EXHIBIT 10.1
DIGITAL IMAGING RESOURCES INC.
STOCK OPTION AGREEMENT
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RECITALS
A. The Board of this Corporation has granted to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, by
action taken at a meeting of the Board held on December 15, 2004, an option to
purchase 100,000 shares of the Corporation's Common Stock exercisable at a price
of $0.20 per share; and
B. Optionee has rendered valuable services to the Corporation and the
grant of the option and this Agreement are executed in partial consideration of
those services. C. All capitalized terms in this Agreement shall have the
meaning assigned to them in Paragraph 12 of this Agreement.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the
Grant Date, an option to purchase up to the number of Option Shares specified in
Recital A. Subject to Paragraph 4, the Option Shares shall be purchasable from
time to time during the option term specified in Paragraph 2 at the Exercise
Price.
2. Option Term. This option shall have a maximum term of ten (10) years
measured from the Grant Date and shall accordingly expire at the close of
business on the Expiration Date.
3. Limited Transferability. This option shall be neither transferable nor
assignable by Optionee other than by will or by the laws of descent and
distribution following Optionee's death and may be exercised, during Optionee's
lifetime, only by Optionee, provided, however,. this option may, in connection
with the Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of the Optionee's immediate family or
to a trust established for the exclusive benefit of the Optionee and/or one or
more such family members. The assigned portion shall be exercisable only by the
person or persons who acquire a proprietary interest in the option pursuant to
such assignment. The terms applicable to the assigned portion shall be the same
as those in effect for this option immediately prior to such assignment.
4. Dates of Exercise. This option shall become exercisable for the Option
Shares in installments for thirty three and one-third percent (33 1/3%) of the
Option Shares upon each twelve month anniversary of the Grant Date. As the
option becomes exercisable for such installments, those installments shall
accumulate and the option shall remain exercisable for the accumulated
installments until the Expiration Date.
5. Adjustment in Option Shares; Anti-Dilution Adjustments.
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(a) Should any change be made to the Common Stock by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation's receipt of consideration, appropriate adjustments
shall be made to (i) the total number and/or class of securities subject to this
option and (ii) the Exercise Price in order to reflect such change and thereby
preclude a dilution or enlargement of benefits hereunder.
(b) In the event that, prior to the Expiration Date, the
Corporation shall consummate a merger, consolidation, share exchange or other
reorganization, or any other transaction pursuant to which the holders of the
Corporation's Common Stock receive or become entitled to receive securities,
cash or other assets or any combination thereof, the Optionee shall be entitled
to receive upon exercise of this Option from time to time in accordance with the
terms of this Agreement, the amount of cash, securities, or other assets that
Optionee would have been entitled to receive or become entitled to receive had
such Optionee been the record holder of the number of shares of the
Corporation's Common Stock issuable to Optionee on full exercise of this Option
had the merger, consolidation, share exchange or other reorganization, or other
transaction occurred immediately prior to the consummation of such transaction.
(c) The Exercise Price shall be subject to adjustment from time to
time as hereinafter provided. Upon each adjustment of the Exercise Price, the
holder of this option shall thereafter be entitled to purchase, at the Exercise
Price resulting from such adjustment, the number of shares of Common Stock
resulting from dividing the number of Option Shares by the number of shares of
Common Stock of the Corporation outstanding immediately prior to such adjustment
and multiplying the product thereof by the number of shares of Common Stock of
the Corporation outstanding, including shares deemed to be outstanding pursuant
to Paragraphs 5(c)(A)(i) and (ii), immediately after such adjustment.
(A) Adjustment of Exercise Price Upon Issuance of Common
Stock.
(x) If and whenever after the date hereof the Corporation
shall issue or sell any Common Stock for no consideration or for a
consideration per share less than the Exercise Price, then, forthwith
upon such issue or sale, the Exercise Price shall be reduced (but not
increased, except as otherwise specifically provided in Paragraph 5(a)
hereof), to the lower price per share (calculated to the nearest
one-ten thousandth of a cent) but in any event not less than $0.001 per
share.
