THE OPTIONS AND OPTION SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND (i) THE OPTIONS AND THE OPTION SHARES MAY NOT
BE EXERCISED, OFFERED OR SOLD BY OR ON BEHALF OF U.S. PERSONS, (ii) THE
OPTIONS MAY NOT BE EXERCISED IN THE UNITED STATES AND (iii) THE OPTION
SHARES MAY NOT BE DELIVERED IN THE UNITED STATES UNLESS, IN EACH CASE,
THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE OPTIONS AND OPTION
SHARES OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT OF 1933 AS AMENDED.
OPTION AGREEMENT
THIS AGREEMENT is made effective as of August 1, 1995 by and between
Xxxxxxx X. Xxxxxx (hereinafter referred to as "Optionee"), and 4Front Software
International, Inc., a Colorado corporation (hereinafter referred to as
"Optionor").
RECITALS:
WHEREAS, Optionee has performed services for the Optionor; and
WHEREAS, to compensate Optionee for its services to Optionor, Optionor
desires to grant to Optionee and Optionee is desirous of acquiring an option to
purchase shares of the common stock of Optionor, subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereby agree as follows:
1. INCORPORATION OF RECITALS. The parties hereby incorporate by this
reference the recitals set forth above.
2. GRANT OF OPTION. Subject to the terms and conditions hereinafter set
forth, Optionor hereby gives and grants to Optionee the right and option to
purchase theretofore authorized but unissued common shares of Optionor at such
time and for the purchase price specified below.
A. From the date hereof and up until and including a period of five
years Optionee shall have the right and option to purchase, at $5.00 per share,
and Optionor shall have the obligation to issue to Optionee, 109,300 shares of
the authorized but unissued common shares of Optionor.
3. EXERCISE OF OPTION. Optionee may exercise any option granted hereunder
by notifying Optionor in writing of its intention to exercise such option. A
closing date shall then be agreed to in good faith no later than 30 days after
the notice, at which time Optionee shall pay the purchase price of the Shares
being purchased, and Optionor shall deliver to Optionee the certificates for
shares duly endorsed. Optionee may purchase all or any part of the Shares
subject to options granted hereby.
4. REPRESENTATIONS. Optionor represents and warrants to Optionee that
Optionee, upon proper exercise, shall receive good and marketable title to the
shares of Optionor underlying the options being granted hereby, free of all
pledges, liens and encumbrances, except as stated in paragraph 5.
5. REPRESENTATIONS AND WARRANTIES OF OPTIONEE. Optionee hereby represents
and warrants that:
A. The options granted hereby and the Shares which will be purchased
by and delivered to Optionee upon exercise of such options are
being acquired by Optionee for his own account and not with a
view to resale or other disposition thereof.
B. Optionee will not sell, transfer, or make any other disposition
of any option or the shares to be purchased and delivered to
Optionee hereunder upon the exercise of such option unless and
until (a) such option or shares, as applicable, are included in a
registration statement or a post-effective amendment under the
Securities Act which has been filed by the Optionor and declared
effective by the Securities and Exchange Commission (the "SEC"),
or (b) in the opinion of counsel for the Optionor, no such
registration statement or post-effective amendment is required,
or (c) the SEC has first issued a "no action" letter regarding
any such proposed disposition of any option or the shares.
6. FEDERAL AND STATE SECURITIES LAW REQUIREMENTS. The obligation of the
Optionor to deliver and transfer the shares to the Optionee upon any exercise
of any option shall be subject to the following:
A. Optionor may require Optionee, as an additional condition of its
obligation to deliver the shares upon exercise of any option
hereunder, to make any representations and warranties (including
without limit those set forth in Paragraph 5 hereof) with respect
to the shares as may, in the opinion of counsel to Optionor, be
required to ensure compliance with the Securities Act, the
securities
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laws of any state, or any other applicable law, regulation, or
rule of any governmental agency.
