STOCK OPTION AGREEMENT
EXHIBIT
10.2 - THIS OPTION AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE
NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN
OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER
SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
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BLUEGATE
CORPORATION
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No.
E-06-04
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Date
of Grant:
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August
1, 2006
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THIS
GRANT, dated as of the date of grant first stated above (the "Date of Grant"),
is delivered by Bluegate Corporation (the "Company") to Xxxxxxx X. Xxxxxxx
(the
“Grantee"), who is an employee, consultant or director of the Company or one
of
its subsidiaries (the Company is sometimes referred to herein as the
"Employer").
WHEREAS,
the Board of Directors of the Company (the "Board) approved the Company’s grant
to Grantee the right to purchase shares of the Common Stock of the Company,
par
value $0.001 per share (the "Stock"), in accordance with the terms and
provisions hereof.
NOW,
THEREFORE, the parties hereto, intending to be legally bound hereby, agree
as
follows:
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1.
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Grant
of Option.
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Subject
to the terms and conditions hereinafter set forth, the Company, with the
approval and at the direction of the Board, hereby grants to the Grantee,
as of
the Date of Grant, an option to purchase up to 1,200,000 shares of Stock
at a
price of $0.60 per share. Such option is hereinafter referred to as the "Option"
and the shares of stock purchasable upon exercise of the Option are hereinafter
sometimes referred to as the "Option Shares." The Option Shares to be issued
pursuant to this Stock Option Agreement shall be restricted
securities.
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2.
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Vesting.
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This
Option shall vest according to the schedule below:
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Option
Shares
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Vesting
Date
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600,000
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August
1, 2006
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50,000
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September
1, 2006
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50,000
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October
1, 2006
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50,000
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November
1, 2006
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50,000
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December
1, 2006
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50,000
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January
1, 2007
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50,000
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February
1, 2007
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50,000
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March
1, 2007
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50,000
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April
1, 2007
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50,000
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May
1, 2007
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50,000
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June
1, 2007
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50,000
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July
1, 2007
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50,000
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August
1, 2007
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3.
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Termination
of Option.
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(a) The
Option and all rights hereunder with respect thereto, to the extent such
Option
has vested, shall terminate and become null and void after the expiration
of
five (5) years from the Date of Grant (the "Option Term"). To the extent
that
the Option has not vested in accordance with Section 2 above, then the
non-vested portion of the Option shall terminate and become null and void
upon
the termination of the Grantee as an employee, officer or director of the
Company.
(b) In
the
event of the death of the Grantee, the Option may be exercised by the Grantee's
legal representative(s), but only to the extent that the Option would otherwise
have been exercisable by the Grantee.
(c) In
the
event the Board (or Committee, if any) finds by a majority vote after full
consideration of the facts that Grantee, before or after termination of his
employment with the Company or an Affiliate for any reason (i) committed
or
engaged in fraud, embezzlement, theft, commission of a felony, or proven
dishonesty in the course of his employment by the Company or any subsidiary
or
affiliate of the Company, which conduct damaged the Company or subsidiary
or
affiliate, or disclosed trade secrets of the Company its subsidiary or its
affiliate, or (ii) participated, engaged in or had a material, financial
or
other interest, whether as an employee, officer, director, consultant,
contractor, shareholder, owner, or otherwise, in any commercial endeavor
anywhere which is competitive with the business of the Company or a subsidiary
or Affiliate without the written consent of the Company, the Grantee shall
forfeit all outstanding Options. Clause (ii) shall not be deemed to have
been
violated solely by reason of the Grantee’s ownership of stock or securities of
any publicly owned corporation, if that ownership does not result in effective
control of the corporation.
The
decision of the Board (or Committee, if any) as to the cause of the Grantee’s
discharge, the damage done to the Company or a subsidiary or an affiliate,
and
the extent of the Grantee’s competitive activity shall be final. No decision of
the Board (or Committee, if any) however, shall affect the finality of the
discharge of the Grantee by the Company.
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4.
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Exercise
of Options.
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(a) The
Grantee may exercise the Option with respect to all or any part of the number
of
Option Shares then exercisable hereunder by giving the Secretary of the Company
written notice of intent to exercise. The notice of exercise shall specify
the
number of Option Shares as to which the Option is to be exercised and the
date
of exercise thereof, which date shall be at least five days after the giving
of
such notice unless an earlier time shall have been mutually agreed upon.
Notwithstanding the foregoing, an Option granted under this Agreement may
be
exercised in increments of not less than 10% of the full number of Shares
as to
which it can be exercised. A partial exercise of an Option will not affect
the
Grantee’s right to exercise the Option from time to time in accordance with this
Agreement as to the remaining Shares subject to the Option.
(b) Full
payment (in U.S. dollars) by the Grantee of the option price for the Option
Shares purchased shall be made on or before the exercise date specified in
the
notice of exercise in cash, or certified or cashier's check or money order,
or,
with the prior written consent of the Board, in whole or in part through
the
surrender of previously acquired shares of Stock at their fair market value
on
the exercise date.
