STOCK OPTION AWARD AGREEMENT
THIS AGREEMENT is dated as of the 17th day of March, 2004, by and between
SURFNET MEDIA GROUP, INC., a Delaware corporation ("SurfNet"), and
Xxxxxx X. Xxxxx, a Georgia resident (the "Participant"). Unless
otherwise expressly provided herein, capitalized terms used herein have the same
meanings assigned to them in the SurfNet 2004 Stock Plan (the "Plan").
Recitals
A. Participant, in accordance with the Plan has been granted as of the date
hereof (the "Award Date") an incentive stock option, (as defined in Section 422
of the Internal Revenue Code of 1986, as amended, ("Option" or "Award") to
purchase all or any part of the total number of shares of Common Stock of
SurfNet set forth on Schedule I upon the terms and conditions hereinafter set
forth.
B. Participant and SurfNet desire to enter into a written agreement in
accordance with the Plan.
Agreement
In consideration of the mutual promises and covenants made herein and the mutual
benefits to be derived herefrom, the parties hereto agree as follows:
1. Grant of Option. SurfNet has granted to the Participant as a matter of
separate inducement and agreement in connection with his employment by
SurfNet or any of its existing or future subsidiaries, and not in lieu of
any salary or other compensation for her services, the right and option to
purchase, in accordance with the Plan and on the terms and conditions of
the Plan and those hereinafter set forth, all or any part of the total
number of shares of Common Stock set forth on Schedule I at the exercise
price per share set forth on Schedule I attached hereto and incorporated
herein by reference (the "Price"), exercisable from time to time subject to
the provisions of this Agreement prior to the close of business on March
16, 2014 (the "Expiration Date"). Such Price has been determined by the
Committee in accordance with Section 3.2 of the Plan.
2. Exercisability of Option. Except as otherwise provided in this Agreement,
the Option may be exercised in accordance with the vesting schedule set
forth on Schedule II attached hereto and incorporated herein by reference
and the Option may only be exercised at any given time to the extent the
Option has vested in accordance with Schedule II; provided, however, that
the Option may not be exercised as to less than 1,000 shares at any one
time unless the number of shares purchased is the total number at the time
available for purchase under the Option. The Option may be exercised only
as to whole shares; fractional share interests will be disregarded except
that they may be accumulated.
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3. Method of Exercise and Payment. Each exercise of any part of the Option
will be by means of written notice of exercise duly delivered to SurfNet,
specifying the number of whole shares with respect to which the Option is
being exercised, together with any written statements required pursuant to
Section 10 below and payment of the Price in full (i) in cash or by
certified or cashier's check payable to the order of SurfNet, (ii) if
permitted by applicable law, by a promissory note made by the Participant
in favor of SurfNet, upon the terms and conditions determined by the
Committee, and secured by the Common Stock issuable upon exercise in
compliance with applicable law (including, without limitation, state
corporate law and federal margin requirements), (iii) by shares of Common
Stock of SurfNet already owned by the Participant, or (iv) by application
of the then market value of vested Options of SurfNet (net of the Option
price); provided, however, the Committee may in its absolute discretion
limit the Participant's ability to exercise the Option by delivering
shares, and any shares delivered which were initially acquired upon
exercise of a stock option must have been owned by the Participant at least
six months as of the date of delivery.
4. Continuance of Employment. Nothing contained in this Agreement or in the
Plan will confer upon the Participant any right to continue in the employ
of SurfNet or constitute any contract or agreement of employment. Nothing
contained in this Agreement or in the Plan will interfere in any way with
the right of SurfNet to (i) terminate the employment of the Participant, or
(ii) reduce the compensation received by the Participant from the rate in
existence on the Award Date provided that nothing herein will modify any
written employment agreement as may now exist or hereinafter be entered
into between Participant and SurfNet.
5. Effect of Termination of Relationship.
(a) If the Participant ceases to be employed by SurfNet for any
reason, the Option will terminate to the extent not vested. In no
event may any Option be exercised by any person after the
Expiration Date.
(b) Except as may be otherwise provided in Section 422 of the
Internal Revenue Code of 1986, as amended, or in the Plan, upon
termination of Participant's employment by reason of retirement,
disability or death, the Option, to the extent vested, may be
exercised by the Participant or her executor or administrator, as
the case may be, at any time during the Option period.
(c) Any transfer of Participant's employment between SurfNet and any
of its existing or future subsidiaries or between any two
subsidiaries will not be deemed to be a termination of
Participant's employment for purposes of implementation of the
Plan.
6. Non-Assignability of Option. Interests in the Option will not be subject
to sale, transfer, pledge, assignment or alienation other than by will or the
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laws of descent and distribution regardless of any interest therein of the
Participant's spouse or such spouse's successor in interest.
