NONSTATUTORY STOCK OPTION AGREEMENT AND GRANT
PURSUANT TO
HLM DESIGN, INC. 1998 STOCK OPTION PLAN
This Nonstatutory Stock Option Agreement and Grant is entered into as of
the 1st day of September , 1998 between HLM Design, Inc., a Delaware corporation
(the "Company"), and Xxxx Pounds (the "Optionee").
WHEREAS, the Company and its stockholders have approved the HLM Design,
Inc. 1998 Stock Option Plan (the "Plan") pursuant to which the Company may, from
time to time, make awards of Options (as defined below) and enter into
Nonstatutory Stock Option Agreements with eligible employees and directors of
the Company or of any Subsidiary (as defined below);
WHEREAS, pursuant to the Plan, the Company has determined to grant to the
Optionee an Option to purchase Common Stock (as defined below) of the Company,
which Option shall be subject to the terms and conditions of this Nonstatutory
Stock Option Agreement and Grant;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements hereinafter set forth, the parties hereby agree as follows:
1. DEFINITIONS.
For purposes of this Nonstatutory Stock Option Agreement and Grant, the
following terms shall have the meanings indicated:
(a) "ACT" shall mean the Securities Act of 1933, as amended.
(b) "BOARD" shall mean the Board of Directors of the Company;
provided, that Optionee shall decline to vote with respect to any issue
involving this Option.
(c) "CAUSE" shall mean any act, action or series of acts or actions
or any omission, omissions, or series of omissions which result in, or which
have the effect of resulting in, (i) the commission of a crime by the Optionee
involving moral turpitude, which crime has a material adverse impact on the
Company or any Subsidiary, (ii) gross negligence or willful misconduct which is
continuous and results in material damage to the Company or any Subsidiary, or
(iii) any conduct which, in the judgment of the Committee, involves a breach of
fiduciary duty by the Optionee or other conduct detrimental to the Company.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
any successor revenue laws of the United States and the rules and regulations
promulgated thereunder.
(e) "COMMITTEE" shall mean the committee of members of the Board
that is designated by the Board to administer the Plan; provided that, if
Optionee is a member of the Committee, then Optionee shall decline to vote with
respect to any issue involving this Option. In the event that no such Committee
exists or is appointed, "COMMITTEE" shall mean the Board.
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(f) "COMMON STOCK" shall mean the Common Stock, par value $.001 per
share, of the Company.
(g) "DISABILITY" shall mean the inability or failure of a person to
perform those duties for the Company or any Subsidiary traditionally assigned to
and performed by such person because of the person's then-existing physical or
mental condition, impairment or incapacity. The fact of disability shall be
determined by the Committee, which may consider such evidence as it considers
desirable under the circumstances, the determination of which shall be final and
binding upon all parties.
(h) "EXERCISE DATE" shall mean the business day, during the Option
Period, upon which the Optionee delivers to the Company the written notice and
consideration contemplated by Section 5(c) of the Plan.
(i) "FAIR MARKET VALUE" shall mean, with respect to the Common Stock
on any day, its market value determined as provided in Section 5(c) of the Plan.
(j) "IMMEDIATE FAMILY" shall mean the Optionee's spouse, children,
present or former stepchildren, grandchildren, present or former
stepgrandchildren, parents, present or former stepparents, grandparents,
siblings (including half brothers and sisters), in-laws and individuals whose
relationship with the Optionee arises due to legal adoption.
(k) "INVOLUNTARY TERMINATION WITHOUT CAUSE" shall mean either (i)
the dismissal of, or the request for the resignation of, a person, by court
order, order of any court-appointed liquidator or trustee of the Company, or the
order or request of any creditors' committee of the Company constituted under
the federal bankruptcy laws, provided that such order or request contains no
specific reference to Cause; or (ii) the dismissal of, or the request for the
resignation of, a person, by the Board or the shareholders of the Company, for
any reason other than for Cause.
(l) "OPTION" shall mean the option to purchase shares of Common
Stock granted to the Optionee pursuant to this Option Agreement.
(m) "OPTION AGREEMENT" shall mean this Nonstatutory Stock Option
Agreement and Grant between the Company and the Optionee by which the Option is
granted to the Optionee pursuant to the Plan.
(n) "OPTION PERIOD" shall mean the period commencing from the date
of this Option Agreement and ending at the close of business ten years from the
date of this Option Agreement or such earlier date as when this Option Agreement
may be terminated by its terms.
