UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-22529
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inTEST Corporation
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(Exact name of registrant as specified in its charter)
Delaware 22-2370659
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2 Pin Oak Lane, Cherry Hill, New Jersey 08003
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(Address of principal executive offices) (Zip Code)
(856) 424-6886
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares of Common Stock, $.01 par value, outstanding as of March 31,
2000: 8,582,827.
This Form 10-Q/A is being filed to amend Item 6 of the Form 10-Q of the
registrant for the quarter ended March 31, 2000, which was filed with the
Securities and Exchange Commission on May 12, 2000. The Form 10-Q is being
amended to include as exhibits thereto the employment agreement and option
agreements between Temptronic Corporation and William M. Stone, President and
Chief Executive Officer of Temptronic Corporation. The employment agreement
was executed and the option agreements were assumed by inTEST Corporation upon
the acquisition of Temptronic Corporation on March 9, 2000. Item 6 is hereby
amended to include Exhibit 10.1, the Temptronic Corporation 1998 Incentive and
Non-Statutory Stock Option Plan, Exhibit 10.2, the Incentive Stock Option
dated October 26, 1998 granted by Temptronic Corporation to William M. Stone
under the Temptronic Corporation 1998 Incentive and Non-Statutory Stock Option
Plan, Exhibit 10.3, the Non-Statutory Option granted by Temptronic Corporation
to William M. Stone, dated June 9, 1997, and Exhibit 10.4, the Employment
Agreement dated March 9, 2000 between William M. Stone and Temptronic
Corporation.
PART II.
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Incorporation: Previously filed by the Company
as an Exhibit to the Company's Registration Statement on
Form S-1, File No. 333-26457, and incorporated herein by
reference.
3.2 By-Laws: Previously filed by the Company as an Exhibit to
the Company's Registration Statement on Form S-1, File No.
333-26457, and incorporated herein by reference.
10.1 Temptronic Corporation 1998 Incentive and Non-Statutory
Stock Option Plan.
10.2 Incentive Stock Option dated October 26, 1998 granted by
Temptronic Corporation to William M. Stone under the
Temptronic Corporation 1998 Incentive and Non-Statutory
Stock Option Plan.
10.3 Non-Statutory Option granted by Temptronic Corporation to
William M. Stone, dated June 9, 1997.
10.4 Employment Agreement dated March 9, 2000 between William M.
Stone and Temptronic Corporation.
27 Financial Data Schedule.
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(b) Reports on Form 8-K
During the quarter covered by this report, we filed two reports
on Form 8-K as follows:
1) 8-K dated March 9, 2000 providing information responsive to
the requirements of Items 2 and 7 of that form.
2) 8-K dated March 31, 2000 providing information regarding the
settlement of litigation described in Part II, Item 1 of
this report.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
inTEST Corporation
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(Registrant)
Date: June 20, 2000 By: /s/Robert E. Matthiessen
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Robert E. Matthiessen
President and Chief Executive Officer
Date: June 20, 2000 By: /s/Hugh T. Regan, Jr.
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Hugh T. Regan, Jr.
Treasurer and Chief Financial Officer
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INDEX TO EXHIBITS
3.1* Articles of Incorporation: Previously filed by the Company as an
Exhibit to the Company's Registration Statement on Form S-1, File
No. 333-26457, and incorporated herein by reference.
3.2* By-Laws: Previously filed by the Company as an Exhibit to the
Company's Registration Statement on Form S-1, File No. 333-26457,
and incorporated herein by reference.
10.1 Temptronic Corporation 1998 Incentive and Non-Statutory Stock
Option Plan.
10.2 Incentive Stock Option dated October 26, 1998 granted by
Temptronic Corporation to William M. Stone under the Temptronic
Corporation 1998 Incentive and Non-Statutory Stock Option Plan.
10.3 Non-Statutory Option granted by Temptronic Corporation to William
M. Stone, dated June 9, 1997.
10.4 Employment Agreement dated March 9, 2000 between William M. Stone
and Temptronic Corporation.
27* Financial Data Schedule: Previously filed by the Company as an
Exhibit to the Company's quarterly report on Form 10-Q for the
quarter ended March 31, 2000.
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* Indicates document previously filed.
5
EXHIBIT 10.1
TEMPTRONIC CORPORATION
1998 Incentive and Non-Statutory Stock Option Plan
SECTION 1. PURPOSE
This 1998 Incentive and Non-Statutory Stock Option Plan (the "Plan") is
intended as a performance incentive for officers and employees of Temptronic
Corporation, a Massachusetts corporation (the "Company"), or its Subsidiaries
(as hereinafter defined) and for certain other individuals providing services
to or acting as directors of the Company or its Subsidiaries, to enable the
persons to whom options are granted (an "Optionee" or "Optionees") to
acquire or increase a proprietary interest in the Company and its success.
The Company intends that this purpose will be effected by the granting of
incentive stock options ("Incentive Options") as defined in Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code"), and other stock
options ("Non-Statutory Options") under the Plan. The term "Subsidiaries"
means any corporations in which stock possessing 50% or more of the total
combined voting power of all classes of stock of such corporation or
corporations is owned directly or indirectly by the Company.
SECTION 2. OPTIONS TO BE GRANTED AND ADMINISTRATION
2.1 Options to be Granted. Options granted under the Plan may be either
Incentive Options or Non-Statutory Options.
2.2 Administration by the Board. This Plan shall be administered by the
Board of Directors of the Company (the "Board"). The Board shall have full
and final authority to operate, manage and administer the Plan on behalf of
the Company. This authority includes, but is not limited to: (i) the power to
grant options conditionally or unconditionally; (ii) the power to prescribe
the form or forms of the instruments evidencing options granted under this
Plan; (iii) the power to interpret the Plan; (iv) the power to provide
regulations for the operation of the incentive features of the Plan, and
otherwise to prescribe regulations for interpretation, management and
administration of the Plan; (v) the power to delegate responsibility for Plan
operation, management and administration on such terms, consistent with the
Plan, as the Board may establish; (vi) the power to delegate to other persons
the responsibility for performing ministerial acts in furtherance of the
Plan's purpose; and (vii) the power to engage the services of persons or
organizations in furtherance of the Plan's purpose, including but not limited
to banks, insurance companies, brokerage firms and consultants.
In addition, as to each option, the Board shall have full and final
authority in its discretion to determine: (i) the number of shares subject to
each option; (ii) the time or times at which options will be granted; (iii)
the option price for the shares subject to each option, which price shall be
subject to the applicable requirements, if any, of Section 5.1(c) hereof; and
(iv) the time or times when each option shall become exercisable, the
conditions under which exercise may be accelerated and the duration of the
exercise period, which shall not exceed the limitations specified in Section
5.1(a).
2.3 Appointment and Proceedings of Committee. The Board may appoint a
Stock Option Committee (the "Committee") which shall consist of at least
three members of the Board. The Board may from time to time appoint members of
the Committee in substitution for or in addition to members previously
appointed, and may fill vacancies, however caused, in the Committee. The
Committee shall select one of its members as its chairman and shall hold its
meetings at such times and places as it shall deem advisable. A majority of
its members shall constitute a quorum, and all actions of the Committee shall
require the affirmative vote of a majority of its members. Any action may be
taken by a written instrument signed by all of the members, and any action so
taken shall be as fully effective as if it had been taken by a vote of a
majority of the members at a meeting duly called and held.
2.4 Powers of Committee. Subject to the provisions of this Plan and the
approval of the Board, the Committee shall have the power to make
recommendations to the Board as to whom options should be granted, the number
of shares to be covered by each option, the time or times of option grants,
and the terms and conditions of each option. In addition, the Committee shall
have authority to interpret the Plan, to prescribe, amend and rescind rules
and regulations relating to the Plan, and to exercise the administrative and
ministerial powers of the Board with regard to aspects of the Plan other than
the granting of options. The interpretation and construction by the Committee
of any provisions of the Plan or of any option granted hereunder and the
exercise of any power delegated to it hereunder shall be final, unless
otherwise determined by the Board. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with
respect to the Plan or any option granted hereunder.
