Exhibit 10(b)
THIS OPTION HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY
AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH BOTH THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND THE
RESTRICTIONS CONTAINED HEREIN. THIS OPTION HAS NOT BEEN
REGISTERED UNDER THE ACT.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT (hereinafter the "Agreement"), is entered into
under seal as of this 13th day of February, 1997 by and between CHOICES
ENTERTAINMENT CORPORATION, a Delaware Corporation (hereinafter the
"Corporation"), and Xxxxx X. Xxxx, a resident of the Commonwealth of
Pennsylvania (hereinafter the "Optionee").
R E C I T A L S
WHEREAS, the Corporation now desires to provide for the grant to the
Optionee of an option to purchase certain shares of the Common Stock of the
Corporation, upon certain stated terms and conditions.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration both the receipt and legal sufficiency of which are hereby
acknowledged, the parties hereby specifically agree under seal as follows:
1. Grant of Option. In exchange for good and valuable consideration and
Ten Dollars ($10.00) paid in hand by the Optionee to the Corporation, the
Corporation hereby grants to the Optionee, subject to the provisions hereof, the
right, privilege and option to purchase up to, but not exceeding, two hundred
thousand (200,000) shares of the Common Stock of the Corporation, par value One
Cent ($.01) per share (hereinafter the "Option"), at a per share exercise price
of $0.05.
2. Manner of Exercise. Subject at all times to the provisions of the
Corporation's Certificate of Incorporation, as amended, the Option granted
pursuant to this Agreement may be exercised by the Optionee at any time during
the period of time commencing on August 13, 1997, and terminating at 5:00 p.m.,
prevailing New York time, on February 13, 2002 (hereinafter the "Expiration
Date"). Said Option may be exercised from time to time prior to said Expiration
Date, but in no instance for less than Ten Thousand (10,000) shares of the
Common Stock of the Corporation at any one (1) time (unless a lesser number of
shares shall then be the maximum number subject to exercise at that time and, if
such is the case, the Optionee must exercise in toto, and not in part, all such
shares subject to exercise at that time). It is expressly
understood that any and all Options not exercised prior to the Expiration Date
shall expire immediately and automatically thereon and become null and void
without any further act or deed whatsoever at that time.
3. Exercise of Option. The Option granted by this Agreement, to the extent
the same is exercisable in accordance with the provisions set forth in Section 2
hereof, may be exercised only by delivering to the Secretary of the Corporation
written notice of exercise in the form of the Notice of Exercise, attached
hereto as Exhibit A and incorporated by reference herein, together with payment
in the form of cash, check, bank draft or money order payable to the Order of
Corporation in an amount equal to the total exercise price as set forth in
Section 1 hereof (hereinafter the "Exercise Price") for that number of shares
purchased pursuant to said Notice of Exercise and a written statement that the
shares are being purchased for the Optionee's own account, for investment only,
and not with a view to distribution. This statement will not be required in the
event that the offering of the securities pursuant to this Agreement is then
registered under the federal Securities Act of 1933, as amended (hereinafter the
"Act"), and any and all applicable similar state securities laws (hereinafter
the "State Acts"). Within thirty (30) days after delivery of any Notice of
Exercise as set forth hereinabove, the Corporation shall cause certificates for
the number of shares of the Common Stock of the Corporation with respect to
which such Option is exercised to be issued in the name of the Optionee.
4. Option Stock. Any shares issued upon the exercise of the Option granted
hereby shall be either authorized but unissued or reacquired shares of the
Corporation's common stock, par value One Cent ($.01) per share (any such shares
issued pursuant to such exercise, hereinafter the "Option Stock").
5. Option Transfer Restrictions. The Option granted pursuant to this
Agreement may not be transferred, assigned, pledged, sold, donated, hypothecated
or otherwise disposed of in any way whatsoever, shall not be subject to
attachment or similar process, and may be exercised, subject to the restrictions
contained herein, only by the Optionee. Upon any attempt to transfer the Option
granted pursuant thereto, or to assign, pledge, hypothecate, sell, donate or
otherwise dispose of the same in any manner whatsoever, not in strict accordance
with the provisions hereof, or upon the levy of any execution, attachment, or
similar process upon such option, the Option shall immediately and automatically
become null and void and without any force or effect whatsoever.
