NONSTATUTORY STOCK OPTION AGREEMENT
Exhibit
10.1
THIS
NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is made and entered into as of
the date set forth below, by and between HepaLife Technologies, Inc., a Florida
corporation (the “Company”), and the following Director of the Company
(“Optionee”):
In
consideration of the covenants herein set forth, the parties hereto agree as
follows:
1. Option
Information.
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(a) Date
of Option:
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September
12, 2008
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(b) Optionee
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Xxxxxxxx
X. Xxxxxx
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(c) Number
of Shares:
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50,000
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(d) Exercise
Price:
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$0.26
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2. Acknowledgements.
(a) Optionee
is a director of the Company.
(b) The
Board of Directors (the “Board” which term shall include an authorized committee
of the Board of Directors) and shareholders of the Company have heretofore
adopted a 2001 Incentive Stock Plan (the “Plan”), pursuant to which this Option
is being granted; and
(c) The
Board has authorized the granting to Optionee of a nonstatutory stock option
(“Option”) to purchase shares of common stock of the Company (“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.
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 Stock set forth in Section 1(c) above (the “Shares”) for cash (or
other consideration as is authorized under the Plan and acceptable to the Board,
in their sole and absolute discretion) at the price per Share set forth in
Section 1(d) above (the “Exercise Price”), such price being not less than [e.g.,
85%] of the fair market value per share of the Shares covered by this Option as
of the date hereof.
4. Term of Option; Continuation
of Service. This Option shall expire, and all rights hereunder
to purchase the Shares shall terminate 10 years from the date hereof. Nothing
contained herein shall be construed to interfere in any way with the right of
the Company or its shareholders to remove or not elect Optionee as a Director of
the Company, or to increase or decrease the compensation of Directors from the
rate in effect at the date hereof.
5. Vesting of
Option. Subject to the provisions of Sections 7 and 8 hereof,
this Option shall become exercisable during the term that Optionee serves as a
Director of the Company in five (5) equal annual installments of twenty percent
(20%) of the Shares covered by this Option, the first installment to be
exercisable on the first anniversary of the date of this Option, with an
additional twenty percent (20%) of such Shares becoming exercisable on each of
the four (4) successive anniversary dates. The installments shall be cumulative
(i.e., this option may be exercised, as to any or all shares covered by an
installment, at any time or times after an installment becomes exercisable and
until expiration or termination of this Option).
6. Exercise. This
Option shall be exercised by delivery to the Company of (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
hereto 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 consistent with the Plan) and (c) a written
investment representation as provided for in Section 13 hereof. This Option
shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and shall be exercisable only by Optionee during his
or her lifetime.
7. Termination of
Service. If Optionee shall cease to serve as a Director of the
Company for any reason, no further installments shall vest pursuant to Section
5, and the maximum number of Shares that Optionee may purchase pursuant hereto
shall be limited to the number of Shares that were vested as of the date
Optionee ceases to be a Director (to the nearest whole Share). Thereupon,
Optionee shall have the right to exercise this Option, at any time during the
remaining term hereof, to the extent, but only to the extent, that this Option
was exercisable as of the date Optionee ceases to be a Director; provided,
however, if Optionee is removed as a Director pursuant to the Florida
corporation law, the foregoing right to exercise shall automatically terminate
on the date Optionee ceases to be a Director as to all Shares covered by this
Option not exercised prior to termination. Unless earlier terminated, all rights
under this Option shall terminate in any event on the expiration date of this
Option as defined in Section 4 hereof.
8. Death of
Optionee. If the Optionee shall die while a Director of the
Company, Optionee’s personal representative or the person entitled to Optionee’s
rights hereunder may at any time within six (6) months after the date of
Optionee’s death, or during the remaining term of this Option, whichever is the
lesser, exercise this Option and purchase Shares to the extent, but only to the
extent, that Optionee could have exercised this Option as of the date of
Optionee’s death; provided, in any case, that this Option may be so exercised
only to the extent that this Option has not previously been exercised by
Optionee.
9. No Rights as
Shareholder. Optionee shall have no rights as a shareholder
with respect to the Shares covered by any installment of this Option until the
effective date of issuance of the 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 hereof.
10. Recapitalization. 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 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
having been “effected without receipt of consideration by the
Company”.
