ECO SOIL SYSTEMS, INC.
NON STATUTORY STOCK OPTION AGREEMENT
The Company has granted to the Optionee, pursuant to a Notice of Grant
of Stock Options (the "GRANT AGREEMENT") an option to purchase certain shares
of Stock, upon the terms and conditions set forth in this Option Agreement
(the "OPTION"). The Option shall in all respects be subject to the terms and
conditions of the Grant Agreement, the provisions of which are incorporated
herein by reference.
1. DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. Unless otherwise defined herein, capitalized terms
shall have the meanings assigned to such terms in the Grant Agreement.
1.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of this Option Agreement. Except when otherwise indicated by the
context, the singular shall include the plural and the plural shall include
the singular. Use of the term "or" is not intended to be exclusive, unless
the context clearly requires otherwise.
2. TAX STATUS OF OPTION. As indicated in the Grant Agreement, this
Option is intended to be a Nonstatutory Stock Option and is not intended to
be an incentive stock option within the meaning of Section 422(b) of the
Code. The Optionee should consult with the Optionee's own tax advisor
regarding the tax effects of this Option.
3. ADMINISTRATION. All questions of interpretation concerning this
Option Agreement shall be determined by the Board. All determinations by the
Board shall be final and binding upon all persons having an interest in the
Option. Any officer of the Company or its subsidiaries (collectively, a
"Participating Company" and collectively, the "Participating Company Group")
shall have the authority to act on behalf of the Company with respect to any
matter, right, obligation, or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, or election.
4. EXERCISE OF THE OPTION.
4.1 RIGHT TO EXERCISE. Except as otherwise provided herein, the
Option shall be exercisable in accordance with the terms of the Grant
Agreement prior to the termination of the Option (as provided in Section 6)
in an amount not to exceed the number of vested Option shares. In no event
shall the Option be exercisable for more shares than the Number of Option
Shares.
4.2 METHOD OF EXERCISE. Exercise of the Option shall be by written
notice to the Company which must state the election to exercise the Option,
the number of whole shares of
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Stock for which the Option is being exercised and such other representations
and agreements as to the Optionee's investment intent with respect to such
shares as may be required pursuant to the provisions of this Option
Agreement. The written notice must be signed by the Optionee and must be
delivered in person, by certified or registered mail, return receipt
requested, by confirmed facsimile transmission, or by such other means as the
Company may permit, to the Stock Option Plan Administrator of the Company, or
other authorized representative of the Participating Company Group, prior to
the termination of the Option as set forth in Section 6, accompanied by full
payment of the aggregate Exercise Price for the number of shares of Stock
being purchased. The Option shall be deemed to be exercised upon receipt by
the Company of such written notice and the aggregate Exercise Price.
4.3 PAYMENT OF EXERCISE PRICE.
(a) FORMS OF CONSIDERATION AUTHORIZED. Except as otherwise
provided below, payment of the aggregate Exercise Price for the number of
shares of Stock for which the Option is being exercised shall be made (i) in
cash, by check, or cash equivalent, (ii) by tender to the Company, or
attestation to the ownership, of whole shares of Stock owned by the Optionee
having a Fair Market Value (as determined by the Company without regard to
any restrictions on transferability applicable to such stock by reason of
federal or state securities laws or agreements with an underwriter for the
Company) not less than the aggregate Exercise Price, (iii) by means of a
Cashless Exercise, as defined in Section 4.3(c), or (iv) by any combination
of the foregoing.
(b) TENDER OF STOCK. Notwithstanding the foregoing, the Option
may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock to the extent such tender, or attestation to
the ownership, of Stock would constitute a violation of the provisions of any
law, regulation or agreement restricting the redemption of the Company's
stock. The Option may not be exercised by tender to the Company, or
attestation to the ownership, of shares of Stock unless such shares either
have been owned by the Optionee for more than six (6) months or were not
acquired, directly or indirectly, from the Company.
(c) CASHLESS EXERCISE. A "CASHLESS EXERCISE" means the
assignment in a form acceptable to the Company of the proceeds of a sale or
loan with respect to some or all of the shares of Stock acquired upon the
exercise of the Option pursuant to a program or procedure approved by the
Company (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board
of Governors of the Federal Reserve System). The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
decline to approve or terminate any such program or procedure.
