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EXHIBIT 10(b)
No.4-011
THE OPTION TO PURCHASE SHARES OF THE COMMON STOCK OF TECHNOLOGY GUARDIAN, INC.,
REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE ACT. NEITHER THE OPTIONS NOR THE UNDERLYING SHARES MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF SAID CORPORATION AND SUCH FURTHER
RESTRICTIONS AS THE BOARD OF DIRECTORS MAY DETERMINE.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT effective as of this 1st day of September, 1998,
between Technology Guardian, Inc., a California corporation (the "Corporation"),
and Advantage Associates (the "Recipient").
WHEREAS, the Corporation, by action of the Board of Directors on July
28, 1998, has authorized the granting of stock options to purchase 150,000
shares of this Corporation's common stock, $.001 par value ("Common Stock"), to
Advantage Associates at an exercise price of $2.00 per share.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the Corporation and the Optionee agree
as follows:
1. Grant of Option. The Corporation hereby grants to Advantage
Associates an option to purchase (the "Option") an aggregate of
150,000 shares of the Corporation's common stock for a purchase
price of $ 2.00 per share (the "Option Price").
2. Vesting of Option. This option shall be immediately fully vested
from the Date of Grant.
3. Exercise of Option. This Option may be exercised in whole or in
part at any time during the term of the Option, provided,
however, no portion of this Option shall be exercisable after
the expiration of the term thereof.
The Option may be exercised, as provided in this Paragraph 3, by
notice and payment to the Corporation as provided in Paragraph 5
hereof.
4. Conversion. In lieu of exercising this Option as specified in
Paragraph 3, the Recipient may from time to time convert this
Option, in whole or in part, into a number of shares determined
by dividing (a) the aggregate Fair Market Value (determined on
the date of exercise) of the shares of the Corporation's Common
Stock issuable upon exercise of this Option (less the number of
shares as to which this Option has been previously exercised)
minus the aggregate Option Price of such shares minus all
amounts which it is required to withhold under federal, state or
local law in connection with the exercise of the Option, by (b)
the Fair Market Value (determined on the date of exercise) of
one share. This is represented mathematically as: {{(FMV per
share) X [(number of share issuable under the Option) - (share
previously issued and converted under the Option)]} - (amount
required to be withheld)} / (FMV per share). For purpose of this
Paragraph 4, "Fair Market Value" shall be the value determined
in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded
on the Nasdaq National Market System or the Nasdaq
SmallCap Market, the Fair Market Value shall be the
closing selling price per share of Common Stock on the
date in question, as such price is reported by the
National Association of Securities Dealers through the
Nasdaq National Market System or any successor system or
the Nasdaq SmallCap Market or any successor market. If
there is no closing selling price for the common stock
on the date in question, then the FMV shall be the
closing selling price on the last preceding date for
which such quotation exists.
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(b) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, the Fair Market Value
shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange
determined by the Board of Directors of the Corporation
to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
(c) If the Common Stock is at the time neither listed nor
admitted to trading on any stock exchange, not traded on
the Nasdaq National Market System nor on the Nasdaq
SmallCap Market, then such Fair Market Value shall be
determined by the Board of Directors of the Corporation
after taking into account such factors as the Board of
Directors of the Corporation shall deem appropriate.
5. Manner of Exercise.
(a) During the lifetime of the Recipient, only he may
exercise the Option or any portion thereof. After the
death of the Recipient, any exercisable portion of the
Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the
Recipient's personal representative or by any person
empowered to do so under the Recipient's will or under
the then applicable laws of descent and distribution.
(b) The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the
Secretary's office of all of the following prior to the
time when such exercisable Option or portion thereof
becomes unexercisable:
(i) Notice in writing signed by the Recipient, or such
other person then entitled to exercise the Option or
portion thereof, stating that the Option or portion
thereof is thereby exercised, such notice complying with
all applicable rules established by the Corporation; and
(ii) (a) Full payment (in cash or by check) for the
shares with respect to which such Option or
portion thereof is exercised; or
(b) With the consent of the Corporation, shares
of the Company's Common Stock owned by the
Recipient duly endorsed for transfer to the
Company with a Fair Market Value on the date of
delivery equal to the aggregate purchase price
of the shares with respect to which such Option
or portion thereof is exercised.
6. Term of Option. The term of the Option will be through August
24, 2003, subject to Paragraphs 8 and 9 as provided in this
Agreement.
The Recipient of the Option will not have any rights to
dividends or any other rights of a shareholder with respect to
any shares of Common Stock subject to the Option until such
shares shall have been purchased through the exercise of the
Option and has been evidenced on the stock transfer records of
the Corporation maintained by the Corporation's transfer agent.
7. Performance Restrictions. The Recipient of this Option will not
have the right to exercise this Option until confirmation by the
Board of Directors that the following performance goals have
been completed:
NET SALES OF 1,000 UNITS SOLD BY THE EAST COAST OFFICE IN THE 12 MONTH
PERIOD BEGINNING MARCH 1, 1999. HOWEVER, IF NET SALES OF 1,000 UNITS HAVE
BEEN ACHIEVED BY AUGUST 31, 1999, THEN THE NUMBER OF SHARES SUBJECT TO
THIS OPTION SHALL BE INCREASED BY 50,000 SHARES. SALES SHALL BE DEEMED
COMPLETED DURING THE FOREGOING PERIODS IF A CONTACT LEADING TO A SALE HAS
BEEN MADE WITH A CUSTOMER DURING THE RELEVANT TIME PERIOD, AND THE SALE IS
COMPLETED WITHIN SIX MONTHS AFTER THE END OF THE RELEVANT TIME PERIOD.
AFTER SUCH 1,000 UNITS IN NET SALES HAVE BEEN ACHIEVED, THEN THE RECIPIENT
SHALL BE ENTITLED TO THE RIGHTS DESCRIBED IN SECTION 11(b), SUBJECT TO
THE REQUIREMENTS AND LIMITATIONS OF SECTION 11. ANY PARTY WHICH ACQUIRES
CONTROL OF THE CORPORATION SHALL BE REQUIRED TO HONOR THE RIGHTS OF
ADVANTAGE SET FORTH IN THIS AGREEMENT SUBSEQUENT TO THE ACQUISITION OF
CONTROL.
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For purposes of this paragraph, the East Coast Office shall mean
the people working out of the office of the Corporation located
in the Washington, D.C., metropolitan area as of the date of
this Agreement, and those who subsequently work in at such
office as approved by the Corporation as part of the East Coast
Office. The East Coast Office shall also include those VARs
recruited by and working under the direction of the East Coast
Office.
For purposes of this paragraph, a "unit" shall consist of a
server and associated hardware and the Corporation's software
that allows high-speed access to the Internet, together with a
service contract of at least two years duration. For purposes of
definition of "unit" in this paragraph, a server and/or
associated hardware may be furnished by the customer in lieu of
a server and associated hardware furnished by the Corporation.
A sale of a unit shall be deemed to occur or at such time as a
sale is recognized by the Corporation in accordance with
generally accepted accounting principles. Units which are
returned to the Corporation shall be deducted from the number of
Units sold. The number of Units sold less the number of Units
returned shall be the net Units sold.
8. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated
in any way (whether by operation of law or otherwise) (1)
without the consent of the Corporation, and (2) such transfer is
not in violation of the Securities Act of 1933, the Corporate
Securities Laws of the State of California, or the securities
laws of any state. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt
to make any such levy of execution, attachment or other process
not in accordance with the foregoing sentence shall cause the
Option to terminate immediately upon the happening of any such
event, and the Recipient shall lose all rights under this
agreement, provided, however, that any such termination of the
Option under the foregoing provisions of this Paragraph 6, will
not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
9. Death, Disability or Retirement of Recipient. The Recipient's
rights to exercise this Option upon the death, disability or
retirement of the Recipient are set forth as follows:
(a) If the Recipient ceases to be in Service to the
Corporation for a reason other than permanent disability
or death, the Recipient must, within (2) months after
the date of termination of such Service, but in no event
after the Option's stated expiration date, exercise some
or all of the Options that the Recipient was entitled to
exercise on the date the Recipient's Service terminated.
