Termination of Agreement - On-Point Technology Systems Inc. and Vanguard Strategies Inc.
TERMINATION OF AGREEMENT
This Termination of Agreement is made and entered into on the 19th day
of March, 1998, by and between ON-POINT TECHNOLOGY SYSTEMS, INC., a Nevada
corporation (previously known as Lottery Enterprises, Inc.) ("ON-POINT") and
VANGUARD STRATEGIES, INC., a Nevada corporation ("VSI") with reference to the
following facts and objectives:
A. ON-POINT and VSI entered into an Agreement dated January 9, 1996
relating to the formation of a wholly-owned subsidiary of ON-POINT for the
purpose of handling and pursuing the exclusive rights to all international sales
of ON-POINT's machines and products (a copy of which is attached hereto as
Exhibit A) ("Agreement"). For convenience, such subsidiary is referred to in the
Agreement as "LEI International."
B. The Agreement required ON-POINT to form LEI International within 60
days of the date of the Agreement, which date was postponed indefinitely by VSI.
C. Pursuant to the terms of the Agreement and the stock option
agreements attached thereto, VSI and Robert Burr were to be granted options to
purchase up to eighty percent (80%) of the outstanding common stock of LEI
International, which were to become exercisable upon satisfaction of certain
performance criteria described in the stock option agreements. In addition,
pursuant to such stock option agreements, ON-POINT had the right to repurchase
the stock of LEI International in accordance therewith.
D. ON-POINT and VSI desire to terminate the Agreement as provided
herein.
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IT IS, THEREFORE, AGREED as follows:
1. TERMINATION OF AGREEMENT.
In consideration of granting of the stock options described in
paragraph 2, the Agreement is hereby terminated effective immediately and is
null and void. ON-POINT and VSI acknowledge that the Agreement was never
implemented by the parties.
2. ON-POINT STOCK OPTIONS.
Concurrently with the execution of this Agreement, ON-POINT shall
grant options to purchase ON-POINT common stock to VSI and Robert Burr pursuant
to Stock Option Agreements which shall be in the form as attached hereto as
Exhibits B and C.
EXECUTED in San Diego, California on the date first written above.
ON-POINT TECHNOLOGY SYSTEMS, INC.
By:_______________________________
Frederick Sandvick, CEO
VANGUARD STRATEGIES, INC.
By:_______________________________
CONSENTED AND AGREED TO:
---------------------------
Robert L. Burr
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EXHIBIT A
AGREEMENT
THIS AGREEMENT is made and entered into as of January 9 , 1996, by and
between LOTTERY ENTERPRISES, INC., a Nevada corporation ("LEI"), and VANGUARD
STRATEGIES, INC., a Nevada corporation ("VSI").
IT IS AGREED as follows:
1. Within sixty (60) days of the date of this Agreement, LEI shall form
a wholly-owned subsidiary for the purpose of handling and pursuing the exclusive
rights to all international sales of LEI's machines and products. The subsidiary
is hereinafter referred to for convenience as "LEI International."
2. LEI shall cause LEI International to initially issue 50,000 shares of
its common stock to LEI in exchange for a contribution and assignment of all of
LEI's right, title and interest in: (a) various distributor agreements relating
to international sales, (b) LEI's ownership interests in Editec and LEI Mexico,
S.A. de C.V., and (c) an exclusive distribution agreement for all LEI machines
and products in locations other than the United States and its territories and
Canada. LEI shall cause LEI International to enter into Stock Option Agreements
with VSI and Robert Burr for a total of 200,000 shares of common stock, which
agreements shall be in the form as attached hereto as Exhibits A and B. No
additional shares of stock of LEI International shall be issued without the
consent of both LEI and VSI until expiration of such options.
3. Each party to this Agreement agrees to perform any further acts and
execute and deliver such further documents which may be reasonably necessary to
carry out the provisions of this Agreement.
4. The covenants and agreements contained herein shall inure to the
benefit of and be binding upon the parties and their respective executors,
administrators and assigns.
5. This Agreement has been entered into in San Diego, California, and
shall be interpreted and governed by the laws of the State of California.
6. This instrument contains the entire Agreement of the parties with
respect to the subject matter hereof. It may be changed only by an agreement in
writing signed by the parties.
7. If any term, provision, covenant or condition of this Agreement is
held by a court of competent jurisdiction to be invalid, void or unenforceable,
the remaining provisions shall remain in full force and effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
LOTTERY ENTERPRISES, INC.
By: /s/ Catherine Winchester
------------------------------
Catherine Winchester,
Chief Operating Officer
VANGUARD STRATEGIES, INC.
By: /s/ Frederick Sandvick
------------------------------
Frederick Sandvick, President
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EXHIBIT A (TO EXHIBIT A)
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of
___________, 1996, by and between __________________________, a _________
corporation ("LEI International"), and Vanguard
Strategies, Inc., a Nevada corporation ("VSI").
W I T N E S S E T H:
WHEREAS, the Board of Directors of LEI International has agreed to
extend to VSI as of the date of this Agreement (the "Date of Grant") a
non-qualified stock option to purchase shares of common stock of LEI
International ("Stock"); and
WHEREAS, VSI desires to obtain the option set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived here-
from, the parties hereto agree as follows:
1. GRANT OF STOCK OPTION
LEI International grants to VSI the right and option to purchase, on the
terms and conditions hereinafter set forth, all or any part of an aggregate of
_____________________ (________) shares of Stock ("Option Shares") at the price
of one dollar ($1.00) per share, exercisable from time to time subject to
provisions of this Agreement prior to the close of business on _______________,
2001 [Note: this date is 5 years from Date of Grant] (the "Expiration Date").
