STOCK OPTION AGREEMENT
Exhibit
10.1
THIS
STOCK OPTION AGREEMENT
(“Agreement”)
is
made and entered into as of July 10, 2008, by and between Future Energy
Solutions, Inc., a New York corporation (the “Company”),
and
the following consultant to the Company (herein, the “Optionee”):
Xxxxxxx Xxxxxx.
A. The
Company is a developer of wind turbine power generator technology and is in
its
development phase.
B. Since
July 2008, the Optionee has provided consulting services to the Company in
connection with its management structure and business development and product
marketing strategies.
C. Optionee
and the Company wish to amend and restate a prior option agreement between
the
parties and two other consultant optionees under the terms set forth in this
agreement.
In
consideration of the covenants set forth in this Agreement, the parties agree
as
follows:
1.
Option
Information.
(a) Date
of
Option: July 10, 2008
(b) Optionee:
Xxxxxxx
Xxxxxx
(c) Number
of
Shares: 167,000
(d) Exercise
Price: $1.00 per share
2.
Acknowledgments.
(a) Optionee
is an independent consultant to the Company, not an employee.
(b) The
Board
of Directors has authorized the granting to Optionee of a stock option
(“Option”)
to
purchase shares of common stock of the Company (“Common
Stock”)
upon
the terms and conditions hereinafter stated and pursuant to an exemption from
registration under the Securities Act of 1933, as amended (the “Securities
Act”)
provided by Rule 701 thereunder.
(c) This
Agreement, along with the substantially identical agreements entered into
simultaneously herewith by the other optionees and the Company, amends and
restates in its entirety, and supersedes and replaces, that certain Option
Agreement between the Company and Xxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx
XxXxxxxx entered into as of July 10, 2008.
3.
Shares;
Price. The
Company hereby grants to Optionee the right to purchase, upon and subject to
the
terms and conditions herein stated, the number of shares of Common Stock set
forth in Section 1(c) above (the “Shares”)
at the
price per Share set forth in Section 1(d) above (the “Exercise
Price”),
the
fair market value per share of the Shares covered by this Option as determined
by the Board of Directors in good faith as of the date of this
Option.
4.
Term
of Option. This
Option shall expire, and all rights under it to purchase the Shares, shall
terminate at 5:00p.m. Eastern Time on July 10, 2011, unless terminated earlier
pursuant to the terms hereof.
5.
Exercise.
(a) This
Option shall be exercised by delivery to the Company of (a) a written notice
of
exercise stating the number of Shares being purchased (in whole shares only)
and
such other information set forth on the form of Notice of Exercise attached
to
this Agreement as Appendix
A,
(b) a
check or cash in the amount of the Exercise Price of the Shares covered by
the
notice (or such other consideration as has been approved by the Board of
Directors) and (c) a written investment representation as provided for in
Section 10 of this Agreement.
(b) This
Option shall not be assignable or transferable, except by will or by the laws
of
descent and distribution or by gift or domestic relations orders to the
Optionee’s Family Members who agree to be bound by the terms of this Agreement.
For purposes of this Agreement, “Family Member” includes any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the employee's household (other than a tenant or employee), a trust
in
which these persons have more than fifty percent of the beneficial interest,
a
foundation in which these persons (or the employee) control the management
of
assets, and any other entity in which these persons (or the employee) own more
than fifty percent of the voting interests.
6.
No
Rights as Shareholder. Optionee
shall have no rights as a shareholder with respect to the Shares covered by
this
Option until the effective date of the issuance of shares following exercise
of
this Option, and no adjustment will be made for dividends or other rights for
which the record date is prior to the date such stock certificate or
certificates are issued except as provided in Section 7 of this
Agreement.
7.
Recapitalization.
(a) Subject
to any required action by the shareholders of the Company, the number of Shares
covered by this Option, and the Exercise Price thereof, shall be proportionately
adjusted automatically for any increase or decrease in the number of issued
shares resulting from a subdivision or consolidation of shares or the payment
of
a stock dividend, or any other increase or decrease in the number of such shares
effected without receipt of consideration by the Company; provided however
that
the conversion of any convertible securities of the Company shall not be deemed
to have been “effected without receipt of consideration by the
Company.”
