Exhibit 10.7
AMENDMENT TO OPTION AGREEMENT
This agreement of amendment (this "Amendment") is made as of November __,
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2006, by and between Citadel Security Software Inc., a Delaware corporation
("Citadel"), and the undersigned option holder (the "Optionee").
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WHEREAS, Citadel and Optionee have entered into that certain Stock Option
Agreement, dated as of ___________, providing for the issuance of up to ______
shares of the common stock of Citadel (the "Stock Option Agreement");
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WHEREAS, Citadel, and certain of its subsidiaries, have entered into an
Asset Purchase Agreement, dated as of October 2, 2006, with McAfee, Inc. and
McAfee Security LLC (the "Asset Purchase Agreement");
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WHEREAS, conditioned upon the closing of the transactions contemplated by
the Asset Purchase Agreement, Citadel has implemented a "cash-out plan" to
cash-out options subject to its 2002 Stock Incentive Plan pursuant to the
resolution of its board of directors (such that any holder of stock options
outstanding at the closing of a change of control may receive a payment equal to
the difference between the price received by stockholders in the change of
control and the exercise price of such holder's stock option(the "Cash-Out
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Plan"). Citadel intends to implement the Cash-Out Plan in connection with the
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closing of the Asset Purchase Agreement and the subsequent distributions to its
stockholders. As a result, holders of options that remain unexercised on the
record date of our initial anticipated liquidating distribution, will receive
from Citadel, at the same time liquidating distributions are made to holders of
its common stock, cash payments equal to the product of the total number of
shares that were subject to such option immediately prior to the closing of the
asset sale, and the amount per share then being distributed in respect of its
common stock. However, these cash payments will be paid only to the extent, if
any, per share liquidating distributions in respect of its common stock exceed
the per share exercise price of such option; and
WHEREAS, each of Citadel and the Optionee now desire to amend the Stock
Option Agreement to permit the options that may be granted pursuant to the Stock
Option Agreement (the "Options"), although not subject to Citadel's 2002 Stock
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Incentive Plan, to be included within the Cash-Out Plan;
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Citadel and the Optionee
hereby agree as follows:
1. Amendment of the Stock Option Agreement. The Stock Option Agreement is
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hereby amended to provide that the Options may be included in the Cash-Out Plan.
2. No Other Changes. Except as amended by this Amendment, the Stock
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Option Agreement shall remain in full force and effect in accordance with is
terms.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.
COMPANY
CITADEL SECURITY SOFTWARE, INC.
By:
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Name:
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Title:
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OPTIONEE
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Name:
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Schedule of Persons and Number of Options
Name Options subject to amendment
Xxxx Xxxxxxx 225,000
Xxxxxxx Xxxxxxxx 375,000
Xxxxx X. Xxxxxxxx 62,500
Xxxx X. Xxxxx 62,500
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