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EXHIBIT 10(c)
No.4-015
THE OPTION TO PURCHASE SHARES OF THE COMMON STOCK OF TECHNOLOGY GUARDIAN, INC.,
REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE ACT. NEITHER THE OPTIONS NOR THE UNDERLYING SHARES MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF SAID CORPORATION AND SUCH FURTHER
RESTRICTIONS AS THE BOARD OF DIRECTORS MAY DETERMINE.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT effective as of this 1st day of September, 1998,
between Technology Guardian, Inc., a California corporation (the "Corporation"),
and Xxxxxxx Xxxxxxxxx (the "Recipient").
WHEREAS, the Corporation, by action of the Board of Directors on July
28, 1998, has authorized the granting of stock options to purchase 150,000
shares of this Corporation's common stock, $.001 par value ("Common Stock"), to
Xxxxxxx Sarpaliusat an exercise price of $ 2.00 per share.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the Corporation and the Optionee agree
as follows:
1. Grant of Option. The Corporation hereby grants to Xxxxxxx
Xxxxxxxxx an option to purchase (the "Option") an aggregate of
150,000 shares of the Corporation's common stock for a purchase
price of $ 2.00 per share (the "Option Price").
2. Vesting of Option. This option shall be immediately fully vested
from the Date of Grant.
3. Exercise of Option. This Option may be exercised in whole or in
part at any time during the term of the Option, provided,
however, no portion of this Option shall be exercisable after
the expiration of the term thereof.
The Option may be exercised, as provided in this Paragraph 3, by
notice and payment to the Corporation as provided in Paragraph 5
hereof.
4. Conversion. In lieu of exercising this Option as specified in
Paragraph 3, the Recipient may from time to time convert this
Option, in whole or in part, into a number of shares determined
by dividing (a) the aggregate Fair Market Value (determined on
the date of exercise) of the shares of the Corporation's Common
Stock issuable upon exercise of this Option (less the number of
shares as to which this Option has been previously exercised)
minus the aggregate Option Price of such shares minus all
amounts which it is required to withhold under federal, state or
local law in connection with the exercise of the Option, by (b)
the Fair Market Value (determined on the date of exercise) of
one share. This is represented mathematically as: {{(FMV per
share) X [(number of share issuable under the Option) - (share
previously issued and converted under the Option)]} - (amount
required to be withheld)} / (FMV per share). For purpose of this
Paragraph 4, "Fair Market Value" shall be the value determined
in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded
on the Nasdaq National Market System or the Nasdaq
SmallCap Market, the Fair Market Value shall be the
closing selling price per share of Common Stock on the
date in question, as such price is reported by the
National Association of Securities Dealers through the
Nasdaq National Market System or any successor system or
the Nasdaq SmallCap Market or any successor market. If
there is no closing selling price for the common stock
on the date in question, then the FMV shall be the
closing selling price on the last preceding date for
which such quotation exists.
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(b) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, the Fair Market Value
shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange
determined by the Board of Directors of the Corporation
to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
(c) If the Common Stock is at the time neither listed nor
admitted to trading on any stock exchange, not traded on
the Nasdaq National Market System nor on the Nasdaq
SmallCap Market, then such Fair Market Value shall be
determined by the Board of Directors of the Corporation
after taking into account such factors as the Board of
Directors of the Corporation shall deem appropriate.
5. Manner of Exercise.
(a) During the lifetime of the Recipient, only he may
exercise the Option or any portion thereof. After the
death of the Recipient, any exercisable portion of the
Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the
Recipient's personal representative or by any person
empowered to do so under the Recipient's will or under
the then applicable laws of descent and distribution.
(b) The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the
Secretary's office of all of the following prior to the
time when such exercisable Option or portion thereof
becomes unexercisable:
(i) Notice in writing signed by the Recipient, or such
other person then entitled to exercise the Option or
portion thereof, stating that the Option or portion
thereof is thereby exercised, such notice complying with
all applicable rules established by the Corporation; and
(ii) (a) Full payment (in cash or by check) for the
shares with respect to which such Option or
portion thereof is exercised; or
(b) With the consent of the Corporation, shares
of the Company's Common Stock owned by the
Recipient duly endorsed for transfer to the
Company with a Fair Market Value on the date of
delivery equal to the aggregate purchase price
of the shares with respect to which such Option
or portion thereof is exercised.
