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 100,000 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, 2002 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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