The option granted hereby is a non-qualified stock option.
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2. EXERCISABILITY OF OPTION
Except as otherwise provided in this Agreement, the Option Shares shall
vest and become exercisable on the later of:
(a) the first year anniversary of the Date of Grant, or
(b) the date as of which Lottery Enterprises, Inc. ("LEI"), the
parent corporation of LEI International, has "income before provision
for income taxes" as shown on LEI's Consolidated Statement of Operations
("Pre-tax Income") as determined on a cumulative basis for four (4)
consecutive fiscal quarters of at least one million five hundred
thousand dollars ($1,500,000), as shown on LEI's forms 10-Q and 10-K
filed with the Securities and Exchange Commission; provided, however,
that Pre-tax Income shall be adjusted to reflect only a twenty percent
(20%) ownership interest in LEI International, or
(c) the date VSI has obtained an additional $1,050,000 in
financing for LEI either in the form of debt or equity in accordance
with the Letter Agreement between VSI and LEI dated January ___, 1996.
In no event may this option be exercised after the Expiration Date.
3. METHOD OF EXERCISE OF OPTION AND PAYMENT OF PURCHASE PRICE\
This option shall be exercised, in whole or in part, by the delivery to
the Secretary of LEI International of a written notice stating the number of
Option Shares to be purchased and accompanied by payment of the purchase price
in full by certified or cashiers' check made payable to the order of LEI
International. In addition,
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VSI shall furnish any written statements required pursuant to
Section 8 below.
4. NON-ASSIGNABILITY OF OPTION
Except as otherwise provided in this Agreement, this option may be
exercised only by VSI. Except as otherwise provided in this Agreement, this
option shall not be offered, sold, transferred, assigned, pledged, hypothecated,
or otherwise disposed of in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Upon any
attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of the
option contrary to the provisions hereof, or upon the levy of any attachment or
similar process upon such option, the option shall immediately become null and
void.
5. OPTION TO PURCHASE BY LEI
During the period commencing with the two (2) year anniversary of the
Date of Grant and ending with the Expiration Date, LEI shall have the option to
purchase from VSI both the unexercised Option Shares and the shares of Stock
issued upon the exercise of the Option Shares (collectively referred to as the
"Option Stock") for a price equal to the Agreed Value or the Appraised Value, as
the case may be, of the Option Stock. If LEI desires to purchase all of the
Option Stock, the Secretary of LEI shall give a written notice of exercise to
VSI ("Notice of Exercise").
The purchase price to be paid for each share of the Option Stock shall
be equal to the Agreed Value or Appraised Value of LEI International, as the
case may be, divided by the number of shares of Stock outstanding, assuming the
exercise of all outstanding
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stock options. The Agreed Value shall be the value of LEI International as
agreed upon between VSI and LEI. If they do not agree upon a value within thirty
(30) days after the date of the Notice of Exercise, VSI or LEI may give notice
("Appraisal Notice") to the other of intention to submit the matter to an
appraiser for determination. Within fifteen (15) days from the date of delivery
of the Appraisal Notice, the parties shall select a single neutral appraiser to
determine the fair market value of LEI International ("Appraised Value"). If the
parties are unable to agree upon a single neutral appraiser, then within thirty
(30) days following delivery of the Appraisal Notice, each party shall select an
appraiser who shall each determine the fair market value of LEI International.
In the event the difference between fair market value of LEI International as
determined by each of the two appraisers is fifteen percent (15%) or less (such
percentage to be based on the lower determination), the values shall be averaged
and the resulting average shall be the Appraised Value. In the event the
difference between the fair market value of LEI International as determined by
each of the two appraisers is greater than fifteen percent (15%) (such
percentage to be based on the lower determination), and the parties do not agree
to average the values, the two appraisers shall appoint a third appraiser who
alone shall determine the fair market value of LEI International. In determining
the fair market value of LEI International, the appraiser(s) shall take into
consideration among other things the tangible assets of LEI International, its
receivables, securities and other intangible assets, liabilities and past and
current
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earnings. The decision of the appraiser(s) shall be binding upon the parties. As
soon as the Appraised Value of LEI International has been determined, the
appraiser(s) shall give written notice to the parties. All expenses of
appraisal, including legal fees and costs of the proceedings to petition to
compel arbitration, shall be borne pro rata by the respective parties.
The purchase and sale of the Option Stock between the parties
shall occur at an agreed upon time and place within fifteen (15) days of the
final determination of the Agreed Value or the Appraised Value (the "Closing").
At the Closing, LEI shall pay to VSI the purchase price in cash or at LEI's
option, a combination of LEI common stock and cash (provided the cash shall not
be less than an amount equal to the income taxes owed by VSI resulting from the
transaction) in exchange for the Option Stock.
6. ADJUSTMENTS AND OTHER RIGHTS
In the event that additional shares of Stock are issued pursuant to a
stock split or a stock dividend, the number of unexercised Option Shares shall
be increased proportionately with no increase in the total purchase price of
such Option Shares. In the event that the shares of Stock of LEI International
from time to time issued and outstanding are reduced by a combination of shares,
the number of unexercised Option Shares shall be reduced proportionately with no
reduction in the total price of such Option Shares. In the event that LEI
International should transfer assets to another corporation and distribute the
stock of such other corporation without the surrender of Stock of LEI
International, and if such distribution is not taxable as a dividend and no gain
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or loss is recognized by reason of Section 355 of the Internal Revenue Code, or
some similar section, then the total purchase price of the unexercised Option
Shares shall be reduced by an amount which bears the same ratio to the total
purchase price then in effect as the market value of the stock distributed in
respect of a share of Stock of LEI International, immediately following the
distribution, bears to the aggregate of the market value at such time of a share
of Stock of LEI International and the stock distributed in respect thereof. All
such adjustments shall be made by the Board of Directors, whose determination
upon the same shall be final and binding upon VSI. Any fractional shares
resulting from the computations pursuant to this Section 6 shall be eliminated
from this option. No adjustments shall be made for cash dividends or the
issuance to stockholders of rights to subscribe for additional Stock or other
securities.
