Exhibit 10.2
NON-QUALIFIED STOCK OPTION AGREEMENT
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AGREEMENT, made as of 16th day of December 2004, by and between VELOCITY
ASSET MANAGEMENT, INC., a Delaware corporation (the "Grantor), having its
principal executive offices at 48 S. Franklin Turnpike, 3rd Floor; Ramsey, NJ
07446, and THE DEL MAR CONSULTING GROUP, INC., a California corporation having
its principal executive offices at 2455 El Amigo Road, Del Mar; CA 92014 (the
"Optionee").
WITNESSETH:
WHEREAS, the Optionee has agreed to perform services for the Grantor
pursuant to the Consulting Agreement by and between the Grantor and the Optionee
effective December 16, 2004 (the "Consulting Agreement"), and
WHEREAS, the Grantor desires the Optionee to perform such services on
behalf of the Grantor;
NOW, THEREFORE, in consideration of the Optionee's services to be rendered
to the Grantor pursuant to the Consulting Agreement, the Grantor hereby grants
to the Optionee an option to purchase common stock of the Grantor, $.001par
value per share ("Common Stock"), on the following terms and conditions:
1. Option.
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The Grantor hereby grants to the Optionee a non-qualified stock option (not
qualified as described in Section 422 of the Internal Revenue Code of 1986, as
amended, the "Code") to purchase up to an aggregate of Two Hundred Fifty
Thousand (250,000) fully paid and nonassessable shares of Common Stock (the
"Shares"), subject to the terms and conditions set forth below.
2. Exercise Price.
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The exercise price shall be Two Dollars and Fifty Cents ($2.50) per share.
The Grantor shall pay all original issue or transfer taxes on the exercise of
this option and all other fees and expenses incurred by the Grantor in
connection herewith.
3. Exercise of Option.
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Subject to the provisions of Paragraph 4 hereof, the option granted
hereunder shall be exercisable in whole or in part at any time and from time to
time from the earlier of June 16, 2005 or the date a registration statement
filed by the Grantor containing the shares underlying the Option is deemed
effective by the SEC through and until 5:00 p.m. Los Angeles, CA time on
December 16, 2009.
In order to exercise the option granted hereunder in whole or in part, the
Optionee shall deliver to the Grantor a written notice substantially in the form
of Notice of Exercise of Option to Purchase Shares attached hereto, delivery to
be effected by facsimile and original copies to be delivered by overnight
courier or by registered or certified mail, return receipt requested, addressed
to the Grantor at its principal office. Such notice shall specify the number of
Shares which Optionee is purchasing under the option herein granted and shall be
accompanied by either:
(i) Payment (in the form of cash or bank check or wire transfer of
immediately useable funds) for the Shares so being purchased at the
exercise price so specified in the form of Notice of Exercise of Option to
Purchase Shares and therefor as specified in Paragraph 2 above; or
(ii) Optionee's written direction to the Grantor to retain as
consideration for the option exercise that number of the Shares (rounded
upward to the next highest full Share) so being purchased which have an
aggregate value (valued for such purposes using the average of the five
highest closing prices of the Grantor's Common Stock in the principal
market in which Shares trade during the twenty trading days preceding the
date on which this Notice is delivered to VELOCITY ASSET MANAGEMENT, INC.)
equal to the product derived by multiplying (a) the number of Shares so
being purchased by (b) the exercise price of Two Dollars and Fifty Cents
($2.50) per share therefor as specified in Paragraph 2 of the Agreement;
As soon as practicable thereafter but in any event within ten (10) business
days after Grantor shall cause to be delivered to the Optionee certificates
issued in the Optionee's name evidencing (x) in the case payment of the exercise
price pursuant to (i) above the full number of Shares as to which this option
was exercised by the Optionee or (y) in the case of payment of the exercise
price pursuant to (ii) above the number of Shares remaining after subtracting
from the full number of Shares as to which the option was exercised by Optionee
that number of Shares which Grantor is to retain pursuant to (ii) above.
Optionee shall be considered to be the holder and owner of the Shares to be
evidenced by such certificates as of the close of business on the date Grantor
received the notice of exercise accompanied by payment, as contemplated herein,
without regard to the date of actual issuance of the certificate (s)
representing such Shares.
4. Divisibility and Non-Assignability of the Option.
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(a) The Optionee may exercise the option herein granted in whole or
in part at any time and from time to time, subject to the provisions of
Paragraph 3 above, with respect to any whole number of Shares included therein,
but in no event may the option be exercised as to less than ten thousand
(10,000) Shares at any one time, except for the remaining Shares covered by the
option if less than ten thousand (10,000).
