INCENTIVE STOCK OPTION AGREEMENT
THIS INCENTIVE STOCK OPTION AGREEMENT made and entered into at
Beachwood, Ohio on this 16th day of July, 1998, by and between FIX-CORP
INTERNATIONAL, INC., a duly organized and existing Delaware corporation
having a usual place of business located at 0000 X. Xxxxx Xxxx, Xxxxx 000,
Xxxxxxxxx, Xxxx 00000 (hereinafter referred to as the "Company"), and XXXXX
XXXXXXXXX, whose address is 000 X. Xxxxxxxxxxx Xxxxxx, Xxxxxx, Xxxx 00000
(hereinafter referred to as the "Executive").
WITNESSETH:
WHEREAS, on July 16, 1998, the Company and Executive entered into an
Executive Employment Agreement (the "Executive Employment Agreement")
which contains terms and conditions granting to the Executive certain
Incentive Stock Options; and,
WHEREAS, the Company has employed the Executive and considers it
desirable and in its best interest and as an added incentive to the
Executive to advance the interests of the Company, to grant to the
Executive options to purchase common shares of the Company.
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth, the parties hereto agree as follows:
1. GRANT OF INCENTIVE STOCK OPTIONS. The Company hereby grants to the
Executive the right to purchase Five Hundred Thousand (500,000) of the
Company's Common Stock $.001 par value, at a price of Four Dollars and 18/00
($4.18) per share. These Incentive Stock Options are granted as of July 16,
1998 and are subject to the terms and conditions hereinafter set forth and as
referred to in the Executive Employment Agreement.
2. TIME OF EXERCISE OF THE OPTION. These incentive stock options are
not vested. On July 16, 1999 (1st anniversary of date of grant), an option to
purchase 100,000 (ie. 20%) shares will become vested. The remaining incentive
stock options will vest at the rate of 100,000 shares on each anniversary
date thereafter (ie. July 16, 2000; July 16, 2001; July 16, 2002; and July
16, 2003). No further vesting of shares shall occur on or after the date
either party gives notice of termination of the employment of the Executive
for whatever reason(s).
Subject to the option termination provision hereinafter set forth, the
option may be exercised by the Executive at any time during the Employment
Period or Renewal Term if the
Executive Employment Agreement has been renewed, by written notice given by
certified mail return receipt requested to the Company's President and/or
CEO. These options are not assignable by the Executive.
If the Executive's employment with the Company is terminated pursuant to
Section 4(b) of the Executive Employment Agreement, then the Executive's
option to purchase the Shares and the vesting of said shares as described
above, shall terminate within ninety (90) days after the Executive receives
written notice that his employment with the Company is being terminated. In
the event that the Executive's employment is terminated with cause as
provided in the Executive Employment Agreement and/or voluntarily by the
Executive, then the Executive's option to purchase the Shares and the vesting
of the shares as described above shall terminate effective on the earlier of
the date he is terminated, or the date he received written notice of his
termination, or the date upon which the act or omission giving rise to
Executive's termination for cause occurred. If the Executive's employment
with the Company is terminated due to death or disability, then the
Executive's option to purchase the Shares and the vesting of said shares as
described above, shall terminate (a) in the event of disability, within one
(1) year after the Executive's employment with the Company is terminated as a
result of any disability or, (b) in the event of death, within six (6) months
of the Executive's death. If the Executive's employment with the Company
terminates as a result of the term of the Employment Period ending and/or the
term of the Renewal Term ending as provided in the Executive's Employment
Agreement, than the Executive's option to purchase the shares shall terminate
and be of no further effect.
The Shares referred to above resulting from exercise of the Executive's
option being acquired by the Executive pursuant to this Agreement and the
Executive Employment Agreement will be acquired solely by and for the account
of the Executive for investment and said shares are not being acquired for
resale or distribution. The Company expressly acknowledges, and the Executive
so agrees, that the shares are not registered under Federal securities laws
and under the law of any state, are not to be registered as part of this
Agreement and/or the Executive Employment Agreement and may not be sold
without registration under any applicable Federal or state securities laws
and said shares will be a legend so stating.
