ARIEL CORPORATION
STOCK OPTION AGREEMENT
Agreement made this 5th day of February, 1999 between ARIEL
CORPORATION, a Delaware corporation, (hereinafter called the "Corporation") and
Aziz Mzili, (hereinafter called the "Grantee").
WHEREAS, the Corporation desires to provide the Grantee with an
opportunity to acquire or increase his or her proprietary interest in the
business of the Corporation and, through stock ownership, to possess an
increased personal interest in its continued success and progress;
NOW, THEREFORE, in consideration of the premises, the mutual covenants
hereinafter set forth, and other good and valuable consideration, the
Corporation and the Grantee agree as follows:
1. Award of Option. The Corporation hereby awards to the Grantee, as a
matter of separate inducement and agreement, and not in lieu of salary or any
other compensation for services, options to purchase an aggregate of 10,000
shares of the Corporation's Common Stock on the terms and conditions hereinafter
set forth, at the purchase price of $2.75 per share.
2. Exercise of Option. The stock option granted pursuant to this
Agreement is exercisable in installments in accordance with the following
schedule, in which time periods are calculated from the date of this Agreement:
Installments Exercisable After
------------ -----------------
25% February 5, 2000
25% February 5, 2001
25% February 5, 2002
25% February 5, 2003
Such installments shall be cumulative, but each exercise must encompass
at least one installment or one thousand shares, whichever is less. In the event
the Grantee's exercise includes a fractional share, the Corporation will not be
required to issue a fractional share but will pay the Grantee in cash the value
of such fraction. All unexercised rights shall lapse and forever terminate after
the expiration of ten years from the date of this Agreement.
3. Termination of Employment. If the Grantee's employment with the
Corporation or with a subsidiary of the Corporation is terminated, the term of
any then outstanding option held by the Grantee shall extend for a period ending
on the earlier of the date on which such option would otherwise expire or three
months after such termination of employment, and such option shall be
exercisable to the extent it was exercisable as of such last date of employment,
except in the event the Corporation is acquired and the grantee's job is
terminated as a result of corporate restructuring, the option shall remain in
full force and effect. The representative of a deceased Grantee's estate or
beneficiaries thereof to whom the option has been transferred shall have the
right during the three-month period following his or her death to exercise any
then outstanding option in whole or in part.
4. Manner of Exercise. Full payment for the shares purchased shall be
made at the time of any exercise of this Agreement. The purchase price shall be
payable to the Corporation either (i) in United States dollars in cash or by
check, bank draft, or postal or express money order, or (ii) through the
delivery of shares of Stock of the Corporation owned by the Grantee for at least
six months prior to the date of exercise having a Fair Market Value on the date
of exercise equal to the full purchase price, or (iii) by a combination of (i)
and (ii) above; provided, however, that no fractional share shall be accepted by
the Corporation in partial payment of the purchase price of any Stock but the
value of any such fractional interest shall be paid to the Corporation in the
manner specified in (i) above.
Subject to the terms and conditions hereof, the options shall be
exercisable by notice to the Corporation on the form provided by the
Corporation, a copy of which is attached hereto. In the event that the options
are being exercised by any person or persons, other than the Grantee, the notice
shall be accompanied by proof, satisfactory to the Corporation, of the right of
such person or persons to exercise any right under this Agreement.
5. Rights of Grantee. The grant of an option in any year shall give
such Grantee neither any right to similar grants in future years nor any right
to be retained as an employee of the Corporation or its subsidiaries, such
employment being terminable to the same extent as if this Agreement were not in
effect. The right and power of the Corporation or its subsidiaries to dismiss or
discharge any participant is specifically and unqualifiedly unimpaired by this
Agreement.
Neither the Grantee nor any other person legally entitled to exercise
any rights under this Agreement shall be entitled to any of the rights or
privileges of a stockholder of the Corporation with respect to any shares which
may be issuable upon any exercise pursuant to this Agreement, unless and until a
certificate or certificates representing such shares will have been actually
issued and delivered to the Grantee or such person.
6. Non-Transferability of Option. Except as otherwise provided herein,
an option and the rights and privileges conferred hereby may not be transferred,
assigned, pledged or hypothecated in any way, other than by will or the laws of
descent and distribution, and an option shall be exercisable during the
Grantee's lifetime only by the Grantee or his conservator.
