Exhibit 4.1
Date of Grant: September 7, 2004
INTERNATIONAL DISPLAYWORKS, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made by and International DisplayWorks, Inc. (the
"Company") and Xxxxxx X. Xxxxx (the "Optionee"), as of September 7, 2004.
In consideration of the mutual covenants contained herein and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee, in the manner
and subject to the conditions hereinafter provided, the right, privilege and
option to purchase (the "Option") an aggregate of One Million (1,000,000) shares
of the Company's common stock, no par value (the "Stock").
2. Term of Option. Subject to the terms, conditions, and restrictions set forth
herein, the expiration date shall be September 7, 2011 (the "Expiration Date").
Any portion of this Option not exercised prior to the Expiration Date shall
thereupon become null and void.
3. Exercise of Option.
3.1. Vesting of Option. This Option shall become exercisable as follows:
Number of Shares of Stock Vesting Date
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250,000 October 15, 2005
250,000 October 15, 2006
250,000 October 15, 2007
250,000 October 15, 2008
Each of the foregoing dates shall be referred to as a "Vesting Date" for
that portion of this Option vested on such date ("Vested Portion").
All or any portion of the Stock underlying a Vested Portion of this Option
may be purchased during the term of this Option, but not less than 10,000 shares
of Stock (unless the remaining shares then constituting the Vested Portion of
this Option, are less than 10,000 shares of Stock) at any time.
3.2. Manner of Exercise. The Vested Portion of this Option may be exercised
from time to time, in whole or in part, by presentation of a Request to Exercise
Form, substantially in the form attached hereto, to the Company at its principal
office, which Request to Exercise Form must be duly executed by the Optionee and
accompanied by payment, subject to any legal restrictions, by: (a) cash; (b)
check payable to the Company; or (c) any combination of the foregoing, in the
aggregate amount of the Exercise Price (as defined below), multiplied by the
number of shares of Stock the Optionee is purchasing at such time, subject to
reduction for withholding for tax obligations as provided in Section 15.
Upon receipt and acceptance by the Company of such Form accompanied by the
payment specified, the Optionee shall be deemed to be the record owner of the
Stock purchased, notwithstanding that the stock transfer books of the Company
may then be closed or that certificates representing the Stock purchased under
this Option may not then be actually delivered to the Optionee.
3.3. Exercise Price. The exercise price (the "Exercise Price") payable upon
exercise of this Option shall be $3.85 per share of Stock.
4. Exercise after Certain Events.
4.1. Termination of Employment. If for any reason, other than permanent and
total disability (as defined below) or death of the Optionee, the Optionee
ceases to be employed by the Company or a Subsidiary, this Option if held at the
date of such termination (to the extent then exercisable), may be exercised, in
whole or in part, at any time within three months after the date of such
termination or less period specified herein, but in no event after the
Expiration Date.
4.2. Permanent Disability and Death. If the Optionee becomes permanently
and totally disabled (within the meaning of Section 22(e)(3) of the Code) or
dies while employed by the Company or a Subsidiary, (or, if the Optionee dies
within the period that this Option remains exercisable after termination of
employment), this Option may be exercised, in whole or in part, by the Optionee,
the Optionee's personal representative, or by the person to whom this Option is
transferred by will or the laws of descent and distribution, in whole or in
part, at any time within one year after the disability or death, but in no event
after the Expiration Date.
5. Restrictions on Transfer of Option. This Option is not transferable by the
Optionee other than by will or by the laws of descent and distribution. During
the lifetime of Optionee, only Optionee, his guardian or legal representative
may exercise the Option. The Optionee may designate a beneficiary to exercise
his Options after the Optionee's death.
