Q COMM INTERNATIONAL, INC
Q COMM INTERNATIONAL, INC.
Option for the Purchase of 520,000
Shares of Common Stock
Par Value $0.001
STOCK OPTION AGREEMENT
THE HOLDER OF THIS OPTION, BY ACCEPTANCE HEREOF, BOTH WITH RESPECT TO THE OPTION
AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE OPTION, AGREES AND ACKNOWLEDGES
THAT THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER
THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES HAVE BEEN ACQUIRED FOR
INVESTMENT AND MAY NOT BE TRANSFERRED OR SOLD IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT OR OTHER COMPLIANCE UNDER THE SECURITIES ACT OR THE LAWS
OF THE APPLICABLE STATE OR A "NO ACTION" OR INTERPRETIVE LETTER FROM THE
SECURITIES AND EXCHANGE COMMISSION OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE ISSUER, AND ITS COUNSEL, TO THE EFFECT THAT THE SALE OR
TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH STATE
STATUTES.
This is to certify that, for value received, XXXXXXX X. XXXXXXXX (the
"Optionee") is entitled to purchase from Q COMM INTERNATIONAL, INC. (the
"Company"), on the terms and conditions hereinafter set forth, all or any part
of 520,000 shares ("Option Shares") of the Company's common stock, par value
$0.001 (the "Common Stock"), at the purchase price of $1.50 per share ("Option
Price"). Upon exercise of this option in whole or in part, a certificate for the
Option Shares so purchased shall be issued and delivered to the Optionee. If
less than the total option is exercised, a new option of similar tenor shall be
issued for the unexercised portion of the options represented by this Agreement.
This option is granted subject to the following further terms and
conditions:
1. This option shall vest with respect to a maximum of 520,000 Option
Shares (the "Performance Option Shares"), subject to continued employment by the
Company or its subsidiary, Q Comm, Inc., and become exercisable as stated below
and the option shall expire on April 30, 2004:
(a) 25,000 Performance Option Shares on each of May 3, and November 3,
1999, and May 3 and November 3, 2000;
(b) 20,000 Performance Option Shares on January 1, 2000, if the Company
secures financing in equity or debt by December 31, 1999 for at
least $500,000; or 30,000 Performance Option Shares on January 1,
2000, if the financing is at least $1,000,000; or 40,000 Performance
Option Shares on January 1, 2000, if the financing is at least
$1,500,000.
(c) 25,000 Performance Option Shares on March 31, 2001, if the Company's
gross revenue from operations for the year ending December 31, 2000,
as shown on the Company's audited financial statements (the "2000
Revenue Measure") is at least
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$6,000,000; or 65,000 Performance Option Shares on March 31, 2001,
if the 2000 Revenue Measure is at least $8,000,000; or 105,000
Performance Option Shares on March 31, 2001, if the 2000 Revenue
Measure is at least $10,000,000; or 120,000 Performance Option
Shares on March 31, 2001, if the 2000 Revenue Measure is at least
$12,000,000; or 135,000 Performance Option Shares on March 31, 2001,
if the 2000 Revenue Measure is at least $14,000,000 and
(d) 50,000 Performance Option Shares on May 29, 2000, if the average
Fair Market Value per share of Common Stock (as defined under
paragraph 3(e), below) over the four week period ending May 26, 2000
(the "Price Measure") is at least $3.00 per share and the average
weekly trading volume during said period is at least 20,000 shares;
or 75,000 Performance Option Shares on May 29, 2000, if the Price
Measure is at least $4.00 per share and the average weekly trading
volume during the four week period ending May 26, 2000, is at least
20,000 shares; or 100,000 Performance Option Shares on May 29, 2000,
if the Price Measure is at least $5.00 per share and the average
weekly trading volume during the four week period ending May 26,
2000, is at least 20,000 shares; or 125,000 Performance Option
Shares on May 29, 2000, if the Price Measure is at least $6.00 per
share and the average weekly trading volume during the four week
period ending May 26, 2000, is at least 20,000 shares.
In the event the Employment Agreement between the Company and Optionee dated May
3, 1999 (the "Employment Agreement"), is terminated by the Company for Cause as
defined in paragraph 14 of the Employment Agreement or is terminated by the
Optionee without Good Reason as defined in paragraph 14 of the Employment
Agreement, the right to exercise this option with respect to any of the
Performance Option Shares shall expire and terminate concurrently with the
termination of employment.
