Exhibit 10.6
NONQUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, dated as of October 15, 1999, is made by and between
Entrade Inc. (the "Company"), a Pennsylvania corporation, and Xxxxx X.
Xxxxxxxxxxx (the "Employee"), an employee of Asset Liquidation Group, Inc. and
Public Liquidation Systems, Inc., wholly-owned subsidiaries of the Company (the
"Subsidiary").
Recitals:
WHEREAS, the Company wishes to afford the Employee the opportunity to
purchase shares of the Company's Common Stock; and
WHEREAS, the Company wishes to carry out the relevant terms of the
Employee's Employment Agreement to set forth the terms of the grant the
nonqualified stock option provided for therein to the Employee as an inducement
to the Employee to commence and remain in the service of the Subsidiary and as
an incentive for increased efforts during such service;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS
Whenever the following terms are used in this Agreement, they shall
have the meaning specified below unless the context clearly indicates to the
contrary:
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the no par value Common Stock of the Company.
"Committee" shall mean the Board of Directors of the Company or the
committee appointed by the Board of Directors of the Company for purposes of
administering this Agree ment.
"Employment Agreement" shall mean the Employment Agreement dated the
date hereof between the Employee and the Subsidiary.
"Option" shall mean the nonqualified stock option granted under this
Agreement to purchase shares of Common Stock.
"Secretary" shall mean the Secretary of the Company.
"Termination of Employment" shall mean the time when the
employee-employer relation ship between the Employee and the Subsidiary is
terminated for any reason, including, but not
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by way of limitation, a termination by resignation, discharge, death, disability
(within the meaning of Section 22(e)(3) of the Code) or retirement, but
excluding any termination where there is a simultaneous reemployment by the
Subsidiary. For purposes of this Agreement, "retirement" shall mean a separation
from service by reason of the Employee's retirement at or after the Employee's
earliest permissible retirement date pursuant to and in accordance with his
employer's established plan, policy or practice. The Committee, in its absolute
discretion, shall determine the effect of all other matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question whether a Termination of Employment resulted from a discharge for
cause, and all questions of whether particular leaves of absence constitute
Terminations of Employment.
ARTICLE II
GRANT OF OPTION
Section 2.1 - Grant of Option
In consideration of the Employee's agreement to remain in the employ of
the Subsidiary and for other good and valuable consideration, on the date hereof
the Company irrevocably grants to the Employee the Option to purchase any part
or all of an aggregate of 200,000 shares of the Company's Common Stock upon the
terms and conditions set forth in this Agreement.
Section 2.2 - Purchase Price
The purchase price of the shares of Common Stock covered by the Option
shall be $9.00 per share, without commission or other charge.
ARTICLE III
EXERCISABILITY OF OPTIONS
Section 3.1 - Commencement of Exercisability
Subject to Section 3.2, the Option shall become exercisable in full
commencing on the date hereof. The Option shall remain exercisable until such
time when the Option may no longer be exercised pursuant to the provisions of
Section 3.2.
Section 3.2 - Expiration of Option
The Option may not be exercised to any extent by anyone after the first
to occur of the following events:
(a) The expiration of ten years from the date the Option was granted;
(b) The date of the Employee's Termination of Employment if such
Termination of Employment resulted from (i) a discharge for cause, if the
"cause" for discharge is an act or
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omission of the Employee enumerated in Section 5.6 hereof, or (ii) the voluntary
resignation of the Employee;
(c) The expiration of three months from the date of the Employee's
Termination of Employment other than for cause as provided in Section 3.2(b) or
the voluntary resignation of the Employee, unless such Termination of Employment
results from his retirement, death or disability (within the meaning of Section
22(e)(3) of the Code), but in no event later than the expiration date set forth
in Section 3.2(a) hereof; or
(d) The expiration of one year from the date of the Employee's
Termination of Employment by reason of his retirement, death or disability
(within the meaning of Section 22(e)(3) of the Code), but in no event later than
the expiration date set forth in Section 3.2(a) hereof.
ARTICLE IV
EXERCISE OF OPTION
Section 4.1 - Person Eligible to Exercise
During the lifetime of the Employee, only the Employee may exercise the
Option or any portion thereof. After the death of the Employee, the Option or
any portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.2 hereof, be exercised by the Employee's personal
representative or by any person empowered to do so under the Employee's will or
under the then applicable laws of descent and distribution.
Section 4.2 - Partial Exercise
The Option may be exercised in whole or in part at any time prior to
the time when the Option or portion thereof becomes unexercisable under Section
3.2 hereof; provided, however, that each partial exercise shall be for whole
shares only.
