STOCK OPTION AGREEMENT
Exhibit
10.1
THIS
STOCK OPTION AGREEMENT
is made
this 18th
day of
May, 2006 by and between UNIVERSAL
CAPITAL MANAGEMENT, INC.,
a
Delaware corporation (the "Company") and Xxxxx X. Xxxx, an individual (the
"Optionee").
WITNESSETH:
Company
desires to grant to Optionee options to purchase shares of its common stock,
par
value $0.001 each ("Shares").
NOW,
THEREFORE,
in
consideration of the foregoing, the mutual covenants herein contained, and
other
good and valuable consideration, the receipt and sufficiency of which are
hereby
acknowledged, the parties hereto, each intending to be legally bound hereby,
agree as follows:
1. Definitions.
As used
in this Agreement, the following terms shall have the following respective
meanings:
(a)
The
term
"Affiliate" shall mean a corporation which is a parent corporation or a
subsidiary corporation with respect to Company within the meaning of Section
425(e) or (f) of the Code.
(b)
The
term
"Code" shall mean the Internal Revenue Code of 1986, as amended.
(c)
The
term
"Expiration Date" shall mean 5:00 p.m., local time in Wilmington, Delaware
on
May 16, 2016.
(d)
The
term
"ISO" shall mean an incentive stock option within the meaning of the Code,
for
Federal income tax purposes.
(e)
The
term
"NSO" shall mean an option which is not an ISO.
(f)
The
term
the "Plan" shall mean that certain 2006 Equity Incentive Plan adopted by
the
Board of Directors on April 4, 2006 and the stockholders on May 8,
2006.
(g)
The
term
"Termination Date" shall mean 5:00 p.m. local time in Wilmington, Delaware
on
the day the Option terminates in accordance with the terms of Paragraph
5.
(h)
The
term
"transfer" shall mean any sale, assignment, transfer, gift, donation, or
other
disposition, or any pledge, deposit, or placing of an encumbrance
upon.
(i)
The
term
"Fair Market Value" of Shares means (i) if the Shares are then listed and
traded
on a registered national or regional securities exchange or quoted on The
National Association of Securities Dealers Automated Quotation System, the
average of the high and low sales price of a Share on such exchange or quotation
system on the date of a grant or issuance of an Option, or (ii) if the Shares
are not traded on a registered national or regional securities exchange or
quoted on such a quotation system, the fair market value as determined by
the
Committee, based on such valuation methods as the Committee determines to
be
appropriate as long as such methods are permitted by the Investment Company
Act
of 1940, as amended; provided, however, that in no event shall Fair Market
Value
be less than that determined under section 409A of the Code.
(j)
The
term
"Committee" shall mean the Board of Directors or the Committee of the Board
of
Directors designated by the Board to administer the Plan.
2.
Grant
of Option.
The
Company hereby grants to Optionee the right and option (the "Option") to
purchase Four Hundred Thousand (400,000) Shares (the "Option Shares"), on
the
terms and subject to the conditions hereinafter set forth in this Agreement.
In
the event of any conflict between this Agreement and the terms of the Plan,
the
terms of the Plan shall govern.
3.
Option
Price.
The
purchase price to be paid, if the Option is exercised, shall be Two Dollars
($2.00) per share (the "Option Price"), which shall be paid at the Closing
(as
hereinafter defined) in the manner provided in this Agreement.
4.
Exercise
of Option.
The
following provisions shall apply to exercise of the Option:
(a)
Optionee
shall exercise the Option by sending a notice of election (the "Notice of
Election") to the Company in the form attached hereto and incorporated herein
by
reference. The Notice of Election shall be in writing, shall be sent to the
Company at the address and in the manner set forth in subparagraph 12(c)
hereof
(unless such address has been changed in the manner set forth in such
subparagraph), and shall contain the information about the Closing set forth
in
subparagraph 10(a) hereof.
(b)
If
exercised, the Option may be exercised as to some or all of the Option Shares,
and if with respect to some of the Option Shares, then the Option shall continue
until the Termination Date with respect to the remaining Option
Shares.
(c) The
Option may be exercised at any time prior to the Expiration Date; provided,
however, that the date and time of the exercise of the Option shall be that
day
and time when the Notice of Election is actually received by the
Company.
(2)
(d)
Payment
for Shares shall be made as provided in Section 7.1.3 of the Plan.
(e)
Subject
to the provisions of this Agreement, Optionee will become obliged to purchase
the Option Shares on the terms and conditions set forth in this Agreement
and
the Notice of Election upon the sending by Optionee of the Notice of
Election.
5.
Term.
(a)
Except
as
provided in subparagraph (b) of this Paragraph 5, the Option will terminate
at
5:00 p.m. local time in Wilmington, Delaware on the Expiration
Date.
(b)
In
the
event of Optionee’s death or disability, the provisions of Section 7.1.4 of the
Plan shall govern.
6.
Change
or Exchange of Capital Stock.
(a)
In
the
event of any merger, reorganization, consolidation, recapitalization, stock
dividend or other change in corporate structure affecting the Stock, the
provisions of Section 4.1 of the Plan shall govern.