All options which have not vested in accordance with
Paragraph 2 will thereafter be void for all purposes. If
the Recipient ceases to be in Service to the Corporation
by reason of permanent disability within the meaning of
section 22(e)(3) of the Internal Revenue Code (as
determined by the Board of Directors), the Recipient
will have two (2) months after the date of termination
of Service, but in no event after the stated expiration
date of the Recipient's Options, to exercise Options
that the Recipient was entitled to exercise on the date
the Recipient's Service terminated as a result of the
disability.
(b) If a Recipient dies while in the Corporation's Service,
any Options that the Recipient was entitled to exercise
on the date of death will be exercisable within the
six-month period following the date of issuance of
letters testamentary or letters of administration of a
deceased Recipient, in the case of the Recipient's death
during his Service to the Corporation's Board, but not
later than one year after the Recipient's death or until
the stated expiration date of the Recipient's Option,
whichever occurs first, by the person or persons
("successors") to whom the Recipient's rights pass under
a will or by the laws of descent and distribution. As
soon as practicable after receipt by the Corporation of
such notice and of payment in full of the Option Price,
a certificate or certificates representing the Optioned
Shares shall be registered in the name or names
specified by the successors in the written notice of
exercise and shall be delivered to the successors.
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(c) The term "Service" means service as an employee, as an
independent contractor, or an employee of an independent
contractor.
10. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as
amended (the "Securities Act") and the Corporation has no
obligation to register under the Securities Act the Option or
any of the shares of Common Stock subject to and issuable upon
the exercise of the Option. The Recipient represents that the
Option is being acquired by him for investment and acknowledges
that all certificates for the shares issued upon exercise of the
Option will bear the following legend unless such shares are
registered under the Securities Act prior to their issuance:
The shares of Common Stock evidenced by this
certificate have been issued to the registered
owner in reliance upon written representations
that these shares have been purchased solely for
investment. These shares may not be sold,
transferred or assigned unless in the opinion of
the Corporation and its legal counsel such
sales, transfer or assignment will not be in
violation of the Securities Act of 1933, as
amended, and the rules and regulations
thereunder.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Securities Act and applicable state laws.
11. Effect of Certain Changes.
(a) If there is any change in the number of shares of
outstanding Common Stock through the declaration of
stock dividends, or through a recapitalization resulting
in stock splits or combinations or exchanges of such
shares, the number of shares of Common Stock available
for Options and the number of such shares covered by
outstanding Options, and the exercise price per share of
the outstanding Options, shall be proportionately
adjusted by the Board to reflect any increase or
decrease in the number of issued shares of Common Stock:
provided, however, that any fractional shares resulting
from such adjustment shall be eliminated.
(b) In the event of the proposed dissolution or liquidation
of the Corporation, or any corporate separation or
division, including, but not limited to, split-up,
split-off or spin-off, or a merger or consolidation of
the Corporation with another corporation, or any sale or
transfer by the Corporation of all or substantially all
its assets or any tender offer or exchange offer for or
the acquisition, directly or indirectly, by any person
or group for more than 50% of the then outstanding
voting securities of the Corporation, the board may
provide that the Recipient shall have the right to
exercise such Option (at its then current Option Price)
solely for the kind and amount of shares of stock and
other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation,
corporate separation or division, merger or
consolidation, sale or transfer of assets or tender
offer or exchange offer, by a Recipient of the number of
shares of Common Stock for which such Option might have
been exercised immediately prior to such dissolution,
liquidation, corporate separation or division, or merger
or consolidation: sales or transfer of assets or tender
offer or exchange offer, or in the alternative the Board
may provide that each Option granted herein shall
terminate as of a date fixed by the Board: provided,
however, that not less than 30 day's written notice of
the date so fixed shall be given to the Recipient, who
shall have the right, during the period of 30 days
preceding such termination, to exercise the Option.
(c) Paragraph (b) of this Section 11 shall not apply to a
merger or consolidation in which the Corporation is the
surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities of any
other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the
Corporation in which the Corporation is the surviving
corporation and in which there is a reclassification or
change (including a change which results in the right to
receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par
value to par value, or as a result of a subdivision or
combination, but including any change in such shares
into two or more classes or series of shares), the Board
may provide that the Recipient shall have the right to
exercise such Option solely for the kind and
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amount of shares of stock and other securities
(including those of any direct or indirect Parent of the
Corporation), property, cash or any combination thereof
receivable upon such reclassification, change
consolidation or merger by the Recipient of the number
of shares of Common Stock for which Option might have
been exercised.
(d) If there is a change in the Common Stock of the
Corporation as presently constituted, which is limited
to a change of all of its authorized shares with par
value into the same number of shares with a different
par value or without par value, the shares resulting
from any such change shall be deemed to be the Common
Stock within the meaning of this Stock Option Agreement.
(e) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments
shall be made by the Board.
(f) Except as expressly provided in this Section 11, the
Recipient shall have no rights by reason of any
subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other
increase in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger, or
consolidation or split-up, split-off, or spin-off of
assets or stock of another corporation; and any issue by
the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any
class, shall not effect, and no adjustment by reason
thereof shall be made with respect to, the number or
price of shares of Common Stock subject to this Option.
The grant of this Option shall not affect in any way the
right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structures or to merge or
consolidate or to dissolve, liquidate or sell or
transfer all or any part of its business or assets.
12. Notices. Each notice relating to this Agreement will be in
writing and delivered in person or by certified mail to the
proper address. Notices to the Corporation shall be addressed to
the Corporation c/o President, Technology Guardian, Inc., 00000
Xxxxxx Xxxx., Xxxx X, Xxxxxxxx, Xxxxxx, XX 00000. Notices to the
Recipient or other person or persons then entitled to exercise
the Option shall be addressed to the Recipient or such other
person or persons at the Recipient's address specified below.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect given pursuant
to this Paragraph 12.
13. Approval of Consent. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be
subject to approval by the Corporation's counsel of all legal
matters in connection therewith, including compliance with the
requirements of the Securities Act, the Securities Exchange Act
of 1934, as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any national
securities exchange or association upon which the Common Stock
than may be listed.
14. Benefits of Agreement. This Agreement will inure to the benefit
of and be binding upon each successor and assign of the
Corporation. All obligations imposed upon the Recipient and all
rights granted to the Corporation under this Agreement will be
binding upon the Recipient's heirs, legal representatives and
successors.
15. Governmental and Other Regulations. The exercise of the Option
and the Corporation's obligation to sell and deliver shares upon
the exercise of rights to purchase shares is subject to all
applicable federal and state laws, rules and regulations, and to
such approvals by the regulatory or governmental agency which,
in the opinion of counsel for the Corporation, may be required.
16. Conditions to Exercise. The shares of stock deliverable upon the
exercise of the Option, or any portion thereof, may be either
previously authorized but unissued shares or issued shares which
have then been reacquired by the Company. Such shares shall be
fully paid and non-assessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of the Option or portion
thereof prior to fulfillment of all of the following conditions:
(i) The admission of such shares to listing on all stock
exchanges, if any, on which such class of stock is then
listed;
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(ii) The completion of any registration or other
qualification of such shares under any state or federal
law or under the rulings or regulations of the
Securities and Exchange Commission or any other
governmental regulatory body, which the Corporation
shall, in its absolute discretion, deem necessary or
advisable;
(iii) The obtaining of any approval or other clearance from
any state or federal governmental agency which the
Corporation shall, in its absolute discretion, determine
to be necessary or advisable;
(iv) The payment to the Company of all amounts which it is
required to withhold under federal, state or local law
in connection with the exercise of the Option; and
(v) The lapse of such reasonable period of time following
the exercise of the Option as the Corporation may from
time to time establish for reasons of administrative
convenience.
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This Stock Option Agreement is executed in the name and on behalf of the
Corporation by one of its duly authorized officers and by the Recipient all as
of the date first above written.
TECHNOLOGY GUARDIAN, INC.
By ____________________________
The undersigned Recipient understands the terms of this Option
Agreement. The undersigned agrees to comply with the terms and conditions of
this Option Agreement.
