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OPTION TO PURCHASE COMMON STOCK OF STELLAR TECHNOLOGIES, INC.

Stock Purchase Agreement

OPTION TO PURCHASE COMMON STOCK

                                       OF

                           STELLAR TECHNOLOGIES, INC.
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This Stock Purchase Agreement involves

STELLAR TECHNOLOGIES, INC.

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Title: OPTION TO PURCHASE COMMON STOCK OF STELLAR TECHNOLOGIES, INC.
Governing Law: Florida     Date: 12/19/2005
Law Firm: Fox Rothschild LLP    

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     THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER

     THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,

     ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION

     STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN

     ACCORDANCE WITH RULE 144, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR

     THE HOLDER OF THESE SECURITIES, REASONABLY SATISFACTORY TO THE COMPANY,

     STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT

     FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.

 

                         OPTION TO PURCHASE COMMON STOCK

                                       OF

                           STELLAR TECHNOLOGIES, INC.

 

                          Void after December 12, 2015

 

     This certifies that, for value received, Mark G. Sampson ("Holder") is

entitled, subject to the terms set forth below, to purchase from Stellar

Technologies, Inc., a Colorado corporation (the "Company"), shares of the common

stock, $.001 par value per share, of the Company ("Common Stock"), as

constituted on the date hereof (the "Option Issue Date"), with the Notice of

Exercise attached hereto duly executed, and simultaneous payment therefor in

lawful money of the United States or as otherwise provided in Section 3 hereof,

at the Exercise Price then in effect. The number, character and Exercise Price

of the shares of Common Stock issuable upon exercise hereof are subject to

adjustment as provided herein.

 

     1. Term of Option. Subject to compliance with the vesting provisions

identified at Section 2.3 hereof, this Option shall be exercisable, in whole or

in part, during the term commencing on the date Holder begins serving as Chief

Executive Officer of the Company and ending at 5:00 p.m. EST on December 12,

2015 (the "Option Expiration Date") and shall be void thereafter.

 

     2. Number of Shares, Exercise Price and Vesting Provisions.

 

          2.1 Number of Shares. The number of shares of Common Stock which may

be purchased pursuant to this Option shall be 5,000,000 shares (the "Shares"),

subject, however, to adjustment pursuant to Section 11 hereof.

 

          2.2 Exercise Price. The Exercise Price at which this Option, or

portion thereof, may be exercised shall be $0.40 per Share, subject, however, to

adjustment pursuant to Section 11 hereof.

 

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          2.3 Vesting. This Option shall vest in accordance with the following

schedule:

 

          (i) Options to purchase 1,666,667 shares shall vest and become

     exercisable on June 15, 2006;

 

          (ii) Options to purchase 1,666,667 shares shall vest and become

     exercisable on December 15, 2006; and

 

          (iii) Options to purchase 1,666,666 shares shall vest and become

     exercisable on June 15, 2007.

 

     3. Exercise of Option.

 

          3.1 Payment of Exercise Price. Subject to the terms hereof, the

purchase rights represented by this Option are exercisable by the Holder in

whole or in part, at any time, or from time to time, by the surrender of this

Option and the Notice of Exercise annexed hereto duly completed and executed on

behalf of the Holder, at the office of the Company (or such other office or

agency of the Company as it may designate by notice in writing to the Holder at

the address of the Holder appearing on the books of the Company) accompanied by

payment of the Exercise Price in full (i) in cash or by bank or certified check

for the Shares with respect to which this Option is exercised; (ii) by delivery

to the Company of shares of the Company's Common Stock having a Fair Market

Value (as defined below) equal to the aggregate Exercise Price of the Shares

being purchased which Holder is the record and beneficial owner of and which

have been held by the Holder for at least six (6) months; (iii) if the sale of

the Shares is covered by an effective registration statement, by delivering to

the Company a Notice of Exercise together with an irrevocable direction to a

broker-dealer registered under the Securities Exchange Act of 1934, as amended

(the "Exchange Act"), to sell a sufficient portion of the Shares and deliver the

sales proceeds directly to the Company to pay the Exercise Price; or (iv) by any

combination of the procedures set forth in subsections (i), (ii) and (iii) of

this Section 3.1.

