STOCK OPTION AGREEMENT
AGREEMENT made as of this 16th day of April 2003, by and between American
Vantage Companies, a Nevada corporation having its principal executive offices
at 0000 Xxxx Xxxx Xxxx Xxxx., Xxx Xxxxx, Xxxxxx 00000 ("Grantor"), and Xxx X.
Xxxxx, an individual residing at 000 X. Xxxxxx Xxxxxx, Xxx Xxxxx, XX 00000
("Optionee").
W I T N E S S E T H:
WHEREAS, Optionee is a member of the Grantor's Advisory Group; and
WHEREAS, Grantor is desirous of increasing the incentive of Optionee to
exert his utmost efforts to improve the business and increase the assets of
Grantor.
NOW, THEREFORE, in consideration for Optionee's services rendered and
to be rendered to Grantor or any of its subsidiaries, and for other good and
valuable consideration, Grantor hereby grants to Optionee an option to purchase
shares of Grantor's common stock, par value $.01 per share ("Common Stock"),
upon the following terms and conditions:
1. Option.
Pursuant to its 1996 Stock Option Plan, as amended (the "Plan"),
Grantor hereby grants to Optionee a non-qualified option (the "Option"), to
purchase up to eighty-seven thousand five hundred (87,500) fully paid and
non-assessable shares of Common Stock, commencing on July 12, 2002 and expiring
at 5:00 Pacific Time on July 11, 2012 (the "Expiration Date"), subject to the
terms and conditions set forth below. The Option is not intended to qualify
under Section 422 of the Internal Revenue Code of 1986, as amended.
2. Purchase Price.
The purchase price for the Option shall be $1.41 per share (the
"Purchase Price"). Grantor shall pay all original issue or transfer taxes on the
exercise of the Option and all other fees and expenses necessarily incurred by
Grantor in connection therewith.
3. Exercise of Option.
The Option may be exercised in whole or in part by delivering a Notice
of Exercise substantially in the form attached hereto, to Grantor by hand
delivery, overnight courier or by registered or certified mail, return receipt
requested, addressed to its principal office, as to the number of shares of
Common Stock which Optionee desires to purchase under the Option herein granted.
The payment of the Purchase Price may be made, at the option of the Holder,
either (i) by cash or certified or bank cashier's check in lawful money of the
United States of America, payable to the order of the Company in an amount equal
to the Purchase Price multiplied by the number of shares of Common Stock for
which this Option is being exercised, (ii) by delivery of shares of Common Stock
having a fair market value on the trading day immediately preceding the date of
Grantor's receipt of the Notice of Exercise equal to the Purchase Price of the
shares of Common Stock being exercised, (iii) by having the Company withhold
from the shares of Common Stock to be issued upon exercise of the Option, the
number of shares of Common Stock having a value, based on the Common Stock
closing price on the trading day immediately prior to the date of such exercise,
equal to the product of the Purchase Price times the number of shares of Common
Stock as to which this Option is being exercised, or (iv) by any combination
thereof. As soon as practicable thereafter, Grantor shall cause to be delivered
to Optionee certificates issued in Optionee's name evidencing the shares of
Common Stock purchased by Optionee.
4. Divisibility and Non-Assignability of Options.
(a) The Optionee may exercise the Option herein granted from time
to time subject to the provisions of Paragraph 3 above with respect to any whole
number of shares of Common Stock included therein, but in no event may the
Option be exercised as to less than one thousand (1,000) shares of
Common Stock at any one time, except for the remaining shares of Common Stock
covered by the Option if less than one thousand (1,000).
(b) Except as specifically provided herein, Optionee may not give,
grant, sell, exchange, transfer legal title, pledge, assign or otherwise
encumber or dispose of the Option herein granted or any interest therein,
otherwise than by will or the laws of descent and distribution or pursuant to a
domestic relations order issued by a court of competent jurisdiction, and this
Option herein granted, or any of them, shall be exercisable during Optionee's
lifetime only by Optionee.
5. Stock as Investment.
By accepting this Option herein granted, Optionee agrees for himself,
his heirs and legatees, that unless such shares are sold pursuant to an
effective registration statement under the under the Securities Act of 1933, as
amended (the "Securities Act") or an exemption from registration, all shares of
Common Stock purchased hereunder shall be acquired for investment purposes only
and not for sale or distribution, and upon the issuance of any or all of the
shares of Common Stock issuable under the Option, Optionee, or his heirs or
legatees receiving such shares of Common Stock, shall deliver to Grantor a
representation in writing, that such shares of Common Stock are being acquired
in good faith for investment purposes only and not for sale or distribution.
Grantor may place a "stop transfer" order with respect to the shares of Common
Stock with its transfer agent and place an appropriate restrictive legend on the
stock certificate(s) evidencing such shares of Common Stock.
6. Restriction on Issuance of Shares.
Grantor shall not be required to issue or deliver any certificate for
shares of its Common Stock purchased upon the exercise of the Option unless (a)
the issuance of such shares of Common Stock has been registered with the
Securities and Exchange Commission under the Securities Act, or counsel to
Grantor shall have given an opinion that such registration is not required; (b)
approval, to the extent required, shall have been obtained from any state
regulatory body having jurisdiction thereof; and (c) permission for the listing
of such shares of Common Stock, if required, shall have been given by Nasdaq
and/or any national securities exchange on which the Common Stock of Grantor is
at the time of issuance listed.
