EXHIBIT 10.10
XXXXXX.XXX, INC.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT (the "AGREEMENT"), dated as of April
11, 2000, between XXXxxx.xxx, Inc., a Delaware corporation (the "COMPANY"),
having an address at 00 X. 00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and
Xxxxxx Xxxxxxx, having an address at 0 Xxxxxxx Xxxxx, Xxx, Xxx Xxxx 00000 (the
"GRANTEE"):
W I T N E S S E T H
WHEREAS, concurrently herewith, the Company and the Grantee
have entered into an employment agreement (the "EMPLOYMENT AGREEMENT") and,
unless otherwise defined herein, all defined terms in this Agreement shall have
the meanings ascribed to them in the Employment Agreement,
NOW, THEREFORE, in consideration of the mutual promises set
forth herein, and for other good and valuable consideration, the Company and the
Grantee hereby agree as follows:
1. GRANT. The Company hereby grants to the Grantee a stock
option (the "OPTION") to purchase all or any part of an aggregate of 500,000
shares of the Company's common stock, $.001 par value per share (the "SHARES").
2. NUMBER OF SHARES. This Option shall be for an aggregate of
500,000 Shares.
3. EXERCISE PRICE. The exercise price shall be $1.28 per share
(the "EXERCISE PRICE").
4. MEDIUM AND TIME OF PAYMENT. The Option shall be exercised
by a written notice signed by the Grantee which identifies this Agreement and
states the number of Shares then being purchased (the "EXERCISE NOTICE"),
delivered to the attention of the Company's Secretary at the Company's principal
office in New York. The exercise date shall be the date such notice is received
by the Company. The Exercise Notice shall be accompanied by the Exercise Price,
which is payable either by: (i) cash payment or certified check equal to the
Exercise Price; or (ii) a certificate representing Company stock owned by the
Grantee, if not subject to any restrictions, with a Fair Market Value equal to
the Exercise Price; or (iii) a cashless exercise, pursuant to which the Grantee
shall be issued that number of Shares as is determined by multiplying the number
of Shares being purchased hereunder by a fraction, the numerator of which shall
be the difference between the then Fair Market Value of the Company's common
stock and the Exercise Price, and the denominator of which shall be the then
Fair Market Value of the Company's common stock; or (iv) by a combination of the
methods described in clauses (i), (ii) and (iii) above. The Exercise Notice
shall state the method or methods being utilized by the Grantee to purchase
Shares hereunder. "Fair Market Value" of a share of common stock of the Company
as of a specified date shall mean the closing price of a
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share of the common stock on the principal securities exchange (including but
not limited to the Nasdaq Stock Market or the Nasdaq National Market) on which
such shares are traded on the day immediately preceding the date as of which
Fair Market Value is being determined, or on the next preceding date on which
such shares are traded if no shares were traded on such immediately preceding
day, or if the shares are not traded on a securities exchange, Fair Market Value
shall be deemed to be the average of the high bid and low asked prices of the
shares in the over-the-counter market on the day immediately preceding the date
as of which Fair Market Value is being determined or on the next preceding date
on which such high bid and low asked prices were recorded. If the shares are not
publicly traded, Fair Market Value of a share of common stock shall be
determined in good faith by the Board of Directors (the "BOARD") of the Company.
In no case shall Fair Market Value be determined with regard to restrictions
other than restrictions which, by their terms, will never lapse. Upon acceptance
of the Exercise Notice and receipt of payment in full, the Company shall cause
to be issued a certificate representing the shares of common stock so purchased.
