EXHIBIT 4.1
CORPORATE STRATEGIES, INC.
STOCK OPTION AGREEMENT
Optionee: Xxxx Xxxxxxx
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1. GRANT OF STOCK OPTION. As of the "Grant Date" (identified below),
Xxxxxxx X. Xxxxxxxx, an individual residing in Houston, Texas ("Optionor"),
hereby grants a Stock Option (the "Option") to the "Optionee" (identified below)
to purchase the number of shares of Class B Common Stock, $0.001 par value, of
Corporate Strategies, Inc., a Delaware corporation (the "Company"), identified
below (the "Shares"), subject to the terms and conditions of this agreement (the
"Agreement"). The Shares, when issued to Optionee upon the exercise of the
Option, shall be fully paid and nonassessable. The Option is not an "incentive
stock option" as defined in Section 422 of the Internal Revenue Code.
2. DEFINITIONS. The following capitalized terms shall have those meanings
set forth opposite them:
(a) Optionee: Xxxx Xxxxxxx
(b) Grant Date: September 1, 2004
(c) Shares: 8,104,050 Shares
(d) Option Price: $0.10 per Share
(e) Option Period: September 1, 2004, through August 31, 2008 (until
12:00 p.m. CST).
(f) Vesting Schedule: The Option shall vest in three (3) equal tranches
of 2,701,350 Shares each on each of the first, second and third
anniversary of the Grant Date.
3. OPTION TERM. The Option shall commence on the Grant Date (identified
above) and terminate on August 31, 2008. This period during which the Option is
in effect and may be exercised is referred to herein as the "Option Period".
4. OPTION PRICE. The Option Price per Share is set forth in Section 2(d).
5. VESTING. Subject to the terms of Section 8 hereof, the total number of
Shares subject to this Option shall vest in accordance with the Vesting Schedule
set forth in Section 2(f). The Shares may be purchased at any time after they
become vested, in whole or in part, during the Option Period. The right of
exercise provided herein shall be cumulative so that if the Option is not
exercised to the maximum extent permissible after vesting, it shall be
exercisable, in whole or in part, at any time during the Option Period.
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6. METHOD OF EXERCISE AND PAYMENT. All or part of the Option (to the
extent vested) shall be exercised by the delivery of a signed written notice of
exercise to Optionor. The notice shall set forth the number of Shares with
respect to which the Option is to be exercised, accompanied by full payment for
the Shares. The Option Price upon exercise of any part of the Option shall be
payable to the Optionor in full in cash.
As soon as practicable after receipt of a written notification of exercise
and full payment, Optionor shall cause the Company to deliver to or on behalf of
Optionee, in the name of Optionee or other appropriate recipient, share
certificates for the number of Shares purchased under the Option. Such delivery
shall be effected for all purposes when a stock transfer agent (or the
Secretary) of the Company shall have deposited such certificates in the United
States mail, addressed to Optionee or other appropriate recipient.
7. CONDITIONS ON EXERCISE. Unless the shares of Common Stock issuable upon
the exercise of the Option have been registered with the Securities and Exchange
Commission under the Securities Act of 1933 (as amended, the "Act"), prior to
the exercise of the Option, Optionee must represent in writing to Optionor and
the Company that the Shares are being acquired for investment purposes only and
not with a view towards the further resale or distribution thereof, and must
supply to the Company such other documentation as may be required by the
Company, unless in the opinion of counsel to the Company such representation,
agreement or documentation is not necessary to comply with the Act.
8. TERMINATION OF SERVICE AS EMPLOYEE. On even date herewith, the Company,
as employer, and Optionee, as employee, have executed that certain Employment
Agreement (the "Employment Agreement"). If Optionee's employment with the
Company (or any of its subsidiaries) is terminated by the Company for Cause (as
defined in the Employment Agreement) or by Optionee for any reason other than
Good Reason (as defined in the Employment Agreement), the Option will
automatically immediately terminate in its entirety. If Optionee's employment
with the Company is terminated by the Company without Cause or by Optionee for
Good Reason, the Option, to the extent unvested, shall immediately vest in full,
and Optionee must exercise its right to purchase all or any portion of the
Option during the thirty (30)-day period immediately following the date of
termination of Optionee's employment with the Company. Upon the expiration of
such thirty (30)-day period, the Option shall automatically terminate. In the
event that Optionor terminates the Employment Agreement without Cause during the
first year as provided for in Section 2 of the Employment Agreement, the Option
shall immediately vest in full, and Optionee must exercise its right to purchase
all or a portion of the vested portion of the Option on or before the date that
is thirty (3) days after the date of termination of the Employment Agreement.
Upon the expiration of such thirty (30)-day period, the Option shall
automatically terminate. Until the effective date of any such termination of
employment, the Option shall continue to vest in accordance with the terms of
this Agreement.
