OPTION TO PURCHASE COMMON STOCK OF STELLAR TECHNOLOGIES, INC.
Stock Purchase Agreement
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OPTION TO PURCHASE COMMON STOCK OF STELLAR TECHNOLOGIES, INC.
Stock Purchase Agreement
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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
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.
2.3 Vesting. This Option shall vest in accordance with the following
(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"
(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
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
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
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
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
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,
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