OPTION AGREEMENT
THIS AGREEMENT is made effective as of November 1, 1994 by and between
Xxxxxx Xxxxx (hereinafter referred to as "Optionee"), and 4Front Software
International, Inc., a Colorado corporation (hereinafter referred to as
"Optionor").
RECITALS:
WHEREAS, Optionee has performed services for the Optionor; and
WHEREAS, to compensate Optionee for its services to Optionor, Optionor
desires to grant to Optionee and Optionee is desirous of acquiring an option to
purchase shares of the common stock of Optionor, subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereby agree as follows:
1. INCORPORATION OF RECITALS. The parties hereby incorporate by this
reference the recitals set forth above.
2. GRANT OF OPTION. Subject to the terms and conditions hereinafter set
forth, Optionor hereby gives and grants to Optionee the right and option to
purchase theretofore authorized but unissued common shares of Optionor at such
time and for the purchase price specified below.
A. From the date hereof and up until and including a period of
five years Optionee shall have the right and option to purchase, at $4.00
per share, and Optionor shall have the obligation to issue to Optionee,
40,000 shares of the authorized but unissued common shares of Optionor.
3. EXERCISE OF OPTION. Optionee may exercise any option granted hereunder
by notifying Optionor in writing of its intention to exercise such option. A
closing date shall then be agreed to in good faith no later than 30 days after
the notice, at which time Optionee shall pay the purchase price of the Shares
being purchased, and Optionor shall deliver to Optionee the certificates for
shares duly endorsed. Optionee may purchase all or any part of the Shares
subject to options granted hereby.
4. REPRESENTATIONS. Optionor represents and warrants to Optionee that
Optionee, upon proper exercise, shall receive good and marketable title to
the shares of Optionor underlying the options being granted hereby, free of
all pledges, liens and encumbrances, except as stated in paragraph 5.
5. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby represents
and warrants that:
A. The options granted hereby and the Shares which will be purchased
by and delivered to Optionee upon exercise of such options are
being acquired by Optionee for his own account and not with a
view to resale or other disposition thereof.
B. Optionee will not sell, transfer, or make any other disposition
of any option or the shares to be purchased and delivered to
Optionee hereunder upon the exercise of such option unless and
until (a) such option or shares, as applicable, are included in a
registration statement or a post-effective amendment under the
Securities Act which has been filed by the Optionor and declared
effective by the Securities and Exchange Commission (the "SEC"),
or (b) in the opinion of counsel for the Optionor, no such
registration statement or post-effective amendment is required,
or (c) the SEC has first issued a "no action" letter regarding
any such proposed disposition of any option or the shares.
6. FEDERAL AND STATE SECURITIES LAW REQUIREMENTS. The obligation of the
Optionor to deliver and transfer the shares to the Optionee upon any exercise of
any option shall be subject to the following:
A. Optionor may require Optionee, as an additional condition of its
obligation to deliver the shares upon exercise of any option
hereunder, to make any representations and warranties (including
without limit those set forth in Paragraph 5 hereof) with respect
to the shares as may, in the opinion of counsel to Optionor, be
required to ensure compliance with the Securities Act, the
securities laws of any state, or any other applicable law,
regulation, or rule of any governmental agency.
B. Each certificate representing the shares issued pursuant to
this Agreement shall bear whatever legends are required by
federal or state law or by any governmental agency. In
particular, unless an appropriate registration statement is
filed pursuant to the Securities Act with respect to the
shares, each certificate representing such shares shall be
endorsed on its face with the following legend or its
equivalent:
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SECURITIES
MAY BE SOLD OR TRANSFERRED ONLY IF THEY HAVE BEEN REGISTERED
UNDER SAID ACT OR THERE EXISTS AN EXEMPTION FROM REGISTRATION
UNDER SAID ACT OR THE RULES AND REGULATIONS THEREUNDER
EVIDENCED BY A NO-ACTION LETTER OR AN OPINION OF COUNSEL TO
THE ISSUER OR TO THE HOLDER HEREOF REASONABLY SATISFACTORY TO
THE ISSUER.
7. RESTRICTIONS. Optionee:
A. Shall not be entitled to any type of dividend declared by
Optionor, unless and until an option is exercised; and
B. Shall not be entitled to any voting rights by virtue of an
option; and
C. Acknowledges that the options granted hereby are personal to
Optionee and that Optionee may not sell, assign, transfer or
otherwise dispose of such options to any other person.
8. ANTI-DILUTION. If prior to the exercise of any option granted
hereunder Optionor shall have effected one or more stock
split-ups, stock dividends, or other increases or reductions of the number of
Shares of its common stock outstanding without receiving compensation
therefor in money, services or property, the number of Shares of common stock
subject to the options hereby granted shall (a) if a net increase shall have
been effected in the number of outstanding shares of Optionor's common stock,
be proportionately increased and the cash consideration payable per Share
shall be proportionately reduced; and (b) if a net reduction shall have been
effected in the number of outstanding Shares of Optionor's common stock, be
proportionately reduced and the cash consideration payable per Share be
proportionately increased.
