NONINCENTIVE STOCK OPTION AGREEMENT
THIS NONINCENTIVE STOCK OPTION AGREEMENT ("Agreement") is entered into as
of July 1, 2001, by and between Cadapult Graphic Systems, Inc., a Delaware
corporation (the "Company"), and Xxxxxxx X. Xxxxx (the "Optionee").
R E C I T A L S
Whereas, Optionee is a valuable employee of the Company, and the Company
considers it desirable and in its best interest that the terms of options to
purchase shares of the Company's common stock, par value $.001 per share (the
"Common Stock") previously granted to Optionee pursuant to an amended employment
agreement dated as of September 1, 1998 (the "Employment Agreement") be set
forth in writing;
Whereas, Optionee was previously granted options to advance the interests
of the Company ;
Whereas, this Agreement supercedes any previously issued Option Agreement
concerning the subject matter herein;
A G R E E M E N T
It is hereby agreed as follows:
1. GRANT OF OPTIONS. Optionee has been granted the right, privilege, and
option to purchase up to 500,000 shares of Common Stock at the purchase price
equal to the fair market value of the Company's common stock ($1.375 per share
(the "Options") on the date of the Employment Agreement, in the manner and
subject to the conditions hereinafter provided. The time the Options shall be
deemed granted, sometimes referred to herein as the "date of grant," shall be
the date of the Employment Agreement. These Options will vest upon the
achievement of certain corporate earnings milestones as set forth in the
Employment Agreement, which provided that Options to purchase 125,000 shares
shall vest following the first fiscal year end in which the Company's EBITDA
exceeds $500,000; additional options to purchase 125,000 additional shares shall
vest following the first fiscal year end in which the Company's EBITDA exceeds
$1,000,000; additional options to purchase 125,000 additional shares shall vest
following the first fiscal year end in which the Company's EBITDA exceeds
$1,500,000; and additional options to purchase 125,000 additional shares shall
vest following the first fiscal year end in which the Company's EBITDA exceeds
$2,000,000. These Options are cumulative and are subject to anti-dilution
rights, as more fully set forth in Section 12 below. As of July 1, 2001, Options
to purchase 250,000 shares vested due to the achievement of the first two
vesting criteria in the 2000 fiscal year.
2. CONDITION OF CONTINUED SERVICES TO THE COMPANY. The Options are subject
to certain conditions of continued service of the Optionee by the Company. In
the event the Optionee's employment with the Company is terminated, at any time,
for whatever reason, all Options which have not vested as of the Optionee's
termination of service date in accordance with the vesting schedule set forth
herein shall be immediately forfeited upon such termination. In the event the
Optionee's employment with the Company is terminated, at any time, for whatever
reason, all vested but unexercised Options and rights to such Options shall be
forfeited on the one hundred and eightieth (180th) day after the date of
termination of employment. Nothing contained in this Agreement shall obligate
the Company to employ or have another relationship with the Optionee.
3. OPTION PERIOD. Provided such Options have vested in accordance with the
award schedule set forth in Section 2 above, Options shall be exercisable at any
time during the period commencing with the date of this Agreement and expiring
on the date five (5) years from the date of the Employment Agreement, unless
earlier terminated pursuant to Section 2 or Section 14 of this Agreement, or if
said day is a day on which banking institutions are authorized by law to close,
then on the next succeeding day which shall not be such a day, by presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, together with all Federal and state taxes applicable upon such
exercise, if any.
4. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each share
which the Optionee is entitled to purchase under the Options shall be $1.375 per
Share.
5. METHOD OF EXERCISE. The Options shall be exercisable by the Optionee by
giving written notice to the Company of the election to purchase and of the
number of Shares the Optionee elects to purchase, such notice to be accompanied
by such other executed instruments or documents as may be required by the Board
of Directors pursuant to this Agreement, and unless otherwise directed by the
Board of Directors, the Optionee shall at the time of such exercise tender the
purchase price of the Shares he has elected to purchase. The Optionee may
purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than One Hundred (100) Shares. If the Optionee shall not purchase all of the
Shares which he is entitled to purchase under the Options, his right to purchase
the remaining unpurchased Shares shall continue until expiration of the Options.
The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
6. PAYMENT OF PURCHASE PRICE. At the time of the Optionee's notice of
exercise of the Options, the Optionee shall tender in cash or by certified or
bank cashier's check payable to the Company, the purchase price for all Shares
then being purchased. Nothwithstanding the foregoing, cashless exercise of the
Options is specifically permitted. If authorized by the Company's Board of
Director, alternative means of payment, including by means of a promissory note,
an advance from the Company, or other means, is permitted.
