STOCK OPTION AGREEMENT
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MERLIN SOFTWARE TECHNOLOGIES
INTERNATIONAL, INC.
THIS is entered into as of the 4th day of January, 2001 (the "Date of
Grant")
BETWEEN:
MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL, INC., a company incorporated
pursuant to the laws of the State of Nevada, of ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
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(the "Company")
AND:
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(the "Optionee")
WHEREAS:
A. The Board of Directors of the Company (the "Board") has approved and
adopted the 2000 Stock Option Plan (the "Plan"), pursuant to which the Board is
authorized to grant to employees and other selected persons stock options to
purchase common stock, without par value, of the Company (the "Common Stock");
B. The Plan provides for the granting of stock options that either (i)
are intended to qualify as "Incentive Stock Options" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or
(ii) do not qualify under Section 422 of the Code ("Non-Qualified Stock
Options"); and
C. The Board has authorized the grant to Optionee of options to
purchase a total of 100,000 shares of Common Stock (the "Options"), which
Options are intended to be (select one):
[X] Incentive Stock Options
[ ] Non-Qualified Stock Options;
NOW THEREFORE, the Company agrees to offer to the Optionee the option
to purchase, upon the terms and conditions set forth herein and in the Plan,
100,000 shares of
Common Stock. Capitalized terms not otherwise defined herein shall have the
meanings ascribed thereto in the Plan.
1. Exercise Price. The exercise price of the Options shall be $0.35 per
share.
2. Limitation on the Number of Shares. If the Options granted hereby are
Incentive Stock Options, the number of shares which may be acquired upon
exercise thereof is subject to the limitations set forth in Section 5.1(a) of
the Plan.
3. Vesting Schedule. The Options are exercisable in accordance with the
following vesting schedule:
(a) 20,000 of the Options may be exercised upon execution of a management
agreement between the Company and the Optionee (the "Management Agreement"); and
(b) 80,000 of the Options may be exercised upon the expiration of 12 months
from the date of execution of the Management Agreement.
4. Options not Transferable. The Options may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or otherwise)
other than by will, by applicable laws of descent and distribution or (except in
the case of an Incentive Stock Option) pursuant to a qualified domestic
relations order, and shall not be subject to execution, attachment or similar
process; provided, however, that if the Options represent a Non-Qualified Stock
Option, such Option is transferable without payment of consideration to
immediate family members of the Optionee or to trusts or partnerships
established exclusively for the benefit of the Optionee and the Optionee's
immediate family members. Upon any attempt to transfer, pledge, hypothecate or
otherwise dispose of any Option or of any right or privilege conferred by the
Plan contrary to the provisions thereof, or upon the sale, levy or attachment or
similar process upon the rights and privileges conferred by the Plan, such
Option shall thereupon terminate and become null and void.
5. Investment Intent. By accepting the Options, the Optionee represents and
agrees that none of the shares of Common Stock purchased upon exercise of the
Options will be distributed in violation of applicable federal, state and
provincial laws and regulations. In addition, the Company may require, as a
condition of exercising the Options, that the Optionee execute an undertaking,
in such a form as the Company shall reasonably specify, that the shares of
Common Stock is being purchased only for investment and without any then-present
intention to sell or distribute such shares of Common Stock.
6. Termination of Employment and Options. Options which have vested in
accordance with Section 3 of this Agreement shall terminate, to the extent not
previously exercised, upon the occurrence of the first of the following events:
(a) Expiration. Ten (10) years; except, that the expiration date of any
Incentive Stock Option granted to a greater than ten percent (> 10%) shareholder
of the Company shall not be later than five (5) years from the Date of Grant;
(b) Termination for Cause. The date of an Optionee's termination of
employment or contractual relationship with the Company or any Related
Corporation for cause (as determined in the sole discretion of the Plan
Administrator);
(c) Termination Due to Death or Disability. The expiration of one (1) year
from the date of the death of the Optionee or cessation of an Optionee's
employment or contractual relationship by reason of disability (as defined in
Section 5.1(g) of the Plan). If an Optionee's employment or contractual
relationship is terminated by death, any Option held by the Optionee shall be
exercisable only by the person or persons to whom such Optionee's rights under
such Option shall pass by the Optionee's will or by the laws of descent and
distribution;
(d) Termination Due to Cessation of Service as a Director. The expiration
of three (3) months from the date an Optionee, if a director of the Company,
ceases to serve as a director of the Company; or
(e) Termination for Any Other Reason. The expiration of three (3) months
from the date of an Optionee's termination of employment or contractual
relationship with the Company or any Related Corporation for any reason
whatsoever other than cause, death or Disability (as defined in Section 5.1(g)
of the Plan).