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9. REORGANIZATION OF COMPANY. The existence of the Option shall not affect
in any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Shares or the rights thereof,
or the dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
10. ADJUSTMENT OF SHARES. In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving the
Company, appropriate adjustments shall be made to the terms and provisions of
this Option as determined by the Board of Directors of the Company in its sole
discretion.
11. NO RIGHTS IN SHARES. Optionee shall have no rights as a shareholder in
respect of the Shares until the Optionee becomes the record holder of such
Shares.
12. INVESTMENT REPRESENTATION. Optionee will enter into such written
representations, warranties and agreements as the Company may reasonably request
in order to comply with any federal or state securities law. Moreover, any stock
certificate for any Shares issued to Optionee hereunder may contain a legend
restricting their transferability as determined by the Company in its
discretion. Optionee agrees that the Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of Shares
hereunder to comply with any law, rule or regulation that applies to the Shares
subject to the Option.
13. NO GUARANTEE OF SERVICE AS EMPLOYEE. The Option itself shall not
confer upon Optionee any right to employment with the Company (or any of its
subsidiaries) or serve the Company in any other capacity, nor shall it interfere
with any right the Company's shareholders would otherwise have to terminate such
Optionee's employment or other service at any time, with or without Cause.
14. LOCKUP PROVISION. Optionee hereby acknowledges and agrees that the
Shares are may not be sold or exchanged prior to December 31, 2007, except as
otherwise set forth in this Section 14, and Optionee agrees to be bound by such
provision. In addition, Optionor and Optionee hereby agree that in the event
that Optionor is granted additional shares pursuant to the anti-dilution
provisions of Optionor's employment agreement with the Company, the amount of
Shares that may be purchased pursuant to this Option shall be increased pro rata
so that the total amount of Shares subject to this Option constitutes 15.66% of
the total issued and outstanding shares of common stock of the Company as of
December 31, 2007. Notwithstanding the foregoing sentence, Optionee shall, upon
exercise of the Option and ownership of the Shares, be permitted to transfer the
Shares to any of the following:
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(i) Any corporation, general or limited partnership, or limited liability
company owned at least fifty-one percent (51%) by Optionee and its affiliates;
(ii) A trust that has all of the following characteristics:
(A) Members of the immediate family of the affiliates of Optionee,
including any descendants are (and will remain) the sole beneficiaries of
the trust;
(B) The affiliates of Optionee are (and will remain) the sole
trustees or co-trustees of the trust; and
(C) Such Shares may not be transferred or assigned by the trust,
except to another trust satisfying the requirements of this section; or
(iii) A charitable organization as referred to in Section 501(c)(3) of the
Code provided that such transfer is gratuitous in nature and furthers Optionee's
federal income or estate tax planning objectives.
15. GENERAL.
(a) Notices. All notices under this Agreement shall be mailed or delivered
by hand to the parties at their respective addresses set forth beneath their
signatures below or at such other address as may be designated in writing by
either of the parties to one another. Notices shall be effective upon receipt.
(b) Shares Reserved. Optionor shall at all times during the Option Period
reserve and keep available such number of Shares as will be sufficient to
satisfy the requirements of this Option.
(c) Nontransferability of Option. The Option granted pursuant to this
Agreement is not transferable other than by will, the laws of descent and
distribution or by a qualified domestic relations order (as defined in Section
414(p) of the Internal Revenue Code). The Option will be exercisable during
Optionee's lifetime only by Optionee or by Optionee's legal representative in
the event of Optionee's disability. No right or benefit hereunder shall in any
manner be liable for or subject to any debts, contracts, liabilities, or torts
of Optionee.
(d) Amendment and Termination. Except as otherwise provided herein, no
amendment or termination of the Option shall be made at any time without the
written consent of Optionee.
(e) No Guarantee of Tax Consequences. The Optionor makes no commitment or
guarantee that any federal or state tax treatment will apply or be available to
any person eligible for benefits under the Option. The Optionee has been advised
and been provided the opportunity to obtain independent legal and tax advice
regarding the grant and exercise of this Option and the disposition of any
Shares acquired thereby.
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(f) Severability. In the event that any provision of this Agreement shall
be held illegal, invalid, or unenforceable for any reason, such provision shall
be fully severable, but shall not affect the remaining provisions of the
Agreement, and the Agreement shall be construed and enforced as if the illegal,
invalid, or unenforceable provision had not been included herein.
(g) Governing Law. The Option shall be construed in accordance with the
laws of the State of Delaware without regard to its conflict of law provisions,
to the extent federal law does not supersede and preempt Texas law.
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IN WITNESS WHEREOF, this Agreement is executed effective this the 1st day
of September, 2004.
OPTIONOR:
CORPORATE STRATEGIES, INC., a Delaware
corporation
By:
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Xxxxxxx X. Xxxxxxxx, Chairman
Address: 0000 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: Chairman
OPTIONEE:
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XXXX XXXXXXX
Address:
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Houston, Texas
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Signature Page to
Stock Option Agreement
(Xxxx Xxxxxxx - September 1, 2004)
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