STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT made this day of May, 1997 by SAF T LOK INCORPORATED,
a Florida corporation (the "Company"), in favor of XXXXX X. XXXXXXX (the
"Holder").
Recital:
The Company and the Holder are simultaneously herewith entering into a
Consulting Agreement pursuant to which the Company shall engage the Holder as
its part time chief financial officer (the "Consulting Agreement"). As partial
compensation thereunder the Company agreed to grant the Holder an option to
purchase restricted shares of the Company's common stock.
NOW THEREFORE for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company has agreed, among other things, to
grant to the Holder the Option (as herein defined).
1. Grant. The Company hereby grants to the Holder the right to purchase one
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hundred fifty thousand (150,000) newly-issued shares (the "Shares") of the
Company's common stock, $0.01 par value (the "Common Stock"), exercisable at any
time and from time to time through April 30, 2002 (the "Option").
2. Exercise Price. The exercise price per Share for which all or any of the
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Shares may be purchased pursuant to the terms of the Option is two dollars and
fifty cents ($2.50) (the "Exercise Price").
3. Exercise The Option may be exercised by the Holder so long as he is engaged
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by the Company pursuant to the Consulting Agreement, or within 90 days of
termination if termination occurred without cause. The term "Cause" as used in
this paragraph shall mean: (1) commission of a felony or a charge of theft,
dishonesty, fraud or embezzlement; (2) failure to adhere to Company's reasonable
directives and policies, willful disobedience or insubordination; (3) disclosing
to a competitor or other unauthorized person, proprietary information,
confidences or trade secrets of the Company or any Parent or Subsidiary; (4)
recruitment of Company or any Parent or Subsidiary personnel on behalf of a
competitor or potential competitor of the Company, any Parent or Subsidiary, or
any successor thereof; (5) solicitation of business on behalf of a competitor or
potential competitor of the Company, any Parent or Subsidiary, or any successor
thereof. The option may be exercised as to all or in increments of ten thousand
(10,000) Shares upon delivery of written notice of intent to exercise in the
form attached hereto as Exhibit "A" to the Company at the following address:
00000 X.X. Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxx 00000, or such other address as
the Company shall designate in a written notice to the Holder, together with (1)
a check payable to the Company for the aggregate Exercise Price of the shares so
purchased, or (2) shares of the Company's common stock or cancellation of a
vested portion of the Stock Option, or any combination of the foregoing in an
amount determined by the Company to be equal to the full option price of the
shares of stock being purchased. Upon exercise of the Option as aforesaid, the
Company shall, as promptly as practicable,and in any event within thirty (30)
days thereafter, execute and deliver to the Holder a certificate or certificates
for the total number of whole Shares for which the Option is being exercised.
The Company covenants and agrees that it shall pay when due any and all state
and federal issue taxes which may be payable in respect of the issuance of any
Shares upon exercise of the Option.
4. Repurchase. If the Consulting Agreement is terminated for cause, the
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Company may repurchase the Shares acquired by the Holder hereunder within
ninety (90) days of such termination at a price equal to the average daily
trading price (bid price) of the stock for the five trading days preceding the
date of termination. To exercise its repurchase right, the Company must notify
the Holder in writing of its intent to repurchase, specifying the date and time
at which payment for the Shares of the Holder to be repurchased is to occur and
the number of Shares to be repurchased. The date specified shall be no later
than thirty (30) days after the notification date. Settlement shall take place
on the repurchase at the Company's headquarters. The Holder shall deliver to the
Company at settlement the certificate or certificates, duly endorsed, evidencing
the Shares being repurchased and the Company shall deliver to the Holder a good
check in payment therefor. In the event the Holder does not perform in
accordance with the preceding sentence, the Company may deposit its check into
escrow for the benefit of the Holder, to be held by the escrow agreement until
withdrawn by the Holder upon compliance with the preceding sentence. Upon such
deposit into escrow, the Holder's Shares being repurchased shall be deemed to
have been transferred from the Holder to the Company upon compliance with the
preceding sentence. Upon such deposit into escrow, the Holder's Shares being
repurchased shall be deemed to have been transferred from the Holder to the
Company and the Holder shall have no further rights therein.
5. Covenants and Conditions. The above provisions are subject to the
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following:
(a) Neither the Option nor the Shares have been registered under the
Securities Act of 1933, as amended (the "Securities Act") or any state
securities laws (the "Blue Sky Laws"). The Option has been acquired for
investment purposes and not with a view to distribution or resale and may not be
pledged, hypothecated, sold, made subject to a security interest, or otherwise
transferred without (i) an effective registration statement under the Securities
Act and applicable Blue Sky Laws, or (ii) an opinion of counsel, which opinion
and counsel shall be reasonably satisfactory to the Company and its counsel and
which will not be unreasonably withheld from the Holder. Transfer of the Shares
issued upon the exercise of the Option shall be restricted in the same manner
and to the same extent as the Option and the certificates representing such
Shares shall bear substantially the following legend:
THE SHARES OF COMMON STOCK REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
APPLICABLE STATE SECURITIES LAW AND MAY NOT BE TRANSFERRED UNTIL (I) A
REGISTRATION STATEMENT UNDER THE ACT OR SUCH APPLICABLE STATE SECURITIES LAW
SHALL HAVE BECOME EFFECTIVE WITH REGARD THERETO, OR (II) IN THE OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE ACT OR SUCH
APPLICABLE STATE SECURITIES LAW IS NOT REQUIRED IN CONNECTION WITH THE
PROPOSED TRANSFER.