(y) Notwithstanding the provisions of this Paragraph 5(c)(A),
no adjustment shall be made in the Exercise Price in the event that the
Corporation issues, in one or more transactions, (i) Common Stock or
convertible securities upon exercise of any options issued to officers,
directors or employees of the Corporation pursuant to a stock option
plan or an employment, severance or consulting agreement as now or
hereafter in effect, in each case approved by the Board of Directors
(provided that the aggregate number of shares of Common Stock which may
be issuable, including options issued prior to the date hereof, under
all such employee plans and agreements shall at no time exceed the
number of such shares of Common Stock that are issuable under currently
effective employee plans and agreements); or (ii) Common Stock upon
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exercise of any stock purchase warrant or option (other than the
options referred to in clause (i) above) or other convertible security
outstanding on the date hereof. In addition, for purposes of
calculating any adjustment of the Exercise Price as provided in this
Section, all of the shares of Common Stock issuable pursuant to any of
the foregoing shall be assumed to be outstanding prior to the event
causing such adjustment to be made.
For purposes of this Paragraph 5(c)(A), the following
Subparagraphs (i) to (iii) inclusive, shall be applicable:
(i) Issuance of Rights or Options. In case at any time
after the date hereof the Corporation shall in any manner grant
(whether directly or by assumption in a merger or otherwise) any rights
to subscribe for or to purchase, or any options for the purchase of,
Common Stock or any stock or securities convertible into or
exchangeable for Common Stock (such convertible or exchangeable stock
or securities being herein called "Convertible Securities"), whether or
not such rights or options or the right to convert or exchange any such
Convertible Securities are immediately exercisable, and the price per
share for which shares of Common Stock are issuable upon the exercise
of such rights or options or upon conversion or exchange of such
Convertible Securities (determined by dividing (i) the total amount, if
any, received or receivable by the Corporation as consideration for the
granting of such rights or options, plus the minimum aggregate amount
of additional consideration, if any, payable to the Corporation upon
the exercise of such rights or options, or plus, in the case of such
rights or options that relate to Convertible Securities, the minimum
aggregate amount of additional consideration, if any, payable upon the
issue or sale of such Convertible Securities and upon the conversion or
exchange thereof, by (ii) the total maximum number of shares of Common
Stock issuable upon the exercise of such rights or options or upon the
conversion or exchange of all such Convertible Securities issuable upon
the exercise of such rights or options) shall be less than the Exercise
Price in effect as of the date of granting such rights or options, then
the total maximum number of shares of Common Stock issuable upon the
exercise of such rights or options or upon conversion or exchange of
all such Convertible Securities issuable upon the exercise of such
rights or options shall be deemed to be outstanding as of the date of
the granting of such rights or options and to have been issued for such
price per share, with the effect on the Exercise Price specified in
Paragraph 5(c) hereof. Except as provided in Paragraph 5(c) hereof, no
further adjustment of the Exercise Price shall be made upon the actual
issuance of such Common Stock or of such Convertible Securities upon
exercise of such rights or options or upon the actual issuance of such
Common Stock upon conversion or exchange of such Convertible
Securities.
(ii) Change in Option Price or Conversion Rate. Upon the
happening of any of the following events, namely, if the purchase price
provided for in any right or option referred to in Subparagraph
5(c)(A)(i), the additional consideration, if any, payable upon the
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conversion or exchange of any Convertible Securities referred to in
Subparagraph 5(c)(A)(i), or the rate at which any Convertible
Securities referred to in Subparagraph 5(c)(A)(i), are convertible into
or exchangeable for Common Stock shall change (other than under or by
reason of provisions designed to protect against dilution), the
Exercise Price then in effect hereunder shall forthwith be readjusted
(increased or decreased, as the case may be) to the Exercise Price that
would have been in effect at such time had such rights, options or
Convertible Securities still outstanding provided for such changed
purchase price, additional consideration or conversion rate, as the
case may be, at the time initially granted, issued or sold. On the
expiration of any such option or right referred to in Subparagraph
5(c)(A)(i), or on the termination of any such right to convert or
exchange any such Convertible Securities referred to in Subparagraph
5(c)(A)(i), the Exercise Price then in effect hereunder shall forthwith
be readjusted (increased or decreased, as the case may be) to the
Exercise Price that would have been in effect at the time of such
expiration or termination had such right, option or Convertible
Securities, to the extent outstanding immediately prior to such
expiration or termination, never been granted, issued or sold, and the
Common Stock issuable thereunder shall no longer be deemed to be
outstanding. If the purchase price provided for in Subparagraph
5(c)(A)(i) or the rate at which any Convertible Securities referred to
in Subparagraph 5(c)(A)(i) are convertible is reduced at any time under
or by reason of provisions with respect thereto designed to protect
against dilution, then in case of the delivery of Common Stock upon the
exercise of any such right or option or upon conversion or exchange of
any such Convertible Securities, the Exercise Price then in effect
hereunder shall, if not already adjusted, forthwith be adjusted to such
amount as would have obtained had such right, option or Convertible
Securities never been issued as to such Common Stock and had
adjustments been made upon the issuance of the Common Stock delivered
as aforesaid, but only if as a result of such adjustment the Exercise
Price then in effect hereunder is thereby reduced.
