EXHIBIT 10.3
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URECOATS INDUSTRIES INC.
a Delaware corporation
SERIES C PREFERRED STOCK OPTION AGREEMENT
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▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ No. SCPSOA-1
THIS OPTION AGREEMENT ("Agreement") is made as of the date set forth above
between Urecoats Industries Inc., a Delaware corporation (the "Company"), and
the optionee named above (the "Optionee"). The option granted by this Agreement
is designated a "Series C Preferred Option" granted hereby:
1. Grant of Option. Pursuant to and subject to the terms and
conditions of the Agreement, the Company grants to the Optionee, the right and
option (the "Call Option") to purchase at $20.00 per share (the "Stated Value")
on the terms and conditions hereinafter set forth all or any part of an
aggregate of 250,000 shares of Series C Convertible Preferred Stock (the "Series
C Preferred Stock" or the "Shares") of the currently authorized and unissued
Series C Preferred Stock, par value $1.00 per share of Urecoats Industries Inc.
The Call Option shall be exercisable, in whole or in part, during the period
commencing with the date on which it is granted and ending on December 31, 2003,
subject to the terms and conditions hereof.
2. Method of Exercise by Optionee.
(a) The Call Option may be exercised pursuant thereto by written
notice to the Company stating the number of Shares with respect to which the
option is being exercised, together with payment in full: (i) in cash or
certified check; (ii) securities or other liquidable property; (iii)
acknowledgement of cancellation of the Company's indebtedness to the Optionee;
or (iv) any combination of the foregoing. If requested by the Board of
Directors, prior to the delivery of any Shares, the Optionee shall supply the
Board of Directors with a representation that the Shares are not being acquired
with a view to unlawful distribution and will be sold or otherwise disposed of
only in accordance with applicable federal and state statutes, rules and
regulations.
(b) As soon after the notice of exercise as the Company is
reasonably able to comply, the Company shall, without payment of any transfer or
issue tax by the Optionee, deliver to the Optionee or any such other person, at
the main office of the Company or such other place as shall be mutually
acceptable, a certificate or certificates for the Shares being purchased upon
exercise of the Call Option. Notwithstanding the foregoing, the Company shall
have the right to postpone the time of delivery of the Shares for such period as
may be required for it with reasonable diligence to comply with any applicable
listing requirements of any national securities exchange or any state or local
law.
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(c) The Optionee may exercise the Call Option for less than the
total number of Shares for which the Call Option is then exercisable, provided
that a partial exercise may not be for fewer than 25,000 shares, unless the
remaining shares exercisable under the Call Option is for less than 25,000
shares. The Call Option may be exercisable for whole shares only. The Series C
Preferred Stock issuable upon exercise shall be restricted shares as such terms
are defined under the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, and shall be acquired for investment and not
with a view to the unlawful distribution thereof.
3. Grant to Company of Right to Demand Exercise. Pursuant to the terms
hereof, Optionee hereby grants to the Company the right and option ("Exercise
Demand Right") to require Optionee to exercise a portion of his Call Option up
to a maximum aggregate of 250,000 shares of Series C Preferred Stock. This
Exercise Demand Right shall be exercisable by the Company at any time or from
time to time during the term that the Call Option, or any part thereof is
outstanding, solely to require the Optionee to purchase as much of the Series C
Preferred Stock necessary for continuance of the Company's operations during
fiscal 2002. The Exercise Demand Right shall remain outstanding for as long as
the Call Option remains outstanding, and to the same extent as the Call Option.
4. Method of Use of Exercise Demand Right by Company. The Company's
Exercise Demand Right shall be exercisable upon the service of a notice
("Exercise Demand Notice") faxed and mailed to the Optionee at the address
designated herein thirty (30) days prior to the anticipated purchase date by
Optionee. The Exercise Demand Notice shall state the type(s) of payment (as set
forth in Paragraph 2(a) above) required by the Optionee therein. Optionee shall
then take such steps as is necessary to pay or cause to be paid the applicable
amounts and in the form(s) specified in the Exercise Demand Notice within said
thirty (30) day period. Thereupon the shares of Series C Preferred Stock shall
be issued in the same manner and pursuant to the terms specified in Paragraph
2(b) above.
