Galaxy Enterprises, Inc.
Incentive Stock Option Agreement
This Incentive Stock Option Agreement is made and entered into by and
between Galaxy Enterprises, Inc. a Nevada Corporation ("Company"),
and ("Optionee")
as of the day of 19 with respect to the
following facts:
A. During October, 1997, The Board of Directors of the Company adopted
the Galaxy Enterprises, Inc. Employee Stock Option Plan ("Plan") to authorize
the Company to grant incentive stock options and non-qualified stock options
under the Plan to employees and non-employee directors of the Company or any
of its subsidiaries;
B. During 1998, the shareholders of the Company approved the Plan as so
adopted;
C. Optionee has received and reviewed a copy of the Plan; and
D. Optionee is an employee or a non-employee director of the Company or
one of its subsidiaries.
NOW THEREFORE, in consideration of the premises and intending to be
legally bound, the parties agree as follows:
1 . Grant of Option. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Optionee an incentive stock option
("Option") to
purchase from the Company,
at the price of Dollars ($ per share,
) shares of the Company's
authorized and unissued or reacquired shares of
common stock, of $.007 par
value per share.
2. Incentive Stock Option. The Option granted to Optionee pursuant to
this Agreement is intended to qualify as an "incentive stock option" under
section 422 of the Internal Revenue Code of 1954, as amended ("Code").
3. Administration. The Plan provides that it shall be administered by
the Board of Directors of the Company ("Board"), or, in the Board's sole
discretion, by a committee ("Committee") consisting of not less than three (3)
individuals, at least two (2) of whom shall be members of the Board. Subject
to the provisions of the Plan, the Board or the Committee shall have authority
to construe and interpret the Plan and this Agreement, to promulgate, amend,
and rescind rules and regulations relating to the administration of the Plan
and this Agreement, and to make all of the determinations necessary or
advisable for administration of the plan and this Agreement. The
interpretation and construction by the Board or the Committee of any provision
of this agreement, shall be final and binding upon all parties. No member of
the Board or the Committee shall be liable for any action or determination
undertaken or made in good faith with respect to the Plan or this Agreement.
4. Term of Option. Unless earlier exercised pursuant to Section 5 of
this Agreement, the Option shall terminate on, and shall not be exercisable
after the expiration of the earliest of: (a) ten (10) years after the date
first above written, (b) three (3) months after the date Optionee's employment
with the Company and its subsidiaries terminates if such termination is for
any reason other than permanent disability, death, or cause, unless Optionee
dies or becomes permanently disabled within three (3) months after the date of
such termination, (c) thirty (30) days after the date Optionee's employment
with the Company and its subsidiaries terminates if such termination is for
cause, as determined by the Board or the Committee, in its sole discretion,
and (d) one (1) year after the date Optionee's employment with the Company and
its subsidiaries terminates if such termination is the result of death or
permanent disability or the optionee dies or becomes permanently disabled
within three (3) months after the date of such termination. For purposes of
this Agreement "permanent disability" shall mean a disability of the type
defined in Section 22(e)(3) of the Internal Revenue Code of 1954, as amended.
5. Exercise.
5.1 Exercisability. Subject to the terms and conditions of this
Agreement, the Option shall become exercisable with respect to
shares of common stock of the Company on and with respect to an
additional (_) shares of common stock of the Company
on of each consecutive calendar year thereafter until the Option has
become exercisable with respect to the total number of shares of common stock
of the Company set forth in Section 1 of this agreement. The Option may be
exercised by Optionee with respect to any shares of common stock of the
Company covered by the Option at any time on or after the date on which the
Option becomes exercisable with respect to such shares; provided that the
Option may not be exercised at any one time with respect to less than ten (10)
shares of common stock of the Company, unless the number of shares with
respect to which the Option is exercised is the total number of shares with
respect to which the Option is exercisable at that time.
