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EXHIBIT 10.8
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is made as of the third day
of April, 1997, between Xxxxxx General Corporation, a California corporation
(the "Company"), and Xxxxxx X. Xxxxxxxxxxx ("Christoffel ").
The Company hereby grants an option to purchase shares of the Company's
Common Stock to Christoffel , and Christoffel hereby accepts the option, on the
following terms and conditions:
Section 1. GRANT OF OPTION.
The Company hereby grants to Christoffel the right and option ("Option")
to purchase up to Three Hundred Fifty Thousand (350,000) shares of the Company's
authorized but unissued Common Stock (the "Shares"), all of which have been
reserved for issuance pursuant to the Option.
Section 2. OPTION PRICE.
The Option price shall be $1.53 per share, representing the closing bid
price of the Common Stock on the last trading day before the issuance of the
Option, subject to adjustment as provided in Section 6 hereof
Section 3. WHEN OPT10N MAY BE EXERCISED.
Each Option issued pursuant to Section 1 shall be exercisable at any time
and from time to time, as to all or any portion of the Shares, from the date
hereof until the close of business on the fifth anniversary of the date of this
Option.
Section 4. INVESTMENNT REPRESENTATION OF EMPLOYEE.
Christoffel acknowledges that the Option and the Shares issuable upon
exercise of the Option (the "Restricted Securities") have not been registered
under the Securities Act of 1933, as amended (the "Act") or applicable state
securities laws. Christoffel acknowledges that the offer, sale and delivery of
the Restricted Securities to him is made in reliance upon his representations,
warranties, agreements and undertakings reflected herein. Christoffel represents
and warrants that he is acquiring the Restricted Securities solely for his own
account and interest and not with a view to distribute them to the public.
Christoffel understands and agrees that unless the Restricted Securities either
are registered under the Act or are disposed of in transactions for which
exemptions from such registration are available, Christoffel must continue to
own and hold the Restricted Securities for his own account and interest
indefinitely. Christoffel further understands that whether an exemption from the
registration requirements of the Act will be available for such future
transactions as he may propose will depend upon the nature of each such
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transaction, the pertinent surrounding facts and circumstances then extant, and
the then applicable law.
Any certificate evidencing the Restricted Securities shall bear a legend
substantially in the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY
APPLICABLE STATE SECURITIES LAW.
Section 5. EXERCISE OF OPTION.
The Option, or any portion of the Option, may be exercised from time to
time, in whole or in part, in accordance with the provisions of Section 3 above,
which exercise shall be effective immediately upon written notice to the Company
at its principal offices, setting forth the number of Shares with respect to
which the Option is being exercised, accompanied by the full amount of the
purchase price for such Shares. The purchase price shall be payable in cash or
by check. Upon receipt of notice and payment, the Company shall promptly make
arrangements for the issuance to Christoffel of the number of Shares as to which
the Option was exercised. Upon exercise of the Option, the number of Shares
subject to the Option shall be automatically reduced to the extent of the number
of Shares as to which the Option is exercised, and the Option shall remain in
effect as to the remaining number of Shares. The Company reserves the right to
require Christoffel, before receipt of the Shares, to represent and warrant in
writing, in form and substance reasonably satisfactory to the Company, that the
Shares purchased are being acquired without any view to distribution and to
agree in writing to the imposition of legends on the share certificates setting
forth any restrictions upon disposition required by applicable federal or state
securities laws.
Section 6. ADJUSTMENTS.
If all or any portion of the Option is exercised subsequent to any stock
dividend, split-up, recapitalization, combination or exchange of shares, merger,
consolidation, acquisition of property for stock, separation, reorganization, or
liquidation, as a result of which shares of any class shall be issued in respect
of outstanding shares of Common Stock, or shares of Common Stock shall be
changed into the same or a different number of shares of the same or another
class or classes, Christoffel shall receive, upon the exercise of such exercise
right, the aggregate number and class of shares which, if the Option had been
exercised at the date hereof and the shares acquired thereby had not been
disposed of, Christoffel would be holding as a result of any such stock
dividend, split-up, recapitalization, combination or exchange of shares, merger,
consolidation, acquisition of
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property for stock, separation, reorganization, or liquidation; provided,
however, that no fractional share shall be issued upon any such exercise.
