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EXHIBIT 10.1
VENTURI TECHNOLOGY ENTERPRISES, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (the "Agreement") is
made and entered into as of the 1st day of January, 1997, by and between Venturi
Technology Enterprises, Inc., a Nevada corporation with its principal place of
business in Utah (the "Company"), and (the "Optionee"),
pursuant to the Employee Program of the Dual Stock Option Plan of the Company
(the "Plan") which reserves for issuance to persons serving the Company and its
subsidiaries as key employees certain shares of the Company's no par value
common stock (the "Common Stock"). This Option is granted to replace an
Incentive Stock Option granted to Optionee on July 1, 1996 (the "Effective
Date") by the Company's predecessor, Venturi Technologies, Inc., a Texas
corporation. Because this Option is a replacement option, the Effective Date for
purposes of this Agreement is the date the Option was originally granted by the
Company's predecessor. As used herein, the term "subsidiary" shall mean any
present or future corporation which would be a "subsidiary" of the Company as
that term is defined in Section 424(f) of the Internal Revenue Code of 1986, as
amended (the "Code").
WHEREAS, the Company desires to carry out the purposes of the
Plan by affording the Optionee, who is a key employee and who began working for
the Company on (the "Hire Date"), an opportunity to purchase
shares of Common Stock by means of a grant of an incentive stock option, as
hereinafter provided;
NOW, THEREFORE, based upon the mutual covenants and conditions
contained herein, the parties hereto have agreed to and do hereby agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee
the right and option (the "Option") to purchase all or any part of an aggregate
of shares of the Common Stock (such number being subject to adjustment
as provided in Section 7 hereof and hereinafter called the "Option Shares") on
the terms and conditions herein set forth. The Option is intended to qualify as
an "incentive stock option" within the meaning of Section 422 of the Code.
2. Purchase Price. The purchase price of the Option Shares
shall be $2.40 per share, which price has been determined by the Stock Option
Committee appointed by the Board of Directors (the "Committee") to be not less
than 100% (or 110% if Optionee owns more than 10% of the outstanding Common
Stock of the Company as of the Effective Date) of the fair market value of said
shares as of the Effective Date.
3. Terms of Option. The Option shall automatically terminate
upon the date ten (10) years subsequent to the Effective Date, subject to
earlier termination as provided in Sections 5, 6 and 7 hereof, or when all of
the Option Shares have been acquired.
The Option may be exercised as to any or all of the available
Option Shares. The purchase price of the shares as to which the Option shall be
exercised shall be paid in full at time of exercise either in cash, or, subject
to the approval of the Board, by promissory note, in shares
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of the Company's stock, or a combination of cash, promissory note and/or shares
of the Company's stock. Except as provided in Sections 5 and 6 hereof, the
Option may not be exercised at any time unless the Optionee is then employed by
the Company or a subsidiary and shall have been continuously employed by the
Company or by a subsidiary since the Effective Date. The holder of the Option
shall not have any of the rights of a shareholder with respect to the Option
Shares as to which there has been no exercise of the Option.
4. Nontransferability. The Option shall not be transferable
otherwise than by will or the laws of descent and distribution, and the Option
may be exercised, during the lifetime of the Optionee, only by the Optionee.
More particularly (but without limiting the generality of the foregoing), the
Option may not be assigned, transferred (except as otherwise provided herein),
pledged or hypothecated in any way, shall not be assignable by operation of law
and shall not be subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge, hypothecation or other disposition of
the Option contrary to the provisions hereof, and the levy of any execution,
attachment or similar process upon the Option, shall be null and void and
without effect.
5. Termination of Employment. In the event that the Optionee's
employment with the Company or a subsidiary of the Company is terminated for any
reason, with or without cause, and whether at the initiative of the Optionee or
the Company, the Option may be exercised by the Optionee, to the extent that the
Optionee shall have been entitled to do so at the date of such termination, at
any time within three (3) months after such termination, but not after the
termination date provided in paragraph 3, above, at the end of which time the
Option shall terminate. Nothing in this Agreement shall confer upon the Optionee
any right to continue in the employ of the Company or any of its subsidiaries or
interfere in any way with the right of the Company or any such subsidiary to
terminate the Optionee's employment at any time.
6. Death or Disability of Optionee. If the Optionee shall die
or become disabled (as defined in Code Section 422(c)(6)) while employed by the
Company or one or more of its subsidiaries or within three (3) months after the
termination of such employment, the Option may be exercised (to the extent that
the Optionee shall have been entitled to do so at the date of the Optionee's
death or disability) by the Optionee (or the Optionee's personal
representatives, heirs or legatees) at any time within one (1) year after his
termination of employment, but not after the date on which the Option
automatically expires pursuant to Section 3 above, at the expiration of which
time the Option shall terminate.
