December 13, 1994
Donald Patterson et al.
24 Elgin Avenue
Toronto Ontario
Canada
M5R 1G6
Dear Don:
This letter shall serve as an Agreement made between Myo Diagnostics Inc.
("Myo") and Donald Patterson, Ronald Goldsack, James Connacher, Chris Skillen,
Richard Reid and James Black ("Guarantors").
1. PREVIOUS LETTER
Myo and Guarantor hereby cancel the letter agreement between us dated March 23,
1994 (the "Previous Agreement")and replace it with the following agreement.
2. PROVISIONS OF THE LETTER OF CREDIT
The Guarantors have furnished a series of irrevocable Letters of Credit (the
"L.C.s") in favor of the Wells Fargo Bank, Century City branch for the account
of Myo Diagnostics Ltd. The L. C.s are in the aggregate amount of $400,000
(U.S.).
The Letters of Credit were issued according to the following schedule:
Date Issued Amount Guarantor
----------- ------ ---------
May 27, 1994 - $75,000 Donald Patterson
July 7, 1994 - $65,000 Ronald Goldsack
July 7, 1994 - $65,000 James Connacher
August 8, 1994 - $65,000 Chris Skillen
September 15, 1994- $65,000 Richard Reid
October 17, 1994 - $65,000 James Black
Each L.C. expires one year from the date of issue. Myo has assumed all costs
associated with the issuance of the L.C.s.
3. ENTITLEMENT TO STOCK OPTIONS
As consideration for providing the guarantee for the L.C.s, Myo shall issue to
the Guarantors, Options (the "Options") each substantially in the form of
Exhibit A hereto, to purchase an aggregate of 400,000 shares of the Common Stock
of Myo. Each Guarantor's option shall be for an aggregate number of shares equal
to one share of Myo Common stock for each dollar guaranteed by such Guarantor as
set forth opposite his name in the foregoing schedule.
Myo proposes to enter into a Securities Purchase Agreement (the "Purchase
Agreement") with Ontario Municipal Employees Retirement Board ("OMERB")
providing, among other things, for the purchase by OMERB of shares of Myo Common
Stock for an aggregate purchase price of $1,000,000. In the event that this
transaction is consummated, the options shall be executed and delivered to the
Guarantors as soon as is practicable following such consummation, ant the per
share purchase price of each Option shall be equal to 75% of the per share
purchase price paid by OMERB. In the event that such transaction is not
consummated, the Options shall be issuable at the time of the completion of
Myo's next private placement of Common Stock with aggregate purchase price in
excess of $500,000, and the per share exercise price shall be equal to 75% of
the per share purchase price paid in such a private placement.
Each Guarantor's option shall become exercisable nine months following the
issuance date of the corresponding Letter of Credit as set forth opposite his
name in the foregoing schedule or pursuant to the provisions of Section 3 (a) or
5 (b) thereof. Each option shall expire on the first anniversary of the
completion of an initial public offering by Myo of shares of its Common Stock
unless sooner terminated in accordance with the provisions of Section 4 or
Section 5(a) thereof.
In the event that the options are exercised in part or in full, the Guarantors
shall have the same "piggyback" registration rights and be subject to the same
limitations as are provided to OMERB in the Purchase Agreement.
4. GENERAL TERMS AND CONDITIONS
At the date of the closing of the OMERS transaction, Myo will provide to the
Guarantors a copy of Myo's latest financials, a copy of the resolution of the
Board of Directors authorizing the issuance of the Options on these terms and
conditions agreed upon, and a copy of the resolution of the Board of Directors
authorizing the use of proceeds of any offering of shares subsequent to the
OMERB transaction to repay and cancel the letters of credit. Audited financial
statements for Myo for the fiscal year ending December 31, 1994 shall be
provided to Guarantors when available.
Myo agrees to indemnify and hold harmless the Guarantors, their servants, agents
or employees, against claims of, or liability to, any third person resulting
from negligence or misconduct of Myo or its against, servants or employees.
5. REPRESENTATIONS OF GUARANTORS
The Guarantors represent and warrant to Myo that they constitute all persons
having any rights as "Guarantor" under the previous Agreement. This is the
complete agreement between the parties with respect to the transactions
contemplated hereby and supersedes all previous negotiations, understandings
agreements, or representations, written or oral, made by or among the parties,
relating thereto.
AGREED on this _____ day of December, 1994.
GUARANTORS MYO DIAGNOSTICS, INC.
