STOCK OPTION AGREEMENT
AGREEMENT made as of the 25th day of August, 1998, by and between Cyber
Mark International Corp., a Delaware corporation ("Company"), and James Runge
("Employee").
WHEREAS, the Company and Employee have currently or in the past had an
employer/employed relationship;
WHEREAS, on August 25, 1998 ("Grant Date"), the Board of Directors of the
Company ("Board") authorized the grant to the Employee of an option ("Option")
to purchase an aggregate of 20,000 shares of the authorized but unissued Common
Stock of the Company ("Common Stock"), conditioned upon the Employee's
acceptance thereof upon the terms and conditions set forth in this Agreement;
and
WHEREAS, the Employee desires to acquire the Option on the terms and
conditions set forth in this Agreement;
IT IS AGREED:
1. Grant of Stock Option. The Company hereby grants the Employee the Option
to purchase all or any part of an aggregate of 20,000 shares of Common Stock
("Option Shares") on the terms and conditions set forth herein.
2. Non-Incentive Stock Option. The Option represented hereby is not
intended to be an Option which qualifies as an "Incentive Stock Option" under
Section 422 of the Internal Revenue Code of 1986, as amended.
3. Exercise Price. The exercise price of the Option is as set forth in
paragraph 4 hereof, subject to adjustment as hereinafter provided.
4. Exercisability. This Option shall become exercisable on August 25, 1998,
if Employee is in the employ of the Company on that date, and once exercisable,
the Option will remain exercisable until August 25, 2001, subject to the terms
of this Agreement. The Option may be exercised at US$1.00 per share. The period
during which a portion of the Option is exercisable is referred to as the
Exercise Period.
5. Effect of Employment. This Option is granted in recognition of past
service by Employee to the Company, therefore the exercisability of this Option
may be made at any time during the Exercise Period regardless of whether or not
Employee is employed by the Company at the time of exercise.
6. Withholding Tax. Not later than the date as of which an amount first
becomes includible in the gross income of the Employee for Federal income tax
purposes with respect to the Option, the Employee shall notify the Company of
the amount and, to the extent required, pay to the Company, or make arrangements
satisfactory to the Company regarding the payment of, any Federal, state, local
and other taxes of any kind required by law to be withheld or paid with respect
to such amount. The obligations of the Company under this Agreement shall be
conditional upon such pay ment or arrangements with the Company and the Company
shall, to the extent permitted by law, have the right to deduct any such taxes
from any payment of any kind otherwise due to the Employee from the Company.
7. Adjustments. In the event of any stock dividend, forward stock split,
reverse stock split, or other recapitalization of the Company which affects the
number of outstanding shares of Common Stock, the Company shall proportionally
adjust the number and kind of Option Shares and the exercise price of the Option
in order to prevent the dilution or enlargement of the Employee's proportionate
interest in the Company and Employee's rights hereunder immediately prior to the
stock dividend, stock split, reverse stock split or recapitalization, provided
that the number of Option Shares shall always be a whole number. No other
adjustment is required to be made in the number of shares or price per share
subject to this Option.
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8. Method of Exercise.
8.1. Notice to the Company. The Option shall be exercised in whole or in
part by written notice in substantially the form attached hereto as Exhibit A
directed to the Company at its principal place of business accompanied by full
payment as hereinafter provided of the exercise price for the number of Option
Shares specified in the notice.
8.2. Delivery of Option Shares. The Company shall deliver a certificate
for the Option Shares to the Employee as soon as practicable after payment
therefor.
8.3. Payment of Purchase Price.
8.3.1. Payment. The Employee shall make payments by wire transfer,
certified or bank check or personal check, in each case payable to the order of
the Company; the Company shall not be required to deliver certificates for
Option Shares until the Company has confirmed the receipt of good and available
funds in payment of the purchase price thereof.
8.3.2. Payment of Withholding Tax. Any required withholding tax
shall be paid in cash in accordance with Sections 8.3.1.
9. Nonassignability. The Option shall not be assignable or transferable
except by will or by the laws of descent and distribution in the event of the
death of the Employee. No transfer of the Option by the Employee by will or by
the laws of descent and distribution shall be effective to bind the Company
unless the Company shall have been furnished with written notice thereof and a
copy of the will and such other evidence as the Company may deem necessary to
establish the validity of the transfer and the acceptance by the transferee or
transferees of the terms and conditions of the Option.
10. Company Representations. The Company hereby represents and warrants to
the Employee that:
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(a) the Company, by appropriate and all required action, is duly
authorized to enter into this Agreement and consummate all of the
transactions contemplated hereunder; and
(b) the Option Shares, when issued and delivered by the Company to the
Employee in accordance with the terms and conditions hereof, will be duly
and validly issued and fully paid and non-assessable.
11. Employee Representations. The Employee hereby represents and warrants
to the Company that:
(a) he is acquiring the Option and shall acquire the Option Shares for
his own account and not with a view towards the distribution thereof;
(b) he understands that he must bear the economic risk of the
investment in the Option Shares, which cannot be sold by him unless they
are registered under the Securities Act of 1933 ("1933 Act") or an
exemption therefrom is available thereunder (which exemption may require a
holding period of not less than one year after exercise in certain
circumstances and not less than two years after exercise in certain other
circumstances and if an affiliate of the Company may impose other
restrictions) and that the Company is under no obligation to register the
Option Shares for sale under the 1933 Act except as stated in this
Agreement;
(c) he has had both the opportunity to ask questions and receive
answers from the officers and directors of the Company and all persons
acting on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the
Company possesses or may possess such information or can acquire it without
unreasonable effort or expense necessary to verify the accuracy of the
information obtained pursuant to this clause;
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(d) he is aware that the Company shall place stop transfer orders with
its transfer agent against the transfer of the Option Shares in the absence
of registration under the 1933 Act or an exemption therefrom as provided
herein; and
(e) The certificates evidencing the Option Shares may bear the
following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of August 25, 1998, a copy of which is on file
with the Company, and may not be trans ferred,
pledged or disposed of except in accordance with the
terms and conditions thereof."
