STOCK OPTION AGREEMENT
Exhibit 10.7
Option Agreement between Skye and Sundance Financial Corp.
THIS
STOCK OPTION AGREEMENT (this "Agreement"), dated as of February 11,
2004,
(the "Grant Date"), is between Tankless Systems Worldwide, Inc., a Nevada
corporation (the "Company"), and Sundance Financial Corporation, a Turks
and
Caicos Company (the "Grantee").
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1.
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Grant
of Option, Exercise Price and Term.
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(a) The
Company irrevocably grants to the Grantee and Grantee is entitled, subject
to
the terms and conditions set forth in this Stock Option Agreement (the
"Option")
to purchase Three Hundred Thousand (300,000) fully paid, duly authorized
and
nonassessable shares of common stock, $0.001 par value per share, of
the Company
(the "Option Shares") from the Company, at any time commencing from the
date
hereof and continuing for five (5) years from the date hereof, (the “Exercise
Period”) at an exercise price of Fifty cents ($0.50 U.S.) per Share (the
“Exercise Price”), subject to adjustment pursuant to Section 8
hereof
(b) The
term
of this Option shall be a period of five (5) years from the Grant Date
(the
"Option Period"). During the Option Period, the Option shall be fully
vested.
(c) The
Option shall be fully exercisable as of the Grant Date.
(d) The
Company shall not be required to issue any fractional shares of Stock.
2. Method
of Exercise.
Subject
to the provisions of this Section, the Stock Options may be exercised,
in whole
or in part, at any time during the option term by giving written notice
of
exercise to the Company, in form satisfactory to the Company, specifying
the
number of shares of Stock subject to the Stock Option to be purchased
and the
aggregate Exercise Price for such shares, together with payment in full
of such
aggregate Exercise Price. The Exercise Price of any Stock Option shall
be paid
in full in cash (by cash, certified or bank check, wire transfer, or
any
combination thereof, or such other instrument as the Company may accept).
The
Option may not be exercised unless the Grantee (a) enters into any document
(a
"Private Issuance Document") the Company determines necessary to ensure
that the
Option Shares are issued pursuant to an available exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and applicable state securities laws, and (b) there
has been
compliance with all the preceding provisions of this Section 2. For all
purposes
of this Stock Option Agreement, the date of the exercise of the Option
shall be
the date upon which there is compliance with all such requirements.
3. Common
Stock to be Issued. Subject
to the terms of this Option Agreement, upon notice of exercise any portion
of
the Option and payment of such Exercise Price as aforesaid, the Company
shall
promptly issue and cause to be delivered to the Grantee or to such person
or
persons as the Grantee may designate in writing, a certificate or certificates
(in such name or names as the Grantee may designate in writing) for the
number
of duly authorized, fully paid and non-assessable whole Shares to be
purchased
upon the exercise of this Option, and shall deliver to the Grantee Common
Stock.
This Option shall be exercisable, at the sole election of the Grantee,
either in
full or from time to time in part and, in the event that any certificate
evidencing this Option (or any portion thereof) is exercised prior to
the
Termination Date with respect to less than all of the Shares specified
therein
at any time prior to the Termination Date, a new certificate of like
tenor
evidencing the remaining portion of this Option shall be issued by the
Company,
if so requested by the Grantee.
4. Transfer
Agent. Upon
the
Company’s receipt of a facsimile or original of Grantee’s signed Election to
Exercise Option, the Company shall instruct its transfer agent to issue
one or
more stock Certificates representing that number of shares of Common
Stock which
the Grantee is entitled to purchase in accordance with the terms and
conditions
of this Option and the Election to Exercise Option.
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5. Shareholder
of Record. Each
person in whose name any certificate for shares of Common Stock shall
be issued
shall for all purposes be deemed to have become the holder of record
of the
Common Stock represented thereby on the date on which the Option was
exercised
and payment of the purchase price and any applicable taxes was made,
irrespective of date of issue or delivery of such certificate, except
that if
the date of such exercise and payment is a date when the Shares transfer
books
of the Company are closed, such person shall be deemed to have become
the holder
of such Shares on the next succeeding date on which such Share transfer
books
are open. The Company shall not close such Share transfer books at any
one time
for a period longer than seven (7) days.
