STOCK OPTION AGREEMENT
AUTHORISZOR INC.
This unilateral grant by the Company (as hereinafter defined) constitutes
a valid Nonqualified Stock Option (the "Option") for a total of 200,000 shares
(the "Shares") of common stock, par value $.01 per share (the "Common Stock"),
of AUTHORISZOR INC., a Delaware corporation (the "Company") whose principal
executive offices are situated at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000, is hereby granted to XXXXXXX X. XXXXXXXX (the "Optionee") pursuant to
an Executive Employment Agreement dated as of January 1, 2000 between the
Company and the Optionee (the "Employment Agreement") and pursuant to the
terms of this Option Agreement (the "Option Agreement").
SECTION 1. EXERCISE PRICE. The exercise price of the Option is $6.75
for each Share.
SECTION 2. EXERCISE OF THE OPTION. This Option may be exercised on
January 1, 2001 and from time to time thereafter, subject to the provisions
contained in SECTIONS 3 AND 4 below.
(a) METHOD OF EXERCISE. Options shall be deemed properly exercised
when:
(i) the Company has received written notice of such exercise,
stating the number of Shares which are being purchased, delivered to
the Company and signed by the person or persons entitled to exercise
the Option and, if the Option is being exercised by any person or
persons other than the Optionee, be accompanied by proof,
satisfactory to the Company, of the right of such person or persons
to exercise the Option;
(ii) full payment of the exercise price of the Shares as to
which the Option is exercised has been tendered to the Company; and
(iii) arrangements that are satisfactory to the Board of
Directors of the Company (the "Board") in its sole discretion have
been made for the Optionee's payment to the Company of the amount, if
any, that the Company determines to be necessary for the Company to
withhold in accordance with applicable federal or state income, or
federal employment, tax withholding requirements.
(b) PAYMENT. The exercise price of any Shares purchased shall be
paid in cash, by certified or cashier's check, by money order or by
personal check (if approved by the Board); PROVIDED, FURTHER, that any
federal or state income, or federal employment, taxes which the Company
determines should be withheld, shall be paid by the Optionee to the
Company in cash, by certified or cashier's check, by money order or by
personal check (if approved by the Board).
(c) RESTRICTIONS ON EXERCISE.
(i) This Option may not be exercised if the issuance of the
Shares upon such exercise would constitute a violation of any
applicable federal or state securities or other law or valid
regulation. As a condition to the exercise of this Option, the
Company may require the exercising person to make any agreements and
undertakings that may be required by any applicable law or
regulation.
(ii) Shares issued upon the exercise of this Option without
registration of such Shares under the Securities Act of 1933, as
amended (the "Securities Act"), shall be restricted securities
subject to the terms of Rule 144 under the Securities Act. The
certificates representing any such Shares shall bear an appropriate
legend restricting transfer and the transfer agent of the Company
shall be given stop transfer instructions with respect to such
Shares.
(iii) At the request of the Optionee, the Company will file a
Registration Statement on Form S-8 registering the issuance of the
Shares; PROVIDED THAT the Company meets the requirements of Form S-8.
SECTION 3. TERM OF OPTION. This Option may not be exercised after
December 31, 2009 and is subject to earlier termination as provided in SECTION
4. In addition, this Option is subject to cancellation by the Company upon a
significant corporate event as provided in SECTION 4 below. This Option may
be exercised during such times only in accordance with the terms of this
Option Agreement.
SECTION 4. TERMINATION OF OPTION PERIOD.
The unexercised portion of this Option shall automatically and
without notice terminate and become null and void at the time of the
earliest to occur of the following:
(a) upon the date the Company terminates the Employment
Agreement for "Cause" pursuant to the terms of Paragraph 25 of the
Employment Agreement;
(b) upon the date on which the Optionee becomes physically or
mentally disabled, as defined by 29 C.F.R. Section 1630.2(g)(1), and
cannot perform the essential functions of his position, with
reasonable accommodation;
(c) upon the date of the death of the Optionee; or
(d) December 31, 2009.
SECTION 5. ACCELERATION OF OPTION PERIOD.
Upon the occurrence of either of the events described in Section 5(a)
or 5(b), the Option shall automatically vest in full and become
immediately exercisable.
