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EXHIBIT 1
XOX CORPORATION
NON-QUALIFIED STOCK OPTION AGREEMENT
XOX Corporation, a Delaware corporation (the "Company"), hereby grants
to Xxxxxx X. Xxxxxxxxxxx (the "Optionee"), who is director of the Company, a
Non-Qualified Stock Option (the "Option"), pursuant to the following terms of
this Non-Qualified Stock Option Agreement (the "Agreement") dated December 2,
1997:
1. GRANT OF OPTION. This Option is subject to the terms and
provisions set forth below. The capitalized terms used herein are defined in
the Company's 1996 Omnibus Stock Plan and in the unanimous written consent of
the Board of Directors of XOX Corporation dated November 11, 1997, which are
incorporated by reference. The Option Price Per Share is 85% of the Fair Market
Value of the stock.
Grant Number 1
Date of Grant 11/11/97
Option Price Per Share $1.70
Total Number of Shares Granted 75,000
Total Price of Shares Granted $127,500
2. VESTING SCHEDULE. Subject to such further limitations as are
provided herein, the Option shall become exercisable during its term in whole
or in part in accordance with the following schedule:
25,000 Shares subject to the Option shall vest immediately on
the date of grant, with the balance of such options vesting in pro
rata equal installments on each of November 30, 1997, December 31,
1997 and January 31, 1998, or earlier in the event of a Change of
Control.
3. TERMINATION OF OPTION.
(a) This Option and all rights hereunder with respect
thereto, to the extent such rights shall not have been exercised, shall become
null and void after the expiration of ten (10) years from the date of grant
(the "Option Term").
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(b) In the event of termination of Optionee's relationship
with the Company, Optionee may, to the extent otherwise so entitled at
the date of such termination (the "Termination Date"), exercise this Option
within 90 days after such Termination. To the extent that Optionee was not
entitled to exercise this Option at the date of such termination, or if
Optionee does not exercise this Option within the time specified herein, unless
extended by the Committee or the Board of Directors the Option shall terminate.
(c) Upon the death of the Optionee, any Option exercisable
on the date of death may be exercised by the Optionee's estate or by a
person who acquires the right to such Option by bequest or inheritance or by
reason of the death of the Optionee, provided that such exercise occurs within
both the remaining option term and one year after the Optionee's death (but in
no event after the expiration date of this Option).
(d) Upon the termination of the Optionee's relationship
with the Company by reason of permanent disability or retirement (as
each is determined by the Committee), the Optionee may, within 12 months from
the date of such termination of employment, exercise any Non-Qualified Stock
Options to the extent such Non-Qualified Stock Options were exercisable at the
date of such termination of relationship with the Company.
4. EXERCISE OF OPTION. This Option shall be exercisable during
its term in accordance with Section 2 of this Agreement and this Section 4.
(a) Right to Exercise.
(i) This Option may not be exercised for a fraction
of a share.
(ii) In the event of Optionee's death, disability or
other termination of relationship with the Company, the exercisability of the
Option is governed by Sections 3 above and the Plan.
(iii) In no event may this Option be exercised after
the date of expiration of the term of this Option.
(b) Method of Exercise. The Optionee may exercise this
Option by giving written notice (in the form attached as Exhibit A) to
the Company which shall state the election to exercise the Option, and specify
the number of Shares in respect of which the Option is being exercised, and
such other representations and agreements as to the holder's investment intent
with respect to such shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan. Such written notice shall be signed by
the Optionee and shall be delivered in person or by certified mail to the
Company. The written notice shall be accompanied by payment of the Exercise
Price.
(c) Method of Payment. Payment of the Exercise Price
shall be by any of the following, or a combination thereof, at the
election of the Optionee:
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(i) cash; or
(ii) check; or
(iii) surrender of other shares of Common Stock of
the Company which (A) in the case of Shares acquired pursuant to the exercise
of a Company option, have been owned by the Optionee for more than six (6)
months on the date of surrender, and (B) have a fair market value on the date
of surrender equal to the Exercise Price of the Shares as to which the Option
is being exercised; or
(iv) delivery of a properly executed Broker-
Exercise Notice together with such other documentation as the
Committee shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the Exercise Price.
(d) Compliance with all Laws. No Shares will be issued
pursuant to the exercise of an Option unless such issuance and such
exercise shall comply with all relevant provisions of law and 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 Optionee on the date on which the Option is exercised with respect to
such Shares.
5. OPTIONEE'S REPRESENTATIONS. In the event the Shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, if required by the Company, concurrently with the
exercise of all or any portion of this Option, deliver to the Company his
Investment Representation Statement in the form attached hereto as Exhibit B.
6. NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by him.
The terms of this Option shall be binding upon the executors, administrators,
heirs, successors and assigns of the Optionee.
7. AMENDMENT OF THE OPTION.
(a) The Committee may, at any time, without further
action by the shareholders and without receiving further consideration from the
participants, amend, alter, suspend or discontinue the Option, but no
amendment, alteration, suspension or discontinuation shall be made which would
impair the rights of any Optionee under any goal theretofore made, without his
or her consent. This Option may also be amended in response to changes in
securities or other laws or rules, regulations or regulatory interpretations
thereof applicable or to comply with stock exchange rules or requirements.