6. Optionee Not a Stockholder. The Optionee shall not be deemed for any
purpose to be a stockholder of the Corporation with respect to any shares as to
which the Option granted hereunder has not been exercised in strict accordance
hereof, with payment of the Exercise Price and issuance of certificates made as
provided herein.
7. Optionee's Representations & Warranties; Acknowledgement of Certain
Facts.
(a) The Optionee acknowledges that any and all securities to be
acquired pursuant to this Agreement have not been registered under either the
Act or the State Acts. Accordingly, the Optionee represents and warrants that
the Option granted hereby and any Option Stock acquired pursuant hereto will be
acquired for its own account and without a view to, the offer, offer for sale,
or any sale in connection with, the distribution of either such Option or the
Option Stock represented by such Option. The Optionee further represents and
warrants that it will hold such Option Stock indefinitely unless subsequently
registered under the Act and the State Acts or unless exemption from such
registration is available and an opinion of counsel for the Corporation, in form
and substance satisfactory to the Corporation, is obtained to that effect.
Consequently, all certificates representing shares of Option Stock issued upon
the exercise of the Option, or part thereof, shall bear a conspicuous legend in
substantially the following form:
"The securities represented by this certificate have not been
registered under the Federal Securities Act of 1933 (the "Act") or
applicable state securities laws (the "State Acts") and shall not be sold,
pledged, hypothecated, donated, or otherwise transferred (whether or not
for consideration) by the holder except upon the issuance to the
Corporation of a favorable opinion of its counsel and/or the submission to
the Corporation of such other evidence as may be satisfactory to counsel
for the Corporation, to the effect that any such transfer shall not be in
violation of the Act and the State Acts."
(b) The Optionee recognizes that the securities to be acquired
pursuant to this Agreement are highly speculative and involve a high degree of
risk. The Optionee further recognizes that the Option granted hereby is not
transferable except as specifically set forth herein and that the
transferability of shares of the Option Stock is significantly restricted. The
Optionee acknowledges that it has sufficient financial means to be able to
sustain the loss of the amount necessary to exercise the Option or part thereof,
should it choose to do so. The Optionee expressly recognizes and specifically
acknowledges that the percentage of the Corporation's equity represented by this
Option is subject to substantial dilution in any one of a variety of means,
including, but not limited to, by way of a future issuance of stock, stock
split, reverse stock split, stock dividend or other distribution,
reclassification of outstanding shares, recapitalization or otherwise.
(c) The parties agree that if the Corporation shall be advised by
its legal counsel that the issuance of securities or transfer of the Option
pursuant to this Agreement is not permitted under the Act or the State Acts, the
Corporation may, in its
discretion, defer either the delivery of any Option Stock to the Optionee or the
transfer of the Option until such time as the same would be permitted by the Act
and the State Acts, including by effecting registration of the same. The
Optionee shall have no right to demand or force the Corporation to effect such
registration.
(d) The Optionee hereby acknowledges that the Corporation has
provided it with the most recent financial statements of the Corporation, all
prepared by the independent certified public accountant engaged by the
Corporation, and further acknowledges that the Corporation has provided it with
an opportunity to ask questions of and to receive answers from a person
authorized to act on behalf of the Corporation concerning any aspect of the
Corporation's present or future financial or business status and prospects. At
reasonable times prior to the exercise of the Option, or part thereof, the
Optionee may request and the Corporation shall thereafter again provide the
Optionee with a balance sheet, a profit and loss statement, and a statement of
changes in capital of the Corporation for the preceding year, all prepared by
the independent certified public accountant then engaged by the Corporation, and
furthermore, shall again provide the Optionee with an opportunity to ask
questions of and to receive answers from any person authorized to act on behalf
of the Corporation concerning any aspect of the Corporation's present and future
financial or business status.