5. TERM AND EXERCISE OF THE OPTION. Subject to earlier
termination as set forth in this Agreement, the Option shall be exercisable, in
accordance with the vesting schedule set forth below, commencing on the date
hereof and continuing until 5:00 p.m., New York City time, on April 10, 2006
(the "EXPIRATION DATE"). The Option may be exercised in whole or in increments
in accordance with the following schedule:
ON OR AFTER THIS OPTION SHALL BE EXERCISABLE AS TO:
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(i) Date of Grant 25% of the Shares
(ii) April 10, 2001 An additional 25% of the Shares
(iii) April 10, 2002 An additional 25% of the Shares
(iv) April 10, 2003 An additional 25% of the Shares
6. NONTRANSFERABILITY. The Option may be transferred only by
will or the laws of descent and distribution, and the Option may be exercised
during the Grantee's lifetime only by the Grantee (or by the Grantee's legal
representative under the circumstances described in Section 7 hereof).
7. RIGHTS IN THE EVENT OF THE GRANTEE'S DISABILITY. If the
Grantee's employment with the Company and any parent or subsidiary corporation
(within the meaning of Section 424(e) and (f) of the Internal Revenue Code of
1986, as amended (each an "AFFILIATE")) is terminated on account of Disability,
the Grantee or the Grantee's legal representative (or the Grantee's estate if
the Grantee dies after termination of employment) may exercise the Option, to
the extent exercisable on the date of the Grantee's termination of employment,
at any time within ninety (90) days after termination of employment but in no
event after the expiration of the term of the Option. The Grantee's "estate"
means the Grantee's legal representative or any person who acquires the right to
exercise the Option by reason of the Grantee's death.
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8. RIGHTS IN THE EVENT OF THE GRANTEE'S DEATH. If the Grantee
dies while an employee of the Company or any Affiliate but while he still has
the right to exercise this Option, his estate may exercise the Option, to the
extent exercisable at the date of the Grantee's death, any time within one (1)
year after the Grantee's death, but in no event after the expiration of the term
of the Option.
9. RIGHTS IN THE EVENT OF TERMINATION OF EMPLOYMENT. If
Grantee's employment with the Company or any Affiliate is terminated
involuntarily for "GOOD CAUSE" (as such term is defined in the Employment
Agreement) or if Grantee should resign without "GOOD REASON" (as such term is
defined in the Employment Agreement), the Grantee's Option shall expire as of
the date of termination of employment. If the Grantee's employment is terminated
(i) by the Company without Good Cause, or (ii) by the Grantee for Good Reason,
then all of the Grantee's Options shall be immediately vested and exercisable
and shall remain exercisable until the Expiration Date. If the Grantee's
employment is terminated for any reason other than death, disability, or as
described in the preceding sentences of this Section, the Grantee (or the
Grantee's estate, if the Grantee dies after the termination) may exercise the
Option, to the extent exercisable before the termination, within ninety days
after the termination, but in no event after the expiration of the term of the
Option.
10. EXTENSION IF GRANTEE SUBJECT TO SECTION 16(b) OF THE 1934
ACT. Notwithstanding the foregoing paragraphs 7, 8 and 9, if the exercise of the
Option within the applicable time periods set forth above would subject the
Optionee to suit under Section 16(b) of the Securities Act of 1934, as amended,
the Option shall remain exercisable to the extent permitted by law until the
earliest to occur of (i) the 10th day following the date on which the Grantee
would no longer be subject to such suit; (ii) the 190th day after the Grantee's
termination of employment; provided such termination was not for cause; or (iii)
the Expiration Date; provided that no additional vesting of the Option shall
occur during such periods. The Grantee agrees to consult with the Grantee's own
tax advisors as to the tax consequences to the Grantee of any such delayed
exercise.
11. REPRESENTATIONS AND WARRANTIES OF GRANTEE. (a) Grantee
represents and warrants that this Option is being acquired by Grantee for
Grantee's personal account, for investment purposes only, and not with a view to
the distribution, resale or other disposition thereof.
