SABER CAPITAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS OPTION AGREEMENT is made and entered into as of the 1st day of August,
1999, by and between Saber Capital, Inc., a Nevada corporation (the
"Corporation") and Paul E. Palmeri (the "Optionee").
WHEREAS, the Optionee is the Chief Executive Officer of the Corporation;
and
WHEREAS, the Corporation considers it desirable and in its best interests
that Optionee be given an opportunity to acquire a proprietary interest in the
Corporation by possessing a non-qualified option to purchase up to three hundred
fifty thousand (350,000) shares of common stock of the Corporation, par value
$.01 per share (the "Common Stock").
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth and for other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties agree as follows:
1. Grant of Option. The Corporation hereby grants to the Optionee the right
and option (the "Option") to purchase all or any part of an aggregate of three
hundred fifty thousand (350,000) shares of Common Stock as of August 1, 1999
(the "Grant Date") during the Term of the Agreement (such number to be subject
to adjustment as hereinafter provided), on the terms and conditions set forth
herein and in the 1999 Stock Option Plan (the "Plan"), which is incorporated
herein by reference.
The Option shall be exercisable as follows: The Optionee may exercise up to
three hundred fifty thousand (350,000) shares of Common Stock during the Term,
subject to the terms and conditions set forth herein, commencing on the earliest
date of any of the following events: (i) the average market price for the
Corporation's Common Stock for thirty (30) consecutive trading days is five ($5)
dollars or greater, (ii) the Corporation sells all or substantially all of its
assets, or (iii) there is a change in control of the Corporation, which for the
purposes of this Agreement, shall be defined as a transfer of the voting power
of thirty five (35%) percent or more of the outstanding Common Stock of the
Corporation in one transaction or in a series of related transactions.
The Optionee acknowledges receipt of a copy of the Plan. The Optionee
further acknowledges that the Option is not an "incentive option" within the
meaning of an "incentive stock option plan" and Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").
2. Purchase Price. The purchase price of the Common Stock covered by the
Option shall be $.10 per share (the "Purchase Price").
3. Term of the Option. The Options granted hereby shall terminate on July
31, 2006, unless earlier terminated as provided herein or in the Plan.
4. Method of Exercising Option. The Option may be exercised in whole or in
part at any time (to the extent that it is exercisable in accordance with its
terms) by giving written notice to the Corporation, together with the tender of
the Purchase Price of the Common Stock covered by the Option. Payment of the
Purchase Price may be made in any of the following ways:
(a) in United States dollars in cash or by check payable to the
Corporation; or
(b) by delivery of shares of Common Stock of the Corporation already owned
by the Optionee, valued at fair market value; or
(c) by a combination of cash or check and Common Stock as provided in (a)
and (b) above; or
(d) in the discretion of the Corporation, by the issuance by the Optionee
of a promissory note, which shall be payable in thirty (30) days and shall bear
interest at such rate as shall be determined by the Corporation, which in no
event shall be less than the minimum rate required by the provisions of Section
483 of the Code to award the imputation of income to such Optionee.
As soon as practicable after receipt by the Corporation of such notice and
of payment in full of the Option price of all the Common Stock with respect to
which the Option has been exercised (including interest if payment is made in
installments), a certificate or certificates representing such Common Stock
shall be issued in the name of the Optionee, and shall be delivered to the
Optionee. All Common Stock shall be issued only upon receipt by the Corporation
of the Optionee's representation that the shares of Common Stock are purchased
for investment and not with a view toward distribution thereof.
5. Availability of Shares. The Corporation, during the term of this Option,
at all times shall keep available the number of shares of Common Stock required
to satisfy the Option. Notwithstanding the foregoing, the Corporation shall not
be obligated to deliver any Common Stock unless and until, in the opinion of the
Corporation's counsel, all applicable federal and state laws and regulations
have been complied with, nor, if the outstanding Common Stock is at the time
listed on any securities exchange, unless and until the Common Stock to be
delivered has been listed (or authorized to be added to the list upon official
notice of issuance) upon such exchange, nor unless or until all other legal
matters in connection with the issuance and delivery of the Common Stock have
been approved by the Corporation's counsel.
