Neither this Option nor the Common Stock to issued upon exercise hereof has been
registered under the Securities Act of 1933 (the "Act"), or qualified under any
state securities law (the "Law"), and this Option has been, and the Common Stock
to be issued upon exercise hereof will be, acquired for investment and not with
a view to, or for resale in connection with, any distribution thereof. No such
sale or other disposition may be made without an effective registration
statement under the Act and qualification under the law related thereto or an
opinion of counsel reasonably satisfactory to Tech Laboratories, Inc. and its
counsel, that said registration and qualifications are not required under the
Act and Law, respectively.
TECH LABORATORIES, INC.
STOCK OPTION AGREEMENT
This stock option (the "Option" or the "Agreement") is being granted
pursuant to that certain consulting agreement dated March 10, 1999, by and
between Tech Laboratories, Inc. (the "Company") and Mint Corporation (the
"Optionee").
I. NOTICE OF STOCK OPTION GRANT
The Optionee is being granted an Option to purchase Common Stock of the
Company. This Option shall be subject to the following terms and conditions:
Date of Grant: July 10, 1999
Exercise Price: $1.75 per share
Number of Shares Granted: 100,000
Type of Option: Nonstatutory Stock Option
Expiration Date: July 10, 2001, except as otherwise provided in this
Agreement.
II. AGREEMENT
1. GRANT OF OPTION. The Company hereby grants to the Optionee the Option to
purchase the number of shares ("Shares") set forth in the Notice of Grant, at
the Exercise Price per share set forth in the Notice of Grant, subject to the
terms and conditions set forth herein.
2. EXERCISE OF OPTION.
(a) Right of Exercise. This Option may be exercised, in whole or in
part, subject to the terms of this Agreement, at any time from time to
time, after the Date of Grant and prior to the Expiration Date.
(b) Method of Exercise. This Option is exercisable by delivery of an
exercise notice, in the form attached as Exhibit A (the "Exercise Notice"),
which shall state the election to exercise the Option, the number of Shares
in respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the
Company. The Exercise Notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares. This Option shall be
deemed to be exercised upon receipt by the Company of such fully executed
Exercise Notice accompanied by such aggregate Exercise Price.
3. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:
(a) Cash; or
(b) Check.
4. REGISTRATION UNDER THE SECURITIES ACT.
(a) "Piggyback Registration". If the Company shall determine to
proceed with the actual preparation and filing of a registration statement
under the Securities Act in connection with the proposed offer and sale of
any of its securities by it or any of its security holders in an initial
public offering or otherwise (other than a registration statement on Form
S-4 or S-8 or an offering statement on Form 1-A), then the Company will
give written notice of its determination to all record holders of the
Option and/or any Shares, as the case may be. Upon the written request from
any record holder or holders of an aggregate of more than 50% of the
Options and Shares, considered in the aggregate, within 20 days after
receipt of any such notice from the Company, the Company will, except as
herein provided, cause all such Shares to be included in such registration
statement, all to the extent requisite to permit the sale or other
disposition by the prospective seller or sellers of the Shares to be so
registered; provided, further, that nothing herein shall prevent the
Company from, at any time, abandoning or delaying any registration. If any
registration pursuant to this Section 4(a) shall be underwritten in whole
or in part, the Company will require that the Shares requested for
inclusion pursuant to this Section 4(a) be included in the underwriting on
the same terms and conditions as the securities otherwise being sold
through the underwriters. In the event that the Shares requested for
inclusion pursuant to this Section 4(a) together with any other shares
which have similar piggyback registration rights (such other shares and the
Shares being collectively referred to as the "Requested Stock") would, in
the sole discretion of the managing underwriter, interfere with the
successful marketing of the shares of stock offered by the Company, the
number of shares of Requested Stock otherwise to be included in the
underwritten public offering may be reduced pro rata (by number of shares)
among the holders thereof requesting such registration or excluded in their
entirety if so required by the underwriter. To the extent all or any
portion of the Requested Stock is excluded from the underwritten public
offering, those shares of Requested Stock which are thus excluded from the
underwritten public offering shall be withheld from the market by the
holders thereof for a period, not to exceed 120 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering; provided, however, that the Shares included
in such Requested Stock shall be included in the Company's next
registration statement, subject to the earlier registration pursuant to
Section 4(b).