7. LIMITATIONS OF VSI'S RIGHTS
Neither VSI nor any other person entitled to exercise this option shall
have any of the rights or privileges of a shareholder of LEI International in
respect of any shares issuable upon exercise of this option unless and until a
certificate representing such shares shall have been issued in the name of VSI
or such person.
8. REPRESENTATIONS OF VSI
VSI represents, agrees and certifies that:
(a) If VSI exercises this option in whole or in part at a time
when there is not in effect under the Securities Act of 1933, as amended
(the "Act"), a registration statement
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relating to the shares issuable upon exercise hereof, and available for
delivery to VSI a prospectus meeting the requirements of Section
10(a)(3) of the Act, VSI will acquire the shares issuable upon such
exercise for the purpose of investment and not with a view to their
resale or distribution, and upon each such exercise of this option, VSI
will furnish to LEI International a written statement to such effect,
satisfactory in form and substance to LEI International and its counsel;
(b) If and when VSI proposes to offer to sell shares which are
issued to VSI upon exercise of this option at a time when there is not
in effect under the Act a registration statement relating to the resale
of such shares and available for delivery a prospectus meeting the
requirements of Section 10(a)(3) of the Act, or if VSI is a holder of
10% or more of the stock of LEI International, VSI will notify LEI
International prior to any such offering or sale and will abide by the
opinion of counsel of LEI International as to whether and under what
conditions and circumstances, if any, VSI may offer and sell such
shares; and
(c) No shares may be acquired hereunder pursuant to exercise of
the option granted hereby unless and until any then applicable
requirements of the Securities and Exchange Commission, the California
Department of Corporations, other regulatory agencies, including any
other state securities law commissioners having jurisdiction over LEI
International or
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such issuance, and any exchanges upon which Stock of LEI International
may be listed, shall have been fully satisfied. VSI understands that the
certificate or certificates representing the shares acquired pursuant to
this option may bear a legend referring to the foregoing matters and any
limitations under the Act and state securities laws with respect to the
transfer of such shares, and LEI International may impose stop transfer
instructions to implement such limitations, if applicable. Any person or
persons entitled to exercise this option under the provisions of Section
4 above shall be bound by and obligated under the provisions of this
Section 8 to the same extent as is VSI.
9. NOTICES
Any notice to be given under the terms of this Agreement shall
be in writing and addressed to the Secretary of LEI International
at its principal office, and to VSI at its principal office, or at
such other address as either party may hereinafter designate in
writing to the other.
10. LAWS APPLICABLE TO CONSTRUCTION
The interpretation, performance and enforcement of this
Agreement and all rights and obligations of the parties hereunder
shall be governed by the laws of the State of California.
11. NECESSARY ACTS
Each party to this Agreement agrees to perform any further acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement.
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12. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns.
13. SEVERABILITY
Each provision of this Agreement shall be viewed as separate
and divisible, and in the event any provision shall be held to be
invalid, the remaining provisions shall continue to be in full
force and effect.
14. NO ORAL CHANGES
This instrument contains the entire agreement of the parties. It may be
changed only by an agreement in writing, signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date hereinabove set forth.
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<PAGE>
EXHIBIT B (TO EXHIBIT A)
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of the ____ day of
___________, 1996, by and between __________________________, a _________
corporation ("LEI International"), and Robert Burr, an individual residing in
San Diego, California ("Burr").
W I T N E S S E T H:
WHEREAS, the Board of Directors of LEI International has agreed to
extend to Burr as of the date of this Agreement (the "Date of Grant") a
non-qualified stock option to purchase shares of common stock of LEI
International ("Stock"); and
WHEREAS, Burr desires to obtain the option set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived here-
from, the parties hereto agree as follows:
1. GRANT OF STOCK OPTION
LEI International grants to Burr the right and option to purchase, on
the terms and conditions hereinafter set forth, all or any part of an aggregate
of _____________________ (________) shares of Stock ("Option Shares") at the
price of one dollar ($1.00) per share, exercisable from time to time subject to
provisions of this Agreement prior to the close of business on _______________,
2001 [Note: this date is 5 years from Date of Grant] (the "Expiration Date").
The option granted hereby is a non-qualified stock option.
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<PAGE>
2. EXERCISABILITY OF OPTION
Except as otherwise provided in this Agreement, the Option Shares shall
vest and become exercisable on the later of:
(a) the first year anniversary of the Date of Grant, and
(b) the date as of which Lottery Enterprises, Inc. ("LEI"), the
parent corporation of LEI International, has "income before provision
for income taxes" as shown on LEI's Consolidated Statement of Operations
("Pre-tax Income") as determined on a cumulative basis for four (4)
consecutive fiscal quarters of at least one million five hundred
thousand dollars ($1,500,000), as shown on LEI's forms 10-Q and 10-K
filed with the Securities and Exchange Commission; provided, however,
that Pre-tax Income shall be adjusted to reflect only a twenty percent
(20%) ownership interest in LEI International, or
(c) the date VSI has obtained an additional $1,050,000 in
financing for LEI either in the form of debt or equity in accordance
with the Letter Agreement between VSI and LEI dated January ___, 1996.
