DIGITALFX INTERNATIONAL, INC. STOCK OPTION AGREEMENT
DIGITALFX
INTERNATIONAL, INC.
DIGITALFX
INTERNATIONAL, INC.
2006
Stock Incentive Plan
Notice
Of Stock Option Grant
You
have
been granted the following option to purchase shares of the Common Stock of
DigitalFX International, Inc. (the “Company”):
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Name
of Optionee:
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[____________________]
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Total
Number of Shares Granted:
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[____________________]
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Type
of Option:
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[ISO/Non-Qualified
Stock Option]
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Exercise
Price Per Share:
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[$______]
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Date
of Grant:
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[_______
__, ____]
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Vesting
Commencement Date:
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[_______
__, ____]
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Vesting
Schedule:
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[______________________________________]
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Expiration
Date:
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[_______________]
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By
your
signature and the signature of the Company’s representative below, you and the
Company agree that this option is granted under and governed by the terms and
conditions of the DigitalFX International, Inc. 2006 Stock Incentive Plan and
the Stock Option Agreement, both of which are attached to and made a part of
this document. Optionee hereby represents that both the option and any shares
acquired upon exercise of the option have been or will be acquired for
investment for his own account and not with a view to or for sale in connection
with any distribution or resale of the security.
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Optionee:
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DigitalFX
International, Inc.
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| By: | /s/ | By: | /s/ | ||||
| Name: |
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Its: |
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1
ANNEX
I
THE
OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
DIGITALFX
INTERNATIONAL, INC.
2006
Stock Incentive Plan:
SECTION
1:
GRANT OF OPTION
1.1 Option.
On the
terms and conditions set forth in the notice of stock option grant to which
this
agreement (the “Agreement”)
is
attached (the “Notice
of Stock Option Grant”)
and
this Agreement, the Company grants to the individual named in the Notice of
Stock Option Grant (the “Optionee”)
the
option to purchase at the exercise price specified in the Notice of Stock Option
Grant (the “Exercise
Price”)
the
number of shares of Stock (the “Shares”)
set
forth in the Notice of Stock Option Grant. This option is intended to be either
an ISO or a Non-Qualified Stock Option, as provided in the Notice of Stock
Option Grant.
1.2 Stock
Plan and Defined Terms.
This
option is granted pursuant to and subject to the terms of the DigitalFX
International, Inc. 2006 Stock Incentive Plan, as in effect on the date
specified in the Notice of Stock Option Grant and as amended from time to time
(the “Plan”),
a
copy of which is attached hereto and which the Optionee acknowledges having
received. Capitalized terms not otherwise defined in this Agreement have the
definitions ascribed to them in the Plan.
SECTION
2:
RIGHT TO EXERCISE
2.1 Exercisability.
Subject
to Section 2.2
below
and the other conditions set forth in this Agreement, all or part of this option
may be exercised prior to its expiration at the time or times set forth in
the
Notice of Stock Option Grant, notwithstanding the vesting provisions identified
therein.
2.2 $100,000
Limitation.
The
aggregate fair market value (determined at the time the option is granted)
of
the Shares with respect to which ISOs are exercisable for the first time during
any calendar year (under all ISO plans of the Company and its Subsidiaries)
shall not exceed $100,000. If this option is designated as an ISO in the Notice
of Stock Option Grant, then to the extent (and only to the extent) the
Optionee’s right to exercise this option causes this option (in whole or in
part) to not be treated as an ISO by reason of the $100,000 annual limitation
under Section 422(d) of the Code, such options shall be treated as
Non-Qualified Stock Options, but shall be exercisable by their terms. The
determination of options to be treated as Non-Qualified Stock Options shall
be
made by taking options into account in the order in which they are granted.
If
the terms of this option cause the $100,000 annual limitation under
Section 422(d) of the Code to be exceeded, a pro rata portion of each
exercise shall be treated as the exercise of a Non-Qualified Stock
Option.
1
SECTION
3:
NO TRANSFER OR ASSIGNMENT OF OPTION
Except
as
provided herein, an Optionee may not assign, sell or transfer the option, in
whole or in part, other than by will or by operation of the laws of descent
and
distribution. The Administrator, in its sole discretion may permit the transfer
of a Non-Qualified Stock Option (but not an ISO) as follows: (i) by gift to
a
member of the Participant’s “immediate family” (as such term is defined in the
Plan) or (ii) by transfer by instrument to a trust providing that the option
is
to be passed to beneficiaries upon death of the trustor (each party referred
to
in either or both (i) or (ii), a “Permitted
Transferee”).
A
transfer permitted under this Section
3
may be
made only upon written notice to and approval thereof by the Administrator.
A
Permitted Transferee may not further assign, sell or transfer the transferred
option, in whole or in part, other than by will or by operation of the laws
of
descent and distribution. A Permitted Transferee shall agree in writing to
be
bound by the provisions of the Plan and this Agreement.
