EXHIBIT 10.6
STOCK OPTION AGREEMENT
2006 TOMBSTONE CARDS, INC. OPTION PLAN
Notice Of Stock Option Grant
You have been granted the following option to purchase Common Stock of TOMBSTONE
CARDS, INC. (the "Company"):
Name of Optionee: Dale Stonedahl
Total Number of Shares Granted: 50,000
Type of Option: Non-Qualified
Exercise Price Per Share: $0.55
Date of Grant: May 8, 2006
Vesting Commencement Date: August 29, 2006
Vesting Schedule: 100%
Expiration Date: August 29, 2009
By your signature and the signature of the Company's authorized representative
below, you and the Company agree that this option is granted under and governed
by the terms and conditions of the 2006 TOMBSTONE CARDS, INC. OPTION PLAN and
the STOCK OPTION AGREEMENT, both of which are attached hereto and are
incorporated herein by reference. Optionee hereby represents that both the
option and any shares acquired upon exercise of the option have been or will be
acquired for investment for his own account and not with a view to or for sale
in connection with any distribution or resale of the security.
Optionee: TOMBSTONE CARDS, INC.
By:/s/Dale Stonedahl By:/s/John N. Harris
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John N. Harris
Name: Dale Stonedahl Its: President
ANNEX I
THE OPTION GRANTED PURSUANT TO THIS AGREEMENT AND THE SHARES ISSUABLE UPON THE
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF COUNSEL,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
2006 TOMBSTONE CARDS, INC. OPTION PLAN:
STOCK OPTION AGREEMENT
SECTION 1: GRANT OF OPTION
1.1 Option. On the terms and conditions set forth in the notice of
stock option grant to which this agreement (the "Agreement") is attached (the
"Notice of Stock Option Grant") and this agreement, the Company grants to the
individual named in the Notice of Stock Option Grant (the "Optionee") the option
to purchase at the exercise price specified in the Notice of Stock Option Grant
(the "Exercise Price") the number of Shares set forth in the Notice of Stock
Option Grant. This option is intended to be either an ISO or a Non-Qualified
Stock Option, as provided in the Notice of Stock Option Grant.
1.2 Stock Plan and Defined Terms. This option is granted pursuant to
and subject to the terms of the 2006 TOMBSTONE CARDS, INC. OPTION PLAN, as in
effect on the date specified in the Notice of Stock Option Grant (which date
shall be the later of (i) the date on which the Board resolved to grant this
option, or (ii) the first day of the Optionee's Service) and as amended from
time to time (the "Plan"), a copy of which is attached hereto and which the
Optionee acknowledges having received. Capitalized terms not otherwise defined
in this Agreement have the definitions ascribed to them in the Plan.
SECTION 2: RIGHT TO EXERCISE
2.1 Exercisability. Subject to Sections 2.2 and 2.3 below and the other
conditions set forth in this Agreement, all or part of this option may be
exercised prior to its expiration at the time or times set forth in the Notice
of Stock Option Grant. Shares purchased by exercising this option may be subject
to the Right of Repurchase under Section 7. In addition, all of the remaining
unexercised options shall become vested and fully exercisable if (i) a Change in
Control occurs before the Optionee's Service terminates, and (ii) the option is
not assumed or an equivalent option is not substituted by the successor entity
that employs the Optionee immediately after the Change in Control or by its
parent or subsidiary.
2.2 Limitation. If this option is designated as an ISO in the Notice of
Stock Option Grant, then to the extent (and only to the extent) the Optionee's
right to exercise this option causes this option (in whole or in part) to not be
treated as an ISO by reason of the $100,000 annual limitation under Section
422(d) of the Code, such options shall be treated as Non-Qualified Stock
Options, but shall be exercisable by their terms. The determination of options
to be treated as Non-Qualified Stock Options shall be made by taking options
into account in the order in which they are granted. If the terms of this option
cause the $100,000 annual limitation under Section 422(d) of the Code to be
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exceeded, a pro rata portion of each exercise shall be treated as the exercise
of a Non-Qualified Stock Option.
