Exhibit 10.4
STOCK OPTION AGREEMENT
----------------------
STOCK OPTION AGREEMENT (this "Agreement") entered into as of June 20,
2005 by and between REFAC, a Delaware corporation, and XXXX LIMITED, INC., a
Florida corporation (the "Optionee").
WHEREAS, the Optionee is a consultant to the Corporation pursuant to
a Consulting Agreement of even date herewith (the "Consulting Agreement"); and
WHEREAS, under the terms of the Consulting Agreement, REFAC has
agreed to grant the Optionee the opportunity to purchase shares of its common
stock, par value $.001 per share (the "Stock") as hereinafter provided and
subject to the terms and conditions hereof:
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the parties hereto
have agreed and do hereby agree as follows:
1. Number of Shares. REFAC hereby grants to the Optionee a
nonqualified stock option (the "Option") to purchase an aggregate of 50,000
shares of Stock, subject to adjustment as provided in Section 2 hereof, on the
terms and conditions herein set forth.
2. Adjustments. In the event that the Board of Directors of REFAC
(the "Board") shall determine that any dividend or other distribution (whether
in the form of cash, Stock or other property), recapitalization, stock split,
reverse stock split, reorganization, merger, consolidation, spin-off,
combination, repurchase, or share exchange, or other similar corporate
transaction or event, affects the Stock such that an adjustment is appropriate
in order to prevent dilution or enlargement of the rights of the Optionee
hereunder, then the Board shall make such equitable changes or adjustments as
it deems necessary or appropriate to any or all of (i) the number and kind of
shares of stock issued or issuable in respect of the Option, and (ii) the
Exercise Price (as defined below) of the Option.
3. Option Price. The purchase price of the Stock subject to the
Option share (the "Exercise Price") shall be $4.92 and shall be subject to
adjustment as provided in Section 2 hereof.
4. Term and Exercisability of Option.
(a) The Option shall become exercisable as set forth in Exhibit
"1" hereto. The Option Term shall commence on the date hereof (the "Date of
Grant") and terminate as set forth on Exhibit "1" hereto. Upon the termination
of the Option, all rights of the Optionee hereunder shall cease. (b)
Exercisability of Option. Except as otherwise provided for in Section 6 hereof,
the Option shall be exercisable as set forth in Exhibit "1" hereto and the
right of the Optionee to purchase shares with respect to which this Option has
become exercisable as herein provided may be exercised in whole or in part at
any time or from time to time, prior to the expiration of the exercise period.
5. Payment. Upon the exercise of all or any portion of the Option,
the Exercise Price of the shares being purchased shall be paid in full in cash
or by certified or bank check payable to the Corporation.
6. Termination.
(a) In the event that the Consulting Agreement is terminated by
the Optionee or pursuant to Paragraph 3(c) of the Consulting Agreement, then
the Option shall immediately terminate as to any shares that have not
previously become exercisable as of the date of such termination (the
"Termination Date"). Any portion of the Option that is exercisable as of the
Termination Date shall remain exercisable for a period of thirty (30) days
following the Termination Date. Upon expiration of such thirty (30) day period,
any unexercised portion of the Option shall terminate in full.
(b) In the event that the Consulting Agreement is terminated by
REFAC for cause, then the Option shall immediately terminate as to any and all
shares as of the Termination Date.
(c) In the event that the Consulting Agreement is terminated
pursuant to Paragraph 3(b) thereof, then the Option shall immediately terminate
as to any shares that have not previously become exercisable as of the
Termination Date. Any portion of the Option that is exercisable as of the
Termination Date shall remain exercisable by Optionee for a period of one (1)
year thereafter. Upon expiration of such one (1) year period, any unexercised
portion of the Option shall terminate in full.
(d) In the event that the Consulting Agreement is terminated by
REFAC prior to June 30, 2006 for any reason other than (i) as provided for in
Section 3(b) thereof or (ii) for cause, then notwithstanding anything herein
contained to the contrary all of the options shall vest and become immediately
exercisable for the full term specified in Exhibit "1" without regard to the
fact that the Consulting Agreement has been terminated.
(e) Except as otherwise provided for in this Section 6, the Option
shall be exercisable during the entire period specified in Exhibit "1".
Notwithstanding anything to the contrary in this Section 6, the Option shall
not be exercisable later than the date of its termination as set forth in
Section 4(a) hereof.
7. Rights of Optionee.
(a) The Optionee shall have none of the rights of a stockholder
with respect to the shares covered by the Option until the shares are issued or
transferred to such Optionee upon exercise of the Option.
(b) The Option shall not interfere with or limit in any way the
right the Board may have to terminate the Consulting Agreement.
8. Nontransferability of Option. Except as otherwise provided for in
the following sentence, the Option shall not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated and shall be exercisable by
the Optionee. Optionee may transfer and assign the Option to Xxxxxxx X. Xxxx
provided that, as a condition of such transfer, he agrees to be bound by all of
the provisions hereof.
9. Notification.
(a) The Option shall be exercised by written notification of
exercise substantially in the form of Exhibit "2" hereto and delivered to the
Secretary of REFAC in accordance with subsection (b) of this Section 9. Such
notification shall specify the number of shares of Stock to be purchased and
the manner in which payment is to be made.
