EXHIBIT 10.1

 

DIGITAL LOCATIONS, INC.

NONSTATUTORY STOCK OPTION AGREEMENT

 

 

 

 

 

THIS NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is made and entered into
as of the date set forth below, by and between Digital Locations, Inc., a Nevada
corporation (the “Company”), and Derek Jones (“Optionee”) named in Section 1(b):

 

In consideration of the covenants herein set forth, the parties hereto agree as
follows:

 

1. Option Information.

 

 

(a) Date of Option:

November 30, 2018  

 

 

 

 

 

 

 

(b) Optionee:

Derek Jones

 

 

 

 

 

 

 

(c) Number of Shares:

100,000,000

 

 

 

 

 

 

 

(d) Exercise Price:

$0.005

 

 

2. Acknowledgements.

 

(a) Optionee is an officer of the Company’s subsidiary, EllisLab Corp.

 

(b) The Board of Directors (the “Board”) has authorized the granting to Optionee
of a nonstatutory stock option (“Option”) to purchase shares of common stock of
the Company (“Stock”) upon the terms and conditions hereinafter stated and
pursuant to an exemption from registration under the Securities Act of 1933, as
amended (the “Securities Act”) provided by Rule 701 thereunder.

 

(c) This Option is being granted pursuant to the certain Agreement and Plan of
Merger between EllisLab, Inc. (“Seller”), Rick Ellis, the sole shareholder of
Seller, the Company and Merger Sub, dated as of November 30, 2018 (the “Merger
Agreement”) Optioinee currently holds an option to purchase 10% of the issued
and outstanding shares of EllisLab (the “EllisLab Option”). The Optionee
acknowledges that as of the date hereof, the Ellis Lab Option is null and void
and of no force or effect.

 

3. Shares; Price. Company hereby grants to Optionee the right to purchase, upon
and subject to the terms and conditions herein stated, the number of shares of
Stock set forth in Section 1(c) above (the “Shares”) for cash or on a cashless
basis (or other consideration as is acceptable to the Board of Directors of the
Company, in its sole and absolute discretion) at the price per Share set forth
in Section 1(d) above (the “Exercise Price”).

 

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4. Term of Option; Continuation of Service. This Option shall expire, and all
rights hereunder to purchase the Shares shall terminate ten (10) years from the
date hereof. This Option shall terminate earlier subject to Sections 7 and 8 of
this Agreement, upon, and as of the date of, the termination of Optionee’s
service to the Company such that Optionee no longer has any of the executive
management positions or relationships with the Company or the Company’s
subsidiaries, thereby creating a “severance”, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended: a director, an officer, a consultant,
or an employee of the Company. Nothing contained herein shall confer upon
Optionee the right to the continuation of his or her service as a director, an
officer, a consultant, or an employee of the Company.

 

5. Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof, this
Option shall be fully vested immediately. These vested Options shall become
exercisable only after two (2) years from the Date of this Option and is then
exercisable for a period of eight (8) years thereafter, unless this Agreement is
terminated earlier pursuant to Sections 7 or 8. If the Company experiences a
Reorganization as defined in Section 10, then all remaining unvested Options
owned by the Optionee will vest immediately and be exercisable in accordance
with Section 6 of this Agreement, subject to the consummation of such
Reorganization. Any unexercised Options after the Reorganization event shall be
forfeited.

 

6. Exercise. This Option shall be exercised by delivery to the Company of (a)
written notice of exercise stating the number of Shares being purchased (in
whole shares only) and such other information set forth on the form of Notice of
Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the
Exercise Price of the Shares covered by the notice (or such other consideration
as has been approved by the Board of Directors) and (c) a written investment
representation as provided for in Section 13 hereof. Notwithstanding anything to
the contrary contained in this Option, this Option may be exercised by
presentation and surrender of this Option to the Company at its principal
executive offices with a written notice of the holder’s intention to effect a
cashless exercise, including a calculation of the number of shares of Common
Stock to be issued upon such exercise in accordance with the terms hereof (a
“Cashless Exercise”). In the event of a Cashless Exercise, in lieu of paying the
Exercise Price in cash, the holder shall surrender this Option for that number
of shares of Common Stock determined by multiplying the number of Shares to
which it would otherwise be entitled by a fraction, the numerator of which shall
be the difference between the then current Market Price per share of the Common
Stock and the Exercise Price, and the denominator of which shall be the then
current Market Price per share of Common Stock. For example, if the holder is
exercising 100,000 Options with a per exercise price of $0.75 per share through
a cashless exercise when the Common Stock’s current Market Price per share is
$2.00 per share, then upon such Cashless Exercise the holder will receive 62,500
shares of Common Stock. Market Price is defined as the average of the last
reported sale prices on the principal trading market for the Common Stock during
the five (5) trading days immediately preceding such date. This Option shall not
be assignable or transferable, except by will or by the laws of descent and
distribution, and shall be exercisable only by Optionee during his or her
lifetime, except as provided in Section 8 hereof. With respect to the public
resale of the Common Stock received from any exercise of this Option, Optionee
shall at all times be subject to the restrictions, conditions and requirements
applicable to an affiliate of the Company, as described in Rule 144 of the
Securities Act of 1933, as amended, even if the Optionee or Optionee’s assignees
and successors are not affiliates of the Company.