SECTION 3. STOCK
3.1 Shares Subject to Plan. The stock subject to the options granted
under the Plan shall be 250,000 shares of the Company's authorized but
unissued common stock, $.01 par value ("Common Stock"). The total number of
shares that may be issued pursuant to options granted under the Plan shall not
exceed an aggregate of 250,000 shares of Common Stock. Such number of shares
shall be subject to adjustment as provided in Section 7 hereof.
3.2 Lapsed or Unexercised Options. Whenever any outstanding option
under the Plan expires, is cancelled or is otherwise terminated (other than by
exercise), the shares of Common Stock allocable to the unexercised portion of
such option shall be restored to the Plan and shall again become available for
the grant of other options under the Plan.
SECTION 4. ELIGIBILITY
4.1 Eligible Optionees. Incentive Options may be granted only to
officers and other employees of the Company or its Subsidiaries, including
members of the Board who are also employees of the Company or a Subsidiary.
Non-Statutory Options may be granted to officers or other employees of the
Company or its Subsidiaries, to members of the Board or the board of directors
of any Subsidiary whether or not employees of the Company or such Subsidiary,
and to other persons who have provided, are providing or will provide services
to the Company or a corporation or other business entity that is or becomes a
Subsidiary.
2
4.2 Limitations on 10% Stockholders. No Incentive Option shall be
granted to an individual who, at the time the Incentive Option is granted,
owns (including ownership attributed pursuant to Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of
the Company or any parent or Subsidiary of the Company (a "greater-than-l0%
stockholder"), unless such Incentive Option provides that (i) the purchase
price per share shall not be less than 110% of the fair market value of the
Common Stock at the time such Incentive Option is granted, and (ii) that such
Incentive Option shall not be exercisable to any extent after the expiration
of five years from the date on which it is granted.
4.3 Limitation on Exercisable Options. The aggregate fair market value
(determined at the time the Incentive Option is granted) of the Common Stock
with respect to which Incentive Options are exercisable for the first time by
any person during any calendar year under the Plan and under any other option
plan of the Company (or a parent or subsidiary as defined in Section 424 of
the Code) shall not exceed $100,000. Any option granted in excess of the
foregoing limitation shall be specifically designated as being a Non-Statutory
Option.
SECTION 5. TERMS OF THE OPTION AGREEMENTS
5.1 Mandatory Terms. Each option agreement shall contain such
provisions as the Board or the Committee shall from time to time deem
appropriate. Option agreements need not be identical, but each option
agreement by appropriate language shall include the substance of all of the
following provisions:
(a) Expiration. Notwithstanding any other provision of the Plan or
of any option agreement, each option shall expire on the date specified in the
option agreement, which date shall not be later than the tenth anniversary of
the date on which the option was granted (fifth anniversary in the case of an
Incentive Option granted to a greater-than-10% stockholder).
(b) Exercise. Each option shall be exercisable in full or in
installments (which need not be equal) and at such times as designated by the
Board or the Committee. To the extent not exercised, installments shall
accumulate and be exercisable, in whole or in part, at any time after becoming
exercisable, but not later than the date the option expires.
(c) Purchase Price. The purchase price per share of the Common
Stock under each Incentive Option shall be not less than the fair market value
of the Common Stock on the date the option is granted (110% of the fair market
value in the case of a greater-than-10% stockholder). For the purpose of the
Plan the fair market value of the Common Stock shall be determined by the
Board or the Committee. The price at which shares may be purchased pursuant
to Non-Statutory Options shall be specified by the Board or the Committee at
the time the option is granted, and may be less than, equal to or greater than
the fair market value of the shares of Common Stock on the date such Non-
Statutory Option is granted, but shall not be less than the par value of
shares of Common Stock.
(d) Transferability of Options. Options granted under the Plan and
the rights and privileges conferred thereby may not be transferred, assigned,
pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by applicable laws of descent and
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distribution, and shall not be subject to execution, attachment or similar
process. Upon any attempt so to transfer, assign, pledge, hypothecate or
otherwise dispose of any option under the Plan or any right or privilege
conferred hereby, contrary to the provisions of the Plan, or upon the sale or
levy or any attachment or similar process upon the rights and privileges
conferred hereby, such option shall there upon terminate and become null and
void.
(e) Termination of Employment or Death of Optionee. Except as may
be otherwise expressly provided in the terms and conditions of the option
granted to an Optionee, options granted hereunder shall terminate on the
earliest to occur of:
(i) the date of expiration thereof;
(ii) if the Optionee is employed by the Company and such employment
is terminated by the Company for cause, as hereinafter defined, on the date of
such termination; or
(iii) if the Optionee is employed by the Company and such employment
is terminated for any reason other than death or for cause as aforesaid, on
the earlier of the date of expiration thereof or 60 days following the date of
such termination.
Until the date on which the option so expires, the Optionee may exercise
that portion of his option which is exercisable at the time of termination of
such relationship.
An employment relationship between the Company and the optionee shall be
deemed to exist during any period during which the Optionee is employed by the
Company or by any Subsidiary. Whether authorized leave of absence or absence
on military government service shall constitute termination of the employment
relationship between the Company and the Optionee shall be determined by the
Board or the Committee at the time thereof. For purposes of this Section
5.1(e), the term "cause" shall mean (a) any material breach by the Optionee
of any agreement to which the Optionee and the Company are both parties, (b)
any act (other than retirement) or omission to act by the Optionee which may
have a material and adverse effect on the Company's business or on the
Optionee's ability to perform services for the Company, including, without
limitation, the commission of any crime (other than minor traffic violations),
or (c) any material misconduct or material neglect of duties by the Optionee
in connection with the business or affairs of the Company or any Subsidiary or
affiliate of the Company.
In the event of the death of an Optionee while in an employment or other
relationship with the Company and before the date of expiration of such
option, such option shall terminate on the earlier of such date of expiration
or 180 days following the date of such death. After the death of the
Optionee, his executor, administrator or any person or persons to whom his
option may be transferred by will or by laws of descent and distribution,
shall have the right, at any time prior to such termination, to exercise the
option to the extent the Optionee was entitled to exercise such option as of
the date of his death.
(f) Rights of Optionees. No Optionee shall be deemed for any
purpose to be the owner of any shares of Common Stock subject to any option
4
unless and until (i) the option shall have been exercised with respect to such
shares pursuant to the terms thereof, and (ii) the Company shall have issued
and delivered a certificate representing such shares. Thereupon, the Optionee
shall have full voting, dividend and other ownership rights with respect to
such shares of Common Stock.
5.2 Certain Optional Terms. The Board or the Committee may in its
discretion provide; upon the grant of any option hereunder, that the Company
shall have the right from time to time to repurchase all or any number of
shares purchased upon exercise of such option. The repurchase price per share
payable by the Company shall be such amount or be determined in such a manner
as is fixed or determined by the Board or the Committee at the time the option
for the shares subject to repurchase was granted. The Board or the Committee
may also provide that the Company shall have a right of first refusal with
respect to the transfer or proposed transfer of any shares purchased upon
exercise of an option granted hereunder. In the event the Board or the
Committee shall grant options subject to the Company's repurchase rights or
rights of first refusal, the certificate or certificates representing the
shares purchased pursuant to the exercise of such option shall carry a legend
satisfactory to counsel for the Company referring to such rights.
SECTION 6. METHOD OF EXERCISE; PAYMENT OF PURCHASE PRICE
6.1 Notice of Exercise. Any option granted under the Plan may be
exercised by the Optionee by delivering to the Company on any business day a
written notice specifying the number of shares of Common Stock the Optionee
then desires to purchase and specifying the address to which the certificates
for such shares are to be mailed (the "Notice"). The Notice shall be
accompanied by payment for such shares, any required payment of withholding
taxes, and such documents, including without limitation an investment letter
and an agreement relating to restrictions on transfer, rights of first refusal
and Company buy-back rights (if applicable), as may reasonably be required or
requested by the Company.