(b) The Optionee may not give, grant, sell, exchange, transfer legal
title, pledge, assign or otherwise encumber or dispose of the option herein
granted or any interest therein, and the option herein granted shall be
exercisable only by the Optionee or its legal successors.
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5. Stock as Investment.
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By accepting this option, the Optionee agrees that it is Optionee's
intention to purchase Shares hereunder for investment and without any view
towards the resale or distribution thereof. In the event Shares to be issued
upon exercise of this Option have not been registered at the time of proposed
issuance under the Securities Act of 1933, as amended (the "Securities Act"),
the Optionee shall deliver to the Grantor at the time of such issuance a written
representation that optionee is acquiring such Shares in good faith for
investment purposes only and not for resale or distribution. Grantor may place a
"stop transfer" order with respect to such Shares with its transfer agent and
place an appropriate restrictive legend on the stock certificate(s) evidencing
such Shares, in order to prevent transfers unless such Shares are registered
under the Securities Act or an exemption from the registration requirements of
the Securities Act is applicable.
6. Conditions to Issuance of Shares.
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The Grantor shall issue and deliver certificates for Shares purchased upon
the exercise of any option granted hereunder, provided each of the following
conditions is satisfied, which conditions the Grantor hereby undertakes and
agrees to exercise its best efforts to satisfy or cause to be satisfied: (a) the
issuance of such Shares shall have been registered with the Securities and
Exchange Commission under the Securities Act of 1933, as amended, or counsel to
the Grantor shall have given an opinion that such issuance is exempt from the
registration requirements of such Act; (b) approval, to the extent required,
shall have been obtained from any state regulatory body having jurisdiction
thereof; and (c) permission for the listing of such Shares, if required, shall
have been given by any national securities exchange on which Shares are at the
time of issuance listed.
7. Registration Rights.
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(a) If, at any time during the exercise period hereof and for the two
(2) years following the complete exercise of the Option, the Grantor proposes to
file a registration statement with respect to any class of securities (other
than pursuant to a registration statement on Forms S-4 or S-8 or any successor
form) under the Securities Act, the Grantor shall notify the Optionee at least
twenty (20) days prior to the filing of such registration statement and will
offer to include in such registration statement all or any portion of the
Shares. In a written notice to be delivered to the Grantor within twenty (20)
days after receipt of any such notice from Grantor, the Optionee shall state the
number of Shares that it wishes to register for resale and distribution publicly
under the proposed registration statement. The Grantor will also use its best
efforts, through its officers, directors, auditors and counsel in all matters
necessary or advisable, to include within the coverage of each such registration
statement (except as hereinafter provided) the Shares that Optionee has advised
grantor that Optionee wishes to register pursuant to such registration statement
for resale and distribution, to prosecute each such registration statement
diligently to effectiveness, and to cause such registration statement to become
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effective as promptly as practicable . In that regard, the grantor makes no
representation or warranties as to its ability to have any registration
statement declared effective.
All registrations requested pursuant to this Paragraph 7 (a) are referred
to herein as "Piggyback Registrations." In the event the Grantor is advised by
the staff of the SEC, or any applicable self-regulatory or state securities
agency that the inclusion of the Shares will prevent, preclude or materially
delay the effectiveness of a registration statement filed, the Grantor, in good
faith, may amend such registration statement to exclude the Shares without
otherwise affecting the Optionee's rights to any other registration statement
herein.
8. Adjustments Upon Changes in Capitalization.
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(a) In the event of changes in the outstanding Common Stock of the
Grantor by reason of stock dividends, stock splits, reverse stock splits,
recapitalization's, consolidations, combinations, exchanges of shares,
separations, reorganizations, liquidation's or any similar events or events
having similar consequences, the number and class of Shares as to which the
option may be exercised shall be correspondingly adjusted so that for the same
aggregate exercise price the Optionee shall be entitled to acquire the
securities and other property Optionee would have held if Optionee had exercised
the option granted hereunder for the number of Shares under consideration prior
to the first of such events to occur and continued to hold such Shares and all
other securities and other property issued with respect thereto in connection
with such events. No adjustment shall be made with respect to cash dividends or
non-liquidating dividends payable in property other than cash. Grantor shall
also give Optionee prompt written notice of any event resulting in an adjustment
under this Paragraph 8 (a), including a detailed computation of such adjustment.
