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EXHIBIT 10.10
ADVANCED SYSTEMS INTERNATIONAL, INC.
NONQUALIFIED STOCK OPTION AGREEMENT
Advanced Systems International, Inc., a Nevada corporation (the
"Company"), hereby grants to XXXXXX X. XXXXX (the "Employee"), as of July 8,
1997 (the "Date of Grant"), an option to purchase up to 500,000 shares (the
"Option") of the Company's Common Stock (the "Shares"), at a price of One Dollar
($1.00) per share (the "Option Price"). This Option replaces (pursuant to the
terms of Section 1.06 of the Agreement for RTO Merger dated July 8, 1997 to
which the Company is a party) an option previously granted to Employee by
Automatic Time Systems Corp.
ARTICLE I. EXERCISE OF OPTION
SECTION 1.01 Employee may exercise this Option, in whole or in part, at
any time prior to the date the Option expires, as described in Article IV.
ARTICLE II. TRANSFERABILITY
SECTION 2.01 Employee may not transfer this Option except by will or
the laws of descent and distribution or pursuant to the terms of a domestic
relations order, as defined in Section 414(p)(1)(B) of the Internal Revenue Code
of 1986, which satisfies the requirements of Section 414(p)(1)(A) of the
Internal Revenue Code of 1986 (a "Qualified Domestic Relations Order"). During
Employee's life, only Employee (or Employee's personal representative or
attorney-in-fact) or the alternate payee named in a Qualified Domestic Relations
Order, may exercise this Option. The Employee's estate or beneficiary may
exercise this Option following the death of the Employee. The Option shall not
otherwise be transferred, assigned, pledged or hypothecated for any purpose
whatsoever, and is not subject to execution, attachment or similar process. Any
attempted assignment, transfer, pledge or hypothecation or other disposition of
the Option, other than in accordance with the terms of this Agreement, shall be
void and of no effect.
ARTICLE III. MANNER OF EXERCISE
SECTION 3.01 This Option shall be exercised by written notice to the
Company's Secretary specifying the number of Shares to be purchased and
accompanied by payment for those Shares and any applicable withholding taxes. At
the election of Employee, such payment may be made in cash, check, or by
delivery of certificate(s) representing Shares of the Company's common stock
previously held by the Employee, duly endorsed for transfer, or shares issuable
to the Employee pursuant to the exercise of this Option. The Company may also
permit payment to be made in such other manner as the Company deems appropriate
and in compliance with applicable law. Any shares delivered to the Company in
payment of the aggregate Option Price shall be
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valued at the "Fair Market Value" of the Company's shares, as defined below, as
of the date of Employee's exercise of the Option. If the Employee is, at the
time of exercise, an officer of the Company or any of its subsidiaries, the
Company shall withhold the appropriate number of Shares, rounded up to the next
whole number, as have a Fair Market Value equal to the amount required to
satisfy applicable withholding taxes. If the Employee is not an officer of the
Company or any of its subsidiaries at the date of exercise, he may elect to have
Shares withheld or may deliver cash or a check to pay the withholding taxes. The
Option shall be exercised in accordance with such reasonable administrative
regulations as the Company shall from time to time adopt.
SECTION 3.02 "Fair Market Value" means, on any given date, (a) if the
Company Common Stock is, on the given date, listed on a national securities
exchange, Fair Market Value shall be the highest selling price for the given
date, or the most recent date upon which sales occurred, (b) if (a) does not
apply, then Fair Market Value shall be the highest selling price for the Company
Common Stock as reported on the Nasdaq National Market for the given date, or
the most recent date upon which sales were reported, (c) if neither (a) nor (b)
applies, Fair Market Value shall be the final asked price for the Company Common
Stock as quoted for the given date in whatever medium then issues such quotes,
or the most recent date upon which such quotes were published, (d) if none of
(a), (b) or (c) applies, then Fair Market Value shall be determined by the
Company based on such valuation methods and/or indicia of value as the Company
deems advisable at the time of such determination. The use by the Company of any
method or indicia of value to determine Fair Market Value on any valuation date
will not, of itself, preclude the Company from use of a different method or
indicia on a subsequent valuation date.