6. Actions;
Costs.
It
shall be the Company’s responsibility to take all necessary actions and to bear
all such costs to issue the certificate of Common Stock as provided herein,
including the responsibility and cost for delivery of an opinion letter
to the
transfer agent, if so required, and any documentary stamp taxes if any,
attributable to the initial issuance of the Shares. The person in whose
name the
certificate of Common Stock is to be registered shall be treated as a
shareholder of record on and after the exercise date. Upon exercise of
any
portion of the Option that is to be exercised in part, the Company shall
issue
to the Grantee a written acknowledgment of the number of Shares that
remain
available under the Option, if so requested by Grantee.
7. Payment
of Withholding Taxes.
If the
Company is obligated to withhold an amount on account of any tax imposed
as a
result of the exercise of the Option, the Grantee shall be required to
pay such
amount to the Company, as provided in the Plan. The Grantee acknowledges
and
agrees that the Grantee is responsible for the tax consequences associated
with
the grant of the Option and its exercise.
8. Adjustment
of Common Stock Price, Exercise Price and the Number of Shares.
The
number and kind of securities purchasable upon the exercise of this Option
and
the Exercise Price shall be subject to adjustment from time to time after
the
date hereof upon the happening of certain events, as follows:
8.1 Adjustments.
The
number of Shares purchasable upon the exercise of this Option shall be
subject
to adjustments as follows:
(a) In
case
the Company shall (i) pay a dividend on Common Stock in Common Stock
or
securities convertible into, exchangeable for or otherwise entitling
a holder
thereof to receive Common Stock, (ii) declare a dividend payable in cash
on its
Common Stock and at substantially the same time offer its shareholders
a right
to purchase new Common Stock (or securities convertible into, exchangeable
for
or other entitling a holder thereof to receive Common Stock) from the
proceeds
of such dividend (all Common Stock so issued shall be deemed to have
been issued
as a stock dividend), (iii) subdivide its outstanding shares of Common
Stock
into a greater number of shares of Common Stock, or (iv) issue by
reclassification of its Common Stock any shares of Common Stock of the
Company,
the number of shares of Common Stock issuable upon exercise of the Options
immediately prior thereto shall be adjusted so that the holders of the
Options
shall be entitled to receive after the happening of any of the events
described
above that number and kind of shares as the holders would have received
had such
Options been converted immediately prior to the happening of such event
or any
record date with respect thereto.
(b) In
case
the Company shall distribute, without receiving consideration therefor,
to all
holders of its Common Stock evidences of its indebtedness or assets (excluding
cash dividends other than as described in Section (8)(a)(ii)), then in
such
case, the number of shares of Common Stock thereafter issuable upon exercise
of
the Options shall be determined by multiplying the number of shares of
Common
Stock theretofore issuable upon exercise of the Options, by a fraction,
of which
the numerator shall be the closing bid price per share of Common Stock
on the
record date for such distribution, and of which the denominator shall
be the
closing bid price of the Common Stock less the then fair value (as determined
by
the Board of Directors of the Company, whose determination shall be conclusive)
of the portion of the assets or evidences of indebtedness so distributed
per
share of Common Stock. Such adjustment shall be made whenever any such
distribution is made and shall become effective immediately after the
record
date for the determination of stockholders entitled to receive such
distribution.
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(c) Any
adjustment in the number of shares of Common Stock issuable hereunder
otherwise
required to be made by this Section 8 will not have to be adjusted if
such
adjustment would not require an increase or decrease in one percent (1%)
or more
in the number of shares of Common Stock issuable upon exercise of the
Option. No
adjustment in the number of Shares purchasable upon exercise of this
Option will
be made for the issuance of shares of capital stock to directors, employees
or
independent Optionors pursuant to the Company’s or any of its subsidiaries’
stock option, stock ownership or other benefit plans or arrangements
or trusts
related thereto or for issuance of any shares of Common Stock pursuant
to any
plan providing for the reinvestment of dividends or interest payable
on
securities of the Company and the investment of additional optional amounts
in
shares of Common Stock under such plan.
