EXECUTION COPY
STOCK OPTION AGREEMENT
Room Plus, Inc. (the "Company"), desiring to afford an opportunity to
the Grantee named below to purchase certain shares of the Company's Common
Stock, par value $.00133 per share, to provide the Grantee with an added
incentive as an employee of the Company or of one or more of its subsidiaries,
hereby grants to Grantee, and the Grantee hereby accepts, an option to purchase
the number of such shares optioned as specified below, during the term ending at
midnight (prevailing local time at the Company's principal offices) on the
expiration date of this Option specified below, at the option exercise price
specified below, subject to and upon the following terms and conditions:
1. Identifying Provisions: As used in this Option, the following terms
shall have the following respective meanings:
(a) Grantee: Xxxxxxx Xxxxxxxx
(b) Date of grant: September 21, 1998
(c) Number of shares optioned: 100,000
(d) Option exercise price per share: $2.00
(e) Expiration date: September 20, 2003
(f) Employment Agreement: the Employment Agreement dated as of September
21, 1998 between the Company and the Grantee, together with any amended
or successor employment agreement (References herein to any "Section"
of the Employment Agreement shall refer to the corresponding sections
of the Employment Agreement dated September 21, 1998 and any comparable
provision of any amended or successor employment agreement.)
This Option is not intended to be and shall not be treated as an incentive
stock option under Section 422 of the Internal Revenue Code.
2. Exercise Schedule: Subject to Section 3 hereof, this Option shall vest
and become exercisable as follows: This Option shall become exercisable in
respect of 2800 shares on October 21, 1998, in respect of an additional 2800
shares on the 21st day of each month thereafter to and including August 21, 2001
and in respect of 2000 shares on September 21, 2001 (each such date a "Vesting
Date") and shall be exercisable in whole or in part, from time to time, on or
prior to the expiration date.
3. Additional Exercise Provisions: Notwithstanding the provisions of
Section 2, the exercise of this Option shall be subject to the following
additional provisions:
(a) If the Grantee's employment shall be terminated for Cause pursuant to
Section 6.1 of the Employment Agreement by reason of a criminal
conviction covered by Section 6.3(c) thereof, this Option, including
all rights of exercise, shall expire and terminate forthwith upon the
effective date of such termination for
Cause; in addition, if the Company gives notice to the Grantee pursuant
to Section 6.3 of the Employment Agreement of its intention to
terminate Grantee's employment for Cause based on subsection (c)
thereof, Grantee's right to exercise this Option shall be suspended
during such period of notice;
(b) If the Grantee's employment is terminated by the Company pursuant to
(i) Section 2.2 of the Employment Agreement effective at the end of the
Initial Term (as therein defined) or (ii) Section 6.1(a) (death) or
Section 6.1(b) (disability) of the Employment Agreement , this Option
shall thereupon become exercisable in respect of such additional number
of shares in respect of which it would have become exercisable in the
12-month period immediately following such termination of employment;
(c) If the Grantee's employment by the Company is terminated by the Grantee
pursuant to Section 6.1(d) ("Good Reason") or Section 6.1(e) ("Change
of Control") of the Employment Agreement or by the Company under any of
the circumstances covered by Section 6.6(E) ("Termination by the
Employer Without Cause") thereof, this Option shall thereupon become
exercisable in respect of all shares for which the Vesting Date had not
occurred prior to such termination of employment ; provided, however,
that, in the event of a termination of Grantee's employment by the
Company under circumstances covered by Section 6.6(E) prior to the end
of the Initial Term, this Option shall become exercisable only in
respect of the number of shares for which the Vesting Date would have
occurred on or prior to the second anniversary of the Effective Date
(as therein defined); and
(d) Except as set forth in (b) and (c) of this Section 3, if Grantee ceases
to be employed by the Company for any reason, this Option shall not at
any time become exercisable in respect of any shares for which the
Vesting Date had not occurred prior to such termination of employment.
4. Non-Transferable: The Grantee may not transfer this Option except by
will or the laws of descent and distribution. This Option shall not be otherwise
transferred, assigned, pledged, hypothecated or disposed of in any way, whether
by operation of law or otherwise, and shall be exercisable during the Grantee's
lifetime only by the Grantee or his guardian or legal representative.