4.4 TAX WITHHOLDING. At the time the Option is exercised, in whole
or in part, or at any time thereafter as requested by the Company, the
Optionee hereby authorizes withholding from payroll and any other amounts
payable to the Optionee, and otherwise agrees to make adequate provision for
(including by means of a Cashless Exercise to the extent permitted by the
Company), any sums required to satisfy the federal, state, local and foreign
tax
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withholding obligations of the Participating Company Group, if any, which
arise in connection with the Option, including, without limitation,
obligations arising upon (i) the exercise, in whole or in part, of the
Option, (ii) the transfer, in whole or in part, of any shares acquired upon
exercise of the Option, (iii) the operation of any law or regulation
providing for the imputation of interest, or (iv) the lapsing of any
restriction with respect to any shares acquired upon exercise of the Option.
The Optionee is cautioned that the Option is not exercisable unless the tax
withholding obligations of the Participating Company Group are satisfied.
Accordingly, the Optionee may not be able to exercise the Option when desired
even though the Option is vested, and the Company shall have no obligation to
issue a certificate for such shares.
4.5 CERTIFICATE REGISTRATION. Except in the event the Exercise Price
is paid by means of a Cashless Exercise, the certificate for the shares as to
which the Option is exercised shall be registered in the name of the
Optionee, or, if applicable, in the names of the heirs of the Optionee.
4.6 RESTRICTIONS ON GRANT OF THE OPTION AND ISSUANCE OF SHARES. The
grant of the Option and the issuance of shares of Stock upon exercise of the
Option shall be subject to compliance with all applicable requirements of
federal, state or foreign law with respect to such securities. The Option may
not be exercised if the issuance of shares of Stock upon exercise would
constitute a violation of any applicable federal, state or foreign securities
laws or other law or regulations or the requirements of any stock exchange or
market system upon which the Stock may then be listed. In addition, the
Option may not be exercised unless (i) a registration statement under the
Securities Act shall at the time of exercise of the Option be in effect with
respect to the shares issuable upon exercise of the Option or (ii) in the
opinion of legal counsel to the Company, the shares issuable upon exercise of
the Option may be issued in accordance with the terms of an applicable
exemption from the registration requirements of the Securities Act. THE
OPTIONEE IS CAUTIONED THAT THE OPTION MAY NOT BE EXERCISED UNLESS THE
FOREGOING CONDITIONS ARE SATISFIED. ACCORDINGLY, THE OPTIONEE MAY NOT BE ABLE
TO EXERCISE THE OPTION WHEN DESIRED EVEN THOUGH THE OPTION IS VESTED. The
inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company's legal counsel to
be necessary to the lawful issuance and sale of any shares subject to the
Option shall relieve the Company of any liability in respect of the failure
to issue or sell such shares as to which such requisite authority shall not
have been obtained. As a condition to the exercise of the Option, the Company
may require the Optionee to satisfy any qualifications that may be necessary
or appropriate, to evidence compliance with any applicable law or regulation
and to make any representation or warranty with respect thereto as may be
requested by the Company.
4.7 FRACTIONAL SHARES. The Company shall not be required to issue
fractional shares upon the exercise of the Option.
5. NONTRANSFERABILITY OF THE OPTION. The Option may be exercised during
the lifetime of the Optionee only by the Optionee or the Optionee's guardian
or legal representative and may not be assigned or transferred in any manner
except by will or by the laws of descent and distribution. Following the
death of the Optionee, the Option, to the extent provided in
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Section 7, may be exercised by the Optionee's legal representative or by any
person empowered to do so under the deceased Optionee's will or under the
then applicable laws of descent and distribution.
6. TERMINATION OF THE OPTION. The Option shall terminate and may no
longer be exercised on the first to occur of (a) the Option Expiration Date
or (b) the last date for exercising the Option following termination of the
Optionee's Service as described in Section 7.
