Exhibit 10.6
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (the "Agreement"), made and entered into as
of this 19th day of December 2001, by and between USA Broadband, Inc., a
Delaware corporation (the "Company"), and Xxxxx X. Xxxxxx ("Executive").
R E C I T A L S:
A. Executive and the Company are parties to a Separation Agreement
dated December 19, 2001 (the "Separation Agreement").
B. Pursuant to SECTION 2(c) of the Separation Agreement, Executive has
been granted this Option to purchase from the Company shares of common stock of
the Company ("Common Stock") on the terms and conditions set forth below.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
GRANT OF OPTIONS
1.1 GRANT OF OPTIONS; VESTING; EXERCISE PRICE. As partial consideration
for entering into the Separation Agreement, the Company hereby grants to
Executive the right and option to purchase from the Company (the "Option"), upon
the terms and subject to the vesting requirements and other conditions
hereinafter set forth, in whole or in part, from time to time, up to TWO HUNDRED
THIRTY-FIVE THOUSAND (235,000) shares (the "Option Shares") of Common Stock.
Executive shall have the right to purchase Option Shares under this Option
according to the following schedule and on each of the following dates (each a
"Vesting Date" and collectively, the "Vesting Dates") at each of the following
purchase prices (the "Exercise Price"):
(a) EIGHTY-FIVE THOUSAND (85,000) of the Option Shares on or
after the date of this Agreement for a purchase price equal to $1.50
per Option Share;
(b) SEVENTY-FIVE THOUSAND (75,000) of the Option Shares on or
after April 1, 2002 for a purchase price equal to $2.50 per Option
Share; and
(c) SEVENTY-FIVE THOUSAND (75,000) of the Option Shares on or
after April 1, 2003 for a purchase price equal to $3.50 per Option
Share;
PROVIDED, HOWEVER, Executive's right to purchase Option Shares shall be subject
to SECTION 2.4. Executive shall have the right to purchase Option Shares that
have become vested hereunder between the Vesting Date of such Option Shares and
the date that is five (5) years from the date of this Agreement (the "Expiration
Date"). The number of Option Shares and Exercise Price are subject
to adjustment as provided herein, and all references to "Option Shares" and
"Exercise Price" herein shall be deemed to include any such adjustment or series
of adjustments.
1.2 NON-TRANSFERABLE. During the lifetime of Executive, the Option
shall be exercisable only by Executive, shall not be transferred, assigned,
pledged, or hypothecated in any way and shall not be subject to execution,
attachment, or similar process. In the event of Executive's death, the Option
shall be exercisable by Executive's heir(s), beneficiary(ies) or estate as
provided for under Executive's will or applicable laws of intestate succession.
Upon any attempt to transfer, assign, pledge, hypothecate, or otherwise dispose
of such option contrary to the provisions in this Agreement, or upon the levy of
any attachment or similar process upon such Option or such rights, such Option
and such rights shall immediately become null and void.
1.3 ACKNOWLEDGMENT. The parties acknowledge that the Option is not an
"incentive stock option" as defined in Section 422 of the Internal Revenue Code
of 1986, as amended.
ARTICLE II
EXERCISE OF OPTIONS
2.1 EXERCISE PRICE; METHOD OF PAYMENT. The price for which each Option
Share may be purchased by exercise of this Option shall be the Exercise Price.
Payment of the aggregate Exercise Price shall be by cash, certified or cashier's
check, or Option Shares.
2.2 EXERCISE OF OPTION. Executive may exercise this Option, in whole or
in part, at any time, or from time to time, subsequent to the applicable Vesting
Dates and prior to the Expiration Date, by giving written notice to the Company
(the "Exercise Notice"). The Exercise Notice shall: (i) be signed by Executive;
(ii) state the num-ber of Option Shares with respect to which the Option is
being exercised; (iii) be accompanied either by cash or certified or cashier's
check made payable to the Company in the amount of the Exercise Price multiplied
by the number of Option Shares being purchased or by a written instruction from
Executive to the Company instructing the Company to retain that number of Option
Shares for which the Option is being exercised having a Fair Market Value equal
to the aggregate Exercise Price; and (iv) unless otherwise provided herein, be
accompanied by a stock power (in the form attached hereto as EXHIBIT A) for the
Option Shares with respect to which the Option is being exercised duly executed
by Executive but not dated (the "Stock Power") and (v) otherwise comply with the
terms and conditions of this Agreement. No partial exercise of this Option shall
be for less than one (1) Option Share.
