EXHIBIT 10.22
EXHIBIT A TO
EXECUTIVE CONSULTING
AGREEMENT
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (this "Agreement") effective as of the
1st day of May, 2000 between XXXXXX XXXXXXXX'X INC., a Utah corporation with
offices at 0000 Xxxxxxxxxx Xxx, Xxxxx 000, Xxxxxxxxxxxx, Xxxxxxx 00000 (the
"Corporation"), and XXXXX X. XXXXXXXXXX (the "Optionee") residing at 000
Xxxxxxxx Xxxx, Xxxxx Xxxxx, Xxx Xxxx 00000
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, an affiliate of the Optionee is executing and
delivering contemporaneously with this Agreement an Executive Consulting
Agreement (the "Consulting Agreement") which provides for, among other things,
the requirement that the Corporation issue to the Optionee stock options to
acquire shares of the Corporation's common stock, par value $.37 per share (the
"Common Stock"); and
WHEREAS, the Optionee is executing and delivering the
Consulting Agreement for the purpose of confirming his intention, as the sole
stockholder of such affiliate, to cause such affiliate to perform the Consulting
Agreement; and
WHEREAS, the parties desire to set forth the terms and
conditions of the stock options in this Agreement;
NOW, THEREFORE, in consideration of the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereby agree as follows:
ARTICLE I
GRANT OF OPTIONS
Section 1.1 Grant of Option
On and as of the date hereof, the Corporation
irrevocably grants to the Optionee stock options to purchase
5,000,000 shares of the Common Stock (any such shares, the "Shares") upon the
terms and conditions set forth herein (the "Options").
Section 1.2 Exercise Price
Subject only to the terms of Section 2.3 of this Agreement,
the exercise price shall be $.37 per Share without
commission or other charge (the "Exercise Price"). The Special Exercise Price
described in Section 2.3 of this Agreement shall be $.01 without commission or
other charge.
Section 1.3 Adjustments in Options
In the event of a stock split, stock dividend, combination of
shares or similar event or in the event that the outstanding shares of Common
Stock subject to the Options are, from time to time, changed into or exchanged
for a different number or kind of shares of Common Stock or other securities of
the Corporation by reason of a merger, consolidation, recapitalization,
reclassification, or otherwise, the Corporation shall make an appropriate and
equitable adjustment in the number and kind of shares or other consideration as
to which the Options, or portions thereof then unexercised, shall be
exercisable.
ARTICLE II
PERIOD OF EXERCISABILITY
Section 2.1 Exercisability
The Options are fully vested immediately upon the execution
and delivery of this Agreement, subject only to the forfeiture provisions set
forth in Section 2.2 of this Agreement. The Options shall remain exercisable
until 5:00 p.m. New York City time on September 30, 2007 (the "Expiration
Date").
Section 2.2 Forfeiture of Options
In the event the retention of RJS Consulting Corp. (the
"Executive") under the Consulting Agreement is terminated by the Executive for
any reason other than Good Reason (as such term is defined in the Consulting
Agreement) or by the Corporation for Cause (as such term is defined in the
Consulting Agreement) at any time prior to October 1, 2002, then the Optionee
shall forfeit that number of Options (to the extent not previously exercised)
equal to the product of 100,000 times the number of months between the Date of
Termination (as such term is defined in the Consulting Agreement) and October 1,
2002. Any such forfeited Options shall be deemed null and void.
Section 2.3 Special Exercises
(a) Notwithstanding any other provision of this Agreement, in
the event the retention of the Executive under the Consulting Agreement is
terminated by the Executive for Good Reason, or is terminated by the Corporation
without Cause, the Optionee may exercise all outstanding Options at any time
before the Expiration Date at the Special Exercise Price set forth in Section
1.2 of this Agreement.
(b) Notwithstanding any other provision of this
Agreement, in the event the retention of the Executive under the
Consulting Agreement is terminated by reason of the death or
Disability (as such term is defined in the Consulting Agreement) of the
Optionee, the Options shall remain exercisable through the Expiration Date at
the Exercise Price.