6. Adjustments. (a) If prior to the exercise of the Option granted
hereunder the Corporation shall have effected one or more stock split-ups, stock
dividends, or other increases or reductions of the number of shares of its
Common Stock outstanding without receiving compensation therefor in money,
services or property, the number of shares of Common Stock subject to the option
hereby granted shall (i) if a net increase shall have been effected in the
number of outstanding shares of the Corporation's Common Stock, be
proportionately increased and the Purchase Price per share of Common Stock shall
be proportionately reduced; and (ii) if a net reduction shall have been effected
in the number of outstanding shares of the Corporation's Common Stock, be
proportionately reduced and the Purchase Price per share of Common Share be
proportionately increased.
(b) In the event the Corporation is merged into or consolidated with
another corporation under circumstances where the Corporation is not the
surviving corporation, or if the Corporation is liquidated or sells or otherwise
disposes of all or substantially all of its assets to another corporation while
any unexercised Options remain outstanding:
(i) subject to the provisions of clauses (iii), (iv) and (v) below, after
the effective date of such merger, consolidation or sale, as the case
may be, the Optionee shall be entitled, upon exercise of the Option,
to receive in lieu of shares of Common Stock, shares of such stock or
other securities as the holders of the shares of Common Stock received
pursuant to the terms of the merger, consolidation or sale; or
(ii) the Corporation may waive any discretionary limitations imposed with
respect to the exercise of the Option so that the Option from and
after a date prior to the effective date of such merger,
consolidation, liquidation or sale, as the case may be, specified by
the Corporation, shall be exercisable in full; or
(iii)the Option may be cancelled by the Corporation as of the effective
date of any such merger, consolidation, liquidation or sale, provided
that notice of such cancellation shall be given to the Optionee, and
the Optionee shall have the right to exercise such option in full
(without regard to any discretionary limitations imposed with respect
to the option) during a 30-day period preceding the effective date of
such merger, consolidation, liquidation or sale; or
(iv) the Option may be cancelled by the Corporation as of the date of any
such merger, consolidation, liquidation or sale, provided that notice
of such cancellation shall be given to the Optionee and the Optionee
shall have the right to exercise the Option but only to the extent
exercisable in accordance with any discretionary limitations imposed
with respect to the Option prior to the effective date of such merger,
consolidation, liquidation or sale; or
(v) the Corporation in its discretion may provide for the cancellation of
the Option and for the payment to the Optionee of some part or all of
the amount by which the value thereof exceeds the payment, if any,
which the Optionee would have been required to make to exercise such
option.
(c) Except as expressly provided herein, no issuance by the Corporation of
shares of stock of any class, or securities convertible into shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or Purchase Price of shares of Common Stock subject to
the Option.
7. Restrictions. The holder of this Option, by acceptance hereof,
represents and warrants as follows:
(a) This Option and the right to purchase Common Stock hereunder is
personal to the holder and shall not be transferred to any other person, other
than by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order as defined by the Code, or Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or by the rules
thereunder. The Option shall not be assigned, pledged or hypothecated in any way
(whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar process. Any attempted transfer, assignment,
pledge, hypothecation or other disposition of the Option or of any rights
granted hereunder contrary to the provisions of this Section 7, or the levy of
any attachment or similar process upon the Option or such right, shall be null
and void.
(b) The holder hereof has been advised and understands that the Option has
been issued in reliance upon exemptions from registration under the Securities
Act and applicable state statutes; the exercise of the Option and resale of the
Option and the Common Stock have not been registered under the Securities Act or
applicable state statutes and must be held and may not be sold, transferred, or
otherwise disposed of for value unless they are subsequently registered under
the Securities Act or an exemption from such registration is available; except
as set forth herein, the Corporation is under no obligation to register the
Option or the Common Stock under the Securities Act or the applicable state
statutes; in the absence of such registration, the sale of the Option or the
Common Stock may be practicably impossible; the Corporation's registrar and
transfer agent will maintain stop-transfer instructions against registration or
transfer of the Option and the Common Stock and any certificate issued upon
exercise of the Option representing the Common Stock will bear on its face a
legend in substantially the following form restricting the sale of the Common
Stock:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") AND ARE "RESTRICTED SECURITIES" WITHIN THE
MEANING OF RULE 144 PROMULGATED UNDER THE SECURITIES ACT. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
SOLD OR TRANSFERRED WITHOUT COMPLYING WITH RULE 144 IN THE
ABSENCE OF EFFECTIVE REGISTRATION OR OTHER COMPLIANCE UNDER
THE SECURITIES ACT.