TRANSFERABILITY IS FURTHER RESTRICTED UNDER THE TERMS OF A STOCK OPTION
AGREEMENT BETWEEN THE COMPANY AND THE OPTIONEE NAMED THEREIN.
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The Holder agrees to execute such other documents and instruments as counsel for
the Company reasonably deems necessary to effect the compliance of the issuance
of the Option and any Shares issued upon exercise of the Option with applicable
federal and state securities laws.
(b) The Company covenants and agrees that all Shares which may be issued
upon exercise of the Option shall, upon issuance and payment therefor, be
legally and validly issued and outstanding, fully paid and nonassessable, free
from all taxes, liens, charges and preemptive rights, if any, with respect
thereto or to the issuance thereof. The Company shall at all times reserve and
keep available for issuance upon the exercise of the Option such number of
authorized but unissued shares of Common Stock as will be sufficient to permit
the exercise in full of the Option.
6. Transfer of Option. The option is exercisable only by the Holder, except
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in the case of Holder's death while under contract to the Company, in which
case, the option is exercisable by Holder's estate's personal representative any
time within six (6) months of Holder's death.
7. Adjustment Upon Changes In Capitalization.
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(a) If all or any portion of the Option shall be exercised subsequent to
any stock split, stock dividend, recapitalization, combination of shares of the
Company, or other similar event occurring after the date hereof, then the Holder
exercising the Option shall receive, for the aggregate price paid upon the
exercise, the aggregate number and class of shares which the Holder would have
received if the Option had been exercised immediately prior to such stock split,
stock dividend, recapitalization, combination of shares, or other similar event.
If any adjustment under this Section 7(a) would create a fractional share of
Common Stock or a right to acquire a fractional share of Common Stock, such
fractional share shall be disregarded and the number of shares subject to the
Option shall be the next higher number of shares, rounding all fractions upward.
Whenever there shall be an adjustment pursuant to this Section 7(a), the Company
shall forthwith notify the Holder of such adjustment, setting forth in
reasonable detail the event requiring the adjustment and the method by which
such adjustment was calculated.
(b) If all or any portion of the Option shall be exercised subsequent to
any merger, consolidation, exchange of shares, separation, reorganization or
liquidation of the Company or other similar event occurring after the date
hereof, as a result of which shares of Common Stock shall be changed into the
same or a different number of shares of the same or another class or classes of
securities of the Company or another entity, then the Holder exercising the
Option shall receive, for the aggregate price paid upon such exercise, the
aggregate number and class of shares which the Holder would have received if the
Option had been exercised immediately prior to such merger, consolidation,
exchange of shares, separation, reorganization or liquidation, or other
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similar event. If any adjustment under this Section 7(b) would create a
fractional share of Common Stock or a right to acquire a fractional share of
Common Stock, such fractional share shall be disregarded and the number of
shares subject to this Option shall be the next higher number of shares,
rounding all fractions upward. Whenever there shall be an adjustment pursuant to
this Section 7(b), the Company shall forthwith notify the Holder of such
adjustment, setting forth in reasonable detail the event requiring the
adjustment and the method by which such adjustment was calculated.
8. Registration Rights.
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(a) In the event the Company proposes to file a registration statement
under the Securities Act which relates to a current offering of securities of
the Company (except in connection with an offering on Form S-8 or S-4 or any
other inappropriate form), such registration statement (and the prospectus
included therein) shall also, at the written request to the Company by Holder,
relate to and meet the requirements of the Securities Act with respect to any
public offering of the Shares so as to permit the public sale of all or some
portion of the Shares. The Company shall give written notice to the Holder of
its intention to file a registration statement under the Securities Act relating
to a current offering of securities of the Company not less than fifteen (15)
days prior to the filing of such registration statement. Any written request of
the Holder to include the Shares held by the Holder shall be given to the
Company not less than five (5) days prior to the date specified in the notice as
the date on which such registration statement is intended to be filed with the
Securities and Exchange Commission. Neither the delivery or such notice by the
Company nor of such request by the Holder shall obligate the Company to file
such registration statement and notwithstanding the filing of such registration
statement, the Company may, at any time prior to the effective date thereof,
determine to withdraw such registration statement and not offer the securities
intended to be offered by the Company to which the registration statement
relate, without liability to the Holder on account thereof.