7. Changes in Capital Structure. In the event of changes in
the outstanding capital stock of the Company by reason of any stock dividend,
stock split or reverse split, reclassification, recapitalization, merger,
consolidation, reorganization or liquidation, the Committee and/or the Board may
make such adjustments in (a) the aggregate number and class of shares available
under the Plan; (b) the number and class of shares to which optionees will
thereafter be entitled upon exercise of their options; and (c) the price which
optionees shall be required to pay upon such exercise; as it deems appropriate,
and such determination shall be final, binding and conclusive.
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In the event of any merger of the Company (except with a
subsidiary) or any acquisition of 80 percent or more of its gross assets or
stock, or any reorganization or liquidation of the Company (an "Event"), the
Board shall make arrangements (the "Arrangements") which shall be binding upon
the holders of unexpired options then outstanding under the Plan (d) for the
substitution of new options for any portion of such unexpired options; (e) for
the assumption of any portion of such unexpired options by any successor to the
Company; (f) for the acceleration of the expiration date of any portion of such
unexpired options to a date not earlier than thirty (30) days after notice to
the optionee; or (g) for the cancellation of such portion of unexpired options
in exchange for the payment by any successor to the Company of deferred
compensation to the optionee in an amount equal to the difference between the
fair market value of the Shares subject to such unexpired portion and the
aggregate exercise price of the Shares under the terms of such unexpired portion
on the date of the Event, in installments which correspond to the vesting
schedule of the unexpired option.
Notwithstanding the foregoing, if an Event should occur, the
Arrangements which the Board shall make to each portion of all outstanding
unexercised options shall be limited to either (h) providing for the
substitution of new options for such portion; (i) providing the holder of such
portion with no less than thirty (30) days to exercise such portion in full; (j)
causing any successor corporation to assume such portion in full; or (k)
cancelling such portion and causing any successor corporation to pay deferred
compensation to the holder of such portion at the time such portion would have
become exercisable, in an amount equal to the difference between the fair market
value of the Shares subject to the portion and the aggregate exercise price of
the portion on the Date of the Event.
8. Method of Exercising Option. Subject to the terms and
conditions of this Agreement, the Option may be exercised by written notice to
the Company at its main office. Such notice shall state the election to exercise
the Option and the number of shares in respect of which it is being exercised
and shall be signed by the person or persons so exercising the Option. Such
notice shall be accompanied by payment of the full purchase price of such
shares, and the Company shall deliver a certificate or certificates representing
such shares as soon as practicable after the notice shall be received. The
certificate or certificates for the shares as to which the Option shall have
been so exercised shall be registered in the name of the Optionee and shall be
delivered as provided above to or upon the written order of the person or
persons exercising the Option. In the event the Option shall be exercised
pursuant to Section 6 hereof, such notice shall be accompanied by appropriate
proof of the right of such person or persons to exercise the Option. All shares
that shall be purchased upon the exercise of the Option as provided herein shall
be fully paid and nonassessable.
The shares to be issued upon the exercise of options granted
under the Plan have not been registered with the Securities and Exchange
Commission, nor have they been registered or qualified under the laws of any
state. The notice exercising the Option shall be in a form satisfactory to the
Company, and shall affirm that the purchaser is acquiring the shares for the
purchaser's own account for investment and not for the purposes of resale or
distribution. The certificates for the shares shall be subject to any legend
condition imposed under the laws of any
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state. In addition, the certificate representing the shares shall be subject to
the following restrictions and all certificates representing said shares shall
bear a conspicuous legend containing said restrictions:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR QUALIFIED UNDER THE
SECURITIES LAWS OF ANY STATE (THE "LAW"). SUCH
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NEITHER SAID SHARES NOR ANY INTEREST THEREIN MAY BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER
THE ACT AND QUALIFICATION UNDER THE LAW OR AN OPINION
OF COUNSEL SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION AND QUALIFICATION ARE NOT REQUIRED AS TO
SAID SALE OR OFFER.
9. Right of First Refusal.
A. Initiation of Right of First Refusal. Each time
the Optionee exercises the Option and acquires Option Shares until the initial
public offering of the Corporation's Capital Stock, the Optionee (which for
purposes of this Section 9 shall include the Optionee's heirs, executors,
administrators and transferees, and shall be referred to as the "Shareholder")
shall not sell, pledge, assign, or otherwise transfer such Option Shares without
first offering to the Corporation or its designees the right and option to
purchase said shares as provided hereinafter in this Section 9 (the "Right of
First Refusal"). Notwithstanding the above, the Optionee may sell or transfer
said Option Shares to the Optionee's spouse or children, or to a trustee or
custodian for the benefit of the Optionee or Optionee's spouse or children
without first offering said Option Shares to the Corporation or its designees,
provided such buyer or transferee agrees in writing to be bound by the
restrictions set forth in this Agreement, including the restrictions set for the
in this Section 9. In the event of a pledge or other hypothecation of the Option
Shares, then the Right of First Refusal shall come into existence at the time of
any sale or transfer of ownership of the Option Shares pursuant to the
foreclosure under such pledge or hypothecation, provides, however, that Optionee
may not pledge the Option Shares unless the pledge holder agrees in writing at
the time of the pledge to be bound by the Right of First Refusal as contained in
this Section 9 and to cause any proposed assignee or transferee of such pledge
to execute and deliver to the Corporation a similar writing prior to such
assignment or transfer.