Section 7. ASSIGNABILITY OF THE OPTION.
The Option may not be assigned, transferred, pledged, hypothecated, sold
or otherwise disposed of, in whole or in part, either voluntarily or
involuntarily, except with the prior written consent of the Company, and the
Option may be exercised, during the lifetime of Christoffel, only by him. Any
attempted assignment, transfer, pledge, hypothecation, sale or other disposition
of the Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect. Notwithstanding the foregoing, upon the death of Christoffel,
the Option may be exercised by the estate and/or beneficiary of Christoffel.
Section 8. REGISTRATION RIGHTS.
The Company covenants and agrees to provide the following registration
rights at any time from and after the date of this Agreement to Christoffel:
8.1 (a) If the Company receives a written request from
Christoffel that the Company effect a registration statement and any related
blue sky qualification or compliance with respect to all or a part of the Shares
of the Common Stock of the Company issued or issuable upon exercise of the
Option ("Registrable Shares "), the Company will, as soon as reasonably
practicable, effect such registration and all such qualifications and
compliances as would reasonably permit or facilitate the sale and distribution
of all or such portion of the Registrable Shares; provided, however, that the
Company shall not be obligated to effect any such registration, qualification or
compliance, pursuant to this Section 8.1: (1) if the Company shall furnish to
Christoffel a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the registration statement for a period of not more than 60
days after receipt of the request under this Section 8.1; provided, however,
that the Company shall not utilize this right more than once; (2) if the Company
has already effected a registration pursuant to this Section 8.1; or (3) in any
particular jurisdiction in which the Company would be required to qualify to do
business in effecting such registration, qualification or compliance. Subject to
the foregoing, the Company shall file a registration statement covering the
Registrable Shares as soon as practicable after receipt of the request.
(b) Whenever the Company proposes to file a registration
statement relating to any of its capital stock under the Act, other than a
registration statement required to be filed in respect of employee benefit plans
on Form S-8 or similar form or any registration statement on Form S-4 or similar
form relating to securities issued in connection with a reorganization, the
Company shall, at least seven business days prior
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to such filing, give written notice thereof to Christoffel. Upon receipt by the
Company, not more than four business days after receipt of such notice by
Christoffel, of a written request by Christoffel for registration of all or a
portion of the Registrable Shares then owned by Christoffel, the Company shall
include such Registrable Shares in such registration statement or in a separate
registration statement concurrently filed, and shall use all reasonable efforts
to cause such registration statement to become effective with respect to such
Registrable Shares, unless the managing underwriter therefor concludes in its
reasonable good faith judgment that compliance with this Section 8.1 would
materially adversely affect such offering. If the managing underwriter
determines in good faith that a portion but not all of such Registrable Shares
may be included, then only such portion shall be included.
8.2 The Company will use all reasonable efforts to cause such
registration statement to remain effective until the earlier of 45 days from the
effective date of the registration statement or the date that Christoffel
completes his distribution of the Registrable Shares. The Company will use all
reasonable efforts to effect such qualifications under applicable blue sky or
other state securities laws as may be reasonably requested by Christoffel to
permit or facilitate such sale or other distribution. The Company will cause the
Registrable Shares for which the registration statement is effected to be listed
on any national securities exchange or quoted on any stock quotation system on
which the shares of Common Stock are listed or quoted.
8.3 Christoffel shall furnish to the Company such information
as the Company may reasonably request and as shall be required in connection
with any registration, qualification or compliance referred to in this Section
8. The Company agrees to furnish to Christoffel the number of prospectuses,
offering circulars or other documents, or any amendments or supplements thereto,
incident to any registration, qualification or compliance referred to in this
Section 8 as Christoffel from time to time may reasonably request.
