ALANCO ENVIRONMENTAL RESOURCES CORPORATION
1998 XXXX X. XXXXXXX STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made and entered into this
9th day of September, 1998 ("Grant Date"), by and between ALANCO ENVIRONMENTAL
RESOURCES CORPORATION, an Arizona corporation (the "Company"), and XXXX X.
XXXXXXX (the "Optionee").
RECITALS
The Company, through its Board of Directors (the "Board"), has determined
that in order to attract and retain the best available personnel for positions
of substantial responsibility to provide successful management of the Company's
business, it must offer a compensation package that provides key employees of
the Company an opportunity to participate financially in the success of the
Company by developing an equity interest in it. By this Agreement, the Company
and the Optionee desire to establish the terms upon which the Company is
willing to grant to the Optionee, and upon which the Optionee is willing to
accept from the Company, an option to purchase shares of common stock, no par
value, of the Company ("Common Stock").
IN CONSIDERATION of the promises and of the mutual agreements hereinafter
set forth, the parties agree as follows:
1. Grant of Non-Statutory Stock Option. Subject to the terms and
conditions hereinafter set forth, the Company grants to the Optionee the right
and option (the "Option") to purchase from the Company all or any part of an
aggregate number of One Hundred Thousand (100,000) shares of Common Stock,
authorized but unissued or, at the option of the Company, treasury stock if
available (the "Optioned Shares").
2. Purchase Price. The price to be paid for the Optioned Shares (the
"Purchase Price") upon exercise of the Option, or any part thereof, shall be
the lower of (i) $1.00 per share or (ii) the price per share which is equal to
the average low daily bid price of any ten (10) consecutive trading days from
July 1, 1998 until thirty (30) days following the date of public release of the
Company's Summary Financial Results for its fiscal year ending June 30, 1998.
3. Vesting of Options; Exercise. The Options shall vest as follows:
Fifty Thousand (50,000) Options shall vest upon March 1, 1999, and the
remaining Fifty Thousand (50,000) Options shall vest upon September 1, 1999,
provided Optionee is still employed by the Company. In addition, all unvested
options shall immediately vest in the event the employment of Optionee with the
Company is terminated by the Company. The Option may be exercised by the
Optionee, in whole or in part from time to time, for any number of shares up to
the full amount of shares then vested.
4. Termination of Option. The Option shall not be exercisable as to any
shares not vested and will automatically terminate with respect to non-vested
shares if the continuous employment requirement is not satisfied, unless
Optionee is terminated by the Company. Vested Shares, to the extent not
exercised, shall terminate upon the tenth (10th) anniversary of the Grant date
(the "Option Term").
5. Exercise of Option. Subject to the terms and conditions of this
Agreement, the Option may be exercised only by completing and signing a written
notice to the Company in substantially the following form:
I hereby exercise the Option granted to me by Alanco Environmental
Resources Corporation and elect to purchase _________________ shares
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of no par value Common Stock of Alanco Environmental Resources
Corporation for [the purchase price set forth in Paragraph 2 of this
Stock Option Agreement].
6. Payment of Purchase Price. Payment of the Purchase Price may be made
as follows:
(a) In United States dollars in cash or by check, bank draft or
money order payable to the Company; or
(b) At the discretion of the Board, through the delivery of shares
of Common Stock with an aggregate fair market value at the date of such
delivery, equal to the Purchase Price; or
(c) By a combination of both (a) and (b) above.
The Board shall determine acceptable methods for tendering Common Stock as
payment upon exercise of an Option and may impose such limitations and
conditions on the use of Common Stock to exercise an Option as it deems
appropriate. At the election of the Optionee and subject to the acceptance of
such election by the Board, to satisfy the Company's withholding obligations,
it may retain such number of shares of Common Stock subject to the exercised
Option which have an aggregate fair market value on the date of exercise equal
to the Company's aggregate federal, state, and local tax withholding and FICA
and FUTA obligations with respect to the exercise of the Option by the
Optionee.
7. Adjustments. In the event of any stock split, reverse stock split,
stock dividend, combination or reclassification of shares of Common Stock or
any other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company, the number and kind
of Optioned Shares and the Purchase Price per share shall be proportionately
and appropriately, adjusted without any change in the aggregate Purchase Price
to be paid therefor upon exercise of the Option.
8. Liquidation, Sale of Assets or Merger. Provided that the Options
shall have been fully vested for at least 30 days, in the event of a
dissolution or liquidation of the Company, the Option will terminate
immediately prior to the consummation of such action, unless otherwise provided
by the Board. In the event of a proposed sale of all or substantially all of
the assets of the Company, or the merger of the Company with or into another
corporation, the option shall be assumed or an equivalent option shall be
substituted by such successor corporation.
9. Optionee Not A Shareholder. The Optionee shall not be deemed for any
purposes to be a shareholder of the Company with respect to any of the Optioned
Shares except to the extent that the Option herein granted shall have been
exercised and a stock certificate issued therefor.
10. Covenants of the Company. The Company covenants and agrees that all
shares of Common Stock issued upon the exercise of the Option will, upon
issuance and payment therefor in accordance with the terms hereof, be validly
issued, fully paid and nonassessable.
11. Registration of Common Stock. The Company shall promptly cause
appropriate securities registration statements to be filed with respect to the
shares underlying the Option so that upon exercise of the Option the Common
Stock received may be freely tradeable.
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12. Notices. Any notice to be given under the terms of the Agreement
("Notice") shall be addressed to the Company in care of its Secretary at 00000
X. 00xx Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, or at its then current
corporate headquarters. Notice to be given to the Optionee shall be addressed
to him at his then current residential address as appearing on the records of
the Company. Notice shall be deemed duly given when enclosed in a properly
sealed envelope and deposited by certified mall, return receipt requested, in a
post office or branch post office regularly maintained by the United States
Government.
13. Governing Law. This Agreement is executed pursuant to and shall be
governed by and construed in accordance with the laws of the State of Arizona.
14. Entire Agreement. This Agreement constitutes the entire agreement of
the parties with respect to the subject matter hereof and supersedes all prior
understandings and agreements written or oral of any party hereto. This
Agreement may not be amended, waived, discharged or terminated, except by a
written instrument signed by both the Company and the Optionee.
IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officer, and the Optionee has hereunto affixed his
signature.
ALANCO ENVIRONMENTAL RESOURCES CORPORATION, an Arizona corporation
By: /s/Xxxxxx X. Xxxxxxxx
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Xxxxxx X. Xxxxxxxx
Its: Chairman and Chief Executive Officer
OPTIONEE:
/s/Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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