2.3 Stockholder Approval. Any other provision of this Agreement
notwithstanding, no portion of this option shall be exercisable at any time
prior to the approval of the Plan by the Company's stockholders.
SECTION 3: NO TRANSFER OR ASSIGNMENT OF OPTION
Except as provided herein, an Optionee may not assign, sell or transfer
the option, in whole or in part, other than by testament or by operation of the
laws of descent and distribution. The Administrator, in its sole discretion may
permit the transfer of a Non-Qualified Option (but not an ISO) as follows: (i)
by gift to a member of the Participant's immediate family, or (ii) by transfer
by instrument to a trust providing that the Option is to be passed to
beneficiaries upon death of the Settlor (either or both (i) or (ii) referred to
as a "Permitted Transferee"). For purposes of this Section 3, "immediate family"
shall mean the Optionee's spouse (including a former spouse subject to terms of
a domestic relations order); child, stepchild, grandchild, child-in-law; parent,
stepparent, grandparent, parent-in-law; sibling and sibling-in-law, and shall
include adoptive relationships. A transfer permitted under this Section 3 hereof
may be made only upon written notice to and approval thereof by Administrator. A
Permitted Transferee may not further assign, sell or transfer the transferred
option, in whole or in part, other than by testament or by operation of the laws
of descent and distribution. A Permitted Transferee shall agree in writing to be
bound by the provisions of this Plan, which agreement shall be submitted to and
approved by the Administrator before the transfer.
SECTION 4: EXERCISE PROCEDURES
4.1 Notice of Exercise. The Optionee or the Optionee's representative
may exercise this option by delivering a written notice in the form of Exhibit A
attached hereto ("Notice of Exercise") to the Company in the manner specified
pursuant to Section 14.4 hereof. Such Notice of Exercise shall specify the
election to exercise this option, the number of Shares for which it is being
exercised and the form of payment, which must comply with Section 5. The Notice
of Exercise shall be signed by the person who is entitled to exercise this
option. In the event that this option is to be exercised by the Optionee's
representative, the notice shall be accompanied by proof (satisfactory to the
Company) of the representative's right to exercise this option.
4.2 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 which this option has been exercised, registered in the name of the
person exercising this option (or in the names of such person and his or her
spouse as community property or as joint tenants with right of survivorship).
The Company shall cause such certificate or certificates to be deposited in
escrow or delivered to or upon the order of the person exercising this option.
4.3 Withholding Taxes. In the event that the Company determines that it
is required to withhold any tax as a result of the exercise of this option, the
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. The Optionee shall also make arrangements satisfactory to the
Company to enable it to satisfy any withholding requirements that may arise in
connection with the vesting or disposition of Shares purchased by exercising
this option, and shall provide to the Company his/her/its social security number
or employment identification number.
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SECTION 5: PAYMENT FOR STOCK
5.1 General Rule. The entire Exercise Price of Shares issued under the
Plan shall be payable in full by cash or cashier's check for an amount equal to
the aggregate Exercise Price for the number of shares being purchased.
Alternatively, in the sole discretion of the Plan Administrator and upon such
terms as the Plan Administrator shall approve, the Exercise Price may be paid
by:
5.1.1 Cashless Exercise. Provided the Company's Common Stock
is publicly traded, a copy of instructions to a broker directing such
broker to sell the Shares for which this option is exercised, and to
remit to the Company the aggregate Exercise Price of such option
("Cashless Exercise");
5.1.2 Stock-For-Stock Exercise. Paying all or a portion of the
Exercise Price for the number of Shares being purchased by tendering
Shares owned by the Optionee, duly endorsed for transfer to the
Company, with a Fair Market Value on the date of delivery equal to the
Exercise Price multiplied by the number of Shares with respect to which
this option is being exercised (the "Purchase Price") or the aggregate
Purchase Price of the shares with respect to which this option or
portion hereof is exercised ("Stock-for-Stock Exercise"); or
5.1.3 Attestation Exercise. By a stock for stock exercise by
means of attestation whereby the Optionee identifies for delivery
specific Shares already owned by Optionee and receives a number of
Shares equal to the difference between the Option Shares thereby
exercised and the identified attestation Shares ("Attestation
Exercise").
