EXHIBIT 10.41
APPLIED VOICE RECOGNITION, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Optionee: J. Xxxxxxx Xxxxx
1. GRANT OF STOCK OPTION. As of the GRANT DATE (identified below),
Applied Voice Recognition, Inc., a Delaware corporation doing business as
x-XXXX.xxx (the "COMPANY"), hereby grants a Nonqualified Stock Option (the
"OPTION") to the OPTIONEE (identified below) to purchase the number of shares of
the Company's common stock, $.001 par value per share, identified below (the
"SHARES"), subject to the terms and conditions of this agreement (the
"AGREEMENT") and the Company's 1997 Incentive Plan (the "PLAN") which is
incorporated herein in its entirety by reference. The Shares, when issued to
Optionee upon the exercise of the Option, shall be fully paid and nonassessable.
The Option is not an "incentive stock option" as defined in Section 422 of the
Internal Revenue Code. The Shares underlying the Option will be registered with
the Securities and Exchange Commission at the Company's cost pursuant to a
Registration Statement on Form "S-8."
2. DEFINITIONS. All capitalized terms used herein shall have the meanings
set forth in the Plan unless otherwise provided herein. Section 16 below sets
forth meanings for various capitalized terms used in this Agreement.
3. OPTION TERM. The Option shall commence on the Grant Date (identified
below) and terminate on the date immediately prior to the tenth (10th)
anniversary of the Grant Date. This period during which the Option is in effect
and may be exercised is referred to herein as the "OPTION PERIOD".
4. OPTION PRICE. The Option Price per Share is identified below.
5. VESTING. The total number of Shares subject to this Option shall vest
in accordance with the VESTING SCHEDULE (identified below). Except as set forth
in Section 14 of this Agreement, the Shares may be purchased at any time after
they become vested, in whole or in part, during the Option Period. The right of
exercise provided herein shall be cumulative so that if the Option is not
exercised to the maximum extent permissible after vesting, it shall be
exercisable, in whole or in part, at any time during the Option Period.
6. METHOD OF EXERCISE AND PAYMENT. The Option, to the extent vested,
shall be exercised by the delivery of a signed written notice of exercise to the
Company as of a date set by the Company in advance of the effective date of the
proposed exercise. The notice shall set forth the number of Shares with respect
to which the Option is to be exercised, accompanied by full payment
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for the Shares. The Option Price upon exercise of all or any part of the Option
shall be payable to the Company in full either: (i) in cash or its equivalent,
or (ii) subject to prior approval by the Committee under the Plan, by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered by an Insider, if applicable, must have been held by the Insider for at
least six (6) months prior to their tender to satisfy the Option Price), or
(iii) subject to prior approval by the Committee, by withholding Shares which
otherwise would be acquired on exercise having an aggregate Fair Market Value at
the time of exercise equal to the total Option Price, or (iv) subject to prior
approval by the Committee, by a combination of (i), (ii), and (iii) above. Any
payment in Shares of Common Stock shall be effected by the delivery of such
Shares to the Secretary of the Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with any other documents as the
Secretary shall require from time to time.
The Committee also may allow (i) "cashless exercise" as permitted
under Federal Reserve Board's Regulation T, 12 CFR Part 220 (or its successor),
and subject to applicable securities law restrictions and tax withholdings, or
(ii) by any other means which the Committee, in its discretion, determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of
exercise and full payment, the Company shall deliver to or on behalf of the
Optionee, in the name of the Optionee or other appropriate recipient, Share
certificates for the number of Shares purchased under the Stock Option. Such
delivery shall be effected for all purposes when a stock transfer agent of the
Company shall have deposited such certificates in the United States mail,
addressed to Optionee or other appropriate recipient.
7. TERMINATION AS CHAIRMAN OF BOARD OF DIRECTORS. Voluntary or
involuntary termination of Optionee's service as the Chairman of the Board of
Directors of the Company and death or disability of Optionee shall affect
Optionee's rights under the Option as follows:
(a) Termination for Cause. The Option shall terminate immediately and
shall not be further exercisable to any extent if Optionee's service as the
Chairman of the Board of Directors of the Company (or any of its
Subsidiaries) is terminated for Cause (as defined in the Plan at the time
of such termination).
(b) Other Involuntary Termination or Voluntary Termination. If
Optionee's service as the Chairman of the Board of Directors of the Company
(or any of its Subsidiaries) is terminated for any reason other than for
Cause, death or disability (as defined in the Plan at the time of
termination), then (i) the Option will immediately terminate to the extent
it is unvested, and (ii) the vested portion of the Option will terminate to
the extent not exercised within 90 calendar days after the date of such
termination. In no event may the Option be exercised by anyone after the
earlier of (i) the expiration of the Option Period, or (ii) 90 calendar
days after involuntary termination of Optionee's service as the Chairman of
the Board of Directors of the Company.
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(c) Death or Disability. If Optionee's service as the Chairman of the
Board of Directors of the Company is terminated by death or disability,
then (i) the Option will immediately terminate to the extent it is unvested
and (ii) the vested portion of the Option will terminate 365 calendar days
after the date of such termination to the extent not exercised by Optionee
or, in the case of death, by the person or persons to whom Optionee's
rights under the Option have passed by will or by the laws of descent and
distribution or, in the case of disability, by Optionee's legal
representative. In no event may any Option be exercised by anyone after
the earlier of (i) the expiration of the Option Period or (ii) 365 days
after Optionee's death or termination of service as the Chairman of the
Board of Directors of the Company due to disability.
8. REORGANIZATION OF COMPANY. The existence of the Option shall not
affect in any way the right or power of Company or its stockholders to make or
authorize any or all adjustments, recapitalizations, reorganizations or other
changes in Company's capital structure or its business, or any merger or
consolidation of Company, or any issue of bonds, debentures, preferred or prior
preference stock ahead of or affecting the Shares or the rights thereof, or the
dissolution or liquidation of Company, or any sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.
