EXHIBIT 10.3
January 13, 2004
Mr. Xxxx Xxxxxxxx
0000 Xxx Xxxx
Xxxx Xxxxx, Xxxxxxx 00000
Dear Xxxx:
This letter will confirm our mutual understanding with respect to your
agreement to serve as a member of the Board of Directors (the "Board") of Arc
Communications Inc., a New Jersey corporation (the "Company"). The terms and
conditions of your service as a director of the Company are as follows:
1. For purposes of this letter agreement, it is agreed that your service
as a director with the Company will commence on the date hereof.
2. The Company will to issue you a non-qualified stock option to purchase
100,000 shares of common stock, par value $.001 per share, of the Company, at a
purchase price of $0.08 per share (the "Option"). The Option shall be fully
vested and exercisable upon the earlier of (a) ninety (90) days from the date of
this Agreement or (b) the closing of the merger of ARC with RoomLinX, Inc. (the
"Merger"). At the time that the Company's stock option plan (the "2004 Plan") is
established in connection with the Merger, the Company will cause the Option to
be covered by the 2004 Plan either by the exchange of the Option for a new
option or otherwise.
3. The Company will pay you $1,000 per month for your service as a
director. In addition, you shall be entitled to receive reimbursement of all
reasonable out of pocket expenses incurred by you in connection with your
attendance at Board meetings.
4. In performing your duties as a director under this Agreement, you may
obtain certain proprietary knowledge of operations and products and other
confidential information of the Company which are of a special and unique nature
and value to the Company. You covenant and agree that you will not, at any time,
whether during the term of this Agreement or otherwise, reveal or make known to
any person or entity or use for your own account or the account of others, any
proprietary records, plans, trade secrets, policies, strategies, methods,
computer programs, know-how or knowledge relating to customers, sales, market
developments, equipment, processes, products or any other confidential or
proprietary information whatsoever of the Company (the "Confidential
Information"). You further covenant and agree that you shall retain all
Confidential Information which you acquire or develop in trust for the sole
benefit of the Company and its successors and assigns. You agree to deliver to
the Company at the termination of this Agreement or at any other time the
Company may request, all copies of memoranda, notes, plans, programs,
correspondence, data, books, manuals, reports and other documents (and copies
thereof) relating to the business of the Company which you may possess or have
under your control. You agree that a remedy at law for any breach of the
covenants contained in this paragraph would be inadequate and that the Company
shall be entitled to seek and obtain a temporary and permanent injunction or an
order for specific performance of such covenants without the necessity of
proving actual damage to the Company.
5. The Company agrees to indemnify and hold you harmless against any
losses, expenses (including reasonable attorneys fees and expenses), claims,
damages or liabilities to which you may become subject, insofar as such losses,
claims, expenses, damages or liabilities arise out of or are based upon your
service as a director of the Company; provided, however, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
expense, damage or liability arises out of or is based upon your commission of
an act of fraud or the breach of your fiduciary duty.
6. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
7. This Agreement shall be governed by and construed pursuant to the laws
of the State of New York, without giving effect to conflicts of laws principles.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Please acknowledge your agreement with the foregoing by executing this
letter agreement where indicated below.
Very truly yours,
ARC COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
--------------------
Xxxxx X. Xxxxxx, Xx.
Chief Executive Officer
Accepted and Agreed this
19th day of January, 2004.
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
EXHIBIT10.3
NONSTATUTORY STOCK OPTION AGREEMENT
This Grant Agreement (the "AGREEMENT") evidences the stock options (each,
an "OPTION" or collectively, the "OPTIONS") granted to Xxxx Xxxxxxxx (the
"OPTIONEE") by ARC Communications Inc., a New Jersey corporation (the
"COMPANY"), effective as of January 13, 2004 (the "GRANT DATE"), and conditioned
upon the Optionee's agreement to the terms described below.
1. Grant of Options. The Optionee is granted 100,000 Options under this
Agreement. Each Option is a nonstatutory stock option that entitles the Optionee
to purchase from the Company, at a price of $0.08 per share (the "EXERCISE
PRICE"), one share of common stock, par value $.001 per share, of the Company
(the "COMMON STOCK"). If not sooner exercised or terminated, the Options expire
at 5:00 p.m. Eastern Time on the last business day coincident with or prior to
the fourth anniversary of the Grant Date (the "EXPIRATION DATE").
2. Terminology. For purposes of this Agreement, the terms below have the
following meanings:
(a) "AFFILIATE" shall mean any entity, whether now or hereafter
existing, which controls, is controlled by, or is under common control with, the
Company (including, but not limited to, joint ventures, limited liability
companies, and partnerships). For this purpose, "control" shall mean ownership
of 50% or more of the total combined voting power or value of all classes of
stock or interests of the entity.
