EXHIBIT 10.42
APPLIED VOICE RECOGNITION, INC.
QUALIFIED STOCK OPTION AGREEMENT
Optionee: Xxxxx Xxxxxxxxxxx
1. GRANT OF STOCK OPTION. As of the GRANT DATE (identified below),
Applied Voice Recognition, Inc., a Delaware corporation doing business as e-
XXXX.xxx (the "COMPANY"), hereby grants a Qualified Stock Option (the "OPTION")
to the OPTIONEE (identified below) to purchase the number of shares of the
Company's common stock, $.001 par value per share, identified below (the
"SHARES"), subject to the terms and conditions of this agreement (the
"AGREEMENT") and the Company's 1997 Incentive Plan (the "PLAN") which is
incorporated herein in its entirety by reference. The Shares, when issued to
Optionee upon the exercise of the Option, shall be fully paid and nonassessable.
The Option is an "incentive stock option" as defined in Section 422 of the
Internal Revenue Code. The Shares underlying the Option will be registered with
the Securities and Exchange Commission at the Company's cost pursuant to a
Registration Statement on Form "S-8."
2. DEFINITIONS. All capitalized terms used herein shall have the meanings
set forth in the Plan unless otherwise provided herein. Section 16 below sets
forth meanings for various capitalized terms used in this Agreement.
3. OPTION TERM. The Option shall commence on the Grant Date (identified
below) and terminate on the date immediately prior to the tenth (10th)
anniversary of the Grant Date. This period during which the Option is in effect
and may be exercised is referred to herein as the "OPTION PERIOD".
4. OPTION PRICE. The Option Price per Share is identified below.
5. VESTING. The total number of Shares subject to this Option shall vest
in accordance with the VESTING SCHEDULE (identified below). Except as set forth
in the Employment Agreement (as defined in Section 14 hereof) and in Section 14
of this Agreement, the Shares may be purchased at any time after they become
vested, in whole or in part, during the Option Period. The right of exercise
provided herein shall be cumulative so that if the Option is not exercised to
the maximum
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extent permissible after vesting, it shall be exercisable, in whole
or in part, at any time during the Option Period.
6. METHOD OF EXERCISE AND PAYMENT. The Option, to the extent vested,
shall be exercised by the delivery of a signed written notice of exercise to the
Company as of a date set by the Company in advance of the effective date of the
proposed exercise. The notice shall set forth the number of Shares with respect
to which the Option is to be exercised, accompanied by full payment for the
Shares. The Option Price upon exercise of all or any part of the Option shall
be payable to the Company in full either: (i) in cash or its equivalent, or
(ii) subject to prior approval by the Committee under the Plan, by tendering
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price (provided that the Shares which are
tendered by an Insider, if applicable, must have been held by the Insider for at
least six (6) months prior to their tender to satisfy the Option Price), or
(iii) subject to prior approval by the Committee, by withholding Shares which
otherwise would be acquired on exercise having an aggregate Fair Market Value at
the time of exercise equal to the total Option Price, or (iv) subject to prior
approval by the Committee, by a combination of (i), (ii), and (iii) above. Any
payment in Shares of Common Stock shall be effected by the delivery of such
Shares to the Secretary of the Company, duly endorsed in blank or accompanied by
stock powers duly executed in blank, together with any other documents as the
Secretary shall require from time to time.
The Committee also may allow (i) "cashless exercise" as permitted under
Federal Reserve Board's Regulation T, 12 CFR Part 220 (or its successor), and
subject to applicable securities law restrictions and tax withholdings, or (ii)
by any other means which the Committee, in its discretion, determines to be
consistent with the Plan's purpose and applicable law.
As soon as practicable after receipt of a written notification of exercise
and full payment, the Company shall deliver to or on behalf of the Grantee, in
the name of the Grantee or other appropriate recipient, Share certificates for
the number of Shares purchased under the Stock Option. Such delivery shall be
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to Grantee or
other appropriate recipient.
