STOCK OPTION AGREEMENT
AUTHORISZOR INC.
This unilateral grant by the Company (as hereinafter defined)
constitutes a valid Nonqualified Stock Option (the "Option") for a total of
100,000 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of AUTHORISZOR INC., a Delaware corporation (the "Company")
whose principal executive offices are situated at 0000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxx, Xxxxx 00000, is hereby granted to XXXXXXX X. XXXXXXXX (the
"Optionee") pursuant to an Executive Employment Agreement dated as of January
1, 2000 between the Company and the Optionee (the "Employment Agreement") and
pursuant to the terms of this Option Agreement (the "Option Agreement").
SECTION 1. EXERCISE PRICE. The exercise price of the Option is $6.75
for each Share.
SECTION 2. EXERCISE OF THE OPTION. This Option may be exercised on
January 1, 2004 and from time to time thereafter, subject to the provisions
contained in SECTIONS 3 AND 4 below.
(a) METHOD OF EXERCISE. Options shall be deemed properly
exercised when:
(i) the Company has received written notice of such
exercise, stating the number of Shares which are being
purchased, delivered to the Company and signed by the person
or persons entitled to exercise the Option and, if the Option
is being exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to the
Company, of the right of such person or persons to exercise
the Option;
(ii) full payment of the exercise price of the
Shares as to which the Option is exercised has been tendered
to the Company; and
(iii) arrangements that are satisfactory to the
Board of Directors of the Company (the "Board") in its sole
discretion have been made for the Optionee's payment to the
Company of the amount, if any, that the Company determines to
be necessary for the Company to withhold in accordance with
applicable federal or state income, or federal employment,
tax withholding requirements.
(b) PAYMENT. The exercise price of any Shares purchased shall
be paid in cash, by certified or cashier's check, by money order or by
personal check (if approved by the Board); PROVIDED, FURTHER, that any
federal or state income, or federal employment, taxes which the
Company determines should be withheld, shall be paid by the Optionee
to the Company in cash, by certified or cashier's check, by money
order or by personal check (if approved by the Board).
(c) RESTRICTIONS ON EXERCISE.
(i) This Option may not be exercised if the issuance
of the Shares upon such exercise would constitute a violation
of any applicable federal or state securities or other law or
valid regulation. As a condition to the exercise of this
Option, the Company may require the exercising person to make
any agreements and undertakings that may be required by any
applicable law or regulation.
(ii) Shares issued upon the exercise of this Option
without registration of such Shares under the Securities Act
of 1933, as amended (the "Securities Act"), shall be
restricted securities subject to the terms of Rule 144 under
the Securities Act. The certificates representing any such
Shares shall bear an appropriate legend restricting transfer
and the transfer agent of the Company shall be given stop
transfer instructions with respect to such Shares.
(iii) At the request of the Optionee, the Company
will file a Registration Statement on Form S-8 registering
the issuance of the Shares; PROVIDED THAT the Company meets
the requirements of Form S-8.
SECTION 3. TERM OF OPTION. This Option may not be exercised after
December 31, 2009 and is subject to earlier termination as provided in SECTION
4. In addition, this Option is subject to cancellation by the Company upon a
significant corporate event as provided in SECTION 4 below. This Option may be
exercised during such times only in accordance with the terms of this Option
Agreement.
SECTION 4. TERMINATION OF OPTION PERIOD.
The unexercised portion of this Option shall automatically
and without notice terminate and become null and void at the time of
the earliest to occur of the following:
(a) upon the date the Company terminates the
Employment Agreement for "Cause" pursuant to the terms of
Paragraph 25 of the Employment Agreement;
(b) upon the date on which the Optionee becomes
physically or mentally disabled, as defined by 29 C.F.R.
Section 1630.2(g)(1), and cannot perform the essential
functions of his position, with reasonable accommodation;
(c) upon the date of the death of the Optionee; or
(d) December 31, 2009.
SECTION 5. ACCELERATION OF OPTION PERIOD.
Upon the occurrence of either of the events described in
Section 5(a) or 5(b), the Option shall automatically vest in full and
become immediately exercisable.
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(a) a Sale of the Company, as defined in Paragraph 3
of the Employment Agreement; or
(b) termination of the Optionee by the Company
without cause under Paragraph 24 of the Employment Agreement.
