STOCK OPTION AGREEMENT
Exhibit 10.12
This
STOCK OPTION AGREEMENT (the "Agreement") is
effective this 17 th day of Decemberr_2008, between GLOBAL DIVERSIFIED
INDUSTRIES, INC., a Nevada corporation, (the "Company") and Xxxxxxx
Xxxxxxxx (the "Executive").
BACKGROUND
INFORMATION
The
Company desires to promote the long-term interests of the Company by retaining
the Executive. In order to achieve such goal, the Company has
determined to provide Executive with compensation opportunities based on the
performance of the Company. To that end, the Company has decided to
grant the Executive a right to acquire an option to purchase common shares of
the Company (the "Shares") under this Agreement. Accordingly, in
consideration of the mutual covenants hereinafter set forth and for other good
and valuable consideration, the parties hereto agree as follows:
OPERATIVE
PROVISIONS
Section
1. Grant of
Option. The Company hereby irrevocably grants to the Executive
the right and option (the "Option"), subject to
Section 4 below, to purchase all or any part of an aggregate of 68,168,164
Shares on the terms and conditions herein set forth.
Section
2. Exercise
Price. The exercise price for each Share shall be
five cents ($0.05) per share.
Section
3. Term of the
Option. The maximum term of the Option shall be for a period
of seven (7) years after the date of this Agreement. The Option, when
and if vested, shall expire on the seventh (7th)
anniversary of this agreement (the “Expiration
Date”).
Section
4.
Vesting. The
Option shall vest and become exercisable upon the satisfaction in full
(inclusive of all principal, interest and penalties) of the six million and
00/100 U.S. Dollar ($6,000,000.00) loan made to the Company by Debt Opportunity
Fund, LLP (“DOF”), under the
terms of that certain Loan and Securities Agreement by and between the Company
and DOF, of even date herewith,
Section
5.
Exercise
Procedure.
5.1
Manner of
Exercise. Subject to Section 4 above, the
Executive shall be entitled to exercise this Option, in whole or in part at any
time or times in accordance with the provisions of this Section 5, by delivering
written notice of such exercise to the office of the Secretary of the Company or
to such other location as may be designated by the Company, specifying therein
the number of Shares with respect to which the Option is being exercised, which
notice shall be accompanied by payment in full of the purchase price of the
Shares being acquired.
5.2
Payment of
Exercise Price. Payment shall be made in cash. No
Shares shall be issued until full payment therefore has been made in the manner
set forth above.
Section
6. Transferability of
Option. The Option shall not be transferable otherwise than by
will or by the laws of descent and distribution, and shall be exercised during
the lifetime of the Executive only by the Executive or by the Executive’s
guardian or legal representative. Notwithstanding the preceding
provisions of this Section, the Executive, at any time prior to his death, may
assign all or any portion of an Option granted to him to (i) his spouse or
lineal descendant, (ii) the trustee of a trust established for the primary
benefit of his spouse or lineal descendant, (iii) a partnership of which his
spouse and lineal descendants are the only partners. In such event,
the spouse, lineal descendants, trustee, or partnership will be entitled to all
the rights of the Executive with respect to the assigned portion of the Option,
and such portion of the Option will continue to be subject to all of the terms,
conditions and restrictions applicable to the Option as set forth herein
immediately prior to the effective date of the assignment. Any such
assignment will be permitted only if (i) the Executive does not receive any
consideration therefore, and (ii) the assignment is expressly approved by the
Company. Any such assignment shall be evidenced by an appropriate
written document executed by the Executive and a copy thereof shall be delivered
to the Company on or prior to the effective date of the assignment.
