EXHIBIT 10.12
UNIVERSAL HEIGHTS, INC.
STOCK OPTION AGREEMENT FOR EMPLOYEES
AGREEMENT ("Agreement") dated this 28th day of January, 1999 by and
between Universal Heights, Inc., a Delaware corporation ("Corporation"), and
Xxxxx X. Xxxxxxx, an employee of the Corporation ("Optionee").
WHEREAS, the Corporation entered into an agreement with Optionee on
January 28, 1999 ("Employment Agreement"), in which the Corporation agreed to
provide Optionee with an option to purchase common stock in the Corporation and
Optionee agreed to be in Corporation's employ; and
WHEREAS, the option granted hereby is not intended to qualify as an
"incentive stock option" within the meaning of Section 422 or any successor
provision of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the mutual covenants and
representations herein contained and intending to be legally bound, the parties
hereto agree as follows:
1. NUMBER OF SHARES AND PRICE. The Corporation hereby grants to the
Optionee an option ("Option") to purchase the number of shares of common stock
of the Corporation ("Common Stock") set forth on the attached Face Sheet of this
Agreement. The exercise price per share of Common Stock of the Option shall be
as is set forth on the attached Face Sheet of this Agreement, such price being
the fair market value per share of Common Stock on the Date of Grant of the
Option ("Fair Market Value"). The Option is not intended to qualify as an
"incentive stock option" under Section 422 of the Code.
2. TERM AND EXERCISE. The Option shall expire ten (10) years from the
date hereof, subject to earlier termination as set forth in Section 3. Subject
to the provisions of Section 3, the Option shall become exercisable in
installments as set forth on the attached Face Sheet of this Agreement.
3. EXERCISE OF OPTION UPON TERMINATION OF EMPLOYMENT OR CHANGE IN
CONTROL.
(a) TERMINATION OF EMPLOYMENT.
(i) TERMINATION. Upon the Optionee's termination of
employment, other than by reason of death, disability, or
termination for cause, the Optionee may, within three (3) months
from the date of such termination of employment, exercise all or
any part of the Option to the extent it was exercisable at the date
of termination of employment. In no event may the Option be
exercised later than the expiration date described in Section 2.
(ii) TERMINATION OF EMPLOYMENT FOR CAUSE. Upon the
Corporation's termination of Optionee's employment with the
Corporation for Cause (as defined in the Employment Agreement), the
Corporation may terminate any portion of the unexercised Option.
(ii) DISABILITY. Upon the date of Optionee's termination by
reason of disability ("Disability Date"), the Optionee may, within
one year after such Disability Date, exercise all or a part of the
Option, whether or not it was exercisable on such Disability Date,
but only to the extent not previously exercised. In no event,
however, may the Option be exercised later than the expiration date
described in Section 2.
(iii) DEATH. In the event of the death of the Optionee
while employed by the Corporation, the right of any individual,
trust or estate who or that, by will or the laws of descent and
distribution, succeeds to the rights and obligations of the
Optionee under this Agreement ("Beneficiary") to exercise the
Option in full (whether or not all or any part of the Option was
exercisable as of the date of death, but only to the extent not
previously exercised) shall expire upon the expiration of one year
from the date of the Optionee's death or, if earlier, on the date
of expiration of the Option determined pursuant to Section 2.
(b) TERMINATION OF UNVESTED OPTION UPON TERMINATION OF EMPLOYMENT.
Except as specified in Section 3(a), to the extent all or any part of the Option
was not exercisable as of the date of termination of employment, the
unexercisable portion of the Option shall expire at the date of such
termination.
(c) CHANGE IN CONTROL. In the event of a "change in control" of the
Corporation, the vesting of the shares of Corporation Stock referred to in the
attached Face Sheet of this Agreement shall be accelerated and immediately
vested in full. A change in control, for purposes hereof, shall mean: (i) the
acquisition by any person or group of persons of more than forty percent (40%)
of the issued and outstanding shares of capital stock of Corporation that is not
authorized or otherwise approved by the Board of Directors of the Corporation or
(ii) any plan for the liquidation or dissolution of the Corporation.
4. EXERCISE PROCEDURES. The Option shall be exercisable by written
notice to the Corporation, which must be received by the Corporation not later
than 5:00 P.M. local time at the principal executive office of the Corporation
on the expiration date of the Option. Such written notice shall set forth (a)
the number of shares of Common Stock being purchased, (b) the total exercise
price for the shares of Common Stock being purchased, (c) the exact name as it
should appear on the stock certificate(s) to be issued for the shares of Common
Stock being purchased, and (d) the address to which the stock certificate(s)
should be sent. The exercise price of shares of Common Stock purchased upon
exercise of the Option shall be paid in full (a) in cash or (b) by delivery of
such other consideration as the Board of Directors deems appropriate and in
compliance with applicable law (including payment in accordance with a cashless
exercise program approved by the Board of Directors).
5. AGREEMENT PROVISIONS CONTROL OPTION TERMS; MODIFICATIONS. The Option
is granted pursuant and subject to the terms and conditions of this Agreement
and the Employment Agreement. The Option shall not be modified after the Date of
Grant except by express written agreement between the Corporation and the
Optionee; PROVIDED, HOWEVER, that any such modification shall be approved by the
Board of Directors.