In the event the Employment Agreement is terminated by the Company without Cause
as defined in paragraph 14 of the Employment Agreement or is terminated by the
Optionee with Good Reason as defined in paragraph 14 of the Employment
Agreement, the right to exercise this option with respect to any of the
Performance Option Shares that are subject to vesting on the occurrence of
future events following the date of termination shall immediately vest and be
exercisable in accordance with the terms hereof.
In the event there is a Change in Control of the Company (as hereinafter
defined), the right to purchase all Performance Option Shares vested as of the
date of the Change in Control shall expire 120 days following the date of the
Change in Control, and all Performance Option Shares subject to vesting on the
occurrence of future events following the date of the Change in Control shall
immediately vest and expire 120 days following the date of the Change in
Control. For purposes of this Agreement, a "Change in Control" means the
occurrence of any one or more of the following:
(i) Any "person", as such term is used in Sections 13(d) and 14(d) of
the Securities Exchange Act of 1934, as amended ("Exchange Act"),
(other than the Company, a majority-owned subsidiary of the Company,
an affiliate of the Company within the meaning of the Exchange Act,
or a Company employee benefit plan, including any trustee of such
plan acting as trustee), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company (or a successor to the
Company) representing 50% or more of the combined voting power of
the then outstanding securities of the Company or such successor;
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(ii) At any time that the Company has shares registered under the
Exchange Act at least 50% of the directors of the Company constitute
persons who were not at the time of their first election to the
board of directors of the Company, candidates proposed by a majority
of such board of directors in office prior to the time of such first
election; or
(iii) (A) the dissolution of the Company or liquidation of more than 50%
in value of the Company or a sale of assets involving 50% or more in
value of the assets of the Company, (B) any merger or reorganization
of the Company whether or not another entity is the survivor,
pursuant to which the holders, as a group, of all of the shares of
the Company outstanding prior to the transaction hold, as a group,
less than 50% of the combined voting power of the Company or any
successor company outstanding after the transaction, (C) a
transaction or related set of transactions (including without
limitation a merger or tender offer together with a related purchase
of shares by the tender offeror in the market) pursuant to which the
holders, as a group, of all of the shares of the Company outstanding
prior to the transaction hold, as a group, less than 50% of the
combined voting power of the Company or any successor company
outstanding after the transaction, or (D) any other event which the
board of directors of the Company determines, in its discretion,
would materially alter the structure of the Company or its
ownership.
2. If the Employment Agreement is terminated by the Company without Cause
as defined in paragraph 14 of the Employment Agreement or is terminated by the
Optionee with Good Reason as defined in paragraph 14 of the Employment
Agreement, this option shall vest with respect to that number of Option Shares
(up to a maximum of 120,000 Option Shares) equal in number to the dollar amount
of the base salary of Optionee specified in paragraph 6 of the Employment
Agreement as of the date of termination of the Employment Agreement (the
"Termination Option Shares") and become exercisable as stated below at any time
on or before April 30, 2004.
3. In order to exercise this option with respect to all or any part of the
Option Shares for which this option is at the time exercisable, Optionee (or in
the case of exercise after Optionee's death, Optionee's executor, administrator,
heir or legatee, as the case may be) must take the following actions:
(a) Deliver to the Corporate Secretary of the Corporation an executed
notice of exercise in substantially the form of attached to this
Agreement (the "Exercise Notice") in which there is specified the
number of Option Shares which are to be purchased under the
exercised option.