7. EFFECT OF TERMINATION OF SERVICE.
7.1 OPTION EXERCISABILITY.
(a) DISABILITY. If the Optionee's Service (whether as an
employee, consultant or director) with the Participating Company Group is
terminated because of the Disability of the Optionee, the Option, to the
extent unexercised and exercisable on the date on which the Optionee's
Service terminated, may be exercised by the Optionee (or the Optionee's
guardian or legal representative) at any time prior to the expiration of six
(6) months after the date on which the Optionee's Service terminated, but in
any event no later than the Option Expiration Date.
(b) DEATH. If the Optionee's Service with the Participating
Company Group is terminated because of the death of the Optionee, the Option,
to the extent unexercised and exercisable on the date on which the Optionee's
Service terminated, may be exercised by the Optionee's legal representative
or other person who acquired the right to exercise the Option by reason of
the Optionee's death at any time prior to the expiration of six (6) months
after the date on which the Optionee's Service terminated, but in any event
no later than the Option Expiration Date. The Optionee's Service shall be
deemed to have terminated on account of death if the Optionee dies within
thirty (30) days after the Optionee's termination of Service.
(c) OTHER TERMINATION OF SERVICE. If the Optionee's Service
with the Participating Company Group terminates for any reason, except
Disability or death, the Option, to the extent unexercised and exercisable by
the Optionee on the date on which the Optionee's Service terminated, may be
exercised by the Optionee within thirty (30) days (or such other longer
period of time as determined by the Board, in its sole discretion) after the
date on which the Optionee's Service terminated, but in any event no later
than the Option Expiration Date.
7.2 EXTENSION IF EXERCISE PREVENTED BY LAW. Notwithstanding the
foregoing, if the exercise of the Option within the applicable time periods
set forth in Section 7.1 is prevented by the provisions of Section 4.6, the
Option shall remain exercisable until one (1) month after the date the
Optionee is notified by the Company that the Option is exercisable, but in
any event no later than the Option Expiration Date. The Company makes no
representation as to the tax consequences of any such delayed exercise. The
Optionee should consult with the Optionee's own tax advisor as to the tax
consequences of any such delayed exercise.
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7.3 EXTENSION IF OPTIONEE SUBJECT TO SECTION 16(b). Notwithstanding
the foregoing, if a sale within the applicable time periods set forth in
Section 7.1 of shares acquired upon the exercise of the Option would subject
the Optionee to suit under Section 16(b) of the Exchange Act, the Option
shall remain exercisable until the earliest to occur of (i) the tenth (10th)
day following the date on which a sale of such shares by the Optionee would
no longer be subject to such suit, (ii) the one hundred and ninetieth (190th)
day after the Optionee's termination of Service, or (iii) the Option
Expiration Date. The Company makes no representation as to the tax
consequences of any such delayed exercise. The Optionee should consult with
the Optionee's own tax advisor as to the tax consequences of any such delayed
exercise.
8. TRANSFER OF CONTROL.
8.1 DEFINITIONS.
(a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have
occurred if any of the following occurs with respect to the Company:
(i) the direct or indirect sale or exchange in a single or
series of related transactions by the shareholders of the Company of more
than fifty percent (50%) of the voting stock of the Company;
(ii) a merger or consolidation in which the Company is a
party;
(iii) the sale, exchange, or transfer of all or
substantially all of the assets of the Company; or
(iv) a liquidation or dissolution of the Company.
(b) A "TRANSFER OF CONTROL" shall mean an Ownership Change
Event or a series of related Ownership Change Events (collectively, the
"TRANSACTION") wherein the shareholders of the Company immediately before the
Transaction do not retain immediately after the Transaction, in substantially
the same proportions as their ownership of shares of the Company's voting
stock immediately before the Transaction, direct or indirect beneficial
ownership of more than fifty percent (50%) of the total combined voting power
of the outstanding voting stock of the Company or the corporation or
corporations to which the assets of the Company were transferred (the
"TRANSFEREE CORPORATION(S)"), as the case may be. For purposes of the
preceding sentence, indirect beneficial ownership shall include, without
limitation, an interest resulting from ownership of the voting stock of one
or more corporations which, as a result of the Transaction, own the Company
or the Transferee Corporation(s), as the case may be, either directly or
through one or more subsidiary corporations. The Board shall have the right
to determine whether multiple sales or exchanges of the voting stock of the
Company or multiple Ownership Change Events are related, and its
determination shall be final, binding and conclusive.
