EXHIBIT 10.3
Date: June 9, 1997
Non-Statutory Option Granted
by
TEMPTRONIC CORPORATION
(hereinafter called the "Company")
to
Xxxxxxx Xxxxx
(hereinafter called the "Holder")
WITNESSETH:
For valuable consideration, the receipt of which is hereby acknowledged,
the Company hereby grants to the Holder the following option:
1. Grant of Option. Subject to the terms and conditions hereinafter set
forth, the Holder is hereby given the right and option to purchase from the
Company, at an option price of $.01 per share, an aggregate of 12,500 shares
of the Company's Common Stock, $.01 par value (the "Common Stock"), at the
time and in the manner herein provided. Subject to earlier termination
pursuant to Section 8 hereof, the Holder shall have the right and option to
purchase any or all of such shares
(a) 2,500 of such shares on and after the first anniversary of the
effective date of this option as set forth above (the "Effective
Date"); and
(b) an additional 2,500 of such shares on and after June 9 of each of
the years 1999 through 2002, until the Holder shall have the right
to purchase all of the shares.
This option shall terminate in all respects, and all rights and options to
purchase shares hereunder shall terminate, ten years from the Effective Date.
The right to purchase shares hereunder shall be cumulative.
2. Exercise of Option. Purchase of any shares hereunder shall be made
by delivery to the Company of a written notice of exercise specifying the
address to which the certificates representing such shares are to be mailed,
accompanied by cash, certified check, bank draft or postal or express money
order payable to the order of the Company for an amount equal to the option
price of such shares.
3. Conditions and Limitations. As a condition precedent to any exercise
of this option, the Holder (or if any other individual or individuals are
exercising this option, such individual or individuals) shall deliver to the
Company an investment letter in form and substance satisfactory to the Company
and its counsel which shall contain, among other things (including an
acknowledgment of the rights of first refusal set forth in Section 9 hereof) a
statement in writing: (a) that the option is then being exercised for the
account of the Holder and only with a view to investment in, and not in
connection with or with a view to the disposition of, the shares with respect
to which the option is then being exercised; (b) that the Holder has been
advised that Rule 144 of the Securities and Exchange Commission (the
"Commission"), which permits the resale, subject to various terms and
conditions, of small amounts of "restricted securities" (as therein defined)
after they have been held for two years, does not now apply to the Company
because the Company is not now required to file, and does not file, current
reports under the Securities Exchange Act of 1934 (the "Exchange Act"), nor
is there publicly available information concerning the Company substantially
equivalent to that which would be available if the Company were required to
file such reports; (c) that the Holder understands that there is no assurance
that the Company will ever become a reporting company under the Exchange Act
and that the Company has no obligation to the Holder to do so; (d) that the
Holder and Xxxxxx's representatives have fully investigated the Company and
the business and financial conditions concerning it and have knowledge of the
Company's then current corporate activities and financial condition; (e) if
the Company shall so require, confirming the rights of first refusal and
repurchase option of the Company (if any) set forth herein; and (f) that the
Holder believes that the nature and amount of the shares being purchased are
consistent with Xxxxxx's investment objectives, abilities and resources. The
restriction imposed by the foregoing investment representations shall be
inoperative upon the registration with the Commission of the stock subject to
this option or acquired through the exercise of this option.
The Holder also agrees for a period of up to 180 days from the effective
date of any registration of securities of the Company under the Securities Act
of 1933, as amended (the "Securities Act"), upon request of the Company or
the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any shares issued pursuant to the
exercise of this option, without the prior written consent of the Company and
such underwriters.