6. Adjustment for Changes in Capitalization. The existence of this Option
shall not affect the Company's right to effect adjustments, recapitalizations,
reorganizations or other changes in its or any other corporation's capital
structure or business, any merger or consolidation, any issuance of bonds,
debentures, preferred or prior preference stock ahead of or affecting the Stock,
the dissolution or liquidation of the Company's or any other corporation's
assets or business or any other corporate act whether similar to the events
described above or otherwise. Subject to Section 7, if the outstanding shares of
the Stock are increased or decreased in number or changed into or exchanged for
a different number or kind of securities of the Company or any other corporation
by reason of a recapitalization, reclassification, stock split, combination of
shares, stock dividend or other event, an appropriate adjustment of the number
and kind of securities with respect to which Options may be granted under the
Plan, the number and kind of securities as to which outstanding Options may be
exercised and the exercise price at which outstanding Options may be exercised
will be made.
7. Dissolution, Liquidation, Merger.
7.1. Company Not The Survivor. In the event of a dissolution or liquidation
of the Company, a merger, consolidation, combination or reorganization in which
the Company is not the surviving corporation, or a sale of substantially all of
the assets of the Company (as determined in the sole discretion of the Board of
Directors), the Committee, in its absolute discretion, may cancel this Option
upon payment in cash to the Optionee of the amount by which any cash and the
fair market value of any other property which the Optionee would have received
as consideration for the shares of Stock covered by Option, if this Option had
been exercised before such liquidation, dissolution, merger, consolidation,
combination, reorganization or sale exceeds the exercise price of this Option or
negotiate to have this Option assumed by the surviving corporation.
7.2. Company is the Survivor. In the event of a merger, consolidation,
combination or reorganization in which the Company is the surviving corporation,
the Board of Directors shall determine the appropriate adjustment of the number
and kind of securities with respect to which this Option may be exercised, and
the exercise price at which this Option may be exercised. The Board of Directors
shall determine, in its sole and absolute discretion, when the Company shall be
deemed to survive for purposes of this Plan.
8. Change of Control. If there is a change of control in the Company, all
outstanding Options shall fully vest immediately upon the Company's public
announcement of such a change. A "change of control" shall mean an event
involving one transaction or a related series of transactions, in which (i) the
Company issues securities equal to more than 50% of the Company's issued and
outstanding voting securities, determined as a single class, to any individual,
firm, partnership, limited liability company, or other entity, including a
"group" within the meaning of SEC Exchange Act Rule 13d-3, (ii) the Company
issues voting securities equal to more than 50% of the issued and outstanding
voting stock of the Company in connection with a merger, consolidation other
business combination, (iii) the Company is acquired in a merger or other
business combination transaction in which the Company is not the surviving
company, or (iv) all or substantially all of the Company's assets are sold or
transferred. See Section 7 with respect to Options vesting upon the occurrence
of either of the events described in (iii) or (iv) of this Section 8 and the
result upon the non-exercise of the Options.
9. Suspension and Termination. In the event the Board or the Committee
reasonably believes the Optionee has committed an act of misconduct including,
but limited to acts specified below, the Committee may suspend the Optionee's
right to exercise this Option granted hereunder pending final determination by
the Board or the Committee. If the Committee determines that the Optionee has
committed an act of embezzlement, fraud, breach of fiduciary duty or deliberate
disregard of the Company rules or rules made by a supervisor, or if the Optionee
makes an unauthorized disclosure of any Company trade secret or confidential
information, engages in any conduct constituting unfair competition, induces any
Company customer to breach a contract with the Company or induces any principal
for whom the Company acts as agent to terminate such agency relationship,
neither the Optionee nor his or her estate shall be entitled to exercise any
Option hereunder. In making such determination, the Board or the Committee shall
give the Optionee an opportunity to appear and present evidence on the
Optionee's behalf. The determination of the Board or the Committee shall be
final and conclusive.
