▇▇▇▇▇▇ CAPITAL CORPORATION
EMPLOYEE NONSTATUTORY STOCK OPTION AGREEMENT
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THIS EMPLOYEE NONSTATUTORY STOCK OPTION AGREEMENT ("Agreement") is made
and entered into as of the date set forth below, by and between ▇▇▇▇▇▇ CAPITAL
CORPORATION, a Nevada corporation (the "Company"), and the following employee of
the Company ("Optionee"):
In consideration of the covenants herein set forth, the parties hereto
agree as follows:
1. Option Information.
(a) Date of Option: May 31, 2004
(b) Optionee: ▇▇▇▇▇▇ ▇▇▇▇▇
(c) Number of Shares: 1,000,000
(d) Exercise Price: $0.25
2. Acknowledgements.
(a) Optionee is an employee of the Company.
(b) The Board of Directors (the "Board" which term shall include an
authorized committee of the Board of Directors) have heretofore adopted a
2004 Employee Stock Option Plan (the "Plan"), pursuant to which this
Option is being granted; and
(c) The Board has authorized the granting to Optionee of a
nonstatutory stock option ("Option") to purchase shares of common stock of
the Company ("Stock") upon the terms and conditions hereinafter stated and
pursuant to an exemption from registration under the Securities Act of
1933, as amended (the "Securities Act") provided by Rule 701 thereunder.
3. Shares; Price. Company hereby grants to Optionee the right to purchase,
upon and subject to the terms and conditions herein stated, the number of shares
of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board of
Directors of the Company, in their sole and absolute discretion) at the price
per Share set forth in Section 1(d) above (the "Exercise Price"), such price
being not less than eighty-five percent (85%) of the fair market value per share
of the Shares covered by this Option as of the date of grant of this option.
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4. Term of Option; Continuation of Service. This Option shall expire, and
all rights hereunder to purchase the Shares shall terminate, ten (10) years from
the date hereof. This Option shall earlier terminate subject to Section 7 hereof
upon, and as of the date of, the termination of Optionee's employment if such
termination occurs prior to the end of such ten (10) year period. Nothing
contained herein shall confer upon Optionee the right to the continuation of his
or her employment by the Company or to interfere with the right of the Company
to terminate such employment or to increase or decrease the compensation of
Optionee from the rate in existence at the date hereof.
5. Vesting of Option. Subject to the provisions of Section 7, 333,333
options shall vest on July 1, 2004, 333,333 options shall vest on July 1, 2005,
and 333,334 options shall vest on July 1, 2006.
6. Exercise. This Option shall be exercised by delivery to the Company of
(a) written notice of exercise stating the number of Shares being purchased (in
whole shares only) and such other information set forth on the form of Notice of
Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the
Exercise Price of the Shares covered by the notice (or such other consideration
as has been approved by the Board of Directors consistent with the Plan) and (c)
a written investment representation as provided for in Section 13 hereof. This
Option shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and shall be exercisable only by Optionee during his
or her lifetime, except as provided in Section 7 hereof.
7. Termination or Death of Optionee. (a) If employment or other
relationship of an Optionee with the Company shall be terminated voluntarily by
the Optionee and without the consent of the Company or for "Cause" (as
hereinafter defined), and immediately after such termination such Optionee shall
not then be employed by the Company, any Options granted to such Optionee to the
extent not theretofore exercised shall expire forthwith. For purposes of the
Plan, "Cause" shall mean "Cause" as defined in any employment agreement
("Employment Agreement") between Optionee and the Company, and, in the absence
of an Employment Agreement or in the absence of a definition of "Cause" in such
Employment Agreement, "Cause" shall mean (i) any continued failure by the
Optionee to obey the reasonable instructions of the President or any member of
the Board of Directors, (ii) continued neglect by the Optionee of his duties and
obligations as an employee of the Company, or a failure to perform such duties
and obligations to the reasonable satisfaction of the President or the Board of
Directors, (iii) willful misconduct of the Optionee or other actions in bad
faith by the Optionee which are to the detriment of the Company, including
without limitation commission of a felony, embezzlement or misappropriation of
funds or commission of any act of fraud or (iv) a breach of any material
provision of any Employment Agreement not cured within 10 days after written
notice thereof.
(b) If such employment or other relationship shall terminate other than
(i) by reason of death, (ii) voluntarily by the optionee and without the consent
of the Company, or (iii) for Cause, and immediately after such termination such
Optionee shall not them be employed by the Company, any Options granted to such
Optionee may be exercised at any time within five years after such termination,
subject to the provisions of subparagraph (d) of this Section 7. After such
five-year period, the unexercised Options shall expire. For the purposes of the
Plan, the retirement of an Optionee either pursuant to a pension or retirement
plan adopted by the Company or on the normal retirement date prescribed from
time to time by the Company, and the termination of employment as a result of a
disability (as defined in Section 22(e) (3) of the Code) shall be deemed to be a
termination of such Optionee's employment or other relationship other than
voluntarily by the Optionee or for Cause.
