EXHIBIT 10.2
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, entered into as of the Grant Date (as defined in
Section 1), by and between the Participant and Xxxxxx Interactive Inc. (the
"Company") This Agreement is made in connection with the Employment Agreement
between the Company and the Participant effective January 1, 2005, as the same
may be modified, extended, restated, or replaced from time to time (the
"Employment Agreement").
IT IS AGREED, by and between the Company and the Participant, as
follows:
1. Terms of Award. The following terms used in this Agreement
shall have the meanings set forth in this Section 1:
(a) The "Participant" is Xxxxx X. Xxxxxxxx, Xx..
(b) The "Grant Date" is January 3, 2005.
(c) The number of "Covered Shares" shall be 235,000 shares of
Stock.
(d) The "Initial Exercise Date" is the One-year anniversary of the
Grant Date.
(e) The "Exercise Price" is $7.94 per share.
(f) The "Stock" shall be par value $.001 shares of common stock of
the Company.
Other terms used in this Agreement are defined in Section 12 and elsewhere in
this Agreement.
2. Award and Exercise Price. The Participant is hereby granted an
option (the "Option") to purchase the number of Covered Shares of Stock at the
Exercise Price per share as set forth in Section 1. The Option is not intended
to qualify as an incentive stock option as defined in the Plan and in Section
422(b) of the Code.
3. Date of Exercise. The Option shall become exercisable with
respect to:
(a) 1/4th of the Covered Shares as of the Initial
Exercise Date; and
(b) 1/48th of the Covered Shares as of the end of each of
the next 36 calendar months thereafter,
provided, however, that to the extent that the Option has not become exercisable
on of before the Participant's Date of Termination, such Option shall no longer
become exercisable in accordance with the foregoing schedule as of any date
subsequent to the Participant's Date of Termination except as provided in the
immediately following paragraph. Exercisability under this schedule is
cumulative, and after the Option becomes exercisable under the schedule with
respect to any
portion of the Covered Shares, it shall continue to be exercisable with respect
to that portion, and only that portion, of the Covered Shares until the
Expiration Date (described in Section 4 below).
Notwithstanding the foregoing provisions of this Section 3, the Option
shall become immediately exercisable with respect to all of the Covered Shares
(whether or not previously vested) upon the occurrence of either (i) the
Participant's Date of Termination by reason of the Participant's death or
Disability if such Date of Termination is after the Initial Exercise Date, or
(ii) the date of a Change in Control if the Participant's Date of Termination
does not occur before such Change in Control.
4. Expiration. The Option, to the extent not theretofore
exercised, shall not be exercisable on or after the Expiration Date. The
"Expiration Date" shall be earliest to occur of:
(a) the ten-year anniversary of the Grant Date;
(b) if the Participant's Date of Termination occurs by reason of
Disability or death, the one-year anniversary of such Date of Termination;
(c) if the Participant's Date of Termination occurs for reasons
other than death or Disability, three months after the Date of Termination; and
(d) the date of termination of Participant's employment by virtue
of the breach by Participant of his or her obligations under Section 8 of this
Agreement.
In the event of the Participant's death while in the employ of the Company, the
Participant's executors or administrators (or the person or persons to whom the
Participant's rights under the Option shall have passed by the Participant's
will or by the laws of descent and distribution) may exercise, any unexercised
portion of the Option to the extent such exercise is otherwise permitted by this
Agreement.
Any Option exercised subsequent to the Participant's Date of
Termination as permitted hereunder shall be exercisable only to the extent
vested at the time of the Participant's Date of Termination, regardless of the
reason for the termination, and no extension of time beyond the Participant's
Date of Termination shall permit exercise beyond the date such Option would
otherwise expire if no termination had occurred.
5. Method of Option Exercise. The Option may be exercised in
whole or in part by filing a written notice with, and which must be received by,
the Secretary of the Company at its corporate headquarters prior to the
Expiration Date. Such notice shall (a) specify the number of shares of Stock
which the Participant elects to purchase; provided, however, that not less than
one hundred (100) shares of Stock may be purchased at any one time unless the
number purchased is the total number of shares available for purchase at that
time under the Option, and (b) be accompanied by payment of the Exercise Price
for such shares of Stock indicated by the Participant's election. Payment shall
be by cash or by check payable to the Company, or, at the discretion of the
Committee at any time: (a) all or a portion of the Exercise Price may be paid by
the Participant by delivery of shares of Stock acceptable to the Committee
(including, if the Committee so approves, the withholding of shares otherwise
issuable upon exercise of the Option) and having an aggregate Fair Market Value
(valued as of the date of exercise) that is equal to the amount of cash that
would otherwise be required; and (b) the Participant may pay the Exercise Price
by authorizing a third party to sell shares of Stock (or a sufficient portion of
the shares) acquired upon exercise of the Option and remit to the Company a
sufficient portion of the sale proceeds to pay the entire Exercise Price and any
tax withholding resulting from such exercise.