(c) Prior to one year from the date the Option has been exercised and the
Common Stock fully paid for, the Corporation may refuse to transfer the Common
Stock unless the holder thereof provides an opinion of legal counsel reasonably
satisfactory to the Corporation or a "no action" letter or interpretive response
from the staff of the Securities and Exchange Commission to the effect that the
transfer is proper; further, unless such opinion letter or response states that
the Common Stock are free of any restrictions under the Securities Act, the
Corporation may refuse to transfer the Common Stock to any transferee who does
not furnish in writing to the Corporation the same representations and agree to
the same conditions with respect to such Common Stock as are set forth herein.
Notwithstanding any of the foregoing, the Corporation may refuse to transfer the
Common Stock if any circumstances are present reasonably indicating that the
transferee's representations are not accurate.
(d) After one year but prior to two years from the date the Option has been
exercised and the Common Stock fully paid for, the Corporation may refuse to
transfer the Common Stock unless the holder either (i) meets the requirements of
Subparagraph (b) above; or (ii) sells such Common Stock in accordance with Rule
144 and furnishes to the Corporation written assurances of compliance therewith
in the form of a copy of the Notice of Form 144 and appropriate letters of
compliance from the holder of such Common Stock and the securities broker-dealer
to or through which such Common Stock are being sold. No opinion of counsel for
the holder of the Common Stock shall be required respecting sales in reliance on
Rule 144 pursuant to Clause (ii) of this Subparagraph (d).
(e) After two years from the date of the Option has been exercised and the
Common Stock fully paid for, the Corporation shall, upon the written request of
any persons who have held the Common Stock for one year (excluding any tolling
period provided for by Rule 144) and who is not, and has not been during the
preceding three months, an affiliate of the Corporation, re-issue to such holder
in such names and denominations as the holder shall request, one or more
certificates for the Common Stock without any restriction whatsoever on their
further transfer and cancel any and all stop transfer instructions regarding
such Common Stock on the books and records of the Corporation.
8. Shareholders' Rights. The Optionee shall have no rights as a shareholder
with respect to the Common Stock issuable upon exercisable of this Option until
payment of the Option price and delivery to the Optionee of the Common Stock as
provided herein.
9. Termination of Option. Except as otherwise stated herein, the Option to
the extent not heretofore exercised shall terminate upon the first of the
following dates to occur:
(a) In the event the Optionee ceases to be a member of the Board of
Directors of the Corporation for any reason other than death or permanent
disability, any portion of the Option which is then vested but has not been
exercised at the time the Optionee so ceases to be a member of the Board of
Directors may be exercised, by the Optionee within 180 days of the date the
Optionee ceased to be a member of the Board; and all options shall terminate
after such 180 days have expired.
(b) In the event that the Optionee ceases to be a member of the Board by
reason of his or her death or permanent disability, all unexercised options
shall be exercisable by the Optionee (or by the Optionee's personal
representative, heir or legatee, in the event of death) until the scheduled
expiration date of the Option.
(c) July 31, 2006, one day prior to the seventh anniversary of the Grant
Date.
10. Validity and Construction. The validity and construction of this Option
shall be governed by the laws of the State of New York. Such construction is
vested in the Board of Directors and its construction shall be final and
conclusive.
IN WITNESS WHEREOF, the Corporation has caused this Option Agreement to be
executed by its proper corporate officers thereunto duly authorized.
SABER CAPITAL, INC.
By: /s/ Richard Bernstein
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Richard Bernstein, Vice President
/s/ Paul E. Palmeri
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Paul E. Palmeri, Optionee