The obligation of the Company under this Section 4(a) shall be limited
to one subsequent registration statement and shall not apply in the event
and for so long as the Company has an effective registration statement
including a current prospectus pursuant to Section 4(b) hereof.
(b) Mandatory Registration. In the event the undersigned or its
transferees have not had included in the registration statement all of
their Shares in connection with the Company's initial public offering, then
the Company shall effect the registration of all remaining Shares as soon
as practicable, but not later than 180 days after the effective date of
such initial public offering; provided, however, that such period may be
extended or delayed by the Company for
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one period up to 90 days if, upon advice of counsel at the time such
registration statement is required to filed, or at the time the Company is
required to exercise best efforts to cause such registration statement to
become effective, such delay is advisable and in the best interests of the
Company because of the existence of non-public material information, or to
allow the Company to complete any pending audit of its financial statement,
or any non-routine transaction, such as a merger, reorganization, or
acquisition, which would require the filing of a Current Report on Form
8-K.
(c) Registration Procedures. If and whenever the Company is required
by the provisions of Section 4(a) or 4(b) to effect the registration of
Registrable Securities under the Securities Act, the Company will:
i) prepare and file with the SEC a registration statement with
respect to such securities, and use its best efforts to cause such
registration statement to become and remain effective until the Shares
are freely salable without the volume limitations of Rule 144;
ii) prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained
therein as may be necessary to keep such registration statement
effective until the Shares are freely saleable without the volume
limitations of Rule 144;
iii) furnish to the security holders participating in such
registration and to the underwriters of the securities being
registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other
documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
iv) use its best efforts to register or qualify the securities
covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as such participating holders may
reasonably request in writing within 20 days following the original
filing of such registration statement, except that the Company shall
not for any purpose be required to execute a general consent to
service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
v) notify the holders of Shares participating in such
registration, promptly after it shall receive notice thereof, of the
time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration
statement has been filed;
vi) notify such holders promptly of any request by the SEC for
the amending or supplementing of such registration statement or
prospectus or for additional information;
vii) prepare and file with the SEC, promptly upon the request of
any such holders, any amendments or supplements to such registration
statement or prospectus which, in the opinion of counsel for such
holders (and concurred in by counsel for the Company), is required
under the Securities Act or the rules and regulations thereunder in
connection with the distribution of Common Stock by such holder;
viii) prepare and promptly file with the SEC and promptly notify
such holders of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct
any statements or omissions if, at the time when a prospectus relating
to such securities is required to be delivered under the Securities
Act, any event shall have
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occurred as the result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in the light of the circumstances in which they
were made, not misleading; and
ix) advise such holders, promptly after it shall receive notice
or obtain knowledge thereof, of the issuance of any stop order by the
SEC suspending the effectiveness of such registration statement or the
initiation or threatening of any proceeding for that purpose and
promptly use its best efforts to prevent the issuance of any stop
order or to obtain its withdrawal if such stop order should be issued.
(d) Expenses.
i) With respect to the registration required pursuant to Section
4(a) or 4(b) hereof, all fees, costs and expenses of and incidental to
such registration, inclusion and public offering (as specified in
paragraph (ii) below) in connection therewith shall be borne by the
Company, provided, however, that any securityholders participating in
such registration shall bear their pro rata share of the underwriting
discount and commissions and transfer taxes.
ii) The fees, costs and expenses of registration to be borne by
the Company as provided in paragraph (i) above shall include, without
limitation, all registration, filing, and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the
Company, and all legal fees and disbursements and other expenses of
complying with state securities or blue sky laws of any jurisdictions
in which the securities to be offered are to be registered and
qualified (except as provided in (i) above). Fees and disbursements of
counsel and accountants for the selling securityholders and any other
expenses incurred by the selling securityholders not expressly
included above shall be borne by the selling securityholders.
