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EXHIBIT 10
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT (this "Agreement"), made as of <>, by
and between XXXxxxxx.xxx Inc. (the "Company"), a Colorado corporation, and
<> ("Employee").
WHEREAS, the Company, pursuant to its 1999 Stock Option Plan (the
"Plan"), wishes to grant this stock option to Employee.
WHEREAS, this option is intended to be a non-qualified stock option for
purposes of Section 83 of the United States Internal Revenue Code of 1986, as
amended (the "Code").
WHEREAS, this stock option is subject to the terms and conditions of
the Plan, as interpreted in the sole and absolute discretion of the Company's
Compensation Committee.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto hereby agree as follows:
1. Grant of Option. The Company hereby grants to Employee, on the date
set forth above, the right and option (hereinafter called the "Option") to
purchase all or any part of an aggregate of <> shares of the Company's
Common Stock, par value $0.01 per share (the "Common Stock"), at the price of
<> per share on the terms and conditions set forth herein. This Option is
not intended to be an incentive stock option within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code").
2. Vesting of Options. Options shall vest with the following terms:
(1) twenty-four percent (24%) of the Options will vest
upon completion of probation period;
(2) forty percent (40%) of the Options will vest on the
first anniversary date of this Agreement;
(3) three percent (3%) of Options will vest on the last
business day of each month thereafter during each of
the following twelve (12) months; and
(4) the Option to exercise shall fully vest after two (2)
years.
If the Employee's death or termination of employment with the Company occurs
prior to an anniversary date, the vested portion of the Option shall be
determined by reference to the vested percentage of the Employee earned as of
the preceding anniversary date.
3. Exercise of Option.
(a) Subject to the provisions of Section 6 of this Agreement,
any Option or portion of any Option granted pursuant to this Agreement which has
become
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vested in accordance with Section 2 of this Agreement may be exercised by the
Employee at any time prior to the termination of the Option pursuant to Section
4 of this Agreement.
(b) The Options granted to the Employee hereunder and any
Common Stock purchased by the Employee upon exercise of the Option are subject
to a hold period under British Columbia securities law and cannot be traded by
the Employee unless the trade is made pursuant to an available exemption under
British Columbia securities law from the prospectus and registration
requirements of the Securities Act (British Columbia), a prospectus is firstly
filed with the British Columbia Securities Commission and a receipt therefor is
obtained or a discretionary order exempting the trade from the prospectus and
registration requirements of the Securities Act (British Columbia) is obtained
from the British Columbia Securities Commission prior to the trade. The Company
hereby notifies the Employee that the Employee must file a report with the
British Columbia Securities Commission in the form attached hereto as Schedule A
(the "Initial Trade Report") within ten (10) days of the initial trade of the
Options or the Common Stock, as the case may be, by the Employee. Where the
Employee has filed an Initial Trade Report with respect to the Options or Common
Stock, the Employee is not required to file a further report in respect of
additional trades of Options or Common Stock, as the case may be, acquired under
this Agreement. The notification to the employee in this Section 3(b)
constitutes the notice in writing requirement of the Company pursuant to BOR
#95/17 of the British Columbia Securities Commission.
4. Termination of Option. This Option shall in all events terminate ten
(10) years after the date of grant.
5. Nontransferability of Options. This Option shall not be
transferable, except that Employee may, by will, transfer a vested Option to the
Employee's beneficiary or to the Employee's estate upon the death of the
Employee. This Option shall be exercisable during the Employee's lifetime only
by the Employee. Upon any attempt to transfer, assign, pledge, hypothecate or
otherwise dispose of any Option (other than a transfer specifically permitted by
the first sentence of this Section 5), or upon the levy of any attachment or
similar process upon an Option, such Option shall immediately terminate.
6. Effect of Termination of Employment.
(a) In the event that Employee shall cease to be employed by
the Company or its subsidiaries, if any, for any reason other than Employee's
serious misconduct or Employee's death or disability (as such term is defined in
Section 6(c) hereof), Employee shall have the right to exercise the Option at
any time within one (1) month after such termination of employment to the extent
of the full number of shares vested under the Option as of the date of
termination, subject to the condition that no Option shall be exercisable after
the expiration of the term of the Option.
