STOCK OPTION AGREEMENT
AUTHORISZOR INC.
This unilateral grant by the Company constitutes a valid Nonqualified
Stock Option for a total of 200,000 shares (the "Shares") of common stock, par
value $.01 per share (the "Common Stock"), of Authoriszor Inc., a Delaware
corporation (the "Company"), is hereby granted to Xxxxxxx X. Xxxxxxxx (the
"Optionee") in connection with (i) that certain Severance and Release Agreement,
dated as of January 31, 2001 (the "Severance Agreement"), by and among the
Company and Xxxxxxx X. Xxxxxxxx and (ii) pursuant to the terms of this Option
Agreement (the "Option Agreement").
Section 1. Exercise Price. The exercise price of the Option is $6.75
for each Share. The exercise payment ("Exercise Payment") shall be the aggregate
consideration payable to the Company upon exercise of the Option by the Optionee
equal to the product of the number of shares desired to be exercised and the
Exercise Price.
Section 2. Exercise of the Option. The Option shall be comprised of (i)
the first option ("First Option") to purchase 100,000 shares of Common Stock,
which shall be exercisable on or after January 31, 2001 and (ii) the second
option ("Second Option", together with the First Option, the "Option" or
"Options", as the case may be) to purchase 100,000 shares of Common Stock, which
shall be exercisable on or after January 31, 2002, and each may be exercised
from time to time thereafter, subject to the provisions contained in Sections 3,
4 and 5 below.
(a) Method of Exercise. Options shall be deemed properly
exercised when:
(i) the Company has received written notice (the
"Notice") of such exercise, stating the number of Shares
which are being purchased, delivered to the Company and
signed by the person or persons entitled to exercise the
Option and, if the Option is being exercised by any person
or persons other than the Optionee, be accompanied by proof,
satisfactory to the Company, of the right of such person or
persons to exercise the Option; and
(ii) full payment of the exercise price of the
Shares as to which the Option is exercised has been tendered
to the Company pursuant to Section 2(b) hereof; or
(iii) at the option of the Optionee, without a
cash payment of the Exercise Price, by designating that the
number of Shares of Common Stock issuable to the Optionee
upon such exercise shall be reduced by the number of Shares
having a Fair Market Value (as hereinafter defined) equal to
the amount of the Exercise Payment for such exercise. In
such instance, no cash or other consideration will be paid
by Optionee in connection with such exercise other than the
surrender of the Option Agreement itself, and no commission
or other remuneration will be paid or given by Optionee or
the Company in connection with such exercise. If such
election results in only a partial exercise of the Options
covered by the Option Agreement, the Company shall deliver
to Optionee a new Option Agreement evidencing the remaining
Shares under the Options. This election is available to the
Optionee only if on the business day immediately prior to
the date (the "Exercise Date") the Notice is received by the
Company, the Shares trade on any stock exchange, the NASDAQ
Stock Market or the OTC Bulletin Board. For this purpose,
the Fair Market Value of shares of Common Stock shall be
determined as of the last business day preceding the
Exercise Date and shall be deemed to be the average of the
closing bid and ask prices of the Common Stock; provided,
however, if shares of the Common Stock are then listed on a
national securities exchange or the NASDAQ Stock Market, the
Fair Market Value of shares of Common Stock shall be deemed
to be the closing price on the relevant date; and
(iv) arrangements that are satisfactory to the
Board of Directors of the Company (the "Board") in its sole
discretion have been made for the Optionee's payment to the
Company of the amount, if any, that the Company reasonably
determines to be necessary for the Company to withhold in
accordance with applicable federal or state income, or
federal employment, tax withholding requirements.
(b) Payment. The exercise price of any Shares purchased
shall be paid in cash, by certified or cashier's check, by money
order, by personal check (if approved by the Board) or pursuant to the
provisions contained in Section 2(a)(iii); provided, further, that any
federal or state income, or federal employment, taxes which the
Company reasonably determines should be withheld, shall be paid by the
Optionee to the Company in cash, by certified or cashier's check, by
money order or by personal check (if approved by the Board).
(c) Restrictions on Exercise.
(i) This Option may not be exercised if the
issuance of the Shares upon such exercise would constitute a
violation of any applicable federal or state securities or
other law or valid regulation. As a condition to the
exercise of this Option, the Company may require the
exercising person to make any agreements and undertakings
that may be required by any applicable law or regulation.