Section
7 Stock
Certificates. Upon exercise of the Option and payment of the
exercise price, the Company shall deliver a certificate or certificates
representing such Shares as soon as practicable after the notice shall be
received. The certificate or certificates for the Shares as to which
the Option shall have been so exercised shall be registered in the name of the
person so exercising the Option (or, if the Option shall be exercised by the
Executive and if the Executive shall so request in the notice exercising the
Option, shall be registered in the name of the Executive and another person
jointly, with right of survivorship) and shall be delivered upon the written
order of the person exercising the Option. In the event the Option
shall be exercised by any person other than the Executive, such
notice shall be accompanied by appropriate proof of the right of such person to
exercise the Option. All shares that shall be purchased upon the
exercise of the Option as provided herein shall be fully paid and no
assessable.
Section
8. No Additional
Rights. The Executive shall have no right to be employed by
the Company under the terms of this Agreement or interfere in any way
with the right of the Company to terminate any employment of the Executive at
any time. Neither the Executive nor any other person entitled to
exercise the Option under the terms hereof shall be, or have any of the rights
or privileges of, a shareholder of the Company with respect to any of the shares
of common stock issuable upon exercise of the Option, unless and until the
purchase price for such shares shall have been paid in full. Nothing
in this Agreement shall be construed to limit the authority of the Company to
exercise its corporate rights and powers, including, by way of illustration and
not by way of limitation, the right to grant options for proper corporate
purposes otherwise than under this Agreement to any employee or any other
person, firm, corporation, association or other entity, or to grant options to,
or assume options of, any person in connection with the acquisition, by
purchase, lease, merger, consolidation or otherwise, of all or any part of the
business and assets of any person, firm, corporation, association or other
entity.
Section
9. Notices. All
notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been given on the day delivered if delivered
personally, within three (3) Business Days after being sent if sent by
registered or certified mail (postage prepaid, return receipt requested), the
next day after being sent if sent by overnight courier (prepaid) or the next day
after being sent if sent by telecopier to either party at the following
address:
If
to the Company:
Global
Diversified Industries, Inc.
0000
Xxxxxxx Xxxxx
Xxxxxxxxxx,
XX 00000
Attention:
X. Xxxxxxxx, CEO
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
E-Mail:
xxxxxxxxx@xxxx.xxx
If
to the Executive:
Xx.
Xxxxxxx Xxxxxxxx
0000
00xx
Xx. 0xx
Xxxxx
Xxxxxxx,
XX 00000
Telephone:
(000) 000-0000
Telecopier:
(000) 000-0000
E-Mail:
xxxxxxxxx@xxxx.xxx
or to
such other address as either party shall have specified for itself or himself
from time to time to the other party in writing.
Section
10. Investment
Purpose. The Option is granted on the express condition that
the purchase of Shares upon an exercise hereof shall be made for investment
purposes only and not with a view to their resale or further distribution unless
such shares, at the time of their issuance and delivery, are registered under
the Securities Act or, alternatively, at some time following such issuance their
resale is determined by counsel for the Company to be exempt from the
registration requirements of the Act and of any other applicable law, regulation
or ruling.
Section
11. Certificates. Within
five (5) Business Days after the exercise date, the Company shall, subject to
the receipt of withholding tax, if any, issue to the Executive the number of
shares with respect to which such Option shall be so exercised, and shall
deliver to the Executive a certificate (or certificates)
therefore. The certificate shall bear the following legends, if
applicable:
"THIS
COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAW AND MAY BE OFFERED,
SOLD, OR TRANSFERRED ONLY IF REGISTERED PURSUANT TO THE PROVISIONS OF THE ACT OR
APPLICABLE STATE SECURITIES LAW OR IF THE PROVISIONS OF RULE 144(K) UNDER THE
ACT ARE APPLICABLE OR IF IN THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE."
