Exhibit 10.3
OPTION AGREEMENT
STOCK OPTION NOT UNDER A PLAN
AMERICAN CARD TECHNOLOGY, INC., a Delaware corporation (the "Company"),
and SHREVEPORT ACQUISITION CORP., a Connecticut corporation (the "Optionee"), DO
HEREBY AGREE as follows:
1. Grant. The Company grants to the Optionee an option (the "Option")
to purchase 100,000 shares (the "Shares") of the Company's Common Stock, par
value $.001 per share ("Common Stock") at the purchase price of $5.00 a share
(the "Exercise Price"). The date of grant of the Option is December ___, 1996
(the "Date of Grant"). The grant is not made pursuant to any of the Company's
stock option plans.
2. Purchase of Shares. The Company shall not be obligated to issue or
deliver any Shares upon exercise of the Option if to do so would violate the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities law. Unless a registration statement with respect to the Shares to be
purchased upon exercise of the Option is in effect under the Securities Act and
any applicable state securities law, the Optionee's right to purchase such
Shares shall be subject to the condition that the Company shall have received
such assurance as it may reasonably request that such purchase will be in
accordance with an applicable exemption from the registration requirements of
each such law. The Company shall have no obligation to file any such
registration statement or to take any other action required or permitted by any
such law. However, the Company shall give the Optionee and its counsel access to
such information as may reasonably be requested to enable such counsel to
express an opinion as to the availability of an exemption from such registration
requirements.
3. Sale of Shares. The Optionee shall not be entitled to transfer the
Shares except pursuant to (i) an effective registration statement under the
Securities Act, or (ii) if there is no registration statement in effect,
pursuant to a specific exemption from registration under the Securities Act.
Prior to offering or selling the Shares upon claim of exemption, the Optionee
shall obtain a written opinion from counsel reasonably satisfactory to the
Company to the effect that such exemption is available and that registration of
the Shares with the Securities and Exchange Commission is not required, or shall
deliver a "no-action" letter from the Securities and Exchange Commission with
respect to the proposed sale, transfer or distribution of the Shares.
4. Terms of Exercise. This Option may be exercised, in whole or in
part, commencing on the earlier of (i) that date which is three (3) months after
the closing of the Company's initial public offering or (ii) January 1, 1998.
Notwithstanding the foregoing, the Optionee agrees not to sell, pledge,
hypothecate, encumber, or otherwise dispose of the Shares for a period of twelve
(12) months following the effective date of the Company's initial public
offering, subject to earlier release at the discretion of the underwriter of
such initial public offering.
5. Expiration of Option. This Option is not exercisable after the
expiration of ten years from the Date of Grant.
6. Exercise and Payment. The Option shall be exercised by delivery to
the Company at its principal executive office (Attention: Richard J. Shea, Jr.,
Secretary) of (i) a signed written notice of exercise setting forth the number
of Shares to be purchased and (ii) payment in full of the option price for the
Shares to be purchased. The option price to be paid upon the exercise of this
Option may be made by either of the following methods:
(a) payment in cash in the full amount of the option price; or
(b) in lieu of cash payment, at any time until the expiration of this
Option, the holder of this Option ("Holder") may, at its option, exchange the
Option represented by this Option Agreement, in whole or in part (an "Option
Exchange"), into the number of Shares determined in accordance with this
paragraph 6(b), by surrendering this Option Agreement at the principal office of
the Company accompanied by a notice stating such Holder's intent to effect such
exchange, the number of Shares to be exchanged, and the date on which the Holder
requests that such Option Exchange occur (the "Notice of Exchange"). The Option
Exchange shall take place on the date specified in the Notice of Exchange or, if
later, the date the Notice of Exchange is received by the Company (the "Exchange
Date"). Certificates for the Shares issuable upon such Option Exchange and, if
applicable, a new Option Agreement (a "Remainder Option Agreement") of like
tenor evidencing the Shares which were subject to the surrendered Option
Agreement and not included in the Option Exchange, shall be issued as of the
Exchange Date and delivered to the Holder within three (3) business days
following the Exchange Date. In connection with any Option Exchange, the
Holder's Option Agreement shall represent the right to subscribe for and acquire
(I) the number of Shares (rounded to the next highest integer) equal to (A) the
number of Shares specified by the Holder in its Notice of Exchange (the "Total
Share Number") less (B) the number of Shares equal to the quotient obtained by
dividing (i) the product of the Total Share Number and the existing Exercise
Price per Share by (ii) the current Market Price (as hereinafter defined) of a
Share of Common Stock, and (II) a Remainder Option Agreement, if applicable.
