STOCK OPTION AGREEMENT
Exhibit
99.1
THIS STOCK OPTION AGREEMENT
(the “Agreement”) is made and entered into, effective as of April 5, 2009
(the “Effective Date”), by and between Xxxxx XxXxxxx, an individual
with an address at ________ (the “Optionor”), and Xxxxx X. Xxxxx, an individual
with an address at ___________ (the “Optionee”), with
reference to the following facts:
RECITALS:
As an
inducement for the Optionee to accept full time employment with Carbon Sciences,
Inc. (the “Company”) as President and as incentive to Optionee to continue in
the employ of the Company as its President, the Optionor has agreed to sell to
Optionee an option to purchase certain shares of the common stock of the Company
held by Optionor, and the parties have agreed to execute this Agreement in order
to evidence the sale of such option.
AGREEMENTS:
NOW, THEREFORE, FOR VALUABLE
CONSIDERATION, receipt which is hereby acknowledged, Optionor hereby sell
to Optionee the following option:
Section
1. Sale of
Option. Subject to the terms and conditions set forth below,
the Optionor hereby sells to Optionee for the purchase price of Fifteen Hundred
Dollars ($1,500.00) the right and option (the “Option”) to purchase from the
Optionor Fifteen Million (15,000,000) shares (the “Option Shares”) of the
Company’s common stock ("Common Stock") at an exercise price of Ten Cents
($0.10) per share (the “Exercise Price”), subject to Optionee’s becoming vested
in the Option as set forth in this Section 1.
(a) Subject
to Sections 1(b) and 1(c), below, the Option shall be exercisable only to the
extent Optionee has become vested therein. As of any date during the
term of this Option, Optionee shall be entitled to purchase such number of the
Option Shares (to the extent not previously purchased hereunder) as is
determined by multiplying the total number of Option Shares times Optionee’s
then-current vesting percentage as determined under this Section 1(a) and
Section 7, below. In consideration for Optionee’s continuous
employment as President of the Company from and after January 1, 2009 (the
“Employment Commencement Date”), Optionee shall become vested in this Option as
follows:
(i) After one
month of continuous employment by the Company following Optionee’s Employment
Commencement Date, Optionee shall become vested in one-thirty-sixth (1/36th) of
this Option.
(ii) For each
subsequent period of thirty (30) days thereafter that Optionee remains
continuously employed by the Company, Optionee shall become vested in
one-thirty-sixth (1/36th) of the this Option until all of the Option Shares are
vested.
(b) For
purposes of this Agreement, “employment” as used herein shall refer to full-time
employment of the Optionee as President of the Company during which time the
Optionee shall devote his full-time efforts to the business and affairs of the
Company and use his best efforts to carry out such responsibilities faithfully
and efficiently.
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(c) Notwithstanding
any provision hereof to the contrary, if for any reason Optionee shall ceased to
be employed by the Company as its President, whether voluntarily or
involuntarily, Optionee shall forfeit any portion of the Option in
which Optionee is not then vested as of the first date that Optionee’s
employment with the Company terminates.
(d) Subject
to the foregoing provisions of this Section 1, the Option is exercisable at any
time and from time to time during its term, in whole or in part, to the extent
that Optionee has become vested in such Option pursuant to this Section
1. This Option will terminate in all respects, and all rights and
options to purchase shares hereunder will terminate on the earlier of (i) ninety
(90) days after Optionee is fully vested or (ii) 90 days after the Optionee’s
employment with the Company terminates (“the Term”).
Section
2. Manner of
Exercise of Option. Optionee may exercise the Option only by
delivering to the Optionor (a) a written notice of exercise specifying the
number of shares with respect to which the Option is to be exercised and the
address to which the certificate representing such shares is to be mailed, (b)
cash, certified or bank check or postal money order payable to the order of the
Optionor for an amount equal to the sum of (x) the Exercise Price of such
shares, and (y) such amount, if any, as may be due to fund withholding taxes due
with respect to such exercise, as required by Section 11, below, and (c) such
documentation establishing that the conditions precedent specified in Section 3,
below, have been satisfied by the Optionee.