 

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7. Termination of Employment. If Optionee shall cease to serve as an employee of
the Company or the Company’s subsidiary for any reason, whether voluntarily or
involuntarily, other than by his or her death, Optionee (or if the Optionee
shall die after such termination, but prior to such exercise date, Optionee’s
personal representative or the person entitled to succeed to the Option) shall
have the right at any time within twenty-four (24) months following such
termination of service to the Company or the remaining term of this Option,
whichever is less, to exercise in whole or in part this Option to the extent,
but only to the extent, that this Option was exercisable as of the date of
termination of service to the Company and had not previously been exercised.
However, if Optionee is terminated “for cause”, this Option shall automatically
terminate as to all Shares covered by this Option not exercised prior to
termination. For purposes of this Section 7, “for cause” shall mean (i) the
commission of, or plea of guilty or no contest to, a felony or a crime involving
moral turpitude or the commission of any other act involving willful malfeasance
or material fiduciary breach with respect to the Company or an Affiliate; (ii)
conduct that results in or is reasonably likely to result in material harm to
the reputation or business of the Company or any of its affiliates; (iii) gross
negligence or willful misconduct with respect to the Company or an affiliate; or
(iv) material violation of state or federal securities laws.

 

Unless earlier terminated, all rights under this Option shall terminate in any
event on the expiration date of this Option as defined in Section 4 hereof.

 

8. Death of Optionee. If the Optionee shall die while in the employ of the
Company, Optionee’s personal representative or the person entitled to Optionee’s
rights hereunder may at any time within twenty-four (24) months after the date
of Optionee’s death, or during the remaining term of this Option, whichever is
the lesser, exercise this Option and purchase Shares to the extent, but only to
the extent, that Optionee could have exercised this Option as of the date of
Optionee’s death; provided, in any case, that this Option may be so exercised
only to the extent that this Option has not previously been exercised by
Optionee.

 

9. No Rights as Shareholder. Optionee shall have no rights as a shareholder with
respect to the Shares covered by any installment of this Option until the
effective date of issuance of the Shares following exercise of this Option, and
no adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate or certificates are issued
except as provided in Section 10 hereof.

 

10. Recapitalization. Subject to any required action by the shareholders of the
Company, the number of Shares covered by this Option, and the Exercise Price
thereof, shall be proportionately adjusted for any increase or decrease in the
number of issued shares resulting from a subdivision or consolidation of shares,
or any other increase or decrease in the number of such shares effected without
receipt of consideration by the Company; provided however that the conversion of
any convertible securities of the Company shall not be deemed having been
“effected without receipt of consideration by the Company”.

 

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In the event of a proposed dissolution or liquidation of the Company, a merger
or consolidation in which the Company is not the surviving entity, or a sale of
all or substantially all of the assets or capital stock of the Company
(collectively, a “Reorganization”), unless otherwise provided by the Board, this
Option shall terminate immediately prior to such date as is determined by the
Board, which date shall be no later than the consummation of such
Reorganization. In such event, if the entity which shall be the surviving entity
does not tender to Optionee an offer, for which it has no obligation to do so,
to substitute for any unexercised Option a stock option or capital stock of such
surviving of such surviving entity, as applicable, which on an equitable basis
shall provide the Optionee with substantially the same economic benefit as such
unexercised Option, then the Board may grant to such Optionee, in its sole and
absolute discretion and without obligation, the right for a period commencing
thirty (30) days prior to and ending immediately prior to the date determined by
the Board pursuant hereto for termination of the Option or during the remaining
term of the Option, whichever is the lesser, to exercise any unexpired Option or
Options without regard to the installment provisions of Section 5; provided,
however, that such exercise shall be subject to the consummation of such
Reorganization.

