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EXHIBIT 10(h)
No. 4-001
THE OPTION TO PURCHASE SHARES OF THE COMMON STOCK OF eSAT, INC., REPRESENTED BY
THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN RULE 144
UNDER THE ACT. NEITHER THE OPTIONS NOR THE UNDERLYING SHARES MAY BE OFFERED FOR
SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE
SATISFACTION OF SAID CORPORATION AND SUCH FURTHER RESTRICTIONS AS THE BOARD OF
DIRECTORS MAY DETERMINE.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT effective as of this 15 day of September , 1999,
between eSat, Inc., a Nevada corporation (the "Corporation"), and XXXXX X.
XXXXXXX (the "Recipient").
WHEREAS, the Corporation, by action of the Board of Directors on July 28,
1998, has authorized the granting of stock options to purchase 400,000 shares of
this Corporation's common stock, $.001 par value ("Common Stock"), to XXXXX X.
XXXXXXX at an exercise price of $ 3.00 per share.
NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy
whereof is hereby acknowledged, the Corporation and the Optionee agree as
follows:
1. Grant of Option. The Corporation hereby grants to XXXXX X. XXXXXXX an
option to purchase (the "Option") an aggregate of 400,000 shares of the
Corporation's common stock for a purchase price of $ 3.00 per share (the
"Option Price").
2. Vesting of Option. This option shall be immediately fully vested from the
Date of Grant.
3. Exercise of Option. This Option may be exercised in whole or in part at
any time during the term of the Option, provided, however, no portion of
this Option shall be exercisable after the expiration of the term thereof.
The Option may be exercised, as provided in this Paragraph 3, by notice
and payment to the Corporation as provided in Paragraph 5 hereof.
4. Conversion. In lieu of exercising this Option as specified in Paragraph 3,
the Recipient may from time to time convert this Option, in whole or in
part, into a number of shares determined by dividing (a) the aggregate
Fair Market Value (determined on the date of exercise) of the shares of
the Corporation's Common Stock issuable upon exercise of this Option (less
the number of shares as to which this Option has been previously
exercised) minus the aggregate Option Price of such shares minus all
amounts which it is required to withhold under federal, state or local law
in connection with the exercise of the Option, by (b) the Fair Market
Value (determined on the date of exercise) of one share. This is
represented mathematically as: {{(FMV per share) X [(number of share
issuable under the Option) - (share previously issued and converted under
the Option)]} - (amount required to be withheld)} / (FMV per share). For
purpose of this Paragraph 4, "Fair Market Value" shall be the value
determined in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or admitted to trading
on any stock exchange but is traded on the Nasdaq National Market
System or the Nasdaq SmallCap Market, the Fair Market Value shall be
the closing selling price per share of Common Stock on the date in
question, as such price is reported by the National Association of
Securities Dealers through the Nasdaq National Market System or any
successor system or the Nasdaq SmallCap Market or any successor
market. If there is no closing selling price for the common stock on
the date in question, then the FMV shall be the closing selling
price on the last preceding date for which such quotation exists.
(b) If the Common Stock is at the time listed or admitted to trading on
any stock exchange, the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question on
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the stock exchange determined by the Board of Directors of the
Corporation to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of transactions on
such exchange. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be
the closing selling price on the last preceding date for which such
quotation exists.
(c) If the Common Stock is at the time neither listed nor admitted to
trading on any stock exchange, not traded on the Nasdaq National
Market System nor on the Nasdaq SmallCap Market, then such Fair
Market Value shall be determined by the Board of Directors of the
Corporation after taking into account such factors as the Board of
Directors of the Corporation shall deem appropriate.
5. Manner of Exercise.
(a) During the lifetime of the Recipient, only he may exercise the
Option or any portion thereof. After the death of the Recipient, any
exercisable portion of the Option may, prior to the time when the
Option becomes unexercisable under Section 3.3, be exercised by the
Recipient's personal representative or by any person empowered to do
so under the Recipient's will or under the then applicable laws of
descent and distribution.