10. Compliance with Securities Laws. The Company shall not be obligated to
issue any shares of Stock upon exercise of this Option unless such shares are at
that time effectively registered or exempt from registration under the federal
securities laws and the offer and sale of the shares of Stock are otherwise in
compliance with all applicable securities laws. Upon exercising all or any
portion of this Option, the Optionee may be required to furnish representations
or undertakings deemed appropriate by the Company to enable the offer and sale
of the shares of Stock or subsequent transfers of any interest in such shares to
comply with applicable securities laws. Evidence of ownership of shares of Stock
acquired upon exercise of Options shall bear any legend required by, or useful
for purposes of compliance with, applicable securities laws or this Option.
11. Reservation of Shares of Stock. The Company agrees that prior to the
earlier of the expiration of this Option or the exercise and purchase of the
total number of shares of Stock represented by this Option, there shall be
reserved for issuance and delivery upon exercise of this Option such number of
the Company's authorized and unissued shares as shall be necessary to satisfy
the terms and conditions of this Agreement.
12. No Rights as Shareholder. The Optionee shall have no rights as a shareholder
with respect to any shares of Stock covered by this Option. The Optionee shall
have no right to vote any shares of Stock, or to receive distributions of
dividends or any assets or proceeds from the sale of Company assets upon
liquidation until such Optionee has effectively exercised this Option and fully
paid for such shares of Stock. Subject to Sections 7 and 8, no adjustment shall
be made for dividends or other rights for which the record date is prior to the
date title to the shares of Stock has been acquired by the Optionee.
13. No Rights to Employment or Continued Employment. The grant of this Option
shall in no way be construed so as to confer on the Optionee the rights to
employment or continued employment by the Company or any Subsidiary. Nothing
hereunder shall confer upon the Optionee any right to employment or to continue
in the employ or consultancy of the Company or any Subsidiary, or to interfere
with or restrict in any way the rights of the Company, which are hereby
expressly reserved, to terminate or discharge the Optionee at any time for any
reason whatsoever, with or without cause.
14. Participation in Option Plans. The grant of this Option shall not prevent
the Optionee from participating or being granted options in option plans,
provided, however, that the Optionee meets the eligibility requirements and such
participation or grant does not prevent the plan from meeting the requirements
of the Internal Revenue Code of 1986, as amended.
15. Payment of Taxes. Upon the exercise of the Option, the Company shall have
the right to require the Optionee or such other person to pay by cash, or check
payable to the Company, the amount of any required withholding on applicable
federal, state, and local taxes and FICA with respect to such transactions. Any
such payment must be made promptly when the amount of such obligation becomes
determinable (the "Tax Date"). To the extent permissible under applicable tax,
securities and other laws, the Committee may, in its sole discretion and upon
such terms and conditions as it may deem appropriate, permit the Optionee to
satisfy his obligation to pay any such tax, in whole or in part, up to an amount
not greater than the employer's minimum statutory withholding based on the
minimum statutory withholding rates, by (a) directing the Company to apply
shares of Stock to which the Optionee is entitled as a result of the exercise of
this Option, or (b) delivering to the Company shares of Stock owned by the
Optionee. The shares of Stock so applied or delivered in satisfaction of the
Optionee's tax withholding obligation shall be valued at their Fair Market Value
as of the date of measurement of the amount of income subject to withholding.
16. Arbitration. Any controversy, dispute, or claim arising out of or relating
to this Option which cannot be amicably settled including, but not limited to,
the suspension or termination of the Optionee's right in accordance with Section
9 above, shall be settled by arbitration. Said arbitration shall be conducted in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association at a location selected by the arbitrator(s) within the County of
Sacramento.
16.1. Initiation of Arbitration. After seven (7) days prior written notice
to the other, either party hereto may formally initiate arbitration under this
Agreement by filing a written request therefore, and paying the appropriate
filing fees, if any.
16.2. Hearing and Determination Dates. The hearing before the arbitrator
shall occur within thirty (30) days from the date the matter is submitted to
arbitration. Further, a determination by the arbitrator shall be made within
forty-five (45) days from the date the matter is submitted to arbitration.