6. LIMITATIONS ON TRANSFER. The Option may not be assigned or
transferred other than by will, by the laws of descent and distribution, or
2
pursuant to a qualified domestic relations order as defined by the Code, Title I
of ERISA or the rules thereunder.
7. TAXES. The Corporation shall be entitled to withhold (or secure
payment from the Optionee in lieu of withholding) the amount of any withholding
or other tax required by law to be withheld or paid by the Corporation with
respect to any shares of Common Stock issuable under this Agreement, and the
Corporation may defer issuance of shares of Common Stock upon the exercise of
the Option unless the Corporation is indemnified to its satisfaction against any
liability for any such tax. The amount of such withholding or tax payment shall
be determined by the Board of Directors or its delegate and shall be payable by
the Optionee at such time as the Board of Directors determines. The Optionee may
satisfy his tax withholding obligation by (a) having cash withheld from the
Optionee's salary or other compensation payable by the Corporation or a
subsidiary, (b) the payment of cash to the Corporation, (c) the payment in
shares of Common Stock already owned by the Optionee valued at Fair Market
Value, and/or (d) the withholding from the Option, at the appropriate time, of a
number of shares of Common Stock sufficient, based upon the Fair Market Value of
such shares of Common Stock, to satisfy such tax withholding requirements. The
Board of Directors shall be authorized, in its sole and absolute discretion, to
establish such rules and procedures relating to any such withholding methods as
it deems necessary or appropriate, including, without limitation, rules and
procedures relating to elections to have shares of Common Stock withheld upon
exercise of the Option to meet such withholding obligations.
8. NO EXERCISE IN VIOLATION OF LAW. Notwithstanding any of the
provisions of this Agreement, the Optionee hereby agrees that he will not
exercise the Option granted hereby, and that the Corporation will not be
obligated to issue any shares of Common Stock to the Optionee hereunder, if the
exercise thereof or the issuance of such shares of Common Stock shall constitute
a violation by the Optionee or the Corporation of any provision of any law or
regulation of any governmental authority. Any determination in this regard by
the Board of Directors shall be final, binding and conclusive.
9. SECURITIES LAW COMPLIANCE. Optionee agrees, for the Optionee or any
Beneficiary, with respect to all shares of Common Stock acquired pursuant to the
terms and conditions of this Agreement and the Option (or any other shares of
Common Stock issued pursuant to a stock dividend or stock split thereon or any
securities issued in lieu thereof or in substitution or exchange therefor), that
the Optionee and any Beneficiary will not sell or otherwise dispose of these
shares except pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Act"), or except in a transaction that,
in the opinion of counsel for the Corporation, is exempt from registration under
the Act. Further, the Corporation shall not be required to sell or issue any
shares under the Option if, in the opinion of the Corporation, (a) the issuance
of such shares would constitute a violation by the Optionee or the Corporation
of any applicable law or regulation of any government authority or (b) the
consent or approval of any governmental body is necessary or desirable as
condition of, or in connection with, the issuance of such shares.
10. ADJUSTMENTS. The existence of the Option shall not affect in any
way the right or power of the Corporation or its directors or shareholders to
make or authorize any or all adjustments, recapitalizations, reorganizations, or
other changes in the Corporation's capital structure or its business, or any
merger or consolidation of the Corporation, or any issuance of bonds,
debentures, preferred stock or prior preference stock ahead of or affecting the
Common Stock or the rights thereof, or dissolution or liquidation of the
Corporation, 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.
3
11. DISPUTE RESOLUTION. As a condition of granting the Option, the
Optionee agrees, for the Optionee and any Beneficiary, that any dispute or
disagreement that may arise under or as a result of or pursuant to this
Agreement and the Option shall be determined by the Board of Directors in its
sole discretion, and any interpretation by the Board of Directors of the terms
of this Agreement and the Option shall be final, binding and conclusive.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: UNIVERSAL HEIGHTS, INC.
/s/ Xxxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxx
---------------------- ---------------------------------
Xxxxxxx X. Xxxxx,
President
By: /s/ Xxxxxx Xxxxx
---------------------------------
[Member of Board of Directors]
WITNESS: OPTIONEE
/s/ Xxxxx Xxxxx /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
4
FACE SHEET
Notice Addresses:
Optionee:
Xxxxx X. Xxxxxxx
---------------------
---------------------
Corporation:
Universal Heights, Inc.
0000 X.X. 000 Xxxxxx
Xxxxx 000X
Xxxxx, Xxxxxxx 00000
Grant Date: January 28, 1999
----------------
Total Options Granted: 50,000
Exercise Price per share of Common Stock: $ .75
----------------
Vesting Schedule:
Date Number of Shares
---- ----------------
1/28/2000 25,000
--------------
1/28/2001 25,000
--------------
Expiration Date:
Optioned shares must be purchased within ten (10) years from the date
of grant, which is January 28, 2009. That is, all options must be exercised by
January 28, 2009.