ARTICLE III
EXERCISE OF OPTION
Section 3.1 Persons Eligible to Exercise
During the Optionee's lifetime, only the Optionee may exercise
the Options. After the death or Disability (as such term is defined in the
Consulting Agreement) of the Optionee and prior to the close of business on the
Expiration Date, the Options may be exercised by the Optionee's personal
representative, conservator, or by any person empowered to do so under the
Optionee's will or under the then applicable laws of descent and distribution.
The party entitled to exercise the Options shall be referred to herein as the
"Exercising Party."
Section 3.2 Partial Exercise
The Options or any exercisable portion thereof may be
exercised in whole or in part at any time prior to the close of business on the
Expiration Date.
Section 3.3 Manner of Exercise
The Options may be exercised solely by delivering to the
Corporation all of the following prior to the close of business on the
Expiration Date:
(a) Notice in writing signed by the Exercising Party,
stating the number of Shares with respect to which the Options
are exercised;
(b) Full payment (in cash, by check or by a combination
thereof) for the Shares with respect to which such Options or portion thereof is
exercised, at either the Exercise Price or the Special Exercise Price, whichever
applies;
(c) In the event that the Exercising Party is not the
Optionee, appropriate proof, in the reasonable judgment of the
Corporation, of the right of such person to exercise the Options;
and
(d) The Corporation covenants to provide to the Optionee, upon
Optionee's or Optionee's representative's request, a loan to enable Optionee to
exercise the Options hereunder. Any such loan shall have a term of ten (10)
business days and shall be interest-free.
Section 3.4 Shares to be Issued
The Shares deliverable upon the exercise of the Options, or
any portion thereof, shall be fully paid and nonassessable. Promptly after
proper exercise of the Options or any portion thereof, the Corporation shall
deliver to the
Optionee one or more stock certificates for the appropriate number of Shares
issued in connection with such exercise. The Corporation shall not deduct from
or withhold any Shares issuable pursuant hereto on account of any Federal, State
or local income or other taxes.
Section 3.5 No Rights as Stockholder
Neither the Optionee nor any Exercising Party shall be a
stockholder of the Corporation as to any Shares covered by the Options prior to
the exercise of the Options.
ARTICLE IV
REGISTRATION RIGHTS
Section 4 Registration of Securities
(a) If, at any time the Corporation proposes to register any
of its securities under the Securities Act of 1933, as amended (the "Securities
Act") other than in connection with a merger or pursuant to Form S-8 or other
comparable form, it will give written notice by registered mail, at least thirty
(30) days prior to the filing of any such registration statement, pre- effective
or post-effective amendment thereto (the "Registration Statement"), to the
Optionee of its intention to do so. If the Optionee notifies the Corporation
within twenty (20) days after receipt of any such notice of his desire to
include the Shares purchased pursuant to this Agreement and owned by him in such
proposed Registration Statement, the Corporation shall afford the Optionee the
opportunity to have all or any of his shares registered under such Registration
Statement. However, there can be no assurance that the Corporation will
effectuate any public offering of its securities.
If the managing underwriter in such underwritten offering
shall advise the Corporation that it declines to include a portion or all of the
Shares requested by the Optionee or its Permitted Assignee (collectively, the
"Holders") in the Registration Statement, then (i) registration of all of the
Shares sold in connection with the Offering shall be excluded from such
Registration Statement on the condition that all securities to be registered by
other selling security holders, if any, are also excluded and (ii) registration
of a portion of such Shares shall be excluded if such portion is allocated among
the Optionee and any other selling security holders in proportion to the
respective numbers of securities to be registered by each such Holder and other
selling security holder. In such event the Corporation shall give the Optionee
prompt notice of the number of Shares excluded.
Notwithstanding the provisions of this Section 4(a), the
Corporation shall have the right at any time after it shall have given written
notice pursuant to this Section (irrespective of whether a written request for
inclusion of the Shares shall have been made) to elect not to file any such
proposed registration statement, or to withdraw the same after the filing but
prior to the effective date thereof.
