Document:

Exhibit

10.5

 

 

VIRTUALFUND.COM,

INC.

 

DIRECTOR’S

NON-QUALIFIED STOCK OPTION AGREEMENT

 

 

 

	

  OPTIONEE:

  	

   

  	

  [Name of Optionee]

  
	

   

  	

   

  	

   

  
	

  GRANT DATE:

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  NUMBER OF OPTION SHARES:

  	

   

  	

   Shares

  
	

   

  	

   

  	

   

  
	

  OPTION PRICE PER SHARE:

  	

   

  	

  $            

  per Share

  
	

   

  	

   

  	

   

  
	

  EXPIRATION DATE:

  	

   

  	

   

  

 

 

THIS

AGREEMENT is made

as of the Grant Date stated above, by and between VirtualFund.com, Inc., a

Minnesota corporation (the “Company”), and the Optionee named above (the

“Optionee”).  The Optionee is a director

of the Company.

 

The

Company is granting this option to give the Optionee an opportunity to purchase

shares of the Company’s Common Stock, par value $.01 per share (the “Common

Stock”), on the terms and conditions set forth in this Agreement.

 

NOW,

THEREFORE, the

Company and the Optionee agree as follows:

 

1.             Grant of Option. 

The Company hereby grants to the Optionee the right and option (the

“Option”) to purchase all or part of the aggregate number of shares of Common

Stock stated above (the “Option Shares”) on the terms and conditions set forth

in this Agreement.  The number of Option

Shares is subject to adjustment as provided in paragraph 12 of this

Agreement.

 

2.             Nature of Option. 

This Option is not intended to be an “incentive stock option”

within the meaning of Section 422 of the Internal Revenue Code of 1986, as

amended.

 

3.             Purchase Price. 

The purchase price of the Option Shares shall be the Option Price per

share stated above.  The Option Price is

subject to adjustment as provided in paragraph 12 of this Agreement.

 

4.             Duration of Option. 

This Option shall be in effect for the period commencing on the Grant

Date stated above and ending on the Expiration Date stated above.  All rights of the Optionee under this Option

shall terminate and be forfeited to the extent this Option has not been

exercised at the date this Option expires.

 

5.             Vesting of Option. 

This Option is fully vested and exercisable in full as of the Grant Date

stated above.

 

 

 

6.             Manner of Exercise of Option.

 

(a)           Time of Exercise.  This Option may be exercised at any time,

and at one or more times, before it expires. 

This Option, when exercised, may be exercised for some or all of the

Option Shares, and any Option Shares that are not purchased at that date of

exercise may be purchased at a subsequent date of exercise.  The exercise of this Option at each date of

exercise shall be subject to all of the terms and conditions of this Agreement,

including but not limited to the provisions of paragraphs 6 and 7 of this

Agreement.

 

(b)           Exercise Only by Optionee or Other

Proper Party.  During the lifetime

of the Optionee, the Optionee is the only person who may exercise this Option,

except that, ­if the Optionee shall be incapacitated, the Optionee’s guardian

or other legal representative may exercise this Option on behalf of the

Optionee.  If the Optionee shall die,

this Option may be exercised only by the personal representatives, executors or

administrators of the Optionee’s estate or by the person or persons to whom the

Optionee’s rights under this Option shall pass by the Optionee’s will or the

laws of descent and distribu­tion.

 

(c)           Notice of Exercise.  To exercise this Option, the Optionee (or

other proper party in the event of the Optionee’s incapacity or death) shall

deliver a written notice of exercise (the “Notice of Exercise”) to the Company

at its principal executive office.  The

Notice of Exercise shall state the number of Option Shares with respect to

which this Option is being exercised and shall be accompanied by payment in full

of the aggregate Option Price for all Option Shares designated in the Notice of

Exercise.  If required by the Company,

in its sole discretion, the Notice of Exercise shall also include other

representations and agreements as to the purchaser’s investment intent with

respect to the Option Shares.  The

Notice of Exercise shall be signed by the Optionee (or other proper party in

the event of the Optionee’s incapacity or death) and must be delivered to the

Company prior to the expiration of this Option.

 

(d)           Payment of Option Price.  The aggregate Option Price for all Option

Shares designated in the Notice of Exercise shall be paid (i) in cash

(including check, bank draft or money order), (ii) by tendering shares of

Common Stock that are already owned by the Optionee having an aggregate fair

market value on the date of exercise which is not less than the aggregate

Option Price, or (iii) by a combination of such methods.

 

7.             Restrictions on Exercise of Option.

 

(a)           This Option may not be exercised for

a fraction of a share.