In no event may this option be exercised after the Expiration Date.
3. EXCLUSIVE SERVICES TO LEI AND LEI INTERNATIONAL
This option shall immediately become null and void in the event Burr
performs services for or engages in any business other than the business of LEI
and LEI International and does not devote his full business time and best
efforts to the business of LEI and LEI International and perform faithfully,
exclusively and to the best of his ability and powers the duties assigned to him
by the
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Boards of Directors of LEI and LEI International, unless LEI and
LEI International consent otherwise in writing. This Section shall
not apply to passive investments by Burr.
4. METHOD OF EXERCISE OF OPTION AND PAYMENT OF PURCHASE PRICE
This option shall be exercised, in whole or in part, by the delivery to
the Secretary of LEI International of a written notice stating the number of
Option Shares to be purchased and accompanied by payment of the purchase price
in full by certified or cashiers' check made payable to the order of LEI
International. In addition, Burr (or the person or persons exercising the option
if Burr is deceased) shall furnish any written statements required pursuant to
Section 9 below.
5. NON-ASSIGNABILITY OF OPTION; DEATH
During Burr's lifetime, this option may be exercised only by Burr,
except as otherwise provided in this Agreement. This option shall not be
offered, sold, transferred, assigned, pledged, hypothecated, or otherwise
disposed of in any way (whether by operation of law or otherwise) except by will
or the laws of descent and distribution or except as otherwise provided in this
Agreement, and shall not be subject to execution, attachment or similar process.
Upon any attempt so to transfer, assign, pledge, hypothecate, or otherwise
dispose of the option contrary to the provisions hereof, or upon the levy of any
attachment or similar process upon such option, the option shall immediately
become null and void.
In the event of the death of Burr prior to the Expiration Date, this
option, to the extent it shall not have been exercised,
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may be exercised on or before the Expiration Date by the person or
persons to whom Burr's rights under this option shall pass by will
or by the applicable laws of descent.
6. OPTION TO PURCHASE BY LEI
During the period commencing with the two (2) year anniversary of the
Date of Grant and ending with the Expiration Date, LEI shall have the option to
purchase from Burr both the unexercised Option Shares and the shares of Stock
issued upon the exercise of the Option Shares (collectively referred to as the
"Option Stock") for a price equal to the Agreed Value or the Appraised Value, as
the case may be, of the Option Stock. If LEI desires to purchase all of the
Option Stock, the Secretary of LEI shall give a written notice of exercise to
Burr ("Notice of Exercise").
The purchase price to be paid for each share of the Option Stock shall
be equal to the Agreed Value or Appraised Value of LEI International, as the
case may be, divided by the number of shares of Stock outstanding, assuming the
exercise of all outstanding stock options. The Agreed Value shall be the value
of LEI International as agreed upon between Burr and LEI. If they do not agree
upon a value within thirty (30) days after the date of the Notice of Exercise,
Burr or LEI may give notice ("Appraisal Notice") to the other of intention to
submit the matter to an appraiser for determination. Within fifteen (15) days
from the date of delivery of the Appraisal Notice, the parties shall select a
single neutral appraiser to determine the fair market value of LEI International
("Appraised Value"). If the parties are unable to agree upon a single neutral
appraiser, then within thirty (30)
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days following delivery of the Appraisal Notice, each party shall select an
appraiser who shall each determine the fair market value of LEI International.
In the event the difference between fair market value of LEI International as
determined by each of the two appraisers is fifteen percent (15%) or less (such
percentage to be based on the lower determination), the values shall be averaged
and the resulting average shall be the Appraised Value. In the event the
difference between the fair market value of LEI International as determined by
each of the two appraisers is greater than fifteen percent (15%) (such
percentage to be based on the lower determination), and the parties do not agree
to average the values, the two appraisers shall appoint a third appraiser who
alone shall determine the fair market value of LEI International. In determining
the fair market value of LEI International, the appraiser(s) shall take into
consideration among other things the tangible assets of LEI International, its
receivables, securities and other intangible assets, liabilities and past and
current earnings. The decision of the appraiser(s) shall be binding upon the
parties. As soon as the Appraised Value of LEI International has been
determined, the appraiser(s) shall give written notice to the parties. All
expenses of appraisal, including legal fees and costs of the proceedings to
petition to compel arbitration, shall be borne pro rata by the respective
parties.
The purchase and sale of the Option Stock between the parties
shall occur at an agreed upon time and place within fifteen (15) days of the
final determination of the Agreed Value or the Appraised Value (the "Closing").
At the Closing, LEI shall pay to
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Burr the purchase price in cash or at LEI's option, a combination of LEI common
stock and cash (provided the cash shall not be less than an amount equal to the
income taxes owed by Burr resulting from the transaction) in exchange for the
Option Stock.
Any person or persons entitled to exercise this option under
the provisions of Section 5 above shall be bound by and obligated
under the provisions of this Section 6 to the same extent as is
Burr.