2.3 CASHLESS EXERCISE.
(a) In lieu of payment of the Exercise Price in cash or by
certified or cashier's check, Executive may elect to pay the Exercise
Price with Option Shares (a "Cashless Exercise"). If Executive elects
to make a Cashless Exercise, Executive shall provide written
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instruction to the Company of its desire to make a Cashless Exercise
and such instruction shall be contained in the Exercise Notice as
provided in SECTION 2.2 and shall be irrevocable. Upon receipt by the
Company of the Exercise Notice indicating that Executive desires to
make a Cashless Exercise, the Company shall withhold that number of the
Option Shares for which the Option is being exercised having a Fair
Market Value (defined below) equal to the aggregate Exercise Price plus
any withholding obligations for taxes as described in SECTION 2.7
below. If the number of Option Shares to be withheld by the Company on
such exercise do not have a Fair Market Value equal to or greater than
the aggregate Exercise Price, then the Executive may not make a
Cashless Exercise. Election of a Cashless Exercise shall constitute an
authorization to the Company to withhold that number of Option Shares
for which the Option is being exercised having a Fair Market Value
equal to the aggregate Exercise Price plus any withholding obligations
for taxes as described in SECTION 2.7 below.
(b) For purposes of this Agreement, the term "Fair Market Value"
means the average of the "bid price" of the Company's Common Stock for
the five (5) days immediately preceding the date of the Exercise
Notice as quoted in the over the counter or other secondary market for
the Company's Common Stock, or if no such sales occurred on such
dates, then on the next five (5) preceding dates on which sales were
made.
2.4 FORFEITURE.
(a) If, during the period from the date of this Agreement up
to and including the date that is twenty-four (24) months following the
date of this Agreement (the "Separation Period"), Executive shall have
defaulted or breached the Separation Agreement or Promissory Note: (i)
this Option shall immediately become null and void; and (ii) the
Company shall complete the Stock Power to transfer any Option Shares
previously issued to Executive to the Company pursuant to the Stock
Power. This remedy shall be in addition to, and not in substitution
for, all other remedies otherwise available to the Company in the event
of a default or breach by Executive under the Separation Agreement or
Promissory Note.
(b) If, during the Separation Period, Executive has not defaulted
or breached the Separation Agreement or Promissory Note, then on the
first day following the end of the Separation Period: (x) all Stock
Powers previously issued to the Company pursuant to SECTION 2.2 shall
become null and void; and (y) for any exercises of this Option after
the Separation Period, Executive shall not be required to deliver the
Stock Power pursuant SECTION 2.2(iv).
2.5 ISSUANCE OF OPTION SHARES. Within five (5) business days following
receipt by the Company of the Exercise Notice (which date may be extended by the
Company if any law or regulation requires the Company to take any action with
respect to the Option Shares prior to the issuance thereof), the Company shall
deliver to Executive an appropriate certificate or certificates for the Option
Shares as to which the Option was exercised (or in the case of a Cashless
Exercise, the
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Option Shares as to which the Option was exercised less that number of Option
Shares having a Fair Market Value equal to the aggregate Exercise Price and all
applicable taxes required to be withheld or payable on exercise), registered in
the name of Executive and containing the legend provided for in SECTION 2.8. The
Company hereby represents and warrants that all Option Shares that may be issued
upon the exercise of this Option will, upon payment of the Exercise Price, be
duly and validly authorized and issued, fully paid and nonassessable and free
from all taxes, liens and charges in respect of the issuance thereof (other than
liens or charges created by or imposed upon Executive as the holder of the
Option pursuant to this Agreement or taxes in respect of any transfer occurring
contemporaneously or otherwise specified herein).
