STOCK OPTION AGREEMENT
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AGREEMENT dated as of March 20, 1998 by and between NeTTaxi Online
Communities, Inc., a Delaware corporation, with principal offices located at
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxx, XX 00000 (the "Company"), and Xxxx Xxxxxxxx,
(the "Optionee").
WITNESSETH
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WHEREAS, the Board of Directors of the Company authorized the grant to the
Optionee of an option to purchase 35,000 shares of Common Stock of the Company
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(the "Common Stock"), conditioned upon the Optionee's acceptance thereof upon
the terms and conditions set forth in this Agreement; and,
WHEREAS, the Optionee desires to acquire said option on the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
parties hereto hereby agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee,
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effective as of the date hereof, an option to purchase, 35,000 shares of Common
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Stock at a purchase price of $ .10 per share, subject to the terms and
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conditions set forth herein.
2. Vesting. (a) Subject to Sections 2(b), 3, 7, 9 and 10 hereof,
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this option may be exercised to purchase 35,000 shares of Common Stock in
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accordance with the following schedule; one-third of the shares of Common Stock
underlying this option shall be purchasable on the first anniversary of the date
hereof, an additional one-third shall be purchasable on the second anniversary
of the date hereof, and an additional one-third shall be purchasable on the
third anniversary of the date hereof. This option shall expire and no shares of
Common Stock may be purchased hereunder ten years after the date hereof and
thereafter.
(b) Notwithstanding the provisions of Section 2(a) hereof, this option
shall become immediately exercisable upon a Change in Control Date. For purposes
hereof, a Change in Control Date shall mean the date of the first to occur of a
Liquidation or Sale. A "Liquidation" shall occur upon the voluntary or
involuntary dissolution or winding up of the Company. A "Sale" shall occur, in
any single transaction or series of related transactions, upon
(a) a sale, abandonment, transfer, lease or disposition of all or
substantially of the properties or assets of the Company (other than to any
wholly-owned subsidiary of the Company),
(b) a sale, transfer or other disposition by the Company's shareholders of
securities of the Company representing in excess of 50% of the Common Stock
equivalent voting rights of the Company (on a fully diluted basis) or
(c) a merger or consolidation of the Company with or into any other entity
or entities (other than a merger of the Company with or into a wholly-owned
subsidiary of the Company with no change in beneficial ownership of the
Company). In addition, notwithstanding the provisions of Section 2(a) hereof,
50% of any options which are not exercisable upon the consummation of an initial
public offering and registration of the Common Stock under the Securities Act of
1933, as amended (the "Act") shall become exercisable at such time.
3. Nonqualified Option Withholding Tax, This option shall not be
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deemed an "Incentive Stock Option" under the Internal Revenue Code of 1986, as
amended (the "Code"). Accordingly, the Optionee acknowledges that, under
existing laws and regulations, exercise of this option may be a taxable event
under the Code. In such event, the Optionee will be subject to a withholding tax
on the difference between the purchase price of the shares and their fair market
value on the date of exercise. Any such tax shall be paid to the Company by the
Optionee within two days of receipt of a notice from the Company containing the
amount thereof.
4. Exercise of Option. Subject to the terms and conditions set
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forth herein, the Optionee may exercise this option at any time as to all or any
of the shares of Common Stock then purchasable in accordance with Section 2
hereof by delivering to the Company written notice in the form attached hereto
as Exhibit A. Such notice shall specify:
(a) The number of whole shares of Common Stock to be purchased together
with payment in full of the aggregate option price of such shares, provided that
this option may not be exercised for fewer than one hundred (100) shares of
Common Stock or the number of shares of Common Stock underlying the option that
are exercisable pursuant to Section 2 hereof, whichever is smaller;
(b) The name or names in which the stock certificate or certificates are to
be registered;
(c) The address to which dividends, notices, reports, etc. are to be sent;
and
(d) The Optionee's social security number.