(b)
In
connection with any event described in this Section 6 or a sale by the Company
of all or substantially all of its assets, the Committee may provide, in
its
sole discretion, for the cancellation of this Award Agreement in exchange
for a
payment in cash or other property equal to the Fair Market Value of the Option
issuable on exercise of this cancelled Award Agreement less the exercise
price
or purchase price hereof.
(c)
No
such
adjustment shall be made, however, by reason of the issuance of shares of
common
stock of the Company for cash, property, or services; by way of stock options,
stock warrants, subscription rights; or otherwise.
7.
Condition
Precedent to Exercise.
Notwithstanding anything to the contrary contained in this Agreement, the
Option
shall first become exercisable with respect to the following number of Shares
on
the dates indicated:
|
Date
|
ISOs
|
NSOs
|
Total
|
|
May
18, 2006
|
0
|
400,000
|
400,000
|
8.
Securities
Laws Compliance Procedures.
Optionee represents and acknowledges that (i) he or she knows, or has had
the
opportunity to acquire, all information concerning the business, affairs,
financial condition and prospects of the Company which he or she deems relevant
to making a fully informed decision regarding the consummation of the
transactions contemplated hereby and (ii) he or she has been supplied with
copies of the Company's latest annual report on Form 10-K, the Company's
latest
quarterly report on Form 10-Q, Company's latest proxy statement, and Company's
latest annual report to shareholders. Without intending any limitation on
the
generality of the foregoing, Optionee understands and acknowledges that neither
the Company nor anyone acting on its behalf has made any representations
or
warranties other than those contained herein respecting the Company or the
future conduct of Company's business, and Optionee has not relied upon any
representations or warranties other than those contained herein in the belief
that they were made on behalf of the Company. Optionee further understands
and
acknowledges that, if Optionee is an Employee (as defined in the Plan) of
the
Company, the Fair Market Value of the Shares, and thus the value of the Option
will depend, in part on the personal efforts and skills of Optionee in working
for the Company.
(3)
9.
Transfers.
The
Option is not assignable or otherwise transferable by the Optionee except
by
will, by the laws of descent and distribution or pursuant to a qualified
domestic relations order. During the life of the Optionee, an Option
shall be
exercisable only by the Optionee.
Any
attempt at assignment, transfer, pledge or disposition of the Option contrary
to
the provisions hereof or the levy of any execution, attachment or similar
process upon the Option shall be null and void and without force or effect.
Any
exercise of the Option by a person other than Optionee shall be accompanied
by
appropriate proofs, satisfactory in form and substance to the Company, of
the
right of each person to exercise the Option.
10.
Closing.
(a)
The
Closing shall be held at a date and time to be selected by Optionee in the
Notice of Election; provided, however, that the date specified in the Notice
of
Election shall not be more than forty-five (45) days after the sending of
such
Notice of Election.
(b)
Closing
shall be held at the chief executive offices of the Company, or such other
place
as shall be agreed upon by the parties.
(c)
At
Closing, the Company shall deliver or cause to be delivered to Optionee
certificates for all of the Option Shares to be purchased by Optionee pursuant
to the Notice of Election issued to and registered in the name of Optionee,
and
with all required transfer tax stamps, if any, affixed.
(d)
At
Closing Optionee shall pay to Company the full Option Price required to be
paid
for all of the Option Shares to be purchased by Optionee pursuant to the
Notice
of Election.
(e)
At
Closing, at the request of the Company, Optionee shall deliver to the Company
a
certificate signed by Optionee certifying to the truth and correctness as
of the
date of Closing of each of the representations, warranties, acknowledgments,
agreements, and confirmations set forth in Paragraph 8 of this
Agreement.
(4)
11.
No
Rights As Shareholder Pending Exercise.
Optionee shall not have any rights as a shareholder of the Company as a result
of the existence of the Option until and unless he or she shall acquire some
or
all of the Option Shares. Without intending any limitation on the generality
of
the foregoing, Optionee shall not be entitled to vote on any matter presented
to
the Shareholders of the Company nor to receive any dividends or other
distributions made or declared by the Company, the record date or ex-dividend
date of which, respectively, precedes the date on which some or all of the
Option Shares are acquired pursuant hereto.
12.
Miscellaneous.
(a)
Indulgences,
Etc.
Neither
the failure nor any delay on the part of either party to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power
or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver
of
such right, remedy, power or privilege with respect to any other occurrence.
No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
(b)
Controlling
Law.
This
Agreement and all questions relating to its validity, interpretation,
performance and enforcement (including, without limitation, provisions
concerning limitations of actions), shall be governed by and construed in
accordance with the laws of the State of Delaware, notwithstanding any
conflict-of-laws doctrines of such jurisdiction to the contrary, and without
the
aid of any canon, custom or rule of law requiring construction against the
draftsman.
(c)
Notices.