(b) Any adjustment in the number and kind of Shares and other
securities shall apply proportionately to only the unexercised portion of the
option granted hereunder at the time of the event giving rise to the adjustment.
If fractions of a Share would result from any such adjustment, the adjustment
shall be revised to the next higher whole number of Shares so long as such
increase does not result in the holder of the option being deemed to own more
than 5% of the total combined voting power or value of all classes of stock of
the Grantor or its subsidiaries, in which case the adjustment shall be revised
to the next lower whole number of Shares.
9. No Rights in Option Stock.
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Optionee shall have no rights as a shareholder in respect of Shares as to
which the option granted hereunder shall not have been exercised and payment
made as herein provided.
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10. Effect Upon Employment.
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This Agreement does not give the Optionee any right to employment by, or
any other relationship with, the Grantor, except as provided in the "Consulting
Agreement".
11. [Intentionally Omitted].
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12. Binding Effect.
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Except as herein otherwise expressly provided, this Agreement shall be
binding upon and inure to the benefit of the parties hereto, their successors,
legal representatives and permitted assigns.
13. Miscellaneous.
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This Agreement shall be construed under the laws of the State of New York
applied to agreements made and to be performed entirely within such state.
Headings have been included herein for convenience of reference only and shall
not be deemed a part of this Agreement.
14. Notices.
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All notices, requests, and other communications hereunder shall be deemed
to be duly given two days after sending prepaid overnight mail which requires
signature by the recipient, addressed to the other party at the address as set
forth herein below:
To the Grantor:
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Velocity Asset Management, Inc.
Jack Kleinert, CEO
48 S. Franklin Turnpike, 3rd Floor
Ramsey, NJ 07446
Phone: (201) 760-1030
Fax: (201) 760-0930
jck@tnrc.com
To the Optionee:
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The Del Mar Consulting Group, Inc.
Robert B. Prag, President
2455 El Amigo Road
Del Mar, CA 92014
Phone: (858) 794-9500
Fax: (858) 794-9544
bprag@delmarconsulting.com
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It is understood that either party may change the address to which notices for
it shall be addressed by providing notice of such change to the other party in
the manner set forth in this paragraph.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
GRANTOR: VELOCITY ASSET MANAGEMENT, INC.
By: /s/ JACK KLEINERT
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Name: Jack Kleinert
Title: CEO
ACCEPTED AND AGREED TO:
OPTIONEE: THE DEL MAR CONSULTING GROUP, INC.
By: /s/ ROBERT B. PRAG
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Name: Robert B. Prag
Title: President and Its
Duly Authorized Agent
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NOTICE OF EXERCISE OF OPTION TO PURCHASE SHARES
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TO: VELOCITY ASSET MANAGEMENT, INC.
The undersigned hereby exercises the option for the purchase of
___________________ (_______) shares with an exercise price of Two Dollars and
Fifty Cents ($2.50) according to the terms and conditions of that certain
Non-Qualified Stock Option Agreement, dated as of December 16, 2004 between
VELOCITY ASSET MANAGEMENT, INC. and the undersigned (the "Agreement") and
herewith makes payment of the exercise price in full in accordance with the
terms of said Agreement by (check one):
[ ] (i) payment in the form of cash or certified or bank cashier's check
or wire transfer of immediately available funds for the Shares so being
purchased at the exercise price of Two Dollars and Fifty Cents ($2.50) therefore
as specified in Paragraph 2 of the Agreement; or
[ ] (ii) this written direction to the Grantor to retain as consideration
for the option exercise that number of the Shares (rounded upward to the next
highest full Share) so being purchased which have an aggregate value (valued for
such purposes using the average of the five highest closing prices of the
Grantor's Common Stock in the principal market in which Shares trade during the
twenty trading days preceding the date on which this Notice is delivered to
VELOCITY ASSET MANAGEMENT, INC.) equal to the product derived by multiplying (a)
the number of Shares so being purchased by (b) the exercise price of Two Dollars
and Fifty Cents ($2.50) per share therefor as specified in Paragraph 2 of the
Agreement.
The undersigned is purchasing such shares for investment purposes only and not
with a view to the sale or distribution thereof. Kindly issue the certificate
for such shares in accordance with the instructions given below.
_________________________________
Robert B. Prag, President
Taxpayer I.D. Number:_____________________________
Instructions for issuance of stock:
________________________________________________________________________________
Name
________________________________________________________________________________
Street Address
________________________________________________________________________________
City State Zip Code
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