By /s/ Donald Paterson By /s/ Gerald D. Appel
------------------------- -----------------------
Donald Paterson Gerald D. Appel,
President
By /s/ Ronald Goldsack
-------------------------
Ronald Goldsack
By /s/ James Connacher
-------------------------
James Connacher
By /s/ Chris Skillen
-------------------------
Chris Skillen
By /s/ Richard Reid
-------------------------
Richard Reid
By /s/ James Black
-------------------------
James Black
THIS OPTION AND THE UNDERLYING COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE. THIS OPTION HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND THIS
OPTION AND THE UNDERLYING COMMON STOCK MAY NOT BE SOLD, MORTGAGED, PLEDGED,
HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT
REQUIRED UNDER SUCH ACT OR LAWS.
MYO DIAGNOSTICS, INC.
STOCK OPTION AGREEMENT
OPTION AGREEMENT made as of the 19th day of December, 1994 between Myo
Diagnostics, Inc., a California corporation (the "Company"), and ______________
(the "Optionee").
1. GRANT OF OPTION.
The Company hereby irrevocably grants to the Optionee the right and option
to purchase all or any part of an aggregate of sixty-five thousand (65,000)
shares of its common stock (the "Shares") on the terms and conditions herein set
forth.
2. EXERCISE PRICE.
The exercise price of each of the Shares covered by the Option shall be
$1.13.
3. TIME AND MANNER OF EXERCISE OF OPTION.
(a) This Option shall become exercisable on July 17, 1995. Notwithstanding
the foregoing, in the event that any person or entity, including a "group" as
contemplated by Section 13(d) (3) of the Securities Exchange Act of 1934, as
amended, acquires more than 50% of the outstanding Common Stock of the Company,
this Option shall become exercisable immediately prior to the occurrence of any
such acquisition (a "Change in Control"). This Option shall also become
exercisable pursuant to the provisions of Section 5(b) hereof.
(b) To the extent that this Option has become exercisable and prior to its
termination, this Option may be exercised by giving written notice, signed by
the person or persons exercising the Option, to the Company, stating the number
of Shares with respect to which the Option is being exercised, accompanied by
payment in full by cash or certified check for such Shares, provided, however,
that no less than One Thousand (1,000) Shares may be purchased upon any one
exercise of this Option unless the number of Shares purchased at such time is
the total number of Shares in respect of which this Option is then exercisable.
Upon
such exercise, instructions shall be given to issue and deliver to the Optionee
a certificate for paid-up non-assessable Shares. The Optionee shall not have
any rights as an owner of Common Stock of the Company by reason of the exercise
of this Option until the date of issuance to him or her of a certificate or
certificates representing the shares of Common Stock purchased.
4. TERM OF OPTION.
This Option shall terminate the earlier of either i) one year from the date
of COMPLETION of the first public offering of the Company's shares in an
offering registered under the Securities Act of 1933, as amended, or ii) the
occurrence of a Change in Control. This Option shall also terminate in
accordance with the provisions of Section 5(b) hereof.
5. ADJUSTMENTS.
(a) In the event of any change in the outstanding Common Stock of the
Company by reason of stock dividends, split-ups, consolidations,
recapitalization, or reorganizations, an appropriate and proportionate
adjustment shall be made by the Company in the number of shares subject to this
Option and in the exercise price per share with respect to any unpurchased
shares hereunder. Any such adjustment hereto shall be made without a change in
the total exercise price applicable to such unpurchased shares but with a
corresponding adjustment in the per share exercise price. No fractional shares
of Common Stock shall be issued under this Option on account of any adjustment
under this Section 5(a).
(b) Notwithstanding anything in paragraph 5(a) above to the contrary, in
the event of any merger, consolidation or other reorganization of the Company or
in the event of the liquidation or dissolution of the Company, this Option shall
terminate on the effective date of such merger, consolidation, reorganization,
liquidation or dissolution. Notwithstanding any other provision of this Option
to the contrary, this Option shall be exercisable for a period of 30 days prior
to the effective date of any such merger, consolidation, reorganization,
liquidation or dissolution.
6. TRANSFERABILITY OF THE OPTION.
The Optionee may transfer the Shares to or for the benefit of any spouse,
child or grandchild, or to a trust for their benefit, or by will or the laws of
descent and distribution.
7. OPTIONEE'S AGREEMENT TO GUARANTEE LETTER OF CREDIT TO THE COMPANY.
In consideration for the grant of this Option, the Optionee
hereby has guaranteed a Letter of Credit in the amount of $65,000 (U.S.) to a
bank selected by the Company. The terms of this Stock Option Agreement require
that the Letter of Credit remain guaranteed by the Optionee for a minimum of one
year from the date of the Letter of Credit.
