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EXHIBIT 10.4
STOCK OPTION AGREEMENT
(NOT ISSUED UNDER ANY STOCK OPTION PLAN)
THIS STOCK OPTION AGREEMENT is issued to Xxxx X. German by Stupid PC,
Inc., a Georgia corporation (the "Company").
1. OPTIONEE; BASIC TERMS. The Optionee is hereby granted an
option to purchase the number of fully paid and non-assessable shares of the
Common Stock, with pre-emptive rights, of the Company at the option price
hereinbelow set forth, subject to the following additional terms and
Conditions:
X. XXXXX OF OPTION.
The Company hereby grants to the Optionee an option (the "Option") to
purchase 750,000 shares of the Common Stock of the Company, upon the terms and
conditions set forth below. The date of grant of the Option is JULY 25, 1997
(the "Grant Date"). This Option is intended to be a non-qualified option, the
exercise of which generally results in an immediate taxable event under the
Internal Revenue Code.
B. DURATION OF OPTION.
This Option shall have a term of five (5) years from the Grant Date
and shall expire on JULY 25, 2002, unless terminated earlier as provided
herein.
C. PURCHASE PRICE.
The purchase price for the shares subject to the Option shall be $.05
per share, which is equal to one-hundred percent (100%) of fair market value,
as determined by the Board of Directors, on the Grant Date.
2. EXERCISABILITY. Subject to Section 6 regarding termination of
Optionee's employment, consulting or other relationship with the Company, as
currently applicable, and unless otherwise accelerated by action of the Board
of Directors or pursuant to Section 7(b), this Option shall become fully vested
and exercisable on August 1, 1997.
3. METHOD OF EXERCISE AND PAYMENT. This Option may be exercised
from time to time, in whole or in part, to the extent exercisable, only by
delivery to an officer of the Company of the original of this Option with an
appropriate Notice of Exercise duly signed by the holder, together with the
full purchase price of the shares purchased pursuant to the exercise of the
Option; provided, however, that this Option may not be exercised if such
exercise would violate any law or governmental order or regulation. If the
offer and sale of the shares subject to the Option has not been registered
under the Securities Act of 1933, as amended (the "Act"), Optionee shall
deliver to the Company, at the time of exercise, an Appropriate "investment
letter" in form and content satisfactory to the Company unless, in the opinion
of counsel for the Company, the shares issued would not be deemed "restricted
securities" within the meaning of such Act or the rules and regulations
promulgated thereunder. Payment for the shares purchased pursuant to any
exercise shall be made in full at the time of such exercise in cash or by check
payable to the order of the Company or in Common Stock of the Company, having
been owned by the Optionee for a period of six (6) months prior to such
exercise, valued as of the date of exercise of the Option at Fair Market Value.
Optionee agrees to have withheld from any remuneration payable to him by the
Company and/or to pay to the Company, at the time of exercise of the Option, an
amount which is required to be withheld or paid pursuant to any Federal, State
or local tax or revenue laws or regulations, as may be determined by the
Company. The Optionee may satisfy such tax withholding by instructing the
Company to withhold such number of option shares exercised which, when valued
at Fair Market Value on the date of Exercise, equal the total tax obligations
required to be withheld.
Stock Option Agreement
(Not Issued Under Any Stock Option Plan)
Stupid PC, Inc.
2
4. NON-TRANSFERABILITY. This Option shall not be transferred,
sold, pledged, assigned, hypothecated, or disposed of in any manner by Optionee
other than by will or the laws of descent and distribution to the extent
hereinafter set forth. This Option may be exercised during the holder's
lifetime only by the holder hereof or, upon the holder's legal incapacity to
act on his/her own behalf, by the holder's conservator or other lawful
representative. The Option shall be null and void and without effect upon any
attempted assignment or transfer, except as hereinabove provided, including
without limitation, any purported assignment, whether voluntary or by operation
of law, pledge, hypothecation or other disposition contrary to the provisions
hereof, or levy of execution, attachment, trustee process or similar process,
whether legal or equitable, upon the Option.
5. TERMINATION. To the extent that this Option shall not have
been exercised in full prior to its termination or expiration date, whichever
shall be sooner, it shall terminate and become void and of no effect.