7. ISSUANCE OF STOCK CERTIFICATES. Upon receipt of the materials delivered
by the Optionee indicating exercise of the Options, the Company shall, as
promptly as practicable and in any event within five (5) business days
thereafter, execute and deliver, or cause to be executed and delivered, to the
Optionee a certificate or certificates representing the aggregate number of
Shares specified in such notice or form together with cash in lieu of any
fractional share as hereinafter provided. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified in
such notice or form and shall be registered in the name of the Optionee or such
other name as shall be designated (together with an address) in such notice or
form. Such certificate(s) shall be deemed to have been issued and the Optionee
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such Shares as of the exercise date. The Company
shall pay all expenses and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this Section
except that, in the case such share certificates shall be registered in a name
or names other than the name of the Optionee, funds sufficient to pay all share
transfer taxes which shall be payable upon issuance of such share certificate or
certificates shall be paid by the Optionee at the time the notice of exercise
hereinabove is delivered to the Company.
8. SHARES FULLY PAID. All Shares shall be, when issued, duly authorized,
validly issued and non-assessable.
9. NO IMPAIRMENT. The Company will not, by amendment of its charter or
though reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Options, but will
at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Optionee of the Options against impairment.
Notwitstanding the foregoing, in the event of a "change of control" as defined
in the Employment Agreement, the Options shall vest immediately in their
entirety.
10. RESERVATION OF SHARES. The Company hereby agrees that, during the time
period the Options are exercisable, there shall be reserved for issuance and/or
delivery upon exercise of the Options such number of shares of its common stock
as shall be required for issuance or delivery upon exercise of the Options.
11. FRACTIONAL SHARES. With respect to any fraction of a Share called for
upon any exercise hereof, the Optionee agrees to waive the Optionee's right to
such fractional Shares. As such, no fractional Shares or scrip representing
fractional Shares shall be issued upon the exercise of the Options.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding shares of
the Company are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. The term "Adjustment Event" shall also mean to
include: (i) any issuance by the Company of the Company's securities (excluding
securities issued to the Company's employees, directors, consultants and others
similarly situtated) below fair market value for such securities as determined
at the time of issuance; and (ii) any issuance at a price below the purchase
price per Share for the common stock underlying the Options, as adjusted. Upon
the occurrence of an Adjustment Event, (i) appropriate and proportionate
adjustments shall be made to the number and kind and exercise price for the
shares subject to the Options, and (ii) appropriate amendments to this Agreement
shall be executed by the Company and the Optionee if the Board of Directors in
good faith determines that such an amendment is necessary or desirable to
reflect such adjustments. If determined by the Board of Directors to be
appropriate, in the event of an Adjustment Event which involves the substitution
of securities of a corporation other than the Company, the Board of Directors
shall make arrangements for the assumptions by such other corporation of the
Options. Notwithstanding the foregoing, any such adjustment to the Options shall
be made without change in the total exercise price applicable to the unexercised
portion of the Options, but with an appropriate adjustment to the number of
shares, kind of shares and exercise price for each share subject to the Options.
The good faith determination by the Board of Directors as to what adjustments,
amendments or arrangements shall be made pursuant to this Section, and the
extent thereof, shall be final and conclusive, provided that the Options herein
are adjusted in a manner that is no less favorable than the manner of adjustment
used as to any other options issued by the Company to its employees, directors,
consultants or in any transaction. No fractional Shares shall be issued on
account of any such adjustment or arrangement.
13. RIGHTS OF THE OPTIONEE. The Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to the Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Company's counsel, any then applicable
requirements of any laws, or governmental or regulatory agencies having
jurisdiction, and of any exchanges upon which the stock of the Company may be
listed shall have been fully complied with.
14. EFFECT OF DEATH OF THE OPTIONEE. If the Optionee dies, all Options
shall expire six (6) months thereafter. During such six (6) month period (or
such shorter period prior to the expiration of the Option by its own terms),
such Options may be exercised by the executor or administrator or the person or
persons to whom the Option is transferred by will or the applicable laws of
descent and distribution, as the case may be, but only to the extent such
Options were exercisable on the date the Optionee died.
15. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by the Optionee.
16. SECURITIES LAWS COMPLIANCE. The Company will diligently endeavor to
comply with all applicable securities laws before any stock is issued pursuant
to the Options. Without limiting the generality of the foregoing, the Company
may require from the Optionee such investment representation or such agreement,
if any, as counsel for the Company may consider necessary in order to comply
with the Securities Act of 1933 as then in effect, and may require that the
Optionee agree that any sale of the Shares will be made only in such manner as
is permitted by the Board of Directors. The Optionee shall take any action
reasonably requested by the Company in connection with registration or
qualification of the Shares under federal or state securities laws.