5.2 Withholding Payment. The Exercise Price shall include payment of
the amount of all federal, state, local or other income, excise or employment
taxes subject to withholding (if any) by the Company or any parent or subsidiary
corporation as a result of the exercise of a Stock Option. The Optionee may pay
all or a portion of the tax withholding by cash or check payable to the Company,
or, at the discretion of the Administrator, upon such terms as the Administrator
shall approve, by (i) Cashless Exercise or Attestation Exercise; (ii)
Stock-for-Stock Exercise; (iii) in the case of an Option, by paying all or a
portion of the tax withholding for the number of shares being purchased by
withholding shares from any transfer or payment to the Optionee ("Stock
withholding"); or (iv) a combination of one or more of the foregoing payment
methods. Any shares issued pursuant to the exercise of an Option and transferred
by the Optionee to the Company for the purpose of satisfying any withholding
obligation shall not again be available for purposes of the Plan. The fair
market value of the number of shares subject to Stock withholding shall not
exceed an amount equal to the applicable minimum required tax withholding rates.
5.3 Promissory Note. The Plan Administrator, in its sole discretion,
upon such terms as the Plan Administrator shall approve, may permit all or a
portion of the Exercise Price of Shares issued under the Plan to be paid with a
full-recourse promissory note. However, in the event there is a stated par value
of the shares and applicable law requires, the par value of the shares, if newly
issued, shall be paid in cash or cash equivalents. The Shares shall be pledged
as security for payment of the principal amount of the promissory note and
interest thereon, and shall be held in the possession of the Company until the
promissory note is repaid in full. Subject to the foregoing, the Plan
Administrator (at its sole discretion) shall specify the term, interest rate,
amortization requirements (if any) and other provisions of such note.
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5.4 Exercise/Pledge. In the discretion of the Plan Administrator, upon
such terms as the Plan Administrator shall approve, payment may be made all or
in part by the delivery (on a form prescribed by the Plan Administrator) of an
irrevocable direction to pledge Shares to a securities broker or lender approved
by the Company, as security for a loan, and to deliver all or part of the loan
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.
SECTION 6: TERM AND EXPIRATION
6.1 Basic Term. This option shall expire and shall not be exercisable
after the expiration of the earliest of (i) the Expiration Date specified in the
Notice of Stock Option Grant, (ii) three months after the date the Optionee's
Service with the Company and its Subsidiaries terminates if such termination is
for any reason other than death, Disability or Cause, (iii) one year after the
date the Optionee's Service with the Company and its Subsidiaries terminates if
such termination is a result of death or Disability, and (iv) if the Optionee's
Service with the Company and its Subsidiaries terminates for Cause, all
outstanding Options granted to such Optionee shall expire as of the commencement
of business on the date of such termination. Outstanding Options that are not
exercisable at the time of termination of employment for any reason shall expire
at the close of business on the date of such termination. The Plan Administrator
shall have the sole discretion to determine when this option is to expire. For
any purpose under this Agreement, Service shall be deemed to continue while the
Optionee is on a bona fide leave of absence, if such leave to the extent
required by applicable law. To the extent applicable law does not require such a
leave to be deemed to continue while the Optionee is on a bona fide leave of
absence, such leave shall be deemed to continue if, and only if, expressly
provided in writing by the Administrator or a duly authorized officer of the
Company, Parent or Subsidiary for whom Optionee provides his or her services.
