Exhibit 3
COMMON STOCK OPTION AGREEMENT
THIS COMMON STOCK OPTION AGREEMENT ("Agreement") is made and entered
into as of May 15, 2003, between Xxxxxx Xxxx ("Stockholder") and GVI
Acquisition, LLC, a limited liability company ("Optionee ") with respect to the
following:
WHEREAS, Stockholder currently owns Twenty Thousand (20,000) shares of
the common stock (the "Common Stock") of GVI Security, Inc., a Delaware
corporation (the "Corporation"); and
WHEREAS, Stockholder wishes to grant Optionee an option to purchase
such shares on the terms set forth herein and to irrevocably appoint Optionee as
his proxy and attorney-in-fact with respect to said shares until such time as
such option is exercised, if at all, or expires.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto have agreed,
and do hereby agree, as follows:
1. Grant of Option. In consideration of the payment by Optionee of One Thousand
Dollars ($1,000.00) (the "Option Price"), Stockholder hereby grants to Optionee
the irrevocable right to purchase from Stockholder (the "Option"), from the date
hereof through November 15, 2003, or such later date as may be mutually agreed
to in writing by the parties (the "Expiration Date"), Twenty Thousand (20,000)
fully paid and nonassessable shares of Common Stock of the Corporation, together
with any additional shares of Common Stock of the Corporation, options or
warrants to purchase any shares of Common Stock of the Corporation or any
securities convertible into or exchangeable for shares of Common Stock of the
Corporation, now owned or hereafter acquired by Stockholder (collectively, the
"Shares"), at a price of $39.13 per Share, for a total aggregate purchase price
of Seven Hundred Eighty Two Thousand Six Hundred Dollars ($782,600) (the
"Purchase Price"). In the event the Option is exercised, the Option Price shall
be fully applicable and credited against the Purchase Price.
2. Irrevocable Proxy and Power of Attorney. Stockholder does hereby appoint
Optionee as his proxy and attorney-in-fact to call and attend any and all
meetings of the stockholders of the Corporation, to represent and vote the
Shares (including without limitation to execute consents to corporate action and
waivers), and otherwise to act for the Stockholder in the same manner and with
the same effect as if Stockholder were personally present at any such meeting to
vote such Shares or personally acting on any matters submitted to stockholders
for approval or consent. This appointment is coupled with an interest, is
irrevocable, and is effective from the date of this Agreement through the
earlier of the date that the Option is exercised (if at all, in accordance with
Paragraph 4) and the Expiration Date. In furtherance of this Xxxxxxxxx 0,
Xxxxxxxxxxx hereby agrees to execute the Irrevocable Proxy in the form attached
hereto as Exhibit A (the "Proxy"). In the event that the Option is exercised in
accordance with Paragraph 4, or the Option expires, the Proxy will expire.
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3. Closing. Concurrent with the full execution of this Agreement: (a) Optionee
will pay the Option Price; (b) Stockholder shall execute and deliver the Proxy;
(c) Stockholder and Optionee will execute and deliver the escrow agreement in
the form attached hereto as Exhibit B ("Escrow Agreement"); (d) Stockholder
shall execute and deliver to Xxxxxx Xxxxxxxx & Markiles LLP ("Escrow Agent")
stock certificate # 2 ("Stock Certificate") evidencing the Shares (to be held
and transferred pursuant to the terms and conditions of the Escrow Agreement)
and the Stock Assignment Separate from Certificate in the form attached hereto
as Exhibit C ("Stock Assignment"); and (e) in the event that Stockholder is
currently married, Stockholder shall cause to be executed and delivered to
Optionee the Spousal Consent in the form attached hereto as Exhibit D.
4. Method of Exercising Option. The Option may be exercised by Optionee by (a)
delivering written notice thereof ("Notice") to Stockholder at the address set
forth in Paragraph 12(b) and (b) payment to Stockholder of the Purchase Price
less the Option Price (which net amount shall be hereinafter referred to as the
"Option Exercise Price").
