EXHIBIT 10.28
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement") dated as of August 15, 1999,
between Sportsprize Entertainment Inc. (the "Company"), a Nevada corporation,
and Xxxxxx Xxxxxxxx (the "Employee"), a resident of Venice, California.
WHEREAS, the Company wishes to employ the Employee to render services for
the Company on the terms and conditions set forth in this Agreement, and the
Employee wishes to be retained and employed by the Company on such terms and
conditions.
NOW, THEREFORE, in consideration of the premises, the mutual agreements set
forth below and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties agree as follows:
1. Employment. The Company hereby employs the Employee, and the Employee
accepts such employment and agrees to perform services for the Company, for the
period and upon the other terms and conditions set forth in this Agreement.
2. Term. Unless terminated at an earlier date in accordance with Section 9
of this Agreement, the term of the Employee's employment hereunder shall be for
a period of six months, commencing on the date hereof. Thereafter, the term of
this Agreement shall be automatically extended for successive six month periods
unless either party objects to such extension by written notice to the other
party at least 30 days prior to the expiration of the initial term or any
extension term.
3. Position and Duties.
(a) Service with Company. During the term of the Employee's employment, the
Employee agrees to perform such reasonable employment duties as the Board of
Directors or Chief Executive Officer of the Company shall assign to him from
time to time including presenting and exposing the Company to the investment
community, raising additional funds for the expansion of the Company either
through a public offering or a private financing and having overall
responsibility of the Company's business plan and management of investor
relations. The Employee also agrees to serve, for any period for which he is
elected, as a director of the Company; provided, however, that the Employee
shall not be entitled to any additional compensation for serving as a director.
The Employee's title shall be "Senior Vice-President, Corporate Development".
(b) Performance of Duties. The Employee agrees to serve the Company
faithfully and to the best of his ability and to devote his full time, attention
and efforts to the business and affairs of the Company during his employment by
the Company. The Employee hereby confirms that he is under no contractual
commitments inconsistent with his obligations set forth in this Agreement and
that during the term of this Agreement, he will not render or perform services
for any other
corporation, firm, entity or person which are inconsistent with the provisions
of this Agreement. While he remains employed by the Company, the Employee may
participate in reasonable charitable activities and personal investment
activities so long as such activities do not interfere with the performance of
his obligations under this Agreement.
4. Compensation.
(a) Base Salary. As compensation in full for all services to be rendered by
the Employee under this Agreement, the Company shall pay to the Employee a base
salary of $10,000, less deductions and withholdings, which salary shall be paid
on a monthly basis in arrears in accordance with the Company's normal payroll
procedures and policies.
(b) Incentive Compensation. In addition to the base salary, the Employee
shall be eligible to participate in any bonus or incentive compensation plans
that may be established by the Board of Directors of the Company from time to
time applicable to the Employee.
(c) Participation in Benefit Plans. While he is employed by the Company,
the Employee shall also be eligible to participate in all employee benefit plans
or programs (including medical and dental coverage) of the Company to the extent
that the Employee meets the requirements for each individual plan. The Company
provides no assurance as to the adoption or continuance of any particular
employee benefit plan or program, and the Employee's participation in any such
plan or program shall be subject to the provisions, rules and regulations
applicable thereto.
(d) Expenses. The Company will pay or reimburse the Employee for all
reasonable and necessary out-of-pocket expenses incurred by him in the
performance of his duties under this Agreement, subject to the Company's normal
policies for expense verification.
(e) Issuance of Stock Option. Concurrently with the execution of this
Agreement, the Company is granting to the Employee an option to purchase up to
400,000 shares of the Company's common stock pursuant to the Company's Stock
Option Plan. Such option shall be subject to the vesting schedule and terms and
conditions set forth in the form of stock option agreement attached as Exhibit A
hereto.
