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EXHIBIT 10.17
OPTION AGREEMENT
THIS AGREEMENT is made effective as of August 8, 1996 by and between
Xxxxxxx Xxxxxxxx (hereinafter referred to as "Optionee"), and Decora Industries,
Inc., a Delaware corporation (hereinafter referred to as "Optionor").
RECITALS:
WHEREAS, Optionee has performed numerous valuable services to the Optionor,
including serving as a director.
WHEREAS, to compensate Optionee for his services to Optionor, Optionor
desires to grant to Optionee and Optionee is desirous of acquiring an option to
purchase shares of the common stock of Optionor, subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereby agree as follows:
1. Incorporation of Recitals. The parties hereby incorporate by this
reference the recitals set forth above.
2. Grant of Option. Subject to the terms and conditions hereinafter set
forth, Optionor hereby gives and grants to Optionee the right and option to
purchase theretofore authorized but unissued common shares of Optionor at such
time and for the purchase price specified below.
A. From August 8, 1996, and up until and including August 7, 2001,
Optionee shall have the right and option to purchase, at $1.15 per share, and
Optionor shall have the obligation to issue to Optionee, 100,000 shares of the
authorized but unissued common shares of Optionor. Options shall vest if at any
time during the option period the average closing stock price is $2.00 per
share.
3. Exercise of Option. Optionee may exercise any option granted hereunder
by notifying Optionor in writing of its intention to exercise such option. A
closing date shall then be agreed to in good faith no later than 30 days after
the notice, at which time Optionee shall pay the purchase price of the Shares
being purchased, and Optionor shall deliver to Optionee the certificates for
shares duly endorsed. Optionee may purchase all or any part of the Shares
subject to options granted hereby.
4. Representations. Optionor represents and warrants to Optionee that
Optionee, upon proper exercise, shall receive good and marketable title to the
shares of Optionor underlying the options being granted hereby, free of all
pledges, liens and encumbrances, except as stated in paragraph 5.
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5. Representations and Warranties of Optionee. Optionee hereby represents
and warrants that:
A. The options granted hereby and the Shares which will be purchased
by and delivered to Optionee upon exercise of such options are
being acquired by Optionee for his own account and not with a
view to resale or other disposition thereof.
B. Optionee will not sell, transfer, or make any other disposition
of any option or the shares to be purchased and delivered to
Optionee hereunder upon the exercise of such option unless and
until (a) such option or shares, as applicable, are included in a
registration statement or a post-effective amendment under the
Securities Act which has been filed by the Optionor and declared
effective by the Securities and Exchange Commission (the "SEC"),
or (b) in the opinion of counsel for the Optionor, no such
registration statement or post-effective amendment is required,
or (c) the SEC has first issued a "no action" letter regarding
any such proposed disposition of any option or the shares.
6. Federal and State Securities Law Requirements. The obligation of the
Optionor to deliver and transfer the shares to the Optionee upon any exercise of
any option shall be subject to the following:
A. Optionor may require Optionee, as an additional condition of its
obligation to deliver the shares upon exercise of any option
hereunder, to make any representations and warranties (including
without limit those set forth in Paragraph 5 hereof) with respect
to the shares as may, in the opinion of counsel to Optionor, be
required to ensure compliance with the Securities Act, the
securities laws of any state, or any other applicable law,
regulation, or rule of any governmental agency.
B. Each certificate representing the shares issued pursuant to this
Agreement shall bear whatever legends are required by federal or
state law or by any governmental agency. In particular, unless an
appropriate registration statement is filed pursuant to the
Securities Act with respect to the shares, each certificate
representing such shares shall be endorsed on its face with the
following legend or its equivalent:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SECURITIES MAY
BE SOLD OR TRANSFERRED ONLY IF THEY HAVE BEEN REGISTERED UNDER
SAID ACT OR THERE EXISTS AN EXEMPTION FROM REGISTRATION UNDER
SAID ACT OR THE RULES AND REGULATIONS THEREUNDER EVIDENCED BY A
NO-ACTION LETTER OR AN OPINION OF COUNSEL TO THE ISSUER OR TO THE
HOLDER HEREOF REASONABLY SATISFACTORY TO THE ISSUER.
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7. Restrictions. Optionee:
A. Shall not be entitled to any type of dividend declared by
Optionor, unless and until an option is exercised; and
B. Shall not be entitled to any voting rights by virtue of an
option; and
C. Acknowledges that the options granted hereby are personal to
Optionee and that Optionee may not sell, assign, transfer or
otherwise dispose of such options to any other person.