(o) "OPTION SHARES" shall mean the shares of Common Stock purchased
upon exercise of the Option.
(p) "OPTIONEE" shall mean the individual executing this Option
Agreement and, as applicable, the estate, personal representative, beneficiary
or Permitted Transferee to whom this Option may be transferred pursuant to this
Option Agreement by will, by the laws of descent and
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distribution, pursuant to a domestic relations order as defined in the Code, or
as otherwise permitted by paragraph 3(f) below.
(q) "PERMITTED TRANSFEREE" shall mean a member of the Optionee's
Immediate Family, a trust established solely for the benefit of one or more
members of the Optionee's Immediate Family or a partnership or limited liability
company of which the only individuals or entities who are or could be partners
or shareholders are members of the Optionee's Immediate Family and/or a trust
established solely for the benefit of one or more members of the Optionee's
Immediate Family.
(r) "PLAN" shall mean the HLM Design, Inc. 1998 Stock Option Plan
and any amendments thereto.
(s) "RETIREMENT" shall mean, with respect to the Optionee,
retirement from the Board in accordance with the Board's retirement policy as
may be in effect from time to time.
(t) "SUBSIDIARY" shall mean any subsidiary corporation of HLM
Design, Inc. as defined in Sections 424(f) and 424(g) of the Code.
(u) "TERMINATION" shall mean the cessation, for any reason, of the
Optionee's status as a member of the Board.
(v) "TOTAL OPTION PRICE" shall mean the consideration payable to the
Company by the Optionee upon exercise of the Option pursuant to Section 5(c) of
the Plan.
2. GRANT OF OPTION. Effective upon the date hereof, and subject to the
terms and conditions set forth herein, the Company hereby grants to the Optionee
the Option to purchase from the Company, at an exercise price of $ 4.50 (but not
less than 100% of the Fair Market Value on the date of the grant of this Option
per share), up to but not exceeding in the aggregate Ten Thousand (10,000)
shares of Common Stock.
3. EXERCISE OF OPTION. The Option granted in paragraph 2 above may be
exercised as follows:
(a) The Option shall be exercisable at any time and from time to
time during the Option Period. The Option shall terminate on the expiration of
the Option Period, if not earlier terminated; provided that, in the event of the
Optionee's Retirement, the Committee in its sole and absolute discretion may
accelerate the Exercise Date, which acceleration may, in the sole discretion of
the Committee, be subject to further terms and conditions mandated by the
Committee.
(b) No less than 100 shares of Common Stock may be purchased on any
Exercise Date unless the number of shares purchased at such time is the total
number of shares in respect of which the Option is then exercisable.
(c) If at any time and for any reason the Option covers a fraction
of a share, then, upon exercise of the Option, the Optionee shall receive the
Fair Market Value of such fractional share in cash.
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(d) The Option shall be exercised by the Optionee in accordance with
the terms and conditions of Section 5(c) of the Plan.
(e) As soon as administratively practicable following the Exercise
Date, subject to the receipt of payment of the Total Option Price and, as
appropriate, of any payment in cash of federal, state or local income tax
withholding or other tax that may be due upon the issuance of the Option Shares
as determined and computed by the Company pursuant to paragraph 6 below, the
Company shall issue to the Optionee the number of shares with respect to which
such Option shall be so exercised and shall deliver to the Optionee a
certificate or certificates therefor.
(f) The Option is not transferable by the Optionee otherwise than
(i) by will or the laws of descent and distribution; (ii) pursuant to a domestic
relations order as defined in the Code; or (iii) by transfer without
consideration to a Permitted Transferee, with the consent of and subject to the
rules, terms and conditions imposed by the Committee and provided that the
Committee is notified in advance in writing of any proposed transfer to a
Permitted Transferee and the Committee determines that the proposed transfer
complies with the requirements of the Plan and this Nonstatutory Stock Option
Agreement. No assignment or transfer of this Option, or of the rights
represented thereby, whether voluntary or involuntary, by operation of law or
otherwise, except as described above, shall vest in the assignee or transferee
any interest or right herein whatsoever; but immediately upon any attempt to
assign or transfer this Option, except as expressly permitted herein, the same
shall terminate and be of no force or effect.
4. TERMINATION. The Option granted hereby shall terminate and be of no
force or effect upon and following the occurrence of any of the following
events:
(a) The expiration of the Option Period.
(b) The Termination of the Optionee's status as a director of the
Company for any reason other than the Optionee's death, Disability or
Involuntary Termination Without Cause.
