Exhibit A
STOCK OPTION AGREEMENT
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This Stock Option Agreement (this "Agreement"), made as of this 12th day of
November, 1996 (the "Date of Grant"), is among Xxxxxxx X. Xxxx ("Xxxx"), One Up
Corporation, a Florida corporation (the "Company"), and EAI Partners Inc., a
Florida corporation ("Optionee").
Introductory Statements
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Xxxx desires to grant to Optionee certain rights, as provided hereunder,
with respect to 6,000,000 shares (the "Option Shares") of the Company's common
stock, no par value per share (the "Common Stock"), owned by Xxxx. The Company
has determined that it is in the best interests of the Company to enter into
this Agreement for the limited purposes set forth herein, since the delivery of
this Agreement is a condition precedent to the Placement Agent Agreement between
Noble International Investments, Inc. and the Company of even date herewith.
Optionee desires to receive the rights provided hereunder regarding the Option
Shares in return for the payment to Xxxx of the consideration provided for
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
hereinafter set forth, the parties hereto, intending to become legally bound,
agree as follows:
1. Grant of the Option. Xxxx hereby grants to Optionee the right and
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option to purchase, on the terms and conditions hereinafter set forth, the
Option Shares (the "Option"). The per share purchase price of the first
2,000,000 Option Shares to become exercisable pursuant to this Option, except as
otherwise provided for in this Section and in Section 3, shall be 50% of the
average five day average closing bid price per share of the Common Stock as
traded on the Nasdaq OTC Bulletin Board or the principal exchange over which the
Common Stock is traded immediately prior to the date of exercise (the "Standard
Exercise Price"). The per share purchase price of the next 4,000,000 Option
Shares to become exercisable pursuant to this Option (the "Alternative Exercise
Price") shall be the greater of (i) $.50 or (ii) the Standard Exercise Price.
In connection with the grant of the Option and the other rights regarding the
Option Shares provided to Optionee hereunder, Optionee shall on the date hereof
deliver to Xxxx, by wire transfer in immediately available funds, the amount of
$50,000 (the "Initial Amount") in exercise of the applicable number of shares to
the account set forth on Exhibit A hereto. The purchase price per share of the
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Option Shares purchased with the Initial Amount shall be the Alternative
Exercise Price.
2. Option Term. Subject to the provisions of Section 3, which provides
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for earlier termination of portion of the Option or later termination in certain
cases, the term of the Option and this Agreement shall begin immediately and
continue until September 30, 1998.
3. Vesting of Stock Options.
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(a) This Option shall only be exercisable in accordance with the
following vesting schedule:
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Number of Shares Vesting Date Expiration Date
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2,000,000 Immediate Later of June 30, 1997 or 90 days
following the Registration Date (as
defined)* (the "Initial Tranche
Termination Date")
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1,000,000 June 30, 1997 180 days from the Initial Tranche
Termination Date
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1,000,000 September 30, 1997 270 days from the Initial Tranche
Termination Date
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1,000,000 December 31, 1997 365 days from the Initial Tranche
Termination Date
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1,000,000 March 31, 1998 1 year and 90 days from the Initial
Tranche Termination Date
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*The Registration Date ("Registration Date") shall mean the date a
registration statement filed with the Securities and Exchange Commission
("Commission") to register the Option Shares under the Securities Act of 1933,
as amended (the "Securities Act") becomes effective.
(b) Optionee agrees that by the later of (i) April 15, 1997 or (ii) 30
days after the Registration Date it shall exercise the Option to purchase the
corresponding number of Option Shares for which the applicable Alternative
Exercise Price is equal to $250,000. Notwithstanding the foregoing, Optionee
shall not be required to exercise this Option if (i) the Company's shares of
common stock are not trading on the Nasdaq OTC Bulletin Board or other principal
exchange or (ii) the Company is in default with respect to its 7% Convertible
Subordinated Debentures.
(c) In the event of the dissolution or liquidation of the Company; the
Option shall terminate as of a date which is ten days prior to such dissolution
or liquidation; provided, however, that not less than 30 days' written notice of
the date of such liquidation or dissolution shall be given to the Optionee by
Xxxx and the Optionee shall be fully vested in and shall have the right during
such 30 day period to exercise the Option, even though the Option would not
otherwise be exercisable under the Vesting Schedule. At the end of such 30 day
period, any unexercised portion of the Option shall terminate and be of no
further effect.
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4. Exercise of the Option. This Option may exercised as to Option Shares
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in whole or in part but subject to the vesting schedule specified in Section 3
of this Agreement. Each exercise of the Option, or any part thereof, shall be
evidenced by a notice in writing to Xxxx. The applicable exercise price of the
Option Shares as to which the Option shall be exercised shall be paid in full at
the time of exercise, and may be paid to Xxxx by wire transfer in immediately
available funds to the account set forth on Exhibit A hereto.
