OPTION AGREEMENT
THIS AGREEMENT dated May 5, 2003, by and between CNH Holdings Company, a Nevada
corporation ("COMPANY"), and those individuals set forth on Exhibit A attached
hereto,
WITNESSETH:
WHEREAS, the Company, in connection with the services rendered to certain
individuals in the prosecution of its business, has agreed to issue options
("OPTIONS") allowing such holders to purchase shares of the common stock of the
Company;
WHEREAS, the Company desires to provide for the issuance of certificates
representing the Options; and
WHEREAS, the Company desires to act at least initially as its own Option Agent
in connection with the issuance, registration, transfer and exchange of
certificates and the exercise of the Options;
NOW, THEREFORE, in consideration of the above and foregoing premises, and the
mutual promises and agreements hereinafter set forth, it is agreed that:
1. OPTION CERTIFICATES. Each Option shall entitle the holder ("REGISTERED
HOLDER" or, in the aggregate, "REGISTERED HOLDERS") in whose name the
certificate shall be registered on the books maintained by the Company to
purchase one (1) share of Common Stock on exercise thereof, subject to
modification and adjustment as provided in Section 8 hereof. Option certificates
shall be executed by the Company's President and attested to by its Secretary.
The Company shall deliver Option certificates in required whole number
denominations to Registered Holders in connection with any transfer or exchange
permitted under this Agreement. Except as provided in Section 7 hereof, no
Option certificates shall be issued except (i) certificates initially issued
hereunder, (ii) certificates issued on or after the initial issuance date upon
the exercise of any Option to evidence the unexercised Options held by the
exercising Registered Holder and (iii) Option certificates issued after the
initial issuance date upon any transfer or exchange of certificates or
replacements of lost or mutilated certificates.
2. FORM AND EXECUTION OF CERTIFICATES. The Option certificates shall be dated as
of the date of their issuance, whether on initial transfer or exchange or in
lieu of mutilated, lost, stolen or destroyed certificates. The form of the
Option certificate is attached hereto as Exhibit B. Each Option certificate
shall be numbered serially beginning with the number one.
The Option certificates shall be manually signed on behalf of the Company as the
Option Agent by a proper officer thereof and shall not be valid for any purpose
unless so signed. In the event any officer of the Company who executed
certificates shall cease to be an officer of the Company such certificates may
be issued and delivered by the Company or transferred by Registered Holders with
the same force and effect as though the person who signed such certificate had
not ceased to be an officer of the Company; and any certificate signed on behalf
of the Company by any person, who at the actual date of the execution of such
certificate was a proper officer of the Company, shall be proper although at the
date of execution of this Agreement any such person was not such an officer.
3. EXERCISE. The Company hereby issues Options, as set forth in Exhibit A,
allowing for the acquisition of up to 850,000 shares of Common Stock, each of
which may be exercised at a price (the "OPTION EXERCISE PRICE") of $3.00 per
share of Common Stock subject to adjustment, in whole or in part at any time
during the period (the "OPTION EXERCISE PERIOD") commencing on May 5, 2003 (the
"INITIAL OPTION EXERCISE DATE"), and terminating on a date (the "OPTION
EXPIRATION DATE") ending five (5) years thereafter, unless extended by a
majority vote of the board of directors for the Company ("BOARD OF DIRECTORS")
for such length of time as they, in their sole discretion, deem reasonable and
necessary. (The Option Exercise Price is also referred to herein as the
"EXERCISE PRICE.") An Option shall be deemed to have been exercised immediately
prior to the close of business on the date ("EXERCISE DATE") of the surrender
for exercise of the certificate. The exercise form shall be executed by the
Registered Holder thereof or his attorney duly authorized in writing and shall
be delivered together with payment to the Company at its corporate offices or at
any such other office or agency as the Company may designate.
Unless Option Shares may not be issued as provided herein, the person entitled
to receive the number of shares deliverable on exercise shall be treated for all
purposes as the holder of such shares as of the close of business on the
Exercise Date. The Company shall not be obligated to issue any fractional share
interest in shares issuable or deliverable on the exercise of any Option or
scrip or cash therefore and such fractional shares shall be of no value
whatsoever.
