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EXHIBIT 10.34
KARTS INTERNATIONAL INCORPORATED
NON-QUALIFIED STOCK OPTION AGREEMENT
Non-Qualified Option No. ____________________
NON-QUALIFIED STOCK OPTION AGREEMENT (the "Agreement") made this the
30th day of January, 1997 (the "Date of Grant"), by and between KARTS
INTERNATIONAL INCORPORATED, a Nevada corporation (the "Company"), and the
undersigned officer, director, employee or advisor of the Company or a
subsidiary thereof (the "Optionee").
W I T N E S E T H:
WHEREAS, the Company desires, by affording the Optionee an opportunity
to purchase shares of its common stock, $.001 par value per share (the "Common
Stock"), as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party, the parties hereto
have agreed, and do hereby agree, as follows:
1. Grant of Option. The Company hereby grants to the Optionee
the right and option to purchase all or any part of an aggregate of __________
shares of the Common Stock (as adjusted to reflect the two-for-three reverse
stock split effective March 24, 1997) (such number being subject to further
adjustment as provided in Section 15 hereof) pursuant to the terms and
conditions set forth herein (the "Option").
2. Purchase Price. The purchase price of the shares of the
Common Stock covered by the Option shall be $4.875 per share (which represents
the closing bid price of $3.25 per share of the Common Stock as quoted on the
NASD Electronic Bulletin Board on January 30, 1997 as adjusted to reflect the
two-for-three reverse stock split effective March 24, 1997) (subject to further
adjustment as provided in Section 15 hereof).
3. Term of Option. The term of the Option shall be for a period
of five (5) years from the date hereof, subject to earlier termination or
extension as provided in Sections 12, 13 and 14 hereof. The Option and all
rights hereunder with respect thereto, to the extent such rights shall not have
been previously exercised, shall terminate and become null and void upon
expiration of the term hereof.
4. Time of Exercise of Option. Except as otherwise stated
herein, the Option may be exercised, at any time during the period stated
below, as to any part or all of the number of shares of the Common Stock shown
below with respect to the applicable period, subject to adjustment as provided
in Section 15 hereof; provided that, except as otherwise provided in Section 13
or Section 14 hereof, the Option may not be exercisable at any time by the
Optionee unless the Optionee shall have been in the continuous employ or
service of the Company or a Subsidiary either as an officer, director,
employee, advisor or a combination thereof from the date hereof to the date of
the exercise of the Option.
Maximum Percentage of Shares of Common Stock that
Option Exercise Period Optionee May Purchase Pursuant to Option By End of Period
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From Date of Grant but before First
Anniversary of Date of Grant . . . . . . . . . . . . . . . . . . . . . . . 0
From First Anniversary of Date of Grant
but before expiration of term of Option . . . . . . . . . . . . . . . . . . 100%
NON-QUALIFIED STOCK OPTION AGREEMENT - Page 1
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For purposes of this Agreement, the term "Subsidiary" shall mean any
corporation (other than the employer corporation) in an unbroken chain of
corporations beginning with the employer corporation if, at the time of
granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock possessing fifty percent (50%) or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
5. Acceleration and Exercise Upon Change of Control.
Notwithstanding the provisions of Section 4 hereof, the exercise period set
forth in Section 4 hereof shall be accelerated upon the occurrence of a Change
of Control (as hereinafter defined) of the Company, or a threatened Change of
Control of the Company, so that the Option shall thereupon become exercisable
immediately in part or in its entirety by the Optionee, as the Optionee shall
elect, subject to the condition that no Option shall be exercisable after the
expiration of the term of the Option. For the purposes of this Agreement, a
"Change of Control" shall be deemed to have occurred if:
(a) Any "person", including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act of
1934 and the Rules and Regulations promulgated thereunder, is or
becomes, through one or a series of related transactions or through
one or more intermediaries, the beneficial owner, directly or
indirectly, of securities of the Company representing 25% or more of
the combined voting power of the Company's then outstanding
securities;
(b) As a result of, or in connection with, any tender
offer or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing
transactions (a "Transaction"), the persons who were Directors of the
Company before the Transaction shall cease to constitute a majority of
the Board of Directors of the Company or any successor to the Company;
(c) Following the Date of Grant, the Company is merged or
consolidated with another corporation and as a result of such merger
or consolidation less than 40% of the outstanding voting securities of
the surviving or resulting corporation shall then be owned in the
aggregate by the former shareholders of the Company, other than (i)
any party to such merger or consolidation, or (ii) any affiliates of
any such party;
(d) A tender offer or exchange offer is made and
consummated for the ownership of securities of the Company
representing 25% or more of the combined voting power of the Company's
then outstanding voting securities; or
(e) The Company transfers more than 50% of its assets, or
the last of a series of transfers result in the transfer of more than
50% of the assets of the Company, to another corporation that is not a
wholly- owned corporation of the Company. For purposes of this
subsection 5(e), the determination of what constitutes more than 50%
of the assets of the Company shall be determined based on the sum of
the values attributed to (i) the Company's real properties as
determined by an independent appraisal thereof and (ii) the net book
value of all other assets of the Company, each taken as of the date of
the Transaction involved.
