DYNAGEN, INC.
Non-Qualified Stock Option Agreement
DYNAGEN, INC., a Delaware corporation (the "Company"), hereby grants
this 28th day of October, 1996, to Xxxxxxx Xxxxxx (the "Optionee"), an option to
purchase a maximum of 330,000 shares (the "Option Shares") of Common Stock, $.01
par value (the "Common Stock"), at the price of $1.31 per share, on the
following terms and conditions:
1. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This Option is
intended to be a Non-Qualified Option (rather than an incentive stock option),
and the Board of Directors or any committee appointed by the Board to administer
the Company's options (hereinafter, all references to the "Committee" mean the
committee so appointed or the Board if no such committee has been appointed)
intends to take appropriate action, if necessary, to achieve this result. This
Option is in addition to any other options heretofore or hereafter granted to
the Optionee by the Company, but a duplicate original of this instrument shall
not affect the grant of another option.
2. EXTENT OF OPTION IF BUSINESS RELATIONSHIP CONTINUES. If the Optionee
has continued to serve the Company in the capacity of an employee, officer,
director, agent, advisor, or consultant (such service is described herein as
maintaining or being involved in a "Business Relationship" with the Company), on
the following dates, the Optionee may exercise this Option for the number of
Option Shares set opposite the applicable date:
Less than one year from the date hereof - No shares
One year but less than two years from - 25% of the Option Shares
the date hereof
Two years but less than three years from - An additional 35% of the
the date hereof Option Shares
Three years from the date hereof - An additional 40% of the
Option Shares
The foregoing rights are cumulative and, while the Optionee continues to
maintain a Business Relationship with the Company, may be exercised up to and
including the date which is seven (7) years from the date this Option is
granted. All of the foregoing rights are subject to Sections 3 and 4, as
appropriate, if the Optionee ceases to maintain a Business Relationship with the
Company or dies, becomes disabled or undergoes dissolution while involved in a
Business Relationship with the Company.
3. TERMINATION OF BUSINESS RELATIONSHIP. If the Optionee ceases to
maintain a Business Relationship with the Company, other than by reason of death
or disability as defined
in Section 4, no further installments of this Option shall become exercisable
and this Option shall terminate after the passage of thirty (30) days from the
date the Business Relationship ceases, but in no event later than the scheduled
expiration date. In such a case, the Optionee's only rights hereunder shall be
those which are properly exercised before the termination of this Option.
4. DEATH; DISABILITY. If the Optionee dies while involved in a Business
Relationship with the Company, this Option may be exercised, to the extent of
the number of Option Shares with respect to which the Optionee could have
exercised it on the date of his death, by his estate, personal representative or
beneficiary to whom this Option has been assigned pursuant to Section 9, at any
time within 180 days after the date of death, but not later than the scheduled
expiration date. If the Optionee's Business Relationship with the Company is
terminated by reason of disability, this Option may be exercised, to the extent
of the number of Option Shares with respect to which the Optionee could have
exercised it on the date the Business Relationship was terminated, at any time
within 180 days after the date of such termination, but not later than the
scheduled expiration date. At the expiration of such 180-day period or the
scheduled expiration date, whichever is the earlier, this Option shall terminate
and the only rights hereunder shall be those as to which the Option was properly
exercised before such termination. If the Optionee is a corporation,
partnership, trust or other entity that is dissolved, liquidated, becomes
insolvent or enters into a merger or acquisition with respect to which such
Optionee is not the surviving entity at the time when such entity is involved in
a Business Relationship with the Company, this Option shall immediately
terminate as of the date of such event, and the only rights hereunder shall be
those as to which this Option shall immediately terminate as of the date of such
event, and the only rights hereunder shall be those as to which this Option was
properly exercised before such dissolution or other event.
5. PARTIAL EXERCISE. Exercise of this Option up to the extent above
stated may be made in part at any time and from time to time within the above
limits, except that this Option may not be exercised for a fraction of a share
unless such exercise is with respect to the final installment of stock subject
to this Option and a fractional share (or cash in lieu thereof) must be issued
to permit the Optionee to exercise completely such final installment. Any
fractional share with respect to which an installment of this Option cannot be
exercised because of the limitation contained in the preceding sentence shall
remain subject to this Option and shall be available for later purchase by the
Optionee in accordance with the terms hereof.