(b) The Option, or any exercisable portion thereof, may be exercised
solely by delivery to the Secretary or the Secretary's office of all
of the following prior to the time when such exercisable Option or
portion thereof becomes unexercisable:
(i) Notice in writing signed by the Recipient, or such other
person then entitled to exercise the Option or portion
thereof, stating that the Option or portion thereof is thereby
exercised, such notice complying with all applicable rules
established by the Corporation; and
(ii) (a) Full payment (in cash or by check) for the shares with
respect to which such Option or portion thereof is exercised;
or
(b) With the consent of the Corporation, shares of the
Company's Common Stock owned by the Recipient duly endorsed
for transfer to the Company with a Fair Market Value on the
date of delivery equal to the aggregate purchase price of the
shares with respect to which such Option or portion thereof is
exercised.
6. Term of Option. The term of the Option will be through August 24, 2003,
subject to Paragraphs 8 and 9 as provided in this Agreement.
The Recipient of the Option will not have any rights to dividends or any
other rights of a shareholder with respect to any shares of Common Stock
subject to the Option until such shares shall have been purchased through
the exercise of the Option and has been evidenced on the stock transfer
records of the Corporation maintained by the Corporation's transfer agent.
7. Performance Restrictions. The Recipient of this Option will not have the
right to exercise this Option until confirmation by the Board of Directors
that the following performance goals have been completed:
2000 UNITS SOLD '99 BY THE COMPANY.
For purposes of this paragraph, the East Coast Office shall mean the
people working out of the office the Corporation located in the
Washington, D.C., metropolitan area as of the date of this Agreement, and
those who subsequently work in at such office as approved by the
Corporation as part of the East Coast Office.
For purposes of this paragraph, a "unit" shall consist of a server and
associated hardware and software that allows access to the Internet.
A sale of a unit shall be deemed to occur or at such time as a sale is
recognized the Company in accordance with generally accepted accounting
principles. Units which are returned to the Company shall be deducted
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from the number of units sold. The number of units sold less the number of
units returned shall be the net units sold.
8. Transferability Restriction. The Option may not be assigned, transferred
or otherwise disposed of, or pledged or hypothecated in any way (whether
by operation of law or otherwise) (1) without the consent of the
Corporation, and (2) such transfer is not in violation of the Securities
Act of 1933, the Corporate Securities Laws of the State of Nevada, or the
securities laws of any state. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt to make
any such levy of execution, attachment or other process not in accordance
with the foregoing sentence shall cause the Option to terminate
immediately upon the happening of any such event, and the Recipient shall
lose all rights under this agreement, provided, however, that any such
termination of the Option under the foregoing provisions of this Paragraph
6, will not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
9. Death, Disability or Retirement of Recipient. The Recipient's rights to
exercise this Option upon the death, disability or retirement of the
Recipient are set forth as follows:
(a) If the Recipient ceases to be in Service to the Corporation for a
reason other than permanent disability or death, the Recipient must,
within (2) months after the date of termination of such Service, but
in no event after the Option's stated expiration date, exercise some
or all of the Options that the Recipient was entitled to exercise on
the date the Recipient's Service terminated. All options which have
not vested in accordance with Paragraph 2 will thereafter be void
for all purposes. If the Recipient ceases to be in Service to the
Corporation by reason of permanent disability within the meaning of
section 22(e)(3) of the Internal Revenue Code (as determined by the
Board of Directors), the Recipient will have two (2) months after
the date of termination of Service, but in no event after the stated
expiration date of the Recipient's Options, to exercise Options that
the Recipient was entitled to exercise on the date the Recipient's
Service terminated as a result of the disability.