4. Delivery of Shares. Within a reasonable time following the receipt
by the Company of the option price for any shares to be purchased hereunder
and the investment letter referred to in Section 3, the Company will deliver
or cause to be delivered to the Holder (or if any other individual or
individuals are exercising this option, to such individual or individuals) at
the address specified pursuant to Section 2 hereof, a certificate or
certificates for the number of shares with respect to which the option is then
being exercised, registered in the name of the Holder (or the name or names of
the individual or individuals exercising the option, either alone or jointly
with another person or persons with rights of survivorship, as the individual
or individuals exercising the option shall prescribe in writing to the
Company); provided, however, that such delivery shall be deemed effected for
all purposes when a stock transfer agent shall have deposited such certificate
or certificates in the United States mail, addressed to the Holder (or such
individual or individuals) at the address so specified; and provided further
that if any law, regulation or order of the Commission or other body having
jurisdiction in the premises shall require the Company or the Holder (or the
individual or individuals exercising this option) to take any action in
connection with the sale of the shares then being purchased, then, subject to
the other provisions of this paragraph, the date on which such sale shall be
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deemed to have occurred and the date for the delivery of the certificates for
such shares shall be extended for the period necessary to take and complete
such action, it being understood that the Company shall have no obligation to
take and complete any such action. It shall be a condition of the Company's
obligation to issue any shares purchased hereunder that the Company's
obligations, if any, to withhold state or federal taxes incurred by the Holder
in connection with such exercise shall have been discharged in full.
5. Adjustments Upon Changes in Capitalization. The existence of this
option shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, without
receiving compensation therefor in money, services or property, then the
number, class, and per share price of shares of stock subject to this option
shall be appropriately adjusted in such a manner as to entitle the Holder to
receive upon exercise of this option, for the same aggregate cash
consideration, the same total number and class of shares that the owner of an
equal number of outstanding shares of Common Stock would own as a result of
the event requiring the adjustment.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services, either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares of obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock then subject to this option.
6. Effect of Certain Transactions. If the Company is a party to a
merger or reorganization with one or more other corporations, whether or not
the Company is the surviving or resulting corporation, or if the Company
consolidates with or into one or more other corporations, or if the Company is
liquidated, or if there is a sale or other disposition of substantially all of
the Company's capital stock or assets to a third party or parties (each
hereinafter referred to as a "Transaction"), in any case while this option
remains outstanding: (a) subject to the provisions of clause (b) below, after
the effective date of such Transaction this option shall remain outstanding
and shall be exercisable in shares of Common Stock or, if applicable, shares
of such stock or other securities, cash or property as the holders of shares
of Common Stock received pursuant to the terms of such Transaction; or (b)
this option may be canceled by the Company's board of directors as of the
effective date of such Transaction, provided that notice of such cancellation
shall be given to the Holder and the Holder shall have the right to exercise
this option in part or in full prior to the effective date of such
Transaction.
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7. Rights of Holder. No person shall, by virtue of the granting of this
option to the Holder, be deemed to be a holder of any shares purchasable under
this option or to be entitled to the rights or privileges of a holder of such
shares unless and until this option has been exercised with respect to such
shares and they have been issued pursuant to that exercise of this option.
The granting of this option shall not impose upon the Company any
obligations to employ or to continue to employ the Holder; and the right of
the Company to terminate the employment of the Holder shall not be diminished
or affected by reason of the fact that this option has been granted to the
Holder.
The Company shall, at all times while any portion of this option is
outstanding: reserve and keep available, out of shares of its authorized and
unissued stock or reacquired shares, a sufficient number of shares of Common
Stock to satisfy the requirements of this option; comply with the terms of
this option promptly upon exercise of the option rights; and pay all fees or
expenses necessarily incurred by the Company in connection with the issuance
and delivery of shares pursuant to the exercise of this option.
8. Transfer and Termination. This option is not transferable by the
Holder otherwise than by will or the laws of descent and distribution. This
option is exercisable, during the Holder's lifetime, only by the Holder.