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "CODE" shall mean the Internal Revenue Code of 1986, as amended,
and any regulations promulgated thereunder.
(d) "COMMON STOCK" shall mean shares of common stock of the Company,
par value of ($0.001) per share.
(e) "COMPANY" includes ARC Communication Inc. and its Affiliates,
except where the context otherwise requires.
(f) "FAIR MARKET VALUE" shall mean, with respect to a share of the
Company's Common Stock for any purpose on a particular date, as applicable, (i)
either the closing price or the average of the high and low sale price on the
relevant date, as determined in the Board's discretion, quoted on the New York
Stock Exchange, the American Stock Exchange, or the Nasdaq National Market; (ii)
the last sale price on the relevant date quoted on the Nasdaq SmallCap Market;
(iii) the average of the high bid and low asked prices on the relevant date
quoted on the Nasdaq OTC Bulletin Board Service or by the National Quotation
Bureau, Inc. or a comparable service as determined in the Board's discretion; or
(iv) if the Common Stock is not quoted by any of the above, the average of the
closing bid and asked prices on the relevant date furnished by a professional
market maker for the Common Stock, or by such other source, selected by the
Board. If no public trading of the Common Stock occurs on the relevant date,
then Fair Market Value shall be determined as of the next preceding date on
which trading of the Common Stock does occur. For all purposes under this Plan,
the term "relevant date" as used in this Section 2.1(h) shall mean either the
date as of which Fair Market Value is to be determined or the next preceding
date on which public trading of the Common Stock occurs, as determined in the
Board's discretion.
3. Vesting.
(a) The shares of Common Stock underlying the Options are referred
to in this Agreement as "OPTION SHARES."
(b) All Options shall be fully vested and exercisable upon the
earlier of (a) ninety (90) days from the date of this Agreement or (b) the
closing of the merger of the Company with RoomLinX, Inc. (the "MERGER").
4.Exercise of Options.
(a) Right to Exercise. The Optionee may exercise the Options to the
extent vested at any time on or before the Expiration Date. The Options may be
exercised only in multiples of whole shares and may not be exercised at any one
time as to fewer than one hundred shares (or such lesser number of shares as to
which the Options are then exercisable). No fractional shares will be issued
under the Options.
(b) Exercise Procedure. In order to exercise the Options, the
following items must be delivered to the Secretary of the Company before the
expiration or termination of the Options: (i) an exercise notice, in such form
as the Board may require from time to time, specifying the number of Option
Shares to be purchased, and (ii) full payment of the Exercise Price for such
Option Shares or properly executed, irrevocable instructions, in such form as
the Board may require from time to time, to effectuate a broker-assisted
cashless exercise, each in accordance with Section 4(c) of this Agreement, and
(iii) an executed copy of any other agreements requested by the Board pursuant
to Section 4(d) of this Agreement. An exercise will not be effective until all
of the foregoing items are received by the Secretary of the Company.
(c) Method of Payment. Payment of the Exercise Price may be made by
any of the following methods, or a combination thereof, as determined by the
Board in its discretion at the time of exercise:
(i) by delivery of cash, certified or cashier's check, money
order or other cash equivalent acceptable to the Board in its discretion;
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(ii) by a broker-assisted cashless exercise in accordance with
Regulation T of the Board of Governors of the Federal Reserve System through a
brokerage firm approved by the Board; or
(iii) by any other method approved by the Board.
(d) Issuance of Shares upon Exercise. Upon exercise of the Options
in accordance with the terms of this Agreement, the Company will issue to the
Optionee, the brokerage firm specified in the Optionee's delivery instructions
pursuant to a broker-assisted cashless exercise, or such other person exercising
the Options, as the case may be, the number of shares of Common Stock so paid
for, in the form of fully paid and nonassessable stock. The Company will deliver
stock certificates for the Option Shares as soon as practicable after exercise,
which certificates will, unless such Option Shares are registered or an
exemption from registration is available under applicable federal and state law,
bear a legend restricting transferability of such shares and referencing any
applicable Stock Restriction Agreement.
5. Transferability of Options. These Options are nontransferable otherwise
than by will or the laws of descent and distribution and during the lifetime of
the Optionee, the Options may be exercised only by the Optionee, by such
permitted transferees or, during the period the Optionee is under a legal
disability, by the Optionee's guardian or legal representative. Except as
provided above, the Options may not be assigned, transferred, pledged,
hypothecated or disposed of in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process.
6. Nonstatutory Nature of the Options. The Options are not intended to
qualify as incentive stock options within the meaning of Code section 422, and
this Agreement shall be so construed. The Optionee acknowledges that, upon
exercise of the Options, the Optionee will recognize taxable income in an amount
equal to the excess of the then Fair Market Value of the Option Shares over the
Exercise Price and must comply with the provisions of Section 7 of this
Agreement with respect to any tax withholding obligations that arise as a result
of such exercise.
