STOCK OPTION AGREEMENT FOR THE GRANT OF NON-QUALIFIED STOCK OPTIONS UNDER THE TRULITE, INC. STOCK OPTION PLAN
Exhibit
10.3
FOR
THE GRANT OF
NON-QUALIFIED
STOCK OPTIONS UNDER THE
TRULITE,
INC.
STOCK
OPTION PLAN
THIS
AGREEMENT
is
entered into as of October 17, 2005 by and between Trulite, Inc., a Delaware
corporation (“Trulite” or the “Company”), and Xxxx Xxxxxxx
(“Optionee”).
WHEREAS,
Optionee
is an employee
and/or Director of
the
Company and the Company considers it desirable and in its best interest that
Optionee be given an inducement to acquire a proprietary interest in the
Company
and an added incentive to advance the interests of the Company by possessing
an
option to purchase shares of the common stock, $.0001 par value per share
(the
“Common Stock”) of the Company in accordance with the Trulite, Inc. Stock Option
Plan (the “Plan”) which was adopted by the Board of Directors on April 11,
2005.
NOW,
THEREFORE,
in
consideration of the premises, it is agreed as follows:
1. DEFINITIONS
For
purposes of this Agreement, any capitalized terms used herein and not defined
herein shall have the meaning provided in the Plan and the following terms
shall
have the definitions indicated:
| (a) |
Date
of Grant - the date of this Agreement, October 17,
2005.
|
| (b) |
Exercise
Date - date that the Option or any portion thereof, as the context
requires, is exercised.
|
2. GRANT
OF OPTION
Subject
to the provisions of the Plan, the Company hereby grants to Optionee the
right,
privilege and option to purchase (the “Option”) 42,218
shares
of Common Stock (the “Option Shares”) at a price of $0.88 per share (the “Xxxxx
Xxxxx”), which has been determined by the Board of Directors to be equal to the
Fair Market Value of a share of Common Stock on the Date of Grant. The Option
shall be exercisable in the amounts and at the times specified in Section
3
below. The number of Option Shares and the Xxxxx Xxxxx have been adjusted
to
reflect a five-for-one stock split of the Trulite common stock to be effective
in April 2005. The Option is a non-qualified stock option and shall not be
treated as an incentive stock option.
3.
VESTING
AND EXERCISE OF OPTIONS
3.1
The
Option shall vest as provided below if Optionee continues to be employed
by the
Company on such dates:
|
With
respect to 18.5% of the Option Shares
|
One
year after the Date of Grant
|
|
|
With
respect to an additional 22.5% of the Option Shares
|
Two
years after the Date of Grant
|
|
|
With
respect to an additional 26.5% of the Option Shares
|
Three
years after the Date of Grant
|
|
|
With
respect to an additional 32.5% of the Option Shares
|
Four
years after the Date of Grant
|
3.2 The
Option may not be exercised later than seven years after the Date of
Grant.
3.3 (a) If
some
or all of the shareholders of Trulite on the Date of Grant (the “Current
Shareholders”) enter into a definitive agreement to sell to a third party (an
“Acquiring Party”) some or all of the shares of Common Stock held by the Current
Shareholders and the proposed sale will result in the Current Shareholders
having voting power with respect to less then 50% of the voting securities
entitled to vote in the election of directors of Trulite, the Board may require
the Optionee to exercise the vested portion of the Option and sell the Option
Shares to the Acquiring Party or to the Current Shareholders, on the same
terms
and conditions, including prices, as the Acquiring Party is acquiring the
shares
from the Current Shareholders. Following the sale to the Acquiring Party,
the
unvested portion of the Option shall continue to be subject to the vesting
terms
provided herein.
(b) In
the
event of (1)
a sale
of all or substantially all of the assets of the Company
or (2)
a
merger, consolidation or reorganization involving Trulite, following which
the
Current Shareholders will have voting power with respect to less than 50%
of the
voting securities entitled to vote generally in the election of directors
of the
surviving entity, the Board can require that all vested Options be exercised
at
the time of effectiveness of the asset sale, merger, consolidation or
reorganization and that, if not exercised, shall be forfeited. All Options
not
exercised at the time of the asset sale, merger, consolidation or reorganization
and not required to be forfeited, shall be assumed by any acquiring or surviving
entity on the same terms and shall become equivalent options to acquire
securities of such acquiring or surviving entity.
(c) In
the
event of a “Change of Control” (that is, (i) a sale of all or substantially
all of the assets or (ii) a merger, consolidation or reorganization involving
Trulite, all options held by the employee and/or Director of
the on
record as of April 30, 2005 will be subject to accelerated vesting. Board
approval will not be required under these terms and conditions. It should
be
noted that these terms and conditions do not include the purchase of Trulite
by
Synexus or vice versa nor does it include a public offering or reverse merger
of
Trulite/Synexus into a public entity.
3.4 Notwithstanding
the foregoing, the Board may at any time in its sole discretion declare
any
outstanding Options to be fully vested and immediately exercisable in full
or in
part.