7. ADJUSTMENTS AND OTHER RIGHTS
In the event that additional shares of Stock are issued pursuant to a
stock split or a stock dividend, the number of unexercised Option Shares shall
be increased proportionately with no increase in the total purchase price of
such Option Shares. In the event that the shares of Stock of LEI International
from time to time issued and outstanding are reduced by a combination of shares,
the number of unexercised Option Shares shall be reduced proportionately with no
reduction in the total price of such Option Shares. In the event that LEI
International should transfer assets to another corporation and distribute the
stock of such other corporation without the surrender of Stock of LEI
International, and if such distribution is not taxable as a dividend and no gain
or loss is recognized by reason of Section 355 of the Internal Revenue Code, or
some similar section, then the total purchase price of the unexercised Option
Shares shall be reduced by an amount which bears the same ratio to the total
purchase price then in effect as the market value of the stock distributed in
respect of a share of Stock of LEI International, immediately following the
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distribution, bears to the aggregate of the market value at such time of a share
of Stock of LEI International and the stock distributed in respect thereof. All
such adjustments shall be made by the Board of Directors, whose determination
upon the same shall be final and binding upon Burr. Any fractional shares
resulting from the computations pursuant to this Section 7 shall be eliminated
from this option. No adjustments shall be made for cash dividends or the
issuance to stockholders of rights to subscribe for additional Stock or other
securities.
8. LIMITATIONS OF BURR'S RIGHTS
Neither Burr nor any other person entitled to exercise this
option shall have any of the rights or privileges of a shareholder
of LEI International in respect of any shares issuable upon
exercise of this option unless and until a certificate representing
such shares shall have been issued in the name of Burr or such
person.
9. REPRESENTATIONS OF BURR
Burr represents, agrees and certifies that:
(a) If Burr exercises this option in whole or in part at a time
when there is not in effect under the Securities Act of 1933, as amended
(the "Act"), a registration statement relating to the shares issuable
upon exercise hereof, and available for delivery to Burr a prospectus
meeting the requirements of Section 10(a)(3) of the Act, Burr will
acquire the shares issuable upon such exercise for the purpose of
investment and not with a view to their resale or distribution, and upon
each such exercise of this option, Burr
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will furnish to LEI International a written statement to such effect,
satisfactory in form and substance to LEI International and its counsel;
(b) If and when Burr proposes to offer to sell shares which are
issued to Burr upon exercise of this option at a time when there is not
in effect under the Act a registration statement relating to the resale
of such shares and available for delivery a prospectus meeting the
requirements of Section 10(a)(3) of the Act, or if Burr is a holder of
10% or more of the stock of LEI International, Burr will notify LEI
International prior to any such offering or sale and will abide by the
opinion of counsel of LEI International as to whether and under what
conditions and circumstances, if any, Burr may offer and sell such
shares; and
(c) No shares may be acquired hereunder pursuant to exercise of
the option granted hereby unless and until any then applicable
requirements of the Securities and Exchange Commission, the California
Department of Corporations, other regulatory agencies, including any
other state securities law commissioners having jurisdiction over LEI
International or such issuance, and any exchanges upon which Stock of
LEI International may be listed, shall have been fully satisfied.
Burr understands that the certificate or certificates representing the
shares acquired pursuant to this option may bear a legend referring to the
foregoing matters and any limitations under the Act and state securities laws
with respect to the transfer of such shares, and LEI International may impose
stop
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transfer instructions to implement such limitations, if applicable.
Any person or persons entitled to exercise this option under the
provisions of Section 5 above shall be bound by and obligated under
the provisions of this Section 9 to the same extent as is Burr.
10. NOTICES
Any notice to be given under the terms of this Agreement or
pursuant to the Plan shall be in writing and addressed to the
Secretary of LEI International at its principal office, and to Burr
at his address in the records of LEI International, or at such
other address as either party may hereinafter designate in writing
to the other.
11. LAWS APPLICABLE TO CONSTRUCTION
The interpretation, performance and enforcement of this
Agreement and all rights and obligations of the parties hereunder
shall be governed by the laws of the State of California.
12. NECESSARY ACTS
Each party to this Agreement agrees to perform any further
acts and execute and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.
13. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, beneficiaries,
legal representatives, successors and assigns.
14. SEVERABILITY
Each provision of this Agreement shall be viewed as separate and
divisible, and in the event any provision shall be held to be
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invalid, the remaining provisions shall continue to be in full
force and effect.
15. NO ORAL CHANGES
This instrument contains the entire agreement of the parties. It may be
changed only by an agreement in writing, signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date hereinabove set forth.
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EXHIBIT B
ON-POINT TECHNOLOGY SYSTEMS, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of the 19th day of March,
1998, by and between ON-POINT TECHNOLOGY SYSTEMS, INC., a Nevada corporation
("OPTS"), and Vanguard Strategies, Inc., a Nevada corporation ("VSI").
W I T N E S S E T H:
WHEREAS, the Board of Directors of OPTS has agreed to extend to VSI as
of the date of this Agreement (the "Date of Grant") a non-qualified stock option
to purchase shares of common stock of OPTS ("Stock") in connection with the
termination of an Agreement dated January 9, 1996 between OPTS and VSI relating
to international sales; and
WHEREAS, VSI desires to obtain the option set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows:
1. GRANT OF STOCK OPTION
OPTS grants to VSI the right and option to purchase, on the terms and
conditions hereinafter set forth, all or any part of an aggregate of fifty
thousand (50,000) shares of Stock ("Option Shares") at the price of two and
88/100 dollars ($2.88) per share, exercisable from time to time subject to
provisions of this Agreement prior to the close of business on December 31, 2002
(the "Expiration Date"). The option granted hereby is a non-qualified stock
option.