(d) Whenever
the number of shares of Common Stock issuable upon the exercise of the
Options
is adjusted, as herein provided, the Exercise Price shall be adjusted
(to the
nearest cent) by multiplying such Exercise Price immediately prior to
such
adjustment by a fraction, of which the numerator shall be the number
of shares
of Common Stock issuable upon the exercise of each share of the Options
immediately prior to such adjustment, and of which the denominator shall
be the
number of shares of Common Stock issuable immediately thereafter.
(e) The
Company from time to time by action of its Board of Directors may decrease
the
Exercise Price by any amount for any period of time if the period is
at least
twenty (20) days, the decrease is irrevocable during the period and the
Board of
Directors of the Company in its sole discretion shall have made a determination
that such decrease would be in the best interest of the Company, which
determination shall be conclusive. Whenever the Exercise Price is decreased
pursuant to the preceding sentence, the Company shall mail to holders
of record
of the Options a notice of the decrease at least fifteen (15) days prior
to the
date the decreased Exercise Price takes effect, and such notice shall
state the
decreased Exercise Price and the period it will be in effect.
(f) Price/Share
Adjustment. Except as provided in the last sentence of this Paragraph
8.1(f), if
at any time during the first two (2) years of the term of this Option
Agreement,
the Company enters into any NEW Stock, Option or Option Agreement(s),
for a
price that is LOWER
than the
Exercise Price of this Option, which is Fifty cents ($0.50 U.S.) per
Share, then
all Options represented by this Agreement shall be lowered by the Company
to
reflect the NEW lower Common Stock and Exercise Price, to be equal to
the lower
NEW Stock, Option or Exercise Price of such Agreement. Notwithstanding
any other
provision of this Paragraph 8.1(f) to the contrary, no adjustment to
either
price or number of shares shall be made or required by occasion of (i)
the grant
or issuance of any stock, stock option, stock Option, stock appreciation
right
or other similar benefit relating to securities to any existing officer,
director or employee or to any other person as an inducement to become
an
officer, director or employee, or to any person rendering services to
the
Company in connection with a consulting agreement, whether such grant
or
issuance is in respect of stock restricted under Section 144 or otherwise
the
subject of a Registration Statement filed with the SEC under Form S-8
or its
equivalent, or (ii) any adjustment required pursuant to the other provisions
of
this Section 8.
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8.2 Mergers,
Etc.
In the
case of any (i) consolidation or merger of the Company into any entity
(other
than a consolidation or merger that does not result in any reclassification,
exercise, exchange or cancellation of outstanding shares of Common Stock
of the
Company), (ii) sale, transfer, lease or conveyance of all or substantially
all
of the assets of the Company as an entirety or substantially as an entirety,
or
(iii) reclassification, capital reorganization or change of the Common
Stock
(other than solely a change in par value, or from par value to no par
value), in
each case as a result of which shares of Common Stock shall be converted
into
the right to receive stock, securities or other property (including cash
or any
combination thereof), each holder of Options then outstanding shall have
the
right thereafter to exercise such Option only into the kind and amount
of
securities, cash and other property receivable upon such consolidation,
merger,
sale, transfer, capital reorganization or reclassification by a holder
of the
number of shares of Common Stock of the Company into which such Options
would
have been converted immediately prior to such consolidation, merger,
sale,
transfer, capital reorganization or reclassification, assuming such holder
of
Common Stock of the Company (A) is not an entity with which the Company
consolidated or into which the Company merged or which merged into the
Company
or to which such sale or transfer was made, as the case may be (“constituent
entity”), or an affiliate of a constituent entity, and (B) failed to exercise
his or her rights of election, if any, as to the kind or amount of securities,
cash and other property receivable upon such consolidation, merger, sale
or
transfer (provided that if the kind or amount of securities, cash and
other
property receivable upon such consolidation, merger, sale or transfer
is not the
same for each share of Common Stock of the Company held immediately prior
to
such consolidation, merger, sale or transfer by other than a constituent
entity
or an affiliate thereof and in respect of which such rights or election
shall
not have been exercised (“non-electing share”), then for the purpose of this
Section 8.2 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, sale or transfer by each
non-electing share shall be deemed to be the kind and amount so receivable
per
share by a plurality of the non-electing shares). If necessary, appropriate
adjustment shall be made in the application of the provision set forth
herein
with respect to the rights and interests thereafter of the holder of
Options, to
the end that the provisions set forth herein shall thereafter correspondingly
be
made applicable, as nearly as may reasonably be, in relation to any shares
of
stock or other securities or property thereafter deliverable on the exercise
of
the Options. The above provisions shall similarly apply to successive
consolidations, mergers, sales, transfers, capital reorganizations and
reclassifications. The Company shall not effect any such consolidation,
merger,
sale or transfer unless prior to or simultaneously with the consummation
thereof
the successor company or entity (if other than the Company) resulting
from such
consolidation, merger, sale or transfer assumes, by written instrument,
the
obligation to deliver to the holder of Options such shares of stock,
securities
or assets as, in accordance with the foregoing provision, such holder
may be
entitled to receive under this Section 8.2.