6. CESSATION OF CONTINUOUS STATUS -- TERMINATION, RETIREMENT,
DEATH OR DISABILITY. If the holder shall voluntarily or involuntarily cease
his/her Continuous Status (defined herein as failure to maintain employment or
consulting status with the Company or severance of the relationship with the
Company which gave rise to the grant of this Option) (hereinafter referred to
as a "Termination"), the Option of the holder shall terminate forthwith, except
that the holder shall have ninety days (90) following the Termination to
exercise this Option or any portion hereof which the holder could have
exercised on the date of Termination; provided, however, that if the
Termination is due to retirement by the holder on or after attaining the age of
sixty-two (62) years, the disability of the holder or the death of the holder,
the holder or the representative of the estate of the holder shall have the
privilege of exercising the entire unexercised portion of this Option, provided
that such exercise be accomplished (i) prior to the expiration of this Option
and (ii) either within six (6) months of the holder's retirement, within six
(6) months of the holder's disability, or within twelve (12) months after the
date of death of the holder, as the case may be. Notwithstanding any of the
foregoing, in the event of (i) willful refusal to perform the normal duties and
responsibilities delegated to him as an employee of or consultant to the
Company, (ii) his expropriation of Company property (including but not limited
to trade secrets or other proprietary rights), (iii) his leaving the employment
of the Company in order to directly or indirectly (as an employee or agent of
another business or business entity) compete with the Company or (iv) his
violation of the provisions of Section 10 of this Option Agreement, the
existence of which shall be determined by the Board of Directors (such decision
to be made by the Board in its sole discretion and which determination shall be
conclusive), this Option shall terminate immediately upon the happening of such
event, and the holder shall have hereupon no right thereafter to exercise any
unexercised Option he might have exercised on or prior thereto.
7. ADJUSTMENT OF SHARES AND ACCELERATION OF EXERCISABILITY.
A. STOCK SPLITS AND CAPITAL ADJUSTMENTS. If, prior to
the complete exercise of this Option, there shall be declared and paid a stock
dividend upon the Common Stock of the Company or if such stock shall be split
up, converted, exchanged or reclassified, this Option, to the extent that it
has not been exercised, shall entitle the holder, upon the future exercise of
this Option, to such number and kind of securities or other property, subject
to the terms of the Option, to which the holder would be entitled had he
actually owned the stock subject to the unexercised portion of the Option at
the time of the occurrence of such stock dividend, split up, conversion,
exchange, reclassification or substitution; and the aggregate purchase price
upon the future exercise of the Option shall be the same as if shares of Common
Stock of the Company originally optioned were being purchased as provided
herein.
B. ACELERATION OF EXERCISABILITY UPON "CHANGE IN
CONTROL."
(i) Ten (10) days prior to a "Change in Control" (as
defined below), this Option, if not then presently
exercisable shall immediately vest and become exercisable,
regardless of the original vesting schedule in Section 2. A
"Change in Control" of the Company shall be deemed to have
occurred if (a) any "person" or "group" (as defined in or
pursuant to Sections 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")),
becomes the "beneficial owner" (as defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly,
of securities of the Company
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Stock Option Agreement
(Not Issued Under Any Stock Option Plan)
Stupid PC, Inc.
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representing 40% or more of the voting power of the common
stock outstanding which votes generally for the election of
directors; (b) as a result of market or corporate
transactions or shareholder action, the individuals who
constitute the Board of Directors of the Company at the
beginning of any period of 12 consecutive months (but
commencing not earlier than July 1, 1995), plus any new
directors whose election or nomination was approved by a vote
of at least two-thirds of the directors still in office who
were directors at the beginning of such period of 12
consecutive months, cease for any reason during such period
of 12 consecutive months to constitute at least two-thirds of
the members of such Board; or (c) the Company sells, through
merger, sale, transfer, assignment or otherwise, in one or
more transactions other than in the ordinary course of
business, assets which provided at least 2/3 of the revenues
or pre-tax net income of the Company and its subsidiaries on
a consolidated basis during the most recently completed
fiscal year.
(ii) Notwithstanding paragraph (i) above, the
following events shall not constitute a Change in Control:
any acquisition of beneficial ownership pursuant to (a) a
reclassification, however effected, of the Company's
authorized common stock, or (b) a corporate reorganization
involving the Company or any of its subsidiaries which does
not result in a material change in the ultimate ownership by
the shareholders of the Company (through their ownership of
the Company or its successor resulting from the
reorganization) of the assets of the Company and its
subsidiaries, but only if such reclassification or
reorganization has been approved by the Company's Board of
Directors.
8. COMPLIANCE WITH SECURITIES LAWS.
A. POSTPONE ISSUANCE. Notwithstanding any provision of
this Option to the contrary, the Company may postpone the issuance and delivery
of shares upon any exercise of this Option until one of the following
conditions shall be met:
(i) The shares with respect to which such Option has
been exercised are at the time of the issue of such shares
effectively registered under applicable Federal and state
securities laws now in force or hereafter enacted or amended;
or
(ii) Counsel for the Company shall have given an
opinion that registration of such shares under applicable
Federal and state securities laws, as now in force or
hereafter enacted or amended, is not required.
B. INVESTMENT REPRESENTATION. In the event that for any
reason the shares to be issued upon exercise of the Option shall not be
effectively registered under the Securities Act of 1933 (the "1933 Act"), upon
any date on which the Option is exercised in whole or in part, the Company
shall be under no further obligation to issue shares covered by the Option,
unless the Optionee shall give a written representation to the Company, in form
satisfactory to the Company, that such person is acquiring the shares issued
pursuant to such exercise of the Option for investment and not with a view to,
or for sale in connection with, the distribution of any such shares, and that
he/she will make no transfer of the same except in compliance with the 1933 Act
and the rules and regulations promulgated thereunder and then in force, and in
such event, the Company may place an "investment legend" upon any certificate
for the shares issued by reason of such exercise.