(b) If a Recipient dies while in the Corporation's Service, any Options
that the Recipient was entitled to exercise on the date of death
will be exercisable within the six-month period following the date
of issuance of letters testamentary or letters of administration of
a deceased Recipient, in the case of the Recipient's death during
his Service to the Corporation's Board, but not later than one year
after the Recipient's death or until the stated expiration date of
the Recipient's Option, whichever occurs first, by the person or
persons ("successors") to whom the Recipient's rights pass under a
will or by the laws of descent and distribution. As soon as
practicable after receipt by the Corporation of such notice and of
payment in full of the Option Price, a certificate or certificates
representing the Optioned Shares shall be registered in the name or
names specified by the successors in the written notice of exercise
and shall be delivered to the successors.
(c) The term "Service" means service as an employee, as an independent
contractor, or an employee of an independent contractor.
10. No Registration Obligation. The Recipient understands that the Option is
not registered under the Securities Act of 1933, as amended (the
"Securities Act") and the Corporation has no obligation to register under
the Securities Act the Option or any of the shares of Common Stock subject
to and issuable upon the exercise of the Option. The Recipient represents
that the Option is being acquired by him for investment and acknowledges
that all certificates for the shares issued upon exercise of the Option
will bear the following legend unless such shares are registered under the
Securities Act prior to their issuance:
The shares of Common Stock evidenced by this certificate
have been issued to the registered owner in reliance
upon written representations that these shares have been
purchased solely for investment. These shares may not be
sold, transferred or assigned unless in the opinion of
the Corporation and its legal counsel such sales,
transfer or assignment will not be in violation of the
Securities Act of 1933, as amended, and the rules and
regulations thereunder.
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The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Securities Act and applicable state laws.
11. Effect of Certain Changes.
(a) If there is any change in the number of shares of outstanding Common
Stock through the declaration of stock dividends, or through a
recapitalization resulting in stock splits or combinations or
exchanges of such shares, the number of shares of Common Stock
available for Options and the number of such shares covered by
outstanding Options, and the exercise price per share of the
outstanding Options, shall be proportionately adjusted by the Board
to reflect any increase or decrease in the number of issued shares
of Common Stock: provided, however, that any fractional shares
resulting from such adjustment shall be eliminated.
(b) In the event of the proposed dissolution or liquidation of the
Corporation, or any corporate separation or division, including, but
not limited to, split-up, split-off or spin-off, or a merger or
consolidation of the Corporation with another corporation, or any
sale or transfer by the Corporation of all or substantially all its
assets or any tender offer or exchange offer for or the acquisition,
directly or indirectly, by any person or group for more than 50% of
the then outstanding voting securities of the Corporation, the Board
may provide that the Recipient shall have the right to exercise such
Option (at its then current Option Price) solely for the kind and
amount of shares of stock and other securities, property, cash or
any combination thereof receivable upon such dissolution,
liquidation, corporate separation or division, merger or
consolidation, sale or transfer of assets or tender offer or
exchange offer, by a Recipient of the number of shares of Common
Stock for which such Option might have been exercised immediately
prior to such dissolution, liquidation, corporate separation or
division, or merger or consolidation: sales or transfer of assets or
tender offer or exchange offer, or in the alternative the Board may
provide that each Option granted herein shall terminate as of a date
fixed by the Board: provided, however, that not less than 30 day's
written notice of the date so fixed shall be given to the Recipient,
who shall have the right, during the period of 30 days preceding
such termination, to exercise the Option.
(c) Paragraph (b) of this Section 11 shall not apply to a merger or
consolidation in which the Corporation is the surviving corporation
and shares of Common Stock are not converted into or exchanged for
stock, securities of any other corporation, cash or any other thing
of value. Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the Corporation
in which the Corporation is the surviving corporation and in which
there is a reclassification or change (including a change which
results in the right to receive cash or other property) of the
shares of Common Stock (other than a change in par value, or from no
par value to par value, or as a result of a subdivision or
combination, but including any change in such shares into two or
more classes or series of shares), the Board may provide that the
Recipient shall have the right to exercise such Option solely for
the kind and amount of shares of stock and other securities
(including those of any direct or indirect Parent of the
Corporation), property, cash or any combination thereof receivable
upon such reclassification, change consolidation or merger by the
Recipient of the number of shares of Common Stock for which Option
might have been exercised.