9. Changes
in Company's Capital Structure.
The
existence of the Option will not affect in any way the right or authority
of the
Company or its stockholders to make or authorize
(a) any
adjustment, recapitalization, reorganization or other changes in the
Company's
capital structure or its business;
(b) any
acquisition, merger or consolidation of the Company;
(c) any
issuance of bonds, debentures, preferred or prior preference stock ahead
of or
affecting the Stock or the rights thereof;
(d) the
dissolution or liquidation of the Company;
(e) any
sale
or transfer of all or any part of the Company's assets or business; or
(f) any
other
corporate act or proceeding, whether of a similar character or otherwise.
10. Employment
Rights.
No
provision of this Agreement or of the Option granted hereunder shall
give the
Grantee any right to continue in the employ of the Company or any Affiliate
of
the Company, create any inference as to the length of employment of the
Grantee,
affect the right of the Company or any Affiliate of the Company to terminate
the
employment of the Grantee, with or without Cause, or give the Grantee
any right
to participate in any employee welfare or benefit plan or other program
of the
Company or any Affiliate of the Company.
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11. No
Rights as Stockholders: Notices to Grantees. Nothing
contained in this Option shall be construed as conferring upon the Grantee
or
its transferees any rights as a stockholder of the Company, including
the right
to vote, receive dividends, consent or receive notices as a stockholder
with
respect to any meeting of stockholders for the election of directors
of the
Company or any other matter. If, however, at any time prior to the expiration
of
the Option Period and prior to the exercise of this Option, any of the
following
events shall occur:
(a) any
action which would require an adjustment pursuant to Section 8.1;
or
(b) a
dissolution, liquidation or winding up of the Company or any consolidation,
merger or sale of its property, assets and business as an entirety; then
in any
one or more of said events, the Company shall give notice in writing
of such
event to the Grantee at least ten (10) days prior to the date fixed as
a record
date or the date of closing the transfer books for the determination
of the
shareholders entitled to any relevant dividend, distribution, subscription
rights, or other rights or for the effective date of any dissolution,
liquidation of winding up or any merger, consolidation, or sale of substantially
all assets, but failure to mail or receive such notice or any defect
therein or
in the mailing thereof shall not affect the validity of any such action
taken.
Such notice shall specify such record date or the effective date, as
the case
may be.
12. Obligation
to Register.
Grantee
acknowledges and agrees that the Company does not have any present intention
and
is under no obligation to register the Option Shares under the Securities
and
Exchange Act of 1933 or applicable state securities laws.
13. Piggy-Back
Registration Rights. The
Company hereby gives the Undersigned unlimited Piggy-Back Registration
Rights
under this Option Agreement. If at any time the Company proposes to file
with
the SEC a Registration Statement relating to an offering for its own
account or
the account of others under the 1933 Act of any of its securities (other
than on
Form S-4 or Form S-8 or their then equivalents relating to securities
to be
issued solely in connection with any acquisition of any entity or business
or
equity securities issuable in connection with stock option or other employee
benefit plans) the Company shall promptly send to Grantee written notice
of the
Company’s intention to file a Registration Statement and of Grantee’s rights
under this Section 13 and, if within twenty (20) days after receipt of
such
notice, Grantee shall so request in writing, the Company shall include
in such
Registration Statement all or any part of the Registrable Securities
Grantee
requests to be registered. No right to registration of Registrable Securities
under this Section 13 shall be construed to limit any registration. If
an
offering in connection with which Grantee is entitled to registration
under this
Section 13 is an underwritten offering, then Grantee whose Registrable
Securities are included in such Registration Statement shall, unless
otherwise
agreed by the Company, offer and sell such Registrable Securities in
an
underwritten offering using the same underwriter or underwriters and,
subject to
the provisions of this Agreement, on the same terms and conditions as
other
shares of Common Stock included in such underwritten offering.