(b) Grantee acknowledges that the Company may issue Shares
upon the exercise of the Option without registering such Shares under the
Securities Act of 1933, as amended (the "1933 ACT"), on the basis of certain
exemptions from such registration requirement. Accordingly, Grantee agrees that
his or her exercise of the Option may be expressly conditioned upon his or her
delivery to the Company of an investment certificate including such
representations and undertakings as the Company may reasonably require in order
to assure the availability of such exemptions, including a representation that
Grantee is acquiring the Shares for investment and not with a present intention
of selling or otherwise disposing thereof and an agreement by Grantee that the
certificates evidencing the Shares may bear a legend indicating such
non-registration under the 1933 Act and the resulting restrictions on
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transfer. Grantee acknowledges that, because Shares received upon exercise of an
Option may be unregistered, Grantee may be required to hold the Shares
indefinitely unless they are subsequently registered for resale under the 1933
Act or an exemption from such registration is available.
(c) Grantee hereby acknowledges that, in addition to
certain restrictive legends that the securities laws of the state in which
Optionee resides may require, each certificate representing the Shares may be
endorsed with the following legend:
THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY
NOT BE PLEDGED, HYPOTHECATED, SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE 1933 ACT AND
ANY APPLICABLE STATE SECURITIES LAW OF
RECEIPT BY THE ISSUER OF AN OPINION OF
COUNSEL SATISFACTORY TO THE ISSUER THAT
REGISTRATION UNDER THE ACT AND APPLICABLE
STATE LAW IS NOT REQUIRED.
12. ADJUSTMENT IN THE SHARES AND EXERCISE PRICE. If the
Shares, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares or other securities of the Company or of
another corporation (whether by reason of merger, consolidation,
recapitalization, reclassification, split, reverse split, combination of shares,
or otherwise) or if the number of Shares shall be increased through the payment
of a share dividend, the Grantee shall receive upon exercise of the Option the
number and kind of shares or other securities into which each outstanding Share
shall be so changed, or for which each such Share shall be exchanged, or to
which each such Share shall be entitled, as the case may be. The exercise price
and other terms of the Option shall be appropriately amended to reflect the
foregoing events. If there shall be any other change in the number or kind of
the outstanding Shares, or of any shares or other securities into which the
Shares shall have been changed, or for which the Shares shall have been
exchanged, then, if the Board of Directors shall, in its sole discretion,
determine that such change equitably requires an adjustment in the Option, such
adjustment shall be made in accordance with that determination. Notice of any
adjustment shall be given by the Company to the Grantee.
13. STOP-TRANSFER NOTICES. Grantee understands and agrees
that, in order to ensure compliance with the restrictions referred to herein,
the Company may issue appropriate "stop-transfer" instructions to its transfer
agent, if any, and that, if the Company transfers its own securities, it may
make appropriate notations to the same effect in its own records.
14. NO LIMITATION ON RIGHTS OF THE COMPANY. The grant of this
Option shall not in any way affect the right or power of the Company to make
adjustments, reclassifications, or changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part
of its business or assets.
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15. RIGHTS AS A SHAREHOLDER. The Grantee shall have the rights
of a shareholder with respect to the Shares covered by the Option only upon
becoming the holder of record of those Shares.
16. COMPLIANCE WITH APPLICABLE LAW. Notwithstanding anything
herein to the contrary, the Company shall not be obligated to cause to be issued
or delivered any certificates for Shares pursuant to the exercise of the Option,
unless and until the Company is advised by its counsel that the issuance and
delivery of such certificates is in compliance with all applicable laws,
regulations of governmental authority, and the requirements of any exchange upon
which Shares are traded. The Company shall in no event be obligated to register
any securities pursuant to the 1933 Act (as now in effect or as hereafter
amended) or to take any other action in order to cause the issuance and delivery
of such certificates to comply with any such law, regulation or requirement. The
Board may require, as a condition of the issuance and delivery of such
certificates and in order to ensure compliance with such laws, regulations, and
requirements, that the Grantee make such covenants, agreements, and
representations as the Board, in its sole discretion, considers necessary or
desirable.
17. NO OBLIGATION TO EXERCISE OPTION. The granting of the
Option shall impose no obligation upon the Grantee to exercise the Option.
