THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXERCISE
OF THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.
NON-STATUTORY STOCK OPTION AGREEMENT
THIS NON-STATUTORY STOCK OPTION AGREEMENT is made as of the
____ day of _____________, 1999 by and between DYNAMIC ASSOCIATES,
INC., a Nevada corporation (hereinafter called "Company"), and
XXXXXX X. XXXXXX (hereinafter called "Optionee").
R E C I T A L S
A. The Board of Directors of the Company has adopted the
Company's 1997 Stock Option Plan (the "Plan") for the purpose of
attracting and retaining the services of selected key employees
(including officers and employee directors) and others
(collectively, "Eligible Persons") who contribute to the financial
success of the Company or its subsidiary corporations.
B. Optionee is an Eligible Person and this Agreement is
executed pursuant to, and is intended to carry out the purposes of,
the Plan in connection with the Company's grant of a stock option
to the Optionee.
C. The granted option is not intended to be an incentive
stock option within the meaning of Section 422 of the Internal
Revenue Code, but is rather a non-statutory option.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. Subject to and upon the terms and
conditions set forth in this Agreement, there is hereby granted to
Optionee, as of the date of this Agreement (the "Grant Date"), a
stock option to purchase up to 1,000,000 shares of the Company's
Common Stock (the "Optioned Shares") from time to time during the
option term at the option price of $______ per share.
2. Plan. The options granted hereunder are subject to the
terms and conditions of the Plan. In the event of any conflict
between this Agreement and the Plan, the provisions of the Plan
shall control. Optionee acknowledges receipt of a copy of the Plan
and hereby accepts this option subject to the terms and conditions
of the Plan, except as set forth above. Optionee agrees to accept
as binding, conclusive and final all decisions or interpretations
of the Board upon any questions arising under the Plan.
3. Option Term. This option shall have a maximum term of
five (5) years measured from the Grant Date and shall accordingly
expire at the close of business on _______________, 2004 (the
"Expiration Date"), unless sooner terminated in accordance with
Paragraph 6.
4. Option Nontransferable; Exception. This option shall be
neither transferable nor assignable by Optionee, either voluntarily
or involuntarily, other than by will or by the laws of descent and
distribution and may be exercised, during Optionee's lifetime, only
by Optionee.
5. Dates of Exercise. The option will vest and become
exercisable with respect to one-third (1/3) of the Option Shares
upon the date hereof with respect to one-third (1/3) of the Option
Shares upon the first (1st) anniversary of the date hereof; and with
respect to the remaining one-third (1/3) of the Option Shares upon
the second (2nd) anniversary of the date hereof. Once exercisable,
options shall remain so exercisable until the expiration or sooner
termination of the option term under Paragraph 6 of this Agreement.
In no event, however, shall this option be exercisable for any
fractional shares.
6. Accelerated Termination of Option Term. The option term
specified in Paragraph 3 shall terminate (and this option shall
cease to be exercisable) prior to the Expiration Date should one of
the following provisions become applicable:
(a) Except as otherwise provided in subparagraphs (b) or (c)
below, should Optionee cease to be a director of the Company
at any time before __________, 2001, then the period for exercising
any then-vested portion of this option shall be reduced to a three
(3)-month period commencing with the date of such cessation of
director status. Upon the expiration of such three (3)-month
period or (if earlier) upon the Expiration Date, this option shall
terminate and cease to be outstanding
(b) Should Optionee die while this option is
outstanding, then the executors or administrators of Optionee's
estate or Optionee's heirs or legatees (as the case may be) shall
have the right to exercise this option for the number of shares (if
any) for which the option is exercisable on the date of the
Optionee's death. Such right shall lapse and this option shall
cease to be exercisable upon the earlier of (i) six (6) months from
the date of the Optionee's death or (ii) the Expiration Date.
(c) Notwithstanding clause (a) above, should Optionee's
status as a director be terminated for cause or should Optionee
make or attempt to make any unauthorized use or disclosure of the
confidential information or trade secrets of the Company or any
subsidiary corporations, then in any such event this option shall
terminate and cease to be exercisable immediately upon such
termination of director status or such unauthorized disclosure or
use of confidential or secret information or attempt thereat.
7. Adjustment in Option Shares.
(a) In the event any change is made to the Common Stock
issuable under the Plan by reason of any stock split, stock
dividend, combination of shares, or other change affecting the
outstanding Common Stock as a class without receipt of
consideration (as set forth in the Plan),
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then appropriate adjustments will be made to (i) the total number
of Optioned Shares subject to this option and (ii) the option price
payable per share in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
(b) If the Company is the surviving entity in any merger
or other business combination, then this option, if outstanding
under the Plan immediately after such merger or other business
combination shall be appropriately adjusted to apply and pertain to
the number and class of securities to which Optionee immediately
prior to such merger or other business combination would have been
entitled to receive in the consummation of such merger or other
business combination.
8. Special Adjustments to Option.
(a) In the event of one or more of the following
transactions (a "Corporate Transaction"):
(i) a merger or acquisition in which the Company
is not the surviving entity, except for a transaction the principal
purpose of which is to change the name or state of the
incorporation of the Company;
(ii) the sale, transfer or other disposition of all
or substantially all of the assets of the Company; or
(iii) any other corporate reorganization or
business combination in which fifty percent (50%) or more of the
Company's outstanding voting stock is transferred; or exchanged
through merger, to different holders in a single transaction or a
series of related transactions;
then this option shall continue to be exercisable, and if not fully
exercised prior to the Corporate Transaction, will be assumed by
the successor corporation or parent thereof. If so assumed, this
option shall be appropriately adjusted to apply and pertain to the
number and class of securities to which Optionee immediately prior
to the Corporation Transaction would have been entitled to receive
in the consummation of such Corporation Transaction. The Company
shall provide Optionee with at least thirty (30) days prior written
notice of the specified date for the Corporate Transaction.