On
the
exercise date specified in the Grantee's notice or as soon thereafter as
is
practicable, but not to exceed ten (10) business days, the Company shall
cause
to be delivered to the Grantee, a certificate or certificates for the Option
Shares then being purchased (out of theretofore unissued Stock or reacquired
Stock, as the Company may elect) upon full payment for such Option Shares.
(c) If
the
Grantee fails to pay for any of the Option Shares specified in such notice,
the
Grantee's right to purchase such Option Shares may be terminated by the Company.
The date specified in the Grantee's notice as the date of exercise shall
be
deemed the date of exercise of the Option, provided that payment in full
for the
Option Shares to be purchased upon such exercise shall have been received
by
such date.
(d) Notwithstanding
any of the other provisions hereof, Grantee agrees that he will not exercise
this Option and that the Company will not be obligated to issue any Option
Shares pursuant to this Stock Option Agreement, if the exercise of the Option
or
the issuance of such Option Shares would constitute a violation by the Grantee
or by the Company of any provision of any law or regulation of any governmental
authority or national securities exchanges. Upon the acquisition of any Option
Shares pursuant to the exercise of the Option herein granted, Grantee will
enter
into such written representations, warranties and agreements as the Company
may
reasonably request in order to comply with applicable securities laws with
this
Stock Option Agreement.
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5.
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Piggyback
Registration Rights.
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If
the
Company at any time proposes to register any of its Common Stock under the
Securities Act (other than a registration on Form S-8 or S-4 or any successor
or
similar forms) whether or not for sale for the Company's account, the Company
shall use its best efforts to include in such registration (and any related
qualifications under blue sky laws or other compliance) all the Option Shares
specified in a written request or requests, made by the Grantee and received
by
the Company within 15 days after the Grantee’s receipt of written notice from
the Company regarding the proposed registration, which written request may
specify the inclusion of all or a part of Grantee’s Option Shares.
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6.
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Adjustment
of and Changes in Stock of the
Company.
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In
the
event of a reorganization, recapitalization, change of shares, stock split,
spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger, consolidation, rights offering, or any other change in the
corporate structure or shares of capital stock of the Company, the Board
shall
make such adjustment in the number and kind of shares of Stock subject to
the
Option and in the option price; provided, however, that no such adjustment
shall
give the Grantee any additional benefits under the Option.
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7.
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Fair
Market Value.
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As
used
herein, the "fair market value" of a share of Stock shall be the closing
price
per share of Stock on the PINK SHEETS, OTCBB, NASDAQ, the NYSE, the Amex,
the
composite tape or other recognized market source, as determine by the Board,
on
the applicable date of reference hereunder, or if there is no sale on such
date,
then the closing price on the last previous day on which a sale is
reported.
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8.
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No
Rights of Stockholders.
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Neither
the Grantee nor any personal representative shall be, or shall have any of
the
rights and privileges of, a stockholder of the Company with respect to any
shares of Stock purchasable or issuable upon the exercise of the Option,
in
whole or in part, prior to the date of exercise of the Option.
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9.
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Non-Transferability
of Option.
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During
the Grantee's lifetime, the Option hereunder shall be exercisable only by
the
Grantee or any guardian or legal representative of the Grantee, and the Option
shall not be transferable except, (i) in case of the death of the Grantee,
by
will or the laws of descent and distribution, and (ii) to a child, grandchild
or
stepchild of the Grantee or to a trust or partnership created by the Grantee,
who, in each case, will be subject to all of the provisions hereof, nor shall
the Option be subject to attachment, execution or other similar process.
In the
event of (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate
or otherwise dispose of the Option, except as provided for herein, or (b)
the
levy of any attachment, execution or similar process upon the rights or interest
hereby conferred, the Company may terminate the Option by notice to the Grantee
and it shall thereupon become null and void and of no value to any such
party.
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10.
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Disputes.
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As
a
condition of the granting of this Option, the Grantee and his heirs and
successors agree that any dispute or disagreement which may arise hereunder
shall be determined by the Board (or Committee, if any) in its sole discretion
and judgment, and that any such determination and any interpretation by the
Board (or Committee, if any) of the terms of this Option shall be final and
shall be binding and conclusive, for all purposes upon the Company, the Grantee,
his heirs and successors.
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11.
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Notice.
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Any
notice to the Company provided for in this instrument shall be addressed
to it
in care of its Secretary at its executive offices at Bluegate Corporation,
and
any notice to the Grantee shall be addressed to the Grantee at the current
address shown on the records of the Company. Any notice shall be deemed to
be
duly given if and when properly addressed and posted by registered or certified
mail, postage prepaid.
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12.
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Governing
Law.
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The
validity, construction, interpretation and effect of this instrument shall
exclusively be governed by and determined in accordance with the law of the
State of Texas, except to the extent preempted by federal law, which shall
to
the extent govern.
IN
WITNESS WHEREOF, the Company has caused its duly authorized officers to execute
and attest to this Stock Option Agreement, and to apply the corporate seal
hereto, and the Grantee has placed his or her signature hereon, effective
as of
the Date of Grant.
Bluegate
Corporation
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By:
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Xxxxxxx
Xxxxxxxxx, Chief Executive Officer
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Grantee:
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Xxxxxxx
X. Xxxxxxx
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