6.2 Exercise After Death. All or part of this option may be exercised
at any time before its expiration under Section 6.1 above by the executors or
administrators of the Optionee's estate or by any person who has acquired this
option directly from the Optionee by beneficiary designation, bequest or
inheritance, but only to the extent that this option had become exercisable
before the Optionee's death. When the Optionee dies, this option shall expire
immediately with respect to the number of Shares for which this option is not
yet exercisable and with respect to any Share that is subject to the Right of
Repurchase (as such term is defined in below) (the "Restricted Stock").
6.3 Notice Concerning ISO Treatment. If this option is designated as an
ISO in the Notice of Stock Option Grant, it ceases to qualify for favorable tax
treatment as an ISO to the extent it is exercised (i) more than three months
after the date the Optionee ceases to be an Employee for any reason other than
death or permanent and total disability (as defined in Section 22(e)(3) of the
Code), (ii) more than 12 months after the date the Optionee ceases to be an
Employee by reason of such permanent and total disability, or (iii) after the
Optionee has been on a leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or by contract.
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SECTION 7: RIGHT OF REPURCHASE
7.1 Option Repurchase Right. Following a termination of the Optionee's
Service, the Company shall have the option to repurchase the Optionee's vested
and exercisable options at a price equal to the Fair Market Value of the Stock
underlying such options, less the Exercise Price (the "Option Repurchase
Right").
7.2 Stock Repurchase Right. Unless they have become vested in
accordance with the Notice of Stock Option Grant and Section 7.4 below, the
stock acquired under this Agreement initially shall be Restricted Stock and
shall be subject to a right (but not an obligation) of repurchase by the
Company, which shall be exercisable at a price equal to the Exercise Price paid
for the Restricted Stock (the "Stock Repurchase Right"). Vested stock acquired
under this Agreement shall be subject to a right (but not an obligation) of
repurchase by the Company, which shall be exercisable at a price equal to the
Fair Market Value of the vested Stock.
7.3 Condition Precedent to Exercise. The Option Repurchase Right and
Stock Repurchase Rights (collectively, the "Right of Repurchase") shall be
exercisable over Restricted Stock only during the 90-day period next following
the later of:
7.3.1 The date when the Optionee's Service terminates for any
reason, with or without Cause, including (without limitation) death or
disability; or
7.3.2 The date when this option was exercised by the Optionee,
the executors or administrators of the Optionee's estate, or any person
who has acquired this option directly from the Optionee by bequest,
inheritance or beneficiary designation.
7.4 Lapse of Right of Repurchase. The Right of Repurchase shall lapse
with respect to the Shares subject to this option in accordance with the vesting
schedule set forth in the Notice of Stock Option Grant. In addition, the Right
of Repurchase shall lapse and all of the remaining Restricted Stock shall become
vested if (i) a Change in Control occurs before the Optionee's Service
terminates, and (ii) the Right of Repurchase is not assigned to the entity that
employs the Optionee immediately after the Change in Control or to its parent or
subsidiary. The Right of Repurchase shall lapse with respect to (i) Shares that
are registered under a then currently effective registration statement under
applicable federal securities laws and the issuer is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act or becomes an investment
company registered or required to be registered under the Investment Company Act
of 1940, or (ii) Shares for which a determination is made by counsel for the
Company that such Exercise Price restrictions are not required in the
circumstances under applicable federal or state securities laws.
7.5 Exercise of Right of Repurchase. The Company shall exercise the
Right of Repurchase by written notice delivered to the Optionee prior to the
expiration of the 90-day period specified in Section 7.3 above. The notice shall
set forth the date on which the repurchase is to be effected, which must occur
within 31 days of the notice. The certificate(s) representing the Restricted
Stock to be repurchased shall, prior to the close of business on the date
specified for the repurchase, be delivered to the Company properly endorsed for
transfer. The Company shall, concurrently with the receipt of such
certificate(s), pay to the Optionee the Purchase Price determined according to
this Section 7. Payment shall be made in cash or cash equivalents or by
canceling indebtedness to the Company incurred by the Optionee in the purchase
of the Restricted Stock. The Right of Repurchase shall terminate with respect to
any Restricted Stock for which it has not been timely exercised pursuant to this
Section 7.5.
