EXHIBIT 10(q)
COMPUTERIZED THERMAL IMAGING, INC.
EMPLOYEE STOCK OPTION AGREEMENT
THIS EMPLOYEE STOCK OPTION AGREEMENT (this "Agreement") is entered
into this 29th day of October , 1997, and effective September 18, 1997
(the "Date of Grant") by and between COMPUTERIZED THERMAL IMAGING, INC., a
Nevada corporation (the "Company"), and XXXXX X. XXXXXXXX, an individual (the
"Employee").
I. NOTICE OF GRANT
You have been granted an option to purchase certain shares of common
stock of the Company, subject to the terms and conditions of both this
Agreement and the Company's 1997 Stock Option and Restricted Stock Plan as
may be amended from time to time (the "Plan") , as follows:
Date of Grant : September 18, 1997
Total Number of
Option Shares : 1,000,000 shares
Exercise Price : $0.75 per share
Total Exercise Price : $750,000.00
Type of Option : ___ Incentive Stock Option
X Nonstatutory Stock Option
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Expiration Date : Five (5) years from the Date of
Grant
VESTING SCHEDULE: This Option may be exercised, in whole or in part, in
accordance with the following vesting schedule:
September 18, 1997 : 25% (275,000 shares)
Each year thereafter : 25% (275,000 shares)
Therefore, the Option will be completely vested as of three (3) years after
the Date of Grant.
II. STOCK OPTION AGREEMENT
WHEREAS, the Company and the Employee have entered into that certain
Employment Agreement simultaneously with the execution hereof (the
"EMPLOYMENT AGREEMENT");
WHEREAS, this Agreement is being entered into pursuant to the Employment
Agreement to create options to purchase shares of common stock, $.001 par
value, in the Company (the "SHARES");
WHEREAS, the terms and conditions of the Plan shall govern the Option
granted pursuant to this Agreement; and
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WHEREAS, the Administrator of the Plan of the Company considers it
advisable and in the best interests of the Company to grant said Option to
Employee upon the terms and conditions of this Agreement and the Plan;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein and for other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Employee effective
as of the Date of Grant, as set forth above in the Notice of Grant, an option
(the "OPTION") to purchase all or any portion of the number of Shares set
forth in the Notice of Grant, at the exercise price set forth in the Notice
of Grant (the "EXERCISE PRICE"), subject to the terms and conditions of the
Plan, which is incorporated herein by reference. In the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Agreement, the terms and conditions of the Plan shall prevail.
If designated in the Notice of Grant as an Incentive Stock Option
("ISO"), this Option is intended to qualify as an Incentive Stock Option
under Section 422 of the Internal Revenue Code ("CODE"); provided, however,
to the extent this Option exceeds the $100,000 rule of Code Section 422(d),
it shall be treated as a Nonstatutory Stock Option ("NSO").
2. EXERCISE OF OPTION.
(a) RIGHT TO EXERCISE. This Option is exercisable in whole or in
part in accordance with the Vesting Schedule on or before the Expiration
Date all as set forth in the Notice of Grant and the applicable provisions of
the Plan and this Agreement.
(b) TERMINATION WITHOUT CAUSE. In the event the Company
terminates the Employee's employment without "cause" (as defined in Section
4.2 of the Employment Agreement) then any portion of the Option which the
Employee has the right to exercise as of the date of such termination of
employment must be exercised on or before ninety (90) days after the
effective date of termination. The balance of the Option, if any, shall
revert automatically to the Company.
(c) TERMINATION DUE TO RESIGNATION. In the event the Employee
resigns his full time employment with the Company for any reason whatsoever
then any portion of the Option which the Employee has the right to exercise
as of the date of such resignation must be exercised on or before ninety (90)
days after the effective date of such resignation. The balance of the Option,
if any, shall revert automatically to the Company.