4. TERMINATION
OF EMPLOYMENT
The
Option must be exercised while Optionee is employed and/or is a Director
of the
Company, except that, subject to Section 3.2, the Option may be exercised,
to
the extent vested, within 180 days of the date on which Optionee ceases to
be an
employee and/or a Director of
the
Company as a result of retirement on or after attaining the age of 65 or
early
retirement with approval of the Board (“Retirement”), as a result of disability
within the meaning of Section 22(e)(3) of the Code or as a result of
death.
5.
METHOD OF EXERCISE OF OPTION
5.1 Optionee
may exercise all or a portion of the Option by delivering to the Board a
signed
written notice of his/her intention to exercise the Option, specifying therein
the number of shares to be purchased. Upon receiving such notice, and after
the
Board has received full payment of the Xxxxx Xxxxx for the Option Shares
being
acquired and applicable withholding taxes, the Board shall direct the
appropriate officer of the Company to transfer title to the Option Shares
purchased to Optionee on the Company’s stock records and to issue to Optionee a
stock certificate for the number of Option Shares being acquired. Optionee
shall
not have any rights as a shareholder until the stock certificate is issued
to
him.
5.2 The
Option may be exercised by the payment of the Xxxxx Xxxxx in cash or by
check.
6.
FORFEITURE OF OPTION GAIN
6.1 Forfeiture
of option gain and unexercised options if Optionee engages in certain
activities.
If, at
any time within two years after termination of employment, Optionee engages
in
any activity in competition with any activity of the Company, or inimical,
contrary or harmful to the interests of the Company, including, but not limited
to (a) conduct related to Optionee’s employment for which either criminal or
civil penalties against Optionee may be sought, (b) accepting employment
with or
serving as a consultant, advisor or in any other capacity to an employer
that is
in competition with or acting against the interests of the Company, including
employing or recruiting any present, former or future employee of the Company,
or (c) disclosing or misusing any confidential information or material
concerning the Company, then (i) this Option shall terminate effective the
date
on which Optionee enters into such activity, unless terminated sooner by
operation of another term or condition of this Option or the Plan, and (ii)
any
gain realized by Optionee from exercising all or a portion of this Option
shall
be paid by Optionee to the Company. The forfeiture described herein shall
not be
required if Optionee’s employment with the Company terminates following a
transaction described in Section 3.3.
6.2 Right
of Set-off.
By
accepting this agreement, Optionee consents to a deduction from any amounts
the
Company owes Optionee from time to time (including amounts owed to Optionee
as
wages or other compensation, fringe benefits, or vacation pay, as well as
any
other amounts owed to Optionee by the Company), to the extent of the amounts
Optionee owes the Company under paragraph 6.1 above. Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount Optionee owes it, calculated as set forth
above, Optionee agrees to pay immediately the unpaid balance to the
Company.
6.3 Board
Discretion.
Optionee may be released from his obligations under this Section only if
the
Board determines in its sole discretion that such action is in the best
interests of the Company.
7.
COMPLIANCE WITH APPLICABLE LAW
No
shares
may be issued upon exercise of the Option unless such issuance is in compliance
with the Delaware General Corporation Law, as in effect on the date of such
issuance. It is the intention of the Company to effect full compliance with
all
securities and other applicable laws with respect to the sale of Option Shares
pursuant to the exercise of Options hereunder and subsequent resales by the
Optionee. The Company shall not be required to sell and deliver Option Shares
hereunder upon exercise of these Options in whole or part until the Optionee
shall have made such representations and agreed to the legending of stock
certificates in a fashion as may reasonably be required by the Company's
counsel
to effect compliance with all applicable securities or other laws.
8.
RESTRICTION ON TRANSFER OF OPTION SHARES
Unless
the Common Stock is publicly traded, there will be no market for the Option
Shares and the Option Shares will be subject to restrictions on transfer
imposed
by law, the Plan and this Agreement, as well as an Investors Rights Agreement
and a Right of First Refusal and Co-Sale Agreement to which Optionee will
be
obligated to become a party upon exercise of the Option. By signing this
Agreement, Optionee represents that any purchase of Option Shares upon exercise
of an Option, prior to the Common Stock becoming publicly traded, will be
for
investment purposes without an intention to resell the Option Shares for
a
substantial period of time. No transfer of Option Shares will be recognized
by
the Company, unless in the opinion of counsel to the Company such transfer
will
not result in a violation of applicable securities laws.
9.
TAXES
The
Company may make such provisions as it may deem appropriate for the withholding
of any federal, state and local taxes that it determines are required to
be
withheld on the exercise of the Option.
10.
BINDING EFFECT
This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, executors, administrators and
successors.
11.
INCONSISTENT PROVISIONS
The
Option granted hereby is subject to the provisions of the Plan as in effect
on
the date hereof. If any provision of this Agreement conflicts with such a
provision of the Plan, the Plan provision shall control.
12.
SEVERABILITY
If
a
court of competent jurisdiction determines that any provision of this Agreement
is invalid or unenforceable, then the invalidity or unenforceability of that
provision shall not affect the validity or enforceability of any other provision
of this Agreement, and all other provisions shall remain in full force and
effect.
IN
WITNESS WHEREOF
the
parties hereto have caused this Agreement to be executed on the day and year
first above written.
| TRULITE, INC. | ||
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|
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| By: | /s/ Xxxx X. Xxxxxxx | |
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President and CEO and Director |
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Xxxx Xxxxxxx |
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