(b) In the case of each registration effected by the
Corporation pursuant to Section 4(a), the Corporation will keep the Optionee or
its Permitted Assignee advised in writing as to the initiation of each
registration and as to the completion thereof. As used in this Agreement,
"Permitted Assignee" shall mean an "affiliate" of the Optionee as defined in
Rule 144 of the Securities Act or any other transferee pursuant to a transfer
made in compliance with applicable state and federal securities laws. At its
expense, the Corporation will:
(i) Keep such registration effective for a period of 9
months or until the Optionee or his Permitted
Assignee has completed the distribution described in
the Registration Statement relating thereto,
whichever occurs later.
(ii) Furnish such number of prospectuses and other
documents incident thereto as the Optionee or its
Permitted Assignee from time to time may reasonably
request.
(c) Indemnification will be furnished as follows:
(i) The Corporation will indemnify the Optionee and
any Permitted Assignees whose Shares are included
in any registration when registration has been
effected pursuant to paragraph (a), and each
underwriter, if any, and each person who controls
any underwriter within the meaning of the
Securities Act or the Securities Exchange Act of
1934, as amended (the "Exchange Act") against all
claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue
statement) of a material fact contained in any
registration statement or prospectus incident to
any such registration or based on any omission (or
alleged omission) to state therein a material fact
required to be stated therein or necessary to make
the statements therein not misleading, provided
that the Corporation will be not be liable in any
such case to the extent that any such claim, loss,
damage, liability or expense arises out of or is
based on any untrue statement or omission based
upon information furnished to the Corporation by
the Optionee or a Permitted Assignee whose Shares
are included in such registration or by any
underwriter specifically for use herein.
(ii) The Optionee and each Permitted Assignee will, if
Shares held by them are included in the securities
as to which such registration is being effected,
indemnify the Corporation, each of its directors,
and officers and counsel and each underwriter, if
any, of the Corporation's securities covered by
the Registration Statement, each person who
controls the Corporation or such underwriter
within the meaning of the Exchange Act and the
Securities Act and the rules and regulations
thereunder, each other stockholder participating in
such distribution and each of his officers, directors
and partners, and each person controlling such other
stockholder, against all claims, losses, damages and
liabilities (or actions in respect thereto) arising
out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any
such registration statement, prospectus, or any
omission (or alleged omission) to state therein a
material fact required to be stated therein in order
to make the statements therein not misleading in each
case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such
document in reliance upon and in conformity with
information furnished to the Corporation by the
Optionee and each Permitted Assignee, including the
information set forth in this Agreement; provided,
however, that the obligations of the Optionee and
each Permitted Assignee hereunder shall be limited to
an amount equal to the proceeds received by such
holder or each Permitted Assignee, as the case may
be, of securities sold as contemplated herein.
(iii)Each party entitled to indemnification under this agreement
(the "Indemnified Party") shall give notice to the party
required to provide indemnification (the "Indemnifying Party")
promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom, provided
that counsel for the Indemnifying Party, who shall conduct the
defense of such claim or any litigation resulting therefrom,
shall be approved by the Indemnified Party (whose approval
shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense, and
provided further that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under Section 4 hereof.
Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be
reasonably required in connection with the defense of such
claim and any litigation resulting therefrom.
(d) The Optionee shall furnish to the Corporation such
information regarding the Optionee and any information relating to the
registration of any of the Corporation's securities proposed by the Optionee as
the Corporation may reasonably
request in writing and as shall be reasonably required in
connection with any registration.
(e) The rights granted pursuant to this Section 4 will expire
if the Shares issued upon exercise of the Options are available for sale under
Rule 144(k) of the Securities Act in the opinion of counsel to the Corporation.
ARTICLE V
MISCELLANEOUS
Section 5.1 Options Transferable
The Optionee's rights under this Agreement may be transferred
or assigned in the discretion of the Optionee, including, without limitation, by
will or by the applicable laws of descent and distribution and in connection
with brokerage accounts held by the Optionee. Neither the Options nor any
interest or right therein or part thereof shall be liable for the debts,
contracts or engagements of the Optionee or his legal successors or shall be
subject to disposition by transfer, alienation, anticipation, pledge,
encumbrance, assignment or any other means, whether such disposition be
voluntary or involuntary or occur by operation of law by judgement, levy,
attachment, garnishment or any other legal or equitable proceedings (including
bankruptcy), and any attempted disposition thereof shall be null and void and of
no effect. All of the terms and provisions of this Agreement shall be binding
on, and shall inure to the benefit of, the respective legal successors and
assigns of the parties.
