H2DIESEL HOLDINGS, INC. Stock Option Agreement
H2DIESEL
HOLDINGS, INC.
1. Grant
of Option.
In
accordance with and subject to the terms and conditions of this Stock Option
Agreement (the “Agreement”),
H2Diesel Holdings, Inc., a Florida corporation (the “Corporation”,
which
term shall include any entity which acquires, through merger, share exchange,
purchase of assets or otherwise, substantially all of the capital stock or
assets of the Corporation), grants to Xxxx X. Xxxxxxxxx (the “Optionee”)
a
nonqualified stock option (the “Option”)
to
purchase the number of shares (the “Option
Shares”)
of its
common stock, par value $.001 per share (“Common
Stock”),
set
forth on each of Schedule
1
and
Schedule
2
attached
hereto (collectively, the “Schedules”),
at
the initial option exercise price of $4.00 per share (such price, as it may
be
adjusted hereunder from time to time, the “Exercise
Price”).
Capitalized terms used but not otherwise defined herein shall have the meanings
set forth in the Employment Agreement between the Corporation and the Optionee,
as such agreement may be amended, supplemented, amended and restated or
otherwise modified from time to time.
2. Acceptance
by Optionee.
The
exercise of the Option or any portion thereof is conditioned upon acceptance
by
the Optionee of the terms and conditions of this Agreement, as evidenced by
the
Optionee’s execution and delivery of the Schedules to this Agreement to the
Corporation.
3. Vesting
of Option.
The
Options shall vest in the tranches as set forth in the Schedules and such vested
Options shall be exercisable in accordance with this Agreement.
4. Expiration
of Option.
The
Options shall expire on the expiration date set forth in the Schedules (the
“Expiration
Date”)
unless
earlier terminated as set forth in Section
6
below,
and may not be exercised after such date.
5. Conditions
to Exercise of Option.
Except
as otherwise set forth in Section
6,
the
Optionee may exercise the Option or any portion thereof to the extent then
vested at any time or from time to time during the period commencing on the
grant date set forth on the Schedules and ending on the Expiration Date. The
Option may be exercised only by the Optionee or, in the event of his death
or
incompetence, his personal representative or heirs, as the case may
be.
6. Termination
of Employment.
(a)
Upon termination of the Optionee’s employment by the Corporation or any of its
subsidiaries due to the death of the Optionee, any vested Options may be
exercised on or before the Expiration Date.
(b)
Upon
termination of the Optionee’s employment by the Corporation or any of its
subsidiaries due to a Disability, the next unvested tranche of performance
options set forth on Schedule
2
hereto
(the “Performance
Options”)
will
vest if the applicable Performance Targets are actually met and any vested
Options may be exercised on or before the Expiration Date.
(c)
Upon
termination of the Optionee’s employment by the Corporation or any of its
subsidiaries for Cause, any vested Option may be exercised at any time or from
time to time until and including the 30th day after such termination.
(d)
Subject to Section
6(e)
below,
upon termination of the Optionee’s employment by the Corporation or any of its
subsidiaries without Cause or for Good Reason, then all of the unvested time
based options set forth on Schedule
1
hereto
(the “Time
Based Options”)
will
vest and the next tranche of unvested Performance Options will vest as if the
applicable Performance Targets had been met. Additionally, such vested portions
of the Options may be exercised on or before the Expiration Date.
(e)
If
there is a Change of Control in the Corporation and within twelve (12) months
thereafter the Optionee’s employment by the Corporation or any of its
subsidiaries is terminated without Cause or for Good Reason, then all unvested
Time Based Options and all unvested Performance Options will vest and may be
exercised on or before the Expiration Date.
(f)
Notwithstanding anything in this Agreement to the contrary, in no event may
any
Option be exercised following the Expiration Date nor may any Option be
exercised with respect to the unvested portion thereof.
7. Procedure
for Exercise.
(a) The
vested portion of the Options may be exercised for the number of Option Shares
specified in a written notice delivered to the Corporation at least five days
prior to the date on which purchase is requested (such notice, an “Exercise
Notice”),
accompanied by full payment in cash of the aggregate Exercise Price in respect
of such Option Shares. If specified in the Exercise Notice, payment of such
Exercise Price may also be made by means of the Corporation retaining from
the
Option Shares to be delivered upon exercise of the Option, or portion thereof,
that number of Option Shares having an aggregate Fair Market Value (as defined
below) on the date that the Exercise Notice is delivered to the Corporation
(the
date that the Exercise Notice is delivered to the Corporation being referred
to
as the “Valuation
Date”;
provided,
however,
that if
such date is not a day on which securities markets are open for trading, then
the Valuation Date shall be the first succeeding date that such markets are
open) equal to the aggregate Exercise Price of the total number of Option Shares
with respect to which the Optionee shall then be exercising the Option. If
upon
exercise of all or a portion of the Option there shall be payable by the
Corporation or a subsidiary any amount for withholding taxes, then, at the
Corporation’s election and as a condition to such exercise, either (i) the
Corporation shall reduce the number of Option Shares to be issued to the
Optionee by a number of Option Shares of Common Stock having an aggregate Fair
Market Value on the Valuation Date equal to the amount of such withholding
tax
or (ii) the Optionee shall pay such amount to the Corporation or its subsidiary,
as applicable.