7. Adjustments Upon Changes in Capitalization
(a) In the event of changes in the outstanding Common Stock of Grantor
by reason of stock dividends, stock splits, recapitalizations, mergers,
consolidations, combinations, or exchanges of shares, separations,
reorganizations, or liquidations, the number of shares of Common Stock as to
which the Option may be exercised shall be correspondingly adjusted by Grantor,
and the Purchase Price shall be adjusted so that the product of the Purchase
Price immediately after such event multiplied by the number of options subject
to this Agreement immediately after such event shall be equal to the product of
the Purchase Price multiplied by the number of shares of Common Stock subject to
this Agreement immediately prior to the occurrence of such event. No adjustment
shall be made with respect to stock dividends or splits which do not exceed 10%
in any fiscal year, cash dividends or the issuance to stockholders of Grantor of
rights to subscribe for additional shares of Common Stock or other securities.
(b) Any adjustment in the number of shares of Common Stock shall apply
proportionately to only the unexercised portion of the Option granted hereunder.
If fractions of a share would result from any such adjustment, the adjustment
shall be revised to the next higher whole number of shares of Common Stock.
8. Effect of Mergers, Consolidations or Sales of Assets.
In the event of any consolidation or merger of Grantor with or into
another company, or the conveyance of all or substantially all of the assets of
Grantor to another company for solely stock and/or securities, each then
unexercised Option granted hereunder shall upon exercise thereafter entitle the
holder thereof to such number of shares of Common Stock or other securities or
property to which a holder of shares of Common Stock of Grantor would have been
entitled to upon such consolidation,
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merger or conveyance; and in any such case appropriate adjustment, as determined
by the Board of Directors of Grantor (or successor entity) shall be made as set
forth above with respect to any future changes in the capitalization of Grantor
or its successor entity. In the event of the proposed dissolution or liquidation
of Grantor, or the sale of substantially all the assets of Grantor for other
than stock and/or securities, any unexercised portion of the Option granted
hereunder will automatically terminate, unless otherwise provided by the Board
of Directors of Grantor or any authorized committee thereof.
9. No Rights in Option Stock.
Optionee shall have no rights as a stockholder in respect of shares of
Common Stock as to which the Option granted hereunder shall not have been
exercised and payment made as herein provided.
10. Effect Upon Employment.
This Agreement does not give Optionee any right to employment by
Grantor.
11. Binding Effect.
Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and assigns.
12. Withholding.
Optionee agrees to cooperate with Grantor to take all steps necessary
or appropriate for the withholding of taxes by Grantor under law or regulation
in connection therewith. In the event Optionee does not make the required
withholding payment at the time of exercise, Grantor may make such provisions
and take such steps as it, in its sole discretion, may deem necessary or
appropriate for the withholding of any taxes that Grantor is required by any law
or regulation of any governmental authority, whether federal, state or local,
domestic or foreign, to withhold in connection with the exercise of any Option
granted hereunder, including, but not limited to, (i) the withholding of payment
of all or any portion of such Option until Optionee reimburses Grantor for the
amount Grantor is required to withhold with respect to such taxes, or (ii) the
canceling of any number of shares of Common Stock issuable upon exercise of such
Option in an amount sufficient to reimburse Grantor for the amount it is
required to so withhold, and/or (iii) the selling of any property contingently
credited by Grantor for the purpose of exercising such Option, in order to
withhold or reimburse Grantor for the amount it is required to so withhold.
13. Agreement Subject to Plan.
Notwithstanding anything contained herein to the contrary, this
Agreement is subject to, and shall be construed in accordance with, the terms of
the Plan, and in the event of any inconsistency between the terms hereof and the
terms of the Plan, the terms of the Plan shall govern.
14. Miscellaneous.
This Agreement shall be construed under the laws of the State of Nevada
without application to the principles of conflicts of law. Headings have been
included herein for convenience of reference only, and shall not be deemed a
part of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
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AMERICAN VANTAGE COMPANIES
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------------------
Xxxxxx X. Xxxxxxxxx, Chief Executive Officer
ACCEPTED AND AGREED TO:
/s/ Xxx X. Xxxxx
-------------------
Xxx X. Xxxxx
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EXERCISE OF OPTION
TO
PURCHASE SHARES
TO: American Vantage Companies:
The undersigned hereby exercises the within option for the purchase of
______________ shares of Common Stock according to the terms and conditions
thereof and herewith makes payment of $_____________, representing the purchase
price in full, in accordance with the terms of the Company's 1996 Stock Option
Plan and the Stock Option Agreement, dated as of April 16, 2003, between
American Vantage Companies and the undersigned. The undersigned is purchasing
such shares for investment purposes only and not with a view to the sale or
distribution thereof. Kindly issue the certificate for such shares in accordance
with the instructions given below.
____________________________________________
Print Name
____________________________________________
Signature
____________________________________________
Address
____________________________________________
Social Security or
Taxpayer I.D. Number
____________________________________________
Date
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