WITHOUT PREJUDICE STANDSTILL AGREEMENT by and between ENVIROKARE TECH, INC. as COMPANY and STEVE PAPPAS, as SP April 14, 2006
WITHOUT
PREJUDICE
by
and
between
ENVIROKARE
TECH, INC.
as
COMPANY
and
XXXXX
XXXXXX,
as
SP
April
14,
2006
THIS
STANDSTILL AGREEMENT (the “Agreement”),
dated
as of April 14, 2006, is made and entered into by and between Envirokare
Tech, Inc. (“Company”), a Nevada corporation, with its principal offices at 000
Xxxxxxxxx Xxxxxx, 00xx
Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 and Xxxxx Xxxxxx (“SP”) residing at 00 00xx
Xxxxxx,
Xxxxxxxx, Xxx Xxxx 00000-0000.
WHEREAS,
a dispute between the parties hereto is presently pending in the United States
District Court, Southern District of New York (Civil Action No. 05-cv-05515
(LAK)), (the “Litigation”); and
WHEREAS,
the parties hereto are desirous of discontinuing the Litigation on the terms
and
subject to the conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the foregoing and the mutual agreements set
forth
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE
I
VOTING
RIGHTS OF SP SHARES
1.01 Suspension
of Voting Rights.
SP
hereby agrees that for and during a period of five (5) years commencing the
date
of this Agreement (the “Time Period”) all of the issued and outstanding shares
of the Company stock that he now or hereafter owns and in which he now or
hereafter has or will have any beneficial interest ( the “Voting Securities” )
will not during the Time Period be voted at either any meeting of the
shareholders of the Company or for or against any proposal or resolution
submitted to the shareholders of the Company for their consideration or
adoption.
1.02 Notice
of Voting Rights Suspension.
The
parties agree that unless and until sale on the open market and not privately
the following legend shall be placed and retained upon SP’s Voting
Securities:
“
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF A
STANDSTILL AGREEMENT, DATED AS OF APRIL ___, 2006 AMONG THE ISSUER AND XXXXX
XXXXXX AND ANY OF THEIR SUCCESSORS AND ASSIGNS. A COPY OF SUCH AGREEMENT
IS ON
FILE AT THE OFFICE OF THE SECRETARY OF THE ISSUER AND THE ISSUER WILL FURNISH
TO
ANY SHAREHOLDER, UPON REQUEST AND WITHOUT CHARGE, A FULL STATEMENT OF THE
RIGHTS, TERMS AND CONDITIONS OF SUCH AGREEMENT.”
1.03
Termination
of Voting Rights Suspension.
Upon
sale of any Voting Securities on the open market and not privately, the
suspension of voting on such Voting Securities sold shall cease and terminate
with such suspension no longer in force or effect.
ARTICLE
II
COVENANTS;
BREACH; EQUITABLE RELIEF
2.01 Covenants.
SP
covenants and agrees that for and during the Time Period:
(a) he
will
not be or become an Officer of either the Company or any one or more of its
affiliates;
(b) he
will
not directly or indirectly solicit any proxies in opposition to the current
Directors of the Company (defined herein and hereafter to mean and include
only
Xxxxxxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xx. Xxxx Xxxxxxxx, Xx. Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx Xxxxxxxx and Xxxxx Xxxxxxx);
(c) he
will
not directly or indirectly form or become part of any group in opposition
to the
current Directors; and
(d) he
will
only sell, transfer or otherwise dispose of his Company securities on the
open
market and not privately.
2.02 Breach.
SP
agrees that in the event he breaches any of the above covenants or agreements
he
will pay all costs and expenses (including reasonable legal fees and
disbursements) incurred and to be incurred by the Company and its current
Directors in their respective enforcing of adherence to and compliance with
such
covenants and agreements.
2.03 Equitable
Relief.
SP
acknowledges that a breach by him of any one or more of the above covenants
or
agreements may cause irreparable harm to the Company and that damages would
be
difficult to determine. Accordingly, in the event of any such breach, the
Company and the current Directors shall be entitled to, in addition to all
other
legal remedies available to them, injunctive relief restraining SP from any
further or continued breach of his obligations.
ARTICLE
III
INTER-VIVOS
TRUST TERMINATION; RETURN OF COMPANY SHARES
3.01
Termination
Date Acceleration.
