LOCATION BASED TECHNOLOGIES, CORP. STOCK OPTION AWARD AGREEMENT
EXHIBIT
10.5
LOCATION
BASED TECHNOLOGIES, CORP.
This
agreement dated as of October 11, 2007, (“Award Agreement”), is entered into by
and between Location Based Technologies, Corp., a California corporation
(the
“Company”), and Xxxxxx Xxxxxxx (the “Optionee”).
1. General. The
options evidenced by this Award Agreement (“Options”) are nonqualified stock
options granted as of the date specified above (the “Award
Date”). They are issued pursuant to the power of the Company to do so
set forth in Section 404 of the California Corporations Code, and not pursuant
to any plan.
2. Grant/Termination. The
Company hereby grants to the Optionee Options to purchase a total of 2,000,000
shares of Common Stock of the Company, exercisable as provided in the Exercise
Schedule set forth in Section 5 below at $1 per share (the “Exercise
Price”). These Options shall terminate immediately upon Optionee’s
termination of employment by the Company for Cause; twelve months after the
Optionee’s termination of employment by the Company for other than Cause or
voluntary termination of employment by Optionee; 12 months after the Optionee’s
death or total disability; or ten years from the Award Date. For
purposes of this Award Agreement, the term “Cause” means engaging in any
activity adverse, contrary or harmful to the interests of the Company,
including, but not limited to: (i) conduct related to the Optionee’s employment
for which either criminal or civil penalties have been awarded against the
Optionee, (ii) violation of Company policies, including, without limitation,
the
Company’s discrimination, harassment or xxxxxxx xxxxxxx policies, (iii)
accepting employment with or serving as a consultant, advisor or in any other
capacity to an entity that is, or proposes to be, in competition with or
acting
against the interests of the Company, including employing or recruiting any
present, former or future employee of the Company
3. Exercise
Procedure. In order to exercise the Options granted hereunder,
the Optionee must give written notice thereof (using Exhibit A hereto) to
the
Board of Directors of the Company (“Board”) at the Company’s corporate
headquarters specifying the number of shares of Common Stock being
purchased. Such notice must be accompanied by payment of the Exercise
Price for the share or shares being purchased and this Award Agreement so
that
appropriate notation can be made thereon to reflect such
exercise. Such payment shall be by cash or check payable to the order
of the Company, in an amount equal to the Exercise Price of the shares of
Common
Stock being purchased; provided, however, that all or a portion of the Exercise
Price for the share or shares of Common Stock being purchased may also or
alternatively be paid by the delivery of shares of Common Stock, the aggregate
Fair Market Value of which is equal to the portion of such Exercise Price
being
paid by the delivery of shares of Common Stock. Shares of Common
Stock that may be used for payment shall include shares which were received
by
the Optionee upon the exercise of one or more Options and shares which the
Optionee directs the Company to withhold, for the purpose of paying the Exercise
Price, from shares which the Optionee would have received upon the exercise
of
one or more Options (so-called “cashless exercise”). For purposes of
this Agreement, Fair Market Value shall be determined in good faith by the
Board
of Directors in a manner not inconsistent with that described in Section
260.140.50 of the California Code of Regulations.
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4. No
Other Rights. Nothing herein contained shall confer on the
Optionee any right with respect to continuation of employment by the Company
or
its Subsidiaries or Affiliates, or interfere with the right of the Company
or
its Subsidiaries or Affiliates to terminate at any time the employment of
the
Optionee, or, except as to shares of Common Stock actually delivered, confer
any
rights as stockholder upon the holder hereof.
5. Vesting.
(a) If
the Optionee continues to be employed by the Company (or a Subsidiary or
Affiliate thereof), subject to Section 6 hereof, the Options granted hereunder
will become exercisable by the Optionee in accordance with the following
exercise schedule until the specified events have occurred after the Award
Date
of the Options:
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As
of the Date
the
Company Achieves
the
No. of Customers
Specified
Below*
100,000
250,000
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No.
of
Options
Vested
1,000,000
1,000,000
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For
purposes of this Award Agreement, a person or entity will be deemed to be
a
“customer” if it actually pays for service in any month of measurement as
reflected on the Company’s server system showing active devices.