ARTICLE IV. EXPIRATION
SECTION 4.01 All unexercised rights under the Option shall expire on
the first to occur of (a) July 8, 2017, or (b) the termination of Employee's
employment with the Company or its subsidiaries for "cause," as defined below.
SECTION 4.02 The Employee's employment shall be deemed to have been
terminated for "cause" if such termination is determined, in the sole discretion
of the Company, to have resulted from an act or omission by the Employee
constituting active and deliberate dishonesty, as established by a final
judgment or actual receipt of an improper benefit or profit in money, property
or services, or from the Employee's continuous failure to perform his duties
under any employment agreement in effect between the Employee and the Company in
any material manner (or, in the absence of such an agreement, the consistent
failure or refusal of the Employee to perform according to reasonable
expectations and standards set by the Board and/or management consistent with
Employee's title and position) after receipt of notice of such failure from the
Company specifying how the Employee has so failed to perform.
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ARTICLE V. ANTI-DILUTION PROVISIONS
SECTION 5.01 Common Stock Dividends, Subdivisions, Combinations. If the
Company shall (a) pay or make a dividend or other distribution to all holders of
its Common Stock in shares of Common Stock, (b) subdivide, split or reclassify
the outstanding shares of its Common Stock into a larger number of shares, or
(c) combine or reclassify the outstanding shares of its Common Stock into a
smaller number of shares, then in each such case the Shares for which this
option may be exercised (the "Underlying Shares") shall be adjusted to equal the
number of Shares to which the Employee would have been entitled upon the
occurrence of such event had this Option been exercised immediately prior to the
happening of such event or, in the case of a stock dividend or other
distribution, prior to the record date for determination of such shareholder
entitled thereto, and the Option Price shall be proportionately adjusted. An
adjustment made pursuant to this 0shall become effective immediately after such
record date, in the case of a dividend or distribution, and immediately after
the effective date, in the case of a subdivision, split, combination or
reclassification.
SECTION 5.02 Reorganization or Reclassification. In case of any capital
reorganization or any reclassification of the Common Stock of the Company
(whether pursuant to a merger, consolidation or otherwise), this Option shall
thereafter be exercisable for the number of shares of stock or other securities
or property receivable upon such capital reorganization or reclassification of
Common Stock, as the case may be, by a holder of the number of shares of Common
Stock into which this Option was exercisable immediately prior to such capital
reorganization or reclassification of Common Stock; and, in any case,
appropriate adjustment shall be made in the application of the provisions herein
set forth with respect to the rights and interests thereafter of the Employee to
the end that the provisions set forth herein shall thereafter be applicable, as
nearly as reasonably may be, in relation to any shares of stock or other
securities or property thereafter deliverable upon the exercise of this Option.
SECTION 5.03 Distributions of Assets or Securities Other Than Common
Stock. In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock shares of any of its capital stock (other than
Common Stock), rights or warrants to purchase any of its securities, cash, other
assets or evidences of its indebtedness, then in each such case the Option Price
shall be reduced (but not below zero) by the fair market value (as determined in
good faith by the Board of Directors of the Company) of the portion of the
securities, cash, assets or evidences of indebtedness so distributed applicable
to one share of Common Stock. An adjustment made pursuant to this 0shall become
effective immediately after such distribution date.
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SECTION 5.04 No Impairment. The Company shall not, without the prior
consent of the Employee, by amendment of its Articles of Incorporation or
through any reorganization, transfer of the assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms to be observed
or performed hereunder by the Company, but shall at all times in good faith
assist in the carrying out of all the provisions of this 0 and in the taking of
all such action as may be necessary or appropriate in order to protect the
conversion rights of the Employee against impairment.
