EXHIBIT 10(dd)
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NON-QUALIFIED STOCK OPTION AGREEMENT
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Section 1. Grant of Option. Guardian International, Inc., a Florida
corporation (the "Company"), hereby grants to Xxxxxxx X. Lake (the "Optionee") a
non-qualified stock option to purchase (the "Option") the number of shares (the
"Shares") of Common Stock, par value $.001 per share (the "Common Stock"), of
the Company set forth on Schedule 1, at the option exercise price per share
("Option Exercise Price") set forth on Schedule 1.
Section 2. Definitions. In addition to the terms defined elsewhere in
this Agreement, the following terms shall have the following meanings for
purposes of this Agreement:
a) "Beneficiary" means the person or persons designated in
writing by the Optionee as his beneficiary in respect of this Option
or, in the absence of such a designation or if the designated person or
persons predecease the Optionee, the person or persons who shall
acquire the Optionee's rights in respect of the Option by bequest or
inheritance in accordance with the applicable laws of descent and
distribution. In order to be effective, the Optionee's designation of a
beneficiary must be on file with the Company before the Optionee's
death. Any such designation may be revoked and a new designation
substituted therefor by the Optionee at any time before his death
without the consent of the previously designated beneficiary.
(b) "Board" means the Board of Directors of the Company.
(c) "Change of Control" means:
(i) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more of either (i) the then
outstanding shares of Common Stock (the "Outstanding Company Common
Stock") or (ii) the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities");
provided, however, that the following acquisitions shall not constitute
a Change of Control: (x) any acquisition by the Company or a
Subsidiary, (y) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or a Subsidiary,
or (z) any acquisition by any company with respect to which, following
such acquisition, more than 50% of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting
power of the then outstanding voting securities of such corporation
entitled to vote
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generally in the election of directors is then beneficially owned,
directly or indirectly, by all or substantially all of the individuals
and entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such acquisition in substantially the
same proportions as their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be; or
(ii) Individuals who, as of the date of grant set forth on
Schedule 1, constitute the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date
hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as
though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or
threatened solicitation to which Rule 14a-11 of Regulation 14A
promulgated under the Exchange Act applies or other actual or
threatened solicitation of proxies or consents; or
(iii) Approval by the shareholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities immediately prior to
such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 50% of, respectively, the then outstanding shares
of Common Stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such
reorganization, merger or consolidation in substantially the same
proportions as their ownership, immediately prior to such
reorganization, merger or consolidation of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the case may
be; or
(iv) Approval by the shareholders of the Company of (A) a
complete liquidation or dissolution of the Company or (B) the sale or
other disposition of all or substantially all of the assets of the
Company, other than to a corporation, with respect to which following
such sale or other disposition, more than 50% of, respectively, the
then outstanding shares of common stock of such corporation and the
combined voting power of the then outstanding voting securities of such
corporation entitled to vote generally in the election of directors is
then beneficially owned, directly or indirectly, by all or
substantially all of the
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individuals and entities who were the beneficial owners, respectively,
of the Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such sale or other disposition in
substantially the same proportion as their ownership, immediately prior
to such sale or other disposition, of the Outstanding Company Common
Stock and Outstanding Company Voting Securities, as the case may be.
The term "the sale or other disposition of all or substantially all of
the assets of the Company" shall mean a sale or other disposition
transaction or series of related transactions involving assets of the
Company or of any direct or indirect Subsidiary (including the stock of
any direct or indirect Subsidiary) in which the value of the assets or
stock being sold or otherwise disposed of (as measured by the purchase
price being paid therefor or by such other method as the Board
determines is appropriate in a case where there is no readily
ascertainable purchase price) constitutes more than two-thirds of the
fair market value of the Company (as hereinafter defined). The "fair
market value of the Company" shall be the aggregate market value of the
then Outstanding Company Common Stock (on a fully diluted basis) plus
the aggregate market value of the Company's other outstanding equity
securities. The aggregate market value of the shares of Outstanding
Company Common Stock shall be determined by multiplying the number of
shares of Outstanding Company Common Stock (on a fully diluted basis)
outstanding on the date of the execution and delivery of a definitive
agreement with respect to the transaction or series of related
transactions (the "Transaction Date") by the average closing price of
the shares of Outstanding Company Common Stock for the five trading
days immediately preceding the Transaction Date. The aggregate market
value of any other equity securities of the Company shall be determined
in a manner similar to that prescribed in the immediately preceding
sentence for determining the aggregate market value of the shares of
Outstanding Company Common Stock or by such other method as the Board
shall determine is appropriate.
(d) "Change of Control Price" means the highest price per share paid in
any transaction reported on the securities exchange or trading system on which
shares of Common Stock are then primarily listed or traded, or paid or offered
in any transaction related to a Change of Control of the Company at any time
during the preceding 60-day period as determined by the Committee.