(ii) Shares issued upon the exercise of this
Option without registration of such Shares under the
Securities Act of 1933, as amended (the "Securities Act"),
shall be restricted securities subject to the terms of Rule
144 under the Securities Act. The certificates representing
any such Shares shall bear an appropriate legend restricting
transfer and the transfer agent of the Company shall be
given stop transfer instructions with respect to such
Shares.
(iii) At the written request of the Optionee, the
Company will promptly, but in no event more than 15 days of
receiving such request from Optionee, file with the
Securities and Exchange Commission a registration statement
("Registration Statement") on Form S-8 registering the
issuance of the Shares; provided that such 15 day period
shall be extended if the Company's failure to file the
Registration Statement within such period is the result of
the Company's inability to obtain the required consent of
its independent public accountants. The Company's obligation
to file the Registration Statement is conditioned on the
following: (i) the Company meets the requirements of Form
S-8 with respect to the Shares; (ii) as of the date of the
request the Exercise Price is equal to or lesser than the
Fair Market Value of the Shares; and (iii) the Optionee
timely provides the Company with the information and takes
such further action that the Company may reasonably request
in connection with the Registration Statement. The Company
shall bear all filing fees, the fees and expenses of the
Company's independent public accountants and attorneys and
other expenses incurred by the Company with respect to the
filing of the Registration Statement.
Section 3. Term of Option. This Option may not be exercised after
January 31, 2009 and is subject to earlier termination as provided in Section 4.
In addition, this Option is subject to cancellation by the Company upon a
significant corporate event as provided in Section 4 below. This Option may be
exercised during such times only in accordance with the terms of this Option
Agreement.
Section 4. Termination of Option Period.
(a) The unexercised portion of this Option shall
automatically and without notice terminate and become null and void on
January 31, 2009.
(b) The Company in its sole discretion may, by giving
written notice (a "Cancellation Notice") prior to the consummation of
any of the transactions described in Section 4(b)(i) or 4(b)(ii),
cancel, effective upon the date of the consummation of any of such
transactions, all or any portion of this Option that remains
unexercised on such date. Such Cancellation Notice shall be given a
reasonable period of time (but not less than 30 days) prior to the
effective date of such cancellation, and may be given either before or
after stockholder approval of such transaction.
(i) Any transaction (which shall include a series
of related transactions occurring within 60 days or
occurring pursuant to a plan) that has the result that
stockholders of the Company immediately before such
transaction cease to own at least 51% of (x) the voting
stock of the Company or (y) any entity that results from the
participation of the Company in a reorganization,
consolidation, merger, liquidation or any other form of
corporate transaction.
(ii) A sale, lease, exchange or other disposition
of all or substantially all the property and assets of the
Company to an unaffiliated third party.
Section 5. Acceleration of Option Period.
(a) Notwithstanding the foregoing, immediately prior to the
occurrence of either of the events described in Section 4(b)(i) or
Section 4(b)(ii), the Option shall automatically vest in full and
become immediately exercisable; provided, however, that the Company
shall provide Optionee the Cancellation Notice as described in Section
4(b).
Section 6. Adjustment of Shares.
(a) If at any time while an unexercised Option is
outstanding hereunder, there shall be any increase or decrease in the
number of issued and outstanding shares of Common Stock through the
declaration of a stock dividend or through any recapitalization
resulting in a stock split-up, combination or exchange of shares, then
and in such event proportionate adjustment shall be made in the number
of Shares and the exercise price per Share thereof then subject to
this Option, so that the same proportion of the Company's issued and
outstanding shares shall remain subject to purchase at the same
aggregate exercise price.
(b) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class,
or securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to the number of or exercise price of
Shares then subject to this Option.
(c) Without limiting the generality of the foregoing, the
existence of this Option shall not affect in any manner the right or
power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the
Shares subject to this Option; (iv) the dissolution or liquidation of
the Company; (v) any sale, transfer or assignment of all or any part
of the assets or business of the Company; or (vi) any other corporate
act or proceeding, whether of a similar character or otherwise.
Section 7. Non-Assignability of Option. This Option may be transferred
or assigned by the Optionee only to family members, trusts or other entities for
the benefit of the Optionee or for the benefit of the Optionee's family members,
by will or by the laws of descent and distribution or by the laws regulating
testate or intestate succession applicable to the Optionee.