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5. No Rights as Shareholder Until Exercise. Optionee acknowledges to the
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Company that Optionee shall not have any of the rights of a shareholder of the
Company with respect to the Option Shares covered by this Agreement except to
the extent that one or more certificates of such Option Shares shall have been
delivered to Optionee, or Optionee has been determined to be a shareholder of
record by the Company's Transfer Agent, upon due exercise of the Option granted
hereunder.
6. Voting Agreement.
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(a) Xxxx will xxxxx to Optionee an irrevocable proxy, for the term of
this Agreement, with respect to 50% of all Unexpired Shares (as defined). The
number of Unexpired Shares subject to the irrevocable proxy shall be determined
and the irrevocable proxy shall be amended as of each date portions of the
Option are exercised or terminate in accordance with the terms of this
Agreement.
(b) Xxxx shall not vote the remaining 50% of all Unexpired Shares.
Unexpired Shares ("Unexpired Shares") as used herein means those Option Shares
underlying that portion of the Option as to which the exercise period has not
been terminated in accordance with the terms of this Agreement whether or not
such shares have become exercisable in accordance with the vesting schedule set
forth in Section 3.
7. Adjustments Upon Changes in Capitalization or Reorganization. The
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number of Shares subject to this Option shall be adjusted from time to time as
follows:
(a) Subject to any required action by shareholders of the Company, the
number of Shares subject to this Option, and the Exercise Price, shall be
proportionately and equitably adjusted for any increase or decrease in the
number of shares of Common Stock as a result of a subdivision or consolidation
of Shares or the payment of a stock dividend (but only in shares of Common
Stock).
(b) Subject to any required action by shareholders, if the Company
shall be the surviving corporation in any reorganization, merger or
consolidation, this Option shall pertain to and apply to the securities to which
Xxxx is entitled thereunder, and if a plan or agreement reflecting any such
event is in effect that specifically provides for the change, conversion or
exchange of the Shares, then any adjustment to the Shares subject to this Option
shall not be inconsistent with the terms of any such plan or agreement.
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(c) In the event of a change in the Shares as presently constituted,
which is limited to a change of par value into the same number of the Shares
with a different par value or without par value, the Shares resulting from any
such change shall be deemed to be the Shares within the meaning of this
Agreement.
(d) The Optionee shall have no rights by reason of any subdivision or
consolidation 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 or by
reason of any dissolution, liquidation, reorganization, merger or consolidation
or spinoff of assets or stock of another corporation, and any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect, and no adjustment by reason thereof
shall be made with respect to, the number or Exercise Price of Shares subject to
this Option.
(e) The Optionee shall have no preemptive rights with respect to the
Option Shares.
8. Non-Transferability of the Option. This Option shall not be
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transferable and shall be exercisable only by Optionee.
9. Shelf Registration. (a) The Company agrees to file with the
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Commission within 45 days after the date hereof, a shelf registration statement
("Shelf Registration Statement") for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Option Shares. The Shelf
Registration Statement shall be on Form SB-1 under the Securities Act or another
appropriate form permitting registration of such Option Shares for resale by the
Optionee. The Company shall use its best efforts to cause such Shelf
Registration Statement to be declared effective pursuant to the Securities Act
as promptly as practicable following the filing thereof and to keep the Shelf
Registration Statement continuously effective under the Securities Act for the
period ending September 30, 1998 (except during periods following the filing of
a post effective amendment thereto and prior to the declaration of the
effectiveness of such post effective amendment; provided, the Company shall use
its best efforts to cause any such post effective amendment to be declared
effective as soon as practicable), or such shorter period as may be specified by
the Commission in amending Rule 144 or ending when there cease to be outstanding
any restricted Option Shares ("Effectiveness Time"). In connection with such
registration of the Option Shares, the Company shall use its reasonable efforts
to register or qualify or cooperate with Optionee and respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Option Shares for offer and sale under
the securities of "Blue Sky" laws of the State of Florida and such jurisdictions
within the United States as Optionee reasonably requests in writing.
(b) Xxxx and the Optionee shall provide such information as is
requested from the Company and cooperate fully with the Company's efforts to the
cause the Shelf Registration Statement to be declared effective under the
Securities Act and to remain effective during the Effectiveness Time.