(b) This Agreement shall not in any way affect the right
of the Company to make changes in its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer
all or any part of its business or assets.
9. Privilege of Stock Ownership. The holder of this option
shall not have any of the rights of a shareholder with respect to
the Optioned Shares until such individual shall have exercised the
option and paid the option price in accordance with this Agreement.
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10. Manner of Exercising Option.
(a) In order to exercise this option with respect to all
or any part of the Optioned Shares for which this option is at the
time exercisable, Optionee (or in the case of exercise after
Optionee's death, Optionee's executor, administrator, heir or
legatee, as the case may be) must take the following actions:
(i) Execute and deliver to the Secretary of the
Company a stock purchase agreement in substantially the form of
Exhibit A to this Agreement (the "Purchase Agreement");
(ii) Pay the aggregate option price for the
purchased shares in cash, Company common stock, one-year promissory
notes bearing six percent (6%) annual interest, any combination
thereof, or such other form of consideration as permitted under the
Plan.
(b) This option shall be deemed to have been exercised
with respect to the number of Optioned Shares specified in the
Purchase Agreement at such time as the executed Purchase Agreement
for such shares shall have been delivered to the Company and all
other conditions of this Section have been fulfilled. Payment of
the option price shall immediately become due and shall accompany
the Purchase Agreement. As soon thereafter as practical, the
Company shall mail or deliver to Optionee or to the other person or
persons exercising this option a certificate or certificates
representing the shares so purchased and paid for.
11. Compliance With Laws and Regulations.
(a) The exercise of this option and the issuance of
Optioned Shares upon such exercise shall be subject to compliance
by the Company and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock
exchange on which shares of the Company's Common Stock may be
listed at the time of such exercise and issuance.
(b) In connection with the exercise of this option,
Optionee shall execute and deliver to the Company such
representations in writing as may be reasonably requested by the
Company in order for it to comply with the applicable requirements
of federal and state securities laws.
12. Successors and Assigns. Except to the extent otherwise
provided in Paragraph 4 or 8(b), the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors,
administrators, heirs, legal representatives and assigns of
Optionee and the successors and assigns of the Company.
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13. Liability of Company.
(a) If the Optioned Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock
which may without shareholder approval be issued under the Plan,
then this option shall be void with respect to such excess shares
unless shareholder approval of an amendment sufficiently increasing
the number of shares of Common Stock issuable under the Plan is
obtained in accordance with the provisions of Section 18 of the
Plan.
(b) The inability of the Company to obtain approval from
any regulatory body having authority deemed by the Company to be
necessary to the lawful issuance and sale of any Common Stock
pursuant to this option without the imposition of requirements
unacceptable to the Company in its reasonable discretion shall
relieve the Company of any liability with respect to the
nonissuance or sale of the Common Stock as to which such approval
shall not have been obtained. The Company, however, shall use its
best efforts to obtain all such approvals.
14. No Employment Contract. Except to the extent the terms
of any written employment contract between the Company and Optionee
may expressly provide otherwise, the Company (or any subsidiary
corporation of the Company employing Optionee) shall be under no
obligation to employ or continue the employment of Optionee for any
period of specific duration and may terminate Optionee's status as
an employee at any time, with or without cause.
15. Notices. Any notice required to be given or delivered to
the Company under the terms of this Agreement shall be in writing
and addressed to the Company in care of its Secretary at its
corporate offices. Any notice required to be given or delivered to
Optionee shall be in writing and addressed to Optionee at the
address indicated below Optionee's signature line on this Agreement
(as such address may be changed from time to time upon notice by
Optionee). All notices shall be deemed to have been given or
delivered upon personal delivery or upon deposit in the U.S. mail,
postage prepaid and properly addressed to the party to be notified.
16. Loans or Guarantees. The Company may, in its absolute
discretion and without any obligation to do so, assist Optionee in
the exercise of this option by (i) authorizing the extension of a
loan to Optionee from the Company, (ii) permitting Optionee to pay
the option price for the purchased Common Stock in installments
over a period of years, or (iii) authorizing a guarantee by the
Company of a third party loan to Optionee. The terms of any loan,
installment method of payment or guarantee (including the interest
rate, the collateral requirements and terms of repayment) shall be
established by the Company in its sole discretion.
17. Construction. This Agreement and the option evidenced
hereby are made and granted pursuant to the Plan and, subject to
express provisions to the contrary contained herein, are in all
respects limited by and subject to the express terms and provisions
of the Plan. All decisions of the Company with respect to any
question or issue arising under the Plan or this Agreement shall be
conclusive and binding on all persons having an interest in this
option.
18. Governing Law. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the
State of Nevada.
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IN WITNESS WHEREOF, the Company has caused this Non-statutory
Stock Option Agreement to be executed in duplicate on its behalf by
its duly authorized officer and Optionee has also executed this
Agreement in duplicate, all as of the day and year indicated above.
DYNAMIC ASSOCIATES, INC.,
a Nevada corporation
By: ___________________________
Title: ___________________________
____________________________________
XXXXXX X. XXXXXX, Optionee
Address:___________________________
___________________________
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