(e) The Optionee represents and warrants that it is knowledgeable in
business affairs and is a sophisticated investor with significant investment
experience and has had the opportunity to discuss the suitability of both the
purchase of this Option and the acquisition of the shares of the Option Stock
with both its legal counsel and financial accountant.
(f) The Optionee acknowledges that the exercise of the Option
granted by this Agreement may, under certain circumstances, be restricted or
prohibited by, and any shares of the Corporation's Common Stock may be issued
only in accordance with, the Corporation's Certificate of Incorporation, as
amended, including Article TENTH thereof.
8. Further Assurances. The parties hereto hereby agree to do such further
acts and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as either may at any time reasonably
request in order to better assure and confirm unto each party their respective
rights, powers and remedies conferred hereunder.
9. Specific Performance. The parties hereto hereby expressly recognize and
acknowledge that extensive and irreparable damage would result in the event that
this Agreement is not specifically enforced. Therefore, their respective rights
and obligations hereunder shall be enforceable in a court of equity by a decree
of specific performance and appropriate injunctive relief
may be applied for and granted in connection therewith. Such remedies and any
and all other remedies provided for in this Agreement shall, however, be
cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
10. Notices. Any notice, payment, demand or any other communication
required or permitted to be given hereunder shall be either in writing and
mailed, telegraphed or delivered by hand to the applicable party or parties at
the address(es) indicated below:
If to the Corporation:
Choices Entertainment Corporation
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxxx, President
If to the Optionee:
Xxxxx X. Xxxx
000 Xxxxxx Xxxx
Xxxxxxxx, XX 00000
or, as to each party at such other address(es) as may be designated from time to
time by such party or parties by like notice to the other parties, complying
with this section. All such notices, payments, demands or other communications
shall be deemed validly given and legally effective when: (a) deposited in the
United States postal system, by either certified or registered mail, postage
prepaid thereon and return receipt requested (in the case of notice via mail);
(b) handed over, delivered, or otherwise deposited with the telegraph company
for transmission (in the case of telegraphic notice); or (c) placed in the hands
of a competent adult authorized to accept the same (in the case of notice via
hand delivery).
11. Severability. If any term or provision of this Agreement is held or
deemed to be invalid or unenforceable, in whole or in part, by a court of
competent jurisdiction, this Agreement shall be ineffective only to the extent
of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement.
12. Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the parties with regard to the specific subject matter hereof and
supersedes all prior written and/or oral understandings between the parties. As
the final written expression of all of the agreements and understandings among
the parties hereto, this Agreement is an exhaustive and complete expression of
the parties' intent and therefore may be modified only by a writing signed by
all of the parties.
13. Waiver. Any waiver by either party of a breach of any provision of
this Agreement shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this
Agreement. The failure of a party to insist upon strict adherence to any term of
this Agreement on one or more occasions shall neither be considered a waiver nor
deprive that Party of any right thereafter to insist upon strict adherence to
that term or any other term of this Agreement. Any waiver must be in writing and
signed by the Party to be charged therewith.
14. Binding Effect. This Agreement shall be binding upon, and inure to the
benefit of, the heirs, personal representatives, legal successors and assigns of
the respective parties hereto. Neither party shall assign this Agreement without
the written consent of the others and any attempted assignment without said
consent shall be null, void and without any effect whatsoever ab initio.
15. Construction. This Agreement shall be governed, enforced, performed
and construed in accordance with the laws of the State of Delaware (excepting
those conflicts of laws provisions which would serve to defeat application of
Delaware law).
16. Counterparts. Provided that all parties hereto execute a copy of this
Agreement, this Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which together shall constitute one and the
same instrument.
17. Headings. The headings contained herein are included solely for ease
of reference and in no way shall limit, expand or otherwise affect either the
substance or construction of the terms and conditions of this Agreement or the
intent of the Parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
under seal as of the day and year first above written.
