CUSIP No. 19421N 10 0 13D Page 16 of 20 Pages
EXHIBIT 10.3
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STOCK OPTION AGREEMENT
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e-financial xxxxx.xxx
1999 STOCK OPTION PLAN
THIS AGREEMENT is entered into as of the 4th day of May 2001 ("Date of
Grant") between e-financial xxxxx.xxx, a Nevada corporation (the "Company"), and
Xxxxxxx X. Xxxxxxx (the "Optionee").
WHEREAS, 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");
WHEREAS, 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");
WHEREAS, the Board has authorized the grant to Optionee of options to
purchase a total of 250,000 shares of Common Stock (the "Options"), which
Options are intended to be (select one):
xxx 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,
250,000 shares of Common Stock. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Plan .
1. Exercise Price.
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The exercise price of the options shall be $1.25 per share.
2. Limitation on the Number of Shares.
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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.
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The Options are exercisable in accordance with the following vesting
schedule:
(a) 100% of the Options may be exercised after 2 months;
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(b) 0% of the Options may be exercised after 4 months;
(c) 0% of the Options may be exercised after 6 months;
(d) 0% of the Options may be exercised after 8 months;
4. Options non Transferable.
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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 of 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.
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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, 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.
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Vesting 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
employment or contractual relationship with the Company or
any Related Corporation for cause (as determined in the sole
discretion of the Plan Administrator).
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.
CUSIP No. 19421N 10 0 13D Page 18 of 20 Pages
(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.
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In the case of any stock split, stock dividend or like charge 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.
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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 vesting 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 cheque in the amount of the full
exercise price for the Common Stock to be purchased. In addition to payment in
cash by certified cheque or cashier's cheque, 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:
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(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.
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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 such 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.
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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.
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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.
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12. No Employment Relationship.
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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.
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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.
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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: e-financial xxxxx.xxx
Attention: Xxxx Xxxxxx, President
The Optionee: ____________________________
____________________________
____________________________
(address)
E-FINANCIAL XXXXX.XXX
Per: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx, President
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 e-finance xxxxx.xxx 1999 Stock Option Plan (the
"Plan") and Section 8 of that certain Stock Option Agreement (the "Agreement")
dated as of the day of ____, 1999 between e-financial xxxxx.xxx (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 $ 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 ____ , 1999
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Signature
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Name (typed or printed)