SECTION
4:
EXERCISE PROCEDURES
4.1 Notice
of Exercise.
The
Optionee or the Optionee’s representative may exercise this option by delivering
a written notice in the form of Exhibit
A
attached
hereto (“Notice
of Exercise”)
to the
Company in the manner specified pursuant to Section
10.4
hereof.
Such Notice of Exercise shall specify the election to exercise this option,
the
number of Shares for which it is being exercised and the form of payment, which
must comply with Section
5.
The
Notice of Exercise shall be signed by the person who is entitled to exercise
this option. In the event that this option is to be exercised by the Optionee’s
representative, the notice shall be accompanied by proof (satisfactory to the
Company) of the representative’s right to exercise this option.
4.2 Issuance
of Shares.
After
receiving a proper Notice of Exercise, the Company shall cause to be issued
a
certificate or certificates for the Shares as to which this option has been
exercised, registered in the name of the person exercising this option (or
in
the names of such person and his or her spouse as community property or as
joint
tenants with right of survivorship).
4.3 Withholding
Taxes.
In the
event that the Company determines that it is required to withhold any tax as
a
result of the exercise of this option, the Optionee, as a condition to the
exercise of this option, shall make arrangements satisfactory to the Company
to
enable it to satisfy all withholding requirements. The Optionee shall also
make
arrangements satisfactory to the Company to enable it to satisfy any withholding
requirements that may arise in connection with the vesting or disposition of
Shares purchased by exercising this option.
SECTION
5:
PAYMENT FOR STOCK
5.1 General
Rule.
The
entire Exercise Price of Shares issued under the Plan shall be payable in full
by cash or check for an amount equal to the aggregate Exercise Price for the
number of shares being purchased. Alternatively, in the sole discretion of
the
Administrator and upon such terms as the Administrator shall approve, the
Exercise Price may be paid by:
2
5.1.1 Cashless
Exercise.
A copy
of instructions to a broker directing such broker to sell the Shares for which
this option is exercised, and to remit to the Company the aggregate Exercise
Price of such option (“Cashless
Exercise”);
5.1.2 Stock-For-Stock
Exercise.
Paying
all or a portion of the Exercise Price for the number of Shares being purchased
by tendering Shares owned by the Optionee, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery equal to the Exercise
Price multiplied by the number of Shares with respect to which this option
is
being exercised (the “Purchase
Price”)
(“Stock-for-Stock
Exercise”);
or
5.1.3 Attestation
Exercise.
By a
stock for stock exercise by means of attestation whereby the Optionee identifies
for delivery specific Shares already owned by Optionee and receives a number
of
Shares equal to the difference between the Option Shares thereby exercised
and
the identified attestation Shares (“Attestation
Exercise”).
5.2 Withholding
Payment.
The
Exercise Price shall include payment of the amount of all federal, state, local
or other income, excise or employment taxes subject to withholding (if any)
by
the Company or any parent or subsidiary corporation as a result of the exercise
of a Stock Option. The Optionee may pay all or a portion of the tax withholding
by cash or check payable to the Company, or, at the discretion of the
Administrator, upon such terms as the Administrator shall approve.
5.3 Promissory
Note.
The
Administrator, in its sole discretion, upon such terms as the Administrator
shall approve, may permit all or a portion of the Exercise Price of Shares
issued under the Plan to be paid with a full-recourse promissory note;
provided,
however,
that
payment of any portion of the Exercise Price by promissory note shall not be
permitted where such loan would be prohibited by applicable laws, regulations
and rules of the Securities and Exchange Commission and any other governmental
agency having jurisdiction. However, in the event there is a stated par value
of
the shares and applicable law requires, the par value of the shares, if newly
issued, shall be paid in cash or cash equivalents. The Shares shall be pledged
as security for payment of the principal amount of the promissory note and
interest thereon. Subject to the foregoing, the Administrator (at its sole
discretion) shall specify the term, interest rate, amortization requirements
(if
any) and other provisions of such note.
5.4 Exercise/Pledge.
In the
discretion of the Administrator, upon such terms as the Administrator shall
approve, payment may be made all or in part by the delivery (on a form
prescribed by the Administrator) of an irrevocable direction to pledge Shares
to
a securities broker or lender approved by the Company, as security for a loan,
and to deliver all or part of the loan proceeds to the Company in payment of
all
or part of the Exercise Price and any withholding taxes.
SECTION
6:
TERM AND EXPIRATION
6.1 Basic
Term.