Neither the Grantee nor any other person legally entitled to exercise
any rights under this Agreement shall be entitled to any of the rights or
privileges of a stockholder of the Corporation with respect to any shares which
may be issuable upon any exercise pursuant to this Agreement, unless and until a
certificate or certificates representing such shares will have been actually
issued and delivered to the Grantee or such person.
7. Taxes and Withholding. All payments to a Grantee or to his legal
representative shall be subject to any applicable tax, community property, or
other statutes or regulations of the United States or of any state having
jurisdiction thereof. The Grantee may be required to pay to the Corporation the
amount of any withholding taxes which the Corporation is required to withhold
with respect to a stock option or its exercise. In the event that such payment
is not made when due, the Corporation shall have the right to deduct, to the
extent permitted by law, from any payment of any kind otherwise due to such
person all or part of the amount required to be withheld.
8. Notices. Each notice to the Corporation relating to this Agreement
shall be in writing and delivered in person or by registered mail to the
Corporation at its office, 0000 Xxxxx 000, Xxxxxxxx, Xxx Xxxxxx 00000 to the
attention of the General Counsel. All notices to the Grantee or other person
then entitled to exercise any right pursuant to this Agreement shall be
delivered to the Grantee or such other person or persons at the Grantee's
address specified below or at such other address as the Grantee or such other
person or persons at the Grantee's address specified below or at such other
address as the Grantee or such other person may specify in writing to the
Corporation by a notice delivered in accordance with this paragraph.
9. Restriction on Shares. The Corporation's obligation to issue or
deliver any certificate or certificates for shares of Stock under this option,
and the transferability of shares acquired by the exercise of this option, shall
be subject to all of the following conditions:
(a) Any registration or other qualification of such shares
under any state or federal law or regulation, or the maintaining in
effect of any such registration or other qualification which the
Corporation shall, in its absolute discretion upon the advice of
counsel, deem necessary or advisable.
(b) The obtaining of any other consent, approval, or permit
from any state or federal governmental agency which the Corporation
shall, in its absolute discretion upon the advice of counsel, determine
to be necessary or advisable; and
(c) Each stock certificate issued pursuant to a Stock Option
shall bear the following legend:
"The transferability of this certificate and the shares of stock
represented hereby are subject to restrictions, terms and conditions
contained in an Agreement between the registered owner of such stock
and Ariel Corporation. A copy of the Agreement is on file in the office
of the Secretary of Ariel Corporation."
10. Miscellaneous. This Agreement comprises the whole Agreement between
the parties hereto. It may not be modified or terminated orally, and it shall be
deemed to be a Delaware contract, subject to construction and enforcement in
accordance with the laws of Delaware.
This Agreement shall inure to the benefit of and be binding upon each
successor of the Corporation and to the extent specifically provided herein
shall inure to the benefit of and be binding upon the Grantee's heirs, legal
representatives, and successors.
IN WITNESS WHEREOF, this Agreement is executed by the Grantee and by
the Corporation through its duly authorized officer or officers as of the day
and year first above written.
GRANTOR:
ARIEL CORPORATION
By:________________________________
CEO
By:________________________________
Secretary
GRANTEE:
____________________________________
Full Name
____________________________________
Mailing Address
____________________________________
____________________________________
Social Security No.
LETTER OF STOCK OPTION EXERCISE
CONFIDENTIAL
Dated: _______________
ARIEL CORPORATION
0000 Xxxxx 000
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
Gentlemen:
I wish to purchase the following number of shares of Common Stock
pursuant to the option granted to me on February 5, 1999:
Number of Incentive stock option shares:___________________
The purchase price for these shares is $2.75 per share. My check
payable to Ariel Corporation in the amount $____________ in payment of the
purchase price is enclosed.* Please issue the stock certificate(s) for these
shares in my name as follows:
______________________________________
Name**
______________________________________
Address
______________________________________
______________________________________
Social Security Number
Sincerely yours,
______________________________________
Signature
______________________________________
Office/Home Telephone
* If stock is used in payment, please contact the General Counsel's office at
(000) 000-0000.
** If you wish to have the shares issued in your name and that of another person
jointly, we suggest that the following form be used: "(Your name) and (name of
other person), as joint tenants with right of survivorship."
