ZIASUN TECHNOLOGIES, INC.
Xxxxx X. Xxxxxxx
Non-Qualified Stock Option Agreement
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This Agreement, effective as of April 15, 1999, is between ZiaSun
Technologies, Inc., a Nevada Corporation ("the Company"), and Xxxxx X. Xxxxxxx,
an individual ("Optionee").
1. Grant of Option. The Company, pursuant to the terms of that certain
Employment Agreement dated May 30, 1997, as amended (the "Employment
Agreement"), hereby grants to Optionee an option to purchase One Hundred
Thousand (100,000) shares of the Common Stock of the Company (the "Shares"), on
the terms and conditions set forth in this Agreement. The option granted under
this Agreement is a non-qualified stock option and is not intended to qualify as
either a qualified stock option or an incentive stock option as those terms are
defined by applicable provisions of the Internal Revenue Code of 1986, as
amended.
2. Purchase Price. The Purchase Price of the Shares to be purchased
pursuant to this option shall be Two Dollars ($2.00) per Share.
3. Vesting. Optionee's right to exercise the option granted in this
Agreement shall vest over four (4) years, as provided in this paragraph. This
option shall become exercisable with respect to twenty-five percent (25.0%) of
the shares subject to this Option on each anniversary date of Optionee's
completion of Employment with the Company. Notwithstanding the preceding
sentence, the option shall immediately become exercisable in full in the event
that (i) the shareholders of the Company approve a dissolution or liquidation of
the Company or a sale of all or substantially all of the Company's assets to
another entity; (ii) a tender within the meaning of section 14 of the Securities
Exchange Act of 1934, as amended, is made for five percent (5%) or more of the
Company's outstanding capital stock by any person other than the Company or an
affiliate; or (iii) the Company effects an underwritten public offering of its
securities pursuant to a registration statement filed under the Securities Act
of 1933. This option shall be subject to termination before its date of
expiration as provided in Paragraph 6(b).
4. No Transfer or Assignment of Option. Except as otherwise provided in
this Agreement, this option and the rights and privileges conferred hereby shall
not be transferred, assigned, pledged, or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under execution,
attachment, or similar process. Upon any attempt to transfer, assign, pledge,
hypothecate, or otherwise dispose of this option, or of any right or privilege
conferred hereby, contrary to the provisions of this Agreement, or upon any
attempted sale under any execution, attachment, or similar process upon the
rights and privileges conferred hereby, this option and the rights and
privileges conferred hereby shall immediately become null and void.
5. Method of Exercise.
(a) Notice and Payment. The rights represented by this option may be
exercised by the Optionee, in whole or in part, at any time or in part
from time to time during the exercise period as set forth in Section
3, but not as to a fractional share of Common Stock, by giving written
notice to the Company pursuant to Paragraph 10(g) (or at such other
agency or office of the Company in the United States of America as it
may designate by notice in writing to the holder hereof at the address
of such holder appearing on the books of the Company), and by payment
to the Company of the purchase price, as set forth in Section 2, in
cash or by certified or official bank check in United States Dollars
for each share being purchased.
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(b) Certificate Delivery and Ownership. In the event of any exercise
of the rights represented by this option, (i) a certificate or
certificates for the shares of Common Stock so purchased, registered
in the name of the Optionee entitled to receive the same, shall be
mailed to the Optionee within a reasonable time, not exceeding ten
days, after the rights represented by this option shall have been so
exercised; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificate, and the
Company shall not be required to issue or deliver such certificates
unless or until the Optionee requesting the issuance thereof shall
have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been
paid. The Optionee whose name any certificate for shares of Common
Stock is issued upon exercise of this option shall for all purposes be
deemed to have become the holder of record of such shares on the date
on which the option was exercised and payment of the option price was
made, irrespective of the date of delivery of such certificate, except
that, if the date of such surrender and payment is a date when the
stock transfer books of the Company are closed, such person shall be
deemed to have become the holder of record of such shares at the close
of business on the next succeeding date on which the stock transfer
books are open. The issuance of any shares of Common Stock pursuant to
the terms of this option shall at all times be subject to the
requirements of the Act, as amended, and to the applicable state and
any foreign securities and blue sky laws then in effect.
(c) Issuance of Shares. After receiving a proper notice of exercise,
the Company shall cause to be issued a certificate or certificates for
the Shares as to Optionee, registered in Optionee's name (or in
Optionee's name and the name of Optionee's spouse as community
property or as joint tenants with a right of survivorship). The
certificate or certificates shall contain the legend required by
Paragraph 9(f).
(d) Conversion Right. In lieu of exercising this option as specified
above, Optionee may from time to time convert this Option, in whole or
in part, into a number of shares of Common Stock determined by
dividing (i) the aggregate fair market value of the Shares or other
securities otherwise issuable upon exercise of this Option minus the
aggregate Option Price of such Shares by (ii) the fair market value of
one Share. The fair market value of the Share shall be determined
pursuant to Section (e).
(e) Fair Market Value.