This
option shall expire and shall not be exercisable after the expiration of the
earliest of (i) the Expiration Date specified in the Notice of Stock Option
Grant, (ii) three months after the date the Optionee’s Service with the
Company and its Subsidiaries terminates if such termination is for any reason
other than death, disability or cause, (iii) one year after the date the
Optionee’s Service with the Company and its Subsidiaries terminates if such
termination is a result of death or disability, and (iv) if the Optionee’s
Service with the Company and its Subsidiaries terminates for cause, all
outstanding options granted to such Optionee shall expire as of the commencement
of business on the date of such termination. Except as provided in the preceding
sentence, outstanding options that are not vested at the time of termination
of
employment for any reason shall expire at the close of business on the date
of
such termination. The Administrator shall have the sole discretion to determine
when this option is to expire. For any purpose under this Agreement, Service
shall be deemed to continue while the Optionee is on a bona fide leave of
absence, to the extent provided in the Plan and as required by applicable
law.
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6.2 Exercise
After Death.
All or
part of this option may be exercised at any time before its expiration under
Section
6.1
above by
the executors or administrators of the Optionee’s estate or by any person who
has acquired this option directly from the Optionee by beneficiary designation,
bequest or inheritance, but only to the extent that this option had become
vested before the Optionee’s death. When the Optionee dies, this option shall
expire immediately with respect to the number of Shares for which this option
is
not yet vested.
6.3 Notice
Concerning ISO Treatment.
If this
option is designated as an ISO in the Notice of Stock Option Grant, it ceases
to
qualify for favorable tax treatment as an ISO to the extent it is exercised
(i) more than three months after the date the Optionee ceases to be an
Employee for any reason other than death or permanent and total disability
(as
defined in Section 22(e)(3) of the Code), (ii) more than 12 months
after the date the Optionee ceases to be an Employee by reason of such permanent
and total disability or (iii) after the Optionee has been on a leave of
absence for more than 90 days, unless the Optionee’s reemployment rights are
guaranteed by statute or by contract.
SECTION
7:
LEGALITY OF INITIAL ISSUANCE
No
Shares
shall be issued upon the exercise of this option unless and until the Company
has determined that:
7.1 It
and
the Optionee have taken any actions required to register the Shares under the
Securities Act of 1933, as amended (the “Securities
Act”)
or to
perfect an exemption from the registration requirements thereof;
7.2 Any
applicable listing requirement of any stock exchange on which Stock is listed
has been satisfied; and
7.3 Any
other
applicable provision of state or federal law has been satisfied.
SECTION
8:
NO REGISTRATION RIGHTS
The
Company may, but shall not be obligated to, register or qualify the sale of
Shares under the Securities Act or any other applicable law. The Company shall
not be obligated to take any affirmative action in order to cause the sale
of
Shares under this Agreement to comply with any law.
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SECTION
9:
RESTRICTIONS ON TRANSFER
9.1 Securities
Law Restrictions.
Regardless of whether the offering and sale of Shares under the Plan have been
registered under the Securities Act or have been registered or qualified under
the securities laws of any state, the Company at its discretion may impose
restrictions upon the sale, pledge or other transfer of such Shares (including
the placement of appropriate legends on stock certificates or the imposition
of
stop-transfer instructions) if, in the judgment of the Company, such
restrictions are necessary or desirable in order to achieve compliance with
the
Securities Act, the securities laws of any state or any other law.
9.2 Market
Stand-Off.
In the
event of an underwritten public offering by the Company of its equity securities
pursuant to an effective registration statement filed under the Act (a
“Public
Offering”),
the
Optionee shall not Transfer for value any shares of Stock without the prior
written consent of the Company or its underwriters, for such period of time
from
and after the effective date of such registration statement as may be requested
by the Company or such underwriters (the “Market
Stand-Off”).
The
Market Stand-off shall be in effect for such period of time following the date
of the final prospectus for the offering as may be requested by the Company
or
such underwriters. In the event of the declaration of a stock dividend, a
spin-off, a stock split, an adjustment in conversion ratio, a recapitalization
or a similar transaction affecting the Company’s outstanding securities without
receipt of consideration, any new, substituted or additional securities which
are by reason of such transaction distributed with respect to any Shares subject
to the Market Stand-Off, or into which such Shares thereby become convertible,
shall immediately be subject to the Market Stand-Off. In order to enforce the
Market Stand-Off, the Company may impose stop-transfer instructions with respect
to the Shares acquired under this Agreement until the end of the applicable
stand-off period.
9.3 Investment
Intent at Grant.
The
Optionee represents and agrees that the Shares to be acquired upon exercising
this option will be acquired for investment, and not with a view to the sale
or
distribution thereof.
9.4 Investment
Intent at Exercise.
In the
event that the sale of Shares under the Plan is not registered under the
Securities Act but an exemption is available which requires an investment
representation or other representation, the Optionee shall represent and agree
at the time of exercise that the Shares being acquired upon exercising this
option are being acquired for investment, and not with a view to the sale or
distribution thereof, and shall make such other representations as are deemed
necessary or appropriate by the Company and its counsel.