In addition, upon a Change of Control, any Options previously granted
to the Optionee to the extent not already exercised may be exercised in whole
or in part either immediately or at any time during the term of the Option as
the Optionee shall elect.
6. Method of Exercising Option. Subject to the terms and
conditions of this Agreement, the Option may be exercised by written notice to
the Company at its principal place of business. Such notice shall state the
election to exercise the Option, the number of full shares in respect of which
it is being exercised, shall be signed by the person or persons so exercising
the Option, and shall contain the warranty, if any, required by Section 7(b)
hereof. Such notice shall be accompanied by payment of the full purchase price
of such shares and by this Agreement. The Company shall deliver a certificate
or certificates representing such shares as soon as practicable after the
aforesaid notice and payment of such shares shall be received, except as
otherwise provided in Section 7(d) hereof. The certificate or certificates for
the shares as to which the
NON-QUALIFIED STOCK OPTION AGREEMENT - Page 2
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Option shall have been so exercised shall be registered in the name of the
person or persons so exercising the Option, or, if the Option shall be
exercised by the Optionee and if the Optionee shall so request in the notice
exercising the Option, shall be registered in the name of the Optionee and
another person jointly, with right of survivorship, and shall be delivered as
provided above to or upon the written order of the person or persons exercising
the Option. In the event the Option shall be exercised, pursuant to Section 13
or Section 14 hereof, by any person or persons other than the Optionee, such
notice shall be accompanied by appropriate proof of the right of such person or
persons to exercise the Option. All shares that shall be purchased upon the
exercise of the Option as provided herein shall be fully paid and
non-assessable. In the event the Option shall not be exercised in full, the
Secretary of the Company shall endorse or cause to be endorsed on this
Agreement the number of shares which has been exercised hereunder, the number
of shares that remain exercisable hereunder, and return this Agreement to the
holder hereof.
7. Limitation on Exercise of Option and Compliance with
Securities Laws.
(a) Limitation on Exercise. The Option is subject to the
requirement that, if at any time the Board of Directors of the Company
shall determine, in its sole discretion, that the listing,
registration, or qualification of the shares of Common Stock subject
to the Option upon any securities exchange or under any state or
Federal law, or the consent or approval of any governmental regulatory
body, is necessary or desirable as a condition of, or in connection
with, the granting of the Option or the issue or purchase of shares
under the Option, the Option may not be exercised in whole or in part
unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not
acceptable to the Board of Directors of the Company. The Company
agrees that it will use its best efforts to effect or obtain promptly
any such listing, registration, qualification, consent or approval.
The Committee shall have the right to impose such restrictions and
limitations as it may deem advisable upon the exercise of this Option
in order to satisfy any such regulatory requirements.
(b) Investment Representation. Without limiting the
generality of the provisions of Section 7(a) hereof, if and to the
extent that the issuance of the shares of Common Stock pursuant to the
exercise of the Option is deemed by the Board of Directors of the
Company to be subject to the Securities Act of 1933, as amended (the
"Securities Act"), or any applicable state securities or "blue sky"
laws, unless the shares of Common Stock to be issued upon the exercise
of the Option shall have been effectively registered under the
Securities Act, the Company shall be under no obligation to issue the
shares of Common Stock covered by the exercise of the Option unless
and until the Company receives an investment representation agreement
in form acceptable to the Company and its counsel, which investment
representation agreement shall have been duly executed by the Optionee
and which shall contain the following representations and warranties
of the Optionee: (i) the Optionee is acquiring the shares of Common
Stock covered by the exercise of the Option for investment purposes
only, for the Optionee's own account and not with a view toward resale
or other distribution thereof, (ii) the Optionee is financially able
to bear the economic risks of an investment in the Company, (iii) the
Optionee has received no solicitation whatever regarding investment in
the Company, (iv) the Optionee is knowledgeable and experienced with
respect to stock investments in general and with respect to
investments of a nature similar to an investment in the Company, and
by reason of such knowledge and experience is capable of evaluating
the merits and risks of, and making an informed business decision with
regard to, an investment in the Company, (v) the Optionee , prior to
exercising the Option, has received all the information that the
Optionee deemed necessary to make an informed investment decision with
respect to an investment in the Company, and (vi) the Optionee
understands that the shares of Common Stock issued upon exercise of
the Option must be held indefinitely unless such shares are registered
under the Securities Act or an exemption from such registration is
available.