6. Withholding. All distributions under this Agreement are
subject to withholding of all applicable taxes. At the election of the
Participant, and subject to such rules as may be established by the Committee,
such withholding obligations may be satisfied through the surrender of shares of
Stock which the Participant already owns, or to which the Participant is
otherwise entitled under the Plan.
7. Transferability. The Option is not transferable other than as
designated by the Participant by will or by the laws of descent and
distribution, and during the Participant's life, may be exercised only by the
Participant or the Participant's legal guardian or legal representative.
However, the Participant, with the approval of the Committee, may transfer the
Option for no consideration to or for the benefit of the Participant's Immediate
Family (including, without limitation, to a trust for the benefit of the
Participant or the Participant's Immediate Family or to a partnership or limited
liability company for the exclusive benefit of the Participant or one or more
members of the Participant's Immediate Family), subject to such limits as the
Committee may establish, and the transferee shall remain subject to all the
terms and conditions applicable to the Option prior to such transfer. The
foregoing right to transfer Option shall apply to the right to consent to
amendments to this Agreement and, in the discretion of the Committee, shall also
apply to the right to transfer ancillary rights associated with the Option.
8. Non-Competitive Agreement. In consideration of, and as a
condition to, the grant of the Option and in consideration of the other rights
and privileges of a Participant of the Company, Participant agrees that during
the term of Participant's employment or other contractual relationship giving
rise to Participant's services on behalf of the Company, he shall not, directly
or indirectly, as a director, officer, employee, agent, partner or equity owner
(except as owner of less than 1% of the shares of the publicly traded stock of a
corporation) of any entity, that competes in any manner with the Company.
Furthermore, Participant agrees that, for a period of one year after voluntary
termination of his employment or other contractual relationship giving rise to
Participant's services on behalf of the Company, Participant shall not, directly
or indirectly, as a director, officer, employee, agent, partner or equity owner
(except as owner of less than 1% of the shares of the publicly traded stock of a
corporation) of any entity, solicit or otherwise deal in any way with any of the
clients or customers of the Company as of the time of his voluntary termination
(including any client to whom the Company has sold services or products in the
two years prior to termination and any prospective client or customer for whom a
bid has been prepared within the previous six months) with respect to any
services or products competitive with those of the Company. Participant
acknowledges that the Company's legal remedies for a breach of this provision
shall be inadequate and that the Company shall be entitled
to obtain injunctive relief to enforce this provision.
9. Limit on Distribution. Distribution of shares of Stock shall
be subject to the following:
(a) Notwithstanding any other provision of this Agreement, the
Company shall have no liability to deliver any shares of Stock or make any other
distribution of benefits hereunder unless such delivery or distribution would
comply with all applicable laws (including, without limitation, the requirements
of the Securities Act of 1933), and the applicable requirements of any
securities exchange or similar entity.
(b) To the extent that this Agreement provides for issuance of
stock certificates to reflect the issuance of shares of Stock, the issuance may
be effected on a non-certificated basis, to the extent not prohibited by
applicable law or the applicable rules of any stock exchange or a national
market system, including without limitation the Nasdaq National Stock Market.
(c) No fractional shares of Stock shall be issued or delivered
pursuant to the Option, and the Committee shall determine whether cash shall be
paid or transferred in lieu of any fractional shares of Stock, or whether such
fractional shares of Stock or any rights thereto shall be canceled.
10. Extraordinary Events. In the event of a corporate transaction
involving the Company (including, without limitation, any stock dividend, stock
split, extraordinary cash dividend, recapitalization, reorganization, merger,
consolidation, split-up, spin-off, combination or exchange of shares), the
Committee will make any appropriate adjustments to the number of Covered Shares
to preserve the benefits or potential benefits of this Agreement. Action by the
Committee may include adjustment of. (i) the number and kind of shares which may
be delivered hereunder, (ii) the Exercise Price, and (iii) any other adjustments
that the Committee determines to be equitable. The Committee's good faith
determination of the adjustment absent manifest error shall be binding on the
Participant.
11. Limitation of Implied Rights.
(a) Neither a Participant nor any other person shall, by reason of
this Agreement, acquire any right in or title to any assets, funds or property
of the Company or any Related Company whatsoever, including, without limitation,
any specific funds, assets, or other property which the Company or any Related
Company, in their sole discretion, may set aside in anticipation of a liability
hereunder. A Participant shall have only a contractual right to the Stock to the
extent provided herein, unsecured by any assets of the Company or any Related
Company. Nothing contained herein shall constitute a guarantee that the assets
of the Company shall be sufficient to pay any benefits to any person.