2.6 NO RIGHTS AS STOCKHOLDER PRIOR TO EXERCISE. Until the issuance (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company) of the stock certificate evidencing
the issuance of Option Shares upon the exercise of the Option, no right to vote
or receive dividends or any other rights as a shareholder shall exist with
respect to the Option Shares, notwithstanding the exercise of the Option. Except
as provided herein, no adjustment will be made for a dividend or other right for
which the record date is prior to the date the stock certificate is issued.
2.7 TAXES. Executive shall be responsible for all federal, state and
other taxes related to the receipt or exercise of the Option and of receipt of
the Option Shares. The Company shall have the power to withhold from any source,
or require Executive to remit to the Company, an amount sufficient to satisfy
any withholding or other federal, state or other tax due from Executive or the
Company as a result of any transaction contemplated by this Agreement. If
Executive does not remit to the Company amounts sufficient to meet such
obligations, the Company shall withhold Option Shares from Executive, such that
the number of Option Shares withheld has a fair market value (as determined in
the sole discretion of the Company) sufficient to satisfy the associated
obligation of the Company to withhold federal, state and other taxes.
2.8 WARRANTIES. Unless the Option Shares to be issued upon the
particular exercise of an Option granted under this Agreement shall have been
effectively registered under the Securities Act of 1933, as now in force or
hereafter amended, the Company shall be under no obligation to issue the Option
Shares covered by such exercise unless Executive warrants to the Company, at the
time of such exercise, that Executive is acquiring the Option Shares for
investment and not with a view toward, or for sale in connection with, the
distribution of any such shares; and in such event Executive shall be bound by
the provisions of the following legend or similar legend which shall be endorsed
upon the certificate or certificates evidencing the Option Shares issued by the
Company pursuant to such exercise:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR UNDER THE LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER
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SUCH LAWS OR AN OPINION OF COUNSEL ACCEPTABLE TO USA
BROADBAND, INC. TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED. ADDITIONALLY, THESE SECURITIES ARE SUBJECT TO XXXXX
X. XXXXXX'X COMPLIANCE WITH THE TERMS AND CONDITIONS OF THE
SEPARATION AGREEMENT BY AND BETWEEN XXXXX X. XXXXXX AND USA
BROADBAND, INC. DATED DECEMBER 19, 2001 AND A STOCK OPTION
AGREEMENT ENTERED INTO BY AND BETWEEN XXXXX X. XXXXXX AND USA
BROADBAND, INC. DATED DECEMBER 19, 2001."
ARTICLE III
ADJUSTMENTS TO OPTIONS SHARES AND EXERCISE PRICE
3.1 ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF OPTION SHARES. The
number of Option Shares and the Exercise Price shall be subject to adjustment
from time to time upon the occurrence of certain events, as follows:
(a) RECLASSIFICATION, MERGER OR CERTAIN OTHER TRANSACTIONS. In
case of (i) any reclassification, change or conversion of securities of
the class issuable upon exercise of the Option (other than as a result
of a subdivision or combination), or (ii) in case of any merger of the
Company with or into another corporation (other than a merger with
another corporation in which the Company is a continuing corporation
and which does not result in any reclassification or change of
outstanding securities issuable upon exercise of the Option), the
Company or such successor, as the case may be, shall execute a new
Stock Option Agreement (on substantially the same terms and conditions
as this Agreement, except as the context otherwise requires, and in
form reasonably satisfactory to Executive) providing that Executive
shall have the right to exercise such new options and upon such
exercise to receive, in lieu of each Option Share theretofore issuable
upon exercise of the Option, the kind and amount of shares of stock,
other securities, money and property receivable upon such event or
transaction by a holder of one share of Common Stock. Such new options
shall provide for adjustments that shall be as nearly equivalent as may
be practicable to the adjustments provided for in this SECTION 3.1. The
provisions of this SECTION 3.1 shall similarly apply to successive
events and transactions described above.