18. AGREEMENT NOT A CONTRACT OF EMPLOYMENT. This Agreement is
not a contract of employment, and the terms of employment of the Grantee or the
relationship of the Grantee with the Company or any Affiliate shall not be
affected in any way by this Agreement except as specifically provided herein.
The execution of this Agreement shall not be construed as conferring any legal
rights upon the Grantee for a continuation of employment or relationship with
the Company or any Affiliate, nor shall it interfere with the right of the
Company or any subsidiary thereof to discharge the Grantee and to treat him
without regard to the effect which that treatment might have upon him as a
Grantee.
19. WITHHOLDING. The Company shall have the right to deduct
and withhold from payments or distributions of any kind otherwise due to the
Grantee any federal, state or local taxes of any kind required by law to be so
deducted and withheld with respect to any shares issued upon exercise of the
Option. Subject to the prior approval of the Company, which may be withheld by
the Company in its sole discretion, the Grantee may elect to satisfy such
obligations, in whole or in part by (i) causing the Company to withhold Shares
otherwise issuable pursuant to the exercise of the Option, (ii) delivering to
the Company shares of common stock already owned by the Grantee, or (iii)
delivering to the Company cash or a check to the order of the Company in an
amount equal to the amount required to be so deducted and withheld. The shares
delivered in accordance with method (ii) above or withheld in accordance with
method (i) above shall have a Fair Market Value equal to such withholding
obligation as of the date that the amount of tax to be withheld is to be
determined. The Grantee who has made (with the Company's approval) an election
pursuant to method (i) or (ii) of this Section 19 may only satisfy his or her
withholding obligation with shares of common stock which are not subject to any
repurchase, forfeiture, unfulfilled vesting or other similar requirements.
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20. NOTICES. All notices, requests and demands given to or
made upon the respective parties hereto shall be deemed to have been given or
made three business days after the date of mailing when mailed by registered or
certified mail, postage prepaid, or on the date of delivery if delivered by
hand, or on the date of delivery by Federal Express or other reputable overnight
delivery service, addressed to the parties at their addresses set forth below or
to such other addresses furnished by notice given in accordance with this
Section 20: (a) if to the Company, to XXXxxx.xxx, Inc., 00 X. 00 Xx., 0xx Xxxxx,
Attention: Xxxxxx Xxxxxx, President, with a copy to Xxxx Marks & Xxxxx LLP, 000
Xxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxx X. Xxxxxx, Esq. and (b) if to the
Executive, to Xxxxxx Xxxxxxx, 0 Xxxxxxx Xxxxx, Xxx, Xxx Xxxx 00000, with a copy
to Xxxxxxxxxx Helpern Syracuse & Hirschtritt LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attn: Xxxx X. Xxxxxxxxxxx, Esq.
21. GOVERNING LAW. Except to the extent preempted by Federal
law, this Agreement shall be construed and enforced in accordance with, and
governed by, New York law, without regard to the conflicts of laws thereof.
22. ENTIRE AGREEMENT. This Agreement contains all of the
understandings and agreements between the Company and its Affiliates, and the
Grantee concerning this Option and supersedes all earlier negotiations and
understandings, written or oral, between the parties with respect thereto. The
Company, its Affiliates and the Grantee have made no promises, agreements,
conditions or understandings either orally or in writing, that are not included
in the Agreement.
23. HEADINGS. The headings of Sections and subsections herein
are included solely for convenience of reference and shall not affect the
meaning of any of the provisions of the Agreement.
24. AMENDMENTS. The Agreement may be amended or modified at
any time by an instrument in writing signed by the parties hereto.
25. COUNTERPARTS. This Agreement may be signed in any number
of counterparts (which may be transmitted by facsimile), each of which shall be
an original, with the same effect as if the signatures thereto and hereto were
upon the same instrument. This Agreement shall become effective when each party
hereto shall have received counterparts hereof signed by the other party hereto.
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IN WITNESS WHEREOF, the Company and the Grantee have duly
executed this Stock Option Agreement as of the date first written above.
XXXXXX.XXX, INC.
By:/s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
President
/s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx, Grantee
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