(b)
If
any applicable law requires the Corporation to take any action with respect
to
the Option Shares specified in the Exercise Notice, or if any action remains
to
be taken under the Certificate of Incorporation or Bylaws of the Corporation,
as
in effect at the time, to effect due issuance of Option Shares, then the
Corporation shall take such action and the day for delivery of such Option
Shares shall be extended for the period necessary to take such action. The
Optionee shall not have any of the rights of a shareholder of the Corporation
under the Option.
(c)
As
used herein, the phrase “Fair Market Value” shall mean (i) if the Common
Stock is listed or admitted for trading on a national securities exchange,
an
automated quotation system or the Over-the-Counter Bulletin Board, the last
reported sale price per share of the Common Stock on the Valuation Date, or,
in
case no such reported sale takes place on such day or is reported, then the
average of the last reported per share bid and ask prices for shares of the
Common Stock on such date (or if such bid and ask prices are not available
on
such date, the most recent preceding date), in either case as officially
reported by such securities exchange, quotation system or Bulletin Board on
which the Common Stock is listed or admitted to trading, (ii) if not so
listed or admitted for trading, the fair market value of a share of the Common
Stock as determined by the Corporation’s board of directors in good faith, or
(iii) if such exercise is in connection with a merger or consolidation of the
Corporation in which the Corporation is not the survivor or in which the Common
Stock is exchanged for cash or other securities or a sale of all or
substantially all of the assets of the Corporation (collectively, a “Sale”), the
implied price per share of the Common Stock resulting from such
Sale.
8. Adjustment
of Exercise Price and Option Shares. (a)
If,
at any time prior to the Expiration Date, the number of outstanding shares
of
Common Stock is (i) increased by a stock dividend payable in shares of Common
Stock or by a subdivision or split-up of shares of Common Stock, or (ii)
decreased by a combination of shares of Common Stock, then, following the record
date fixed for the determination of holders of Common Stock entitled to receive
the benefits of such stock dividend, subdivision, split-up, or combination,
the
Exercise Price shall be adjusted to a new amount equal to the product of (A)
the
Exercise Price in effect on such record date, and (B) the quotient obtained
by
dividing (x) the number of Option Shares for which the Option was exercisable
on
such record date without giving effect to the event referred to in the foregoing
clause (i) or (ii) (such number of Option Shares, the “Record
Date Option Shares”),
by
(y) the aggregate number of shares to which the Record Date Option Shares would
have been increased or decreased immediately after and as a result of the event
referred to in the foregoing clause (i) or (ii) had the Record Date Option
Shares been issued immediately prior to such record date.
(b) Upon
each
adjustment of the Exercise Price as provided in Section
8(a),
the
Optionee shall thereafter be entitled to subscribe for and purchase, at the
Exercise Price resulting from such adjustment, the number of Option Shares
equal
to the product of (i) the number of Record Date Option Shares and (ii) the
quotient obtained by dividing (A) the Exercise Price existing prior to such
adjustment by (B) the new Exercise Price resulting from such
adjustment.
9. Reclassification,
Etc. In
case
of any reclassification or change of the outstanding Common Stock of the
Corporation (other than as a result of a subdivision, combination or stock
dividend), or in case of any consolidation of the Corporation with, or merger
of
the Corporation into, another corporation or other business organization (other
than a consolidation or merger in which the Corporation is the continuing
corporation and which does not result in any reclassification or change of
the
outstanding Common Stock of the Corporation) at any time prior to the Expiration
Date, then, as a condition of such reclassification, reorganization, change,
consolidation or merger, lawful provision shall be made, and duly executed
documents evidencing the same from the Corporation or its successor shall be
delivered to the Optionee, so that the Optionee shall have the right prior
to
the Expiration Date to purchase, at a total price not to exceed that payable
upon the exercise of this Option as to the number of Option Shares is then
exercisable, the kind and amount of shares of stock and other securities and
property receivable upon such reclassification, reorganization, change,
consolidation or merger by a holder of the number of Option Shares which might
have been purchased by the Optionee immediately prior to such reclassification,
reorganization, change, consolidation or merger, and in any such case
appropriate provisions shall be made with respect to the rights and interest
of
the Optionee to the end that the provisions hereof (including provisions for
the
adjustment of the Exercise Price and of the number of shares purchasable upon
exercise of the Option) shall thereafter be applicable in relation to any shares
of stock and other securities and property thereafter deliverable upon exercise
of the Option.