Date , 1999 Signature:
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Printed Name: Advantage Associates
Tax ID # (SSN):
----------------------
Address:
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No.4-012
THE OPTION TO PURCHASE SHARES OF THE COMMON STOCK OF TECHNOLOGY GUARDIAN, INC.,
REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE ACT. NEITHER THE OPTIONS NOR THE UNDERLYING SHARES MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF SAID CORPORATION AND SUCH FURTHER
RESTRICTIONS AS THE BOARD OF DIRECTORS MAY DETERMINE.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT effective as of this 1st day of October, 1998,
between Technology Guardian, Inc., a California corporation (the "Corporation"),
and Advantage Associates (the "Recipient").
WHEREAS, the Corporation, by action of the Board of Directors on July
28, 1998, has authorized the granting of stock options to purchase 150,000
shares of this Corporation's common stock, $.001 par value ("Common Stock"), to
Advantage Associates at an exercise price of $2.00 per share.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the Corporation and the Optionee agree
as follows:
1. Grant of Option. The Corporation hereby grants to Advantage
Associates an option to purchase (the "Option") an aggregate of
150,000 shares of the Corporation's common stock for a purchase
price of $ 2.00 per share (the "Option Price").
2. Vesting of Option. This option shall be immediately fully vested
from the Date of Grant.
3. Exercise of Option. This Option may be exercised in whole or in
part at any time during the term of the Option, provided,
however, no portion of this Option shall be exercisable after
the expiration of the term thereof.
The Option may be exercised, as provided in this Paragraph 3, by
notice and payment to the Corporation as provided in Paragraph 5
hereof.
4. Conversion. In lieu of exercising this Option as specified in
Paragraph 3, the Recipient may from time to time convert this
Option, in whole or in part, into a number of shares determined
by dividing (a) the aggregate Fair Market Value (determined on
the date of exercise) of the shares of the Corporation's Common
Stock issuable upon exercise of this Option (less the number of
shares as to which this Option has been previously exercised)
minus the aggregate Option Price of such shares minus all
amounts which it is required to withhold under federal, state or
local law in connection with the exercise of the Option, by (b)
the Fair Market Value (determined on the date of exercise) of
one share. This is represented mathematically as: {{(FMV per
share) X [(number of share issuable under the Option) - (share
previously issued and converted under the Option)]} - (amount
required to be withheld)} / (FMV per share). For purpose of this
Paragraph 4, "Fair Market Value" shall be the value determined
in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded
on the Nasdaq National Market System or the Nasdaq
SmallCap Market, the Fair Market Value shall be the
closing selling price per share of Common Stock on the
date in question, as such price is reported by the
National Association of Securities Dealers through the
Nasdaq National Market System or any successor system or
the Nasdaq SmallCap Market or any successor market. If
there is no closing selling price for the common stock
on the date in question, then the FMV shall be the
closing selling price on the last preceding date for
which such quotation exists.
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(b) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, the Fair Market Value
shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange
determined by the Board of Directors of the Corporation
to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
(c) If the Common Stock is at the time neither listed nor
admitted to trading on any stock exchange, not traded on
the Nasdaq National Market System nor on the Nasdaq
SmallCap Market, then such Fair Market Value shall be
determined by the Board of Directors of the Corporation
after taking into account such factors as the Board of
Directors of the Corporation shall deem appropriate.
5. Manner of Exercise.
(a) During the lifetime of the Recipient, only he may
exercise the Option or any portion thereof. After the
death of the Recipient, any exercisable portion of the
Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the
Recipient's personal representative or by any person
empowered to do so under the Recipient's will or under
the then applicable laws of descent and distribution.
(b) The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the
Secretary's office of all of the following prior to the
time when such exercisable Option or portion thereof
becomes unexercisable:
(i) Notice in writing signed by the Recipient, or such other
person then entitled to exercise the Option or portion thereof,
stating that the Option or portion thereof is thereby exercised,
such notice complying with all applicable rules established by
the Corporation; and
(ii) (a) Full payment (in cash or by check) for the shares with
respect to which such Option or portion thereof is
exercised; or
(b) With the consent of the Corporation, shares of the
Company's Common Stock owned by the Recipient duly
endorsed for transfer to the Company with a Fair Market
Value on the date of delivery equal to the aggregate
purchase price of the shares with respect to which such
Option or portion thereof is exercised.
6. Term of Option. The term of the Option will be through August
24, 2003, subject to Paragraphs 8 and 9 as provided in this
Agreement.
The Recipient of the Option will not have any rights to
dividends or any other rights of a shareholder with respect to
any shares of Common Stock subject to the Option until such
shares shall have been purchased through the exercise of the
Option and has been evidenced on the stock transfer records of
the Corporation maintained by the Corporation's transfer agent.
7. Performance Restrictions. The Recipient of this Option will not
have the right to exercise this Option until confirmation by the
Board of Directors that the following performance goals have
been completed:
NET SALES OF 2,000 UNITS SOLD BY THE EAST COAST OFFICE IN THE 12
MONTH PERIOD BEGINNING MARCH 1, 1999. HOWEVER, IF NET SALES OF
2,000 UNITS HAVE BEEN ACHIEVED BY AUGUST 31, 1999, THEN THE
NUMBER OF SHARES SUBJECT TO THIS OPTION SHALL BE INCREASED BY
50,000 SHARES. AFTER SUCH 2,000 UNITS IN NET SALES HAVE BEEN
ACHIEVED, THEN THE RECIPIENT SHALL BE ENTITLED TO THE RIGHTS
DESCRIBED IN SECTION 11(b), SUBJECT TO THE REQUIREMENTS AND
LIMITATIONS OF SECTION 11. ANY PARTY WHICH ACQUIRES CONTROL OF
THE CORPORATION SHALL BE REQUIRED TO HONOR THE RIGHTS OF
ADVANTAGE SET FORTH IN THIS AGREEMENT SUBSEQUENT TO THE
ACQUISITION OF CONTROL.
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For purposes of this paragraph, the East Coast Office shall mean
the people working out of the office of the Corporation located
in the Washington, D.C., metropolitan area as of the date of
this Agreement, and those who subsequently work in at such
office as approved by the Corporation as part of the East Coast
Office. The East Coast Office shall also include those VARs
recruited by and working under the direction of the East Coast
Office.
For purposes of this paragraph, a "unit" shall consist of a
server and associated hardware and the Corporation's software
that allows high-speed access to the Internet, together with a
service contract of at least two years duration. For purposes of
definition of "unit" in this paragraph, a server and/or
associated hardware may be furnished by the customer in lieu of
a server and associated hardware furnished by the Corporation.
A sale of a unit shall be deemed to occur or at such time as a
sale is recognized by the Corporation in accordance with
generally accepted accounting principles. Units which are
returned to the Corporation shall be deducted from the number of
Units sold. The number of Units sold less the number of Units
returned shall be the net Units sold.
8. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated
in any way (whether by operation of law or otherwise) (1)
without the consent of the Corporation, and (2) such transfer is
not in violation of the Securities Act of 1933, the Corporate
Securities Laws of the State of California, or the securities
laws of any state. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt
to make any such levy of execution, attachment or other process
not in accordance with the foregoing sentence shall cause the
Option to terminate immediately upon the happening of any such
event, and the Recipient shall lose all rights under this
agreement, provided, however, that any such termination of the
Option under the foregoing provisions of this Paragraph 6, will
not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
9. Death, Disability or Retirement of Recipient. The Recipient's
rights to exercise this Option upon the death, disability or
retirement of the Recipient are set forth as follows:
(a) If the Recipient ceases to be in Service to the
Corporation for a reason other than permanent disability
or death, the Recipient must, within (2) months after
the date of termination of such Service, but in no event
after the Option's stated expiration date, exercise some
or all of the Options that the Recipient was entitled to
exercise on the date the Recipient's Service terminated.
All options which have not vested in accordance with
Paragraph 2 will thereafter be void for all purposes. If
the Recipient ceases to be in Service to the Corporation
by reason of permanent disability within the meaning of
section 22(e)(3) of the Internal Revenue Code (as
determined by the Board of Directors), the Recipient
will have two (2) months after the date of termination
of Service, but in no event after the stated expiration
date of the Recipient's Options, to exercise Options
that the Recipient was entitled to exercise on the date
the Recipient's Service terminated as a result of the
disability.