3. PAYMENT OF THE EXERCISE PRICE. The exercise price must be received
by the Company from the Executive within ten (10) days of the exercise of any
Incentive Stock Option.
4. TRANSFERABILITY. These incentive Options may not be transferred by
the Executive, except upon the Executive's death by will or by the laws of
descent and distribution.
5. VESTING. These incentive Options are not vested. The option to
purchase the shares shall become vested upon the following schedule:
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Date No. of Shares
---- -------------
July 16, 1999 (1st anniversary) 100,000 (20%)
July 16, 2000 (2nd anniversary) 100,000 (20%)
July 16, 2001 (3rd anniversary) 100,000 (20%)
July 16, 2002 (4th anniversary) 100,000 (20%)
July 16, 2003 (5th anniversary) 100,000 (20%)
------- -----
Total 500,000 (100%)
No Incentive Stock Option will vest in the Executive if his employment
with the Company and its subsidiaries is terminated, as more specifically
described in Section (2) above.
Any Incentive Stock Option that does not vest will be irrevocably
forfeited by the Executive.
6. EXERCISE. An Incentive Stock Option may be exercised beginning on
the date it vests pursuant to Section 5, and it remains exercisable until it
terminates pursuant to Section 2. An Incentive Stock Option is exercised by
delivery to the Company's President and/or CEO at the Company's offices
located at 3637 5. Xxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, Xxxx 00000 written
notice of exercise by certified mail, return receipt requested.
During the Executive's lifetime, only the Executive may exercise the
Incentive Stock Options. If the Executive dies prior to the expiration of an
Incentive Stock Option without having exercised the option as to all of the
shares covered thereby, the Incentive Stock Option may be exercised, to the
extent of the shares with respect to which the Incentive Stock Option could
have been exercised on the date of the Executive's death (but subject to the
termination provisions of Section 2), by the estate of the Executive or a
person who acquired the right to exercise the Incentive Stock Option by
bequest or inheritance or by reason of the death of the Executive.
7. WITHHOLDING TAXES. If when a person exercises an Incentive Stock
Option such option does not qualify for the tax treatment available pursuant
to Section 422 of the Internal Revenue Code, the Company may require such
person to remit to the Company an amount sufficient to satisfy any federal,
state or local withholding tax requirements prior to the issuance of any
stock certificate. Alternatively, the Company may issue such certificate net
of the number of shares sufficient to satisfy the withholding tax
requirements. For withholding tax purposes, the shares will be valued on the
date the withholding obligation is incurred.
8. CAPITAL ADJUSTMENTS. The number of shares of Common Stock that may
be purchased pursuant to these Incentive Stock Options will be subject to an
appropriate and equitable adjustment, as determined by the Company to reflect
any stock dividends, stock split or share combination, and will be subject to
such exchange of shares, recapitalization, merger, consolidation, separation,
reorganization. liquidation or the like, of or by the Company.
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9. RIGHTS AS A SHAREHOLDER. The Executive shall have no rights as a
shareholder with respect to any shares subject to these Incentive Stock
Options until payment of the option price and delivery to the Executive of
such shares so purchased. No adjustment shall be made for dividends ordinary
or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such certificate is issued, except as provided in Section 8 hereof.
To evidence their agreement to the terms and conditions of this right to
purchase. the Company and the Executive have signed this Incentive Stock
Option Agreement. The terms and conditions of this Agreement shall be binding
up the heirs, executors, administrators and successors of the parties hereto.
This Agreement shall be construed in accordance with the laws of the state of
Ohio and shall not be modified other than in writing signed by each of the
parties.
IN WITNESS WHEREOF, the parties hereto have hereunto set their hands on
the day and year first above written.
COMPANY:
FIX CORP INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
---------------------------
Title: CEO
--------------------------
EXECUTIVE:
/s/ Xxxxx X. Xxxxxxxxx
--------------------------------
Xxxxx Xxxxxxxxx
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