(b) Any notification required or permitted hereunder shall be
addressed to REFAC, to the attention of the Secretary, Xxx Xxxxxx Xxxxx, Xxxx
Xxx, Xxx Xxxxxx 00000 or to the Optionee at the address set forth on the
signature page hereof, as the case may be, and deposited, postage prepaid, in
the United States mail; provided, however, that a notification of exercise
pursuant to subsection (a) of this Section 9 shall be effective only upon
receipt by the Secretary of REFAC of such notification and all necessary
documentation, including full payment for the shares. Either party may, by
notification to the other given in the manner aforesaid, change the address for
future notices.
10. Conditions to Issuance. The Option and exercise of the Option
shall be subject to all applicable federal and state laws, rules and
regulations and to such approvals by any regulatory or governmental agency as
may be required. REFAC, in its discretion, may postpone the issuance or
delivery of Stock under the Option as REFAC may consider appropriate and may
require the Optionee to make such reasonable representations and furnish such
information as it may reasonably consider appropriate in connection with the
issuance or delivery of Stock in compliance with applicable laws, rules and
regulations.
11. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of laws.
12. Miscellaneous.
(a) This Agreement shall bind and inure to the benefit of REFAC
and Optionee and their respective successors and assigns.
(b) The failure of REFAC to enforce at any time any provision of
this Agreement shall in no way be construed to be a waiver of such provision or
of any other provision hereof.
13. Amendment. This Agreement may be amended or modified at any time
by an instrument in writing signed by the parties hereto.
IN WITNESS WHEREOF, each of REFAC and Optionee has caused this
Agreement to be duly executed by its duly authorized officer, all as of the day
and year set forth above.
REFAC
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Executive Officer
ACCEPTED:
XXXX LIMITED, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
EXHIBIT "1"
------------------- ---------- ---------- -------------------------------------
Number
of Exercise
Date Exercisable Shares Price Period of Exercisability
------------------- ---------- ---------- -------------------------------------
Effective Date 16,667 $4.92 From the date such option becomes
exercisable through June 30, 2010
------------------- ---------- ---------- -------------------------------------
October 1, 2005 16,666 $4.92 From the date such option becomes
exercisable through June 30, 2010
------------------- ---------- ---------- -------------------------------------
February 1, 2006 16,666 $4.92 From the date such option becomes
exercisable through June 30, 2010
------------------- ---------- ---------- -------------------------------------
EXHIBIT "2"
NAME OF OPTIONEE
ADDRESS OF OPTIONEE
________________
_______
NOTICE OF EXERCISE OF STOCK OPTION
DATE
Refac
Xxx Xxxxxx Xxxxx
Xxxxx 000
Xxxx Xxx, XX 00000
Attn: Secretary
Gentlemen:
Reference is made to the stock option that Refac (the "Corporation")
granted to the undersigned pursuant to the Stock Option Agreement dated
_______________2005 (the "Stock Option Agreement"). Let this letter serve as
our Notice of Exercise of such option with respect to __________ shares of the
Corporation's Common Stock at the exercise price of $__________ per share and,
in connection therewith, we are enclosing our check in the amount of $________
in payment of the exercise price for the shares.
In exercising this stock option, if the option shares are not
registered under the Securities Act of 1933, as amended, we hereby agree,
warrant and represent to the Company that:
1. The certificate evidencing said shares will bear the following
legend in conspicuous type:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES
LAWS. SUCH SHARES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED, OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT THERETO UNDER SUCH ACT
UNLESS SOLD PURSUANT TO RULE 144 OF SUCH ACT OR UNLESS SUCH SALE,
PLEDGE, HYPOTHECATION OR TRANSFER IS OTHERWISE EXEMPT FROM
REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS. THE CORPORATION MAY REQUEST A WRITTEN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO THE CORPORATION, TO THE EFFECT
THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH SUCH SALE OR
OTHER TRANSFER."
2. We are acquiring said shares for our investment account and do not
have the present intention of reselling or distributing any of said shares.
3. We do not have any contract, understanding, agreement, or
arrangement with any person to sell or transfer to such person or to any third
person any of said shares, and we do not have any present plan to enter into
any such contract, understanding, agreement or arrangement.
4. We do not presently have in mind any future sale or other
disposition of any of said shares, upon the occurrence or nonoccurrence of any
predetermined event or circumstance.
5. We have sufficient knowledge and experience in financial and
business matters to be able to evaluate the merits and risks of this investment
and to bear the economic risks of this investment.
6. We acknowledge that the Corporation has no obligation to issue a
certificate evidencing any shares owned by us until the purchase price of said
shares is fully paid as set forth herein.
7. We are enclosing cash and/or a certified or bank check payable to
the Corporation in an amount equal to the sum of any local, state and federal
withholding taxes due.
Sincerely,
XXXX LIMITED, INC.
By:
-------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chief Executive Officer
Federal Employer Identification No.
-----------------------
REQUIRED INFORMATION
--------------------
Name and Address ____________________
____________________
____________________
Telephone Number ____________________
Social Security Number ____________________