6. Term of Option. The term of the Option will be through August
24, 2003, subject to Paragraphs 8 and 9 as provided in this
Agreement.
The Recipient of the Option will not have any rights to
dividends or any other rights of a shareholder with respect to
any shares of Common Stock subject to the Option until such
shares shall have been purchased through the exercise of the
Option and has been evidenced on the stock transfer records of
the Corporation maintained by the Corporation's transfer agent.
7. Performance Restrictions. The Recipient of this Option will not
have the right to exercise this Option until confirmation by the
Board of Directors that the following performance goals have
been completed:
NET SALES OF 1,000 UNITS SOLD BY THE EAST COAST OFFICE IN THE 12
MONTH PERIOD BEGINNING MARCH 1, 1999. HOWEVER, IF NET SALES OF
1,000 UNITS HAVE BEEN ACHIEVED BY AUGUST 31, 1999, THEN THE
NUMBER OF SHARES SUBJECT TO THIS OPTION SHALL BE INCREASED BY
50,000 SHARES. SALES SHALL BE DEEMED COMPLETED DURING THE
FOREGOING PERIODS IF A CONTACT LEADING TO A SALE HAS BEEN MADE
WITH A CUSTOMER DURING THE RELEVANT TIME PERIOD, AND THE SALE IS
COMPLETED WITHIN SIX MONTHS AFTER THE END OF THE RELEVANT TIME
PERIOD. THE RECIPIENT SHALL BE ENTITLED TO THE RIGHTS DESCRIBED
IN SECTION 11(b), SUBJECT TO THE REQUIREMENTS AND LIMITATIONS
OF SECTION 11.
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For purposes of this paragraph, the East Coast Office shall mean
the people working out of the office of the Corporation located
in the Washington, D.C., metropolitan area as of the date of
this Agreement, and those who subsequently work in at such
office as approved by the Corporation as part of the East Coast
Office. The East Coast Office shall also include those VARs
recruited by and working under the direction of the East Coast
Office.
For purposes of this paragraph, a "unit" shall consist of a
server and associated hardware and the Corporation's software
that allows high-speed access to the Internet, together with a
service contract of at least two years duration. For purposes of
definition of "unit" in this paragraph, a server and/or
associated hardware may be furnished by the customer in lieu of
a server and associated hardware furnished by the Corporation.
A sale of a unit shall be deemed to occur or at such time as a
sale is recognized by the Corporation in accordance with
generally accepted accounting principles. Units which are
returned to the Corporation shall be deducted from the number of
Units sold. The number of Units sold less the number of Units
returned shall be the net Units sold.
8. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated
in any way (whether by operation of law or otherwise) (1)
without the consent of the Corporation, and (2) such transfer is
not in violation of the Securities Act of 1933, the Corporate
Securities Laws of the State of California, or the securities
laws of any state. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt
to make any such levy of execution, attachment or other process
not in accordance with the foregoing sentence shall cause the
Option to terminate immediately upon the happening of any such
event, and the Recipient shall lose all rights under this
agreement, provided, however, that any such termination of the
Option under the foregoing provisions of this Paragraph 6, will
not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
9. Death, Disability or Retirement of Recipient. The Recipient's
rights to exercise this Option upon the death, disability or
retirement of the Recipient are set forth as follows:
(a) If the Recipient ceases to be in Service to the
Corporation for a reason other than permanent disability
or death, the Recipient must, within (2) months after
the date of termination of such Service, but in no event
after the Option's stated expiration date, exercise some
or all of the Options that the Recipient was entitled to
exercise on the date the Recipient's Service terminated.
All options which have not vested in accordance with
Paragraph 2 will thereafter be void for all purposes. If
the Recipient ceases to be in Service to the Corporation
by reason of permanent disability within the meaning of
section 22(e)(3) of the Internal Revenue Code (as
determined by the Board of Directors), the Recipient
will have two (2) months after the date of termination
of Service, but in no event after the stated expiration
date of the Recipient's Options, to exercise Options
that the Recipient was entitled to exercise on the date
the Recipient's Service terminated as a result of the
disability.