(iii) Consideration for Stock. In case at any time Common
Stock or Convertible Securities or any rights or options to purchase
any such Common Stock or Convertible Securities shall be issued or sold
for cash, the consideration therefor shall be deemed to be the amount
received by the Corporation therefor. In case at any time any Common
Stock, Convertible Securities or any rights or options to purchase any
such Common Stock or Convertible Securities shall be issued or sold for
consideration other than cash, the amount of the consideration other
than cash received by the Corporation shall be deemed to be the fair
value of such consideration, as determined reasonably and in good faith
by the Board of Directors of the Corporation. In case at any time any
Common Stock, Convertible Securities or any rights or options to
purchase any Common Stock or Convertible Securities shall be issued in
connection with any merger or consolidation in which the Corporation is
the surviving corporation, the amount of consideration received
therefor shall be deemed to be the fair value, as determined reasonably
and in good faith by the Board of Directors of the Corporation, of such
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portion of the assets and business of the nonsurviving corporation as
such Board of Directors may determine to be attributable to such Common
Stock, Convertible Securities, rights or options as the case may be. In
case at any time any rights or options to purchase any shares of Common
Stock or Convertible Securities shall be issued in connection with the
issuance and sale of other securities of the Corporation, together
consisting of one integral transaction in which no consideration is
allocated to such rights or options by the parties, such rights or
options shall be deemed to have been issued with consideration.
(d) If any event or condition occurs as to which other provisions
of this Paragraph 5 are not strictly applicable or if strictly applicable would
not fairly protect the exercise or purchase rights of this option in accordance
with the essential intent and principles of such provisions, or that might
materially and adversely affect the exercise or purchase rights of the holder
hereof under any provisions of this option, then the Corporation shall make such
adjustments in the application of such provisions, in accordance with such
essential intent and principles, so as to protect such exercise and purchase
rights as aforesaid, and any adjustments necessary with respect to the Exercise
Price and the number of Option Shares purchasable hereunder so as to preserve
the rights of the Optionee hereunder. In no event shall any such adjustment have
the effect of increasing the Exercise Price as otherwise determined pursuant to
this option except in the event of a combination of shares of the type
contemplated in Paragraph 5(a) hereof, and then in no event to an amount greater
than the Exercise Price as adjusted pursuant to Paragraph 5(a) hereof.
6. Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price and become a holder of record
of the purchased shares.
7. Manner of Exercising Option.
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(a) In order to exercise this option with respect to all
or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the
option) must take the following actions:
(i) Execute and deliver to the Corporation a
Notice of Exercise for the Option Shares for which the option
is exercised.
(ii) Pay the aggregate Exercise Price for the
purchased shares in one or more of the following forms:
(A) cash or check made payable to the
Corporation; or
(B) through a "cashless" or "net-issue" exercise
of such Option ("Cashless Exercise"); whereby the
Optionee shall exchange such number of Option Shares
subject to the Notice of Exercise for that number of
shares of Common Stock determined by multiplying the
number of Option Shares subject to the Notice of
Exercise by a fraction, the numerator of which shall
be the difference between (x) the Market Price and
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(y) the Exercise Price for each such Option Shares
subject to the Notice of Exercise, and the
denominator of which shall be the Market Price; the
Exercise Notice shall set forth the calculation upon
which the Cashless Exercise is based, or
(C) a combination of (A) and (B) above;
Except to the extent the Cashless Exercise procedure
is utilized in connection with the option exercise,
payment of the Exercise Price must accompany the
Notice of Exercise delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate
documentation that the person or persons exercising the option
(if other than Optionee) have the right to exercise this
option.
(b) As soon as practical after the Exercise Date, the
Corporation shall issue to or on behalf of Optionee (or any other
person or persons exercising this option) a certificate for the fully
paid and non-assessable shares of Common Stock purchased, with any
appropriate legends affixed thereto.