B. Mechanics. Any Shareholder desiring to sell
any or all of the Option Shares during such time period shall give written
notice to the Secretary of the Corporation of the Shareholder's bona fide
intention to sell the Option Shares pursuant to a bona fide written offer of a
third party other than the Corporation (the "Proposed Purchaser"). The notice
shall include a photocopy of such written offer which shall specify the identity
of the Proposed Purchaser, the number of such Option Shares proposed to be sold
(hereinafter the "Offered Shares"), and the
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price and payment terms of the proposed offer to buy the Offered Shares. The
payment terms of the Proposed Purchaser to the Shareholder (and of the
Shareholder to the Corporation) must be cash, cash equivalent (a certificate of
deposit, shares of stock in a publicly traded company, and the like), or a
promissory note of the Proposed Purchaser payable on date(s) specified by
passage of time. The Corporation or its designees shall have the right and
option to purchase any and all of the Offered Shares, at the price and on the
payment terms specified in the Shareholder's notice, for a period of sixty (60)
days from receipt of said notice from the Shareholder. That is, such notice by
the Shareholder constitutes an irrevocable offer by the Shareholder to sell any
or all of the Offered Shares to the Corporation or its designees at the price
and payment terms specified in such notice for sixty days from the Corporation's
receipt of such notice.
The Corporation shall exercise its option by giving written
notice (the "Original Notice") stating the number of Offered Shares for which it
is exercising its option either by delivering such notice personally to the
Shareholder, or by depositing such notice in the United States Mail, postage
prepaid, and addressed to the Shareholder at the Shareholder's address appearing
in the Corporation's records. The Shareholder shall deliver certificates
representing the number of Offered Shares purchased by the Corporation or its
designees against payment for the account of the Shareholder of the purchase
price in compliance with the terms of the bona fide offer within thirty (30)
days of the option exercise notice.
Any offered Shares for which both the Corporation and its
designees fail to exercise their option as provided in this section, may be sold
by the Shareholder to the proposed Purchase within a period of ninety (90) days
following the end of the Corporation's sixty (60)-day option period specified
above, provided that (1) such sale is made at a price and on terms no more
favorable to the proposed Purchaser than those made available to the Corporation
and its designees under this section, (2) the Proposed Purchaser delivers a
written undertaking to the Secretary of the Corporation to be bound by the
restrictions on the Option Shares set forth in this Agreement, including the
restrictions set forth in this Section 9, and (3) the Corporation receives an
opinion of counsel reasonably satisfactory to it that the sale to the Proposed
Purchaser complies with applicable federal and state corporate securities laws.
Upon receipt of a writing from Shareholder and Proposed
Purchaser that the foregoing conditions have been satisfied and the purchase
price paid to the Shareholder by the proposed Purchasers, the Corporation shall
transfer the ownership of record to the Proposed Purchaser (and reissue the
certificate).
If within this ninety (90)-day period the Shareholder does not
enter into an agreement for such a sale of Offered Shares to the Proposed
Purchaser which is consummated within thirty (30) days of the execution thereof,
the Right of First Refusal shall be revived as to the Offered Shares which shall
not be sold or transferred unless the Shareholder first offers the Corporation
the right and option to repurchase any and all such Option Shares in accordance
with this section.
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Any transfer or purported transfer of the Option Shares or any
interest therein shall be null and void unless the terms and conditions of this
Section 9 are strictly observed and followed, or such terms and conditions are
waived by the Corporation's Board of Directors.
In addition to the legend described in Section 8 of this
Agreement, the Corporation is authorized to place the following conspicuous
legend on all certificates representing Option Shares:
THESE SHARES ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS,
INCLUDING A RIGHT OF FIRST REFUSAL, AS SET FORTH IN A
NON-STATUTORY STOCK OPTION AGREEMENT DATED ON
FILE WITH THE SECRETARY.
10. Disposition of Shares. The Optionee agrees to notify the
Company in writing of any sale or transfer of any Option Shares which takes
place either within two years from the Effective Date or within one year from
the transfer of Option Shares to the Optionee pursuant to exercise of the
Option. Such notice shall set forth the price and terms of any such sale or
transfer.
11. Plan. This Agreement shall be interpreted and construed so
that it is in compliance with the Plan and so that the Option qualifies as an
"incentive stock option" within the meaning of Section 422 of the Code. Any
terms herein which are in conflict with the terms of the Plan shall be modified
so that they are no longer in conflict with the Plan and said Section 422 of the
Code.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the Effective Date written above.
OPTIONEE:
VENTURI TECHNOLOGY ENTERPRISES, INC.
By:
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Its:
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OPTIONEE:
By:
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