Wits Basin Precious Minerals Inc. Stock Option Agreement (Non-Statutory)
EXHIBIT
10.2
(Non-Statutory)
This
Stock Option Agreement is made and entered into as of the 19th
day of
February, 2007, between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ (“Optionee”)
and
Wits Basin Precious Minerals Inc., a Minnesota corporation (the “Company”).
1. Grant
of Option; Purchase Price.
Subject
to the terms and conditions herein set forth, and in consideration of Optionee’s
agreement to serve as the Company’s President of Asia Operations, the Company
hereby irrevocably grants to Optionee the right and option (the “Option”)
to
purchase all or any part of an aggregate of 2,500,000 shares of common stock,
$.01 par value, of the Company (the “Shares”),
at a
price per Share of $0.43 (the “Exercise
Price”),
which
is equal to the fair market value of the Company’s common stock on the date of
grant, as determined by the Board of Directors in its discretion.
2. Exercise
and Vesting of Option.
The
Option shall be exercisable only to the extent that all, or any portion thereof,
has vested in the Optionee. Except as provided herein in paragraph 2, the
Options shall vest in Optionee as follows (the date of each such event is
hereinafter referred to singularly as a “Vesting
Date”
and
collectively as “Vesting
Dates”):
(a) The
Option shall vest with respect to 1,000,000 shares at such time Executive
relocates to Hong Kong and establishes a home office in Hong Kong on behalf
of
the Company;
(b) The
Option shall vest with respect to an additional 500,000 shares on the earlier
of
(i) the
first anniversary of the Effective Date, (ii) the achievement of a milestone,
as determined by the Board of Directors, or (iii) the termination of Executive's
employment with the company; and
(c) The
Option shall vest with respect to the remaining 1,000,000 shares at the earlier
of (i) such time the Company achieves certain performance criteria established
by the Company’s Board of Directors, with such achievement determined by the
Board of Directors, each in its sole discretion, and (ii) the third anniversary
of the date hereof.
Notwithstanding
the foregoing, in the event of an acquisition of the Company through the sale
of
substantially all of the Company’s assets and the consequent discontinuance of
its business, or through a merger, consolidation, exchange, reorganization,
reclassification or extraordinary dividend resulting in shareholders of the
Company immediately prior to the effective time of such transaction holding,
immediately afterwards, less than 50% of the outstanding voting power of the
resulting entity, or through a divestiture or liquidation of the Company
(collectively referred to as a “Change
in Control”),
all
or any portion of the Option remaining unvested hereunder shall become
immediately exercisable, whether or not such portion of the Option had become
exercisable prior to the Change in Control; provided
that,
the
Company’s consummation of a merger or other transaction with Easyknit
Enterprises Holdings Limited and/or its affiliates shall not constitute a Change
in Control under the terms of this Agreement. The Company’s Board of Directors
may restrict the rights of or the applicability of this Section 2 to the extent
necessary to comply with Section 16(b) of the Securities Exchange Act of 1934,
the Internal Revenue Code or any other applicable law or regulation. This Option
shall not limit 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, exchange or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or
assets.
3. Termination
of Employment.
In the
event that the Optionee ceases to be employed by the Company, for any reason
or
no reason, with or without cause, prior to any Vesting Date, that part of the
Option scheduled to vest on such Vesting Date, and all parts of the Option
remaining unvested as of such Vesting Date, shall not vest and all of Optionee's
rights to and under such non-vested parts of the Option shall
terminate.
4. Term
of Option.
To the
extent vested, and except as otherwise provided in this Agreement, the Option
shall be exercisable for ten (10) years from the date hereof; provided,
however,
that in
the event Optionee ceases to be employed by the Company, for any reason or
no
reason, with or without cause, Optionee or Optionee’s legal representative shall
have ninety (90) days from the date of such termination of Optionee’s position
as an employee to exercise any part of the Option vested pursuant to Section
2
of this Agreement. Upon the expiration of such ninety (90) day period, or,
if
earlier, upon the expiration date of the Option as set forth above, the Option
shall terminate and become null and void.
5. Manner
of Exercise.
Subject
to the terms and conditions of this Agreement, the Option may be exercised
by
written notice to the Company. Such notice shall state the election to exercise
the Option and the number of Shares in respect of which it is being exercised,
and shall be signed by the person or persons so exercising the Option. Such
notice shall be accompanied by payment in cash of the full Exercise Price of
such Shares, in which event the Company shall deliver a certificate or
certificates representing such Shares as soon as practicable after the notice
shall be received. Any such notice shall be deemed given when received by the
Company pursuant to Section 10 hereof. All Shares that shall be purchased upon
the exercise of the Option as provided herein shall be fully paid and
non-assessable.
If
at the
time of exercise of all or any portion of the Option, the Company determines
that under applicable law and regulations it could be liable for the withholding
of any federal or state tax upon exercise or with respect to a disposition
of
any Shares acquired upon exercise of the Option, the Company may withhold any
portion of the Shares necessary, in its discretion, to satisfy the payment
obligations.
6. Adjustment.
In the
event of any recapitalization, stock dividend, stock split, combination of
shares or other such change in the Company’s common stock, the number of Shares
subject to this Option shall be adjusted in proportion to the change in
outstanding shares of common stock. In the event of any such adjustments, the
Exercise Price of the Option and the shares of common stock issuable pursuant
to
the Option shall be adjusted as and to the extent appropriate, in the discretion
of the Board of Directors, to provide Optionee the same relative rights before
and after such adjustment.
7. Change
of Control.
