AMENDED AND RESTATED
NON-QUALIFIED STOCK OPTION AGREEMENT
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THIS AMENDED AND RESTATED NON-QUALIFIED STOCK OPTION
AGREEMENT, entered into as of the 19th day of May, 1997, between MICROFRAME,
INC., a corporation organized and existing under the laws of the State of New
Jersey (the "Corporation"), with its principal place of business at 21 Meridian
Road, Edison, New Jersey 08820 and Stephen B. Gray (the "Optionee").
The Corporation, in accordance with the consent of the
Compensation/Stock Option Committee (the "Committee") of the Board of Directors
granted the Optionee a nonqualified stock option on September 25, 1996 , subject
to the terms and conditions set forth in the non-qualified stock option
agreement dated as of September 25, 1996. After additional consideration by the
Committee, the Committee has determined and the Optionee has agreed that certain
of the terms and conditions of such stock option should be amended. For ease of
reference only, the non-qualified stock option agreement evidencing the grant of
a non-qualified option for 400,000 shares of the Common Stock of the Corporation
is hereby amended and restated in its entirety.
W I T N E S S E T H :
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1. The Committee hereby grants as of September 25, 1996 to the Optionee
a nonqualified stock option to purchase an aggregate of 400,000 shares of common
stock, $.001 par value of the Corporation ("Common Stock") at an exercise price
of $1.156 per share, being at least equal to the fair market value of such
shares of Common Stock on the date thereof. Shares of Common Stock to be issued
upon the exercise of this option may, at the election of the Corporation, be
either authorized and unissued shares or shares previously issued and reacquired
by the Corporation. This option shall not be treated as an "incentive stock
option" under Section 422 of the Internal Revenue Code of 1986, as amended, (the
"Code") and shall not be considered an option issued under the Corporation's
1994 Stock Option Plan.
2. This option shall be exercisable immediately as to 200,000 shares of
Common Stock subject hereto, and as to an additional 100,000 shares of Common
Stock on each of April 1, 1998 and April 1, 1999. In no event may this option be
exercised after the Expiration Date.
3. This option shall expire at the close of business on September 25,
2006 (the "Expiration Date").
4. The right to purchase shares of Common Stock under this option shall
be cumulative, so that if the full number of shares purchasable in a period
shall not be purchased, the balance may be purchased at any time or from time to
time thereafter, but not after the expiration of the option. Notwithstanding any
of the foregoing, in no event may a fraction of a share of Common Stock be
purchased under this option.
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5. This option shall be exercised by the delivery by the Optionee (or
his personal representative, as the case may be) of written notice to the
Corporation at its principal office, presently located at 21 Meridian Road,
Edison, New Jersey 08820, Attention: Compensation/Stock Option Committee,
stating that the Optionee is exercising this non-qualified stock option,
specifying the number of shares being purchased and accompanied by payment, in
full of the aggregate purchase price therefor (a) in cash or by certified check,
(b) with previously acquired shares of Common Stock which have been held by the
Optionee for at least six months having a Fair Market Value on the exercise date
equal to the aggregate exercise price, or (c) a combination of the foregoing.
For this purpose, the "Fair Market Value" of a share of Common Stock on any day
shall mean (a) if the principal market for the Common Stock is a national
securities exchange, the average of the highest and lowest sales prices per
share of the Common Stock on such day as reported by such exchange or on a
composite tape reflecting transactions on such exchange, (b) if the principal
market for the Common Stock is not a national securities exchange and the Common
Stock is quoted on the National Association of Securities Dealers Automated
Quotations System ("NASDAQ"), and (i) if actual sales price information is
available with respect to the Common Stock, the average of the highest and
lowest sales prices per share of the Common Stock on such day on NASDAQ, or (ii)
if such information is not available, the average between the highest bid and
the lowest asked prices per share of Common Stock on such day on NASDAQ, or (c)
if the principal market for the Common Stock is not a national securities
exchange and the Common Stock is not quoted on NASDAQ, the average of the
highest bid and lowest asked prices per share for the Common Stock on such day
as reported on the NASDAQ OTC Bulletin Board Service or by National Quotation
Bureau, Incorporated or a comparable service; provided that if clauses (a), (b)
and (c) of this paragraph are all inapplicable, or if no trades have been made
or no quotes are available for such day, the fair market value of a share of
Common Stock shall be determined by the Board of Directors of the Corporation by
any method consistent with applicable regulations adopted by the Treasury
Department relating to stock options.
6. Notwithstanding the foregoing, this option shall not be exercisable
by the Optionee unless (a) a Registration Statement under the Securities Act of
1933, as amended (the "Securities Act") with respect to the shares of Common
Stock to be received upon the exercise of this option shall be effective and
current at the time of exercise or (b) there is an exemption from registration
under the Securities Act for the issuance of the shares of Common Stock upon
exercise. The Optionee hereby represents and warrants to the Corporation that,
unless a Registration Statement is effective and current at the time of exercise
of this option, the shares of Common Stock to be issued upon the exercise of
this option will be acquired by the Optionee for his own account, for investment
only and not with a view to the resale or distribution thereof. In any event,
the Optionee shall notify the Corporation of any proposed resale of the shares
of Common Stock issued to him upon exercise of this option. Any resale or
distribution of such shares of Common Stock by him may be made only pursuant to
(i) a Registration Statement under the Securities Act which is effective and
current with respect to the shares of Common Stock being sold, or (ii) a
specific exemption from the registration requirements of the Securities Act, but
in claiming such exemption, the Optionee shall prior to any offer of sale or
sale of such shares of Common Stock provide the Corporation with a favorable
written opinion of counsel satisfactory to the Corporation, in form and
substance satisfactory to the Corporation, as to the applicability of such
exemption to the proposed sale or distribution. Such representations and
warranties shall also be deemed to be made by the Optionee upon each exercise of
this option.