(c) Restrictive Legend on Stock Certificate. The
Optionee acknowledges that, unless the shares of Common Stock issuable
upon exercise of the Option have been registered under the Securities
Act, the Company will place a legend on the certificate evidencing
such Common Stock restricting the transfer thereof, which legend shall
be substantially as follows:
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THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY APPLICABLE STATE SECURITIES LAW BUT HAVE BEEN
ACQUIRED FOR THE PRIVATE INVESTMENT OF THE HOLDER HEREOF AND
MAY NOT BE OFFERED, SOLD OR TRANSFERRED UNTIL EITHER (i) A
REGISTRATION STATEMENT UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME EFFECTIVE
WITH REGARD THERETO, OR (ii) THE COMPANY SHALL HAVE RECEIVED
AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY AND ITS
COUNSEL THAT REGISTRATION UNDER SUCH SECURITIES ACT OR SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION
WITH SUCH PROPOSED OFFER, SALE OR TRANSFER.
(d) Delay in Issuance of Shares. The Company shall have
no obligation to issue a certificate to the Optionee evidencing
ownership of the shares of Common Stock covered by the exercise of the
Option until such time as the Optionee has complied with or satisfied
all of the applicable provisions of this Agreement and the Plan, and
the Company may delay the issuance of a certificate to the Optionee
evidencing such shares without liability to the Optionee until the
Optionee has complied with or satisfied all of the applicable
provisions of this Agreement and the Plan.
8. Medium and Time of Payment. The purchase price of the shares
as to which the Option shall be exercised shall be paid in full, at the time of
exercise, either (i) in cash to the Company, (ii) by tendering to the Company
shares of the Company's Common Stock having a fair market value (as of the date
of receipt of such shares by the Company) equal to the purchase price for the
number of shares of Common Stock purchased, or (iii) partly in cash and partly
in shares of the Company's Common Stock valued at fair market value as of the
date of receipt of such shares by the Company.
9. Rights as a Shareholder. The holder of the Option shall have
no rights as a shareholder of the Company with respect to the shares covered by
the Option until the due exercise of the Option and the date of the issuance of
one or more stock certificates to the holder for such shares. No adjustment
shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions or other rights for which the
record date is prior to the date such stock certificate is issued, except as
provided in Section 15 hereof.
10. Nontransferability. The Option shall not be transferable
otherwise than by Will or the laws of descent and distribution, and the Option
may be exercised, during the lifetime of the Optionee, only by the Optionee or
by the Optionee's court appointed guardian as set forth in Section 14 hereof.
More particularly (but without limiting the generality of the foregoing), the
Option may not be assigned, transferred (except as provided above), pledged, or
hypothecated in any way, shall not be assignable by operation of law and shall
not be subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof, and the levy of any execution, attachment,
or similar process upon the Option, shall be null and void and without effect
and shall terminate the Option.
11. Service to Company or Subsidiary. In consideration of the
granting of the Option and regardless of whether or not the Option shall be
exercised, if the Optionee was an employee of the Company or a Subsidiary as of
the Date of Grant, the Optionee agrees to remain in the employ of the Company
or a Subsidiary for a period of at least one (1) year from the date hereof;
and, during such employment, the Optionee shall devote such time, energy and
skill to the service of the Company or a Subsidiary as may be required by the
Board of Directors thereof, subject to vacations, sick leaves and other
approved absences and the provisions of any written employment agreement
between the Company or Subsidiary and the Optionee. Such employment, subject
to the provisions of any written employment agreement between the Company or
Subsidiary and the Optionee, shall be at the pleasure of the Board of Directors
of the Company or Subsidiary and at such compensation as the Board of Directors
of the Company or Subsidiary, as appropriate, shall reasonably determine. In
consideration of the granting of the Option and regardless of whether or not
the
NON-QUALIFIED STOCK OPTION AGREEMENT - Page 4
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Option shall be exercised, if the Optionee was an advisor or director of the
Company or a Subsidiary as of the Date of Grant, the Optionee shall agree to
act as an advisor or director of the Company or a Subsidiary, as applicable,
for a period of at least one (1) year from the date hereof. Such service shall
be at the pleasure of the Board of Directors or shareholders of the Company or
Subsidiary and at such compensation as the Board of Directors of the Company or
Subsidiary shall reasonably determine. Notwithstanding the preceding, nothing
in this Agreement shall be construed as constituting a commitment, guarantee,
arrangement or understanding of any kind or nature that the Company or a
Subsidiary will continue to employ, retain or elect or designate the Optionee
in any capacity; nor shall this Agreement affect in any way the right of the
Company or a Subsidiary to terminate the employment, association, designation
or official capacity, if any, of the Optionee at any time with or without
cause, subject to the provisions of any written employment agreement between
the Company or Subsidiary and the Optionee.