(e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time. References to any provision of the Code shall be deemed to include
successor provisions thereto and regulations thereunder.
(f) "Committee" means the Compensation Committee of the Board, or such
other Board committee as may be designated by the Board to administer the
Company's stock option plans and stock option agreements, or any subcommittee of
either.
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(g) "Common Stock" means the common stock, par value $.001 per share,
of the Company.
(h) "Disability" means the permanent and total disability of the
Optionee as defined in Section 22(e)(3) of the Code.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(j) "Fair Market Value" means, with respect to Shares, the fair market
value of such Shares determined by such methods or procedures as shall be
established, in good faith, from time to time by the Committee. Unless otherwise
determined by the Committee, the fair market value of Shares as of any date
shall be the average of the closing bid and asked prices for Shares reported in
the OTC Bulletin Board(R), as applicable, for that date or, if no such prices
are so reported for that date, the average of such closing bid and asked prices
on the immediately preceding date for which such closing prices are so reported.
Fair market value shall be determined without regard to any restriction other
than a restriction which, by its terms, will never lapse. If Shares are listed
on any other exchange, the fair market value of Shares as of any date shall be
the closing sales price on that date of a Share as reported on that exchange as
reported in the composite transactions for such day by The Wall Street Journal
or, if such Shares were not traded on such date, on the next preceding day on
which such Shares were traded.
(k) "Subsidiary" means any corporation (other than the Company) with
respect to which the Company owns, directly or indirectly, 50% or more of the
total combined voting power of all classes of stock. In addition, any other
related entity may be designated by the Board as a Subsidiary, provided such
entity could be considered a subsidiary according to generally accepted
accounting principles.
(l) "Termination for Cause" or "Terminate for Cause" means the
termination of the Optionee's employment by, or service to, the Company because
the Committee determines, in its sole discretion, that (i) the Optionee engaged
in one or more acts constituting a felony; (ii) the Optionee willfully engaged
in one or more acts involving actual fraud; (iii) the Optionee willfully
misappropriated Company assets or willfully engaged in misconduct either of
which is materially injurious to the Company or its affiliates; or (iv) the
Optionee materially and willfully failed to perform his duties as an employee or
in any other capacity. For purposes of this Agreement, the term "willful" means
an act done, or omitted to be done, by the Optionee in bad faith, provided that
the Optionee knew or reasonably should have known that the act or omission was
not in the best interest of the Company.
(m) "Termination Without Cause" or "Terminate Without Cause" means that
the termination of the Optionee's employment or service occurred for a reason
other than Termination for Cause, death or Disability.
Section 3. Acceptance by Optionee. The exercise of the Option or any
portion thereof is conditioned upon acceptance by the Optionee of the terms and
conditions of
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this Agreement, as evidenced by the Optionee's delivery of an executed copy of
Schedule 1 to this Agreement to the Company.
Section 4. Vesting of Option. The Option shall vest and be exercisable
in accordance with the vesting schedule set forth in Schedule 1 or upon a Change
of Control as described in Section 11, subject to the provisions of Section 7
below. In the event that the Option shall terminate as set forth in Sections 5
and 7 below, the unvested portion of the Option shall be void and shall not be
exercisable by the Optionee. Notwithstanding the foregoing, the Optionee shall
vest in all Shares subject to the Option in the event of Optionee's death or
Disability.
Section 5. Expiration of the Option. This Option shall expire on the
date set forth in Schedule 1 (the "Expiration Date"), unless earlier terminated
as set forth in Section 7 below, and may not be exercised after such date.
Section 6. Conditions to Exercise of Option. Except as otherwise set
forth in Section 7 below, the Optionee may exercise this Option or any portion
thereof after it has vested and during his lifetime only while he is employed
by, or providing services to, the Company or a Subsidiary.
Section 7. Termination of Employment or Service. The Option shall
terminate upon the earlier of (a) its full exercise or (b) the Termination for
Cause of the Optionee's employment by, or service to, the Company or a
Subsidiary. In the event of the Optionee's Disability or death, the Option or
any unexercised, unvested portion thereof may be exercised by the Optionee (or
his estate, in the event of the Optionee's death) for up to 12 months after
Optionee's death, after which time the Option shall expire. In the event of the
Optionee's Termination Without Cause, the unexercised, vested portion of the
Option may be exercised by the Optionee for up to three months after the date of
the Termination Without Cause, and the unvested portion of the Option shall be
void and shall not be exercisable by the Optionee. Notwithstanding anything in
this Section 7 to the contrary, in no event may this Option be exercised
following the Expiration Date.