SP and
the Trustee of his inter-vivos trust dated August 7, 2003 have agreed that
the
termination date of the trust shall be changed from August 7,
2006
to the tenth day immediately following the date of this Agreement (the “Trust
Termination Date).
2
3.02
Share
Return.
On the
Trust Termination Date, SP shall execute and deliver to the Trustee a receipt
and release agreement in the form annexed hereto as Annex A and Trustee
simultaneously therewith shall deliver or cause to be delivered to SP all
of the
shares of the Company held by him as Trustee in the Trust.
ARTICLE
IV
COMPANY
STOCK OPTIONS; EXERCISE CREDIT
4.01 Stock
Options.
The
Company agrees that within ten days of the date of this Agreement, it shall
issue to SP additional Company stock options to purchase 1,200,000 shares
of the
Company on any business day within ten (10) years of the date of issuance,
at an
exercise price of $ 0.965 per share and in the form annexed hereto as Annex
B.
4.02 Exercise
Credit.
The
Company agrees that in his exercise hereafter of any and all Company warrants
or
Company options, SP shall be credited with the aggregate sum of
$200,000.
ARTICLE
V
MISCELLANEOUS
5.01 Termination
of Litigation and Expenses.
Upon
execution of this Agreement, counsel for the Company and SP shall enter into
a
stipulation of dismissal of the current litigation and present that stipulation
to the Court, seeking an Order dismissing all claims in the litigation without
prejudice. Except as otherwise expressly provided for herein, the Company
and SP
(i) shall pay and be solely responsible for all of its or his own expenses
(including attorneys’ fees and disbursements) in connection with the negotiation
of this Agreement, the performance of their respective obligations hereunder
and
(ii) shall pay and be solely responsible for, and shall not be required to
reimburse the other party for, any expenses (including attorneys’ fees) incurred
by it or them in connection with the Litigation.
5.02 Amendment
and Waiver.
This
Agreement may not be amended or waived except in a writing executed by the
party
against which such amendment or waiver is sought to be enforced. No course
of
dealing between or among any persons having any interest in this Agreement
will
be deemed effective to modify or amend any part of this Agreement or any
rights
or obligations of any person under or by reason of this Agreement.
3
5.03 Notices.
All
notices, demands and other communications to be given or delivered under
or by
reason of the provisions of this Agreement will be in writing and will be
deemed
to have been given when personally delivered or mailed by first class registered
air mail, return receipt
requested, or on the next business day following transmission, if sent by
facsimile, telecopy or other electronic transmission device. Notices, demands
and communications to the Company and SP will, unless another address is
specified in writing, be sent to the address indicated below:
Notices
to the Company:
Envirokare
Tech, Inc.
000
Xxxxxxxxx Xxxxxx
00xx
Xxxxx
Xxx
Xxxx,
XX 00000:
FAX:
With
a
copy to:
Xxxxxx
& Whitney LLP
000
Xxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxxxxx X. Xxxxxxx/ Xxxxx Xxxxxxxxx
FAX:
0-000-000-0000
Notices
to SP:
Xxxxx
Xxxxxx
00
00xx
Xxxxxx
Xxxxxxxx,
Xxx Xxxx 00000-0000
FAX:
With
a
copy to:
Xxxxxxx
Xxxx Xxxx & Xxxxxxxxxx LLP
000
Xxxx
00xx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attention:
Xxxx X. Xxxxxx/ Xxxxxx F.X. Xxxxx
FAX:
0-000-000-0000
5.04
Assignment.
This
Agreement, and any of the rights or obligations of SP hereunder, may not
be
assigned or delegated by him without the prior written consent of the Company,
which consent may be withheld by the Company in its sole discretion, and
any
such purported assignment or delegation without such prior written consent
shall
be void and of no force or effect. This Agreement and all of the provisions
hereof will be binding upon and inure to the benefit of the parties hereto
and
their respective heirs, personal representatives, successors and permitted
assigns.
4
5.05 Severability.
Whenever possible, each provision of this Agreement will be interpreted in
such
manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable
law,
such provision will be ineffective only to the extent of such prohibition
or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
5.06 Entire
Agreement.
This
Agreement contains the complete agreement between the parties and supersedes
any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any
way.
5.07 Counterparts.
This
Agreement may be executed in one or more counterparts, any one of which need
not
contain the signatures of more than one party, but all such counterparts
taken
together will constitute one and the same instrument.
5.08 Governing
Law.