B. Each certificate representing the shares issued pursuant to this
Agreement shall bear whatever legends are required by federal or
state law or by any governmental agency.
C. The offer and sale of this Option has been made by the Company
pursuant to an exemption available from the registration
requirements of the Securities Act of 1933, as amended, pursuant
to Regulation S promulgated under such Act, and the holder of
this Option has executed and delivered to the Company a
Subscription Agreement containing certain representations and
warranties of the holder which are incorporated herein by
reference. It shall be a condition to the exercise of the Option
that the holder of this Option certify to the Company, at the
time of exercise, either that he or it is not a U.S. Person and
that the Options are not being exercised on behalf of a U.S.
Person, or to provide an opinion of counsel that such securities
have been registered under the Act or that an exemption from the
registration requirements of the Act is available. It shall be a
further condition to the exercise of the Option that the Option
may not be exercised in the United States and the shares
underlying the Option may not be delivered to the United States
absent registration under the Act or an available exemption from
registration.
7. RESTRICTIONS. Optionee:
A. Shall not be entitled to any type of dividend declared by
Optionor, unless and until an option is exercised; and
B. Shall not be entitled to any voting rights by virtue of an
option; and
C. Acknowledges that the options granted hereby are personal to
Optionee and that Optionee may not sell, assign, transfer or
otherwise dispose of such options to any other person.
8. TERMINATION OF EMPLOYMENT.
A. If Optionee shall cease to be employed by Optionor for any reason
other than Optionee's death, then at any time within 30 days
after the date Optionee ceases to be employed by Optionor, and
prior to the
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expiration of this Option pursuant to Paragraph 2 hereof,
Optionee may exercise this option to the extent that Optionee was
entitled to exercise it at the date Optionee ceased to be
employed by Optionor.
B. If Optionee shall die while in the employ of Optionor, his
personal representative or the person entitled to succeed to his
rights hereunder shall have the right, at any time within 180
days after the date of Optionee's death, and prior to the
expiration of this option pursuant to Paragraph 2 hereof, to
exercise this option to the extent that Optionee was entitled to
exercise this option at the date of Optionee's death.
C. For purposes of this Paragraph only, Optionee shall deemed to be
employed by Optionor for so long as Optionee serves as an
employee, officer or director of Optionor.
9. PIGGYBACK REGISTRATION RIGHTS.
A. The Optionor will permit any option shares subject to this
Agreement to be included, at the request of the Optionee in any
registration of securities of the Optionor (other than shares of
Common Stock pursuant to the Optionor's stock option plan or
stock purchase plan) under a registration statement filed by the
Optionor under the Securities Act. The Optionor shall provide
written notice to the Optionee at least 30 days prior to the
filing of any such registration statement sent by registered mail
to the address of record of the Optionee. If Optionee shall
deliver a written request to the Optionor within ten (10)
business days after the mailing of such notice, setting forth the
number of securities which he intends to sell in the public
offering (the "Registered Securities"), and requesting
inclusion of such Registered Securities therein, the Optionor
agrees to include the Registered Securities in such
registration statement and related underwriting agreements (if
any) or if the Optionor eligible to use Form S-3 permit
Optionee to utilize a selling shareholders Registration
Statement on Form S-3. Notwithstanding the above, the Optionee
may only have option shares subject to this agreement so
registered one time.