12. Restriction on Transfer of Stock Option Agreement and Option Shares.
Anything in this Agreement to the contrary notwithstanding and in addition to
the provisions of Section 11 of this Agreement, the Employee hereby agrees that
he shall not sell, transfer by any means or otherwise dispose of the Option
Shares acquired by him without registration under the 1933 Act, or in the event
that they are not so registered, unless (i) an exemption from the 1933 Act
registration requirements is available thereunder, and (ii) the Employee has
furnished the Company with notice of such proposed transfer and the Company's
legal counsel, in its reasonable opinion, shall deem such proposed transfer to
be so exempt.
13. Miscellaneous.
13.1. Notices. All notices, requests, deliveries, payments, demands and
other communications which are required or permitted to be given under this
Agreement shall be in writing and shall be either delivered personally or sent
by registered or certified mail, or by private courier, return receipt
requested, postage prepaid to the parties at their respective addresses set
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forth herein, or to such other address as either shall have specified by notice
in writing to the other. Notice shall be deemed duly given hereunder when
delivered or mailed as provided herein.
13.2. Stockholder Rights. The Employee shall not have any of the rights
of a stockholder with respect to the Option Shares until such shares have been
issued after the due exercise of the Option. Nothing contained in this Agreement
shall be deemed to confer upon Employee any right to continued employment with
the Company or any subsidiary thereof, nor shall it interfere in any way with
the right of the Company to terminate Employee in accordance with the provisions
regarding such termination set forth in Employee's written agreement with the
Company, or if there exists no such agreement, to terminate Employee at will.
13.3. Waiver. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
other or subsequent breach.
13.4. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof. This Agreement
may not be amended except by writing executed by the party to be charged.
13.5. Binding Effect; Successors. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and, to the extent not
prohibited herein, their respective heirs, successors, assigns and
representatives. Nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto and as provided above, their
respective heirs, successors, assigns and representatives any rights, remedies,
obligations or liabilities.
13.6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware (without regard to
conflicts of law provisions).
13.7. Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the terms or provisions of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
day and year first above written.
CYBER MARK INTERNATIONAL CORP. Address:
50 West Pearce Street - Unit 6
Richmond Hill, Ontario L4B 1E3
Canada
By:__________________________
Harvey Betsalel
EMPLOYEE: Address:
577 Carrville Road
Richmond Hill, Ontario L4C 6E5
Canada
____________________________
James Runge
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EXHIBIT A
FORM OF NOTICE OF EXERCISE OF OPTION
Cyber Mark International Corp.
50 West Pearce Street - Unit 6
Richmond Hill, Ontario L4B 1E3
Canada
_______________________________
DATE
Attention: Secretary or Treasurer
Re: Purchase of Option Shares
Gentlemen:
In accordance with my Stock Option Agreement dated as of
August 25, 1998 ("Agreement") with Cyber Mark International Corp. ("Company"), I
hereby irrevocably elect to exercise the right to purchase _________ shares of
the Company's common stock ("Common Stock"), which are being purchased for
investment and not for resale.
As payment for my shares, enclosed is (check and complete
applicable box[es]):
|_| a [personal check] [certified check] [bank check]
payable to the order of "Cyber Mark International Corp." in
the sum of $_________; and/or
|_| confirmation of wire transfer in the amount of
$_____________.
I hereby represent, warrant to, and agree with, the Company
that:
(i) I have acquired the Option and shall acquire the Option
Shares for my own account and not with a view towards the distribution thereof;
(ii) I understand that I must bear the economic risk of the
investment in the Option Shares, which cannot be sold by me unless they are
registered under the Securities Act of 1933 ("1933 Act") or an exemption
therefrom is available thereunder and that the Company is under no obligation to
register the Option Shares for sale under the 1933 Act;
(iii) I have had both the opportunity to ask questions and
receive answers from the officers and directors of the Company and all persons
acting on its behalf concerning the terms and conditions of the offer made
hereunder and to obtain any additional information to the extent the Company
possesses or may possess such information or can acquire it without unreasonable
effort or expense necessary to verify the accuracy of the information obtained
pursuant to clause (ii) above;
(iv) I am aware that the Company shall place stop transfer
orders with its transfer agent against the transfer of the Option Shares in the
absence of registration under the 1933 Act or an exemption therefrom as provided
herein; and
(v) the certificates evidencing the Option Shares may bear
the following legends:
"The shares represented by this certificate have been
acquired for investment and have not been registered
under the Securities Act of 1933. The shares may not
be sold or transferred in the absence of such
registration or an exemption therefrom under said
Act."
"The shares represented by this certificate have been
acquired pursuant to a Stock Option Agreement, dated
as of August 25, 1998, a copy of which is on file
with the Company, and may not be transferred, pledged
or disposed of except in accordance with the terms
and conditions thereof."
Kindly forward to me my certificate at your earliest convenience.
Very truly yours,
____________________________________ _______________________________________
(Signature) (Address)
____________________________________ _______________________________________
(Print Name) (Address)
_______________________________________
(Social Security Number)