Exhibit 10.3
EMPLOYMENT AGREEMENT
BETWEEN
AssureTec Systems, Inc.
AND
Xxxxx X. Xxxx
This EMPLOYMENT AGREEMENT made as of the 10th day of October, 2001 (the
"Effective Date"), by and between AssureTec Systems, Inc., such corporation
organized under the laws of Delaware with offices at 000 Xxxxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000 (the "Company"), and Xxxxx X. Xxxx, an employee of X.X.
Xxxxxxxxx Consultants Inc., residing at 0 Xxxxx Xxxxx, Xxxxxx, XX 00000 (the
"Employee").
W I T N E S E T H :
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The Company and the Employee desire that he serve as President and Chief
Operating Officer, an executive management position with the Company, on the
terms and conditions hereinafter set forth.
In consideration of the premises and covenants and agreements contained
herein, the parties hereto agree as follows:
1. Employment, Duties and Acceptance.
a. The Company hereby employs the Employee to render his services on behalf
of the Company or affiliated companies as President and Chief Operating Officer
and to perform those services normally associated with such title in accordance
with the terms of this agreement.
b. The services of the Employee shall be rendered subject to the direction
of the Company's Board of Directors, its Executive Committee and CEO.
c. The Employee will accept such additional duties and assignments within
AssureTec. Inc. as may be requested from time to time. These services and
additional duties shall be consistent with the Employee's position and need not
necessarily relate to the development and sale of imaging based authentication
systems and product activities.
d. The activities of the Employee shall be performed principally in
Southern New Hampshire in which the Company's research and engineering
facilities are located and such other locations as the Company deems necessary.
The Employee recognizes that his duties may require of him overnight travel from
time to time.
e. The Employee hereby accepts such employment by signing this Agreement.
Subject to the provisions set out at Section 3 hereof and except for such
exemptions set out in Schedule A, the Employee shall devote all of his business
time to the business and affairs of the Company, shall use his best efforts to
promote the interests of the Company, and shall perform his duties faithfully,
diligently and to the best of his ability.
f. The Employee represents and warrants that he understands the importance
of the provisions of this Agreement to him, and has consulted with his own legal
counsel to the extent desired by him in order that the provisions of this
Agreement and the legal and tax consequences hereof may be understood and agreed
to by him.
g. The parties acknowledge that the Company intends that the Employee's
services, salary and other benefits provided for hereunder shall commence as of
the Effective Date.
2. Term of Employment.
a. The term of the Employee's employment shall commence as of the Effective
Date hereof and shall continue for a period of three (3) years after the
Effective Date. Neither Employee nor the Company makes any representation as to
whether this Agreement shall be renewed.
b. Notwithstanding the foregoing, the employment of the Employee shall
sooner terminate as provided herein in respect of his death, permanent and total
disability, all as provided in Section 6 below.
3. Compensation.
a. From the Effective Date through March 31, 2003 the Employee shall earn
compensation at the rate of $1,000 per month ($12,000 per year) payable in cash
(subject to required withholding). Effective April 1, 2003 the rate of
compensation paid monthly shall increase to $11,500 per month ($138,000 per
year) payable in cash (subject to required withholding). A performance and
salary review shall occur periodically after commencement of employment followed
by a salary adjustment deemed appropriate by Employer
b. As an incentive to the Employee to remain in the employ of the Company,
in addition to the compensation specified in Section 3a the Employee will be
paid a one time cash bonus equal to $9,000 per month for each month of continued
employment from Effective date through November 30, 2002 and $10,500 per month
for each month of continued employment from December 1, 2002 through March 31,
2003. All amounts due under this Section 3b shall accrue and become payable in
twelve (12) equal monthly installments without interest beginning April1, 2003.
c. In addition to the compensation described in this section, on the
Effective Date hereof Employee shall receive a stock option award the terms of
which are set forth in the Stock Option Agreement attached as Schedule B hereto
d. No agreement exists or shall be implied to provide any other form of
compensation to Employee such as company vehicle, stock, bonus other than as
provided hereunder. The Employee shall be eligible to receive only such salary
increases, bonus or incentive compensation, if any, as the Company and its
Directors may, in its sole discretion, elect to award.