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(a) a Sale of the Company, as defined in Paragraph 3 of the
Employment Agreement; or
(b) termination of the Optionee by the Company without cause
under Paragraph 24 of the Employment Agreement.
SECTION 6. ADJUSTMENT OF SHARES.
(a) If at any time while an unexercised Option is outstanding
hereunder, there shall be any increase or decrease in the number of issued
and outstanding shares of Common Stock through the declaration of a stock
dividend or through any recapitalization resulting in a stock split-up,
combination or exchange of shares, then and in such event proportionate
adjustment shall be made in the number of Shares and the exercise price
per Share thereof then subject to this Option, so that the same proportion
of the Company's issued and outstanding shares shall remain subject to
purchase at the same aggregate exercise price.
(b) Except as otherwise expressly provided herein, the issuance by
the Company of shares of its capital stock of any class, or securities
convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the
Company convertible into such shares or other securities, shall not
affect, and no adjustment by reason thereof shall be made with respect to
the number of or exercise price of Shares then subject to this Option.
(c) Without limiting the generality of the foregoing, the existence
of this Option shall not affect in any manner the right or power of the
Company to make, authorize or consummate (i) any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's
capital structure or its business; (ii) any merger or consolidation of the
Company; (iii) any issue by the Company of debt securities, or preferred
or preference stock that would rank above the Shares subject to this
Option; (iv) the dissolution or liquidation of the Company; (v) any sale,
transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a
similar character or otherwise.
SECTION 7. MARKET STAND OFF PERIOD. Optionee hereby agrees that, if so
requested by the Company or any representative of the underwriters in
connection with any registration of the offering (the "Offering") of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any of the Shares or other securities of the Company during
the 180-day period (or such other period as may be requested in writing by the
managing underwriter with respect to the Offering and agreed to by the
Company) (the "Market Standoff Period") following the effective date of a
registration statement of the Company filed under the Securities Act. Such
restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities
to be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
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instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
SECTION 8. NON-ASSIGNABILITY OF OPTION. This Option may be transferred
or assigned by the Optionee only to family members, trusts or other entities
for the benefit of the Optionee or for the benefit of the Optionee's family
members, by will or by the laws of descent and distribution or by the laws
regulating testate or intestate succession applicable to the Optionee.
SECTION 9. ISSUANCE OF SHARES. No person shall be, or have any rights
or privileges of, a stockholder of the Company with respect to any of the
Shares subject to this Option unless and until certificates representing such
Shares have been issued and delivered to such person. As a condition of an
issuance of a stock certificate for Shares, the Company may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of this Option Agreement or any law or
regulation, including, but not limited to, the following:
(a) The Optionee's representation and warranty to the Company, at
the time the Option is exercised, that the Shares to be issued are being
acquired for investment and not with a view to, or for sale in connection
with, the distribution of any such Shares; and
(b) The Optionee's representation, warranty or agreement to be bound
by any legends that are, in the opinion of the Company, necessary or
appropriate to comply with the provisions of any securities law deemed by
the Company to be applicable to the issuance of the Shares and to be
endorsed upon the certificates representing the Shares.
SECTION 10. ADMINISTRATION OF THIS OPTION.
(a) The determinations and the interpretation and construction of
any provision of this Option by the Company shall be final and conclusive.
(b) Subject to the express provisions of this Option, the Company
shall have the authority, in its sole and absolute discretion, to adopt,
amend, and rescind administrative and interpretive rules and regulations
relating to this Option and to perform all other acts necessary or
advisable for administering this Option, including the delegation of such
ministerial acts and responsibilities as the Company deems appropriate.
SECTION 11. GOVERNMENT REGULATIONS. The granting and exercise of this
Option and the obligation of the Company to sell and deliver Shares under this
Option, shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges
as may be required.
SECTION 12. LAW GOVERNING. THIS OPTION IS INTENDED TO BE PERFORMED IN
THE STATE OF DELAWARE AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SUCH STATE EXCEPT TO THE EXTENT DELAWARE LAW IS
PREEMPTED BY FEDERAL LAW.