9.5 Legends.
Certificates evidencing Shares purchased under this Agreement in an unregistered
transaction shall bear the following legend (and such other restrictive legends
as are required or deemed advisable under the provisions of any applicable
law):
“THE
SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF
1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT
AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.”
5
9.6 Removal
of Legends.
If, in
the opinion of the Company and its counsel, any legend placed on a stock
certificate representing Shares sold under this Agreement no longer is required,
the holder of such certificate shall be entitled to exchange such certificate
for a certificate representing the same number of Shares but without such
legend.
9.7 Administration.
Any
determination by the Company and its counsel in connection with any of the
matters set forth in this Section
9
shall be
conclusive and binding on the Optionee and all other persons.
SECTION
10 :
MISCELLANEOUS PROVISIONS
10.1 Rights
as a Shareholder.
Neither
the Optionee nor the Optionee’s representative shall have any rights as a
shareholder with respect to any Shares subject to this option until the Optionee
or the Optionee’s representative becomes entitled to receive such Shares by
filing a notice of exercise and paying the Exercise Price pursuant to
Section
4
and Section
5
hereof.
10.2 Adjustments.
If there
is any change in the number of outstanding shares of Stock by reason of a stock
split, reverse stock split, stock dividend, recapitalization, combination or
reclassification, then (i) the number of shares subject to this option and
(ii)
the Exercise Price of this option, in effect prior to such change, shall be
proportionately adjusted to reflect any increase or decrease in the number
of
issued shares of Stock; provided,
however,
that
any fractional shares resulting from the adjustment shall be
eliminated.
10.3 No
Retention Rights.
Nothing
in this option or in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Company (or any Parent or
Subsidiary employing or retaining the Optionee) or of the Optionee, which rights
are hereby expressly reserved by each, to terminate his or her Service at any
time and for any reason, with or without cause.
10.4 Notice.
Any
notice required by the terms of this Agreement shall be given in writing and
shall be deemed effective upon personal delivery or upon deposit with the United
States Postal Service, by registered or certified mail, with postage and fees
prepaid. Notice shall be addressed to the Optionee at the address set forth
in
the records of the Company. Notice shall be addressed to the Company at:
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DigitalFX
International, Inc.
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0000
Xxxx Xxxxxxx Xxxx, Xxxxx 0
Xxx
Xxxxx, Xxxxxx 00000
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10.5 Entire
Agreement.
The
Notice of Stock Option Grant, this Agreement and the Plan constitute the entire
contract between the parties hereto with regard to the subject matter hereof.
They supersede any other agreements, representations or understandings (whether
oral or written and whether express or implied) that relate to the subject
matter hereof.
10.6 Choice
of Law.
THIS
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEVADA, WITHOUT REGARD TO ITS CHOICE OF LAWS PROVISIONS, AS NEVADA
LAWS ARE APPLIED TO CONTRACTS ENTERED INTO AND PERFORMED IN SUCH
STATE.
6
10.7 Attorneys’
Fees.
In the
event that any action, suit or proceeding is instituted upon any breach of
this
Agreement, the prevailing party shall be paid by the other party thereto an
amount equal to all of the prevailing party’s costs and expenses, including
attorneys’ fees incurred in each and every such action, suit or proceeding
(including any and all appeals or petitions therefrom). As used in this
Agreement, “attorneys’
fees”
shall
mean the full and actual cost of any legal services actually performed in
connection with the matter involved calculated on the basis of the usual fee
charged by the attorney performing such services and shall not be limited to
“reasonable attorneys’ fees” as defined in any statute or rule of
court.
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EXHIBIT
A
NOTICE
OF EXERCISE
(To
be
signed only upon exercise of the option)
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DigitalFX
International, Inc.
0000
Xxxx Xxxxxxx Xxxx, Xxxxx 0
Xxx
Xxxxx, Xxxxxx 00000
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The
undersigned, the holder of the enclosed Stock Option Agreement, hereby
irrevocably elects to exercise the purchase rights represented by the option
and
to purchase thereunder ______* shares of Common Stock of DigitalFX
International, Inc. (the “Company”),
and
herewith encloses payment of $_______ and/or _________ shares of the Company's
common stock in full payment of the purchase price of such shares being
purchased.
Dated:________________
YOUR
STOCK MAY BE SUBJECT TO RESTRICTIONS UNDER THE NOTICE OF STOCK OPTION GRANT
AND
STOCK OPTION AGREEMENT
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(Signature
must conform in all respects to name of holder as specified on the
face of
the option)
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(Please
Print Name)
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(Address)
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*
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Insert
here the number of shares called for on the face of the option, or,
in the
case of a partial exercise, the number of shares being exercised,
in
either case without making any adjustment for additional Common Stock
of
the Company, other securities or property that, pursuant to the adjustment
provisions of the option, may be deliverable upon
exercise.
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1