The
internal law, without regard to conflicts of laws principles of the State
of New
York (other than Section 5-1401 of the New York General Obligations Law),
will
govern all questions concerning the construction, validity and interpretation
of
this Agreement and the performance of the obligations imposed by this
Agreement.
5.09 Waiver;
Jurisdiction.Each
party hereto hereby irrevocably (i) agrees that any legal or equitable action,
suit or proceeding arising out of or relating to this Agreement, may be
instituted in any state or federal court located in the County of New York,
State of New York; (ii) waives any objection which it may now or hereafter
have
to the venue or forum of any such action, suit or proceeding; (iii) waives
the
right to a trial by jury in any such action, suit or proceeding; (iv) submits
to
the non-exclusive jurisdiction of any state or federal court of competent
jurisdiction in the County of New York, State of New York for purposes of
any
such action, suit or proceeding; (v) waives any objection they or it may
now or
hereafter have to the personal jurisdiction and subject matter jurisdiction
in
any such action, suit or proceeding which may be instituted in any state
or
federal court in the County of New York, State of New York; (vi) waives,
to the
fullest extent permitted by applicable law, any claim that any action or
proceeding commenced by the other party relating in any way to this Agreement
should be dismissed or stayed by reason, or pending the resolution, of any
other
action or proceeding commenced and relating in any way to this Agreement,
whether or not commenced earlier; (vii) appoints Corporation Service Company,
which currently maintains an Albany, New York office at 00 Xxxxx Xxxxxx,
0xx
Xxxxx,
Xxxxxx, Xxx Xxxx 00000, as its agent to receive service of process or other
legal summons for purposes of any such action or proceeding; and (viii) agrees
that so long as such party has any obligations under this Agreement, they
or it
will maintain a duly appointed agent in New York City for the service of
such
process or summons, and if they fail to maintain such an agent, any such
process
or summons may be served by mailing a copy thereof by registered mail, or
a form
of mail substantially equivalent thereto, addressed to them or it at their
or
its address as provided for notices under this Agreement, such party irrevocably
waiving any right to assert that failure of such process agent to appear
in any
such action or proceeding is a defense thereto.
5
IN
WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
| ENVIROKARE TECH, INC. | ||
| |
|
|
| By: | /s/ Xxxxxx X. Xxxxxxxxx | |
|
Name: XXXXXX X. XXXXXXXXX |
||
| Its: PRESIDENT, COO | ||
| /s/ Xxxxx Xxxxxx | ||
|
XXXXX XXXXXX |
||
STATE
OF NEW YORK)
COUNTY
OF
NEW YORK) SS.:
On
the
14th day of April 2006, before me personally came Xxxxxx
X. Xxxxxxxxx to me known, who being by me duly sworn, did depose and
say that he is the
Chief
oper. off & Pres. of Envirokare Tech, Inc, the company described in and
which executed the foregoing instrument; and acknowledged that he signed
his
name thereto on behalf of said company.
| /s/
Xxxxxx X. Xxxxxxx
Notary Public |
XXXXXX
X. XXXXXXX
Notary
Public, State of New
York
No.
02FR4736316
Qualified
in New York County
Commission
Expires Aug 16, 0000
XXXXX
XX
XXX XXXX)
XXXXXX
XX
XXX XXXX) SS.:
On
the
14th day
of April, 2006,
before
me personally came Xxxxx Xxxxxx to me known, who being by me duly sworn,
did
depose and say that he is the person described in and who executed the foregoing
instrument, and acknowledged that he signed his name thereto.
| /s/ Xxxxxx X. Xxxxxxx
Notary Public |
XXXXXX
X. XXXXXXX
Notary
Public, State of New York
No.
02FR4736316
Qualified
in New York County
Commission
Expires Aug 16, 2008
6
ANNEX
A
SUPREME
COURT OF THE STATE OF NEW YORK
COUNTY
OF
NEW YORK
|
|
x |
In
the
Matter of the Non-Judicial
Settlement
of the Account of
Proceedings
of XXXXXX X. XXXXXXXXXXXX, RECEIPT
& RELEASE
as
Trustee of the XXXXX XXXXXX Trust
dated
August 7, 2003.