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Nothing herein shall be construed as requiring the Corporation to register
shares subject to this option under the Securities Act.
7. Notwithstanding anything herein to the contrary, if at any time the
Corporation shall determine in its discretion that the listing or qualification
of the shares of Common Stock subject to this option on any securities exchange
or under any applicable law, or the consent or approval of any governmental
agency or regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of an option, or the issue of shares of Common
Stock thereunder, this option may not be exercised in whole or in part unless
such listing, qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Corporation.
8. Nothing herein shall confer upon the Optionee any right to continue
as an employee of the Corporation, its parent or any of its subsidiaries or
interfere in any way with any right of the Corporation, its parent or any
subsidiary to terminate such relationship at any time for any reason without
liability to the Corporation, its parent or subsidiaries. Neither the Optionee
nor his legal representatives shall have any of the rights or privileges of a
shareholder of the Corporation in respect of any of the shares issuable upon the
exercise of this option, unless and until certificates representing such shares
shall have been issued and delivered; provided, however, that until such
certificates are issued, the Optionee shall be treated as owning any previously
acquired shares of Common Stock used to exercise such option.
9. The Corporation may withhold cash and/or shares of Common Stock in
the amount, if any, necessary to satisfy its obligations to withhold taxes or
other amounts by reason of the grant, exercise or disposition of the option or
the shares of Common Stock underlying the option, or may require the Optionee to
pay the Corporation such amount. The Optionee agrees to pay any such amount to
the Corporation in cash upon demand.
10. The Corporation may affix appropriate legends upon the certificates
for shares and may issue such "stop transfer" instructions to its transfer agent
in respect of such shares as it determines, in its discretion, to be necessary
or appropriate to (a) prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act, or (b) implement the
provisions of any agreement between the Corporation and the Optionee with
respect to such shares.
11. The Optionee represents and agrees that he will comply with all
applicable laws relating to the grant and exercise of this option and the
disposition of the shares of Common Stock acquired upon exercise of this option,
including without limitation, Federal and state securities and "blue sky" laws.
12. This option is not transferable by the Optionee other than by will
or the laws of descent and distribution and may be exercisable during the
Optionee's lifetime only by him, or his legal representatives. Neither this
option nor any of the rights and privileges conferred hereby shall be
transferred, assigned, pledged (as collateral for a loan, or as security for the
performance of an obligation, or for any other purpose), or hypothecated in any
way (whether voluntarily, by operation of law or otherwise) or be subject to
execution, attachment, or similar process. Any attempted transfer, assignment,
pledge (as collateral for a loan or as security for the performance of any
obligation, or for any other purpose), hypothecation, execution, attachment or
similar process shall be null and void and of no force or effect.
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13. In the event that, prior to the issuance by the Corporation of all
the shares pursuant to this option, there shall be any change in the outstanding
Common Stock of the Corporation by reason of a stock dividend, stock split,
spin-off, stock combination, recapitalization, merger in which the Corporation
is the surviving corporation or the like, the remaining number of shares still
subject to this option and the exercise price therefor shall be proportionally
adjusted by the Board of Directors of the Corporation to reflect such change.
Such adjustment may provide for the elimination of fractional shares which might
otherwise be subject to options, without payment therefor. The determination of
the Board of Directors with respect thereto shall be conclusive and binding on
the parties. Notwithstanding anything herein to the contrary, in the event of
(a) the liquidation or dissolution of the Corporation or (b) a merger in which
the Corporation is not the surviving corporation or a consolidation involving
the Corporation, this option shall terminate, unless other provision is made
therefor in the transaction.
14. The invalidity, unenforceability or illegality of any provision
herein shall not affect the validity, enforceability or legality of any other
provision.
15. This Agreement shall be binding upon and inure to the benefit of
any successor or assign of the Corporation and to any heir, distributee,
executor, administrator or legal representative entitled by law to the
Optionee's rights hereunder. This Agreement may not be amended except in writing
signed by the parties.
16. Whenever notice is required to be given under the terms of this
Agreement, such notice shall be in writing and shall be deemed delivered:
(a) if to the Corporation, upon receipt by the Corporation, at the
Corporation's address set forth above, Attention: Compensation/Stock Option
Committee, or such other address as the Corporation may designate by notice to
the Optionee, effective upon receipt of such notice by the Optionee.
(b) if to the Optionee, as of the day it is personally delivered, or
5 days after mailing, by registered or certified mail, return receipt requested,
postage prepaid, at the Optionee's address set forth above, or such other
address as the Optionee may designate by notice to the Corporation, effective
upon receipt of such notice by the Corporation.
17. This Agreement shall be governed by and construed in accordance
with the laws of the State of New Jersey, without regard to conflict of law
provisions.
18. This Agreement constitutes the entire understanding between the
parties with respect to the subject matter hereof and supersedes any prior
agreements with respect thereto.
19. The Corporation shall pay all issuance taxes with respect to the
shares of Common Stock upon exercise of this option, as well as all expenses
incurred by the Corporation in connection therewith.
20. This option shall not be construed or interpreted with any
presumption against the Corporation by reason of the Corporation causing this
Agreement to be drafted.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above set forth.
MICROFRAME, INC.
By: / S / Stephen Deixler
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Name: Stephen M. Deixler
Title: Chairman of Board
/ S / Stephen B. Gray
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Stephen B. Gray
Address: 37 Shy Creek Rd.
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Pittstown, NJ 08867
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