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(c) If an Optionee dies (i) while employed by, or engaged in such other
relationship with, the Company or (ii) within three months after the termination
of his employment or other relationship other than voluntarily by the Optionee
and without the consent of the Company or for Cause, any options granted to such
Optionee may be exercised at any time within five years after such Optionee's
death, subject to the provisions of subparagraph (d) of this Section 7. After
the three month period, the unexercised Options shall expire.
(d) An Option may not be exercised pursuant to this Section 7 except to
the extent that the Optionee was entitled to exercise the Option at the time of
termination of employment or such other relationship, or death, and in any event
may not be exercised after the expiration of the earlier of (i) the term of the
option or (ii) ten (10) years from the date the Option was granted, or five (5)
years from the date an ISO was granted if the optionee was a Principal
Stockholder at that date.
8. No Rights as Shareholder. Optionee shall have no rights as a
shareholder with respect to the Shares covered by any installment of this Option
until the effective date of issuance of the Shares following exercise of this
Option, and no adjustment will be made for dividends or other rights for which
the record date is prior to the date such stock certificate or certificates are
issued except as provided in Section 9 hereof.
9. Recapitalization. Subject to any required action by the shareholders of
the Company, the number of Shares covered by this Option, and the Exercise Price
thereof, shall be proportionately adjusted for any increase or decrease in the
number of issued shares resulting from a subdivision or consolidation of shares
or the payment of a stock dividend, or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company;
provided however that the conversion of any convertible securities of the
Company shall not be deemed having been "effected without receipt of
consideration by the Company".
In case of any consolidation of the Company with, or merger of the Company
into any other corporation, or in case of any sale or conveyance of all or
substantially all of the assets of the Company other than in connection with a
plan of complete liquidation of the Company, then as a condition of such
consolidation, merger or sale or conveyance, adequate provision will be made
whereby the holder of this Option will have the right to acquire and receive
upon exercise of this Option in lieu of the shares of Common Stock immediately
theretofore acquirable upon the exercise of this Option, such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for the number of shares of Common Stock immediately theretofore acquirable and
receivable upon exercise of this Option had such consolidation, merger or sale
or conveyance not taken place. In any such case, the Company will make
appropriate provision to insure that the provisions of this paragraph will
thereafter be applicable as nearly as may be in relation to any shares of stock
or securities thereafter deliverable upon the exercise of this Option. The
Company will not effect any consolidation, merger or sale or conveyance unless
prior to the consummation thereof, the successor corporation (if other than the
Company) assumes by written instrument the obligations under this paragraph and
the obligations to deliver to the holder of this Option such shares of stock,
securities or assets as, in accordance with the foregoing provisions, the holder
may be entitled to acquire.
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Subject to any required action by the shareholders of the Company, if the
Company shall be the surviving entity in any merger or consolidation, this
Option thereafter shall pertain to and apply to the securities to which a holder
of Shares equal to the Shares subject to this Option would have been entitled by
reason of such merger or consolidation, and the installment provisions of
Section 4 shall continue to apply.
In the event of a change in the shares of the Company as presently
constituted, which is limited to a change of all of its authorized Stock without
par value into the same number of shares of Stock with a par value, the shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Option.
To the extent that the foregoing adjustments relate to shares or
securities of the Company, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
hereinbefore expressly provided, Optionee shall have no rights by reason of any
subdivision or consolidation of shares of Stock of any class or the payment of
any stock dividend or any other increase or decrease in the number of shares of
stock of any class, and the number and price of Shares subject to this Option
shall not be affected by, and no adjustments shall be made by reason of, any
dissolution, liquidation, merger, consolidation or sale of assets or capital
stock, or any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.
The grant of this Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets.
10. Taxation upon Exercise of Option. Optionee understands that, upon
exercise of this Option, Optionee will recognize income, for Federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the Exercise
Price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Optionee's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Optionee to make a cash payment to cover such liability as a
condition of the exercise of this Option.
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11. Modification, Extension and Renewal of Options. The Board or
Committee, as described in the Plan, may modify, extend or renew this Option or
accept the surrender thereof (to the extent not theretofore exercised) and
authorize the granting of a new option in substitution therefore (to the extent
not theretofore exercised), subject at all times to the Plan, the Code and the
Colorada Securities Rules. Notwithstanding the foregoing provisions of this
Section 12, no modification shall, without the consent of the Optionee, alter to
the Optionee's detriment or impair any rights of Optionee hereunder.