7. Withholding of Taxes. At the time the Options are exercised, in whole
or in part, or at any time thereafter as requested by the Company, the Optionee
agrees to make adequate provision for foreign, federal, state and local taxes
required by law to be withheld, if any, which arise in connection with the
Options. The Company may require the Optionee to make a cash payment to cover
any withholding tax obligation as a condition of exercise of the Options or
issuance of share certificates representing Option Shares.
The Board may, in its sole discretion, permit the Optionee to satisfy, in
whole or in part, any withholding tax obligation which may arise in connection
with the Options either by electing to have the Company withhold from the shares
to be issued upon exercise that number of shares, or by electing to deliver to
the Company already-owned shares, in either case having a Fair Market Value
equal to the amount necessary to satisfy the statutory minimum withholding
amount due.
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8. Adjustments and Business Combinations.
(a) Adjustments for Events Affecting Common Stock. Upon a stock
dividend of, or stock split or reverse stock split affecting, the Common Stock
of the Company, the number of shares covered by and the exercise price and other
terms of the Options shall, without further action of the Board, be adjusted to
reflect such event. The Board may make adjustments, in its discretion, to
address the treatment of fractional shares and fractional cents that arise with
respect to the Options as a result of the stock dividend, stock split or reverse
stock split. In the event of any changes affecting the Company, the
capitalization of the Company or the Common Stock of the Company by reason of
any spin-off, split-up, dividend, recapitalization, merger, consolidation, or
exchange of shares, the Board, in its discretion and without the consent of the
Optionee, shall make any other adjustments in the Options, including but not
limited to reducing the number, kind and price of securities subject to the
Options.
(b) Adjustments for Unusual Events. The Board is authorized to make,
in its discretion and without the consent of the Optionee, adjustments in the
terms and conditions of, and the criteria included in, the Options in
recognition of unusual or nonrecurring events affecting the Company, or the
financial statements of the Company or any Affiliate, or of changes in
applicable laws, regulations, or accounting principles, whenever the Board
determines that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Options.
(c) Binding Nature of Adjustments. Adjustments under this Section 8
will be made by the Board, whose determination as to what adjustments, if any,
will be made and the extent thereof will be final, binding and conclusive. No
fractional shares will be issued pursuant to the Options on account of any such
adjustments. The terms and conditions of this Agreement shall apply with equal
force to any additional and/or substitute securities received by the Optionee
pursuant to this Section 8 in exchange for, or by virtue of the Optionee's
ownership of, the Options or the Option Shares, except as otherwise determined
by the Board.
9. Confidential Information. In consideration of the Options granted to
the Optionee pursuant to this Agreement, the Optionee agrees and covenants that,
except as specifically authorized by the Company, the Optionee will keep
confidential any trade secrets or confidential or proprietary information of the
Company which are now or which hereafter may become known to the Optionee as a
result of the Optionee's service relationship with the Company, and shall not at
any time, directly or indirectly, disclose any such information to any person,
firm, Company or other entity, or use the same in any way other than in
connection with the business of the Company, at all times during and after the
Optionee's service relationship. The provisions of this Section 9 shall not
narrow or otherwise limit the obligations and responsibilities of the Optionee
set forth in any agreement of similar import entered into between the Optionee
and the Company.
10. No Rights as a Stockholder. The Optionee shall not have any of the
rights of a stockholder with respect to the Option Shares until such shares have
been issued to him or her upon the due exercise of the Options. No adjustment
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shall be made for dividends or distributions or other rights for which the
record date is prior to the date such shares are issued.
11. The Company's Rights. The existence of the Options shall not affect in
any way the right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
other stocks with preference ahead of or convertible into, or otherwise
affecting the Common Stock or the rights thereof, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part of the
Company's assets or business, or any other corporate act or proceeding, whether
of a similar character or otherwise.
12. Optionee. Whenever the word "Optionee" is used in any provision of
this Agreement under circumstances where the provision should logically be
construed, as determined by the Board, to apply to the estate, personal
representative, beneficiary to whom the Options or Option Shares may be
transferred by will or by the laws of descent and distribution, or another
permitted transferee, the word "Optionee" shall be deemed to include such
person.
13. Notices. All notices and other communications made or given pursuant
to this Agreement shall be in writing and shall be sufficiently made or given if
hand delivered or mailed by certified mail, addressed to the Optionee at the
address contained in the records of the Company, or addressed to the Board, care
of the Company for the attention of its Chief Executive Officer at its principal
office or, if the receiving party consents in advance, transmitted and received
via telecopy or via such other electronic transmission mechanism as may be
available to the parties.