Section
12 Taxes.
12.1 Withholding of
Taxes. The Company shall have the right to deduct from any
payment or settlement upon the exercise of the Option, or the delivery of any
Shares, any federal, state, local or other taxes of any kind which the Company,
in its sole discretion, deems necessary to be withheld to comply with the Code
and/or any other applicable law, rule or regulation. In addition, in
the event that the Executive disposes of any Shares, the Company shall have the
right to require the Executive to remit to the Company an amount sufficient to
satisfy all federal, state, and local withholding tax requirements as a
condition to registering the transfer of such Shares on its books. If
the Company, in its sole discretion, permits Shares of the Company’s common
stock to be used to satisfy any such tax withholding, such shares shall be
valued based on the Fair Market Value of such shares as of the date the tax
withholding is required to be made.
12.2 Code §
409A. The Options issued hereunder are intended to avoid the
inclusion of amounts with respect to the Options as deferred compensation of
Executive under Code § 409A. However, neither the Company nor any of
its affiliates makes any representations with respect to the application of Code
§ 409A to the Options and, by the acceptance of the Options, Executive agrees to
accept the potential application of Code § 409A to the Options and the other tax
consequences of the issuance, vesting, ownership, modification, adjustment and
disposition of the Options. Executive agrees to hold harmless and
indemnify the Company and its affiliates from any adverse tax consequences to
Executive with respect to the Options, any withholding obligations of the
Company or its affiliates with respect to the Options, and from any action or
inaction, or omission of the Company or its affiliates pursuant to the Plan or
otherwise that may cause such Options to be or become subject to Code §
409A.
Section
13 General. The
Company shall at all times during the term of the Option reserve and keep
available such number of shares of its common stock as will be sufficient to
satisfy the requirements of this Agreement, shall pay all original issue and
transfer taxes with respect to the issue and transfer of shares pursuant hereto
and all other fees and expenses necessarily incurred by the Company in
connection therewith, and will from time to time use its best efforts to comply
with all laws and regulations which, in the opinion of counsel for the
Company, shall be applicable thereto. The Option shall be
exercised in accordance with such administrative regulations as the Company
shall from time to time adopt and may be amended from time to time by the
Company in its sole and absolute discretion.
Section
14. Acceptance by
Executive. The exercise of the Option is conditioned upon the
acceptance of Executive of the terms hereof as evidenced by his execution of
this Agreement. Executive acknowledges and represents that he has
reviewed the terms of this Agreement and has been advised of his right to
consult with a tax advisor, financial consultant or legal counsel to obtain
legal or financial advice regarding this Agreement.
Section
15. Definitions.
When used
herein, the following terms shall have the meaning set forth below:
“Board” means the
Company’s board of directors.
"Business Day" means
any day other than a Saturday, a Sunday or any day on which commercial banks in
Tampa, Florida are authorized or required by law to close.
“Code” means the
Internal Revenue Code of 1986, as amended, and any successor
statute.
“Common Stock” means
the Company’s common stock, par value $.001 per share.
“Disability” shall
have the meaning as set forth in § 409A(a)(2)(c) of the Code.
"Securities Act" shall
mean the Securities Act of 1933, as amended, and applicable rules and
regulations thereunder, and any successor to such statute, rules or
regulations. Any reference herein to a specific section, rule or
regulation of the Securities Act shall be deemed to include any corresponding
provisions of future law.
“Securities Exchange
Act” means the Securities Exchange Act of 1934, as amended, and
applicable rules and regulations thereunder, and any successor to such statute,
rules or regulations. Any reference herein to a specific section,
rule or regulation of the Securities Exchange Act shall be deemed to include any
corresponding provisions of future law.
Section
16. Amendment. The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and the Employee.
Section
17. Application
of New York Law. This Agreement, and the
application or interpretation thereof, shall be governed exclusively by its
terms and by the laws of the State of New York.
[Signature
page follows.]
[Signature
Page, Stock Option Agreement.]
The
Executive and the Company have executed this Agreement on the day and year
first written above.
GLOBAL
DIVERSIFIED INDUSTRIES, INC.
By:
Xxxxxxx
Xxxxxxxx, Chief Executive Officer
EXECUTIVE:
_____________________________________
Xxxxxxx
Xxxxxxxx