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 such proposed action, unless otherwise provided by
the Board; provided, however, if Optionee shall be a Director at the time such
Reorganization is approved by the stockholders, Optionee shall have the right to
exercise this Option as to all or any part of the Shares, without regard to the
installment provisions of Section 5, for a period beginning 30 days prior to the
consummation of such Reorganization and ending as of the Reorganization or the
expiration of this Option, whichever is earlier, subject to the consummation of
the Reorganization. In any event, the Company shall notify Optionee, at least 30
days prior to the consummation of such Reorganization, of his exercise rights,
if any, and that the Option shall terminate upon the consummation of the
Reorganization.
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 such
merger or consolidation, and the installment provisions of Section 5 shall
continue to apply.
In the
event of a change in the shares of the Company as presently constituted, which
is limited to a change of all of its authorized Stock without par value into the
same number of shares of Stock with a par value, the shares resulting from any
such change shall be deemed to be the Shares within the meaning of this
Option.
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 hereinbefore
expressly provided, Optionee shall have no rights by reason of any subdivision
or consolidation of shares of 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.
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.
11. 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. Withholding for federal or
state income and employment tax purposes will be made, if and as required by
law, from Optionee’s then current compensation, or, if such current compensation
is insufficient to satisfy withholding tax liability, the Company may require
Optionee to make a cash payment to cover such liability as a condition of the
exercise of this Option.
12. Modification, Extension and
Renewal of Options. The Board or Committee, as described in
the Plan, may modify, extend or renew this Option or accept the surrender
thereof (to the extent not theretofore exercised) and authorize the granting of
a new option in substitution therefore (to the extent not theretofore
exercised), subject at all times to the Plan, the Code. Notwithstanding the
foregoing provisions of this Section 12, no modification shall, without the
consent of the Optionee, alter to the Optionee’s detriment or impair any rights
of Optionee hereunder.
13. 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 such exercise of this Option in whole or
in part, Optionee (or any person or persons entitled to exercise this Option
under the provisions of Sections 7 and 8 hereof) shall furnish to the Company a
written statement to such effect, satisfactory to the Company in form and
substance. If the Shares represented by this Option are registered under the
Securities Act, either before or after the exercise of this Option in whole or
in part, the Optionee shall be relieved of the foregoing investment
representation and agreement and shall not be required to furnish the Company
with the foregoing written statement.
(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, and to
obtain additional information reasonably necessary to verify the accuracy of
such information
(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 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.
THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN
NONSTATUTORY STOCK OPTION AGREEMENT DATED June 16, 2008 BETWEEN THE COMPANY AND
THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO
REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.
and/or
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.
14. 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 one
year following the effective date of registration of such offering.
15. Restriction Upon
Transfer. The Shares may not be sold, transferred or otherwise
disposed of and shall not be pledged or otherwise hypothecated by the Optionee
except as hereinafter provided.
(a) Repurchase Right on
Termination Other Than by Removal. For the purposes of this
Section, a “Repurchase Event” shall mean an occurrence of one of (i) termination
of Optionee’s service as a director; (ii) death of Optionee; (iii) bankruptcy of
Optionee, which shall be deemed to have occurred as of the date on which a
voluntary or involuntary petition in bankruptcy is filed with a court of
competent jurisdiction; (iv) dissolution of the marriage of Optionee, to the
extent that any of the Shares are allocated as the sole and separate property of
Optionee’s spouse pursuant thereto (in which case, this Section shall only apply
to the Shares so affected); or (v) any attempted transfer by the Optionee of
Shares, or any interest therein, in violation of this Agreement. Upon the
occurrence of a Repurchase Event, and upon mutual agreement of the Company and
Optionee, the Company may repurchase all or any portion of the Shares of
Optionee at a price equal to the fair value of the Shares as of the date of the
Repurchase Event.
(b) Repurchase Right on
Removal. In the event Optionee is removed as a director “for
cause” or Optionee voluntarily resigns as a director prior to the date upon
which the last installment of Shares becomes exercisable pursuant to Section 5,
then the Company shall have the right (but not an obligation) to repurchase
Shares of Optionee at a price equal to the Exercise Price. Such right of the
Company to repurchase Shares shall apply to 100% of the Shares for one (1) year
from the date of this Agreement; and shall thereafter lapse ratably in equal
annual increments on each anniversary of the date of this Agreement over the
term of this Option specified in Section 4. In addition, the Company shall have
the right, in the sole discretion of the Board and without obligation, to
repurchase upon removal or resignation all or any portion of the Shares of
Optionee, at a price equal to the fair value of the Shares as of the date of
such removal or resignation, which right is not subject to the foregoing lapsing
of rights. In the event the Company elects to repurchase the Shares, the stock
certificates representing the same shall forthwith be returned to the Company
for cancellation.
