EXHIBIT 10.20
VALUESTAR CORPORATION
1997 STOCK OPTION PLAN
INCENTIVE AND NON-STATUTORY STOCK OPTION AGREEMENT
This Stock Option Agreement ("Agreement") is made and entered into as of the
Date of Grant indicated below by and between ValueStar Corporation, a Colorado
corporation (the "Company"), and the person named below as Employee or
Participant.
WHEREAS, Employee is an employee of the Company and/or one or more of its
subsidiaries; and
WHEREAS, pursuant to the Company's 1997 Stock Option Plan (the "Plan"), the
committee of the Board of Directors of the Company administering the Plan (the
"Committee") has approved the grant to Employee of an option to purchase shares
of the common stock, $0.00025 par value, of the Company (the "Common Stock" or
"Shares"), on the terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the foregoing recitals and the covenants set
forth herein, the parties hereto hereby agree as follows:
1. Grant of Option: Certain Terms and Conditions. The Company hereby grants to
Employee, and Employee hereby accepts, as of the Date of Grant, an option to
purchase the number of shares of Common Stock indicated below (the "Option
Shares") at the Exercise Price per share indicated below, which option shall
expire at 5:00 o'clock p.m., California time, on the Expiration Date indicated
below and shall be subject to all of the terms and conditions set forth in this
Agreement (the "Option"). The Option shall become exercisable to purchase, and
shall vest with respect to, that number of Option Shares as provided in the
Vesting Schedule provided below.
Employee: ▇▇▇▇▇▇ SICK
Date of Grant: January 28, 2000
Number of shares purchasable: Fifteen Thousand (15,000)
Exercise Price per share: $7.00
Expiration Date: January 27, 2005
Vesting Schedule: All 15,000 shares shall vest on March 31, 2000.
The first 14,000 shares that vest and become exercisable are intended as Options
intended to qualify as an incentive stock option under Section 422 of the
Internal Revenue Code (an "Incentive Stock Option") and consequently:
(a) the Expiration Date shall not be more than 10 years after the Date
of Grant and the Exercise Price per share shall not be less than the
Fair Market Value (as defined in the Plan) per share on the Date of
Grant; provided. however, that if, on the Date of Grant, Employee owns
(after application of the family and other attribution rules of Section
425(d) of the Internal Revenue Code) more than 10% of the total
combined voting power of all classes of stock of the Company or of its
parent or subsidiary corporations, then the Expiration Date shall not
be more than five years after the Date of Grant and the Exercise Price
per share shall not be less than 110% of the Fair Market Value per
share on the Date of Grant; and
(b) the aggregate Fair Market Value (determined as of the date such
options are granted) of the shares of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
Employee during any calendar year (under the Plan and all other stock
option plans of the Company and its parent and subsidiary corporations)
shall not exceed $100,000.
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The balance of the shares under Option are not intended to qualify as an
incentive stock option under Section 422 of the Internal Revenue Code (an
"Incentive Stock Option").
2. Acceleration and Termination of Option.
(a) Termination of Employment.
(i) Permanent Disability. If Participant's Employment is Terminated by
reason of Permanent Disability (within the meaning of Section 422(c)(6)
of the Code) of Participant, then (A) the portion of the Option that
has not vested on or prior to the date of such Termination of
Employment shall terminate on such date and (B) the remaining vested
portion of the Option shall terminate upon the earlier of the
Expiration Date or the first anniversary of the date of such
Termination of Employment. Any determination by the Board that
Participant does or does not have a Permanent Disability shall be final
and binding upon the Company and Participant.
(ii) Death During Employment. If Participant's Employment is Terminated
by reason of death of Employee, then (A) the portion of the Option that
has not vested on or prior to the date of such Termination of
Employment shall terminate on such date and (B) the remaining vested
portion of the Option shall terminate upon the earlier of the
Expiration Date or fifteen (15) months after the date of such
Termination of Employment.
(iii) Other Termination. If Participant's Employment is Terminated for
no reason, or for any reason other than Retirement, death or Permanent
Disability, and a Change of Control shall not have occurred within one
year prior thereto, then the Option shall terminate six months after
such Termination of Employment.
