EXHIBIT 10.02
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XXX.xxx, Inc.
STOCK OPTION AGREEMENT
1. GRANT OF OPTION.
XXX.xxx, Inc., a Delaware corporation (the "Company"), hereby grants to
Xxxxx X. Xxxxxx (the "Employee") an option to purchase an aggregate of
10,000,000 shares (the "Shares") of Common Stock, par value $.0005 per share
("Common Stock"), of the Company at an exercise price per share equal to the
closing price of the Company's Common Stock on the last trading day prior to the
Employee's initial date of hire with the Company (i.e., the "Effective Date"
under that certain Employment Agreement between the Company and the Employee,
dated as of April 15, 2004), as listed on the Nasdaq SmallCap Market,
purchasable as set forth in and subject to the terms and conditions of this
option agreement. The original date of grant of this option is April 15, 2004,
and is hereinafter referred to as the "Original Grant Date," and the date ending
one hundred and twenty (120) months thereafter is herein referred to as the
"Tenth Anniversary Date."
2. EXERCISE OF OPTION AND PROVISIONS FOR TERMINATION.
(a) Except as otherwise provided herein and subject to the right of
cumulation provided herein, this option may be exercised, prior to
the Tenth Anniversary Date, as to not more than the following number
of shares covered by this option during the respective periods set
forth as follows: (i) no Shares prior to October 15, 2004, (ii)
16.6% of the Shares from and after October 15, 2004, and (iii) an
additional 2.78% of the Shares on each monthly anniversary of such
date thereafter, until fully vested, provided, however, that in the
event there is no corresponding monthly anniversary date in any
given month, such additional amount shall vest on the last day of
such month (i.e., February 29 would correspond to January 31).
(b) Notwithstanding anything herein to the contrary, (i) in the
event that Employee's employment with the Company is terminated
either by the Company without Cause or by the Employee for Good
Reason, then the portion of the option granted hereunder which would
otherwise vest or become exercisable pursuant to this Section 2(a)
within twelve (12) months following the date of such termination
shall immediately vest and become fully exercisable; and (ii) in the
event that Employee's employment with the Company is terminated
either by the Company without Cause or by the Employee for Good
Reason at any time following the consummation of a Change in
Control, any unvested portion of the option granted to the Employee
hereunder shall immediately vest and become fully exercisable. As
used herein, the terms "Cause", "Good Reason" and "Change in
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Control" shall have the meanings set forth in the Employment
Agreement executed herewith between Employee and the Company
effective as of April 15, 2004 (the "Employment Agreement").
(c) The right of exercise provided herein shall be cumulative so
that if the option is not exercised to the maximum extent
permissible during any period it shall be exercisable, in whole or
in part, with respect to all shares not so purchased at any time
during any subsequent period prior to the expiration or termination
of this option. This option may not be exercised at any time after
the Tenth Anniversary Date.
(d) Subject to the conditions hereof, this option shall be
exercisable by the Employee giving written notice of exercise to the
Company, specifying the number of shares to be purchased and the
purchase price to be paid therefor and accompanied by payment in
accordance with Section 3 hereof. Such exercise shall be effective
upon receipt by the Treasurer of the Company of the written notice
together with the required payment. The Employee shall be entitled
to purchase less than the number of shares covered hereby, provided
that no partial exercise of this option shall be for less than 10
whole shares.
(e) If the Employee ceases to be employed by the Company or one of
its subsidiaries for any reason, including retirement but other than
death, this option shall immediately terminate; provided, however,
that any portion of this option which was otherwise exercisable on
the date of termination of the Employee's employment may be
exercised within the three-month period following the date on which
the Employee ceased to be so employed; provided, further, that if
the Employee's employment with the Company was terminated by the
Company for a reason other than Cause or by the Employee for Good
Reason, any portion of this option which was otherwise exercisable
on the date of termination of the Employee's employment (including
the portions that have been accelerated pursuant to Section 2(b))
may be exercised within the one-year period following such
termination of employment, but in no event after the Tenth
Anniversary Date. Any such exercise may be made only to the extent
of the number of shares subject to this option which are purchasable
upon the date of such termination of employment (including the
portions that have been accelerated pursuant to Section 2(b)). If
the Employee dies during such three-month or one year period, as the
case may be, this option shall be exercisable by the Employee's
personal representatives, heirs or legatees to the same extent and
during the same period that the Employee could have exercised this
option on the date of his or her death.
(f) If the Employee dies while an employee of the Company or any
subsidiary of the Company, this option shall be exercisable, by the
Employee's personal representatives, heirs or legatees, to the same
extent that the Employee could have exercised this option on the
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date of his or her death. This option or any unexercised portion
hereof shall terminate unless so exercised prior to the earlier of
the expiration of six months from the date of such death or the
Tenth Anniversary Date.
3. PAYMENT OF PURCHASE PRICE.
(a) Payment of the purchase price for shares purchased upon exercise
of this option shall be made by one or any combination of the
following forms of payment:
(i) by delivery to the Company of cash or check payable
to the order of the Company in an amount equal to the
purchase price of such shares;
(ii) if the Employee elects and the Company permits,
subject to Section 3(b) below, by delivery of shares of
Common Stock of the Company having a fair market value
equal in amount to the purchase price of such shares; or
(iii) if the Employee elects and the Company permits,
and the Common Stock is then traded on a national
securities exchange or on the Nasdaq National Market or
Nasdaq SmallCap Market (or successor trading system
thereof), by delivery of an irrevocable and
unconditional undertaking, satisfactory in form and
substance to the Company, by a creditworthy broker to
deliver promptly to the Company sufficient funds to pay
the exercise price, or delivery by the Employee to the
Company of a copy of irrevocable and unconditional
instructions, satisfactory in form and substance to the
Company, to a creditworthy broker to deliver promptly to
the Company cash or a check sufficient to pay the
exercise price.