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(c) The fees and expenses incident to the performance of or compliance
with this section shall be borne by the Company whether or not the Shelf
Registration Statement becomes effective and whether or not any securities are
sold pursuant to any Shelf Registration Statement. The fees and expenses
referred to in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the National Association of
Securities Dealers, Inc. and (B) in compliance with the applicable state
securities laws, (ii) printing expenses, (iii) fees and disbursements of Counsel
for the Company (but not counsel for the Optionee), (iv) fees and disbursements
of the Company's independent certified public accountants and (v) fees and
expenses of all other persons retained for such purpose by the Company.
10. Compliance with Securities and other Laws. In no event shall Xxxx be
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required to issue Option shares under this Option if the issuance thereof would
constitute a violation of applicable federal or state securities laws or
regulations or a violation of any other law or regulation of any governmental or
regulatory agency or authority or any national securities exchange. As a
condition to any transfer of Option Shares, the Company may place legends on
Option Shares, issue stop transfer orders and require such agreements or
undertakings as the Company may deem necessary or advisable to assure compliance
with any such laws or regulations, including, if the Company or its counsel
deems it reasonably appropriate, further representations from Optionee that
Optionee is acquiring the Option Shares solely for investment and not with a
view to distribution and that no distribution of the Option Shares will be made
unless such shares are registered pursuant to applicable securities laws, or in
the opinion of counsel of the Company, such registration is unnecessary.
11. Organization of Optionee. Optionee is a corporation duly organized
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under the laws of the State of Florida and is validly existing under the laws of
Florida.
12. Authority. Optionee has full corporate power and authority to execute
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and deliver this Agreement and to carry out its obligations hereunder. The
execution, delivery and performance by Optionee of this Agreement have been duly
authorized by the Optionee. This Agreement is a valid, binding and enforceable
obligation of the Optionee, enforceable against it in accordance with its terms,
except to the extent the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other laws and judicial decisions of general
application relating to or affecting the enforcement of creditors' rights
generally or by general equitable principles.
13. Accredited Investor. Optionee is an "Accredited Investor" as such
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term is defined in Section 501(a) of the Securities Act. Optionee represents
and warrants that it has such knowledge and experience in financial and business
matters as to be capable of evaluation the merits and risks of its investment in
the Option and the Option Shares. Optionee has had the opportunity to obtain
from the Company and Xxxx any and all information, to the extent possessed by
the Company and Xxxx or obtainable with reasonable efforts by the Company and
Xxxx, necessary to evaluate the merits and risks of an investment in the Option
and the Option Shares and has concluded, based on such information and other
information previously known
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to Optionee to invest in the Option and the Option Shares pursuant to the terms
of this Agreement.
14. Investment Purposes. Optionee hereby represents and warrants that it
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is acquiring the Option and the Option Shares for investment purposes only, for
its own account, and not as nominee or agent for any other person or entity, and
not with a view to, or for resale in connection with, any distribution thereof
within the meaning of the Securities Act. Optionee has no agreement or other
arrangement with any person or entity to sell, transfer or pledge any part of
the Option or the Option Shares and has no plans to enter into any such
agreement or arrangement.
15. Restricted Security. Optionee acknowledges that Xxxx is selling the
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Option to Optionee without registration under the Securities Act and that the
Option Shares are not currently registered under the Securities Act. Optionee
further acknowledges that the representatives of the Company and Xxxx have
advised Optionee that no state or federal agency or instrumentality has made any
finding or determination as to the investment in the Option or the Option
Shares, nor has any state or federal agency or instrumentality made any
recommendation with respect to any purchase or investment in the Option or the
Option Shares.
16. Domicile. As of the date hereof, the principal business offices of
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the Optionee is in the State of Florida.
17. Notices. Any notice necessary under this Agreement shall be in
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writing, addressed (a) to the Company in care of its Secretary at the principal
executive office of the Company in Westlake, Texas, (b) to Optionee at 0000
Xxxxxxxxx Xxxxxxxxx, Xxxxx 000X, Xxxx Xxxxx, Xxxxxxx 00000 or (c) to Xxxx in
care of the Company at the principal executive office of the Company in
Westlake, Texas. Except as otherwise provided herein, any such notice shall be
deemed effective upon receipt thereof by the addressee.
18. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF
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THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA, WITHOUT
REGARD TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.
19. Amendment of Agreement. This Agreement may be amended, altered,
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suspended, discontinued or terminated only by the mutual written consent of Xxxx
and Optionee (the consent of the Company not being required).
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
ONE UP CORPORATION
By:/s/ Xxxxx Xxxxxxxxx
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Name:Xxxxx Xxxxxxxxx
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Title:Vice President/Secretary
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OPTIONEE:
EAI PARTNERS, INC.
By:/s/ X.X. Xxxxxxxxx
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Name:X.X. Xxxxxxxxx
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Title:President
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XXXX:
/s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
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