9. NO AGREEMENT OF EMPLOYMENT. Neither the grant of this Option
nor this Agreement shall be deemed to create any agreement with, or obligation
by, the Company to employ the Optionee for any period of time. By accepting
this Option, the Optionee acknowledges that his employment, if he is an
employee of the Company, is strictly "at will," and such person understands
that his employment may be terminated by the Company at any time, with or
without cause.
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Stock Option Agreement
(Not Issued Under Any Stock Option Plan)
Stupid PC, Inc.
4
10. ASSIGNMENT OF INVENTIONS, ETC,; NON-DISCLOSURE OF CONFIDENTIAL
INFORMATION.
A. ASSIGNMENT OF INVENTIONS. As further consideration
for the issuance of the Option, the Optionee, if he is an Employee of the
Company, agrees that any and all inventions, processes, discoveries, "know-how"
and improvements (collectively "Inventions") (regardless of whether the
Inventions are patentable), and any and all patent rights, letters patent,
copyrights, trademarks, trade name, applications therefor in the United Sates
and all other countries and any and all rights and interests in, to and under
the same, now possessed by the Optionee (except those, if any, listed next to
Optionee's signature on this Agreement) or acquired after the date of this
Agreement, conceived, reduced to practice, acquired, or possessed by him
(either solely or jointly with others) during the Optionee's employment by the
Company or any of its subsidiaries, relating in any way to the work or services
performed by Optionee for the Company, or made with the Company's assets or the
business and activities of, or the equipment, devices, processes, and formulae
connected with the Company's business or any other business conducted by the
Company or any of its subsidiaries shall be assigned to, and become the
absolute property of, the Company and shall at all times and for all purposes
be regarded as acquired and held by the Optionee in a fiduciary capacity for
the sole benefit of the Company, and the Optionee agrees that, upon request, he
will promptly make all disclosures, execute all instruments and papers, and
perform all acts whatsoever necessary or desired by the Company to vest and
confirm in it, its successors, assigns and nominees, fully and completely, all
rights created or contemplated by this subparagraph A and which may be
necessary or desirable to enable the Company, its successors, assigns, and
nominees to secure and enjoy the full benefits and advantages thereof.
B. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. The
Optionee, regardless of whether he is an employee or consultant, shall not at
any time, directly or indirectly use, divulge, furnish or make accessible to
anyone other than the Company, its directors and officers other than in the
regular course of the business of the Company or any of its subsidiaries, any
knowledge or information with respect to (i) confidential or secret processes,
plans, formulae, data (including cost data), machinery, devices, drawings,
specifications, manufacturing procedures and techniques, methods, technology,
"know how," or material relating to the business, products (whether existing or
under development) or activities of the Company or its subsidiaries, (ii) any
confidential or secret engineering, development or research work of the Company
or its subsidiaries, (iii) any other confidential or secret aspect of the
business, products or activities of the Company or its subsidiaries, or (iv)
any customer usages and requirements or any customer lists of the Company or
its subsidiaries.
C. REMEDIES. The Optionee acknowledges that a breach of
him of the provisions of this Agreement will cause the Company irreparable
injury for which the Company cannot be reasonably or adequately compensated in
damages. Such breach shall cause an immediate termination of this Option, and
the Company shall be entitled, in addition to all other remedies available to
it, to injunctive and/or other equitable relief to prevent a continuing breach
of this Agreement, or any part of it, and to secure its enforcement.
D. SEVERABILITY. If any condition, term or provision of
this Agreement is determined by a court to be illegal or in conflict with any
law, state or Federal, the validity of the remaining portions or provisions
shall not be affected, and the rights and obligations of the parties shall be
construed and enforced as if this Agreement did not contain the particular
condition, term or provision determined to be unenforceable.
E. ENTIRE AGREEMENT; GEORGIA LAW. This Agreement
contains the entire understanding and agreement between the parties hereto
respecting the within subject matter, and there are no representations,
agreements, arrangements or understandings, oral or written, between the
parties hereto relating to the subject matter of this Agreement that are not
fully expressed herein. The Company is a Georgia corporation, and this
Agreement shall be governed by and construed in accordance with the laws of the
State of Georgia.
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Stock Option Agreement
(Not Issued Under Any Stock Option Plan)
Stupid PC, Inc.
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WITNESS the signature of its duly authorized officer of the Company as
of the date of grant hereof.
By: /s/ Xxxxxxx X. Xxxxxxx
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Title: President
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Acknowledged and Agreed to:
/s/ Xxxx X. German
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XXXX X. GERMAN
0000 XXXXXXX XXXXXX XXXXX
XXXXXXXXX, XX 00000
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Social Security No.
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Stock Option Agreement
(Not Issued Under Any Stock Option Plan)
Stupid PC, Inc.