(b) Pay the aggregate Option Price for the purchased shares through one
or more of the following alternatives:
(i) full payment in cash or by check made payable to the
Corporation's order;
(ii) full payment in shares of Common Stock held for the requisite
period necessary to avoid a charge to the Company's earnings
for financial reporting purposes and valued at Fair Market
Value on the Exercise Date (as such term is defined below);
(iii) full payment through a combination of shares of Common Stock
held for the requisite period necessary to avoid a charge to
the Company's earnings for
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financial reporting purposes and valued at Fair Market Value
on the Exercise Date and cash or check payable to the
Company's order;
(vi) full payment effected through a broker-dealer sale and
remittance procedure pursuant to which Optionee shall provide
concurrent irrevocable written instructions (i) to a brokerage
firm to effect the immediate sale of the purchased shares and
remit to the Company, out of the sale proceeds available on
the settlement date, sufficient funds to cover the aggregate
Option Price payable for the purchased shares plus all
applicable Federal, state and local income and employment
taxes required to be withheld in connection with such purchase
and (ii) to the Company to deliver the certificates for the
purchased shares directly to such brokerage firm in order to
complete the sale transaction; or
(v) full payment through conversion of the option to purchase
Option Shares into the number of fully paid and nonassessable
Option Shares calculated pursuant to the following formula:
X = Y(A-B)
------
A
where: X = the number of Option Shares to be issued to
the Optionee;
Y = the number of Option Shares for which the
conversion right is being exercised;
A = the Fair Market Value per share as of the date of
exercise of such conversion right; and
B = the Option Price with respect to such Option
Shares.
(c) Furnish to the Corporation appropriate documentation that the person
or persons exercising the option (if other than Optionee) have the
right to exercise this option.
(d) For purposes of this Agreement, the Exercise Date shall be the date
on which the executed Exercise Notice shall have been delivered to
the Company. Except to the extent the sale and remittance procedure
specified above is utilized in connection with the option exercise,
payment of the Option Price for the purchased shares must accompany
such Exercise Notice.
(e) For all valuation purposes under this Agreement, the Fair Market
Value per share of Common Stock on any relevant date shall be
determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or admitted to
trading on any national securities exchange but is traded on
the Nasdaq National Market, the Fair Market Value shall be the
mean between the highest "bid" and lowest "offered" quotations
of a share of Common Stock on such date (or if none, on the
most recent date on which there were bid and offered
quotations of a share of
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Common Stock), as reported by the Nasdaq National Market or
any successor system.
(ii) If the Common Stock is at the time listed or admitted to
trading on any national securities exchange, then the Fair
Market Value shall be the closing selling price per share on
the date in question on the securities exchange, as such price
is officially quoted in the composite tape of transactions on
such exchange. If there is no reported sale of Common Stock on
such exchange on the date in question, then the Fair Market
Value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.
(iii) If the Common Stock is not listed on such date on any national
securities exchange nor included in the Nasdaq National
Market, but is traded in the over-the-counter market, the
highest "bid" quotation of a share of Common Stock on such
date (or if none, on the most recent date on which there were
bid quotations of a share of Common Stock), as reported on the
Nasdaq Smallcap Market or the NASD OTC Bulletin Board, as
applicable.
(f) Upon such exercise, the Company shall issue and cause to be
delivered with all reasonable dispatch (and in any event within
three business days of such exercise) to or upon the written order
of the Optionee at its address, and in the name of the Optionee, a
certificate or certificates for the number of full Option Shares
issuable upon the exercise together with such other property
(including cash) and securities as may then be deliverable upon such
exercise. Such certificate or certificates shall be deemed to have
been issued and the Optionee shall be deemed to have become a holder
of record of such Option Shares as of the Exercise Date.
4. The Optionee acknowledges that the shares subject to this option have
not and will not be registered as of the date of exercise of this option under
the Securities Act or the securities laws of any state. The Optionee
acknowledges that this option and the shares issuable on exercise of the option,
when and if issued, are and will be "restricted securities" as defined in Rule
144 promulgated by the Securities and Exchange Commission and must be held
indefinitely unless subsequently registered under the Securities Act and any
other applicable state registration requirements. The Company is under no
obligation to register the securities under the Securities Act or under
applicable state statutes. In the absence of such a registration or an available
exemption from registration, sale of the Option Shares may be practicably
impossible. The Optionee shall confirm to the Company the representations set
forth above in connection with the exercise of all or any portion of this
option.
5. The number of Option Shares purchasable upon the exercise of this
option and the Option Price per share shall be subject to adjustment from time
to time subject to the following terms. If the outstanding shares of Common
Stock of the Company are increased, decreased, changed into or exchanged for a
different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, the Company or its successors and assigns shall make an appropriate and
proportionate adjustment in the number or kind of shares, and the per-share
Option Price thereof, which may be issued to the Optionee under this Agreement
upon exercise of the options granted under this Agreement. The purchase rights
represented by this option shall not be exercisable with respect to a fraction
of a share of Common Stock. Any fractional shares of Common Stock arising from
the dilution or other adjustment in the number of shares subject to this option
shall rounded up to the nearest whole share.