(b) In
the
event of a proposed dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving entity, or a sale of
all
or substantially all of the assets or capital stock of the Company
(collectively, a “Reorganization”),
this
Option shall terminate immediately prior to the consummation of the proposed
action, unless otherwise provided by the Board in its sole and absolute
discretion.
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(c) Subject
to any required action by the shareholders of the Company, if the Company shall
be the surviving entity in any merger or consolidation, this Option thereafter
shall pertain to and apply to the securities to which a holder of Shares equal
to the Shares subject to this Option would have been entitled by reason of
the
merger or consolidation.
(d) To
the
extent that the foregoing adjustments relate to shares or securities of the
Company, such adjustments shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as expressly
provided in this Agreement, Optionee shall have no rights by reason of any
subdivision or consolidation of shares of Common Stock of any class or the
payment of any stock dividend or any other increase or decrease in the number
of
shares of stock of any class, and the number and price of Shares subject to
this
Option shall not be affected by, and no adjustments shall be made by reason
of,
any dissolution, liquidation, merger, consolidation or sale of assets or capital
stock, or any issue by the Company of shares of stock of any class or securities
convertible into shares of stock of any class.
(e) The
grant
of this Option shall not affect in any way the right or power of the Company
to
make adjustments, reclassifications, reorganizations or changes in its capital
or business structure or to merge, consolidate, dissolve or liquidate or to
sell
or transfer all or any part of its business or assets.
8.
Taxation
Upon Exercise of Option. Optionee
understands that, upon exercise of this Option, Optionee will recognize income,
for Federal and state income tax purposes, in an amount equal to the amount
by
which the fair market value of the Shares, determined as of the date of
exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee
shall constitute an agreement by Optionee to report such income in accordance
with then applicable law and to cooperate with Company in establishing the
amount of such income and corresponding deduction to the Company for its income
tax purposes. The Company may require Optionee to make a cash payment to cover
the withholding for federal or state income and employment tax purposes as
a
condition of the exercise of this Option.
9.
Modification,
Extension and Renewal of Options. The
Board
of Directors or a Committee thereof may modify, extend or renew this Option
or
accept its surrender (to the extent not yet exercised) and authorize the
granting of a new option in substitution for it (to the extent not yet
exercised), subject at all times to the Internal Revenue Code and New York
law.
Notwithstanding the provisions of this Section 9, no modification shall, without
the consent of the Optionee, alter to the Optionee's detriment or impair any
rights of Optionee hereunder.
10.
Investment
Intent; Restrictions on Transfer.
(a) Optionee
represents and agrees that if Optionee exercises this Option in whole or in
part, Optionee will in each case acquire the Shares upon such exercise for
the
purpose of investment and not with a view to, or for resale in connection with,
any distribution thereof; and that upon the exercise of this Option in whole
or
in part, Optionee (or any person or persons entitled to exercise this Option
under the provisions of Section 5 of this Agreement) shall furnish to the
Company a written statement to such effect, satisfactory to the Company in
form
and substance.
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(b) Optionee
further represents that Optionee has had access to the financial statements
or
books and records of the Company, has had the opportunity to ask questions
of
the Company concerning its business, operations and financial condition.
Optionee further represents to obtain additional information reasonably
necessary to verify the accuracy of such information, and further represents
that Optionee (either alone or in conjunction with his or her professional
advisers) has such experience in and knowledge of investment, financial and
business matters with respect to investments similar to the stock of the Company
that Optionee is capable of evaluating the merits and risks thereof and has
the
capacity to protect his or her own interest in connection
therewith.
(c) Unless
and until the Shares represented by this Option are registered under the
Securities Act, all certificates representing the Shares and any certificates
subsequently issued in substitution therefor and any certificate for any
securities issued pursuant to any stock split, share reclassification, stock
dividend or other similar capital event shall bear legends in substantially
the
following form:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES
ACT OF 1933 (THE “SECURITIES
ACT”)
OR
UNDER THE APPLICABLE SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES
NOR
ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF
IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS
THEREFROM.”
The
certificates shall bear such other legend or legends as the Company and its
counsel deem necessary or appropriate. Appropriate stop transfer instructions
with respect to the Shares have been placed with the Company's transfer
agent.
11.
