T3 Motion, Inc. STOCK OPTION AGREEMENT
Exhibit 10.53
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the services of selected
Employees, non-employee members of the Board or the Board of Directors of any Parent or Subsidiary
and consultants and other independent advisors in the service of the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a Parent or Subsidiary), and
this Agreement is executed pursuant to, and is intended to carry out the purposes of, the Plan in
connection with the Corporation’s grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning assigned to them in the
attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. Grant of Option. The Corporation hereby grants to Optionee, as of the Grant Date,
an option to purchase up to the number of Option Shares specified in the Grant/Release. The Option
Shares shall be purchasable from time to time during the option term specified in Paragraph 2 at
the Exercise Price.
2. Option Term. This option shall have a term of ten (10) years measured from the
Grant Date and shall accordingly expire at the close of business on the Expiration Date, unless
sooner terminated in accordance with Paragraph 5 or 6.
3. Limited Transferability. During Optionee’s lifetime, this option shall be
exercisable only by Optionee and shall not be assignable or transferable other than by will or by
the laws of descent and distribution following Optionee’s death.
4. Dates of Exercise. This option shall become exercisable for the Option Shares in
one or more installments as specified in the Grant/Release. As the option becomes exercisable for
such installments, those installments shall accumulate and the option shall remain exercisable for
the accumulated installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2 shall terminate (and
this option shall cease to be outstanding) prior to the Expiration Date should any of the following
provisions become applicable:
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(a) Should Optionee cease to remain in Service for any reason (other than death or Disability)
while this option is outstanding, then Optionee shall have a period of three (3) months (commencing
with the date of such cessation of Service) during which to exercise this option, but in no event
shall this option be exercisable at any time after the Expiration Date.
(b) Should Optionee die while this option is outstanding, then the personal representative of
Optionee’s estate or the person or persons to whom the option is transferred pursuant to Optionee’s
will or in accordance with the laws of inheritance shall have the right to exercise this option.
Such right shall lapse, and this option shall cease to be outstanding, upon the earlier of (i) the
expiration of the twelve (12) month period measured from the date of Optionee’s death or (ii) the
Expiration Date.
(c) Should Optionee cease Service by reason of Disability while this option is outstanding,
then Optionee shall have a period of twelve (12) months (commencing with the date of such cessation
of Service) during which to exercise this option. In no event shall this option be exercisable at
any time after the Expiration Date.
Note: Exercise of this option on a date later than three (3)
months following cessation of Service due to Disability will
result in loss of favorable Incentive Option treatment, unless
such Disability constitutes Permanent Disability. In the event
that Incentive Option treatment is not available, this option will
be taxed as a Non-Statutory Option upon exercise.
(d) During the limited period of post-Service exercisability, this option may not be exercised
in the aggregate for more than the number of Option Shares in which Optionee is, at the time of
Optionee’s cessation of Service, vested pursuant to the Vesting Schedule specified in the
Grant/Release. Upon the expiration of such limited exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be outstanding for any vested Option
Shares for which the option has not been exercised. To the extent Optionee is not vested in the
Option Shares at the time of Optionee’s cessation of Service, this option shall immediately
terminate and cease to be outstanding with respect to those shares.
(e) In the event of a Corporate Transaction, the provisions of Paragraph 6 shall govern the
period for which this option is to remain exercisable following Optionee’s cessation of Service and
shall supersede any provisions to the contrary in this paragraph.
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6. Corporate Transaction
(a) The vesting provisions set forth in the Grant/Release shall apply in the event of a
Corporate Transaction (as defined in the appendix to this Agreement).
(b) Immediately following the Corporate Transaction, this option shall terminate and cease to
be outstanding, except to the extent assumed by the successor corporation (or parent thereof) in
connection with the Corporate Transaction.
(c) If this option is assumed in connection with a Corporate Transaction, then this option
shall be appropriately adjusted, immediately after such Corporate Transaction, to apply to the
number and class of securities which would have been issuable to Optionee in consummation of such
Corporate Transaction had the option been exercised immediately prior to such Corporate
Transaction, and appropriate adjustments shall also be made to (i) the number and class of
securities available for issuance under the Plan following the consummation of such Corporate
Transaction and (ii) the Exercise Price, provided, the aggregate Exercise Price shall
remain the same.
(d) This Agreement shall not in any way affect the right of the Corporation to adjust,
reclassify, reorganize or otherwise change its capital or business structure or to merge,
consolidate, dissolve, liquidate or sell or transfer all or any part of its business or assets.