(d) TERMINATION DUE TO DEATH OR DISABILITY. In the event of the
death or permanent and total disability of the Employee (as defined in the
Plan) while employed by the Company, then any portion of the Option which is
exercisable as of the date of death or permanent and total disability may be
exercised as provided by the Plan.
(e) FINAL TERMINATION. Notwithstanding anything in this Agreement
to the contrary, the Option will terminate and revert to the Company
automatically without notice and be of no further force or effect:
(i) to the extent the Option is not yet exercised as of and
in the event the Company terminates the Employee's employment with "cause"
(as defined in Section 4.2 of the Employment Agreement); and
(ii) to the extent the Option is not yet exercised prior to
the Expiration Date set out in the Notice of Grant, or as otherwise governed
by the Plan.
3. METHOD OF EXERCISE. The Option may be exercised on one or more
occasions. The Option shall be exercised by Employee delivering to the
Company written notification on or before the dates described above that
Employee desires to exercise the Option and indicating which portion of the
Option is to be exercised. The Option may be exercised only for whole
Shares. The Company and Employee shall then set a mutually convenient time
for a Closing which shall be no more than ten (10) calendar days from receipt
of the notification. At such Closing, the Employee shall deliver to the
Company an amount in immediately available funds equal to the Exercise Price
per share
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as set forth in the Notice of Grant multiplied by that portion of the Option
actually exercised. Additionally, the Employee shall deliver to the Company
at such Closing an amount equal to any applicable employment taxes. Within
ten (10) days of such Closing, the Company shall issue instructions to its
Transfer Agent and Registrar to issue to Employee certificate(s) for said
Shares (collectively, the "OPTION SHARES"). Employee shall execute such
documents and instruments as requested by the Company to evidence the
issuance of the Option Shares. The Company may, in its sole discretion if
requested by the Employee, accept payment for the Option Shares by delivery
of other Shares having a fair market value on the date of delivery equal to
the total Exercise Price of the Shares so exercised and any applicable
employment taxes.
4. REGISTRATION RIGHTS. All Shares in the Company which the Employee
obtains from the exercise of Options will be subject to the following
"piggy-back" registration rights:
If the Company at any time proposes to file, or does file, any registration
statement under the Securities Act of 1933, as amended (the "Securities
Act") covering the class of Shares which Employee holds, whether that
registration is for securities to be issued by the Company or then held by
another party, Employee will have the right to have any part or all of the
Shares then held to be registered under such proposed registration
statement. If Employee wishes to exercise such right, Employee shall
notify the Company in writing of such desire within thirty (30) days after
the date Employee receives notice of the proposed registration from the
Company. Upon receipt of Employee's timely request for registration under
this Section 4, the Company will add the Shares Employee requested be
registered to the proposed registration statement; provided, that if after
Employee makes a request for registration and the Company decides not to
register or delay such registration, for any reason, the Company will give
Employee written notice of its decision. However, no such determination
will prejudice Employee's rights to other and further registrations to be
made by the Company from time to time. The Company will bear all costs and
expenses of each and all such registrations incurred in connection with the
exercise of rights granted under this Section 4.
5. NON-TRANSFERABILITY OF OPTION. Except as hereinafter set forth and
the Plan, the Option shall not be sold, transferred, pledged, or exchanged in
any manner and shall be exercisable only by Employee. Employee may, however,
transfer all or any portion of the Option upon the express written consent of
the Company approving in its sole discretion the terms and conditions of the
transfer and the party or parties to whom all or any portion of the Option is
transferred. Any attempted sale, pledge, assignment, or other transfer of
the Option shall be null and void without force or effect.
6. REQUIREMENTS OF LAW.
(a) COMPLIANCE WITH LAWS. Notwithstanding anything in this
Agreement to the contrary, the Company shall not be required to sell or issue
any Shares under this Agreement if the issuance of such Shares shall
constitute a violation by Employee or the Company of any provisions of any
law or regulation of any governmental authority or the Bylaws of the Company.