Within ten days after the Exercise Date and in any event prior to the Option
Expiration Date, the Company at its expense shall cause to be issued and
delivered to the person or persons entitled to receive the same a certificate or
certificates in the name requested by the Option holder for the number of Option
shares deliverable on such exercise. No adjustment shall be made in respect of
cash dividends on Option shares delivered on exercise of any Option. All shares
of Common Stock or other securities delivered upon the exercise of the Options
shall be validly issued, fully paid and non-assessable.
The Company may deem and treat the Registered Holder of the Options at any time
as the absolute owner thereof for all purposes, and the Company shall not be
affected by any notice to the contrary. The Options shall not entitle the holder
thereof to any of the rights of shareholders or to any dividend declared on the
Common Stock unless the holder shall have exercised the Options prior to the
record date fixed by the Board of Directors for the determination of holders of
Common Stock entitled to such dividends or other right.
4. REGISTRATION RIGHTS. (A) DEMAND RIGHT. A majority of the Registered Holders
shall have the right, one time only during the exercise period of the Options,
to request a registration by the Company under the Securities Act of 1933, as
amended ("ACT"), of the shares of Common Stock issuable upon exercise of the
Options, as well as any other shares they may have. Within ten days after
receipt of such request, the Company will serve written notice of such
registration request to all other Registered Holders, and will include in such
registration all shares underlying the Options for which the Company has
received written requests for inclusion therein within fifteen business days
after receipt from any other Registered Holder of notice; provided, however,
that any such subsequent electing Registered Holder shall also deposit into
escrow an amount sufficient to allow for the exercise of all Options for which
the registration of the underlying shares is requested. All requests shall
specify the number of shares to be registered. All costs of the registration
will be borne by the Company. (B) PIGGY-BACK RIGHTS. The Registered Holders
shall also have the right to register the shares of Common Stock underlying the
Options at any time that the Company shall register shares under the Act for an
initial or secondary distribution; however, any underwriter of any such
distribution shall have the right to limit the number of shares so registered in
its reasonable discretion. The expenses of any such registration shall be borne
by the Company. The Company shall provide the Registered Holders with ten days
prior, written notice of any such registration, and the Registered Holders shall
have fifteen business days after receipt thereof to notify the Company of their
intent to exercise their Options. Upon such notice, any exercising Registered
Holder shall be required to deposit the Exercise Price into escrow with an
acceptable third-party escrow agent. (C) REGISTRATION. Whenever the Registered
Holders have requested the registrations set forth above, the Company shall use
its best efforts to effect registration and permit the intended sales in
accordance with the intended method of disposition thereof.
5. RESERVATION OF SHARES AND PAYMENT OF TAXES. The Company covenants that it
shall at all times reserve and have available from its authorized Common Stock
such number of shares as shall then be issuable on the exercise of all
outstanding Options. The Company covenants that all Option shares shall be duly
and validly issued, fully paid and non-assessable, and shall be free from all
taxes, liens and charges with respect to the issuance thereof.
No Options may be exercised by the Registered Holder, nor may Option Shares be
issued or delivered by the Company, unless on the Exercise Date: (i) there is an
effective registration statement covering the issuance of the securities being
acquired under the Act and applicable "Blue Sky" statutes; or (ii) an exemption
is available from registration thereunder.
The Company shall pay all documentary, stamp or similar taxes and other
government charges that may be imposed with respect of the issuance of the
Options, or the issuance, transfer or delivery of any Common Stock on exercise
of the Options. In the event the Common Stock is to be delivered in a name other
than the name of the Registered Holder of the certificate, no such delivery
shall be made unless the person requesting the same has paid to the Company the
amount of any such taxes, charges, or transfer fees incident thereto.
6. REGISTRATION OF TRANSFER. The Option certificates may be transferred in whole
or in part. Certificates to be exchanged shall be surrendered to the Company at
its Corporate Office. The Company shall execute, issue and deliver in exchange
therefor the Option certificate or certificates which the holder making the
transfer shall be entitled to receive.
