EXHIBIT 4.2
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT (this "Agreement") is
entered into this 27th day of August, 2002, by and between Dtomi, Inc., a
Nevada corporation (the "Company") and The Xxxx Law Group, PLLC, a Washington
professional limited liability company (the "Grantee"). Each of the Grantee
and the Company are also referred to in this Agreement as the "Parties."
RECITALS
WHEREAS, the Board of Directors of the Company (the "Board of
Directors") has authorized the grant to the Grantee, for certain legal
services to be rendered by the Grantee as a consultant to the Company pursuant
to the terms of a letter agreement for legal services dated October 23, 2001
(the "Engagement Agreement") between the Company and the Grantee, of a
non-qualified stock option (the "Option") to purchase the number of shares of
the Company's common stock (the "Common Stock") specified in Section 1 of this
Agreement, at the price specified in Section 1 of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the premises and mutual covenants
set forth in this Agreement, the Parties hereby agree as follows:
1. Number of Shares; Exercise Price. Pursuant to action taken by the
Board of Directors, the Company hereby grants to the Grantee, in consideration
of legal services which have been or are to be performed for the benefit of
the Company pursuant to the Engagement Agreement, an option ("Option") to
purchase the number of common shares ("Option Shares") of Common Stock set
forth below, at the exercise price set forth below:
Number of Option Shares: 600,000
Exercise Price per Option Share: $0.00001 per share
2. Term. The Option and this Agreement shall expire ten (10) years
from the date of this Agreement.
3. Shares Subject To Exercise. The Option shall be immediately
exercisable and shall remain exercisable for the entire Term specified in
Section 2 of this Agreement. Payment of the Exercise Price of the Option
Shares being purchased, may be made by a cashless exercise procedure whereby
the Option Shares issued upon exercise of the Option will be sold with the
Grantee receiving the difference between the Exercise Price and the sale
price, in cash, and the Company receiving the Exercise Price for the Option
Shares, in cash.
4. Method and Time of Exercise. The Option may be exercised in whole
or from time to time in part by written notice delivered to the Company
stating the number of Option Shares with respect to which the Option is then
being exercised, together with a check or wire transfer to the Company in the
amount equal to the Exercise Price multiplied by the number of Option Shares
then being issued pursuant to the written notice of exercise. Not less than
one hundred (100) Option Shares may be purchased upon exercise of the Option
at any one time unless the number of Option Shares for which exercise of the
Option is being made is all of the Option Shares then issuable upon exercise
of the Option. Only whole shares shall be issued upon exercise of the Option.
5. Tax Withholding. As a condition to exercise of the options Grantee
shall be liable to pay to all applicable federal, state and local taxes.
6. Exercise Following Termination of Engagement Agreement. The Option
shall not terminate as a result of the termination of Grantee's services as a
consultant to the Company pursuant to the Engagement Agreement.
7. Transferability. The Option and this Agreement may not be assigned
or transferred except by will or by the laws of descent and distribution, and
with consent of the Company.
8. Grantee Not a Shareholder. The Grantee shall have no rights as a
shareholder with respect to the Option Shares issued from time to time upon
exercise of the Option until the earlier of: (1) the date of issuance of a
stock certificate or stock certificates to the Grantee applicable to the
Option Shares then issuable to the Grantee upon exercise of the Option and (2)
the date on which the Grantee or his nominee is recorded as owner of such
Option Shares on the Company's stock ledger by the Company's registrar and
transfer agent, which may be the Company. Except as set forth in Section 13 of
this Agreement, no adjustment will be made for dividends or other rights for
which the record date is prior to the earlier of the events described in
clauses (1) and (2) of this paragraph.
9. Restrictions on Transfer. The Grantee represents and agrees that,
upon the Grantee's exercise of the Option in whole or in part, unless there is
in effect at that time under the Securities Act of 1933, as amended, a
registration statement relating to the Option Shares, the Grantee will acquire
the Option Shares for the purpose of investment and not with a view to their
resale or further distribution, and that upon such exercise hereof, the
Grantee will furnish to the Company a written statement to such effect,
satisfactory to the Company in form and substance.
10. Shares Qualified for Listing. Company represents that it is a
"reporting issuer" under the Securities Exchange Act of 1934, as amended, and
its Common Stock is qualified for trading or quotation on the Over-the-Counter
Bulletin Board.
