INCENTIVE STOCK OPTION AWARD AGREEMENT Issued Pursuant to the Milk Bottle Cards Inc. 2008 Incentive Plan (ForgeHouse, Inc.)
Issued
Pursuant to the
Milk
Bottle Cards Inc. 2008 Incentive Plan (ForgeHouse, Inc.)
THIS
OPTION AWARD AGREEMENT (“Agreement”),
effective ____________, (the “Date
of Grant”)
represents the grant of an incentive stock option (“Option”)
by
ForgeHouse, Inc. (the “Company”),
to
__________________ (the “Participant”)
pursuant to the provisions of the Milk Bottle Cards Inc., 2008 Incentive Plan
adopted January 2, 2008, and approved by stockholders on January 2, 2008 (the
“Plan”),
as
may be amended from time to time. The Option granted hereby is intended to
be an
Incentive Option (“ISO”),
as
such term is defined in the Plan, within the meaning of Section 422 of the
Code
to the maximum extent permissible under the Code. To the extent that the Option
does not qualify as an ISO, the Option or the portion thereof which does not
so
qualify shall constitute a separate nonqualified option.
The
Plan
provides a complete description of the terms and conditions governing this
Option. If there is any inconsistency between the terms of this Agreement and
the terms of the Plan, the Plan’s terms shall completely supersede and replace
the conflicting terms of this Agreement. All capitalized terms shall have the
meanings ascribed to them in the Plan, unless specifically set forth otherwise
herein, and the receipt of a copy of which the Participant hereby acknowledges
by his or her signature below. The parties hereto agree as follows:
1. General
Option Grant Information.
The
individual named above has been selected to be a Participant in the Plan and
receive an incentive option grant, as of the Date of Grant, as specified
below:
(a) Number
of Shares Covered by this Option:
________
(“Shares”)
(b) Option
Price per share:
$________
(c) Date
of Expiration:
____________________
2. Grant
of Option.
The
Company hereby grants to the Participant an Option to purchase the number of
Shares set forth above, at the stated Option Price per share, which is _______%
of the Fair Market Value of a Share on the Date of Grant, in the manner and
subject to the terms and conditions of the Plan and this Agreement. The Board
of
Directors (“Board”)
has
determined that the Fair Market Value of a Share on the date of grant is equal
to $________.
3. Option
Term.
The
term of this Option begins as of the Date of Grant as detailed above and
continues through the Date of Expiration as detailed above, unless sooner
terminated in accordance with the terms of this Agreement.
4. Vesting
Period.
If the
Participant has been continuously employed by the Company or its Subsidiaries
or
Affiliates, with respect to each incremental vesting period, this Option shall
vest and be exercisable in the following manner:
____________________________________.
Notwithstanding
anything to the contrary set forth herein, in the event of the occurrence of
a
change in control of the Company (a “Change
in Control”),
the
Option shall immediately vest. For purposes of this Agreement, a “Change in
Control” shall be defined to include the following:
(a)
Change
in Ownership.
The
acquisition, in a single transaction or in a series of transactions, by any
individual or entity, acting severally or as a group (a “Person”),
of
ownership of capital stock of the Company that, together with capital stock
held
by such Person, constitutes more than 50% of the total fair market value or
the
total voting power of the capital stock of the Company. However, if any Person
is considered already to own more than 50% of the total fair market value or
total voting power of the capital stock of the Company, the acquisition of
additional capital stock by the same Person is not considered to cause a change
in ownership of the Company. An increase in the percentage of capital stock
owned by any one Person as a result of a transaction in which the Company
acquires its capital stock in exchange for property will be treated as an
acquisition of capital stock for purposes of this paragraph. This paragraph
applies only when there is a transfer of capital stock of the Company (or
issuance of capital stock of the Company) and capital stock in the Company
remains outstanding after the transaction.
(b) Change
in Effective Control.
(i) The
acquisition by any Person (or the aggregate acquisitions during the 12-month
period ending on the date of the most recent acquisition by such Person) of
ownership of capital stock of the Company possessing 35% or more of the total
voting power of the capital stock of the Company (however, if any Person is
considered already to own more than 35% of the total voting power of the capital
stock of the Company, the acquisition of additional capital stock by the same
Person is not considered to cause a change in effective control of the Company);
or (ii) the replacement of a majority of the members of the Board (excluding
those members of the Board elected by the Series A preferred stockholders)
during any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of the Board prior to the date of the
appointment or election. A change in effective control also may occur in any
transaction in which either of the two corporations involved in such transaction
has a “Change in Ownership” or “Change in Ownership of a Substantial Portion of
the Company’s Assets.”
(c) Change
in Ownership of a Substantial Portion of Assets.
The
acquisition by any Person (or the aggregate acquisitions during the 12-month
period ending on the date of the most recent acquisition by such Person) of
assets from the Company that have a total gross fair market value equal to
or
greater than 40% of the total gross fair market value of all of the assets
of
the Company immediately prior to such acquisition(s). For this purpose,
“gross
fair market value”
means
the value of the assets of the Company, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets, as reflected in the Company’s financial statements as reported to the
Securities and Exchange Commission.
Notwithstanding
anything to the contrary set forth herein, in the event of the termination
of
the Participant’s employment for Cause, the Option and all rights granted
hereunder shall be forfeited and deemed canceled and no longer exercisable
on
the day of such termination of employment. For the purposes of this Agreement,
“Cause”
shall
have the same meaning as that set forth in Section 4.1.1 of that certain
Employment Agreement by and between the Company and the Participant, dated
as of
the date hereof (the “Employment
Agreement”).
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5. Exercise.
This
Option shall not be transferable by the Participant other than by will or the
laws of descent and distribution. The Participant, or the Participant’s
representative upon the Participant’s death or disability, may exercise this
Option at any time prior to the termination of the Option, subject to and as
provided in Sections 3 and 8.
6. How
to Exercise.
Once
vested, the Options hereby granted shall be exercised by written notice to
the
Company, specifying the number of Shares subject to this Option Participant
desires to exercise. The Option Price of the Options shall be payable to the
Company in full either: (a) in cash or its equivalent; (b) by tendering
(either by actual delivery or attestation) previously acquired Shares having
an
aggregate Fair Market Value at the time of exercise equal to the Option Price
(provided that except as otherwise determined by the Board, the Shares that
are
tendered must have been held by the Participant for at least six months prior
to
their tender to satisfy the Option Price or have been purchased on the open
market); (c) by a combination of (a) and (b); or (d) any other method
approved or accepted by the Board in its sole discretion, including, without
limitation, if the Board so determines, a cashless (broker-assisted) exercise.
In no event may the Option be exercised for a fraction of a share.
Unless
otherwise determined by the Board, all cash payments under all of the methods
indicated above shall be paid in United States dollars.
7. Nontransferability.
This
Option may not be sold, transferred, pledged, assigned, or otherwise alienated
or hypothecated, other than by will or by the laws of descent and distribution,
and may be exercised or surrendered during Participant’s lifetime only by the
Participant or his or her guardian or legal representative. No assignment or
transfer of the Option in violation of this Section 7, whether voluntary or
involuntary, by operation of law or otherwise, except by will or the laws of
descent and distribution or as otherwise required by applicable law, shall
vest
in the assignee or transferee any interest whatsoever.
8. Termination
of Option.
(a)
In
General.
The
Option, which is exercisable as provided in Section 6 above, shall terminate
and
be of no force or effect if the Participant ceases to perform services of any
kind for the Company or any of its Subsidiaries for any reason other than death
or disability; provided,
however,
that
under conditions satisfactory to the Company, the Board may, in its sole
discretion, allow all, or less than all, of the vested portion of the Option
not
previously exercised or expired to be exercisable for a period of time to be
specified by the Board (although if exercised more than three months after
termination of employment other than by reason of death or disability, the
option will no longer be an ISO); provided,
further,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(c), above.
