Exhibit 10.3
SUTRON CORPORATION
STOCK OPTION AGREEMENT
(Non-qualified Stock Option)
THIS STOCK OPTION AGREEMENT (the Agreement) is made and
entered into as of the 13th day of May, 2004 by and
between Sutron Corporation, a Virginia corporation
(the Company), and Xxxxxx X. Xxxxxxx, Xx. (the Optionee).
WHEREAS, the Board of Directors of the Company (the Board)
has adopted and approved that certain Sutron Corporation
2002 Stock Option Plan (the Plan), a copy of which has
been provided to the Optionee and which is incorporated
by reference herein; and
WHEREAS, pursuant to and in accordance with the provisions
of the Plan, the Board has determined that the Optionee
is eligible to be granted an option (the Option) to
acquire shares of the Company Common Stock, $0.01 par
value per share (the Stock); and
WHEREAS, Options granted under the Plan are not intended
or designed to qualify for Federal income tax treatment
as incentive stock options under Section 422 of the
Internal Revenue Code of 1986 (the Code); and
WHEREAS, the Optionee desires to be granted Options under
the Plan; and
WHEREAS, the Corporation and the Optionee desire to set
forth herein the terms of such Options.
NOW, THEREFORE, in consideration of the foregoing, of the
mutual covenants set forth herein, and of other good and
valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree
as follows:
1. Grant of Option. The Company hereby grants to the
Optionee the right and option to purchase
ten thousand (10,000) shares of Stock, subject to
and in accordance with the terms and conditions set forth
in the Plan and in this Agreement.
2. Exercise Price. The Exercise Price to be paid for
each share of Stock to be acquired upon exercise of the
Option granted hereunder is $2.80. Such Exercise Price
is equal to the Fair Market Value (as defined in the Plan)
of the Stock as of the date of grant of the Option.
3. Transferability. The Option granted hereunder shall
be exercisable during the Optionees lifetime only by the
Optionee and shall not be assignable or transferable other
than by will or by the laws of descent and distribution
following the Optionees death.
4. Exercise Terms; Vesting; Procedure.
(a) Except as provided in Section 6 hereof, the Option
may be exercised in whole or in part in accordance with the
vesting schedule set forth in Section 5 hereof, provided,
however, that the Option shall not be exercisable after
the expiration of ten (10) years from the date of grant
of the Option.
(b) In order to exercise the Option granted hereunder,
the Optionee shall deliver to the Secretary of the Company
written notice stating the Optionees intent to exercise
the Option, which notice shall specify:
(i) the name of the Optionee;
(ii) the Option to be exercised;
(iii) the number of shares of Stock to be purchased pursuant
to such exercise; and
(iv) the address to which certificates representing the
shares of Stock issuable upon exercise of the Option are
to be mailed.
(c) The Optionees written notice shall be accompanied
by a certified check payable to the Company in the amount
of the product of the Exercise Price times the number of
shares with respect to which the Option is being exercised.
The notice and payment shall be delivered in person or
sent by registered mail, return receipt requested, to the
Secretary of the Company. The Option shall be considered
exercised on the date the notice and payment are delivered
to the Secretary or deposited in the mail, as the case may
be. As promptly as practicable after the Secretarys receipt
of the notice of exercise and payment, and the receipt of
any certificates from the Optionee required by the Company
pursuant to Sections 8 and 9 hereof, the Company shall
deliver to the Optionee a certificate or certificates for
the number of shares of Stock with respect to which the
Option has been exercised.
5. Vesting. The Option shall vest and become
cumulatively exercisable as to one hundred percent (100%) of
the shares of Stock subject to such Option on the date
of grant of the Option.
6. Effect of Termination of Employment, Disability or
Death. The following provisions shall govern the exercise
of any Options held by an Optionee at the time the Optionee
ceases to be an employee of the Company, suffers a Disability,
or dies.
6.1 Termination of Employment. In the event that the
Optionee ceases to be an employee of the Company for any
reason other than Disability or death, then the period during
which each outstanding Option held by such Optionee is to
remain exercisable shall be limited to the ninety (90) day
period following the date of termination of employment. Under
no circumstances, however, shall any such Option be exercisable
after the specified expiration date of the Option term. Any
outstanding Option may not be exercised in the aggregate for
more than the number of vested shares for which the Option is
exercisable on the date of the termination of employment, and
such Option shall terminate and cease to be outstanding with
respect to any Option shares for which the Option is not at
that time exercisable or in which the Optionee is not otherwise
at that time vested.