(b) SUBDIVISIONS OR COMBINATION OF SHARES. If the Company at
any time while this Option remains outstanding and unexercised shall
subdivide or combine its Common Stock, the Exercise Price and the
number of Option Shares issuable upon exercise shall be proportionally
adjusted.
ARTICLE IV
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REGISTRATION RIGHTS
4.1 PIGGYBACK REGISTRATION. If the Company files a registration
statement (other than a registration relating to the sale of securities to
participants in a dividend reinvestment plan, a registration on Form S-4
relating to a business combination or similar transaction permitted to be
registered on such Form S-4, a registration on Form S-8 relating to the sale of
securities to participants in a stock or employee benefit plan) with the
Securities and Exchange Commission (the "Commission") while any Registrable
Securities (as defined herein) are outstanding, the Company shall give Executive
at least ten (10) days' prior written notice of the filing of such registration
statement (a "Piggyback Registration"). If requested by Executive in writing
within two (2) days after receipt of any such notice, the Company shall register
all or, at such Executive's option, any portion of Executive's Registrable
Securities concurrently with the registration of such other securities, all to
the extent required to permit the public offering and sale of the Registrable
Securities. The Company will use its reasonable efforts through its officers,
directors, auditors, and counsel to cause such registration statement to become
effective as promptly as reasonably practicable; PROVIDED, HOWEVER, that the
number of Registrable Securities that may be registered pursuant to this SECTION
4.1 on any such registration statement involving an underwriting shall be
subject to those reductions determined to be necessary by the underwriter of the
offering pursuant to SECTION 4.2.
As used herein, "Registrable Securities" shall mean (i) the Option
Shares acquired by Executive from the Company upon the exercise of this Option
and (ii) any Common Stock issued by way of a stock split, stock dividend,
recapitalization, merger or other distribution with respect to, or in exchange
for, or in replacement of, such Option Shares.
4.2 UNDERWRITING. If a Piggyback Registration is for a registered
public offering involving an underwriting, the Company shall so advise Executive
as part of the notice given pursuant hereto. The Company shall (together with
all other holders of Common Stock proposing to distribute their securities
through such underwriting), if requested by the underwriter, enter into an
underwriting agreement in customary form with a managing underwriter selected
for such underwriting by the Company. Notwithstanding any other provision of
this ARTICLE IV, if the managing underwriter advises the Company in writing that
market factors require exclusion of shares to be sold by selling stockholders,
or a limitation of the number of shares to be so sold, then the Company shall so
advise Executive and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
holders of Common Stock proposing to distribute their securities through such
underwriting (except those holders who have indicated to the Company their
decision not to distribute any of their Securities through such underwriting) in
proportion, as nearly as practicable, to the respective amounts of securities
held by such holders at the time of filing the registration statement. No
Registrable Securities excluded from the underwriting by reason of the
underwriter market limitation shall be included in such registration.
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Notwithstanding anything to the contrary in this ARTICLE IV, (a) no
reduction shall be made with respect to securities offered by the Company for
its own account in connection with the Piggyback Registration, and (b) no
reduction in the securities to be registered by Executive shall occur until all
other securities, other than those offered by the Company, have been reduced pro
rata to the reduction of the Registrable Securities which were requested to be
included and eligible for resale in such offering. If Executive disapproves of
the terms of the underwriting, Executive may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the other holders.
In such event, the Registrable Securities affected shall be withdrawn from
registration.
4.3 EXPENSES OF REGISTRATION. All Registration Expenses (defined below)
incurred in connection with a Piggyback Registration shall be borne by the
Company. All Selling Expenses (defined below) incurred in connection with a
Piggyback Registration shall be borne by Executive for the Registrable
Securities so registered. For purposes of this SECTION 4.3:
(a) "REGISTRATION EXPENSES" shall mean all expenses incurred
by the Company in connection with a Piggyback Registration, including,
without limitation, all registration, filing and qualification fees,
underwriters expense allowances, printing expenses, fees and
disbursements of counsel for the Company, blue sky fees and expenses
(but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
(b) "SELLING EXPENSES" shall mean all underwriting discounts
and selling commissions applicable to the sale of the Registrable
Securities in the Piggyback Registration and all fees and disbursements
of any special counsel (other than the Company's regular counsel) for
Executive(but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).