Such notice shall be accompanied by payment of the full purchase price- for the
shares of Common Stock underlying the options which are being exercised. The
purchase price of the shares of Common Stock as to which the Option is exercised
shall be paid in full in U.S. dollars, in cash, or by certified or bank
cashier's check payable to the order of the Company, free from all collection
charges. The purchase price for the shares of Common Stock covered by this
option may also be paid in shares of Common Stock owned by the Optionee having a
Fair Market Value (as hereinafter defined) on the date of exercise equal to the
aggregate purchase price, or in a combination of cash and Common Stock. As is
used herein, the "Fair Market Value" of a share of Common Stock on any day
means; (i) if the principal market for the Common Stock is The New York Stock
Exchange, any other national securities exchange or the NASDAQ National Market,
the closing sales price of the Common Stock on such day as reported by such
exchange or market, or on a consolidated tape reflection transactions on such
exchange or markets, or (ii) if the principal market for the Common Stock is not
a national securities exchange or the NASDAQ National Market and the Common
Stock is quoted on the National Association of Securities Dealers Automated
Quotations System, the mean between the closing bid ad the closing asked prices
for the Common Stock on such day as quoted on such System, or (iii) if the
Common Stock is not quoted on the National Association of Securities Dealers
Automated Quotations Systems, the mean between the highest bid and lowest asked
prices for the Common Stock on such day as reported by the National Quotation
Bureau, Intl; provided that if clauses (i), (ii) and (iii) of this paragraph are
all inapplicable, or if no trades have been made or no quotes are available for
such day, the Fair Market Value of the Common Stock shall be determined by the
Company by any method which it deems to be appropriate. The determination of the
Company shall be conclusive as to the Fair Market Value of the Common Stock. The
Optionee shall not be entitled to any rights as a stockholder of the Company in
respect of any shares of Common Stock underlying this option until such shares
of Common Stock shall have been paid in full and issued to the Optionee.
5. Delivery of Stock Certificate. As soon as practicable after the
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Company received payment for shares of Common Stock covered by this option, it
shall deliver a certificate or certificates representing the shares of Common
Stock so purchased to the Optionee. Only one stock certificate will be issued
unless the Optionee otherwise requests in writing.
6. Nontransferability of Option. This option is personal to the
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Optionee and during the Optionee's lifetime may be exercised only by the
Optionee. This option and the rights and privileges conferred hereby may not be
transferred, assigned, pledged or hypothecated in any way and shall Dot be
subject to execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of this option or any
right or privilege conferred hereby contrary to the provisions hereof, or upon
the levy
or any attachment or similar process on the rights and privileges conferred
hereby, this option and the rights and privileges conferred hereby shall
immediately become null and void.
7. Effect of Terminations of Employment. In the event that the
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Optionee's employment as an employee of the Company and, if applicable, of each
direct or indirect subsidiary corporation (a "Subsidiary") of the Company
(hereinafter the "Optionee's employment) is terminated prior to the time that
this option has been fully exercised, this option shall be exercisable, as to
any remaining shares of Common Stock subject hereto, only to the extent the
option granted hereunder was exercisable pursuant to Section 2 hereof on the
date of the Optionee's employment ceased, whether for cause, death, disability
or any other reason, and the Optionee shall have no right to exercise this
option with respect to any shares of Common Stock which shall not have vested
pursuant to Section 2 hereof, as of the date of the Optionee's employment
ceased.
8. No Right of Continued Employment. This option does not confer on
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the Optionee any right to continue in the employ of the Company or any
Subsidiary or interfere in any way with the right of the Company or any
Subsidiary to determine the terms of the Optionee's employment.
9. Anti-Dilution. In the event of a reorganization,
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recapitalization, stock split, reverse stock split, stock dividend, combination
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of shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of the Company, the number of shares covered by
any unexercised portion of this option and the related purchase price per share
shall be adjusted proportionately.
10. Registration of Shares. This option shall be subject to the
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requirement that if at any time the Board of Directors of the Company shall
determine that the registration, listing or qualification of the shares of
Common Stock covered hereby upon any securities exchange or under any federal or
state law, is necessary or desirable in connection with the granting of this
option or the purchase I of shares hereunder, this option may not be exercised
until such registration, listing or qualification shall have been effected or
obtained. The Board of Directors may require that the person exercising this
option shall make such representations and furnish such information, as it deems
appropriate to assure compliance with the foregoing or any other applicable
legal requirement.