Section
3. Conditions
Precedent. As a condition
precedent to any exercise of this Option, the Optionee shall deliver to the
Optionor an investment letter in form and substance satisfactory to the Optionor
and its counsel which will contain among other things a statement in writing
that (i) the Option is then being exercised for the account of the Optionee and
only with a view to investment in, and not for, in connection with or with a
view to the distribution of, the shares with respect to which the Option is then
being exercised; (ii) Optionee has been advised that Rule 144 of the Securities
and Exchange Commission (the "Commission"), which permits the resale, subject to
various terms and conditions, of small amounts of "restricted securities" (as
therein defined) applies to the Optionor; (iii) Optionee and Optionee's
representatives have fully investigated the Company and the business and
financial conditions concerning it and have knowledge of the Company's then
current corporate activities and financial condition; and (iv) Optionee believes
that the nature and amount of the shares being purchased are consistent with
Optionee's investment objectives, abilities and resources. The
foregoing investment representations no longer shall be required after
registration with the Commission of the stock subject to this Option or acquired
through the exercise of this Option.
Section
4. Delivery
of Shares. Within a
reasonable time following the receipt by the Optionor of the written notice and
payment of the option exercise price for the shares to be purchased hereunder
and the fulfillment by Optionee of the conditions precedent to exercise, the
Optionor and the Optionee shall deliver notice to the Escrow Agent
instructing the Escrow Agent tocause to be delivered to Optionee at
the address specified pursuant to Section 2, above, a certificate or
certificates for the number of shares with respect to which the Option is then
being exercised, registered in the name of the Optionee; provided, however, that
such delivery will be deemed effected for all purposes when such certificate or
certificates will have been deposited in the United States mail, addressed to
the Optionee at the address so specified; and provided further that if any law,
regulation or order of the Securities and Exchange Commission or other body
having jurisdiction in the premises will require the Optionor or the Optionee to
take any action in connection with the sale of the shares then being purchased,
then, subject to the other provisions of this paragraph, the date on which such
sale will be deemed to have occurred and the date for the delivery of the
certificates for such shares will be extended for the period necessary to take
and complete such action, it being understood that the Optionor will have no
obligation to take and complete any such action.
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Section
5.
Legend. Unless
and until the Shares represented by this Option are registered under the
Securities Act of 1933 (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:
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“THESE
SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR UNDER THE APPLICABLE OR
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.”
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Section
6. Adjustments
Upon Changes in Capitalization. The existence of
this Option will not affect in any way the right or power of the Company to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the Common Stock or tile rights
thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise. If
the Company will effect a subdivision or consolidation of shares or other
capital readjustment, the payment of a stock dividend, or other increase or
reduction of the number of shares of the Common Stock outstanding, without
receiving compensation therefor in money, services or property, then the number,
class, and per share price of shares of stock subject to this Option will be
appropriately adjusted in such a manner as to entitle the Optionee to receive
upon exercise of this Option, for the same aggregate cash consideration, the
same total number and class of shares that the owner of an equal number of
outstanding shares of Common Stock would own as a result of the event requiring
the adjustment. Except as hereinbefore expressly provided, the issue
by the Company of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
therefor, or upon conversion of shares of obligations of the Company convertible
into such shares or other securities, will not affect, and no adjustment by
reason thereof will be made with respect to, the number or price of shares of
Common Stock then subject to this Option.
Section
7. Effect of
Certain Transactions. If the Company is
a party to a merger or reorganization with one or more other corporations,
whether or not the Company is the surviving or resulting corporation, or if the
Company consolidates with or into one or more other corporations, or if the
Company is liquidated, or if there is a sale or other disposition of
substantially all of the Company's capital stock or assets to a third party or
parties (each hereinafter referred to as a "Transaction"), in any case while
this Option remains outstanding: (a) subject to the provisions of clause (b)
below, after the effective date of such Transaction this Option will remain
outstanding and will be exercisable in shares of Common Stock or, if applicable,
shares of such stock or other securities, cash or property as the Optionee’s of
shares of Common Stock received pursuant to the terms of such Transaction; or
(b) the time for exercise of this Option will be accelerated so that this Option
will be fully exercisable on or prior to the effective date of such Transaction;
provided that (x) notice of such acceleration will be given to the Optionee, (y)
the Optionee will have the right to exercise this Option in part or in full
prior to the effective date of such Transaction, and (z) to the extent not
so exercised, this Option will be canceled prior to or as of such effective
date.