 

(b)           The issuance of Option Shares upon

the exercise of this Option shall be subject to all applicable laws, rules, and

regulations.  If the Company determines

at any date of exercise that the issuance of the Option Shares requires the

listing, registration or qualification of the Option Shares on any securities

exchange or under any federal or state law, or the consent or approval of any

regulatory body, this Option shall not be exercisable and the Option Shares

shall not be issued unless and until such requirements are fulfilled in a

manner satisfactory to the Company.

 

 

2

 

8.             Taxation Upon Exercise of Option. 

The Optionee understands that the exercise of this Option will cause the

Optionee to recognize income for tax purposes.  The amount of taxable income will be equal to the amount by which

the Fair Market Value of the Option Shares that are purchased on the date of

exercise exceeds the aggregate Option Price for such Option Shares.

 

9.             Nontransferability of Option. 

This Option shall not be transferable by the Optionee, other than by

will or the laws of descent and distribution.

 

10.          Rights as Shareholder. 

The Optionee (or any other party claiming rights through the Optionee)

shall not be, or be deemed to be, a holder of any Option Shares for any purpose

unless and until certificates for such shares are issued to the Optionee (or

other proper party in the event of the Optionee’s incapacity or death) under

the terms of the Plan.

 

11.          No Promise of Continued Service. 

This Option does not constitute an express or implied promise that the

Company will continue to retain the Optionee’s services as a director of the

Company, nor shall this Option interfere in any way with the Company’s right to

terminate the Optionee’s service as a director at any time.

 

12.          Adjustments. 

In the event of any change in the outstanding shares of Common Stock by

reason of any stock dividend, recapitalization, reorganization, merger,

consolidation, split-up, combination or exchange of shares, or rights offering

to purchase Common Stock at a price substantially below fair market value, or

other similar change affecting the Common Stock, while any portion of this

Option is outstanding and unexercised, the Board of Directors shall make such

adjustments in the number of Option Shares and in the Option Price as shall be

equitable and appropriate in order to prevent substantial dilution or

enlargement of the rights granted to, or available for, the Optionee.  No adjustment shall be made in connection

with the issuance by the Company of any warrants, rights, or options to acquire

additional shares of Common Stock or of securities convertible into Common

Stock at a price that is not substantially below the fair market value of the

Common Stock at the date such warrants, rights or options are issued.

 

13.          Interpretation. 

The interpretation and construction of any provision of this Option

shall be made by the Board of Directors and shall be final, conclusive and

binding on the Optionee and all other persons.

 

IN

WITNESS WHEREOF,

the Company has caused this Agreement to be executed in its corporate name by

its duly author­ized officer, and the Optionee has executed this Agreement as

of the Grant Date stated above.

 

	

  COMPANY:

  	

   

  	

  OPTIONEE:

  
	

  VirtualFund.com, Inc.

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  By 

  	

   

  	

   

  	

   

  
	

  Its 

  	

   

  	

   

  	

  [Name of Optionee]

  

 

 

3

 

Schedule of Director’s Non-Qualified Stock Options

 

Options in the form set forth above have been granted to the directors

of the Company as follows:

 

	

  Name

  	

   

  	

  Number of

  Options

  	

   

  	

  Grant Date

  	

   

  	

  Exercise

  Price

  	

   

  
	

  Edward Adams

  	

   

  	

  250,000

  	

   

  	

  June 1, 2001

  	

   

  	

  $

  	

  0.15

  	

  *

  
	

  Edward Adams

  	

   

  	

  100,000

  	

   

  	

  July 17, 2002

  	

   

  	

  $

  	

  0.15

  	

   

  
	

  John Cavanaugh

  	

   

  	

  50,000

  	

   

  	

  June 1, 2001

  	

   

  	

  $

  	

  0.16

  	

   

  
	

  John Cavanaugh

  	

   

  	

  100,000

  	

   

  	

  July 17, 2002

  	

   

  	

  $

  	

  0.05

  	

   

  
	

  Timothy Duoos

  	

   

  	

  250,000

  	

   

  	

  June 1, 2001

  	

   

  	

  $

  	

  0.15

  	

  *

  
	

  Timothy Duoos

  	

   

  	

  100,000

  	

   

  	

  July 17, 2002

  	

   

  	

  $

  	

  0.15

  	

   

  
	

  Steve Fisher

  	

   

  	

  100,000

  	

   

  	

  July 17, 2002

  	

   

  	

  $

  	

  0.05

  	

   

  
	

  Kelly Johnson

  	

   

  	

  100,000

  	

   

  	

  July 17, 2002

  	

   

  	

  $

  	

  0.05

  	

   

  

 

*                 Originally granted at an exercise price of $0.16 per

share, and repriced to $0.15 per share on July 10, 2001.