14. Miscellaneous.
14.1 Benefits
of this Agreement.
Nothing
in this Option shall be construed to give to any person or corporation
other
than the Company and the Grantee any legal or equitable right, remedy
or claim
under this Option, and this Option shall be for the sole and exclusive
benefit
of the Company and the Grantee.
14.2 Rights
Cumulative; Waivers.
The
rights of each of the parties under this Option are cumulative. The rights
of
each of the parties hereunder shall not be capable of being waived or
varied
other than by an express waiver or variation in writing. Any failure
to exercise
or any delay in exercising any of such rights shall not operate as a
waiver or
variation of that or any other such right. However, the Grantee may waive
a
default and its consequences. Any defective or partial exercise of any
of such
rights shall not preclude any other or further exercise of that or any
other
such right. No act or course of conduct or negotiation on the part of
any party
shall in any way preclude such party from exercising any such right or
constitute a suspension or any variation of any such right.
14.3 Benefit;
Successors Bound.
This
Option and the terms, covenants, conditions, provisions, obligations,
undertakings, rights, and benefits hereof, shall be binding upon, and
shall
inure to the benefit of, the parties hereto and their heirs, executors,
administrators, representatives, successors, and permitted assigns.
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14.4 Entire
Agreement.
This
Option contains the entire agreement between the parties with respect
to the
subject matter hereof. There are no promises, agreements, conditions,
undertakings, understandings, warranties, covenants or representations,
oral or
written, express or implied, between them with respect to this Option
or the
matters described in this Option, except as set forth in this Option.
Any such
negotiations, promises, or understandings shall not be used to interpret
or
constitute this Option.
14.5 Assignment.
This
Option may be assigned, in whole or in part, by Assignment of Option
completed,
executed and delivered to the Company.
14.6 Amendment.
This
Option may be amended only by an instrument in writing executed by the
parties
hereto.
14.7 Severability.
Each
part of this Option is intended to be severable. In the event that any
provision
of this Option is found by any court or other authority of competent
jurisdiction to be illegal or unenforceable, such provision shall be
severed or
modified to the extent necessary to render it enforceable and as so severed
or
modified, this Option shall continue in full force and effect.
14.8 Notices.
Notices
required or permitted to be given hereunder shall be in writing and shall
be
deemed to be sufficiently given when personally delivered (by hand, by
courier,
by telephone line facsimile transmission, receipt confirmed, or other
means) or
sent by certified mail, return receipt requested, properly addressed
and with
proper postage pre-paid (i) if to the Company, at its executive office
(ii) if
to the Grantee, at the address set forth under its name in the subscription
agreement for this Option, with a copy to its designated attorney and
(iii) if
to any other Grantee, at such address as such Grantee shall have provided
in
writing to the Company, or at such other address as each such party furnishes
by
notice given in accordance with this section, and shall be effective,
when
personally delivered, upon receipt and, when so sent by certified mail,
four (4)
business days after deposit with the United States Postal Service.
14.9 Governing
Law.
This
Agreement shall be governed by the interpreted in accordance with the
laws of
the State of Arizona without reference to its conflicts of laws rules
or
principles.
14.10 Forum
Selection and Consent to Jurisdiction.
Any
litigation based thereon, or arising out of, under, or in connection
with, this
agreement or any course of conduct, course of dealing, statements (whether
oral
or written) or actions of the Company or Grantee shall be brought and
maintained
exclusively in the federal courts of the State of Arizona without reference
to
its conflicts of laws rules or principles. The Company hereby expressly
and
irrevocably submits to jurisdiction exclusively with the federal Courts
of the
State of Arizona for the purpose of any such litigation as set forth
above and
irrevocably agrees to be bound by any final judgment rendered thereby
in
connection with such litigation. The Company further irrevocably consents
to the
service of process by registered mail, postage prepaid, or by personal
service
within or without the State of Arizona. The Company hereby expressly
and
irrevocably waives, to the fullest extent permitted by law, any objection
which
it may have or hereafter may have to the laying of venue of any such
litigation
brought in any such court referred to above and any claim that any such
litigation has been brought in any inconvenient forum. To the extent
that the
Company has or hereafter may acquire any immunity from jurisdiction of
any court
or from any legal process (whether through service or notice, attachment
prior
to judgment, attachment in aid of execution or otherwise) with respect
to itself
or its property. The Company hereby irrevocably waives such immunity
in respect
of its obligations under this agreement and the other loan
documents.