The Company shall not be obligated to take any affirmative action other than
that which is specifically set forth in this Paragraph 6 in order to cause
the exercise of the Option or the issuance of Shares pursuant hereto in order
to comply with any law or regulation of any governmental authority.
(b) FEDERAL AND STATE SECURITIES LAWS. Upon exercise of the
Option, unless a registration statement under the Securities Act, is in
effect with respect to the Shares covered hereby, the Company shall not be
required to issue such Shares unless the Company has received evidence
reasonably satisfactory to it that such issuance is exempt from registration
under the Securities Act and all applicable state securities laws. The
Company may, but shall in no event be obligated to, register any securities
covered hereby pursuant to the Securities Act or any applicable state
securities laws. The certificate(s) issued representing the Option Shares
may bear a legend in substantially the following form:
"The shares represented by this certificate have been acquired for
investment and may not be sold or transferred unless the same are
registered under the Securities Act of 1933, as amended, or the
Company receives an opinion from counsel reasonably satisfactory to
the Company that such registration is not required for such sale or
transfer or that the shares have been legally sold in broker
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transactions pursuant to Rule 144 of the rules and regulations of the
Securities and Exchange Commission promulgated under the Securities
Act of 1933."
(c) INVESTMENT INTENT. Consultant hereby represents and warrants
that the Options and Option Shares are being acquired solely for the account
of Consultant for investment purposes only and not with a view to or for the
resale, distribution, subdivision, or fractionalization thereof; Consultant
has no contract, understanding, undertaking, agreement, or arrangement with
any person to sell, transfer or pledge to any person the Options or Option
Shares or any part thereof; Consultant has no present plans to enter into any
such contract, undertaking, agreement or arrangement; Consultant understands
the legal consequences of the foregoing representations and warranties to
mean that Consultant must bear the economic risk of the investment in the
Option Shares for an indefinite period of time; Consultant has such knowledge
and experience in financial and business matters that Consultant is capable
of evaluating the merits and risks of acquiring the Option Shares; and
Consultant acknowledges that the acquisition of the Option Shares involves a
HIGH degree of risk that may result in the loss of the total amount of
Consultant's investment in the Options and Option Shares.
(d) DUE DILIGENCE. Consultant acknowledges that it has for a
reasonable amount of time had an opportunity to ask questions and receive
answers concerning the terms and conditions of the issuance of the Options
and Option Shares and the actual and proposed business and affairs of the
Company, and is satisfied with the results thereof, and been given access, if
requested, to all documents with respect to the Company or this transaction,
as well as to such other information that Consultant has requested to
evaluate an investment in the Options and Option Shares.
7. NO RIGHTS AS STOCKHOLDER. Employee shall have no rights as a
stockholder of the Company with respect to the Option Shares until the date
of issuance of a certificate for such Shares; no adjustment for
distributions, or otherwise, shall be made if the record date therefor is
prior to the date of issuance of such certificate.
8. CHANGES IN THE COMPANY'S STRUCTURE.
(a) CHANGES IN STRUCTURE. The existence of the Option shall not
affect in any way the right or power of the Company or its officers,
directors, or stockholders to make or authorize any or all adjustments,
recapitalizations, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, or any other security or the dissolution or
liquidation of the 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.
(b) CHANGES IN NUMBER OF SHARES. If, while the Option is
outstanding, the Company shall effect a subdivision or consolidation of
Shares or other capital readjustment, the payment of a stock dividend, or
other increase or reduction of the number of Shares outstanding, without
receiving compensation therefor in money, services, or property, then (i) in
the event of such an increase in the number of Shares outstanding, the number
of Shares then subject to the Option shall be proportionately increased, and
the Exercise Price shall be proportionately reduced and (ii) in the event of
such a reduction in the number of Shares outstanding, the number of Shares
then subject to the Option shall be proportionately reduced, and the Exercise
Price shall be proportionately increased.
