Exhibit 3.2
THIS OPTION HAS BEEN ISSUED PURSUANT TO EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE
QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS (THE "LAWS"). IT
IS UNLAWFUL TO EXERCISE, SELL, PLEDGE OR OTHERWISE DISPOSE OF THIS OPTION, OR
ANY INTEREST THEREIN, OR RECEIVE ANY CONSIDERATION THEREFORE, IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND QUALIFICATION UNDER THE
LAWS, UNLESS EXEMPTIONS FROM SUCH REGISTRATION AND QUALIFICATION REQUIREMENTS
ARE AVAILABLE.
THIS OPTION MAY BE EXERCISED ONLY IN ACCORDANCE WITH THE TERMS OF THIS STOCK
OPTION AGREEMENT.
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FOOD EXTRUSION, INC.
OPTION AGREEMENT
Food Extrusion, Inc., a Nevada corporation (the "Company"), hereby grants
to Xxxxx X. Xxxxxxx (the "Optionee"), an option (the "Option") to purchase up to
1,000,000 shares (the "Shares") of Common Stock of the Company (the "Common
Stock"), at the per share price (the "Exercise Price") equal to $1.75 per share
subject to the terms, definitions and provisions of this Option Agreement (the
"Agreement" or "Option").
1. Nature of the Option. The Option is intended to be a nonstatutory option and
not an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Exercise of Option. The Option shall vest and become exercisable during its
term, subject to the provisions of Section 4 below, as follows:
(a) Vesting and Right to Exercise.
(i) The Option hereby granted shall vest and become exercisable
upon the closing by the Company of a financing, joint venture, acquisition, or
any other agreement which provides working capital to the Company by or with a
party or parties introduced to the Company directly by Optionee during the term
of this Agreement or within 18 months following the date of such introduction,
whichever is later. The Option may not be exercised prior to any other time,
except as provided in Subsection (ii) below.
(ii) In the event the Company rejects a bona fide and duly
authorized offer in which no more than 10% of the equity of the Company on a
fully diluted basis, would be issued and in which the Company would receive net
proceeds, after deduction of all placement fees, commissions and expenses, of at
least $5,000,000 had the Company not rejected such bona fide offer, one-half of
this Option for 500,000 shares of Common Stock shall vest and thereupon be
immediately exercisable. The determination of whether any offer is "bona fide"
for purposes of this provision shall be conclusively determined by the Company's
independent directors acting at a duly called meeting of the Company's Board of
Directors.
(iii) The Option may be exercised in whole or in part, in
accordance with the provisions of this paragraph 2(a), but may not be exercised
as to fractional shares.
(b) Method of Exercise. In order to exercise any portion of the
Option, the Optionee shall execute and deliver to the Chief Financial Officer of
the Company the Notice of Exercise of Stock Option in the form attached hereto
as Exhibit B during the period set forth in paragraph 4 hereof. The Notice of
Exercise must be accompanied by payment in full of the aggregate purchase price
for the Shares to be purchased. The Notice of Exercise may be delivered to the
Company at any time to the extent Shares are vested. The certificate(s) for the
Shares as to which the Option has been exercised shall be registered in the name
of Optionee or his designee.
(c) Restrictions on Exercise. The 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 law or any other law or regulation. As a
condition to the exercise of the Option, the Company may require the Optionee to
make any representation or warranty to the Company at the time of exercise of
the Option as in the opinion of legal counsel for the Company may be required by
any applicable law or regulation, including the execution and delivery of an
appropriate representation statement. The stock certificate(s) for the Shares
issued upon exercise of the Option may bear appropriate legends restricting
transfer.
(d) Delivery of Certificates. The Company shall deliver the
certificate(s) for the Shares issued upon exercise of the Option to the Optionee
as soon as is practicable; provided, however, that if any law or regulation
requires the Company to take any action with respect to such shares before the
issuance thereof, including, without limitation, actions taken pursuant to
Section 5 below, then the date of delivery of such Shares shall be extended for
a period necessary to take such action.
3. Method of Payment. Payment of the Exercise Price shall be made by the
delivery of a cashier's check or wire transfer to the Company.
4. Term of the Option. Except as otherwise provided in this Agreement, to the
extent not previously exercised, the right to exercise the Option shall
terminate within 36 months from the date any Shares become vested under the
terms of this Agreement (the "Exercise Period").