Section 5.2 Shares to be Reserved
The Corporation shall at all times during the term of the
Options reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement.
Section 5.3 Arbitration
Any controversy or claim arising out of or relating to this
Agreement, the breach thereof, or any other aspect of the relationship between
the parties, or relating to the scope of this arbitration provision, shall be
settled exclusively by private arbitration before JAMS Endispute, New York, New
York (or any successor thereto) or, if such entity is no longer operating, such
other dispute resolution agency as may be acceptable to the Company and the
Optionee. The arbitration of such issues, including the determination of the
amount of any damages suffered by either party hereto by reason of the acts or
omissions of the other, shall be to the exclusion of any court of law. The
decision of the arbitrators or a majority of them shall be final and binding on
both parties and their respective heirs, executors, administrators, successors
and assigns. There shall be three arbitrators, one to be chosen directly by each
party and the third arbitrator to be selected jointly by the Company and the
Optionee from a list of arbitrators provided by JAMS
Endispute or such other dispute resolution agency. In all events the arbitrators
so chosen shall be experienced in the valuations and business operations of
closely-held business which complete and initial public offering of equity
securities under the Securities Act of 1933, as amended. Each party shall pay
the fees of the arbitrator selected by him and of his own attorneys and the
expenses of his witnesses and all other expenses connected with the presentation
of his case. All other costs of the arbitration, including the cost of the
record or transcripts thereof, if any, administrative fees, and all other fees
and costs shall be borne equally by the parties.
Section 5.4 Entire Agreement
This Agreement supersedes and cancels any and all prior
agreements between the parties hereto, express or implied, relating to the
subject matter hereof. This Agreement, together with the Consulting Agreement,
sets forth the entire agreement between the parties hereto. It may not be
changed, altered, modified or amended except in a writing signed by both
parties.
Section 5.5 Non-Waiver
The failure or refusal of either party to insist upon the
strict performance of any provision of this Agreement or to exercise any right
in any one or more instances or circumstances shall not be construed as a waiver
or relinquishment of such provision or right, nor shall such failure or refusal
be deemed a custom or practice contrary to such provision or right.
Section 5.6 Non-Assignment
The Optionee shall have no right to delegate any of the duties
created by this Agreement, and any delegation or attempted delegation of the
Optionee's duties, shall be null and void. In all other respects, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective heirs, beneficiaries, personal representatives, successors,
permitted assigns, officers and directors.
Section 5.7 Severability
If any paragraph, term or provision of this Agreement shall be
held or determined to be unenforceable, the balance of this Agreement shall
nevertheless continue in full force and effect unaffected by such holding or
determination. In addition, in any such event, the parties agree that it is
their intention and agreement that any such paragraph, term or provision which
is held or determined to be unenforceable as written, shall nonetheless be
enforced and binding to the fullest extent permitted by law as though such
paragraph, term or provision has been written in such a manner and to such an
extent as to be enforceable under the circumstances. Without limitation of the
foregoing, with respect to any restrictive covenant contained herein, if it is
determined that any such provision is excessive as to duration or scope, it is
intended that it nonetheless be enforced for such shorter duration or with such
narrower scope as will render it enforceable.
Section 5.8 Notices
All notices hereunder shall be in writing. Notices may be
delivered personally, or by mail, postage prepaid, to the respective addresses
noted above.
Section 5.9 Governing Law
This Agreement shall be governed in all respects by the laws
of the State of New York without regard to principles of conflicts of laws.
Section 5.10 Captions and Titles
Captions and titles have been used in this Agreement only for
convenience, and in no way define, limit or describe the meaning of this
Agreement or any part thereof.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto on the date first set forth above.
XXXXXX XXXXXXXX'X INC.
By:/s/Xxxxx Xxxxxxxx
Name: Xxxxx Xxxxxxxx
Title: Chairman
AGREED AND ACCEPTED BY:
/s/Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