(c) CHANGES IN CORPORATE STRUCTURE. After a merger of one or more
corporations into the Company or after a consolidation of the Company and one
or more corporations in which the Company shall be the surviving corporation,
Employee shall, at no additional cost, be entitled upon exercise of the
Option to receive (subject to any required action by the stockholders) in
lieu of the number of Shares as to which the Option shall then be so
exercisable, the number and class of Shares or other securities to which
Employee would have been entitled pursuant to the terms of the agreement of
merger or consolidation if, immediately prior to such merger or
consolidation, Employee had been the holder of record of a number of Shares
equal to the number of Shares as to which the Option shall be so exercised.
(d) ISSUANCE OF SHARES. Except as hereinbefore expressly provided,
the issuance by the Company of shares of any class, or securities convertible
into shares of any class, for cash or property, or for labor or services,
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either upon direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of Shares or obligations of the
Company convertible into such Shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
or price of the Shares then subject to the Option.
9. EXPENSES. Each party shall pay its own expenses, including legal
expenses and attorneys' fees, which have been or may be incurred in
connection with the preparation, administration, amendment, or modification
of this Agreement and the other documents and instruments executed in
connection herewith.
10. NOTICES. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed to have been sufficiently
given if delivered in person, or if sent by certified mail, return receipt
requested, or telexed or telefaxed to the party entitled thereto with
confirmation of transmission, addressed as set forth on the signature pages
hereto, unless such address is changed by written notice hereunder. If so
mailed the same shall not be deemed effective until three (3) business days
after posting.
11. AMENDMENTS. No amendment, modification or waiver of this Agreement
or any other agreements or documents executed pursuant hereto shall be
effective unless the same is in writing and signed by the person against whom
such amendment is sought to be enforced.
12. BINDING EFFECTS. This Agreement shall be binding upon and inure to
the benefit of each of the parties hereto and its heirs, successors,
permitted assigns and legal representatives.
13. GOVERNING LAW. This Agreement and all matters relating thereto
shall be governed by and construed in accordance with the laws of the State
of Texas, without regard to any conflicts of laws principles thereof.
14. ALTERNATIVE DISPUTE RESOLUTION. ANY CONTROVERSY OR CLAIM ARISING
OUT OF OR RELATING TO THIS AGREEMENT, OR THE BREACH, TERMINATION, OR VALIDITY
THEREOF, SHALL BE SETTLED BY FINAL AND BINDING ARBITRATION IN ACCORDANCE WITH
THE COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION
("AAA RULES") IN EFFECT AS OF THE EFFECTIVE DATE OF THIS AGREEMENT. THE
AMERICAN ARBITRATION ASSOCIATION ("AAA") SHALL BE RESPONSIBLE FOR (i)
APPOINTING A SOLE ARBITRATOR, AND (ii) ADMINISTERING THE CASE IN ACCORDANCE
WITH THE AAA RULES. THE SITUS OF THE ARBITRATION SHALL BE HOUSTON, TEXAS.
UPON THE APPLICATION OF EITHER PARTY TO THIS AGREEMENT, AND WHETHER OR NOT AN
ARBITRATION PROCEEDING HAS YET BEEN INITIATED, ALL COURTS HAVING JURISDICTION
HEREBY ARE AUTHORIZED TO: (a) ISSUE AND ENFORCE IN ANY LAWFUL MANNER, SUCH
TEMPORARY RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS AND OTHER INTERIM
MEASURES OF RELIEF AS MAY BE NECESSARY TO PREVENT HARM TO A PARTIES INTEREST
OR AS OTHERWISE MAY BE APPROPRIATE PENDING THE CONCLUSION OF ARBITRATION
PROCEEDINGS PURSUANT TO THIS AGREEMENT; AND (b) ENTER AND ENFORCE IN ANY
LAWFUL MANNER SUCH JUDGMENTS FOR PERMANENT EQUITABLE RELIEF AS MAY BE
NECESSARY TO PREVENT HARM TO A PARTIES INTEREST OR AS OTHERWISE MAY BE
APPROPRIATE FOLLOWING THE ISSUANCE OF ARBITRAL AWARDS PURSUANT TO THIS
AGREEMENT. TO THE MAXIMUM EXTENT PERMITTED BY LAW, EACH PARTY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO CONSEQUENTIAL, EXEMPLARY,
OR PUNITIVE DAMAGES REGARDLESS OF THE FORUM FOR THE PROCEEDINGS. ANY ORDER
OR JUDGEMENT RENDERED BY THE ARBITRATOR MAY BE ENTERED AND ENFORCED BY ANY
COURT HAVING COMPETENT JURISDICTION.