In the event of a "Change in Control" of the Company (as defined in the
Plan at the time of such event), vesting of the Option will be accelerated and
the Option shall otherwise be affected as provided in the Plan at such time.
9. ADJUSTMENT OF SHARES. In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving
Company, appropriate adjustments shall be made to the terms and provisions of
this Option as provided in the Plan.
10. NO RIGHTS IN SHARES. Optionee shall have no rights as a stockholder
in respect of the Shares until the Optionee becomes the record holder of such
Shares.
11. INVESTMENT REPRESENTATION. Optionee will enter into such written
representations, warranties and agreements as Company may reasonably request in
order to comply with any federal or state securities law. Moreover, any stock
certificate for any Shares issued to Optionee hereunder may contain a legend
restricting their transferability as determined by the Company in its
discretion. Optionee agrees that Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of Shares
hereunder to comply with any law, rule or regulation that applies to the Shares
subject to the Option.
12. NO GUARANTEE OF DIRECTORSHIP, EMPLOYMENT OR SERVICE CONTRACT. The
Option shall not confer upon Optionee any right to directorship, employment or
other service with Company, nor shall it interfere with any right the Company
would otherwise have to terminate such Optionee's service as the Chairman of the
Board of Directors or other service at any time, with or without cause.
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13. WITHHOLDING OF TAXES. Company shall have the right to (i) make
deductions from the number of Shares otherwise deliverable upon exercise of the
Option in an amount sufficient to satisfy withholding of any federal, state or
local taxes required by law, or (ii) take such other action as may be necessary
or appropriate to satisfy any such tax withholding obligations.
14. RESTRICTION ON EXERCISE OF OPTION. Notwithstanding the terms of this
Agreement to the contrary, Optionee acknowledges that Company, as of the Grant
Date, has an insufficient number of authorized, issuable Shares reserved under
the Plan, and Optionee agrees that he will be prohibited from exercising any
portion of the Option until the number of authorized, issuable Shares has been
increased by amendment to Company's Certificate of Incorporation or a sufficient
number of authorized, issuable Shares otherwise becomes available.
15. GENERAL.
(a) Notices. All notices under this Agreement shall be mailed or
delivered by hand to the parties at their respective addresses set forth
beneath their signatures below or at such other address as may be
designated in writing by either of the parties to one another. Notices
shall be effective upon receipt.
(b) Shares Reserved. Company shall at all times during the Option
Period reserve and keep available under the Plan such number of Shares as
will be sufficient to satisfy the requirements of this Option.
(c) Nontransferability of Option. The Option granted pursuant to this
Agreement is not transferable other than by will, the laws of descent and
distribution or by a qualified domestic relations order (as defined in
Section 414(p) of the Internal Revenue Code). The Option will be
exercisable during Optionee's lifetime only by Optionee or by Optionee's
legal representative in the event of Optionee's disability. No right or
benefit hereunder shall in any manner be liable for or subject to any
debts, contracts, liabilities, or torts of Optionee.
(d) Amendment and Termination. No amendment or termination of the
Option shall be made at any time without the written consent of Optionee.
(e) No Guarantee of Tax Consequences. None of the Company, Board or
Committee makes any commitment or guarantee that any federal or state tax
treatment will apply or be available to any person eligible for benefits
under the Option. The Optionee has been advised and been provided the
opportunity to obtain independent legal and tax advice regarding the grant
and exercise of this Option and the disposition of any Shares acquired
thereby.
(f) Severability. In the event that any provision of this Agreement
shall be held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable, but shall not affect the remaining
provisions of the Agreement, and the Agreement shall be construed and
enforced as if the illegal, invalid, or unenforceable provision had not
been included herein.
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(g) Governing Law. The Option shall be construed in accordance with
the laws of the State of Texas without regard to its conflict of law
provisions, to the extent federal law does not supersede and preempt Texas
law.
16. DEFINITIONS AND OTHER TERMS. The following capitalized terms shall
have those meanings set forth opposite them:
(a) Optionee: J. Xxxxxxx Xxxxx
(b) Grant Date: October 1, 2000
(c) Shares: 500,000 Shares of the Company's Common Stock.
(d) Option Price: $0.31 per Share.
(e) Option Period: October 1, 2000 through September 30, 2010 (until
12:00 p.m. CST).
(f) Vesting Schedule: Options shall vest as follows:
Date Options Vesting
---- ---------------
10/1/00 33,333
11/1/00 33,333
12/1/00 33,333
1/1/01 33,333
2/1/01 33,333
3/1/01 33,333
4/1/01 33,333
5/1/01 33,333
6/1/01 33,333
7/1/01 33,333
8/1/01 33,334
9/1/01 33,334
10/1/01 33,334
11/1/01 33,334
12/1/01 33,334
-------
TOTAL: 500,000
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IN WITNESS WHEREOF, this Stock Option Agreement is executed as of the ____
day of October, 2000, to be effective as of October 1, 2000.
COMPANY:
APPLIED VOICE RECOGNITION, INC., a Delaware
corporation, d/b/a x-XXXX.xxx
By: ________________________________________
(Signature)
Name: ______________________________________
(Printed Name)
Title: ______________________________________
Address: 0000 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attn: President
Accepted and agreed this ___ day of October, 2000, to be effective as of
October 1, 2000.
OPTIONEE:
___________________________________________
J. XXXXXXX XXXXX
Address: 10115 Memorial
Xxxxxxx, Xxxxx 00000
Signature Page to
Nonqualified Stock Option Agreement
(J. Xxxxxxx Xxxxx-Chairman)
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