(c) In no event may this option be exercised for any
fractional shares.
8. Compliance with Laws and Regulations. The exercise of this option and
the issuance of the Option Shares upon such exercise shall be subject to
compliance by the Corporation and Optionee with all applicable requirements of
law relating thereto and with all applicable regulations of any stock exchange
(or the Nasdaq Market, if applicable) on which the Common Stock may be listed
for trading at the time of such exercise and issuance.
9. Successors and Assigns. Except to the extent otherwise provided in
Paragraph 3, the provisions of this Agreement shall inure to the benefit of, and
be binding upon, the Corporation and its successors and assigns and Optionee,
Optionee's assigns and the legal representatives, heirs and legatees of
Optionee's estate.
10. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address hereinafter provided or such other address as last provided by
Optionee to the Corporation. All notices shall be deemed effective upon personal
delivery or upon deposit in the mail, postage prepaid and properly addressed to
the party to be notified.
11. Governing Law. The interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware without resort
to that State's conflict-of-laws rules.
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12. The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Board shall mean the Corporation's Board of Directors.
C. Common Stock shall mean shares of the Corporation's common
stock, par value $0.001 per share.
D. Corporation shall mean Digital Imaging Resources Inc., a
Delaware corporation, its successors and assigns.
E. Exercise Date shall mean the date on which the option shall
have been exercised in accordance with Paragraph 7 of the Agreement.
F. Exercise Price shall mean the exercise price per Option Share
as specified in Recital A of this Agreement.
G. Expiration Date shall mean ten (10) years after the Grant
Date.
L. Fair Market Value per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is at the time listed on any
Stock Exchange or is traded on the Nasdaq Market, then the Fair Market
Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Board to
be the primary market for the Common Stock, as such price is officially
quoted in the composite tape of transactions on such exchange, or on
the Nasdaq Market. If there is no closing selling price for the Common
Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such
quotation exists.
(ii) If the Common Stock is at the time traded on the
over-the counter market, then the Fair Market Value shall be the
closing selling price per share of Common Stock on the date in
question, as such price is reported on the NASD Bulletin Board or the
Pink Sheets, or any successor of either. If there is no closing selling
price for the Common Stock on the date in question, then the Fair
Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.
(iii) If the Common Stock is not then listed or admitted to
trading on any securities exchange or electronic quotation system, then
the Fair Market Value shall be the average of the bid and asked prices
as reported by any other reputable quotation service, or if there shall
be no bid and asked prices on such day, the average of the high bid and
low asked prices, as so reported, on the most recent day (not more than
thirty (30) days prior to the date in question) for which prices have
been so reported, and, if there are no bid and asked prices reported
during the thirty (30) days prior to the date in question, the Fair
Market Value shall be determined in good faith by the Board.
▇. ▇▇▇▇▇ Date shall mean December 15, 2004.
N. Notice of Exercise shall mean the notice of exercise in the
form attached hereto as Exhibit I.
O. Option Shares shall mean the number of shares of Common Stock
subject to the option as set forth in Recital A to this Agreement.
P. Optionee shall mean the person to whom the option is granted
as specified in Recital A of this Agreement.
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Q. Stock Exchange shall mean the American Stock Exchange or the
New York Stock Exchange.
IN WITNESS WHEREOF, this Agreement has been signed by the Corporation
on the date hereinafter provided.
DATED:_________, 2006
Digital Imaging Resources Inc.
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Title: President
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Duly Authorized
OPTIONEE ADDRESS:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Digital Imaging Resources Inc. (the "Corporation") that
I elect to purchase _________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $___ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to me
December 15, 2004. Concurrently with the delivery of this Exercise Notice to the
Corporation, I shall hereby pay to the Corporation the Exercise Price for the
Purchased Shares in accordance with the provisions of my agreement with the
Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a condition
for exercise.
__________________, 200
Date
Optionee Address:
________________________________________________________________________________
________________________________________________________________________________
Print name in exact manner
it is to appear on the
stock certificate:__________________________________________________
Cashless Exercise Calculation:
(i) Number of Option Shares subject to the Notice of Exercise times
(ii) a fraction, (a) the numerator of which shall be the difference between (x)
the Market Price and (y) the Exercise Price for each such Option Shares subject
to the Notice of Exercise, and (b) the denominator of which shall be the Market
Price.
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