This option is exercisable, during the Holder's lifetime, only by him or
her, and by him or her only while he or she is an employee of the Company,
except that in the event that such employment terminates for any reason other
than for cause as determined by the Company and other than by reason of death
or retirement in good standing from the employ of the Company by reason of age
or disability under the then established rules of the Company, the Holder
shall have the right to exercise this option within 30 days after the date he
or she ceases to be an employee of the Company (but not later than the
expiration date of this option) with respect to the shares which were
purchasable by him or her by exercise of this option at the time of such
cessation of employment. As used in this paragraph, "cause" shall mean (a)
any material breach by the Holder of any agreement to which the Holder and the
Company are both parties, (b) any act (other than retirement) or omission to
act by the Holder which may have a material and adverse effect on the
Company's business or on the Holder's ability to perform services for the
Company, including, without limitation, the commission of any crime (other
than ordinary traffic violations), or (c) any material misconduct or material
neglect of duties by the Holder in connection with the business or affairs of
the Company or any affiliate of the Company. An employment relationship
between the Company and the Holder shall be deemed to exist, for purposes of
this option, during any period in which the Holder is employed in any capacity
by the Company or any subsidiary of the Company.
In the event that the Holder retires in good standing from employment by
the Company by reason of age or disability under the then established rules of
the Company, the Holder shall have the right to exercise this option at any
time within 90 days after his or her retirement (but not after the termination
date of this option) with respect to the shares which were purchasable by the
Holder at the date of such retirement.
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In the event of the death of the Holder while he or she has the right to
exercise this option, his or her executors, administrators, heirs or legatees,
as the case may be, shall have the right to exercise this option at any time
within 180 days after his or her death (but not after the termination date of
this option) with respect to the shares which were purchasable by the Holder
as of the date of his or her death.
9. Company Purchase Rights. During the term of this option and
thereafter, no shares purchased upon exercise of this option (or obtained by
way of stock dividend, stock split or other distribution with respect to such
shares) shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, by operation of law or otherwise (collectively
"transferred") to any person at any time or times whatsoever, except as
specifically provided in this Section 9.
(a) Right of First Refusal. If at any time the Holder shall receive
a bona fide offer (an "Offer") in writing acceptable to him to purchase any
or all of his shares, the Holder shall give written notice to the Company of
the terms of the Offer, including the name of the offeror, the price and the
terms of payment. Thereupon, the Company shall have the right and option (the
"Buy-back Option") for 60 days after such notice is given to purchase not
less than all the shares so offered, at a price (the "Buyback Price") which
shall be the lower of (i) the current fair market value of the Common Stock,
as determined by an independent appraiser within one year prior or 45 days
subsequent to the date of the Offer, and (ii) the price stated in the Offer.
The exercise by the Company of its right to purchase the shares upon
the terms of the Offer must be made by notice to the Holder prior to the
expiration of the applicable period referred to above. Such notice shall set
forth a time and place of closing no later than 30 days after the date of such
notice. At such closing, the Holder shall deliver the stock certificate or
certificates representing the shares, duly endorsed for transfer; and upon
such delivery the Company shall pay the Buyback Price to the Holder in cash or
by check.
In the event that the Company does not elect to purchase the Holder's
shares as herein provided, then the Holder may sell, at any time within 30
days of the expiration of the option period provided herein, the number of
shares specified in the Offer to the person who made the Offer and pursuant to
the terms of the Offer. In the event that the Holder does not sell the shares
pursuant to the Offer within such 30-day period, the shares shall be subject
to the terms, provisions and restrictions provided for in this Section as if
the Holder had never submitted the sale notice to the Company as aforesaid.
(b) Repurchase Option. Upon termination of the Holder's employment
with the Company at any time, by either the Company or the optionee and for
any reason whatsoever including death or disability, the Company shall have
the option to repurchase (the "Repurchase Option") any or all of the
Holder's shares at the current fair market value of the Common Stock, as
determined by an independent appraiser within one year prior or 45 days
subsequent to the date of termination of the Holder's employment (the
"Repurchase Price"). The Company shall have the right to exercise the
Repurchase Option for the Holder's shares at any time within 90 days after the
termination of the Holder's employment.