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2. EXERCISABILITY OF OPTION
Except as otherwise provided in this Agreement, the Option Shares shall
vest and become exercisable as of the March 31 following the end of the Fiscal
Year (January 1 through December 31) during which the Cumulative Gross Revenues
of OPTS (as defined below) from customers in the Territory (as defined below)
exceed $5,000,000. "Gross Revenues" shall be determined each Fiscal Year by the
independent auditors of OPTS (whose decision shall be final and binding on all
parties) in accordance with generally accepted accounting principles based on
purchase orders from customers located in the Territory, adjusted for returns
and receivables more than sixty (60) days in arrears as of the end of each
Fiscal Year. "Cumulative Gross Revenues" shall mean the sum of the Gross
Revenues during the Fiscal Years ending December 31, 1998, 1999, 2000 and 2001.
"Territory" shall mean Brazil, Mexico and any other country in South America or
Central America.
Notwithstanding the foregoing, the Option Shares shall vest
and become exercisable on June 30, 2002 even if the foregoing
condition has not been satisfied by that date.
3. METHOD OF EXERCISE OF OPTION AND PAYMENT OF PURCHASE PRICE
This option shall be exercised by the delivery to the Secretary of OPTS
of a written notice stating the number of Option Shares to be purchased and
accompanied by payment of the purchase price in full in cash (or by certified or
cashiers' check made payable to the order of OPTS). In addition, VSI shall
furnish any written statements required pursuant to Section 9 below.
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4. EFFECT OF TERMINATION OF RELATIONSHIP
This option, to the extent such option shall not have been exercised,
shall terminate and become null and void at such time as Frederick Sandvick
("Sandvick") ceases to be a consultant or employee of OPTS, except that:
(a) In the event Sandvick's engagement or employment with OPTS is
terminated for any reason other than death, VSI may at any time within
three (3) months after such termination exercise this option to the
extent this option was vested and exercisable at the date of such
termination; provided, however, that in no event may this option be
exercised after the Expiration Date; and
(b) In the event of the death of Sandvick while still under
contact with or in the employ of OPTS, then this option, to the extent
this option was vested and exercisable by VSI on the date of Sandvick's
death (or earlier termination), may be exercised within three (3) months
after such death by VSI; provided, however, that in no event may this
option be exercised by anyone, under this Section or otherwise, after
the Expiration Date.
5. NON-ASSIGNABILITY OF OPTION
Except as otherwise provided in this Agreement, this option may be
exercised only by VSI. Except as otherwise provided in this Agreement, this
option shall not be offered, sold, transferred, assigned, pledged, hypothecated,
or otherwise disposed of in any way (whether by operation of law or otherwise)
and shall not be subject to execution, attachment or similar process. Upon any
attempt so to transfer, assign, pledge, hypothecate, or otherwise
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dispose of the option contrary to the provisions hereof, or upon
the levy of any attachment or similar process upon such option, the
option shall immediately become null and void.
6. ADJUSTMENTS AND OTHER RIGHTS
In the event that additional shares of Stock are issued pursuant to a
stock split or a stock dividend, the number of unexercised Option Shares shall
be increased proportionately with no increase in the total purchase price of
such Option Shares. In the event that the shares of Stock of OPTS from time to
time issued and outstanding are reduced by a combination of shares, the number
of unexercised Option Shares shall be reduced proportionately with no reduction
in the total price of such Option Shares. In the event that OPTS should transfer
assets to another corporation and distribute the stock of such other corporation
without the surrender of Stock of OPTS, and if such distribution is not taxable
as a dividend and no gain or loss is recognized by reason of Section 355 of the
Internal Revenue Code, or some similar section, then the total purchase price of
the unexercised Option Shares shall be reduced by an amount which bears the same
ratio to the total purchase price then in effect as the market value of the
stock distributed in respect of a share of Stock of OPTS, immediately following
the distribution, bears to the aggregate of the market value at such time of a
share of Stock of OPTS and the stock distributed in respect thereof. All such
adjustments shall be made by the Board of Directors, whose determination upon
the same shall be final and binding upon VSI. Any fractional shares resulting
from the computations pursuant to this Section 6 shall be eliminated from this
option. No adjustments shall be made for cash
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dividends or the issuance to stockholders of rights to subscribe
for additional Stock or other securities.
7. LIMITATIONS OF VSI'S RIGHTS
Neither VSI nor any other person entitled to exercise this
option shall have any of the rights or privileges of a shareholder
of OPTS in respect of any shares issuable upon exercise of this
option unless and until a certificate representing such shares
shall have been issued in the name of VSI or such person.
8. REGISTRATION OF SHARES
VSI shall have "piggy-back" registration rights with respect to the
Option Shares.
9. REPRESENTATIONS OF VSI
VSI represents, agrees and certifies that:
(a) If VSI exercises this option in whole or in part at a time
when there is not in effect under the Securities Act of 1933, as amended
(the "Act"), a registration statement relating to the shares issuable
upon exercise hereof, and available for delivery to VSI a prospectus
meeting the requirements of Section 10(a)(3) of the Act, VSI will
acquire the shares issuable upon such exercise for the purpose of
investment and not with a view to their resale or distribution, and upon
each such exercise of this option, VSI will furnish to OPTS a written
statement to such effect, satisfactory in form and substance to OPTS and
its counsel;
(b) If and when VSI proposes to offer to sell shares which are
issued to VSI upon exercise of this option at a time when there is not
in effect under the Act a registration statement relating to the resale
of such shares and available
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for delivery a prospectus meeting the requirements of Section 10(a)(3)
of the Act, or if VSI is a holder of 10% or more of the stock of OPTS,
VSI will notify OPTS prior to any such offering or sale and will abide
by the opinion of counsel of OPTS as to whether and under what
conditions and circumstances, if any, VSI may offer and sell such
shares; and
(c) No shares may be acquired hereunder pursuant to exercise of
the option granted hereby unless and until any then applicable
requirements of the Securities and Exchange Commission, the California
Department of Corporations, other regulatory agencies, including any
other state securities law commissioners having jurisdiction over OPTS
or such issuance, and any exchanges upon which Stock of OPTS may be
listed, shall have been fully satisfied.
