ECHO THERAPEUTICS, INC. NONQUALIFIED STOCK OPTION AGREEMENT
Exhibit 10.1
This NONQUALIFIED STOCK OPTION AGREEMENT (the “Option Agreement”), dated as of the 25th day of
March, 2008 (the “Grant Date”), is between Echo Therapeutics, Inc., a Minnesota corporation (the
“Company”), and Xxxxxxx X. Xxxxxxx (the “Optionee”), a director of the Company.
WHEREAS, the Company desires to give the Optionee the opportunity to purchase shares of common
stock of the Company (“Common Stock”) as hereinafter provided;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other
good and valuable consideration, the parties hereto, intending to be legally bound hereby, agree as
follows:
1. Grant of Option. The Company hereby grants to the Optionee the right and option
(the “Option”) to purchase all or any part of an aggregate of 50,000 shares of Common Stock. The
Option is in all respects limited and conditioned as hereinafter provided. It is intended that the
Option granted hereunder be a nonqualified stock option (“NQSO”) and not an incentive stock
option (“ISO”) as such term is defined in section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”).
2. Exercise Price. The exercise price of the shares of Common Stock covered by this
Option shall be $1.55 per share. It is the determination of the Board of Directors of the Company
(the “Board”) that on the Grant Date the exercise price was not less than the greater of (i) 100%
of the “Fair Market Value,” or (ii) the par value of the Common Stock. The term “Fair Market
Value” for purposes of this Option Agreement means the closing price of a share of Common Stock on
the trading day before the Grant Date.
3. Term. Except as otherwise provided in Paragraph 8 or Paragraph 12, this Option
shall expire on March 25, 2018 (the “Expiration Date”), which date is not more than 10 years from
the Grant Date. This Option shall not be exercisable on or after the Expiration Date.
4. Exercise of Option. The Optionee shall have the right to purchase from the
Company, on and after the following dates, the following number of Shares:
| Date Installment Becomes | ||||
| Exercisable | Number of Option Shares | |||
Grant Date |
16,667 Shares | |||
March 25, 2009 |
16,667 Shares | |||
March 25, 2010 |
16,666 Shares | |||
Once options become exercisable, they will remain exercisable until they are exercised or until
they terminate.
5. Method of Exercising Option. Subject to the terms and conditions of this Option
Agreement, the Option may be exercised by written notice to the Company at its principal office,
which is presently located at 00 Xxxxx Xxxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000, Attn: Chief
Executive Officer. Such notice (a suggested form of which is attached hereto) shall state the
election to exercise the Option and the number of whole shares with respect to which it is being
exercised; shall be signed by the person or persons so exercising the Option; shall, unless the
Company otherwise notifies the Optionee, be accompanied by the investment certificate referred to
in Paragraph 6; and shall be accompanied by payment of the full exercise price of such shares.
Only full shares will be issued.
The exercise price shall be paid to the Company –
(a) in cash, or by certified check, bank draft, or postal or express money order;
(b) through the delivery of shares of Common Stock which shall be valued at the closing sale
price of the Common Stock on the date of exercise (“Exercise Fair Market Value”);
(c) by having the Company withhold shares of Common Stock at the Exercise Fair Market Value on
the date of exercise;
(d) by delivering a properly executed notice of exercise of the Option to the Company and a
broker, with irrevocable instructions to the broker promptly to deliver to the Company the amount
of sale or loan proceeds necessary to pay the exercise price of the Option; or
(e) in any combination of (a), (b), (c) or (d) above.
In the event the exercise price is paid, in whole or in part, with shares of Common Stock, the
portion of the exercise price so paid shall be equal to the Exercise Fair Market Value of the
Common Stock surrendered.