Section 4.3 - Manner of Exercise
The Option or any portion of the Option may be exercised solely by
delivery to the Secretary or his office of all of the following prior to the
time when the Option or such portion becomes unexercisable under Section 3.2
hereof:
(a) Notice in writing signed by the Employee or such other person then
entitled to exercise the Option, or any portion thereof, stating that the Option
or portion is thereby exercised, such notice complying with all applicable rules
established by the Committee;
(b) Full cash payment for the shares with respect to which the Option
or portion is thereby exercised and which are to be delivered to the Employee
pursuant to such exercise; provided, however, that at the discretion of the
Committee, payment may be made in whole or in part in shares of Common Stock of
the Company, which Common Stock will be valued at its
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then fair market value. The Employee may also, upon prior notification to the
Company and subject to Section 4.4 hereof, enter into an agreement with the
Company's transfer agent or a brokerage firm of national standing whereby the
Employee will simultaneously exercise the Option, or portion thereof, and sell
the shares acquired thereby through such transfer agent or brokerage firm and
the transfer agent or brokerage firm executing the sale will remit to the
Company from the proceeds of sale the exercise price of the shares as to which
the Option has been exercised;
(c) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with the
Securities Act of 1933, as amended, and any other federal or state securities
laws or regulations. The Committee may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars;
(d) In the event that the Option or any portion thereof shall be
exercised pursuant to Section 4.1 hereof by any person other than the Employee,
appropriate proof of the right of such person to exercise the Option; and
Section 4.4 - Conditions to Issuance of Stock Certificates
The shares of Common Stock deliverable upon the exercise of the Option,
or any portion thereof, may be either previously authorized but unissued shares
or issued shares that have been reacquired by the Company. The Company shall not
be required to issue or deliver any certificate or certificates for shares of
Common Stock purchased upon the exercise of the Option or portion thereof prior
to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which the Common Stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under rulings or regulations of the
Securities and Exchange Commission or of any other governmental or regulatory
body, which the Committee shall, in its absolute discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state or
federal govern mental agency that the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and
(d) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may from time to time establish, in its absolute
discretion, for reasons of administrative convenience.
(e) In the discretion of the Committee, the satisfaction to counsel for
the Company that the issuance of shares of Common Stock or other securities or
property of the Company and
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other forms of payment hereunder will be in compliance with applicable federal,
state, local and foreign legal, securities exchange and other applicable
requirements.
Section 4.5 - Rights as Shareholder
The holder of the Option shall not be, nor have any of the rights or
privileges of, a shareholder of the Company in respect of any shares purchasable
upon the exercise of any part of the Option unless and until certificates
representing such shares shall have been issued by the Company to such holder.
ARTICLE V
MISCELLANEOUS
Section 5.1 - Administration
The Committee shall have the power to interpret this Agreement and to
adopt such rules for the administration, interpretation and application of this
Agreement as are consistent therewith and to interpret or revoke any such rules.
All actions taken and all interpretations and determina tions made by the
Committee in good faith shall be final and binding upon the Employee, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Option. In its absolute discretion, the Board of
Directors of the Company may at any time and from time to time exercise any and
all rights and duties of the Committee under this Agreement.
Section 5.2 - Options Not Transferable
Neither the Option nor any interest or right therein or part thereof
shall be liable for the debts, contracts or engagements of the Employee or the
Employee's successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect; provided, however, that this Section 5.2
shall not prevent transfers by will or by the applicable laws of descent and
distribution.
Section 5.3 - Withholding
All amounts which, under federal, state or local law, are required to
be withheld from the amount payable with respect to any Option shall be withheld
by the Company. Whenever the Company proposes or is required to issue or
transfer shares of Common Stock, the Company shall have the right to require the
recipient to remit to the Company an amount sufficient to satisfy any federal,
state or local withholding tax requirements prior to the delivery of any
certificate or certificates for such shares.
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Section 5.4 - No Right of Continued Employment
Nothing in this Agreement shall confer upon the Employee any right to
continue in the employ of the Company or any Subsidiary or shall interfere with
or restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge the Employee at any time for any reason
whatsoever, with or without cause.
Section 5.5 Adjustments.
(a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, the number of shares of Common Stock covered by the
Option as well as the price per share of Common Stock covered by the Option,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consider ation." Such adjustment shall
be made by the Committee, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option.
(b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Option will terminate immediately
prior to the consummation of such proposed action, unless otherwise provided by
the Committee. The Committee may, in the exercise of its discretion in such
instances, declare that the Option shall terminate as of a date fixed by the
Committee and give the Employee the right to exercise his Option as to all or
any part of the shares of Common Stock covered by the Option.
