AMENDMENT TO CAPITAL STOCK OPTION AGREEMENT
This Amendment to Capital Stock Option Agreement, (the “Amendment”) is entered into by and among (the “Company”), with offices at,
WHEREAS, the Company has one million (1,000,000) shares of common capital stock authorized for issue, of which one thousand (1,000) shares are outstanding in the name of the Company’s sole shareholder.
WHEREAS FURTHER, the parties to this Amendment are the same parties who entered into that one certain Capital Stock Option Agreement dated xx whereby the Company granted a non-transferable option to purchase so much of the shares of the common capital stock of the Company (the “Stock”) in order to make at the time of the exercise of the option a shareholder of the Company owning a ten percent (10%) interest in all of the then issued and outstanding shares of the Stock of the Company.
WHEREAS FURTHER the Company and, as its sole shareholder, intend by this Amendment to replace and supersede the original Capital Stock Option Agreement dated xxxx, and to increase the percentage of Stock to be granted as an option to so that is granted a non-transferable option to purchase so much of the shares of the common capital stock of the Company (the “Stock”) in order to make, at the time of the exercise of the option, a shareholder of the Company owning a fifteen percent (15%) interest in all of the then issued and outstanding shares of the Stock of the Company.
WHEREAS FURTHER, joins in this Agreement as the sole shareholder of the Company to evidence his agreement, consent and intention to be bound with the terms and conditions of this Agreement.
NOW THEREFORE, FOR AND IN CONSIDERATION of the mutual covenants and promises as hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged and confessed, and based on the foregoing, the parties hereto agree as follows:
1. Grant of Option to . The Company hereby grants a non-transferable option to purchase so much of the shares of the common capital stock of the Company (the “Stock”) in order to make at the time of the exercise of the option a shareholder of the Company owning a fifteen percent (15%) interest in all of the then issued and outstanding shares of the Stock of the Company (the “Option”) specifically subject to the terms and conditions of this Agreement. The Company’s grant of the Option to is conditioned upon (i) continuing in the employ of the Company under the terms and conditions of her presently existing Employment Agreement with the Company, (ii) being an employee of the Company as of the date the Option is exercised and (iii) complying with the other terms and conditions of this Agreement including but not limited to numbered paragraph 4 of this Agreement.
2. Term of Option. The term of the Option provided for in this Agreement shall coincide with the term of the Employment Agreement presently has with the Company (the “Option Term”), however, such Option Term is specifically limited by the provisions in this Agreement relating to, among possible other things, compliance with this Agreement, the procedures for the exercise of such Option to purchase, the conditions relating to the procedures for exercising the Option, and by paying the “Option Exercise Price” as defined in this Agreement.
3. Option Exercise. The Option is exercisable, if at all, only during the “Option Term”.
4. Option Exercise Price. The Company hereby acknowledges and agrees that the “Option Exercise Price” for the purchase of the Stock covered by the Option is ONE THOUSAND FIVE HUNDRED AND NO\100 DOLLARS ($1,500.00).
5. Procedures to Exercise the Option. At any time that desires to exercise her Option before its expiration and within the Option Term, she shall give the Company written notice thereof. After receipt of such notice and subject to the other terms of this Agreement, the Company shall immediately deliver to , so many shares of the Company’s Stock as are necessary to make at the time of the exercise of the Option, a shareholder of the Company owning a fifteen percent (15%) interest in all of the then issued and outstanding Stock of the Company. The Company’s obligation to deliver any of the Stock shall be expressly contingent upon the following events or conditions:
a. ’s exercise of the Option within the Option Term, and
b. ’s tendering of the Option Exercise Price to the Company in cash, certified funds or wire transfer within ten (10) days immediately after the time she gives the Company written notice that she is exercising the Option, and
c. ’s being employed by the Company at the time of ’s exercise of the Option, and
d. paying to the Company within ten (10) days immediately after the time she gives the Company written notice that she is exercising the Option the amount that the Company deems necessary to satisfy the Company’s obligation to withhold all federal, state or local income, employment or other taxes arising in connection with the exercise of the Option, and
e. ’s agreement to the terms of any buyout of either the Stock or assets of the Company that , as majority shareholder, thinks is reasonable, as long as is bound to the same contract or agreement for the sale and transfer of such assets or Stock as is bound and ’s written acknowledgement of such agreement to the terms of any buyout of either the Stock or assets of the Company that thinks is reasonable, such written acknowledgment being in substantially the form and substance as contained in Exhibit “A” attached hereto and incorporated herein by reference, and
f. ’s exercise of the Option and the issuance and delivery of the Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, the Securities Exchange Act of 1934, as amended, any applicable state securities or blue sky laws, the rules and regulations promulgated under any of the foregoing, and the requirements of any stock exchange upon which the common stock of the Company may then be listed.
Each of the parties to this Agreement hereby acknowledges and agrees that each would not have entered into this Agreement and the Option would never have been granted to without every party agreeing to be bound by the terms and conditions of the Procedures to Exercise Option and the conditions precedent for to exercise the Option as contained in this numbered paragraph 5 exactly as written.
