Date of Grant: May 22, 2006
Number of Shares Subject to Option: 125,000
WIZZARD SOFTWARE CORPORATION
STOCK OPTION PLAN AND AGREEMENT
This Agreement, dated May 22, 2006 is made between Wizzard Software
Corporation, (the "Company") and Xxxx Xxxxxxxx (the "Employee"), an employee
of the Company.
I. Stock Option
1. Grant of Incentive Stock Option. In compliance with the
provisions of Section 422 of the Internal Revenue Code of 1986, as may be
amended from time to time, the Company herby grants to the Employee,
subject to the terms and conditions herein set forth, an option
("Option") to purchase 125,000 shares of the Company's common stock, par
value $0.001 per share ("Stock"), at the Fair Market Value on May 22,
2006, such Option to be exercisable and exercised as hereinafter
provided.
For any calendar year, the aggregate Fair Market Value (determined at
the Grant Date) of the stock with respect to which any Incentive Stock
Option is exercisable for the first time by the employee (under all
Incentive Stock Option plans of the Company and all subsidiary
corporations) shall not exceed $100,000. The Employee may, if he or she
is otherwise eligible, be granted an additional Option or Options if the
Company shall so determine. Any Incentive Stock Option that becomes
exercisable and exceeds the above limitation shall be treated as a Non-
Qualified Option.
The Option price shall be subject to adjustment as provided in Section
10 hereof.
2. Specific Terms and Conditions.
(a) Exercise of Option. Subject to the other terms of the Agreement
regarding the exercisability of this Option, this Option may be
exercised in accordance with the following:
On or After This Date: This Option Shall be
Exercisable With Respect to
The Following Cumulative
Number of Shares:
5/22/2006 20,000
3/31/2007 105,000
This Option also shall become fully exercisable as set forth in Section
4. This Option may be exercised, to the extent exercisable by its
terms, from time to time in whole or in part at any time prior to the
expiration thereof. Any exercise shall be accompanied by a written
notice to the Company specifying the number of shares as to which this
Option is being exercised. Notation of any partial exercise or
installment exercise shall be made by the Company on Schedule B hereto.
II. General Terms and Conditions
1. Payment of Purchase Price Upon Exercise. At the time of any
exercise of this Option, the purchase of the shares as to which any such
Option shall be exercised shall be paid in full to the Company in cash or
in Stock already owned by the Employee, or a combination of cash and
Stock, or in such other consideration acceptable to the Board of
Directors of the Company (including, to the extent permitted by
applicable law, the relinquishment of a portion of the Options) as the
Board deems appropriate, having a total fair market value equal to the
purchase price.
2. Expiration Date. Except as indicated in Section 4 below, this
Option granted pursuant to this Agreement shall expire ten years from the
date indicated above.
3. Issuance of Certificates. As promptly as practicable after receipt of
the written notice and payment specified, the Company shall deliver to
the Employee certificates for the number of shares with respect to which
this Option has been exercised, issued in the Employee's name; provided,
however that such delivery shall be deemed effected for all purposes
when the Company, or the stock transfer agent for the Company, shall
have deposited such certificates in the United States mail, postage
prepaid, addressed to the Employee at the address specified in the
written notice of exercise.
4. Acceleration of Vesting. In the event of a Change of Control of the
Company, all of the Options granted hereunder shall become immediately
vested and may be exercised within twenty-four months from the event of
a Change of Control of the Company. If the Employee's employment with
the Company terminates due to his or her death, retirement, total
disability or his discharge by the Company without Cause, then all
Options granted pursuant to this Agreement vest immediately and may be
exercised by the Employee, (or, in the event of the Employee's death or
total disability, the Employee's representative) within twenty-four
months after the date of the Employee's termination of employment, or at
such later date, as the Board may specify, but not later than the
expiration dates specified in Section II.2.
Upon the Employee's termination of employment by the Company for Cause,
any vested Options granted pursuant to this Agreement may be exercised
by the Employee within six months after the date of the Employee's
termination, and all non-vested Options granted pursuant to this
Agreement shall expire as of the date of such termination, or at such
later date, and subject to such terms and conditions, as the Board may
specify, but not later than the expiration dates specified in Section
II.2.
As used in the Agreement, the term "Cause" shall mean and include (i)
chronic alcoholism or controlled substance abuse, (ii) commission by the
Employee of an act of fraud or dishonesty with respect to the Company or
its subsidiaries, (iii) knowing and material failure by the Employee to
comply with material applicable laws, regulations or Company policies
relating to the business of the Company or its subsidiaries, (iv) the
Employee's material and continuing failure to perform (as opposed to
unsatisfactory performance) his duties as an employee of the Company
which is not corrected within 10 days after receipt of written notice
from the Company, except, in each case, where such failure or breach is
caused by the illness or other similar incapacity or disability of the
Employee; or (v) conviction of (or pleading guilty or nolo contendere
to) a felony.