|
|
x |
WHEREAS,
by an Agreement dated August 7, 2003, between Xxxxx Xxxxxx, as Settlor, and
Xxxxxx X. Xxxxxxxxxxxx, as Trustee, a Trust was created for the benefit of
Xxxxx
Xxxxxx; and
WHEREAS,
Article Seventeenth of the Trust Agreement creating said Trust provides that
any
amendment of the terms of the Trust Agreement shall require the prior written
approval of the Board of Directors of Envirokare Tech., Inc. (“Envirokare”),
upon a showing of necessity and appropriateness; and
WHEREAS,
the Settlor, Xxxxx Xxxxxx, the Trustee, Xxxxxx X. Xxxxxxxxxxxx, and the Board
of
Directors of Envirokare have together concluded and agreed that the Trust
should
be terminated and that its Article First (A) and Article Fourteenth should
be
amended to read as follows:
“FIRST:
(A) This Trust shall
terminate upon the first to occur of the following: (1) at Three years from
the
date of this document; (2) Settlor’s death; and (3) the tenth day immediately
following the date of the Standstill Agreement to which the receipt and release
agreement to be executed by and between the Settlor and the Trustee is appended
as Annex A. The period between the date of this Agreement and the termination
of
the Trust shall be called the “Trust Term.”
“FOURTEENTH:
Except as provided hereinabove, the Trustee shall make no accounting to the
Settlor until the date of termination of this Trust, and at such time either
the
Trustee shall render a full and final accounting of his acts and transactions
as
Trustee to the Settlor or the Settlor shall waive his entitlement to the
same
and the assets of the Trust then being held by the Trustee shall be turned
over
to the Settlor pursuant to appropriate receipt and release
agreement”.
;and
WHEREAS,
the Trust has now terminated and the Settlor has requested that the assets
of
the Trust now being held by the Trustee be turned over to the Settlor without
the necessity of a full and final accounting by the Trustee of his acts and
transactions during the Trust Term;
NOW,
THEREFORE, Xxxxx Xxxxxx waives a Judicial Settlement of the Account of Xxxxxx
X.
Xxxxxxxxxxxx, as Trustee of the Xxxxx Xxxxxx Trust dated August 7, 2003 to
avoid
unnecessary expense and delay;
AND,
Xxxxx Xxxxxx does hereby approve and confirm all of the acts and transactions
of
Xxxxxx X. Xxxxxxxxxxxx, as Trustee in the administration of the Xxxxx Xxxxxx
Trust dated August 7, 2003 and consents and agrees that Envirokare shall
make
payment to and fully compensate the Trustee for both offering and providing
services in connection with all of the securities listed on Schedule B to
the
Trust Agreement;
AND,
the
undersigned, Xxxxx Xxxxxx does hereby for himself, his heirs, executors,
administrators and assigns, release and forever discharge Xxxxxx X.
Xxxxxxxxxxxx, individually and as Trustee of the Xxxxx Xxxxxx Trust dated
August
7, 2003, his heirs, executors, administrators, successors and assigns, of
and
from all claims and demands which in such capacity he now has or hereafter
may
have against said Xxxxxx X. Xxxxxxxxxxxx, individually and as Trustee as
aforesaid, for any claims of any kind and nature whatsoever in connection
with
the Xxxxx Xxxxxx Trust dated August 7, 2003;
AND,
by
executing this instrument Xxxxx Xxxxxx acknowledges receipt of all the assets
of
the aforesaid Trust as listed in Schedule “A” annexed hereto and made a part of
this Agreement as full and final distribution to him of the assets in said
Trust;
AND,
the
undersigned, Xxxxx Xxxxxx, individually for himself, his heirs, executors,
distributees, administrators and assigns, does hereby agree to indemnify
and
hold harmless Xxxxxx X. Xxxxxxxxxxxx, individually and as Trustee of the
aforesaid Trust, from any and all claims of any kind, nature and description
whatsoever arising from the performance of his duties as Trustee of the Trust
other than claims arising from his willful act or default.
IN
WITNESS WHEREOF, this instrument has been duly executed as of the ___
day
of
April, 2006.
| /s/
Xxxxx
Xxxxxx
Xxxxx Xxxxxx |
||
| Settlor | ||
|
Xxxxxx X. Xxxxxxxxxxxx |
||
| Xxxxxxx | ||
0
XXXXX
XX
XXX XXXX)
:
ss.:
COUNTY
OF
NEW YORK )
On
this ___ day of April, 2006, before me personally came Xxxxx Xxxxxx to me
known and known to me to be the individual described in and who executed
the
foregoing instrument, and he duly acknowledged to me that he executed the
same.
|
Notary Public |
STATE
OF
NEW YORK)
:
ss.:
COUNTY
OF
NEW YORK )
On
this ___ day of April, 2006, before me personally came Xxxxxx X.