5.2 Acceleration of Exercisability. If at any time during the
term of this Option there is outstanding (as that term is defined in Section 7
hereof) an incentive stock option (the "Latter Option") which was granted
after the granting of this Option and so long as the Later Option so provides,
Optionee may accelerate the date on which this Option becomes exercisable with
respect to such number of shares of common stock as the Later Option is then
exercisable (but not in excess of the total number of shares of common stock
the subject of this Option) by delivering written notice of such acceleration
to the Company; provided that: (a) Optionee must exercise this Option with
respect to the total number of shares of common stock for which the exercise
date is accelerated, (b) the Later Option thereupon shall cease to be
exercisable with respect to such number of shares of common stock and
thereafter shall become exercisable with respect to such number of shares of
common stock on the date on which this Option otherwise would have become
exercisable with respect to such number of shares of common stock, and (c) the
number of shares of common stock for which the exercise date is accelerated
may not be less than the lesser of (i) the total number of shares then subject
to this Option and (ii) the total number of shares with respect to which the
Later Option is then exercisable.
5.3 Notice of Exercise. Optionee shall exercise the Option by
delivering to the Company, either in person or by certified or registered
mail, written notice of election to exercise and payment in full of the
purchase price as provided in Section 5.4 of this Agreement. The written
notice shall set forth the whole number of shares with respect to which the
Option is being exercised.
5.4 Payment of Purchase Price. The purchase price for any shares
of common stock of the Company with respect to which Optionee exercises this
Option shall be paid in full at the time Optionee delivers to the Company the
written notice of election to exercise. The purchase price shall be paid in
cash, by check or, at the discretion of the Board or the Committee, upon such
terms and conditions as the Board or the Committee shall approve, by
transferring to the Company for redemption shares of common stock of the
Company at their fair market value determined in the manner provided in the
Plan. Notwithstanding the foregoing, the Company may extend and maintain, or
arrange for the extension and maintenance of, credit to Optionee to finance
payment of the purchase price on such terms as may be approved by the Board or
the Committee.
6. Issuance of Shares. Promptly after the Company's receipt of the
written notice of election provided for in Section 5.2 hereof and Optionee's
payment in full of the purchase price, the Company shall deliver, or cause to
be delivered to Optionee, certificates for the whole number of shares with
respect to which the Option is being exercised by Optionee. Shares shall be
registered in the name of Optionee. If any law or regulation of the Securities
and Exchange Commission or of any other federal or state governmental body
having jurisdiction shall require the Company or Optionee to take any action
prior to issuance to Optionee of the shares of common stock of the Company
specified in the written notice of election to exercise, or if any listing
agreement between the Company and any national securities exchange requires
such shares to be listed prior to issuance, the date for the delivery of such
shares shall be adjourned until the completion of such action and/or such
listing.
7. Fractional Shares.. In no event shall the Company be required to
issue fractional shares upon the exercise of all or any portion of the option.
8. Rights as a Shareholder. Optionee shall have no rights as a
shareholder of the Company with respect to any shares covered by the Option
until the date of the issuance of a share certificate for such shares. Except
as provided in Section 11 of this Agreement, no adjustment shall be made for
dividends (ordinary or extraordinary, whether cash, securities, or other
property) or distributions or other rights for which the record dates is prior
to the date such share certificate is issued.
9. Termination of Employment, Disability, or Death. In the event
Optionee ceases to be an employee of the Company and its subsidiaries for any
reason other than the termination of his employment for cause (as such cause
may be determined by the Board or the Committee, in its sole discretion) while
still living, the Option or unexercised portion thereof may, to the extent
(but only to the extent) that it would have been exercisable by Optionee on
the date on which Optionee ceased to be an employee, be exercised by Optionee
within three (3) months after the date on which Optionee ceased to be an
employee, but in no event after the date of expiration of the Option. In the
event of the death or disability (as defined in the Plan) of Optionee while
Optionee is an employee of the Company or any of its subsidiaries or within
not more than three (3) months after the date on which Optionee ceased to be
an employee of the Company or any of its subsidiaries, any unexercised portion
of the Option, to the extent (but only to the extent) exercisable by Optionee
on the date of death or disability, may be exercised by Optionee or, if
Optionee is then deceased, by Optionee's personal representatives, heirs, or
legatees at any time prior to the expiration of one (1) year from the date on
which Optionee ceased to be an employee of the Company or any of its
subsidiaries, but in no event after the termination of the Option.