6. Failure to Exercise the Option. If fails to exercise her Option within the Option Term, or if does not comply with the other terms and conditions of this Agreement including but not limited to the Procedures to Exercise the Option as contained in numbered paragraph 5 of this Agreement, (unless such failure is the result of the actions or inaction of either the Company or , with the exception of the firing of from the employment of the Company for adequate cause, as that term is hereinafter defined) the Option granted herein shall be immediately null and void and all consideration given for the Option shall be forfeited.
7. Representations and Warranties of the Company and . Each of the Company and represent and warrant to as follows:
a. The Company is a corporation duly authorized and validly existing.
b. The Company only has one class of stock, being common stock and will continue to have only one class of stock during the term of the Option.
c. Each of the Company and has full power and authority to enter into this Agreement and the agreements referred to herein and to carry out the transactions contemplated hereby and thereby. This Agreement has been duly executed and delivered by the Company and , and is legally binding on the Company and in accordance with its terms.
d. The Company has complete and unrestricted power to grant the Option as contemplated by this Agreement and the grant will not constitute a violation of any agreement to which either the Company or is a party or by which the Stock of the Company is affected. Upon delivery to of this Agreement for the consideration provided herein, will be vested with full right and title in and to the Option, free of all liens, claims and encumbrances of any kind or nature, but subject to the terms and conditions of this Agreement. There are no issued and outstanding options, warrants, rights, securities, contracts, commitments, understandings, or arrangements by which the Company or is bound to issue any additional ownership interests or options to purchase any additional ownership interests in or to the Company.
e. Neither the Company nor are subject to any restriction contained in any charter, bylaw, mortgage, lien, lease, agreement, instrument, order, judgment or decree that would prevent the consummation of the transactions contemplated by this Agreement.
f. To the knowledge of the Company and , there are no actions, suits, audits, proceedings, or investigations (whether or not purportedly on behalf of the Company) pending or threatened against or affecting the Company or the assets of the Company.
g. From and after the date of this Agreement shall use good faith efforts to operate the Company and may endeavor to engage investment bankers or other professionals in order to represent and/or the Company for the purpose of completing a sale of substantially all of the assets or capital stock of the Company. In the event of the sale being structured as a capital stock sale, it shall be a requirement that in the event is then a shareholder of the Company, ’s shares of stock in the Company be sold to such buyer. In addition, shall use good faith efforts to negotiate any agreement for the sale of substantially all of the assets or capital stock of the Company containing a provision or provisions to the effect that , for three (3) years from and after any closing date of the sale and purchase of the assets or capital stock of the Company, shall continue to be employed by any such prospective purchaser or the company under substantially the same terms and conditions as her presently existing Employment Agreement, subject to numbered paragraph 8(l) of this Agreement. Notwithstanding the foregoing, does not and cannot guaranty the continued economic viability of the Company and cannot guaranty completing any sale of substantially all of the assets or capital stock of the Company on any timetable or containing any provisions relating to the continued employment of . hereby reserves the right to approve or disapprove the final terms and conditions of any such sale and engagement of investment bankers in his sole and absolute discretion.
h. Neither the Company, nor will fire , except for “Adequate Cause.” “Adequate Cause” as that term is used in this Agreement shall be defined as (i) because of theft, misappropriation or embezzlement of a material amount of Company property, property of any officer, shareholder, director or employee, or property of any customer of the Company; (ii) because of fraud against the Company, which fraud shall consist of making false representations known to be false (or concealing material facts) with the intent to deceive the Company, or its officers, directors or shareholders, for the purpose of obtaining for herself or someone else something of material value to which that person is not entitled, and which has the effect of materially damaging the Company, either financially, legally or in its relations with its customers; (iii) conviction of, or the pleading of nolo contendere to, a crime punishable as a felony, or a crime of moral turpitude; (iv) failure to materially comply with her current conditions of employment with the Company, which failure to materially comply shall not have been cured within thirty (30) days after notice thereof shall have been given to by the Company.
8. Representations and Warranties of . hereby represents and warrants to the Company and as follows:
a. is an individual, natural person.
b. The execution and delivery of this Agreement by and the consummation of the transaction contemplated hereby have been duly and validly authorized. This Agreement has been duly executed and delivered by and is legally binding on in accordance with its terms.
c. is not subject to any restriction contained in any charter, bylaw, mortgage, lien, lease, agreement, instrument, order, judgment or decree that would prevent the consummation of the transactions contemplated by this Agreement.
d. It is the intent of to purchase the Option and the Stock of the Company for investment.
e. acknowledges that unless and until exercises the Option, she will have no rights as a shareholder and will not become an owner of a fifteen percent (15%) interest in all of the then issued and outstanding shares of the Stock of the Company unless and until she effectively exercises the Option expressly and strictly in accordance with the terms and conditions of this Agreement.
f. understands that the Stock has not been registered under the Securities Act of 1933, as amended (the “1933 Act”), and therefore the Stock cannot be resold and must be held indefinitely unless they are registered under the 1933 Act or unless an exemption from such registration is available, and that the certificate(s) representing the Stock may bear a legend to that effect. understands that the Company is under no obligation to register the Stock and that an exemption may not be available or may not permit to transfer Stock in the amounts or at the times proposed by . Specifically, has been advised that Rule 144 promulgated under the 1933 Act, which permits certain resales of unregistered securities, is not presently available with respect to the Stock and, in any event, requires that the Stock be paid for and then be held for at least two years (and in some cases three years) before they may be resold under Rule144.