Stand-Off
Agreement. Optionee
agrees that, in connection with any registration of the Company's securities
under the Securities Act, and upon the request of the Company or any underwriter
managing an underwritten offering of the Company's securities, Optionee shall
not sell, short any sale of, loan, grant an option for, or otherwise dispose
of
any of the Shares (other than Shares included in the offering) without the
prior
written consent of the Company or such managing underwriter, as applicable,
for
a period of up to two years following the effective date of registration of
such
offering.
12.
Confidentiality;
Non-Solicitation; Intellectual Property.
As a
material inducement to the Company to grant this Option and to enter into this
Agreement, the Optionee hereby expressly agrees to be bound by the following
covenants, terms and conditions:
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(a) During
the course of the Optionee's relationship with the Company or any of its
affiliates, the Optionee has had, and will have, access to Confidential
Information relating to the Company and its affiliates and their respective
suppliers, partners and customers. The Optionee agrees to keep secret and retain
in strictest confidence all of such Confidential Information, and will not
disclose, disseminate or use such information for the Optionee's own advantage
or for the advantage of any other person or entity other than the Company in
accordance with the terms of the Optionee's employment or relationship with
the
Company. In the event disclosure of any such Confidential Information is
required or purportedly required by law, the Optionee will provide the Company
with prompt notice of any such requirement so that the Company may seek an
appropriate protective order prior to disclosure.
(b) In
the
event that the Optionee as part of his activities on behalf of the Company
generates, creates, authors or contributes to any invention, design, new
development, device, product, method or process (whether or not patentable
or
reduced to practice or constituting Confidential Information), any copyrightable
work (whether or not constituting Confidential Information) or any other form
of
Confidential Information relating directly or indirectly to the Company's
business (including anything that has occurred since the first date Optionee
provided services to the Company), the Optionee acknowledges that such
Intellectual Property is the exclusive property of the Company and hereby
assigns all right, title and interest in and to such Intellectual Property
to
the Company. Any copyrightable work prepared in whole or in part by the Optionee
is and will be deemed “a work made for hire” under Section 201(b) of the 1976
Copyright Act, and the Company shall own all of the rights comprised by the
copyright therein. The Optionee shall promptly and fully disclose all
Intellectual Property to the Company and shall cooperate with the Company to
protect the Company's interests in and rights to such Intellectual Property
(including, without limitation, providing reasonable assistance in securing
patent protection and copyright registrations and executing all documents as
reasonably requested by the Company, whether such requests occur prior to or
after termination of the Optionee's employment with the Company).
Notwithstanding the Date of Option or anything else herein to the contrary,
the
provisions of this Section 12(b) shall be deemed to be effective as of and
apply
to all matters occurring since the first date Optionee provided services to
the
Company.
(c) As
requested by the Company from time to time for any reason, the Optionee shall
promptly deliver to the Company all copies and embodiments, in whatever form,
of
all Confidential Information and Intellectual Property in the Optionee's
possession or within his control (including, but not limited to, written
records, notes, photographs, manuals, notebooks, documentation, program
listings, flow charts, magnetic media, disks, diskettes, tapes and all other
materials containing any Confidential Information or Intellectual Property)
irrespective of the location or form of such material and, if requested by
the
Company, shall provide the Company with written confirmation that all such
materials have been delivered to the Company.
(d) The
Optionee acknowledges that in the event the Optionee violates any provisions
of
this Section 12, in addition to its other rights and remedies, the Company
shall
be entitled to injunctive relief without the necessity of proving actual
damages. The Optionee further acknowledges that if any provision of this Section
12 is held to be unenforceable, the court making such holding shall have the
power to modify such provision and in its modified form such provision shall
be
enforced.
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(e) Without
in any way limiting the provisions of this Section 12, the Optionee further
acknowledges and agrees that the provisions of this Section 12 shall remain
applicable in accordance with their terms after the termination or cessation
of
services to the Company or exercise or termination of the Option.
(f) “Confidential
Information” means information or material proprietary to the Company or
designated as Confidential Information by Company and not generally known by
non-Company personnel, which the Optionee develops, or of which Optionee obtains
knowledge, or to which the Optionee may obtain access, through or as a result
of, the Optionee's relationship with the Company (including information
conceived, originated, discovered or developed in whole or in part by the
Optionee). Confidential Information includes, but is not limited to, the
following types of information and other information of a similar nature
(whether or not reduced to writing): discoveries, ideas, concepts, software
in
various stages of development, designs, drawings, specifications, techniques,
models, data, source code, object code, data structures, instruction sets,
documentation, diagrams, flow charts, research, development, training methods,
training manuals, processes, procedures, “know-how”, marketing techniques and
materials, marketing and development plans, customer names and other information
related to customers, price lists, pricing policies and financial information.