(c) Sale or Merger. In the event of a proposed sale of all or
substantially all of the assets of the Company, or the merger of the Company
with or into another corporation, the Com mittee, in the exercise of its sole
discretion, may take such action as it deems desirable, including, but not
limited to: (i) causing the Option to be assumed or an equivalent option to be
substituted by the successor corporation or a parent or subsidiary of such
successor corporation, or (ii) declaring that the Option shall terminate at a
date fixed by the Committee provided that the Employee is given notice and
opportunity to exercise the then exercisable portion of his Option prior to such
date.
Section 5.6 Forfeiture.
Notwithstanding anything to the contrary in this Agreement, if the
Committee finds, by a majority vote, after full consideration of the facts
presented on behalf of both the Company and the Employee, that the Employee has
been engaged in fraud, embezzlement, theft or commission of a felony in the
course of his employment or retention by the Company or any subsidiary of
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the Company or that the Employee has willfully disclosed confidential
information of the Compa ny or any subsidiary of the Company and that such
disclosure materially damaged the Company or any subsidiary of the Company, the
Employee shall forfeit all unexercised Options and all exer cised Options under
which the Company has not yet delivered the certificates. The decision of the
Committee in interpreting and applying the provisions of this Section 5.6 shall
be final. No decision of the Committee, however, shall affect the finality of
the discharge or termination of the Employee by the Company or any subsidiary of
the Company in any manner.
Section 5.7 No Prohibition on Corporate Action.
No provision of this Agreement shall be construed to prevent the
Company or any officer or director thereof from taking any action deemed by the
Company or such officer or director to be appropriate or in the Company's best
interest, whether or not such action could have an adverse effect on the Option
granted hereunder, and neither the Employee nor his estate, personal
representative or beneficiary shall have any claim against the Company or any
officer or director thereof as a result of the taking of such action.
Section 5.8 Indemnification.
With respect to the administration of this Agreement, the Company shall
indemnify each present and future member of the Committee and the Board against,
and each member of the Committee and the Board shall be entitled without further
action on his part to indemnity from the Company for, all expenses (including
the amount of judgments and the amount of approved settlements made with a view
to the curtailment of costs of litigation, other than amounts paid to the
Company itself) reasonably incurred by him in connection with or arising out of,
any action, suit or proceeding in which he may be involved by reason of his
being or having been a member of the Committee or the Board, whether or not he
continues to be such member at the time of incurring such expenses; provided,
however, that such indemnity shall not include any expenses incurred by any such
member of the Committee or the Board (i) in respect of matters as to which he
shall be finally adjudged in any such action, suit or proceeding to have been
guilty of gross negligence or willful misconduct in the performance of his duty
as such member of the Committee or the Board; or (ii) in respect of any matter
in which any settlement is effected for an amount in excess of the amount
approved by the Company on the advice of its legal counsel; and provided further
that no right of indemnification under the provisions set forth herein shall be
available to or enforceable by any such member of the Committee or the Board
unless, within 60 days after institution of any such action, suit or proceeding,
he shall have offered the Company in writing the opportunity to handle and
defend same at its own expense. The foregoing right of indemnifi cation shall
inure to the benefit of the heirs, executors or administrators of each such
member of the Committee or the Board and shall be in addition to all other
rights to which such member may be entitled as a matter of law, contract or
otherwise.
Section 5.9 - Shares To Be Reserved
The Company shall at all times during the term of the Option reserve
and keep available such number of shares of stock as will be sufficient to
satisfy the requirements of this Agreement.
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Section 5.11 - Notices
Any notice to be given under the terms of this Agreement to the Company
shall be addressed to the Company in care of its Secretary and any notice to be
given to the Employee shall be addressed to the Employee at the address given
beneath his signature hereto. By a notice given pursuant to this Section 5.11,
either party may hereafter designate a different address for notices to be given
to him or it hereunder. Any notice that is required to be given to the Employee
shall, if the Employee is then deceased, be given to the Employee's personal
representa tive if such representative has previously informed the Company of
his status and address by written notice under this Section 5.11. Any notice
shall have been deemed duly given when enclosed in a properly sealed envelope or
wrapper addressed as aforesaid, deposited (with postage prepaid) in the United
States mail or sent by overnight courier (with charges prepaid).
Section 5.12 - Titles
Titles are provided herein for convenience only and are not to serve as
a basis for interpretation or construction of this Agreement.
Section 5.13 - Pronouns
The masculine pronoun shall include the feminine and neuter, and the
singular the plural, where the context so indicates.
IN WITNESS THEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
Attest: ENTRADE INC.
/s/ Xxxx X. Xxxx By:/s/ Xxxx Xxxxxxxxxx
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Secretary President
/s/ Xxxxx X. Xxxxxxxxxxx
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Xxxxx X. Xxxxxxxxxxx
0000 Xxxx Xxxxxx
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Xxxx Xxxxx, XX 00000
Address
Employee's Taxpayer
Identification Number:
###-##-####
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