STOCK OPTION AGREEMENT
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MERLIN SOFTWARE TECHNOLOGIES INC.
1999 STOCK OPTION PLAN
THIS is entered into as of the 1st day of November, 1999 ("Date of Grant")
BETWEEN:
MERLIN SOFTWARE TECHNOLOGIES INC., a company incorporated pursuant to the laws
of the State of Nevada, of 0000 Xxxxx-XxXxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxx
00000
( "Company")
AND:
XXXXXXXX XXXX of Suite 755 - 1130 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx
Xxxxxxxx X0X 0X0
( "Optionee")
A. The Board of Directors of the Company (the "Board") has approved and
adopted the 1999 Stock Option Plan (the "Plan"), pursuant to which the Board is
authorized to grant to employees and other selected persons stock options to
purchase common stock, without par value, of the Company (the "Common Stock");
B. The Plan provides for the granting of stock options that either (i)
are intended to qualify as "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) do not qualify under Section 422 of the Code ("Non-Qualified Stock
Options"); and
C. The Board has authorized the grant to Optionee of options to
purchase a total of 10,000 shares of Common Stock (the "Options"), which Options
are intended to be (select one):
[X] Incentive Stock Options
[ ] Non-Qualified Stock Options;
NOW THEREFORE, the Company agrees to offer to the Optionee the option
to purchase, upon the terms and conditions set forth herein and in the Plan,
10,000 shares of Common Stock. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Plan.
1. Exercise Price. The exercise price of the options shall be US$1.00 per
share.
2. Limitation on the Number of Shares. If the Options granted hereby are
Incentive Stock Options, the number of shares which may be acquired upon
exercise thereof is subject to the limitations set forth in Section 5(a) of the
Plan.
3. Vesting Schedule. The Options are exercisable in accordance with the
following vesting schedule:
(a) 100% of the Options (10,000) may be exercised upon the execution of the
Consulting Agreement between the Company and the Optionee
4. Options not Transferable. This Option may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or (except in
the case of an Incentive Stock Option) pursuant to a qualified domestic
relations order, and shall not be subject to execution, attachment or similar
process; provided, however, that if this Option represents a Non-Qualified Stock
Option, such Option is transferable without payment of consideration to
immediate family members of the Optionee or to trusts or partnerships
established exclusively for the benefit of the Optionee and the Optionee's
immediate family members. Upon any attempt to transfer, pledge, hypothecate or
otherwise dispose of any Option or of any right or privilege conferred by the
Plan contrary to the provisions thereof, or upon the sale, levy or attachment or
similar process upon the rights and privileges conferred by the Plan, such
Option shall thereupon terminate and become null and void.
5. Investment Intent. By accepting the option, the Optionee represents and
agrees that none of the shares of Common Stock purchased upon exercise of the
Option will be distributed in violation of applicable federal and state laws and
regulations. In addition, the Company may require, as a condition of exercising
the Options, that the Optionee execute an undertaking or agreement, in such a
form as the Company shall reasonably specify, that the Stock is being purchased
only for investment and without any then-present intention to sell or distribute
such shares.
6. Termination of Employment and Options. Vested Options shall terminate,
to the extent not previously exercised, upon the occurrence of the first of the
following events:
(a) Expiration. Ten (10) years; except, that the expiration date of any
Incentive Stock Option granted to a greater than ten percent (10%) shareholder
of the Company shall not be later than five (5) years from the Date of Grant.
(b) Termination for Cause. The date of an Optionee's termination of
employment or contractual relationship with the Company or any Related
Corporation for cause (as determined in the sole discretion of the Plan
Administrator).
(c) Termination Due to Death or Disability. The expiration of one (1) year
from the date of the death of the Optionee or cessation of an Optionee's
employment or contractual relationship by reason of disability (as defined in
Section 5(g) of the Plan). If an Optionee's employment or contractual
relationship is terminated by death, any Option held by the Optionee shall be
exercisable only by the person or persons to whom such Optionee's rights under
such Option shall pass by the Optionee's will or by the laws of descent and
distribution.