(b) If Section 3(a)(ii) is applicable, and if the Employee delivers
Common Stock held by the Employee ("Old Stock") to the Company in
full or partial payment of the exercise price and the Old Stock so
delivered is subject to restrictions or limitations imposed by
agreement between the Employee and the Company, an equivalent number
of Shares shall be subject to all restrictions and limitations
applicable to the Old Stock to the extent that the Employee paid for
the Option Shares by delivery of Old Stock, in addition to any
restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Employee may not pay any part of
the exercise price hereof by transferring Common Stock to the
Company unless such Common Stock has been owned by the Employee free
of any substantial risk of forfeiture for at least six months.
(c) For the purposes of Section 3(a)(ii) hereof, the fair market
value of any share of the Company's Common Stock to be delivered to
the Company in exercise of this option shall be determined as of the
last business day for which such prices or quotes are available
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prior to the date of exercise and shall mean (i) the last reported
sale price (on that date) of the Common Stock on the principal
national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange;
(ii) the last reported sale price (on that date) of the Common Stock
on the Nasdaq National Market or Nasdaq SmallCap Market (or
successor trading system thereof), if the Common Stock is not then
traded on a national securities exchange; or (iii) if the stock is
not then traded on a national securities exchange or listed on the
Nasdaq National Market or Nasdaq SmallCap Market (or successor
trading system thereof), the fair market value as determined in good
faith by the Board of Directors of the Company.
(d) If the Employee elects to exercise options by delivery of shares
of Common Stock of the Company, the certificate or certificates
representing the shares of Common Stock of the Company to be
delivered shall be duly executed in blank by the Employee or shall
be accompanied by a stock power duly executed in blank suitable for
purposes of transferring such shares to the Company. Fractional
shares of Common Stock of the Company will not be accepted in
payment of the purchase price of shares acquired upon exercise of
this option.
4. DELIVERY OF SHARES.
The Company shall, upon payment of the purchase price for the number of
shares purchased and paid for, make (or cause to be made) prompt delivery of
such shares to the Employee, provided that if any law or regulation requires the
Company to take any action with respect to such shares before the issuance
thereof, then the date of delivery of such shares shall be extended for the
period necessary to complete such action. No shares shall be issued and
delivered upon exercise of any option unless and until, in the opinion of
counsel for the Company, any applicable registration requirements of the
Securities Act of 1933, any applicable listing requirements of any national
securities exchange or over-the-counter market on which stock of the same class
is then listed, and any other requirements of law or of any regulatory bodies
having jurisdiction over such issuance and delivery, shall have been fully
complied with.
5. NON-TRANSFERABILITY OF OPTION.
Except as provided in Section 2(c) and 2(d) hereof, this option is personal
and no rights granted hereunder shall be transferred, assigned, pledged or
hypothecated in any way (whether by operation of law or otherwise) nor shall any
such rights be subject to execution, attachment or similar process. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this
option or of such rights contrary to the provisions hereof, or upon the levy of
any attachment or similar process upon this option or such rights, this option
and such rights shall become null and void.
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6. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in this Agreement shall be construed or deemed by any
person under any circumstances to bind the Company or any of its subsidiaries to
continue the employment of the Employee for the period within which this option
may be exercised.
7. RIGHTS AS A STOCKHOLDER.
The Employee shall have no rights as a stockholder with respect to any
shares which may be purchased by exercise of this option unless and until a
certificate or certificates representing such shares are duly issued and
delivered to the Employee. No adjustment shall be made for dividends or other
rights for which the record date is prior to the date such stock certificate is
issued.
8. RECAPITALIZATION.
In the event that dividends are payable in shares of Common Stock or in the
event there are splits, sub-divisions or combinations of shares of Common Stock
subsequent to the date hereof, the number of shares subject to this option shall
be increased or decreased proportionately, as the case may be, and the number of
shares deliverable upon the exercise thereafter of this option shall be
increased or decreased proportionately, as the case may be, without change in
the aggregate purchase price.
9. REORGANIZATION.
In case the Company is merged or consolidated with another corporation or
entity and the Company is not the surviving corporation, or in case the property
or stock of the Company is acquired by any other corporation, or in case of a
reorganization or liquidation of the Company, prior to the termination or
expiration of this option, the Employee shall, with respect to this option or
any unexercised portion thereof, be entitled to the rights and benefits, and be
subject to the limitations, set forth in Section 2 hereof.
10. WITHHOLDING TAXES.
Whenever shares are to be issued upon exercise of this option, the Company
shall have the right to require the Employee to remit cash to the Company in an
amount sufficient to satisfy any federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
shares.
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11. MISCELLANEOUS.
(a) Except as provided herein, this Agreement may not be amended or
otherwise modified unless evidenced in writing and signed by the
Company and the Employee.
(b) All notices under this Agreement shall be mailed or delivered by
hand to the parties at their respective addresses set forth beneath
their names below or at such other address as may be designated in
writing by either of the parties to one another.
(c) This Agreement shall be governed by and construed in accordance
with the laws of the State of Connecticut.
Dated: April 15, 2004 XXX.xxx, Inc.
By: /s/ J. Xxxxx Xxxxxxx
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Name: J. Xxxxx Xxxxxxx
Title: President
Address: 000 Xxxx Xxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxxx 00000
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EMPLOYEE'S ACCEPTANCE
The undersigned hereby accepts the foregoing option and agrees to the terms
and conditions thereof.
EMPLOYEE
/s/ Xxxxx X. Xxxxxx
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Signature
Xxxxx X. Xxxxxx
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