Each unvested Option granted pursuant hereto shall terminate immediately upon
termination of the Optionee's employment or contractual relationship with the
Company for any reason whatsoever, including death or Disability unless vesting
is accelerated in accordance with Section 5.1(f) of the Plan.
7. Common Stock. In the case of any stock split, stock dividend or like
change in the nature of shares of Common Stock covered by this Agreement, the
number of shares of Common Stock and the exercise price shall be proportionately
adjusted as set forth in Section 5.1(m) of the Plan.
8. Exercise of Option. Options shall be exercisable, in full or in part, at
any time after vesting, until termination; provided however, that any Optionee
who is subject to the reporting and liability provisions of Section 16 of the
Securities Exchange Act of 1934 with respect to the Common Stock shall be
precluded from selling or transferring any Common Stock or other security
underlying an Option during the six (6) months immediately following the grant
of that Option. If less than all of the shares of Common Stock included in the
vested portion of any Option are purchased, the remainder may be purchased at
any subsequent time prior to the expiration of the Option term. No portion of
any Option for less than fifty (50) shares (as adjusted pursuant to Section
5.1(m) of the Plan) may be exercised; provided, that if the vested portion of
any Option is less than fifty (50) shares, it may be exercised with respect to
all shares for which it is vested. Only whole shares of Common Stock may be
issued pursuant to an Option, and to the extent that an Option covers less than
one (1) share, it is unexercisable.
Each exercise of the Options shall be by means of delivery of a notice
of election to exercise (which may be in the form attached hereto as Exhibit A)
to the Secretary of the Company at its principal executive office, specifying
the number of shares of Common Stock to be purchased and accompanied by payment
in cash by certified check or cashier's check in the
amount of the full exercise price for the Common Stock to be purchased. In
addition to payment in cash by certified check or cashier's check, an Optionee
or transferee of an Option may pay for all or any portion of the aggregate
exercise price by complying with one or more of the following alternatives:
(a) by delivering to the Company free trading shares of Common Stock
previously held by the Optionee or by the Company withholding shares of Common
Stock otherwise deliverable pursuant to exercise of the Option, which shares of
Common Stock received or withheld shall have a fair market value at the date of
exercise (as determined by the Plan Administrator) equal to the aggregate
purchase price to be paid by the Optionee upon such exercise; or
(b) by complying with any other payment mechanism approved by the Plan
Administrator at the time of exercise.
It is a condition precedent to the issuance of shares of Common Stock that the
Optionee execute and deliver to the Company a Stock Transfer Agreement, in a
form acceptable to the Company, to the extent required pursuant to the terms
thereof.
9. Holding period for Incentive Stock Options. In order to obtain the tax
treatment provided for Incentive Stock Options by Section 422 of the Code, the
shares of Common Stock received upon exercising any Incentive Stock Options
received pursuant to this Agreement must be sold, if at all, after a date which
is later of two (2) years from the date of this Agreement is entered into or one
(1) year from the date upon which the Options are exercised. The Optionee
agrees to report sales of shares of Common Stock prior to the above determined
date to the Company within one (1) business day after such sale is concluded.
The Optionee also agrees to pay to the Company, within five (5) business days
after such sale is concluded, the amount necessary for the Company to satisfy
its withholding requirement required by the Code in the manner specified in
Section 5.1(l) of the Plan. Nothing in this Section 9 is intended as a
representation that Common Stock may be sold without registration under
provincial, state and federal securities laws or an exemption therefrom or that
such registration or exemption will be available at any specified time.
10. Subject to 2000 Stock Option Plan. The terms of the Options are subject
to the provisions of the Plan, as the same may from time to time be amended, and
any inconsistencies between this Agreement and the Plan, as the same may be from
time to time amended, shall be governed by the provisions of the Plan, a copy of
which has been delivered to the Optionee, and which is available for inspection
at the principal offices of the Company.