SECTION 5.05 Readjustment. Upon the termination of any right of
conversion or exchange of any securities convertible into or exchangeable for
Common Stock, or upon the expiration of any rights or options to purchase Common
Stock (other than this Option) or any securities convertible into or
exchangeable for Common Stock, or upon any change in the number of shares of
Common Stock issuable upon exercise, conversion or exchange of any such
securities, rights or options, the Underlying Shares then in effect shall
forthwith be readjusted to such Underlying Shares as would have been in effect
had the adjustments made upon the issuance or sale of such securities, rights or
options been made upon the basis of the issuance of only the number of shares of
Common Stock actually issued or to be issued upon the exercise, conversion or
exchange or such securities, rights or options, and the Option Price shall be
proportionately adjusted.
SECTION 5.06 Notice of Certain Corporate Transactions. The Company
shall mail to the Employee a notice of any proposed dividend, merger,
dissolution, liquidation or winding up of the Company, stating the proposed
record date (if any) or effective date for any such transaction and briefly
describing the transaction. The Company shall give this notice at least ten
business days prior to the date of such action.
SECTION 5.07 No Adjustment or Readjustment in Certain Circumstances.
The Company shall not make any adjustment or readjustment of any of the Option
Price or the number of Underlying Shares in the case of (a) the exercise of this
Option, or (b) the issuance or sale by the Company of Common Stock or rights or
options pursuant to, or the adjustment of the Option Price, or the exercise or
termination, of rights or options issued pursuant to, any employee stock option
or similar plan of the Company, or (c) except as specifically provided in this
0, by reason of the issuance of shares of Common Stock or any other securities
of the Company in exchange for cash, property or services or other
consideration.
SECTION 5.08 Certificate of Adjustment. Upon the occurrence of each
adjustment or readjustment pursuant to this 0, the Company, at its expense,
shall as promptly as practicable compute such adjustment or readjustment in
accordance with the provisions of this 0, and prepare and furnish to the
Employee a certificate setting forth such adjustment or readjustment and
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showing in reasonable detail the facts upon which such adjustment or
readjustment in based.
SECTION 5.09 Information to be Furnished Upon Request. Upon the request
at any time of the Employee, the Company shall as promptly as practicable
furnish or cause to be furnished, to the Employee, at his address set forth in
such request, a certificate setting forth the number of shares of Common Stock
that at the time would be received upon the exercise of the Option and the
Option Price thereof.
ARTICLE VI. SALE OF THE COMPANY; REORGANIZATION
SECTION 6.01 In the event that (i) a Sale of the Company, or (ii) any
capital reorganization or reclassification of the capital stock of the
Corporation or merger of the Company with or into another corporation or other
entity (collectively, a "Reorganization"), is in such a way that holders of
Common Stock are entitled to receive stock, securities or assets with respect to
or in exchange for Common Stock, then, as a condition of such Sale of the
Company or Reorganization, lawful and adequate provision shall be made whereby
the Employee shall thereafter have the right to receive, upon the basis and upon
the terms and conditions specified in this Option, and in lieu of the Common
Stock immediately theretofore receivable upon the exercise of this Option, such
shares of stock, securities or assets as would have been (by virtue of such Sale
of the Company or Reorganization) issued or payable with respect to or in
exchange for a number of outstanding shares of Common Stock equal to the number
of shares of Common Stock immediately theretofore receivable upon the exercise
of this Option, assuming such exercise had taken place immediately prior to such
Sale of the Company or Reorganization. In any such case, appropriate provision
shall be made with respect to the rights and interests of the Employee to the
end that the provisions hereof (including, without limitation, provisions for
adjustments of the number of shares of Common Stock receivable upon exercise of
this Option) shall thereafter be applicable, as nearly as may be, in relation to
any shares of stock, securities or assets thereafter receivable upon the
exercise of this Option. The Company shall not effect any such Sale of the
Company or Reorganization, unless, prior to or simultaneously with the
consummation thereof, the successor entity (if other than the Company) resulting
from such transaction shall assume by written instrument, executed and mailed or
delivered to the Employee, the obligation to deliver to the Employee such shares
of stock, securities or assets as, in accordance with the foregoing provisions,
the Employee may be entitled to receive.
SECTION 6.02 Notice of any proposed Sale of the Company or
Reorganization shall be given by the Company to the Employee as promptly as
practicable after such transaction appears likely, but not less than 20 days
prior to the date on which the proposed Sale of the Company or Reorganization is
to be consummated.