 

Subject to any required action by the shareholders of the Company, if the
Company shall be the surviving entity in any merger or consolidation, this
Option thereafter shall pertain to and apply to the securities to which a holder
of Shares equal to the Shares subject to this Option would have been entitled by
reason of such merger or consolidation, and the installment provisions of
Section 5 shall continue to apply.

 

In the event of a change in the shares of the Company as presently constituted,
which is limited to a change of all of its authorized Stock without par value
into the same number of shares of Stock with a par value, the shares resulting
from any such change shall be deemed to be the Shares within the meaning of this
Option.

 

To the extent that the foregoing adjustments relate to shares or securities of
the Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as hereinbefore
expressly provided, Optionee shall have no rights by reason of any subdivision
or consolidation of shares of Stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class, and the number and price of Shares subject to this Option shall not
be affected by, and no adjustments shall be made by reason of, any dissolution,
liquidation, merger, consolidation or sale of assets or capital stock, or any
issue by the Company of shares of stock of any class or securities convertible
into shares of stock of any class.

 

The grant of this Option shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes in
its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets.

 

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11. Taxation upon Exercise of Option. Optionee understands that, upon exercise
of this Option, Optionee will recognize income, for Federal and state income tax
purposes, in an amount equal to the amount by which the fair market value of the
Shares, determined as of the date of exercise, exceeds the Exercise Price. The
acceptance of the Shares by Optionee shall constitute an agreement by Optionee
to report such income in accordance with then applicable law and to cooperate
with Company in establishing the amount of such income and corresponding
deduction to the Company for its income tax purposes. Withholding for federal or
state income and employment tax purposes will be made, if and as required by
law, from Optionee’s then current compensation, or, if such current compensation
is insufficient to satisfy withholding tax liability, the Company may require
Optionee to make a cash payment to cover such liability as a condition of the
exercise of this Option.

 

12. Modification, Extension and Renewal of Options. The Board of Directors of
the Company or a committee designated by the Board of Directors, may modify,
extend or renew this Option or accept the surrender thereof (to the extent not
theretofore exercised) and authorize the granting of a new option in
substitution therefore (to the extent not theretofore exercised).
Notwithstanding the foregoing provisions of this Section 12, no modification
shall, without the consent of the Optionee, alter to the Optionee’s detriment or
impair any rights of Optionee hereunder.

 

13. Investment Intent; Restrictions on Transfer.

 

(a) Optionee represents and agrees that if Optionee exercises this Option in
whole or in part, Optionee will in each case acquire the Shares upon such
exercise for the purpose of investment and not with a view to, or for resale in
connection with, any distribution thereof; and that upon such exercise of this
Option in whole or in part, Optionee (or any person or persons entitled to
exercise this Option under the provisions of Sections 7 and 8 hereof) shall
furnish to the Company a written statement to such effect, satisfactory to the
Company in form and substance. If the Shares represented by this Option are
registered under the Securities Act, either before or after the exercise of this
Option in whole or in part, the Optionee shall be relieved of the foregoing
investment representation and agreement and shall not be required to furnish the
Company with the foregoing written statement.

 

(b) Optionee further represents that Optionee has had access to the financial
statements or books and records of the Company, has had the opportunity to ask
questions of the Company concerning its business, operations and financial
condition, and to obtain additional information reasonably necessary to verify
the accuracy of such information.

 

(c) Unless and until the Shares represented by this Option are registered under
the Securities Act, all certificates representing the Shares and any
certificates subsequently issued in substitution therefor and any certificate
for any securities issued pursuant to any stock split, share reclassification,
stock dividend or other similar capital event shall bear legends in
substantially the following form:

 

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THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE ‘SECURITIES ACT’) OR UNDER THE APPLICABLE OR
SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN
MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY
STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

 

 

and/or such other legend or legends as the Company and its counsel deem
necessary or appropriate. Appropriate stop transfer instructions with respect to
the Shares have been placed with the Company’s transfer agent.