5. Confidential Information. Except as permitted or directed by the
Company's Board of Directors or Chief Executive Officer, during the term of his
employment or at any time thereafter, the Employee shall not divulge, furnish or
make accessible to anyone or use in any way (other than in the ordinary course
of the business of the Company) any confidential or secret knowledge or
information of the Company that the Employee has acquired or become acquainted
with or will acquire or become acquainted with prior to the termination of the
period of his employment by the Company (including employment by the Company or
any affiliated companies prior to the date of this Agreement), whether developed
by himself or by others, concerning any trade secrets, confidential or secret
designs, processes, formulae, plans, devices or material (whether or not
patented or patentable) directly or indirectly useful in any aspect of the
business of the Company, any customer or supplier lists of the Company, any
confidential or secret development or research work of the Company, or any other
confidential information or secret aspects of the business of the Company. The
Employee acknowledges that the above-described knowledge or information
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constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company, and that any
disclosure or other use of such knowledge or information other than for the sole
benefit of the Company would be wrongful and would cause irreparable harm to the
Company. Both during and after the term of his employment, the Employee will
refrain from any acts or omissions that would reduce the value of such knowledge
or information to the Company. The foregoing obligations of confidentiality
shall not apply to any knowledge or information that is now published or which
subsequently becomes generally publicly known in the form in which it was
obtained from the Company, other than as a direct or indirect result of the
breach of this Agreement by the Employee.
6. Ventures. If, during the term of his employment the Employee is engaged
in or associated with the planning or implementing of any project, program or
venture involving the Company and a third party or parties, all rights in such
project, program or venture shall belong to the Company. Except as approved by
the Company's Board of Directors or Chief Executive Officer, the Employee shall
not be entitled to any interest in such project, program or venture or to any
commission, finder's fee or other compensation in connection therewith other
than the compensation to be paid to the Employee as provided in this Agreement.
The Employee shall have no interest, direct or indirect, in any vendor or
customer of the Company.
7. Noncompetition Covenant.
(a) Agreement Not to Compete. During the term of his employment with the
Company and for a period of two years after the termination of such employment
(whether such termination is with or without cause, or whether such termination
is occasioned by the Employee or the Company), he shall not, directly or
indirectly, engage in competition with the Company in any manner or capacity
(e.g., as an advisor, principal, agent, partner, officer, director, stockholder,
employee, member of any association or otherwise) in any phase of the business
which the Company is conducting with respect to similar sports-related
entertainment games for the Internet during the term of this Agreement,
including the design, development, distribution and marketing of sports-related
entertainment games for the Internet being sold by the Company or hire any
current or former employee of the Company.
(b) Geographic Extent of Covenant. The obligations of the Employee under
Section 7(a) shall apply to any geographic area in which the Company (i) has
engaged in business during the term of this Agreement through production,
promotional, sales or marketing activity, or otherwise, or (ii) has otherwise
established its goodwill, business reputation or any customer or supplier
relations.
(c) Limitation of Covenant. Ownership by the Employee, as a passive
investment, of less than two percent of the outstanding shares of capital stock
of any corporation listed on a national securities exchange or publicly traded
on Nasdaq shall not constitute a breach of this Section 7.
(d) Indirect Competition. The Employee will not, directly or indirectly,
assist or encourage any other person in carrying out, directly or indirectly,
any activity that would be prohibited by the above provisions of this Section 7
if such activity were carried out by the Employee, either directly or
indirectly. In particular the Employee agrees that he will not, directly or
indirectly, induce any employee of the Company to carry out, directly or
indirectly, any such activity.
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(e) Acknowledgment. The Employee agrees that the restrictions and
agreements contained in this Section 7 are reasonable and necessary to protect
the legitimate interests of the Company and that any violation of this Section 7
will cause substantial and irreparable harm to the Company that would not be
quantifiable and for which no adequate remedy would exist at law and accordingly
injunctive relief shall be available for any violation of this Section 7.
(f) Blue Pencil Doctrine. If the duration or geographical extent of, or
business activities covered by, this Section 7 are in excess of what is valid
and enforceable under applicable law, then such provision shall be construed to
cover only that duration, geographical extent or activities that are valid and
enforceable. The Employee acknowledges the uncertainty of the law in this
respect and expressly stipulates that this Agreement be given the construction
which renders its provisions valid and enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.
8. Patent and Related Matters.
(a) Disclosure and Assignment. The Employee will promptly disclose in
writing to the Company complete information concerning each and every invention,
discovery, improvement, device, design, apparatus, practice, process, method or
product, whether patentable or not, made, developed, perfected, devised,
conceived or first reduced to practice by the Employee, either solely or in
collaboration with others, during the term of this Agreement, or within six
months thereafter, whether or not during regular working hours, relating either
directly or indirectly to the business, products, practices or techniques of the
Company ("Developments"). The Employee, to the extent that he has the legal
right to do so, hereby acknowledges that any and all of the Developments are the
property of the Company and hereby assigns and agrees to assign to the Company
any and all of the Employee's right, title and interest in and to any and all of
the Developments. At the request of the Company, the Employee will confer with
the Company and its representatives for the purpose of disclosing all
Developments to the Company as the Company shall reasonably request during the
period ending one year after termination of the Employee's employment with the
Company.