6.2 Means of Payment and Delivery. Payment for the shares of Common
Stock purchased pursuant to the exercise of an option shall be made either (i)
in cash equal to the option price for the number of shares specified in the
Notice (the "Total Option Price"), or (ii) if authorized by the applicable
option agreement, in shares of Common Stock of the Company having a fair
market value equal to or less than the Total Option Price, plus cash in an
amount equal to the excess, if any, of the Total Option Price over the fair
market value of such shares of Common Stock. For the purpose of the preceding
sentence, the fair market value of the shares of Common Stock so delivered to
the Company shall be determined in the manner specified in Section 5.1(c)
hereof. As promptly as practicable after receipt of such written notification
and payment, the Company shall deliver to the Optionee or other appropriate
person certificates for the number of shares with respect to which such Option
has been so exercised, issued in the Optionee's name; provided, however, that
such delivery shall be deemed effected for all purposes when the Company or a
stock transfer agent of the Company shall have deposited such certificates in
the United States mail, addressed to the Optionee or other appropriate person,
at the address specified pursuant to Section 6.1.
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SECTION 7. ADJUSTMENT UPON CHANGES IN CAPITALIZATION
7.1 No Effect of Options upon Certain Corporate Transactions. The
existence of outstanding options shall not affect in any way the right or
power of the Company or its stockholders to make or authorize any or all
adjustments, recapitalizations, reorganizations or other changes in the
Company's capital structure or its business, or any merger or consolidation of
the Company, or any issue of Common Stock, or any issue of bonds, debentures,
preferred or prior preference stock ahead of or affecting the Common Stock or
the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
7.2 Stock Dividends, Recapitalizations, Etc. If the Company shall
effect a subdivision or consolidation of shares or other capital readjustment,
the payment of a stock dividend, or other increase or reduction of the number
of shares of the Common Stock outstanding, without receiving compensation
therefor in money, services or property, then: (i) the number, class and per
share price of shares of stock subject to outstanding options hereunder shall
be appropriately adjusted in such a manner as to entitle an Optionee to
receive upon exercise of an option, for the same aggregate cash consideration,
the same total number and class of shares that the owner of an equal number of
outstanding shares of Common Stock would own as a result of the event
requiring the adjustment; and (ii) the number and class of shares with respect
to which options may be granted under the Plan shall be adjusted by
substituting for the total number of shares of Common Stock then reserved for
issuance under the Plan that number and class of shares of stock that the
owner of an equal number of outstanding shares of Common Stock would own as
the result of the event requiring the adjustment.
7.3 Determination of Adjustments. Adjustments under this Section 7 shall
be determined by the Board or the Committee and such determinations shall be
conclusive. The Board or the Committee shall have the discretion and power in
any such event to determine and to make effective provision for acceleration
of the time or times at which any option or portion thereof shall become
exercisable. No fractional shares of Common Stock shall be issued under the
Plan on account of any adjustment specified above.
7.4 No Adjustment in Certain Cases. Except as hereinbefore expressly
provided, the issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, for cash or property
or for labor or services, either upon direct sale or upon the exercise of
rights or warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other securities,
shall not affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of shares of Common Stock then subject to
outstanding options.
SECTION 8. EFFECT OF CERTAIN TRANSACTIONS
If the Company is a party to a reorganization or merger with one or more
other corporations, whether or not the Company is the surviving or resulting
corporation, or if the Company consolidates with or into one or more other
corporations, or if the Company is liquidated, or if there is a sale or other
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disposition of substantially all of the Company's capital stock or assets to a
third party or parties (each hereinafter referred to as a "Transaction"), in
any such event while unexercised options remain outstanding under the Plan,
then: (i) subject to the Board's powers under clauses (ii) and (iii) below,
after the effective date of such Transaction unexercised options shall remain
outstanding and shall be exercisable in shares of Common Stock, or, if
applicable, shares of such stock or other securities, cash or property as the
holders of shares of Common Stock received pursuant to the terms of such
Transaction; (ii) the Board may accelerate the time for exercise of all
unexercised and unexpired options, effective as of a date prior to the
effective date of such Transaction; or (iii) all outstanding options may be
canceled by the Board as of the effective date of such Transaction; provided
that (x) notice of such cancellation shall be given to each holder of an
option, (y) each holder of an option shall have the right to exercise such
option to the extent that the same is then exercisable or, if the Board shall
have accelerated the time for exercise of all unexercised and unexpired
options, in full, prior to the effective date of such Transaction, and (z) to
the extent not so exercised, all of such options shall be canceled prior to or
as of such effective date.
SECTION 9. AMENDMENT OF THE PLAN
The Board may terminate the Plan at any time, and may amend the Plan at
any time and from time to time, subject to the limitation that, except as
provided in Sections 7 and 8 hereof, no amendment shall be effective unless
approved by the stockholders of the Company in accordance with applicable law
and regulations, at an annual or special meeting held within twelve months
before or after the date of adoption of such amendment, in any instance in
which such amendment would: (i) increase the number of shares of Common Stock
as to which options may be granted under the Plan; or (ii) change in substance
the provisions of Section 4 hereof relating to eligibility to participate in
the Plan.
Except as provided in Sections 7 and 8 hereof, rights and obligations
under any option granted before termination or amendment of the Plan shall not
be altered or impaired by such termination or amendment except with the
consent of the Optionee.
SECTION 10. NON-EXCLUSIVITY OF THE PLAN; NON-UNIFORM DETERMINATIONS
Neither the adoption of the Plan by the Board nor the approval of the
Plan by the stockholders of the Company shall be construed as creating any
limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including without limitation the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.
The Board's or Committee's determinations under the Plan need not be
uniform and may be made by it selectively among persons who receive or are
eligible to receive options under the Plan (whether or not such persons are
similarly situated). Without limiting the generality of the foregoing, the
Board or the Committee shall be entitled, among other things, to make
nonuniform and selective determinations, and to enter into nonuniform and
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selective option agreements, as to (i) the persons to receive options under
the Plan, (ii) the terms and provisions of options, (iii) the exercise by the
Board or the Committee of its discretion in respect of the exercise of options
pursuant to the terms of the Plan, and (iv) the treatment of leaves of absence
pursuant to Section 5.1(e) hereof.
SECTION 11. GOVERNMENT AND OTHER REGULATIONS; GOVERNING LAW; WITHHOLDING
TAXES
The obligation of the Company to sell and deliver shares of Common Stock
with respect to options granted under the Plan shall be subject to all
applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by government
agencies as may be deemed necessary or appropriate by the Board or the
Committee. All shares sold under the Plan shall bear appropriate legends.
The Company may, but shall in no event be obligated to, register or qualify
any shares covered by options under applicable federal and state securities
laws; and in the event that any shares are so registered or qualified the
Company may remove any legend on certificates representing such shares. The
Company shall not be obligated to take any other affirmative action in order
to cause the exercise of an option or the issuance of shares pursuant thereto
to comply with any law or regulation of any governmental authority. The Plan
shall be governed by and construed in accordance with the laws of The
Commonwealth of Massachusetts.
Whenever under the Plan shares are to be delivered upon exercise of an
option, the Company shall be entitled to require as a condition of delivery
that the Optionee remit an amount sufficient to satisfy all federal, state and
other governmental withholding tax requirements related thereto.
SECTION 12. "LOCKUP" AGREEMENT
The Board or the Committee may in its discretion specify upon granting an
option that the Optionee shall agree, for a period of time (not to exceed 180
days) from the effective date of any registration of securities of the
Company, upon request of the Company or the underwriter or underwriters
managing any underwritten offering of the Company's securities, not to sell,
make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any shares issued pursuant to the exercise of such
option, without the prior written consent of the Company or such underwriter
or underwriters, as the case may be.
SECTION 13. EFFECTIVE DATE OF PLAN
The effective date of the Plan is October 26, 1998, the date on which it
was approved by the Board. No option may be granted under the Plan after the
tenth anniversary of such effective date. Subject to the foregoing, options
may be granted under the Plan at any time subsequent to October 26, 1998;
provided, however, that (a) no Incentive Option shall be exercised or
exercisable unless the stockholders of the Company shall have approved the
Plan no later than one year from such effective date, and (b) all Incentive
Options issued prior to the date of such stockholders' approval shall contain
a reference to such condition.