Section 8. Procedure for Exercise. The Option may be exercised for the
number of Shares specified in a written notice delivered to the Company at least
10 days prior to the date on which purchase is requested, accompanied by full
payment in cash, or, with the consent of the Committee, in Common Stock or by a
promissory note payable to the order of the Company which is acceptable to the
Committee. Such payment may, with the written consent of the Committee, also
consist of a cash down payment and delivery of such a promissory note in the
amount of the unpaid Option Exercise Price. In the discretion of and subject to
the conditions as may be established by the Committee, payment of the Option
Exercise Price may also be made by the Company retaining from the Shares to be
delivered upon exercise of the Option, or portion thereof, that number of Shares
having a Fair Market Value on the date of exercise equal to the
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Option Exercise Price of the number of Shares with respect to which the Optionee
exercises the Option, or portion thereof. Such payment may also be made in such
other manner as the Committee determines is appropriate, in its sole discretion,
subject to the restrictions set forth in this Agreement. If upon exercise of all
or a portion of the Option there shall be payable by the Company or a Subsidiary
any amount for income tax withholding, then, at the Company's option and as a
condition to such exercise, either (a) the Company shall reduce the number of
Shares to be issued to the Optionee by a number of Shares of Common Stock having
an aggregate Fair Market Value on the date of exercise equal to the amount of
such income tax withholding or (b) the Optionee shall pay such amount to the
Company or its Subsidiary, as applicable. If any applicable law requires the
Company to take any action with respect to the Shares specified in the written
notice of exercise, or if any action remains to be taken under the Articles of
Incorporation or Bylaws of the Company, as in effect at the time, to effect due
issuance of the Shares, then the Company shall take such action and the day for
delivery of such Shares shall be extended for the period necessary to take such
action.
Section 9. Exchange Provisions. The Committee may at any time offer to
exchange or buy out the Option for a payment in cash, Shares, other options or
other property based on such terms and conditions as the Committee shall
determine and communicate to the Optionee in writing at the time that such offer
is made.
Section 10. General Restrictions Applicable to this Option.
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(a) Limits on Transfer of Options; Beneficiaries. The Option shall not
be transferable or assignable by the Optionee other than by will or by the laws
of descent and distribution (except to the Company or its Subsidiary under the
terms of this Agreement), and the Option shall be exercisable during the
Optionee's lifetime only by the Optionee. No right or interest of the Optionee
in the Option shall be pledged, encumbered or hypothecated to or in favor of any
party (other than the Company or a Subsidiary), or shall be subject to any lien,
obligation or liability of the Optionee to any party (other than the Company or
a Subsidiary); provided, however, that the Optionee may, in the manner
established by the Committee, designate a Beneficiary or Beneficiaries to
exercise the rights of the Optionee, and to receive any distribution, with
respect to the Option, upon the death of the Optionee. A Beneficiary, guardian,
legal representative, or other person claiming any rights under this Agreement
from or through the Optionee shall be subject to all terms and conditions of
this Agreement.
(b) Registration. The Company shall not be obligated to deliver any
Shares with respect to the Option in a transaction subject to regulatory
approval, registration or any other applicable requirement of federal or state
law, until such laws, regulations and contractual obligations of the Company
have been complied with in full.
(c) Share Certificates. All certificates for Shares delivered pursuant
to the exercise of the Option shall be subject to such stop-transfer order and
other restrictions as the Committee may deem advisable under applicable federal
or state laws and rules
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and regulations promulgated thereunder. The Committee may cause a legend or
legends to be placed on any such certificates to make appropriate reference to
such restrictions or any other restrictions that may be applicable to Shares. In
addition, during any period in which the Option or Shares are subject to
restrictions under the terms of this Agreement, or during any period during
which delivery or receipt of Shares has been deferred by the Committee or the
Optionee, the Committee may require the Optionee to enter into an agreement
providing that certificates representing Shares issuable or issued pursuant to
this Agreement shall remain in the physical custody of the Company or such other
person or entity as the Committee may designate.
Section 11. Change of Control. As determined in its sole discretion by
the Committee in writing at any time after the grant of the Option and prior to
a Change of Control, in the event of a Change of Control and on the conditions
described in this Section, (a) Optionee's outstanding Option may be canceled,
and Optionee shall be paid in cash the Change of Control Price less the Option
Exercise Price multiplied by the number of shares which may be purchased under
the outstanding Option; (b) or any outstanding portion of the Option held by
Optionee may be immediately vested and exercisable and remain exercisable by the
Optionee as set forth in Schedule 1; or (c) the Committee may offer to exchange
the Option for a payment in Shares, other options or other property based on
such terms and conditions as the Committee shall determine and communicate in
writing to the Optionee.