11. Representations and Warranties of Optionee. The Optionee represents
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and warrants to the Company that:
(a) The Optionee is acquiring this option and will acquire the shares of
Common Stock purchasable hereunder for the Optionee's own account
and not with a view towards the distribution, resale, subdivision or
fractionalization of the shares of Common Stock purchased on exercise of this
option;
(b) The Optionee (i) has adequate means of providing for his or her current
needs and contingencies, (ii) has no need for liquidity in an investment in the
Common Stock underlying this options, (iii) can bear the economic risk of losing
his entire investment in the share of Common Stock underlying this option, (iv)
does not have an overall commitment to investments which are not readily
marketable, that is, disproportionate to his or her net worth, and the
Optionee's investment in the Common Stock underlying this option will not cause
such investment to become disproportionate to his or her net worth, (v) has such
knowledge and experience in financial and business matters that the Optionee is
capable of evaluating the risks and merits of an investment in the Company and,
(vi) is not relying on the Company respecting the tax or other economic
considerations of an investment in the Common Stock purchasable hereunder-,
(c) In the Optionee's position with the Company, the Optionee has had
both the opportunity to ask questions and receive answers from the officers and
directors of the Company respecting the Company and an investment in the shares
of Common Stock purchasable hereunder and to obtain any additional information
to the extent the Company possesses or may possess such information or can
acquire it without unreasonable effort or expense; however, no oral
representations have been made or oral information furnished to the Optionee or
his or her representatives respecting an investment in the shares of Common
Stock purchasable hereunder;
(d) Anything in this Agreement to the contrary notwithstanding, the
Optionee hereby agrees that he or she shall not sell, transfer by any means or
otherwise dispose of the shares acquired by the Optionee without registration
under the Act and applicable state securities laws unless (i) an exemption
from the Act and applicable sales securities laws is available, and (ii) the
Optionee has furnished the Company with notice of such proposed transfer and
the Company's legal counsel, in its reasonable opinion, shall deem such proposed
transfer to be so exempt; and
(e) The Optionee is aware that the Company shall place stop-transfer
orders with its transfer agent against the transfer of any shares of Common
Stock purchasable hereunder in the absence of registration under the Act and
applicable state securities laws unless the Optionee complies with the provision
of Section I I (d) hereof.
12. (a) Binding Effect - Successors. Subject to the provisions of
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Section 6 hereof, this Agreement shall be binding upon and inure to the benefit
of each party hereto and to the extent not prohibited herein, their respective
heirs, successors, assigns and representatives.
(b) Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(c) Waiver. The waiver by any party hereto of a breach of any provision
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of this Agreement shall not operate or be construed as a waiver of any other or
subsequent breach.
(d) Entire Agreement . This Agreement constitutes the entire agreement
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between the parties hereto with respect to the subject matter hereof and may be
modified or amended only by an instrument in writing signed by the party against
whom enforcement is sought.
(e)Notices, Any notice, demand, request or consent to be given or
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served in connection herewith shall be in writing and shall be deemed to have
been given and received by the respective par-ties designated therein on the day
on which delivered by messenger to the receiving party at the address set forth
herein (or at such other address as such party shall specify to the other
parties in writing pursuant to this Section) or, if sent by certified or
registered mail postage prepaid, return receipt requested, on the, second day
after the day on which mail to such party at such address.
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto as of
the date first set forth above.
NETTAXI ONLINE COMMUNITIES, INC.
By: Xxxxxx X. Xxxxxxxx, Xx. CEO
By: Xxxx Xxxxxxxx, President
OPTIONEE: Xxxx Xxxxxxxx
Address 0000 Xxxxxxxx Xxx.
Xxx Xxxx, XX 00000
EXHIBIT A
FORM OF NOTICE OF EXERCISE OPTION
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(Date)
NeTTaxi Online Communities, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Ladies and Gentlemen:
In accordance with the Stock Option Agreement (the, "Stock Option Agreement")
dated as of March 20, 1998 between me and Nettaxi Online Communities, Inc, ("the
Company"), I wish to purchase ____________ shares of Common Stock of the
Company. I understand that if I should transfer ownership of these shares within
one year from the date of this letter, I must promptly notify you in writing.
I hereby certify that the representations I made in the Stock Option Agreement
are true and correct on and as of the date hereof.
As payment for my shares, enclosed is my check payable to NeTTaxi Online
Communities, Inc. in the amount of $______ and/or securities of the Company
having a value of $______ as determined in accordance with the Stock Option
Agreement.
Kindly forward to me a stock certificate issued in my name at your earliest
convenience. I understand that delivery of these shares will take approximately
two weeks.
Very truly yours
___________________________________________________
(Signature)
___________________________________________________
(Print name)
Address: _________________________________________
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Social Security Number: __________________________