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EXHIBIT 10.2
Effective Date: October 26, 1998
INCENTIVE STOCK OPTION
Granted by
TEMPTRONIC CORPORATION
(hereinafter called the "Company")
to
William M. Stone
(hereinafter called the "Holder")
Under the Company's
1998 Incentive and Non-Statutory Stock Option Plan
For valuable consideration, the receipt of which is hereby acknowledged,
the Company hereby grants to the Holder the following option:
1. Grant of Option. Subject to the terms and conditions hereinafter set
forth, the Holder is hereby given the right and option to purchase from the
Company, at an option price of $3.75 per share, an aggregate of 50,000 shares
of the Company's Common Stock, $.01 par value (the "Common Stock"), at the
time and in the manner herein provided. Subject to earlier termination
pursuant to Section 8 hereof, the Holder shall have the right and option to
purchase any or all of such shares in accordance with the following schedule:
(a) 10,000 of such shares on and after the first anniversary of the
effective date of this option as set forth above (the "Effective
Date"); and
(b) an additional 10,000 of such shares on and after each of the next
succeeding four anniversaries of the Effective Date, until the
Holder shall have the right to purchase all of the shares.
This option shall terminate in all respects, and all rights and options to
purchase shares hereunder shall terminate, ten years from the Effective Date.
The right to purchase shares hereunder shall be cumulative.
2. Exercise of Option. Purchase of any shares hereunder shall be made
by delivery to the Company of a written notice of exercise specifying the
number of shares with respect to which the option is to be exercised and the
address to which the certificate representing such shares is to be mailed,
accompanied by (a) cash, certified or bank check or postal money order payable
to the order of the Company for an amount equal to the option price of such
shares, (b) shares of Common Stock of the Company having a fair market value
equal to or less than the option price of such shares accompanied by cash or a
certified or bank check or postal money order in an amount equal to the
difference, if any, between the option price of such shares and the fair
market value of such shares. For the purpose of the preceding sentence, the
fair market value of the shares of Common Stock so delivered to the Company
shall be determined in accordance with procedures adopted by the Company's
board of directors (the "Board") or its option committee (the
"Committee").
3. Conditions and Limitations. As a condition precedent to any exercise
of this option, the Holder (or if any other individual or individuals are
exercising this option, such individual or individuals) shall deliver to the
Company an investment letter in form and substance satisfactory to the Company
and its counsel which shall contain among other things a statement in writing:
(a) that the option is then being exercised for the account of the Holder and
only with a view to investment in, and not for, in connection with or with a
view, to the disposition of, the shares with respect to which the option is
then being exercised; (b) that the Holder has been advised that Rule 144 of
the Securities and Exchange Commission (the "Commission"), which permits the
resale, subject to various terms and conditions, of small amounts of
"restricted securities" (as therein defined) after they have been held for
two years, does not now apply to the Company because the Company is not now
required to file, and does not file, current reports under the Securities
Exchange Act of 1934 (the "Exchange Act"), nor is there publicly available
information concerning the Company substantially equivalent to that which
would be available if the Company were required to file such reports; (c) that
the Holder understands that there is no assurance that the Company will ever
become a reporting company under the Exchange Act and that the Company has no
obligation to the Holder to do so; (d) that the Holder and Holder's
representatives have fully investigated the Company and the business and
financial conditions concerning it and have knowledge of the Company's then
current corporate activities and financial condition; (e) that the Holder
believes that the nature and amount of the shares being purchased are
consistent with Holder's investment objectives, abilities and resources; and
(f) that the Holder understands, acknowledges and agrees to comply with the
rights of first refusal and repurchase rights of the Company set forth or
referred to in Section 9 hereof and any other restrictions on the disposition
of such shares set forth or referred to herein. The restrictions imposed by
this Section and any investment representation made pursuant to this Section
shall be inoperative upon the registration with the Commission of the stock
subject to this option or acquired through the exercise of this option.
The Holder also agrees for a period of up to 180 days from the effective
date of any registration of securities of the Company under the Securities Act
of 1933, as amended (the "Securities Act"), upon request of the Company or
the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any shares issued pursuant to the
exercise of this option, without the prior written consent of the Company and
such underwriters.
2
4. Delivery of Shares. Within a reasonable time following the receipt
by the Company of payment of the option price for the shares to be purchased
hereunder and the investment letter referred to in Section 3, the Company will
deliver or cause to be delivered to the Holder (or if any other individual or
individuals are exercising this option, to such individual or individuals) at
the address specified pursuant to Section 2 hereof a certificate or
certificates for the number of shares with respect to which the option is then
being exercised, registered in the name of the Holder (or the name or names of
the individual or individuals exercising the option, either alone or jointly
with another person or persons with rights of survivorship, as the individual
or individuals exercising the option shall prescribe in writing to the
Company); provided, however, that such delivery shall be deemed effected for
all purposes when a stock transfer agent shall have deposited such certificate
or certificates in the United States mail, addressed to the Holder (or such
individual or individuals) at the address so specified; and provided further
that if any law, regulation or order of the Commission or other body having
jurisdiction in the premises shall require the Company or the Holder (or the
individual or individuals exercising this option) to take any action in
connection with the sale of the shares then being purchased, then, subject to
the other provisions of this paragraph, the date on which such sale shall be
deemed to have occurred and the date for the delivery of the certificates for
such shares shall be extended for the period necessary to take and complete
such action, it being understood that the Company shall have no obligation to
take and complete any such action.
5. Adjustments Upon Changes in Capitalization. The existence of this
option shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, without
receiving compensation therefor in money, services or property, then the
number, class, and per share price of shares of stock subject to this option
shall be appropriately adjusted in such a manner as to entitle the Holder to
receive upon exercise of this option, for the same aggregate cash
consideration, the same total number and class of shares that the owner of an
equal number of outstanding shares of Common Stock would own as a result of
the event requiring the adjustment.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services, either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares of obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock then subject to this option.
3
6. Effect of Certain Transactions. If the Company is a party to a
merger or reorganization with one or more other corporations, whether or not
the Company is the surviving or resulting corporation, or if the Company
consolidates with or into one or more other corporations, or if the Company is
liquidated or sells or otherwise disposes of substantially all its assets to
another corporation (each hereinafter referred to as a "Transaction"), in
any case while this option remains outstanding: (a) subject to the provisions
of clause (c) below, after the effective date of such Transaction this option
shall remain outstanding and shall be exercisable in shares of Common Stock
or, if applicable, shares of such stock or other securities, cash or property
as the holders of shares of Common Stock received pursuant to the terms of
such Transaction; (b) the Board may accelerate the time for exercise of this
option, so that from and after a date prior to the effective date of such
Transaction this option shall be exercisable in full; or (c) this option may
be canceled by the Board as of the effective date of such Transaction,
provided that notice of such cancellation shall be given to the Holder and the
Holder shall have the right to exercise this option to the extent that the
same is then exercisable or, if the Board shall have accelerated the time for
exercise of this option pursuant to clause (a) above, in part or in full,
prior to the effective date of such Transaction.
7. Rights of Holder. No person shall, by virtue of the granting of this
option to the Holder, be deemed to be a holder of any shares purchasable under
this option or to be entitled to the rights or privileges of a holder of such
shares unless and until this option has been exercised with respect to such
shares and they have been issued pursuant to that exercise of this option.
The granting of this option shall not impose upon the Company any
obligations to employ or to continue to employ the Holder; and the right of
the Company to terminate the employment of the Holder shall not be diminished
or affected by reason of the fact that this option has been granted to the
Holder.
Nothing herein contained shall impose any obligation upon the Holder to
exercise this option.
Although this option is intended to qualify as an incentive stock option
under the Internal Revenue Code of 1986, the Company makes no representation
as to the tax treatment to the Holder upon receipt or exercise of this option
or sale or other disposition of the shares covered by this option.
At all times while any portion of this option is outstanding, the Company
shall: reserve and keep available, out of shares of its authorized and
unissued stock or reacquired shares, a sufficient number of shares of its
Common Stock to satisfy the requirements of this option; comply with the terms
of this option promptly upon exercise of the option rights; and pay all fees
or expenses necessarily incurred by the Company in connection with the
issuance and delivery of shares pursuant to the exercise of this option.
8. Transfer and Termination. This option is not transferable by the
Holder otherwise than by will or the laws of descent and distribution.
