INTERNATIONAL HERITAGE, INCORPORATED
1996 EMPLOYEE STOCK OPTION PLAN STOCK AGREEMENT
1. Grant of Option. International Heritage, Incorporated, a Nevada
corporation (the "Company"), hereby grants to the Optionee named in the Notice
of Grant (the "Optionee"), an option (the "Option") to purchase a total number
of shares of Common Stock (the "Shares") set forth in the Notice of Grant, at
the exercise price per share set forth in the Notice of Grant (the "Exercise
Price") subject to the terms, definitions and provisions of the International
Heritage, Incorporated 1996 Stock Option Plan (the "Plan") adopted by the
Company, which is incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in
this Agreement.
If designated an Incentive Stock Option, this Option is intended
to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
2. Exercise of Option. This Option shall be exercisable during its
term in accordance with the Exercise Schedule set out in the Notice of Grant
and with the provisions of Section 4 hereof and Section 9 of the Plan as
follows:
(i) Right to Exercise.
This Option may not be exercised for a fraction of a share.
(b) In the event of Optionee's death, Disability or other
termination of relationship, the exercisability of the Option is governed by
Sections 5, 6 and 7 below, subject to the limitation contained in subsection
(2)(i)(c).
(c) In no event may this Option be exercised after the
date of expiration of the term of this Option as set forth in the Notice of
Grant.
(ii) Method of Exercise. This Option shall be exercisable by
written notice (in the form attached as Exhibit A) which shall state the
election to exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and agreements as to
the holder's investment intent with respect to such shares of Common Stock as
may be required by the Company pursuant to the provisions of the Plan. Such
written notice shall be signed by the Optionee and shall be delivered in
person or by certified mail to the Secretary of the Company. The written
notice shall be accompanied by payment of the Exercise Price. This Option
shall be deemed to be exercised upon receipt by the Company of such written
notice accompanied by the Exercise Price.
No shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which the
Shares may then be listed. Assuming such compliance, for income tax purposes
the Shares shall be considered transferred to the Optionee on the date on
which the Option is exercised with respect to the Shares.
3. Method of Payment. Payment of the Exercise Price shall be by any
of the following, or a combination thereof, at the election of the Optionee
and upon the acceptance by the Administrator:
cash;
check;
promissory note;
surrender of other shares of Common Stock of the Company which (A)
in the case of Shares acquired pursuant to the exercise of a Company option,
have been owned by the Optionee for more than six (6) months on the date of
surrender, and (B) have a Fair Market Value on the date of surrender equal to
the Exercise Price of the Shares as to which the Option is being exercised;
(v) authorization from the Company to retain from the total
number of shares as to which the Option is exercised that number of shares
having a Fair Market Value on the date of said exercise equal to the exercise
price for the total number of shares as to which the option is exercised;
(vi) delivery of a properly executed Exercise Notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the Exercise Price;
(vii) by delivering an irrevocable subscription agreement for
the shares which irrevocably obligates the optionholder to take and pay for
the shares not more than twelve (12) months after the date of delivery of the
subscription agreement;
(viii) Employee Payroll Deduction Plan which will require the
Employee to execute an agreement authorizing withholding from income for a
minimum six (6) month period. Amounts accrued will be used to cover the cost
of exercise and any taxes or fees associated with the cost of exercise.
Options must be exercised in 250 share minimum increments under the Employee
Payroll Deduction Plan;
(ix) any combination of the foregoing methods of payment; or
(x) such other consideration and method of payment of the
issuance of shares the extent permitted under applicable laws. In making its
determination as to the type of consideration to accept, the Administrator
shall consider if acceptance of such consideration may reasonably be expected
to benefit the Company.
4. Restrictions on Exercise. This Option may not be exercised until
such time as the Plan has been approved by the shareholders of the Company, or
if the issuance of such Shares upon exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
federal or state securities or other law or regulation, including any rule
under Part 207 of Title 12 of the Code of Federal Regulations ("Regulation G")
as promulgated by the Federal Reserve Board. As a condition to the exercise
of this Option, the Company may require Optionee to make any representation
and warranty to the Company as may be required by any applicable law or
regulation.
