STOCK OPTION GRANT AGREEMENT
AGREEMENT dated as of January 14, 2004, by and between Distinctive
Devices, Inc., a Delaware corporation (the "Company"), and Xxxxxxxx Xxxxxx (the
W I T N E S S E T H
WHEREAS, in consideration of the services provided to the Company by
the Optionee in connection with the Company's acquisition of galaxis technology
ag and pursuant to an Employment Contract between the Optionee and the Company
(the "Employment Contract"), the Company desires to provide the Optionee with an
opportunity to acquire shares of the Company's Common Stock, par value $.001 per
share (the "Common Stock"), and thereby obtain a proprietary interest in the
progress and success of the business of the Company, and the Optionee desires to
obtain a proprietary interest in the Company, subject to the terms and
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein set forth and other good and valuable consideration, the Company and the
Optionee hereby agree as follows;
1. Grant of Option. The Company hereby grants to the Optionee an
option (the "Option") to purchase an aggregate of one million two hundred fifty
thousand (1,250,000) shares (each individually an "Option Share" and
collectively the "Option Shares") of Common Stock, vesting over time in
accordance with the terms of this Agreement, at an exercise price of $0.70 per
Share (the "Exercise Price"), and the Optionee accepts the grant of the Option,
subject to adjustment as provided in Section 5 herein.
2. Vesting of Option. The Option shall vest as to 312,500 Option
Shares in six months from the date hereof, and as to 312,500 Option Shares on
the first, second and third anniversary of the date hereof, subject to Sections
5 and 9 hereof.
3. Exercise of Option. The Option may be exercised at any time, or
from time to time, subject to vesting pursuant to Section 2 hereof, and
terminating on the fifth anniversary of the date hereof (the "Expiration Date").
The Option may be exercised, as provided in this Section 3, by notice and
payment to the Company as provided in Section 7 hereof.
4. Non-Transferability. The Option shall not be transferable in
whole or in part by the Optionee, except by will or the laws of descent or
distribution, and shall be exercised during the lifetime of the Optionee only by
him. Any transfer or attempted transfer of all or part of the Option in
violation of this Agreement shall be null and void, and, at the discretion of
the Company, the Option shall then be terminated.
5. Adjustments. In the event of a stock dividend, stock split-up,
share combination, exchange of shares, recapitalization, merger, consolidation,
reorganization, liquidation or other similar changes or transactions, of or by
the Company, the Board of Directors of the Company shall make (or shall
undertake to have the Board of Directors of any corporation which merges with,
or acquires the stock or assets of, the Company make) such adjustment of the
number and class of shares then covered by the Option, or of the Exercise Price,
or both. To the extent practicable, the Company shall give the Optionee prior
written notice of any such event, provided that the failure by the Company to
give such notice shall not subject the Company to any liability herein. After an
event which results in an adjustment in the Option, the Company shall give
written notice to the Optionee specifying the adjusted number or type of Option
Shares or other security and/or the Exercise Price, together with a calculation
of the adjustment. The determination of the adjustment by the Company shall be
final and binding on the Optionee.
6. Reservation of Shares. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of Common
Stock or such other class of stock then subject to the Option as shall be
sufficient to satisfy the requirements of this Agreement.
7. Methods of Exercise of Option.
7.1 The Exercise Notice. Subject to the terms and conditions of
this Agreement, the Option shall be exercisable by notice (the "Exercise
Notice") and payment to the Company. Each Exercise Notice shall:
(i) state the election to exercise the Option and the number
of Option Shares (such number being the "Purchased Shares") in respect
of which it is being exercised;
(ii) contain a representation and agreement as to investment
intent with respect to the Purchased Shares, and an acknowledgement as
to restrictions on resale or transfer of such Shares by reason of the
Securities Act of 1933, as amended (the "Securities Act"), if the
Purchased Shares are not subject to an effective registration
statement under the Securities Act; and
(iii) be signed by the Optionee or other person entitled to
exercise the Option and, if the Option is being exercised by any
person other than the Optionee, be accompanied by proof, satisfactory
to counsel for the Company, of the right of such person to exercise
7.2 Payment. Accompanying the Exercise Notice shall be a
certified check or wire transfer payable to the order of the Company in the full
amount of the purchase price for the Purchased Shares.