Section 8. Issuance of Shares. No person shall be, or have any rights
or privileges of, a stockholder of the Company with respect to any of the Shares
subject to this Option unless and until certificates representing such Shares
have been issued and delivered to such person. As a condition of an issuance of
a stock certificate for Shares, the Company may obtain such agreements or
undertakings, if any, as it may deem necessary or advisable to assure compliance
with any provision of this Option Agreement or any law or regulation, including,
but not limited to, the following:
(a) The Optionee's representation and warranty to the Company,
at the time the Option is exercised, that the Shares to be issued are
being acquired for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares until registration
of the issuance of such Shares is effective; and
(b) The Optionee's representation, warranty or agreement to be
bound by any legends that are, in the opinion of the Company, necessary
or appropriate to comply with the provisions of any securities law
deemed by the Company to be applicable to the issuance of the Shares
and to be endorsed upon the certificates representing the Shares.
Section 9. Government Regulations. The granting and exercise of this
Option and the obligation of the Company to sell and deliver Shares under this
Option, shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.
Section 10. Law Governing. THIS OPTION IS INTENDED TO BE PERFORMED IN
THE STATE OF DELAWARE AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF SUCH STATE EXCEPT TO THE EXTENT DELAWARE LAW IS
PREEMPTED BY FEDERAL LAW.
Section 11. Notices. Whenever any notice is required or permitted under
this Option Agreement, such notice must be in writing and personally delivered
or sent by registered mail or delivery by a recognized courier service. Any
notice required or permitted to be delivered under this Option Agreement shall
be deemed to be delivered on the date on which it is delivered, or, if mailed,
whether actually received or not, on the third business day after it is
deposited in the mail, certified or registered, postage prepaid, addressed to
the person who is to receive it at the address that such person has previously
specified by written notice delivered in accordance with this subsection. The
Company or the Optionee may change, at any time and from time to time, by
written notice to the other, an address, or in the case of Optionee the name and
address of his counsel, that was previously specified for receiving notices.
Until changed in accordance with this Option Agreement, the Company and the
Optionee shall specify as its or his address for receiving notices the address
set forth in this Option Agreement pertaining to the Shares to which such notice
relates.
Section 12. Miscellaneous.
(a) The Company has full corporate authority to grant this
Option, and this Option is granted to the Optionee in connection with
the Severance Agreement describing such Option and is in addition to
any other stock option plans of the Company or other benefits with
respect to the Optionee's position with or relationship to the Company
or its subsidiaries.
(b) The members of the Board shall not be liable for any act,
omission or determination taken or made in good faith with respect to
this Option, and members of the Board shall, in addition to all other
rights of indemnification and reimbursement, be entitled to
indemnification and reimbursement by the Company in respect of any
claim, loss, damage, liability or expense (including attorneys' fees,
the costs of settling any suit, provided such settlement is approved by
independent legal counsel selected by the Company, and amounts paid in
satisfaction of a judgment, except a judgment based on a finding of bad
faith) arising from such claim, loss, damage, liability or expense to
the full extent permitted by law and under any directors' and officers'
liability or similar insurance coverage that may from time to time be
in effect.
(c) Neither the Board nor the Company guarantees Shares from
loss or depreciation.
(d) All expenses incident to the administration,
termination, or protection of this Option, including, but not limited
to, legal and accounting fees, shall be paid by the Company.
(e) Records of the Company shall be conclusive for all
purposes under this Option, unless determined by the Board to be
incorrect.
(f) Any action required of the Company relating to this
Option shall be by resolution of the Board or by a person authorized
to act by resolution of the Board.
(g) If any provision of this Option is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of this Option, but such provision shall be
fully severable, and this Option shall be construed and enforced as if
the illegal or invalid provision had never been included in this
Option.
(h) Any person entitled to notice under this Option may
waive such notice.
(i) This Option shall be binding upon the Optionee, his
legal representatives, heirs, legatees and distributees upon the
Company, its successors, and assigns, and upon the Board and its
successors.
(j) The titles and headings of Sections are included for
convenience of reference only and are not to be considered in
construction of this Option's provisions.
(k) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Option dictates,
the plural shall be read as the singular and the singular as the
plural.
(l) The Company hereby covenants and agrees to at all times
to reserve a sufficient number of shares for issuance pursuant to the
exercise of this Option Agreement.
DATE OF GRANT: AUTHORISZOR INC.
January 31, 2001
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------
Xxxxx X. Xxxxxxx
Vice President and Secretary
ADDRESS:
Xxx Xxx xx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000-0000
Optionee hereby accepts this Option subject to all the terms and
provisions of this Option Agreement.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------------
Xxxxxxx X. Xxxxxxxx
ADDRESS:
0 Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
COUNSEL:
Xxxxxxx Xxxxxx & Green, P.C.
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