8.4 The Company will bear all expenses of registrations,
qualifications or compliance pursuant to this Section 8 (other than underwriting
discounts and commissions and brokerage commissions and fees, if any, payable
with respect to the Registrable Shares or the cost of counsel for Christoffel),
including, without limitation, registration fees, printing expenses, expenses of
blue sky or other state securities law registration or compliance, and legal and
auditing fees incurred by the Company in connection therewith.
8.5 In connection with any registration of Registrable Shares
pursuant to this Section 8, the Company agrees to provide reasonable cooperation
to Christoffel and any underwriters participating in such offering, including,
without limitation, entering into such customary underwriting or other
agreements (which may contain customary representations and warranties by the
Company and indemnification provisions); furnishing a customary comfort letter
or letters, dated the date of the final prospectus with respect to the
Registrable Shares, from the independent certified public accountants of the
Company and addressed to Christoffel and any such underwriters; furnishing an
opinion of counsel
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for the Company, dated the date of the closing of the sale of the Registrable
Shares, with respect to such matters as may be reasonably requested; and making
available for inspection by Christoffel and his agents all financial and other
records, corporate documents and properties of the Company as shall be
reasonably requested.
8.6 During the effectiveness of a registration statement in
which Registrable Shares are included pursuant to this Section 8, the Company
will notify Christoffel promptly of any notice from a regulatory authority
affecting the sale of the Registrable Shares and of any event or facts that, in
the reasonable judgment of the Company, should be set forth in such registration
statement. The Company will, as promptly as practicable, take such action as may
be necessary to amend or supplement such registration statement in order to set
forth or reflect such event or facts.
8.7 In the event of the registration of any Registrable Shares
pursuant to this Section 8, each party hereto (the "Indemnifying Party"), to the
extent permitted by law, shall indemnify and hold harmless the other party
hereto and its officers, directors, employees and agents (collectively, the
"Indemnified Parties") against any losses, claims, damages or liabilities, joint
or several (collectively, "Claims"), to which any of the Indemnified Parties may
become subject under the Act or otherwise, insofar as such Claims (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of material fact contained in the registration statement (or
any document contained in or incorporated by reference in the registration
statement) relating to the Registrable Shares, or arise out of or are based upon
any omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Indemnified Party for any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending
any Claims; provided however, that the Indemnifying Party will not be liable in
any such case to the extent that any such Claim arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged omission
made or incorporated by reference in such registration statement in reliance
upon and in conformity with written information provided by such Indemnified
Party specifically for use in the preparation thereof. The indemnity provided
by this paragraph shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Party. If the
indemnification provided for by this paragraph is unavailable to a party that
would have been an Indemnified Party in respect of any Claims, then each party
that would have been an Indemnifying Party shall, in lieu of indemnifying such
Indemnified Party, contribute to the extent permitted by law to the amount paid
or payable by such Indemnified Party as a result of such Claims in such
proportion as is appropriate on an equitable basis to reflect the relative fault
of the Indemnifying Party on the one hand and such Indemnified Party on the
other hand in connection with the statement or omission which resulted in such
Claims; provided, however, that no person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Act shall be entitled to contribution
from any person who was not found guilty of such fraudulent misrepresentation.
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Section 9. RESERVATION OF SHARES.
The Company will at all times reserve and keep available out of its
authorized capital stock, solely for issuance upon the exercise of this Option,
such number of shares of Common Stock as shall be issuable upon the exercise of
this Option. Such Common Stock, when issued pursuant to this Agreement, shall be
duly and validly issued, fully paid and nonassessable.
Section 10. RIGHTS OF OPTIONEE.
With respect to the shares underlying this Option, prior to the exercise
of this Option, except as otherwise provided herein, Christoffel shall not be
entitled to any rights of a stockholder of the Company, including without
limitation the right to vote, to receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive notice of
any proceedings of the Company.