8. Anti-Dilution. If prior to the exercise of any option granted hereunder
Optionor shall have effected one or more stock split-ups, stock dividends, or
other increases or reductions of the number of Shares of its common stock
outstanding without receiving compensation therefor in money, services or
property, the number of Shares of common stock subject to the options hereby
granted shall (a) if a net increase shall have been effected in the number of
outstanding shares of Optionor's common stock, be proportionately increased and
the cash consideration payable per Share shall be proportionately reduced; and
(b) if a net reduction shall have been effected in the number of outstanding
Shares of Optionor's common stock, be proportionately reduced and the cash
consideration payable per Share be proportionately increased.
9. Piggyback Registration Rights.
A. The Optionor will permit any option shares subject to this
agreement to be included, at the request of the Optionee in any
registration of securities of the Optionor (other than shares of
Common Stock pursuant to the Optionor's stock option plan or
stock purchase plan) under a registration statement filed by the
Optionor under the Securities Act. The Optionor shall provide
written notice to the Optionee at least 30 days prior to the
filing of any such registration statement sent by registered mail
to the address of record of the Optionee. If Optionee shall
deliver a written request to the Optionor within ten (10)
business days after the mailing of such notice, setting forth the
number of securities which he intends to sell in the public
offering (the "Registered Securities"), and requesting inclusion
of such Registered Securities therein, the Optionor agrees to
include the Registered Securities in such registration statement
and related underwriting agreements (if any) or if the Optionor
eligible to use Form S-3 permit Optionee to utilize a selling
shareholders Registration Statement on Form S-3. Notwithstanding
the above, the Optionee may only have option shares subject to
this agreement so registered one time.
B. The parties hereto agree that if the offering is underwritten,
the Registered Securities shall be for purposes of the preceding
sentence underwritten by the same underwriter or underwriters on
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terms no less favorable than those applicable to the shares
offered by the Optionor or other stockholders pursuant to such
registration statement, and agree, at the request of the Optionor
or such other stockholders, to join with the Optionor or such
other stockholders in executing appropriate underwriting
agreements with such underwriter or underwriters and to execute
appropriate powers of attorney and custodian agreements in forms
acceptable to the underwriter or underwriters, which agreements
shall not place any restrictions upon the sale or transfer of the
Registered Securities not otherwise placed on all other
shareholders whose shares are registered in such registration
statement. Optionee agrees that if, in spite of the best efforts
of the Optionor (which the Optionor agrees to use), the inclusion
of all of the Registered Securities which he may desire to
include in any such registration statement shall not be
acceptable to the managing underwriter or underwriters of the
offering (acting reasonably and in good faith), some or all of
his Registered Securities may be excluded or withdrawn from such
registration statement in accordance with the following
provision: Optionee shall have the right to include in such
registration statement such number (but only such number) of
shares, as applicable, as shall bear the same relationship to the
total number of Units, Warrants, or shares, as applicable, which
the managing underwriter or underwriters will permit to be
included in such registration statement by all holders of
securities who wish to register securities in such registration
statement.
C. Optionor shall pay all expenses associated with filing and
causing to become effective any registration statement and with
maintaining its effectiveness excepting only (i) the underwriting
discounts and commissions incurred directly on the sale of any of
Optionee's Registered Securities included therein, and (ii) legal
expense individually incurred by Optionee, said discounts,
commissions and legal expenses with respect to the sale of
Optionee's shares to be borne by Optionee.
10. Notice and Opportunity to Cure Default. In the event of a perceived
default of the provisions of this agreement, Optionor agrees to provide Optionee
and his counsel written notice of any default and Optionor shall have 10 days
from receipt of said notice to cure the stated default.
11. Agreement to Perform Necessary Acts. The parties hereto agree to
cooperate fully with one another in executing all documents, certificates,
notices, filings and the like and performing all acts reasonably necessary to
carry out the intent of this agreement.
12. Assignment and Transfer. No option granted hereby may be assigned by
Optionee without the prior written consent of Optionor.
13. Amendments. This agreement may not be modified, amended or changed
except by an instrument in writing signed by the parties hereto.
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14. Litigation and Attorneys' Fees. In the event of any litigation between
the parties to in connection with this Agreement or to enforce any provision or
right hereunder, the unsuccessful party to such litigation shall pay to the
successful party therein by such successful party, which costs, expenses and
attorneys' fees shall be included as a part of any judgment rendered in such
action in addition to any other relief to which the successful party may be
entitled.
IN WITNESS WHEREOF, the parties have executed this Option Agreement as of
the day and year first above written.
OPTIONOR OPTIONEE
Decora Industries, Inc.
By: /s/ Xxxxxxx Xxxxxxx
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Its: Secretary and EVP /s/ Xxxxxxx Xxxxxxxx
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XXXXXXX XXXXXXXX
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