(b) Future Developments. As to any future Developments made by the Employee
that relate to the business, products or practices of the Company and that are
first conceived or reduced to practice during the term of this Agreement, or
within six months thereafter, but which are claimed for any reason to belong to
an entity or person other than the Company, the Employee will promptly disclose
the same in writing to the Company and shall not disclose the same to others if
the Company, within 20 days thereafter, shall claim ownership of such
Developments under the terms of this Agreement. If the Company makes no such
claim, the Employee hereby acknowledges that the Company has made no promise to
receive and hold in confidence any such information disclosed by the Employee.
(c) Limitation on Sections 8(a) and 8(b). The provisions of Section 8(a)
and 8(b) shall not apply to any Development meeting the following conditions:
(i) such Development was developed entirely on the Employee's own
time;
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(ii) such Development was made without the use of any Company
equipment, supplies, facility or trade secret information;
(iii) such Development does not relate (A) directly to the business of
the Company or (B) to the Company's actual or demonstrably anticipated
research or development; and
(iv) such Development does not result from any work performed by the
Employee for the Company.
(d) Assistance of the Employee. Upon request and without further
compensation therefor, but at no expense to the Employee, the Employee will do
all lawful acts, including but not limited to, the execution of papers and
lawful oaths and the giving of testimony, that in the opinion of the Company,
may be necessary or desirable in obtaining, sustaining, reissuing, extending and
enforcing United States and foreign copyrights and Letters Patent, including but
not limited to, design patents, on the Developments, and for perfecting,
affirming and recording the Company's complete ownership and title thereto, and
to cooperate otherwise in all proceedings and matters relating thereto.
(e) Records. The Employee will keep complete, accurate and authentic
accounts, notes, data and records of the Developments in the manner and form
requested by the Company. Such accounts, notes, data and records shall be the
property of the Company, and, upon its request, the Employee will promptly
surrender same to it or, if not previously surrendered upon its request or
otherwise, the Employee will surrender the same, and all copies thereof, to the
Company upon the conclusion of his employment.
(f) Obligations, Restrictions and Limitations. The Employee understands
that the Company may enter into agreements or arrangements with agencies of the
United States Government, and that the Company may be subject to laws and
regulations which impose obligations, restrictions and limitations on it with
respect to inventions and patents which may be acquired by it or which may be
conceived or developed by employees, consultants or other agents rendering
services to it. The Employee shall be bound by all such obligations,
restrictions and limitations applicable to any such invention conceived or
developed by him while he is employed by the Company and shall take any and all
further action which may be required to discharge such obligations and to comply
with such restrictions and limitations.
(g) Copyrightable Material. All right, title and interest in all
copyrightable material that the Employee shall conceive or originate, either
individually or jointly with others, and which arise out of the performance of
this Agreement, will be the property of the Company and are by this Agreement
assigned to the Company along with ownership of any and all copyrights in the
copyrightable material. Upon request and without further compensation therefor,
but at no expense to the Employee, the Employee shall execute all papers and
perform all other acts necessary to assist the Company to obtain and register
copyrights on such materials in any and all countries. Where applicable, works
of authorship created by the Employee for the Company in performing his
responsibilities under this Agreement shall be considered "works made for hire,"
as defined in the U.S. Copyright Act.
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(h) Know-How and Trade Secrets. All know-how and trade secret information
conceived or originated by the Employee that arises out of the performance of
his obligations or responsibilities under this Agreement or any related material
or information shall be the property of the Company, and all rights therein are
by this Agreement assigned to the Company.
9. Termination of Employment.
(a) Grounds for Termination. The Employee's employment shall terminate
prior to the expiration of the initial term set forth in Section 2 or any
extension thereof in the event that at any time:
(i) The Employee dies,
(ii) The Employee becomes "disabled," so that he cannot perform the
essential functions of his position with or without reasonable
accommodation,
(iii) The Board of Directors of the Company elects to terminate this
Agreement for "cause" and notifies the Employee in writing of such
election,
(iv) The Board of Directors of the Company elects to terminate this
Agreement without "cause" and notifies the Employee in writing of such
election, or
(v) The Employee elects to terminate this Agreement and notifies the
Company in writing of such election.