14.11 Waiver
of Jury Trial. The
Grantee and the Company hereby knowingly, voluntarily and intentionally
waive
any rights they may have to a trial by jury in respect of any litigation
based
hereon, or arising out of, under, or in connection with, this agreement,
or any
course of conduct, course of dealing, statements (whether oral or written)
or
actions of the Grantee or the Company. The Company acknowledges and agrees
that
it has received full and sufficient consideration for this provision
and that
this provision is a material inducement for the Grantee entering into
this
agreement.
14.12 Consents.
The
person signing this Option on behalf of the Company hereby represents
and
Options that he has the necessary power, consent and authority to execute
and
deliver this Option on behalf of the Company.
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14.13 Further
Assurances.
In
addition to the instruments and documents to be made, executed and delivered
pursuant to this Option, the parties hereto agree to make, execute and
deliver
or cause to be made, executed and delivered, to the requesting party
such other
instruments and to take such other actions as the requesting party may
reasonably require to carry out the terms of this Option and the transactions
contemplated hereby.
14.14 14.14 Section
Headings.
The
Section headings in this Option are for reference purposes only and shall
not
affect in any way the meaning or interpretation of this Option.
14.15 Construction.
Unless
the context otherwise requires, when used herein, the singular shall
be deemed
to include the plural, the plural shall be deemed to include each of
the
singular, and pronouns of one or no gender shall be deemed to include
the
equivalent pronoun of the other or no gender.
IN
WITNESS WHEREOF, the parties have caused this Option to be duly executed,
all as
of the day and year first above written.
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Tankless
Systems Worldwide, Inc.
|
Sundance Financial Corporation | ||
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxxxx X. Xxxxxxx | ||
|
Xxxxxx Xxxxxxxx, Chief Executive Officer |
Xxxxxxxx X. Xxxxxxx, President |
||
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AMENDMENT
TO
THIS
AGREEMENT (“Amendment”), is between Tankless Systems Worldwide, Inc., a Nevada
corporation (the "Company"), and Sundance Financial Corporation, a Turks
and
Caicos Company (the "Grantee").
WHEREAS,
the Grantee and the Company are parties to that one certain Stock Option
Agreement dated February 11, 2004 (the “Option Agreement”); and
WHEREAS,
by amendment even date herewith to the Consulting Agreement between the Company
and Grantee, dated February 1, 2004, the parties have agreed to extend the
period of time in which Grantee shall have the right to exercise its rights
pursuant to the Option Agreement;
NOW,
THEREFORE, in consideration of the foregoing and the covenants contained
herein,
the parties hereto hereby agree as follows:
1. Paragraphs
1(a) and 1(b) of the Option Agreement shall be amended to provide that the
Exercise Period and the Option Period, as those terms are defined respectively
therein, shall be extended five additional years from the Grant Date, for
a
total of ten (10) years, each such period to end on February 11,
2014.
2. Except
as
expressly provided in this Amendment, the terms and conditions of the Option
Agreement shall remain as originally agreed and in full force and effect.
In the
event of any conflict between the provisions of this Amendment and the Option
Agreement, the terms and provisions of this Amendment shall
prevail.
EXECUTED
effective the 6th
day
of
September, 2005
|
TANKLESS
SYSTEMS WORLDWIDE, INC.
a Nevada corporation
|
SUNDANCE
FINANCIAL CORPORATION
a Turks and Caicos corporation
|
||
| /s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxxxx X. Xxxxxxx | ||
|
Xxxxxx Xxxxxxxx, Chief Executive Officer |
Xxxxxxxx X. Xxxxxxx, President |
||
