STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of October 29, 1999 between Windswept
Environmental Group, Inc., a Delaware corporation (the "Company"), and Xxxxxxx
X'Xxxxxx (the "Optionee").
WHEREAS, pursuant to a Subscription Agreement dated the date hereof, (the
"Subscription Agreement"), Spotless Plastics (USA) Inc., a Delaware corporation
("Spotless"), has purchased 22,284,683 shares of common stock of the Company,
par value $0.0001 per share (the "Common Stock"), and 9,346 shares of Series B
Preferred Stock of the Company, par value $.01 per share (the "Series B
Preferred Stock");
WHEREAS, in connection with the execution and delivery of the Subscription
Agreement, Spotless has advanced to the Company the sum of $2,000,000 pursuant
to the terms of a Convertible Note (the "Convertible Note"), which is
convertible into 25,304,352 shares of Common Stock or, subject to the terms and
conditions thereof, 25,305 shares of Series B Preferred Stock;
WHEREAS, in connection with the execution and delivery of the Subscription
Agreement, the Company and the Optionee have entered into an Employment
Agreement dated the date hereof (the "Employment Agreement") and a Stock Option
Agreement, pursuant to which the Optionee has been granted options to purchase
2,674,714 shares of Common Stock; and
WHEREAS, in connection with the execution and delivery of the Employment
Agreement, the Company and the Optionee have agreed to the award of an option to
purchase shares of Common Stock on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
and agreements hereinafter set forth, the Company and the Optionee agree as
follows:
1. Grant of Option
The Company hereby grants to the Optionee the right and option (the
"Option") to purchase from the Company, on the terms and conditions set forth
herein, 2,811,595 shares of Common Stock (the "Option Shares"). The Option shall
vest and become exercisable in accordance with paragraph 3 below and shall
terminate on October 1, 2009 if not sooner exercised.
2. Option Price
The price at which the Option Shares may be purchased upon exercise of the
Option shall be $0.07904 ("Option Price").
3. Vesting
The Option shall vest on the seventh anniversary of the date hereof;
provided, however, that the Option shall vest and be exercisable if and to the
extent that the Convertible Note has been converted into either shares of Common
Stock or Series B Preferred or exchanged for shares of capital stock of the
Company or any other entity. In the event that the Convertible Note is converted
in part, the Option shall be vested and exercisable only in proportion to the
amount of the Convertible Note so converted.
4. Method of Exercising Option
a. The Option may be exercised only upon receipt of written
notice of exercise by the Secretary of
the Company (the "Secretary") specifying that the Option is being
exercised and the total number of Option Shares to be purchased. Such
notice shall be accompanied by payment in cash of the relevant portion
of the Option Price for the number of Option Shares purchased, and
such exercise shall be effective on the date upon which the Secretary
receives such written notice and payment. The Company shall, within
three (3) business days following receipt of the purchase price for
the number of Option Shares purchased, give instructions to its
transfer agent to issue certificates representing the Option Shares.
b. The Option may be so exercised during the Optionee's lifetime
only by the Optionee, in the event of the death of the Optionee, the
Option shall be exercisable by his estate or personal representative
within a period not to exceed twelve (12) months following the death
of the Optionee. The Option, rights and privileges conferred by this
Agreement shall not be transferred, assigned, pledged or hypothecated
in any way (whether by operation of law or otherwise), other than by
the laws of descent and distribution, and shall not be subject to
execution, attachment or similar process.
c. No person shall not have any rights or privileges of a
shareholder of the Company in respect of any of the Option Shares
issuable upon exercise of the Option unless and until certificates
representing such Option Shares shall have been issued and delivered.
d. If requested by the Company and if the Option Shares have not
been registered under the Securities Act of 1933, as amended, the
Optionee (or his beneficiary or estate in the death of the Optionee)
shall provide a written representation that the Option Shares to be
acquired upon any exercise of the Option are for investment only and
not for resale or with a view to the distribution thereof. The Company
shall register its sale of the Option Shares pursuant to a
Registration Statement on Form S-8 within ninety (90) days following
the date hereof and comply with all other requirements of the federal
securities laws to enable the Option Shares to be freely tradable upon
exercise of the Option by the Optionee.
5. General
a. The Company will have the right to withhold from any exercise
of the Option, transfer of Common Stock or payment made to the
Optionee or to any person hereunder, whether such payment is to be
made in cash or in Common Stock, all applicable federal, state, city
or other taxes as shall be required, in the determination of the
Company, pursuant to any statute or governmental regulation or ruling.
In connection with such withholding, the Company reserves the right,
where necessary, to deliver to the person entitled to receive Common
Stock only the number of whole shares remaining after the withholding
has been accomplished, or it may make such other arrangements with the
person entitled to receive such payment as it may deem appropriate.
b. The Company shall not be required to issue or deliver any
certificates for Option Shares purchased upon exercise of the Option
unless counsel for the Company shall advise that such issuance shall
not violate any applicable securities laws or regulations. The
Optionee acknowledges that Common Stock issuable upon exercise of the
Option is subject to applicable United States securities laws with
respect to the resale thereof. Unless the resale of the Option Shares
has been registered pursuant to a Registration Statement on Form S-8,
certificates representing the Option Shares shall bear the following
legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR THE SECURITIES LAWS OF ANY STATE. NO TRANSFER, SALE, PLEDGE,
ENCUMBRANCE OR OTHER DISPOSITION OF SUCH SECURITIES MAY BE MADE
2
UNLESS A REGISTRATION STATEMENT WITH RESPECT TO SUCH SECURITIES HAS
BECOME EFFECTIVE UNDER THE ACT OR WINDSWEPT ENVIRONMENTAL GROUP, INC.
(THE "COMPANY") IS FURNISHED WITH AN OPINION OF APPROVED COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
c. Notwithstanding any other provision of this Agreement, in no
event shall the Option be exercisable in whole or in part after (i)
the expiration of the term of the Option, (ii) the termination by the
Company of the employment of the Optionee for Cause (as that term is
defined in the Employment Agreement) or (iii) the termination by the
Optionee of his employment for any reason other than by Resignation
for Good Reason.
d. Nothing in this Agreement shall be deemed to limit, in any
way, the right of the Company to terminate the Optionee's employment
with the Company.
e. Any notice, consent or other communication under this
Agreement shall be in writing and shall be delivered personally or
mailed by registered or certified mail, postage prepaid. Any such
notice shall be deemed given and effective when so delivered
personally or, if mailed, when actually received or presented for
delivery to the following addressee during normal business hours if
such presentation shall be refused for any reason, at the following
addresses (or at such other address as a party may specify by notice
in accordance with the provisions hereof to the other):
If to the Optionee, at:
Xxxxxxx X'Xxxxxx
00 Xxxxxxx Xx. Xxxx
Xxxx Xxxxxxxx, Xxx Xxxx 00000
If to the Company, at:
Windswept Environmental Group, Inc.
000 Xxxxxxxxxxx Xxx.
Xxx Xxxxx, Xxx Xxxx 00000
f. This Agreement may be executed in counterparts, each of which
shall constitute one and the same instrument.
g. The section headings herein are for convenience only and shall
not affect the construction hereof.
h. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
WINDSWEPT ENVIRONMENTAL GROUP, INC.
By: /s/Xxxxxxx Xxxxxx
---------------------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
ACCEPTED BY:
/s/ Xxxxxxx X'Xxxxxx
-------------------------
Xxxxxxx X'Xxxxxx
3