Notwithstanding the foregoing, in the event that Optionee's employment with
the Company or any of its subsidiaries is terminated for cause, as determined
by the Board or the Committee, in its sole discretion, the Option or the
unexercised portion thereof may, to the extent (and only to the extent) the
Option would have been exercisable by Optionee on the date on which his or her
employment with the Company or any of its subsidiaries was terminated, be
exercised by Optionee within thirty (30) days after the date on which his or
her employment was terminated, but in any event not later than the earlier of
(i) the date of expiration of the Option, and (ii) the date of expiration of
such 30-day period, regardless of whether or not Optionee dies or becomes
permanently disabled within such 30-day period. Notwithstanding anything in
this Agreement to the contrary, the Option may not be exercised, and shall not
be or become exercisable, after the date of the termination of Optionee's
employment with the Company and its subsidiaries (regardless of the cause of
such termination of employment) except with respect to that number of shares
of common stock of the Company with respect to which the Option was
exercisable on the date of the termination of Optionee's employment.
10. Recapitalization or Reorganization of Company. Except as otherwise
provided herein, appropriate and proportionate adjustments shall be made in
the number and class of shares subject to the Option and the purchase price of
such shares in the event of a stock dividend (but only on common stock), stock
split, reverse stock split, recapitalization, reorganization, merger,
consolidation, separation, or like change in the capital structure of the
Company. In the event of a liquidation of the Company or a merger,
reorganization, or consolidation of the Company with any other corporation in
which the Company is not the surviving corporation or the Company becomes a
wholly-owned subsidiary of another corporation, any unexercised portion of the
Option shall be deemed canceled unless the surviving corporation in any such
merger, reorganization, or consolidation elects to assume the Option or to
issue substitute options in place thereof. Notwithstanding the foregoing, if
the Options otherwise would be canceled in accordance with the preceding
sentence, Optionee shall have the right, exercisable during a thirty-day
period ending on the fifth day prior to such liquidation, merger, or
consolidation, to exercise the Option in whole or in part without regard to
the installment exercise provisions of Section 5.1 hereof. To the extent that
the foregoing adjustments relate to stock or securities of the Company, such
adjustments shall be made by the Board or the Committee, the determination of
which shall be final, binding, and conclusive; provided that the Option shall
not be adjusted in a manner that causes it to fail to continue to qualify as
an incentive stock option within the meaning of Section 422 of the Code.
11. No Transfer of Option. Optionee may not transfer all or any part of
the Option except by Will or the laws of descent and distribution, and the
Option shall not be exercisable during the lifetime of Optionee by any person
other than Optionee or, in the event of the disability (as defined in the
Plan) of Optionee, Optionee's personal representative.
12. Investment Representation. Optionee hereby represents and warrants
to, and agrees with, the Company that, if he exercises the Option in whole or
in part at a time when there is not in effect under the Securities Act of
1933, as amended, a registration statement covering the shares issuable upon
exercise of the Option and available for delivery a prospectus meeting the
requirements of Section 10 of said Act, that Optionee may be required, as a
condition of issuance of the shares of common stock of the Company covered by
the Option, to represent to the Company that the shares issued pursuant to the
exercise of the Option are being acquire for investment and without a view to
distribution thereof; and that in such case the Company may place a legend on
the Certificates(s) evidencing the shares of the common stock of the Company
issued upon exercise of the Option reflecting the fact that the shares were
acquired for investment and cannot be sold or transferred unless registered
under said Act or unless counsel for the Company is satisfied that the
circumstances of the proposed transfer do not require such registration,
because there exists a valid exemption from the registration requirements of
said act.
13. Restriction on Transfer. Optionee shall not sell, assign, pledge,
hypothecate or otherwise transfer, whether or not for value, any or all of the
shares of the capital stock or the Company subject to the restrictions of this
Section 14 except in strict compliance with the terms of this Agreement. Any
transfer or attempted transfer of any of such shares which is not in strict
compliance with the terms of this Section 14 shall be null and void.