(b) If a Recipient dies while in the Corporation's Service,
any Options that the Recipient was entitled to exercise
on the date of death will be exercisable within the
six-month period following the date of issuance of
letters testamentary or letters of administration of a
deceased Recipient, in the case of the Recipient's death
during his Service to the Corporation's Board, but not
later than one year after the Recipient's death or until
the stated expiration date of the Recipient's Option,
whichever occurs first, by the person or persons
("successors") to whom the Recipient's rights pass under
a will or by the laws of descent and distribution. As
soon as practicable after receipt by the Corporation of
such notice and of payment in full of the Option Price,
a certificate or certificates representing the Optioned
Shares shall be registered in the name or names
specified by the successors in the written notice of
exercise and shall be delivered to the successors.
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(c) The term "Service" means service as an employee, as an
independent contractor, or an employee of an independent
contractor.
10. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as
amended (the "Securities Act") and the Corporation has no
obligation to register under the Securities Act the Option or
any of the shares of Common Stock subject to and issuable upon
the exercise of the Option. The Recipient represents that the
Option is being acquired by him for investment and acknowledges
that all certificates for the shares issued upon exercise of the
Option will bear the following legend unless such shares are
registered under the Securities Act prior to their issuance:
The shares of Common Stock evidenced by this
certificate have been issued to the registered
owner in reliance upon written representations
that these shares have been purchased solely for
investment. These shares may not be sold,
transferred or assigned unless in the opinion of
the Corporation and its legal counsel such
sales, transfer or assignment will not be in
violation of the Securities Act of 1933, as
amended, and the rules and regulations
thereunder.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Securities Act and applicable state laws.
11. Effect of Certain Changes.
(a) If there is any change in the number of shares of
outstanding Common Stock through the declaration of
stock dividends, or through a recapitalization resulting
in stock splits or combinations or exchanges of such
shares, the number of shares of Common Stock available
for Options and the number of such shares covered by
outstanding Options, and the exercise price per share of
the outstanding Options, shall be proportionately
adjusted by the Board to reflect any increase or
decrease in the number of issued shares of Common Stock:
provided, however, that any fractional shares resulting
from such adjustment shall be eliminated.
(b) In the event of the proposed dissolution or liquidation
of the Corporation, or any corporate separation or
division, including, but not limited to, split-up,
split-off or spin-off, or a merger or consolidation of
the Corporation with another corporation, or any sale or
transfer by the Corporation of all or substantially all
its assets or any tender offer or exchange offer for or
the acquisition, directly or indirectly, by any person
or group for more than 50% of the then outstanding
voting securities of the Corporation, the Recipient
shall have the right to exercise such Option (at its
then current Option Price) solely for the kind and
amount of shares of stock and other securities,
property, cash or any combination thereof receivable
upon such dissolution, liquidation, corporate separation
or division, merger or consolidation, sale or transfer
of assets or tender offer or exchange offer, by a
Recipient of the number of shares of Common Stock for
which such Option might have been exercised immediately
prior to such dissolution, liquidation, corporate
separation or division, or merger or consolidation:
sales or transfer of assets or tender offer or exchange
offer, or in the alternative the Board may provide that
each Option granted herein shall terminate as of a date
fixed by the Board: provided, however, that not less
than 30 day's written notice of the date so fixed shall
be given to the Recipient, who shall have the right,
during the period of 30 days preceding such termination,
to exercise the Option.
(c) Paragraph (b) of this Section 11 shall not apply to a
merger or consolidation in which the Corporation is the
surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities of any
other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the
Corporation in which the Corporation is the surviving
corporation and in which there is a reclassification or
change (including a change which results in the right to
receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par
value to par value, or as a result of a subdivision or
combination, but including any change in such shares
into two or more classes or series of shares), the Board
may provide that the Recipient shall have the right to
exercise such Option solely for the kind and amount of
shares of stock and other securities (including those of
any direct or indirect Parent of the
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Corporation), property, cash or any combination thereof
receivable upon such reclassification, change
consolidation or merger by the Recipient of the number
of shares of Common Stock for which Option might have
been exercised.