SECTION 6. ADJUSTMENT OF SHARES.
(a) If at any time while an unexercised Option is outstanding
hereunder, there shall be any increase or decrease in the number of
issued and outstanding shares of Common Stock through the declaration
of a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of shares, then and in such
event proportionate adjustment shall be made in the number of Shares
and the exercise price per Share thereof then subject to this Option,
so that the same proportion of the Company's issued and outstanding
shares shall remain subject to purchase at the same aggregate exercise
price.
(b) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class,
or securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to the number of or exercise price of
Shares then subject to this Option.
(c) Without limiting the generality of the foregoing, the
existence of this Option shall not affect in any manner the right or
power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above
the Shares subject to this Option; (iv) the dissolution or
liquidation of the Company; (v) any sale, transfer or assignment of
all or any part of the assets or business of the Company; or (vi) any
other corporate act or proceeding, whether of a similar character or
otherwise.
SECTION 7. MARKET STAND OFF PERIOD. Optionee hereby agrees that, if
so requested by the Company or any representative of the underwriters in
connection with any registration of the offering (the "Offering") of any
securities of the Company under the Securities Act, Optionee shall not sell or
otherwise transfer any of the Shares or other securities of the Company during
the 180-day period (or such other period as may be requested in writing by the
managing underwriter with respect to the Offering and agreed to by the
Company) (the "Market Standoff Period") following the effective date of a
registration statement of the Company filed under the Securities Act. Such
restriction shall apply only to the first registration statement of the
Company to become effective under the Securities Act that includes securities
to be sold on behalf of the Company to the public in an underwritten public
offering under the Securities Act. The Company may impose stop-transfer
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instructions with respect to securities subject to the foregoing restrictions
until the end of such Market Standoff Period.
SECTION 8. NON-ASSIGNABILITY OF OPTION. This Option may be
transferred or assigned by the Optionee only to family members, trusts or
other entities for the benefit of the Optionee or for the benefit of the
Optionee's family members, by will or by the laws of descent and distribution
or by the laws regulating testate or intestate succession applicable to the
Optionee.
SECTION 9. ISSUANCE OF SHARES. No person shall be, or have any rights
or privileges of, a stockholder of the Company with respect to any of the
Shares subject to this Option unless and until certificates representing such
Shares have been issued and delivered to such person. As a condition of an
issuance of a stock certificate for Shares, the Company may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of this Option Agreement or any law or
regulation, including, but not limited to, the following:
(a) The Optionee's representation and warranty to the
Company, at the time the Option is exercised, that the Shares to be
issued are being acquired for investment and not with a view to, or
for sale in connection with, the distribution of any such Shares; and
(b) The Optionee's representation, warranty or agreement to
be bound by any legends that are, in the opinion of the Company,
necessary or appropriate to comply with the provisions of any
securities law deemed by the Company to be applicable to the issuance
of the Shares and to be endorsed upon the certificates representing
the Shares.
SECTION 10. ADMINISTRATION OF THIS OPTION.
(a) The determinations and the interpretation and
construction of any provision of this Option by the Company shall be
final and conclusive.
(b) Subject to the express provisions of this Option, the
Company shall have the authority, in its sole and absolute discretion,
to adopt, amend, and rescind administrative and interpretive rules and
regulations relating to this Option and to perform all other acts
necessary or advisable for administering this Option, including the
delegation of such ministerial acts and responsibilities as the
Company deems appropriate.
SECTION 11. GOVERNMENT REGULATIONS. The granting and exercise of this
Option and the obligation of the Company to sell and deliver Shares under this
Option, shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges as
may be required.
SECTION 12. LAW GOVERNING. THIS OPTION IS INTENDED TO BE PERFORMED IN
THE STATE OF DELAWARE AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SUCH STATE EXCEPT TO THE EXTENT DELAWARE LAW IS
PREEMPTED BY FEDERAL LAW.