9. PIGGYBACK REGISTRATION RIGHTS.
A. The Optionor will permit any option shares subject to this
agreement to be included, at the request of the Optionee in
any registration of securities of the Optionor (other than
shares of Common Stock pursuant to the Optionor's stock option
plan or stock purchase plan) under a registration statement
filed by the Optionor under the Securities Act. The Optionor
shall provide written notice to the Optionee at least 30 days
prior to the filing of any such registration statement sent by
registered mail to the address of record of the Optionee. If
Optionee shall deliver a written request to the
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Optionor within ten (10) business days after the mailing of
such notice, setting forth the number of securities which he
intends to sell in the public offering (the "Registered
Securities"), and requesting inclusion of such Registered
Securities therein, the Optionor agrees to include the
Registered Securities in such registration statement and
related underwriting agreements (if any) or if the Optionor
eligible to use Form S-3 permit Optionee to utilize a selling
shareholders Registration Statement on Form S-3. Notwithstanding
the above, the Optionee may only have option shares subject to
this agreement so registered one time.
B. The parties hereto agree that if the offering is underwritten,
the Registered Securities shall be for purposes of the
preceding sentence underwritten by the same underwriter or
underwriters on terms no less favorable than those applicable
to the shares offered by the Optionor or other stockholders
pursuant to such registration statement, and agree, at the
request of the Optionor or such other stockholders, to join
with the Optionor or such other stockholders in executing
appropriate underwriting agreements with such underwriter or
underwriters and to execute appropriate powers of attorney and
custodian agreements in forms acceptable to the underwriter or
underwriters, which agreements shall not place any
restrictions upon the sale or transfer of the Registered
Securities not otherwise placed on all other shareholders
whose shares are registered in such registration statement.
Optionee agrees that if, in spite of the best efforts of the
Optionor (which the Optionor agrees to use), the inclusion of
all of the Registered Securities which he may desire to include
in any such registration statement shall not be acceptable to the
managing underwriter or underwriters of the offering (acting
reasonably and in good faith), some or all or his Registered
Securities may be excluded or withdrawn from such registration
statement in accordance with the following provision:
Optionee shall have the right to include in such registration
statement such number (but only such number) of shares, as
applicable, as shall bear the same relationship to the total
number of Units, Warrants, or shares, as applicable, which the
managing underwriter or underwriters will permit to be
included in such registration statement by all holders of
securities
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who wish to register securities in such registration statement.
C. Optionor shall pay all expenses associated with filing and
causing to become effective any registration statement and
with maintaining its effectiveness excepting only (i) the
underwriting discounts and commissions incurred directly on
the sale of any of Optionee's Registered Securities included
therein, and (ii) legal expense individually incurred by
Optionee, said discounts, commissions and legal expenses with
respect to the sale of Optionee's shares to be borne by
Optionee.
10. WAIVER. Optionee acknowledges that Optionor has an inadequate
number of shares to allow immediate exercise of the Option. Optionee agrees
that if there is any exercise of the option hereunder prior to an increase in
the Optionor's authorized number of shares, Optionee will not receive his
shares until authorized but unissued shares are available.
11. NOTICE AND OPPORTUNITY TO CURE DEFAULT. In the event of a perceived
default of the provisions of this agreement, Optionor agrees to provide Optionee
and his counsel written notice of any default and Optionor shall have 10 days
from receipt of said notice to cure the stated default.
12. AGREEMENT TO PERFORM NECESSARY ACTS. The parties hereto agree to
cooperate fully with one another in executing all documents, certificates,
notices, filings and the like and performing all acts reasonably necessary to
carry out the intent of this agreement.
13. ASSIGNMENT AND TRANSFER. No option granted hereby may be assigned by
Optionee without the prior written consent of Optionor.
14. AMENDMENTS. This agreement may not be modified, amended or changed
except by an instrument in writing signed by the parties hereto.
15. ARBITRATION AND ATTORNEYS' FEES. Any controversy or claim arising out
of or relating to this Agreement, or breach thereof, including without
limitation claims against either party, its affiliates employees, professionals,
officers or directors shall be settled by binding arbitration in Los Angeles,
California, in accordance with the Commercial Rules of the American Arbitration
Association. The arbitrator shall be an active member of the California bar. In
the proceeding, the arbitrator shall apply California substantive law and the
California Evidence Code, except that the arbitrator's authority in awarding
damages shall be interpreted under New York law. The arbitrator shall prepare an
award in writing, which shall include factual findings and any
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legal conclusions on which the decision is based. Judgment upon any award
rendered by the Arbitrator(s) may be entered in any court having jurisdiction
thereof. In any such proceeding, the prevailing party shall be entitled, in
addition to any other relief awarded or adjudged, such sum as the
Arbitrator(s) may fix as and for reasonable attorneys' fees and costs, and the
same shall be included in the award and any judgment.
IN WITNESS WHEREOF, the parties have executed this option Agreement as of
the day and year first above written.
OPTIONOR OPTIONEE
4FRONT SOFTWARE INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxx Xxxxx
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XXXXXX XXXXX
Its: PRESIDENT
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