 

14. Stand-off Agreement. Optionee agrees that, in connection with any
registration of the Company’s securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
the Company’s securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of at least
one year following the effective date of registration of such offering.

 

15. Restriction Upon Transfer. The Shares may not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated by the
Optionee except as hereinafter provided.

 

(a) Right of First Refusal. In the event Optionee desires to transfer any Shares
during his or her lifetime, Optionee shall first offer to sell such Shares to
the Company. Optionee shall deliver to the Company written notice of the
intended sale, such notice to specify the number of Shares to be sold, the
proposed purchase price and terms of payment, and grant the Company an option
for a period of thirty days following receipt of such notice to purchase the
offered Shares upon the same terms and conditions. To exercise such option, the
Company shall give notice of that fact to Optionee within the thirty (30) day
notice period and agree to pay the purchase price in the manner provided in the
notice. If the Company does not purchase all of the Shares so offered during
foregoing option period, Optionee shall be under no obligation to sell any of
the offered Shares to the Company, but may dispose of such Shares in any lawful
manner during a period of one hundred and eighty (180) days following the end of
such notice period, except that Optionee shall not sell any such Shares to any
other person at a lower price or upon more favorable terms than those offered to
the Company.

 

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(b) Acceptance of Restrictions. Acceptance of the Shares shall constitute the
Optionee’s agreement to such restrictions and the legending of his certificates
with respect thereto. Notwithstanding such restrictions, however, so long as the
Optionee is the holder of the Shares, or any portion thereof, he shall be
entitled to receive all dividends declared on and to vote the Shares and to all
other rights of a shareholder with respect thereto.

 

(c) Permitted Transfers. Notwithstanding any provisions in this Section 15 to
the contrary, the Optionee may transfer Shares subject to this Agreement to his
or her parents, spouse, children, or grandchildren, or a trust for the benefit
of the Optionee or any such transferee(s); provided, that such permitted
transferee(s) shall hold the Shares subject to all the provisions of this
Agreement (all references to the Optionee herein shall in such cases refer
mutatis mutandis to the permitted transferee, except in the case of clause (iv)
of Section 15(a) wherein the permitted transfer shall be deemed to be
rescinded); and provided further, that notwithstanding any other provisions in
this Agreement, a permitted transferee may not, in turn, make permitted
transfers without the written consent of the Optionee and the Company.

 

16. Covenant Not to Compete. As a material inducement for Optioniee to enter
into this Agreement, and issue the Option, the Optionee hereby agrees that for a
period of two (2) years following the date hereof (the “Non-Competition
Period”), he shall not, directly or indirectly own, manage, operate, participate
in, produce, represent, distribute and/or otherwise act on behalf of any person,
firm, corporation, partnership or other entity which involves in the sale and
marketing of content management software systems (the “Competitive Business”)
anywhere in the world (collectively, the “Territory”); or hire any employee or
former employee of the Company. Merger Sub, or Seller, Inc. to perform services
in or involving the Competitive Business, unless the individual hired shall have
departed the Company’s, Seller’s or Merger Sub’s employment at least twelve (12)
months prior to the hiring. The Optionee may hire a former employee within (12)
months of former employees’ employment upon written consent of the Company. The
Optionee further covenants and agrees that during the Non-Competition Period, he
will not directly or indirectly solicit or agree to service for their benefit or
the benefit of any third-party, any of Seller’s, the Company’s Merger Sub or the
Surviving Company’s (as defined in the Merger Agreement) customers.
Notwithstanding the foregoing, nothing in this Section shall prohibit the
Optionee from owning, managing, operating, participating in the operation of, or
advising, consulting or being employed by any entity that is not involved in the
Competitive Business, as long as such activities do not affect any
responsibilities of employment or consultation at the Company or its
subsidiaries, including the Merger Sub or the Surviving Company (as defined in
the Merger Agreement). The Optioneee acknowledges and agrees that the Company
will expend substantial time, talent, effort and money in marketing, promoting,
managing, selling and otherwise exploiting the businesses the Company and the
Merger Sub or the Surviving Company operate, in part by virtue of the Company
acquisition of Seller pursuant to this Agreement, that he is receiving a
substantial benefit from the transactions contemplated by the Merger Agreement
and that the benefit received by the Company and the Optionee in agreeing to be
bound by this Section is a material part of the consideration for the
transactions contemplated by this Agreement. The Optionee recognize that this
Section contains conditions, covenants, and time limitations that are reasonably
required for the protection of the business of the Merger Sub, Surviving Company
(as defined in the Merger Agreement) and the Company. If any limitation,
covenant or condition shall be deemed to be unreasonable and unenforceable by a
court or arbitrator of competent jurisdiction, then this Section shall thereupon
be deemed to be amended to provide modification of such limitation, covenant
and/or condition to such extent as the court or arbitrator (as applicable) shall
find to be reasonable and such modification shall not affect the remainder of
this Agreement. The Optionee acknowledges that, in the event the Optionee
breaches this Agreement, money damages will not be adequate to compensate the
Company for the loss occasioned by such breach. The Optionee therefore consents,
in the event of such a breach, to the granting of injunctive or other equitable
relief against the Optionee by any court of competent jurisdiction.