(b)
Death.
In the
event the Participant dies while an employee of the Company or any of its
Subsidiaries or Affiliates, the Option, to the extent not previously expired
or
exercised, shall, to the extent vested and exercisable, be exercisable by the
estate of such Participant or by any person who acquired the Option by bequest
or inheritance at any time within one year after the death of the Participant,
unless otherwise earlier terminated or expired pursuant to its terms,
provided,
however,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(c) above. Notwithstanding the previous
sentence, if the date of death is within the Restriction Period (as defined
in
that certain Lock-Up Agreement by and between the Company and the Participant,
dated of even date hereof (the “Lock-Up
Agreement”)),
(1)
the Option shall be exercisable within one year after the expiration of the
Restriction Period, unless the Option is otherwise earlier terminated or expired
pursuant to its terms, provided,
however,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(c) above; and (2) the person(s) who acquire
the Option by bequest or inheritance shall become subject to the Lock-Up
Agreement in the same manner as Participant was prior to his or her death.
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In
addition to the vested and exercisable portion of the Option on the date of
death, that portion of the Option that would have vested, absent such death,
during the remainder of the calendar year of such date of death shall
immediately vest; but, such vested portion of the Option will automatically
terminate and not be exercisable unless exercised within 120 days after the
date
of death, except that, if the date of death is within the Restriction Period,
such 120-day period shall not commence until the end of such Restriction Period.
That portion of the Option that vests pursuant to the preceding sentence, and
the underlying common stock (upon exercise of such portion of the Option),
shall
continue to be subject to the Lock-Up Agreement. Notwithstanding the foregoing,
in no instance may the term of such portion of the Option exceed the date of
expiration set forth in Section 1(c) above.
(c)
Disability.
In the
event the Participant ceases to perform services of any kind for the Company
or
any of its Subsidiaries or Affiliates due to permanent and total disability,
the
Participant, or his guardian or legal representative, shall have the unqualified
right to exercise the vested portion of the Option, to the extent not previously
exercised or expired, as of the first date of permanent and total disability
(as
determined in the sole discretion of the Board), at any time within one year
after the first date of permanent and total disability, unless earlier
terminated pursuant to its terms, provided,
however,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(c), above. Notwithstanding the previous
sentence, if the first date of permanent and total disability is within the
Restriction Period, the Option shall be exercisable within one year after the
expiration of the Restriction Period, unless the Option is otherwise earlier
terminated or expired pursuant to its terms, provided,
however,
that in
no instance may the term of the Option, as so extended, exceed the date of
expiration set forth in Section 1(c) above. For purposes of this Agreement,
the
term “permanent
and total disability”
shall
have the same meaning as the term “Permanently Disabled” as defined in Section
4.2 in the Employment Agreement.
In
addition to the vested and exercisable portion of the Option on the first date
of permanent and total disability, that portion of the Option that would have
vested, absent such permanent and total disability, during the remainder of
the
calendar year of such first date of permanent and total disability shall
immediately vest; but, such vested portion of the Option will automatically
terminate and not be exercisable unless exercised within 120 days after the
first date of permanent and total disability, except that, if the first date
of
permanent and total disability is within the Restriction Period, such 120-day
period shall not commence until the end of such Restriction Period. That portion
of the Option that vests pursuant to the preceding sentence, and the underlying
common stock (upon exercise of such portion of the Option), shall continue
to be
subject to the Lock-Up Agreement. Notwithstanding the foregoing, in no instance
may the term of such portion of the Option exceed the date of expiration set
forth in Section 1(c) above.
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9. Administration.
This
Agreement and the rights of the Participant hereunder are subject to all the
terms and conditions of the Plan, as the same may be amended from time to time,
as well as to such rules and regulations as the Board may adopt for
administration of the Plan. It is expressly understood that the Board is
authorized to administer, construe, and make all determinations necessary or
appropriate to the administration of the Plan and this Agreement, all of which
shall be binding upon the Participant. Any inconsistency between the Agreement
and the Plan shall be resolved in favor of the Plan.