8. PURCHASE FOR INVESTMENT.
By his execution of this Option, Optionee represents, acknowledges and
agrees that (a) this Option is, and any shares of Common Stock acquired upon
exercise hereof will be (unless then registered under the United States
Securities Act of 1933 (the "Act") or unless an exemption from such registration
not requiring such representation is then available for the sale of the Common
Stock), acquired for investment and not with a view to or for sale in connection
with any distribution thereof, (b) this Option has not been, and the shares of
Common Stock issuable upon exercise hereof may not be, registered under the Act,
may not be transferred in violation of the Act, and must be held indefinitely
unless they are subsequently registered thereunder or an exemption from such
registration is available, and (c) all Certificates representing Common Stock
issued upon exercise of this Option may bear a restrictive legend as may be
required to comply with any law or with any rule or regulation of any stock
exchange on which such securities may be listed.
9. GOVERNING LAW.
This Option shall be governed by and interpreted in accordance with the
laws of the State of California.
IN WITNESS WHEREOF, the Company has caused this Stock Option Agreement to
be duly executed by its officer thereunto duly authorized, and the Optionee has
hereunto set his hand as of the date and year first above written.
MYO DIAGNOSTICS INC.
By /s/ Gerald D. Appel
----------------------------
Gerald D. Appel, President
Optionee
______________________________
Address:
______________________________
______________________________
______________________________
FIRST AMENDMENT TO STOCK OPTION AGREEMENT
This FIRST AMENDMENT TO STOCK OPTION AGREEMENT (this "Amendment") is made
as of June 30, 1996, by and between Myo Diagnostics, Inc., a California
corporation (the "Company") and ______________ ("Optionee").
R E C I T A L S
A. The Company and Optionee are parties to that certain Myo
Diagnostics, Inc. Stock Option Agreement (the "Option"), dated as of December
19, 1994; and
B. The Company and Optionee desire to amend the Option as hereinafter
provided.
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing facts, and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1. TIME AND MANNER OF EXERCISE OF OPTION. Section 3(a) of the Option is
hereby amended to read in its entirety as follows:
"This Option shall become exercisable on July 17, 1995. Notwithstanding
the foregoing, in the event that any person or entity, including a "group"
as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), acquires more than 50% of the outstanding
Common Stock of the Company or the securities of a successor company for
which this Option may be exercised, this Option shall become exercisable
immediately prior to the occurrence of any such acquisition (a "Change in
Control")."
2. TERM OF OPTION. Section 4 of the Option is hereby amended to read in
its entirety as follows:
"This Option shall terminate on the earliest of (i) one year from the
date the Common Stock of the Company or any other securities for which this
Option may be exercised becomes registered under Section 12 of the Exchange
Act, (ii) one year from the date the Common Stock of the Company is
exchanged for a security which is registered under Section 12 of the
Exchange Act, or (iii) the occurrence of a Change in Control."
3. ADJUSTMENTS. Section 5(b) of the Option is hereby amended to read in
its entirety as follows:
"Subject to Section 4 hereof, in case any capital reorganization or
reclassification, change in the outstanding Common Stock of the Company,
merger or consolidation of the Company with or into another entity, or sale
of substantially all of the assets of the Company to another entity, shall
be effected in such a way that holders of Common Stock shall be entitled to
receive stock, securities, or assets with respect to or in exchange for
Common Stock, the Option shall, without any further act or the execution of
any further instrument whatsoever, become an Option to purchase or receive,
at the exercise price, such shares of stock or other securities or assets
as Optionee would have been entitled to receive upon such reorganization,
reclassification, change, merger or consolidation, or sale of assets, in
exchange for or in respect of that portion of the Shares which remain
unexercised immediately prior to such reorganization, reclassification,
change, merger or consolidation, or sale of assets, and appropriate
adjustment (as reasonably determined by the Board of Directors of the
Company or the surviving entity, as the case may be) shall be made in the
application of the provisions herein set forth with respect to the rights
of Optionee, to the end that such provisions (including provisions with
respect to changes in and other adjustments of the exercise price) shall
thereafter be applicable, as nearly as reasonably may be, in relation to
any shares of stock or other property thereafter deliverable upon exercise
of such Option, provided that the aggregate purchase price shall remain the
same."
4. This Amendment may be executed in two or more counterparts and by
different parties in separate counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
5. Except as otherwise expressly provided for herein, all of the terms
and conditions of the Option shall remain in full force and effect.
2
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
as of the date first above written.
"THE COMPANY"
MYO DIAGNOSTICS, INC.
By
---------------------------------
Gerald D. Appel
President
"OPTIONEE"
By
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