5.Adjustments and Corporate Reorganizations: If the outstanding shares of
the class then subject to this Option are increased or decreased, or are changed
into or exchanged for a different number or kind of shares or securities, as a
result of one or more reorganizations, recapitalizations, stock splits, reverse
stock splits, stock dividends or the like, appropriate adjustments shall be made
in the number and/or kind of shares or securities for which the unexercised
portions of this Option may thereafter be exercised, all without any change in
the aggregate exercise price applicable to the unexercised portions of this
Option, but with a corresponding adjustment in the exercise price per share or
other unit. No fractional share of stock shall be issued under this Option or in
connection with any such adjustment. Such adjustments shall be made by or under
authority of the Company's board of directors whose
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determinations as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive.
In case the Company shall reorganize its capital, reclassify its capital
stock, consolidate or merger with or into another corporation (where the Company
is not the surviving corporation or where there is a change in or distribution
with respect to the Common Stock of the Company), or sell, transfer or otherwise
dispose of all or substantially all of its property, assets or business to
another corporation and, pursuant to the terms of such reorganization,
reclassification, merger, consolidation or disposition of assets, shares of
common stock of the successor or acquiring corporation, or any cash, shares of
stock or other securities or property of any nature whatsoever (including
warrants or other subscription or purchase rights) in addition to or in lieu of
common stock of the successor or acquiring corporation ("Other Property"), are
to be received by or distributed to the holders of Common Stock of the Company,
then Grantee shall have the right thereafter to receive, upon exercise of this
Option, the number of shares of common stock of the successor or acquiring
corporation or of the company, if it is the surviving corporation, and Other
Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition of assets by a holder of
the number of shares of Common Stock for which this Option is exercisable
immediately prior to such event (including after giving effect to the
accelerated vesting referred to in Section 3). In case of any such
reorganization, reclassification, merger, consolidation or disposition of
assets, the successor and acquiring corporation (if other than the Company)
shall expressly assume the due and punctual observance and performance of each
and every covenant and condition of this Option to be performed and observed by
the Company and all the obligations and liabilities hereunder, subject to such
modifications as may be deemed appropriate (as determined by resolution of the
Board of Directors of the Company) in order to provide for adjustments of shares
of the Common Stock for which this Option is exercisable which shall be as
nearly equivalent as practicable to the adjustments provided for in this Section
5. For purposes of this Section 5, "common stock of the successor or acquiring
corporation" shall include stock of such corporation of any class which is not
preferred as to dividends or assets over any other class of stock of such
corporation and which is not subject to redemption and shall also include any
evidences of indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either immediately or upon
the arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscriber for or purchase any such stock. The
foregoing provisions of this Section 5 shall similarly apply to successive
reorganizations, reclassifications, mergers, consolidations or disposition of
assets.
6. Exercise, Payment For and Delivery of Stock: This Option may be
exercised by the Grantee or other person then entitled to exercise it by giving
five (5) business days' written notice of exercise to the Company specifying the
number of shares to be purchased and the total purchase price, accompanied by a
check to the order of the Company in payment of such price. If the Company is
required to withhold an account of any present or future tax imposed as a result
of such exercise, the notice of exercise shall be accompanied by a check to the
order of the Company in payment of the amount of such withholding.
7. Alternative Payment with Stock: Notwithstanding the foregoing provisions
requiring payment by check, payment of such purchase price or any portion
thereof may be made with shares of stock of the same class as the shares then
subject to this Option, if shares of that
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class are then publicly traded (as defined below), such shares to be credited
toward such purchase price at the Market Price thereof as defined in Section 8,
in which event the stock certificates evidencing the shares so to be used shall
accompany the notice of exercise and shall be duly endorsed or accompanied by
duly executed stock powers to transfer the same to the Company; provided,
however, that such payment in stock instead of cash shall not be effective and
shall be rejected by the Company if (i) the Company is then prohibited from
purchasing or acquiring shares of the class of its stock thus tendered to it, or
(ii) the right or power of the person exercising the Option to deliver such
shares in payment of said purchase price is subject to the prior interests of
any other person (excepting the Company), as indicated by legends upon the
certificate(s) or as known to the Company. For purposes of this Section,
"publicly traded" shares are those which are listed or admitted to unlisted
trading privileges on a national securities exchange or as to which sales or bid
and offer quotations are reported in the automated quotation system ("NASDAQ")
operated by the National Association of Securities Dealers, Inc. ("NASD"). If
the Company rejects the payment in stock, the tendered notice of exercise shall
not be effective hereunder unless promptly after being notified of such
rejection the person exercising the Option pays the purchase price in acceptable
form. If and while payment of the purchase price with stock is permitted in
accordance with the foregoing provisions, the person then entitled to exercise
this Option may, in lieu of using previously outstanding shares therefor, use
some of the shares as to which this Option is then being exercised, in which
case the notice of exercise need not be accompanied by any stock certificates
but shall include a statement directing the Company to withhold so many of the
shares that would otherwise have been delivered upon that exercise of this
Option as equals the number of shares that would have been transferred to the
Company if the purchase price had been with previously issued stock.