Section 12. Adjustment Provisions. In the event that the Board shall
determine that any dividend or other distribution (whether in the form of cash,
Shares or other property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, spinoff, combination, repurchase, or
share exchange, or other similar corporate transaction or event, affects the
Shares such that an adjustment is determined by the Committee to be appropriate
in order to prevent dilution or enlargement of the rights of the Optionee under
this Agreement, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of (a) the number and kind of Shares which may
thereafter be issued in connection with the Option, and (b) the Option Exercise
Price or, if deemed appropriate, make provision for a cash payment with respect
to this Option.
Section 13. Miscellaneous.
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(a) Changes to Options. The Committee may waive any conditions or
rights under, or amend, alter, suspend, discontinue, or terminate, this
Agreement; provided, however, that, without the consent of the Optionee, no such
amendment, alteration, suspension, discontinuation or termination of this Option
may impair the rights of Optionee under this Option.
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(b) No Shareholder Rights. The Option shall not confer on Optionee any
of the rights of a shareholder of the Company unless and until Shares are duly
issued or transferred to the Optionee in accordance with the terms of this
Agreement.
(c) Unfunded Status of Options. The Option is intended to constitute an
"unfunded" Option for incentive compensation. With respect to any payments not
yet made to the Optionee pursuant to this Agreement, nothing contained in this
Agreement shall give the Optionee any rights that are greater than those of a
general creditor of the Company; provided, however, that the Committee may
authorize the creation of trusts or make other arrangements to meet the
Company's obligations under this Agreement to deliver cash, Shares, other
options or other property pursuant to this Agreement, which trusts or other
arrangements shall be consistent with the "unfunded" status of the Option unless
the Committee determines otherwise with the written consent of the Optionee.
(d) Fractional Shares. No fractional Shares shall be issued or
delivered pursuant to this Agreement. The Committee shall determine whether
cash, other options or other property shall be issued or paid in lieu of
fractional Shares or whether such fractional Shares or any rights thereto shall
be forfeited or otherwise eliminated.
(e) Compliance With Applicable Law; Governing Law. The validity,
construction and effect of this Agreement and the issuance of the Shares
pursuant to the exercise of the Option, are subject to compliance with all
applicable laws including, without limitation, laws governing withholding from
employees and nonresident aliens for income tax purposes. This Agreement shall
be governed by the laws of the State of Florida, without giving effect to
principles of conflicts of laws, and applicable federal law.
(f) No Obligations to Exercise Options. The granting of the Option
shall impose no obligation upon the Optionee to exercise the Option.
(g) No Right to Employment or Service. Nothing contained in this
Agreement, nor any action taken by the Committee, shall confer upon the Optionee
any right with respect to continuation of employment by, or service to, the
Company or a Subsidiary as an employee or in any other capacity nor interfere in
any way with the right of the Company or a Subsidiary to Terminate the
Optionee's employment or service at any time for Cause or Without Cause.
(h) Representations as to Purchase of Shares. As a condition of the
Company's obligation to issue Shares upon exercise of the Option, if requested
by the Company, the Optionee shall, concurrently with the delivery of the stock
certificate representing the Shares so purchased, give such written assurances
to the Company, in the form and substance that its counsel reasonably requests,
to the effect that the Optionee is acquiring the Shares for investment
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and without any present intention of reselling or redistributing the same in
violation of any applicable law, and the Company shall have the right to endorse
the certificate representing the Shares with an appropriate restrictive legend
as to compliance with such law. In the event that the Company registers the
Shares under the Securities Act of 1933, as amended, and any applicable state
laws, the issuance of such Shares shall not be subject to the restrictions
contained in this Section 13(h).
(i) Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of all successors of the Company. This Agreement may not be
amended without the express written consent of both parties hereto.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed as of the Date of Grant set forth in Schedule 1.
GUARDIAN INTERNATIONAL, INC.
By: /s/ XXXXXXX XXXXXXXX
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Xxxxxxx Xxxxxxxx, President and
Chief Executive Officer
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Schedule 1
Stock Option Agreement
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Name of Optionee: Xxxxxxx X. Lake
Number of Shares: 75,000 (seventy five thousand)
shares of Common Stock
Option Exercise Price Per Share: $0.84
Date of Grant: April 28, 1998,
Expiration Date: April 28, 2008
Vesting Schedule: 15,000 shares of Common Stock April 28, 1998
15,000 shares of Common Stock April 28, 1999
15,000 shares of Common Stock April 28, 2000
15,000 shares of Common Stock April 28, 2001
15,000 shares of Common Stock April 28, 2002
The undersigned agrees to the terms and conditions of the Non-Qualified
Stock Option Agreement of which this Schedule 1 is a part.
Date Accepted: October 10, 1999
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By: /s/ XXXXXXX X. LAKE
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Name: Xxxxxxx X. Lake
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