11. Registration Rights. Upon signing this Agreement, the Company
shall immediately, at the Company's expense, use its best efforts to file with
the Securities and Exchange Commission ("SEC"), a registration statement
("Registration Statement") on Form S-8 or other comparable form, or if such
form is not then available, such other form of registration statement then
available, in such form as to comply with applicable federal and state laws
for the purpose of registering or qualifying the Option Shares for public
resale by the Grantee, and prepare and file with the appropriate state
securities regulatory authorities the documents reasonably necessary to
register or qualify the Option Shares, subject to the ability of the Company
to register or qualify the Option Shares under applicable state law.
12. Notices. All notices to the Company shall be addressed to the
Company at the principal office of the Company at 000 Xxxxx Xxxxxx Xxxxx Xxxxx
000, Xxxxxx Xxxxxx, Xxxxxxx, 00000, and all notices to the Grantee shall be
addressed to the Grantee at the address and facsimile number of the Grantee
set forth on the signature page of this Agreement or, if different, the last
address and facsimile number on file with the Company, or to such other
address and facsimile number as either may designate to the other in writing.
A notice shall be deemed to be duly given if and when enclosed in a properly
addressed sealed envelope deposited, postage prepaid and followed by facsimile
to the addressee. In lieu of giving notice by mail as aforesaid, written
notices under this Agreement may be given by personal delivery to the Grantee
or to the Company (as the case may be) by nationally recognized courier or
overnight delivery service.
2
13. Adjustments. If there is any change in the capitalization of the
Company after the date of this Agreement affecting in any manner the number of
kind of outstanding shares of Common Stock of the Company, whether by stock
dividend, stock split, reclassification or recapitalization of such stock, or
because the Company has merged or consolidated with one or more other
corporations (and provided the Option does not thereby terminate pursuant to
paragraph 14 of this Agreement), then the number and kind of shares then
subject to the Option and the exercise price to be paid for the Option Shares
shall be appropriately adjusted by the Board of Directors; provided, however,
that in no event shall any such adjustment result in the Company being
required to sell or issue any fractional shares. Any such adjustment shall be
made without change in the aggregate exercise price applicable to the
unexercised portion of the Option, but with an appropriate adjustment to the
exercise price of each Option Share or other unit of security then covered by
the Option and this Agreement.
14. Cessation of Corporate Existence. Notwithstanding any other
provision of this Agreement, in the event of the reorganization, merger or
consolidation of the Company with one or more corporations as a result of
which the Company is not the surviving corporation, or the sale of
substantially all the assets of the Company or of more than fifty percent
(50%) of the then outstanding stock of the Company to another corporation or
other entity in a single transaction, the Option granted hereunder shall
terminate, provided, however, that not later than five (5) days before the
effective date of such merger or consolidation or sale of assets in which the
Company is not the surviving corporation, the surviving corporation may, but
shall not be so obligated to, tender to the Grantee an option to purchase a
number of shares of capital stock of the surviving corporation equal to the
number of Option Shares then issuable upon exercise of the Option, and such
new option or options for shares of the surviving corporation shall contain
such terms, conditions and provisions as shall be required substantially to
preserve the rights and benefits of the Option and this Agreement.
15. Miscellaneous.
15.1 Entire Agreement. This Agreement and the Engagement
Agreement contain the entire agreement between the Parties, and may not be
waived, amended, modified or supplemented except by agreement in writing
signed by the Party against whom enforcement of any waiver, amendment,
modification or supplement is sought. Waiver of or failure to exercise any
rights provided by this Agreement and the Engagement Agreement in any respect
shall not be deemed a waiver of any further or future rights.
15.2 Governing Law. This Agreement shall be construed under
the internal laws of the State of Washington, and the Parties agree that the
exclusive jurisdiction for any litigation or arbitration arising from this
Agreement shall be in Seattle, Washington.
15.3 Counterparts. This Agreement may be executed by
facsimile and in two or more counterparts, each of which shall be deemed an
original, but which when taken together shall constitute one agreement.
15.4 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision(s)
shall be excluded from this Agreement and the balance of this Agreement shall
be interpreted as if such provision were excluded and shall be enforceable in
accordance with its terms.
3
IN WITNESS WHEREOF the Parties hereto have executed this Agreement as of the
date set forth below.
The Company: DTOMI, INC.
By: _______________________________
Name: Xxxx "JT" Thatch
Title: Chief Executive Officer,
President, Secretary and
Treasurer
The Grantee: THE XXXX LAW GROUP, PLLC
By: ______________________________
Name: Xxxxx X. Xxxx
Title: Member
Grantee's Address: 000 Xxxxxx Xxxxxx, Xxx. 0000
Xxxxxxx, Xxxxxxxxxx 00000
4