(d) If there is a change in the Common Stock of the
Corporation as presently constituted, which is limited
to a change of all of its authorized shares with par
value into the same number of shares with a different
par value or without par value, the shares resulting
from any such change shall be deemed to be the Common
Stock within the meaning of this Stock Option Agreement.
(e) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments
shall be made by the Board.
(f) Except as expressly provided in this Section 11, the
Recipient 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 in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger, or
consolidation or split-up, split-off, or spin-off of
assets or stock of another corporation; and any issue by
the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any
class, shall not effect, and no adjustment by reason
thereof shall be made with respect to, the number or
price of shares of Common Stock subject to this Option.
The grant of this Option shall not affect in any way the
right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structures or to merge or
consolidate or to dissolve, liquidate or sell or
transfer all or any part of its business or assets.
12. Notices. Each notice relating to this Agreement will be
in writing and delivered in person or by certified mail
to the proper address. Notices to the Corporation shall
be addressed to the Corporation c/o President,
Technology Guardian, Inc., 00000 Xxxxxx Xxxx., Xxxx X,
Xxxxxxxx, Xxxxxx, XX 00000. Notices to the Recipient or
other person or persons then entitled to exercise the
Option shall be addressed to the Recipient or such other
person or persons at the Recipient's address specified
below. Anyone to whom a notice may be given under this
Agreement may designate a new address by notice to that
effect given pursuant to this Paragraph 12.
13. Approval of Consent. The exercise of the Option and the
issuance and delivery of shares of Common Stock pursuant
thereto shall be subject to approval by the
Corporation's counsel of all legal matters in connection
therewith, including compliance with the requirements of
the Securities Act, the Securities Exchange Act of 1934,
as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any
national securities exchange or association upon which
the Common Stock than may be listed.
14. Benefits of Agreement. This Agreement will inure to the
benefit of and be binding upon each successor and assign
of the Corporation. All obligations imposed upon the
Recipient and all rights granted to the Corporation
under this Agreement will be binding upon the
Recipient's heirs, legal representatives and successors.
15. Governmental and Other Regulations. The exercise of the
Option and the Corporation's obligation to sell and
deliver shares upon the exercise of rights to purchase
shares is subject to all applicable federal and state
laws, rules and regulations, and to such approvals by
the regulatory or governmental agency which, in the
opinion of counsel for the Corporation, may be required.
16. Conditions to Exercise. The shares of stock deliverable
upon the exercise of the Option, or any portion thereof,
may be either previously authorized but unissued shares
or issued shares which have then been reacquired by the
Company. Such shares shall be fully paid and
non-assessable. The Company shall not be required to
issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of the
Option or portion thereof prior to fulfillment of all of
the following conditions:
(i) The admission of such shares to listing on all
stock exchanges, if any, on which such class of
stock is then listed;
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(ii) The completion of any registration or other
qualification of such shares under any state or
federal law or under the rulings or regulations
of the Securities and Exchange Commission or any
other governmental regulatory body, which the
Corporation shall, in its absolute discretion,
deem necessary or advisable;
(iii) The obtaining of any approval or other clearance
from any state or federal governmental agency
which the Corporation shall, in its absolute
discretion, determine to be necessary or
advisable;
(iv) The payment to the Company of all amounts which
it is required to withhold under federal, state
or local law in connection with the exercise of
the Option; and
(v) The lapse of such reasonable period of time
following the exercise of the Option as the
Corporation may from time to time establish for
reasons of administrative convenience.
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This Stock Option Agreement is executed in the name and on behalf of the
Corporation by one of its duly authorized officers and by the Recipient all as
of the date first above written.
TECHNOLOGY GUARDIAN, INC.
By
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The undersigned Recipient understands the terms of this Option
Agreement. The undersigned agrees to comply with the terms and conditions of
this Option Agreement.
Date , 1999 Signature:
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Printed Name: Xxxxxxx Xxxxxxxxx
Tax ID # (SSN):
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Address:
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