Exhibit 10.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF
COUNSEL FOR THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.
Date of Issuance: October 1, 2003
NUTECH DIGITAL, INC.
OPTION TO PURCHASE COMMON STOCK
NuTECH DIGITAL, INC. (the "Company"), for value received, hereby
certifies that Michael Doherty (the "Optionee") is entitled, subject to the
terms set forth below, to purchase from the Company on or after the Exercise
Date (as that term is defined below), up to 1,000,000 shares of the Company's
Common Stock at the purchase price set forth herein. The right of the Optionee
to purchase the Common Stock shall terminate on a date which is two years from
the date of this Option (the "Termination Date"). The shares purchasable upon
exercise of this Option, and the purchase price per share, each as adjusted from
time to time pursuant to the provisions of this Option, are hereinafter referred
to as the "Option Stock" and the "Purchase Price," respectively.
1. EXERCISE.
(a) This Option may be exercised by the Optionee as follows:
(i) immediately as to 23,809 shares (the
"Initial Shares"); and
(ii) as to the remaining 976,191 shares of
Option Stock (the "Remaining Shares"), as agreed to by the
Optionee and the Company, pursuant to subsection (b) below.
(b) The Purchase Price shall be $0.42 per share for the
Initial Shares and for the Remaining Shares the Purchase Price shall be computed
at a 20% discount to the average closing price from the trailing five trading
days prior to the exercise date. The right to exercise the Remaining Shares
shall vest as the Services that are to be provided to the Company by the
Optionee pursuant to that certain Consulting Services Agreement of even date
herewith are rendered. The value of the Services rendered and the number of the
Remaining Shares that are vested shall be mutually agreed upon by the Company
and the Optionee, from time-to-time.
(c) The Optionee shall exercise the Option by submitting a
form duly executed by the Optionee, substantially similar to the form appended
hereto as Exhibit A, to the principal office of the Company accompanied by
payment in full of the Purchase Price payable in respect of the number of shares
of Option Stock purchased upon such exercise. The Purchase Price shall be paid
by cashier's check, money order or wire transfer.
(d) Upon exercise of this Option the Company or the Company's
agent shall deliver to the Optionee a certificate for the number of shares of
Option Stock to which the Optionee shall be entitled.
(e) Upon exercise of this Option, the Optionee shall be deemed
to have become the holder of record of the Option Stock represented by such
exercise.
2. ADJUSTMENTS.
(a) If outstanding shares of the Company's Common Stock shall
be subdivided into a greater number of shares or a dividend in Common Stock
shall be paid in respect of Common Stock, the Purchase Price in effect
immediately prior to such subdivision or at the record date of such dividend
shall simultaneously with the effectiveness of such subdivision or immediately
after the record date of such dividend be proportionately reduced. If
outstanding shares of Common Stock shall be combined into a smaller number of
shares, the Purchase Price in effect immediately prior to such combination
shall, simultaneously with the effectiveness of such combination, be
proportionately increased. When any adjustment is required to be made in the
Purchase Price, the number of shares of Option Stock purchasable upon the
exercise of this Option shall be changed to the number determined by dividing
(i) an amount equal to the number of shares issuable upon the exercise of this
Option immediately prior to such adjustment, multiplied by the Purchase Price in
effect immediately prior to such adjustment, by (ii) the Purchase Price in
effect immediately after such adjustment.
(b) In case of any recapitalization, reclassification or
change of the outstanding securities of the Company or of any reorganization of
the Company or any similar corporate reorganization (other than a merger or
consolidation with a wholly-owned subsidiary, a reincorporation of the Company
in a different jurisdiction, or other transaction in which there is no
substantial change in the stockholders of the Company or their relative stock
holdings) on or after the date hereof (a "Restructuring"), then as a condition
to such Restructuring, lawful and adequate provisions shall be made so that in
each such case the holder of this Option, upon the exercise hereof at any time
after the consummation of such reclassification, change or reorganization, shall
be entitled to receive, in lieu of the stock or other securities and property
receivable upon the exercise hereof prior to such consummation, the stock or
other securities or property to which such holder would have been entitled upon
such consummation if such holder had exercised this Option immediately prior
thereto, all subject to further adjustment as provided in paragraph (a); and in
each such case, the terms of this Section 2 shall be applicable to the shares of
stock or other securities properly receivable upon the exercise of this Option
after such consummation.
(c) When any adjustment is required to be made in the Purchase
Price or the number of shares of Option Stock issuable upon exercise of this
Option, the Company shall promptly mail to the Optionee in accordance with
Section 8 hereof a certificate setting forth the Purchase Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment. Such certificate shall also set forth the kind and amount of stock
or other securities or property into which this Option shall be exercisable
following the occurrence of any of the events specified in this Section 2.