5. Termination of Relationship. In the event of termination of
Optionee's consulting relationship or Continuous Status as an Employee,
Optionee may, to the extent otherwise so entitled at the date of such
termination (the "Termination Date"), exercise this Option during the
Termination Period set out in the Notice of Grant. To the extent that
Optionee was not entitled to exercise this Option at the Termination Date, or
if Optionee does not exercise this Option within the time specified herein,
the Option shall terminate.
6. Disability of Optionee. Notwithstanding the provisions of Section
5 above, in the event of termination of Optionee's Continuous Status as an
Employee as a result of his or her Disability (as defined in Section 22(e)(3)
of the Code), Optionee may, but only within twelve (12) months from the date
of termination of employment (but in no event later than the date of
expiration of the term of this Option as set forth in Section 9 below),
exercise the Option to the extent otherwise so entitled at the date of such
termination. To the extent that Optionee was not entitled to exercise the
Option as of the date of termination, or if Optionee does not exercise such
option (to the extent otherwise so entitled) within the time specified herein,
the Option shall terminate.
7. Death of Optionee. In the event of the death of Optionee, the
Option may be exercised at any time within twelve (12) months following the
date of death (but in no event later than the date of expiration of the term
of this Option as set forth in Section 9 below), by Optionee's estate or by a
person who acquired the right to exercise the Option by bequest or inheritance
but only to the extent the Optionee could exercise the Option at the date of
death.
8. Non-Transferability of Option. This Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
otherwise than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of Optionee only by the Optionee. The terms of
this Option shall be binding upon the executors, administrators, heirs,
successors and assigns of the Optionee. Any disposition of the shares issued
under the Plan by the Optionee not made in accordance with the Plan or the
Agreement will be void. The Company will not recognize, or have a duty to
recognize, any disposition not made in accordance with the Plan and the
Agreement, and the shares transferred will continue to be bound by the Plan
and the Agreement.
9. Term of Option. This Option may be exercised only within the term
set out in the Notice of Grant, and may be exercised during such term only in
accordance with the Plan and the terms of this Agreement. The limitations set
out in Section 7 of the Plan regarding Options designated as Incentive Stock
Options and Options granted to more than ten percent (10%) shareholders shall
apply to this Option.
10. Taxation Upon Exercise of Option. Optionee understands that, upon
exercising a Nonstatutory Stock Option, he or she will recognize income for
tax purposes in an amount equal to the excess of the then Fair Market Value of
the Shares over the exercise price. However, the timing of this income
recognition may be deferred for up to six (6) months if Optionee is subject to
Section 16 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). If the Optionee is an Employee, the Company will be required to
withhold from Optionee's compensation, or collect from Optionee and pay to the
applicable taxing authorities an amount equal to a percentage of this
compensation income. Additionally, the Optionee may at some point be required
to satisfy tax withholding obligations with respect to the disqualifying
disposition of an Incentive Stock Option. The Optionee shall satisfy his or
her tax withholding obligation arising upon the exercise of this Option by one
or some combination of the following methods: (i) by cash payment, or (ii) out
of Optionee's current compensation, or (iii) if permitted by the
Administrator, in his or her discretion, by surrendering to the Company Shares
which (a) in the case of Shares previously acquired from the Company, have
been owned by the Optionee for more than six (6) months on the date of
surrender and (b) have a Fair Market Value on the date of surrender equal to
or less than Optionee's marginal tax rate times the ordinary income
recognized, or (iv) by electing to have the Company withhold from the Shares
to be issued upon exercise of the Option that number of shares having a Fair
Market Value equal to the amount required to be withheld. For this purpose,
the Fair Market Value of the Shares to be withheld shall be determined on the
date that the amount of tax to be withheld is to be determined (the "Tax
Date").
If the Optionee is subject to Section 16 of the Exchange Act (an
"Insider"), any surrender of previously owned Shares to satisfy tax
withholding obligations arising upon exercise of this Option must comply with
the applicable provisions of Rule 16b-3 promulgated under the Exchange Act
("Rule 16b-3") and shall be subject to such additional conditions or
restrictions as may be required thereunder to qualify for the maximum
exemption from Section 16 of the Exchange Act with respect to Plan
transactions.