This option is exercisable, during the Holder's lifetime, only by him,
and by him only while he is an employee of the Company, except that in the
event that such employment terminates for any reason other than for cause as
4
determined by the Company (in which event this option shall terminate on the
date of termination of employment) and other than by reason of death, the
Holder shall have the right to exercise this option within 90 days after the
date he ceases to be an employee of the Company (but not later than the
expiration date of this option) with respect to the shares which were
purchasable by him by exercise of this option at the time of such cessation of
employment. As used in this paragraphs, "cause" shall mean (a) any material
breach by the Holder of any agreement to which the Holder and the Company are
both parties, (b) any act (other than retirement) or omission to act by the
Holder which may have a material and adverse effect on the Company's business
or on the Holder's ability to perform services for the Company, including,
without limitation, the commission of any crime (other than ordinary traffic
violations), or (c) any material misconduct or material neglect of duties by
the Holder in connection with the business or affairs of the Company or any
affiliate of the Company. An employment relationship between the Company and
the Holder shall be deemed to exist, for purposes of this option, during any
period in which the Holder is employed in any capacity by the Company or any
subsidiary of the Company.
In the event of the death of the Holder while he has the right to
exercise this option, his executors, administrators, heirs or legatees, as the
case may be, shall have the right to exercise this option at any time within
one year after his death (but not after the termination date of this option)
with respect to the shares which were purchasable by the Holder as of the date
of his death.
9. Company Purchase Rights. During the term of this option and
thereafter, no shares purchased upon exercise of this option (or obtained by
way of stock dividend, stock split or other distribution with respect to such
shares) shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, by operation of law or otherwise (collectively
"transferred") to any person at any time or times whatsoever, except as
specifically provided in this Section 9.
(a) Right of First Refusal. If at any time the Holder shall receive
a bona fide offer (an "Offer") in writing acceptable to him to purchase any
or all of his shares, the Holder shall give written notice to the Company of
the terms of the Offer, including the name of the offeror, the price and the
terms of payment. Thereupon, the Company shall have the right and option (the
"Buyback Option") for 60 days after such notice is given to purchase not
less than all the shares so offered, at a price (the "Buyback Price") which
shall be the lower of (i) the current fair market value of the Common Stock,
as determined by an independent appraiser within one year prior or 45 days
subsequent to the date of the Offer, and (ii) the price stated in the Offer.
The exercise by the Company of its right to purchase the shares upon
the terms of the Offer must be made by notice to the Holder prior to the
expiration of the applicable period referred to above. Such notice shall set
forth a time and place of closing no later than 30 days after the date of such
notice. At such closing, the Holder shall deliver the stock certificate or
certificates representing the shares, duly endorsed for transfer; and upon
such delivery the Company shall pay the Buyback Price to the Holder in cash or
by check.
5
In the event that the Company does not elect to purchase the Holder's
shares as herein provided, then the Holder may sell, at any time within 30
days of the expiration of the option period provided herein, the number of
shares specified in the Offer to the person who made the Offer and pursuant to
the terms of the Offer. In the event that the Holder does not sell the shares
pursuant to the Offer within such 30-day period, the shares shall be subject
to the terms, provisions and restrictions provided for in this Section as if
the Holder had never submitted the sale notice to the Company as aforesaid.
(b) Repurchase Option. Upon termination of the Holder's employment
with the Company at any time, by either the Company or the optionee and for
any reason whatsoever including death or disability, the Company shall have
the option to repurchase (the "Repurchase Option") any or all of the
Holder's shares at the current fair market value of the Common Stock, as
determined by an independent appraiser within one year prior or 45 days
subsequent to the date of termination of the Holder's employment (the
"Repurchase Price"). The Company shall have the right to exercise the
Repurchase Option for the Holder's shares at any time within 90 days after the
termination of the Holder's employment.
In the event the Company shall be entitled to and shall elect to exercise
the Repurchase Option, it shall give to the Holder a written notice specifying
the number of shares which the Company elects to purchase and specifying a
date for closing hereunder which date shall be not more than 30 calendar days
after the giving of such notice. At such closing, the Holder shall deliver
the stock certificate or certificates representing the shares, duly endorsed
for transfer; and upon such delivery the Company shall pay the Repurchase
Price to the Holder in cash or by check.
For purposes of the Repurchase Option and the Buyback Option, the term
"shares" shall mean any and all new, substituted or additional securities or
other property issued to the Holder, by reason of his ownership of Common
Stock, in connection with any stock dividend, liquidating dividend, stock
split or other change in the character or amount of any of the outstanding
securities of the Company, or any consolidation, merger or sale of all, or
substantially all, of the assets of the Company. The Repurchase Option and
Buyback Option shall terminate on the effective date of a registration
statement under the Securities Act of 1933, as amended, pursuant to which
securities of the Company with an aggregate sale price in excess of $1,000,000
are sold to the public.
(c) Legends. Any certificate representing shares of stock subject
to the provisions of this Section 9 may have endorsed thereon one or more
legends, substantially as follows:
(i) "Any disposition of any interest in the securities
represented by this certificate is subject to restrictions,
and the securities represented by this certificate are subject
to certain options, contained in a certain agreement between
the record holder hereof and the Company, a copy of which will
be mailed to any holder of this certificate without charge
upon receipt by the Company of a written request therefor."
6
(ii) "The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any state and may not be pledged,
hypothecated, sold or otherwise transferred except upon such
registration or upon receipt by the Company of an opinion of
counsel satisfactory to the Company, in form and substance
satisfactory to the Company, that such registration is not
required."
10. Notice. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company and delivered at the office of
the Company, 55 Chapel Street, Newton, MA 02158, attention of the President,
or such other address as the Company may hereafter designate.
Any notice to be given to the Holder hereunder shall be deemed sufficient
if addressed to and delivered in person to the Holder at his address furnished
to the Company or when deposited in the mail, postage prepaid, addressed to
the Holder at such address.
11. Appraisal of Shares. Wherever in this option provisions are made
for a determination of the fair market value of the Common Stock by an
independent appraiser, such requirement shall be satisfied by an appraisal
effected by the independent appraiser acting under the provisions of the
Company's Equity Participation Plan.
12. Government and Other Regulations; Governing Law. This option is
subject to all laws, regulations and order of any governmental authority which
may be applicable thereto and, notwithstanding any of the provisions hereof,
the Holder agrees that he will not exercise the option granted hereby nor will
the Company be obligated to issue any shares of stock hereunder if the
exercise thereof or the issuance of such shares, as the case may be, would
constitute a violation by the Holder or the Company of any such law,
regulation or order or any provision thereof. Without limiting the generality
of the foregoing, the Company shall not be obligated to issue any such shares
if in the Company's sole judgment to do so would cause the Company or such
issue not to be in compliance with the requirements of Rule 504 promulgated
under the Securities Act of 1933 as amended. The Company shall use reasonable
efforts in order to cause the exercise of this option or the issuance of
shares pursuant hereto to comply with any such law, regulation, order or
provision. In the event that the Company has failed, after using its
reasonable efforts for a period of one year, to cause compliance with any such
law, regulation, order or provision to be effected, the Company shall pay the
Holder an amount in cash equal to the difference between the exercise price
and the fair market value (as determined by an independent appraiser) of the
shares then purchasable hereunder, in consideration for the Holder's release
of all rights hereunder relating to such shares.
This option is and shall be subject in every respect to the provisions of
the Company's 1998 Incentive and Non-Statutory Stock Option Plan, as amended
from time to time, which is incorporated herein by reference and made a part
hereof. The Holder hereby accepts this option subject to all the terms and
provisions of the Plan and agrees that (a) in the event of any conflict
7
between the terms hereof and those of the Plan, the latter shall prevail; and
(b) all decisions under and interpretations of the Plan by the Committee or
the Board shall be final, binding and conclusive upon the Holder and his heirs
and legal representatives.
This option shall be governed by and construed in accordance with the
laws of The Commonwealth of Massachusetts.
12. Effective Date; Shareholder Approval. This option shall be
effective on the Effective Date; provided, however, that this option shall be
null and void, and no portion of this option shall be exercisable or
exercised, in the event that the shareholders of the Company have not approved
the Plan by the first anniversary of the Effective Date.
IN WITNESS WHEREOF, the parties have executed this option, or caused this
option to be executed, as of the effective date.