 

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17. Notices. Any notice required to be given pursuant to this Option shall be in
writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, five (5) days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided by Optionee to the
Company.

 

18. Applicable Law. This Option has been granted, executed and delivered in the
State of New York, and the interpretation and enforcement shall be governed by
the laws thereof and subject to the exclusive jurisdiction of the courts located
in the State of New York.

 

19. Limitation of Exercises After the Options are exercisable pursuant to
Section 5 of this Agreement and notwithstanding anything else to the contrary
herein, in no event shall the Optionee be entitled to exercise any portion of
this Option, such that upon exercise of which the sum of (1) the number of
shares of Stock beneficially owned by the Optioneed its affiliates (other than
shares of Stock which may be deemed beneficially owned through the ownership of
the unexercised portion of this Option or the unexercised or unconverted portion
of any other security of the Company subject to a limitation on conversion or
exercise analogous to the limitations contained herein) and (2) the number of
shares of Stock issuable upon the exercise of the Option with respect to which
the determination of this proviso is being made, would result in beneficial
ownership by the Optionee and its affiliates of more than 4.99% of the
outstanding shares of Stock (the “Beneficial Ownership Limitation”). For
purposes of the proviso of the immediately preceding sentence, beneficial
ownership shall be determined in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G
thereunder, except as otherwise provided in clause (1) of such proviso,
provided, further, however, that the limitations on conversion may be waived by
the Optionee upon, at the election of the Optionee , not less than 61 days prior
notice to the Company, and the provisions of the conversion limitation shall
continue to apply until such 61st day (or such later date, as determined by the
Optionee, as may be specified in such notice of waiver).

 

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In Witness Whereof, the parties hereto have executed this Option as of the date
first above written.

 

COMPANY:

 

Digital Locations, Inc.

 

 

 

 

 

 

 

 

By:

/s/ William E. Beifuss, Jr.

 

 

 

Name:

William E. Beifuss, Jr.

 

 

 

Title:

President

 

 

 

 

 

OPTIONEE:

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ Derek Jones

 

 

 

 

(signature)

 

 

 

Name:

Derek Jones

 

 

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Appendix A

 

NOTICE OF EXERCISE

 

DIGITAL LOCATIONS, INC.

_________________

_________________

_________________

 

Re: Nonstatutory Stock Option

 

1) Notice is hereby given pursuant to Section 6 of my Nonstatutory Stock Option
Agreement that I elect to purchase the number of shares set forth below at the
exercise price set forth in my option agreement:

 

Nonstatutory Stock Option Agreement dated: ____________

 

Number of shares being purchased: ____________

 

Exercise Price: $____________

 

A check in the amount of the aggregate price of the shares being purchased is
attached.

 

OR

 

2) I elect a cashless exercise pursuant to Section 6 of my Nonstatutory Stock
Option Agreement. The Average Market Price as of _______ was $_____.

 

I hereby confirm that such shares are being acquired by me for my own account
for investment purposes, and not with a view to, or for resale in connection
with, any distribution thereof. I will not sell or dispose of my Shares in
violation of the Securities Act of 1933, as amended, or any applicable federal
or state securities laws. Further, I understand that the exemption from taxable
income at the time of exercise is dependent upon my holding such stock for a
period of at least one year from the date of exercise and two years from the
date of grant of the Option.

 

I understand that the certificate representing the Option Shares will bear a
restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.

 

 

 

 

 

 

By:

 

 

 

 

(signature)

 

 

Name: