STOCK OPTION AGREEMENT
THIS
OPTION AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933.
THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED,
OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE
COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH
ACT
OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.
THIS
GRANT, dated as of the date of grant first stated above (the "Date of
Grant"),
is delivered by Bluegate Corporation (the "Company") to Xxxxxxx X. Xxxxxx
(the
"Grantee"),
who is an employee, consultant or director of the Company or one of its
subsidiaries
(the Company is sometimes referred to herein as the "Employer").
WHEREAS,
the Board of Directors of the Company (the "Board") approved the Company's
grant
to Grantee the right to purchase shares of the Common Stock of the Company,
par value $0.001 per share (the "Stock"), in accordance with the terms and
provisions
hereof.
NOW,
THEREFORE, the parties hereto, intending to be legally bound hereby,
agree
as
follows:
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1.
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Grant
of Option.
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Subject
to the terms and conditions hereinafter set forth, the Company, with the
approval
and at the direction of the Board, hereby grants to the Grantee, as of the
Date
of Grant, an option to purchase up to 1,200,000 shares of Stock
at a price of $0.95
per share. Such option is hereinafter referred to as the "Option" and
the shares
of
stock purchasable upon exercise of the Option are hereinafter sometimes
referred
to as the "Option Shares." The Option Shares to be issued pursuant to
this
Stock Option Agreement shall be restricted securities.
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2.
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Vesting.
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This
Option shall vest according to the schedule below:
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Option
Shares
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Vesting
Date
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600,000
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December 31, 2006
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25,000
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January
1, 2007
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25,000
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February 1,2007
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25,000
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March 1, 2007
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|
25,000
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April
1, 2007
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|
25,000
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May
1, 2007
|
|
25,000
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June
1, 2007
|
|
25,000
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July
1, 2007
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|
25,000
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August 1, 2007
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1
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25,000
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September
1, 2007
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|
25,000
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October 1, 2007
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|
25,000
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November
1,2007
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|
25,000
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December 1, 2007
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|
25,000
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January 1, 2008
|
|
25,000
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February 1, 2008
|
|
25,000
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March 1, 2008
|
|
25,000
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April
1, 2008
|
|
25,000
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May
1, 2008
|
|
25,000
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June
1, 2008
|
|
25,000
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July
1, 2008
|
|
25,000
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August 1, 2008
|
|
25,000
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September 1,2008
|
|
25,000
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October
1,2008
|
|
25,000
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November 1, 2008
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25,000
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December 1,2008
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3.
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Termination
of Option.
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(a)
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The
Option and all rights hereunder with respect thereto, to the extent
suchOption
has vested, shall terminate and become null and void after theexpiration
of five (5) years from the Date of Grant (the "Option Term").To
the extent that the Option has not vested in accordance with Section
2above,
then the non-vested portion of the Option shall terminate andbecome
null and void upon the termination of the Grantee as an employee,officer
or director of the Company.
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(b)
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In
the event of the death of the Grantee, the Option may be exercised
bythe
Grantee's legal representative(s), but only to the extent that
the
Optionwould
otherwise have been exercisable by the
Grantee.
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(c)
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In
the event the Board (or Committee, if any) finds by a majority
vote
after
full consideration of the facts that Grantee, before or after
termination
of his employment with the Company or an Affiliate for any reason
(i) committed or engaged in fraud, embezzlement, theft, commission
of a felony, or proven dishonesty in the course of his employment
by the
Company or any subsidiary or affiliate of the Company,
which conduct damaged the Company or subsidiary or affiliate,
or
disclosed trade secrets of the Company its subsidiary or its
affiliate, or
(ii)
participated, engaged in or had a material, financial or other
interest,
whether
as an employee, officer, director, consultant, contractor, shareholder,
owner, or otherwise, in any commercial endeavor anywhere which
is competitive with the business of the Company or a subsidiary
or
Affiliate
without the written consent of the Company, the Grantee shall
forfeit all
outstanding Options. Clause (ii) shall not be deemed to have
been
violated solely by reason of the Grantee's ownership of stock
or
securities
of any publicly owned corporation, if that ownership does not
result
in effective control of the
corporation.
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The
decision of the Board (or Committee, if any) as to the cause of the Grantee's
discharge, the damage done to the Company or a subsidiary or an
affiliate, and the extent of the Grantee's competitive activity shall be
final.
No decision of the Board (or Committee, if any) however, shall affect
the finality of the discharge of the Grantee by the
Company.
2
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4.
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Exercise
of Options.
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(a)
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The
Grantee may exercise the Option with respect to all or any part
of the
number
of Option Shares then exercisable hereunder by giving the Secretary
of the Company written notice of intent to exercise. The notice
of
exercise shall specify the number of Option Shares as to which
the
Option
is to be exercised and the date of exercise thereof, which date
shall
be
at least five days after the giving of such notice unless an
earlier time
shall
have been mutually agreed upon. Notwithstanding the foregoing,
an
Option
granted under this Agreement may be exercised in increments of
not
less than 10% of the full number of Shares as to which it can
be
exercised.
A partial exercise of an Option will not affect the Grantee's
right
to exercise the Option from time to time in accordance with this
Agreement
as to the remaining Shares subject to the
Option.
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(b)
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Full
payment (in U.S. dollars) by the Grantee of the option price
for the
Option
Shares purchased shall be made on or before the exercise date
specified
in the notice of exercise in cash, or certified or cashier's
check or
money
order, or, with the prior written consent of the Board, in whole
or
in
part through the surrender of previously acquired shares of Stock
at
their
fair market value on the exercise
date.