TEMPTRONIC CORPORATION
By: /s/ Thomas Gerendas
--------------------------
Acknowledged and accepted:
/s/ William M. Stone
- ----------------------------
Holder
8
EXHIBIT 10.3
Date: June 9, 1997
Non-Statutory Option Granted
by
TEMPTRONIC CORPORATION
(hereinafter called the "Company")
to
William Stone
(hereinafter called the "Holder")
WITNESSETH:
For valuable consideration, the receipt of which is hereby acknowledged,
the Company hereby grants to the Holder the following option:
1. Grant of Option. Subject to the terms and conditions hereinafter set
forth, the Holder is hereby given the right and option to purchase from the
Company, at an option price of $.01 per share, an aggregate of 12,500 shares
of the Company's Common Stock, $.01 par value (the "Common Stock"), at the
time and in the manner herein provided. Subject to earlier termination
pursuant to Section 8 hereof, the Holder shall have the right and option to
purchase any or all of such shares
(a) 2,500 of such shares on and after the first anniversary of the
effective date of this option as set forth above (the "Effective
Date"); and
(b) an additional 2,500 of such shares on and after June 9 of each of
the years 1999 through 2002, until the Holder shall have the right
to purchase all of the shares.
This option shall terminate in all respects, and all rights and options to
purchase shares hereunder shall terminate, ten years from the Effective Date.
The right to purchase shares hereunder shall be cumulative.
2. Exercise of Option. Purchase of any shares hereunder shall be made
by delivery to the Company of a written notice of exercise specifying the
address to which the certificates representing such shares are to be mailed,
accompanied by cash, certified check, bank draft or postal or express money
order payable to the order of the Company for an amount equal to the option
price of such shares.
3. Conditions and Limitations. As a condition precedent to any exercise
of this option, the Holder (or if any other individual or individuals are
exercising this option, such individual or individuals) shall deliver to the
Company an investment letter in form and substance satisfactory to the Company
and its counsel which shall contain, among other things (including an
acknowledgment of the rights of first refusal set forth in Section 9 hereof) a
statement in writing: (a) that the option is then being exercised for the
account of the Holder and only with a view to investment in, and not in
connection with or with a view to the disposition of, the shares with respect
to which the option is then being exercised; (b) that the Holder has been
advised that Rule 144 of the Securities and Exchange Commission (the
"Commission"), which permits the resale, subject to various terms and
conditions, of small amounts of "restricted securities" (as therein defined)
after they have been held for two years, does not now apply to the Company
because the Company is not now required to file, and does not file, current
reports under the Securities Exchange Act of 1934 (the "Exchange Act"), nor
is there publicly available information concerning the Company substantially
equivalent to that which would be available if the Company were required to
file such reports; (c) that the Holder understands that there is no assurance
that the Company will ever become a reporting company under the Exchange Act
and that the Company has no obligation to the Holder to do so; (d) that the
Holder and Holder's representatives have fully investigated the Company and
the business and financial conditions concerning it and have knowledge of the
Company's then current corporate activities and financial condition; (e) if
the Company shall so require, confirming the rights of first refusal and
repurchase option of the Company (if any) set forth herein; and (f) that the
Holder believes that the nature and amount of the shares being purchased are
consistent with Holder's investment objectives, abilities and resources. The
restriction imposed by the foregoing investment representations shall be
inoperative upon the registration with the Commission of the stock subject to
this option or acquired through the exercise of this option.
The Holder also agrees for a period of up to 180 days from the effective
date of any registration of securities of the Company under the Securities Act
of 1933, as amended (the "Securities Act"), upon request of the Company or
the underwriters managing any underwritten offering of the Company's
securities, not to sell, make any short sale of, loan, grant any option for
the purchase of, or otherwise dispose of any shares issued pursuant to the
exercise of this option, without the prior written consent of the Company and
such underwriters.
4. Delivery of Shares. Within a reasonable time following the receipt
by the Company of the option price for any shares to be purchased hereunder
and the investment letter referred to in Section 3, the Company will deliver
or cause to be delivered to the Holder (or if any other individual or
individuals are exercising this option, to such individual or individuals) at
the address specified pursuant to Section 2 hereof, a certificate or
certificates for the number of shares with respect to which the option is then
being exercised, registered in the name of the Holder (or the name or names of
the individual or individuals exercising the option, either alone or jointly
with another person or persons with rights of survivorship, as the individual
or individuals exercising the option shall prescribe in writing to the
Company); provided, however, that such delivery shall be deemed effected for
all purposes when a stock transfer agent shall have deposited such certificate
or certificates in the United States mail, addressed to the Holder (or such
individual or individuals) at the address so specified; and provided further
that if any law, regulation or order of the Commission or other body having
jurisdiction in the premises shall require the Company or the Holder (or the
individual or individuals exercising this option) to take any action in
connection with the sale of the shares then being purchased, then, subject to
the other provisions of this paragraph, the date on which such sale shall be
2
deemed to have occurred and the date for the delivery of the certificates for
such shares shall be extended for the period necessary to take and complete
such action, it being understood that the Company shall have no obligation to
take and complete any such action. It shall be a condition of the Company's
obligation to issue any shares purchased hereunder that the Company's
obligations, if any, to withhold state or federal taxes incurred by the Holder
in connection with such exercise shall have been discharged in full.
5. Adjustments Upon Changes in Capitalization. The existence of this
option shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock ahead of or affecting
the Common Stock or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar
character or otherwise.
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, without
receiving compensation therefor in money, services or property, then the
number, class, and per share price of shares of stock subject to this option
shall be appropriately adjusted in such a manner as to entitle the Holder to
receive upon exercise of this option, for the same aggregate cash
consideration, the same total number and class of shares that the owner of an
equal number of outstanding shares of Common Stock would own as a result of
the event requiring the adjustment.
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock
of any class, for cash or property, or for labor or services, either upon
direct sale or upon the exercise of rights or warrants to subscribe therefor,
or upon conversion of shares of obligations of the Company convertible into
such shares or other securities, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common
Stock then subject to this option.
6. Effect of Certain Transactions. If the Company is a party to a
merger or reorganization with one or more other corporations, whether or not
the Company is the surviving or resulting corporation, or if the Company
consolidates with or into one or more other corporations, or if the Company is
liquidated, or if there is a sale or other disposition of substantially all of
the Company's capital stock or assets to a third party or parties (each
hereinafter referred to as a "Transaction"), in any case while this option
remains outstanding: (a) subject to the provisions of clause (b) below, after
the effective date of such Transaction this option shall remain outstanding
and shall be exercisable in shares of Common Stock or, if applicable, shares
of such stock or other securities, cash or property as the holders of shares
of Common Stock received pursuant to the terms of such Transaction; or (b)
this option may be canceled by the Company's board of directors as of the
effective date of such Transaction, provided that notice of such cancellation
shall be given to the Holder and the Holder shall have the right to exercise
this option in part or in full prior to the effective date of such
Transaction.
3
7. Rights of Holder. No person shall, by virtue of the granting of this
option to the Holder, be deemed to be a holder of any shares purchasable under
this option or to be entitled to the rights or privileges of a holder of such
shares unless and until this option has been exercised with respect to such
shares and they have been issued pursuant to that exercise of this option.
The granting of this option shall not impose upon the Company any
obligations to employ or to continue to employ the Holder; and the right of
the Company to terminate the employment of the Holder shall not be diminished
or affected by reason of the fact that this option has been granted to the
Holder.
The Company shall, at all times while any portion of this option is
outstanding: reserve and keep available, out of shares of its authorized and
unissued stock or reacquired shares, a sufficient number of shares of Common
Stock to satisfy the requirements of this option; comply with the terms of
this option promptly upon exercise of the option rights; and pay all fees or
expenses necessarily incurred by the Company in connection with the issuance
and delivery of shares pursuant to the exercise of this option.
8. Transfer and Termination. This option is not transferable by the
Holder otherwise than by will or the laws of descent and distribution. This
option is exercisable, during the Holder's lifetime, only by the Holder.