5. Adjustments Upon Changes in Capitalization; Other Adjustments. Subject to any
required action by the shareholders of the Company, the number of Shares and the
Exercise Price shall be proportionately adjusted for any increase or decrease in
the number of issued shares of common stock resulting from a stock split,
reverse stock split, combination, reclassification, the payment of a stock
dividend on the common stock or any other increase or decrease in the number of
shares of common stock of the Company effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number of Shares
subject to, or the Exercise Price of, this Option.
The Board may, if it so determines in the exercise of its sole discretion, also
make provision for adjusting the number of Shares, as well as the Exercise
Price, in the event that the Company effects one or more reorganizations,
recapitalization, rights offerings, or other increases or reductions of shares
of its outstanding common stock, and in the event of the Company being
consolidated with or merged into any other corporation.
The Board may, if it so determines in the exercise of its sole discretion, also
make provision for changing, modifying, amending or adjusting any of the terms
of this Option solely in order for the Company to perfect an initial public
offering of its Common Stock.
6. Rights of Shareholder. Optionee shall have no rights as a shareholder with
respect to the Shares until the date of the issuance or the transfer to the
Optionee of the certificate(s) for such Shares and only after the Exercise Price
for such Shares has been paid in full.
7. Exchange, Transfer, Assignment or Loss of Option. This Option is
exchangeable, without expense, at the option of the Optionee, upon presentation
and surrender hereof to the Company or at the office of its stock transfer
agent, if any, for other options of different denominations entitling the
Optionee, or any subsequent holder ("Holder") of this Option, to purchase in the
aggregate the same number of shares of Common Stock purchasable hereunder. Upon
surrender of this Option to the Company at its principal office or at the office
of its stock transfer agent, if any, with an Assignment Form in the form
attached as Exhibit B hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and deliver a new
Option in the name of the assignee named in such Assignment Form and this Option
shall promptly be canceled. This Option may be divided or combined with other
Options which carry the same rights upon presentation hereof at the principal
office of the Company or at the office of its stock transfer agent, if any,
together with a written notice specifying the names and denominations in which
new Options are to be issued and signed by the Holder hereof. The term "Option"
as used herein includes any Option into which this Option may be divided or
exchanged. Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Option, and (in the case of loss,
theft or destruction) of reasonably satisfactory indemnification, and upon
surrender and cancellation of this Option, if mutilated, the Company will
execute and deliver a new Option of like tenor and date. Any such new Option
executed and delivered shall constitute an additional contractual obligation on
the part of the Company, whether or not this Option so lost, stolen, destroyed,
or mutilated shall be at any time enforceable by anyone.
8. Amendment. Except as set forth in Section 5, this Agreement may not be
amended without the written consent of the Optionee.
9. Investment Representations; Legends.
(a) Representations. The Optionee represents, warrants and covenants
that:
(i) Any shares purchased upon exercise of this option shall be
acquired for the Optionee's account for investment only, and not with a view to,
or for sale in connection with, any distribution of the shares in violation of
the Securities Act of 1933 (the "Securities Act"), or any rule or regulation
under the Securities Act.
(ii) The Optionee has had such opportunity as he or she has
deemed adequate to obtain from representatives of the Company such information
as is necessary to permit the Optionee to evaluate the merits and risks of his
or her investment in the Company.
(iii) The Optionee is able to bear the economic risk of holding
such shares acquired pursuant to the exercise of this option for an indefinite
period.
(iv) The Optionee understands that (A) the Shares will not be
registered under the Securities Act and are "restricted securities" within the
meaning of Rule 144 under the Securities Act; (B) the Shares cannot be sold,
transferred or otherwise disposed of unless they are subsequently registered
under the Securities Act or an exemption from registration is then available;
(C) in any event, an exemption from registration under Rule 144 or otherwise
under the Securities Act will not be available for at least two years from the
date the Shares are fully paid for and even then will not be available unless a
public market then exists for the Common Stock, adequate information concerning
the Company is then available to the public, and other terms and conditions of
Rule 144 are complied with; and (D) there is now no registration statement on
file with the Securities and Exchange Commission with respect to any stock of
the Company and the Company has no obligation or current intention to register
the Shares under the Securities Act.
(v) The Optionee agrees that, if the Company offers any of its
Common Stock for sale pursuant to a registration statement under the Securities
Act ("Registration Statement"), the Optionee will not, without the prior written
consent of the Company, offer, sell, contract to sell or otherwise dispose of,
directly or indirectly (a "Disposition"), any shares purchased upon exercise of
the Option for a period of time after the effective date of the Registration
Statement that is no shorter than the period of time that the Company's senior
management shall have agreed with the Company or the managing underwriters of
such offering not to make any Disposition with respect to any shares held by
such senior management and not sold in connection with such Registration
Statement.