(b) Death Following Termination of Employment. Notwithstanding anything to the
contrary in this Agreement, if Participant shall die within not more than six
months after the Termination of his or her Employment and prior to the
Expiration Date, then (i) the portion of the Option that has not vested on or
prior to the date of such death shall terminate on such date and (ii) the
remaining vested portion of the Option shall terminate on the earlier of the
Expiration Date or fifteen (15) months after the date of such death.
(c) Merger. In the event of a merger, sale or reorganization of the Company with
or into any other corporation or corporations or a sale of all or substantially
all of the assets or outstanding stock of the Company, in which transaction the
Company's stockholders immediately prior to such transaction own immediately
after such transaction less than 50% of the equity securities of the surviving
corporation or its parent, all Options that have not been terminated in
accordance with the Stock Option Agreement that will become vested within 48
months of the closing date of such merger, sale or reorganization will be
accelerated. In the event of a merger of the Company with or into another
corporation, each outstanding Option or Stock Purchase Right may be assumed or
an equivalent option or right may be substituted by such successor corporation
or a parent or subsidiary of such successor corporation. If, in such event, an
Option or Stock Purchase Right is not assumed or substituted, the Option or
Stock Purchase Right shall terminate as of the date of the closing of the
merger. For the purposes of this paragraph, the Option or Stock Purchase Right
shall be considered assumed if, following the merger, the Option or Stock
Purchase Right confers the right to purchase or receive, for each Share of
Optioned Stock subject to the Option or Stock Purchase Right immediately prior
to the merger, the consideration (whether stock, cash, or other securities or
property) received in the merger by holders of Common Stock for each Share held
on the effective date of the transaction (and if the holders are offered a
choice of consideration, the type of consideration chosen by the holders of a
majority of the outstanding Shares). If such consideration received in the
merger is not solely common stock of the successor corporation or its Parent,
the Committee may, with the consent of the successor corporation, provide for
the consideration to be received upon the exercise of the Option or Stock
Purchase Right, for each Share of Optioned Stock subject to the Option or Stock
Purchase Right, to be solely common stock of the successor corporation or its
Parent equal in fair market value to the per share consideration received by
holders of Common Stock in the merger.
(d) Other Events Causing Acceleration of Option. The Committee, in its sole
discretion, may accelerate the exercisability of the Option at any time and for
any reason.
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(e) Other Events Causing Termination of Option. Notwithstanding anything to the
contrary in this Agreement, the Option shall terminate upon the consummation of
any of the following events, or, if later, the thirtieth day following the first
date upon which such event shall have been approved by both the Board and the
shareholders of the Company:
(i) the dissolution or liquidation of the Company; or
(ii) a sale or lease of all or substantially all of the property and
assets of the Company, unless the term of such sale or lease shall
provide otherwise.
3. Adjustments. In the event that the outstanding securities of the class then
subject to the Option are increased, decreased or exchanged for or converted
into cash, property and/or a different number or kind of securities, or cash,
property and/or securities are distributed in respect of such outstanding
securities, in either case as a result of a reorganization, merger,
consolidation, recapitalization, reclassification, dividend (other than a
regular, quarterly cash dividend) or other distribution, stock split, reverse
stock split or the like, or in the event that substantially all of the property
and assets of the Company are sold, then, unless such event shall cause the
option to terminate pursuant to Section 2(d) hereof, the Committee shall make
appropriate and proportionate adjustments in the number and type of shares or
other securities or cash or other property that may thereafter be acquired upon
the exercise of the Option; provided. however. that any such adjustments in the
Option shall be made without changing the aggregate Exercise Price of the then
unexercised portion of the Option.
4. Exercise.
(a) The Option shall be exercisable during a Participant's lifetime only by
Participant or by his or her guardian or legal representative, and after
Participant's death only by the person or entity entitled to do so under
Participant's last will and testament or applicable intestate law. The Option
may only be exercised by the delivery to the Company of a written notice of such
exercise, which notice shall specify the number of Option Shares to be purchased
(the "Purchased Shares") and the aggregate Exercise Price for such shares (the
"Exercise Notice"), together with payment in full of such aggregate Exercise
Price in cash or by cashier's or personal check or money order payable to the
Company; provided, however, that at the option of the Committee payment of such
aggregate Exercise Price may instead be made, in whole or in part, by the
delivery to the Company of a certificate or certificates representing shares of
Common Stock, duly endorsed or accompanied by a duly executed stock powers,
which delivery effectively transfers to the Company good and valid title to such
shares, free and clear of any pledge, commitment, lien, claim or other
encumbrance (such shares to be valued on the basis of the aggregate Fair Market
Value (as defined in the Plan) thereof on the date of such exercise), provided
that the Company is not then prohibited from purchasing or acquiring such shares
of Common Stock.