(b) If a Recipient dies while in the Corporation's Service,
any Options that the Recipient was entitled to exercise
on the date of death will be exercisable within the
six-month period following the date of issuance of
letters testamentary or letters of administration of a
deceased Recipient, in the case of the Recipient's death
during his Service to the Corporation's Board, but not
later than one year after the Recipient's death or until
the stated expiration date of the Recipient's Option,
whichever occurs first, by the person or persons
("successors") to whom the Recipient's rights pass under
a will or by the laws of descent and distribution. As
soon as practicable after receipt by the Corporation of
such notice and of payment in full of the Option Price,
a certificate or certificates representing the Optioned
Shares shall be registered in the name or names
specified by the successors in the written notice of
exercise and shall be delivered to the successors.
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11
(c) The term "Service" means service as an employee, as an
independent contractor, or an employee of an independent
contractor.
10. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as
amended (the "Securities Act") and the Corporation has no
obligation to register under the Securities Act the Option or
any of the shares of Common Stock subject to and issuable upon
the exercise of the Option. The Recipient represents that the
Option is being acquired by him for investment and acknowledges
that all certificates for the shares issued upon exercise of the
Option will bear the following legend unless such shares are
registered under the Securities Act prior to their issuance:
The shares of Common Stock evidenced by this
certificate have been issued to the registered
owner in reliance upon written representations
that these shares have been purchased solely for
investment. These shares may not be sold,
transferred or assigned unless in the opinion of
the Corporation and its legal counsel such
sales, transfer or assignment will not be in
violation of the Securities Act of 1933, as
amended, and the rules and regulations
thereunder.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Securities Act and applicable state laws.
11. Effect of Certain Changes.
(a) If there is any change in the number of shares of
outstanding Common Stock through the declaration of
stock dividends, or through a recapitalization resulting
in stock splits or combinations or exchanges of such
shares, the number of shares of Common Stock available
for Options and the number of such shares covered by
outstanding Options, and the exercise price per share of
the outstanding Options, shall be proportionately
adjusted by the Board to reflect any increase or
decrease in the number of issued shares of Common Stock:
provided, however, that any fractional shares resulting
from such adjustment shall be eliminated.
(b) In the event of the proposed dissolution or liquidation
of the Corporation, or any corporate separation or
division, including, but not limited to, split-up,
split-off or spin-off, or a merger or consolidation of
the Corporation with another corporation, or any sale or
transfer by the Corporation of all or substantially all
its assets or any tender offer or exchange offer for or
the acquisition, directly or indirectly, by any person
or group for more than 50% of the then outstanding
voting securities of the Corporation, the board may
provide that the Recipient shall have the right to
exercise such Option (at its then current Option Price)
solely for the kind and amount of shares of stock and
other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation,
corporate separation or division, merger or
consolidation, sale or transfer of assets or tender
offer or exchange offer, by a Recipient of the number of
shares of Common Stock for which such Option might have
been exercised immediately prior to such dissolution,
liquidation, corporate separation or division, or merger
or consolidation: sales or transfer of assets or tender
offer or exchange offer, or in the alternative the Board
may provide that each Option granted herein shall
terminate as of a date fixed by the Board: provided,
however, that not less than 30 day's written notice of
the date so fixed shall be given to the Recipient, who
shall have the right, during the period of 30 days
preceding such termination, to exercise the Option.
(c) Paragraph (b) of this Section 11 shall not apply to a
merger or consolidation in which the Corporation is the
surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities of any
other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the
Corporation in which the Corporation is the surviving
corporation and in which there is a reclassification or
change (including a change which results in the right to
receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par
value to par value, or as a result of a subdivision or
combination, but including any change in such shares
into two or more classes or series of shares), the Board
may provide that the Recipient shall have the right to
exercise such Option solely for the kind and amount of
shares of stock and other securities (including those of
any direct or indirect Parent of the
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Corporation), property, cash or any combination thereof
receivable upon such reclassification, change
consolidation or merger by the Recipient of the number
of shares of Common Stock for which Option might have
been exercised.
(d) If there is a change in the Common Stock of the
Corporation as presently constituted, which is limited
to a change of all of its authorized shares with par
value into the same number of shares with a different
par value or without par value, the shares resulting
from any such change shall be deemed to be the Common
Stock within the meaning of this Stock Option Agreement.
(e) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments
shall be made by the Board.
(f) Except as expressly provided in this Section 11, the
Recipient shall have no rights by reason of any
subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other
increase in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger, or
consolidation or split-up, split-off, or spin-off of
assets or stock of another corporation; and any issue by
the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any
class, shall not effect, and no adjustment by reason
thereof shall be made with respect to, the number or
price of shares of Common Stock subject to this Option.
The grant of this Option shall not affect in any way the
right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structures or to merge or
consolidate or to dissolve, liquidate or sell or
transfer all or any part of its business or assets.
12. Notices. Each notice relating to this Agreement will be in
writing and delivered in person or by certified mail to the
proper address. Notices to the Corporation shall be addressed to
the Corporation c/o President, Technology Guardian, Inc., 00000
Xxxxxx Xxxx., Xxxx X, Xxxxxxxx, Xxxxxx, XX 00000. Notices to the
Recipient or other person or persons then entitled to exercise
the Option shall be addressed to the Recipient or such other
person or persons at the Recipient's address specified below.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect given pursuant
to this Paragraph 12.
13. Approval of Consent. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be
subject to approval by the Corporation's counsel of all legal
matters in connection therewith, including compliance with the
requirements of the Securities Act, the Securities Exchange Act
of 1934, as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any national
securities exchange or association upon which the Common Stock
than may be listed.
14. Benefits of Agreement. This Agreement will inure to the benefit
of and be binding upon each successor and assign of the
Corporation. All obligations imposed upon the Recipient and all
rights granted to the Corporation under this Agreement will be
binding upon the Recipient's heirs, legal representatives and
successors.
15. Governmental and Other Regulations. The exercise of the Option
and the Corporation's obligation to sell and deliver shares upon
the exercise of rights to purchase shares is subject to all
applicable federal and state laws, rules and regulations, and to
such approvals by the regulatory or governmental agency which,
in the opinion of counsel for the Corporation, may be required.
16. Conditions to Exercise. The shares of stock deliverable upon the
exercise of the Option, or any portion thereof, may be either
previously authorized but unissued shares or issued shares which
have then been reacquired by the Company. Such shares shall be
fully paid and non-assessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of the Option or portion
thereof prior to fulfillment of all of the following conditions:
(i) The admission of such shares to listing on all stock
exchanges, if any, on which such class of stock is then
listed;
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13
(ii) The completion of any registration or other
qualification of such shares under any state or federal
law or under the rulings or regulations of the
Securities and Exchange Commission or any other
governmental regulatory body, which the Corporation
shall, in its absolute discretion, deem necessary or
advisable;
(iii) The obtaining of any approval or other clearance from
any state or federal governmental agency which the
Corporation shall, in its absolute discretion, determine
to be necessary or advisable;
(iv) The payment to the Company of all amounts which it is
required to withhold under federal, state or local law
in connection with the exercise of the Option; and
(v) The lapse of such reasonable period of time following
the exercise of the Option as the Corporation may from
time to time establish for reasons of administrative
convenience.
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This Stock Option Agreement is executed in the name and on behalf of the
Corporation by one of its duly authorized officers and by the Recipient all as
of the date first above written.
TECHNOLOGY GUARDIAN, INC.
By
--------------------------
The undersigned Recipient understands the terms of this Option
Agreement. The undersigned agrees to comply with the terms and conditions of
this Option Agreement.
Date , 1999 Signature:
----------- --------------------------
Printed Name: Advantage Associates
Tax ID # (SSN):
----------------------
Address:
---------------------------
---------------------------
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No.4-013
THE OPTION TO PURCHASE SHARES OF THE COMMON STOCK OF TECHNOLOGY GUARDIAN, INC.,
REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE ACT. NEITHER THE OPTIONS NOR THE UNDERLYING SHARES MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF SAID CORPORATION AND SUCH FURTHER
RESTRICTIONS AS THE BOARD OF DIRECTORS MAY DETERMINE.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT effective as of this 1st day of October, 1998,
between Technology Guardian, Inc., a California corporation (the "Corporation"),
and Advantage Associates (the "Recipient").