4. Expenses.
a. Following the Effective Date, Employee shall be entitled to
reimbursement for all normal and reasonable approved business expenses incurred
by him on behalf of the f Company upon presentation of vouchers or other
evidence of those expenses in accordance with the Company's policies.
5. Benefits.
a Employee is eligible to participate in any group life insurance program,
hospitalization insurance program, retirement plan, or similar benefit plans
available to professional employees of the Company. Upon the approval of the
CEO, and generally, in keeping with the Company's policies which may be in
effect during the term of this Agreement, Employee may apply for coverage under
the benefit plan available to professional employees of the Company; provided,
however, that this provision shall not require the Company to create or maintain
any such programs or plans. The Company reserves the right to limit its
contribution in effect anytime after the Effective Date hereof provided such
policy is equally applied to the engineering team as a matter of policy.
b Employee will be permitted to take annually up to three (3) weeks vacation
each year, in accordance with applicable policies of the Company. Such time
shall be pro rated for each calendar year. Employee shall be eligible for
additional vacation time if and when such is made available to the professional
employees. Any vacation time not used by the Employee during any calendar year
shall be forfeited without obligation on the part of the Company to compensate
the Employee therefore except that a maximum of one (1) week vacation may be
carried over subject to the approval in advance by an Officer of the Company.
6. Termination.
a. Termination by the Company for Cause.
If the Employee shall, during his employment (i) breach his fiduciary duty
to the Company, (ii) breach any of the material terms of this Agreement, (iii)
engage in any
wrongful appropriation of any significant opportunity properly belonging to the
Company; or (iv) be convicted of a felony (any of the foregoing shall constitute
"cause" for purposes of this Agreement), the Company shall have the right to
immediately terminate the Employee's employment, whereupon the Employee shall be
entitled solely to receive any unpaid amounts associated with his then
applicable salary at the rate provided in Section 3 (a). Such unpaid amount
shall be calculated through to the day on which such termination shall take
effect. In addition to amounts called for under this Section 6 (a), amounts
payable to Employee under Section 3(b) shall be pro-rated through the day on
which such termination shall take effect however the terms governing the payment
of such amount, as set forth therein, shall not be changed.
b. Early Termination by the Company Without Cause.
In the event that 1) the Company terminates the services of the Employee
during the term hereof without cause (cause as set forth in (a) above) 2) there
is a significant change in the Employee's position, role or responsibilities or
3) a consolidation or merger or sale of all or substantially all of the assets
of the Company, which would result in the stockholders of the Company
immediately prior to such transaction owning less than 50% of the voting power
of the surviving corporation immediately following such transaction (a "Change
of Control"), (items 1,2 & 3 individually to be considered a "Compensatory
Terminating Event") the Employee shall be entitled to receive, and the Company
shall pay to the Employee an amount equal 1) to his salary then payable pursuant
to Section 3(a) and 2) the monthly amount of the cash bonus stated in Section 3
(b) , such amount shall be paid for a period of one (1) month for each two
months or portion thereof of employment from the Effective date hereof but in no
case shall such period exceed three (3) months. Such payment to be made on the
last day of that continuation period provided that during such period the
Employee (i) makes himself available to, cooperates with, and assists the
Company as a consultant and otherwise to effect an orderly transition, and (ii)
observes the covenants contained in Section 7 below. During the period of salary
continuance as provided under this provision, base salary in effect at the time
of termination shall be the salary without increase for the entire term of
salary continuance.
Amounts payable to Employee under Section 3(b) shall be pro-rated through the
day on which such termination shall take effect, however the terms governing the
payment of such amount, as set forth therein, shall not be changed.
Employee shall have the right to retain all shares vested under the Section 3(c)
Stock Option Agreement as of the effective date of termination.
The parties intend that such salary payments plus the right to retain option
shares vested as of the effective date of termination shall constitute full and
liquidated damages for such termination without cause, and the Employee shall
have no duty to mitigate his losses by seeking other employment or income during
or in respect of the salary continuance period following such termination.
c. Benefits Payable Upon Death.
