STOCK OPTION AGREEMENT
AUTHORISZOR INC.
This unilateral grant by the Company (as hereinafter defined)
constitutes a valid Nonqualified Stock Option (the "Option") for a total of
200,000 shares (the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of AUTHORISZOR INC., a Delaware corporation (the "Company"),
whose principal executive offices are situatated at 0000 Xxxxxxx Xxxx, Xxxxx
000, Xxxxxx, Xxxxx 00000, is hereby granted to XXXXXXX X X XXXXX of 00
Xxxxxxxxx Xxxxx, Xxxxxx X00XX (the "Optionee") pursuant to the terms of this
Option Agreement (the "Option Agreement").
SECTION 1. EXERCISE PRICE. The exercise price of the Option is $3.00
for each Share.
SECTION 2. EXERCISE OF THE OPTION. This Option may be exercised at any
time and from time to time after the Date of Grant, subject to the provisions
contained in SECTIONS 3 AND 4 below.
(a) METHOD OF EXERCISE. Options shall be deemed properly
exercised when:
(i) the Company has received written notice of such
exercise, stating the number of Shares which are being
purchased, delivered to the Company and signed by the person
or persons entitled to exercise the Option and, if the Option
is being exercised by any person or persons other than the
Optionee, be accompanied by proof, satisfactory to the
Company, of the right of such person or persons to exercise
the Option;
(ii) full payment of the exercise price of the Shares
as to which the Option is exercised has been tendered to the
Company; and
(iii) arrangements that are satisfactory to the Board
of Directors of the Company (the "Board") in its sole
discretion have been made for the Optionee's payment to the
Company of the amount, if any, that the Company determines to
be necessary for the Company to withhold in accordance with
applicable federal or state income tax withholding
requirements.
(b) PAYMENT. The exercise price of any Shares purchased
shall be paid in cash, by certified or cashier's check, by money
order or by personal check (if approved by the Board).
(c) RESTRICTIONS ON EXERCISE.
(i) This Option may not be exercised if the issuance
of the Shares upon such exercise would constitute a violation
of any applicable federal or state securities or other law or
valid regulation. As a condition to the exercise of this
Option, the Company may require the exercising person to make
any agreements and undertakings that may be required by any
applicable law or regulation.
(ii) Shares issued upon the exercise of this Option
without registration of such Shares under the Securities Act
of 1933, as amended (the "Act"), shall be restricted
securities subject to the terms of Rule 144 under the Act.
The certificates representing any such Shares shall bear an
appropriate legend restricting transfer and the transfer
agent of the Company shall be given stop transfer
instructions with respect to such Shares.
SECTION 3. TERM OF OPTION. This Option may not be exercised after
October 31, 2002 and is subject to earlier termination as provided in SECTION
4. In addition, this Option is subject to cancellation by the Company upon a
significant corporate event as provided in SECTION 4 below. This Option may be
exercised during such times only in accordance with the terms of this Option
Agreement.
SECTION 4. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of this Option shall
automatically and without notice terminate and become null and void
at the time of the earliest to occur of the following:
(i) thirty (30) days after the date that the
Optionee ceases to be employed by the Company or a
subsidiary of the Company or ceases to be a director,
consultant or advisor to the Company or a subsidiary of the
Company, as the case may be, regardless of the reason
therefor other than as a result of such termination by
reason of (x) death, (y) mental or physical disability of
the Optionee as determined by a medical doctor satisfactory
to the Company or (z) valid termination of the Optionee's
employment, status as director, or consulting contract or
advisory services, as the case may be, with the Company or a
subsidiary for Cause,
The term "Cause," for the purposes of this Agreement, shall
mean any one or more of the following:
w. Optionee's failure to observe or perform any
of the provisions of his Consulting
Agreement with the Company, dated November
12, 1999 (the "Consulting Agreement"), or
Optionee's failure to carry out lawful
directives of the Board.
x. Optionee's performance of any criminal acts
(excluding traffic violations and other
minor offenses);
y. Optionee's theft or embezzlement of
property, including trade secrets, of the
Company; or
z. Optionee's negligence in the performance of
his duties under the Consulting Agreement.