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(b) In the event that Employee shall cease to be employed by
the Company or its subsidiaries, if any, by reason of Employee's serious
misconduct during the course of employment, including but not limited to
wrongful appropriation of the Company's funds, the Option shall be terminated as
of the date of the misconduct.
(c) If Employee shall die while in the employ of the Company
or a subsidiary, if any, or within one (1) month after termination of employment
for any reason other than serious misconduct or if employment is terminated
because Employee has become disabled (within the meaning of Code Section
22(e)(3)) while in the employ of the Company or a subsidiary, if any, and
Employee shall not have fully exercised the Option, such Option may be exercised
at any time within twelve (12) months after Employee's death or date of
termination of employment for disability by Employee, personal representatives
or administrators, or guardians of Employee, as applicable, or by any person or
persons to whom the Option is transferred by will or the applicable laws of
descent and distribution, to the extent of the full number of shares Employee
was entitled to purchase under the Option on the date of death, termination of
employment, if earlier, or date of termination for such disability and subject
to the condition that no Option shall be exercisable after the expiration of the
term of the Option.
(d) The Employee acknowledges and agrees that in the event of
termination of the Employee's employment for any reason he/she will not be
entitled to any claim against the Company for loss, damages or any other remedy
with respect to the Employee's loss of any right to exercise stock options which
would have vested and become exercisable at any time after the Employee's
termination date. The provisions of this Section 6(d) shall however not
interfere with any right of the Employee to exercise (strictly within the grace
periods specified in this Section 6) any options to the extent (and only to the
extent) that such options were exercisable by the Employee on the termination
date.
7. Manner of Exercise.
(a) The Option can be exercised only by Employee or other
proper party by delivering within the Option period written notice to the
Company at its principal office. The notice shall state the number of shares as
to which the Option is being exercised and be accompanied by payment in full of
the Option price for all shares designated in the notice.
(b) Employee may pay the Option price in cash, by check (bank
check, certified check or personal check), by money order, or with the approval
of the Company (i) by delivering to the Company for cancellation Common Stock of
the Company with a fair market value as of the date of exercise equal to the
Option price or the portion thereof being paid by tendering such shares, (ii) by
delivering to the Company a combination of cash and Common Stock of the Company
with an aggregate fair market value and a principal amount equal to the Option
price or (iii) by authorizing the Company to retain from the total number of
shares as to which the Option is exercised that number of shares
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having a fair market value on the date of exercise equal to the exercise price
for the total number of shares as to which the Option is exercised.
(c) For purposes of Section 7(b), fair market value of the
Common Stock of the Company as of a particular date (the "Determination Date")
shall mean: (i) if the Company's Common Stock is traded on an exchange or is
quoted on Nasdaq, then the average closing or last sale prices, respectively,
reported for the ten (10) business days immediately preceding the Determination
Date, and (ii) if the Company's Common Stock is not traded on an exchange or on
Nasdaq but is traded on the over-the-counter market, then the average closing
bid and asked prices reported for the ten (10) business days immediately
preceding the Determination Date.
8. Miscellaneous.
(a) This Option is issued pursuant to the Company's 1999 Stock
Option Plan and is subject to its terms. The terms of the Plan are available for
inspection during business hours at the principal offices of the Company.
(b) This Agreement shall not confer on Employee any right with
respect to continuance of employment by the Company or any of its subsidiaries,
nor will it interfere in any way with the right of the Company to terminate such
employment at any time. Employee shall have none of the rights of a shareholder
with respect to shares subject to this Option until such shares shall have been
issued to Employee upon exercise of this Option.
(c) The exercise of all or any parts of this Option shall only
be effective at such time that the sale of Common Stock pursuant to such
exercise will not violate any state or federal securities or other laws.
(d) If there shall be any change in the Common Stock of the
Company through merger, consolidation, reorganization, recapitalization,
dividend in the form of stock (of whatever amount), stock split or other change
in the corporate structure of the Company, and all or any portion of the Option
shall then be unexercised and not yet expired, then appropriate adjustments in
the outstanding Option shall be made by the Company in its sole discretion, in
order to prevent dilution or enlargement of Option rights. Such adjustments
shall include, where appropriate, changes in the number of shares of Common
Stock and the price per share subject to the outstanding Option.