In the event of the Employee's death during the term hereof, the Employee
or the Employee's designated beneficiaries shall be entitled to receive his base
salary at the rate provided in Section 3(a) and the benefits provided in Section
5 through the end of a two weeks following the weekly payroll period in which
death occurred, such salary continuance period to be inclusive of all accrued
vacation time Employee otherwise would be eligible for at the time of Employee's
death. In addition, the Employee's designated beneficiaries shall be entitled to
receive; 1) the available proceeds under any group term or other insurance
maintained for the benefit of the Employee and 2) Employee's interest in any
stock options vested at the time of Employee's death. In addition to amounts
called for under this Section 6 (c) amounts payable to Employee under Section
3(b) shall be pro-rated through the date of the Employees death, however the
terms governing the payment of such amount, as set forth therein, shall not be
changed.
7. Covenants During or Following the Term of This Agreement by Employee.
a. Assistance in Litigation. The Employee shall, upon reasonable notice,
furnish such information and proper assistance to the Company during or
following the
term of this Agreement as may reasonably be required by the Company in
connection with any litigation in which it or any of its subsidiaries or
affiliates is, or becomes, a party.
b. Covenant Not to Compete.
(i) The Employee agrees that, during the period of his employment and for
six months thereafter, he will not, except on behalf of the Company or any
of its subsidiaries or affiliates, directly or indirectly, whether as an
officer, director, stockholder, partner, proprietor, associate, employee,
consultant, representative or in any other capacity, become involved or be
interested in, or otherwise associated with in a business activity, any
other person, corporation, firm, partnership or other entity whatsoever
involving Company sales agents, employees, customers. Employee shall not
engage in document authentication development activities reasonably similar
to the company's research and products in the field of border control,
check cashing verification, public transportation passenger control and
products reasonably similar to the company's products and technologies
whether or not protected by patent, such within any territory or area in
which the Company is then engaging in business or providing goods or
services to its customers; provided, however, that anything to the contrary
notwithstanding, the Employee may own as an inactive investor securities of
any competitor corporation listed on a national securities exchange or
traded in the over-the-counter market, so long as his holding in any one
such corporation shall not in the aggregate constitute more than 2% of the
voting stock of such corporation. If Employee desires to have such
non-compete period less than six months, Employee shall submit such request
in writing to the Company within 30 days following termination of
employment. Company shall have no obligation to consent to such request.
(ii) The Employee agrees that, except for such incidental responsibilities
to Arabella Adventures, Employee shall devote his exclusive and entire
services to the Company as hereinbefore described. The Employee agrees that
during his employment he shall not accept any position, employment,
gratuities, compensation, or the like from any person, corporation, firm,
partnership or other entity whatsoever without written consent from the
Company.
(iii) Non-Solicitation of Fellow Employees and Agents.
The Employee further agrees that, during the period of his employment and
for a period of one (1) year after any termination thereof, for whatever
reason, he will not solicit any employee or Agent of the Company or any
subsidiary or affiliate of the Company to terminate his employment or
agency relationship with the Company or any of its subsidiaries or
affiliates.
(iv) If any restriction set forth in this Section 7(b) is found by any
court of competent jurisdiction to be unenforceable because it extends for
too long a period of time or over too great a range of activities or in too
broad a geographic area, it shall be interpreted to extend only over the
maximum period of time, range of activities or geographic area as to which
it may be enforceable.
c. Proprietary Information.
(i) Employee agrees that all information and know-how, whether or not in
writing, of a private, secret or confidential nature concerning the
Company's business or financial affairs (collectively, "Proprietary
Information") is and shall be the exclusive property of the Company. By way
of illustration, but not a limitation, Proprietary Information includes,
but is not limited to, inventions, products, processes, methods,
techniques, formulas, compositions, compounds, Projects, developments,
plans, research data, financial data, personnel data, computer programs,
and customer and supplier lists, software and systems codes and
architecture. Employee will not disclose any Proprietary Information to
others outside the Company or use the same for any unauthorized purposes
without written approval by an Officer of the Company, either during or
after his employment, unless and until such Proprietary Information has
become public knowledge without fault by the Employee.