(b) Notwithstanding
the foregoing, upon a “Change in Control”, all Options which have not lapsed
prior to the date of such Change in Control shall become fully vested and
exercisable (if not already vested and exercisable) by Optionee. The
phrase “Change in Control” means the following and shall be deemed to occur if
any of the following events specified in clauses (i), (ii), (iii) or (iv)
occur:
(i) Any
person or entity becomes, after the Award Date, the beneficial owner (within
the
meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1923,
as
amended), directly or indirectly, more than 50% of the combined voting power
of
the Company’s then outstanding securities; or
(ii) During
any period of two consecutive years, individuals, who at the beginning of
such
period, constitute the Board and any new Director of the Company (other than
a
Director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii) or (iv) of
this
definition) whose election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least two-thirds of the
Directors of the Company then still in office who either were Directors of
the
Company at the beginning of the two-year period or whose election or nomination
for election was previously so approved, cease for any reason to constitute
at
least a majority of the Board;
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(iii) A
merger or consolidation of the Company with any other corporation, other
than a
merger or consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either
by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after
such merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no person acquires more than 50% of the combined voting power of
the
Company’s then outstanding securities shall not constitute a Change in Control,
and provided further a merger or consolidation in which the Company is the
surviving entity (other than as a wholly owned subsidiary of another entity)
and
in which the Board of Directors of the Company or the successor to the Company
after giving effect to the merger or consolidation, is comprised of a majority
of members who are either (x) Directors of the Company immediately preceding
the
merger or consolidation, or (y) appointed to the Board of Directors by the
Company (or the Board) as an integral part of such merger or consolidation,
shall not constitute a Change in Control; or
(iv) Approval
by the shareholders of the Company or any order by a court of competent
jurisdiction of a plan of liquidation of the Company, or the sale or disposition
by the Company of all or substantially all of the Company’s assets other than
(i) the sale or disposition of all or substantially all of the assets of
the
Company to a person or persons who beneficially own, directly or indirectly,
at
least 50% or more of the combined voting power of the outstanding voting
securities of the Company at the time of the sale; or (ii) pursuant to a
dividend in kind or spin-off type transaction, directly or indirectly, of
such
assets to the shareholders of the Company;
(v) Notwithstanding
the foregoing, a Change in Control of the type described in clauses (ii),
(iii)
or (iv) above shall be deemed to be completed on the date it occurs, and
a
Change in Control of the type described in clause (i) above shall be deemed
to
be completed as of the date the entity or group attaining greater than 50%
ownership has elected its representatives to the Board and/or caused its
nominees to become officers of the Company with the authority to terminate
or
alter the terms of any Employee’s employment.
(c) In
addition, upon a Change in Control where the equity holders of the Company
hold
more than 50% of the outstanding voting equity of the survivor of the Change
of
Control, if necessary, this Option shall be automatically converted into
the
right to receive, and thereafter shall be exercisable for, in accordance
with
this Agreement, the securities, cash and/or other consideration that a holder
of
the shares underlying the Options would have been entitled to receive upon
a
consummation of such Change of Control had such shares been issued and
outstanding immediately prior to the effective date and time of the Change
of
Control (net of appropriate exercise prices).
6. Noncompetition. In
consideration for the grant of the Options granted hereunder, Optionee
specifically agrees that while Optionee is an employee of the Company and
for a
period of 12 months after the termination of his employment with the Company
and
all Subsidiaries and Affiliates, Optionee he will not, either directly or
indirectly:
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(a) as
an individual proprietor, partner, stockholder, officer, employee, director,
joint venturer, investor, lender, or in any other capacity whatsoever (other
than as the holder of not more than four percent of the total outstanding
stock
of a publicly held company), engage in the business of developing, producing,
marketing or selling products or services which would compete with the products
or services of the kind or type developed or being developed, produced, marketed
or sold by the Company, or planned to be produced, marketed or sold as described
in any business plan of the Company or as set forth in any notes or minutes
of
internal Company meetings, while the Employee was employed by the Company
or any
Subsidiary or Affiliate;
(b) recruit,
solicit or induce, or attempt to induce, any employee or employees of the
Company to terminate their employment with, or otherwise cease their
relationship with, the Company; or
(c) solicit,
divert or take away, or attempt to divert or to take away, the business or
patronage of any of the clients, customers or accounts, or prospective clients,
customers or accounts, of the Company which were contacted, solicited or
served
by the Employee while employed by the Company;
provided,
however, that this Section 6 shall cease to apply if the Optionee’s employment
with the Company and all of its Subsidiaries and Affiliates is terminated
by
Optionee’s employer without Cause. Optionee further agrees to notify
anyone employing Optionee or utilizing Optionee as a consultant, advisor
or in
any other capacity, or evidencing an intention to employ or so utilize Optionee,
of the existence and provisions of this Award Agreement.