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In the event the Company shall be entitled to and shall elect to
exercise the Repurchase Option, it shall give to the Holder a written notice
specifying the number of shares which the Company elects to purchase and
specifying a date for closing hereunder which date shall be not more than 30
calendar days after the giving of such notice. At such closing, the Holder
shall deliver the stock certificate or certificates representing the shares,
duly endorsed for transfer; and upon such delivery the Company shall pay the
Repurchase Price to the Holder in cash or by check.
For purposes of the Repurchase Option and the Buyback Option, the
term "shares" shall mean any and all new, substituted or additional
securities or other property issued to the Holder, by reason of his ownership
of Common Stock, in connection with any stock dividend, liquidating dividend,
stock split or other change in the character or amount of any of the
outstanding securities of the Company, or any consolidation, merger or sale of
all, or substantially all, of the assets of the Company. The Repurchase
Option and Buyback Option shall terminate on the effective date of a
registration statement under the Securities Act of 1933, as amended, pursuant
to which securities of the Company with an aggregate sale price in excess of
$1,000,000 are sold to the public.
(c) Legends. Any certificate representing shares of stock subject
to the provisions of this Section 9 may have endorsed thereon one or more
legends, substantially as follows:
(i) "Any disposition of any interest in the securities represented
by this certificate is subject to restrictions, and the
securities represented by this certificate are subject to
certain options, contained in a certain agreement between the
record holder hereof and the Company, a copy of which will be
mailed to any holder of this certificate without charge upon
receipt by the Company of a written request therefor."
(ii) "The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any state and may not be pledged,
hypothecated, sold or otherwise transferred except upon such
registration or upon receipt by the Company of an opinion of
counsel satisfactory to the Company, in form and substance
satisfactory to the Company, that such registration is not
required."
10. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company and delivered at the office of
the Company, 00 Xxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, attention of the
President, or such other address as the Company may hereafter designate.
Any notice to be given to the Holder hereunder shall be deemed sufficient
if addressed to and delivered in person to the Holder at his address furnished
to the Company or when deposited in the mail, postage prepaid, addressed to
the Holder at such address.
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11. Appraisal of Shares. Wherever in this option provisions are made
for a determination of the fair market value of the Common Stock by an
independent appraiser, such requirement shall be satisfied by an appraisal
effected by the independent appraiser acting under the provisions of the
Company's Equity Participation Plan.
12. Governmental and Other Regulations. This option is subject to all
laws, regulations and orders of any governmental authority which may be
applicable thereto and, notwithstanding any of the provisions hereof, the
Holder agrees that he will not exercise the option granted hereby nor will the
Company be obligated to issue any shares of stock hereunder if the exercise
thereof or the issuance of such shares, as the case may be, would constitute a
violation by the Holder or the Company of any such law, regulation or order or
any provision thereof. Without limiting the generality of the foregoing, the
Company shall not be obligated to issue any such shares if in the Company's
sole judgment to do so would cause the Company or such issue not to be in
compliance with the requirements of Rule 504 promulgated under the Securities
Act of 1933, as amended. The Company shall be obligated to use reasonable
efforts to cause the exercise of this option or the issuance of shares
pursuant hereto to comply with any such law, regulation, order or provision.
In the event that the Company has failed, after using its reasonable efforts
for a period of one year, to cause compliance with any such law, regulation,
order or provision to be effected, the Company shall pay the Holder an amount
in cash equal to the fair market value (as determined by an independent
appraiser) of the shares then purchasable hereunder.
13. Government Law and Interpretation. This option shall be governed
by, and construed and enforced in accordance with, the substantive laws of The
Commonwealth of Massachusetts. The Holder hereby agrees that all decisions
under and interpretations of the Plan by the Company's board of directors
shall be final, binding and conclusive upon the Holder and his heirs and legal
representatives.
IN WITNESS WHEREOF, the Company has caused this option to be executed in
its name and on its behalf as of the date first above written.
TEMPTRONIC CORPORATION
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Its President
Accepted and Agreed to:
/s/ Xxxxxxx X. Xxxxx
--------------------------
Holder
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