(ii) Employee agrees that all files, letters, memoranda, reports, formulas,
customer and agent lists, records, data, sketches, drawings, laboratory
notebooks, program listings, or other written, photographic, or other
tangible material containing Proprietary Information, whether created by
the Employee or others, which shall come into his custody or possession
during his employment by the Company, shall
be and are the exclusive property of the Company to be used by the Employee
only in the performance of his duties for the Company.
(iii) Employee agrees that his obligation not to disclose or use
information, know-how and records of the types set forth in paragraphs (i)
and (ii) above, also extends to such types of information, know-how,
records and tangible property of customers of the Company or suppliers of
the Company or other third parties who may have disclosed or entrusted the
same to the Company or to the Employee in the course of the Company's
business.
d. Patents and Other Developments. With respect to every patent, patent
application, invention, product, process, program, apparatus, design, trademark,
trade name, copyrightable work or other legally protectable form of
"intellectual property" ("Protectable Asset") which the Employee, singly or
jointly with others, during his employment by the Company or any of its
subsidiaries or affiliates or during the period of salary continuance following
termination of employment, for any reason may (during normal business hours
and/or using "company" facilities or resources) invent, create, make, discover,
conceive, originate or reduce to practice and relating in any way to the
products, devices, procedures, programs or schemes then being utilized by the
Company or its subsidiaries or affiliates or which otherwise relate to the field
of research and or product development of the Company or its subsidiaries or
affiliates, the Employee:
(i) will promptly fully disclose same to the Company and will not disclose
same to any other person, company or party without the Company's consent;
(ii) does hereby assign same and all United States and foreign patent
applications, patents, trademarks, trademark applications, trade names and
copyrights that may be filed or issued thereon to the Company;
(iii) will, but without personal expense, fully cooperate with the Company
or any of its subsidiaries or affiliates in applying for and securing in
the Company's name, or that of its nominee or designees, patents(s),
trademark(s), trade name(s) or copyright(s) on the same in each country in
the world in which the Company or its nominees or designees may desire to
secure such protection or registration and the
Employee will promptly execute all proper documents presented to him for
signature by the Company or its nominees or designees to enable it or them
to secure such protection or registration and to transfer legal title
therein, to Company or its nominees or its designees;
(iv) will, but without personal expense, give such true information and
testimony as may be requested by the Company or its nominees or designees
relative to the same or relative to such invention(s), product(s),
program(s), process (es), apparatus, design(s), trademark(s), trade name(s)
or work(s) invented, created, made, discovered, conceived, originated or
reduced to practice by any other person or persons and concerning which he
has knowledge by reason of his employment by the Company, or any of its
subsidiaries or affiliates; and
(v) states that the only patents, inventions, products, processes,
programs, apparatuses, designs, trademarks, trade names or copyrights, or
applications for any of the same, in which the Employee personally holds an
interest prior to the Effective Date are listed and described in a Schedule
attached hereto and are not subject to this Agreement. The absence of any
such Schedule means that no such exceptions exist.
Except as set forth in Schedule A, as of the Effective Date, the Employee
does not own nor is he currently developing a Protectable Asset(s) as that
term is defined in this Section
e. Other Agreements. Employee hereby represents that he is not bound by the
terms of any agreement with any previous employer or other person or company to
refrain from using or disclosing any trade secret or confidential or proprietary
information in the course of his employment with the Company which relates
directly to the Company's business or to refrain from competing, directly or
indirectly, with the business of such previous employer or any other person or
company. Employee further represents that his performance of all the terms of
this Agreement and as an Employee of the Company does not and will not breach
any agreement to keep in confidence
proprietary information, knowledge or data acquired by him in confidence or in
trust related to the Company's business prior to his employment with the
Company.
f. Company's Legal Remedies. The Company and the Employee agree that a
violation of the foregoing covenants of this Section 7 or any provision thereof,
will cause irreparable injury to the Company and its subsidiaries and
affiliates, and that the Company and its subsidiaries and affiliates shall be
entitled, in addition to any other rights and remedies they may have at law or
in equity, to an injunction enjoining and restraining the Employee from doing or
continuing to do any such act and any other violations or threatened violations
if this Section 7 or any provisions thereof.