All
notices, requests, demands and other communications required or permitted
under
this Agreement shall be in writing and shall be deemed to have been duly
given,
made and received when personally delivered or when deposited in the United
States mails, registered or certified mail, postage prepaid, return receipt
requested, addressed as set forth below:
(i)
If
to
Optionee:
Xxxxx
X.
Xxxx
000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx
Xxxx
Xxxxx, Xxxxxxx 00000
(5)
(ii)
If
to
Company:
0000
Xxxxxx Xxxxx
Xxxxx
00
Xxxxxxxxxx,
XX 00000
In
addition, notice by mail shall be by air mail if posted outside of the
continental United States. Either party may alter the address to which
communications or copies are to be sent by giving notice of such change of
address in conformity with the provisions of this subparagraph (c) for the
giving of notice.
(d)
Binding
Nature of Agreement; No Assignment.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, personal representatives, successors and assigns,
except that neither party may assign or transfer its rights nor delegate
its
obligations under this Agreement without the prior written consent of the
other
party hereto.
(e)
Provisions
Separable.
The
provisions of this Agreement are independent of and separable from each other,
and no provision shall be affected or rendered invalid or unenforceable by
virtue of the fact that for any reason any other or others of them may be
invalid or unenforceable in whole or in part.
(f)
Entire
Agreement.
This
Agreement contains the entire understanding between the parties hereto with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written, except as herein contained. The express
terms hereof control and supersede any course of performance and/or usage
of the
trade inconsistent with any of the terms hereof. This Agreement may not be
modified or amended other than by an agreement in writing.
(g)
Paragraph
Headings.
The
Paragraph and subparagraph headings in this Agreement have been inserted
for
convenience of reference only; they form no part of this Agreement and shall
not
affect its interpretation.
(h)
Gender,
Etc.
Words
used herein, regardless of the number and gender specifically used, shall
be
deemed and construed to include any other number, singular or plural, and
any
other gender, masculine, feminine or neuter, as the context indicates is
appropriate.
(i)
Number
of Days.
In
computing the number of days for purposes of this Agreement, all days shall
be
counted, including Saturdays, Sundays and Holidays; provided, however, that
if
the final day of any time period falls on a Saturday, Sunday or Holiday,
then
the final day shall be deemed to be the next day which is not a Saturday,
Sunday
or Holiday. For purposes of this subparagraph (i), the term "Holiday" shall
mean
a day, other than a Saturday or Sunday, on which national banks with branches
in
the State of Delaware are or may elect to be closed.
(6)
IN
WITNESS WHEREOF,
the
parties have executed this Agreement on the date first above
written.
| ATTEST: | UNIVERSAL CAPITAL MANAGEMENT, INC. | |
| |
|
|
| Xxxxxxx X. Xxxxxxx | By: | /s/ Xxxxxxx X. Xxxxx |
|
Secretary |
Xxxxxxx X. Xxxxx, President |
|
| [Corporate Seal] | ||
| WITNESS: | ||
| |
|
|
| By: | /s/ Xxxxx X. Xxxx | |
|
|
Xxxxx X. Xxxx |
|
NOTICE
OF ELECTION
The
undersigned and Universal Capital Management, Inc. (the "Company") are parties
to that certain Stock Option Agreement dated May 18, 2006. Pursuant to the
terms
thereof, the undersigned hereby exercises his/her option to purchase
____________ shares of the common stock, (the "Shares") par value $0.001
per
Share of the "Company". Closing hereunder shall be held at the chief executive
offices of the Company at _____ _.m., on ____________________ ___,
________.
Please
register the Shares in the name of the undersigned and use the address set
forth
herein as the registered address of the undersigned.
[Cross
out this paragraph if not applicable.] I
understand that the Shares have not been registered under the Securities
Act of
1933, as amended (the "Act") or under any state securities law, and the Company
is under no obligation to do so. I understand that the Shares may not be
resold
or otherwise transferred in the absence of such applicable registrations
or
exemptions from the registration requirements. I understand that I may have
to
hold the Shares for the indefinite future. I understand that the Shares are
"restricted securities" within the meaning of Rule 144 promulgated under
the Act
and the Company has no obligation to make any information available or to
file
any reports to permit sales to be made under such rule. The undersigned
understands that the Share certificate shall bear a restrictive legend with
respect to the transferability of the Shares.
The
undersigned represents and warrants to the Company that he or she (a) has
been
advised and understands that the Shares may not be transferred without
compliance with all applicable Federal and state securities laws; and (b)
has
had all material information about the Company's business and financial
condition made available to him prior to exercise of the Option, and that
he or
she was afforded the opportunity to ask questions of and receive answers
from
the officers and directors of the Company with respect to the Company's business
affairs and prospects.
The
undersigned represents and warrants that he is acquiring the Shares for his
or
her own account as principal for investment and not with a view to resale
or
distribution, and that he has such knowledge and experience in financial
and
business matters as will enable him or her to evaluate the merits and risks
of
the proposed investment in the Shares.
| Name: Xxxxx X. Xxxx | ||
|
Address: 000
Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx Xxxxx, Xxxxxxx
00000
|