Upon receipt of notice of exercise and payment, the Company shall deliver a certificate or
certificates representing the shares with respect to which the Option is so exercised. Such
certificate(s) shall be registered in the name of the person or persons so exercising the
Option (or, if the Option is exercised by the Optionee and if the Optionee so requests in the
notice exercising the Option, shall be registered in the name of the Optionee and the Optionee’s
spouse, jointly, with right of survivorship) and shall be delivered as provided above to, or upon
the written order of, the person or persons exercising the Option. In the event the Option is
exercised by any person or persons after the death or disability of the Optionee, the notice shall
be accompanied by appropriate proof of the right of such person or persons to exercise the Option.
All shares that are purchased upon the exercise of the Option as provided herein shall be fully
paid and non-assessable.
6. Shares to be Purchased for Investment. Unless the Company has theretofore notified
the Optionee that a registration statement covering the shares to be acquired upon the exercise of
the Option has become effective under the Securities Act of 1933, as amended (the “1933 Act”), and
the Company has not thereafter notified the Optionee that such registration statement is no longer
effective, it shall be a condition to any exercise of this Option that the shares acquired upon
such exercise be acquired for investment and not with a view to distribution, and the person
effecting such exercise shall submit to the Company a certificate of such investment intent,
together with such other evidence supporting the same as the Company may request. The Company
shall be entitled to restrict the transferability of the shares issued upon any such exercise to
the extent necessary to avoid a risk of violation of the 1933 Act (or of any rules or regulations
promulgated thereunder), or of any state laws or regulations. Such restrictions may, in the
discretion of the Company, be noted or set forth in full on the share certificates.
7. Transferability of Option. This Option is not assignable or transferable, in whole
or in part, by the Optionee other than by will or by the laws of descent and distribution. During
the lifetime of the Optionee, the Option shall be exercisable only by the Optionee or, in the event
of his or her disability, by his or her guardian or legal representative.
8. Termination of Service. If the Optionee’s service with the Company is terminated
for any reason prior to the Expiration Date, this Option may be exercised, to the extent of the
number of shares with respect to which the Optionee could have exercised it on the date of such
termination of service, or to any greater extent permitted by the Company, by the Optionee at any
time prior to the earlier of (i) the Expiration Date, or (ii) six months after the date of such
termination of service.
9. Withholding of Taxes. The obligation of the Company to deliver shares of Common
Stock upon the exercise of this Option shall be subject to applicable federal, state and local tax
withholding requirements. If the exercise of the Option is subject to the withholding requirements
of applicable federal, state and/or local tax law, the Optionee, subject to such additional
withholding rules (the “Withholding Rules”) as shall be adopted by the Company, may satisfy the
withholding tax, in whole or in part, by electing to have the Company withhold (or by returning to
the Company) shares of Common Stock, which shares shall be valued, for this purpose, at their Fair
Market Value on the date the amount attributable to the exercise of the Option is includable in
income by the Optionee under section 83 of the Code. Such election must be made in compliance with
and subject to the Withholding Rules, and the Company may
limit the number of withheld shares to the extent necessary to avoid adverse accounting
consequences.
10. Change in Control. Notwithstanding any other Paragraph of this Option Agreement,
each outstanding Option shall become fully vested and exercisable upon a “Change in Control” (as
defined below). However, this Paragraph shall not increase the extent to which an Option is vested
or exercisable if the Optionee’s termination of service occurs prior to the Change in Control.
“Change in Control” means the date on which occurs a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, combination or exchange of shares, spin-off,
split-up, or other similar change in capitalization or event in which the stockholders of the
Company immediately prior to the transaction own less than 50% of the Company’s outstanding shares
immediately after such transaction.
11. Adjustment in Case of Changes in Common Stock. The maximum number of shares with
respect to which Options may be granted under this Agreement, and the number of shares issuable
upon the exercise of outstanding Options under this Agreement (Paragraph 4), as well as the option
price per share of such outstanding Options (Paragraph 2), shall be adjusted, as may be deemed
appropriate by the Company, to reflect any stock dividend, stock split, spin-off, share combination
or similar change in the capitalization of the Company. In the event any such change in
capitalization cannot be reflected in a straight mathematical adjustment of the number of shares
issuable upon the exercise of outstanding Options (and a straight mathematical adjustment of the
exercise price thereof), the Committee shall make such adjustments as are appropriate to reflect
most nearly such straight mathematical adjustment. Such adjustments shall be made only as
necessary to maintain the proportionate interest of Optionees, and preserve, without exceeding, the
value of Options.