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7.6 Rights of Repurchase Adjustments. If there is any change in the
number of outstanding shares of Stock by reason of a stock split, reverse stock
split, stock dividend, an extraordinary dividend payable in a form other than
stock, recapitalization, combination or reclassification, or a similar
transaction affecting the Company's outstanding securities without receipt of
consideration, then (i) any new, substituted or additional securities or other
property (including money paid other than as an ordinary cash dividend)
distributed with respect to any Restricted Stock (or into which such Restricted
Stock thereby become convertible) shall immediately be subject to the Right of
Repurchase; and (ii) appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the
Restricted Stock and to the price per share to be paid upon the exercise of the
Right of Repurchase; provided, however, that the aggregate Purchase Price
payable for the Restricted Stock shall remain the same.
7.7 Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Restricted Stock to be repurchased in
accordance with this Section 7, then after such time the person from whom such
Restricted Stock is to be repurchased shall no longer have any rights as a
holder of such Restricted Stock (other than the right to receive payment of such
consideration in accordance with this Agreement). Such Restricted Stock shall be
deemed to have been repurchased in accordance with the applicable provisions
hereof, whether or not the certificate(s) therefore have been delivered as
required by this Agreement.
7.8 Escrow. Upon issuance, the certificates for Restricted Stock shall
be deposited in escrow with the Company to be held in accordance with the
provisions of this Agreement. Any new, substituted or additional securities or
other property described in Section 7.6 above shall immediately be delivered to
the Company to be held in escrow, but only to the extent the Shares are at the
time Restricted Stock. All regular cash dividends on Restricted Stock (or other
securities at the time held in escrow) shall be paid directly to the Optionee
and shall not be held in escrow. Restricted Stock, together with any other
assets or securities held in escrow hereunder, shall be (i) surrendered to the
Company for repurchase and cancellation upon the Company's exercise of its Right
of Repurchase or Right of First Refusal or (ii) released to the Optionee upon
the Optionee's request to the extent the Shares are no longer Restricted Stock
(but not more frequently than once every six months). In any event, all Shares
which have vested (and any other vested assets and securities attributable
thereto) shall be released within 60 days after the earlier of (i) the
Optionee's cessation of Service or (ii) the lapse of the Right of First Refusal.
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SECTION 8: RIGHT OF FIRST REFUSAL
8.1 Right of First Refusal. In the event that the Company's stock is
not readily tradable on an established securities market and the Optionee
proposes to sell, pledge or otherwise transfer to a third party any Shares
acquired under this Agreement, or any interest in such Shares, to any person,
entity or organization (the "Transferee") the Company shall have the Right of
First Refusal with respect to all (and not less than all) of such Shares (the
"Right of First Refusal"). If the Optionee desires to transfer Shares acquired
under this Agreement, the Optionee shall give a written transfer notice
("Transfer Notice") to the Company describing fully the proposed transfer,
including the number of Shares proposed to be transferred, the proposed transfer
price, the name and address of the proposed Transferee and proof satisfactory to
the Company that the proposed sale or transfer will not violate any applicable
federal or state securities laws. The Transfer Notice shall be signed both by
the Optionee and by the proposed Transferee and must constitute a binding
commitment of both parties to the transfer of the Shares. The Company shall have
the right to purchase all, and not less than all, of the Shares on the terms of
the proposal described in the Transfer Notice by delivery of a notice of
exercise of the Right of First Refusal within 30 days after the date when the
Transfer Notice was received by the Company. The Company's rights under this
Section 8.1 shall be freely assignable, in whole or in part.