(i) If the Common Stock is listed on a national securities
exchange or admitted to unlisted trading privileges on such
exchange or listed for trading on the Nasdaq National Market, the
current fair market value shall be the last reported sale price
of the Common Stock on such exchange or market on the last
business day prior to the date of exercise of this Option or if
no such sale is made on such day, the average closing bid and
asked prices for such day on such exchange or market; or
(ii) If the Common Stock is not so listed or admitted to unlisted
trading privileges, but is traded on the Nasdaq SmallCap Market,
the current market value shall be the average of the closing bid
and asked prices for such day on such market and if the Common
Stock is not so traded, the current market value shall be the
mean of the last reported bid and asked prices reported by the
National Quotation Bureau, Inc. on the last business day prior to
the date of the exercise of this Option; or
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(iii)If the Common Stock is not so listed or admitted to unlisted
trading privileges and bid and asked prices are not so reported,
the current fair market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year
of the Company ending prior to the date of the exercise of the
Option, determined in such reasonable manner as may be prescribed
by the Board of Directors of the Corporation.
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By way of example only, and assuming the following, the number of
shares to be issued to Optionee upon conversion would be
calculated as follows:
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(i) The closing bid for the Company's common stock is $10.00 on
the date that Optionee exercises his rights as to vested
options.
(ii) The Optionee is vested with the right to purchase 25,000
shares; (iii) The exercise price of the Option is $2.00 per
share.
Aggregate Fair market value of Shares (25,000 x $10.00)= 250,000
Aggregate Option Price .............. (25,000 x $2.00) = 50,000
Fair market value of one share ...... (Closing Bid) = $10.00
(Aggregate Fair market value of Shares) minus (Aggregate Option Price
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Aggregate Option Price
20,000 Shares to be Issued = (250,000 - 50,000) i.e.200,000
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$10.00 $10.00
6. Term and Expiration.
(a) Term. This option, if it has not expired earlier under the
provisions of Paragraph 6(b), shall expire in all events on the
seventh (7th) anniversary of the effective date of this Agreement.
(b) Termination of Option. The option granted under this Agreement, to
the extent that it has not been exercised, shall terminate at the
following times:
DEATH: If Optionee dies while he is employed by the Company,
Optionee's estate shall have the right for a period of six (6) months
after the date of death to exercise the option to the extent Optionee
was entitled to exercise the option on that date, provided the actual
date of exercise is in no event after the expiration of the term of
the option. To the extent the option is not exercised within this
six-month period, the option will terminate. Optionee's "estate" shall
mean Optionee's legal representative or any person who acquires the
right to exercise the option by reason of Optionee's death.
DISABILITY: If Optionee's employment ends because Optionee
becomes disabled, Optionee or his qualified representative (in the
event of Optionee's mental disability) shall have the right for a
period of twelve (12) months after the date on which Optionee's
employment ends to exercise the option to the extent Optionee was
entitled to exercise the option on that date, provided the actual date
of exercise is in no event after the expiration of the term of the
option. To the extent the option is not exercised within this
twelve-month period, the option will terminate.
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RESIGNATION: If Optionee voluntarily resigns from the Company,
Optionee shall have the right for a period of three (3) months after
the date of resignation to exercise the option to the extent Optionee
was entitled to exercise the option on that date, provided the date of
exercise is in no event after the expiration of the term of the
option. To the extent the option is not exercised within this
three-month period, the option will terminate.
TERMINATION FOR REASONS OTHER THAN CAUSE: If Optionee's
employment is terminated by the Company for reasons other than cause,
Optionee shall have the right for a period of three (3) months after
the date of termination to exercise the option to the extent Optionee
was entitled to exercise the option on that date, provided the date of
exercise is in no event after the expiration of the term of the
option. To the extent the option is not exercised within this
three-month period, the option will terminate. The termination of
Optionee's employment by the Company will be for reasons other than
cause if the termination is NOT due to an act by Optionee of
embezzlement, fraud, dishonesty, or breach of fiduciary duty to the
Company, or to deliberate disregard by Optionee of the rules of the
Company resulting in loss, damage, or injury to the Company, or to any
unauthorized disclosure by Optionee of any of the secrets or
confidential information of the Company, or to Optionee's having
induced any client or customer of the Company to break any contract
with the Company, or to Optionee's having induced any principal for
whom the Company acts as agent to terminate the agency relationship,
or to any conduct of Optionee that constitutes unfair competition with
the Company.
OTHER REASONS: If Optionee's employment ends for any reason not
mentioned above in this Paragraph 6(b), all rights of Optionee in the
option, to the extent that it has not been exercised, shall terminate
on the date his employment ends.
7. Legality of Initial Issuance. No Shares shall be issued upon the
exercise of this option unless and until the Company has determined that all
applicable provisions of state and federal securities laws have been satisfied.