WHEREAS, the Corporation, by action of the Board of Directors on July
28, 1998, has authorized the granting of stock options to purchase 100,000
shares of this Corporation's common stock, $.001 par value ("Common Stock"), to
Advantage Associates at an exercise price of $2.00 per share.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the Corporation and the Optionee agree
as follows:
1. Grant of Option. The Corporation hereby grants to Advantage
Associates an option to purchase (the "Option") an aggregate of
100,000 shares of the Corporation's common stock for a purchase
price of $ 2.00 per share (the "Option Price").
2. Vesting of Option. This option shall be immediately fully vested
from the Date of Grant.
3. Exercise of Option. This Option may be exercised in whole or in
part at any time during the term of the Option, provided,
however, no portion of this Option shall be exercisable after
the expiration of the term thereof.
The Option may be exercised, as provided in this Paragraph 3, by
notice and payment to the Corporation as provided in Paragraph 5
hereof.
4. Conversion. In lieu of exercising this Option as specified in
Paragraph 3, the Recipient may from time to time convert this
Option, in whole or in part, into a number of shares determined
by dividing (a) the aggregate Fair Market Value (determined on
the date of exercise) of the shares of the Corporation's Common
Stock issuable upon exercise of this Option (less the number of
shares as to which this Option has been previously exercised)
minus the aggregate Option Price of such shares minus all
amounts which it is required to withhold under federal, state or
local law in connection with the exercise of the Option, by (b)
the Fair Market Value (determined on the date of exercise) of
one share. This is represented mathematically as: {{(FMV per
share) X [(number of share issuable under the Option) - (share
previously issued and converted under the Option)]} - (amount
required to be withheld)} / (FMV per share). For purpose of this
Paragraph 4, "Fair Market Value" shall be the value determined
in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded
on the Nasdaq National Market System or the Nasdaq
SmallCap Market, the Fair Market Value shall be the
closing selling price per share of Common Stock on the
date in question, as such price is reported by the
National Association of Securities Dealers through the
Nasdaq National Market System or any successor system or
the Nasdaq SmallCap Market or any successor market. If
there is no closing selling price for the common stock
on the date in question, then the FMV shall be the
closing selling price on the last preceding date for
which such quotation exists.
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16
(b) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, the Fair Market Value
shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange
determined by the Board of Directors of the Corporation
to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
(c) If the Common Stock is at the time neither listed nor
admitted to trading on any stock exchange, not traded on
the Nasdaq National Market System nor on the Nasdaq
SmallCap Market, then such Fair Market Value shall be
determined by the Board of Directors of the Corporation
after taking into account such factors as the Board of
Directors of the Corporation shall deem appropriate.
5. Manner of Exercise.
(a) During the lifetime of the Recipient, only he may
exercise the Option or any portion thereof. After the
death of the Recipient, any exercisable portion of the
Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the
Recipient's personal representative or by any person
empowered to do so under the Recipient's will or under
the then applicable laws of descent and distribution.
(b) The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the
Secretary's office of all of the following prior to the
time when such exercisable Option or portion thereof
becomes unexercisable:
(i) Notice in writing signed by the Recipient, or such
other person then entitled to exercise the Option or
portion thereof, stating that the Option or portion
thereof is thereby exercised, such notice complying with
all applicable rules established by the Corporation; and
(ii) (a) Full payment (in cash or by check) for the
shares with respect to which such Option or
portion thereof is exercised; or
(b) With the consent of the Corporation, shares
of the Company's Common Stock owned by the
Recipient duly endorsed for transfer to the
Company with a Fair Market Value on the date of
delivery equal to the aggregate purchase price
of the shares with respect to which such Option
or portion thereof is exercised.
6. Term of Option. The term of the Option will be through August
24, 2003, subject to Paragraphs 8 and 9 as provided in this
Agreement.
The Recipient of the Option will not have any rights to
dividends or any other rights of a shareholder with respect to
any shares of Common Stock subject to the Option until such
shares shall have been purchased through the exercise of the
Option and has been evidenced on the stock transfer records of
the Corporation maintained by the Corporation's transfer agent.
7. Performance Restrictions. The Recipient of this Option will not
have the right to exercise this Option until confirmation by the
Board of Directors that the following performance goals have
been completed:
NET SALES OF 3,000 UNITS SOLD BY THE EAST COAST OFFICE PRIOR TO
MARCH 1, 2001. AFTER SUCH 3000 UNITS IN NET SALES HAVE BEEN
ACHIEVED, THEN THE RECIPIENT SHALL BE ENTITLED TO THE RIGHTS
DESCRIBED IN SECTION 11(b), SUBJECT TO THE REQUIREMENTS AND
LIMITATIONS OF SECTION 11. ANY PARTY WHICH ACQUIRES CONTROL OF
THE CORPORATION SHALL BE REQUIRED TO HONOR THE RIGHTS OF
ADVANTAGE SET FORTH IN THIS AGREEMENT SUBSEQUENT TO THE
ACQUISITION OF CONTROL.
For purposes of this paragraph, the East Coast Office shall mean
the people working out of the office of the Corporation located
in the Washington, D.C., metropolitan area as of the date of
this Agreement, and those
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17
who subsequently work in at such office as approved by the
Corporation as part of the East Coast Office. The East Coast
Office shall also include those VARs recruited by and working
under the direction of the East Coast Office.
For purposes of this paragraph, a "unit" shall consist of a
server and associated hardware and the Corporation's software
that allows high-speed access to the Internet, together with a
service contract of at least two years duration. For purposes of
definition of "unit" in this paragraph, a server and/or
associated hardware may be furnished by the customer in lieu of
a server and associated hardware furnished by the Corporation.
A sale of a unit shall be deemed to occur or at such time as a
sale is recognized by the Corporation in accordance with
generally accepted accounting principles. Units which are
returned to the Corporation shall be deducted from the number of
Units sold. The number of Units sold less the number of Units
returned shall be the net Units sold.
8. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated
in any way (whether by operation of law or otherwise) (1)
without the consent of the Corporation, and (2) such transfer is
not in violation of the Securities Act of 1933, the Corporate
Securities Laws of the State of California, or the securities
laws of any state. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt
to make any such levy of execution, attachment or other process
not in accordance with the foregoing sentence shall cause the
Option to terminate immediately upon the happening of any such
event, and the Recipient shall lose all rights under this
agreement, provided, however, that any such termination of the
Option under the foregoing provisions of this Paragraph 6, will
not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
9. Death, Disability or Retirement of Recipient. The Recipient's
rights to exercise this Option upon the death, disability or
retirement of the Recipient are set forth as follows:
(a) If the Recipient ceases to be in Service to the
Corporation for a reason other than permanent disability
or death, the Recipient must, within (2) months after
the date of termination of such Service, but in no event
after the Option's stated expiration date, exercise some
or all of the Options that the Recipient was entitled to
exercise on the date the Recipient's Service terminated.
All options which have not vested in accordance with
Paragraph 2 will thereafter be void for all purposes. If
the Recipient ceases to be in Service to the Corporation
by reason of permanent disability within the meaning of
section 22(e)(3) of the Internal Revenue Code (as
determined by the Board of Directors), the Recipient
will have two (2) months after the date of termination
of Service, but in no event after the stated expiration
date of the Recipient's Options, to exercise Options
that the Recipient was entitled to exercise on the date
the Recipient's Service terminated as a result of the
disability.
(b) If a Recipient dies while in the Corporation's Service,
any Options that the Recipient was entitled to exercise
on the date of death will be exercisable within the
six-month period following the date of issuance of
letters testamentary or letters of administration of a
deceased Recipient, in the case of the Recipient's death
during his Service to the Corporation's Board, but not
later than one year after the Recipient's death or until
the stated expiration date of the Recipient's Option,
whichever occurs first, by the person or persons
("successors") to whom the Recipient's rights pass under
a will or by the laws of descent and distribution. As
soon as practicable after receipt by the Corporation of
such notice and of payment in full of the Option Price,
a certificate or certificates representing the Optioned
Shares shall be registered in the name or names
specified by the successors in the written notice of
exercise and shall be delivered to the successors.
(c) The term "Service" means service as an employee, as an
independent contractor, or an employee of an independent
contractor.