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8.2 EFFECT OF TRANSFER OF CONTROL ON OPTION. Notwithstanding
anything to the contrary contained in this Option Agreement or the Grant
Agreement, in the event of a Transfer of Control, subject to compliance with
applicable securities laws, this Option shall immediately accelerate in full
and shall become immediately exercisable as to all Shares underlying the
Option. All Shares acquired upon exercise of the Option subsequent to such
acceleration shall continue to be subject to all applicable provisions of
this Option Agreement.
9. ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
stock dividend, stock split, reverse stock split, recapitalization,
combination, reclassification, or similar change in the capital structure of
the Company, appropriate adjustments shall be made in the number, Exercise
Price and class of shares of stock subject to the Option. If a majority of
the shares which are of the same class as the shares that are subject to the
Option are exchanged for, converted into, or otherwise become (whether or not
pursuant to an Ownership Change Event) shares of another corporation (the
"NEW SHARES"), the Board may unilaterally amend the Option to provide that
the Option is exercisable for New Shares. In the event of any such amendment,
the Number of Option Shares and the Exercise Price shall be adjusted in a
fair and equitable manner, as determined by the Board, in its sole
discretion. Notwithstanding the foregoing, any fractional share resulting
from an adjustment pursuant to this Section 9 shall be rounded up or down to
the nearest whole number, as determined by the Board, and in no event may the
Exercise Price be decreased to an amount less than the par value, if any, of
the stock subject to the Option. The adjustments determined by the Board
pursuant to this Section 9 shall be final, binding and conclusive.
10. RIGHTS AS A SHAREHOLDER, EMPLOYEE OR CONSULTANT. The Optionee shall
have no rights as a shareholder with respect to any shares covered by the
Option until the date of the issuance of a certificate for the shares for
which the Option has been exercised (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 9. If the Optionee is an Employee, the
Optionee understands and acknowledges that, except as otherwise provided in a
separate, written employment agreement between a Participating Company and
the Optionee, the Optionee's employment is "at will" and is for no specified
term. Nothing in this Option Agreement shall confer upon the Optionee any
right to continue in the Service of a Participating Company or interfere in
any way with any right of the Participating Company Group to terminate the
Optionee's Service as an Employee or Consultant, as the case may be, at any
time.
11. LEGENDS. The Company may at any time place legends referencing any
applicable federal, state or foreign securities law restrictions on all
certificates representing shares of stock subject to the provisions of this
Option Agreement. The Optionee shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to the Option in the possession of the Optionee in order to carry
out the provisions of this Section. Unless otherwise specified by the
Company, legends placed on such certificates may include, but shall not be
limited to, the following:
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"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS
MADE IN ACCORDANCE WITH RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY
RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY
SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT."
12. PUBLIC OFFERING. The Optionee hereby agrees that in the event of any
underwritten public offering of stock, including an initial public offering
of stock, made by the Company pursuant to an effective registration statement
filed under the Securities Act, the Optionee shall not offer, sell, contract
to sell, pledge, hypothecate, grant any option to purchase or make any short
sale of, or otherwise dispose of any shares of stock of the Company or any
rights to acquire stock of the Company for such period of time from and after
the effective date of such registration statement as may be established by
the underwriter for such public offering; provided, however, that such period
of time shall not exceed one hundred eighty (180) days from the effective
date of the registration statement to be filed in connection with such public
offering. The foregoing limitation shall not apply to shares registered in
the public offering under the Securities Act. The Optionee shall be subject
to this Section provided and only if the officers and directors of the
Company are also subject to similar arrangements.