6.2 Disability. In the event that the Optionee ceases to be
an employee of the Company by reason of a Disability, then the
period during which each outstanding Option held by such
Optionee is to remain exercisable shall be limited to a period
of one (1) year following the date of termination of employment
due to Disability. Under no circumstances, however, shall any
such Option be exercisable after the specified expiration date
of the Option term as set forth in the Option Agreement. Any
outstanding Option may not be exercised in the aggregate for
more than the number of vested shares for which the Option is
exercisable on the date of the termination of employment due
to Disability, and such Option shall terminate and cease to
be outstanding with respect to any Option shares for which the
Option is not at that time exercisable or in which the Optionee
is not otherwise at that time vested.
6.3 Death. In the event that the Optionee dies while holding
one or more outstanding Options, then the period during which
each outstanding Option held by such Optionee is to remain
exercisable shall be limited to a period of one (1) year
following the date of the Optionees death. During such limited
period, the Option may be exercised by the personal representative
of the Optionees estate or by the person or persons to whom the
option is transferred pursuant to the Optionees will or in
accordance with the laws of descent and distribution. Under no
circumstances, however, shall any such Option be exercisable
after the specified expiration date of the Option term. Any
outstanding Option may not be exercised in the aggregate for more
than the number of vested shares for which the Option is
exercisable on the date of the death of the Optionee, and such
Option shall terminate and cease to be outstanding with respect
to any Option shares for which the Option is not at that time
exercisable or in which the Optionee is not otherwise at that
time vested.
7. Adjustments to Upon Certain Events. In the event that
any change is made to the Stock issuable under the Plan and
the Option granted hereunder by reason of stock split, stock
dividend, recapitalization, combination of shares, exchange of
shares, repurchase, merger, consolidation, spin-off or other
change affecting the outstanding Stock as a class, the Board
shall make appropriate adjustments to the maximum number of
shares and/or class of shares, and the number of shares and/or
class of shares and the exercise price per share in effect under
the Option, in order to prevent the dilution or enlargement of
benefits thereunder. Any adjustments made by the Board pursuant
to this Section 7 shall be final, binding and conclusive.
Neither the existence nor the terms of the Plan or this Agreement,
nor the grant of any Option hereunder, shall affect the right
or power of the Company to make any adjustments, reorganizations,
reclassifications or other changes to its capital structure or
to merge, consolidate, dissolve, liquidate, sell or transfer any
or all of its assets or otherwise change its business structure.
Except as expressly provided above, the issuance by the Company
of shares of stock of any class, for cash or property, or for
labor or services, either upon direct sale or upon the exercise
of rights, warrants or options to subscribe therefor, or upon
conversions of shares or obligations of the Company convertible
into such shares or other securities, shall not affect the
number, class or exercise price of shares of Stock then subject
to the Option, and no adjustment shall be made by reason
thereof.
8. Requirements of Law. The Company shall not be required
to sell or issue shares of its Stock under the Option if the
sale or issuance would constitute a violation by the Optionee
or the Company of any provisions of any state or federal law,
rule or regulation. In addition, in connection with the
Securities Act of 1933, as amended, upon exercise of the Option,
the Company shall not be required to issue such shares of
Stock unless the Company has received evidence satisfactory
to it to the effect that the Optionee will not transfer such
shares except pursuant to a registration statement in effect
under the Securities Act of 1933, as amended, or unless an
opinion of counsel to the Company has been received to the
effect that such registration is not required. Any
determination in this regard by the Company shall be final,
binding and conclusive. Certificates representing shares
of Stock issued pursuant to the exercise of the Option will
be subject to such stop-transfer orders and other restrictions
as may be applicable under federal and state laws, regulations
and rules, or the requirements of any securities exchange or
automated quotation system. In the event the shares issuable
on exercise of the Option are not registered under the
Securities Act, the Company may imprint the following legend
or any other legend which counsel to the Company considers
necessary or advisable:
The shares of Stock represented by this certificate have not
been registered under the Securities Act of 1933 or under
the securities laws of any state and may not be sold or
transferred except upon such registration or upon receipt
by the Company of an opinion of counsel satisfactory to
the Company that registration is not required for such sale
or transfer.