(d) If there is a change in the Common Stock of the Corporation as
presently constituted, which is limited to a change of all of its
authorized shares with par value into the same number of shares with
a different par value or without par value, the shares resulting
from any such change shall be deemed to be the Common Stock within
the meaning of this Stock Option Agreement.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by the
Board.
(f) Except as expressly provided in this Section 11, the Recipient shall
have no rights by reason of any subdivision or consolidation of
shares of stock of any class or the payment of any stock dividend or
any other increase in the number of shares of stock of any class or
by reason of any dissolution, liquidation, merger, or consolidation
or split-up, split-off, or spin-off of assets or stock of another
corporation; and
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any issue by the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any class, shall not
effect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to this Option. The
grant of this Option shall not affect in any way the right or power of the
Corporation to make adjustments, reclassifications, reorganizations or
changes of its capital or business structures or to merge or consolidate
or to dissolve, liquidate or sell or transfer all or any part of its
business or assets.
12. Notices. Each notice relating to this Agreement will be in writing and
delivered in person or by certified mail to the proper address. Notices to
the Corporation shall be addressed to the Corporation c/o President, eSat,
Inc., 00000 Xxxxxx Xxxx., Xxxx, X, Xxxxxxxx, Xxxxxx, XX 00000. Notices to
the Recipient or other person or persons then entitled to exercise the
Option shall be addressed to the Recipient or such other person or persons
at the Recipient's address specified below. Anyone to whom a notice may be
given under this Agreement may designate a new address by notice to that
effect given pursuant to this Paragraph 12.
13. Approval of Consent. The exercise of the Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall be subject to
approval by the Corporation's counsel of all legal matters in connection
therewith, including compliance with the requirements of the Securities
Act, the Securities Exchange Act of 1934, as amended, applicable state
securities laws, the rules and regulations thereunder, and the
requirements of any national securities exchange or association upon which
the Common Stock than may be listed.
14. Benefits of Agreement. This Agreement will inure to the benefit of and be
binding upon each successor and assign of the Corporation. All obligations
imposed upon the Recipient and all rights granted to the Corporation under
this Agreement will be binding upon the Recipient's heirs, legal
representatives and successors.
15. Governmental and Other Regulations. The exercise of the Option and the
Corporation's obligation to sell and deliver shares upon the exercise of
rights to purchase shares is subject to all applicable federal and state
laws, rules and regulations, and to such approvals by the regulatory or
governmental agency which, in the opinion of counsel for the Corporation,
may be required.
16. Conditions to Exercise. The shares of stock deliverable upon the exercise
of the Option, or any portion thereof, may be either previously authorized
but unissued shares or issued shares which have then been reacquired by
the Company. Such shares shall be fully paid and non-assessable. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of the Option
or portion thereof prior to fulfillment of all of the following
conditions:
(i) The admission of such shares to listing on all stock exchanges, if
any, on which such class of stock is then listed;
(ii) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or
regulations of the Securities and Exchange Commission or any other
governmental regulatory body, which the Corporation shall, in its
absolute discretion, deem necessary or advisable;
(iii) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Corporation shall, in its
absolute discretion, determine to be necessary or advisable;
(iv) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law in connection with the
exercise of the Option; and
(v) The lapse of such reasonable period of time following the exercise
of the Option as the Corporation may from time to time establish for
reasons of administrative convenience.
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This Stock Option Agreement is executed in the name and on behalf of the
Corporation by one of its duly authorized officers and by the Recipient all as
of the date first above written.
ESAT, INC.
By
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The undersigned Recipient understands the terms of this Option
Agreement. The undersigned agrees to comply with the terms and conditions of
this Option Agreement.
Date , 1999 Signature:
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Printed Name:
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Tax ID # (SSN):
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Address:
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