B. The parties hereto agree that if the offering is underwritten,
the Registered Securities shall be
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for purposes of the preceding sentence underwritten by the same
underwriter or underwriters on terms no less favorable than those
applicable to the shares offered by the Optionor or other
stockholders pursuant to such registration statement, and agree,
at the request of the Optionor or such other stockholders, to
join with the Optionor or such other stockholders in executing
appropriate underwriting agreements with such underwriter or
underwriters and to execute appropriate powers of attorney and
custodian agreements in forms acceptable to the underwriter or
underwriters, which agreements shall not place any restrictions
upon the sale or transfer of the Registered Securities not
otherwise placed on all other shareholders whose shares are
registered in such registration statement. Optionee agrees that
if, in spite of the best efforts of the Optionor (which the
Optionor agrees to use), the inclusion of all of the Registered
Securities which he may desire to include in any such
registration statement shall not be acceptable to the managing
underwriter or underwriters of the offering (acting reasonably
and in good faith), some or all or his Registered Securities may
be excluded or withdrawn from such registration statement in
accordance with the following provision: Optionee shall have
the right to include in such registration statement such number
(but only such number) of shares, as applicable, as shall bear
the same relationship to the total number of Units, Warrants,
or shares, as applicable, which the managing underwriter or
underwriters will permit to be included in such registration
statement by all holders of securities who wish to register
securities in such registration statement.
C. Optionor shall pay all expenses associated with filing and
causing to become effective any registration statement and with
maintaining its effectiveness excepting only (i) the underwriting
discounts and commissions incurred directly on the sale of any of
Optionee's Registered Securities included therein, and (ii) legal
expense individually incurred by Optionee, said discounts,
commissions and legal expenses with respect to the sale of
Optionee's shares to be borne by Optionee.
10. ANTI-DILUTION. If prior to the exercise of any option granted
hereunder Optionor shall have effected one or more stock split-ups, stock
dividends, or other increases or reductions of the number of Shares of its
common stock outstanding without receiving
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compensation therefor in money, services or property, the number of Shares of
common stock subject to the options hereby granted shall (a) if a net
increase shall have been effected in the number of outstanding shares of
Optionor's common stock, be proportionately increased and the cash
consideration payable per Share shall be proportionately reduced; and (b) if
a net reduction shall have been effected in the number of outstanding Shares
of Optionor's common stock, be proportionately reduced and the cash
consideration payable per Share be proportionately increased.
11. NOTICE AND OPPORTUNITY TO CURE DEFAULT. In the event of a perceived
default of the provisions of this agreement, Optionor agrees to provide Optionee
and his counsel written notice of any default and Optionor shall have 10 days
from receipt of said notice to cure the stated default.
12. AGREEMENT TO PERFORM NECESSARY ACTS. The parties hereto agree to
cooperate fully with one another in executing all documents, certificates,
notices, filings and the like and performing all acts reasonably necessary to
carry out the intent of this agreement.
13. ASSIGNMENT AND TRANSFER. No option granted hereby may be assigned by
Optionee without the prior written consent of Optionor.
14. AMENDMENTS. This agreement may not be modified, amended or changed
except by an instrument in writing signed by the parties hereto.
15. ARBITRATION AND ATTORNEYS' FEES. Any controversy or claim arising out
of or relating to this Agreement, or breach thereof, including without
limitation claims against either party, its affiliates employees, professionals,
officers or directors shall be settled by binding arbitration in Los Angeles,
California, in accordance with the Commercial Rules of the American Arbitration
Association. The arbitrator shall be an active member of the California bar. In
the proceeding, the arbitrator shall apply California substantive law and the
California Evidence Code, except that the arbitrator's authority in awarding
damages shall be interpreted under New York law. The arbitrator shall prepare an
award in writing, which shall include factual findings and any legal conclusions
on which the decision is based. Judgment upon any award rendered by the
Arbitrator(s) may be entered in any court having jurisdiction thereof. In any
such proceeding, the prevailing party shall be entitled, in addition to any
other relief awarded or adjudged, such sum as the Arbitrator(s) may fix as and
for reasonable attorneys' fees and costs, and the same shall be included in the
award and any judgment.
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IN WITNESS WHEREOF, the parties have executed this option Agreement as of
the day and year first above written.
OPTIONOR OPTIONEE
4FRONT SOFTWARE INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxx By: /s/ Xxxxxxx X. Xxxxxx
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XXXXXXX X. XXXXXX
Its: PRESIDENT
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