Xxxxxxxxxxxx to me known
and
known to me to be the individual described in and who executed the foregoing
instrument, and he duly acknowledged to me that he executed the
same
|
Notary Public |
3
SCHEDULE
A
4,100,000
shares of the capital stock of Envirokare Tech., Inc.
4
ANNEX
B
ENVIROKARE
TECH, INC.
STOCK
OPTION AGREEMENT
ENVIROKARE
TECH, INC. (the “Company”), desiring to afford an opportunity to
the Grantee named below to purchase certain shares of the Company’s Common Stock
to provide the Grantee with an added incentive to work on behalf of the Company
or one or more of its subsidiaries, hereby grants to the Grantee, and the
Grantee hereby accepts, an option to purchase the number of such shares
specified below, during a term ending at midnight (prevailing local time
at the
Company’s principal offices) on the expiration date of this Option specified
below, at the option exercise price specified below, subject to and upon
the
following terms and conditions:
1. Identifying
Provisions. As used in this Option, the following terms shall have the
following respective meanings:
|
(a)
|
Grantee:
|
Xxxxx
Xxxxxx
|
|
(b)
|
Date
of grant:
|
April
__, 2006
|
|
(c)
|
Number
of shares optioned:
|
1,200,000
|
|
(d)
|
Option
exercise price per share:
|
$0.965
|
|
(e)
|
Exercise
Dates:
|
After
April ___,
2006 until April ___, 2016
|
This
Option is not intended to be and shall not be treated as an incentive stock
option under Section 422 of the Internal Revenue Code unless this sentence
has
been manually lined out and its deletion is followed by the signature of
the
corporate officer who signed this Option on behalf of the Company and the
Grantee.
2. Vesting
Schedule and Expiration. Options
to purchase 1,200,000 shares are exerciseable after April __,
2006
until April __, 2016
3. Termination
Provisions. The
right
to exercise this Option is subject to the following additional restrictions
and limitations:
(a)
Death of Grantee. If
the
Grantee shall die while this Option remains exercisable, the Grantee’s legal
representative or representatives or the persons entitled to do so under
the Grantee’s last will and testament or under applicable intestate laws shall
have the right to exercise this Option, but only for the number of shares
as to
which this Option might have been exercised on the date of the Grantee’s death,
and such right shall expire and this Option shall terminate
five years after the date of the Grantee’s death or on the
expiration date of this Option, whichever date is earlier. In all other
respects, this Option shall terminate upon such death.
4. Transferability
of Option. This
Option may be transferred by the Grantee in part or in whole without restriction
and the parties to whom the Grantee may transfer such options shall have
all of
the rights and obligations with respect to such transferred options as the
Grantee under the terms contained herein.
5. Adjustments
and Corporate Reorganizations. If
the
outstanding shares of stock of the class then subject to this Option are
increased or decreased, or are changed into or exchanged for a different
number
or kind of shares or securities or other forms of property (including cash)
or
rights, as a result of one or more reorganizations, recapitalizations,
spin-offs, stock splits, reverse stock splits, stock dividends or the like,
appropriate adjustments shall be made in the number and/or kind of shares
or
securities or other
forms of property (including cash) or rights for which this Option may
thereafter be exercised, all without any change in the aggregate exercise
price
applicable to the unexercised portions of this Option, but with a corresponding
adjustment in the exercise price per share or other unit. No fractional share
of
stock shall be issued under this Option or in connection with any such
adjustment.
Upon
the
dissolution or liquidation of the Company, or upon a reorganization, merger
or
consolidation of the Company as a result of which the outstanding securities
of
the class then subject to this Option are changed into or exchanged for property
(including cash), rights or securities not of the Company’s issue, or any
combination thereof, or upon a sale of substantially all the property of
the
Company to, or the acquisition of stock representing more than eighty percent
(80%) of the voting power of the stock of the Company then outstanding by,
another corporation or person, this Option shall terminate unless provision
be
made in writing in connection with such transaction for the assumption of
this
Option, or the substitution for this Option of an option covering the stock
of a
successor employer corporation, or a parent or a subsidiary thereof, with
appropriate adjustments in accordance with the provisions hereinabove in
this
Section entitled “Adjustments and Corporate Reorganizations” as to the number
and kind of shares optioned and their exercise prices, in which event this
Option shall continue in the manner and under the terms so provided, In any
event, no provision will be made which shall limit the rights provided
hereunder.