(c) The expiration of three months after the date of the Optionee's
Involuntary Termination Without Cause. During such three-month period, the
Optionee shall have the right to exercise the Option hereby granted in
accordance with the terms of this Option Agreement, but only to the extent the
Option was exercisable on the date of the Termination of the Optionee's status
as a director of the Company.
(d) The expiration of twelve months after Termination of the
Optionee's status as a director of the Company as a result of the Optionee's
Disability. During such twelve-month period, the Optionee shall have the right
to exercise the Option hereby granted in accordance with the terms of this
Option Agreement, but only to the extent the Option was exercisable on the date
of the Termination of the Optionee's status as a director of the Company.
(e) In the event of the death of the Optionee while a director of
the Company or, in the event of the death of the Optionee after Termination
described in subparagraph (c) or (d), above, but within the three-month or
twelve-month period described in subparagraph (c) or (d), above, upon the
expiration of twelve months following the Optionee's death. During such extended
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period, the Option may be exercised by the person or persons to whom the
deceased Optionee's rights under the Option Agreement shall pass by will or by
the laws of descent and distribution, but only to the extent the Option was
exercisable on the date of the Termination of the Optionee's status as a
director of the Company.
(f) To the extent set forth in paragraph 7 below, upon the
dissolution, liquidation, consolidation or merger of the Company, and, to the
extent set forth in subparagraph 3(f) above, upon an attempted assignment or
transfer of the Option otherwise than as expressly permitted herein.
Any determination made by the Committee with respect to any matter
referred to in this paragraph 4 shall be final and conclusive on all persons
affected thereby.
5. RIGHTS AS STOCKHOLDER. An Optionee shall have no rights as a
stockholder of the Company with respect to any shares underlying the Option
until the day of the issuance of a stock certificate to him or her for those
shares upon payment of the exercise price in accordance with the terms and
provisions hereof. Subject to paragraph 7 below, no adjustments shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date such stock certificate is issued.
6. PAYMENT OF WITHHOLDING TAXES. Upon the Optionee's exercise of his or
her Option with respect to any of the Option Shares in accordance with the
provisions of paragraph 3 above, the Optionee shall pay to the Company upon
exercise of the Option the amount of any federal, state or local income tax
withholding or other tax that may be due upon such exercise. The determination
of the amount of any such federal, state or local income tax withholding or
other tax due in such event shall be made by the Company and shall be binding
upon the Optionee. Nothing in this Section or Agreement shall be construed to
impose on the Company a duty to withhold where applicable law does not require
such withholding, or to imply that the Optionee is an employee or anything other
than an independent director of the Company.
7. RECAPITALIZATION; REORGANIZATION. The shares underlying this Option are
shares of Common Stock as constituted on the date of this Option Agreement, but
if, during the Option Period and prior to the delivery by the Company of all of
the shares of Common Stock with respect to which this Option is granted, the
Company shall effect a subdivision or consolidation of shares or other capital
readjustment, the payment of a stock dividend or some other increase or decrease
in the number of shares of Common Stock outstanding, without receiving
compensation therefor in money, services or property, then, (a) in the event of
any increase in the number of such shares outstanding, the number of shares of
Common Stock then remaining subject to this Option shall be proportionately
increased (except that any fraction of a share resulting from any such
adjustment shall be excluded from the operation of this Option Agreement), and
the exercise price per share shall be proportionately reduced, and, (b) in the
event of a reduction in the number of such shares outstanding, the number of
shares of Common Stock then remaining subject to this Option shall be
proportionately reduced (except that any fractional share resulting from any
such adjustment shall be excluded from the operation of this Option Agreement),
and the exercise price per share shall be proportionately increased.
In the event of a merger of one or more corporations into the Company with
respect to which the Company shall be the surviving or resulting corporation,
the Optionee shall, at no additional
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cost, be entitled upon any exercise of this Option to receive (subject to any
required action by shareholders), in lieu of the number of shares as to which
this Option shall then be so exercised, the number and class of shares of stock
or other securities to which the Optionee would have been entitled pursuant to
the terms of the agreement of merger if, immediately prior to such merger, the
Optionee had been the holder of record of a number of shares of Common Stock of
the Company equal to the number of shares as to which such Option shall be so
exercised; provided, however, that, anything herein contained to the contrary
notwithstanding, upon the occurrence of any event described in Section 5(g) of
the Plan, this Option shall be subject to acceleration as provided in such
Section 5(g).
In the event of a change in the Common Stock as presently constituted,
which change is limited to a change of all of the authorized shares with par
value into the same number of shares with a different par value or without par
value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of the Plan.
