EXHIBIT 10.2
STOCK OPTION AGREEMENT
AGREEMENT, made as of the 21st day of May, 1999 between BIG CITY
BAGELS, INC., a New York corporation ("Company"), and XXXX XXXXXXX ("Holder").
WHEREAS, Holder and Company have entered into a Severance and
Consulting Agreement ("Severance and Consulting Agreement") with respect to the
termination of Holder's employment with Company and his retention by Company as
a consultant thereto, dated as of the date hereof; and
WHEREAS, on May 12, 1999, the Board of Directors authorized the grant
to Holder, outside of any of the Company's Performance Equity Plans, of an
option (the "Option") to purchase an aggregate of 50,000 of the authorized but
unissued or treasury shares of the common stock of Company, $.001 par value
("Common Stock"), on the terms and conditions set forth in this Agreement,
conditioned upon a closing ("Closing") of the transactions contemplated by the
Agreement and Plan of Reorganization and Merger, dated as of May 21, 1999, among
the Company, Big City Acquisition Corp. I, and Big City Acquisition Corp. II,
and Intelligent Computer Solutions, Inc., VillageNet, Inc. and the shareholders
set forth on Schedule 2.1 thereto ("Merger Agreement"); and
WHEREAS, Holder desires to acquire said Option on the terms and
conditions set forth in this Agreement:
IT IS AGREED:
1. Grant of Stock Option. Company hereby grants Holder the Option to
purchase all or any part of an aggregate of 50,000 shares of Common Stock (the
"Option Shares") on the terms and conditions set forth herein, conditioned upon
the Closing. The Option and the rights provided to the Holder hereunder shall
become effective if and only if the Closing shall have occurred (the date of the
Closing being hereinafter referred to as the "Closing Date") on or before
November 21, 1999, unless such date shall have been postponed to a later date by
the parties to the Merger Agreement, in which case such later date shall apply.
2. Non-Qualified Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the first 25,000 Option Shares
shall be $0.48, the exercise price of the next 12,500 Option Shares shall be
$0.75 and the exercise price of the remaining 12,500 Option Shares shall be
$1.00, subject to adjustment as hereinafter provided ("Exercise Prices").
4. Exercisability. This Option is exercisable, subject to the terms and
conditions of this Agreement, at any time from and after the Closing Date, and
it shall remain exercisable until the close of business on the fifth anniversary
of the Closing Date (the "Exercise Period").
5. Effect of Termination of Employment and/or Consultancy. The
termination of the Holder's employment with the Company pursuant to the
Severance and Consulting Agreement and the termination of the Holders'
consultancy with the Company under the Severance and Consulting Agreement for
any reason whatsoever shall not cause a termination of the Option and once it
shall become exercisable, it shall remain exercisable until the expiration of
the Exercise Period.
6. Withholding Tax. Not later than the date as of which an amount first
must be included in the gross income of Holder for federal income tax purposes
with respect to the Option, Holder may be required to pay to Company, or make
arrangements satisfactory to Company regarding the payment of, any federal,
state and local taxes of any kind required by law to be withheld or paid with
respect to such amount. The obligations of Company under the Plan and pursuant
to this Agreement shall be conditional upon such payments or arrangements with
Company, if such payments or arrangements are required, and Company shall, to
the extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to Holder from Company.
7. Adjustments.
7.1 In the event of a stock split, stock dividend, combination
of shares, or any other similar change in the Common Stock of Company as a
whole, the Board of Directors of Company shall make equitable, proportionate
adjustments in the number and kind of shares covered by the Option and in the
Exercise Prices hereunder.
7.2 In the event of any reclassification or reorganization of
the outstanding shares of Common Stock other than a change covered by Section
7.1 hereof or which solely affects the par value of such shares of Common Stock,
or in the case of any merger or consolidation of Company with or into another
corporation (other than a consolidation or merger in which Company is the
continuing corporation and which does not result in any reclassification or
reorganization of the outstanding shares of Common Stock), Holder shall have the
right thereafter (until the expiration of the right of exercise of this Option)
to receive upon the exercise hereof after such event, for the same aggregate
Exercise Prices payable hereunder immediately prior to such event, the kind and
amount of shares of stock or other securities or property (including cash)
receivable upon such reclassification, reorganization, merger or consolidation
by a holder of the number of shares of Common Stock of Company obtainable upon
exercise of this Option immediately prior to such event. The provisions of this
Section 7.2 shall similarly apply to successive reclassifications,
reorganizations, mergers or consolidations, sales or other transfers.
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8. Method of Exercise.
8.1 Notice to Company. The Option shall be exercised in whole
or in part by written notice in the form attached hereto as Exhibit A directed
to Company at its principal place of business accompanied by full payment as
hereinafter provided of the Exercise Price for the number of Option Shares
specified in the notice.