8.2 Additional Shares or Substituted Securities. In the event of the
declaration of a stock dividend, the declaration of an extraordinary dividend
payable in a form other than stock, a spin-off, a stock split, an adjustment in
conversion ratio, a recapitalization or a similar transaction affecting the
Company's outstanding securities without receipt of consideration, any new,
substituted or additional securities or other property (including money paid
other than as an ordinary cash dividend) which are by reason of such transaction
distributed with respect to any Shares subject to this Section 8 or into which
such Shares thereby become convertible shall immediately be subject to this
Section 8. Appropriate adjustments to reflect the distribution of such
securities or property shall be made to the number and/or class of the Shares
subject to this Section 8.
8.3 Termination of Right of First Refusal. Any other provision of this
Section 8 notwithstanding, in the event that the Stock is readily tradable on an
established securities market when the Optionee desires to transfer Shares, the
Company shall have no Right of First Refusal, and the Optionee shall have no
obligation to comply with the procedures prescribed by this Section 8.
8.4 Permitted Transfers. This Section 8 shall not apply to a transfer
(i) by gift to a member of the Participant's immediate family or (ii) by
transfer by instrument to a trust providing that the Option is to be passed to
beneficiaries upon death of the Settlor. For purposes of this Section 8.4,
"immediate family" shall mean the Optionee's spouse (including a former spouse
subject to terms of a domestic relations order); child, stepchild, grandchild,
child-in-law; parent, stepparent, grandparent, parent-in-law; sibling and
sibling-in-law, and shall include adoptive relationships.
8.5 Termination of Rights as Stockholder. If the Company makes
available, at the time and place and in the amount and form provided in this
Agreement, the consideration for the Shares to be purchased in accordance with
this Section 8, then after such time the person from whom such Shares are to be
purchased shall no longer have any rights as a holder of such Shares (other than
the right to receive payment of such consideration in accordance with this
Agreement). Such Shares shall be deemed to have been purchased in accordance
with the applicable provisions hereof, whether or not the certificate(s)
therefore have been delivered as required by this Agreement.
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SECTION 9: OBLIGATION TO SELL.
Notwithstanding anything herein to the contrary, if at any time
following Optionee's acquisition of Shares hereunder, stockholders of the
Company owning 51% or more of the shares of the Company (on a fully diluted
basis) (the "Control Sellers") enter into an agreement (including any agreement
in principal) to transfer all of their shares to any person or group of persons
who are not affiliated with the Control Sellers, such Control Sellers may
require each stockholder who is not a Control Seller (a "Non-Control Seller") to
sell all of their shares to such person or group of persons at a price and on
terms and conditions the same as those on which such Control Sellers have agreed
to sell their shares, other than terms and conditions relating to the
performance or non-performance of services. For the purposes of the preceding
sentence, an affiliate of a Control Seller is a person who controls, which is
controlled by, or which is under common control with, the Control Seller.
SECTION 10: STOCKHOLDERS AGREEMENT
As a condition to the transfer of Stock pursuant to this Stock Option
Agreement, the Administrator, in its sole and absolute discretion, may require
the Participant to execute and become a party to any agreement by and among the
Company and any of its stockholders which exists on or after the Date of Grant
(the "Stockholders Agreement"). If the Participant becomes a party to a
Stockholders Agreement, in addition to the terms of the Plan and this Stock
Option Agreement, the terms and conditions of Stockholders Agreement shall
govern Participant's rights in and to the Stock; and if there is any conflict
between the provisions of the Stockholders Agreement and the Plan or any
conflict between the provisions of the Stockholders Agreement and this Stock
Option Agreement, the provisions of the Stockholders Agreement shall be
controlling. Notwithstanding anything to the contrary in this Section 10, if the
Stockholders Agreement contains any provisions which would violate Colorado
corporate law if applied to the Participant, the terms of the Plan and this
Stock Option Agreement shall govern the Participant's rights with respect to
such provisions.
