Exhibit 10.28
STOCK OPTION AGREEMENT
This Stock Option Agreement (the "Agreement") is dated as of the 17th
day of October, 2002, by and between Rare Medium Group, Inc., a Delaware
corporation (the "Company") and XXXXX X. XXXXXX (the "Executive").
W I T N E S S E T H:
WHEREAS, for reasons set forth in the resolutions of Compensation
Committee of the Board of Directors of the Company (the "Committee"), the
Company desires to grant to the Executive a right to acquire shares of common
stock, par value $.01 per share (the "Common Stock") of the Company pursuant
to the 1998 Long Term Compensation Plan, as amended (the "Plan") according to
the terms and conditions provided herein.
NOW, THEREFORE, in consideration of the premises and covenants herein
set forth and other good and valuable consideration, the Company and the
Executive hereby agree as follows:
1. CONFIRMATION OF GRANT OF OPTION. Pursuant to a determination by the
Committee, the Company, subject to the terms and conditions of this Agreement,
hereby confirms that the Executive has been granted, effective October 15,
2002 (the "Date of Grant"), pursuant to the Plan, as a matter of separate
inducement and agreement, and in addition to and not in lieu of salary or
other compensation for services, the right to purchase from the Company
155,000 shares of Common Stock (the "Option"). The Option shall vest as
provided in Sections 4 and 5 hereof and shall be subject to adjustment as
provided in Section 6 hereof.
2. EXERCISE PRICE. The exercise price per share (the "Exercise Price")
for the Option shall be $0.85.
3. NON-TRANSFERABILITY OF OPTION. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated in any way,
and shall not be subject to execution, attachment or other process otherwise
than by will or by the laws of descent and distribution, and the Option may be
exercised during the lifetime of the Executive only by him. Any attempt at
assignment, transfer, pledge or disposition of the Option contrary to the
provisions hereof or the levy of any execution, attachment or similar process
upon the Option shall be null and void and without effect. Any exercise of the
Option by a person other than the Executive shall be accompanied by
appropriate proofs of the right of such person to exercise the Option.
4. TERM AND EXERCISE OF OPTION.
(a) The Option shall remain outstanding (subject to the vesting
and exercisability provisions provided herein and in Section 5 below) during a
period of ten (10) years beginning on the Date of Grant and ending on October
15, 2012 (the "Option Term"). Except as set forth in Sections 4(b) and 5
hereof, the Option shall vest ratably on an annual basis, commencing on the
date hereof and continuing for a period of three (3) years. Except as
otherwise provided in Section 5 hereof, any portion of the Option that has
vested (regardless of the provision of this Agreement pursuant to which
vesting occurred) shall remain exercisable in whole at any time or in part and
from time to time until the earlier to occur of the expiration of the Option
Term and the expiration of one year after the date of the termination of the
Executive's employment with the Company. The Executive shall not have any
rights to dividends or any other rights of a stockholder of the Company with
respect to any shares of Common Stock underlying the Option until such shares
have been issued to him upon the exercise of the Option.
(b) Notwithstanding any provision hereof to the contrary, Executive
may purchase all or any portion of the unexercised (including any unvested)
balance of this Option upon the effective date of a change in the control of
the Company, including, without limitation, (i) a merger or consolidation of
the Company into or with any other corporation when the Company is not the
surviving entity of such merger or consolidation, (ii) the acquisition,
directly or indirectly by any entity or "group" (as defined in Section 13(d)
of the Securities and Exchange Act of 1934, as amended), of stock or options,
or any combination thereof, (a) constituting a majority of the then
outstanding common stock of the Company or (b) possessing a majority of the
then outstanding voting power of the Company, (iii) any similar purchase or
other acquisition of a majority of the total equity interest of the Company,
(iv) the acquisition of all, or substantially all of, the assets of the
Company, or (v) the formation of a joint venture or partnership with the
Company for the purpose of effecting a transfer of control of, or a material
interest in, the Company (such merger, consolidation, sale or other
transaction being hereinafter referred to as a "Transaction"). There shall be
excluded from the foregoing any Transaction as a result of which (a) the
holders of Common Stock prior to the Transaction retain or acquire securities
constituting a majority of the outstanding voting common stock of the
acquiring or surviving corporation or other entity and (b) no single person
owns more than half of the outstanding voting common stock of the acquiring or
surviving corporation or other entity. For purposes of this Paragraph 4,
voting common stock of the acquiring or surviving corporation or other entity
that is issuable upon conversion of convertible securities or upon exercise of
warrants or options shall be considered outstanding, and all securities that
vote in the election of directors (other than solely as the result of a
default in the making of any dividend or other payment) shall be deemed to
constitute that number of shares of voting common stock which is equivalent to
the number of such votes that may be cast by the holders of such securities.
5. TERMINATION. The Executive's rights with respect to the Option upon
the termination of his employment with the Company are as follows:
(a) Cause. If the Executive is terminated from his employment with
the Company "for cause" (as defined in the Employment Agreement) in accordance
with Section 6 of the Employment Agreement, then any unvested portion of the
Option shall automatically terminate and be cancelled (without any action on
the part of the Company) on the effective date of termination.
(b) Termination other than for Cause. If the Executive ceases to be
employed by the Company for any reason other than "for cause" (as defined in
the Employment Agreement), then any portion of this Option that is unvested
shall automatically vest (without any action on the part of the Company or the
Executive) on the effective date that the Executive ceases to be an employee
of the Company.
