STOCK OPTION AGREEMENT
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AGREEMENT made this 27th day of August, 1996, by and among Elcom
Technologies Corporation, a corporation organized under the laws of the
Commonwealth of Pennsylvania (hereinafter referred to as "ELCOM"), and Xxxx Xxxx
Xxxxxx, an individual Director of ELCOM (hereinafter referred to as "DIRECTOR").
BACKGROUND
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WHEREAS; ELCOM's corporate charter currently permits ELCOM to issue up
to Twenty Million (20,000,000) shares of common stock; and
WHEREAS, as of the execution of this Agreement, ELCOM's total issued,
and outstanding shares of common stock is approximately Thirteen Million
(13,000,000) shares.
WHEREAS, ELCOM desires to grant to DIRECTOR an option to purchase twenty
five thousand (25,000) shares of ELCOM Technologies Corporation's common stock.
NOW, THEREFORE, in consideration of the mutual promises herein and other
valuable considerations, ELCOM and DIRECTOR agrees as follows:
1. Prior Agreements. DIRECTOR and ELCOM have previously entered into the
following Agreement concerning Stock Options
None
1.1 Upon execution of this Agreement, all Stock Options granted under any
prior Agreement are hereby cancelled in full and all rights, duties and
obligations of the Parties thereto are hereby declared null and void.
2. Grant of Options. Subject to all of the terms and conditions of this
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Agreement, ELCOM hereby grants to DIRECTOR options to purchase a total of twenty
five thousand (25,000) Shares of ELCOM's common stock at the price of fifty
cents ($0.50) per share in accordance with the following schedule:
Number of Shares Date Exercisable Expiration Date
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5,000 July 24, 1996 December 31, 2002
5,000 July 24, 1997 December 31, 2002
5,000 July 24, 1998 December 31, 2002
5,000 July 24, 1999 December 31, 2002
5,000 July 24, 2000 December 31, 2002
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Any Options not exercised by the Expiration Date listed above shall be
terminated in full for all purposes whatsoever.
2.1 Sale of Company. In the event that a controlling interest (over 50%) of
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ELCOM is sold to a third party, other then the Public markets, DIRECTOR may
exercise one hundred percent (100%) of all options granted under Section 2
herein. DIRECTOR must exercise said options within sixty (60) days of
notification of the acquisition of a controlling interest by a third party. Any
Options not exercised by DIRECTOR within this sixty (60) day period will
terminate in full upon expiration of said sixty (60) day period.
3. Termination of Employment. In the event that DIRECTOR terminates
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employment with ELCOM for any reason whatsoever, including death or disability,
all Options to purchase ELCOM common stock granted under this Agreement shall
terminate in full and be declared null and void for all purposes whatsoever,
sixty (60) days subsequent to the date of DIRECTOR's last day of active
employment with ELCOM. DIRECTOR shall receive no further vesting of Options
under Section 2 herein, after DIRECTOR's last day of active employment with
ELCOM.
4. Registration of Options. In the event that ELCOM makes an initial public
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offering (the "IPO") of its common stock pursuant to rules established by the
United States Securities and Exchange Commission and the NASDAQ stock exchange,
the options granted in Section 2 of this Agreement shall be registered with the
Securities and Exchange Commission pursuant to the following schedule:
Six (6) months after completion of the IPO.........25%(twenty five percent)
Eighteen (18) months after completion of the IPO...25%(twenty five percent)
Thirty (30) months after completion of the IPO.....25%(twenty five percent)
Forty two (42) months after completion of the IPO..25%(twenty five percent)
5. Restrictions and Regulations. DIRECTOR agrees that any Shares of ELCOM's
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common stock purchased under this Stock Option Agreement will be subject to the
restrictions and regulations outlined in this Agreement and that these SHARES
may be subject to further restrictions and regulations. Said restrictions and
regulations may be imposed at any time by ELCOM at the sole discretion of ELCOM
and without the approval of DIRECTOR.
5.1 In addition to the aforementioned restrictions, DIRECTOR agrees that any
Shares purchased by DIRECTOR pursuant to this Agreement, shall be subject to all
of the restrictions, regulations and non-dilution provisions of the ELCOM
Private Placement Memorandum dated, July 12, 1996.
6. Exercise of Option. DIRECTOR may exercise any Options earned in accor-
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dance with Section 2, herein, in any number that DIRECTOR elects.
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7. Adjustment of Option Shares. Prior to any public offering of ELCOM shares,
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if the outstanding common shares of Elcom Technologies Corporation, are changed
into or exchanged for a different number or kind of shares or other securities
of Elcom Technologies Corporation or of another corporation, whether through
reorganization, share split-up, combination of shares,merger or consolidation,
then these shares shall be substituted for each common share of Elcom
Technologies Corporation then subject to this Stock Option Agreement. The number
and kinds of shares or other securities into which each such ELCOM share is so
changed or for which each ELCOM share is exchanged shall be at the sole
discretion of ELCOM.
8. Time for Payment for Shares. The option price of the Shares to be
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purchased pursuant to the exercise of Options under this Agreement shall be paid
in full at the time of the exercise of the options.
9. Method of Exercising Option. DIRECTOR shall provide ELCOM with at least
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five (5) business days prior written notice in order to exercise any options
under this Agreement. DIRECTOR shall comply with all procedures established by
ELCOM from time to time concerning exercising any options under this Agreement.
10. Modification. This Agreement shall be effective as of the date hereof and,
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unless sooner terminated under the provisions of this Agreement, shall remain in
effect until December 31, 2002. No modification or amendment of this Agreement
shall be effective unless in writing and signed by the parties hereto.
11. Notices. All notices or other communications required or permitted to be
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given under the terms of this Agreement shall be in writing, delivered
personally, or sent via certified mail, postage prepaid, return receipt
requested.
12. Entire Agreement. This Agreement constitutes the entire agreement between
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the parties hereto and supersedes all prior negotiations, understandings and
agreements of any nature with respect to the subject matter hereto. No
amendment, waiver or discharge of any of the provisions of this Agreement shall
be effective against any part, unless that party shall have consented thereto in
writing.
13. Binding Effect. This Agreement shall be binding upon execution by ELCOM
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and inure to the benefit of the parties hereto and their respective heirs,
executors, administrators, successors, and assigns.
14. Governing Law. This Agreement shall be constured, interpreted and
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enforced in accordance with the laws of the Commonwealth of Pennsylvania.
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IN WITNESS WHEREOF, ELCOM and DIRECTOR have set their hands and seals
hereto the day and year first above written.
ATTEST: Elcom Technologies Corporation
/s/ Xxxxxx X. Xxxxx BY: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxxx, Secretary Xxxxxx X. Xxxx, President
/s/ Xxxx Xxxx Xxxxxx
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XXXX XXXX SEEDOR
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