(b) The Committee may at any time and from time to time
terminate or modify or amend the Option in any respect, except that without
shareholder approval the Committee may not (i) increase the maximum number of
shares of Common Stock which may be issued under the
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Option, (ii) extend the period during which any Option may be granted or
exercised, or (iii) extend the term of the Option. The termination or any
modification or amendment of the Option, except as provided in subsection (a),
shall not without the consent of an Optionee, affect his or her rights under an
Option previously granted to him or her.
8. RIGHT TO TERMINATE EMPLOYMENT. Nothing in this Option or in
any agreement entered into pursuant to the Option will interfere with or limit
in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Optionee at any time, nor confer upon any Optionee
any right to continue in the employ or service of the Company or Subsidiary.
9. NO RIGHTS OF STOCKHOLDERS. Neither the Optionee nor any
personal representative of the Optionee shall have any rights as a shareholder
with respect thereto unless and until certificates for shares of Common Stock
are issued to him.
10. ADJUSTMENT UPON CHANGES IN CAPITALIZATION OR CONTROL. In the
event of a change in capitalization or control of the Company, the adjustment
made to the Option, if any, shall be according to provisions of the Plan,
provided, however that no such adjustment shall give the Optionee any
additional benefits under the Option.
11. GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in
accordance with the laws of the State of Minnesota.
12. TAX CONSEQUENCES. The exercise of this Option, and the
subsequent sale or disposition of Shares thus acquired, shall have income tax
consequences for the Optionee, and it is Optionee's responsibility to determine
any such income tax liability.
XOX CORPORATION
a Delaware Corporation
By: /s/ Xxxxx Xxxxxx
Its: Interim Chief Executive Officer
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EXHIBIT A
STOCK OPTION EXERCISE NOTICE
XOX Corporation
0000 Xxxxxx Xxxx Xxxxx, Xxxxx 000
Xx. Xxxx, XX 00000
Attention: Chief Financial Officer
1. EXERCISE OF OPTION. Effective as of today, ____________,
199__, the undersigned ("Optionee") hereby elects to exercise Optionee's
option to purchase _________ shares of the Common Stock (the "Shares") of XOX
Corporation (the "Company") pursuant to the Non-Qualified Stock Option
Agreement dated December 2, 1997 (the "Option Agreement").
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that
Optionee has received, read and understood the Option Agreement and agrees to
abide by and be bound by their terms and conditions. Optionee represents that
Optionee is purchasing the Shares for Optionee's own account for investment and
not with a view to, or for sale in connection with, a distribution of any of
such Shares.
3. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right to
vote or receive dividends or any other rights as a shareholder shall exist with
respect to the optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the stock
certificate is issued.
Optionee shall enjoy rights as a shareholder until such time as
Optionee disposes of the Shares. Upon such exercise, Optionee shall have no
further rights as a holder of the Shares so purchased except the right to
receive payment for the Shares so purchased in accordance with the provisions
of this Agreement, and Optionee shall forthwith cause the certificate(s)
evidencing the Shares so purchased to be surrendered to the Company for
transfer or cancellation.
4. TAX CONSULTATION. Optionee understands that Optionee may
suffer adverse tax consequences as a result of Optionee's purchase or
disposition of the Shares. Optionee represents that Optionee has consulted
with any tax consultants Optionee deems advisable in connection with the
purchase or disposition of the Shares and that Optionee is not relying on the
Company for any tax advice.
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5. RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.
(a) Legends. Optionee understands and agrees that the
Company shall cause the legends set forth below or legends
substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be
required by state or federal securities laws:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, (THE "ACT") OR THE SECURITIES LAWS OF CERTAIN STATES
AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT PURSUANT TO
EFFECTIVE REGISTRATION STATEMENTS UNDER SAID LAWS UNLESS THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
IT THAT SUCH TRANSFER OR DISPOSITION DOES NOT REQUIRE
REGISTRATION UNDER SAID LAWS AND, FOR ANY SALES UNDER RULE 144
OF THE ACT, SUCH EVIDENCE AS IT SHALL REQUEST FOR COMPLIANCE
WITH THAT RULE."
(b) Stop-Transfer Notices. Optionee agrees that, in order
to ensure compliance with the restrictions referred to herein, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be
required (i) to transfer on its books any Shares that have been sold or
otherwise transferred in violation of any of the provisions of this Agreement
or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have
been so transferred.
6. MARKET STANDOFF AGREEMENT. Optionee hereby agrees that if so
requested by the Company or any representative of the underwriters in
connection with any registration of the offering of any securities of the
Company under the 1933 Act, Optionee shall not sell or otherwise transfer any
Shares or other securities of the Company during the 180-day period following
the effective date of a registration statement of the Company filed under the
1933 Act; provided, however, that such restriction shall only apply to the
first two registration statements of the Company to become effective under the
1933 Act which include securities to be sold on behalf of the Company to the
public in an underwritten public offering under the 1933 Act. The Company may
impose stop-transfer instructions with respect to securities subject to the
foregoing restrictions until the end of such 180-day period.