7.3 Stock Certificate. Within five days after its receipt of the
documents to be provided for in Sections 7.1 and 7.2 hereof in proper form, the
Company shall deliver to the Optionee or other person exercising the Option
certificates for the Purchased Shares. In the event the Purchased Shares are not
then subject to an effective registration statement under the Securities Act,
each certificate shall bear the following legend.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT IF 1933, AS AMENDED.
THEY MAY NOT PUBLICLY BE OFFERED FOR SALE, SOLD OR DELIVERED
AFTER SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER SUCH ACT EXCEPT AS
AUTHORIZED UNDER SAID ACT, AND UNLESS HEREAFTER REGISTERED
WILL NOT BE TRANSFERRED UPON THE RECORDS OF THE CORPORATION
IN THE ABSENCE OF AN OPINION OF COUNSEL TO THE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED.
8. Rights of Holder.
8.1 As Stockholder. The Optionee shall not have any rights to
voting, dividends or any other rights of a stockholder with respect to any
Option Shares until the certificates for such Option Shares shall have been
issued to him as evidenced by the appropriate entry on the stock record books of
the Company upon purchase of such Option Shares upon exercise of the Option.
8.2 As Employee. Nothing in this Agreement shall constitute an
employment agreement or arrangement between the Optionee and the Company, nor
shall anything in this Agreement give the Optionee any rights as an employee,
other than pursuant to the Employment Contract.
9. Rights to Reclaim Option Shares. The Optionee hereby acknowledges
that the Company and Media Hill Communication Beratungs-und Vertriebs GmbH
entered into a Share Purchase Agreement, dated January 14, 2004 (the "Purchase
Agreement"), pursuant to which the Company acquired galaxis technology ag. As
part of the Purchase Agreement, the Optionee agreed to be bound under Section
6.2(c) thereof whereby the Optionee granted the right to the Company to satisfy
any of its indemnification claims arising under Article X of the Purchase
Agreement by reclaiming all or any part of the Option Shares at a rate of fifty
cents ($0.50) per Option Share, subject to any adjustment pursuant to Section 5
of this Agreement. In the event that the Company has the right to reclaim any
Option Shares, it shall have the discretion to choose which Option Shares are
10. Notices. Any notice relating to this Agreement shall be in writing
and delivered in person, by certified mail, hand, express courier or fax as
follows to the following address:
If to the Company:
Distinctive Devices, Inc.
Xxx Xxxxxx Xxxxx, Xxxxx 000
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxxxx Xxxx, CEO
Fax: (000) 000-0000
If to the Optionee:
00000 Xxx Xxxxxxxxx
or to such other address as either party hereto may hereafter duly give to the
11.1 Benefits of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors, assigns, heirs and administrators.
11.2 Governing Law. This Agreement shall be construed by and
governed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of law.
11.3 Severability. In the event that any one or more provisions
of this Agreement shall be deemed to be illegal, invalid or unenforceable, such
illegality, invalidity or unenforceability shall not affect the legality,
validity and enforceability of the remaining legal, valid and enforceable
provisions hereof, which shall be construed as if such illegal, invalid or
unenforceable provision or provisions had not been inserted.
11.4 Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto as to the subject matter herein, and cannot
be amended, modified or terminated except by a writing executed by the parties
11.5 Counterparts. This agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
constitute a single instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first set forth above.
/s/ Xxxxxxxx Xxxxxx
DISTINCTIVE DEVICES, INC.
By: /s/Xxxxxx Xxxx
Xxxxxx Xxxx, CEO