8. Definition of Market Price: The Market Price of a share of stock or
other securities on any day shall mean the average closing price of a share of
Common Stock or other security for the 5 consecutive trading days preceding such
day on the principal national securities exchange or NASDAQ system on which the
shares of Common Stock or securities are listed or admitted to trading or, if
not listed or admitted to trading on any national securities exchange or NASDAQ
system, the average of the reported bid and asked prices during such 5 trading
day period in the over-the-counter market as furnished by the National Quotation
Bureau, Inc., or, if such firm is not then engaged in such business selected by
the Company, or, if there is no such firm, as furnished by any member of the
National Association of Securities Dealers, Inc. selected by the Company, or if
the shares of Common Stock or securities are not publicly traded, the Market
Price for such day shall be the fair market value thereof as determined in good
faith by the Board of Directors of the Company.
9. Rights in Shares Before Issuance and Delivery: No person shall be
entitled to the privileges of stock ownership in respect of any shares issuable
upon exercise of this Option, unless and until such shares have been issued to
such person as fully paid shares.
10. Requirements of Law of Stock Exchanges: By accepting this Option, the
Grantee represents and agrees for himself and his transferees by will or the
laws of descent and distribution that, unless a registration statement under the
Securities Act of 1933 is in effect as to shares purchased upon any exercise of
this Option, (i) any and all shares so purchased shall be acquired for his
personal account and not with a view to or for sale in connection with any
distribution, and (ii) each notice of the exercise of any portion of this Option
shall be
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accompanied by a representation and warranty in writing, signed by the person
entitled to exercise the same, that the shares are being so acquired in good
faith for his personal account and not with view to or for sale in connection
with any distribution.
No certificate or certificates for shares of stock purchased upon exercise
of this Option shall be issued and delivered prior to the admission of such
shares to listing on notice of issuance on any stock exchange on which shares of
that class are then listed, nor unless and until, in the opinion of counsel for
the Company, such securities may be issued and delivered without causing the
Company to be in violation of or incur any liability under any federal, state or
other securities law, any requirement of any securities exchange listing
agreement to which the Company may be a party, or any other requirement of law
or of any regulatory body having jurisdiction over the Company.
Notwithstanding the foregoing , the company agrees to use its best efforts
to cause a registration statement on Form S-8 (or comparable form) to be filed
with the Securities and Exchange Commission in respect of the shares underlying
this Option and to become effective and to take all steps as may be necessary to
cause such shares to be eligible for trading on any stock exchange on which the
Company's Common Stock is traded.
11. Notices: Any notice to be given to the Company shall be addressed to
the Company in care of its Secretary as its principal office, and any notice to
be given to the Grantee shall be addressed to him at the address given beneath
his signature hereto or at such other address as the Grantee may hereafter
designate in writing to the Company. Any such notice shall be deemed duly given
when enclosed in a properly sealed envelope or wrapper addressed as aforesaid,
registered or certified, and deposited, postage and registry or certification
fee prepaid, in a post office or branch post office regularly maintained by the
United States Postal Service.
12. Applicable Law: This Agreement shall be construed and enforced in
accordance with the laws of the State of New York applicable to contracts made
and to be performed therein.
IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.
ROOM PLUS, INC.
By: /s/ XXXX XXXXXX
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Title: CHIEF EXECUTIVE OFFICER
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:
ACCEPTED
/s/ XXXXXXX XXXXXXXX
---------------------------------
Grantee
Xxxxxxx Xxxxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
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