13. RESTRICTIONS ON TRANSFER OF SHARES. No shares acquired upon exercise
of the Option may be sold, exchanged, transferred (including, without
limitation, any transfer to a nominee or agent of the Optionee), assigned,
pledged, hypothecated or otherwise disposed of, including by operation of
law, in any manner which violates any of the provisions of this Option
Agreement and any such attempted disposition shall be void. The Company shall
not be required (a) to transfer on its books any shares which will have been
transferred in violation of any of the provisions set forth in this Option
Agreement or (b) to treat as owner of such shares or to accord the right to
vote as such owner or to pay dividends to any transferee to whom such shares
will have been so transferred.
14. BINDING EFFECT. Subject to the restrictions on transfer set forth
herein, this Option Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective heirs, executors,
administrators, successors and assigns.
15. TERMINATION OR AMENDMENT. The Board may terminate or amend this
Option at any time; provided, however, that no such termination or amendment
may adversely affect the Option or any unexercised portion hereof without the
consent of the Optionee unless such termination or amendment is necessary to
comply with any applicable law or government regulation. No amendment or
addition to this Option Agreement shall be effective unless in writing.
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16. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given (except to the extent that
this Option Agreement provides for effectiveness only upon actual receipt of
such notice) upon personal delivery or upon deposit in the United States Post
Office, by registered or certified mail, with postage and fees prepaid,
addressed to the other party at the address shown on the Grant Agreement or
at such other address as such party may designate in writing from time to
time to the other party.
17. INTEGRATED AGREEMENT. The Grant Agreement and this Option Agreement
constitute the entire understanding and agreement of the Optionee and the
Participating Company Group with respect to the subject matter contained
herein and therein and there are no agreements, understandings, restrictions,
representations, or warranties among the Optionee and the Participating
Company Group with respect to such subject matter other than those as set
forth or provided for herein or therein. To the extent contemplated herein or
therein, the provisions of the Grant Agreement and this Option Agreement
shall survive any exercise of the Option and shall remain in full force and
effect.
18. APPLICABLE LAW. This Option Agreement shall be governed by the laws
of the State of Delaware as such laws are applied to agreements between
Delaware residents entered into and to be performed entirely within the State
of Delaware.
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Optionee: ________________________
Date: ________________________
EXERCISE NOTICE
Eco Soil Systems, Inc.
___________________________
___________________________
Attention: Stock Option Plan Administrator
Ladies and Gentlemen:
1. EXERCISE OF OPTION. I was granted a nonstatutory stock option
(the "OPTION") to purchase shares of the common stock of Eco Soil Systems,
Inc. (the "COMPANY") on ___________________, 19___, pursuant to the Notice of
Grant of Stock Options dated __________________, 19___ and the related Stock
Option Agreement (together, the "OPTION AGREEMENT"). I hereby elect to
exercise the Option as to a total of __________________ shares of the common
stock of the Company (the "SHARES"), all of which have vested in accordance
with the Option Agreement.
2. PAYMENT. Enclosed herewith is full payment in the aggregate
amount of $_____________ (representing $_______ per share) for the Shares in
the manner set forth in the Option Agreement. I authorize payroll withholding
and otherwise will make adequate provision for foreign, federal and state tax
withholding obligations of the Company, if any.
3. BINDING EFFECT. I agree that the Shares are being acquired in
accordance with and subject to the terms, provisions and conditions of the
Option Agreement set forth therein, to all of which I hereby expressly
assent. This Agreement shall inure to the benefit of and be binding upon my
heirs, executors, administrators, successors and assigns.
4. TRANSFER. I am aware that Rule 144, promulgated under the
Securities Act of 1933, which permits limited public resale of securities
acquired in a nonpublic offering, is not currently available with respect to
the Shares and, in any event, is available only if certain conditions are
satisfied. I understand that any sale of the Shares that might be made in
reliance upon Rule 144 may only be made in limited amounts in accordance with
the terms and conditions of such rule and that a copy of Rule 144 will be
delivered to me upon request.
My address of record is:
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____________________________________________________________________
____________________________________________________________________
My Social Security Number is:
_____________________________________________
I understand that I am purchasing the Shares pursuant to the terms
of my Option Agreement, copies of which I have received and carefully read
and understand.
Very truly yours,
(Signature) ___________________________________
(Optionee's Name Printed) ___________________________________
Receipt of the above is hereby acknowledged.
ECO SOIL SYSTEMS, INC.
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
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