5. Escrow of the Shares. On execution hereof, Stockholder shall deposit the
Stock Certificate and the executed Stock Assignment with the Escrow Agent in
accordance with the Escrow Agreement.
6. Stock Fully Paid. Stockholder covenants and agrees that the Shares are, and
upon the exercise of the Option shall be, fully paid and nonassessable and free
from all claims, liens and encumbrances.
7. Certain Adjustments.
(a) Adjustments for Stock Splits, Stock Dividends and Combinations of
Common Stock. In the event that the Shares, after the date of this
Agreement and prior to any exercise by Optionee, are subdivided
(split), or combined (reverse split), by reclassification or otherwise,
or in the event of any dividend or other distribution of additional
shares or warrants in connection with the Shares to Stockholder, the
number of shares of Common Stock to be acquired by Optionee pursuant to
the Option shall be proportionately adjusted to reflect and/or include
any such reverse split or split or warrants.
(b) Adjustments for Merger or Reorganization, Etc. In case of a
reclassification, reorganization or exchange, or any consolidation or
merger of the Corporation with another corporation, then Optionee shall
receive upon exercise of the Option, in addition to or in lieu of the
Shares receivable thereupon, the amount of securities of the
Corporation or property which Optionee would have received had this
Option been exercised on the date of such event.
8. Representations and Warranties of Stockholder. Stockholder hereby represents
and warrants to Optionee as follows:
(a) Stockholder owns the Shares, beneficially and of record, and
has good and marketable title to the Shares, free and clear of
all liens, claims, encumbrances, security interests and
restrictions on transfer, with full power and authority to
sell the Shares to Optionee. Stockholder will convey to
Optionee good and marketable title to the Shares (on exercise
of the Option), free and clear of all liens, claims,
encumbrances, security interests and restrictions on transfer.
(b) Stockholder acknowledges and agrees that, in entering into
this Agreement, he has relied exclusively on his own
investigation of the Corporation and its business affairs and
activities, and not upon any representation or inducement by
Optionee, in deciding whether to sell the Shares pursuant to
this Agreement and to grant the Proxy on the Shares.
(c) Stockholder understands that the Proxy is irrevocable during
its effective term, that his commitment to sell the Shares is
irrevocable, subject only to receipt of the Notice and Option
Exercise Price prior to the Expiration Date. Prior to the
Expiration Date, Stockholder shall not sell, assign, encumber,
hypothecate or otherwise transfer any of the Shares or take
any other action that would impede Stockholder's ability to
deliver the Shares to Optionee upon exercise of the Option.
(d) All information, arrangements and circumstances which might be
material to a person or entity optioning or acquiring the
Shares pursuant to this Agreement have been disclosed in
writing to Optionee and there are no facts, arrangements or
circumstances which might make such information misleading or
inaccurate, or which may restrict, impair or interfere with
the Optionee's unencumbered ownership of the Shares.
(e) Each of Stockholder's warranties and representations are of
the essence of this Agreement and shall survive the early
termination hereof. None of Stockholder's warranties and
representations shall in any way be limited by reason of any
investigation made by Optionee or on behalf of Optionee
regarding said warranties and representations.
(f) Stockholder has no knowledge of the existence of any written
agreements relating to the employment of Xxxxxxx Xxxxxxxxxx,
or any written agreements or any understandings relating to
any outstanding preemptive, conversion or other rights,
options, warrants or agreements granted or issued by or
binding upon the Corporation for the purchase or acquisition
of any shares of its capital stock, other than the 230,000
shares of its outstanding Common Stock.
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9. Representations and Warranties of Optionee. Optionee hereby represents and
warrants to Stockholder as follows:
(a) Optionee will acquire the Shares for investment and not with a
view to distributing all or any part thereof in any
transaction which would constitute a "distribution" within the
meaning of the Securities Act of 1933 (the "Securities Act").