By making payment upon exercise of this option, the Optionee shall be deemed to
have reaffirmed, as of the date of such payment, the representations made in
this Section 9.
(b) Legends of Stock Certificate. All stock certificates representing
the Shares shall have affixed thereto legends substantially in the following
forms, in addition to any other legends required by applicable state law:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT WITH RESPECT
TO THE SHARES EVIDENCED BY THIS CERTIFICATE, FILED AND MADE EFFECTIVE UNDER THE
SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO
THE EFFECT THAT REGISTRATION UNDER SUCH ACT IS NOT REQUIRED.
10. Reclassification, Reorganization or Merger. In case of any reclassification,
capital reorganization or other change of outstanding shares of Common Stock of
the Company, or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with a subsidiary in which merger
the Company is the continuing corporation and which does not result in any
reclassification, capital reorganization or other change of outstanding shares
of Common Stock of the class issuable upon exercise of this Option) or in case
of any sale, lease or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition precedent to such
transaction, cause effective provisions to be made so that the Holder shall have
the right thereafter by exercising this Option at any time prior to the
expiration of this Option, to purchase the kind and amount of shares of stock
and other securities and property receivable upon such reclassification, capital
reorganization and other change, consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock which might have been purchased
upon exercise of this Option immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Any such provision shall include
provision for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Option. The foregoing
provisions of this Section 10 shall similarly apply to successive
reclassification, capital reorganizations and changes of shares of Common Stock
and to successive consolidations, mergers, sales or conveyances. In the event
that in connection with any such capital reorganization or reclassification,
consolidation, merger, sale or conveyance, additional shares of Common Stock
shall be issued in exchange, conversion, substitution or payment, in whole or in
part, for a security of the Company other than Common Stock, any such issue
shall be treated as an issue of Common Stock covered by the provisions Section 5
hereof.
11. Registration Rights under the Securities Act of 1933.
(a) The Option and the Shares have not been registered for purposes of
public distribution under the Securities Act of 1933, as amended (the "Act").
(b) As used herein the term "Registrable Security" means the Shares and any
shares of Common Stock issued upon any stock split, dividend or stock dividend
in respect of the Shares; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Act and disposed of pursuant thereto, (ii) registration under the Act
is no longer required for subsequent public distribution of such security, or
(iii) it has ceased to be outstanding. The term "Registrable Securities" means
any and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Section 11.
(c) If, at any time during the Exercise Period, the Company proposes to
prepare and file any new registration statement or post-effective amendments
thereto covering equity or debt securities of the Company, or any such
securities of the Company held by its shareholders (in any such case, other than
in connection with a merger, acquisition or pursuant to Form S-8 or successor
form) (for purposes of this Section 11 collectively, a "Company Registration
Statement"), it will give written notice (the "Notice") of its intention to do
so by registered mail, at least thirty (30) business days prior to the filing of
each such Company Registration Statement, to all holders of the Registrable
Securities. Upon the written request of such a holder (a "Requesting Holder"),
made within twenty (20) business days after receipt of the Notice, that the
Company include any of the Requesting Holder's Registrable Securities in the
proposed Company Registration Statement, the Company shall, as to each such
Requesting Holder, use its best efforts to effect the registration under the
Securities Act of the Registrable Securities which it has been so requested to
register ("Piggyback Registration"), at the Company's sole cost and expense and
at no cost or expense to the Requesting Holders (except as to underwriting
discounts and commissions and costs of individual Requesting Holders' counsel
and professional advisors). In the event such Company Registration Statement is
filed with respect to an underwritten offering, inclusion of any Registrable
Securities shall be subject to cutback or exclusion by the underwriter in light
of market conditions. Notwithstanding the provisions of this Section 11, the
Company shall have the right at any time after it shall have given written
notice pursuant to this Section 11 (irrespective of whether any written request
for inclusion of such securities shall have already been made) to elect not to
file any such proposed Company Registration Statement, or to withdraw the same
after the filing but prior to the effective date thereof.
12. Covenants of the Company with respect to Registration. The Company covenants
and agrees as follows:
(a) The Company shall pay all costs, fees and expenses in connection with
all Registration Statements filed pursuant to Section 11 hereof including,
without limitation, the Company's legal and accounting fees, printing expenses,
and blue sky fees and expenses, except for any underwriting discounts or
commissions with respect to the Registrable Securities and except for fees of
counsel and other professional advisors of a holder or group of holders.