5. Payment of Withholding Taxes. The exercise of any Option is subject to the
condition that if at any time the Company shall determine, in its discretion,
that the satisfaction of withholding tax or other withholding liabilities under
any federal, state or local law is necessary or desirable as a condition of, or
in connection with, such exercise or a later lapsing of time or restrictions on
or disposition of the shares of Common Stock received upon such exercise, then
in such event, the exercise of the Option shall not be effective unless such
withholding shall have been effected or obtained in a manner acceptable to the
Company.
6. Notices. All notices and other communications required or permitted to be
given pursuant to this Agreement shall be in writing and shall be deemed given
if delivered personally or five days after mailing by certified or registered
mail, postage prepaid, return receipt requested, to the Company at ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇▇▇▇▇, or to Participant at the
address set forth beneath his or her signature on the signature page hereto, or
at such other addresses as they may designate by written notice in the manner
aforesaid.
7. Applicable Laws. Notwithstanding anything to the contrary in this Agreement,
no shares of stock purchased upon exercise of the Option, and no certificate
representing all or any part of such shares, shall be issued or delivered if in
the opinion of counsel to the Company, such issuance or delivery would cause the
Company to be in violation of or to incur liability under any federal, state or
other securities law, or any requirement of any stock exchange listing agreement
to which the Company is a party, or any other requirement of law or of any
administrative or regulatory body having jurisdiction over the Company. The
issuance of any unregistered Shares upon the exercise of an Option shall be
conditioned upon the Participant providing to the Committee a written
representation that, at the time of exercise, it is the intent of the
Participant to acquire the Shares for investment only and not with a view toward
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distribution. Any unregistered Shares shall be restricted as to transfer by the
Company unless the Company receives an opinion of counsel satisfactory to the
Company to the effect that such restriction is not necessary.
8. Nontransferability. Neither the Option nor any interest therein may be sold,
assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in
any manner other than by will or the laws of descent and distribution.
9. Plan. The Option is granted pursuant to the Plan, as in effect on the Date of
Grant, and is subject to all the terms and conditions of the Plan, as the same
may be amended from time to time; provided, however, that no such amendment
shall deprive Participant, without his or her consent, of the Option or of any
of Participant's rights under this Agreement. The interpretation and
construction by the Committee of the Plan, this Agreement, the Option and such
rules and regulations as may be adopted by the Committee for the purpose of
administering the Plan shall be final and binding upon Participant. Until the
Option shall expire, terminate or be exercised in full, the Company shall, upon
written request therefor, send a copy of the Plan, in its then-current form, to
Participant or any other person or entity then entitled to exercise the Option.
10. Shareholder Rights. No person or entity shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of any Option Shares until the
Option shall have been duly exercised to purchase such Option Shares in
accordance with the provisions of this Agreement.
11. Unemployment or Contract Rights. No provision of this Agreement or of the
Option granted hereunder shall (a) confer upon Participant any right to continue
in the employ of or contract with the Company or any of its subsidiaries, (b)
affect the right of the Company and each of its subsidiaries to terminate the
employment or contract of Participant, with or without cause, or (c) confer upon
Participant any right to participate in any employee welfare or benefit plan or
other program of the Company or any of its subsidiaries other than the Plan.
Participant hereby acknowledges and agrees that the Company and each of its
subsidiaries may terminate the employment or contract of Participant at any time
and for any reason, or for no reason, unless Participant and the Company or such
subsidiary are party to a written employment, consulting or other agreement that
expressly provides otherwise.
12. Governing Law. This Agreement and the Option granted hereunder shall be
governed by and construed and enforced in accordance with the laws of the State
of California without reference to choice or conflict of law principles.
IN WITNESS WHEREOF, the Company and Participant have duly executed this
Agreement as of the Date of Grant.
VALUESTAR CORPORATION
/s/ ▇▇▇▇▇ ▇▇▇▇▇
By: ▇▇▇▇▇ ▇▇▇▇▇
Title: President and CEO
PARTICIPANT
/s/ ▇▇▇▇▇▇ ▇. SICK
Signature
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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