8. Capital Adjustments.
(a) The Company's Freedom to Act. The existence of this Agreement
shall not affect in any way the right or power of the Company or its
shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company's
capital structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, or preferred or
preference stocks affecting the Shares or the rights thereof, or of
any rights, options, or warrants to purchase any capital stock of the
Company, or the dissolution or liquidation of the Company, any sale or
transfer of all or any part of its assets or business, or any other
corporate act or proceedings of the Company, whether of a similar
character or otherwise.
(b) Adjustment of Optioned Shares. The Shares with respect to which
this option is granted are Shares of the Company as presently
constituted; but if and whenever, prior to the delivery by the Company
of all of the Shares with respect to which these options are granted,
the Company shall effect a subdivision or consolidation of the Shares
or other capital readjustment, the payment of a stock dividend, or
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other increase or reduction in the number of the Shares outstanding
without receiving compensation therefor in money, services, or
property, the number of the Shares then remaining subject to option
hereunder shall (i) in the event of an increase in the number of
outstanding Shares, be proportionately increased, and the cash
consideration payable per Share shall be proportionately reduced; and
(ii) in the event of a reduction in the number of outstanding Shares,
be proportionately reduced, and the cash consideration payable per
Share shall be proportionately increased.
9. Miscellaneous Provisions.
(a) Withholding Taxes. In the event that the Company determines that
it is required to withhold federal, state, or local tax as a result of
the exercise of this option, Optionee, as a condition to the exercise
of this option, shall make arrangements satisfactory to the Company to
enable it to satisfy all withholding requirements.
(b) No Rights as a Shareholder. Optionee shall have no rights as a
shareholder with respect to any Shares subject to this option until
the Shares have been issued in the name of Optionee.
(c) No Employment Rights. Nothing in this Agreement shall be construed
as giving Optionee the right to be retained as an Employee of the
Company.
(d) Further Assurances. Each party to this Agreement agrees to perform
any and all further acts and to execute and deliver any documents that
may reasonably be necessary to carry out the provisions of this
Agreement.
(e) Attorneys' Fees. In any legal action or other proceeding brought
by either party to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to recover reasonable
attorneys' fees and costs.
(f) Governing Law. The Agreement and all determinations made and
actions taken pursuant hereto, to the extent not otherwise governed by
the Code or the securities laws of the United States, shall be
governed by the law of the State of Nevada.
(g) Notices. Any written notice to the Company required by any of the
provisions of the Agreement shall be addressed to the chief personnel
officer or to the chief executive officer of the Company, and shall
become effective when it is received by the office of the chief
personnel officer or the chief executive officer.
(h) Entire Agreement.This Agreement, together with those documents
that are referenced in the Agreement, are intended to be the final,
complete, and exclusive statement of the terms of the agreement
between Optionee and the Company with regard to the subject matter of
this Agreement. This Agreement supersedes all other prior agreements,
communications, and statements, whether written or oral, express or
implied, pertaining to that subject matter. This Agreement may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements, oral or written, and may not be explained or supplemented
by evidence of consistent additional terms.
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(i) Successors and Assigns. Optionee agrees that he will not assign,
sell, transfer, delegate, or otherwise dispose of, whether voluntarily
or involuntarily, or by operation of law, any rights or obligations
under this Agreement, except as expressly permitted by this Agreement.
Any such purported assignment, sale, transfer, delegation, or other
disposition shall be null and void. Subject to the limitations set
forth in this Agreement, the Agreement shall be binding on and inure
to the benefit of the successors and assigns of the Company and any
successors and permitted assigns of Optionee, including any of his
executors, administrators, or other legal representatives. It shall
not benefit any person or entity other than those specifically
enumerated in this Agreement.
(j) Severability. If any provision of this Agreement, or its
application to any person, place, or circumstance, is held by an
arbitrator or a court of competent jurisdiction to be invalid,
unenforceable, or void, that provision shall be enforced to the
greatest extent permitted by law, and the remainder of this Agreement
and of that provision shall remain in full force and effect as applied
to other persons, places, and circumstances.
(k) Interpretation. This Agreement shall be construed as a whole,
according to its fair meaning, and not in favor of or against any
party. By way of example and not in limitation, this Agreement shall
not be construed in favor of the party receiving a benefit nor against
the party responsible for any particular language in this Agreement.
Captions are used for reference purposes only and should be ignored in
the interpretation of the Agreement. Unless the context requires
otherwise, all references in this Agreement to Paragraphs are to the
paragraphs of this Agreement.
(1) Counterparts. This Agreement may be executed in one or more
counterparts, all of which together shall constitute one and the same
instrument. Consent may be executed by facsimile and such facsimile
copy shall be conclusive evidence of the consent and ratification of
the matters contained herein by the undersigned parties.
The parties have duly executed this Agreement as of the date first written
above.
ZIASUN TECHNOLOGIES, INC.
A Nevada Corporation
/S/ Xxxxxxx Xxxxx /S/ Xxxxxxx Xxxx X. Xxxx III
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By: Xxxxxxx Xxxxx By: Xxxxxxx Xxxx X. Xxxx III
Its: President Its: Secretary
OPTIONEE
/S/ Xxxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
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