8.2 Delivery of Option Shares. Company shall deliver a
certificate for the Option Shares to Holder as soon as practicable after payment
therefor, but in any event not more than ten business days thereafter.
8.3 Payment of Purchase Price.
8.3.1 Cash Payment. Holder shall make cash payments
by wire transfer, certified or bank check or personal check, in each case
payable to the order of Company, Company shall not be required to deliver
certificates for Option Shares until Company has confirmed the receipt of good
and available funds in payment of the purchase price thereof.
8.3.2 Stock Payment. At Holder's election, Holder
shall be permitted to use Common Stock of Company owned by him to pay the
purchase price for the Option Shares (and any required withholding taxes) by
delivery of stock certificates in negotiable form which are effective to
transfer good and valid title thereto to Company, free of any liens or
encumbrances. Shares of Common Stock used for this purpose shall be valued at
the Fair Market Value, as defined below, on the second trading day immediately
preceding the date notice is delivered by Holder pursuant to Section 8.1.
8.3.3 Fair Market Value. "Fair Market Value", unless
otherwise required by any applicable provision of the Internal Revenue Code of
1986, as amended, or any regulations issued thereunder, means, as of any given
date: (i) if the Common Stock is listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale
price of the Common Stock in the principal trading market for the Common Stock
on the last trading day preceding the date of exercise in accordance with
Section 8.3.2, above, as reported by the exchange or Nasdaq, as the case may be;
(ii) if the Common Stock is not listed on a national securities exchange or
quoted on the Nasdaq National Market or Nasdaq SmallCap Market, but is traded in
the over-the-counter market, the closing bid price for the Common Stock on the
last trading day preceding the date of exercise in accordance with Section
8.3.2, above, as reported by the OTC Bulletin Board or the National Quotation
Bureau, Incorporated or similar publisher of such quotations; and (iii) if the
fair market value of the Common Stock cannot be determined pursuant to clause
(i) or (ii) above, such price as Company shall determine, in good faith.
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8.3.4 Cashless Exercise. At Holder's election,
Holder shall be permitted to convert this Option, in whole or part, into Common
Stock ("Conversion Right") as follows: Upon exercise of the Conversion Right,
Company shall deliver to Holder (without payment by Holder of any of the
Exercise Price) that number of shares of Common Stock equal to the quotient
obtained by dividing (i) the "Value" (as defined below) of the portion of the
Option being converted on the second trading day immediately preceding the date
notice is delivered by Holder pursuant to Section 8.1 ("Valuation Date") by (ii)
the "Market Price" (as defined above) on the Valuation Date. The "Value" of the
portion of the Option being converted shall equal the remainder derived from
subtracting (a) the Exercise Price multiplied by the number of shares of Common
Stock underlying the portion of the Option being converted from (b) the Market
Price of the Common Stock multiplied by the number of shares of Common Stock
underlying the portion of the Option being converted.
9. Nonassignability. The Option shall not be assignable or
transferable, without the consent of Company, except by will or by the laws of
descent and distribution in the event of the death of Holder. No transfer of the
Option by Holder by will or by the laws of descent and distribution shall be
effective to bind Company unless Company shall have been furnished with written
notice thereof and a copy of the will and/or such other evidence as Company may
deem necessary to establish the validity of the transfer and the acceptance by
the transferee or transferees of the terms and conditions of the Option.
10. Form S-8 Registration. The Company shall register the Option Shares
on a Registration Statement on Form S-8 filed by it under the Securities Act of
1933, as amended ("Act") not later than the Closing Date and shall take such
action as is necessary to maintain the effectiveness of such registration
statement and a current prospectus relating thereto as long as any portion of
the Option remains exercisable.
11. Company Representations. Company hereby represents and warrants to
Holder that:
(i) Company, by appropriate and all required action,
is duly authorized to enter into this Agreement and consummate all of
the transactions contemplated hereunder; and
(ii) the Option Shares, when issued and delivered by
Company to Holder in accordance with the terms and conditions hereof,
will be duly and validly issued and fully paid and non-assessable.