7. Adjustment in Option Shares. Should any change be made to the Common Stock by
reason of any stock split, stock dividend, recapitalization, combination of shares, exchange of
shares or other change affecting the outstanding Common Stock as a class without the Corporation’s
receipt of consideration, appropriate adjustments shall be made to (i) the total number and/or
class of securities subject to this option and (ii) the Exercise Price in order to reflect such
change and thereby preclude a dilution or enlargement of benefits hereunder.
8. Shareholder Rights. The holder of this option shall not have any shareholder rights
with respect to the Option Shares until such person shall have exercised the option, paid the
Exercise Price and become a holder of record of the purchased shares.
9. Manner of Exercising Option.
(a) In order to exercise this option with respect to all or any part of the Option Shares for
which this option is at the time exercisable, Optionee (or any other person or persons exercising
the option) must take the following actions:
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(i) Execute and deliver to the Corporation a Purchase Agreement for the Option Shares for
which the option is exercised.
(ii) Pay the aggregate Exercise Price for the purchased shares in one or more of the
following forms:
(A) Cash or check made payable to the Corporation; or
(B) a promissory note payable to the Corporation, but only to the extent
authorized by the Plan Administrator in accordance with Paragraph 14.
Should the Common Stock be registered under Section 12(g) of the 1934 Act at
the time the option is exercised, then the Exercise Price may also be paid as
follows:
(C) in shares of Common Stock held by Optionee (or any other person or persons
exercising the option) for the requisite period necessary to avoid a charge to the
Corporation’s earnings for financial reporting purposes and valued at Fair Market
Value on the Exercise Date; or
(D) to the extent the option is exercised for vested Option Shares, through a
special sale and remittance procedure pursuant to which Optionee (or any other
person or persons exercising the option) shall concurrently provide irrevocable
instructions (a) to a Corporation-designated brokerage firm to effect the immediate
sale of the purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate Exercise
Price payable for the purchased shares plus all applicable Federal, state and local
income and employment taxes required to be withheld by the Corporation by reason of
such exercise and (b) to the Corporation to deliver the certificates for the
purchased shares directly to such brokerage firm in order to complete the sale.
Except to the extent the sale and remittance procedure is utilized in
connection with the option exercise, payment of the Exercise Price must
accompany the Purchase Agreement delivered to the Corporation in
connection with the option exercise.
(iii) Furnish to the Corporation appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the right to exercise this option.
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(iv) Execute and deliver to the Corporation such written representations as may be
requested by the Corporation in order for it to comply with the applicable requirements of
Federal and state securities laws.
(v) Make appropriate arrangements with the Corporation (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction of all federal, state and local
income and employment tax withholding requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, the Corporation shall issue to or on behalf
of Optionee (or any other person or persons exercising this option) a certificate for the purchased
Option Shares, with the appropriate legends affixed thereto.
(c) In no event may this option be exercised for any fractional shares.
10. RIGHT OF FIRST REFUSAL. OPTIONEE HEREBY AGREES THAT ALL OPTION SHARES ACQUIRED
UPON THE EXERCISE OF THE OPTION SHALL BE SUBJECT TO RIGHTS OF FIRST REFUSAL EXERCISABLE BY THE
CORPORATION AND ITS ASSIGNS. THE TERMS OF SUCH RIGHTS ARE SPECIFIED IN THE PURCHASE AGREEMENT
ATTACHED AS EXHIBIT B TO THE GRANT/RELEASE.
11. Compliance with Laws and Regulations.
(a) The exercise of this option and the issuance of the Option Shares upon such exercise shall
be subject to compliance by the Corporation and Optionee with all applicable requirements of law
relating thereto and with all applicable regulations of any stock exchange (or the Nasdaq National
Market, if applicable) on which the Common Stock may be listed for trading at the time of such
exercise and issuance.
(b) The inability of the Corporation to obtain approval from any regulatory body having
authority deemed by the Corporation to be necessary to the lawful issuance and sale of any Common
Stock pursuant to this option shall relieve the Corporation of any liability with respect to the
non-issuance or sale of the Common Stock as to which such approval shall not have been obtained.
The Corporation, however, shall use its best efforts to obtain all such approvals.
12. Successors and Assigns. Except to the extent otherwise provided in Paragraphs 3
and 6, the provisions of this Agreement shall inure to the benefit of, and
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be binding upon, the Corporation and its successors and assigns and Optionee, Optionee’s
assigns and the legal representatives, heirs and legatees of Optionee’s estate.
13. Notices. Any notice required to be given or delivered to the Corporation under the
terms of this Agreement shall be in writing and addressed to the Corporation at its principal
corporate offices. Any notice required to be given or delivered to Optionee shall be in writing and
addressed to Optionee at the address indicated below Optionee’s signature line on the
Grant/Release. All notices shall be deemed effective upon personal delivery or upon deposit in the
U.S. mail, postage prepaid and properly addressed to the party to be notified.