Optionee acknowledges and understands that such Shares have
not been registered under the Securities Act, that such Shares
cannot be resold without registration under the applicable
federal and state securities laws or pursuant to an exemption
therefrom and a legend to this effect will be placed on the
certificate representing the Shares;
(b) Optionee (i) is an "accredited investor" as such term is
defined under Regulation D under the Securities Act, (ii) has
such knowledge and experience in business and financial
matters that it is capable of evaluating the merits and risks
of an investment in the Shares, and (iii) has conducted its
own due diligence investigation with respect to such
investment; and
(c) Optionee will not, directly or indirectly, offer, transfer,
sell, assign, pledge, hypothecate or otherwise dispose of any
of the Shares (or solicit any offers to buy, purchase, or
otherwise acquire or take a pledge of any of such shares)
except in compliance with the Securities Act, and the rules
and regulations under the Securities Act.
10. Confidentiality. Stockholder hereby agrees to not release, disclose or
reveal to any person or entity the terms or conditions of this Agreement without
the prior written consent of Optionee.
11. Further Assurances. Stockholder agrees to promptly execute and deliver to
Optionee any and all further agreements, documents and/or instruments which
Optionee may reasonably request in order to effectuate the purposes, and protect
Optionee's interests, under this Agreement.
12. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of
California. The parties hereto consent to exclusive venue for
the adjudication of any disputes pertaining to the
interpretation or enforcement of this Agreement in the County
of Los Angeles, California U.S.A. Subject to the provisions of
Paragraph 12(e) relating to arbitration of disputes, the
parties hereto consent to the exercise of personal
jurisdiction by any court located in the County of Los
Angeles, California U.S.A. having subject matter jurisdiction
over any such dispute. Nothing contained in this paragraph
shall be deemed a limitation upon either party's right to seek
the enforcement of a lawfully issued judgement in any other
court of competent jurisdiction.
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(b) Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and
shall be deemed effectively given upon personal delivery to
the party to be notified or, if sent by telecopier, upon
confirmation report of such telecopy or upon deposit with the
United States Post Office, by registered or certified mail, or
upon deposit with an overnight air courier, in each case
postage prepaid and addressed to the party to be notified at
the address set forth below, or by facsimile to the number set
forth below:
(i) If to Stockholder:
Xxxxxx Xxxx
0000 Xxxxxx Xxxx
Xxxxxx, XX 00000
Facsimile: _______________
(ii) If to Optionee:
GVI Acquisition, LLC
c/o Sunland Entertainment
00000 X. Xxxxxxx Xxxx.
Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attn: Xxxxx Xxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxxx & Markiles, LLP
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxxx
Facsimile: (000) 000-0000
(c) Severability. If one or more provisions (or portions thereof)
of this Agreement are held to be unenforceable under
applicable law, such provision (or portion thereof) shall be
excluded from this Agreement and the balance of this Agreement
(or such provision) shall be interpreted as if such provision
(or portion thereof) were so excluded and shall be enforceable
in accordance with its terms.
(d) Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto pertaining to the subject
matter hereof and supersedes all prior agreements, term
sheets, letters, discussions and understandings of the parties
in connection herewith. No supplement, modification or
amendment of this Agreement shall be binding unless executed
in writing by all the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall
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constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver.
No waiver shall be binding unless executed in writing by the
party making the waiver.
(e) Arbitration. Any dispute, controversy or claim arising out of
or relating to the enforcement, interpretation or alleged
breach of this Agreement shall be submitted to and resolved by
binding arbitration in Los Angeles, California before one
neutral arbitrator appointed in accordance with the Commercial
Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator may be
entered in and enforceable by any court having jurisdiction.
(f) Assignment. This Agreement may be assigned by Optionee. This
Agreement may not be assigned by Stockholder without the prior
written consent of Optionee.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first set forth above.
GVI Acquisition, LLC
("Optionee")
By:
------------------------------- -----------------------------
Xxxxxx Xxxx
("Stockholder") Its:
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EXHIBIT A
IRREVOCABLE PROXY ON THE OPTION SHARES
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EXHIBIT B
ESCROW AGREEMENT
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EXHIBIT C
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
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EXHIBIT D
SPOUSAL CONSENT
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