13.1 Stock Subject to Restriction. All of the shares of common
stock of the Company acquired by optionee upon exercise of the Option, as well
as (a) all shares of the capital stock or other securities of the Company
hereafter received by Optionee as a dividend or other distribution upon or
with respect to such shares, and (b) all shares of capital stock or other
securities of the Company into which such shares hereafter may be exchanged or
for which such shares may be exchanged, whether through reorganization,
recapitalization, stock split-ups or the like, shall be subject to the
provisions of this Agreement and shall be referred to as the "Restricted
Shares".
13.2 Option to Purchase. The Company and its nominee jointly and
severally shall have the option to purchase all, but not less than all, of the
Restricted Shares on the occurrence of any of the following events:
(a) Optionee agrees to sell, assign, pledge, hypothecate or otherwise
transfer, whether or not for value, any or all of the Restricted Shares or any
interest therein;
(b) Optionee is forced to transfer any or all of the Restricted Shares,
or any interest therein, in an involuntary transfer, including but not limited
to, a transfer pursuant to the entry of a court order or the enforcement of
any judgement;
(c) The filing of a voluntary or involuntary petition in bankruptcy by
or with respect to Optionee (other than an involuntary petition which is
dismissed within sixty (60) days after the date of filing the petition) or the
making by Optionee of an assignment for the benefit of creditors of the
employee; and
(d) Optionee's employment with the Company or any of its subsidiaries
is terminated for any reason.
Notwithstanding the foregoing, Optionee may, with the prior approval of the
Board or the Committee, transfer any of the Restricted Shares to other
employees of the Company or to his or her spouse or children or to a trust for
their benefit; provided that any such transferees shall acknowledge in writing
prior to such transfer that the transferred shares shall remain subject to the
provisions of this Section 14.
13.3 Notice. Optionee shall deliver to the Company within ten
(10) days after the occurrence of any of the events described in Section 14.2
above, written notice of the occurrence of such event. With respect to a
transfer described in paragraph (a) of Section 14.2 above, Optionee shall
specify in the written notice the identity of the proposed transferee, the
purchase price Optionee will receive in the proposed transfer, and the other
terms and conditions of the proposed transfer. The Company and/or its nominee
shall exercise, if at all, their options to purchase such shares within thirty
(30) days after the Company's receipt of written notice of the occurrence of
any such event. If the Company and/or its nominee do not exercise their
options to purchase such shares within such 30-day period, the options of the
Company and/or its nominee to purchase the shares covered by such written
notice shall terminate and Optionee thereafter shall be free to transfer such
shares without further complying with the provisions of this Section 14;
provided that if the written notice relates to a voluntary transfer of the
shares by Optionee in a transfer described in paragraph (a) of Section 14.2
above and the identity of the proposed transferee or the terms and conditions
of the proposed transfer are changed from those specified in the written
notice or the transfer is not completed within forty-five (45) days after the
expiration of the 30-day period Optionee shall be required to comply with the
provisions of this Section 14 to the same extent is if Optionee had not
previously given notice of such intended transfer.
13.4 Purchase Price. The purchase price for the Restricted Shares
purchased by the Company and/or its nominee pursuant to this Section 14 shall
be an amount equal to the fair market value of the shares of common stock of
the Company on the date the Company and/or its nominee exercise their option
to purchase. For purposes of this Section 14, the "fair market value" of any
share of common stock of the Company at any date shall be determined as
follows: (a) the Company, its nominee and Optionee shall agree on the fair
market value within thirty (30) days after the Company's and/or its nominee's
exercise of the option to purchase provided for in Section 14.2 above; (b) if
the Company, its nominee, and the Optionee do not agree on the fair market
value within such 30-day period, the parties jointly shall select a mutually
acceptable appraiser within fifteen (15 days after the end of such 30-day
period; and (c) if the parties cannot agree on a mutually acceptable appraiser
within such 15-day period, (i) the Company and/or its nominee jointly shall
select one appraiser, (ii) Optionee shall select one appraiser, and (iii) the
two appraisers so selected shall select a third mutually acceptable appraiser.