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6. The Company covenants and agrees that all Option Shares which may be
delivered upon the exercise of this option will, upon delivery, be free from all
taxes, liens, and charges with respect to the purchase thereof; provided, that
the Company shall have no obligation with respect to any income tax liability of
the Optionee and the Company may, in its discretion, withhold such amount or
require the Optionee to make such provision of funds or other consideration as
the Company deems necessary to satisfy any income tax withholding obligation
under federal or state law.
7. The Company agrees at all times to reserve or hold available a
sufficient number of shares of Common Stock to cover the number of Option Shares
issuable upon the exercise of this and all other options of like tenor then
outstanding.
8. This option shall not entitle the holder hereof to any voting rights or
other rights as a shareholder of the Company, or to any other rights whatsoever,
except the rights herein expressed, and no dividends shall be payable or accrue
in respect of this option or the interest represented hereby or the Option
Shares purchasable hereunder until or unless, and except to the extent that,
this option shall be exercised..
9. The Company may deem and treat the registered owner of this option as
the absolute owner hereof for all purposes and shall not be affected by any
notice to the contrary.
10. In the event that any provision of this Agreement is found to be
invalid or otherwise unenforceable under any applicable law, such invalidity or
unenforceability shall not be construed as rendering any other provisions
contained herein invalid or unenforceable, and all such other provisions shall
be given full force and effect to the same extent as though the invalid or
unenforceable provision were not contained herein.
11. This Agreement shall be governed by and construed in accordance with
the internal laws of the state of Utah, without regard to the principles of
conflicts of law thereof.
12. Except as otherwise provided herein, this Agreement shall be binding
on and inure to the benefit of the Company and the person to whom an option is
granted hereunder, and such person's heirs, executors, administrators, legatees,
personal representatives, assignees, and transferees.
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IN WITNESS WHEREOF, the Company has caused this option to be executed by
the signature of its duly authorized officer, effective this 3rd day of May,
1999.
Q COMM INTERNATIONAL, INC.
By /s/ Xxxx Xxxxxx
------------------------------------
Duly Authorized Officer
The undersigned Optionee hereby acknowledges receipt of a copy of the
foregoing option and agrees to the terms and conditions set forth in the option.
/s/ Xxxxxxx X. Xxxxxxxx
--------------------------------------
Xxxxxxx X. Xxxxxxxx
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Exercise Notice
(to be signed only upon exercise of Option)
TO: Q Comm International, Inc.
The Optionee, holder of the attached option, hereby irrevocable elects to
exercise the purchase rights represented by the option for, and to purchase
hereunder, ____________________________________ shares of common stock of Q Comm
International, Inc., and herewith makes payment therefor, and requests that the
certificate(s) for such shares be delivered to the Optionee at:
_____________________________________________________________________
_____________________________________________________________________
_____________________________________________________________________
If purchase is to be effected by conversion of the option to Common Stock,
the Optionee hereby converts option rights with respect to
______________________________________ Option Shares represented by the option.
If acquired without registration under the Securities Act of 1933, as
amended ("Securities Act"), the Optionee represents that the Common Stock is
being acquired without a view to, or for, resale in connection with any
distribution thereof without registration or other compliance under the
Securities Act and applicable state statutes, and that the Optionee has no
direct or indirect participation in any such undertaking or in the underwriting
of such an undertaking. The Optionee understands that the Common Stock has not
been registered, but is being acquired by reason of a specific exemption under
the Securities Act as well as under certain state statutes for transactions by
an issuer not involving any public offering and that any disposition of the
Common Stock may, under certain circumstances, be inconsistent with these
exemptions. The Optionee acknowledges that the Common Stock must be held and may
not be sold, transferred, or otherwise disposed of for value unless subsequently
registered under the Securities Act or an exemption from such registration is
available. The Company is under no obligation to register the Common Stock under
the Securities Act, except as provided in the Agreement for the option. The
certificates representing the Common Stock will bear a legend restricting
transfer, except in compliance with applicable federal and state securities
statutes.
The Optionee agrees and acknowledges that this purported exercise of the
option is conditioned on, and subject to, any compliance with requirements of
applicable federal and state securities laws deemed necessary by the Company.
DATED this ________ day of______________________, _________
____________________________________________
Signature
