ENVIROKARE TECH, INC.
STOCK OPTION AGREEMENT
ENVIROKARE TECH, INC. (the "Company"), desiring to afford an opportunity to
the Grantee named below to purchase certain shares of the Company's Common Stock
to provide the Grantee with an added incentive to work on behalf of the Company
or one or more of its subsidiaries, hereby grants to the Grantee, and the
Grantee hereby accepts, an option to purchase the number of such shares
specified below, during a 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: Xxxx X. Xxxxxxxx, Xx.
(b) Date of grant: September 24, 2003
(c) Number of shares optioned: 2,000,000
(d) Option exercise price per share: $0.23
(e) Expiration date: September 24, 2013
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 unless this sentence
has been manually lined out and its deletion is followed by the signature of the
corporate officer who signed this Option on behalf of the Company and the
Grantee.
2. Vesting Schedule and Expiration. This Option is not exercisable in any
part until 30 days after the date of grant. Upon the expiration of 30 days after
the date of grant and subject to the provisions for termination and acceleration
herein, this Option shall become exercisable in full or in part at the option of
the holder
3. Termination Provisions. The right to exercise this Option is subject to
the following additional restrictions and limitations:
(a) Death of Grantee. If the Grantee shall die while this Option remains
exercisable, the Grantee's legal representative or representatives or the
persons entitled to do so under the Grantee's last will and testament or under
applicable state laws shall have the right to exercise this Option, but only for
the number of shares as to which this Option might have been exercised on the
date of the Grantee's death, and such right shall expire and this Option shall
terminate five years after the date of the Grantee's death or on the expiration
date of this Option, whichever date is earlier. In all other respects, this
Option shall terminate upon such death.
4. Transferability of Option. This Option may be transferred by the Grantee
in part or in whole without restriction or any encumberance and the parties to
whom the Grantee may transfer such options shall have all of the rights and
obligations with respect to such transferred options as the Grantee under the
terms contained herein.
5. Adjustments and Corporate Reorganizations. If the outstanding shares of
stock 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 or other forms of property (including cash) or rights, as a result of
one or more reorganizations, recapitalizations, spin-offs, stock splits, reverse
stock splits, stock 2 dividends or the like, appropriate adjustments shall be
made in the number and/or kind of shares or securities or other forms of
property (including cash) or rights for which 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.
Upon the dissolution or liquidation of the Company, or upon a
reorganization, merger or consolidation of the Company as a result of which the
outstanding securities of the class then subject to this Option are changed into
or exchanged for property (including cash), rights or securities not of the
Company's issue, or any combination thereof, or upon a sale of substantially all
the property of the Company to, or the acquisition of stock representing more
than eighty percent (80%) of the voting power of the stock of the Company then
outstanding by, another corporation or person, this Option shall terminate
unless provision be made in writing in connection with such transaction for the
assumption of this Option, or the substitution for this Option of an option
covering the stock of a successor employer corporation, or a parent or a
subsidiary thereof, with appropriate adjustments in accordance with the
provisions hereinabove in this Section entitled "Adjustments and Corporate
Reorganizations" as to the number and kind of shares optioned and their exercise
prices, in which event this Option shall continue in the manner and under the
terms so provided. In any event, no provision will be made which shall limit the
rights provided hereunder.
If this Option shall terminate pursuant to the next preceding paragraph,
the Grantee or other person then entitled to exercise this Option shall have the
right, at such time prior to the consummation of the transaction causing such
termination as the Company shall designate, to exercise the unexercised portions
of this Option, including the portions thereof which would, but for this Section
entitled "Adjustments and Corporate Reorganizations," not yet be exercisable.
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
four 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 on account of any federal, state or local tax imposed as a
result of such exercise, the notice of exercise shall also be accompanied by a
check to the order of the Company in payment if the amount thus required to be
withheld.
7. Alternative Payment with Stock. Notwithstanding the foregoing provisions
requiring payment by check, if stock of the class then subject to this Option is
then Publicly Traded, payment of such purchase price or any portion thereof may
also be made in whole or in part with shares of the same class of stock as that
then subject to this Option, surrendered in lieu of the payment of cash
concurrently with such exercise, the shares so surrendered to be valued on the
basis of the Fair Market Value of the stock on the date of exercise, 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 (a) the Company is then prohibited from purchasing or
acquiring shares of the class of its stock thus tendered to it, or (b) the right
or power of the person exercising the Option to deliver such shares in payment
of the purchase price is subject to the prior interests of any other person
(excepting the Company) as indicated by legends upon the certificate(s) or known
to the Company. 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 with stock is permitted in
accordance with the foregoing provision, the person then entitled to exercise
this Option may, in lieu of using previously outstanding stock 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 retain so many shares
that would otherwise have been delivered by the Company upon that exercise of
this Option as equals the number of shares that would have been surrendered to
the Company if the purchase price had been paid with previously issued stock. If
the Company is required to withhold on account of any federal, state or local
tax imposed as a result of an exercise of this Option with previously issued
stock or by retention of some optioned shares under this Section entitled
"Alternative Payment with Stock," the stock surrendered or retained shall
include an additional number of shares whose Fair Market Value equals the amount
thus required to be withheld.