7. TERMINATION OF EMPLOYMENT. Voluntary or involuntary termination of
employment and death or disability of Optionee shall affect Optionee's rights
under the Option as follows:
(a) Termination by the Company for Cause. If Optionee's employment
with the Company (or any of its Subsidiaries) is terminated for Cause (as
defined in the Employment Agreement at the time of such termination) the
unvested portion of the Option shall be forfeited and immediately become
null and void.
(b.) Termination by Optionee for Good Reason or by the Company Without
Cause. If Optionee's employment with the Company (or any of its
Subsidiaries) is terminated either (i) by the Company without Cause, or
(ii) by Optionee with Good Reason (as defined in the Employment Agreement),
the unvested portion of the Option for the calendar year in
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which such termination occurs shall become immediately vested and
exercisable in full, and the unvested portion of the Option that would
otherwise vest after the calendar year in which such termination and
pursuant to Section 7(a) occurs will be forfeited and shall immediately
become null and void.
(c) Other Involuntary Termination or Voluntary Termination. If
Optionee's employment with the Company (or any of its Subsidiaries) is
terminated for any reason other than (i) by the Company for Cause, (ii) by
the Company without Cause, (iii) by Optionee with Good Reason, or (iv)
death or disability (as defined in the Employment Agreement) then at the
time of termination (i) the Option will immediately terminate to the extent
it is unvested, and (ii) the vested portion of the Option will terminate to
the extent not exercised within 90 calendar days after the date of such
termination. In no event may the Option be exercised by anyone after the
earlier of (i) the expiration of the Option Period, or (ii) 90 calendar
days after termination of employment pursuant to this Section 7(c).
(d) Death or Disability. If Optionee's employment is terminated by
death or disability, then (i) the Option will immediately terminate to the
extent it is unvested and (ii) the vested portion of the Option will
terminate 365 calendar days after the date of such termination to the
extent not exercised by Optionee or, in the case of death, by the person or
persons to whom Optionee's rights under the Option have passed by will or
by the laws of descent and distribution or, in the case of disability, by
Optionee's legal representative. In no event may any Option be exercised
by anyone after the earlier of (i) the expiration of the Option Period or
(ii) 365 days after Optionee's death or termination of employment due to
disability.
8. REORGANIZATION OF COMPANY; CHANGE OF CONTROL. The existence of the
Option shall not affect in any way the right or power of Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in Company's capital structure or its business,
or any merger or consolidation of Company, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Shares or the
rights thereof, or the dissolution or liquidation of Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.
In the event of a "Change in Control" of the Company (as defined in the
Employment Agreement), the Option shall at the time of such event become
immediately vested and exercisable in full, subject to the terms of the
transaction giving rise to the "Change in Control."
9. ADJUSTMENT OF SHARES. In the event of stock dividends, spin-offs of
assets or other extraordinary dividends, stock splits, combinations of shares,
recapitalizations, mergers, consolidations, reorganizations, liquidations,
issuances of rights or warrants and similar transactions or events involving
Company, appropriate adjustments shall be made to the terms and provisions of
this Option as provided in the Plan.
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10. NO RIGHTS IN SHARES. Optionee shall have no rights as a stockholder
in respect of the Shares until the Optionee becomes the record holder of such
Shares.
11. INVESTMENT REPRESENTATION. Optionee will enter into such written
representations, warranties and agreements as Company may reasonably request in
order to comply with any federal or state securities law. Moreover, any stock
certificate for any Shares issued to Optionee hereunder may contain a legend
restricting their transferability as determined by the Company in its
discretion. Optionee agrees that Company shall not be obligated to take any
affirmative action in order to cause the issuance or transfer of Shares
hereunder to comply with any law, rule or regulation that applies to the Shares
subject to the Option.
12. NO GUARANTEE OF EMPLOYMENT OR SERVICE CONTRACT. The Option shall not
confer upon Optionee any right to employment or other service with Company, nor
shall it interfere with any right the Company would otherwise have to terminate
such Optionee's employment or other service at any time, with or without cause.