If this Agreement is terminated pursuant to clause (i), (ii) or (iii) of
this Section 9(a), such termination shall be effective immediately. If this
Agreement is terminated pursuant to clause (iv) or (v) of this Section 9(a),
such termination shall be effective 60 days after delivery of the notice of
termination.
(b) "Cause" Defined. "Cause" means:
(i) The Employee has breached the provisions of Section 5, 7 or 8 of
this Agreement in any material respect,
(ii) The Employee has engaged in willful and material misconduct,
including willful and material failure to perform the Employee's duties as
an officer or employee of the Company and has failed to cure such default
within 30 days after receipt of written notice of default from the Company,
(iii) The Employee has committed fraud, misappropriation or
embezzlement in connection with the Company's business, or
(iv) The Employee has been convicted or has pleaded nolo contendere to
criminal misconduct (except for parking violations and occasional minor
traffic violations).
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In the event that the Company terminates the Employee's employment for "cause"
pursuant to clause (ii) of this Section 9(b) and the Employee objects in writing
to the Board's determination that there was proper "cause" for such termination
within 20 days after the Employee is notified of such termination, the matter
shall be resolved by arbitration in accordance with the provisions of Section
10(a). If the Employee fails to object to any such determination of "cause" in
writing within such 20-day period, he shall be deemed to have waived his right
to object to that determination. If such arbitration determines that there was
not proper "cause" for termination, such termination shall be deemed to be a
termination pursuant to clause (iv) of Section 9(a) and the Employee's sole
remedy shall be to receive the wage continuation benefits contemplated by
Section 9(f).
(c) Effect of Termination Notwithstanding any termination of this
Agreement, the Employee, in consideration of his employment hereunder to the
date of such termination, shall remain bound by the provisions of this Agreement
which specifically relate to periods, activities or obligations upon or
subsequent to the termination of the Employee's employment.
(d) "Disabled" Defined. "Disabled" means any mental or physical condition
that renders the Employee unable to perform the essential functions of his
position, with or without reasonable accommodation, for a period in excess of
one month.
(e) Surrender of Records and Property. Upon termination of his employment
with the Company, the Employee shall deliver promptly to the Company all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables, calculations or copies thereof that relate in
any way to the business, products, practices or techniques of the Company, and
all other property, trade secrets and confidential information of the Company,
including, but not limited to, all documents that in whole or in part contain
any trade secrets or confidential information of the Company, which in any of
these cases are in his possession or under his control.
(f) Salary Continuation. If the Employee's employment by the Company is
terminated by the Company pursuant to Section 9(a), the Employee's right to base
salary and benefits shall immediately terminate, except as may otherwise be
required by applicable law.
In either event, if the Employee's employment by the Company terminates
within six months of the end of any fiscal year of the Company, the Employee
shall also be entitled to receive a pro rata portion (based on the number of
days of employment during that fiscal year) of any bonus payment that would have
been payable to him for that fiscal year pursuant to Section 4(b) if the
Employee had been in the employ of the Company for the full fiscal year. No
bonus will be payable to the Employee with respect to any fiscal year in which
the Employee was employed by the Company for less than six months or with
respect to any fiscal year after the fiscal year in which the Employee's
employment terminated.
10. Settlement of Disputes.
(a) Arbitration. Except as provided in Section 10(b), any claims or
disputes of any nature between the Company and the Employee arising from or
related to the performance, breach, termination, expiration, application or
meaning of this Agreement or any matter relating to the Employee's employment
and the termination of that employment by the Company shall be resolved
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exclusively by arbitration in Manhattan Beach, California, in accordance with
the applicable rules of the American Arbitration Association. In the event of
submission of any dispute to arbitration, each party shall, not later than 30
days prior to the date set for hearing, provide to the other party and to the
arbitrator(s) a copy of all exhibits upon which the party intends to rely at the
hearing and a list of all persons each party intends to call at the hearing. The
fees of the arbitrator(s) and other costs incurred by the Employee and the
Company in connection with such arbitration shall be paid by the party that is
unsuccessful in such arbitration.