 

          3.2 Fair Market Value. If previously owned shares of Common Stock are

tendered as payment of the Exercise Price, the value of such shares shall be the

"Fair Market Value" of such shares on the trading date immediately preceding the

date of exercise. For the purpose of this Agreement, the "Fair Market Value"

shall be:

 

               (a) If the Common Stock is admitted to quotation on the National

Association of Securities Dealers Automated Quotation System ("NASDAQ"), the

Fair Market Value on any given date shall be the average of the highest bid and

lowest asked prices of the Common Stock as reported for such date or, if no bid

and asked prices were reported for such date, for the last day preceding such

date for which such prices were reported;

 

               (b) If the Common Stock is admitted to trading on a United States

securities exchange or the NASDAQ National Market System, the Fair Market Value

on any date shall be the closing price reported for the Common Stock on such

exchange or system for such

 

 

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date or, if no sales were reported for such date, for the last day preceding

such date for which a sale was reported;

 

               (c) If the Common Stock is traded in the over-the-counter market

and not on any national securities exchange nor in the NASDAQ Reporting System,

the Fair Market Value shall be the average of the mean between the last bid and

ask prices per share, as reported by the National Quotation Bureau, Inc., or an

equivalent generally accepted reporting service, or if not so reported, the

average of the closing bid and asked prices for a share as furnished to the

Company by any member of the National Association of Securities Dealers, Inc.,

selected by the Company for that purpose; or

 

               (d) If the Fair Market Value of the Common Stock cannot be

determined on the basis previously set forth in this definition on the date that

the Fair Market Value is to be determined, the Board of Directors of the Company

shall in good faith determine the Fair Market Value of the Common Stock on such

date.

 

If the tender of previously owned shares would result in an issuance of a whole

number of Shares and a fractional Share of Common Stock, the value of such

fractional share shall be paid to the Company in cash or by check by the Holder.

 

          3.3 Termination of Employment or Service; Death.

 

               (a) If Holder shall cease to be employed by or provide management

services to the Company, all Options to which Holder is then entitled to

exercise may be exercised only within ninety (90) days after the termination of

employment or cessation of service and prior to the Option Termination Date or,

if such termination or cessation was due to death, within one (1) year after

termination of employment or cessation of service and prior to the Option

Termination Date. Notwithstanding the foregoing, in the event that any

termination of employment or cessation of service shall be for Cause (as defined

below), then this Option shall forthwith terminate.

 

          For purposes of this Option, the term "Cause" shall mean (a) if Holder

is a party to a written agreement with the Company, or provides services to the

Company pursuant to a services agreement between the Company and a third party,

which contains a definition of "cause" or "for cause" or words of similar import

for purposes of termination of employment or service thereunder by the Company,

"cause" or "for cause" as defined in such agreement; (b) in all other cases (i)

the Holder's intentional, persistent failure, dereliction, or refusal to perform

such duties as are reasonably assigned to him or her by the officers or

directors of the Company; (ii) the Holder's fraud, dishonesty or other

deliberate injury to the Company in the performance of his or her duties on

behalf of, or for, the Company; (iii) the Holder's conviction of a crime which

constitutes a felony involving moral turpitude, fraud or deceit in the

jurisdiction in which the Holder is employed, regardless of whether such crime

involves the Company; (iv) the willful commission by the Holder of a criminal or

other act that causes substantial economic damage to the Company or substantial

injury to the business reputation of the Company; or (v) the Holder's material

breach of his or her employment agreement, or the breach of a services agreement

by and between the Company and a third party pursuant to which the Holder

provides services to the

 

 

                                         3

 

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Company, if any. For purposes of this Option, no act, or failure to act, on the

part of any person shall be considered "willful" unless done or omitted to be

done by the person other than in good faith and without reasonable belief that

the person's action or omission was in the best interest of the Company.

 

               (b) If Holder shall die while employed by or providing services

to the Company and prior to the Option Termination Date, any Options then

exercisable may be exercised only within one (1) year after Holder's death,

prior to the Option Termination Date, and only by the Holder's personal

representative or persons entitled thereto under the Holder's will or the laws

of descent and distribution.