12. Investment Intent; Restrictions on Transfer.
(a) Optionee represents and agrees that if Optionee exercises this
Option in whole or in part, Optionee will in each case acquire the Shares
upon such exercise for the purpose of investment and not with a view to,
or for resale in connection with, any distribution thereof; and that upon
such exercise of this Option in whole or in part, Optionee (or any person
or persons entitled to exercise this Option under the provisions of
Section hereof) shall furnish to the Company a written statement to such
effect, satisfactory to the Company in form and substance. If the Shares
represented by this Option are registered under the Securities Act, either
before or after the exercise of this Option in whole or in part, the
Optionee shall be relieved of the foregoing investment representation and
agreement and shall not be required to furnish the Company with the
foregoing written statement.
(b) Optionee further represents that Optionee has had access to the
financial statements or books and records of the Company, has had the
opportunity to ask questions of the Company concerning its business,
operations and financial condition, and to obtain additional information
reasonably necessary to verify the accuracy of such information
(c) Unless and until the Shares represented by this Option are
registered under the Securities Act, all certificates representing the
Shares and any certificates subsequently issued in substitution therefor
and any certificate for any securities issued pursuant to any stock split,
share reclassification, stock dividend or other similar capital event
shall bear legends in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
THAT CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED APRIL 9, 2003
BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE
SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN
CONDITIONS. AND/OR SUCH OTHER LEGEND OR LEGENDS AS THE COMPANY AND ITS
COUNSEL DEEM NECESSARY OR APPROPRIATE. APPROPRIATE STOP TRANSFER
INSTRUCTIONS WITH RESPECT TO THE SHARES HAVE BEEN PLACED WITH THE
COMPANY'S TRANSFER AGENT.
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13. Stand-off Agreement. Optionee agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company's securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of at least
one year following the effective date of registration of such offering.
14. Restriction Upon Transfer. The Shares may not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated by the
Optionee except as hereinafter provided.
(a) Repurchase Right on Termination Other Than for Cause. For the
purposes of this Section, a "Repurchase Event" shall mean an occurrence of
one of (i) termination of Optionee's employment by the Company, voluntary
or involuntary and with or without cause; (ii) retirement or death of
Optionee; (iii) bankruptcy of Optionee, which shall be deemed to have
occurred as of the date on which a voluntary or involuntary petition in
bankruptcy is filed with a court of competent jurisdiction; (iv)
dissolution of the marriage of Optionee, to the extent that any of the
Shares are allocated as the sole and separate property of Optionee's
spouse pursuant thereto (in which case, this Section shall only apply to
the Shares so affected); or (v) any attempted transfer by the Optionee of
Shares, or any interest therein, in violation of this Agreement. Upon the
occurrence of a Repurchase Event, the Company shall have the right (but
not an obligation) to repurchase all or any portion of the Shares of
Optionee at a price equal to the fair value of the Shares as of the date
of the Repurchase Event.
(b) Repurchase Right on Termination for Cause. In the event
Optionee's employment is terminated by the Company "for cause", then the
Company shall have the right (but not an obligation) to repurchase Shares
of Optionee at a price equal to the Exercise Price. Such right of the
Company to repurchase Shares shall apply to 100% of the Shares for one (1)
year from the date of this Agreement; and shall thereafter lapse at the
rate of twenty percent (20%) of the Shares on each anniversary of the date
of this Agreement. In addition, the Company shall have the right, in the
sole discretion of the Board and without obligation, to repurchase upon
termination for cause all or any portion of the Shares of Optionee, at a
price equal to the fair value of the Shares as of the date of termination,
which right is not subject to the foregoing lapsing of rights. In the
event the Company elects to repurchase the Shares, the stock certificates
representing the same shall forthwith be returned to the Company for
cancellation.
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(c) Exercise of Repurchase Right. Any Repurchase Right under
Paragraphs 15(a) or 15(b) shall be exercised by giving notice of exercise
as provided herein to Optionee or the estate of Optionee, as applicable.
Such right shall be exercised, and the repurchase price thereunder shall
be paid, by the Company within a ninety (90) day period beginning on the
date of notice to the Company of the occurrence of such Repurchase Event
(except in the case of termination of employment or retirement, where such
option period shall begin upon the occurrence of the Repurchase Event).
Such repurchase price shall be payable only in the form of cash (including
a check drafted on immediately available funds) or cancellation of
purchase money indebtedness of the Optionee for the Shares. If the Company
can not purchase all such Shares because it is unable to meet the
financial tests set forth in the Nevada and/or Colorado corporation law,
the Company shall have the right to purchase as many Shares as it is
permitted to purchase under such sections. Any Shares not purchased by the
Company hereunder shall no longer be subject to the provisions of this
Section 15.