The decision of the arbitrator(s) shall be final and binding upon both
parties. Judgment of the award rendered by the arbitrator(s) may be entered in
any court of competent jurisdiction.
(b) Resolution of Certain Claims--Injunctive Relief. Section 10(a) shall
have no application to claims by the Company asserting a violation of Section 5,
7, 8 or 9(e) or seeking to enforce, by injunction or otherwise, the terms of
Section 5, 7, 8 or 9(e). Such claims may be maintained by the Company in a
lawsuit subject to the terms of Section 10(c). The Employee acknowledges that it
would be difficult to fully compensate the Company for damages resulting from
any breach by him of the provisions of this Agreement. Accordingly, the Employee
agrees that, in addition to, but not to the exclusion of any other available
remedy, the Company shall have the right to enforce the provisions of Sections
5, 7, 8 and 9(e) by applying for and obtaining temporary and permanent
restraining orders or injunctions from a court of competent jurisdiction without
the necessity of filing a bond therefor, and without the necessity of proving
actual damages, and the Company shall be entitled to recover from the Employee
its reasonable attorneys' fees and costs in enforcing the provisions of Sections
5, 7, 8 and 9(e).
(c) Venue. Any action at law, suit in equity or judicial proceeding arising
directly, indirectly, or otherwise in connection with, out of, related to or
from this Agreement, or any provision hereof, shall be litigated only in the
courts of the State of Nevada. The Employee and the Company consent to the
jurisdiction of such courts over the subject matter set forth in Section 10(b).
The Employee waives any right the Employee may have to transfer or change the
venue of any litigation brought against the Employee by the Company.
11. Miscellaneous.
(a) Entire Agreement. This Agreement (including the exhibits, schedules and
other documents referred to herein) contains the entire understanding between
the parties hereto with respect to the subject matter hereof and supersedes any
prior understandings, agreements or representations, written or oral, relating
to the subject matter hereof.
(b) Counterparts. This Agreement may be executed in separate counterparts,
each of which will be an original and all of which taken together shall
constitute one and the same agreement, and any party hereto may execute this
Agreement by signing any such counterpart.
(c) Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such a manner as to be effective and valid under applicable
law but if any provision of this Agreement is held to be invalid, illegal or
unenforceable under any applicable law or rule, the validity, legality and
enforceability of the other provision of this Agreement will not be affected or
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impaired thereby. In furtherance and not in limitation of the foregoing, should
the duration or geographical extent of, or business activities covered by, any
provision of this Agreement be in excess of that which is valid and enforceable
under applicable law, then such provision shall be construed to cover only that
duration, extent or activities which may validly and enforceably be covered. The
Employee acknowledges the uncertainty of the law in this respect and expressly
stipulates that this Agreement be given the construction which renders its
provision valid and enforceable to the maximum extent (not exceeding its express
terms) possible under applicable law.
(d) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, personal
representatives and, to the extent permitted by subsection (e), successors and
assigns.
(e) Assignability. Neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason hereof shall be assignable
(including by operation of law) by either party without the prior written
consent of the other party to this Agreement, except that the Company may,
without the consent of the Employee, assign its rights and obligations under
this Agreement to any corporation, firm or other business entity with or into
which the Company may merge or consolidate, or to which the Company may sell or
transfer all or substantially all of its assets, or of which 50% or more of the
equity investment and of the voting control is owned, directly or indirectly,
by, or is under common ownership with, the Company. After any such assignment by
the Company, the Company shall be discharged from all further liability
hereunder and such assignee shall thereafter be deemed to be the Company for the
purposes of all provisions of this Agreement including this Section 11.
(f) Modification, Amendment, Waiver or Termination. No provision of this
Agreement may be modified, amended, waived or terminated except by an instrument
in writing signed by the parties to this Agreement. No course of dealing between
the parties will modify, amend, waive or terminate any provision of this
Agreement or any rights or obligations of any party under or by reason of this
Agreement. No delay on the part of the Company in exercising any right hereunder
shall operate as a waiver of such right. No waiver, express or implied, by the
Company of any right or any breach by the Employee shall constitute a waiver of
any other right or breach by the Employee.
(g) Notices. All notices, consents, requests, instructions, approvals or
other communications provided for herein shall be in writing and delivered by
personal delivery, overnight courier, mail or electronic facsimile addressed to
the receiving party at the address set forth herein. All such communications
shall be effective when received.
Xxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx
00000
Fax No.: (000) 000-0000
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Sportsprize Entertainment Inc.
360 - 000 X. Xxxxxxxxx Xxxx.
Xxxxxxxxx Xxxxx, Xxxxxxxxxx
00000
Fax No.: (000) 000-0000
Any party may change the address set forth above by notice to each other party
given as provided herein.
(h) Headings. The headings and any table of contents contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
(i) Governing Law. ALL MATTERS RELATING TO THE INTERPRETATION,
CONSTRUCTION, VALIDITY AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF NEVADA, WITHOUT GIVING EFFECT TO ANY CHOICE OF
LAW PROVISIONS THEREOF.
(j) Third-Party Benefit. Nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights, remedies, obligations or
liabilities of any nature whatsoever.
(k) Withholding Taxes. The Company may withhold from any benefits payable
under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in the first paragraph.
SPORTSPRIZE ENTERTAINMENT INC.
By -------------------------------------
Its -----------------------------------
---------------------------------------
Xxxxxx Xxxxxxxx
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Exhibit A
---------
STOCK OPTION AGREEMENT
----------------------
Sportsprize Entertainment Inc.
(formerly Kodiak Graphics Company)
1999 STOCK OPTION PLAN
THIS AGREEMENT is entered into as of the 15th day of August, 1999 ("Date of
Grant") between Sportsprize Entertainment Inc., a Nevada corporation (the
"Company"), and Xxxxxx Xxxxxxxx (the "Optionee").
WHEREAS, the Board of Directors of the Company (the "Board") has approved
and adopted the 1999 Stock Option Plan (the "Plan"), pursuant to which the Board
is authorized to grant to employees and other selected persons stock options to
purchase common stock, without par value, of the Company (the "Common Stock");
WHEREAS, the Plan provides for the granting of stock options that either
(i) are intended to qualify as "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) do not qualify under Section 422 of the Code ("Non-Qualified Stock
Options");
WHEREAS, the Board has authorized the grant to Optionee of options to
purchase a total of 400,000 shares of Common Stock (the "Options"), which
Options are intended to be (select one):
--------- Incentive Stock Options
X Non-Qualified Stock Options;
---------
NOW, THEREFORE, the Company agrees to offer to the Optionee the option to
purchase, upon the terms and conditions set forth herein and in the Plan,
400,000 shares of Common Stock. Capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Plan.
1. Exercise Price. The exercise price of the options shall be $0.50 per
share for 200,000 shares of Common Stock and $2.00 per share for 200,000 shares
of Common Stock.
2. Limitation on the Number of Shares. If the Options granted hereby are
Incentive Stock Options, the number of shares which may be acquired upon
exercise thereof is subject to the limitations set forth in Section 5(a) of the
Plan.
3. Vesting Schedule. The Options are exercisable in accordance with the
following vesting schedule:
(a) 100,000 of the $0.50 Options may be exercised immediately;
(b) 100,000 of the $0.50 Options may be exercised when the Company's
trading share price closes at $7.00 or higher or when the Company completes
a financing in excess of $10,000,000;
(c) in the event that 100,000 of the $0.50 Options set out in Section 3(b)
become exercisable as a result of the Company's trading price closing at a
price equal to or greater than $7.00 per share, then 50,000 of the $2.00
Options may be exercised immediately and 150,000 of the $2.00 Options may
be exercised when the Company completes a financing in excess of
$10,000,000; and
(d) in the event that 100,000 of the $0.50 Options set out in Section 3(b)
become exercisable as a result of the Company completing a financing in
excess of $10,000,000, then 50,000 of the $2.00 Options may be exercised
immediately and 150,000 of the $2.00 Options may be exercised when the
Company's trading price closes at a price equal to or greater than $7.00
per share.
4. Options not Transferable. This Option may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or (except in
the case of an Incentive Stock Option) pursuant to a qualified domestic
relations order, and shall not be subject to execution, attachment or similar
process; provided, however, that if this Option represents a Non-Qualified Stock
Option, such Option is transferable without payment of consideration to
immediate family members of the Optionee or to trusts or partnerships
established exclusively for the benefit of the Optionee and the Optionee's
immediate family members. Upon any attempt to transfer, pledge, hypothecate or
otherwise dispose of any Option or of any right or privilege conferred by the
Plan contrary to the provisions thereof, or upon the sale, levy or attachment or
similar process upon the rights and privileges conferred by the Plan, such
Option shall thereupon terminate and become null and void.
