Exhibit 99.04
OPTION AGREEMENT granted as of the 20th day of January, 1995 between
EASTCO INDUSTRIAL SAFETY CORP., a New York corporation with offices at 130
West 10th Street, Huntington Station, New York 11746 (hereinafter the
"Company") (which includes its subsidiaries) and residing at c/o Eastco
Industrial Safety Corp., 130 W. 10th Street, Huntington Station, New York
11746 (hereinafter the "Optionee").
WHEREAS, the Company has begun to achieve a dramatic turnaround in
its financial condition,
WHEREAS, the Optionee has heretofore taken substantial reductions in
salary, given up options and made numerous sacrifices in order to achieve such
turnaround,
WHEREAS, the Company acknowledges that such financial turnaround can
be traced to the efforts and leadership of the Optionee,
WHEREAS, the Company desires to restore an option to the Optionee,
but only on the condition that the Company be profitable for fiscal 1995 and
1996, and
NOW THEREFORE, in consideration of the covenants contained herein it
is agreed as follows:
1. Grant. The Company hereby grants the Optionee an option to
purchase up to 400,000 shares of common stock of the Company, par value $0.12
per share ("Common Stock").
2. Exercise Price. The exercise price of the option shall be $1.0625
per share (the "Exercise Price" or "Option Price"), subject to adjustment as
provided hereunder. The purchase price may be paid for in cash, an exchange of
stock valued at the average closing price for the ten (10) day period ending
five (5) days prior to the exercise of the Option (the "Closing Price"). The
options hereunder may be exercised in whole or in part. It shall be a
condition to the obligation of the Company to issue shares of Common Stock
upon the exercise of an option, that the Optionee pay to the Company upon its
demand, such amount as may be requested by the Company for the purpose of
satisfying any liability to withhold federal, state, local and foreign income
or other taxes. If the amount requested is not paid, the Company may refuse to
issue shares of Common Stock.
3. Antidilution Provisions. Any and all of the shares of the Common
Stock of the Company which may be acquired by the Optionee or his registered
assigns as a result of the exercise, in whole or in part, of this Option,
shall be subject to the antidilution adjustment set forth below.
3.1 In case the Company shall (i) declare a dividend on its
Common Stock in shares of its capital stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares, or (iv) issue any shares by reclassification of its Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), the Option Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification
shall be proportionally adjusted so that the Optionee shall be entitled to
receive the kind and aggregate number of shares of Common Stock which it would
have owned or would have been entitled to receive after the happening of any
of the events described above on any record date with respect thereto, if this
Option had been exercised immediately prior to such time such dividend,
subdivision, combination or reclassification occurred. Such adjustment shall
be made successively whenever any event listed above shall occur.
3.2. In case the Company shall fix a record date for the
issuance of rights or warrants to the holders of its Common Stock entitling
them (for a period expiring within 45 days after such record date) to
subscribe for or purchase shares of Common Stock at a price per share less
than the current Option Price on such record date, the Option Price shall be
adjusted so that the same shall equal the Price determined by multiplying the
Option Price in effect immediately prior to such record date by a fraction, of
which the numerator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so
offered would purchase at the current Option Price, and of which the
denominator shall be the number of shares of Common Stock outstanding on such
record date plus the number of shares of Common Stock offered for subscription
or purchase. Such adjustment shall be made successively whenever such a record
date is fixed; and in the event that such rights or warrants are not so
issued, the Option Price shall again be adjusted to be the Option Price which
would then be in effect if such record date has not been fixed.
3.3 In case the Company shall fix a record date for the
making of a distribution to the holders of its Common Stock (including any
such distribution made in connection with a consolidation or merger in which
the Company is the continuing corporation) of evidences of its indebtedness or
assets (other than cash dividends out of earned surplus) or subscription
rights or warrants (excluding those referred to in Paragraph 3.2 above), then
in each such case the Option Price in effect after such record date shall be
determined by multiplying the Option Price in effect immediately prior to such
record date by a fraction, of which the numerator shall be the total number of
outstanding shares of Common Stock multiplied by the current Option Price,
less the fair market value (as determined in good faith by the Company's Board
of Directors, whose determination shall be conclusive) of the portion of the
assets or evidences of indebtedness so to be distributed or of such
subscription rights or warrants, and of which the denominator shall be the
total number of outstanding shares of Common Stock on such record date
multiplied by the current Option Price. Such adjustment shall be made
successively whenever such a record date is fixed.