12. Certain Corporate Transactions. In the event of a corporate transaction (such as,
for example, a merger, consolidation, acquisition of property or stock, separation, reorganization
or liquidation), the surviving or successor corporation shall assume each outstanding Option or
substitute a new option for each outstanding Option; provided, however, that, in the event of a
proposed corporate transaction, the Company may terminate all or a portion of the outstanding
Options, effective upon the closing of the corporate transaction, if it determines that such
termination is in the best interests of the Company. If the Company decides so to terminate
outstanding Options, the Company shall give the Optionee not less than seven days’ notice prior to
any such termination, and any Option which is to be so terminated may be exercised (if and only to
the extent that it is then exercisable, but taking into consideration the full vesting that occurs
under Paragraph 10 if the transaction constitutes a Change in Control) up to, and including the
time of, such termination. Further, the Company, in its discretion, may accelerate, in whole or in
part, the date on which any or all Options become exercisable. The Company also may, in its
discretion, change the terms of any outstanding Option to reflect any such corporate transaction.
13. Governing Law. This Option Agreement shall be governed by the applicable Code
provisions to the maximum extent possible. Otherwise, the laws of the State of Minnesota (without
reference to the principles of conflict of laws) shall govern the operation of, and the rights of
the Optionee under, this Option Agreement.
IN WITNESS WHEREOF, the Company has caused this Option Agreement to be duly executed by its
duly authorized officer and the Optionee has hereunto set his hand and seal, all as of the day and
year first above written.
| ECHO THERAPEUTICS, INC. |
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| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Xxxxx X. Xxxxxxxx | ||||
| Chief Operating Officer and Chief Financial Officer |
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| /s/ Xxxxxxx X. Xxxxxxx | ||||
| Optionee | ||||
ECHO THERAPEUTICS, INC.
Notice of Exercise of Nonqualified Stock Option
Notice of Exercise of Nonqualified Stock Option
I hereby exercise the nonqualified stock option granted to me pursuant to the Nonqualified
Stock Option Agreement, dated as of March, 25 2008 by Echo Therapeutics, Inc. (the “Company”), with
respect to the following number of shares of the Company’s common stock (“Shares”), par value $.01
per Share, covered by said option:
| Number of Shares to be purchased | ||||||||||
| Exercise price per Share | $ | |||||||||
| Total exercise price | $ | |||||||||
| A. | Enclosed is cash or my certified check, bank draft, or postal or express money order in the amount of $ in full/partial [circle one] payment for such Shares; |
and/or
| B. | Enclosed is/are Share(s) with a total Exercise Fair Market Value of $ on the date hereof in full/partial [circle one] payment for such Shares; |
and/or
| C. | Please withhold Shares with a total Exercise Fair Market Value of $ on the date hereof in full/partial [circle one] payment for such Shares; |
and/or
D. I have provided notice to [insert name of broker], a
broker, who will render full/partial [circle one] payment for such Shares. [Optionee should attach
to the notice of exercise provided to such broker a copy of this Notice of Exercise and irrevocable
instructions to pay to the Company the full exercise price for the number of Shares purchased in
this method.]
Please have the certificate or certificates representing the purchased Shares registered in
the following name or names* and sent to:
| * | Certificates may be registered in the name of the Optionee alone or in the joint names (with right of survivorship) of the Optionee and his or her spouse. |
If the condition in Paragraph 6 (“Shares to be Purchased for Investment”) of the Nonqualified
Stock Option Agreement related to the Shares purchased hereby is applicable, the undersigned hereby
certifies that the Shares purchased hereby are being acquired for investment and not with a view to
the distribution of such Shares.
DATED: |
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