5. Investment Intent. By accepting the option, the Optionee represents and
agrees that none of the shares of Common Stock purchased upon exercise of the
Option will be distributed in violation of applicable federal and state laws and
regulations.
6. Termination of Employment and Options. Vested Options shall terminate,
to the extent not previously exercised, upon the occurrence of the first of the
following events:
(i) Expiration: Five (5) years.
(ii) Termination for Cause: The date of an Optionee's termination of
employment or contractual relationship with the Company or any Related
Corporation for cause (as determined in the sole discretion of the Plan
Administrator).
(iii) Termination Due to Death or Disability: The expiration of one (1)
year from the date of the death of the Optionee or cessation of an
Optionee's employment or contractual relationship by reason of Disability
(as defined in Section 5(g) of the Plan). If an Optionee's employment or
contractual relationship is terminated by death, any Option held by the
Optionee shall be exercisable only by the person or persons to whom such
Optionee's rights under such Option shall pass by the Optionee's will or by
the laws of descent and distribution.
(iv) Termination Due to Cessation of Service as a Director: The expiration
of
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sixty (60) days from the date an Optionee ceases to serve as a director of
the Company.
Each unvested Option granted pursuant hereto shall terminate immediately upon
termination of the Optionee's employment or contractual relationship with the
Company for any reason whatsoever, including death or Disability unless vesting
is accelerated in accordance with Section 5(f) of the Plan.
7. Stock. In the case of any stock split, stock dividend or like change in
the nature of shares of Stock covered by this Agreement, the number of shares
and exercise price shall be proportionately adjusted as set forth in Section
5(m) of the Plan.
8. Exercise of Option. Options shall be exercisable, in full or in part, at
any time after vesting, until termination; provided, however, that any Optionee
who is subject to the reporting and liability provisions of Section 16 of the
Securities Exchange Act of 1934 with respect to the Common Stock shall be
precluded from selling or transferring any Common Stock or other security
underlying an Option during the six (6) months immediately following the grant
of that Option. If less than all of the shares included in the vested portion of
any Option are purchased, the remainder may be purchased at any subsequent time
prior to the expiration of the Option term. No portion of any Option for less
than fifty (50) shares (as adjusted pursuant to Section 5(m) of the Plan) may be
exercised; provided, that if the vested portion of any Option is less than fifty
(50) shares, it may be exercised with respect to all shares for which it is
vested. Only whole shares may be issued pursuant to an Option, and to the extent
that an Option covers less than one (1) share, it is unexercisable.
Each exercise of the Option shall be by means of delivery of a notice of
election to exercise (which may be in the form attached hereto as Exhibit A) to
the Secretary of the Company at its principal executive office, specifying the
number of shares of Common Stock to be purchased and accompanied by payment in
cash by certified check or cashier's check in the amount of the full exercise
price for the Common Stock to be purchased. In addition to payment in cash by
certified check or cashier's check, an Optionee or transferee of an Option may
pay for all or any portion of the aggregate exercise price by complying with one
or more of the following alternatives:
(i) by delivering to the Company shares of Common Stock previously held by
such person or by the Company withholding shares of Common Stock otherwise
deliverable pursuant to exercise of the Option, which shares of Common
Stock received or withheld shall have a fair market value at the date of
exercise (as determined by the Plan Administrator) equal to the aggregate
purchase price to be paid by the Optionee upon such exercise;
(ii) by delivering a properly executed exercise notice together with
irrevocable instructions to a broker promptly to sell or margin a
sufficient portion of the shares and deliver directly to the Company the
amount of sale or margin loan proceeds to pay the exercise price; or
3
(iii) by complying with any other payment mechanism approved by the Plan
Administrator at the time of exercise.
9. Holding Period for Incentive Stock Options. Period for Incentive Stock
Options. In order to obtain the tax treatment provided for Incentive Stock
Options by Section 422 of the Code, the shares of Common Stock received upon
exercising any Incentive Stock Options received pursuant to this Agreement must
be sold, if at all, after a date which is later of two (2) years from the date
of this agreement is entered into and one (1) year from the date upon which the
Options are exercised. The Optionee agrees to report sales of such shares prior
to the above determined date to the Company within one (1) business day after
such sale is concluded. The Optionee also agrees to pay to the Company, within
five (5) business days after such sale is concluded, the amount necessary for
the Company to satisfy its withholding requirement required by the Code in the
manner specified in Section 5(l)(2) of the Plan. Nothing in this Section 9 is
intended as a representation that Common Stock may be sold without registration
under state and federal securities laws or an exemption therefrom, or that such
registration or exemption will be available at any specified time.