7. Adjustments upon Specified Changes. As set forth in Section 4.2 of the
Plan, upon the occurrence of specified events relating to SurfNet' stock,
adjustments will be made in the number and kind of shares that may be
issuable under an Option. In addition, upon the occurrence of other
specified events relating to SurfNet, such as its dissolution or
liquidation, a reorganization, merger or consolidation in which it is not
the surviving corporation, or upon sale of all or substantially all of
SurfNet' property, the provisions of Section 4.4 of the Plan will govern.
8. Participant not a Shareholder. Neither the Participant nor any other person
entitled to exercise the Option will have any of the rights or privileges
of a shareholder of SurfNet as to any shares of Common Stock not actually
issued and delivered to her. No adjustment will be made for dividends or
other rights for which the record date is prior to the date on which such
stock certificate or certificates are issued even if such record date is
subsequent to the date upon which notice of exercise was delivered and the
tender of payment was accepted.
9. Application of Securities Laws.
(a) No shares of Common Stock may be purchased pursuant to the Option
unless and until any then applicable requirements of the Securities
and Exchange Commission and any other regulatory agencies, including
any other state securities law commissioners having jurisdiction over
SurfNet or such issuance, and any exchanges upon which the Common
Stock may be listed, will have been fully satisfied. The Participant
represents, agrees and certifies that if the Participant exercises the
Option in whole or in part, the Participant will acquire the Common
Stock issuable upon such exercise for the purpose of investment and
not with a view to resale or distribution and that, as a condition to
each such exercise, he will furnish to SurfNet a written statement to
such effect, satisfactory in form and substance to SurfNet.
(b) The Participant understands that the certificate or certificates
representing the Common Stock acquired pursuant to the Option may bear
a legend referring to the fact that the Common Stock has not been
registered under the Securities Act of 1933, as amended (the
"Securities Act"), and has not been qualified under any state
securities laws and any limitations under the Securities Act and state
securities laws with respect to the transfer of such Common Stock, and
SurfNet may impose stop transfer instructions to implement such
limitations, if applicable. Any person or persons entitled to exercise
the Option under the provisions of Section 5 above will be bound by
and obligated under the provisions of this Section 9 to the same
extent as is the Participant.
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(c) The Committee may impose such conditions on an Option or on its
exercise or acceleration or on the payment of any withholding
obligation (including without limitation restricting the time of
exercise to specified periods) as may be required to satisfy
applicable regulatory requirements.
(d) If at any time prior to the Expiration Date, SurfNet causes a
registration statement ("Registration") under the Securities Act to
become effective with respect to any shares of its Common Stock,
SurfNet will, within one hundred eighty (180) calendar days of the
effective date of the Registration prepare and file with the
Securities and Exchange Commission a registration statement on Form
S-8 or any successor or similar forms with respect to the shares of
its Common Stock reserved for issuance pursuant to the Plan and use
its reasonable commercial efforts to cause such registration statement
to become effective, and prepare and file with the Securities and
Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective.
10. Notices. All notices and other communications required or permitted under
this Agreement will be delivered to the parties at the address set forth
below their respective signature blocks, or at such other address that they
hereafter designate by notice to all other parties in accordance with this
Section. All notices and communications will be deemed to be received in
accordance with the following: (i) in the case of personal delivery, on the
date of such delivery; (ii) in the case of facsimile transmission, on the
date on which the sender receives confirmation by facsimile transmission
that such notice was received by the addressee, provided that a copy of
such transmission is additionally sent by mail as set forth in (iv) below;
(iii) in the case of overnight air courier, on the second business day
following the day sent, with receipt confirmed by the courier; and (iv) in
the case of mailing by first class certified mail, postage prepaid, return
receipt requested, on the fifth business day following such mailing.
11. Effect of Agreement. The Agreement is not assignable, in whole or in part,
by either party without the written consent of the other party, except that
the Agreement may be assigned by (i) SurfNet, without the consent of
Participant, upon the occurrence of a Change in Control as described in
Section 4.2(b) of the Plan, and (ii) any Beneficiary or Personal
Representative of the Participant, without the consent of SurfNet, as
provided in Section 4.3 of the Plan. After any such assignment by SurfNet,
SurfNet will be discharged from all further liability hereunder, and such
assignee will thereafter be deemed to be SurfNet for the purposes of all
provisions of this Agreement including this Section 11.
12. Tax Withholding. The provisions of Section 4.6 of the Plan are hereby
incorporated and will govern any withholding that SurfNet employing the
Participant is required to make with respect to an exercise of the Option,
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as well as SurfNet' right to condition a transfer of Common Stock upon
compliance with the applicable withholding requirements of federal, state
and local authorities.
13. Terms of Plan Govern. The Option and this Agreement are subject to, and
SurfNet and the Participant agree to be bound by, all of the terms and
conditions of the Plan. The Participant acknowledges receipt of a copy of
the Plan, which is made a part hereof by this reference. The rights of the
Participant are subject to limitations, adjustments, modifications,
suspension and termination in certain circumstances and upon the occurrence
of certain conditions as set forth in the Plan.