The fair marker value of the common stock shall be the value determined by the
appraiser, if only one appraiser is selected, or the average of the values
determined by all of the appraisers, if more than one appraiser is selected.
The Company and its nominee jointly shall pay one-half (1/2) of the cost of
the appraisal and the Optionee shall pay one-half (1/2) of the cost of the
appraisal. Except upon a showing of fraud, corruption or undue influence by
any party or appraiser, the fair market value determined by such appraisers
shall be conclusive for all purposes under this Section 14. Notwithstanding
anything in this Section 14 to the contrary, in no event shall the "fair
market value" of the common stock of the Company with respect to the transfer
described in paragraph (a) of Section 14.2 above exceed the purchase price
specified in the written notice provided by optionee pursuant to Section 14.3
above.
13.5 Payment. The purchase price for any Restricted Shares
purchased by the Company and/or its nominee pursuant to this Section 14 shall
be paid in full upon Optionee's transfer of the Restricted Shares to the
Company and/or its nominee, in cash, or by check; provided that if the Company
extended or arranged for the extension of any credit to Optionee to finance
Optionee's purchase of the Restricted Shares upon the exercise of the Option
and Optionee has not yet satisfied in full such credit obligation, the Company
may pay all or a portion of its purchase price by canceling the unpaid portion
of such credit obligation of Optionee.
13.6 Transfer Date. The Company shall designate a date, not less
than ten (10) nor more than forty-five (45) days after the date of the
Company's and/or its nominee's exercise of their options to purchase the
Restricted Shares, on which Optionee shall transfer the Restricted Shares to
the Company and/or its nominee and the Company and/or its nominee shall pay
the purchase price to Optionee.
13.7 Joint Exercise. Optionee acknowledges that the Company and
its nominee may exercise their options to purchase either separately or
jointly and in such proportions as they may determine, provided that together
they purchase all of the Restricted Shares held by Optionee and the subject of
the written notice specified in Section 14.3 above.
13.8 Termination of Restrictions. The provisions of this Section
14 shall lapse and be of no further force or effect from and after the date on
which the first of the following events occurs:
(a) The consummation by the Company of a bona fide underwritten public
offering of the common stock of the Company registered under the Securities
Act of 1933, as amended;
(b) The common stock of the Company is held of record by 500 or more
persons according to the stock record books of the Company; and
(c) The execution and delivery of binding agreements for the
consummation of any of the following transactions: (i) all or substantially
all of the assets and business of the Company are sold in substantially a
single transaction; or (ii) the Company is merged or consolidated with and
into another corporation and is not the surviving corporation; or (iii) eighty
percent (80%) or more in fair market value of the outstanding capital stock of
the Company is acquired by another person, firm or corporation; provided that
if any such agreements are canceled prior to the consummation of such
transactions or such transactions are otherwise abandoned prior to
consummation, the provisions of this Section 14 shall be reinstated and shall
apply to all Restricted Shares to the same extent as if no such binding
agreements had ever been entered into. For purposes of this subparagraph (c),
the granting by the Company to a third party of an option or other right to
effect in the future any of the transactions described in (i), (ii) or (iii)
above shall not constitute the execution and delivery of binding agreements
for the consummation of any of such transactions until the Company receives
written notice of the exercise of such option or right by the third party.
13.9 Legend. Optionee consents to the placement of the following
restrictive legend on each certificate representing any of the Restricted
Shares:
"NEITHER THESE SHARES NOR ANY INTEREST THEREIN MAY BE
SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
TRANSFERRED EXCEPT IN COMPLIANCE WITH THE PROVISIONS
OF THAT INCENTIVE STOCK OPTION AGREEMENT WITH THE
ISSUER, AND DATED '1 19 , A COPY OF WHICH
MAY BE OBTAINED FROM THE ISSUER, AND ANY SUCH ATTEMPTED
TRANSFER IN VIOLATION THEREOF IS NULL AND VOID AND WILL
NOT BE RECOGNIZED BY THE ISSUER."