 

 

4Exhibit 10.20

 

VIRTUALFUND.COMTM

YOUR  VENTURE

RESOURCE COMPANY

 

 

 

August 23, 1999

 

 

 

Tim Duoos

6412 Lyndale Avenue South

Richfield, MN  55423

 

Dear Tim:

 

I am very pleased to be able to offer you the

opportunity to join the Board of Directors of VirtualFund.com, Inc.

 

I believe your participation will give us a

significant boost in our efforts to retool the company as the first step in

building a world class “E-Team”.  We are

totally committed to searching out the best minds in pursuit of our strategy to

diversify and embrace the Information Technology (IT) market opportunity.

 

As coined by Walt Disney, we are looking for

a select few who can “Think, Believe, Dream and Dare”.

 

As consideration for your participation on

our Board, we are prepared to enter into a simple consulting agreement related

specifically to guiding us in developing financing tactics for our IT

acquisition program.  This consultancy

fee shall be in lieu of Director’s fees and in an amount of not less than

$36,000 per year.  In addition, we are

prepared to grant 12,500 options per year, with a strike price of $1.65 per

share, vesting annually on the anniversary for the next eight years of service

on our Board.  If you continue to serve

for the full eight year vesting period, you would earn the entire 100,000 share

grant at the original $1.65 strike price.

 

We plan to convene two times per year in

person and probably another two times per year by telephone as a formal

group.  In addition to that, I will

probably chase you on the phone once or twice per quarter just to bend your ear

or have you bend mine.

 

We have a Compensation Committee, Audit

Committee and a Stock Option Committee. 

We ask that you participate as an outside director in the Audit

Committee and, of course, any others that may hold particular interest.

 

 

 

We sincerely hope that you will find our

offer worthwhile.  We are looking

forward to your being able to share in the financial rewards of our next phase

of growth.  I know you will be able to

stimulate our troops as a key contributor to our developing world class E-Team.

 

If this offer is acceptable, please provide

your signature and return one copy.

 

 

 

Sincerely,

 

/s/ Mel Masters

 

 

Mel Masters

CEO, VirtualFund.com, Inc.

 

 

 

Accepted By:

 

 

	

  /s/ Tim Duoos

  
	

  Tim Duoos

  
	

   

  
	

  8/23/99

  
	

  Date

  

 

 

 

VIRTUALFUND.COMTM

YOUR  VENTURE

RESOURCE COMPANY

 

November 30, 1999

 

Mr. Tim Duoos

Lyndale Gardens

6412 Lyndale Avenue South

Richfield, MN  55423

 

Dear Tim:

 

Per our discussions regarding the difficult

and stressful period in which VFND now finds itself, the company shall make the

following adjustments to the financial commitments we have made to you as a

Director and Consultant:

 

1.               We shall

accelerate the VFND option vesting period, which was previously eight (8)

years, to a four (4) year period from your starting date as a Director.  Your strike price shall not change.

 

2.               With respect to

your $36,000 annual consultancy fee, we will modify this component by granting

warrants to purchase common stock in VFND at $2.00 per share which can be funded

exclusively by waiving the annual consulting fee of $36,000 at the end of each

year of service. Accordingly, the grant of warrants will be for 72,000 shares

at $2.00 each which will be only available for purchase at the rate of 9,000

warrants per six (6) months of service for each of the next four (4) years.

 

Additionally

we believe that B2BXchange.com, Inc., our wholly owned subsidiary, will be in a

position in the coming year to seek independent financing and potentially move

to the IPO stage.  As a participate in

this exciting development, we will grant an additional 100,000 options in

B2BXchange.com, Inc., which shall vest over the next four (4) years (25,000 per

year) and carry a strike price of $.25.

 

Under separate cover we

shall detail restrictions on options in B2BXchange.com, Inc., which will

include the same limitations and restrictions as the yet to be adopted Employee

Option Plan.  The B2BXchange.com, Inc.,

grant requires that these options shall be valid and exercisable after the

underwriter holdback period, which follows a successful IPO.

 

 

 

We sincerely appreciate your

continued participation and valuable contributions during these trying

times.  We will deliver additional

documentation on all options and warrants shortly.

 

Sincerely,

 

	

  /s/ Mel Masters

  	

   

  	

   

  	

   

  	

   

  
	

  Mel Masters

  	

   

  	

  Accepted

  by:

  	

   

  	

  /s/ Tim Duoos

  
	

  CEO, VirtualFund.com, Inc.

  	

   

  	

   

  	

   

  	

  November 30, 1999

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