EXHIBIT 10.18
Grant No. _________
ULTIMATE SPORTS ENTERTAINMENT, INC.
STOCK OPTION GRANT
Optionee: __________________________________________________________
Address: ___________________________________________________________
Grant Date: ________________________________________________________
Exercise Price: $__________ per share
Number of Option Shares: __________ shares
Expiration Date: _____________________________________________________
Type of Option: _____ Incentive Option _____ Non-Statutory Option
This Stock Option Grant is made, as of the Grant Date set forth above, by
and between Ultimate Sports Entertainment, Inc., a Delaware corporation (the
"Corporation") and the Optionee named above. This Stock Option Grant includes
the terms of the Stock Option Exercise Notice and Purchase Agreement attached
hereto as Exhibit A, and is subject to the terms of the Corporation's Stock
Option Plan (the "Plan"), a copy of which is attached hereto as Exhibit B. All
capitalized terms not defined herein shall have the meaning set forth in the
Appendix to the Plan.
1. Grant of Option. The Corporation hereby grants to Optionee named above,
as of the Grant Date, an option to purchase up to the total number of Option
Shares specified above. The Option Shares shall be purchasable from time to time
during the option term specified in paragraph 2 below at the Exercise Price.
2. Option Term. The option term shall be measured from the Grant Date and
shall accordingly expire at the close of business on the Expiration Date
specified above, unless sooner terminated in accordance with paragraph 5 below.
3. Limited Transferability. This option shall be neither transferable nor
assignable, in whole or in part, by Optionee other than by will or by the laws
of descent and distribution following Optionee's death and may be exercised,
during Optionee's lifetime, only by Optionee. However, if this option is
designated a Non-Statutory Option above, then this option may also, in
connection with Optionee's estate plan, be assigned in whole or in part during
Optionee's lifetime to one or more members of Optionee's immediate family
(spouse or children) or to a trust established exclusively for the benefit of
one or more such immediate family members. Optionee
shall give written notice of any such assignment during Optionee's lifetime to
the Corporation within 20 days of assignment. The assigned portion may only be
exercised by the person or persons who acquire a proprietary interest in the
option pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for this option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.
4. Exercisability. This option shall become vested or exercisable for the
Option Shares in installments as provided in the Exercise Schedule below:
[EXERCISE SCHEDULE]
For purposes of calculating the number of months since grant only full
complete calendar months from the first of said month until the end of said
month will be counted. For example, if the grant was issued on June 18th, the
remaining days in the month of June would be disregarded and a full calendar
month would not accrue until July 31st. If the grant was issued on June 1st a
full calendar month would accrue on June 30th.
If the Optionee is terminated by the actions of the Corporation, except for
Misconduct, at any time before he has obtained an accumulated exercisable
percentage of 100% then, upon such termination, he shall be deemed to have
obtained the next exercisable percentage upon such termination. For example, if
the Optionee has worked twenty-two months after the grant of option and the
Optionee is then terminated by the Corporation without cause, the Optionee, upon
such termination, will obtain an additional fifteen percent (15 %) of
exercisable percent as if he had worked twenty-seven (27) months after the grant
of the Option.
As the option becomes exercisable or vested for such installments, those
installments shall accumulate and the option shall remain exercisable for the
accumulated installments until the Expiration Date or sooner termination of the
option term under paragraph 5 below. The exercisable installments may be
exercised in whole or in part, but only as to whole shares.
5. Cessation of Service. The option term specified in paragraph 2 above
shall terminate, and this option shall cease to be outstanding prior to the
Expiration Date, upon Optionee's ceasing to be in the Service of the
Corporation. In such event, the following provisions shall apply:
a. Should Optionee cease to remain in Service for any reason (other
than death, Permanent Disability or Misconduct) while this option is
outstanding, then Optionee shall have a period of three (3) months (commencing
with the date of such cessation of Service) during which to exercise this option
as to vested Option Shares.
b. Should Optionee die while this option is outstanding, then personal
representative of Optionee's estate (or the person or persons to whom the option
is transferred pursuant to Optionee's will or in accordance with the laws of
descent and distribution) shall have a
period of twelve (12) months (commencing with the date of such cessation of
service) during which to exercise this option as to vested Option Shares.
c. Should Optionee cease Service by reason of Permanent Disability
while this option is outstanding, then Optionee shall have a period of twelve
(12) months (commencing with the date of such cessation of Service) during which
to exercise this option as to vested Option Shares.
d. Should Optionee's Service be terminated for Misconduct, then this
option shall terminate immediately and cease to remain outstanding.
e. During the limited post-Service exercise period, this option may
not be exercised in the aggregate for more than the number of vested Option
Shares for which the option is exercisable on the date of the Optionee's
cessation of Service. Upon the expiration of such limited post-Service exercise
period or upon the Expiration Date (if earlier), this option shall terminate and
cease to be outstanding for any vested Option Shares for which the option has
not been exercised. In no event shall this option be exercisable at any time
after the Expiration Date. To the extent this option is not otherwise
exercisable for vested Option Shares at the time of Optionee's cessation of
Service, this option shall immediately terminate and cease to be outstanding
with respect to those shares.
6. Adjustment in Option Shares. Should any change be made to the Common
Stock by reason of any split, stock dividend, recapitalization, combination of
shares, exchange of shares or other change affecting the outstanding Common
Stock as a class without the Corporation's receipt of consideration, appropriate
adjustments shall be made to (i) the total number and/or class of securities
subject to this option, and (ii) the Exercise Price, in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.
7. Stockholder Rights. The holder of this option shall not have any
stockholder rights with respect to the Option Shares until such person shall
have exercised the option, paid the Exercise Price, and become a holder of
record of the Purchased Shares.
8. Manner of Exercising Options
a. In order to exercise this option with respect to all or any part of
the Option Shares for which this option is at the time exercisable, Optionee (or
any other person or persons exercising this option) must take the following
actions:
(1) Execute and deliver to the Corporation a Stock Option
Exercise Notice and Purchase Agreement (Exhibit A) for the Option Shares for
which the option is exercised.
(2) Pay the aggregate Exercise Price for the Purchased Shares in
one or more of the following forms:
(a) Cash or check made payable to the Corporation; or
(b) A promissory note payable to the Corporation, but only
to the extent authorized by the Plan Administrator in accordance
with paragraph 13.
Upon prior written approval of the Plan Administrator, the
Exercise Price may also be paid as follows:
(c) In shares of Common Stock held by Optionee (or any other
person or persons exercising the option) for the requisite period
necessary to avoid a charge to the Corporation's earnings for
financial reporting purposes and valued at Fair Market Value on
the Exercise Date; or
(d) Through a special sale and remittance procedure pursuant
to which Optionee (or any other person or persons exercising the
option) shall concurrently provide irrevocable written
instructions (1) to a Corporation- designated brokerage firm to
effect the immediate sale of the Purchased Shares and remit to
the Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate Exercise
Price payable for the Purchased Shares plus all applicable
federal, state and local income and employment taxes required to
be withheld by the Corporation by reason of such exercise and (2)
to the Corporation to deliver the certificates for the Purchased
Shares directly to such brokerage firm in order to complete the
sale.
Except to the extent the sale and remittance procedure is
utilized in connection with the option exercise, payment of the Exercise Price
must accompany the Stock Option. Exercise Notice and Purchase Agreement
delivered to the Corporation in connection with the option exercise.
(3) Furnish to the Corporation appropriate documentation
that the person or persons exercising the option (if other than Optionee) have
the right to exercise this option.
(4) Execute and deliver to the Corporation such written
representations as may be requested by the Corporation in order for it to comply
with the applicable requirements of federal and state securities laws.
(5) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the satisfaction of
all federal, state and local income and employment tax withholding requirements
applicable to the option exercise.
b. As soon as practical after the Exercise Date, the Corporation shall
issue to, or, on behalf of Optionee (or any other person or persons exercising
this option), a share certificate for the Purchased Shares, with the appropriate
legends affixed thereto.
c. In no event may this option be exercised for any fractional shares.
9. Compliance with Laws and Regulations
a. The exercise of this option and the issuance of the Option Shares
upon such exercise shall be subject to compliance by the Corporation and
Optionee with all applicable requirements of law relating thereto and with all
applicable regulations of any stock exchange (or Nasdaq, if applicable) on which
the Common Stock may be listed for trading at the time of such exercise and
issuance.
b. The inability of the Corporation to obtain approval from any
regulatory body having authority deemed by the Corporation to be necessary to
the lawful issuance and sale of any Common Stock pursuant to this option shall
relieve the Corporation of any liability with respect to the non-issuance or
sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such
approvals.
10. Successors and Assigns. Except to the extent otherwise provided in
paragraph 3 above, the provisions of this Agreement shall inure to the benefit
of, and be binding upon, the Corporation and its successors and assigns and
Optionee, Optionee's permitted assigns and the legal representatives, heirs and
legatees of Optionee's estate.
11. Notices. Any notice required to be given or delivered to the
Corporation under the terms of this Agreement shall be in writing and addressed
to the Corporation at its principal corporate offices. Any notice required to be
given or delivered to Optionee shall be in writing and addressed to Optionee at
the address indicated on the Stock Option Grant. All notices shall be deemed
effective upon personal delivery or upon deposit in the U.S. mail, postage
prepaid and properly addressed to the party to be notified.
12. Financing. The Plan Administrator may, in its absolute discretion and
without any obligation to do so, permit Optionee to pay the Exercise Price for
the purchase Option Shares by delivering a full-recourse promissory note payable
to the Corporation. The terms of any such promissory note (including the
interest rate, the requirements for collateral and the terms of repayment) shall
be established by the Plan Administrator in its sole discretion.
13. Construction. This Agreement and the option evidenced hereby are made
and granted pursuant to the Plan and are in all respects limited by and subject
to the terms of the Plan and the Stock Option Exercise Notice and Purchase
Agreement. All decisions of the Plan Administrator with respect to any question
or issue arising under the Plan or this Agreement shall be conclusive and
binding on all persons having an interest in this option.
14. Additional Terms Applicable to an Incentive Option. In the event this
option is designated an Incentive Option above, the following terms and
conditions shall also apply to the grant:
a. This option shall cease to qualify for favorable tax treatment as
an Incentive Option if (and to the extent) this option is exercised for one or
more Option Shares: (1) more than three (3) months after the date Optionee
ceases to be an Employee or in the Service of the Corporation for any reason
other than death or Permanent Disability or (2) more than twelve (12) months
after the date Optionee ceases to be an Employee by reason of death or Permanent
Disability.
b. No installment under this option shall qualify for favorable tax
treatment as an Incentive Option if (and to the extent) the aggregate Fair
Market Value (determined at the Grant Date) of the Common Stock for which such
installment first becomes exercisable hereunder would, when added to the
aggregate value (determined as of the respective date or dates of grant) of any
earlier installments of the Common Stock and any other securities for which this
option or any other Incentive Options granted to Optionee prior to the Grant
Date (whether under the Plan or any other option plan of the Corporation or any
Parent or Subsidiary) first become exercisable during the same calendar year,
exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should such One
Hundred Thousand Dollar ($100,000) limitation be exceeded in any calendar year,
this option shall nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
c. Should the Board elect to accelerate the exercisability of this
option upon a Corporate Transaction, then this option shall qualify as an
Incentive Option only to the extent the aggregate Fair Market Value (determined
at the Grant Date) of the Common Stock for which this option first becomes
exercisable in the calendar year in which the Corporate Transaction occurs does
not, when added to the aggregate value (determined as of the respective date or
dates of grant) of the Common Stock or other securities for which this option or
one or more other Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation or any
Parent or Subsidiary) first become exercisable during the same calendar year,
exceed One Hundred Thousand Dollars ($100,000) in the aggregate. Should the
applicable One Hundred Thousand Dollar ($100,000) limitation be exceeded in the
calendar year of such Corporate Transaction, the option may nevertheless be
exercised for the excess shares in such calendar year as a Non-Statutory Option.
d. Should Optionee hold, in addition to this option, one or more other
options to purchase Common Stock which become exercisable for the first time in
the same calendar year as this option, then the foregoing limitations on the
exercisability of such options as Incentive Options shall be applied on the
basis of the order in which such options are granted.
e. The grant of this option is subject to approval of the Plan by
Corporation's stockholders within twelve (12) months after the adoption of the
Plan by the Board. In the event that such stockholder approval is not obtained,
then this option shall not qualify as an Incentive Option.
f. If the Option Shares covered by this Agreement exceed, as of the
Grant Date, the number of shares of Common Stock which may without stockholder
approval be issued under the Plan, then this option shall cease to qualify as an
Incentive Option unless stockholder
approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of
the Plan.
g. If Optionee is a 10% Stockholder, then the Exercise Price shall
not be less than one hundred ten percent (110%) of the Fair Market Value per
share of Common Stock on the Grant Date, and the option term shall not exceed
five (5) years measured from the Grant Date.
h. ▇▇▇▇▇▇ purchased pursuant to this option shall cease to qualify for
favorable tax treatment as Incentive Option shares if and to the extent Optionee
disposes of such shares within two (2) years from the Grant Date or within one
(1) year of Optionee's purchase of said shares.
i. Optionee acknowledges that the rules regarding Incentive Options as
contained in the Internal Revenue Code are subject to amendment in the future.
Optionee should consult his or her tax advisor prior to taking any action with
respect to this option or the shares purchased hereunder.
IN WITNESS WHEREOF, this Agreement is executed as of the Grant Date first
noted above.
Ultimate Sports Entertainment, Inc.
By:
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▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
ACKNOWLEDGMENT
Optionee understands and agrees that the option is granted subject to and
in accordance with the terms of the Corporation's Stock Option Plan (the
"Plan"). Optionee further agrees to be bound by the terms of the Plan and the
terms of the option as set forth in this Agreement. Optionee understands that
any Option Shares purchased under the option shall be subject to the terms set
forth in the Stock Option Exercise Notice and Purchase Agreement attached hereto
as Exhibit A.
Optionee hereby acknowledges receipt of a copy of the Plan in the form
attached hereto as Exhibit B, and represents that Optionee has read and
understands the Plan, and accepts this option subject to all terms and
provisions of the Plan and the Plan documents. Optionee hereby agrees to accept
as binding, conclusive and final, all decisions and interpretations of the Board
of Directors upon any questions arising under the Plan. Optionee acknowledges
that there may be adverse tax consequences upon exercise of this option and/or
upon disposition of the Purchased Shares, and that Optionee should consult a tax
advisor prior to such exercise or disposition.
OPTIONEE
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Signature
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Please Print Name
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Date
EXHIBIT A
FORM OF STOCK OPTION EXERCISE NOTICE AND PURCHASE AGREEMENT
(To be signed only upon exercise of Option)
To: Ultimate Sports Entertainment, Inc.
The undersigned, the owner of the attached Stock Option Grant, hereby
irrevocable elects to exercise the purchase rights represented by the Stock
Option Grant for, and to purchase thereunder, _____________ shares of Common
Stock of Ultimate Sports Entertainment, Inc. Enclosed is payment in the amount
of $_______________ as the exercise price of the Common Stock to be acquired.
Please have the certificate(s) registered in the name of and delivered to the
following address:
Registered Name(s)
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---------------------------------
---------------------------------
Mailing Address
---------------------------------
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If this exercise does not include all of the Common Stock covered by the
attached Stock Option Grant, please deliver a new Stock Option Grant of like
tenor for the balance of the Common Stock to the undersigned at the foregoing
address.
DATED this ______ day of __________ 200___.
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Signature of Optionee
SCHEDULE OF NON-QUALIFIED OPTION HOLDERS
Number of Exercise Expiration
Grant No. Name & Address Option Shares Price Date
--------- -------------- ------------- ----- ----
1 ▇▇▇▇▇▇▇ ▇▇▇▇ 10,000 $0.50 1/11/03
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇. #▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2 ▇▇▇▇ ▇▇▇▇▇▇ 250,000 $0.50 1/11/03
▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3 ▇▇▇▇ ▇▇▇▇▇ 10,000 $0.50 1/11/03
1520-A Miramar Bch.
Montecito, CA 93108
4 ▇▇▇▇ ▇▇▇▇▇▇ 10,000 $0.50 1/11/03
▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇.
Apt. 5-D
New York, NY 10024
5 ▇▇▇▇ ▇▇▇▇▇▇▇ 7,500 $0.50 1/11/03
3 Jagger
Melville, NY 11747
6 ▇▇▇▇▇ ▇▇▇▇ 5,000 $0.50 1/11/03
2120 Colorado
▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7 ▇▇▇▇▇ ▇▇▇▇▇▇ 50,000 $1.00 1/11/03
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
Suite 2070
Los Angeles, CA 90024