of and be binding upon each successor
        corporation to the Company. This Agreement shall inure to the benefit of
        the
        Optionee’s legal representatives. All obligations imposed upon the Optionee and
        all rights granted to the Company under this Agreement shall be final, binding
        and conclusive upon the Optionee’s heirs, executors, administrators and
        successors.

       

      
        	
                16.

              	
                Resolution
                  of Disputes.

              


      

       

      Any
        dispute or disagreement which may arise under, or as a result of, or in any
        way
        relate to, the interpretation, construction or application of this Agreement
        shall be determined by the Administrator. 

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

      

      IN
        WITNESS WHEREOF, the parties have executed this Agreement effective as of
        the
        date first above written.

       

       

      
        	 	
                ORION
                  HEALTHCORP,
                  INC.

              
	 	 
	 	By:
	 	Name:
	 	Title:
	 	 


      

       

       

      By
        signing below, Optionee hereby accepts the Option subject to all its terms
        and
        provisions and agrees to be bound by the terms and provisions of this Agreement
        and of the Plan. Optionee hereby agrees to accept as binding, conclusive
        and
        final all decisions or interpretations of the Company upon any questions
        arising
        under this Agreement or the Plan. Optionee authorizes the Company to withhold,
        in accordance with applicable law, from any compensation payable to him or
        her,
        any taxes required to be withheld by federal, state or local law as a result
        of
        the grant, existence or exercise of the Option.

       

      


      
        	 	 	
                OPTIONEE

              
	 	 	 
	 	Signature:	 
	 	Name: 	 


      

      


      
 

      [EXHIBIT
        FOLLOWS]

      


      



      
        
          
              

          

           

        

        
          6

          
            

          

        

        
           

          
          

        

      



      EXHIBIT
        A

      


      OPTION
        EXERCISE FORM

      


      I,
        _____________________________, do hereby exercise the Option with a Date
        of
        Grant of ___________________, ______ granted to me pursuant to the Option
        Agreement. The Shares being purchased and the Total Option Exercise Price
        are
        set forth below:

      


      
        	 	 
	
                Number
                  of Incentive Stock Option Shares:

              	
                ________________
                  Shares

              
	
                 

                Total
                  Number of Shares

              	
                 

                ________________
                  Shares

              
	
                 

                Option
                  Exercise Price Per Share

              	
                 

                x
                  $
                  ____________ per Share

              
	
                 

                Total
                  Option Exercise Price:

              	
                 

                =
                  $
                  ____________.

              


      

      


      


      The
        Total
        Option Exercise Price is included with this Form.

      


      


      
        	
                ____________________________________

                Signature

              	
                Date:
                  ___________________

              


      

      


      


      


      Send
        or
        deliver this Form with an original signature to:

      


      Orion
        HealthCorp, Inc.

      1805
        Old
        Alabama Road, Suite 350

      Roswell,
        Georgia 30076

      Attn:
        ____________________