(e) The grant of this Option shall not affect in any way the
right or power of the Company to make adjustments, reclassifications,
reorganizations or changes in its capital or business structure or to merge,
consolidate, dissolve or liquidate or to sell or transfer all or any part of its
business or assets.
(f) 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 Agreement.
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(g) If Employee shall dispose of any of the Common Stock of
the Company acquired by Employee pursuant to the exercise of the Option within
two (2) years from the date this Option was granted or within one (1) year after
the transfer of any such shares to Employee upon exercise of this Option, then,
in order to provide the Company with the opportunity to claim the benefit of any
income tax deduction which may be available to it under the circumstances,
Employee shall promptly notify the Company of the dates of acquisition and
disposition of such shares, the number of shares so disposed of, and the
consideration, if any, received for such shares. In order to comply with all
applicable federal or state income tax laws or regulations, the Company may take
such action as it deems appropriate to insure (i) notice to the Company of any
disposition of the Common Stock of the Company within the time periods described
above and (ii) that, if necessary, all applicable federal or state payroll,
withholding, income or other taxes are withheld or collected from Employee.
(h) Employee agrees to disclose neither the contents nor any
of the terms and conditions of this Option to any other person, and agrees that
such disclosure may result in both immediate termination of this Option without
the right to exercise any part thereof and termination of employment with the
Company.
(i) Employee acknowledges that this Agreement is issued
subject to the terms and conditions of the Plan. In the event any term or
condition hereof conflicts with the Plan, the Plan shall control. Interpretation
of any term or provision of this Agreement shall be at the sole discretion of
the Compensation Committee, in accordance with the Plan.
(j) The Employee acknowledges that the Company has advised the
Employee to obtain independent legal and tax advice prior to entering into this
Agreement, and prior to the resale of any Options or Common Stock acquired
hereunder.
(k) All references to the Code in this Agreement are to the
United States Internal Revenue Code of 1986, as amended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
XXXXXXXX.XXX INC.
By:
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Xxxxx X. Xxxxx, Chief Financial Officer
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<>
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SCHEDULE "A"
Initial Trade Report
Securities Act
1. Name and address of seller
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2. Name and address of the issuer whose securities were traded by the
seller
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3. Name and address of the party from whom the seller acquired the
securities
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4. Description of securities sold
(a) Number and description of securities
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(b) Date of acquisition of securities by the seller
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(c) Exemption under which securities were acquired by the seller
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(d) Exemption under which securities were traded by the seller
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(e) Date of sale of securities
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(f) Sale price
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5. Certificate of seller
The undersigned seller hereby certifies that the information given in
this report relating to the seller is true and that, to the best of the
seller's information and belief,
(a) the information given in this report relating to any other
party is true,
(b) no unusual effort has been made to prepare the market or
create a demand for the securities, and
(c) no extraordinary commission or other consideration has been
paid in respect of the trade which this report relates.
DATED at ___________ this _________ day of __________ 19___
Signature of the seller or, if the seller is a company, signature of authorized
signatory
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Name of the seller or, if the seller is a company, name and office of authorized
signatory
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Instructions:
1. If the space provided for any answer is insufficient, additional sheets
may be used. Each sheet must be cross-referenced to the relevant item,
properly identified and signed by the person whose signature appears on
the report.
2. File this report with the required fee and completed Fee Checklist. In
order to determine the fee payable, consult section 22 of the
Securities Regulation, B.C. Reg. 478/95. Cheques should be made payable
to the "British Columbia Securities Commission". IT IS AN OFFENCE FOR A
PERSON TO MAKE A STATEMENT IN A DOCUMENT REQUIRED TO BE FILED OR
FURNISHED UNDER THE SECURITIES ACT THAT, AT THE TIME AND IN LIGHT OF
CIRCUMSTANCES UNDER WHICH IT IS MADE, IS A MISREPRESENTATION