(d) Right of First Refusal. In the event Optionee desires to
transfer any Shares during his or her lifetime, Optionee shall first offer
to sell such Shares to the Company. Optionee shall deliver to the Company
written notice of the intended sale, such notice to specify the number of
Shares to be sold, the proposed purchase price and terms of payment, and
grant the Company an option for a period of thirty days following receipt
of such notice to purchase the offered Shares upon the same terms and
conditions. To exercise such option, the Company shall give notice of that
fact to Optionee within the thirty (30) day notice period and agree to pay
the purchase price in the manner provided in the notice. If the Company
does not purchase all of the Shares so offered during foregoing option
period, Optionee shall be under no obligation to sell any of the offered
Shares to the Company, but may dispose of such Shares in any lawful manner
during a period of one hundred and eighty (180) days following the end of
such notice period, except that Optionee shall not sell any such Shares to
any other person at a lower price or upon more favorable terms than those
offered to the Company.
(e) Acceptance of Restrictions. Acceptance of the Shares shall
constitute the Optionee's agreement to such restrictions and the legending
of his certificates with respect thereto. Notwithstanding such
restrictions, however, so long as the Optionee is the holder of the
Shares, or any portion thereof, he shall be entitled to receive all
dividends declared on and to vote the Shares and to all other rights of a
shareholder with respect thereto.
(f) Permitted Transfers. Notwithstanding any provisions in this
Section 15 to the contrary, the Optionee may transfer Shares subject to
this Agreement to his or her parents, spouse, children, or grandchildren,
or a trust for the benefit of the Optionee or any such transferee(s);
provided, that such permitted transferee(s) shall hold the Shares subject
to all the provisions of this Agreement (all references to the Optionee
herein shall in such cases refer mutatis mutandis to the permitted
transferee, except in the case of clause (iv) of Section 15(a) wherein the
permitted transfer shall be deemed to be rescinded); and provided further,
that notwithstanding any other provisions in this Agreement, a permitted
transferee may not, in turn, make permitted transfers without the written
consent of the Optionee and the Company.
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(g) Release of Restrictions on Shares. All other restrictions under
this Section 15 shall terminate five (5) years following the date of this
Agreement, or when the Company's securities are publicly traded, whichever
occurs earlier.
15. Notices. Any notice required to be given pursuant to this Option or
the Plan shall be in writing and shall be deemed to be delivered upon receipt
or, in the case of notices by the Company, five (5) days after deposit in the
U.S. mail, postage prepaid, addressed to Optionee at the address last provided
by Optionee for his or her employee records.
16. Agreement Subject to Plan; Applicable Law. This Option is made
pursuant to the Plan and shall be interpreted to comply therewith. A copy of
such Plan is available to Optionee, at no charge, at the principal office of the
Company. Any provision of this Option inconsistent with the Plan shall be
considered void and replaced with the applicable provision of the Plan. This
Option has been granted, executed and delivered in the State of Colorado, and
the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.
IN WITNESS WHEREOF, the parties hereto have executed this Option as of the
date first above written.
COMPANY: ▇▇▇▇▇▇ CAPITAL CORPORATION,
a Nevada corporation
By:
Name:
Title:
OPTIONEE:
By:
(signature)
Name:
(one of the following, as appropriate, shall be signed)
I certify that as of the date By his or her signature, the spouse of
hereof I am unmarried Optionee hereby agrees to be bound by the
provisions of the foregoing INCENTIVE STOCK
OPTION AGREEMENT
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--------------------------------- ---------------------------------
Optionee Spouse of Optionee
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Appendix A
NOTICE OF EXERCISE
▇▇▇▇▇▇ Capital Corporation
Re: Nonstatutory Stock Option
Notice is hereby given pursuant to Section 6 of my Nonstatutory Stock
Option Agreement that I elect to purchase the number of shares set forth below
at the exercise price set forth in my option agreement:
Nonstatutory Stock Option Agreement dated: ____________
Number of shares being purchased: ____________
Exercise Price: $____________
A check in the amount of the aggregate price of the shares being purchased
is attached.
I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my
Shares in violation of the Securities Act of 1933, as amended, or any applicable
federal or state securities laws. Further, I understand that the exemption from
taxable income at the time of exercise is dependent upon my holding such stock
for a period of at least one year from the date of exercise and two years from
the date of grant of the Option.
I understand that the certificate representing the Option Shares will bear
a restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.
I agree to provide to the Company such additional documents or information
as may be required pursuant to the Company's 2004 Employee Stock Option Plan.
By: _____________________
(signature)
Name:____________________
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