In the
event of a Change of Control (as defined in Section 2 hereof), the Board of
Directors shall be authorized, in its sole discretion, to take any and all
action it deems equitable under the circumstances, including but not limited
to
any one or more of the following:
(a) providing
that the Option shall terminate and Option shall receive, in lieu of any Shares
he would have been entitled to receive under the Option, such stock, securities
or assets, including cash, as would have been paid to Optionee had he exercised
the Option immediately prior to such Change of Control (with appropriate
adjustment for the Exercise Price, if any);
(b) providing
that Optionee shall receive, with respect to each Share issuable pursuant to
any
or all vested portions of this Option as of the effective date of any such
Change of Control, at the determination of the Board of Directors, cash,
securities or other property, or any combination thereof, in an amount equal
to
the excess, if any, of the fair market value of such Shares, as determined
in
the discretion of the Board of Directors, on a date within ten days prior to
the
effective date of such Change of Control over the Exercise Price or other amount
owed by Optionee, if any, and that such Option shall be cancelled, including
the
cancellation without consideration of all options that have an Exercise Price
below the per share value of the consideration received by the Company in the
Change of Control transaction; or
2
(c) providing
that all or any unvested portion of this Option, as of the effective date of
such Change in Control transaction, shall be void and deemed terminated, or,
in
the alternative, for the acceleration or waiver of any vesting provision of
the
Option.
The
Company’s Board of Directors may restrict the rights of or the applicability of
this Section 7 to the extent necessary to comply with Section 16(b) of the
Securities Exchange Act of 1934, the Internal Revenue Code or any other
applicable law or regulation.
8. Rights
of Option Holder.
Optionee, as holder of the Option, shall not have any of the rights of a
shareholder with respect to the Shares covered by the Option except to the
extent that one or more certificates for such Shares shall be delivered to
him
or her upon the due exercise of all or any part of the Option.
9. Transferability.
No part
of the Option may be transferred, pledged or assigned by Optionee (except,
in
the event of Optionee’s death, by will or the laws of descent and distribution),
or pursuant to a qualified domestic relations order as defined by the Code
or
Title I of the Employee Retirement Income Security Act, or the rules thereunder,
and the Company shall not be required to recognize any attempted assignment
of
such rights by Optionee. Notwithstanding the preceding sentence, the Option
(or
any portion thereof) may be transferred by Optionee to Optionee’s spouse,
children, grandchildren or parents (collectively, the “Family Members”), to
trusts for the benefit of Family Members, to partnerships or limited liability
companies in which Family Members are the only partners or shareholders, or
to
entities exempt from federal income taxation pursuant to Code Section 501(c)(3).
During Optionee’s lifetime, the Option may be exercised only by him, by his
guardian or legal representative or by the transferees as permitted by the
preceding sentence.
10. Securities
Law Matters.
Optionee acknowledges that the Shares to be received by Optionee upon exercise
of the Option may have not been registered under the Securities Act of 1933
or
the Blue Sky laws of any state (collectively, the “Securities
Acts”).
If
such Shares have not been so registered, Optionee acknowledges and understands
that the Company is under no obligation to register, under the Securities Acts,
the Shares received by Optionee or to assist Optionee in complying with any
exemption from such registration if Optionee should at a later date wish to
dispose of the Shares. Optionee acknowledges that if not then registered under
the Securities Acts, the Shares shall bear a legend restricting the
transferability thereof, such legend to be substantially in the following
form:
“The
shares represented by this certificate have not been registered or qualified
under federal or state securities laws. The shares may not be offered for sale,
sold, pledged or otherwise disposed of unless so registered or qualified, unless
an exemption exists or unless such disposition is not subject to the federal
or
state securities laws, and the Company may require that the availability or
any
exemption or the inapplicability of such securities laws be established by
an
opinion of counsel, which opinion of counsel shall be reasonably satisfactory
to
the Company.”
11. Optionee
Representations.
Optionee hereby represents and warrants that Optionee has reviewed with
Optionee’s own tax advisors the federal, state, and local tax consequences of
the transactions contemplated by this Agreement. Optionee is relying solely
on
such advisors and not on any statements or representation of the Company or
any
of its agents. Optionee understands that Optionee will be solely responsible
for
any tax liability that may result to Optionee as a result of the transactions
contemplated by this Agreement. The Option, if exercised, will be exercised
for
investment and not with a view to the sale or distribution of the Shares to
be
received upon exercise thereof.
3
12. Breach
of Agreements.
In the
event that Optionee materially breaches the terms of any confidentiality,
noncompete agreement or other agreement entered into with the Company or any
affiliate thereof, whether such breach occurs before or after termination of
Optionee’s employment with the Company, the Board of Directors in its discretion
may immediately terminate all rights of Optionee under this Option without
notice of any kind.
13. Notices.
All
notices and other communications provided in this Agreement will be in writing
and will be deemed to have been duly given when received by the party to whom
it
is directed at the following addresses:
|
If
to the Company:
900
IDS Center, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
Attn:
Chief Executive Officer
|
If
to Optionee:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
14. General.
(a) The
Company shall at all times during the term of the Option reserve and keep
available such number of Shares as will be sufficient to satisfy the
requirements of this Option Agreement.
(b) Nothing
herein expressed or implied is intended or shall be construed as conferring
upon
or giving to any person, firm, or corporation other than the parties hereto,
any
rights or benefits under or by reason of this Agreement.
(c) Each
party hereto agrees to execute such further documents as may be necessary or
desirable to effect the purposes of this Agreement.
(d) This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original, but all of which shall constitute one and the same
agreement.
(e) This
Agreement, in its interpretation and effect, shall be governed by the laws
of
the State of Minnesota applicable to contracts executed and to be performed
therein.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first written above.
|
OPTIONEE:
|
||
| |
|
|
|
/s/
▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇
|
By: | /s/ ▇▇▇▇▇▇▇ ▇ ▇▇▇▇ |
|
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
By:
Its:
CEO
|
|
4