(b) In the event the Holder elects to include the Shares in a registration
statement in accordance with subsection (a) of this Section 8, the Company
shall:
(i) Supply to the Holder a reasonable number of copies of the
preliminary, final and other prospectus in conformity with the requirements of
the Securities Act and the rules and regulations promulgated thereunder and such
other documents as the Holder shall reasonable request;
(ii) Use its best efforts to cause the Shares to be registered,
qualified or exempted under the securities laws of
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such reasonable number and selection of states selected by the Holder and do any
and all other acts and things which may be necessary or advisable to enable the
Holder to consummate the proposed sale or other disposition of the Shares in
such states; provided, however, that in no event shall the Company be obligated,
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in connection therewith, to qualify to do business or to file a general consent
to service of process in any jurisdiction where it shall not then be qualified;
(iii) Keep effective for a period of ninety (90) days after the initial
effectiveness thereof all such registration statements, and cooperate in taking
such action as may be necessary to keep effective such other registrations,
qualifications or exemptions, and do any and all other acts and things for such
period, not to exceed such ninety (90) days, as may be necessary to permit the
public sale or other disposition of such Shares by the Holder; and
(iv) Pay all costs of the registration statement and the public
offering and such other registrations, qualifications or exemptions, exclusive
of (A) brokers or sales commissions on the sale of the Shares; and (B) any legal
fees incurred by the Holder in connection with the registration statement or
public offering.
9. Notices. The Company shall provide the Holder with a copy of any notice
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that the Company is required to provide those persons holding shares of the
Common Stock on the same date such persons receive such notice.
10. Loss, Destruction, Etc. of Agreement. Upon receipt of evidence
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satisfactory to the Company of the loss, theft, mutilation or destruction of
this Agreement, and in the case of any such loss, theft or destruction, upon
delivery of a bond of indemnity in such form and amount as shall be reasonably
satisfactory to the Company, or in the event of such mutilation, upon surrender
and cancellation of the Agreement, the Company shall make and deliver a new
Agreement of like tenor in lieu of such lost, stolen, destroyed or mutilated
Agreement. Any Agreement executed and delivered under the provisions of this
Section 10 in lieu of any Agreement alleged to be lost, destroyed or stolen, or
in lieu of any mutilated Agreement, shall constitute an original contractual
obligation on the part of the Company.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the Company and the Holder have executed this Stock Option
Agreement as of the date first above written.
SAF T LOK INCORPORATED
By:
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Xxxx X. Xxxxxxx, President
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XXXXX X. XXXXXXX
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Exhibit "A" to
Stock Option Agreement dated May , 1997
NOTICE OF EXERCISE OF OPTION TO PURCHASE
SHARES OF COMMON STOCK
OF SAF T LOK INCORPORATED
The undersigned does by this notice request that Saf T Lok Incorporated, a
Florida corporation (the "Company"), issue to the undersigned that number of
shares of Common Stock specified below (the "Shares") at the price per Share
specified below pursuant to the exercise of the undersigned's option under the
Stock Option Agreement (the "Agreement") dated May , 1997 between the
undersigned and the Company.
Simultaneously herewith, the undersigned delivers to the Company the purchase
price for the Shares (i.e., that amount which is obtained by multiplying
the number of Shares for which the Option is being exercised by the price
specified), by good check.
The undersigned hereby represents and warrants that the undersigned is acquiring
the Shares for the undersigned's own account and not on behalf of any other
person and without any present view to making a public offering or distribution
of same and without any present intention of selling game at any particular time
or at any particular price or upon the occurrence of any particular event or
circumstance.
The undersigned acknowledges and understands that in connection with the
acquisition of the Shares by the undersigned:
1. The Company has informed the undersigned that the Shares are not registered
under the Securities Act of 1933, as amended (the "Act"), or applicable state
securities or Blue Sky law or laws, and thus the Shares may not be transferred
or otherwise disposed of until the Shares are subsequently registered under the
Act and the applicable state securities or Blue Sky law or laws or an exemption
from such registration requirements is available.
2. The undersigned has been informed that a legend referring to the
restrictions indicated herein on transferability and sale will be placed upon
the certificate(s) evidencing the Shares.
3. If the undersigned is required to file a Form 144 with the Securities and
Exchange Commission in connection with sales of the Shares pursuant to Rule 144
under the Act, the undersigned shall mail a copy of such Form to the Company at
the same time and each time the undersigned mails a copy to the Securities and
Exchange Commission.
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A. Date of Stock Option Agreement: May , 1997
B. Number of Shares covered by Agreement: 150,000
C. Number of Shares of Common Stock actually to be purchased at this time (must
be 10,000 Shares or whole multiples thereof):
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D. Exercise price per Share: $2.50
E. Aggregate price to be paid for Shares actually purchased (D multiplied by
C): $
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Dated:
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Very truly yours,
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XXXXX X. XXXXXXX
Residence:
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ACCEPTED:
SAF T LOK INCORPORATED
By:
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Title:
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Dated:
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