14. Financing. The Plan Administrator may, in its absolute discretion and without any
obligation to do so, permit Optionee to pay the Exercise Price for the purchased Option Shares by
delivering a full-recourse, interest-bearing promissory note secured by those Option Shares. The
payment schedule in effect for any such promissory note shall be established by the Plan
Administrator in its sole discretion.
15. Construction. This Agreement and the option evidenced hereby are made and granted
pursuant to the Plan and are in all respects limited by and subject to the terms of the Plan. All
decisions of the Plan Administrator with respect to any question or issue arising under the Plan or
this Agreement shall be conclusive and binding on all persons having an interest in this option.
16. Governing Law. The interpretation, performance and enforcement of this Agreement
shall be governed by the laws of the State of California without resort to that state’s
conflict-of-laws rules.
17. Shareholder Approval. If the Option Shares covered by this Agreement exceed, as of
the Grant Date, the number of shares of Common Stock which may be issued under the Plan as last
approved by the shareholders, then this option shall be void with respect to such excess shares,
unless shareholder approval of an amendment sufficiently increasing the number of shares of Common
Stock issuable under the Plan is obtained in accordance with the provisions of the Plan.
18. Additional Terms. Applicable to an Incentive Option. In the event this option is
designated an Incentive Option in the Grant/Release, the following terms and conditions shall also
apply to the grant:
(a) This option shall cease to qualify for favorable tax treatment as an Incentive Option if
(and to the extent) this option is exercised for one or more Option Shares: (i) more than three (3)
months after the date Optionee ceases to be an Employee for any reason other than death or
Permanent Disability or (ii) more than twelve (12) months after the date Optionee ceases to be an
Employee by reason of Permanent Disability.
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(b) This option shall not become exercisable in the calendar year in which granted if (and to
the extent) the aggregate Fair Market Value (determined at the Grant Date) of the Common Stock for
which this option would otherwise first become exercisable in such calendar year would, when added
to the aggregate value (determined as of the respective date or dates of grant) of the Common Stock
and any other securities for which one or more other Incentive Options granted to Optionee prior to
the Grant Date (whether under the Plan or any other option plan of the Corporation or any Parent or
Subsidiary) first become exercisable during the same calendar year, exceed One Hundred Thousand
Dollars ($100,000) in the aggregate. To the extent the exercisability of this option is deferred by
reason of the foregoing limitation, the deferred portion shall become exercisable in the first
calendar year or years thereafter in which the One Hundred Thousand Dollar ($100,000) limitation of
this Paragraph 18(b) would not be contravened, but such deferral shall in all events end (i)
immediately prior to the effective date of a Corporate Transaction in which this option is not to
be assumed or (ii) a termination of employment for any reason other than Misconduct, whereupon the
option shall become immediately exercisable as a Non-Statutory Option for the deferred portion of
the Option Shares.
(c) Should Optionee hold, in addition to this option, one or more other options to purchase
Common Stock which become exercisable for the first time in the same calendar year as this option,
then the foregoing limitations on the exercisability of such options as Incentive Options shall be
applied on the basis of the order in which such options are granted.
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APPENDIX
The following definitions shall be in effect under the Agreement:
| 1. | Agreement shall mean this Stock Option Agreement. | ||
| 2. | Board shall mean the Corporation’s Board of Directors. | ||
| 3. | Code shall mean the Internal Revenue Code of 1986, as amended. | ||
| 4. | Common Stock shall mean the Corporation’s common stock. | ||
| 5. | Corporate Transaction shall mean either of the following shareholder-approved transactions to which the Corporation is a party: |
(a) a merger or consolidation in which securities possessing more than fifty
percent (50%) of the total combined voting power of the Corporation’s outstanding
securities are transferred to a person or persons different from the persons
holding those securities immediately prior to such transaction, or
(b) The sale, transfer or other disposition of all or substantially all of the
Corporation’s assets in complete liquidation or dissolution of the Corporation.