WITNESS/ATTEST: CORPORATION:
CHOICES ENTERTAINMENT CORPORATION
By:/s/Xxxx Xxxxxxxxx By:/s/ Xxxxxx X. Xxxxxxxxxx
---------------------------- -------------------------------
Xxxxxx X. Xxxxxxxxxx
(Assistant) Secretary Chief Executive Officer
OPTIONEE:
/s/ Xxxxx X. Xxxx (SEAL)
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EXHIBIT A
NOTICE OF EXERCISE
TO: Secretary
Choices Entertainment Corporation
___________________, 19___
RE: Exercise of Stock Option.
The undersigned, pursuant to the provisions set forth in that certain
_________________, 19___ Stock Option Agreement (hereinafter the "Agreement"),
hereby exercises his option under said Agreement and subscribes for and
purchases _________________________________ (___________) shares of the Common
Stock, par value One Cent ($.01) per share, of Choices Entertainment Corporation
(hereinafter the "Corporation"), and makes payment herewith in full therefore by
the present delivery of its check, drawn in the amount of _____________
__________________________________ Dollars and ____________ Cents
($____________), representing the aggregate exercise price for the shares hereby
purchased, as provided for in the Agreement.
1. In connection herewith, the undersigned hereby expressly
represents, warrants and covenants under seal as follows:
(i) That the shares of Common Stock obtained by the
undersigned pursuant to this Notice of Exercise
(hereinafter collectively the "Shares") are being
acquired by the undersigned for his own account
with the present intention of holding such Shares
for purposes of investment, and that he has no
intention of selling such securities in a public
distribution or otherwise in violation of either
the Federal securities laws or any applicable State
securities laws.
(ii) That the Shares will be held by the undersigned
indefinitely unless subsequently registered under
the Federal Securities Act of 1933, as amended
(hereinafter the "Act"), and any and all applicable
similar state securities acts (hereinafter the
"State Acts"), or unless an exemption from such
registration is available and an opinion of counsel
which (to the Corporation's reasonable
satisfaction) is knowledgeable in securities law
matters is obtained to that effect and delivered to
the Corporation.
(iii) That the undersigned has made such investigations of the
Corporation and has received all information and data that the
undersigned has requested which he considers necessary in
order to reach an informed decision as to the advisability of
purchasing the Shares.
(iv) That the undersigned is knowledgeable in business affairs and
is a sophisticated investor with significant investment
experience and has had the opportunity to discuss the
suitability of the acquisition of the shares with both his
legal counsel and financial accountant.
2. Also in connection herewith, the undersigned specifically
acknowledges under seal as follows:
(i) That the Corporation has provided the undersigned
with the most recent Financial Statements of the
Corporation, including but not limited to, a
balance sheet, a profit and loss statement and a
statement of changes in financial condition, all as
at the end of the most recent fiscal year and
prepared by the independent Certified Public
Accountant engaged by the Corporation.
(ii) That the Corporation has provided the undersigned with an
opportunity to ask questions of and to receive answers from a
person authorized to act on behalf of the Corporation
concerning any aspect of the Corporation's financial or
business status.
(iii) That, if the Shares have not been registered under either the
Act or the State Acts, the Shares cannot be resold unless
subsequently registered under the Act and the State Acts
unless an exemption from such registration is available and an
opinion of counsel which (to the Corporation's reasonable
satisfaction) is knowledgeable in securities law matters is
obtained to that effect and delivered to the Corporation.
(iv) That, the Shares issued, directly or indirectly, pursuant to
this Notice of Exercise have not been registered under the Act
and the State Acts, and the stock certificates of the
Corporation that will evidence such Shares will be imprinted
with a conspicuous legend in substantially the following form:
The securities represented by this
certificate have not been registered under
the federal Securities Act of 1933, as
amended (the "Act"), or
applicable state securities laws (the "State Acts"), and
shall not be sold, pledged, hypothecated, donated or
otherwise transferred (whether or not for consideration)
unless subsequently registered under the Act and all
applicable State Acts, or unless an exemption from such
registration is available and an opinion of counsel, such
counsel to be satisfactory to the Corporation, is provided
to that effect.
IN WITNESS WHEREOF, the undersigned has executed, sealed and delivered
this Notice of Exercise this ____ day of ___________, 19__.
WITNESS:
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