10. Reservation
of Shares.
The
Company hereby agrees that at all times there shall be reserved for issuance
and/or delivery upon exercise of the Option such number of Shares as shall
be
required for issuance or delivery upon exercise hereof.
11. Adjustments.
The
number of Shares subject to this Option, and the exercise price, shall be
subject to adjustment in accordance with Section 4.4 of the Plan.
12. Exclusion
from Pension Computations.
By
acceptance of the grant of this Option, the Participant hereby agrees that
any
income or gain realized upon the receipt or exercise hereof, or upon the
disposition of the Shares received upon its exercise, is special incentive
compensation and shall not be taken into account, to the extent permissible
under applicable law, as “wages”, “salary” or “compensation” in determining the
amount of any payment under any pension, retirement, incentive, profit sharing,
bonus or deferred compensation plan of the Company or any of its Subsidiaries
or
Affiliates.
13. Amendment.
The
Board may, with the consent of the Participant, at any time or from time to
time
amend the terms and conditions of the Option, and may at any time or from time
to time amend the terms of this Option in accordance with the Plan.
14. Notices.
Any
notice which either party hereto may be required or permitted to give to the
other shall be in writing, and may be delivered personally or by mail, postage
prepaid, or overnight courier, addressed as follows: if to the Company, at
its
office at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: CEO or at such other address as the Company by notice to
the
Participant may designate in writing or via electronic mail from time to time;
and if to the Participant, at the address shown below his or her signature
on
this Agreement, or at such other address as the Participant by notice to the
Company may designate in writing from time to time. Notices shall be effective
upon receipt.
15. Withholding
Taxes; Disqualifying Dispositions.
(a) The
Company shall have the right to withhold from a Participant, or otherwise
require such Participant or assignee to pay, any Withholding Taxes arising
as a
result of (i) exercise of the Option, or any other taxable event occurring
pursuant to the Plan or this Agreement, or (ii) a Disqualifying Disposition
(as
defined below) of Shares. If the Participant shall fail to make such tax
payments as are required, the Company (or its Affiliates or Subsidiaries) shall,
to the extent permitted by law, have the right to deduct any such Withholding
Taxes from any payment of any kind otherwise due to such Participant or to
take
such other action as may be necessary to satisfy such Withholding Taxes. In
satisfaction of the requirement to pay Withholding Taxes, the Participant may
make a written election which may be accepted or rejected in the discretion
of
the Board (i) to have withheld a portion of any Shares or other payments then
issuable to the Participant pursuant to any Award, or (ii) to tender other
Shares to the Company (either by actual delivery or attestation, in the sole
discretion of the Board, provided that,
except
as otherwise determined by the Board, the Shares that are tendered must have
been held by the Participant for at least six (6) months prior to their tender
to satisfy the Option Price or have been purchased on the open market), in
either case having an aggregate Fair Market Value equal to the Withholding
Taxes.
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(b)
Participant agrees to notify the Company in writing immediately after such
Participant makes a “Disqualifying Disposition” of any Shares acquired pursuant
to the exercise of the Option. A “Disqualifying Disposition” is any disposition
(including any sale) of such shares before the later of (i) two years after
the
date the Participant was granted the Option or (ii) one year after the date
the
Participant acquired Shares by exercising the Option. If the Participant has
died before such shares are disposed of, these holding period requirements
do
not apply.
16. Registration;
Legend.
The
Company may postpone the issuance and delivery of Shares upon any exercise
of
this Option until (a) the admission of such Shares to listing on any stock
exchange or exchanges on which Shares of the Company of the same class are
then
listed and (b) the completion of such registration or other qualification of
such Shares under any state or federal law, rule or regulation as the Company
shall determine to be necessary or advisable. The Participant shall make such
representations and furnish such information as may, in the opinion of counsel
for the Company, be appropriate to permit the Company, in light of the then
existence or non-existence with respect to such Shares of an effective
Registration Statement under the Securities Act of 1933, as amended, to issue
the Shares in compliance with the provisions of that or any comparable
act.