4.4 QUALIFICATION FOR SALE. In connection with a Piggyback
Registration, the Company shall use its reasonable best efforts to cause the
Registrable Securities so registered to be registered or qualified for sale
under the securities or blue sky laws of such jurisdictions as Executive may
reasonably request; PROVIDED, HOWEVER, that the Company shall not be required to
qualify to do business in any state by reason of this SECTION 4.4 in which it is
not otherwise required to qualify to do business.
4.5 EFFECTIVENESS. In connection with a Piggyback Registration, the
Company shall prepare and file with the Commission a registration statement with
respect to the Registrable Securities requested to be registered and use its
reasonable best efforts to cause such registration statement to become
effective, and shall keep effective any Piggyback Registration and shall from
time to time amend or supplement each applicable registration statement,
preliminary prospectus, final prospectus, application, document and
communication for such period of time as shall be required to permit Executive
to complete the offer and sale of the Registrable Securities covered thereby.
The Company shall in no event be required to keep any such Piggyback
Registration in effect for more than twelve (12) months from the initial
effective date of the Piggyback Registration;
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PROVIDED, HOWEVER, that, if during the twelve (12) month period of effectiveness
of the registration statement, the Company gives to Executive a Blackout Notice
pursuant to SECTION 4.6, the Company shall extend the effectiveness of the
registration statement for the same time period as that set forth in the
Blackout Notice.
4.6 BLACKOUT RIGHTS. Following the effective date of any registration
statement filed pursuant to ARTICLE 4 of this Agreement, the Company shall be
entitled, from time to time, to notify Executive to discontinue offers or sales
of shares pursuant to such registration statement for Registrable Securities for
the period of time stated in the written notice (the "Blackout Notice"), if the
Company determines, in its reasonable business judgment, that the disclosure
required in connection with the offers and sales of the Registrable Securities
could materially damage the Company's ability to successfully complete an
acquisition, corporate reorganization, securities offering or other voluntary
transaction undertaken by the Company (which information the Company would not
be required to disclose at such time other than in connection with Executive's
registration statement) that is material to the Company and its subsidiaries
taken as a whole. The time period for which Executive must discontinue offers or
sales of shares pursuant to a Blackout Notice shall be for any period the
Company reasonably believes is necessary, and if, the Company is unable to
determine the duration of such period at the time the Blackout Notice is issued,
the Blackout Notice may state that the period extends "until the Executive is
otherwise notified by the Company"; provided that the Blackout Notice may not
exceed more than ninety (90) consecutive days or an aggregate of one hundred
eighty (180) days within any calendar year. The Blackout Notice shall be signed
by an authorized officer of the Company and shall certify the Company's
determination. Executive agrees that upon receipt of a Blackout Notice he shall
discontinue offers or sales of Registrable Shares pursuant to any such
registration statement for the period of time stated in the Blackout Notice.
4.7 DISTRIBUTION OF REGISTRATION STATEMENT. In connection with
Piggyback Registration, the Company shall promptly furnish to Executive such
number of copies of the registration statement and of each amendment and
supplement thereto (in each case, including all exhibits), such reasonable
number of copies of each prospectus contained in such registration statement and
each supplement or amendment thereto (including each preliminary prospectus),
all of which shall conform to the requirements of the Securities Act of 1933, as
amended (the "Securities Act") and the rules and regulations thereunder, and
such other documents, as Executive may reasonably request to facilitate the
disposition of the Registrable Securities included in such registration.
4.8 NOTIFICATION OF EFFECTIVENESS. The Company shall notify Executive
promptly when such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed.