11. Professional Advice. The acceptance of the Options and the sale of
shares of Common Stock issued pursuant to the exercise of Options may have
consequences under federal, state and provincial tax and securities laws which
may vary depending upon the individual circumstances of the Optionee.
Accordingly, the Optionee acknowledges that he or she has been advised to
consult his or her personal legal and tax advisor in connection with this
Agreement and his or her dealings with respect to Options for the shares of
Common Stock. Without limiting other matters to be considered, the Optionee
should consider whether upon the exercise of Options, the
Optionee will file an election with the Internal Revenue Service pursuant to
Section 83(b) of the Code.
12. No Employment Relationship. Whether or not any Options are to be
granted under this Plan shall be exclusively within the discretion of the Plan
Administrator, and nothing contained in this Plan shall be construed as giving
any person any right to participate under this Plan. The grant of an Option
shall in no way constitute any form of agreement or understanding binding on the
Company or any Related Company, express or implied, that the Company or any
Related Company will employ or contract with an Optionee for any length of time,
nor shall it interfere in any way with the Company's or, where applicable, a
Related Company's right to terminate Optionee's employment at any time, which
right is hereby reserved.
13. Entire Agreement. This Agreement is the only agreement between the
Optionee and the Company with respect to the Options, and this Agreement and the
Plan supersede all prior and contemporaneous oral and written statements and
representations and contain the entire agreement between the parties with
respect to the Options.
14. Notices. Any notice required or permitted to be made or given hereunder
shall be mailed or delivered personally to the addresses set forth below, or as
changed from time to time by written notice to the other:
The Company:
Merlin Software Technologies International, Inc.
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Attention: President
With a copy to:
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Barristers and Solicitors
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Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
The Optionee:
▇▇▇ Baglot
1514 - 10th Avenue,
New Westminster, British Columbia
MERLIN SOFTWARE TECHNOLOGIES INTERNATIONAL, INC.
Per: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Authorized Signatory
THERE MAY NOT BE PRESENTLY AVAILABLE EXEMPTIONS FROM THE REGISTRATION
REQUIREMENTS OF APPLICABLE FEDERAL, STATE AND PROVINCIAL SECURITIES LAWS FOR THE
ISSUANCE OF SHARES OF STOCK UPON EXERCISE OF THESE OPTIONS. ACCORDINGLY, THESE
OPTIONS CANNOT BE EXERCISED UNLESS THESE OPTIONS AND THE SHARES OF STOCK TO BE
ISSUED UPON EXERCISE OF THESE OPTIONS ARE REGISTERED OR AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS IS AVAILABLE.
THE SHARES OF COMMON STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
"RESTRICTED SECURITIES" AS DEFINED IN RULE 144 UNDER THE SECURITIES ACT OF 1933
AND WILL BEAR A LEGEND RESTRICTING RESALE UNLESS THEY ARE REGISTERED UNDER STATE
AND FEDERAL SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THE
COMPANY IS NOT OBLIGATED TO REGISTER THE SHARES OF STOCK OR TO MAKE AVAILABLE
ANY EXEMPTION FROM REGISTRATION.
THE SHARES OF COMMON STOCK ISSUED PURSUANT TO THE EXERCISE OF OPTIONS WILL BE
SUBJECT TO AN INDEFINITE HOLD PERIOD FOR OPTIONEES RESIDENT IN CANADA AND MAY
ONLY BE RESOLD BY OPTIONEES RESIDENT IN CANADA PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION AND PROSPECTUS REQUIREMENTS OF ANY APPLICABLE CANADIAN SECURITIES
LEGISLATION.
EXHIBIT A
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NOTICE OF ELECTION TO EXERCISE
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This Notice of Election to Exercise shall constitute proper notice
pursuant to Section 5(h) of the Merlin Software Technologies International, Inc.
2000 Stock Option Plan (the "Plan") and Section 8 of that certain Stock Option
Agreement (the "Agreement") dated as of the 4th day of January, 2001, between
Merlin Software Technologies International, Inc. (the "Company") and the
undersigned.
The undersigned hereby elects to exercise Optionee's option to
purchase shares of the common stock of the Company at a price of US$_________
per share, for aggregate consideration of $, on the terms and conditions set
forth in the Agreement and the Plan. Such aggregate consideration, in the form
specified in Section 8 of the Agreement, accompanies this notice.
The undersigned has executed this Notice this day of , .
Signature
Name (typed or printed)