(e) Indemnification.
i) The Company will indemnify and hold harmless each holder of
Shares which are included in a registration statement pursuant to the
provisions of Section 4(a) or 4(b) hereof, its directors and officers,
and any underwriter (as defined in the Securities Act) for such holder
and each person, if any, who controls such holder or such underwriter
within the meaning of the Securities Act, from and against, and will
reimburse such holder and each such underwriter and controlling person
with respect to, any and all loss, damage, liability, cost and expense
to which such holder or any such underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such
losses, damages, liabilities, costs or expenses are caused by any
untrue statement or alleged untrue statement of any material fact
contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such loss, damage,
liability, cost or expenses arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished by such holder, such
underwriter or such controlling person in writing specifically for use
in the preparation thereof.
ii) Each holder of Shares included in a registration pursuant to
the provisions of Section 4(a) or 4(b) hereof will indemnify and hold
harmless the Company, its directors and
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officers, any controlling person and any underwriter from and against,
and will reimburse the Company, its directors and officers, any
controlling person and any underwriter with respect to, any and all
loss, damage, liability, cost or expense to which the Company or any
controlling person and/or any underwriter may become subject under the
Securities Act or otherwise, insofar as such losses, damages,
liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, in
each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission
was so made in reliance upon and in strict conformity with written
information furnished by or on behalf of such holder specifically for
use in the preparation thereof.
iii) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (i) or (ii) of this Section 4(e) of notice
of the commencement of any action involving the subject matter of the
foregoing indemnity provisions such indemnified party will, if a claim
thereof is to be made against the indemnifying party pursuant to the
provisions of said paragraph (i) or (ii), promptly notify the
indemnifying party of the commencement thereof; but the omission to so
notify the indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than hereunder.
In case such action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the
extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party, provided, however, if the
defendants in any action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably
concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or in addition to
those available to the indemnified party, or if there is a conflict of
interest which would prevent counsel for the indemnifying party from
also representing the indemnified party, the indemnified party or
parties have the right to select separate counsel to participate in
the defense of such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party
pursuant to the provisions of said paragraph (i) or (ii) for any legal
or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (1) the indemnified party shall have employed
counsel in accordance with the provisions of the preceding sentence,
(2) the indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after the notice of the commencement of
the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
5. TRANSFERABILITY OF OPTION. This Option may only be transferred in
compliance with the Act. The Company may request in its sole discretion an
opinion of counsel from the transferor prior to any transfer to the effect that
the Option may be transferred by the transferor without violation of the
registration provision of the Act. Transferor shall notify the Company of any
proposed transfer. The terms of this Agreement shall be binding upon the
executors, administrators, heirs, successors, and assigns of the Optionee.
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6. TERM OF OPTION. This Option may be exercised only within the term set
out in the Notice of Grant, and may be exercised during such term only in
accordance with the terms of this Option Agreement.
7. TERMINATION OF OPTION. The Option shall terminate on the Expiration
Date; provided, however, that if the Company files any registration statement
(other than a registration statement on Form S-4 or S-8) on or prior to July 10,
2010, the Expiration Date shall be a date that is (i) if the Shares are included
in that registration statement, 90 days after the effective date of that
registration statement, or (ii) if the Shares are not included in that
registration statement, 90 days after the effective date of the registration
statement in which the Shares are included in accordance with the last sentence
of Section 4(a) or with Section 4(b).