VSI understands that the certificate or certificates representing the
shares acquired pursuant to this option may bear a legend referring to the
foregoing matters and any limitations under the Act and state securities laws
with respect to the transfer of such shares, and OPTS may impose stop transfer
instructions to implement such limitations, if applicable. Any person or persons
entitled to exercise this option under the provisions of Section 4 above shall
be bound by and obligated under the provisions of this Section 9 to the same
extent as is VSI.
10. NOTICES
Any notice to be given under the terms of this Agreement or pursuant to
the Plan shall be in writing and addressed to the Secretary of OPTS at its
principal office, and to VSI at its
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principal office, or at such other address as either party may
hereinafter designate in writing to the other.
11. LAWS APPLICABLE TO CONSTRUCTION
The interpretation, performance and enforcement of this
Agreement and all rights and obligations of the parties hereunder
shall be governed by the laws of the State of California.
12. NECESSARY ACTS
Each party to this Agreement agrees to perform any further
acts and execute and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.
13. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns.
14. SEVERABILITY
Each provision of this Agreement shall be viewed as separate
and divisible, and in the event any provision shall be held to be
invalid, the remaining provisions shall continue to be in full
force and effect.
15. NO ORAL CHANGES
This instrument contains the entire agreement of the parties. It may be
changed only by an agreement in writing, signed by both parties.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date hereinabove set forth.
ON-POINT TECHNOLOGY SYSTEMS, INC.
By: ________________________________
VANGUARD STRATEGIES, INC.
By: ________________________________
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EXHIBIT C
ON-POINT TECHNOLOGY SYSTEMS, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made and entered into as of the 19th day of March,
1998, by and between ON-POINT TECHNOLOGY SYSTEMS, INC., a Nevada corporation
("OPTS"), and Robert L. Burr ("Contractor").
W I T N E S S E T H:
WHEREAS, the Board of Directors of OPTS has agreed to extend to
Contractor as of the date of this Agreement (the "Date of Grant") a
non-qualified stock option to purchase shares of common stock of OPTS ("Stock")
as an additional incentive for the performance of future services by Contractor
for OPTS; and
WHEREAS, Contractor desires to obtain the option set forth in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and
covenants made herein and the mutual benefits to be derived
herefrom, the parties hereto agree as follows:
1. GRANT OF STOCK OPTION
OPTS grants to Contractor the right and option to purchase, on the terms
and conditions hereinafter set forth, all or any part of an aggregate of fifty
thousand (50,000) shares of Stock ("Option Shares") at the price of two and
88/100 dollars ($2.88) per share, exercisable from time to time subject to
provisions of this Agreement prior to the close of business on December 31, 2002
(the "Expiration Date"). The option granted hereby is a non-qualified stock
option.
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2. EXERCISABILITY OF OPTION
Except as otherwise provided in this Agreement, the Option Shares shall
vest and become exercisable as of the March 31 following the end of the Fiscal
Year (January 1 through December 31) during which the Cumulative Gross Revenues
of OPTS (as defined below) from customers in the Territory (as defined below)
exceed $5,000,000. "Gross Revenues" shall be determined each Fiscal Year by the
independent auditors of OPTS (whose decision shall be final and binding on all
parties) in accordance with generally accepted accounting principles based on
purchase orders from customers located in the Territory, adjusted for returns
and receivables more than sixty (60) days in arrears as of the end of each
Fiscal Year. "Cumulative Gross Revenues" shall mean the sum of the Gross
Revenues during the Fiscal Years ending December 31, 1998, 1999, 2000 and 2001.
"Territory" shall mean Brazil, Mexico and any other country in South America or
Central America.
Notwithstanding the foregoing, the Option Shares shall vest
and become exercisable on June 30, 2002 even if the foregoing
condition has not been satisfied by that date.
3. METHOD OF EXERCISE OF OPTION AND PAYMENT OF PURCHASE PRICE
This option shall be exercised by the delivery to the Secretary of OPTS
of a written notice stating the number of Option Shares to be purchased and
accompanied by payment of the purchase price in full in cash (or by certified or
cashiers' check made payable to the order of OPTS). In addition, Contractor (or
the person or persons exercising the option if Contractor is deceased) shall
furnish any written statements required pursuant to Section 9 below.
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4. EFFECT OF TERMINATION OF RELATIONSHIP
This option, to the extent such option shall not have been exercised,
shall terminate and become null and void at such time as Contractor ceases to be
a consultant or employee of OPTS, except that:
(a) In the event Contractor's engagement or employment with OPTS
is terminated for any reason other than death, Contractor may at any
time within three (3) months after such termination exercise this option
to the extent this option was vested and exercisable at the date of such
termination; provided, however, that in no event may this option be
exercised after the Expiration Date; and
(b) In the event of the death of Contractor while still under
contact with or in the employ of OPTS, then this option, to the extent
this option was vested and exercisable by Contractor on the date of
Contractor's death (or earlier termination), may be exercised within
three (3) months after such death by the person or persons to whom
Contractor's rights under this option shall pass by will or by the
applicable laws of descent; provided, however, that in no event may this
option be exercised by anyone, under this Section or otherwise, after
the Expiration Date.
