NON-QUALIFIED STOCK OPTION AGREEMENT
THIS NON-QUALIFIED STOCK OPTION AGREEMENT ("Agreement") is entered into
as of July 1, 2000, by and between XXXXXXX.XXX, INC., a Nevada corporation
("Corporation"), and Xxxxxxx Xxxxx ("Optionee").
R E C I T A L S
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A. On July 1, 2000, the Board of Directors of the Corporation adopted,
subject to the approval of the Corporation's stockholders, the XxxxXxx.xxx, Inc.
2000 Stock Option Plan (the "Plan").
B. Pursuant to the Plan, on July 1, 2000, the Board of Directors of the
Corporation acting as the Plan Committee ("Committee") authorized granting to
Optionee options to purchase shares of the common stock, $.001 par value
("Common Stock"), of the Corporation ("Shares") for the term and subject to the
terms and conditions hereinafter set forth.
A G R E E M E N T
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It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
otherwise clearly requires, terms with initial capital letters used herein shall
have the meanings assigned to such terms in the Plan.
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of 200,000 Shares, upon and subject to
the terms and conditions of the Plan, which is incorporated in full herein by
this reference, and upon the other terms and conditions set forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the date of this Agreement and expiring on the date
June 30, 2010 (10) years from the date of grant, unless earlier terminated
pursuant to Section 7.
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of the
number of Shares Optionee elects to purchase, such notice to be accompanied by
such other executed instruments or documents as may be required by the Committee
pursuant to this Agreement, and unless otherwise directed by the Committee,
Optionee shall at the time of such exercise tender the purchase price of the
Shares he has elected to purchase. An Optionee may purchase less than the total
number of Shares for which the Option is exercisable, provided that a partial
exercise of an Option may not be for less than One Hundred (100) Shares. If
Optionee shall not purchase all of the Shares which he is entitled to purchase
under the Options, his right to purchase the remaining unpurchased Shares shall
continue until expiration of the Options. The Options shall be exercisable with
respect of whole Shares only, and fractional Share interests shall be
disregarded.
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5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $0.25
per Share.
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its sole
discretion, permit payment by the Corporation of the purchase price in whole or
in part with Shares. If the Optionee is so permitted, and the Optionee elects to
make payment with Shares, the Optionee shall deliver to the Corporation
certificates representing the number of Shares in payment for new Shares, duly
endorsed for transfer to the Corporation, together with any written
representations relating to title, liens and encumbrances, securities laws,
rules and regulatory compliance, or other matters, reasonably requested by the
Board of Directors. The value of Shares so tendered shall be their Fair Market
Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP. If an
Optionee's employment or other relationship with the Corporation (or a
Subsidiary) terminates for any reason other than a Change in Control (as defined
below), the effect of the termination on the Optionee's rights to acquire Shares
shall be as follows:
7.1 TERMINATION FOR OTHER THAN DEATH, DISABILITY OR CAUSE. If
an Optionee ceases to be employed by, or ceases to have a relationship with, the
Corporation or a Subsidiary for any reason other than for death, disability or
cause, such Optionee's Options shall expire not later than twelve (12) months
thereafter. During such twelve (12) month period and prior to the expiration of
the Option by its terms, the Optionee may exercise any Option granted to him,
but only to the extent such Options were exercisable on the date of termination
of his employment or relationship and except as so exercised, such Options shall
expire at the end of such twelve (12) month period unless such Options by their
terms expire before such date. The decision as to whether a termination for a
reason other than disability, cause or death has occurred shall be made by the
Committee, whose decision shall be final and conclusive, except that employment
shall not be considered terminated in the case of sick leave or other bona fide
leave of absence approved by the Corporation.
7.2 DEATH OR DISABILITY. If an Optionee ceases to be employed
by, or ceases to have a relationship with, the Corporation or a Subsidiary by
reason of disability (within the meaning of Code Section 22(e)(3)) or death,
such Optionee's Options shall expire not later than one (1) year thereafter.
During such one (1) year period and prior to the expiration of the Option by its
terms, the Optionee may exercise any Option granted to him, but only to the
extent such Options were exercisable on the date the Optionee ceased to be
employed by, or ceased to have a relationship with, the Corporation or
Subsidiary by reason of death or disability. The decision as to whether a
termination by reason of disability has occurred shall be made by the Committee,
whose decision shall be final and conclusive.
7.3 TERMINATION FOR CAUSE. If an Optionee's employment by, or
relationship with, the Corporation or a Subsidiary is terminated for cause, such
Optionee's Option shall expire immediately; provided, however, the Committee
may, in its sole discretion, within thirty (30) days of such termination, waive
the expiration of the Option by giving written notice of such waiver to the
Optionee at such Optionee's last known address. In the event of such waiver, the
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Optionee may exercise the Option only to such extent, for such time, and upon
such terms and conditions as if such Optionee had ceased to be employed by, or
ceased to have a relationship with, the Corporation or a Subsidiary upon the
date of such termination for a reason other than disability, cause or death.
Termination for cause shall include termination for malfeasance or gross
misfeasance in the performance of duties or conviction of illegal activity in
connection therewith or any conduct detrimental to the interests of the
Corporation or a Subsidiary. The determination of the Committee with respect to
whether a termination for cause has occurred shall be final and conclusive.
7.4 CHANGE IN CONTROL. In the event that Optionee resigns or
is dismissed, whether voluntarily or involuntarily, or whether with or without
cause in connection with one or more transactions that result in a change in the
ownership of thirty percent (30%) or more of the outstanding voting stock of the
Corporation (referred to as a "Change in Control"), this Agreement and the
Options represented hereby shall remain unaffected by the provisions of this
Section 7. Upon a Change in Control, the provisions of this Section 7 shall no
longer be effective and shall be deemed to be deleted from this Agreement
without the need for any further action by the parties to this Agreement
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be
transferable, either voluntarily or by operation of law, otherwise than by will
or the laws of descent and distribution and shall be exercisable during the
Optionee's lifetime only by Optionee.
9. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an Adjustment
Event, (i) appropriate and proportionate adjustments shall be made to the number
and kind and exercise price for the shares subject to the Options, and (ii)
appropriate amendments to this Agreement shall be executed by the Corporation
and Optionee if the Committee determines that such an amendment is necessary or
desirable to reflect such adjustments. If determined by the Committee to be
appropriate, in the event of an Adjustment Event which involves the substitution
of securities of a corporation other than the Corporation, the Committee shall
make arrangements for the assumptions by such other corporation of the Options.
Notwithstanding the foregoing, any such adjustment to the Options shall be made
without change in the total exercise price applicable to the unexercised portion
of the Options, but with an appropriate adjustment to the number of shares, kind
of shares and exercise price for each share subject to the Options. The
determination by the Committee as to what adjustments, amendments or
arrangements shall be made pursuant to this Section 9, and the extent thereof,
shall be final and conclusive. No fractional Shares shall be issued on account
of any such adjustment or arrangement.
10. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing
contained in this Agreement shall obligate the Corporation to employ or have
another relationship with Optionee for any period or interfere in any way with
the right of the Corporation to reduce Optionee's compensation or to terminate
the employment of or relationship with Optionee at any time.
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11. TIME OF GRANTING OPTIONS. The time the Options shall be deemed
granted, sometimes referred to herein as the "date of grant," shall be July 1,
2000.
12. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to
the privileges of stock ownership as to any Shares not actually issued and
delivered to Optionee. No Shares shall be purchased upon the exercise of any
Options unless and until, in the opinion of the Corporation's counsel, any then
applicable requirements of any laws, or governmental or regulatory agencies
having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
13. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation may
consider necessary in order to comply with the Securities Act of 1933 as then in
effect, and may require that the Optionee agree that any sale of the Shares will
be made only in such manner as is permitted by the Committee. The Committee may
in its discretion cause the Shares underlying the Options to be registered under
the Securities Act of 1933 as amended by filing a Form S-8 Registration
Statement covering the Options and the Shares underlying the Options. Optionee
shall take any action reasonably requested by the Corporation in connection with
registration or qualification of the Shares under federal or state securities
laws.
14. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options
granted herein are intended to be non-qualified stock options described in U.S.
Treasury Regulation ("Treas. Reg.")ss.1.83-7 to which Sections 421 and 422 of
the Internal Revenue Code of 1986, as amended from time to time ("Code") do not
apply, and shall be construed to implement that intent. If all or any part of
the Options shall not be described in Treas. Reg.ss.1.83-7 or be subject to
Sections 421 and 422 of the Code, the Options shall nevertheless be valid and
carried into effect.
15. PLAN CONTROLS. The Options shall be subject to and governed by the
provisions of the Plan. All determinations and interpretations of the Plan made
by the Committee shall be final and conclusive.
16. SHARES SUBJECT TO LEGEND. If deemed necessary by the Corporation's
counsel, all certificates issued to represent Shares purchased upon exercise of
the Options shall bear such appropriate legend conditions as counsel for the
Corporation shall require.