8. DILUTION PROTECTION.
(a) In the event the Company shall (i) declare a dividend on its
Common Stock in shares of Common Stock or make a distribution in shares of
Common Stock, (ii) declare a stock split or reverse stock split of its
outstanding shares of Common Stock, (iii) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, or (iv) issue
by reclassification of its shares of Common Stock other securities
(including any such reclassification in connection with a consolidation or
merger in which the Company or any of its subsidiaries is the continuing
corporation), then the number of shares of Common Stock of the Company,
deliverable to the Optionee hereunder and the exercise price related
thereto shall be adjusted so that the Optionee shall be entitled to receive
the kind and number of shares of Common Stock of the Company which the
Optionee has the right to receive, upon the happening of any of the events
described above, with respect to the shares of the Company stock which were
otherwise deliverable pursuant herein. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of
such event;
(b) Whenever the number of Shares or the exercise price of this Option
is adjusted pursuant to this paragraph, the Company shall promptly mail by
first class mail, postage prepaid, to the Optionee, notice of such
adjustment or adjustments.
9. AVAILABILITY OF COMPANY STOCK. The Company hereby agrees and covenants
that at all times during the Exercise Period it shall reserve for issuance a
sufficient number of shares of common stock as would be required upon full
exercise of the rights represented by this Agreement.
10. NO RIGHT TO EMPLOYMENT. Nothing in this Agreement shall be deemed to
create a relationship of employer to employee. The Company granted the Option to
Optionee in consideration of the performance of certain consulting services by
Optionee.
11. TAX CONSEQUENCES. Some of the federal tax consequences relating to this
Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option. The Optionee may incur regular federal
income tax liability upon exercise of the Option. The Optionee will be
treated as having received compensation income (taxable at ordinary income
tax rates) equal to the excess, if any, of the Fair Market Value of the
Exercised Shares on the date of exercise over their aggregate Exercise
Price. If the Optionee is deemed for any reason to be an employee, the
Company will be
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required to withhold from his or her compensation or collect from the
Optionee and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
(b) Disposition of Shares. If the Optionee holds Shares for at least a
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.
12. GOVERNING LAW. This Agreement is governed by the laws of the State of
New York.
IN WITNESS WHEREOF, this Agreement is executed this day of April, 1999.
TECH LABORATORIES, INC.
By:
-------------------------------------
OPTIONEE:
MINT CORPORATION
By:
-------------------------------------
Richard Kandel, President
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TECH LABORATORIES, INC.
EXERCISE NOTICE
Tech Laboratories, Inc.
955 Belmont Avenue
North Haledon, New Jersey 07508
1. EXERCISE OF OPTION. Effective as of today, _____________, 199___, the
undersigned ("Purchaser") hereby elects to purchase ___________ shares (the
"Shares") of the Common Stock of Tech Laboratories, Inc. (the "Company") under
and pursuant to the Stock Option Agreement dated April ____, 1999 (the "Option
Agreement"). The purchase price for the Shares shall be as set forth in the
Option Agreement, as adjusted.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
purchase price for the Shares (either in cash or by check).
3. REPRESENTATION OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read, and understood the Option Agreement and agrees to abide by and
be bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company) of the stock certificate evidencing the Shares, no right
to vote or receive dividends or any other rights as a shareholder shall exist
with respect to the Shares, notwithstanding the exercise of the Option. A share
certificate for the number of Shares so acquired shall be issued to the Optionee
as soon as practicable after exercise of the Option.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer
adverse tax consequences as a result of Purchaser's purchase or disposition of
the Shares. Purchaser represents that Purchaser has consulted with any tax
consultants Purchaser deems advisable in connection with the purchase or
disposition of the Shares and that Purchaser is not relying on the Company for
any tax advice.
6. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by
reference. This Exercise Notice and the Option Agreement constitute the entire
agreement of the parties and supersede in their entirety all prior undertakings
and agreements of the Company and Optionee with respect to the subject matter
hereof.
Submitted by: Accepted by:
OPTIONEE:
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Address:
By:
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Its:
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