The Company shall keep transfer books at its Corporate Office which shall
register certificates and the transfer thereof. On due presentment for
registration of transfer of any certificate at the Corporate Office, the Company
shall execute, issue and deliver to the transferee or transferees a new
certificate or certificates representing an equal aggregate number of
securities. All certificates presented for registration of transfer or exercise
shall be duly endorsed or be accompanied by a written instrument or instruments
of transfer in form reasonably satisfactory to the Company. The established
transfer fee for any registration of transfer of certificates shall be paid by
the Registered Holder or the person presenting the certificate for transfer.
Prior to due presentment for registration or transfer thereof, the Company may
treat the Registered Holder of any certificate as the absolute owner thereof
(notwithstanding any notations of ownership or writing thereon made by anyone
other than the Company), and the parties hereto shall not be affected by any
notice to the contrary.
7. LOSS OR MUTILATION. On receipt by the Company of evidence satisfactory as to
the ownership of and the loss, theft, destruction or mutilation of any Option
certificate, the Company shall execute and deliver in lieu thereof a new
certificate representing an equal number of Options. In the case of loss, theft
or destruction of any certificate, the individual requesting reissuance of a new
certificate shall be required to indemnify the Company and also to post an
open-penalty insurance or indemnity bond. In the event a certificate is
mutilated, such certificate shall be surrendered and canceled by the Company
prior to delivery of a new certificate. Applicants for a new certificate shall
also comply with such other regulations and pay such other reasonable charges as
the Company may prescribe.
8. ADJUSTMENT OF INITIAL EXERCISE PRICE AND NUMBER OF SHARES PURCHASABLE. For
purposes hereof, the term "Initial Exercise Price" shall mean $3.00. The Initial
Exercise Price and the number of shares of Common Stock purchasable pursuant to
the Options shall be subject to adjustment from time to time as hereinafter set
forth in this Section 8; provided, however, that no adjustment shall be made
unless, by reason of the happening of any one or more of the events hereinafter
specified, the Exercise Price then in effect shall be changed by one percent or
more, but any adjustment that would otherwise be required to be made but for the
foregoing proviso shall be carried forward and shall be made at the time of and
together with any subsequent adjustment which, together with any adjustment or
adjustments so carried forward, amounts to one percent or more. (A) RIGHT TO
REDUCE EXERCISE PRICE. The Company shall have the right, at any time and from to
time to time, to reduce the Option Exercise Price at any time such appears in
the Company's best interests to do so. (B) ANTI-DILUTION PROVISIONS. In case the
Company shall at any time or from time to time issue any shares of Common Stock
(other than shares issued as a stock dividend as provided in Section 8(d) or as
specified in Section 8(c)) for a consideration per share (the "Issue Price")
less than the Initial Exercise Price, then, forthwith upon such issue, the
Exercise Price at such time shall (until another such issue) be reduced by the
difference between the Initial Exercise Price and the Issue Price (but in no
event shall such amount be reduced to a price below the par value for the Common
Stock then obtaining, calculated to the nearest cent) determined in accordance
with clause 1 through 5 of this Section 8(b), if applicable, and the number of
shares of Common Stock purchasable hereunder shall be increased to a number
determined by dividing (i) the number of shares purchasable hereunder
immediately prior to such issue, multiplied by the Exercise Price hereunder in
effect immediately prior to such issue, by (ii) the Exercise Price hereunder in
effect immediately after the foregoing adjustment. (C) STOCK OPTIONS. The
provisions of this Section 8 shall not apply to any securities issued pursuant
to any stock option or share bonus plan subsequently adopted by the Company for
the benefit of its key employees, directors and/or executive offices, whether
now or subsequently to be employed. (D) SUBDIVISIONS OR COMBINATIONS. In case
the Company shall at any time change as a whole, by subdivision or combination
in any manner or by the making of a stock dividend, the number of outstanding
shares of Common Stock into a different number of shares, with or without par
value, (i) the number of shares which immediately prior to such change the
Registered Holders shall have been entitled to purchase pursuant to this
Agreement shall be increased or decreased, as the case may be, in direct
proportion to the increase or decrease, respectively, in the number of shares
outstanding immediately prior to such change, and (ii) the Exercise Price in
effect immediately prior to such change shall be increased or decreased, as the
case may be, in inverse proportion to such increase or decrease in the number of