17. CONDITIONS TO OPTIONS.
17.1 COMPLIANCE WITH APPLICABLE LAWS. THE CORPORATION'S
OBLIGATION TO ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE OPTIONS IS
EXPRESSLY CONDITIONED UPON THE COMPLETION BY THE CORPORATION OF ANY REGISTRATION
OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR FEDERAL LAW OR
RULINGS OR REGULATIONS OF ANY GOVERNMENTAL REGULATORY BODY, OR THE MAKING OF
SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS AND UNDERTAKINGS BY THE
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OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION IN ORDER TO COMPLY WITH
THE REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH REGISTRATION OR OTHER
QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE SHALL, IN ITS SOLE DISCRETION,
DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED REPRESENTATIONS AND UNDERTAKINGS MAY
INCLUDE REPRESENTATIONS AND AGREEMENTS THAT THE OPTIONEE OR ANY PERSON ENTITLED
TO EXERCISE THE OPTION (i) IS NOT PURCHASING SUCH SHARES FOR DISTRIBUTION AND
(ii) AGREES TO HAVE PLACED UPON THE FACE AND REVERSE OF ANY CERTIFICATES A
LEGEND SETTING FORTH ANY REPRESENTATIONS AND UNDERTAKINGS WHICH HAVE BEEN GIVEN
TO THE COMMITTEE OR A REFERENCE THERETO.
17.2 STOCKHOLDER APPROVAL OF PLAN. IF THE OPTIONS GRANTED
HEREBY ARE GRANTED PRIOR TO APPROVAL OF THE PLAN BY THE STOCKHOLDERS OF THE
CORPORATION PURSUANT TO SECTION 8 OF THE PLAN, THE GRANT OF THE OPTIONS MADE
HEREBY IS EXPRESSLY CONDITIONED UPON AND SUCH OPTIONS SHALL NOT BE EXERCISABLE
UNTIL THE APPROVAL OF THE PLAN BY THE STOCKHOLDERS OF THE CORPORATION IN
ACCORDANCE WITH THE PROVISIONS OF SECTION 8 OF THE PLAN.
17.3 MAXIMUM EXERCISE PERIOD. Notwithstanding any provision of
this Agreement to the contrary, the Options shall expire no later than ten years
from the date hereof or five years if, as of the date hereof, the Optionee owns
or is considered to own by reason of Code Section 425(d) more than 10% of the
total combined voting power of all classes of stock of the Corporation or any
Subsidiary or parent corporation of the Corporation.
18. MISCELLANEOUS.
18.1 BINDING EFFECT. This Agreement shall bind and inure to
the benefit of the successors, assigns, transferees, agents, personal
representatives, heirs and legatees of the respective parties.
18.2 FURTHER ACTS. Each party agrees to perform any further
acts and execute and deliver any documents which may be necessary to carry out
the provisions of this Agreement.
18.3 AMENDMENT. This Agreement may be amended at any time by
the written agreement of the Corporation and the Optionee.
18.4 SYNTAX. Throughout this Agreement, whenever the context
so requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
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18.5 CHOICE OF LAW. The parties hereby agree that this
Agreement has been executed and delivered in the State of California and shall
be construed, enforced and governed by the laws thereof. This Agreement is in
all respects intended by each party hereto to be deemed and construed to have
been jointly prepared by the parties and the parties hereby expressly agree that
any uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
18.6 SEVERABILITY. In the event that any provision of this
Agreement shall be held invalid or unenforceable, such provision shall be
severable from, and such invalidity or unenforceability shall not be construed
to have any effect on, the remaining provisions of this Agreement.
18.7 NOTICES. All notices and demands between the parties
hereto shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made forty-eight
(48) hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph, such
notice or demand shall be deemed given and made at the time the telegraph agency
shall confirm to the sender, delivery thereof to the addressee. All notices and
demands to Optionee or the Corporation may be given to them at the following
addresses:
If to Optionee: Xxxxxxx Xxxxx
000 X. Xxxxx Xxxxxxx 000
Xxxxx X-00
Xxxxxxxxx, Xxxxxxxxxx 00000
If to Corporation: XxxxXxx.xxx, Inc.
000 X. Xxxxx Xxxxxxx 000
Xxxxx X-00
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx Xxxxx, President
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
18.8 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties hereto pertaining to the subject matter hereof,
this Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification or
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions of
this Agreement shall constitute a waiver of any other provision hereof (whether
or not similar) nor shall such waiver constitute a continuing waiver.
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18.9 ATTORNEYS' FEES. In the event that any party to this
Agreement institutes any action or proceeding, including, but not limited to,
litigation or arbitration, to preserve, to protect or to enforce any right or
benefit created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
"CORPORATION"
XXXXXXX.XXX, INC.,
a Nevada corporation
By: /S/ Xxxxxxx Xxxxx
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Xxxxxxx Xxxxx, President
"OPTIONEE"
/S/ Xxxxxxx Xxxxx
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XXXXXXX XXXXX
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