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EXHIBIT 10.25
STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as
of the 9th day of September, 1996, by and between Bikers Dream, Inc., a
California corporation ("Company") and Xxxxxx X. Xxxxx ("Optionee").
R E C I T A L S
A. Company is in the business of developing and operating Bikers
Dream Superstores in the United States.
B. Optionee has been appointed co-Chief Executive Officer of the
Company.
C. Pursuant to the employment agreement between Optionee and
Company, Company has agreed to grant Optionee an irrevocable option to purchase
200,000 shares (the "Shares") of Company common stock ("Common Stock") ,
subject to the terms of this Agreement.
In consideration of the terms and conditions set forth in this
Agreement, Company and Optionee hereby agree as follows:
1. Grant of Option. Company hereby grants to Optionee the
irrevocable right and option (the "Option") to purchase 200,000 shares of the
Company's common stock (the "Option Shares"), at a price (the "Option Price")
of $1.05 per share, on the terms set forth in this Agreement.
2. Exercise of Option.
(a) The Option may be exercised at any time between the
date hereof and September 8, 1998. The Option shall be exercised by giving
notice in writing by personal service or prepaid United States registered mail
to the Company at its principal executive office. The notice shall state
Optionee's election to exercise the Option and the number of Option Shares with
respect to which the Option is being exercised. The Option shall be
exercisable, at the election of the Optionee, either in full or from time to
time in part and, in the event that the Option is partially exercised, a new
Option Agreement evidencing the remaining portion of the Option shall be
executed by both parties hereto.
(b) Payment of the aggregate Option Price shall be made
in cash or by check. At the option of the Optionee, in lieu of payment of the
Option Price for Shares, the Optionee may request in writing that the Company
issue to it the number of Shares issuable as determined in accordance with the
following formula:
NS = OS - [(OP/CMP) x OS]
NS = "net" Shares
OS = No. of Shares issuable upon exercises of the options.
OP = Option Price
CMP= Current Market Price as defined in Section 2(c) hereof.
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Upon such surrender of this Agreement and payment for the Shares or
written request that the Company issue the "net" Shares in accordance with the
foregoing formula, the Company shall issue or cause to be issued and deliver or
cause to be delivered, within 30 days, to the Optionee a certificate or
certificates for the number of full Shares or "net" Shares as the case may be
in respect of which the Option is being exercised, together with cash, as
provided in Section 2(c) hereof, in respect of any fractional Share otherwise
issuable upon such exercise.
(c) The Company shall not be required to issue fractional
Shares on the exercise of the Option. If any fraction of a Share would, except
for the provisions of Section 2(c), be issuable on the exercise of the Option,
the Company shall pay an amount in cash equal to the then Current Market Price
multiplied by such fraction. For purposes of this Agreement, the term "Current
Market Price" shall mean (i) if the Common Stock is traded in the
over-the-counter market and not in the NASDAQ National Market System nor on any
national securities exchange, the average per share closing bid prices of the
Common Stock for the fifteen (15) consecutive trading days immediately
preceding the date in question, as reported by NASDAQ or (ii) if the Common
Stock is traded in the NASDAQ National Market System or on a national
securities exchange, the average for the fifteen (15) consecutive trading days
immediately preceding the date in question of the daily per share closing
prices of the Common Stock in the NASDAQ National Market System or on the
principal stock exchange on which it is listed, as the case may be. For
purposes of clause (i) above, if trading in the Common Stock is not reported by
NASDAQ, the average referred to in said clause shall be as reported in the OTC
Bulletin Board, the "pink sheets" published by National Quotation Bureau,
Incorporated or any other comparable quotation medium. The closing price
referred to in clause (ii) above shall be the last reported sale price or, in
case no such reported sale takes place on such day, the average of the reported
closing bid and asked prices, in either case, in the NASDAQ National Market
System or on the national securities exchange on which the Common Stock is then
listed.
3. Registration Rights.
The Company agrees to register the resale of the Option Shares
at its own expense pursuant to the next registration statement to be filed by
the Company with the Securities and Exchange Commission, such registration
statement to be effective at least for the period from the date thereof to the
end of the applicable Rule 144 restricted period.
4. Closing. Delivery of a certificate for the number of Option
Shares as to which the Option is being exercised and payment of the purchase
price therefore pursuant to Section 2(b) will take place at the Company's
principal executive office, within 48 hours after receipt by Company of notice
of Optionee's exercise of the Option (the "Closing Date").
5. Representations and Warranties of Company. Company represents
and warrants as follows:
(a) The execution, delivery and performance by Company of
this Agreement have been duly authorized by all necessary corporate action, and
this Agreement has been duly executed and delivered by Company.
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(b) Company shall at all times reserve and keep available
a number of its authorized but unissued shares of common stock that will be
sufficient to permit the exercise in full of the Option.
(c) The Option Shares to be issued upon the exercise of
the Option and payment therefor, have been duly authorized and, when issued and
paid for, will be validly issued, fully paid and nonassessable.
6. Investment Representations of Optionee. Optionee represents,
acknowledges and agrees as follows:
(a) Optionee is acquiring the Option and any Option
Shares acquired upon exercise of the Option for Optionee's own account and not
with a view to, or for sale in connection with, any distribution thereof.
(b) The Option Shares shall not be sold or transferred
until either (i) they first shall have been registered under the Securities Act
of 1933, or (ii) Company first shall have been furnished with an opinion of
legal counsel, reasonably satisfactory to Company, to the effect that such sale
or transfer is exempt from the registration requirements of the Securities Act
of 1933.