If
this
Option shall terminate pursuant to the next preceding paragraph, the Grantee
or
other person then entitled to exercise this Option shall have the right,
at such
time prior to the consummation of the transaction causing such termination
as
the Company shall designate, to exercise the unexercised portions of this
Option, including the portions thereof which would, but for this Section
entitled “Adjustments and Corporate Reorganizations,” not yet be
exercisable.
6. Exercise,
Payment For and Delivery of Stock. This
Option may be exercised by the Grantee or other person then entitled to exercise
it by giving four business days written notice of exercise to the Company
specifying the number of shares to be purchased and the total purchase price,
accompanied by a check to the order of the Company in payment of such price.
If
the Company is required to withhold on account of any federal, state or local
tax imposed as a result of such exercise, the notice of exercise shall also
be
accompanied by a check to the order of the Company in payment if the amount
thus
required to be withheld.
7. Alternative
Payment with Stock. Notwithstanding
the foregoing provisions requiring payment by check, if stock of the class
then
subject to this Option is then Publicly Traded, payment of such purchase
price
or any portion thereof may also be made in whole or in part with shares of
the
same class of stock as that then subject to this Option, surrendered in lieu
of
the payment of cash concurrently with such exercise, the shares so surrendered
to be valued on the basis of the Fair Market Value of the stock on the date
of
exercise, in which event the stock certificates evidencing the shares so
to be
used shall accompany the notice of exercise and shall be duly endorsed or
accompanied by duly executed stock powers to transfer the same to the Company;
provided, however, that such payment in stock instead of cash shall not be
effective and shall be rejected by the Company if (a) the Company is then
prohibited from purchasing or acquiring shares of the class of its stock
thus
tendered to it, or (b) the right or power of the person exercising the Option
to
deliver such shares in payment of the purchase price is subject to the prior
interests of any other person (excepting the Company) as indicated by legends
upon the certificate(s) or known to the Company. If the Company rejects the
payment in stock, the tendered notice of exercise shall not be effective
hereunder unless promptly after being notified of such rejection the person
exercising the Option pays the purchase price in acceptable form. If and
while
payment with stock is permitted in accordance with the foregoing provision,
the
person then entitled to exercise this Option may, in lieu of using previously
outstanding stock therefor, use some of the shares as to which this Option
is
then being exercised, in which case the notice of exercise need not be
accompanied by any stock certificates but shall include a statement directing
the Company to retain so many shares that would otherwise have been delivered
by
the Company upon that exercise of this Option as equals the number of shares
that would have been surrendered to the Company if the purchase price had
been
paid with previously issued stock. If the Company is required to withhold
on
account of any federal, state or local tax
imposed as a result of an exercise of this Option with previously issued
stock
or by retention of some optioned shares under this Section entitled “Alternative
Payment with Stock,” the stock surrendered or retained shall include an
additional number of shares whose Fair Market Value equals the amount thus
required to be withheld.
8. Rights
in Stock Before Issuance and Delivery. No
person
shall be entitled to the privileges of stock ownership in respect of any
shares
issuable upon exercise of this Option, unless and until such shares have
been
issued to such person as fully paid shares.
9. Requirements
of Law. By accepting
this Option, the Grantee represents and agrees for himself or herself and
his or
her transferees by will or the laws of descent and distribution that, unless
a
registration statement under the Securities Act of 1933 is in effect as to
shares purchased upon any exercise of this Option, (a) any and all shares
so
purchased shall be acquired for his or her personal account and not with
a view
to or for sale in connection with any distribution, and (b) each notice of
the
exercise of any portion of this Option shall be accompanied by a representation
and warranty in writing, signed by the person entitled to exercise the same,
that the shares are being so acquired in good faith for his or her personal
account and not with a view to or for sale in connection with any distribution.
The Company will exercise its best efforts as quickly as practicable to include
grantees shares resulting from the exercise of these options in any registration
statement which it files.
No
certificate or certificates for shares of stock purchased upon exercise of
this
Option shall be issued and delivered unless and until, in the opinion of
legal
counsel for the Company, such securities may be issued and delivered without
causing the Company to be in violation of or incur any liability under any
federal, state or other securities law or any other requirement of law or
of any
regulatory body having jurisdiction over the Company.