6. CHANGES IN CAPITAL STRUCTURE. The number of Option shares (the
"Option Shares") covered by this Option and the Exercise Price shall be
equitably adjusted in the event (the "Event") of (i) the payment of any
dividend payable in, or the making of any distribution of, Common Stock to
holders of record of Common Stock, which increases the outstanding Common
Stock by more than 25%; (ii) any stock split, combination of shares,
recapitalization or other similar change; (iii) the merger or consolidation of
the Company into or with any other corporation; or (iv) the reorganization,
dissolution, liquidation or winding up of the Company, and the Executive shall
be entitled, upon the exercise of the Option, to entitle the Executive to
receive such new, additional or other shares of stock of any class, or other
property (including cash), as Executive would have been entitled to receive as
a matter of law in connection with such Event had Executive held the Option
Shares on the record date set for such Event. The Company shall have the
authority to determine the adjustments to be made under this Section 6 and any
such determination shall be final, binding and conclusive.
7. MANNER OF EXERCISE. Exercise of the Option shall be by written notice
to Company pursuant to Section 11 hereof. The notice shall be accompanied by
payment in full in cash. Upon receipt of such notice and payment, Company
shall deliver a certificate or certificates representing the Option Shares
purchased. The certificate or certificates representing the Option Shares
shall be registered in the name of the Executive, or if the Executive so
requests, shall be issued in or transferred into the name of the Executive and
another person jointly with the right of survivorship. The certificate or
certificates shall be delivered to or upon the written order of the Executive.
Neither the Executive nor his legal representative, legatees or distributees,
as the case may be, shall be or shall be deemed to be a holder of any shares
subject to this Option unless and until certificates for such shares are
issued to him or them upon the exercise of this Option. The Option Shares that
shall be purchased upon the exercise of the Option as provided herein shall be
fully paid and nonassessable.
8. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in this Agreement shall
confer upon the Executive the right to continue in the employ of the Company
or to be entitled to any right or benefit not set forth in this Agreement or
to interfere with or limit in any way the right of the Company to terminate
the Executive's employment in accordance with the Employment Agreement.
9. WITHHOLDING TAXES. The Company shall have the right to require the
Executive (or such other person, if any, who has the right to exercise the
Option) to pay to the Company in cash the amount of any federal, state, local
and foreign income and other taxes that the Company may be required to
withhold before delivering to the Executive (or such other person) a
certificate or certificates representing shares of Common Stock issuable
hereunder.
10. COMPLIANCE WITH APPLICABLE LAW/REGISTRATION. A registration
statement on Form S-8 covering the Option Shares is currently effective under
the Securities Act of 1933 (the "Act"). If such registration statement shall
cease to be effective for any reason, it shall be a condition to the exercise
of the Option that the Option Shares acquired upon such exercise be acquired
for investment and not with a view to distribution. If requested by the
Company upon advice of its counsel that the same is necessary or desirable,
the Executive shall, at the time of purchase of the Option Shares, deliver to
the Company Executive's written representation that Executive (a) is
purchasing the Option Shares for his own account for investment, and not with
a view to public distribution or with any present intention of reselling any
of the Option Shares (other than a distribution or resale which, in the
opinion of counsel satisfactory to the Company, may be made without violating
the registration provisions of the Act); (b) has been advised and understands
that (i) the Option Shares have are not subject to an effective registration
statement under the Act and are subject to restrictions on transfer and (ii)
the Company is under no obligation to register the Option Shares under the Act
or to take any action which would make available to the Executive any
exemption from such registration; and (c) has been advised and understands
that such Option Shares may not be transferred without compliance with all
applicable federal and state securities laws. This Section 10 shall apply only
to the extent that an effective registration statement is not in effect and is
required for the public sale by the Executive of the Common Stock underlying
the Option.
11. NOTICES. For the purposes of this Agreement, notices, demands and
all other communications provided for in this Agreement shall be in writing
and shall be deemed to have been duly given (i) when hand delivered, (ii) when
sent if sent by overnight mail, overnight courier or facsimile transmission or
(iii) (unless otherwise specified) when mailed by United States registered
mail, return receipt requested, postage prepaid, addressed, as follows:
If to Company: Rare Medium Group, Inc.
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
If to Executive: Xxxxx X. Xxxxxx
0 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
12. BENEFITS OF AGREEMENT. This Agreement shall inure to the benefit of
and be binding upon each successor and assign of the Company. All obligations
imposed upon the Executive and all rights granted to the Company under this
Agreement shall be binding upon the Executive and, to the limited extent set
forth herein, the Executive's heirs, legal representatives and successors. No
other person shall have any rights under this Agreement.
13. SEVERABILITY. In the event that any one or more provisions of this
Agreement shall be deemed to be illegal or unenforceable, such illegality or
unenforceability shall not affect the validity and enforceability of the
remaining legal and enforceable provisions herein, which shall be construed as
if such illegal or unenforceable provision or provisions had not been
inserted.
14. ENTIRE AGREEMENT. The parties hereto agree that this Agreement
contains the entire understanding and agreement between them, and supersedes
all prior understandings and agreements between the parties respecting the
subject matter hereof, and that the provisions of this Agreement may not be
modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by the parties hereto.
15. WAIVER. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision
of this Agreement to be performed by such other party shall be deemed a waiver
of similar or dissimilar provisions or conditions at the same or at any prior
or subsequent time.
16. GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Delaware, without regard to the
conflicts of law principles thereof.
17. INCORPORATION BY REFERENCE. The incorporation herein of any terms by
reference to another document shall not be affected by the termination of any
agreement set forth in such other document or the invalidity of any provision
thereof.
18. COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original but both of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by an authorized officer and the Executive has hereunto set his hand
all as of the day, month and year first above written.
Rare Medium Group, Inc.
By: /s/ XXXXXX X. XXXXX
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/s/ XXXXX X. XXXXXX
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Xxxxx X. Xxxxxx (Executive)