12. Holder Representations. Holder hereby represents and warrants to
Company that:
(i) he is acquiring the Option and, unless the Option
Shares have been registered under the Act, he shall acquire the Option
Shares, for his own account and not with a view towards the
distribution thereof;
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(ii) he has received a copy of the Plan as in effect
as of the date of this Agreement;
(iii) he has received a copy of all reports and
documents required to be filed by Company with the Commission pursuant
to the Exchange Act within the last 12 months and all reports issued by
Company to its shareholders;
(iv) he understands that he must bear the economic
risk of the investment in the Option Shares, which cannot be sold by
him unless they are registered under the Act or an exemption therefrom
is available thereunder;
(v) in his position with Company, he has had both the
opportunity to ask questions and receive answers from the officers and
directors of Company and all persons acting on its behalf concerning
the terms and conditions of the offer made hereunder and to obtain any
additional information to the extent Company possesses or may possess
such information or can acquire it without unreasonable effort or
expense necessary to verify the accuracy of the information obtained
pursuant to clause (iii) above; and
(vi) he is aware that, in the absence of registration
under the Act or his ability to sell the Option Shares pursuant to Rule
144(k) promulgated under the Act, Company shall place stop transfer
orders with its transfer agent against the transfer of the Option
Shares and the certificates evidencing the Option Shares shall bear the
following legend:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
13. Restriction on Transfer of Option Shares. Anything in this
Agreement to the contrary notwithstanding, Holder hereby agrees that he shall
not sell, transfer by any means or otherwise dispose of the Option Shares
acquired by him unless (i) they have been registered under the Act or (ii) an
exemption from the registration requirements of the Act is available thereunder
and Holder has furnished Company with notice of such proposed transfer and an
opinion of legal counsel that such proposed transfer is so exempt.
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14. Miscellaneous.
14.1 Notices. All notices, requests, deliveries, payments,
demands and other communications which are required or permitted to be given
under this Agreement shall be in writing and shall be either delivered
personally or sent by registered or certified mail, or by private courier to the
parties at their respective addresses set forth herein, or to such other address
as either shall have specified by notice in writing to the other. Notice shall
be deemed duly given hereunder when delivered or mailed as provided herein.
14.2 Holder and Shareholder Rights. Holder shall not have any
of the rights of a shareholder with respect to the Option Shares until such
shares have been issued after the due exercise of the Option. Nothing contained
in this Agreement shall be deemed to confer upon Holder any right to continued
employment with Company or any subsidiary thereof, nor shall it interfere in any
way with the right of Company to terminate such employment in accordance with
the provisions regarding such termination set forth in Holder's written
employment agreement with Company, or if there exists no such agreement, to
terminate Holder at will.
14.3 Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
14.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof. This
Agreement may not be amended except by writing executed by Holder and Company.
14.5 Binding Effect; Successors. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
14.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York (without regard
to choice of law provisions).
14.7 Headings. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of
the day and year first above written.
BIG CITY BAGELS, INC. Address: 00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
By: /s/ Xxxxxx Xxxx
---------------------------
Name: Xxxxxx Xxxx
Title: Chief Financial Officer
HOLDER
/s/ Xxxx Xxxxxxx
---------------------------
XXXX XXXXXXX
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
________________________
DATE
Big City Bagels, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: The Board of Directors
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of _____
___, 1999 with Big City Bagels, Inc. ("Company"), I hereby irrevocably elect to
exercise the right to purchase _________ shares of Company's common stock, par
value $.001 per share ("Common Stock").
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of "Big City Bagels, Inc." in
the sum of $_________;
|_| confirmation of wire transfer in the amount of
$_____________; and/or
|_| a certificate for ___________ shares of Company's
Common Stock, free and clear of any encumbrances,
duly endorsed, having a Fair Market Value (as such
term is defined in Section 8.3.3 of the Stock Option
Agreement) of $_________; and/or
|_| in lieu of payment of the purchase price, I elect to
convert my Option into shares of Common Stock
pursuant to Section 8.3.4 of the above-mentioned
agreement.
I hereby represent and warrant to, and agree with, Company
that:
(i) I have received a copy of all reports and
documents required to be filed by Company with the Commission pursuant
to the Exchange Act within the last 12 months and all reports issued by
Company to its shareholders;
(ii) I understand that I must bear the economic risk
of the investment in the Option Shares, which cannot be sold by me
unless they are registered under the Securities Act of 1933 (the "Act")
or an exemption therefrom is available thereunder;
(iii) in my position with Company, I have had both
the opportunity to ask questions and receive answers from the officers
and directors of Company and all persons acting on its behalf
concerning the terms and conditions of the offer made hereunder and to
obtain any additional information to the extent Company possesses or
may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information
obtained pursuant to clause (i) above; and
(iv) if the Option Shares have not been registered
under the Act, (a) I am acquiring the Option and shall acquire the
Option Shares for my own account, for investment, and not with a view
towards the distribution thereof, (b) I am aware that Company shall
place stop transfer orders with its transfer agent against the transfer
of the Option Shares unless they may be transferred pursuant to Rule
144(k) and (c) the certificates evidencing the Option Shares shall bear
the following legend:
"The shares represented by this certificate
have been acquired for investment and have
not been registered under the Securities Act
of 1933. The shares may not be sold or
transferred in the absence of such
registration or an exemption therefrom under
said Act."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
_______________________________ _______________________________
(Signature) (Address)
_______________________________ _______________________________
(Print Name)
_______________________________
(Social Security Number)
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