The
Company may cause the following or a similar legend to be set forth on each
certificate representing Shares or any other security issued or issuable upon
exercise of this Option unless counsel for the Company is of the opinion as
to
any such certificate that such legend is unnecessary:
NEITHER
THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE ACCEPTABLE TO THE COMPANY.
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17. Miscellaneous.
(a) This
Agreement shall not confer upon the Participant any right to continuation of
employment by the Company or any of its Subsidiaries or Affiliates, nor shall
this Agreement interfere in any way with the Company’s or any of its
Subsidiaries’ or Affiliates’ right to terminate, retire or request the
termination of the Participant at any time.
(b) The
Participant shall have no rights as a stockholder of the Company with respect
to
the Shares subject to this Option Agreement until such time as the purchase
price has been paid, and the Shares have been issued and deliv-ered to the
Participant.
(c) With
the
approval of the Board, and if necessary, the shareholders, the Board may
terminate, amend, or modify the Plan; provided, however, that no such
termination, amendment, or modification of the Plan may in any way adversely
affect the Participant’s rights under this Agreement.
(d) This
Agreement shall be subject to all applicable laws, rules, and regulations,
and
to such approvals by any governmental agencies or national securities exchanges
as may be required.
(e) To
the
extent not preempted by federal law, this Agreement shall be governed by, and
construed in accordance with the laws of the State of Nevada, without regard
to
the principles of conflicts of law which might otherwise apply.
(f) All
obligations of the Company under the Plan and this Agreement, with respect
to
the Option, shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substan-tially all of the
business and/or assets of the Company.
(g) The
provisions of this Agreement are severable and if any one or more provisions
are
determined to be illegal or otherwise unenforceable, in whole or in part, the
remaining provisions shall nevertheless be binding and enforceable.
(h) By
accepting this Award or other benefit under the Plan, the Participant and each
person claiming under or through the Participant shall be conclusively deemed
to
have indicated their acceptance and ratification of, and consent to, any action
taken under the Plan by the Company, the Board or the Board.
(i) The
Participant, every person claiming under or through the Participant, and the
Company hereby waives to the fullest extent permitted by applicable law any
right to a trial by jury with respect to any litigation directly or indirectly
arising out of, under, or in connection with the Plan or this Award Agreement
issued pursuant to the Plan.
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(j) The
Participant consents to the exclusive jurisdiction of any court exercising
competent jurisdiction in ▇▇▇▇▇ County, Nevada (or any court exercising
competent appellate jurisdiction), over any dispute arising out of or relating
to this Agreement. The Participant irrevocably agrees that all claims in respect
of such dispute or proceeding may be heard and determined in such court. The
Participant hereby irrevocably waives, to the fullest extent permitted by
applicable law, any objection that he may now or hereafter have to the laying
of
venue of any such dispute or proceeding brought in such court or any defense
of
inconvenient forum in connection therewith. The Participant consents to such
service of process made in the manner set forth in Section 14
hereof.
18. Exculpation.
This
Option and all documents, agreements, understandings and arrangements relating
hereto have been executed by the undersigned in his/her capacity as an officer
of the Company, and not individually, and neither the Directors, officers or
shareholders of the Company nor of any Subsidiary or Affiliate of the Company
shall be bound or have any personal liability hereunder. Each party hereto
shall
look solely to the assets of the Company for satisfaction of any liability
of
the Company in respect of the Option and all documents, agreements,
understanding and arrangements relating hereto and will not seek recourse or
commence any action against any of the Directors, officers or shareholders
of
the Company or of any Subsidiary or Affiliate of the Company, or any of their
personal assets for the performance or payment of any obligation hereunder
or
thereunder. The foregoing shall also apply to any future documents, agreements,
understandings, arrangements and transactions between the parties
hereto.
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ACCEPTED:
FORGEHOUSE,
INC.
By:
__________________________
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