10. Stock
Appreciation Rights. The
Grantee or other person entitled to exercise this Option is further hereby
granted the right (“Stock Appreciation Right”) in lieu of exercising this Option
or any portion thereof to receive an amount equal to the lesser of (a) the
excess of the Fair Market Value of the stock subject to this Option or such
portion thereof over the aggregate exercise price for such shares hereunder
as
of the date the Stock Appreciation Right is exercised. The amount payable
upon
exercise of such Stock Appreciation Right may be settled by payment in cash
or
in shares of the class then subject to this Option valued on the basis of
their
Fair Market Value on the date Stock Appreciation Right is exercised, or in a
combination of cash and such shares so valued. No Stock Appreciation Right
may
be exercised, in whole or in part, (i) other than in connection with the
contemporaneous surrender without exercise of this Option or the portion
thereof
that corresponds to the portion of the Stock Appreciation Right being exercised,
or (ii) except to the extent that this Option or such portion thereof is
exercisable on the date of exercise of the Stock Appreciation Right by the
Person exercising the Stock Appreciation Right, or (iii) unless the class
of
stock then subject to this Option is then Publicly Traded.
11. Company’s
Right of First Purchase. While
and
so long as the stock of the class subject to this Option has not been Publicly
Traded for at least ninety days, any stock issued on exercise of this Option
shall be subject to the Company’s right of first purchase. By virtue of that
right, (a) such stock may not be transferred during the Grantee’s lifetime to
any person other than members of the Grantee’s Immediate Family, a partnership
whose members are the Grantee and/or members of the Grantee’s Immediate Family,
or a trust for the benefit of the Grantee and/ or members of the Grantee’s
Immediate Family, unless such transfer occurs within fifteen days following
the
expiration of thirty days after the Company has been given a written notice
which correctly identified the prospective transferee or transferees and
which
offered the Company an opportunity to purchase such stock at its Fair Market
Value in cash, and such offer was not accepted within thirty days after the
Company’s receipt of that notice; and (b) upon the Grantee’s death, the Company
shall have the right to purchase all or some of such stock at its Fair Market
Value within nine months after the date of death. This fight of first purchase
shall continue to apply to any such stock after the transfer during the
Grantee’s lifetime of that stock to a member of the
Grantee’s subsequent
transfers thereof, but it shall not apply after a transfer of that stock
with
respect to which the Company was offered but did not exercise or waive its
right
of first purchase or more than nine months after the Grantee’s death. Grantee
has the right to assign a portion of the options represented hereby to up
to
five persons that are non-family members. The Company may assign all or any
portion of its right of first purchase to any one or more of its stockholders,
or to a pension or retirement plan or trust for employees of the Company,
who
may then exercise the right so assigned. Stock certificates evidencing stock
subject to this right of first purchase shall be appropriately legended to
reflect that right.
12. Notices.
Any notice
to
be given to the Company shall be addressed to the Company in care of its
Secretary at its principal office, and any notice to be given to the Grantee
shall be addressed to the Grantee at the address set forth beneath the Grantee’s
signature hereto or at such other address as the Grantee may hereafter designate
in writing to the Company. Any such notice shall be deemed duly given when
enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry or certification
fees prepaid, in a post office or branch post office regularly maintained
by the
United States Postal Service.
13. INTENTIONALLY
OMITTED
14. Rules
of Construction. This
Agreement has been executed and delivered by the Company in the State of
Nevada,
and shall be construed and enforced in accordance with the laws of Nevada,
other
than any choice of law rules calling for the application of laws of another
jurisdiction. Should there by any inconsistency or discrepancy between the
provisions of this Option and the terms and conditions of the Executive
Compensation Agreement between the Company and the Grantee, the provisions
of
this Option shall prevail. The receipt of this Option does not give the Grantee
any right to continued employment by the Company or subsidiary for any period,
nor shall granting of this Option or the issuance of shares on exercise thereof
give the Company or any subsidiary any right to the continued services of
the
Grantee for any period.
IN
WITNESS WHEREOF, the Company has
granted this Option on the date of grant specified above.
| ENVIROKARE TECH, INC. | |||
| By: | |||
|
Xxxxxx Xxxxxxxxx, Its COO |
Xxxxx Xxxxxx |
||