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18
10. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as
amended (the "Securities Act") and the Corporation has no
obligation to register under the Securities Act the Option or
any of the shares of Common Stock subject to and issuable upon
the exercise of the Option. The Recipient represents that the
Option is being acquired by him for investment and acknowledges
that all certificates for the shares issued upon exercise of the
Option will bear the following legend unless such shares are
registered under the Securities Act prior to their issuance:
The shares of Common Stock evidenced by this
certificate have been issued to the registered
owner in reliance upon written representations
that these shares have been purchased solely for
investment. These shares may not be sold,
transferred or assigned unless in the opinion of
the Corporation and its legal counsel such
sales, transfer or assignment will not be in
violation of the Securities Act of 1933, as
amended, and the rules and regulations
thereunder.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Securities Act and applicable state laws.
11. Effect of Certain Changes.
(a) If there is any change in the number of shares of
outstanding Common Stock through the declaration of
stock dividends, or through a recapitalization resulting
in stock splits or combinations or exchanges of such
shares, the number of shares of Common Stock available
for Options and the number of such shares covered by
outstanding Options, and the exercise price per share of
the outstanding Options, shall be proportionately
adjusted by the Board to reflect any increase or
decrease in the number of issued shares of Common Stock:
provided, however, that any fractional shares resulting
from such adjustment shall be eliminated.
(b) In the event of the proposed dissolution or liquidation
of the Corporation, or any corporate separation or
division, including, but not limited to, split-up,
split-off or spin-off, or a merger or consolidation of
the Corporation with another corporation, or any sale or
transfer by the Corporation of all or substantially all
its assets or any tender offer or exchange offer for or
the acquisition, directly or indirectly, by any person
or group for more than 50% of the then outstanding
voting securities of the Corporation, the board may
provide that the Recipient shall have the right to
exercise such Option (at its then current Option Price)
solely for the kind and amount of shares of stock and
other securities, property, cash or any combination
thereof receivable upon such dissolution, liquidation,
corporate separation or division, merger or
consolidation, sale or transfer of assets or tender
offer or exchange offer, by a Recipient of the number of
shares of Common Stock for which such Option might have
been exercised immediately prior to such dissolution,
liquidation, corporate separation or division, or merger
or consolidation: sales or transfer of assets or tender
offer or exchange offer, or in the alternative the Board
may provide that each Option granted herein shall
terminate as of a date fixed by the Board: provided,
however, that not less than 30 day's written notice of
the date so fixed shall be given to the Recipient, who
shall have the right, during the period of 30 days
preceding such termination, to exercise the Option.
(c) Paragraph (b) of this Section 11 shall not apply to a
merger or consolidation in which the Corporation is the
surviving corporation and shares of Common Stock are not
converted into or exchanged for stock, securities of any
other corporation, cash or any other thing of value.
Notwithstanding the preceding sentence, in case of any
consolidation or merger of another corporation into the
Corporation in which the Corporation is the surviving
corporation and in which there is a reclassification or
change (including a change which results in the right to
receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par
value to par value, or as a result of a subdivision or
combination, but including any change in such shares
into two or more classes or series of shares), the Board
may provide that the Recipient shall have the right to
exercise such Option solely for the kind and amount of
shares of stock and other securities (including those of
any direct or indirect Parent of the Corporation),
property, cash or any combination thereof receivable
upon such reclassification, change consolidation or
merger by the Recipient of the number of shares of
Common Stock for which Option might have been exercised.
-4-
19
(d) If there is a change in the Common Stock of the
Corporation as presently constituted, which is limited
to a change of all of its authorized shares with par
value into the same number of shares with a different
par value or without par value, the shares resulting
from any such change shall be deemed to be the Common
Stock within the meaning of this Stock Option Agreement.
(e) To the extent that the foregoing adjustments relate to
stock or securities of the Corporation, such adjustments
shall be made by the Board.
(f) Except as expressly provided in this Section 11, the
Recipient shall have no rights by reason of any
subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other
increase in the number of shares of stock of any class
or by reason of any dissolution, liquidation, merger, or
consolidation or split-up, split-off, or spin-off of
assets or stock of another corporation; and any issue by
the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any
class, shall not effect, and no adjustment by reason
thereof shall be made with respect to, the number or
price of shares of Common Stock subject to this Option.
The grant of this Option shall not affect in any way the
right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its
capital or business structures or to merge or
consolidate or to dissolve, liquidate or sell or
transfer all or any part of its business or assets.
12. Notices. Each notice relating to this Agreement will be in
writing and delivered in person or by certified mail to the
proper address. Notices to the Corporation shall be addressed to
the Corporation c/o President, Technology Guardian, Inc., 00000
Xxxxxx Xxxx., Xxxx X, Xxxxxxxx, Xxxxxx, XX 00000. Notices to the
Recipient or other person or persons then entitled to exercise
the Option shall be addressed to the Recipient or such other
person or persons at the Recipient's address specified below.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect given pursuant
to this Paragraph 12.
13. Approval of Consent. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be
subject to approval by the Corporation's counsel of all legal
matters in connection therewith, including compliance with the
requirements of the Securities Act, the Securities Exchange Act
of 1934, as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any national
securities exchange or association upon which the Common Stock
than may be listed.
14. Benefits of Agreement. This Agreement will inure to the benefit
of and be binding upon each successor and assign of the
Corporation. All obligations imposed upon the Recipient and all
rights granted to the Corporation under this Agreement will be
binding upon the Recipient's heirs, legal representatives and
successors.
15. Governmental and Other Regulations. The exercise of the Option
and the Corporation's obligation to sell and deliver shares upon
the exercise of rights to purchase shares is subject to all
applicable federal and state laws, rules and regulations, and to
such approvals by the regulatory or governmental agency which,
in the opinion of counsel for the Corporation, may be required.
16. Conditions to Exercise. The shares of stock deliverable upon the
exercise of the Option, or any portion thereof, may be either
previously authorized but unissued shares or issued shares which
have then been reacquired by the Company. Such shares shall be
fully paid and non-assessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of the Option or portion
thereof prior to fulfillment of all of the following conditions:
(i) The admission of such shares to listing on all stock
exchanges, if any, on which such class of stock is then
listed;
(ii) The completion of any registration or other
qualification of such shares under any state or federal
law or under the rulings or regulations of the
Securities and Exchange Commission or any other
governmental regulatory body, which the Corporation
shall, in its absolute discretion, deem necessary or
advisable;
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(iii) The obtaining of any approval or other clearance from any state
or federal governmental agency which the Corporation shall, in
its absolute discretion, determine to be necessary or advisable;
(iv) The payment to the Company of all amounts which it is required to
withhold under federal, state or local law in connection with the
exercise of the Option; and
(v) The lapse of such reasonable period of time following the
exercise of the Option as the Corporation may from time to time
establish for reasons of administrative convenience.
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This Stock Option Agreement is executed in the name and on behalf of the
Corporation by one of its duly authorized officers and by the Recipient all as
of the date first above written.
TECHNOLOGY GUARDIAN, INC.
By
-----------------------------
The undersigned Recipient understands the terms of this Option
Agreement. The undersigned agrees to comply with the terms and conditions of
this Option Agreement.
Date , 1999 Signature:
----------- --------------------------
Printed Name: Advantage Associates
Tax ID # (SSN):
----------------------
Address:
---------------------------
---------------------------
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No.4-014
THE OPTION TO PURCHASE SHARES OF THE COMMON STOCK OF TECHNOLOGY GUARDIAN, INC.,
REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 (THE "ACT"), AND ARE "RESTRICTED SECURITIES" AS THAT TERM IS DEFINED IN
RULE 144 UNDER THE ACT. NEITHER THE OPTIONS NOR THE UNDERLYING SHARES MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, THE AVAILABILITY OF WHICH IS TO BE
ESTABLISHED TO THE SATISFACTION OF SAID CORPORATION AND SUCH FURTHER
RESTRICTIONS AS THE BOARD OF DIRECTORS MAY DETERMINE.
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT effective as of this 1st day of October, 1998,
between Technology Guardian, Inc., a California corporation (the "Corporation"),
and Advantage Associates (the "Recipient").
WHEREAS, the Corporation, by action of the Board of Directors on July
28, 1998, has authorized the granting of stock options to purchase 100,000
shares of this Corporation's common stock, $.001 par value ("Common Stock"), to
Advantage Associates at an exercise price of $2.00 per share.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy whereof is hereby acknowledged, the Corporation and the Optionee agree
as follows:
1. Grant of Option. The Corporation hereby grants to Advantage
Associates an option to purchase (the "Option") an aggregate of
100,000 shares of the Corporation's common stock for a purchase
price of $ 2.00 per share (the "Option Price").