(c) The certificates evidencing the Option Shares issued
upon exercise of the Option will bear the following restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 ("THE ACT") AS AMENDED, AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS AND UNTIL SUCH SHARES
ARE REGISTERED UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED."
7. Privileges of Stock Ownership. Neither Optionee nor any
transferee of Optionee shall have any of the rights or privileges of a
stockholder of Company with respect to any Option Shares issuable upon the
exercise of the Option until certificates representing such Option Shares shall
have been issued and delivered.
8. Adjustment to Number and Purchase Price of Option Shares. If
the outstanding shares of the Company's common stock are increased or
decreased, or are changed into or exchanged for a different number or kind of
shares or securities or other forms of property (including cash) or rights, as
a result of one or more reorganizations, recapitalizations, spin-offs, stock
splits, reverse stock splits, stock dividends or the like, appropriate
adjustments shall be made in the number and/or kind of shares or securities or
other forms of property (including cash) or rights for which this Option may
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thereafter be exercised, all without any change in the aggregate exercise price
applicable to the unexercised portions of the Option, but with a corresponding
adjustment in the exercise price per share. No fractional share of stock shall
be issued under this Option or in connection with any such adjustment. Such
adjustments shall be made by the independent certified public accountants
regularly retained by Company whose determinations as to what adjustments shall
be made, and the extent thereof, shall be final, binding and conclusive.
Upon the dissolution or liquidation of Company, or upon a
reorganization, merger or consolidation of Company as a result of which the
outstanding shares of common stock are changed into or exchanged for property
(including cash), rights or securities not of Company's issue, or any
combination thereof, or upon a sale of substantially all the property of
Company to, or the acquisition of stock representing more than eighty percent
(80%) of the voting power of the stock of Company then outstanding by, another
corporation or person, this Option shall terminate, unless provision be made in
writing in connection with such transaction for the assumption of this Option,
or the substitution for this Option of an option covering the stock of a
successor corporation, or a parent or a subsidiary thereof, with appropriate
adjustments in accordance with the provisions hereinabove in this Section as to
the number and kind of shares optioned and their exercise prices, in which
event this Option shall continue in the manner and under the terms so provided.
If this Option shall terminate pursuant to the next preceding
paragraph, Optionee or other person then entitled to exercise this Option shall
have the right, at such time prior to the consummation of the transaction
causing such termination as Optionee shall designate, to exercise the
unexercised portion of this Option, including the portions thereof which would,
but for this Section, not yet be exercisable.
9. Default and Remedies. Optionee agrees that any failure by
Optionee to faithfully perform any of its obligations under the Operating
Agreement or any other agreement between the parties shall constitute a default
under this Agreement. Upon the occurrence of an event of default hereunder,
Company shall have all of the rights and remedies accorded to it under the laws
of the State of California and any other applicable jurisdiction, all of which
rights and remedies shall, to the full extent permitted by law, be cumulative.
Without limiting the generality of the foregoing, upon the occurrence of a
default hereunder, Company shall be entitled to immediately cancel any stock
options, Option Shares or other securities granted or issued to Optionee
hereunder.
10. Binding Effect. This Agreement will be binding upon the
parties, their heirs, legal representatives, successors, and assigns.
11. Amendments and Modifications. This Agreement may be amended
or modified only by a writing signed by both parties. Any attempt by either
party to modify or amend this Agreement orally will be void in all respects.
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12. Non-waiver. No delay or failure by either party to exercise
any right under this Agreement, and no partial or single exercise of that
right, will constitute a waiver of that or any other right, unless otherwise
expressly provided herein.
13. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
14. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original but all of which
together will constitute one and the same instrument.
15. Arbitration. All disputes and controversies arising under or
relating to this Agreement, including allegations of fraud and
misrepresentation, will be resolved by arbitration in Santa Ana, California, in
accordance with the rules and regulations of the American Arbitration
Association. The decision of the arbitrator will be final and binding on the
parties and may be filed as a judgment in any court of competent jurisdiction.
Each party will pay one-half of the arbitrator's fees and expenses.
16. Survival. All representations, warranties, covenants and
agreements of the parties contained in this Agreement shall survive the
execution and delivery hereof.
17. Notices. All notices, requests, demands and other
communications under this Agreement shall be in writing and shall be validly
given or made to another party if given by personal delivery, telex, facsimile,
telegram, or if deposited in the United States mail, certified or registered,
postage prepaid, return receipt requested. If such notice, demand or other
communication is given by personal delivery, telex, facsimile or telegram,
service shall be conclusively deemed made at the time of receipt. If such
notice, demand or other communication is given by mail; such notice shall be
conclusively deemed given forty-eight (48) hours after the deposit thereof in
the United States mail addressed to the party to whom such notice, demand or
other communication is to be given as hereinafter set forth:
If to Company: Bikers Dream, Inc.
0000 Xxxxxxx Xxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Attn: Rowland W. Day, II
If to Optionee: Xxxxxx X. Xxxxx
000 Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Any party may change its address for purposes of this paragraph by
giving the other parties written notice of the new address in the manner set
forth above.
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18. Assignment. The Option may not be assigned by Optionee
without the prior written consent of Company.
IN WITNESS WHEREOF, the parties have signed this Agreement on the day,
month and year first written above.
BIKERS DREAM, INC.
By: [SIG]
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Its: CO-CEO
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OPTIONEE
/s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX
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