3.4. In case the Company shall issue shares of its Common
Stock, excluding shares issued (i) in any of the transactions described in
Paragraph 3.1 above, (ii) upon conversion or exchange of securities
convertible into or exchangeable for Common Stock, (iii) upon exercise of
options granted under the stock option plans of the Company, as amended to
date, if such shares would otherwise be included in this Paragraph 3.4, or
(iv) upon exercise of rights or warrants issued to the holders of the Common
Stock, but only if no adjustment is required pursuant to this Section 3
(without regard to Paragraph 3.9 of this Section 3) with respect to the
transaction giving rise to such rights for a consideration per share less than
the current Option Price on the date the Company
fixes the offering price of such additional shares, the Option Price shall be
adjusted immediately thereafter so that it shall equal the price determined by
multiplying the Option Price in effect immediately prior thereto by a
fraction, of which the numerator shall be the total number of shares of Common
Stock outstanding immediately prior to the issuance of such additional shares
plus the number of shares of Common Stock which the aggregate consideration
received (determined as provided in Paragraph 3.7 below) for the issuance of
such additional shares would purchase at the current Option Price, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately after the issuance of such additional shares. Such
adjustment shall be made successively whenever such an issuance is made.
3.5 In case the Company shall issue any securities
convertible into or exchangeable for its Common Stock (excluding securities
issued in transactions described in Paragraphs 3.2 and 3.3 above) for a
consideration per share of Common Stock initially deliverable upon conversion
or exchange of such securities (determined as provided in Paragraph 3.7 below)
less than the current Option Price in effect immediately prior to the issuance
of such securities, the Option Price shall be adjusted immediately thereafter
so that it shall equal the Price determined by multiplying the Option Price in
effect immediately prior thereto by a fraction, of which the numerator shall
be the number of shares of Common Stock outstanding immediately prior to the
issuance of such securities plus the number of shares of Common Stock which
the aggregate consideration received (determined as provided in Paragraph 3.7
below) for such securities would purchase at the current Option Price, and of
which the denominator shall be the number of shares of Common Stock
outstanding immediately prior to such issuance plus the maximum number of
shares of Common Stock of the Company deliverable upon conversion of or in
exchange for such securities at the initial conversion or exchange price or
rate. Such adjustment shall be made successively whenever such an issuance is
made.
3.6. Whenever the Option Price payable upon exercise of this
Option is adjusted pursuant to Paragraphs 3.1, 3.2, 3.3, 3.4 or 3.5 above, the
number of shares of Common Stock purchasable upon exercise of this Option
shall simultaneously be adjusted by multiplying the number of shares of Common
Stock initially issuable upon exercise of this Option by the Option Price in
effect on the date immediately preceding such event and dividing the product
so obtained by the Option Price, as adjusted.
3.7. For purposes of any computation respecting
consideration received pursuant to Paragraphs 3.4 and 3.5 above, the following
shall apply: (i) in the case of the issuance of shares of Common Stock for
cash, the consideration shall be the amount of such cash, provided that in no
case shall any deduction be made for any commissions, discounts or other
expenses incurred by the Company for any underwriting of the issue or
otherwise in connection therewith; (ii) in the case of the issuance of shares
of Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the Board of Directors of the Company
(irrespective of the accounting treatment thereof), whose determination shall
be conclusive; and (iii) in the case of the issuance of securities convertible
or exchangeable for shares of Common Stock, the aggregate consideration
received therefor shall be deemed to be the consideration received by the
Company for the issuance of such securities plus the additional minimum
consideration, if any, to be received by the Company upon the
conversion or exchange thereof (the consideration in each case to be
determined in the same manner as provided in clauses (i) and (ii) of this
Paragraph 3.7).
3.8. No adjustment in the Option Price shall be required
unless such adjustment would require an increase or decrease of at least five
($0.05) cents in such price, provided, however, that any adjustments which by
reason of this Paragraph 3.8 are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All calculations
under this Section 3 shall be made to the nearest cent or to the nearest
one-thousandth of a share, as the case may be. Anything in this Section 3 to
the contrary notwithstanding, the Company shall be entitled, but shall not be
required, to make such changes in the Option Price, in addition to those
required by this Section 3, as it, in its discretion, shall determine to be
advisable in order that any share dividend, subdivision of Common Stock,
distribution of rights or warrants to be purchase Common Stock or distribution
of evidences of indebtedness or other assets (other than distributions of
cash) hereinafter made by the Company to the holders of its Common Stock shall
not result in any tax to the holders of its Common Stock or securities
convertible into Common Stock.