"Market Price" at any date shall be deemed to be the average of the
last reported sale price, or, in case no such reported sale takes place on such
day, the average of the last reported sale prices for the last three (3) trading
days, in either case as officially reported by the principal securities exchange
on which the Common Stock is listed or admitted to trading or as reported in the
NASDAQ National Market System, or, if the Common Stock is not listed or admitted
to trading on any national securities exchange or quoted on the NASDAQ National
Market System, the closing bid price as furnished by the National Association of
Securities Dealers, Inc. through NASDAQ or similar organization if NASDAQ is no
longer reporting such information, or if the Common Stock is not quoted on
NASDAQ, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it for the day
immediately preceding the Exchange Date, the day of the Exchange Date, and the
day immediately after the Exchange Date.
7. Rights. The Optionee shall not, by reason of the granting to it of
this Option, have or thereby acquire any rights of a shareholder of the Company
with respect to any Shares covered by this Option unless and until a certificate
for such Shares shall have been issued and delivered to it.
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8. Adjustment and Substitution of Shares. If a dividend or other
distribution shall be declared upon the Common Stock payable in shares of the
Common Stock, the number of shares of the Common Stock then subject to the
Option may be adjusted by adding thereto the number of shares which would have
been distributable thereon if such shares had been outstanding on the date fixed
for determining the shareholders entitled to receive such stock dividend or
distribution.
If the outstanding shares of the Common Stock shall be changed
into or exchangeable for a different number or kind of shares of stock or other
securities of the Company or another corporation, whether through
reorganization, reclassification, recapitalization, stock split-up, combination
of shares, merger or consolidation, then there shall be substituted for each
share of the Common Stock then subject to the Option the number and kind of
shares of stock or other securities into which each outstanding share of the
Common Stock shall be so changed or for which each such share shall be
exchangeable.
In case of any adjustment or substitution as provided for in
this paragraph 8, the aggregate option price for all shares subject to the
Option prior to such adjustment or substitution shall be the aggregate option
price for all shares of stock or other securities (including any fraction) to
which such shares shall have been adjusted or which shall have been substituted
for such shares. The adjusted price for each share or other security shall be
carried to at least three decimal places with the last decimal place rounded
upward to the nearest whole number.
No adjustment or substitution provided for in this paragraph 8
shall require the Company to issue or sell a fraction of a share or other
security. Accordingly, all fractions of a share or other security which result
from any such adjustment or substitution shall be eliminated and not carried
forward to any subsequent adjustment or substitution.
All references in this Agreement to Shares shall, where the
context so requires, be deemed to be references to such Shares as adjusted
pursuant to this paragraph 8.
9. Amendment. This Agreement may be amended unilaterally by the Company
in order to comply with federal and state laws regulating options and the
issuance and sale of the Company's securities.
10. Interpretation. Any question which shall arise under or in any way
relate to the interpretation or construction of this Option Agreement shall be
resolved by the Board, and its decision shall be final, binding and conclusive
for all purposes.
WITNESS, the signatures of an authorized officer of the Optionee and an
authorized officer of the Company as of the _____ day of December, 1996.
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Signed, Sealed, and Delivered
in the Presence of: AMERICAN CARD TECHNOLOGY, INC.
______________________________ By: _____________________________
Its
______________________________
SHREVEPORT ACQUISITION CORP.
______________________________ By: ______________________________
Its
______________________________
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