14. Employment Relationships.
14.1 Optionee's Employment Agreement. In consideration of the
grant of the Option pursuant to this Agreement, Optionee agrees to remain in
the employ of, and to render services to, the Company or its subsidiaries for
a period of one (1) year from the date first above written, but such agreement
shall not obligate the Company or any of its subsidiaries to continue to
employ Optionee for any period. Nothing in the Plan or in this Agreement shall
confer, or be deemed to confer, upon Optionee any right to continue in the
employ of the Company or its subsidiaries or interfere in any way with any
right of the Company or its subsidiaries to terminate Optionee's employment at
any time. Optionee acknowledges that notwithstanding anything to the contrary
in any agreement regarding his employment with the Company or any of its
subsidiaries, whether written or oral, express or implied, Optionee shall have
no right to exercise all or any portion of the Option or to receive any of the
shares of common stock of the Company subject to the Option except in
accordance with and on the terms and conditions specified in this Agreement.
14.2 Effect of Transfer of Employment. The transfer of Optionee
from the employ of the Company to any one of the Company's subsidiaries, or
vise versa, or from one such subsidiary to another shall not be deemed to
constitute a termination of employment of Optionee with the Company and its
subsidiaries.
14.3 Company's Right of Termination. Neither the execution,
delivery nor performance by the Company or Optionee of this Agreement shall
impose any obligation on the Company or any of its subsidiaries to continue
the employment of Optionee or lessen or affect the right of the Company to
terminate such employment or change the duties, compensation, or other terms
of employment of Optionee.
14.4 Other Employment Benefits. The acceptance by Optionee of
this Agreement with the Company shall not affect Optionee's eligibility for
any stock option, profit sharing, pension, bonus, insurance, or other
compensation-related plan or benefit which the Company or any of its
subsidiaries may provide to employees.
15. General Provisions.
15.1 Interpretation. This Agreement is subject to all of the
terms and conditions of the Plan, and in the event of any conflict between any
of the provisions of this Agreement and any of the provisions of the Plan, the
applicable provisions of the Plan shall control. Optionee agrees that any
dispute or disagreement which may arise under or as a result of this Agreement
shall be determined by the Board in the Board's sole discretion, and any
interpretation by the Board of the terms and conditions hereof shall be final
and binding.
15.2 Entire Agreement. This Agreement contains the entire
understanding between the parties with respect to the subject matter hereof,
and supersedes any and all prior written or oral agreements between the
parties with respect to the subject matter hereof. There are no
representations, agreements, arrangements, or understandings, either written
or oral, between or among the parties with respect to the subject matter
hereof which are not set forth in this Agreement.
15.3 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Utah.
15.4 Notices. Any notice given pursuant to this Agreement may be
served personally on the party to be notified or may be mailed, with postage
thereon fully prepaid, by certified or registered mail, with return receipt
requested, addressed as set forth by the party's signature of this Agreement
or at such other address as such party may designate in writing from time to
time. Any notice given as provided in the preceding sentence shall be deemed
delivered when given, if personally served, or ten (10) business days after
mailing, if mailed.
15.5 Further Acts. Each party to this Agreement agrees to perform
such further acts and to execute and deliver such other and additional
documents as may be reasonably necessary to carry out the provisions of this
Agreement.
15.6 Severability. If any term, provision, covenant, or
condition of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, or unenforceable for any reason, such invalidity,
illegality, or unenforceability shall not affect any of the other terms,
provisions, covenants, or conditions of this Agreement, each of which shall be
binding and enforceable.
IN WITNESS WHEREOF, the parties have entered into this Incentive Stock
Option Agreement as of the date first above written.
"COMPANY" "OPTIONEE"
Galaxy Enterprises, Inc.
000 Xxxxx Xxxxxxxxxx Xxxx Xxxxx
Xxxx, Xxxx 00000 Signature of Optionee
By
Name of Optionee (type or print)
Its Street Address
City State Zip Code
