|
EXHIBIT 10.1
STOCK OPTION AGREEMENT
This Stock Option
Agreement (this "Agreement") is entered into as of "Company"), and
Herman Rappaport (the "Option Holder").
Recitals
A. The
Company has adopted the 2004 Equity Compensation Plan (the "Plan").
The Option Holder has had an opportunity to review the Plan.
B. The
Option Holder is a director and the President of the Company and is
eligible to receive option grants under the Plan. This Agreement is
intended by the parties to evidence the Company’s grant to
the Option Holder of an option to purchase shares of its common
stock.
NOW, THEREFORE, in
consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which hereby are
acknowledged, the Company and the Option Holder hereby agree as
follows:
Agreement
1. Option Grant and Exercise
Price.
(a)
Effective as of October 26, 2006 the Company hereby grants to the
Option Holder the right and option (the "Option") to purchase, on
the terms and conditions set forth in this Agreement and in the
Plan, Eight hundred and fifty thousand (850,000) shares of its
common stock, par value $0.01 per share ("Common Stock"), at an
exercise price of $0.15 per share. The Option exercise price was
determined in accordance with Section 2(p) of the Plan.
(b)
The Option is a non-qualified stock option, and is not intended by
the Company and the Option Holder to be an incentive stock option
within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended.
2. Vesting and Term of the
Option.
(a)
Option Vesting. The Option is fully vested and is exercisable on
October 26, 2006.
(b)
Option Term. The Option shall be exercisable in whole or in part
prior to October 26, 2016. The Option shall terminate on October
26, 2016, and no portion of the Option may be exercised on or after
that date. The exercisability of the Option is not contingent on
the termination of the Option Holder’s employment or
directorship with the Company, it being understood that the Option
Holder shall retain the right to exercise the Option until October
26, 2016 even after the termination of his employment or
directorship with the Company.
3. Manner of Exercising the Option.
The Option Holder may exercise the vested portion of the Option in
whole or in part prior to the Option’s termination, provided
that a partial exercise of the Option may not be for fewer than one
hundred (100) shares of Common Stock unless fewer than one hundred
(100) shares subject to the vested portion of the Option remain
unexercised, in which event the entire remaining vested portion of
the Option must be exercised at one time.
The Option shall not be exercisable with respect to a fraction
of a share of Common Stock. The Option Holder may exercise the
vested portion of the Option, in whole or in part, by delivering to
the Company’s General Counsel written notice of exercise in
the form of the notice attached to this Agreement as Exhibit A.
Such notice shall specify the number of shares of Common Stock to
be purchased and shall be accompanied by payment of the purchase
price of the shares. No shares shall be issued by the Company until
full payment of the purchase price has been made.
4. Payment of the Option Exercise
Price. Payment of the exercise price of the shares of Common Stock
subject to the exercised portion of the Option shall be made in
accordance with Section 6(c) of the Plan.
5. Transferability of the
Option.
(a)
Except as provided in this Section 5, the Option Holder may not
assign or otherwise transfer the Option, either voluntarily or by
operation of law, other than by will or the laws of descent and
distribution, and the Option shall be exercisable during the Option
Holder’s lifetime only by the Option Holder or by the Option
Holder’s legal representative. Following the death of the
Option Holder, the Option shall be exercisable by the Option
Holder’s legal representative, executor and
beneficiaries.
(b)
The Option Holder may assign and transfer part or all of the Option
to a family member or family trust during the Option Holder’s
lifetime but only if: (i) the transfer is made by a gift and not
for consideration; (ii) the transferee is a "family member"
(including, without limitation, a family trust) as defined in
General Instruction A.1(a)(5) of Form S-8 under the Securities Act
of 1933, as amended (the "Securities Act"); (iii) the Option Holder
gives the Company at least ten days’ prior written notice of
the proposed transfer; and (iv) the transferee executes and
delivers to the Company any documents requested by the Company
(including, without limitation, a counterpart of this Agreement) in
order to document the transfer. Any such transferee of all or part
of the Option shall be bound by all of the terms and conditions of
the Plan and this Agreement, and the Option Holder shall be
personally liable to the Company for any breach by the transferee
of any of the terms of the Plan or this Agreement.
6. Securities Law Compliance. No
shares of Common Stock shall be issued or delivered upon exercise
of the Option unless and until the Board determines that the
exercise of the Option and the issuance and delivery of such shares
pursuant thereto will comply with all relevant provisions of law,
including, without limitation, the Securities Act, applicable state
and foreign securities laws and the requirements of any stock
exchange or over-the-counter trading system upon which the Common
Stock may be listed.
7. Incorporation by Reference of
the Plan. The Plan and all of its terms and conditions, as amended
from time to time, are incorporated by reference into this
Agreement. The Option Holder acknowledges that he has received
an
| 