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7. SUCCESSORS AND ASSIGNS. The Company may assign any of its
rights under this Agreement to single or multiple assignees, and this Agreement
shall inure to the benefit of the successors and assigns of the Company.
Subject to the restrictions on transfer herein set forth, this Agreement shall
be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
8. INTERPRETATION. Any dispute regarding the interpretation of
this Agreement shall be submitted by Optionee or by the Company forthwith to
the Company's Board of Directors or the committee thereof that administers the
Plan, which shall review such dispute at its next regular meeting. The
resolution of such a dispute by the Board or committee shall be final and
binding on the Company and on Optionee.
9. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed
by and construed in accordance with the laws of the State of Minnesota
excluding that body of law pertaining to conflicts of law. Should any
provision of this Agreement be determined by a court of law to be illegal or
unenforceable, the other provisions shall nevertheless remain effective and
shall remain enforceable.
10. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company
the full Exercise Price for the Shares.
11. ENTIRE AGREEMENT. The Plan and Option Agreement are
incorporated herein by reference. This Agreement, the Plan and the Notice of
Grant/Option Agreement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter hereof, and is governed
by Minnesota law except for that body of law pertaining to conflict of laws.
Submitted by: Accepted by:
OPTIONEE: XOX Corporation
By:
----------------------------
--------------------------- Its:
(Signature) ---------------------------
Address: Address:
--------------------------- 0000 Xxxxxx Xxxx Xxxxx
Xxxxx 000
--------------------------- Xx. Xxxx, Xxxxxxxxx 00000
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE:
COMPANY: XOX CORPORATION
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
(a) Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the Company
to reach an informed and knowledgeable decision to acquire the securities.
Optionee is acquiring these securities for investment for Optionee's own
account only and not with a view to, or for resale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
(b) Optionee acknowledges and understands that the securities
constitute "restricted securities" under the Securities Act and have not been
registered under the Securities Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona fide
nature of Optionee's investment intent as expressed herein. In this
connection, Optionee understands that, in the view of the Securities and
Exchange Commission, the statutory basis for such exemption may be unavailable
if Optionee's representation was predicated solely upon a present intention to
hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to
register the securities. Optionee understands that the certificate evidencing
the securities will be imprinted with a legend which prohibits the transfer of
the Securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company, a legend prohibiting
their transfer without the consent of the Commissioner of Corporations of the
State of Minnesota and any other legend required under applicable state
securities laws.
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(c) Optionee is familiar with the provisions of Rule 701 and Rule
144, each promulgated under the Securities Act, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of exercise of the Option by the Optionee,
such exercise will be exempt from registration under the Securities Act. In
the event the Company later becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days
thereafter (or such longer period as any market stand-off agreement may
require) the securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144, including
among other things: (1) the sale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker (as said
term is defined under the Securities Exchange Act of 1934); and, in the case of
an affiliate, (2) the availability of certain public information about the
Company, and the amount of securities being sold during any three month period
not exceeding the limitations specified in Rule 144(e), if applicable.
In the event that the Company does not qualify under Rule 701 at the
time of exercise of the Option, then the securities may be resold in certain
limited circumstances subject to the provisions of Rule 144, which requires
among other things: (1) the resale occurring not less than one year after the
party has purchased and made full payment for, within the meaning of Rule 144,
the securities to be sold in the case of an affiliate, or in the case of of a
non-affiliate who has held the securities less than two years, (2) the
availability of certain public information about the Company, (3) the sale
being made through a broker in an unsolicited "broker's transaction" or in
transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934), and (4) the amount of securities being sold
during any three month period not exceeding the specified limitations stated
therein, if applicable.
(d) Optionee agrees, in connection with the Company's initial
underwritten public offering of the Company's securities, (1) not to sell, make
short sale of, loan, grant any options for the purchase of, or otherwise
dispose of any shares of Common Stock of the Company held by Optionee (other
than those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such initial underwritten
public offering of the Company's securities for one hundred eighty (180) days
from the effective date of such registration, and (2) further agrees to execute
any agreement reflecting (i) above as may be requested by the underwriters at
the time of the public offering; provided however that the officers and
directors of the Company who own the stock of the Company also agree to such
restrictions.
(e) Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied, registration
under the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rules 144 and 701 are not exclusive, the Staff of the Securities and
Exchange Commission has expressed its opinion that persons proposing to sell
private placement securities other than in a registered offering and otherwise
than pursuant to Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such offers
or sales, and
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that such persons and their respective brokers who participate in such
transactions do so at their own risk. Optionee understands that no assurances
can be given that any such other registration exemption will be available in
such event.
(f) Optionee understands that the certificate evidencing the
Securities will be imprinted with a legend which prohibits the transfer of the
Securities without the consent of the Commissioner of Corporations of
Minnesota. Optionee has read the applicable Commissioner's Rules with respect
to such restriction, a copy of which is attached.
Signature of Optionee:
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Date: , 19
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