5. Acknowledgement of Nonreservation of Common Stock by Company for
Series C Preferred Stock Conversion.
(a) Optionee acknowledges and confirms that in the event of his
exercise of the Call Option, or the Company's exercise of the Exercise Demand
Right, that there is presently no reserve for Common Stock into which the Series
C Preferred Stock is convertible and further acknowledges his awareness that the
Company has committed, subject to approval of the shareholders, to increasing
the Company's authorized common stock capitalization in its Restated Certificate
of Incorporation, as amended, or taking such other necessary and further steps
in order to obtain and reserve sufficient shares of Common Stock prior to the
time that the Series C Preferred Stock becomes convertible; and
(b) Optionee acknowledges that he is fully conversant with the
certificate of designation of preferences of Series C Convertible Preferred
Stock and has received a copy of the Company's Term Sheet and exhibits relating
to its simultaneous private offering of Series C Preferred Stock to accredited
investors.
6. Termination of Option. The Call Option shall terminate and expire
immediately and in total at the expiration date of the option. In addition, the
Call Option shall automatically terminate in the event of death of the Optionee.
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7. Adjustments. If there is any change in the capitalization of the
Company affecting in any manner the number or kind of outstanding shares of
common stock of the Company, whether by stock dividend, stock split,
reclassification or recapitalization of such stock, or because the Company has
merged or consolidated with one or more other corporations (and provided the
Call Option does not thereby terminate pursuant to Section 5 hereof), then the
number and kind of shares then subject to the Call Option and the price to be
paid therefore shall be commensurately adjusted by the Board of Directors;
provided, however, that in no event shall any such adjustment result in the
Company's being required to sell or issue any fractional shares. Any such
adjustment shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the Call Option, but with an
appropriate adjustment to the price of each Share or other unit of security
covered by this Call Option.
8. Cessation of Corporate Existence. Notwithstanding any other
provision of this Call Option, upon the dissolution or liquidation of the
Company, the reorganization, merger or consolidation of the Company with one or
more corporations as a result of which the Company is not the surviving
corporation or the sale of substantially all the assets of the Company or the
sale of more than 50% of the outstanding stock of the Company to another
corporation or other entity, the Call Option granted hereunder shall terminate;
provided, however, that: (i) each outstanding Call Option hereunder, for which
no option has been tendered by the surviving corporation in accordance with all
of the terms of provision (ii) below shall, at all times before the effective
date of such dissolution or liquidation, merger or consolidation or sale of
assets in which the Company is not the surviving corporation or sale of stock,
shall be fully exercisable; or (ii) the surviving corporation shall tender to
the Optionee, an option to purchase shares of the surviving corporation, and
such new option or options shall contain such terms and provisions as shall be
required to substantially preserve or confer the rights and benefits of this
Call Option.
9. Non-Transferability. The Call Option is not assignable or
transferable by the Optionee, either voluntarily or by operation of law, and is
exercisable, during the Optionee's lifetime, only by the Optionee. Upon any
attempted transfer of this Call Option contrary to the provision hereof, the
Board of Directors may, at its discretion, terminate this option.
10. No Stockholder Rights. The Optionee entitled to exercise this
option shall have no rights or privileges as a stockholder with respect to any
Shares subject hereto until the Optionee has become the holder of record of such
Shares, and no adjustment (except such adjustment as may be effected pursuant to
the provisions of Section 4 hereof) shall be made for dividends or distributions
of rights in respect of such Shares if the record date is prior to the date on
which the Optionee becomes the holder of record.
11. Method of Acceptance. This Agreement is addressed to the Optionee
in duplicate and shall not vest or be effective until the Optionee has executed
the acceptance below and returned one copy to the Company, thereby acknowledging
that he has read and agreed to all the terms and conditions of this Agreement.
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12. Notices. Any notices pursuant to the terms hereof shall be
forwarded by mail and fax as follows:
To the Company: Urecoats Industries Inc.
Newport Center Plaza
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Or to Optionee: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
c/o The Kamson Corporation
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Fax #: (▇▇▇) ▇▇▇-▇▇▇▇
Executed by the Company as of this 8th day of January, 2002.
URECOATS INDUSTRIES INC.
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
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ACCEPTED:
("Optionee")
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 1-8-02
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