such shares outstanding immediately prior to such change. (E) REORGANIZATIONS;
ASSET SALES. In case of any capital reorganization or any reclassification of
the capital stock of the Company or in case of a non-surviving combination or a
disposition of the assets of the Company other than in the ordinary course of
the Company's business, the holders of Options shall thereafter be entitled to
purchase (and it shall be a condition to the consummation of any such
reorganization, reclassification, non-surviving combination or disposition that
appropriate provision shall be made so that such holder shall thereafter be
entitled to purchase) the kind and amount of shares of stock and other
securities and property receivable in such transaction by a holder of the number
of shares of Common Stock of the Company into which this Agreement entitled the
holder to purchase immediately prior to such capital reorganization,
reclassification of capital stock, non-surviving combination or disposition; and
in any such case appropriate adjustments shall be made in the application of the
provisions of this Section 8 with respect to rights and interests thereafter of
the holder to the end that the provisions of this Section 8 shall thereafter be
applicable, as near as reasonably may be, in relation to any shares or other
property thereafter purchasable upon the exercise of a Option. (F) DISPUTES. In
the event that there is any dispute as to the computation of the Exercise Price
or the number of shares of Common Stock required to be issued upon the exercise
of the Options, the Company will retain an independent and nationally recognized
accounting firm to conduct an audit of the computations pursuant to the terms
hereof involved in such dispute, including the financial statements or other
information upon which such computations were based. The determination of such
nationally recognized accounting firm shall, in the absence of manifest error,
be binding. If there shall be a dispute as to the selection of such nationally
recognized accounting firm, such firm shall be appointed by the American
Institute of Certified Public Accountants ("AICPA") if willing, otherwise the
American Arbitration Association ("AAA"). If the Exercise Price or number of
shares of Common Stock as determined by such accounting firm is one percent or
more higher or lower than the calculations thereof computed by the Company, the
expenses of such accounting firm and, if any, of AICPA and AAA, shall be borne
completely by the Company. In all other cases, they shall be borne by the
complaining Registered Holders. Before taking any action which would cause an
adjustment reducing the Exercise Price below the then par value of the shares of
Common Stock issuable upon exercise of the Options, the Company shall take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and non-assessable
shares of Common Stock at the adjusted Exercise Price.
9. NOTICES. All notices, demands, elections, opinions or requests (however
characterized or described) required or authorized hereunder shall be deemed
given sufficiently if in writing and sent by registered or certified mail,
return receipt requested and postage prepaid, or by tested telex, telegram or
cable.
10. BINDING AGREEMENT. This Agreement shall be binding upon and inure to the
benefit of the Company and the Registered Holders. Nothing in this Agreement is
intended or shall be construed to confer upon any other person any right, remedy
or claim or to impose on any other person any duty, liability or obligation.
11. FURTHER INSTRUMENTS. The parties shall execute and deliver any and all such
other instruments and take any and all other actions as may be reasonably
necessary to carry out the intention of this Agreement.
12. SEVERABILITY. If any provision of this Agreement shall be held, declared or
pronounced void, voidable, invalid, unenforceable, or inoperative for any reason
by any court of competent jurisdiction, government authority or otherwise, such
holding, declaration or pronouncement shall not affect adversely any other
provision of this Agreement, which shall otherwise remain in full force and
effect and be enforced in accordance with its terms, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
13. WAIVER. No delay or failure on the part of any party in the exercise of any
right or remedy arising from a breach of this Agreement shall operate as a
waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement.
14. GENERAL PROVISIONS. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of Texas. This Agreement
may not be modified or amended or any term or provisions hereof waived or
discharged except in writing by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The headings of this
Agreement are for convenience in reference only and shall not limit or otherwise
affect the meaning hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first set forth above.
CNH HOLDINGS COMPANY
By: /s/
-----------------------------------
▇▇▇ ▇▇▇▇▇▇, President
EXHIBIT A: REGISTERED HOLDERS:
/s/
▇▇▇▇ ▇▇▇▇▇▇
(425,000 shares)
/s/
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
(425,000 shares)