All elections by an Optionee to have Shares withheld to satisfy
tax withholding obligations shall be made in writing in a form acceptable to
the Administrator and shall be subject to the following restrictions:
the election must be made on or prior to the applicable Tax Date;
(ii) once made, the election shall be irrevocable as to the
particular Shares of the Option as to which the election is made;
(iii) all elections shall be subject to the consent or
disapproval of the Administrator; and
(iv) if the Optionee is an Insider, the election must comply with
the applicable provisions of Rule 16b-3 and shall be subject to such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Plan transactions.
11. Tax Consequences. Set forth below is a brief summary as of the
date of this Option of some of the federal tax consequences of exercise of
this Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. OPTIONEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(i) Exercise of Incentive Stock Option. If this Option
qualifies as an Incentive Stock Option, there will be no regular federal
income tax liability upon the exercise of the Option, although the excess, if
any, of the Fair Market Value of the Shares on the Date of Exercise over the
Exercise Price will be treated as an adjustment to the alternative minimum tax
for federal tax purposes and may subject the Optionee to the alternative
minimum tax in the year of exercise.
(ii) Exercise of Nonstatutory Stock Option. If this Option does
not qualify as an Incentive Stock Option, there may be a regular federal
income tax liability upon the exercise of the Option. The Optionee will be
treated as having received compensation income (taxable at ordinary income tax
rates) equal to the excess, if any, of the Fair Market Value of the Shares on
the Date of Exercise over the Exercise Price. If Optionee is an Employee, the
Company will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount equal to
a percentage of this compensation income at the time of exercise.
(iii) Disposition of Shares. In the case of a Nonstatutory Stock
Option, if Shares are held for at least one (1) year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for
federal income tax purposes. In the case of an Incentive Stock Option, if
Shares transferred pursuant to the Option are held for at least one (1) year
after exercise and are disposed of at least two (2) years after the Date of
Grant, any gain realized on disposition of the Shares will also be treated as
long-term capital gain for federal income tax purposes. If Shares purchased
under an Incentive Stock Option are disposed of within such one-year period or
within two (2) years after the Date of Grant, any gain realized on such
disposition will be treated as compensation income (taxable at ordinary income
rates) to the extend of the excess, if any, of the Fair Market Value of the
Shares on the Date of Exercise over the Exercise Price.
(iv) Notice of Disqualifying Disposition of Incentive Stock
Option Shares. If the Option granted to Optionee herein is an Incentive Stock
Option, and if Optionee sells or otherwise disposes of any of the Shares
acquired pursuant to the Incentive Stock option on or before the later of (a)
the date two (2) years after the Date of Grant, or (b) the date one (1) year
after Date of Exercise, the Optionee shall immediately notify the Company in
writing of such disposition. Optionee agrees that the Optionee may be
subject to income tax withholding by the Company on the compensation income
recognized by the Optionee from the early disposition by payment in cash or
out of the compensation paid to the Optionee.
INTERNATIONAL HERITAGE, INCORPORATED
a Nevada corporation
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
President and CEO
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE
OPTION HEREOF IS EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE
WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND
AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN
WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE ANY
RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE
COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HIS OR HER RIGHT OR THE
COMPANY'S RIGHT TO TERMINATE HIS OR HER EMPLOYMENT, INDEPENDENT CONTRACTORSHIP
OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and certain
information related thereto and represents that he or she is familiar with the
terms and provisions thereof and hereby accepts this Option subject to all of
the terms and provisions thereof, Optionee has reviewed the Plan and this
Option in their entirety, has had an opportunity to obtain advice of counsel
prior to executing this Option and fully understands all provisions of the
Option. Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan.
Dated:_________________________ _________________________________(SEAL)
Optionee
Printed Name: __________________________
EXHIBIT A
INTERNATIONAL HERITAGE, INCORPORATED
1996 EMPLOYEE STOCK OPTION PLAN
EXERCISE NOTICE
Attention: Corporate Secretary
International Heritage, Incorporated
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1. Exercise of Option. Effective as of today, ___________ 19___, the
undersigned ("Optionee") hereby elects Optionee's option to purchase
_____________ shares of the Common Stock (the "Shares") of International
Heritage, Incorporated (the "Company") under and pursuant to the Company's
1996 Employee Stock Option Plan, as amended (the "Plan") and the [ ]
Incentive [ ] Nonstatutory Stock Option Agreement dated ________________
(the "Option Agreement").
2. Representations of Optionee. Optionee acknowledges that Optionee
has received, read and understood the Plan and the Option Agreement and agrees
to abide by and be bound by their terms and conditions.