This option is exercisable, during the Holder's lifetime, only by him or
her, and by him or her only while he or she is an employee of the Company,
except that in the event that such employment terminates for any reason other
than for cause as determined by the Company and other than by reason of death
or retirement in good standing from the employ of the Company by reason of age
or disability under the then established rules of the Company, the Holder
shall have the right to exercise this option within 30 days after the date he
or she ceases to be an employee of the Company (but not later than the
expiration date of this option) with respect to the shares which were
purchasable by him or her by exercise of this option at the time of such
cessation of employment. As used in this paragraph, "cause" shall mean (a)
any material breach by the Holder of any agreement to which the Holder and the
Company are both parties, (b) any act (other than retirement) or omission to
act by the Holder which may have a material and adverse effect on the
Company's business or on the Holder's ability to perform services for the
Company, including, without limitation, the commission of any crime (other
than ordinary traffic violations), or (c) any material misconduct or material
neglect of duties by the Holder in connection with the business or affairs of
the Company or any affiliate of the Company. An employment relationship
between the Company and the Holder shall be deemed to exist, for purposes of
this option, during any period in which the Holder is employed in any capacity
by the Company or any subsidiary of the Company.
In the event that the Holder retires in good standing from employment by
the Company by reason of age or disability under the then established rules of
the Company, the Holder shall have the right to exercise this option at any
time within 90 days after his or her retirement (but not after the termination
date of this option) with respect to the shares which were purchasable by the
Holder at the date of such retirement.
4
In the event of the death of the Holder while he or she has the right to
exercise this option, his or her executors, administrators, heirs or legatees,
as the case may be, shall have the right to exercise this option at any time
within 180 days after his or her death (but not after the termination date of
this option) with respect to the shares which were purchasable by the Holder
as of the date of his or her death.
9. Company Purchase Rights. During the term of this option and
thereafter, no shares purchased upon exercise of this option (or obtained by
way of stock dividend, stock split or other distribution with respect to such
shares) shall be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of, by operation of law or otherwise (collectively
"transferred") to any person at any time or times whatsoever, except as
specifically provided in this Section 9.
(a) Right of First Refusal. If at any time the Holder shall receive
a bona fide offer (an "Offer") in writing acceptable to him to purchase any
or all of his shares, the Holder shall give written notice to the Company of
the terms of the Offer, including the name of the offeror, the price and the
terms of payment. Thereupon, the Company shall have the right and option (the
"Buy-back Option") for 60 days after such notice is given to purchase not
less than all the shares so offered, at a price (the "Buyback Price") which
shall be the lower of (i) the current fair market value of the Common Stock,
as determined by an independent appraiser within one year prior or 45 days
subsequent to the date of the Offer, and (ii) the price stated in the Offer.
The exercise by the Company of its right to purchase the shares upon
the terms of the Offer must be made by notice to the Holder prior to the
expiration of the applicable period referred to above. Such notice shall set
forth a time and place of closing no later than 30 days after the date of such
notice. At such closing, the Holder shall deliver the stock certificate or
certificates representing the shares, duly endorsed for transfer; and upon
such delivery the Company shall pay the Buyback Price to the Holder in cash or
by check.
In the event that the Company does not elect to purchase the Holder's
shares as herein provided, then the Holder may sell, at any time within 30
days of the expiration of the option period provided herein, the number of
shares specified in the Offer to the person who made the Offer and pursuant to
the terms of the Offer. In the event that the Holder does not sell the shares
pursuant to the Offer within such 30-day period, the shares shall be subject
to the terms, provisions and restrictions provided for in this Section as if
the Holder had never submitted the sale notice to the Company as aforesaid.
(b) Repurchase Option. Upon termination of the Holder's employment
with the Company at any time, by either the Company or the optionee and for
any reason whatsoever including death or disability, the Company shall have
the option to repurchase (the "Repurchase Option") any or all of the
Holder's shares at the current fair market value of the Common Stock, as
determined by an independent appraiser within one year prior or 45 days
subsequent to the date of termination of the Holder's employment (the
"Repurchase Price"). The Company shall have the right to exercise the
Repurchase Option for the Holder's shares at any time within 90 days after the
termination of the Holder's employment.
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In the event the Company shall be entitled to and shall elect to
exercise the Repurchase Option, it shall give to the Holder a written notice
specifying the number of shares which the Company elects to purchase and
specifying a date for closing hereunder which date shall be not more than 30
calendar days after the giving of such notice. At such closing, the Holder
shall deliver the stock certificate or certificates representing the shares,
duly endorsed for transfer; and upon such delivery the Company shall pay the
Repurchase Price to the Holder in cash or by check.
For purposes of the Repurchase Option and the Buyback Option, the
term "shares" shall mean any and all new, substituted or additional
securities or other property issued to the Holder, by reason of his ownership
of Common Stock, in connection with any stock dividend, liquidating dividend,
stock split or other change in the character or amount of any of the
outstanding securities of the Company, or any consolidation, merger or sale of
all, or substantially all, of the assets of the Company. The Repurchase
Option and Buyback Option shall terminate on the effective date of a
registration statement under the Securities Act of 1933, as amended, pursuant
to which securities of the Company with an aggregate sale price in excess of
$1,000,000 are sold to the public.
(c) Legends. Any certificate representing shares of stock subject
to the provisions of this Section 9 may have endorsed thereon one or more
legends, substantially as follows:
(i) "Any disposition of any interest in the securities represented
by this certificate is subject to restrictions, and the
securities represented by this certificate are subject to
certain options, contained in a certain agreement between the
record holder hereof and the Company, a copy of which will be
mailed to any holder of this certificate without charge upon
receipt by the Company of a written request therefor."
(ii) "The shares of stock represented by this certificate have not
been registered under the Securities Act of 1933 or under the
securities laws of any state and may not be pledged,
hypothecated, sold or otherwise transferred except upon such
registration or upon receipt by the Company of an opinion of
counsel satisfactory to the Company, in form and substance
satisfactory to the Company, that such registration is not
required."
10. Notices. Any notice to be given to the Company hereunder shall be
deemed sufficient if addressed to the Company and delivered at the office of
the Company, 55 Chapel Street, Newton, Massachusetts 02158, attention of the
President, or such other address as the Company may hereafter designate.
Any notice to be given to the Holder hereunder shall be deemed sufficient
if addressed to and delivered in person to the Holder at his address furnished
to the Company or when deposited in the mail, postage prepaid, addressed to
the Holder at such address.
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11. Appraisal of Shares. Wherever in this option provisions are made
for a determination of the fair market value of the Common Stock by an
independent appraiser, such requirement shall be satisfied by an appraisal
effected by the independent appraiser acting under the provisions of the
Company's Equity Participation Plan.
12. Governmental and Other Regulations. This option is subject to all
laws, regulations and orders of any governmental authority which may be
applicable thereto and, notwithstanding any of the provisions hereof, the
Holder agrees that he will not exercise the option granted hereby nor will the
Company be obligated to issue any shares of stock hereunder if the exercise
thereof or the issuance of such shares, as the case may be, would constitute a
violation by the Holder or the Company of any such law, regulation or order or
any provision thereof. Without limiting the generality of the foregoing, the
Company shall not be obligated to issue any such shares if in the Company's
sole judgment to do so would cause the Company or such issue not to be in
compliance with the requirements of Rule 504 promulgated under the Securities
Act of 1933, as amended. The Company shall be obligated to use reasonable
efforts to cause the exercise of this option or the issuance of shares
pursuant hereto to comply with any such law, regulation, order or provision.
In the event that the Company has failed, after using its reasonable efforts
for a period of one year, to cause compliance with any such law, regulation,
order or provision to be effected, the Company shall pay the Holder an amount
in cash equal to the fair market value (as determined by an independent
appraiser) of the shares then purchasable hereunder.
13. Government Law and Interpretation. This option shall be governed
by, and construed and enforced in accordance with, the substantive laws of The
Commonwealth of Massachusetts. The Holder hereby agrees that all decisions
under and interpretations of the Plan by the Company's board of directors
shall be final, binding and conclusive upon the Holder and his heirs and legal
representatives.
IN WITNESS WHEREOF, the Company has caused this option to be executed in
its name and on its behalf as of the date first above written.