(b) This Agreement does not constitute a contract of employment,
and does not give Participant any right to be retained in the employ of the
Company or any Related Company, nor any right or claim to any benefit hereunder,
unless such right or claim has specifically accrued under the terms of this
Agreement. The Option hereunder does not confer upon the Participant any right
as
a stockholder of the Company prior to the date on which the Participant
exercises the Option in accordance with the terms of this Agreement.
12. Definitions. Capitalized terms not otherwise defined in this
Agreement shall have the meanings given to them in the Employment Agreement. For
purposes of this Agreement, the terms listed below shall be defined as follows:
(a) "Date of Termination" shall be the first day occurring on or
after the Grant Date on which the Participant's employment with the Company and
all Related Companies terminates for any reason; provided that a termination of
employment shall not be deemed to occur by reason of a transfer of the
Participant between the Company and a Related Company or between two Related
Companies; and further provided that the Participant's employment shall not be
considered terminated while the Participant is on a leave of absence from the
Company or a Related Company approved by the Participant's employer. If, as a
result of a sale or other transaction, the Participant's employer ceases to be a
Related Company (and the Participant's employer is or becomes an entity that is
separate from the Company), the occurrence of such transaction shall be treated
as the Participant's Date of Termination caused by the Participant being
discharged by the employer.
(b) "Committee" means the Compensation Committee of the Board of
Directors of the Company.
(c) "Fair Market Value" shall be determined according to the
following rules:
(i) If the Stock is at the time listed or admitted to
trading on any stock exchange or a national market system, including without
limitation the Nasdaq National Market or the Nasdaq Small Cap Market of the
Nasdaq Stock Market, then its Fair Market Value shall be the reported closing
sale price of the Stock (or the closing bid if no sales were reported) as quoted
on such exchange or system for the last market trading day on the date of
determination.
(ii) If the Stock is not at the time listed or admitted to
trading on a stock exchange, the Fair Market Value shall be the mean between the
lowest reported bid price and highest reported asked price of the Stock on the
date in question in the over-the-counter market, as such prices are reported in
a publication of general circulation selected by the Committee and regularly
reporting the market price of Stock in such market.
(iii) If the Stock is not listed or admitted to trading on
any stock exchange or traded in the over-the-counter market, the Fair Market
Value shall be as determined in good faith by the Committee.
(d) "Related Companies" means (i) any Person during any period in
which it owns, directly or indirectly, at least 50% of the voting power of all
classes of stock of the Company (or successor to the Company) entitled to vote;
and (ii) any Person during any period in which at least a 50% voting or profits
interest is owned, directly or indirectly, by the Company, by any Person that is
a successor to the Company, or by any Person that is a Related Company by reason
of clause (i) next above.
13. Heirs and Successors. This Agreement shall be binding upon,
and inure to the benefit of, the Company and its successors and assigns, and
upon any person or entity acquiring, whether by merger, consolidation, purchase
of assets or otherwise, all or substantially all of the Company's assets and
business. In the event of the Participant's death prior to exercise of this
Award, the Award may be exercised by the estate of the Participant to the extent
such exercise is otherwise permitted by this Agreement. Subject to the terms of
the Plan, any benefits distributable to the Participant under this Agreement
that are not paid at the time of the Participant's death shall be paid at the
time and in the form determined in accordance with the provisions of this
Agreement and the Plan, to the beneficiary designated by the Participant in
writing filed with the Committee in such form and at such time as the Committee
shall require. If a deceased Participant fails to designate a beneficiary, or if
the designated beneficiary of the deceased Participant dies before the
Participant or before complete payment of the amounts distributable under this
Agreement, the amounts to be paid under this Agreement shall be paid to the
legal representative or representatives of the estate of the last to die of the
Participant and the beneficiary. Neither the benefits or obligations under this
Agreement may be transferred or assigned by Participant except as otherwise
expressly provided herein or in the Plan.
14. Administration. The authority to manage and control the
operation and administration of this Agreement shall be vested in the Committee,
and the Committee shall have all powers with respect to this Agreement as it has
with respect to the Plan. Any interpretation of the Agreement by the Committee
and any decision made by it with respect to the Agreement is final and binding.
15. Amendment. This Agreement may be amended by written Agreement
of the Participant and the Company, without the consent of any other person.
THIS AGREEMENT SHALL NOT BE EFFECTIVE UNLESS A COPY SIGNED BY THE
PARTICIPANT IS DELIVERED TO THE COMPANY WITHIN THIRTY (30) DAYS AFTER THE DATE
HEREOF.
IN WITNESS WHEREOF, the Participant has executed this Agreement, and
the Company has caused these presents to be executed in its name and on its
behalf, all as of the Grant Date.
Participant Xxxxxx Interactive Inc.
/s/ Xxxxx X. Xxxxxxxx, Xx. By: /s/ Xxxxxx X. Xxxxx
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Xxxxx X. Xxxxxxxx, Xx. Title: Chief Executive Officer
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