8. Rights in Stock 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.
9. Requirements of Law. By accepting this Option, the Grantee represents
and agrees for himself or herself and his or her 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, (a) any and all shares so purchased shall be acquired for his or
her personal account and not with a view to or for sale in connection with any
distribution, and (b) each notice of the exercise of any portion of this Option
shall be 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 or her personal account and not with a view to or for sale in
connection with any distribution. The Company will exercise its best efforts as
quickly as practicable to include grantees shares resulting from the exercise of
these options in any registration statement which it files.
No certificate or certificates for shares of stock purchased upon exercise
of this Option shall be issued and delivered unless and until, in the opinion of
legal 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 or any other requirement of law or of
any regulatory body having jurisdiction over the Company.
10. Stock Appreciation Rights. The Grantee or other person entitled to
exercise this Option is further hereby granted the right ("Stock Appreciation
Right") in lieu of exercising this Option or any portion thereof to receive an
amount equal to the lesser of (a) the excess of the Fair Market Value of the
stock subject to this Option or such portion thereof over the aggregate exercise
price for such shares hereunder as of the date the Stock Appreciation Right is
exercised. The amount payable upon exercise of such Stock Appreciation Right may
be settled by payment in cash or in shares of the class then subject to this
Option valued on the basis of their Fair Market Value on the date Stock
Appreciation Right is exercised, or in a combination of cash and such shares so
valued. No Stock Appreciation Right may be exercised, in whole or in part, (i)
other than in connection with the contemporaneous surrender without exercise of
this Option or the portion thereof that corresponds to the portion of the Stock
Appreciation Right being exercised, or (ii) except to the extent that this
Option or such portion thereof is exercisable on the date of exercise of the
Stock Appreciation Right by the Person exercising the Stock Appreciation Right,
or (iii) unless the class of stock then subject to this Option is then Publicly
Traded.
11. Company's Right of First Purchase. While and so long as the stock of
the class subject to this Option has not been Publicly Traded for at least
ninety days, any stock issued on exercise of this Option shall be subject to the
Company's right of first purchase. By virtue of that right, (a) such stock may
not be transferred during the Grantee's lifetime to any person other than
members of the Grantee's Immediate Family, a partnership whose members are the
Grantee and/or members of the Grantee's Immediate Family, or a trust for the
benefit of the Grantee and/ or members of the Grantee's Immediate Family, unless
such transfer occurs within fifteen days following the expiration of thirty days
after the Company has been given a written notice which correctly identified the
prospective transferee or transferees and which offered the Company an
opportunity to purchase such stock at its Fair Market Value in cash, and such
offer was not accepted within thirty days after the Company's receipt of that
notice; and (b) upon the Grantee's death, the Company shall have the right to
purchase all or some of such stock at its Fair Market Value within nine months
after the date of death. This right of first purchase shall continue to apply to
any such stock after the transfer during the Grantee's lifetime of that stock to
a member of the Grantee's Immediate Family or to a family partnership or trust
as aforesaid, and after any transfer of that stock with respect to which the
Company waived its right of first purchase without also waiving it as to any
subsequent transfers thereof, but it shall not apply after a transfer of that
stock with respect to which the Company was offered but did not exercise or
waive its right of first purchase or more than nine months after the Grantee's
death. Grantee has the right to assign a portion of the options represented
hereby to up to five persons that are non-family members. The Company may assign
all or any portion of its right of first purchase to any one or more of its
stockholders, or to a pension or retirement plan or trust for employees of the
Company, who may then exercise the right so assigned. Stock certificates
evidencing stock subject to this right of first purchase shall be appropriately
legended to reflect that right.
12. Notices. Any notice to be given to the Company shall be addressed to
the Company in care of its Secretary at its principal office, and any notice to
be given to the Grantee shall be addressed to the Grantee at the address set
forth beneath the Grantee's 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 fees prepaid, in a post office or branch post office
regularly maintained by the United States Postal Service.
13. Forfeiture Provisions: The rights granted by this agreement are subject
to the forfeiture provisions contained in the contract for employment between
the Company and Xxxx X. Xxxxxxxx, Xx.
14. Rules of Construction. This Agreement has been executed and delivered
by the Company in the State of Florida, and shall be construed and enforced in
accordance with the laws of Florida, other than any choice of law rules calling
for the application of laws of another jurisdiction. Should there by any
inconsistency or discrepancy between the provisions of this Option and the terms
and conditions of the Executive Compensation Agreement between the Company and
the Grantee, the provisions of this Option shall prevail. The receipt of this
Option does not give the Grantee any right to continued employment by the
Company or subsidiary for any period, nor shall granting of this Option or the
issuance of shares on exercise thereof give the Company or any subsidiary any
right to the continued services of the Grantee for any period.
IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.
ENVIROKARE TECH, INC.
By: /s/ Xxxxxxxx Xxxxxx /s/ Xxxx Xxxxxxxx
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Its: Chairman Individually
ATTEST:
Xxxxxx Xxxxxxxxx
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Executive Vice President/Director