8. Nonassignability.
Except as otherwise provided herein), neither this Agreement nor any right
or interest hereunder shall be assignable by the Employee, his beneficiaries, or
legal representatives without the Company's prior written consent; provided,
however, that nothing in this Section (8) shall preclude (i) the Employee from
designating a beneficiary to receive any benefit payable hereunder upon his
death, or (ii) the executors, administrators, or other legal representatives of
the Employee or his estate from assigning any rights hereunder to the person or
persons entitled thereunto.
9. No Attachment.
Except as required by law, no right to receive payments under this
Agreement shall be subject to anticipation, commutation, alienation, sale,
assignment, encumbrance, charge, pledge, or hypothecation or to execution,
attachment, levy, or similar process or assignment by operation of law, and any
attempt, voluntary or involuntary, to effect any such action shall be null, void
and of no effect.
10. Binding Agreement.
This Agreement shall be binding upon, and inure to the benefit of, the
Employee and the Company and their respective permitted successors and assigns.
11. Complete Agreement.
This Agreement and any agreements specifically referred to herein contain a
complete statement of all arrangements between the parties with respect to the
subject matter hereof and supersede any previous agreements, written or oral,
relating to the subject matter hereof.
12. Amendment of Agreement.
This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.
13. Waiver.
No term or condition of this Agreement shall be deemed to have been waived,
nor shall there by an estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver or
estoppel. No such written waiver shall be deemed a continuing waiver unless it
specifically states such therein, and then, each such waiver shall operate only
as to the specific term or condition and shall not relate to any act other than
that specifically waived. A waiver of a term or condition of this Agreement on
any occasion does not imply that a waiver of the same term or condition will or
should be granted on any other occasion.
14. Severability.
If, for any reason, any provision of this Agreement is held invalid, such
invalidity shall not affect any other provisions of this Agreement not held so
invalid, and such other provisions shall to the full extent consistent with law
continue in full force and effect. If any provision of this Agreement shall be
held invalid in part, such invalidity shall in no way affect the rest of such
provision not held so invalid, and the rest of such provision, together with all
other provisions of this Agreement, shall to the full extent consistent with law
continue in full force and effect. If this Agreement is held invalid or cannot
be enforced, then, to the full extent permitted by law, any prior agreement
between the Company (or any predecessor thereof) and the Employee shall be
deemed reinstated as if this Agreement has not been executed.
15. Headings.
The headings of paragraphs herein are included solely for convenience of
references and shall not control the meaning or interpretation of any of the
provisions of this Agreement.
16. Governing Law.
This Agreement and its validity, interpretation, performance and
enforcement shall be governed by the laws of the State of New Hampshire
17. Notices.
All notices which Company is required or may desire to give to the Employee
shall be given by certified or registered mail, addressed to the Employee at the
address referred to above, or at such other place as the Employee may from time
to time designate in writing. All notices that the Employee is required or may
desire to give to the Company hereunder shall be given by certified or
registered mail, addressed to Company at its principal office, or at such other
office as Company may from time to time designate in writing. Five days after
the date of mailing any such notice shall be deemed to be the date of delivery
thereof, unless actual prior delivery occurs.
18. Miscellaneous.
This Agreement may be executed simultaneously in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. The headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement. All pronouns shall be deemed to refer to the
masculine or feminine gender, as applicable.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
Date:
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Xxxxx X. Xxxx
Date:
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R. Xxxxx Xxxxxx, PhD
Chairman and Chief Executive Officer
AssureTec Systems, Inc.
SCHEDULE A
EMPLOYMENT AGREEMENT
BETWEEN
AssureTec Systems, Inc.
AND
Xxxxx X. Xxxx
Section 1 (e)
SEE ATTACHED
Section 7 (d)
NONE
Date:
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Xxxxx X. Xxxx
SCHEDULE B
AssureTec Systems, Inc.
000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
STOCK OPTION AGREEMENT
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1. Grant of Option. AssureTec Systems, Inc., a Delaware corporation (the
"Company"), hereby grants to Xxxxx X. Xxxx (the "Optionee") options to purchase
an aggregate of a minimum of 2,000,000 shares (subject to upward adjustment only
as set forth in Section 1 (b) of Common Stock ("Common Stock") of the Company,
at the prices (each designated an "Exercise Price"), and contingent upon the
occurrence of the events defined in Section 3(b) of this Agreement, purchasable
as set forth in and subject to the terms and conditions of this Agreement.