12. Termination of Service. The Option (and any other Option or
Options held by the Optionee to the extent not previously exercised) shall
immediately terminate in the event that either (i) the employment of the
Optionee as an officer, employee or advisor of the Company or a Subsidiary
shall be terminated (otherwise than by reason of death or disability), or (ii)
the Optionee is removed or resigns as an officer or Director of the Company or
a Subsidiary (otherwise than by reason of disability). So long as the Optionee
shall continue to be an employee, officer, director or advisor of the Company
or Subsidiary, the Option shall not be affected by any change of duties or
position.
13. Death of Optionee. If the Optionee shall die while employed
by the Company or Subsidiary as an officer, employee or advisor, or if the
Optionee shall die while a director of the Company or a Subsidiary, the Option
may be exercised (to the extent that the Optionee shall have been entitled to
do so at the date of the Optionee's death) by a legatee or legatees of the
Optionee under the Optionee's duly probated Last Will and Testament, or by the
Optionee's duly appointed personal representative, at any time within one (1)
year after the death of the Optionee, subject to the condition that no Option
may be exercised after five (5) years from the Date of Grant.
14. Disability of Optionee. If the Optionee's employment by the
Company or a Subsidiary is terminated by reason of the Disability (as
hereinafter defined) of the Optionee, or if the Optionee was an officer,
director or advisor of the Company or a Subsidiary and the Optionee ceases to
serve as an officer or director thereof or advisor thereto by reason of the
Disability of the Optionee, the Option may be exercised (to the extent that the
Optionee shall have been entitled to do so at the date the Optionee's position
with the Company or a Subsidiary was terminated due to the Disability of the
Optionee) by the Optionee or the Optionee's court appointed guardian at any
time within one (1) year after the Optionee ceased to be an employee, director
or advisor of the Company or a Subsidiary, subject to the condition that no
Option may be exercised after five (5) years from the Date of Grant. For
purposes of this Agreement, the term "Disability" shall mean the inability of
the Optionee to fulfill the Optionee's obligations to the Company or Subsidiary
by reason of any physical or mental impairment which can be expected to result
in death or which has endured or can be expected to endure for a continuous
period of not less than twelve (12) months as determined by a physician
acceptable to the Compensation Committee of the Board of Directors of the
Company.
15. Adjustments upon Changes in Capitalization. The number of
shares of Common Stock covered by the Option, and the price per share thereof
in such Option, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock of the Company resulting from a
subdivision or consolidation of shares or the payment of a stock dividend (but
only on the Common Stock) or any other increase or decrease in the number of
such shares effected without receipt of consideration by the Company.
In the event the Company shall be the surviving corporation in any
merger or consolidation, the Option shall pertain to and apply to the
securities to which a holder of the number of shares of Common Stock subject to
the Option would have been entitled. A dissolution or liquidation of the
Company or a merger or consolidation in which the Company is not the surviving
corporation, shall cause the Option to terminate as of a date to be fixed by
the Committee (which date shall be as of or prior to the effective date of any
such dissolution or liquidation or merger or consolidation); provided, that not
less than thirty (30) days written
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notice of the date so fixed as such termination date shall be given to the
Optionee, and the Optionee shall, in such event, have the right, during the
said period of thirty (30) days preceding such termination date, to exercise
the Option in whole or in part in the manner set forth in the Plan and above.
To the extent that the foregoing adjustments relate to stock or
securities of the Company, such adjustments, if any, shall be appropriately
made by the Compensation Committee appointed and designated by the Board of
Directors of the Company, whose determination in that respect shall be final,
binding and conclusive. The Company shall give timely notice of any
adjustments made to the Optionee.