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SECTION 6.03 In lieu of the provisions of 0above, in the event of a
Sale of the Company or a Reorganization, the Employee may, at his election,
compel the Company to purchase this Option (the "Put") at a price (the "Put
Price") equal to the aggregate Fair Market Value of the Underlying Shares minus
the aggregate Option Price. The Company shall pay the Put Price to the Employee
at the same time that the Sale or Reorganization is consummated. The Employee
may exercise this Put at any time by notice to the Company not later than ten
days after the notice described in 0has been given.
SECTION 6.04 "Sale of the Company" shall mean any change of control of
the Company (as the term "control" is defined in Rule 405 of the Securities and
Exchange
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Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act")), whether such change of control occurs through
merger, consolidation, sale of assets or stock, exchange of securities, or
otherwise.
ARTICLE VII. DISSOLUTION OR LIQUIDATION
SECTION 7.01 Upon any proposed distribution of the assets of the
Company in dissolution or liquidation (except under circumstances when 0 or 0
shall be applicable), the Company shall mail notice thereof to the Employee and
shall make no distribution to its shareholders until the expiration of 30 days
from the date of mailing of such notice and, in any such event, the Employee may
exercise the purchase rights with respect to this Option within 30 days from the
date of mailing such notice. All rights herein granted not so exercised within
such 30-day period shall thereafter become null and void.
ARTICLE VIII. NOTICES AND OTHER SHAREHOLDER COMMUNICATIONS
SECTION 8.01 The Company shall provide to the Employee a copy of any
and all reports, notices, proxy statements, annual, quarterly or special
reports, or other communications to its shareholders of any type whatever, at
the same time such communications are dispatched to the shareholders.
ARTICLE IX. REGISTRATION RIGHTS
SECTION 9.01 Definitions. As used in this Article IX, the term
"Registrable Securities" means (i) the shares of Common Stock issuable upon
exercise of this Option, (ii) any shares of Common Stock which the Employee may
hereafter acquire, and (iii) any capital stock of the Company issued as a
dividend or other distribution with respect thereto, or in exchange for or in
replacement of, the shares of Common Stock referred to in clauses (i) and (ii)
above.
SECTION 9.02 Required Registration.
(a) If, at any time after the Company registers its Common Stock
with the Commission pursuant to the Securities Exchange Act of 1934, as
amended, the Company receives a written request therefor from the
Employee, the Company shall prepare and file a registration statement
under the Securities Act covering the Registrable Securities which are
the subject of such request and shall use its reasonable best efforts
to cause such registration statement to become effective. The Company
shall be obligated to prepare, file and cause to become effective only
one registration statement pursuant to this Section 9.02.
Notwithstanding the foregoing obligation of the Company, if either (i)
in the good faith judgment of the Company's board of directors the
registration of the Registrable Securities would at such time interfere
with a primary offering of
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securities or a sale or acquisition transaction material to the
Company, require the disclosure of material information that the
Company has a bona fide business purpose for preserving as
confidential, or require the Company to provide information required by
the Commission or the Securities Act, such as pro forma information,
that at such time the Company would be unable to provide, then the
Company's obligation to prepare and file a registration statement in
connection with the Registrable Securities which are the subject of the
Employee's request shall be suspended for a reasonable period (not to
exceed 90 days) until the Company consummates or abandons such primary
offering or other transaction, determines that such confidential
information may be disclosed or is able to provide any such information
required by the Commission or the Securities Act, provided that the
Company may exercise the right to suspension of an offering under this
Section 9.02 no more than one time during any 12 month period.
(b) In the event that the Employee shall determine for any reason
not to proceed with a registration at any time before the registration
statement has been declared effective by the Commission, and (i) the
Employee requests the Company to withdraw such registration statement,
if theretofore filed with the Commission, with respect to the
Registrable Securities covered thereby, or if the offering is not
consummated for any reason, and (ii) the Employee agrees to bear its
expenses incurred in connection therewith and to reimburse the Company
for the expenses incurred by it attributable to the registration of
such Registrable Securities, then the Employee shall not be deemed to
have exercised its right to require the Company to register Registrable
Securities pursuant to this Section 9.02.