(b) The Company will take all necessary action which may be required in
qualifying or registering the Registrable Securities included in a Registration
Statement for offering and sale under the securities or blue sky laws of such
states as are requested by the holders of such securities, provided that the
Company shall not be obligated to so qualify or register the Registrable
Securities in any state that would require the Company to execute or file any
general consent to service of process or to qualify as a foreign corporation to
do business under the laws of any such jurisdiction.
(c) The Company shall indemnify any holder of the Registrable Securities to
be sold pursuant to any Registration Statement and any underwriter or person
deemed to be an underwriter under the Act and each person, if any, who controls
such holder or underwriter or person deemed to be an underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act
of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense
or liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which any of them may
become subject under the Act, the Exchange Act or otherwise, arising from any
untrue statement of a material fact contained in a Registration Statement, any
other registration statement filed by the Company under the Act, any
post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Section 12
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished or required to be furnished in
writing to the Company by the holder of the Registrable Securities or
underwriter expressly for use therein; which indemnification shall include each
person, if any, who controls any such underwriter within the meaning of the Act
and each officer, director, employee and agent of such underwriter; provided,
however, that the Company shall not be obligated to so indemnify such holder or
any such underwriter or other person referred to above unless such holder or
underwriter or other person, as the case may be, shall at the same time
indemnify the Company to the extent required herein. Each person who may be
entitled to indemnification pursuant to the preceding sentence shall indemnify
the Company, its directors, each officer signing the registration statement and
each person, if any, who controls the Company within the meaning of the Act,
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
a Registration Statement, any registration statement or any prospectus required
to be filed or furnished by reason of this Section 12 or caused by any omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or alleged untrue
statement or omission based upon information furnished in writing to the Company
by the Holder or underwriter expressly for use therein.
(d) If for any reason the indemnification provided for in the preceding
subparagraph is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, claim, damage, liability or
expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall contribute to the amount
paid or payable by the indemnified party as a result of such loss, claim, damage
or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
(e) Nothing contained in this Agreement shall be construed as requiring any
holder to exercise the Option prior to the initial filing of any registration
statement or the effectiveness thereof.
DATE OF GRANT: August 1, 1996
FOOD EXTRUSION, INC.
By: /s/ Xxxxxxxx Xxxxxx
[corporate seal] --------------------
President
By: /s/ Xxxxxx X. Xxxxx
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Secretary
The Optionee acknowledges receipt of the Stock Option Agreement attached hereto
and represents that he is familiar with the terms and provisions thereof, and
hereby accepts the Option subject to all of the terms and provisions thereof.
The Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Board of Directors of Food Extrusion, Inc.
upon any questions arising under such Agreement.
Dated:
OPTIONEE:
/s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
CONSENT OF SPOUSE
Xxxxx X. Xxxxxxx
I, ----------------------------------, spouse of the Optionee
who executed the Stock Option Agreement attached hereto, hereby agree that my
spouse's interest in the shares of Common Stock of Food Extrusion, Inc. subject
to said Agreement shall be irrevocably bound by the Agreement's terms. I agree
to accept as binding, conclusive and final all decisions or interpretations of
the Board of Directors of Food Extrusion, Inc. upon any questions arising under
such Agreement. I further agree that my community property interest in such
shares, if any, shall similarly be bound by said Agreement and that such consent
is binding upon my executors, administrators, heirs and assigns. I agree to
execute and deliver such documents as may be necessary to carry out the intent
of said Agreement and this consent.
Dated:
/s/ Xxxxx X. Xxxxxxx
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Signature
Xxxxx X. Xxxxxxx
Print Name
EXHIBIT B
NOTICE OF EXERCISE OF STOCK OPTION
Dated _________, 19__
The undersigned hereby irrevocably elects to exercise the
Option to the extent of purchasing shares of Common Stock and hereby
makes payment of in payment of the actual exercise price
thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name
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(Please typewrite or print in block letters)
Address
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Signature
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EXHIBIT C
ASSIGNMENT FORM
FOR VALUE RECEIVED, ____________________________ hereby sells, assigns and
transfers unto
Name
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(Please typewrite or print in block letters)
Address
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the right to purchase Common Stock represented by this Option to the extent of
shares as to which such right is exercisable and does hereby irrevocably
constitute and appoint Attorney, to transfer the same on the
books of the Company with full power of substitution in the premises.
Date , 19
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Signature
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