The existence of this Option shall not affect in any way the right or
power of the Company or its shareholders to make or authorize any or all
adjustments, dividends, stock dividends, recapitalization, 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
other stocks with preference ahead of or convertible into, or otherwise
affecting, the Common Stock 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.
8. NO REGISTRATION RIGHTS. Anything in this Option Agreement to the
contrary notwithstanding, if, at any time specified herein for the issuance of
Option Shares, any law, regulation or requirements of any governmental authority
having jurisdiction in the premises shall require either the Company or the
Optionee, in the opinion of the Company's counsel, to take any action in
connection with the shares then to be issued, the issue of such shares shall be
deferred until such action shall have been taken. Nothing in this Option
Agreement shall be construed to obligate the Company at any time to file or
maintain the effectiveness of a registration statement under the Act, or under
the securities laws of any state or other jurisdiction, or to take or cause to
be taken any action which may be necessary in order to provide an exemption from
the registration requirements of the Act under Rule 144 or any other exemption
with respect to the Option Shares or otherwise for resale or other transfer by
the Optionee (or by the executor or administrator of such Optionee's estate or a
person who is a Permitted Transferee or who acquired the Option or any Option
Shares or other rights by bequest or inheritance or by reason of the death of
the Optionee) as a result of the exercise of an Option granted pursuant to this
Option Agreement.
9. RESOLUTION OF DISPUTES. Any dispute or disagreement that arises under,
or as a result of, or pursuant to, this Option Agreement shall be determined by
the Committee in its absolute and uncontrolled discretion, and any such
determination or other determination by the Committee under or pursuant to this
Option Agreement, and any interpretation by the Committee of the terms of this
Option Agreement, shall be final, binding and conclusive on all parties affected
thereby.
10. COMPLIANCE WITH THE ACT. Notwithstanding any provision herein or in
the Plan to the contrary, the Company shall be under no obligation to issue any
shares of Common Stock to the
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Optionee upon exercise of the Option granted hereby unless and until the Company
has determined that such issuance is either exempt from registration, or is
registered, under the Act and is either exempt from registration and
qualification, or is registered or qualified, as applicable, under all
applicable state securities or "blue sky" laws.
11. MISCELLANEOUS.
(a) BINDING ON SUCCESSORS AND REPRESENTATIVES. This Option Agreement
shall be binding not only upon the parties, but also upon their heirs,
executors, administrators, personal representatives, successors and assigns
(including any transferee of a party to this Agreement); and the parties agree,
for themselves and their successors, assigns and representatives, to execute any
instrument which may be necessary legally to effect the terms and conditions of
this Option Agreement.
(b) ENTIRE AGREEMENT. This Option Agreement, together with the Plan,
constitutes the entire agreement of the parties with respect to the Option and
supersedes any previous agreement, whether written or oral, with respect
thereto. This Option Agreement has been entered into in compliance with the
terms of the Plan; wherever a conflict may arise between the terms of this
Option Agreement and the terms of the Plan, the terms of the Plan shall control.
(c) AMENDMENT. Neither this Option Agreement nor any of the terms
and conditions herein set forth may be altered or amended orally, and any such
alteration or amendment shall be effective only when reduced to writing and
signed by each of the parties or their respective successors and assigns.
(d) CONSTRUCTION OF TERMS. Any reference herein to the singular or
plural shall be construed as plural or singular whenever the context requires.
(e) NOTICES. All notices, requests and amendments under this Option
Agreement shall be in writing, and notices shall be deemed to have been given
when personally delivered or sent prepaid registered mail:
(i) if to the Company, at the following address:
HLM Design, Inc.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
or at such other address as the Company shall designate by notice.
(ii) if to the Optionee, to the Optionee's address appearing
in the Company's records, or at such other address as
the Optionee shall designate by notice.
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(f) GOVERNING LAW. This Option Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina (excluding
the principles of conflict of laws thereof).
(g) SEVERABILITY. The invalidity or unenforceability of any
particular provision of this Option Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were omitted.
(h) NOT AN INCENTIVE STOCK OPTION. The Option granted hereunder is
not intended to be an "Incentive Stock Option" under Section 422 of the Code.
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement
as of the day and year first written above.
HLM DESIGN, INC.
By: /s/ SIGNATURE ILLEGIBLE
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Title: CEO
--------------------------------
OPTIONEE: XXXX POUNDS
/s/ Xxxx Pounds (SEAL)
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