(c) Without the written consent of the Employee, neither the
Company nor any other holder of securities of the Company may include
securities in such registration if in the good faith judgment of the
managing underwriter of such public offering the inclusion of such
securities would interfere with the successful marketing of the
Registrable Securities or require the exclusion of any portion of the
Registrable Securities to be registered.
SECTION 9.03 Incidental Registration. Each time the Company shall
determine to proceed with the actual preparation and filing of a registration
statement under the Securities Act on any form (other than Form S-4 or any
successor form thereto) that would permit the inclusion of the Registrable
Securities in connection with the proposed offer and sale for money of any of
its securities by it or any of its security holders, the Company will give
written notice of its determination to the Employee. Upon the written request of
the Employee given within 30 days after receipt of any such notice from the
Company, the Company will, except as herein provided, cause all such shares of
Registrable Securities for which the Employee has so requested registration, to
be included in such registration statement, all to the extent requisite to
permit the sale or other disposition by the Employee to be so registered;
provided, however, that nothing herein shall prevent the Company from, at any
time, abandoning or delaying any such
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registration initiated by it. If any registration pursuant to this Section shall
be underwritten in whole or in part, the Company may require that the
Registrable Securities requested for inclusion pursuant to this Section be
included in the underwriting on the same terms and conditions as the securities
otherwise being sold through the underwriters. If in the good faith judgment of
the managing underwriter of such public offering the inclusion of all of the
Registrable Securities originally covered by a request for registration would
reduce the number of shares to be offered by the Company or its security holders
exercising demand registration rights, or interfere with the successful
marketing of the shares of stock offered by the Company or its security holders
exercising demand registration rights, the number of shares of Registrable
Securities otherwise to be included in the underwritten public offering may be
reduced pro rata among the holders thereof requesting such registration. Those
shares of Registrable Securities which are thus excluded from the underwritten
public offering shall be withheld from the market by the holders thereof for a
period, not to exceed 180 days, which the managing underwriter reasonably
determines is necessary in order to effect the underwritten public offering.
SECTION 9.04 Registration Procedures. If and whenever the Company is
required by the provisions of Sections 12(b) or 12(c) to effect the registration
of any Registrable Securities under the Securities Act, the Company will:
(a) prepare and file with the Commission a registration statement
with respect to such securities, and use its reasonable best efforts to
cause such registration statement to become and remain effective for
such period as may be reasonably necessary to effect the sale of such
securities, not to exceed three months;
(b) prepare and file with the Commission such amendments to such
registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement
effective for such period as may be reasonably necessary to effect the
sale of such securities, not to exceed three months;
(c) furnish to the security holders participating in such
registration and to the underwriters of the securities being registered
such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as
such security holders and underwriters may reasonably request in order
to facilitate the public offering of such securities;
(d) use its reasonable best efforts to register or qualify the
securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating
holders may reasonably request within 20 days following the original
filing of such registration statement, except that the Company shall
not for any purpose be required to execute a general
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consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(e) notify the security holders participating in such
registration, promptly after it shall receive notice thereof, of the
time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration
statement has been filed;
(f) notify such holders promptly of any request by the Commission
for the amending or supplementing of such registration statement or
prospectus or for additional information;
(g) prepare and file with the Commission, promptly upon the
request of any such holders, any amendments or supplements to such
registration statement or prospectus which, in the opinion of counsel
for such holders (and concurred in by counsel for the Company), is
required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of the Registrable
Securities by such holder;
(h) prepare and promptly file with the Commission and promptly
notify such holders of the filing of such amendment or supplement to
such registration statement or prospectus as may be necessary to
correct any statements or omissions if, at the time when a prospectus
relating to such securities is required to be delivered under the
Securities Act, any event shall have occurred as the result of which
any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of
the circumstances in which they were made, not misleading;
(i) advise such holders, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the
Commission suspending the effectiveness of such registration statement
or the initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop order
or to obtain its withdrawal if such stop order should be issued;
(j) not file any amendment or supplement to such registration
statement or prospectus to which a majority in interest of such holders