3. Rights as Shareholder. Until the stock certificate evidencing
such Shares is issued (as evidenced by the appropriate entry on the books of
the Company or of a duly authorized transfer agent of the Company), no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock
certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except, as provided in Section 12 of the
Plan.
Optionee shall enjoy rights as a shareholder until such time as Optionee
disposes of the Shares or the Company and/or its assignee(s) exercises the
right of First Refusal hereunder. Under such exercise, Optionee shall have no
further rights of the Shares so purchased except the right to receive payment
for the Shares so purchased in accordance with the provisions of the
Agreement, and Optionee shall forthwith cause the certificate(s) evidencing
the Shares so purchased to be surrendered to the Company for transfer or
cancellation.
4. Tax Consultation. Optionee understands that Optionee may suffer
adverse tax consequences as a result of Optionee's purchase or disposition of
the Shares. Optionee represents that Optionee has consulted with any tax
consultants Optionee deems advisable in connection with the purchase or
disposition of the Shares and that Optionee is not relying on the Company for
any tax advice.
5. Stock-Transfer Orders; Refusal to Transfer.
(a) Stop-Transfer Notices. Optionee agrees that, in order to
ensure compliance with the restrictions referred to herein, the Company may
issue appropriate stop-transfer instructions to its transfer agent, if any,
and that, if the Company transfers its own securities, it may make appropriate
notations to the same effect in its own records.
(b) Refusal to Transfer. The Company shall not be required (i)
to transfer on its books any Shares that have been sold or otherwise
transferred in violation of any of the provisions of the Plan or this
Agreement or (ii) to treat as owner of such Shares or to accord the right to
vote or pay dividends to any purchaser or other transferee to whom such Shares
shall have been so transferred.
6. Market Standoff Agreement. Optionee hereby agrees that if so
requested by the Company or any representative of the underwriters in
connection with any registration of the offering of any securities of the
Company under the Securities Act of 1933, as amended ("1933 Act"), Optionee
shall not sell or otherwise transfer any shares or other securities of the
Company during the 180-day period following the effective date of a
registration statement of the Company filed under the 1933 Act; provided,
however, that such restriction shall only apply to the first two registration
statements of the Company to become effective under the 1933 Act which include
securities to be sold on behalf of the Company to the public in an
underwritten public offering under the 1933 Act. The Company may impose stop
transfer instructions with respect to securities subject to the foregoing
restrictions until the end of such 180-day period.
7. Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Agreement shall be binding
upon Optionee and his or her heirs, executors, administrators, successors and
assigns.
8. Interpretation. Any dispute regarding the interpretation of this
Agreement shall be submitted by Optionee or by the Company forthwith to the
Company's Board of Directors or Administrator of the Plan, which shall review
such dispute. Any such review by the Board or Administrator shall be final
and binding on the Company and on Optionee.
9. Governing Law; Severability. This Agreement shall be governed by
and construed in accordance with the laws of the State of Nevada excluding
that body of law pertaining to conflicts of law. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.
10. Notices. Any notice required or permitted hereunder shall be
given in writing and shall be deemed effectively given upon personal delivery
or upon deposit in the United States mail by certified mail, with postage and
fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate in
writing from time to time to the other party.
11. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this Agreement.
12. Delivery of Payment. Optionee herewith delivers to the Company
the full Exercise Price for the Shares.
13. Entire Agreement. The Plan and Notice of Stock Option Grant are
incorporated herein by reference. This Agreement, the Plan and the Notice of
Stock Option Grant constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the
Company and Optionee with respect to the subject matter.
Submitted by: Accepted by:
OPTIONEE: INTERNATIONAL HERITAGE, INCORPORATED
a Nevada Corporation
_____________________________(SEAL) By:
Signature
__________________________________ Its:
Printed Name
Address: Address:
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__________________________________ Raleigh, North Carolina 27608
__________________________________
NOTICE OF SHARE WITHHOLDING ELECTION
INTERNATIONAL HERITAGE, INCORPORATED
1996 EMPLOYEE STOCK OPTION PLAN
International Heritage, Incorporated
Attn: Stock Option Plan Administrator
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This election relates to the Option identified in Paragraph 3 below. I
hereby certify that:
(1) My correct name and social security number and my current address
are set forth at the end of this document.