Except where the context otherwise requires, the term "Company" shall include
the parent and all present and future subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended or
replaced from time to time (the "Code").
2. Non-Statutory Stock Option. These options are not intended to qualify as
incentive stock options within the meaning of Section 422 of the Code.
3. Exercise of Option
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(a) Vesting Schedule. Except as otherwise provided in this Agreement, these
options are granted on 10th day of October, 2001 (the "Grant Date"), may be
exercised only as they vest as defined in Sections 3(b) Any portion of these
options not exercised seven (7) years from their respective date of vesting
("Expirations Date") are terminated. The right of exercise shall be cumulative
so that if an option is not exercised to the maximum extent permissible during
any exercise period, it shall be exercisable, in whole or in part, with respect
to all shares not so purchased at any time up to the defined Expiration Date or
any earlier termination of each of these options. These options may not be
exercised after their respective Expiration Date.
(b) Vesting. The aforementioned options to purchase a total of 2,000,000
shares of Common Stock of the Company at an Exercise Price of $.0001 per share
is fully vested on the Grant Date.
(c) Exercise Procedure. Subject to the conditions set forth in this
Agreement, each of these options shall be exercised by the Optionee's delivery
of written notice of exercise to the Treasurer of the Company, specifying the
option being exercised and the number of shares to be purchased and the purchase
price to be paid therefore and accompanied by payment in full in accordance with
Section 4. Such exercise shall be effective upon receipt by the Treasurer of the
Company of such written notice together with the required payment. The Optionee
may purchase less than the number of shares under any of the options covered
hereby, provided that no partial exercise of any of the options may be for any
fractional share or for fewer than ten whole shares.
4. Payment of Purchase Price.
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(a) Method of Payment. Payment of the purchase price for shares purchased
upon exercise of any of the options granted herein shall be made (i) by delivery
to the Company of cash or a check to the order of the Company in an amount equal
to the purchase price of such shares or (2) by other non-cash consideration as
may be approved by the Board of Directors of the Company.
(b) Valuation of Shares or Other Non-Cash Consideration Tendered in Payment
of Purchase Price. For the purposes hereof, the fair market value of any share
of the Company's Common Stock or other non-cash consideration which may be
delivered to the Company in exercise of any of the options shall be determined
in good faith by the Board of Directors of the Company.
5. Delivery of Shares: Compliance With Securities Laws. Etc. The Company shall,
upon payment of the option price for the number of shares purchased and paid for
under any of the options, make prompt delivery of such shares to the Optionee,
provided that if any law or regulation requires the Company to take any action
with respect to such shares before the issuance thereof, then the date of
delivery of such shares shall be extended for the period necessary to complete
such action.
6. Non-transferability of Options. These options are personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process, except that these options
may be transferred (i) by will or the laws of descent and distribution, (ii)
other than to an "affiliate" of the Optionee within the meaning of Rule 405
under the Securities Act of 1933, as amended or (iii) pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code. Upon any
attempt to transfer, assign, pledge, hypothecate or otherwise dispose of any of
these options or of such rights contrary to the provisions hereof, or upon the
levy of any attachment or similar process upon any of these options or such
rights, these options and such rights shall, at the election of the Company,
become null and void.
7. Rights as a Shareholder. The Optionee shall have no rights as a shareholder
with respect to any shares that may be purchased by exercise of any of these
options (including, without limitation, any rights to receive dividends or
non-cash distributions with respect to such shares) unless and until a
certificate representing such shares is duly issued and delivered to the
Optionee. No adjustment shall be made for dividends or other rights for which
the record date is prior to the date any such stock certificate is issued.
8. Adjustment Provisions.
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(a) General. If, through or as a result of any merger, consolidation, sale
of all or substantially all of the assets of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock
split or other similar transaction, (i) the outstanding shares of Common Stock
are increased or decreased or are exchanged for a different number or kind of
shares or other securities of the Company, or (ii) additional shares or new or
different shares or other securities of the Company or other non-cash assets are
distributed with respect to such shares of Common Stock or other securities, the
Optionee shall, with respect to any of these options or any unexercised portion
hereof, be entitled to the rights and benefits, and be subject to the
limitations, set out from time to time by the Board of Directors relating to
such.