shall have reasonably objected on the grounds that such amendment or
supplement does not comply in all material respects with the
requirements of the Securities Act or the rules and regulations
thereunder, after having been furnished with a copy thereof at least
five business days prior to the filing thereof, unless in the opinion
of counsel for the Company the filing of such amendment or supplement
is reasonably necessary to protect the Company from any liabilities
under any applicable federal or state law and such filing will not
violate applicable law; and
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(k) at the request of any such holder, furnish on the effective
date of the registration statement and, if such registration includes
an underwritten public offering, at the closing provided for in the
underwriting agreement: (A) opinions, dated such respective dates, of
the counsel representing the Company for the purposes of such
registration, addressed to the underwriters, if any, and to the holder
or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, in which
opinion such counsel shall state (without limiting the generality of
the foregoing) that (1) such registration statement has become
effective under the Securities Act; (2) to the best of such counsel's
knowledge no stop order suspending the effectiveness thereof has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Securities Act; (3) the registration
statement and each amendment or supplement thereto comply as to form in
all material respects with the requirements of the Securities Act and
the applicable rules and regulations of the Commission thereunder
(except that such counsel need express no opinion as to financial
statements contained therein); (4) to the best of the knowledge of such
counsel neither the registration statement nor any amendment nor
supplement thereto contains any untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (except that
such counsel need express no opinion as to financial statements
contained therein); (5) the description in the registration statement
or any amendment or supplement thereto of legal and governmental
proceedings and contracts are accurate and fairly present the
information required to be shown; and (6) such counsel does not know of
any legal or governmental proceedings, pending or threatened, required
to be described in the registration statement or any amendment or
supplement thereto which are not described as required nor of any
contracts or documents or instruments of the character required to be
described in the registration statement or amendment or supplement
thereto or to be filed as exhibits to the registration statement, which
are not described or filed as required; and (B) letters, dated such
respective dates, from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and to the holder
or holders making such request, covering such matters as such
underwriters and holder or holders may reasonably request, in which
letters such accountants shall state (without limiting the generality
of the foregoing) that they are independent certified public
accountants within the meaning of the Securities Act and that in the
opinion of such accountants the financial statements and other
financial data of the Company included in the registration statement or
any amendment or supplement thereto comply in all material respects
with the applicable accounting requirements of the Securities Act.
SECTION 9.05 Expenses. With respect to any registration requested
pursuant to Section 9.02 (except as otherwise provided in such Section with
respect to registrations
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voluntarily terminated at the request of the requesting security holders) and
with respect to each inclusion of shares of Registrable Securities in a
registration statement pursuant to Section 9.03, the Company shall bear the
following fees, costs and expenses: all registration, filing and NASD fees,
printing expenses, fees and disbursements of counsel and accountants for the
Company and one counsel for the selling security holders, all internal Company
expenses, the premiums and other costs of policies of insurance against
liability arising out of the public offering, and all legal fees and
disbursements and other expenses of complying with state securities or blue sky
laws of jurisdictions in which the securities to be offered are to be registered
or qualified. Underwriting discounts and commissions and transfer taxes for
selling security holders and any other expenses incurred by the selling security
holders not expressly included above shall be borne by the selling security
holders.
SECTION 9.06 Indemnification. In the event that any Registrable
Securities are included in a registration statement under Sections 9.02 or 9.03:
(a) The Company will indemnify and hold harmless the Employee and
any underwriter (as defined in the Securities Act) and each person, if
any, who controls such holder or such underwriter within the meaning of
the Securities Act, from and against any and all loss, damage,
liability, cost and expense to which such holder or any such
underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading;
provided, however, that the Company will not be liable in any such case
to the extent that any such loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with
information furnished by such holder, in writing, such underwriter or
such controlling person.
(b) The Employee will indemnify and hold harmless the Company,
any controlling person and any underwriter from and against any and all
loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue or alleged
untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or
the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading, in each case
to the
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extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was so made in
reliance upon and in strict conformity with information furnished in
writing by such holder.