7. Nontransferability
of Option. The Option shall not be transferable or assignable by
the Optionee, other than by will or the laws of descent and distribution
(or as
otherwise permitted by the Board in its sole discretion), and shall be
exercisable during the Optionee’s lifetime only by him or her or by his or her
legal representative(s) or guardian(s) or any permitted transferee.
8. Notices. All
notices or other communications which are required or permitted hereunder
shall
be in writing and sufficient if (i) personally delivered, (ii) sent by reputable
overnight courier, (iii) sent via telecopier (fax) transmission or via
electronic mail (e-mail) or (iv) sent by registered or certified mail, postage
prepaid, return receipt requested, addressed as follows: (a) if to Optionee,
at
the address, fax number or e-mail address set forth on the signature page
hereto; or (b) if to the Company, at the address, fax number or e-mail address
set forth in the signature page hereto, or in either case, to such other
address
or fax number as the party to whom notice is to be given may have furnished
to
each other party in writing in accordance herewith. Any such
communication shall be deemed to have been given (i) when delivered, if
personally delivered, (ii) on the first Business Day (as hereinafter defined)
after dispatch, if sent by a reputable overnight courier or via fax or e-mail
and (iii) on the third Business Day following the date on which the piece
of
mail containing such communication is posted, if sent by mail. As
used herein, “Business Day” means a day that is not a Saturday, Sunday or a day
on which banking institutions in the city to which the notice or communication
is to be sent are not required to be open.
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9. Legends. All
certificates representing any shares of Common Stock or other securities
of the
Company subject to the provisions of this Agreement shall have endorsed thereon
the following legends:
(a) “These
securities have not been registered under the Securities Act of 1933 or any
state securities law. They may not be sold, offered for sale, pledged
or hypothecated in the absence of an effective registration statement as
to the
securities under said Act or law or an opinion of counsel satisfactory to
the
Company that such registration is not required.”
(b) Such
other or similar legends as the Company may reasonably require.
10. Applicable
Law. The validity, construction, interpretation and
enforceability of this Award Agreement shall be determined and governed by
the
laws of the State of California without regard to any conflicts or choice
of law
rules or principles that might otherwise refer construction or interpretation
of
this Award Agreement to the substantive law of another jurisdiction, and
any
litigation arising out of this Award Agreement shall be brought in the Superior
Court of the State of California for Orange County or the United States District
Court for the Central District of California and the Optionee consents to
the
jurisdiction and venue of those courts.
11. Severability. The
provisions of this Award Agreement are severable and if any one or more
provisions may be determined to be illegal or otherwise unenforceable, in
whole
or in part, the remaining provisions, and any partially unenforceable provision
to the extent enforceable in any jurisdiction, shall nevertheless be binding
and
enforceable.
12. Waiver. The
waiver by the Company of a breach of any provision of this Award Agreement
by
Optionee shall not operate or be construed as a waiver of any subsequent
breach
by Optionee.
13. Survival. Section
6 of this Award Agreement will remain in full force and effect following
the
termination of the Optionee’s employment with the Company and its Subsidiaries
and Affiliates for any reason.
14. Binding
Effect. The provisions of this Award Agreement shall be binding
upon the parties hereto, their successors and assigns, including, without
limitation, the Company, its successors or assigns (including, without
limitation, merger participants), the estate of the Optionee and the executors,
administrators or trustees of such estate and any receiver, trustee in
bankruptcy or representative of the creditors of the
Optionee. Notwithstanding anything herein to the contrary, in the
event of the merger or consolidation of the Company with any other corporation
or corporations, the sale by the Company of a major portion of its assets
or of
its business and good will, or any other corporate reorganization involving
the
Company, the Optionee’s obligations under Section 7 hereof may be assigned and
transferred to such successor in interest.