17. SECURITIES SUBJECT TO LEGEND. If deemed necessary by the Company's
counsel, all certificates issued to represent the Options and/or the Shares
purchased upon exercise of the Options shall bear such appropriate legend
conditions as counsel for the Company shall require in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND MAY BE TRANSFERRED ONLY (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT, OR (B) IN ACCORDANCE WITH THE ACT AND SUBJECT
TO RECEIPT OF AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE ISSUER
THAT THE PROPOSED TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE
ACT."
18. REPRESENTATIONS OF OPTIONEE.
(a) SOPHISTICATION OF OPTIONEE. The Optionee acquired the Options for
investment and not with a view to the sale or distribution thereof, and the
Optionee has no commitment or present intention to liquidate the Company or
to sell or otherwise dispose of the Options or the underlying Shares. The
Optionee represents and warrants that, by reason of financial, tax and
business sophistication, income, net assets, education, background and
business acumen, the Optionee has the experience and knowledge in business
and financial matters to evaluate the risks and merits attendant to an
investment decision in the Company, either singly or through the aid and
assistance of a competent professional, and is fully capable of bearing the
economic risk of loss of the total investment pursuant to this Agreement.
The Optionee represents and warrants to the Company that the Optionee has
been an employee of the Company and is fully familiar with its business and
oeprations and has been provided with, and has had access to, all material
information about the Company.
(b) LOCK-UP RESTRICTIONS. The Optionee hereby agrees to any lockup of
the Shares which the Board of Directors of the Company requests when
requested by an investment banker or underwriter providing financing to the
Company.
19. MISCELLANEOUS.
(a) Binding Effect. This Agreement shall bind and inure to the benefit
of the successors, assigns, transferees, agents, personal representatives,
heirs and legatees of the respective parties.
(b) Further Acts. Each party agrees to perform any further acts and
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
(c) Amendment. This Agreement may be amended at any time by the
written agreement of the Company and the Optionee.
(d) Syntax. Throughout this Agreement, whenever the context so
requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of
the various Sections hereof are for convenience only and they shall not
limit, expand or otherwise affect the construction or interpretation of
this Agreement.
(e) Choice of Law. The parties hereby agree that this Agreement has
been executed and delivered in the State of New York and shall be
construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to
have been jointly prepared by the parties and the parties hereby expressly
agree that any uncertainty or ambiguity existing herein shall not be
interpreted against either of them.
(f) Severability. In the event that any provision of this agreement
shall be held invalid or unenforceable, such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to
have any effect on, the remaining provisions of this agreement.
(g) Notices. All notices and demands between the parties hereto shall
be in writing and shall be served either by registered or certified mail,
and such notices or demands shall be deemed given and made forty-eight (48)
hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or
made, and the issuance of the registered receipt therefor. If served by
telegraph, such notice or demand shall be deemed given and made at the time
the telegraph agency shall confirm to the sender, delivery thereof to the
addressee. All notices and demands to the Optionee or the Company may be
given to them at the following addresses:
If to the Optionee: Xxxxxxx X. Xxxxx
_________________________
_________________________
_________________________
If to Corporation: Cadapult Graphic Systems, Inc.
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attn.: Board of Directors
With a copy to: Law Offices of Xxx Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Such parties may designate in writing from time to time such other
place or places that such notices and demands may be given.
(h) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations
or other agreements between the parties in connection with the subject
matter hereof except as set forth or referred to herein. No supplement,
modification or waiver or termination of this Agreement shall be binding
unless executed in writing by the party to be bound thereby. No waiver of
any of the provisions of this Agreement shall constitute a waiver of any
other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
(i) Attorneys' Fees. In the event that any party to this Agreement
institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right
or benefit created by or granted under this Agreement, the prevailing party
in each respective such action or proceeding shall be entitled, in addition
to any and all other relief granted by a court or other tribunal body, as
may be appropriate, to an award in such action or proceeding of that sum of
money which represents the attorneys' fees reasonably incurred by the
prevailing party therein in filing or otherwise instituting and in
prosecuting or otherwise pursuing or defending such action or proceeding,
and, additionally, the attorneys' fees reasonably incurred by such
prevailing party in negotiating any and all matters underlying such action
or proceeding and in preparation for instituting or defending such action
or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
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Xxxxxxx X. Xxxxx (the "Optionee")
CADAPULT GRAPHIC SYSTEMS, INC.
By:
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___________, Director
