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 Joseph
Byck ("Employee").
WHEREAS, the Company and Employee have entered into an Employment
Agreement of even date herewith pursuant to which Employee will be employed by
the Company ("Employment Agreement");
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 400,000 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 400,000 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 is exercisable as follows: (i)
commencing December 31, 1998 and ending December 31, 2001, this Option may be
exercised for up to 200,000 shares of Common Stock at US$.50 per shares; (ii)
commencing December 31, 1999 and ending December 31, 2002, this Option may be
exercised for up to 100,000 additional shares of Common Stock at US$1.00 per
share; and (iii) commencing December 31, 2000 and ending December 31, 2003, this
Option may be exercised for up to 100,000 additional shares of Common Stock at
US$1.25 per share. The period during which a portion of the Option is
exercisable is referred to as the Exercise Period.
5. Effect of Termination of Employment. The termination of the
employment of Employee will have no effect on the exercisability of a portion of
this Option once it becomes exercisable. If Employee's employment is terminated
before a portion of this Option is exercisable, that portion of the Option will
terminate and be of no further effect.
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
2
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.
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.
3
10. Company Representations. The Company hereby represents and
warrants to the Employee that:
(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 or stated in this agreement;
(c) in his position with the Company, 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
4
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;
(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. Registration Right. The Company shall promptly (time not being of
the essence) file a Registration Statement on Form S-8 (or successor form) to
register the Option Shares for issuance to Employee at such time as is permitted
5
for the Company to use Form S-8, after it has registered a class of securities
under the Exchange Act of 1934, as amended, ("Exchange Act"), and provided
further that the Option Shares may be registered on Form S-8. Employee agrees
that the Company is not obligated to register a class of securities under the
Exchange Act at any time.
14. Miscellaneous.
14.1. 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 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.
14.2. 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.
14.3. 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.
14.4. 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.
14.5. Binding Effect; Successors. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and, to the extent not
6
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.
14.6. 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).
14.7. 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.
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:
605 Finch Avenue- West - #1707
North York, Ontario M2R 1P1
__________________________
Joseph Byck
7
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)
2