Thereafter, the arbitrator shall have fifteen (15) days to provide the parties
with his or her decision in writing. However, any failure to meet the deadlines
in this section will not affect the validity of any decision or award.
16.3. Binding Nature of Decision. The decision of the arbitrator shall be
binding on the parties. Judgment thereon shall be entered in a court of
competent jurisdiction.
16.4. Injunctive Actions. Nothing herein contained shall bar the right of
either party to seek to obtain injunctive relief or other provisional remedies
against threatened or actual conduct that will cause loss or damages under the
usual equity rules including the applicable rules for obtaining preliminary
injunctions and other provisional remedies.
16.5. Costs. The cost of arbitration, including the fees of the arbitrator,
shall initially be borne equally by the parties; provided, the prevailing party
shall be entitled to recover such costs, in addition to attorneys' fees and
other costs, in accordance with Section 19 of this Agreement.
17. Notices. All notices to be given by either party to the other shall be in
writing and may be transmitted by personal delivery, facsimile transmission,
overnight courier or mail, registered or certified, postage prepaid with return
receipt requested; provided, however, that notices of change of address or
facsimile number shall be effective only upon actual receipt by the other party.
Notices shall be delivered at the following addresses, unless changed as
provided for herein.
To the Optionee: Xxxxxx X. Xxxxx
To the Company: International DisplayWorks, Inc.
000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attn: Corporate Secretary
18. Applicable Law. This Option and the relationship of the parties in
connection with its subject matter shall be governed by, and construed under,
the laws of the State of California.
19. Attorneys Fees. In the event of any litigation, arbitration, or other
proceeding arising out of this Option, the prevailing party shall be entitled to
an award of costs, including an award of reasonable attorneys' fees. Any
judgment, order, or award entered in any such proceeding shall designate a
specific sum as such an award of attorney's fees and costs incurred. This
attorneys' fee provision is intended to be severable from the other provisions
of this Agreement, shall survive any judgment or order entered in any proceeding
and shall not be deemed merged into any such judgment or order, so that such
further fees and costs as may be incurred in the enforcement of an award or
judgment or in defending it on appeal shall likewise be recoverable by further
order of a court or panel or in a separate action as may be appropriate.
20. Binding Effect. This Agreement shall inure to the benefit of, and be binding
upon, the parties hereto and their respective heirs, executors, and successors.
21. Counterparts. This Option Agreement may be executed in one or more
counterparts, each of which when taken together shall constitute one and the
same instrument.
22. Tax Effect. The federal tax consequences of stock options are complex and
subject to change. The Optionee should consult with his tax advisor before
exercising any Option or disposing of any Shares acquired upon the exercise of
an Option.
IN WITNESS WHEREOF, this Option Agreement has been executed as of the ___
day of September 7, 2004 at Rocklin, California.
THE COMPANY:
INTERNATIONAL DISPLAYWORKS, INC.
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Xxxxxxx X. Xxxxxxx, Chairman
THE OPTIONEE:
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Xxxxxx X. Xxxxx, an Individual
REQUEST TO EXERCISE FORM
Dated:______________
The undersigned hereby irrevocably elects to exercise all or part, as
specified below, of the Vested Portion of the option ("Option") granted to him
or her pursuant to a certain stock option agreement ("Agreement") effective
_____________________, between the undersigned and International DisplayWorks,
Inc. (the "Company") to purchase an aggregate of _________ shares of the
Company's common stock, no par value (the "Stock").
The undersigned hereby tenders cash in the amount of $ ________ per share
multiplied by ____________, the number of shares of Stock he or she is
purchasing at this time, for a total of $_____________.
INSTRUCTIONS FOR REGISTRATION OF SHARES
IN COMPANY'S TRANSFER BOOKS
Name:__________________________________________
(Please type or print in block letters)
Address:__________________________________________
__________________________________________
Signature: __________________________________________
Accepted by International DisplayWorks, Inc.
By: ____________________________
____________________________
Name
____________________________
Title