3.9. Whenever the Option Price is adjusted, as herein
provided, the Company will promptly prepare a certificate signed by the
President and Chief Financial Officer of the Company setting forth (i) the
Option Price as so adjusted, (ii) the number of shares of Common Stock or
other securities purchasable upon exercise of this Option after such
adjustment, and (iii) a brief statement of the facts accounting for such
adjustment. The Company will promptly file a certificate with its corporate
record agent and cause a brief summary thereof to be sent by ordinary first
class mail to the Optionee, at his last address as it shall appear on the
Company's option register. The affidavit of an officer of the Option Agent or
the Secretary or an Assistant Secretary of the Company that such notice has
been mailed shall, in the absence of fraud, be prima facie evidence of the
facts stated therein. The Company may retain a firm of independent public
accounts of recognized standing selected by the Board of Directors (who may be
the regular accountants employed by the Company) to make any computation
required by this Section 3, and a certificate signed by such firm shall be
conclusive evidence of the correctness of such adjustment.
3.10. In the event that at any time, as a result of an
adjustment made pursuant to Paragraph 3.1 above, the Optionee thereafter shall
become entitled to receive any shares of the Company, other than Common Stock,
thereafter the number of such other shares so receivable upon exercise of this
Option shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to
the Common Stock contained in Paragraphs 3.1 to 3.8, inclusive, above.
4. Term. The options shall be exercisable for a period of ten (10)
years commencing on January 20, 1995 and shall expire on January 19, 2005.
5 Exercisability. The options shall not be exercisable for a period
of five (5) years except as follows:
5.1 For the fiscal year ended June 30, 1995, should the
Company attain an audited
annual pre-tax income of at least $50,000, options to purchase up to 200,000
shares of Common Stock shall then become immediately exercisable.
5.2 For the fiscal year ended June 30, 1996, should the
Company attain an audited annual pre-tax income of at least $250,000, options
to purchase up to 200,000 shares of Common Stock shall then become immediately
exercisable.
5.3 If the Company fails to attain the $50,000 plateau
during the fiscal year ended June 30, 1995, should the Company's combined
pre-tax income for the fiscal years ended June 30, 1995 and 1996 exceed
$300,000, then options to purchase up to 4000,000 shares of Common Stock shall
then become immediately exercisable.
5.4 Audited annual pre-tax income shall be as determined in
the Company's filing under form 10k or other comparable annual report to be
filed with the Securities and Exchange Commission for the Company or any
successor to the Company.
5.5 The option shall only be exercisable by the Optionee,
except in the event of the Optionee's death during the term of this option
grant, a duly authorized representative of the Optionee's estate may exercise
such option.
5.6 The Common Stock issued to the Optionee upon the
exercise of this option is deemed "restricted securities" as the term is
defined under the Securities Act of 1933, as amended (the "Act"), and may only
be sold pursuant to a registration under the Act, in compliance with Rule 144
under the Act, pursuant to another exemption therefrom or pursuant to an
opinion of counsel satisfactory to the Employer that registration under the
Act is not required.
6. Notices. All notices or demands required or given under this
Option Agreement shall be in writing and sent by registered mail or certified
mail, return receipt requested, to the addresses hereinabove set forth or to
such other addresses as any of the parties hereto may designate in writing,
transmitted by registered mail or certified mail, return receipt requested, to
the other.
7. Governing Law. This Option Agreement is intended to and shall be
governed in all respects by the laws of the State of New York, without
reference to principles of conflicts of laws.
8. Modifications. This Option Agreement contains the parties entire
understanding with respect to the subject matter hereof and may not be
modified except in writing signed by each of the parties hereto.
9. Binding Agreement. This Option Agreement shall be binding upon the
heirs, successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
EASTCO INDUSTRIAL SAFETY CORP.
By:
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ALAN E. DENSEN
President
By:
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ANTHONY P. TOWELL
Secretary
PURCHASE FORM
Dated
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The undersigned hereby irrevocably elects to exercise the Option to
the extent of purchasing ________ shares of Common Stock of Eastco Industrial
Safety Corp., and hereby makes payment of $_______ in payment of the actual
excise price thereof.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name___________________________________________________________
(please typewrite or print in block letters)
Address________________________________________________________
Signature______________________________________________________
Social Security or Employer I.D. No.___________________________