Section 11. GENERAL PROVISIONS.
11.1 Severability. If any provision of this agreement is held to
be unenforceable for any reason, it shall be adjusted rather than voided, if
possible, to achieve the intent of the parties to the extent possible. In any
event, all other provisions of this agreement shall be deemed valid and
enforceable to the extent possible.
11.2 Successors. This agreement shall inure to the benefit of and
be binding upon the successors of the parties hereto.
11.3 Notices. Any notice or other communication provided for in
this agreement shall be in writing and sent if to the Company to its principal
office at 00-X Xxxxxxx, Xxxxxx, XX 00000, Attention: President, or at such other
address as the Company may from time to time in writing designate, and if to
Christoffel at 0000 Xxxxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000, or at such other
address as Christoffel may from time to time in writing designate. Each such
notice or other communication shall be effective (i) if given by
telecommunication, when transmitted to the applicable number specified pursuant
to this Section 11 and a verification of receipt is received, (ii) if given by
mail, three days after such communication is deposited in the mails with first
class postage prepaid, addressed as aforesaid or (iii) if given by any other
means, when actually delivered at such address.
11.4 Entire Agreement. This agreement contains the entire
agreement of the parties relating to the subject matter hereof and supersedes
any prior agreements, undertakings, commitments and practices relating to the
subject matter hereof.
11.5 Amendments. No amendment or modification of the terms of
this agreement shall be valid unless made in writing and duly executed by both
parties.
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11.6 Governing Law. This agreement shall be governed by and
construed in accordance with the laws of the State of California without regard
to conflicts of law doctrines and any court action arising out of this Agreement
shall be brought in any court of competent jurisdiction within the State of
California, County of Orange.
11.7 Headings. Section and other headings contained in this
agreement are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this agreement.
IN WITNESS WHEREOF, the parties have executed this Option as of the date
first above written.
XXXXXX GENERAL CORPORATION
By: /s/ XXXXXXX X. XXXXXX
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XXXXXXX X. XXXXXX, Chairman
/s/ XXXXXX XXXXXXXXXXX
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XXXXXX XXXXXXXXXXX
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WAIVER OF DEMAND REGISTRATION RIGHT
Provided that this agreement is executed on behalf of Xxxxxx General
Corporation, a California corporation (the "Company") and delivered to the
undersigned on or before May 30, 1997, the undersigned hereby agrees to amend
his Stock Option Agreement with the Company dated April 3, 1997 (the "Stock
Option Agreement") as follows:
1. The undersigned hereby waives his right to demand the filing of a
registration statement by the Company, pursuant to Section 8.1 of the Stock
Option Agreement, with respect to the resale by him of all or a portion of his
Registrable Securities (as that term is defined in the Stock Option Agreement).
2. In lieu of such demand registration right, the undersigned shall have
the right, at any time and from time to time, at the election of the
undersigned, to exercise his right for a cashless exercise of all or a portion
of the options subject to the Stock Option Agreement by notifying the Company
that he is exercising a number of options. The number of shares to be issued to
the undersigned shall equal the product of (a) the fair market value per share
less the exercise price, divided by the fair market value per share, times (b)
the number of options to be exercised. For purposes of the foregoing sentence,
the fair market value per share of the Company's Common Stock shall be deemed to
be the average of the closing sale or bid price of the Common Stock for the five
trading days immediately prior to the delivery of such election by the
undersigned to the Company.
All other terms and conditions of the Stock Option Agreement shall remain
unchanged.
Dated: May 21, 1997 /s/ XXXXXX X. XXXXXXXXXXX
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Xxxxxx X. Xxxxxxxxxxx
AGREED AND ACCEPTED:
XXXXXX GENERAL CORPORATION
By /s/ XXX X. XXXX
--------------------------------- Dated: May 21, 1997
Xxx X. Xxxx