14. Entire Agreement. This Agreement contains the entire agreement between
the parties with respect to the Options granted hereunder. Any oral or written
agreements, representations, warranties, written inducements, or other
communications made prior to the execution of this Agreement with respect to the
Options granted hereunder shall be void and ineffective for all purposes.
15. Amendment. This Agreement may be amended from time to time by the
Board in its discretion; provided, however, that this Agreement may not be
modified in a manner that would have a materially adverse effect on the Options
or Option Shares as determined in the discretion of the Board, except as
provided in a written document signed by each of the parties hereto.
16. RoomLinX, Inc. Long-Term Incentive Plan. At the time that the
RoomLinX, Inc. Long-Term Incentive Plan (the "PLAN") is established in
connection with the Merger, the Company will cause the Options granted under
this Agreement to be covered by the Plan either by the exchange of the Options
for new options or otherwise. In addition, following the Merger, the Company
will use its commercially reasonable best efforts to cause the shares of Common
Stock underlying the Options to be registered on Form S-8.
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17. Governing Law. The validity, construction and effect of this
Agreement, and of any determinations or decisions made by the Board relating to
this Agreement, and the rights of any and all persons having or claiming to have
any interest under this Agreement, shall be determined exclusively in accordance
with the laws of (a) the State of New Jersey at any time prior to the Merger and
(b) the State of Nevada at any time after to the Merger, without regard to its
provisions concerning the applicability of laws of other jurisdictions. Any suit
with respect hereto will be brought in the federal or state courts in the
districts which include (x) the State of New Jersey at any time prior to the
Merger and (y) the State of Nevada at any time after to the Merger, and the
Optionee hereby agrees and submits to the personal jurisdiction and venue
thereof.
18. Headings. The headings in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement.
[The Remainder of this Page is Intentionally Left Blank]
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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its duly authorized officer as of the date first written above.
COMPANY:
ARC COMMUNICATIONS INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
------------------------
Xxxxx X. Xxxxxx, Xx.
Chief Executive Officer
The undersigned hereby acknowledges that he/she has carefully read this
Agreement and agrees to be bound by all of the provisions set forth in such
documents.
OPTIONEE:
By: /s/ Xxxx Xxxxxxxx
-------------------------
Xxxx Xxxxxxxx
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EXERCISE FORM
Board of Directors
ARC Communications Inc.
Gentlemen:
I hereby exercise the Options granted to me on January 13, 2004, by ARC
Communications Inc. (the "Company"), subject to all the terms and provisions of
the applicable grant agreement (the "Agreement"), and notify you of my desire to
purchase ____________ shares of Common Stock of the Company at a price of $0.08
per share pursuant to the exercise of said Options.
This will confirm my understanding with respect to the shares to be issued
to me by reason of this exercise of the Options (the shares to be issued
pursuant hereto shall be collectively referred to hereinafter as the "Shares")
as follows:
(a) I am acquiring the Shares for my own account for investment with
no present intention of dividing my interest with others or of reselling or
otherwise disposing of any of the Shares.
(b) The Shares are being issued without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon one or more
exemptions contained in the Act, and such reliance is based in part on the above
representation.
(c) The certificates for the Shares to be issued to me will bear a
legend substantially as follows:
"The securities represented by this stock certificate
have not been registered under the Securities Act of 1933 (the
"Act") or applicable state securities laws (the "State Acts"), and
shall not be sold, pledged, hypothecated, donated, or otherwise
transferred (whether or not for consideration) by the holder except
upon the issuance to the Company of a favorable opinion of its
counsel and/or submission to the Company of such other evidence as
may be satisfactory to counsel for the Company, to the effect that
any such transfer shall not be in violation of the Act and the State
Acts.
The certificates shall also bear any legend required by
the Company's Stockholders' Agreement."
Appropriate stop transfer instructions will be issued by the issuer to its
transfer agent.
(d) Since the Shares have not been registered under the Act, they
must be held indefinitely until an exemption from the registration requirements
of the Act is available or they are subsequently registered, in which event the
representation in Paragraph (a) hereof shall terminate, and the legend in
Paragraph (c) hereof shall be removed. As a condition to any transfer of the
Shares, I understand that the issuer will require an opinion of counsel
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satisfactory to the issuer to the effect that such transfer does not require
registration under the Act or any state securities law.
(e) I am a party to a grant agreement with the Company, pursuant to
which I have agreed to certain restrictions on the transferability of the Shares
and other matters relating thereto.
Total Amount Enclosed: $__________
Cashless Exercise |_|
Date:________________________ _____________________________________
[NAME OF OPTIONEE]
Received by ARC COMMUNICATIONS INC. on
--------------------------------, ----
By: _________________________________
Name:
Title:
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