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(ii) one (1) year after the date on which the
Optionee suffers a mental or physical disability as
determined by a medical doctor satisfactory to the Company;
(iii) either (y) one (1) year after the date that the
Optionee ceases to be a director, consultant to or ceases to
be employed by, as the case may be, the Company or a
subsidiary of the Company, by reason of death of the
Optionee, or (z) six (6) months after the date on which the
Optionee shall die, if the Optionee's death shall occur
during the thirty (30) day period described in SECTION
4(a)(i) or the one-year period described in SECTION 4(a)(ii);
(iv) the date that the Optionee ceases to be a
director, consultant to or ceases to be employed by, as the
case may be, the Company or a subsidiary as a result of a
valid termination for Cause; and
(v) October 31, 2002
(b) The Company in its sole discretion may, by giving
written notice (a "Cancellation Notice") prior to the consummation of
any of the transaction described in Section 4(b)(i) or 4(b)(ii),
cancel, effective upon the date of the consummation of any of such
transactions, all or any portion of this Option that remains
unexercised on such date. Such Cancellation Notice shall be given a
reasonable period of time (but not less than 15 days) prior to the
effective date of such cancellation, and may be given either before
or after stockholder approval of such transaction.
(i) Any transaction (which shall include a series of
related transactions occurring within 60 days or occurring
pursuant to a plan) that has the result that stockholders of
the Company immediately before such transaction cease to own
at least 51% of (x) the voting stock of the Company or (y)
any entity that results from the participation of the Company
in a reorganization, consolidation, merger, liquidation or
any other form of corporate transaction.
(ii) A sale, lease, exchange or other disposition of
all or substantially all the property and assets of the
Company to an unaffiliated third party.
SECTION 5. ADJUSTMENT OF SHARES.
(a) If at any time while unexercised Options are
outstanding hereunder, there shall be any increase or decrease in the
number of issued and outstanding shares of Common Stock through the
declaration of a stock dividend or through any recapitalization
resulting in a stock split-up, combination or exchange of shares,
then and in such event proportionate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then
subject to this Option, so that the same proportion of the Company's
issued and outstanding shares shall remain subject to purchase at the
same aggregate exercise price.
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(b) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class,
or securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights
or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof
shall be made with respect to the number of or exercise price of
Shares then subject to this Option.
(c) Without limiting the generality of the foregoing, the
existence of this Option shall not affect in any manner the right or
power of the Company to make, authorize or consummate (i) any or all
adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt
securities, or preferred or preference stock that would rank above the
Shares subject to this Option; (iv) the dissolution or liquidation of
the Company; (v) any sale, transfer or assignment of all or any part
of the assets or business of the Company; or (vi) any other corporate
act or proceeding, whether of a similar character or otherwise.
SECTION 6. NON-ASSIGNABILITY OF OPTION. This Option may be
transferred or assigned by the Optionee only to family members, trusts or
other entities for the benefit of the Optionee or for the benefit of the
Optionee's family members, by will or by the laws of descent and distribution
or by the laws regulating testate or intestate succession applicable to the
Optionee.
SECTION 7. ISSUANCE OF SHARES. No person shall be, or have any rights
or privileges of, a stockholder of the Company with respect to any of the
Shares subject to this Option unless and until certificates representing such
Shares have been issued and delivered to such person. As a condition of an
issuance of a stock certificate for Shares, the Company may obtain such
agreements or undertakings, if any, as it may deem necessary or advisable to
assure compliance with any provision of this Option Agreement or any law or
regulation, including, but not limited to, the following:
(a) The Optionee's representation and warranty to the
Company, at the time the Option is exercised, that the Shares to be
issued are being acquired for investment and not with a view to, or
for sale in connection with, the distribution of any such Shares; and
(b) the Optionee's representation, warranty or agreement to
be bound by any legends that are, in the opinion of the Company,
necessary or appropriate to comply with the provisions of any
securities law deemed by the Company to be applicable to the issuance
of the Shares and to be endorsed upon the certificates representing
the Shares.
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SECTION 8. ADMINISTRATION OF THIS OPTION.
(a) The determinations and the interpretation and
construction of any provision of this Option by the Company shall be
final and conclusive.
(b) Subject to the express provisions of this Option, the
Company shall have the authority, in its sole and absolute discretion,
to adopt, amend, and rescind administrative and interpretive rules and
regulations relating to this Option and to perform all other acts
necessary or advisable for administering this Option, including the
delegation of such ministerial acts and responsibilities as the
Company deems appropriate.
SECTION 9. GOVERNMENT REGULATIONS. The granting and exercise of this
Option and the obligation of the Company to sell and deliver Shares under this
Option, shall be subject to all applicable laws, rules and regulations, and to
such approvals by any governmental agencies or national securities exchanges
as may be required.
SECTION 10. LAW GOVERNING. THIS OPTION IS INTENDED TO BE PERFORMED IN
THE STATE OF DELAWARE AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF SUCH STATE EXCEPT TO THE EXTENT DELAWARE LAW IS
PREEMPTED BY FEDERAL LAW.