4.9 OTHER NOTIFICATIONS. The Company shall promptly notify Executive at
any time when the prospectus included in the Piggyback Registration, as then in
effect, would include an untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
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existing, and at the reasonable request of Executive prepare and furnish to it
such number of copies of a supplement to or an amendment of such prospectus as
may be necessary so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
4.10 INDEMNIFICATION BY COMPANY. Subject to the conditions set forth
below, the Company agrees to indemnify and hold harmless Executive from and
against any and all loss, liability, charge, claim, damage, and expense
whatsoever (which shall include, for all purposes of this SECTION 4.10, but not
be limited to, reasonable attorneys' fees and any and all reasonable expenses
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), as and when incurred,
arising out of, based upon, or in connection with any untrue statement or
alleged untrue statement of a material fact contained (A) in any registration
statement, preliminary prospectus, or final prospectus (as from time to time
amended and supplemented), or any amendment or supplement thereto, relating to
the sale of any of the Registrable Securities or (B) in any application or other
document or communication (in this SECTION 4.10 collectively called an
"Application") executed by or on behalf of the Company and based upon written
information furnished by or on behalf of the Company filed in any jurisdiction
in order to register or qualify any of the Registrable Securities under the
Securities Act or blue sky laws thereof or filed with the Commission or any
securities exchange; or any omission or alleged omission to state a material
fact required to be stated therein or necessary to make the statements made
therein not misleading, unless such statement or omission was made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of Executive for inclusion in any registration statement, preliminary
prospectus, or final prospectus, or any amendment or supplement thereto, or in
any application, as the case may be.
If any action is brought against Executive in respect of which
indemnity may be sought against the Company pursuant to the foregoing paragraph,
Executive shall promptly notify the Company in writing of the institution of
such action (the failure to notify the Company within a reasonable time of the
commencement of any such action, to the extent prejudicial to the Company's
ability to defend such action, shall relieve the Company of liability to
Executive pursuant to this SECTION 4.10) and the Company shall promptly assume
the defense of such action, including the employment of counsel, provided that
Executive shall have the right to employ his own counsel in any such case, but
the fees and expenses of such counsel shall be at the expense of Executive
unless the employment of such counsel shall have been authorized in writing by
the Company in connection with the defense of such action or Executive shall
have reasonably concluded that there may be one or more legal defenses available
to him which are different from or additional to those available to the Company,
in any of which events such fees and expenses shall be borne by the Company and
the Company shall not have the right to direct the defense of such action on
behalf of Executive. Notwithstanding anything in this SECTION 4.10 to the
contrary, the Company shall not be liable for any settlement of any such claim
or action effected without its written consent. The Company shall
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not, without the prior written consent of Executive, settle or compromise any
action, or permit a default or consent to the entry of judgment in or otherwise
seek to terminate any pending or threatened action, in respective of which
indemnity may be sought hereunder, unless such settlement, compromise, consent,
or termination includes an unconditional release of Executive from all liability
in respect of such action. The Company agrees promptly to notify Executive of
the commencement of any litigation or proceedings against the Company or any of
its officers or directors in connection with the sale of any Registrable
Securities or any preliminary prospectus, prospectus, registration statement, or
amendment or supplement thereto, or any application relating to any sale of any
Registrable Securities.
4.11 INDEMNIFICATION BY EXECUTIVE. Executive agrees to indemnify and
hold harmless the Company, each director of the Company, each officer of the
Company who shall have signed any registration statement covering Registrable
Securities held by Executive, to the same extent as the foregoing indemnity from
the Company to Executive in SECTION 4.10, but only with respect to statements or
omissions, if any, made in any registration statement, preliminary prospectus,
or final prospectus (as from time to time amended and supplemented), or any
amendment or supplement thereto, or in any application, in reliance upon and in
conformity with written information furnished to the Company with respect to
Executive by or on behalf of Executive, for inclusion in any such registration
statement, preliminary prospectus, or final prospectus, or any amendment or
supplement thereto, or in any application, as the case may be. If any action
shall be brought against the Company or any other person so indemnified based on
any such registration statement, preliminary prospectus, or final prospectus or
any amendment or supplement thereto, or in any application, and in respect of
which indemnity may be sought against Executive pursuant to this SECTION 4.11,
Executive shall have the rights and duties given to the Company, and the Company
and each other person so indemnified shall have the rights and duties given to
Executive, by the provisions of SECTION 4.10.