10. Subject to 1999 Stock Option Plan . The terms of the Options are
subject to the provisions of the Plan, as the same may from time to time be
amended, and any inconsistencies between this Agreement and the Plan, as the
same may be from time to time amended, shall be governed by the provisions of
the Plan, a copy of which has been delivered to the Optionee, and which is
available for inspection at the principal offices of the Company
11. Professional Advice. The acceptance of the Options and the sale of
Common Stock issued pursuant to the exercise of Options may have consequences
under federal and state tax and securities laws which may vary depending upon
the individual circumstances of the Optionee. Accordingly, the Optionee
acknowledges that he has been advised to consult his personal legal and tax
advisor in connection with this Agreement and his dealings with respect to
Options for the Common Stock. Without limiting other matters to be considered,
the Optionee should consider whether upon the exercise of Options, the Optionee
will file an election with the Internal Revenue Service pursuant to Section
83(b) of the Code.
12. No Employment Relationship. Whether or not any Options are to be
granted under this Plan shall be exclusively within the discretion of the Plan
Administrator, and nothing contained in this Plan shall be construed as giving
any person any right to participate under this Plan. The grant of an Option
shall in no way constitute any form of agreement or understanding binding on the
Company or any Related Company, express or implied, that the Company or any
Related Company will employ or contract with an Optionee for any length of time,
nor shall it interfere in any way with the Company's or, where applicable, a
Related Company's right to terminate Optionee's employment at any time, which
right is hereby reserved,
13. Entire Agreement. This Agreement is the only agreement between the
Optionee and the Company with respect to the Options, and this Agreement and the
Plan supersede all prior and contemporaneous oral and written statements and
representations and contain the entire agreement between the parties with
respect to the Options
4
14. Notices. Any notice required or permitted to be made or given hereunder
shall be mailed or delivered personally to the addresses set forth below, or as
changed from time to time by written notice to the other:
The Company: SportsPrize Entertainment Inc.
000 X. Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxxx Xxxxx, Xxxxxxxxxx
00000
Attention: President
The Optionee: Xxxxxx Xxxxxxxx
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx
00000
Sportsprize Entertainment Inc.
By: -------------------------- -----------------------------------
Xxxxxx Xxxxxxxx
Its:--------------------------
THERE MAY NOT BE PRESENTLY AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS FOR THE ISSUANCE OF
SHARES OF STOCK UPON EXERCISE OF THESE OPTIONS. ACCORDINGLY, THESE OPTIONS
CANNOT BE EXERCISED UNLESS THESE OPTIONS AND THE SHARES OF STOCK TO BE ISSUED
UPON EXERCISE OF THESE OPTIONS ARE REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
THE SHARES OF STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933
AND WILL BEAR A LEGEND RESTRICTING RESALE UNLESS THEY ARE REGISTERED UNDER STATE
AND FEDERAL SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
COMPANY IS NOT OBLIGATED TO REGISTER THE SHARES OF STOCK OR TO MAKE AVAILABLE
ANY EXEMPTION FROM REGISTRATION.
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EXHIBIT A
---------
Notice of Election to Exercise
------------------------------
This Notice of Election to Exercise shall constitute proper notice pursuant
to Section 5(h) of the Sportsprize Entertainment Inc. 1999 Stock Option Plan
(the "Plan") and Section 8 of that certain Stock Option Agreement (the
"Agreement") dated as of the --- day of ----, 1999 between Sportsprize
Entertainment Inc. (the "Company") and the undersigned.
The undersigned hereby elects to exercise Optionee's option to purchase
-------- shares of the common stock of the Company at a price of $-------- per
share, for aggregate consideration of $-------- , on the terms and conditions
set forth in the Agreement and the Plan. Such aggregate consideration, in the
form specified in Section 8 of the Agreement, accompanies this notice.
The undersigned has executed this Notice this ---- day of ---------, 19--.
------------------------------------
Signature
------------------------------------
Name (typed or printed)