The Corporation may, but shall in no event be obligated to,
register any securities covered hereby pursuant to the
Securities Act of 1933; and in the event any shares are
so registered, the Company may, in its discretion, remove
any legend on certificates representing such shares. The
Company shall not be obligated to take any other
affirmative action in order to cause the exercise of the
Option or the issuance of shares pursuant thereto to
comply with any state or federal law or regulation.
9. Investment Purpose. The Optionee agrees that any
shares of Stock subject to the Option granted hereunder
will be acquired for investment and not with any present
intention to resell the same, and the Optionee further
agrees to confirm such intention by an appropriate written
assurances and certificates at the time of exercising an
Option or any portion thereof.
10. Withholding. The Companys obligation to deliver
shares of Stock upon exercise of the Option shall be
subject to any and all applicable federal, state and
local tax withholding and reporting requirements.
11. No Rights as Shareholder. The Optionee shall have
no right as a shareholder with respect to the Stock
covered by the Option until the date of issuance of
Stock Certificates for such Stock to the Optionee.
12. No Employment Obligation. The granting of any
Option shall not impose upon the Company any obligation
to employ the Optionee. The right of the Company to
terminate the employment of the Optionee shall not be
diminished or affected by reason of the fact that an
Option has been granted hereunder to the Optionee.
13. General Provisions.
(a) This Agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their
respective heirs, executors, administrators, personal
representatives, successors and assigns.
(b) This Agreement shall be construed in accordance
with, and shall be governed by, the laws of the
Commonwealth of Virginia.
(c) No waiver by any party hereto of any breach of any
covenant, condition or agreement hereof shall be considered
to constitute a waiver of any such covenant, condition or
provision, or of any subsequent breach thereof.
(d) In the event any court of competent jurisdiction shall
declare any portion of this Agreement to be invalid, the
remainder of this Agreement shall not be invalidated thereby,
but shall remain in full force and effect.
(e) Unless otherwise provided in this Agreement, no notice
or other communication which may be or is required or
permitted to be given under this Agreement shall be effective
unless the same is in writing and is either hand delivered
or sent by registered or certified mail, return receipt
requested, first-class postage prepaid, (1) if to the Optionee,
to X.X. Xxx 000, Xxxxx Xxxxx Xxxx, Xxxxxxxxxxxxx, Xxxxxxxx
00000 and (2) if to the Company, to Sutron Corporation., Attn:
Secretary, 00000 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, or at any
other address that may be given by one party to the other party
by notice pursuant to this paragraph 6(e), with a copy to
the law firm of Shulman, Rogers, Gandal, Pordy & Xxxxx,
P.A., 00000 Xxxxxxxxx Xxxx, Xxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx
00000. Unless otherwise provided in this Agreement, such
notices, or other communications, if sent by registered or
certified mail in accordance with this paragraph 6(e), shall
be deemed to have been given at the time of mailing.
(f) Where the text requires, words in the singular shall
be deemed to include the plural and vice-versa, and words
in one gender shall be deemed to include all genders.
(g) Any headings preceding the text of the sections or
sub-sections in this Agreement are inserted solely for
convenience of reference and shall not constitute a part
of this Agreement, nor shall they affect its meaning,
construction or effect.
(h) The Option granted pursuant hereto is not intended or
designed to qualify for federal income tax treatment as
an incentive stock option under Section 422 of the Code.
(i) The Options are subject to all terms, conditions,
limitations and restrictions contained in the Plan,
which shall be controlling in the event of any
conflicting or inconsistent provisions between
this Agreement and the Plan.
IN WITNESS WHEREOF, the Company has caused this Agreement
to be executed and sealed by its duly authorized officers,
and the Optionee has executed and sealed this Agreement,
all as of the day and year first above written.
ATTEST: THE COMPANY:
SUTRON CORPORATION
/s/ Xxxxxx X. Xxxxxx /s/ Xxxx X. XxXxxxxx
Name: Xxxxxx X. Xxxxxx Name: Xxxx X. XxXxxxxx
Title: Secretary Title: President
WITNESS: THE OPTIONEE:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxx, Xx.
Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxx, Xx.