4.12 TERMINATION OF REGISTRATION RIGHTS. The covenants set forth in
Article IV of this Agreement shall terminate with respect to Executive on the
date that Executive is eligible to sell all of his Registrable Securities under
Rule 144 under the Securities Act.
ARTICLE V
LOCK UP
5.1 LOCK-UP PERIOD. Executive hereby agrees that, if so requested by
the Company or any representative of the underwriters in connection with any
registration of the offering of any securities of the Company under the
Securities Act, Executive shall not sell or otherwise transfer any Registrable
Securities during the period requested in writing by the managing underwriter
and agreed to in writing by the Company (the "Market Standoff Period"). The
Company may impose
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stop-transfer instructions with respect to Option Shares subject to the
foregoing restrictions until the end of such Market Standoff Period.
ARTICLE VI
GENERAL PROVISIONS
6.1 ENTIRE AGREEMENT. This Agreement and the Stock Option Agreement set
forth the entire agreement and understanding of the Parties relating to the
subject matter contained herein and merge all prior discussions, correspondence,
agreements, promises, commitments, contracts or other instruments or
understandings between them, and no Party shall be bound by any subsequent
instrument, agreement or representation pertaining to the subject matter
contained herein unless expressed in writing and signed by the Parties hereto.
6.2 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each shall have the same force and effect as the other, as one and
the same instrument.
6.3 GOVERNING LAW. This Agreement shall be governed by laws of the
State of Illinois.
6.4 BINDING AGREEMENT. The Parties hereto warrant that each has been
represented by counsel in connection with this Agreement, that they have read
this Agreement, that they intend to be legally bound by the same, that they have
entered into this Agreement freely and voluntarily, and that they have the full
right, power, authority and capacity to enter into and execute the same. The
Parties hereto further warrant that this Agreement is entered into with no Party
relying upon any statement or representation made by any other Party not
expressly embodied in this Agreement.
6.5 ATTORNEYS' FEES. In any claim arising out of or relating to this
Agreement, the prevailing party shall recover his or its reasonable costs and
attorneys' fees.
6.6 NOTICES. All notices, requests and other communications hereunder
shall be in writing and shall be deemed to be duly given if delivered or mailed
by prepaid mail addressed or sent via facsimile to:
If to Executive: Xxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: 000-000-0000
If to the Company: USA Broadband, Inc.
000 Xxxxxxxxx Xxx, #0
Xxxxxxxx, XX 00000
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Attention: Xxxxxx Xxxxxx
Facsimile: 707-769-1622
with a copy to: Xxxxxxx & Xxxxxxxx Ltd.
000 X. Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile: 000-000-0000
or such other address as the addressee may direct in writing.
6.7 CAPTIONS. The captions applied to the sections of this Agreement
are for convenience only and shall not affect their meaning or construction.
6.8 WAIVER. The failure of either party to insist in any instance or
performance of any term of this Agreement shall not be construed as a waiver of
future performance of any such term.
6.9 SEVERABILITY. If any portion of this Agreement is held invalid or
unenforceable, the remainder thereof shall remain in full force and effect, and
if the invalidity or unenforceability is due to the unreasonableness of time or
geographical restrictions, such covenants and restrictions shall be effective
for such period of time and for such areas as may be determined to be reasonable
by a court of competent jurisdiction.
IN WITNESS WHEREOF, the parties have caused this Stock Option
Agreement to be executed by their duly authorized officers and to be dated the
Date of Issuance hereof.
USA BROADBAND, INC.
a Delaware corporation
By:
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Its:
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Xxxxx X. Xxxxxx
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EXHIBIT A
FORM OF STOCK POWER
FOR VALUE RECEIVED, I, Xxxxx X. Xxxxxx, do hereby sell, assign and
transfer unto USA Broadband, Inc., a Delaware corporation, ____________________
shares of common stock of USA Broadband, Inc. (the "Company"), standing in my
name on the books of said Company, and do hereby irrevocably constitute and
hereby direct the Company to transfer said shares on its books and records.
Dated the ______ day of __________________ 20__.
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Xxxxx X. Xxxxxx
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