15. SUBMISSION TO JURISDICTION. Each party hereby irrevocably submits
to the personal jurisdiction of the United States District Court for Xxxxxx
County, Texas, as well as of the District Courts of the State of Texas in
Xxxxxx County, Texas over any suit, action or proceeding arising out of or
relating to this Agreement. Each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such mediation, arbitration, suit,
action or proceeding brought in any such county and any claim that any such
mediation, arbitration, suit, action or proceeding brought in such county has
been brought in an inconvenient forum.
16. WAIVERS. The observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively
or prospectively) by the party entitled to enforce such term, but such waiver
shall be effective only if in a writing signed by the party or parties
against which such waiver is to be asserted. No delay or omission on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any right, power or privilege hereunder operate as a
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waiver of any other right, power or privilege hereunder nor shall any single
or partial exercise of any right, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, power
or privilege hereunder. All remedies, either under this Agreement or by law
or otherwise afforded to any party, shall be cumulative and not alternative.
17. ENTIRE AGREEMENT. This Agreement and the documents expressly
referred to herein constitute the entire agreement between the parties with
respect to the matters covered hereby, and any other prior or contemporaneous
oral or written understandings or agreements with respect to the matters
covered hereby are expressly superseded by this Agreement. There are no
unwritten or oral agreements between the parties.
18. SEVERABILITY. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be
declared judicially to be invalid, unenforceable or void, such decision will
not have the effect of invalidating or voiding the remainder of this
Agreement or affect the application of such provision to other persons or
circumstances, and the parties agree that the part or parts of this Agreement
so held to be invalid, unenforceable or void will be deemed to have been
stricken herefrom and the remainder of this Agreement will have the same
force and effect as if such part or parts had never been included herein.
Any such finding of invalidity or unenforceability shall not prevent the
enforcement of such provision in any other jurisdiction to the maximum extent
permitted by applicable law.
19. THIRD PARTY BENEFICIARIES. This Agreement does not create, and
shall not be construed as creating, any rights enforceable by any person or
entity not a party to this Agreement.
20. HEADINGS. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provisions hereof.
21. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original and all of
which together shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the day and year first above written.
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[SIGNATURES NEXT PAGE]
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COMPANY:
COMPUTERIZED THERMAL IMAGING, INC.,
a Nevada corporation
ADDRESS:
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000 By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
XXXXX X. XXXXXX, President
EMPLOYEE:
ADDRESS:
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, Xxxxxx 00000 /s/ Xxxxx X. Xxxxxxxx
-------------------------------------
XXXXX X. XXXXXXXX
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CONSENT OF SPOUSE
The undersigned spouse of Employee has read and hereby approves the
terms and conditions of the Plan and this Agreement. In consideration of the
Company's granting his or her spouse the right to purchase Shares as set
forth in the Plan and this Agreement, the undersigned hereby agrees to be
irrevocably bound by the terms and conditions of the Plan and this Agreement
and further agrees that any community property interest shall be similarly
bound. The undersigned hereby appoints the undersigned's spouse as
attorney-in-fact for the undersigned with respect to any amendment or
exercise of rights under the Plan or this Agreement.
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Spouse of Employee
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