SECTION 11. NOTICES. Whenever any notice is required or permitted
under this Option Agreement, such notice must be in writing and personally
delivered or sent by mail or delivery by a recognized courier service. Any
notice required or permitted to be delivered under this Option Agreement shall
be deemed to be delivered on the date on which it is personally delivered, or,
if mailed, whether actually received or not, on the third business day after
it is deposited in the mail, certified or registered, postage prepaid,
addressed to the person who is to receive it at the address that such person
has previously specified by written notice delivered in accordance with this
subsection. Notwithstanding the foregoing, the Cancellation Notice shall also
be sent to Optionee by facsimile transmission reasonably promptly after the
original of the Cancellation Notice is otherwise sent to the Optionee. The
Company or the Optionee may change, at any time and from time to time, by
written notice to the other, an address, that was previously specified for
receiving notices. Until changed in accordance with this Option Agreement, the
Company and the Optionee shall specify as its or his address for receiving
notices the address set forth in this Option Agreement pertaining to the
Shares to which such notice relates.
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SECTION 12. MISCELLANEOUS.
(a) The Company has full corporate authority to grant this
Option, and this Option is granted to the Optionee in implementation
of the Consulting Agreement describing such Option and is in addition
to any other stock option plans of the Company or other benefits with
respect to the Optionee's position with or relationship to the
Company or its subsidiaries. This Option shall not confer upon the
Optionee the right to continue as an employee, consultant or advisor,
or interfere in any way with the rights of the Company to terminate
the Optionee's status as an employee, consultant or advisor.
(b) The members of the Board shall not be liable for any
act, omission or determination taken or made in good faith with
respect to this Option, and members of the Board shall, in addition
to all other rights of indemnification and reimbursement, be entitled
to indemnification and reimbursement by the Company in respect of any
claim, loss, damage, liability or expense (including attorneys' fees,
the costs of settling any suit, provided such settlement is approved
by independent legal counsel selected by the Company, and amounts
paid in satisfaction of a judgment, except a judgment based on a
finding of bad faith) arising from such claim, loss, damage,
liability or expense to the full extent permitted by law and under
any directors' and officers' liability or similar insurance coverage
that may from time to time be in effect.
(c) Any issuance or transfer of Shares to the Optionee, or
to the Optionee's legal representative, heir, legatee, or
distributee, in accordance with the provisions of this Option, shall,
to the extent thereof, be in full satisfaction of all claims of such
persons under this Option. The Company may require the Optionee, or
any legal representative, heir, legatee or distributee as a condition
precedent to such payment or issuance or transfer of Shares, to
execute a release and receipt for such payment or issuance or
transfer of Shares in such form as it shall determine.
(d) Neither the Board nor the Company guarantees Shares
from loss or depreciation.
(e) All expenses incident to the administration,
termination, or protection of this Option, including, but not limited
to, legal and accounting fees, shall be paid by the Company;
provided, however, the Company may recover any and all damages, fees,
expenses and costs arising out of any actions taken by the Company to
enforce its rights under this Option.
(f) Records of the Company shall be conclusive for all
purposes under this Option, unless determined by the Board to be
incorrect.
(g) Any action required of the Company relating to this
Option shall be by resolution of the Board or by a person authorized
to act by resolution of the Board.
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(h) If any provision of this Option is held to be illegal
or invalid for any reason, the illegality or invalidity shall not
affect the remaining provisions of this Option, but such provision
shall be fully severable, and this Option shall be construed and
enforced as if the illegal or invalid provision had never been
included in this Option.
(i) Any person entitled to notice under this Option may
waive such notice.
(j) This Option shall be binding upon the Optionee, his
legal representatives, heirs, legatees and distributees upon the
Company, its successors, and assigns, and upon the Board and its
successors.
(k) The titles and headings of Sections are included for
convenience of reference only and are not to be considered in
construction of this Option's provisions.
(l) Words used in the masculine shall apply to the feminine
where applicable, and wherever the context of this Option dictates,
the plural shall be read as the singular and the singular as the
plural.
DATE OF GRANT: AUTHORISZOR INC.
NOVEMBER 1, 1999
By:
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Xxxxxx X. Xxxxxxxx, President
ADDRESS:
Xxxxxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxx
HG1 2PW
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Optionee hereby accepts this Option subject to all the terms and
provisions of this Option Agreement.
By:
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XXXXXXX X X XXXXX
ADDRESS:
00 Xxxxxxxxx Xxxxx
Xxxxxx
X0 0XX
Facsimile number:
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