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SECTION 13. NOTICES. Whenever any notice is required or permitted
under this Option Agreement, such notice must be in writing and personally
delivered or sent by mail or delivery by a recognized courier service. Any
notice required or permitted to be delivered under this Option Agreement shall
be deemed to be delivered on the date on which it is personally delivered, or,
if mailed, whether actually received or not, on the third business day after
it is deposited in the mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address that such person
has previously specified by written notice delivered in accordance with this
subsection. The Company or the Optionee may change, at any time and from time
to time, by written notice to the other, an address, or in the case of
Optionee the name and address of his counsel, that was previously specified
for receiving notices. Until changed in accordance with this Option Agreement,
the Company and the Optionee shall specify as its or his address for receiving
notices the address set forth in this Option Agreement pertaining to the
Shares to which such notice relates.
SECTION 14. MISCELLANEOUS.
(a) The Company has full corporate authority to grant this Option,
and this Option is granted to the Optionee in implementation of the
Employment Agreement describing such Option and is in addition to any
other stock option plans of the Company or other benefits with respect to
the Optionee's position with or relationship to the Company or its
subsidiaries. This Option shall not confer upon the Optionee the right to
continue as an employee, director, consultant or advisor, or interfere in
any way with the rights of the Company to terminate the Optionee's status
as an employee, director, consultant or advisor.
(b) The members of the Board shall not be liable for any act,
omission or determination taken or made in good faith with respect to this
Option, and members of the Board shall, in addition to all other rights of
indemnification and reimbursement, be entitled to indemnification and
reimbursement by the Company in respect of any claim, loss, damage,
liability or expense (including attorneys' fees, the costs of settling any
suit, provided such settlement is approved by independent legal counsel
selected by the Company, and amounts paid in satisfaction of a judgment,
except a judgment based on a finding of bad faith) arising from such
claim, loss, damage, liability or expense to the full extent permitted by
law and under any directors' and officers' liability or similar insurance
coverage that may from time to time be in effect.
(c) Any issuance or transfer of Shares to the Optionee, or to the
Optionee's legal representative, heir, legatee, or distributee, in
accordance with the provisions of this Option, shall, to the extent
thereof, be in full satisfaction of all claims of such persons under this
Option. The Company may require the Optionee, or any legal
representative, heir, legatee or distributee as a condition precedent to
such payment or issuance or transfer of Shares, to execute a release and
receipt for such payment or issuance or transfer of Shares in such form as
it shall determine.
(d) Neither the Board nor the Company guarantees Shares from loss or
depreciation.
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(e) All expenses incident to the administration, termination, or
protection of this Option, including, but not limited to, legal and
accounting fees, shall be paid by the Company; provided, however, the
Company may recover any and all damages, fees, expenses and costs arising
out of any actions taken by the Company to enforce its rights under this
Option.
(f) Records of the Company shall be conclusive for all purposes
under this Option, unless determined by the Board to be incorrect.
(g) Any action required of the Company relating to this Option shall
be by resolution of the Board or by a person authorized to act by
resolution of the Board.
(h) If any provision of this Option is held to be illegal or invalid
for any reason, the illegality or invalidity shall not affect the
remaining provisions of this Option, but such provision shall be fully
severable, and this Option shall be construed and enforced as if the
illegal or invalid provision had never been included in this Option.
(i) Any person entitled to notice under this Option may waive such
notice.
(j) This Option shall be binding upon the Optionee, his legal
representatives, heirs, legatees and distributees upon the Company, its
successors, and assigns, and upon the Board and its successors.
(k) The titles and headings of Sections are included for convenience
of reference only and are not to be considered in construction of this
Option's provisions.
(l) Words used in the masculine shall apply to the feminine where
applicable, and wherever the context of this Option dictates, the plural
shall be read as the singular and the singular as the plural.
DATE OF GRANT: AUTHORISZOR INC.
JANUARY 1, 2000
By:
---------------------------
XXXXX X. XXXXXXX
VICE PRESIDENT
ADDRESS:
Xxxxxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx
HG1 2PW
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Optionee hereby accepts this Option subject to all the terms and
provisions of this Option Agreement.
By:
------------------------
XXXXXXX X. XXXXXXXX
ADDRESS:
0 Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
COUNSEL:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxx & Green
phone: (000) 000-0000
fax: (000) 000-0000
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