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On
the
exercise date specified in the Grantee's notice or as soon thereafter
as
is
practicable, but not to exceed ten (10) business days, the Company shall
cause
to be delivered to the Grantee, a certificate or certificates for the
Option Shares then being purchased (out of theretofore unissued Stock
or
reacquired Stock, as the Company may elect) upon full payment for such
Option Shares. If the Grantee fails to pay for any of the Option Shares
specified in such notice, the Grantee's right to purchase such Option
Shares may be terminated by the Company. The date specified in the Grantee's
notice as the date of exercise shall be deemed the date of exercise
of the Option, provided that payment in full for the Option Shares to
be
purchased upon such exercise shall have been received by such date.
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(c)
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Notwithstanding
any of the other provisions hereof. Grantee agrees that he
will
not exercise this Option and that the Company will not be obligated
to
issue
any Option Shares pursuant to this Stock Option Agreement,
if the
exercise
of the Option or the issuance of such Option Shares would constitute
a
violation by the Grantee or by the Company of any provision
of any law or
regulation
of any governmental authority or national securities exchanges.
Upon
the acquisition of any Option Shares pursuant to the exercise
of the
Option
herein granted, Grantee will enter into such written representations,
warranties
and agreements as the Company may reasonably request in order
to
comply
with applicable securities laws with this Stock Option
Agreement.
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3
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5.
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Piggyback
Registration Rights.
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If
the
Company at any time proposes to register any of its Common Stock under the
Securities Act (other than a registration on Form S-8 or S-4 or any successor
or
similar forms) whether or not for sale for the Company's account, the
Company
shall use its best efforts to include in such registration (and any related
qualifications
under blue sky laws or other compliance) all the Option Shares specified
in a
written request or requests, made by the Grantee and received by the
Company within 15 days after the Grantee's receipt of written notice from
the
Company regarding the proposed registration, which written request may specify
the inclusion of all or a part of Grantee's Option Shares.
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6.
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Adjustment
of and Changes in Stock of the
Company.
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In
the
event of a reorganization, recapitalization, change of shares, stock split,
spin-off, stock dividend, reclassification, subdivision or combination of
shares, merger,
consolidation, rights offering, or any other change in the corporate
structure
or shares of capital stock of the Company, the Board shall make such
adjustment
in the number and kind of shares of Stock subject to the Option and in
the
option price; provided, however, that no such adjustment shall give the
Grantee
any additional benefits under the Option.
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7.
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Fair
Market Value.
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As
used
herein, the "fair market value" of a share of Stock shall be the closing
price
per
share of Stock on the PINK SHEETS, OTCBB, NASDAQ, the NYSE, the
Amex,
the composite tape or other recognized market source, as determine by
the
Board, on the applicable date of reference hereunder, or if there is no sale
on
such
date, then the closing price on the last previous day on which a sale is
reported.
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8.
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No
Rights of
Stockholders.
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Neither
the Grantee nor any personal representative shall be, or shall have any of
the
rights and privileges of, a stockholder of the Company with respect to any
shares
of
Stock purchasable or issuable upon the exercise of the Option, in whole or
in
part, prior to the date of exercise of the Option.
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9.
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Non-Transferability
of Option.
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During
the Grantee's lifetime, the Option hereunder shall be exercisable only by
the
Grantee or any guardian or legal representative of the Grantee, and the Option
shall
not
be transferable except, (i) in case of the death of the Grantee, by will
or the
laws of descent and distribution, and (ii) to a child, grandchild or stepchild
of the Grantee or to a trust or partnership created by the Grantee, who,
in each
case, will be subject to all of the provisions hereof, nor shall the Option
be
subject to attachment, execution or other similar process. In the event of
(a)
any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise
dispose of the Option,
except as provided for herein, or (b) the levy of any attachment, execution
or
similar process upon the rights or interest hereby conferred, the Company
may
terminate
the Option by notice to the Grantee and it shall thereupon become null
and
void
and of no value to any such party.
4
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10.
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Disputes.
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As
a
condition of the granting of this Option, the Grantee and his heirs and
successors agree that any dispute or disagreement which may arise hereunder
shall
be
determined by the Board (or Committee, if any) in its sole discretion and
judgment,
and that any such determination and any interpretation by the Board (or
Committee,
if any) of the terms of this Option shall be final and shall be binding and
conclusive, for all purposes upon the Company, the Grantee, his heirs and
successors.
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11.
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Notice.
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Any
notice to the Company provided for in this instrument shall be addressed
to it
in
care
of its Secretary at its executive offices at Bluegate Corporation, and
any
notice
to
the Grantee shall be addressed to the Grantee at the current address
shown
on
the records of the Company. Any notice shall be deemed to be duly given
if
and when properly addressed and posted by registered or certified mail,
postage
prepaid.
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12.
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Governing
Law.
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The
validity, construction, interpretation and effect of this instrument shall
exclusively be governed by and determined in accordance with the law of
the
State
of
Texas, except to the extent preempted by federal law, which shall to the
extent
govern.
IN
WITNESS WHEREOF, the Company has caused its duly authorized officers to
execute
and attest to this Stock Option Agreement, and to apply the corporate seal
hereto, and
the
Grantee has placed his or her signature hereon, effective as of the Date
of
Grant.
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Bluegate
Corporation
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By:
/s/ Xxxxxxx Xxxxxxxxx
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Xxxxxxx
Xxxxxxxxx
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Grantee:
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| /s/ Xxxxxxx X. Xxxxxx | |
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Xxxxxxx
X. Xxxxxx
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