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SECTION 13. NOTICES. Whenever any notice is required or permitted
under this Option Agreement, such notice must be in writing and personally
delivered or sent by mail or delivery by a recognized courier service. Any
notice required or permitted to be delivered under this Option Agreement shall
be deemed to be delivered on the date on which it is personally delivered, or,
if mailed, whether actually received or not, on the third business day after
it is deposited in the mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address that such person
has previously specified by written notice delivered in accordance with this
subsection. The Company or the Optionee may change, at any time and from time
to time, by written notice to the other, an address, or in the case of
Optionee the name and address of his counsel, that was previously specified
for receiving notices. Until changed in accordance with this Option Agreement,
the Company and the Optionee shall specify as its or his address for receiving
notices the address set forth in this Option Agreement pertaining to the
Shares to which such notice relates.
SECTION 14. MISCELLANEOUS.
(a) The Company has full corporate authority to grant this
Option, and this Option is granted to the Optionee in implementation
of the Employment Agreement describing such Option and is in addition
to any other stock option plans of the Company or other benefits with
respect to the Optionee's position with or relationship to the
Company or its subsidiaries. This Option shall not confer upon the
Optionee the right to continue as an employee, director, consultant
or advisor, or interfere in any way with the rights of the Company to
terminate the Optionee's status as an employee, director, consultant
or advisor.
(b) The members of the Board shall not be liable for any act,
omission or determination taken or made in good faith with respect to
this Option, and members of the Board shall, in addition to all other
rights of indemnification and reimbursement, be entitled to
indemnification and reimbursement by the Company in respect of any
claim, loss, damage, liability or expense (including attorneys' fees,
the costs of settling any suit, provided such settlement is approved
by independent legal counsel selected by the Company, and amounts
paid in satisfaction of a judgment, except a judgment based on a
finding of bad faith) arising from such claim, loss, damage,
liability or expense to the full extent permitted by law and under
any directors' and officers' liability or similar insurance coverage
that may from time to time be in effect.
(c) Any issuance or transfer of Shares to the Optionee, or to
the Optionee's legal representative, heir, legatee, or distributee, in
accordance with the provisions of this Option, shall, to the extent
thereof, be in full satisfaction of all claims of such persons under
this Option. The Company may require the Optionee, or any legal
representative, heir, legatee or distributee as a condition precedent
to such payment or issuance or transfer of Shares, to execute a
release and receipt for such payment or issuance or transfer of
Shares in such form as it shall determine.
(d) Neither the Board nor the Company guarantees Shares from
loss or depreciation.
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(e) All expenses incident to the administration, termination,
or protection of this Option, including, but not limited to, legal and
accounting fees, shall be paid by the Company; provided, however, the
Company may recover any and all damages, fees, expenses and costs
arising out of any actions taken by the Company to enforce its rights
under this Option.
(f) Records of the Company shall be conclusive for all
purposes under this Option, unless determined by the Board to be
incorrect.
(g) Any action required of the Company relating to this
Option shall be by resolution of the Board or by a person authorized
to act by resolution of the Board.
(h) If any provision of this Option is held to be illegal or
invalid for any reason, the illegality or invalidity shall not affect
the remaining provisions of this Option, but such provision shall be
fully severable, and this Option shall be construed and enforced as if
the illegal or invalid provision had never been included in this
Option.
(i) Any person entitled to notice under this Option may waive
such notice.
(j) This Option shall be binding upon the Optionee, his legal
representatives, heirs, legatees and distributees upon the Company,
its successors, and assigns, and upon the Board and its successors.
(k) The titles and headings of Sections are included for
convenience of reference only and are not to be considered in
construction of this Option's provisions.
(l) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Option dictates,
the plural shall be read as the singular and the singular as the
plural.
DATE OF GRANT: AUTHORISZOR INC.
JANUARY 1, 2000
By:
-----------------------
XXXXX X. XXXXXXX
VICE PRESIDENT
ADDRESS:
Xxxxxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx
HG1 2PW
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Optionee hereby accepts this Option subject to all the terms and
provisions of this Option Agreement.
By:
--------------------------
XXXXXXX X. XXXXXXXX
ADDRESS:
0 Xxxxxx Xxxx
Xxxxxx, XX 00000-0000
COUNSEL:
Xxxxxx X. Xxxxxxx, Esq.
Xxxxxxx Xxxxxx & Green
phone: (000) 000-0000
fax: (000) 000-0000
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