Confidential information also includes any information described above which
the
Company obtains from other entities and which the Company treats as proprietary
or designates as Confidential Information, whether or not owned or developed
by
the Company. Notwithstanding the foregoing, information publicly known that
is
generally employed by the trade at or after the time Optionee first learns
of
such information, or generic information or knowledge which associate would
have
learned in the course of similar employment or work elsewhere in the trade,
shall not be deemed part of the confidential information.
(g) “Intellectual
Property” shall mean those forms of authorship (as understood from Title 17 of
the United States Code), invention (as understood by Title 35 of the United
States Code) and identification (as understood from Title 15 of the United
States Code Section 1051 et seq., trademarks and service marks) and such other
forms of property rights in ideas, “know how”, inventions, discoveries, or in
their physical embodiments as shall related to or involve the Company's business
or any of its products, services or strategies.
13.
Notices.
Any
notice required to be given pursuant to this Option or the Plan shall be in
writing and shall be deemed to be delivered upon receipt or, in the case of
notices by the Company, three days after deposit in the U.S. mail, postage
prepaid, addressed to Optionee at the address last provided by Optionee for
use
in Company records related to Optionee.
14.
Applicable
Law. This
Option has been granted, executed and delivered in the State of New York, and
the interpretation and enforcement shall be governed by the laws thereof and
subject to the exclusive jurisdiction of the courts therein.
15.
Entire
Agreement.
This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter hereof and controls and supersedes any prior understandings,
agreements or representations by or between the parties, written or oral with
respect to its subject matter, including that certain Option Agreement between
Future Energy Solutions, Inc., and Xxxxx Xxxxxxxxxx, Xxxxxxx Xxxxxx and Xxxxxxx
XxXxxxxx entered into as of July 10, 2008.
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IN
WITNESS WHEREOF,
the
parties hereto have executed this Option as of the date first above
written.
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FUTURE
ENERGY SOLUTIONS, INC.
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/s/
Xxxxxx
Xxxxx
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By:
Xxxxxx Xxxxx
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Title:
President
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Optionee
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/s/
Xxxxxxx
Xxxxxx
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Name:
Xxxxxxx Xxxxxx
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Address:
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7
APPENDIX
A
NOTICE
OF EXERCISE OF STOCK OPTION
To: Future
Energy Solutions, Inc.
The
undersigned is a holder of a stock option (the “Option”)
to
purchase shares of Future Energy Solutions, Inc. (the “Company”)
Common
Stock, $.001 par value (the “Common
Stock”),
issued pursuant to a Future Energy Solutions, Inc. Stock Option Agreement dated
as of ________________ (the “Agreement”).
A
copy of the Agreement evidencing such Option is annexed hereto.
The
undersigned hereby elects to purchase ____________ shares of Common Stock
pursuant to the terms of such Option (the “Option
Shares”),
and
tenders herewith payment in full in the amount of $________ per share, for
a
total purchase price of $_______________, with the payment of the purchase
price
being made in the form of _____________________, pursuant to Section 5 of the
Agreement. The undersigned wishes to consummate the purchase of the Option
Shares by or before ________________.
In
exercising his Option, the undersigned hereby confirms and acknowledges that
he
is acquiring Option Shares for his own account for investment and not with
a
view to, or for sale in connection with, the resale or distribution of any
such
shares. The undersigned also confirms and acknowledges that he will not sell
or
transfer any Option Shares acquired pursuant to the exercise of the Option
until
he requests and receives an opinion of the Company's counsel to the effect
that
such proposed sale or transfer will not result in a violation of the Securities
Act of 1933, as amended, or any applicable state securities law, or a
registration statement covering the sale or transfer of the Option Shares has
been declared effective by the Securities and Exchange Commission or appropriate
state governmental authority, or he obtains a no-action letter from the
Securities and Exchange Commission or appropriate state governmental authority
with respect to the proposed transfer.