5. Nontransferability. No Option shall be transferable other than by will
or by the laws of descent and distribution. During the lifetime of the
Employee, any Option shall be exercisable only by the Employee. If, by
reason of any attempted assignment, transfer, pledge, or encumbrance or
any bankruptcy or other event happening at any time, any shares issuable
or amount payable under any Option would be made subject to the debts or
liabilities of the Employee, then the Board may terminate such person's
interest in any such shares or payment and direct that the same be held
and applied to or for the benefit of the Employee, or any other persons
deemed to be the natural objects of his or her bounty, taking into
account the expressed wishes of the Employee (or, in the event of his or
her death, those of his or her representative) in such manner as the
Board may deem proper.
6. Change in Control. A "Change in Control" shall be deemed to occur if
(i) any "person" (as that term is used in Sections 13 and 14(d)(2) of the
Securities Exchange Act of 1934 as amended ("Exchange Act")) is or
becomes the beneficial owner (as that term is used in Section 13(d) of
the Exchange Act), directly or indirectly, of 50% or more of the voting
Capital Stock of the Company ("Voting Stock") or (ii) during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least
a majority thereof, unless the election or the nomination for election
by the Company's shareholders of each new director was approved by a
vote of at least three-quarters of the directors then still in office
who were directors at the beginning of the period. Any merger,
consolidation or corporate reorganization in which the owners of the
Company's capital stock entitled to vote in the election of directors
prior to said combination, own 50% or more of the resulting entity's
Voting Stock shall not, by itself, be considered a change in control for
the purposes of this Agreement and Plan.
7. No Rights as Stockholder. The Employee shall have no rights as a
stockholder with respect to any shares of Stock subject to any Option
prior to the date of issuance to him or her of a certificate or
certificates for such shares. The issuance of which shall occur within
a reasonable time after the exercise of such Option.
8. No Right to Continued Employment. The Agreement shall not confer upon
the Employee any right with respect to continuance of employment by the
Company nor shall it interfere in any way with the right of the Company
to terminate his or her employment at any time.
9. Tax Withholding Requirements. The Company shall have the right to
require the Employee to remit to the Company an amount sufficient to
satisfy any federal, state or local withholding tax requirements prior
to the delivery of any certificate or certificates for Stock.
10. Adjustments. If, and to the extent that, the number of issued
shares of the Capital Stock of the Company shall be increased or reduced
by change in par value, recapitalization, reorganization, merger,
consolidation, split up, combination, exchange of shares, distribution
of a dividend payable in stock or other similar events, the number of
shares subject to any Option and their purchase price per share shall be
appropriately adjusted by the Company consistent with such change to
prevent substantial dilution or enlargement of the rights granted to or
available to the Employee.
Subject to the foregoing, the grant of this Option shall not affect in
any way the right or power of the Company to make adjustments,
reclassifications, reorganizations, or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
liquidate or sell, or transfer all or any part of its business or
assets.
The Board, at its discretion may make adjustments to the option price
with the prior written consent of the Employee.
III. Miscellaneous
1. Notices. Any notice hereunder to the Company shall be addressed to it
at its office, 0000 Xxxx Xxxxxxxxx, Xxxxx 000, Xxxxxxxxxx, XX 00000,
Attention: Chairman of the Board, and any notice hereunder to the
Employee shall be addressed to the Employee at his or her address on the
records of the Company, subject to the right of either party to
designate at any time hereafter in writing some other address.
2. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute one and the same
instrument.
3. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto with respect to the matters covered hereby,
and any other prior or contemporaneous oral or written understandings or
agreements with respect to the matters covered hereby are expressly
superceded by this Agreement.
4.Governing Law, Jurisdiction and Venue. This Agreement shall be governed
exclusively by and construed according to the laws of the State of
Pennsylvania, as applied to contracts between Pennsylvania residents
entered into and to be performed entirely within Pennsylvania. For the
purposes of any claims or proceedings to enforce this agreement, the
parties consent to the jurisdiction and venue of any federal or state
court of competent jurisdiction in the state of Pennsylvania, and waive
and agree not to raise any defense than y such court is an inconvenient
forum or any similar claim.
5.Headings. The section and subsection headings contain in this Agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, Wizzard Software Corporation has caused this Agreement to
be executed by a duly authorized officer and the Employee has executed the
Agreement both as of the day and year first above written.
WIZZARD SOFTWARE CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
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Xxxxxxxxxxx X. Xxxxxxx, Chief Executive
Officer, President, Treasurer and
Director
/s/ Xxxx Xxxxxxxx
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Xxxx Xxxxxxxx