SECTION 11: LEGALITY OF INITIAL ISSUANCE
No Shares shall be issued upon the exercise of this option unless and
until the Company has determined that:
11.1 It and the Optionee have taken any actions required to register
the Shares, provided the Stock is publicly traded, under the Securities Act of
1933, as amended (the "Securities Act"), or to perfect an exemption from the
registration requirements thereof;
11.2 Any applicable listing requirement of any stock exchange on which
Stock is listed has been satisfied; and
11.3 Any other applicable provision of state or federal law has been
satisfied.
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SECTION 12: NO REGISTRATION RIGHTS
The Company may, but shall not be obligated to, register or qualify the
sale of Shares under the Securities Act or any other applicable law. The Company
shall not be obligated to take any affirmative action in order to cause the sale
of Shares under this Agreement to comply with any law.
SECTION 13: RESTRICTIONS ON TRANSFER
13.1 Securities Law Restrictions. Regardless of whether the offering
and sale of Shares under the Plan have been registered under the Securities Act
or have been registered or qualified under the securities laws of any state, the
Company, at its discretion, may impose restrictions upon the sale, pledge or
other transfer of such Shares (including the placement of appropriate legends on
stock certificates or the imposition of stop-transfer instructions) if, in the
judgment of the Company, such restrictions are necessary or desirable in order
to achieve compliance with the Securities Act, the securities laws of any state
or any other law.
13.2 Market Stand-Off. In the event of an underwritten public offering
by the Company of its equity securities pursuant to an effective registration
statement filed under the Act, including the Company's initial public offering
(a "Public Offering"), the Optionee shall not transfer for value any shares of
Stock without the prior written consent of the Company or its underwriters, for
such period of time from and after the effective date of such registration
statement as may be requested by the Company or such underwriters (the "Market
Stand-Off"). The Market Stand-off shall be in effect for such period of time
following the date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In the event of the declaration of a stock
dividend, a spin-off, a stock split, an adjustment in conversion ratio, a
recapitalization or a similar transaction affecting the Company's outstanding
securities without receipt of consideration, any new, substituted or additional
securities which are by reason of such transaction distributed with respect to
any Shares subject to the Market Stand-Off, or into which such Shares thereby
become convertible, shall immediately be subject to the Market Stand-Off. In
order to enforce the Market Stand-Off, the Company may impose stop-transfer
instructions with respect to the Shares acquired under this Agreement until the
end of the applicable stand-off period.
13.3 Investment Intent at Grant. The Optionee represents and agrees
that the Shares to be acquired upon exercising this option will be acquired for
investment, and not with a view to the sale or distribution thereof.
13.4 Investment Intent at Exercise. In the event that the sale of
Shares under the Plan is not registered under the Securities Act but an
exemption is available which requires an investment representation or other
representation, the Optionee shall represent and agree at the time of exercise
that the Shares being acquired upon exercising this option are being acquired
for investment, and not with a view to the sale or distribution thereof, and
shall make such other representations as are deemed necessary or appropriate by
the Company and its counsel.
13.5 Legends. All certificates evidencing Shares purchased under this
Agreement in an unregistered transaction shall bear the following legend (and
such other restrictive legends as are required or deemed advisable under the
provisions of any applicable law):
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"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR OTHERWISE TRANSFERRED
WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR AN OPINION OF
COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED."
13.6 Removal of Legends. If, in the opinion of the Company and its
counsel, any legend placed on a stock certificate representing Shares sold under
this Agreement no longer is required, the holder of such certificate shall be
entitled to exchange such certificate for a certificate representing the same
number of Shares but without such legend.
13.7 Administration. Any determination by the Company and its counsel
in connection with any of the matters set forth in this Section 13 shall be
conclusive and binding on the Optionee and all other persons.
