THIS AGREEMENT is made effective as of February 19, 1998, by and between
Xxxxxxx XxXxxxx (hereinafter referred to as "Optionee"), and Decora Industries,
Inc., a Delaware corporation (hereinafter referred to as "Optionor").
WHEREAS, Optionee has performed numerous valuable services to Optionor's
Decora Manufacturing subsidiary; and
WHEREAS, to compensate Optionee for his services to Optionor, Optionor
desires to grant to Optionee and Optionee is desirous of acquiring an option to
purchase shares of the common stock of Optionor, subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, the parties hereby agree as follows:
1. Incorporation of Recitals. The parties hereby incorporate by this
reference the recitals set forth above.
2. Grant of Option. Subject to the terms and conditions hereinafter set
forth, Optionor hereby gives and grants to Optionee the right and option to
purchase theretofore authorized but unissued common shares of Optionor at such
time and for the purchase price specified below.
A. From February 19, 1998, and up until and including February
18, 2003, Optionee shall have the right and option to purchase, at $6.00 per
share and Optionor shall have the obligation to issue to Optionee, 30,000 shares
of the authorized but unissued common shares of Optionor. Such options shall
vest as follows: 10,000 shall vest immediately; 10,000 shall vest on February
19, 1999 and 10,000 shall vest on February 19, 2000. Upon any termination of
Optionee's employment with Optionor (or any of its subsidiaries as applicable),
all unvested options shall terminate.
3. Exercise of Option. Optionee may exercise any option granted
hereunder by notifying Optionor in writing of its intention to exercise such
option. A closing date shall then be agreed to in good faith no later than 30
days after the notice, at which time Optionee shall pay the purchase price of
the Shares being purchased, and Optionor shall deliver to Optionee the
certificates for shares duly endorsed. Optionee may purchase all or any part of
the Shares subject to options granted hereby.
4. Representations. Optionor represents and warrants to Optionee that
Optionee, upon proper exercise, shall receive good and marketable title to the
shares of Optionor underlying the options being granted hereby, free of all
pledges, liens and encumbrances, except as stated in paragraph 5.
5. Representations and Warranties of Optionee. Optionee hereby
represents and warrants that:
A. The options granted hereby and the Shares which will be
purchased by and delivered to Optionee upon exercise of
such options are being acquired by Optionee for his own
account and not with a view to resale or other
B. Optionee will not sell, transfer, or make any other
disposition of any option or the shares to be purchased
and delivered to Optionee hereunder upon the exercise of
such option unless and until (a) such option or shares,
as applicable, are included in a registration statement
or a post-effective amendment under the Securities Act
which has been filed by the Optionor and declared
effective by the Securities and Exchange Commission (the
"SEC"), or (b) in the opinion of counsel for the
Optionor, no such registration statement or
post-effective amendment is required, or (c) the SEC has
first issued a "no action" letter regarding any such
proposed disposition of any option or the shares.
6. Federal and State Securities Law Requirements. The obligation of the
Optionor to deliver and transfer the shares to the Optionee upon any exercise of
any option shall be subject to the following:
A. Optionor may require Optionee, as an additional
condition of its obligation to deliver the shares upon
exercise of any option hereunder, to make any
representations and warranties (including without limit
those set forth in Paragraph 5 hereof) with respect to
the shares as may, in the opinion of counsel to
Optionor, be required to ensure compliance with the
Securities Act, the securities laws of any state, or any
other applicable law, regulation, or rule of any
B. Each certificate representing the shares issued pursuant
to this Agreement shall bear whatever legends are
required by federal or state law or by any governmental
agency. In particular, unless an appropriate
registration statement is filed pursuant to the
Securities Act with respect to the shares, each
certificate representing such shares shall be endorsed
on its face with the following legend or its equivalent:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SECURITIES MAY BE SOLD OR TRANSFERRED ONLY IF THEY HAVE
BEEN REGISTERED UNDER SAID ACT OR THERE EXISTS AN
EXEMPTION FROM REGISTRATION UNDER SAID ACT OR THE RULES
AND REGULATIONS THEREUNDER EVIDENCED BY A NO-ACTION
LETTER OR AN OPINION OF COUNSEL TO THE ISSUER
OR TO THE HOLDER HEREOF REASONABLY SATISFACTORY TO THE
7. Restrictions. Optionee:
A. Shall not be entitled to any type of dividend declared
by Optionor, unless and until an option is exercised;
B. Shall not be entitled to any voting rights by virtue of
an option; and
C. Acknowledges that the options granted hereby are
personal to Optionee and that Optionee may not sell,
assign, transfer or otherwise dispose of such options to
any other person.
8. Anti-Dilution. If prior to the exercise of any option granted
hereunder Optionor shall have effected one or more stock split-ups, stock
dividends, or other increases or reductions of the number of Shares of its
common stock outstanding without receiving compensation therefor in money,
services or property, the number of Shares of common stock subject to the
options hereby granted shall (a) if a net increase shall have been effected in
the number of outstanding shares of Optionor's common stock, be proportionately
increased and the cash consideration payable per Share shall be proportionately
reduced; and (b) if a net reduction shall have been effected in the number of
outstanding Shares of Optionor's common stock, be proportionately reduced and
the cash consideration payable per Share be proportionately increased.
9. Notice and Opportunity to Cure Default. In the event of a perceived
default of the provisions of this agreement, Optionor agrees to provide Optionee
and his counsel written notice of any default and Optionor shall have 10 days
from receipt of said notice to cure the stated default.
10. Agreement to Perform Necessary Acts. The parties hereto agree to
cooperate fully with one another in executing all documents, certificates,
notices, filings and the like and performing all acts reasonably necessary to
carry out the intent of this agreement.
11. Assignment and Transfer. No option granted hereby may be assigned by
Optionee without the prior written consent of Optionor.
12. Amendments. This agreement may not be modified, amended or changed
except by an instrument in writing signed by the parties hereto.
13. Litigation and Attorneys' Fees. In the event of any litigation
between the parties to in connection with this Agreement or to enforce any
provision or right hereunder, the unsuccessful party to such litigation shall
pay to the successful party therein by such successful party, which costs,
expenses and attorneys' fees shall be included as a part of any judgment
rendered in such action in addition to any other relief to which the successful
party may be entitled.
IN WITNESS WHEREOF, the parties have executed this Option Agreement as
of the day and year first above written.
Decora Industries, Inc.