The
undersigned acknowledges and agrees that this purported exercise of the Option
is conditioned on, and subject to, (a) any compliance with requirements of
applicable federal and state securities laws deemed necessary by the Company,
(b) to the undersigned's satisfaction of all federal, state or local income
and
employment tax withholding requirements applicable to this
exercise.
Please
issue a certificate or certificates representing said Option Shares in the
name
of the undersigned or in such other name as is specified below. If the Option
Shares are being issued to any person other than the Optionee, evidence of
the
right of such person to exercise the Option has been presented to the Company
and has been deemed satisfactory:
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Name
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Address:
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Social
Security Number
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Date:
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8
AMENDMENT
TO STOCK OPTION AGREEMENT
This
Amendment is dated November 19, 2008, to the Stock Option Agreement dated
July
10, 2008, as amended (“Agreement”),
by
and between Future Energy Solutions, Inc., a New York corporation, and the
following consultant to the Company (herein, the “Optionee”):
Xxxxxxx Xxxxxx.
A.
The
parties wish to amend the Agreement to provide for registration rights to
the
Optionee and certain other amendments.
B.
All
capitalized terms not otherwise defined herein shall have the meanings set
forth
in Agreement.
In
consideration of the foregoing, and other good and valuable consideration,
the
parties agree as follows:
1.
Paragraph
8 shall be amended in its entirety to read as follows:
“Optionee
understands that, upon exercise of this Option, Optionee will recognize income,
for Federal and state income tax purposes, in an amount equal to the amount
by
which the fair market value of the Shares, determined as of the date of
exercise, exceeds the Exercise Price. The acceptance of the Shares by Optionee
shall constitute an agreement by Optionee to report such income in accordance
with then applicable law and to cooperate with Company in establishing the
amount of such income and corresponding deduction to the Company for its
income
tax purposes.”
2. Paragraph
10 shall be amended to add the following covenants of the Company:
“No
later
than February 15, 2009, the Company will file a registration statement with
the
Securities and Exchange Commission on Form S-1 or Form S-8 covering the Shares
subject to this Option in favor of the Optionee and his assigns, and following
the effectiveness the Company will provide an opinion of counsel stating
that
such Shares may be traded without restriction under the federal securities
laws,
to the extent required by the Company’s transfer agent.”
“No
later
than December 15, 2008, the Company will file a Form 10 Registration Statement
with the Securities and Exchange Commission to register its class of common
stock under the Securities Exchange Act of 1934, as amended.”
3. Paragraph
11, entitled "Stand-Off Agreement", shall be deleted in its entirety.
9
4.
Paragraph
7(b) shall be amended in its entirety to read as follows:
"In
the
event of a proposed dissolution or liquidation of the Company, a merger or
consolidation in which the Company is not the surviving entity, or a sale
of all
or substantially all of the assets or capital stock of the Company
(collectively, a "Reorganization"),
this
Option shall terminate upon the consummation of the proposed action, unless
otherwise provided by the Board in its sole and absolute discretion, provided
the Company gives Optionee ninety (90) days notice prior to
consummation."
5.
Paragraph
7(d) shall be amended in its entirety to read as follows:
"The
grant of this Option shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes
in
its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets,
provided that the Company gives Optionee at least sixty (60) days
notice.
IN
WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date
first written above.
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FUTURE
ENERGY SOLUTIONS, INC.
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/s/
Xxxxxx
Xxxxx
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By:
Xxxxxx Xxxxx
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Title:
President
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Optionee
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/s/
Xxxxxxx
Xxxxxx
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Name:
Xxxxxxx Xxxxxx
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10
SCHEDULE
TO EXHIBIT 10.1 – FORM OF
JULY
10, 2008
STOCK OPTION AGREEMENT AS AMENDED
BY
AND AMONG WINDTAMER CORPORATION AND THE
NON-EMPLOYEE
CONSULTANTS OF THE
COMPANY
The
Consultant Stock Option Agreement filed as Exhibit 10.1 is substantially
identical in all material respects to the Consultant Stock Option Agreements
which have been entered into by WindTamer Corporation and the following
non-employee consultants effective as of July
10, 2008,
as
amended except for a difference in the number of shares granted to Optionee
Xxxxx Koloukoris.
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Optionee
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Number of Shares
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Xxxxxxx
XxXxxxxx
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167,000
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Xxxxx
Xxxxxxxxxx
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166,000
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11