SECTION 14: MISCELLANEOUS PROVISIONS
14.1 Rights as a Stockholder. Neither the Optionee nor the Optionee's
representative shall have any rights as a stockholder with respect to any Shares
subject to this option until the Optionee or the Optionee's representative
becomes entitled to receive such Shares by filing a notice of exercise and
paying the Exercise Price pursuant to Section 4 and Section 5 hereof.
14.2 Adjustments. If there is any change in the number of outstanding
shares of Stock by reason of a stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification, then (i) the number of shares
subject to this option and (ii) the Exercise Price of this option, in effect
prior to such change, shall be proportionately adjusted to reflect any increase
or decrease in the number of issued shares of Stock; provided, however, that any
fractional shares resulting from the adjustment shall be eliminated.
14.3 No Retention Rights. Nothing in this option or in the Plan shall
confer upon the Optionee any right to continue in Service for any period of
specific duration or interfere with or otherwise restrict in any way the rights
of the Company (or any Parent or Subsidiary employing or retaining the Optionee)
or of the Optionee, which rights are hereby expressly reserved by each, to
terminate his or her Service at any time and for any reason, with or without
Cause.
14.4 Notice. Any notice required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees prepaid. Notice shall be addressed the Optionee at the
address set forth in the records of the Company. Notice shall be addressed to
the Company at:
TOMBSTONE CARDS, INC.
5380 HIGHLANDS DRIVE
LONGMONT, CO 80503
14.5 Entire Agreement. The Notice of Stock Option Grant, this Agreement
and the Plan constitute the entire contract between the parties hereto with
regard to the subject matter hereof. They supersede any other agreements,
representations or understandings (whether oral or written and whether express
or implied) that relate to the subject matter hereof.
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14.6 Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF COLORADO WITHOUT REGARD TO ITS
CHOICE OF LAWS PROVISIONS, AS COLORADO LAWS ARE APPLIED TO CONTRACTS ENTERED
INTO AND PERFORMED IN SUCH STATE.
14.7 Attorneys' Fees. In the event that any action, suit or proceeding
is instituted upon any breach of this Agreement, the prevailing party shall be
paid by the other party thereto an amount equal to all of the prevailing party's
costs and expenses, including attorneys' fees incurred in each and every such
action, suit or proceeding (including any and all appeals or petitions
therefrom). As used in this Agreement, "attorneys' fees" shall mean the full and
actual cost of any legal services actually performed in connection with the
matter involved calculated on the basis of the usual fee charged by the attorney
performing such services and shall not be limited to "reasonable attorneys'
fees" as defined in any statute or rule of court.
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EXHIBIT A
TO
2006 TOMBSTONE CARDS, INC. OPTION PLAN:
STOCK OPTION AGREEMENT
ANNEX I
NOTICE OF EXERCISE
(To be signed only upon exercise of the Option)
TOMBSTONE CARDS, INC.
5380 HIGHLANDS DRIVE
LONGMONT, CO 80503
The undersigned, the holder of the enclosed Stock Option Agreement, hereby
irrevocably elects to exercise the purchase rights represented by the Option and
to purchase thereunder __________* shares of Common Stock of TOMBSTONE CARDS,
INC. (the "Company"), and herewith encloses payment of $_______ and/or _________
shares of the Company's common stock in full payment of the purchase price of
such shares being purchased.
Dated:
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NOTICE: YOUR STOCK MAY BE SUBJECT TO RESTRICTIONS AND FORFEITABLE UNDER THE
NOTICE OF STOCK OPTION GRANT AND STOCK OPTION AGREEMENT
(Signature must conform in all respects to name of holder as specified on the
face of the Option)
- --------------------------------------------------------------
- --------------------------------------------------------------
(Please Print Name)
- --------------------------------------------------------------
- --------------------------------------------------------------
(Address)
* Insert here the number of shares called for on the face of the Option, or, in
the case of a partial exercise, the number of shares being exercised, in either
case without making any adjustment for additional Common Stock of the Company,
other securities or property that, pursuant to the adjustment provisions of the
Option, may be deliverable upon exercise.
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