13. WITHHOLDING OF TAXES. Company shall have the right to (i) make
deductions from the number of Shares otherwise deliverable upon exercise of the
Option in an amount sufficient to satisfy withholding of any federal, state or
local taxes required by law, or (ii) take such other action as may be necessary
or appropriate to satisfy any such tax withholding obligations.
14. EMPLOYMENT AGREEMENT. This Option is granted contemporaneously
with that certain Employment Agreement dated August 29, 2000 (the "Employment
Agreement"), and is subject to the terms and provisions of the Employment
Agreement, including, but not limited to, Optionee's covenant not to exercise
any portion of the Option until a sufficient number of authorized, issuable
Shares becomes available; provided, however, that to the extent that any terms
and provisions of this Option Agreement conflict with those of the Employment
Agreement, the Employment Agreement shall control.
15. GENERAL.
(a) Notices. All notices under this Agreement shall be mailed or
delivered by hand to the parties at their respective addresses set forth
beneath their signatures below or at such other address as may be
designated in writing by either of the parties to one another. Notices
shall be effective upon receipt.
(b) Shares Reserved. Company shall at all times during the Option
Period reserve and keep available under the Plan such number of Shares as
will be sufficient to satisfy the requirements of this Option.
(c) Nontransferability of Option. The Option granted pursuant to this
Agreement is not transferable other than by will, the laws of descent and
distribution or by a qualified domestic relations order (as defined in
Section 414(p) of the Internal Revenue Code). The Option will be
exercisable during Optionee's lifetime only by Optionee or by Optionee's
legal
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representative in the event of Optionee's disability. No right or
benefit hereunder shall in any manner be liable for or subject to any
debts, contracts, liabilities, or torts of Optionee.
(d) Amendment and Termination. No amendment or termination of the
Option shall be made at any time without the written consent of Optionee.
(e) No Guarantee of Tax Consequences. None of the Company, Board or
Committee makes any commitment or guarantee that any federal or state tax
treatment will apply or be available to any person eligible for benefits
under the Option. The Optionee has been advised and been provided the
opportunity to obtain independent legal and tax advice regarding the grant
and exercise of this Option and the disposition of any Shares acquired
thereby.
(f) Severability. In the event that any provision of this Agreement
shall be held illegal, invalid, or unenforceable for any reason, such
provision shall be fully severable, but shall not affect the remaining
provisions of the Agreement, and the Agreement shall be construed and
enforced as if the illegal, invalid, or unenforceable provision had not
been included herein.
(g) Governing Law. The Option shall be construed in accordance with
the laws of the State of Texas without regard to its conflict of law
provisions, to the extent federal law does not supersede and preempt Texas
law.
16. DEFINITIONS AND OTHER TERMS. The following capitalized terms shall
have those meanings set forth opposite them:
(a) Optionee: Xxxxx Xxxxxxxxxxx
(b) Grant Date: August 29, 2000
(c) Shares: 3,600,000 Shares of the Company's Common
Stock.
(d) Option Price: $0.31 per Share.
(e) Option Period: August 29, 2000 through August 28, 2010 (until
12:00 p.m. CST).
(f) Vesting Schedule: Options shall vest as follows: 1/12th of the
Options (being Options to purchase 300,000 shares) shall vest and
become exercisable on the following dates:
December 31, 2000
March 31, 2001
June 30, 2001
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September 30, 2001
December 31, 2001
March 31, 2001
June 30, 2002
September 30, 2002
December 31, 2002
March 31, 2003
June 30, 2003
September 30, 2003
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Stock Option Agreement is executed as of
the day of October, 2000, to be effective as of August 29, 2000.
COMPANY:
APPLIED VOICE RECOGNITON, INC., a Delaware
corporation, d/b/a x-XXXX.xxx
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Address: 0000 Xx. Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Accepted and agreed this ___ day of October, 2000, to be effective as of
August 29, 2000.
OPTIONEE:
____________________________________________
XXXXX XXXXXXXXXXX
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxx 00000
Signature Page to
Qualified Stock Option Agreement
(Xxxxx Xxxxxxxxxxx)
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