 

               (c) This Option may not be exercised for more Shares (subject to

adjustment as provided in Section 11 hereof) after the termination of the

Holder's employment, cessation of services to the Company, or death, as the case

may be, than the Holder was entitled to purchase thereunder at the time of the

termination of the Holder's employment, the cessation of services to the

Company, or death.

 

          3.4 Exercise Date; Delivery of Certificates. This Option shall be

deemed to have been exercised immediately prior to the close of business on the

date of its surrender for exercise as provided above, and Holder shall be

treated for all purposes as the holder of record of such Shares as of the close

of business on such date. As promptly as practicable on or after such date and

in any event within ten (10) days thereafter, the Company at its expense shall

issue and deliver to the Holder a certificate or certificates for the number of

Shares issuable upon such exercise. In the event that this Option is exercised

in part, the Company at its expense will execute and deliver a new Option of

like tenor exercisable for the number of shares for which this Option may then

be exercised.

 

     4. No Fractional Shares or Scrip. No fractional shares or scrip

representing fractional shares shall be issued upon the exercise of this Option.

In lieu of any fractional share to which the Holder would otherwise be entitled,

the Company shall make a cash payment equal to the Exercise Price multiplied by

such fraction.

 

     5. Replacement of Option. On receipt of evidence reasonably satisfactory to

the Company of the loss, theft, destruction or mutilation of this Option and, in

the case of loss, theft or destruction, on delivery of an indemnity agreement

reasonably satisfactory in form and substance to the Company or, in the case of

mutilation, on surrender and cancellation of this Option, the Company at its

expense shall execute and deliver, in lieu of this Option, a new Option of like

tenor and amount.

 

     6. Rights of Stockholder. Except as otherwise contemplated herein, the

Holder shall not be entitled to vote or receive dividends or be deemed the

holder of Common Stock or any other securities of the Company that may at any

time be issuable on the exercise hereof for any purpose, nor shall anything

contained herein be construed to confer upon the Holder, as such, any of the

rights of a stockholder of the Company or any right to vote for the election of

directors or upon any matter submitted to stockholders at any meeting thereof,

or to give or withhold consent to any corporate action (whether upon any

recapitalization, issuance of stock,

 

 

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reclassification of stock, change of par value, or change of stock to no par

value, consolidation, merger, conveyance or otherwise) or to receive notice of

meetings, or to receive dividends or subscription rights or otherwise until the

Option shall have been exercised as provided herein.

 

     7. Transfer of Option.

 

          7.1. Non-Transferability. This Option shall not be assigned,

transferred, pledged or hypothecated in any way, nor subject to execution,

attachment or similar process, otherwise than by will or by the laws of descent

and distribution. Any attempted assignment, transfer, pledge, hypothecation or

other disposition of this Option contrary to the provisions hereof, and the levy

of an execution, attachment, or similar process upon the Option, shall be null

and void and without effect.

 

          7.2. Compliance with Securities Laws; Restrictions on Transfers. In

addition to restrictions on transfer of this Option and Shares set forth in

Section 7.1 above.

 

               (a) The Holder of this Option, by acceptance hereof, acknowledges

that this Option and the Shares to be issued upon exercise hereof are being

acquired solely for the Holder's own account and not as a nominee for any other

party, and for investment (unless such shares are subject to resale pursuant to

an effective prospectus), and that the Holder will not offer, sell or otherwise

dispose of any Shares to be issued upon exercise hereof except under

circumstances that will not result in a violation of applicable federal and

state securities laws. Upon exercise of this Option, the Holder shall, if

requested by the Company, confirm in writing, in a form satisfactory to the

Company, that the Shares of Common Stock so purchased are being acquired solely

for the Holder's own account and not as a nominee for any other party, for

investment (unless such shares are subject to resale pursuant to an effective

prospectus), and not with a view toward distribution or resale.

 

               (b) Neither this Option nor any share of Common Stock issued upon

exercise of this Option may be offered for sale or sold, or otherwise

transferred or sold in any transaction which would constitute a sale thereof

within the meaning of the 1933 Act, unless (i) such security has been registered

for sale under the 1933 Act and regis


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