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section of notice of the
commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (a) or (b), promptly notify the
indemnifying party of the commencement thereof; but the omission to so
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than hereunder. In
case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party; provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and there is a conflict of interest which would
prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties shall have the
right to select separate counsel to participate in the defense of such
action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party pursuant to the provisions of said
paragraph (a) or (b) for any legal or other expense subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation, unless (A) the
indemnified party shall have employed counsel in accordance with the
proviso of the preceding sentence, (B) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the
notice of the commencement of the action, or (C) the indemnifying party
has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party.
SECTION 9.07 Registration Rights of Transferees. The registration
rights granted to the holders of Registrable Securities pursuant to this 0 shall
also be for the benefit of, and enforceable by, any permitted subsequent holder
of Registrable Securities, whether or not any express assignment of such rights
to any such subsequent holder is made.
ARTICLE X. ISSUANCE OF SHARES
SECTION 10.01 The Company shall not be required to issue or deliver any
Shares upon an exercise of the Option:
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(a) Prior to the admission of such Shares to listing on any
public exchange on which the Company's common stock may be listed; or
(b) Prior to the completion of any proceedings under any
applicable state or federal securities law, rule or regulation that the
Company or its counsel determines to be necessary or advisable to the
issuance of the Shares; or
(c) Unless such issuance, in the opinion of the Company's
counsel, is exempt from federal and state securities registration
requirements.
SECTION 10.02 The Company may require Employee to represent and agree
in writing that if such Shares are issuable under an exemption from registration
requirements, the Shares will be "restricted". Employee shall not have the
rights of a shareholder with respect to the Shares until certificates evidencing
the Shares have been issued and delivered to Employee.
ARTICLE XI. NOTICE
SECTION 11.01 All notices given pursuant to or in connection with this
Agreement shall be in writing and shall be deemed to be duly given when
personally delivered or when mailed, if sent by certified or registered mail,
postage prepaid, return receipt requested, and addressed as follows, or to such
other address as the parties may indicate:
If to the Company:
Advanced Systems International, Inc.
00000 X. Xxxx Xxxx Xx Xxx 000
Xxxxxxxxxx, XX 00000
ATTN: Chief Executive Officer
If to the Employee:
Xxxxxx X. Xxxxx
000 Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
With a Required Copy of any Notice to:
Xxxxx X. Xxxxxx, Esq.
Jaffe, Raitt, Heuer & Xxxxx
Professional Corporation
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00
Xxx Xxxxxxxx Xxx Xxx 0000
Xxxxxxx, Xxxxxxxx 00000-0000
ARTICLE XII. NO RIGHT TO EMPLOYMENT CONFERRED
SECTION 12.01 Nothing in this Agreement or the Plan shall confer upon
the Employee any right to continue as a employee of the Company or a subsidiary
or interfere in any way with the right of the Company or any subsidiary to
terminate such person's engagement as an employee at any time.
ARTICLE XIII. SEVERABILITY
SECTION 13.01 If any provision of this Agreement is held invalid or
unenforceable, the remaining provisions shall continue to be in full force and
effect to the maximum extent permitted by law.
ARTICLE XIV. AMENDMENT
SECTION 14.01 This instrument contains the entire Agreement of the
parties and may only be amended by written agreement executed by the parties
hereto or their respective permitted successors above.
ARTICLE XV. GOVERNING LAW
SECTION 15.01 This Agreement is made and entered into and shall be
construed and enforced in accordance with the laws of the State of Michigan.
ARTICLE XVI. HEADINGS
SECTION 16.01 The section numbers and headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
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IN WITNESS WHEREOF, this Nonqualified Stock Option Agreement is hereby
executed.
"COMPANY"
ADVANCED SYSTEMS INTERNATIONAL,
INC., a Nevada corporation
By:
-------------------------------------------------
Xxxxxxx Xxxxxxxxx, Chief Financial Officer
"EMPLOYEE"
----------------------------------------------------
Xxxxxx X. Xxxxx
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