Except as hereinabove expressly provided in this Section 15, the
Optionee shall have no rights by reason of any subdivision or consolidation of
shares 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, 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 price of shares of Common Stock subject to the
Option.
Without limiting the generality of the foregoing, no adjustment shall
be made with respect to the number or price of shares subject to the Option
upon the occurrence of any of the following events:
(a) The grant or exercise of any other options which may
be granted or exercised under any qualified or non-qualified stock
option plan or under any other employee benefit plan of the Company
whether or not such options were outstanding on the Date of Grant of
the Option or thereafter granted;
(b) The sale of any shares of Common Stock in the
Company's initial or any subsequent public offering, including,
without limitation, shares sold upon the exercise of any overallotment
option granted to the underwriter in connection with such offering;
(c) The issuance, sale or exercise of any warrants to
purchase shares of Common Stock whether or not such warrants were
outstanding on the Date of Grant of the Option or thereafter issued;
(d) The issuance or sale of rights, promissory notes or
other securities convertible into shares of Common Stock in accordance
with the terms of such securities ("Convertible Securities") whether
or not such Convertible Securities were outstanding on the Date of
Grant of the Option or were thereafter issued or sold;
(e) The issuance or sale of Common Stock upon conversion
or exchange of any Convertible Securities, whether or not any
adjustment in the purchase price was made or required to be made upon
the issuance or sale of such Convertible Securities and whether or not
such Convertible Securities were outstanding on the Date of Grant of
the Option or were thereafter issued or sold; or
(f) Upon any amendment to or change in the terms of any
rights or warrants to subscribe for or purchase, or options for the
purchase of, Common Stock or Convertible Securities or in the terms of
any Convertible Securities, including, but not limited to, any
extension of any expiration date of any such right, warrant or option,
any change in any exercise or purchase price provided for in any such
right, warrant or option, any extension of any date through which any
Convertible Securities are convertible into or exchangeable for Common
Stock or any change in the rate at which any Convertible Securities
are convertible into or exchangeable for Common Stock.
16. No Obligation to Exercise. The granting of the Option hereof
shall impose no obligation upon the Optionee to exercise such Option.
17. Withholding. Whenever the Optionee shall recognize
compensation income as a result of the exercise of any Option granted
hereunder, the Optionee shall remit in cash to the Company or Subsidiary the
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minimum amount of federal income and employment tax withholding which the
Company or Subsidiary is required to remit to the Internal Revenue Service in
accordance with the then applicable provisions of the Internal Revenue Code of
1986, as amended. The full amount of such withholding shall be paid by the
Optionee simultaneously with the award or exercise of an Option.
18. Stock Appreciation Rights. In the event the Optionee receives
an alternate stock appreciation right ("SAR") with respect to each share of
Common Stock covered by this Option permitting the Optionee to be paid the
appreciation on the Option in lieu of exercising the Option, the exercise of
any such SAR shall cancel and terminate the right to purchase an equal number
of shares covered by this Option.
19. Reservation of Stock. The Company shall at all times during
the term of the Option reserve and keep available such number of shares of
Common Stock as will be sufficient to satisfy the requirements of this
Agreement, shall pay all original issue and transfer taxes with respect to the
issue and transfer of shares pursuant hereto and all other fees and expenses
necessarily incurred by the Company in connection therewith, and will from time
to time use its best efforts to comply with all laws and regulations which, in
the opinion of counsel for the Company, shall be applicable.
20. General. This Agreement may not be modified, altered,
amended, or terminated except by the written agreement of all of the parties.
If a court of competent jurisdiction determines that any provision contained in
this Agreement is void, illegal or unenforceable, the other provisions shall
remain in full force and effect and the provision held to be void, illegal or
unenforceable shall be limited so that it shall remain in effect to the extent
permissible by law. The parties agree to perform all acts and execute all
instruments necessary or appropriate to carry out the terms of this Agreement.
This Agreement is made and is performable in St. Tammany Rouge Parish, and
shall be governed by the laws of the State of Louisiana. This Agreement sets
forth the entire understanding of the parties with respect to the purchase and
sale of the shares of the Common Stock pursuant to a stock option and
supersedes all prior representations, understandings and agreements, oral or
written, made between the parties effecting the stock of the Company to be
issued pursuant to this Agreement and all such prior representations,
understandings and agreements are hereby terminated. This Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute but one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
KARTS INTERNATIONAL INCORPORATED
By:
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V. Lynn Graybill, Chairman of the
Board, President and Chief
Executive Officer
OPTIONEE:
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Name:
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Address:
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Social Security No.
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