5
15. Counterparts. This
Award Agreement may be executed in one or more counterparts, each of which
shall
be deemed to be an original, but all of which together shall constitute one
and
the same instrument.
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Optionee
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LOCATION
BASED TECHNOLOGIES, CORP.
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/s/
Xxxxxx
Xxxxxxx
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/s/
Xxxxx
Xxxxx
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Xxxxxx
Xxxxxxx
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Xxxxx
Xxxxx,
Chief Executive Officer
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| Address: 00000 Xxxxx Xxxxx Xxxx, X000. | Address: 0000 X. Xx Xxxxx Xxxxxxxxx | |||
| Xxxxx Xxxxx, XX 00000 | Xxxxxxx, Xxxxxxxxxx 00000 | |||
| Fax No.: 000-000-0000 | Fax No.: 000-000-0000 | |||
| E-Mail Address: xxxxxx@xxxxxxxxxxxx.xxx | E-mail: xxxx@xxxxxxxxxxxx.xxx |
6
EXHIBIT
A
NOTICE
OF
EXERCISE
under
To: Location
Based Technologies, Corp. (the “Company”)
From:
Date:
Pursuant
to the Stock Option Award Agreement (the “Agreement”) (capitalized terms used
without definition herein have the meanings given such terms in the Agreement)
between the Company and myself effective _______________, 2007, I hereby
exercise my Option as follows:
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Number
of shares of Common Stock I wish to purchase under the
Option
|
|
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Exercise
Price per Share
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$
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Total
Exercise Price
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$
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“Vested
Portion” of Option (see definition in Section 5 of the
Agreement)
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Number
of shares I have previously purchased by exercising the
Option
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Expiration
Date of the Option
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I
hereby
represent, warrant, and covenant to the Company that:
(a) I
am acquiring the Common Stock for my own account, for investment, and not
for
distribution or resale, and I will make no transfer of such Common Stock
except
in compliance with applicable federal and state securities laws.
(b) I
can bear the economic risk of the investment in the Common Stock resulting
from
this exercise of the Option, including a total loss of my
investment.
(c) I
am experienced in business and financial matters, am familiar with the Company’s
business and prospects and am capable of (i) evaluating the merits and risks
of
an investment in the Common Stock; (ii) making an informed investment decision
regarding exercise of the Option; and (iii) protecting my interests in
connection therewith.
(d) Any
subsequent offer for sale or distribution of any of the shares of Common
Stock
by me shall be made only pursuant to (i) a registration statement on an
appropriate form under the Securities Act of 1933, as amended (“33 Act”), which
registration statement has become effective and is current with regard to
the
shares being offered or sold, or (ii) a specific exemption from the registration
requirements of the 33 Act, it being understood that to the extent any such
exemption is claimed, I shall, prior to any offer for sale or sale of such
shares, obtain a prior favorable written opinion, in form and substance
satisfactory to the Board, from counsel for or approved by the Board, as
to the
applicability of such exemption thereto.
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I
acknowledge that I must pay the total Exercise Price in full and make
appropriate arrangements for the payment of all federal, state and local
tax
withholdings due (if any) with respect to the Option exercised herein, before
the stock certificate evidencing the shares of Common Stock resulting from
this
exercise of the Option will be issued to me.
Attached
in full payment of the Exercise Price for the Option exercised herein is
(i) a
check made payable to the Company in the amount of $_______________ and/or
(ii)
a stock certificate for _______________ shares of Common Stock that have
been
owned by me or by me and my spouse jointly for at least six months, with
a duly
completed stock power attached, with a total Fair Market Value on the date
hereof to the Total Exercise Price, or (iii) written instructions to treat
this
as a “cashless exercise” as described in paragraph 3 of the Award
Agreement.
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Print
Name :
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RECEIVED
BY THE COMPANY:
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LOCATION
BASED TECHNOLOGIES, CORP.
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Name:
____________________________
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Title:
____________________________
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Date:
____________________________
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