TEMPTRONIC CORPORATION
By: /s/ Thomas Gerendas
---------------------------
Its President
Accepted and Agreed to:
/s/ William M. Stone
- --------------------------
Holder
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EXHIBIT 10.4
EMPLOYMENT AGREEMENT
This Agreement is dated as of March 9, 2000, and is by and between
Temptronic Corporation, a Delaware corporation with its principal place of
business in Newton, Massachusetts (the "Company"), and William M. Stone of 12
Samuel Drive, North Grafton, Massachusetts 01536 (the "Employee").
1. Employment. The Company hereby agrees to continue to employ the
Employee, and the Employee agrees to continue in the employ of the Company, on
the terms and conditions hereinafter set forth.
2. Effective Date and Term. The effective date of this Agreement (the
"Effective Date") shall be March 9, 2000. Subject to the provisions of
Section 5 hereof, this Agreement shall have a term of three years, commencing
on the Effective Date. In the event that neither the Company nor the Employee
shall have given notice of termination as provided in Sections 5(a) or 5(c),
in the Company's case at least six months prior to the end of the initial
three-year term of this Agreement, the term of this Agreement shall be
extended for an additional year. The term of this Agreement shall be extended
from year to year thereafter in the event that notice is not given as
aforesaid during any extension of the term hereof.
3. Capacity and Extent of Service.
(a) At all times during the term of this Agreement, the Company
shall employ the Employee as its President and Chief Executive Officer.
(b) During his employment hereunder, the Employee shall devote his
full business time and his best efforts, business judgment, skill and
knowledge to the performance of his duties and responsibilities hereunder.
The Employee shall not engage in any other business activity during the term
of this Agreement, except as may be approved by the Board of Directors of the
Company.
(c) The Company encourages participation by the Employee on
community boards and committees and in activities generally considered to be
in the public interest, but the Board of Directors shall be advised in advance
and shall have the right to approve or disapprove, in its sole discretion, the
Employee's participation on such boards and committees if, in the judgment of
the Board, such participation may conflict with the Company's interests or
with the Employee's duties or responsibilities.
4. Compensation and Benefits.
(a) Base Salary. As compensation for services performed under and
during the term of this Agreement, the Employee shall receive a base salary
("Base Salary"), which shall initially be at a rate of $160,000 per annum.
The Base Salary shall be reviewed annually during the term of this Agreement,
as of October 1 of each year, by the President and CEO of inTEST Corporation
and may be increased, but shall not be decreased below its current level.
(b) Bonuses. For each full calendar year during the term of this
Agreement, the Employee shall receive a bonus equal to 1% of the pre-tax
profit of the Company during such fiscal year. Pre-tax profit shall be
determined by the Company's independent auditors in accordance with generally
accepted accounting principles, except that such computation shall not take
into account the Employee's bonus. The bonus payable pursuant to this Section
4(b) shall be prorated for any portion of a calendar year included within the
term of this Agreement. In addition to the foregoing, the Company will
consider awarding the Employee a supplementary bonus relating to the
Employee's performance during calendar year 1999.
(c) Fringe Benefits. At all times during the term of this
Agreement, the Company shall provide the Employee with fringe benefits
comparable to those provided to other executive officers of the Company.
(d) Business Expenses. The Company shall reimburse the Employee
for all reasonable travel and other business expenses incurred by him in the
performance of his duties and responsibilities, subject to such reasonable
requirements with respect to substantiation and documentation as may be
specified by the Company, its auditors or the Internal Revenue Service.
5. Termination and Termination Benefits
Notwithstanding the provisions of Section 2, the Employee's employment
hereunder shall terminate under the following circumstances:
(a) Termination by the Employee Without Cause. The Employee may
resign from the Company at any time upon not less than 90 and not more than
180 days' prior written notice to the Company. In the event of resignation by
the Employee under this Section 5(a), the Company may elect to waive the
notice period or any portion thereof and the Employee shall cease performing
services hereunder, in which event the Company will pay the Employee's Base
Salary for the full notice period specified in the notice of termination (or
for any remaining portion of the period). If and to the extent that the
Employee continues to perform services hereunder during the notice period, he
shall continue to perform as described in Section 3(b) hereof. From and after
the effective date of such termination of employment under this Section 5(a),
the Company shall have no further liability to the Employee for salary or
other compensation or benefits under this Agreement, other than payment, when
calculated, of any bonus to which the Employee may be entitled pursuant to
Section 4(b) hereof that may have accrued through the effective date of
termination.
(b) Termination by Reason of Death or Disability. In the event of
the Employee's death or permanent disability, as reasonably determined by the
Company, during his employment under this Agreement, the Employee's employment
shall terminate on the date of his death or such determination of permanent
disability. In the event of any such termination, the Employee or those
entitled thereto by will or the laws of descent and distribution shall be paid
his base salary for the greater of (a) one year from the date of such
termination, or (b) the balance of the three-year term of this Agreement. In
addition, the Employee or others so entitled shall be paid any bonus to which
the Employee may be entitled pursuant to Section 4(b) that may have accrued
through the effective date of termination.
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(c) Termination by the Company Without Cause. The Employee's
employment under this Agreement may be terminated by the Company without cause
on written notice to the Employee. In the event of such termination, the
Employee shall be entitled to the same post-employment benefits as shall be
payable pursuant to Section 5(b) in the event of death or disability.
(d) Termination by the Company For Cause. The Employee's
employment hereunder may be terminated for cause by the Company, effective
immediately. Only the following shall constitute "cause" for such
termination:
(i) Conviction of the Employee by a court of competent
jurisdiction of any criminal offense involving dishonesty or
breach of trust or any felony or crime of moral turpitude;
(ii) Commission by the Employee of an act of fraud upon the
Company; or
(iii) Willful refusal by the Employee to perform the duties
reasonably assigned to him by the Board of Directors of the
Company, which failure or breach continues for more than ten
days (or such longer period, not in excess of 30 days, as may
be required to cure such failure) after written notice thereof
is given to the Employee.
In the event of the termination of employment under this Section 5(d), the
Company shall have no further obligation to the Employee hereunder except
payment of salary, that may have accrued, through the effective date of
termination.
(e) Post-Termination Fringe Benefits. In addition to the post-
termination benefits to which the employee is entitled by law, if the
employment of the Employee is terminated pursuant to Sections 5(b) or 5(c),
the Employee shall be entitled to all Company fringe benefits for any period
subsequent to termination of employment during which he continues to receive a
base salary pursuant to the foregoing provisions. In addition, in the event
that his employment terminates under the conditions described in sections 5(b)
or 5(c), the Company shall provide the Employee and his immediate family with
medical and dental insurance coverage, and such other insurance coverage as is
in effect at the time of such termination, at the expense of the Employee,
until the Employee reaches the age of 65 or would have reached such age, such
insurance coverage to be substantially as broad as the coverage in effect as
of the date of termination of employment.
6. Notices. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and delivered
in person or sent by registered or certified mail, postage paid, to the
Employee at the last address the Employee has filed in writing with the
Company or, in the case of the Company, at its main office, attention of the
Board of Directors, with a copy to inTEST Corporation at its main office,
attention of the President.
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7. Entire Agreement and Amendment. This Agreement constitutes the
entire Agreement between the parties with respect for its subject matter,
except for a non-disclosure and proprietary rights agreement heretofore
executed by the Employee and a letter agreement dated as of February 12, 1999
relating to a Company loan to the Employee. This Agreement supersedes in all
respects the Employment Agreement dated as of October 26, 1998 between the
Employee and the Company. This Agreement may not be amended except by a
writing duly executed and delivered by the Employee and on behalf of the
Company.
8. Binding Effect; Non-assignability. This Agreement shall be binding
upon and inure to the benefit of the Company and its successors. This
Agreement shall inure to the benefit of and be enforceable by the Employee's
personal or legal representatives, executors, administrators, successors,
heirs, distributees, devisees and legatees.
9. Applicable Law. This Agreement shall be construed and enforced in
all respects in accordance with the laws of The Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Company, by its duly authorized officer, and by the
Employee, as of the date first above written.
TEMPTRONIC CORPORATION
/s/ William M. Stone By: /s/ Hugh T. Regan, Jr.
- -------------------------- -------------------------------
William M. Stone Hugh T. Regan, Jr.
Secretary and Treasurer
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