2. Vesting of Option. This option shall be immediately fully vested
from the Date of Grant.
3. Exercise of Option. This Option may be exercised in whole or in
part at any time during the term of the Option, provided,
however, no portion of this Option shall be exercisable after
the expiration of the term thereof.
The Option may be exercised, as provided in this Paragraph 3, by
notice and payment to the Corporation as provided in Paragraph 5
hereof.
4. Conversion. In lieu of exercising this Option as specified in
Paragraph 3, the Recipient may from time to time convert this
Option, in whole or in part, into a number of shares determined
by dividing (a) the aggregate Fair Market Value (determined on
the date of exercise) of the shares of the Corporation's Common
Stock issuable upon exercise of this Option (less the number of
shares as to which this Option has been previously exercised)
minus the aggregate Option Price of such shares minus all
amounts which it is required to withhold under federal, state or
local law in connection with the exercise of the Option, by (b)
the Fair Market Value (determined on the date of exercise) of
one share. This is represented mathematically as: {{(FMV per
share) X [(number of share issuable under the Option) - (share
previously issued and converted under the Option)]} - (amount
required to be withheld)} / (FMV per share). For purpose of this
Paragraph 4, "Fair Market Value" shall be the value determined
in accordance with the following provisions:
(a) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded
on the Nasdaq National Market System or the Nasdaq
SmallCap Market, the Fair Market Value shall be the
closing selling price per share of Common Stock on the
date in question, as such price is reported by the
National Association of Securities Dealers through the
Nasdaq National Market System or any successor system or
the Nasdaq SmallCap Market or any successor market. If
there is no closing selling price for the common stock
on the date in question, then the FMV shall be the
closing selling price on the last preceding date for
which such quotation exists.
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(b) If the Common Stock is at the time listed or admitted to
trading on any stock exchange, the Fair Market Value
shall be the closing selling price per share of Common
Stock on the date in question on the stock exchange
determined by the Board of Directors of the Corporation
to be the primary market for the Common Stock, as such
price is officially quoted in the composite tape of
transactions on such exchange. If there is no closing
selling price for the Common Stock on the date in
question, then the Fair Market Value shall be the
closing selling price on the last preceding date for
which such quotation exists.
(c) If the Common Stock is at the time neither listed nor
admitted to trading on any stock exchange, not traded on
the Nasdaq National Market System nor on the Nasdaq
SmallCap Market, then such Fair Market Value shall be
determined by the Board of Directors of the Corporation
after taking into account such factors as the Board of
Directors of the Corporation shall deem appropriate.
5. Manner of Exercise.
(a) During the lifetime of the Recipient, only he may
exercise the Option or any portion thereof. After the
death of the Recipient, any exercisable portion of the
Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by the
Recipient's personal representative or by any person
empowered to do so under the Recipient's will or under
the then applicable laws of descent and distribution.
(b) The Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or the
Secretary's office of all of the following prior to the
time when such exercisable Option or portion thereof
becomes unexercisable:
(i) Notice in writing signed by the Recipient, or such
other person then entitled to exercise the Option or
portion thereof, stating that the Option or portion
thereof is thereby exercised, such notice complying with
all applicable rules established by the Corporation; and
(ii) (a) Full payment (in cash or by check) for the
shares with respect to which such Option or
portion thereof is exercised; or
(b) With the consent of the Corporation, shares
of the Company's Common Stock owned by the
Recipient duly endorsed for transfer to the
Company with a Fair Market Value on the date of
delivery equal to the aggregate purchase price
of the shares with respect to which such Option
or portion thereof is exercised.
6. Term of Option. The term of the Option will be through August
24, 2003, subject to Paragraphs 8 and 9 as provided in this
Agreement.
The Recipient of the Option will not have any rights to
dividends or any other rights of a shareholder with respect to
any shares of Common Stock subject to the Option until such
shares shall have been purchased through the exercise of the
Option and has been evidenced on the stock transfer records of
the Corporation maintained by the Corporation's transfer agent.
7. Performance Restrictions. The Recipient of this Option will not
have the right to exercise this Option until confirmation by the
Board of Directors that the following performance goals have
been completed:
NET SALES OF 4,000 UNITS SOLD BY THE EAST COAST OFFICE PRIOR TO
MARCH 1, 2001. AFTER SUCH 4,000 UNITS IN NET SALES HAVE BEEN
ACHIEVED, THEN THE RECIPIENT SHALL BE ENTITLED TO THE RIGHTS
DESCRIBED IN SECTION 11(b), SUBJECT TO THE REQUIREMENTS AND
LIMITATIONS OF SECTION 11. ANY PARTY WHICH ACQUIRES CONTROL OF
THE CORPORATION SHALL BE REQUIRED TO HONOR THE RIGHTS OF
ADVANTAGE SET FORTH IN THIS AGREEMENT SUBSEQUENT TO THE
ACQUISITION OF CONTROL.
For purposes of this paragraph, the East Coast Office shall mean
the people working out of the office of the Corporation located
in the Washington, D.C., metropolitan area as of the date of
this Agreement, and those
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who subsequently work in at such office as approved by the
Corporation as part of the East Coast Office. The East Coast
Office shall also include those VARs recruited by and working
under the direction of the East Coast Office.
For purposes of this paragraph, a "unit" shall consist of a
server and associated hardware and the Corporation's software
that allows high-speed access to the Internet, together with a
service contract of at least two years duration. For purposes of
definition of "unit" in this paragraph, a server and/or
associated hardware may be furnished by the customer in lieu of
a server and associated hardware furnished by the Corporation.
A sale of a unit shall be deemed to occur or at such time as a
sale is recognized by the Corporation in accordance with
generally accepted accounting principles. Units which are
returned to the Corporation shall be deducted from the number of
Units sold. The number of Units sold less the number of Units
returned shall be the net Units sold.
8. Transferability Restriction. The Option may not be assigned,
transferred or otherwise disposed of, or pledged or hypothecated
in any way (whether by operation of law or otherwise) (1)
without the consent of the Corporation, and (2) such transfer is
not in violation of the Securities Act of 1933, the Corporate
Securities Laws of the State of California, or the securities
laws of any state. Any assignment, transfer, pledge,
hypothecation or other disposition of the Option or any attempt
to make any such levy of execution, attachment or other process
not in accordance with the foregoing sentence shall cause the
Option to terminate immediately upon the happening of any such
event, and the Recipient shall lose all rights under this
agreement, provided, however, that any such termination of the
Option under the foregoing provisions of this Paragraph 6, will
not prejudice any rights or remedies which the Corporation may
have under this Agreement or otherwise.
9. Death, Disability or Retirement of Recipient. The Recipient's
rights to exercise this Option upon the death, disability or
retirement of the Recipient are set forth as follows:
(a) If the Recipient ceases to be in Service to the
Corporation for a reason other than permanent disability
or death, the Recipient must, within (2) months after
the date of termination of such Service, but in no event
after the Option's stated expiration date, exercise some
or all of the Options that the Recipient was entitled to
exercise on the date the Recipient's Service terminated.
All options which have not vested in accordance with
Paragraph 2 will thereafter be void for all purposes. If
the Recipient ceases to be in Service to the Corporation
by reason of permanent disability within the meaning of
section 22(e)(3) of the Internal Revenue Code (as
determined by the Board of Directors), the Recipient
will have two (2) months after the date of termination
of Service, but in no event after the stated expiration
date of the Recipient's Options, to exercise Options
that the Recipient was entitled to exercise on the date
the Recipient's Service terminated as a result of the
disability.
(b) If a Recipient dies while in the Corporation's Service,
any Options that the Recipient was entitled to exercise
on the date of death will be exercisable within the
six-month period following the date of issuance of
letters testamentary or letters of administration of a
deceased Recipient, in the case of the Recipient's death
during his Service to the Corporation's Board, but not
later than one year after the Recipient's death or until
the stated expiration date of the Recipient's Option,
whichever occurs first, by the person or persons
("successors") to whom the Recipient's rights pass under
a will or by the laws of descent and distribution. As
soon as practicable after receipt by the Corporation of
such notice and of payment in full of the Option Price,
a certificate or certificates representing the Optioned
Shares shall be registered in the name or names
specified by the successors in the written notice of
exercise and shall be delivered to the successors.