6. PAYMENT OF PRICE. The option exercise price is payable in United
States dollars and may be paid:
(a) in cash or by check, or any combination of the foregoing,
equal in amount to the option exercise price; or
(b) in the discretion of the Committee, in cash, by check, by
delivery of shares of the Company's Common Stock having a fair market value (as
determined by the Committee) equal as of the date of exercise to the option
exercise price, or by any combination of the foregoing, equal in amount to the
option exercise price.
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If the Optionee delivers shares of Common Stock held by the Optionee
(the "Old Stock") to the Company in full or partial payment of the option
exercise price, and the Old Stock so delivered is subject to restrictions or
limitations imposed by agreement between the Optionee and the Company, the
Common Stock received by the Optionee on the exercise of this Option shall be
subject to all restrictions and limitations applicable to the Old Stock to the
extent that the Optionee paid for such Common Stock by delivery of Old Stock, in
addition to any restrictions or limitations imposed by this Agreement.
7. AGREEMENT TO PURCHASE FOR INVESTMENT. By acceptance of this Option,
the Optionee agrees that a purchase of Option Shares under this Option will not
be made with a view of their distribution, as that term is used in the
Securities Act of 1993, as amended (the "Securities Act"), unless in the opinion
of counsel to the Company such distribution is in compliance with or exempt from
the registration and prospectus requirements of the Securities Act and
applicable state securities laws, and the Optionee agrees to sign a certificate
to such effect at the time of exercising this Option and agrees that the
certificate for the Option Shares so purchased shall be inscribed with a legend
to ensure compliance with the Securities Act and applicable state securities
laws.
8. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of
this Agreement, this Option may be exercised by written notice to the Company,
at the principal executive office of the Company, or to such transfer agent as
the Company shall designate. Such notice shall state the election to exercise
this Option and the number of Option Shares in respect of which it is being
exercised and shall be signed by the person so exercising this Option. Such
notice shall be accompanied by payment of the full exercise price of such Option
Shares, and the Company shall deliver a certificate representing such Option
Shares as soon as practicable after the notice shall be received. The
certificate for the Option Shares as to which this Option shall have been so
exercised shall be registered in the name of the person so exercising this
Option (or, if this Option shall be exercised by the Optionee and if the
Optionee shall so request in the notice exercising this Option, shall be
registered in the name of the Optionee and another person jointly, with right of
survivorship) and shall be delivered as provided above to or upon the written
order of the person exercising this Option. In the event this Option shall be
exercised, pursuant to Section 4 hereof, by any person other than the Optionee,
such notice shall be accompanied by appropriate proof of the right of such
person to exercise this Option. All Option Shares that shall be purchased upon
the exercise of this Option as provided herein shall be fully paid and
nonassessable.
9. OPTION NOT TRANSFERABLE. This Option is not transferable or
assignable except by will, by the laws of descent and distribution or pursuant
to a qualified domestic relations order as defined in the Internal Revenue Code
of 1986, as amended, or Title I of the Employee Retirement Income Security Act,
or the rules thereunder.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
Option imposes no obligation on the Optionee to exercise it.
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11. NO OBLIGATION TO CONTINUE BUSINESS RELATIONSHIP. The Company and
any related corporations are not by this Option obligated in any manner to
continue to maintain a Business Relationship with the Optionee in any capacity
whatsoever.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to Option Shares subject to this Agreement
until a stock certificate therefore has been issued to the Optionee and is fully
paid for by the Optionee.
13. ADJUSTMENTS. Upon the occurrence of any of the following events,
the Optionee's rights with respect to this Option shall be adjusted as follows:
A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common
Stock shall be subdivided or combined into a greater or smaller number
of shares or if the Company shall issue any shares of Common Stock as a
stock dividend on its outstanding Common Stock, the Option Shares shall
be appropriately increased or decreased proportionately, and
appropriate adjustments shall be made in the purchase price per share
to reflect such subdivision, combination or stock dividend.
B. RECAPITALIZATION OR REORGANIZATION. In the event of a
recapitalization or reorganization of the Company (other than an
Acquisition as defined in Section 16) pursuant to which securities of
the Company or of another corporation are issued with respect to the
outstanding shares of Common Stock, the Optionee upon exercising this
Option shall be entitled to receive for the purchase price paid upon
such exercise the securities he would have received if he had exercised
the Option prior to such recapitalization or reorganization.
C. DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, this Option shall terminate
immediately prior to the consummation of such proposed action or at
such other time and subject to such other conditions as shall be
determined by the Committee.
D. ISSUANCES OF SECURITIES. Except as expressly provided
herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect,
and no adjustment by reason thereof shall be made with respect to, the
number of price of shares subject to this Option. No adjustments shall
be made for dividends paid cash or in property other than securities of
the Company.
E. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. In the event of
any stock dividend, stock split, combination, recapitalization or other
similar change in the capital structure of the Company, this Option and
the Option price shall be equitably adjusted and, in lieu of issuing
fractional shares upon exercise thereof, this Option (and the
corresponding Option Shares) shall be rounded upward or downward to the
nearest whole share (rounding upward for all amounts equal to or in
excess of .51). In particular, without affecting the generality of the
foregoing, it is understood that for the purposes of Sections 2 through
4 hereof, inclusive, maintaining or being involved in a Business
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Relationship with the Company includes maintaining or being involved in
a Business Relationship with its parent (if any) and any present or
future subsidiaries of the Company.
14. WITHHOLDING TAXES. The Optionee hereby agrees that the Company may
withhold from the Optionee's wages or other remuneration the appropriate amount
of federal, state and local taxes attributable to the Optionee's exercise of any
installment of this Option. At the Company's discretion, the amount required to
be withheld may be withheld in cash from such wages or other remuneration, or in
kind from the Common Stock otherwise deliverable to the Optionee on exercise of
this Option. The Optionee further agrees that, if the Company does not withhold
an amount from the Optionee's wages or other remuneration sufficient to satisfy
the Company's withholding obligation, the Optionee will reimburse the Company on
demand, in cash, for the amount underwithheld.
15. NO EXERCISE OF OPTION IF BUSINESS RELATIONSHIP TERMINATED FOR
MISCONDUCT. If the Business Relationship of the Optionee is terminated for
"Misconduct," this Option shall terminate on the date of such termination and
this Option shall thereupon not be exercisable to any extent whatsoever.
"Misconduct" is conduct, as determined by the Board of Directors, involving one
or more of the following: (i) disloyalty, gross negligence, dishonesty or breach
of fiduciary duty to the Company; or (ii) the commission of an act of
embezzlement, fraud or deliberate disregard of the rules or policies of the
Company which results in loss, damage or injury to the Company; or (iii) the
unauthorized disclosure of any trade secret or confidential information of the
Company; or (iv) the commission of an act which constitutes unfair competition
with the Company or which induces any customer of the Company to break a
contract with the Company. In making such determination, the Board of Directors
shall act fairly and in utmost good faith.
16. ACCELERATION AND VESTING OF OPTION FOR BUSINESS COMBINATIONS. If
the Company is to be consolidated with or acquired by another entity in a
merger, sale of all or substantially all of the Company's assets or otherwise
(an "Acquisition"), then this Option shall, if the Committee so designates,
become fully vested and exercisable by the Optionee immediately prior to the
consummation of such Acquisition.
17. GOVERNING LAW; SUCCESSORS AND ASSIGNS. This Agreement shall be
governed by and interpreted in accordance with the internal laws of the State of
Delaware and shall be binding upon the heirs, personal representatives,
executors, administrators, successors and assigns of the parties.
18. EXPRESS CONSIDERATION FOR OPTION GRANT. This Option is being
granted to the Optionee on the express condition and for the express
consideration that the Optionee has previously executed, or will immediately
execute and deliver in connection with this Option grant, a form of
nondisclosure, assignment of inventions and/or noncompetition agreement (or any
combination thereof) satisfactory to the Company. If such agreement has not been
executed, or if the Optionee refuses to execute such agreement, this Option may
be canceled by the Company in its sole and absolute discretion.
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19. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof.
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IN WITNESS WHEREOF, the Company and the Optionee have caused this
instrument to be executed, and the Optionee whose signature appears below
acknowledges acceptance of an original copy of this Agreement.
/s/ Xxxxxxx Xxxxxx
_____________________________ DYNAGEN, INC.
SIGNATURE OF OPTIONEE
Xxxxxxx Xxxxxx /s/ Xxxx X. Xxxx
_____________________________ By:_____________________________
Print Name of Optionee
President
_____________________________ Title: ___________________________
Street Address
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City State Zip Code
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Social Security Number
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