(b) Board Authority to Make Adjustments. Any adjustments under this Section
9 will be made by the Board of Directors, whose determination as to what
adjustments, if any, will be made and the extent thereof' will be final, binding
and conclusive. No fractional shares will be issued pursuant to this option on
account of any such adjustments.
9. Mergers, Consolidation, Distributions, Liquidations Etc. In the event of a
merger or consolidation or sale of all or substantially all of the assets of the
Company in which outstanding shares of Common Stock are exchanged for
securities, cash or other property of any other corporation or business entity,
or in the event of a liquidation of the Company, prior to the Expiration Date or
termination of any of these options, the Optionee shall, with respect to any of
these options or any unexercised portion thereof, be
entitled to the rights and benefits, and be subject to the limitations as set
out from time to time by the Board of Directors.
10. Investment Representations: Legends.
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(a) Representation. The Optionee represents, warrants and covenants that:
(i) Any shares purchased upon exercise of any of the options under this
Agreement shall be acquired for the Optionee's account for investment only,
and not with a view to, or for sale in connection with, any distribution of
the shares in violation of the Securities Act of 1933 (the "Securities
Act"), or any rule or regulation under the Securities Act.
(ii) The Optionee has had such opportunity as he or she has deemed adequate
to obtain from representatives of the Company such information as is
necessary to permit the Optionee to evaluate the merits and risks of his or
her investment in the Company.
(iii) The Optionee is able to bear the economic risk of holding such shares
acquired pursuant to the exercise of any of these option for an indefinite
period.
(iv) The Optionee understands that (A) the shares acquired pursuant to the
exercise of any of these options will not be registered under the
Securities Act and are "restricted securities" within the meaning of Rule
144 under the Securities Act; (B) such shares cannot be sold, transferred
or otherwise disposed of unless they are subsequently registered under the
Securities Act or an exemption from registration is then available; (C) in
any event, an exemption from registration under Rule 144 or otherwise under
the Securities Act not be available for at least two years and even then
will not be available unless a public market then exists for the Common
Stock, adequate information concerning the Company is then available to the
public, and other terms and conditions of Rule 144 are complied with; and
(D) there is now no registration statement on file with the Securities and
Exchange Commission with respect to any stock of the Company and the
Company has no obligation or current intention to register any shares
acquired pursuant to the exercise of any of these options under the
Securities Act.
By making payment upon exercise of any of these options, the Optionee shall be
deemed to have re-affirmed, as of the date of such payment, the representations
made in this Section 10.
(b) Legends on Stock Certificate. All stock certificates representing
shares of Common Stock issued to the Optionee upon exercise of any of these
options shall have affixed thereto legends substantially in the following firms,
in addition to any other legends required by applicable state law:
"The shares of stock represented by this certificate have not been
registered under the Securities Act of 1933 and may not be transferred,
sold or otherwise disposed of in the absence of an effective registration
statement with respect to the shares evidenced by this certificate, filed
and made effective under the Securities Act of 1933; or an opinion of
counsel satisfactory to the Company to the effect that registration under
such Act is not required."
"The shares of stock represented by this certificate are subject to certain
restrictions on transfer contained in an Option Agreement, a copy of which
will be furnished upon request by the issuer."
11. Miscellaneous.
--------------
(a) Except as provided herein, any of these options may not be amended or
otherwise modified unless evidenced in writing and. signed by the Company and
the Optionee.
(b) All notices under this Agreement shall be mailed or delivered by hand
to the parties at their respective addresses set forth beneath their names below
or at such other address as may be designated in writing by either of the
parties to one another.
(c) These options shall be governed by and construed in accordance with the
laws of the State of New Hampshire.
Date of Grant: 10th day of October, 2001
AssureTec Systems, Inc.
By: __________________________
R. Xxxxx Xxxxxx, PhD
Chairman and Chief Executive Office
AssureTec Systems, Inc
Signed: ______________________
Xxxxx X. Xxxx
Date: ________________________