(2) I am (check one, whichever is applicable).
Q the original recipient of the Option.
Q the legal representative of the estate of the original
recipient of the Option.
Q a legatee of the original recipient of the Option.
Q the legal guardian of the original recipient of the Option.
(3) The Option pursuant to which this election relates was issued
under the International Heritage, Incorporated 1996 Employee Stock
Option Plan (the "Plan") in the name of __________________
[Optionee Name] for the purchase of a total of __________ [total
number of Shares subject to Option] Shares of Common Stock. This
election relates to __________ [number] Shares of Common Stock
issuable upon exercise of the Option (the "Common Stock"),
provided that the numbers set forth above shall be deemed changed
as appropriate to reflect the applicable Plan provisions.
(4) In connection with any exercise of the Option with respect to the
Common Stock, I hereby elect to have certain of the Shares
issuable pursuant to the exercise withheld by the Company for the
purpose of having the value of the Shares applied to pay federal,
state and local, if any, taxes arising from the exercise.
The Shares to be withheld shall have, as of the Tax Date
applicable to the exercise, a Fair Market Value equal to the
minimum statutory tax withholding requirement under federal, state
and local law in connection with the exercise.
(5) This Withholding Election is made on or prior to the applicable
Tax Date and is otherwise timely made pursuant to the Plan.
(6) I understand that this Withholding Election may not be revised,
amended or revoked by me (except in a manner that satisfies the
requirements of the exemption provided under Rule 16b-3
promulgated under the Securities Exchange Act of 1934).
(7) I further understand that the Company shall withhold from the
Common Stock a whole number of Shares of Common Stock having the
value specified in Paragraph 4 above.
(8) The Plan has been made available to me by the Company, I have read
and understand the Plan and I have no reason to believe that any
of the conditions therein to the making of this Withholding
Election have not been met. Capitalized terms used in this Notice
of Withholding Election is made to without definition shall have
the meanings given to them in the Plan.
Date:___________________________
Signature
___________________________________
Name (Printed)
___________________________________
Street Address
City, State, Zip Code
Social Security Number
cc: Payroll Department
INTERNATIONAL HERITAGE, INCORPORATED
1996 EMPLOYEE STOCK OPTION PLAN
EMPLOYEE STOCK OPTION PAYROLL DEDUCTION PLAN
AUTHORIZATION
International Heritage, Incorporated
Attn: Stock Option Plan Administrator
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The undersigned Employee of International Heritage, Inc., a wholly owned
subsidiary of International Heritage, Incorporated, and an Optionee under the
International Heritage, Incorporated 1996 Employee Stock Option Plan (the
"Plan"), hereby:
1. Certifies that my correct name and social security number and my
current address are set forth below.
2. Agrees to the withholding of $______________ [amount] from each
paycheck, to be accrued toward the exercise of my Options granted
under the Plan.
3. Understands and agrees to the withholding of such funds for a
minimum of six (6) months. I may not adjust the withholding
amount until six (6) months from the date of this enrollment in
this Employee Stock Option Payroll Deduction Plan; however, there
is no limitation to the additional amounts I may contribute toward
the Exercise Price during any period.
4. Acknowledges that all applicable fees and taxes shall be applied
to the Exercise Price.
5. Agrees to execute any other documents the Administrator may
require for the exercise of my Options pursuant to this Employee
Stock Option Payroll Deduction Plan.
6. Understands and agrees to the exercise of my Options in minimum
increments of 250 shares, automatically upon the accrual of the
Exercise Price therefore.*
7. Requests that my certificates be prepared in the name of:
and be delivered to:
(please specify account number; if any):
**
Date:_______________________________________________________
Signature
Name (Printed)
Street Address
City, State, Zip Code
Social Security Number
* Automatic exercise shall occur on or about the first day not subject to
restriction on trading by Employees pursuant to the Company ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Policy, after the pay period in which funds sufficient to cover the Exercise
Price are accrued.
** Pursuant to Paragraph 10 of the Plan and Paragraph 8 of the Agreement, the
Option may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee. Any
disposition of the shares issued under the Plan by the Optionee not made in
accordance with the Plan or the Agreement will be void. The Company will not
recognize, or have a duty to recognize, any disposition not made in accordance
with the Plan and the Agreement, and the shares transferred will continue to
be bound by the Plan and the Agreement.