14. Compulsory Arbitration. Any controversy, claim and/or dispute arising out
of or relating to this Agreement or the breach hereof or subject matter
hereof (including any action in tort) will be finally and settled by
arbitration in the county in which the principal office of SurfNet is
located in accordance with the then-existing Commercial Arbitration Rules
of the American Arbitration Association (the "AAA"), and judgment upon the
award rendered by the arbitrators may be entered in any court having
applicable jurisdiction. Written notice of demand for arbitration will be
given to the other parties and to the AAA within six (6) months after the
controversy, claim or dispute has arisen or be barred, and in no event
after the date when the institution of court proceedings based on such
dispute would be barred by the applicable of statute of limitations.
Controversies, claims and/or disputes involving sums of less than $250,000
will be resolved by one arbitrator selected by the mutual agreement of the
parties or, failing that agreement within forty-five (45) days after
written notice demanding arbitration, by the AAA. All other controversies,
claims and disputes will be resolved by three arbitrators chosen in the
same fashion as one arbitrator would be in accordance with the foregoing.
There will be limited discovery prior to the arbitration hearing as
follows: (i) exchange of witness lists and copies of documentary evidence
and documents related to or arising out of the issues to be arbitrated, and
(ii) depositions of all party witnesses. Depositions will be conducted in
accordance with the rules or code of Civil Procedure of the jurisdiction in
which the arbitration is conducted, and a court reporter will record all
hearings, with such record constituting the official transcript of such
proceedings. All decisions of the arbitrator(s) will be in writing, and the
arbitrator(s) will provide reasons for the decision.
15. Governing Law. This Agreement will be deemed to have been executed in the
State of Delaware and will be governed and construed as to both substantive
and procedural matters in accordance with the laws of the State of
Delaware, but excepting (i) any State of Delaware rule which would result
in judicial failure to enforce the arbitration provisions of Section 14
hereof or any portion thereof and (ii) any State of Delaware rule which
would result in the application of the law of a jurisdiction other than the
State of Delaware. Any dispute arising from this Agreement must be filed in
the county in which the principal office of SurfNet is located.
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16. Notice of Disposition. The Participant agrees to notify SurfNet of any sale
or other disposition of any shares of Common Stock received upon exercise
of the Option if such sale or disposition occurs within two years after the
Award Date or within one year after the date of exercise of the Option.
17. Waiver. The failure of a party to insist upon strict adherence to any term,
condition or other provision of this Agreement will not be considered a
waiver or deprive that party of the right thereafter to insist upon strict
adherence to that term or any other term, condition or other provision of
this Agreement.
18. Counterparts. This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which will be deemed to be
an original, but all such counterparts will together constitute one and the
same instrument.
19. Binding Effect. Except as otherwise set forth herein to the contrary, all
of the terms, covenants, agreements and conditions herein contained will be
binding upon and will inure to the benefit of all of the parties hereto,
and their respective successors and permitted assigns.
20. Severability. In the event that any one or more of the provisions, or parts
of any provisions, contained in this Agreement will for any reason be held
to be invalid, illegal or unenforceable in any respect by a court of
competent jurisdiction, the same will not invalidate or otherwise affect
any other provisions hereof, and this Agreement will be construed as if
such invalid, illegal or unenforceable provision or part of any provision
had never been contained herein.
21. Headings. The headings of this Agreement are solely for convenience of
reference and will not affect its interpretation.
22. Identification. Whenever the singular number is used in this Agreement and
when required by the context, the same will include the plural, and the
masculine gender will include the feminine and neuter genders.
23. Further Assurances. The parties hereto will sign such other instruments,
cause such meetings to be held, resolutions passed and by-laws enacted,
exercise their vote and influence, do and perform and cause to be done and
performed such further and other acts and things as may be necessary or
desirable in order to give full effect to this Agreement.
24. Complete Agreement. This Agreement, along with the Plan, contains the
entire agreement of the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings, whether written or
oral, with respect to such subject matter, and the parties have made no
agreements, representations or warranties relating to the subject matter of
this Agreement which are not set forth herein. If a conflict is determined
to exist among any of the aforementioned agreements, the terms of the Plan
will control.
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25. Amendment. The Agreement may not be amended, modified, superseded, canceled
or terminated, and any of the matters, covenants, representations.
warranties or conditions hereof may not be waived, except by written
instrument.
IN WITNESS WHEREOF, the parties hereto have executed her Agreement as of
the date first above written.
SurfNet:
SURFNET MEDIA GROUP, INC.
/s/ Xxxx Xxxxxxxxx
By:___________________________
Xxxx Xxxxxxxxx
Executive Vice President
Optionee:
/s/ Xxxxxx X. Xxxxx
____________________
Xxxxxx X. Xxxxx
Address: _____________________
SSN: _____________________
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SCHEDULE I
Number of Option Shares: 60,000
Exercise Price Per Share: $1.60
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SCHEDULE II
VESTING OF OPTIONS
The Option vests sequentially at the rate of 50% per year, with the first
installment of the option exercisable on and after March 16, 2005, and the
second and final installment of the option exercisable on or after March 16,
2006.
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