(c) The term "Service" means service as an employee, as an
independent contractor, or an employee of an independent
contractor.
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10. No Registration Obligation. The Recipient understands that the
Option is not registered under the Securities Act of 1933, as
amended (the "Securities Act") and the Corporation has no
obligation to register under the Securities Act the Option or
any of the shares of Common Stock subject to and issuable upon
the exercise of the Option. The Recipient represents that the
Option is being acquired by him for investment and acknowledges
that all certificates for the shares issued upon exercise of the
Option will bear the following legend unless such shares are
registered under the Securities Act prior to their issuance:
The shares of Common Stock evidenced by this
certificate have been issued to the registered
owner in reliance upon written representations
that these shares have been purchased solely for
investment. These shares may not be sold,
transferred or assigned unless in the opinion of
the Corporation and its legal counsel such
sales, transfer or assignment will not be in
violation of the Securities Act of 1933, as
amended, and the rules and regulations
thereunder.
The Recipient further understands and agrees that the Option may be
exercised only if at the time of such exercise the Recipient and the Corporation
are able to establish the existence of an exemption from registration under the
Securities Act and applicable state laws.
11. Effect of Certain Changes.
(a) If there is any change in the number of shares of outstanding
Common Stock through the declaration of stock dividends, or
through a recapitalization resulting in stock splits or
combinations or exchanges of such shares, the number of shares
of Common Stock available for Options and the number of such
shares covered by outstanding Options, and the exercise price
per share of the outstanding Options, shall be proportionately
adjusted by the Board to reflect any increase or decrease in the
number of issued shares of Common Stock: provided, however, that
any fractional shares resulting from such adjustment shall be
eliminated.
(b) In the event of the proposed dissolution or liquidation of the
Corporation, or any corporate separation or division, including,
but not limited to, split-up, split-off or spin-off, or a merger
or consolidation of the Corporation with another corporation, or
any sale or transfer by the Corporation of all or substantially
all its assets or any tender offer or exchange offer for or the
acquisition, directly or indirectly, by any person or group for
more than 50% of the then outstanding voting securities of the
Corporation, the board may provide that the Recipient shall have
the right to exercise such Option (at its then current Option
Price) solely for the kind and amount of shares of stock and
other securities, property, cash or any combination thereof
receivable upon such dissolution, liquidation, corporate
separation or division, merger or consolidation, sale or
transfer of assets or tender offer or exchange offer, by a
Recipient of the number of shares of Common Stock for which such
Option might have been exercised immediately prior to such
dissolution, liquidation, corporate separation or division, or
merger or consolidation: sales or transfer of assets or tender
offer or exchange offer, or in the alternative the Board may
provide that each Option granted herein shall terminate as of a
date fixed by the Board: provided, however, that not less than
30 day's written notice of the date so fixed shall be given to
the Recipient, who shall have the right, during the period of 30
days preceding such termination, to exercise the Option.
(c) Paragraph (b) of this Section 11 shall not apply to a merger or
consolidation in which the Corporation is the surviving
corporation and shares of Common Stock are not converted into or
exchanged for stock, securities of any other corporation, cash
or any other thing of value. Notwithstanding the preceding
sentence, in case of any consolidation or merger of another
corporation into the Corporation in which the Corporation is the
surviving corporation and in which there is a reclassification
or change (including a change which results in the right to
receive cash or other property) of the shares of Common Stock
(other than a change in par value, or from no par value to par
value, or as a result of a subdivision or combination, but
including any change in such shares into two or more classes or
series of shares), the Board may provide that the Recipient
shall have the right to exercise such Option solely for the kind
and amount of shares of stock and other securities (including
those of any direct or indirect Parent of the Corporation),
property, cash or any combination thereof receivable upon such
reclassification, change consolidation or merger by the
Recipient of the number of shares of Common Stock for which
Option might have been exercised.
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(d) If there is a change in the Common Stock of the Corporation as
presently constituted, which is limited to a change of all of
its authorized shares with par value into the same number of
shares with a different par value or without par value, the
shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of this Stock Option Agreement.
(e) To the extent that the foregoing adjustments relate to stock or
securities of the Corporation, such adjustments shall be made by
the Board.
(f) Except as expressly provided in this Section 11, the Recipient
shall have no rights by reason of any subdivision or
consolidation of shares of stock of any class or the payment of
any stock dividend or any other increase in the number of shares
of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or split-up, split-off, or
spin-off of assets or stock of another corporation; and any
issue by the Corporation of shares of stock of any class, or
securities convertible into shares of stock of any class, shall
not effect, and no adjustment by reason thereof shall be made
with respect to, the number or price of shares of Common Stock
subject to this Option. The grant of this Option shall not
affect in any way the right or power of the Corporation to make
adjustments, reclassifications, reorganizations or changes of
its capital or business structures or to merge or consolidate or
to dissolve, liquidate or sell or transfer all or any part of
its business or assets.
12. Notices. Each notice relating to this Agreement will be in
writing and delivered in person or by certified mail to the
proper address. Notices to the Corporation shall be addressed to
the Corporation c/o President, Technology Guardian, Inc., 00000
Xxxxxx Xxxx., Xxxx X, Xxxxxxxx, Xxxxxx, XX 00000. Notices to the
Recipient or other person or persons then entitled to exercise
the Option shall be addressed to the Recipient or such other
person or persons at the Recipient's address specified below.
Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect given pursuant
to this Paragraph 12.
13. Approval of Consent. The exercise of the Option and the issuance
and delivery of shares of Common Stock pursuant thereto shall be
subject to approval by the Corporation's counsel of all legal
matters in connection therewith, including compliance with the
requirements of the Securities Act, the Securities Exchange Act
of 1934, as amended, applicable state securities laws, the rules
and regulations thereunder, and the requirements of any national
securities exchange or association upon which the Common Stock
than may be listed.
14. Benefits of Agreement. This Agreement will inure to the benefit
of and be binding upon each successor and assign of the
Corporation. All obligations imposed upon the Recipient and all
rights granted to the Corporation under this Agreement will be
binding upon the Recipient's heirs, legal representatives and
successors.
15. Governmental and Other Regulations. The exercise of the Option
and the Corporation's obligation to sell and deliver shares upon
the exercise of rights to purchase shares is subject to all
applicable federal and state laws, rules and regulations, and to
such approvals by the regulatory or governmental agency which,
in the opinion of counsel for the Corporation, may be required.
16. Conditions to Exercise. The shares of stock deliverable upon the
exercise of the Option, or any portion thereof, may be either
previously authorized but unissued shares or issued shares which
have then been reacquired by the Company. Such shares shall be
fully paid and non-assessable. The Company shall not be required
to issue or deliver any certificate or certificates for shares
of stock purchased upon the exercise of the Option or portion
thereof prior to fulfillment of all of the following conditions:
(i) The admission of such shares to listing on all stock
exchanges, if any, on which such class of stock is then
listed;
(ii) The completion of any registration or other
qualification of such shares under any state or federal
law or under the rulings or regulations of the
Securities and Exchange Commission or any other
governmental regulatory body, which the Corporation
shall, in its absolute discretion, deem necessary or
advisable;
-5-
27
(iii) The obtaining of any approval or other clearance from
any state or federal governmental agency which the
Corporation shall, in its absolute discretion, determine
to be necessary or advisable;
(iv) The payment to the Company of all amounts which it is
required to withhold under federal, state or local law
in connection with the exercise of the Option; and
(v) The lapse of such reasonable period of time following
the exercise of the Option as the Corporation may from
time to time establish for reasons of administrative
convenience.
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This Stock Option Agreement is executed in the name and on behalf of the
Corporation by one of its duly authorized officers and by the Recipient all as
of the date first above written.
TECHNOLOGY GUARDIAN, INC.
By ----------------------------------
The undersigned Recipient understands the terms of this Option
Agreement. The undersigned agrees to comply with the terms and conditions of
this Option Agreement.
Date , 1999 Signature:
------------- --------------------------
Printed Name: Advantage Associates
Tax ID # (SSN):
---------------------
Address:
----------------------------
----------------------------
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