| 6. | Corporation shall mean T3 Motion, Inc., a Delaware corporation, and any successor corporation to all or substantially all of the assets or voting stock of T3 Motion, Inc. which shall by appropriate action adopt the Plan. | ||
| 7. | Disability shall mean the inability of Optionee to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment and shall be determined by the Plan Administrator on the basis of such medical evidence as the Plan Administrator deems warranted under the circumstances. Disability shall be deemed to constitute Permanent Disability in the event that such Disability is expected to result in death or has lasted or can be expected to last for a continuous period of twelve (12) months or more. | ||
| 8. | Employee shall mean an individual who is in the employ of the Corporation (or any Parent or Subsidiary), subject to the control and direction of the employer entity as to both the work to be performed and the manner and method of performance. |
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| 9. | Exercise Date shall mean the date on which the option shall have been exercised in accordance with Paragraph 9 of the Agreement. | ||
| 10. | Exercise Price shall mean the exercise price payable per Option Share as specified in the Grant/Release. | ||
| 11. | Expiration Date shall mean the date on which the option expires as specified in the Grant/Release. | ||
| 12. | Fair Market Value per share of Common Stock on any relevant date shall be determined in accordance with the following provisions: |
(a) If the Common Stock is at the time traded on the Nasdaq National Market,
then the Fair Market Value shall be the closing selling price per share of Common
Stock on the date in question, as the price is reported by the National Association
of Securities Dealers on the Nasdaq National Market or any successor system. If
there is no closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the last preceding
date for which such quotation exists.
(b) If the Common Stock is at the time listed on any Stock Exchange, then the
Fair Market Value shall be the closing selling price per share of Common Stock on
the date in question on the Stock Exchange determined by the Plan Administrator to
be the primary market for the Common Stock, as such price is officially quoted in
the composite tape of transactions on such exchange. If there is no closing selling
price for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.
(c) If the Common Stock is at the time neither listed on any Stock Exchange
nor traded on the Nasdaq National Market, then the Fair Market Value shall be
determined by the Plan Administrator after taking into account such factors as the
Plan Administrator shall deem appropriate.
| 13. | Grant Date shall mean the date of grant of the option as specified in the Grant/ Release. | ||
| 14. | Grant/Release shall mean the Grant of Stock Option/Release accompanying the Agreement, pursuant to which Optionee has been informed of the basic terms of the option evidenced hereby and has released any other equity rights concerning the Corporation. |
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| 15. | Incentive Option shall mean an option which satisfies the requirements of Code Section 422. | ||
| 16. | Misconduct shall mean the commission of any act of fraud, embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by Optionee of confidential information or trade secrets of the Corporation (or any Parent or Subsidiary), or any other intentional misconduct by Optionee adversely affecting the business or affairs of the Corporation (or any Parent or Subsidiary) in a material manner. The foregoing definition shall not be deemed to be inclusive of all the acts or omissions which the Corporation (or any Parent or Subsidiary) may consider as grounds for the dismissal or discharge of Optionee or any other individual in the Service of the Corporation (or any Parent or Subsidiary). | ||
| 17. | 1934 Act shall mean the Securities Exchange Act of 1934, as amended. | ||
| 18. | Non-Statutory Option shall mean an option not intended to satisfy the requirements of Code Section 422. | ||
| 19. | Option Shares shall mean the number of shares of Common Stock subject to the option. | ||
| 20. | Optionee shall mean the person to whom the option is granted as specified in the Grant/Release. | ||
| 21. | Parent shall mean any corporation (other than the Corporation) in an unbroken chain of corporations ending with the Corporation, provided each corporation in the unbroken chain (other than the Corporation) owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. | ||
| 22. | Plan shall mean the Corporation’s 2007 Stock Option/Stock Issuance Plan. | ||
| 23. | Plan Administrator shall mean either the Board or a committee of the Board acting in its capacity as administrator of the Plan. | ||
| 24. | Purchase Agreement shall mean the stock purchase agreement in substantially the form of Exhibit B to the Grant/Release. | ||
| 25. | Service shall mean the Optionee’s performance of services for the Corporation (or any Parent or Subsidiary) in the capacity of an Employee, |
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| a non-employee member of the Board of Directors or an independent consultant. | |||
| 26. | Stock Exchange shall mean the American Stock Exchange or the New York Stock Exchange. | ||
| 27. | Subsidiary shall mean (i) any corporation (other than the Corporation) in an unbroken chain of corporations beginning with the Corporation, provided each corporation (other than the last corporation) in the unbroken chain owns, at the time of the determination, stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain, or (ii) so long as Ki Y. Nam (and/or his respective family members or trusts) collectively own, directly or indirectly, more than fifty percent (50%) of the total combined voting power of all classes of securities of the Corporation, any corporation or other business entity in which Ki Y. Nam (and/or his respective family members or trusts) collectively own, directly or indirectly, more than fifty percent (50%) of the total combined voting power of all classes of securities of such corporation or other business entity. | ||
| 28. | Vesting Schedule shall mean the vesting schedule specified in the Grant/Release pursuant to which the Optionee is to vest in the Option Shares in a series of installments over his or her period of Service. |
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