(d) Termination Due to Cessation of Service as a Director. The expiration
of ninety (90) days from the date an Optionee, if a director of the Company,
ceases to serve as a director of the Company.
(e) Termination for Any Other Reason. The expiration of three (3) months
from the date of an Optionee's termination of employment or contractual
relationship with the Company or any Related Corporation for any reason
whatsoever other than cause, death or Disability (as defined in Section 5(g) of
the Plan).
Each unvested Option granted pursuant hereto shall terminate immediately upon
termination of the Optionee's employment or contractual relationship with the
Company for any reason whatsoever, including death or Disability unless vesting
is accelerated in accordance with Section 5(f) of the Plan.
7. Stock. In the case of any stock split, stock dividend or like change in
the nature of shares of Stock covered by this Agreement, the number of shares
and exercise price shall be proportionately adjusted as set forth in Section
5(m) of the Plan.
8. Exercise of Option. Options shall be exercisable, in full or in part, at
any time after vesting, until termination; provided, however, that any Optionee
who is subject to the reporting and liability provisions of Section 16 of the
Securities Exchange Act of 1934 with respect to the Common Stock shall be
precluded from selling or transferring any Common Stock or other security
underlying an Option during the six (6) months immediately following the grant
of that Option. If less than all of the shares included in the vested portion
of any Option are purchased, the remainder may be purchased at any subsequent
time prior to the expiration of the Option term. No portion of any Option for
less than fifty (50) shares (as adjusted pursuant to Section 5(m) of the Plan)
may be exercised; provided, that if the vested portion of any Option is less
than fifty (50) shares, it may be exercised with respect to all shares for which
it is vested. Only whole shares may be issued pursuant to an Option, and to the
extent that an Option covers less than one (1) share, it is unexercisable.
Each exercise of the Option shall be by means of delivery of a notice
of election to exercise (which may be in the form attached hereto as Exhibit A)
to the Secretary of the Company at its principal executive office, specifying
the number of shares of Common Stock to be purchased and accompanied by payment
in cash by certified check or cashier's check in the amount of the full exercise
price for the Common Stock to be purchased. In addition to payment in cash by
certified check or cashier's check, an Optionee or transferee of an Option may
pay for all or any portion of the aggregate exercise price by complying with one
or more of the following alternatives:
(a) by delivering to the Company shares of Common Stock previously held by
such person or by the Company withholding shares of Common Stock otherwise
deliverable pursuant to exercise of the Option, which shares of Common Stock
received or withheld shall have a fair market value at the date of exercise (as
determined by the Plan Administrator) equal to the aggregate purchase price to
be paid by the Optionee upon such exercise;
(b) by delivering a properly executed exercise notice together with
irrevocable instructions to a broker promptly to sell or margin a sufficient
portion of the shares and deliver directly to the Company the amount of sale or
margin loan proceeds to pay the exercise price; or
(c) by complying with any other payment mechanism approved by the Plan
Administrator at the time of exercise.
It is a condition precedent to the issuance of shares of Common Stock that the
Optionee execute and deliver to the Company a Stock Transfer Agreement, in a
form acceptable to the Company, to the extent required pursuant to the terms
thereof.
9. Holding period for Incentive Stock Options. Period for Incentive Stock
Options. In order to obtain the tax treatment provided for Incentive Stock
Options by Section 422 of the Code, the shares of Common Stock received upon
exercising any Incentive Stock Options received pursuant to this Agreement must
be sold, if at all, after a date which is later of two (2) years from the date
of this agreement is entered into or one (1) year from the date upon which the
Options are exercised. The Optionee agrees to report sales of shares prior to
the above determined date to the Company within one (1) business day after such
sale is concluded. The Optionee also agrees to pay to the Company, within five
(5) business days after such sale is concluded, the amount necessary for the
Company to satisfy its withholding requirement required by the Code in the
manner specified in Section 5(1)(2) of the Plan. Nothing in this Section 9 is
intended as a representation that Common Stock may be sold without registration
under state and federal securities laws or an exemption therefrom or that such
registration or exemption will be available at any specified time.