(c) Exercise of Repurchase
Right. Any Repurchase Right under Paragraphs 15(a) or 15(b)
shall be exercised by giving notice of exercise as provided herein to Optionee
or the estate of Optionee, as applicable. Such right shall be exercised, and the
repurchase price thereunder shall be paid, by the Company within a ninety (90)
day period beginning on the date of notice to the Company of the occurrence of
such Repurchase Event (except in the case of termination or cessation of
services as director, where such option period shall begin upon the occurrence
of the Repurchase Event). Such repurchase price shall be payable only in the
form of cash (including a check drafted on immediately available funds) or
cancellation of purchase money indebtedness of the Optionee for the Shares. If
the Company can not purchase all such Shares because it is unable to meet the
financial tests set forth in the Florida corporation law, the Company shall have
the right to purchase as many Shares as it is permitted to purchase under such
sections. Any Shares not purchased by the Company hereunder shall no longer be
subject to the provisions of this Section 15.
(d) Right of First
Refusal. In the event Optionee desires to transfer any Shares
during his or her lifetime, Optionee shall first offer to sell such Shares to
the Company. Optionee shall deliver to the Company written notice of the
intended sale, such notice to specify the number of Shares to be sold, the
proposed purchase price and terms of payment, and grant the Company an option
for a period of thirty days following receipt of such notice to purchase the
offered Shares upon the same terms and conditions. To exercise such option, the
Company shall give notice of that fact to Optionee within the thirty (30) day
notice period and agree to pay the purchase price in the manner provided in the
notice. If the Company does not purchase all of the Shares so offered during
foregoing option period, Optionee shall be under no obligation to sell any of
the offered Shares to the Company, but may dispose of such Shares in any lawful
manner during a period of one hundred and eighty (180) days following the end of
such notice period, except that Optionee shall not sell any such Shares to any
other person at a lower price or upon more favorable terms than those offered to
the Company.
(e) Acceptance of
Restrictions. Acceptance of the Shares shall constitute the
Optionee’s agreement to such restrictions and the legending of his certificates
with respect thereto. Notwithstanding such restrictions, however, so long as the
Optionee is the holder of the Shares, or any portion thereof, he shall be
entitled to receive all dividends declared on and to vote the Shares and to all
other rights of a shareholder with respect thereto.
(f) Permitted
Transfers. Notwithstanding any provisions in this Section 15
to the contrary, the Optionee may transfer Shares subject to this Agreement to
his or her parents, spouse, children, or grandchildren, or a trust for the
benefit of the Optionee or any such transferee(s); provided, that such permitted
transferee(s) shall hold the Shares subject to all the provisions of this
Agreement (all references to the Optionee herein shall in such cases refer
mutatis mutandis to the permitted transferee, except in the case of clause (iv)
of Section 15(a) wherein the permitted transfer shall be deemed to be
rescinded); and provided further, that notwithstanding any other provisions in
this Agreement, a permitted transferee may not, in turn, make permitted
transfers without the written consent of the Optionee and the
Company.
(g) Release of Restrictions on
Shares. All other restrictions under this Section 15 shall
terminate five (5) years following the date of this Agreement, or when the
Company’s securities are publicly traded, whichever occurs earlier.
16. 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, five (5) 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.
17. Agreement Subject to Plan;
Applicable Law. This Option is made pursuant to the Plan and
shall be interpreted to comply therewith. A copy of such Plan is available to
Optionee, at no charge, at the principal office of the Company. Any provision of
this Option inconsistent with the Plan shall be considered void and replaced
with the applicable provision of the Plan. This Option has been granted,
executed and delivered in the State of Florida, and the interpretation and
enforcement shall be governed by the laws thereof and subject to the exclusive
jurisdiction of the courts therein.
[SIGNATURES
APPEAR ON NEXT PAGE]
IN
WITNESS WHEREOF, the parties hereto have executed this Option as of the date
first above written.
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HepaLife
Technologies, Inc.
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By:
/s/ Xxxxx
Xxxxxxx
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Xxxxx
Xxxxxxx, President & CEO
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By:
/s/ Xxxxxxxx X.
Xxxxxx
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Xxxxxxxx
X. Xxxxxx, Optionee
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(One of
the following, as appropriate, shall be signed):
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I
certify that as of the date
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By
his or her signature, the
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Hereof I
am unmarried
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spouse
of Optionee hereby agrees
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to
be bound by the provisions of
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the
foregoing NONSTATUTORY STOCK
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OPTION
AGREEMENT
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____________________________
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/s/ Xxxxxx
Xxxxxx
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Optionee
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Xxxxxx
Xxxxxx, Spouse of Optionee
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