3. TRANSFERS. The Optionee acknowledges that this Option and the Option
Stock have not been registered under the Securities Act, and agrees not to sell,
pledge, distribute, offer for sale, transfer or otherwise dispose of this Option
or any Option Stock issued upon its exercise in the absence of (i) an effective
registration statement under the Securities Act as to this Option and such
Option Stock and registration or qualification of this Option and such Option
Stock under any applicable Blue Sky or state securities law then in effect, or
(ii) an opinion of counsel, reasonably satisfactory to the Company, that such
registration and qualification are not required.
4. NO IMPAIRMENT. The Company will not, by amendment of its charter or
through reorganization, consolidation, merger, dissolution, sale of assets or
any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Option, but will at all times in good faith assist
in the carrying out of all such terms and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holder of
this Option against impairment.
5. TERMINATION. This Option (and the right to purchase securities upon
exercise hereof) shall terminate upon the Termination Date.
6. RESERVATION OF STOCK. The Company covenants and agrees that all
shares of Option Stock that may be issued upon the exercise of the rights
represented by this Option will, upon issuance, be duly authorized, validly
issued, fully paid and non-assessable. The Company will at all times reserve and
keep available, solely for the issuance and delivery upon the exercise of this
Option, such shares of Option Stock and other stock, securities and property, as
from time to time shall be issuable upon the exercise of this Option. The
Company will take all such action as may be necessary to assure that such shares
of Option Stock may be issued as provided herein without violation of any
applicable law or regulation, or of any requirements of any domestic securities
exchange or quotation system upon which the Option Stock may be listed or
quoted.
7. REPLACEMENT OF OPTION. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Option and (in the case of loss, theft or destruction) upon delivery of a
reasonable indemnity agreement (with surety if reasonably required) in an amount
reasonably satisfactory to the Company, or (in the case of mutilation) upon
surrender and cancellation of this Option, the Company, at its own expense, will
issue, in lieu thereof, a new Option agreement of like tenor.
8. MAILING OF NOTICES. All notices hereunder shall be made in writing
to the parties at the addresses listed below or at such other address as shall
be given by mail with postage paid and certified or registered or by facsimile
or delivery via courier to the respective parties. Mailed notices shall be
deemed to be delivered three days following the date of such mailing. Facsimile
transmissions shall be deemed to be delivered on the date of the transmission,
so long as a receipt confirming that the transmission was successful is
received. Notices delivered by courier shall be deemed to be received on the
date of delivery by the courier service. Notices shall be addressed (a) if to
the Optionee, to the following address
Michael Doherty
11833 West Olympic Boulevard, Suite 550
Los Angeles, California 90064
and (b) if to the Company, to the following address:
NuTech Digital, Inc.
7900 Gloria Avenue
Van Nuys, California 91406
Attn.: President
9. NO RIGHTS AS SHAREHOLDER. Until the exercise of this Option, the
Optionee shall not have or exercise any rights by virtue hereof as a shareholder
of the Company.
10. NO FRACTIONAL SHARES. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder. In lieu of any fractional
shares which would otherwise be issuable, the Company shall pay an amount equal
to the product of such fraction multiplied by the fair market value of one share
of Common Stock on the date of exercise.
11. AMENDMENT OR WAIVER. Any term of this Option may be amended or
waived upon written consent of the Company and the Optionee. Any such waiver of
a breach of any provision of this Option shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other
provision of this Option.
12. REPRESENTATIONS OF HOLDER. The Optionee hereby represents and
warrants to the Company that: (a) he has had access to and is familiar with
information concerning the Company's business, affairs, financial condition, and
prospects and (b) he has such knowledge and experience in financial and business
matters that he is capable of evaluating the merits and risks of accepting the
Option.
13. HEADINGS. The headings in this Option are for purposes of reference
only and shall not limit or otherwise affect the meaning of any provision of
this Option.
14. GOVERNING LAW. This Option shall be governed, construed and
interpreted in accordance with the laws of the State of California, without
giving effect to principles of conflicts of law.
15. NO ASSIGNMENT. This Option is not assignable or transferable by the
Optionee, other than by will or by the laws of descent and distribution, by
instrument to an inter vivos or testamentary trust in which the options are to
be passed to beneficiaries upon the death of the trustor, or by gift to
"immediate family" as that term is defined in 17 C.F.R. 240.16a-1(e).
NUTECH DIGITAL, INC.
By: /s/ Lee Kasper
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Name: Lee Kasper, President
EXHIBIT A
PURCHASE FORM
To: NUTECH DIGITAL, INC. Dated:
The undersigned, pursuant to the provisions set forth in the attached
Option, hereby irrevocably elects to purchase ________ shares of the Common
Stock covered by the Option and herewith makes payment of $_________,
representing the full purchase price for such shares at the price per share
provided for in such Option.
Signature:
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Address:
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