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Section
8. Rights of
Optionee. No person will,
by virtue of the sale of this Option to the Optionee, be deemed to be a holder
of any shares purchasable under this Option or to be entitled to the rights or
privileges of a holder of such shares unless and until this Option has been
exercised with respect to such shares and they have been issued pursuant to that
exercise of this Option. The sale of this Option will not impose upon
the Company any obligation to continue Optionee’s employment as its President
and the right of the Company to terminate Optionee’s employment with the Company
will not be diminished or affected by reason of the fact that this Option has
been sold to the Optionee. Nothing herein contained will impose any
obligation upon the Optionee to exercise this Option.
Section
9. Escrow of
Shares. The Optionor
shall place the Option shares in escrow, with Sichenzia Xxxx Xxxxxxxx Xxxxxxx
LLP, serving as the escrow agent.
Section
10. Dividend
Restriction. During the first 12 months from the Effective
Date of this Option, Optionee shall not be entitled to dividend rights, with
respect to the Option Shares. In addition, the Optionee shall not be
entitled to receive any dividends declared by the Company to the extent that the
Option has not been exercised.
Section
11. Transfer
and Termination. Optionee may not sell,
pledge, assign, hypothecate, transfer, or otherwise dispose of all or any
portion of the Option other than by will or the laws of descent and
distribution.
Section
12. Tax
Withholding. To the extent
that the exercise of the Option gives rise to an obligation on the part of the
Optionor to withhold income tax from amounts otherwise to be paid to Optionee,
the Optionor shall do so on such terms and in accordance with such procedures as
may be required under applicable law.
SECTION
13. MISCELLANEOUS.
(a) Notices. All notices
permitted or required by this Agreement shall be in writing and shall be deemed
to be delivered and received (i) when personally delivered, or (ii) on the day
on which sent by facsimile, electronic mail, or other similar device generating
a receipt evidencing a successful transmission (provided that on that same
date a copy of the notice is deposited in the United States mail,
first-class-certified mail, postage prepaid), or (iii) on the second (2nd)
business day after the day on which deposited in the United States mail,
first-class-certified mail, postage prepaid, transmitted or addressed to the
person for whom intended, at the facsimile number, email address, or mailing
address appearing at the end of this Agreement, or such other facsimile number,
email address, or mailing address, notice of which is given in the manner
contemplated by this Section 12(a).
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(b) No
Employment Rights. Neither the sale
of the Option evidenced by this Agreement, nor any other action taken by the
Optionor in connection therewith, are intended or shall be construed as giving
to Optionee any right to be retained as an employee of the Company for any
period of time or to restrict in any manner the right and power of the Company
to terminate Optionee’s employment by the Company.
(c) Governing
Law. This Option shall
be governed by the laws of the State of California.
(d) Governmental
and Other Regulations Governing Law. The Option is
subject to all laws, regulations and orders of any governmental authority which
may be applicable thereto and, notwithstanding any of the provisions hereof, the
Optionee agrees that he will not exercise the Option sold hereby nor will the
Optionor be obligated to transfer any shares of stock hereunder if the exercise
thereof or the transfer of such shares, as the case may be, would constitute a
violation by the Optionee or the Optionor of any such law, regulation or order
or any provision thereof. The Optionor will not be obligated to take
any affirmative action in order to cause the exercise of this Option or the
issuance of shares pursuant hereto to comply with any such law, regulation,
order or provision.
(Signatures
appear on following page.)
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IN WITNESS WHEREOF, the
parties have executed this Option, or caused this Agreement to be executed as of
the Effective Date.
| “OPTIONOR:” | “OPTIONEE:” | |||
| Xxxxx XxXxxxx | Xxxxx X. Xxxxx | |||
|
/s/
Xxxxx
XxXxxxx
|
/s/ Xxxxx X. Xxxxx | |||
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Address
and Facsimile No. for Notices:
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Address
and Facsimile No. for Notices:
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| Email: xx@xxxxxxxxxxxxxx.xxx | Email: xxxxx@xxxxxxxxxxxxxx.xxx | |||
|
Facsimile
No: ____________________
|
Facsimile No: ____________________ |
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