5. NON-ASSIGNABILITY OF OPTION; DEATH
During Contractor's lifetime, this option may be exercised only by
Contractor. This option shall not be offered, sold, transferred, assigned,
pledged, hypothecated, or otherwise disposed of in any way (whether by operation
of law or otherwise) except by will or the laws of descent and distribution, and
shall not be
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subject to execution, attachment or similar process. Upon any
attempt so to transfer, assign, pledge, hypothecate, or otherwise
dispose of the option contrary to the provisions hereof, or upon
the levy of any attachment or similar process upon such option, the
option shall immediately become null and void.
6. ADJUSTMENTS AND OTHER RIGHTS
In the event that additional shares of Stock are issued pursuant to a
stock split or a stock dividend, the number of unexercised Option Shares shall
be increased proportionately with no increase in the total purchase price of
such Option Shares. In the event that the shares of Stock of OPTS from time to
time issued and outstanding are reduced by a combination of shares, the number
of unexercised Option Shares shall be reduced proportionately with no reduction
in the total price of such Option Shares. In the event that OPTS should transfer
assets to another corporation and distribute the stock of such other corporation
without the surrender of Stock of OPTS, and if such distribution is not taxable
as a dividend and no gain or loss is recognized by reason of Section 355 of the
Internal Revenue Code, or some similar section, then the total purchase price of
the unexercised Option Shares shall be reduced by an amount which bears the same
ratio to the total purchase price then in effect as the market value of the
stock distributed in respect of a share of Stock of OPTS, immediately following
the distribution, bears to the aggregate of the market value at such time of a
share of Stock of OPTS and the stock distributed in respect thereof. All such
adjustments shall be made by the Board of Directors, whose determination upon
the same shall be final and binding upon Contractor. Any fractional
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shares resulting from the computations pursuant to this Section 6
shall be eliminated from this option. No adjustments shall be made
for cash dividends or the issuance to stockholders of rights to
subscribe for additional Stock or other securities.
7. LIMITATIONS OF CONTRACTOR'S RIGHTS
Neither Contractor nor any other person entitled to exercise
this option shall have any of the rights or privileges of a
shareholder of OPTS in respect of any shares issuable upon exercise
of this option unless and until a certificate representing such
shares shall have been issued in the name of Contractor or such
person.
8. REGISTRATION OF SHARES
Contractor shall have "piggy-back" registration rights with
respect to the Option Shares.
9. REPRESENTATIONS OF CONTRACTOR
Contractor represents, agrees and certifies that:
(a) If Contractor exercises this option in whole or in part at a
time when there is not in effect under the Securities Act of 1933, as
amended (the "Act"), a registration statement relating to the shares
issuable upon exercise hereof, and available for delivery to Contractor
a prospectus meeting the requirements of Section 10(a)(3) of the Act,
Contractor will acquire the shares issuable upon such exercise for the
purpose of investment and not with a view to their resale or
distribution, and upon each such exercise of this option, Contractor
will furnish to OPTS a written statement to such effect, satisfactory in
form and substance to OPTS and its counsel;
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(b) If and when Contractor proposes to offer to sell shares which
are issued to Contractor upon exercise of this option at a time when
there is not in effect under the Act a registration statement relating
to the resale of such shares and available for delivery a prospectus
meeting the requirements of Section 10(a)(3) of the Act, or if
Contractor is a holder of 10% or more of the stock of OPTS, Contractor
will notify OPTS prior to any such offering or sale and will abide by
the opinion of counsel of OPTS as to whether and under what conditions
and circumstances, if any, Contractor may offer and sell such shares;
and
(c) No shares may be acquired hereunder pursuant to exercise of
the option granted hereby unless and until any then applicable
requirements of the Securities and Exchange Commission, the California
Department of Corporations, other regulatory agencies, including any
other state securities law commissioners having jurisdiction over OPTS
or such issuance, and any exchanges upon which Stock of OPTS may be
listed, shall have been fully satisfied.
Contractor understands that the certificate or certificates representing
the shares acquired pursuant to this option may bear a legend referring to the
foregoing matters and any limitations under the Act and state securities laws
with respect to the transfer of such shares, and OPTS may impose stop transfer
instructions to implement such limitations, if applicable. Any person or persons
entitled to exercise this option under the provisions of Section 4 above shall
be bound by and obligated under
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the provisions of this Section 9 to the same extent as is
Contractor.
10. NOTICES
Any notice to be given under the terms of this Agreement or
pursuant to the Plan shall be in writing and addressed to the
Secretary of OPTS at its principal office, and to Contractor at his
address in the records of OPTS, or at such other address as either
party may hereinafter designate in writing to the other.
11. LAWS APPLICABLE TO CONSTRUCTION
The interpretation, performance and enforcement of this
Agreement and all rights and obligations of the parties hereunder
shall be governed by the laws of the State of California.
12. NECESSARY ACTS
Each party to this Agreement agrees to perform any further
acts and execute and deliver any documents that may be reasonably
necessary to carry out the provisions of this Agreement.
13. SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, beneficiaries,
legal representatives, successors and assigns.
14. SEVERABILITY
Each provision of this Agreement shall be viewed as separate and
divisible, and in the event any provision shall be held to be invalid, the
remaining provisions shall continue to be in full force and effect.
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15. NO ORAL CHANGES
This instrument contains the entire agreement of the parties. It may be
changed only by an agreement in writing, signed by both parties.
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date hereinabove set forth.
ON-POINT TECHNOLOGY SYSTEMS, INC.
By: _________________________________
Frederick Sandvick,
Chairman and CEO
-------------------------------------
Robert L. Burr
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