10. Subject to 1999 Stock Option Plan. The terms of the Options are
subject to the provisions of the Plan, as the same may from time to time be
amended, and any inconsistencies between this Agreement and the Plan, as the
same may be from time to time amended, shall be governed by the provisions of
the Plan, a copy of which has been delivered to the Optionee, and which is
available for inspection at the principal offices of the Company.
11. Professional Advice. The acceptance of the Options and the sale of
Common Stock issued pursuant to the exercise of Options may have consequences
under federal and state tax and securities laws which may vary depending upon
the individual circumstances of the Optionee. Accordingly, the Optionee
acknowledges that he or she has been advised to consult his or her personal
legal and tax advisor in connection with this Agreement and his or her dealings
with respect to Options for the Common Stock. Without limiting other matters to
be considered, the Optionee should consider whether upon the exercise of
Options, the Optionee will file an election with the Internal Revenue Service
pursuant to Section 83(b) of the Code.
12. No Employment Relationship. Whether or not any Options are to be
granted under this Plan shall be exclusively within the discretion of the Plan
Administrator, and nothing contained in this Plan shall be construed as giving
any person any right to participate under this Plan. The grant of an Option
shall in no way constitute any form of agreement or understanding binding on the
Company or any Related Company, express or implied, that the Company or any
Related Company will employ or contract with an Optionee for any length of time,
nor shall it interfere in any way with the Company's or, where applicable, a
Related Company's right to terminate Optionee's employment at any time, which
right is hereby reserved.
13. Entire Agreement. This Agreement is the only agreement between the
Optionee and the Company with respect to the Options, and this Agreement and the
Plan supersede all prior and contemporaneous oral and written statements and
representations and contain the entire agreement between the parties with
respect to the Options.
14. Notices. Any notice required or permitted to be made or given hereunder
shall be mailed or delivered personally to the addresses set forth below, or as
changed from time to time by written notice to the other:
The Company: Merlin Software Technologies Inc.
Suite 000 - 0000 Xxxxxxx Xxxxxx
Xxxxxxx, XX X0X 0X0
Attention: Xxxxxx Xxxxxx, President
The Optionee: Xxxxxxxx Xxxx
Suite 755 - 1130 West Xxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
XXXXXX SOFTWARE TECHNOLOGIES INC.
Per: /s/ Xxxxxx Xxxxxx
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Authorized Signatory
THERE MAY NOT BE PRESENTLY AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS FOR THE ISSUANCE OF
SHARES OF STOCK UPON EXERCISE OF THESE OPTIONS. ACCORDINGLY, THESE OPTIONS
CANNOT BE EXERCISED UNLESS THESE OPTIONS AND THE SHARES OF STOCK TO BE ISSUED
UPON EXERCISE OF THESE OPTIONS ARE REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
THE SHARES OF STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933
AND WILL BEAR A LEGEND RESTRICTING RESALE UNLESS THEY ARE REGISTERED UNDER STATE
AND FEDERAL SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
COMPANY IS NOT OBLIGATED TO REGISTER THE SHARES OF STOCK OR TO MAKE AVAILABLE
ANY EXEMPTION FROM REGISTRATION.
EXHIBIT A
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NOTICE OF ELECTION TO EXERCISE
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This Notice of Election to Exercise shall constitute proper notice
pursuant to Section 5(h) of the Merlin Software Technologies Inc. 1999 Stock
Option Plan (the "Plan") and Section 8 of that certain Stock Option Agreement
(the "Agreement") dated as of the 1st day of November, 1999, between Merlin
Software Technologies Inc. (the "Company") and the undersigned.
The undersigned hereby elects to exercise Optionee's option to
purchase shares of the common stock of the Company at a price of US$1.00 per
share, for aggregate consideration of $, on the terms and conditions set forth
in the Agreement and the Plan. Such aggregate consideration, in the form
specified in Section 8 of the Agreement, accompanies this notice.
The undersigned has executed this Notice this day of , .
Signature
Name (typed or printed)