10. Non-Transferability
of Stock Options.
The
Option granted hereunder to the Optionee shall not be transferable by the
Optionee otherwise than by will, or by the laws of descent and
distribution.
11. No
Right to Employment.
Nothing
contained in this Agreement, nor any action taken by the board of directors,
shall confer upon the Optionee any right with respect to continuation of
employment by the Corporation or a subsidiary as an employee nor interfere
in
any way with the right of the Corporation or a subsidiary to terminate the
Optionee’s employment as an employee at any time with or without
Cause.
12. Compliance
With Applicable Law.
The
issuance of the Option Shares pursuant to the exercise of the Option is subject
to compliance with all applicable laws, including without limitation laws
governing withholding from employees and nonresident aliens for income tax
purposes.
13. Investment
Representations; Restrictions on Option Shares.
Unless
a
current registration statement under the Securities Act of 1933, as amended
(the
“Securities
Act”)
shall
be in effect with respect to the Option Shares to be issued upon exercise of
the
Option, the Optionee, by accepting the Option, covenants and agrees that, at
the
time of exercise of the Option, the Optionee will deliver to the Corporation
such written representations that the Corporation may deem necessary or
appropriate to ensure that the Option Shares are not required to be registered
under the Securities Act or applicable state securities laws. The Optionee
agrees that certificates representing Option Shares may bear a legend
substantially as follows:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR TRANSFERRED UNTIL THE
HOLDER HEREOF PROVIDES EVIDENCE SATISFACTORY TO THE ISSUER (WHICH, IN THE
DISCRETION OF THE ISSUER, MAY INCLUDE AN OPINION OF COUNSEL SATISFACTORY TO
THE
ISSUER) THAT SUCH OFFER, SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION WILL NOT
VIOLATE APPLICABLE FEDERAL OR STATE LAWS.
14. Notices
Generally. Any
notice, request, consent, other communication or delivery pursuant to the
provisions hereof shall be in writing and shall be sent by one of the following
means: (i) by registered or certified first class mail, postage prepaid, return
receipt requested; (ii) by facsimile transmission with confirmation of receipt;
(iii) by overnight courier service; or (iv) by personal delivery, and shall
be
properly addressed to the Optionee at the last known address or facsimile number
appearing on the books of the Corporation, or, except as herein otherwise
expressly provided, to the Corporation at its principal executive office
Attention: Chairman of the Board of Directors, or such other address or
facsimile number as shall have been furnished to the party giving or making
such
notice, demand or delivery.
15. Miscellaneous.
(a) This
Agreement has been duly authorized on behalf of the Corporation by the board
of
directors. The Optionee represents that he is free to enter into this Agreement
and that his entering into this Agreement does not violate any obligation that
he has to any other person or legal entity.
(b) In
the
event that any provision of this Agreement would be held to be invalid or
unenforceable for any reason unless narrowed by construction, this Agreement
shall be construed as if such invalid or unenforceable provision had been more
narrowly drawn so as not to be invalid or unenforceable. If, notwithstanding
the
foregoing, any provision of this Agreement shall be held to be invalid or
unenforceable for any reason, such invalidity or unenforceability shall attach
only to such provision and shall not affect or render invalid or unenforceable
any other provision of this Agreement.
(c) This
Agreement sets forth the entire understanding of the Corporation and the
Optionee with respect to the subject matter hereof and cannot be amended or
modified except by a writing signed by both parties.
(d) Except
as
otherwise expressly provided herein, this Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective permitted
successors and assigns, heirs and personal representatives.
(e) This
Agreement may not be amended, and no provision of this Agreement may be waived,
except by a writing signed by Optionee and by a duly authorized representative
of the Corporation. Failure to exercise any right under this Agreement shall
not
constitute a waiver of such right. Any waiver of any breach of this Agreement
shall not operate as a waiver of any subsequent breaches. All rights or remedies
specified for a party herein shall be cumulative and in addition to all other
rights and remedies of the party hereunder or under applicable law
(f) This
Agreement shall be interpreted, construed and administered in accordance with
the laws of the State of Florida without regard to its choice of law provisions
that would cause the laws of another jurisdiction to apply. For the purposes
of
any suit, action, or other proceeding (collectively, a “Proceeding”)
arising out of this Agreement or any transaction contemplated hereby, each
of
the parties hereto irrevocably submits to the exclusive jurisdiction of the
courts of the State of Florida.
(g) This
Agreement may be executed in counterparts which, taken together, shall
constitute a single original document.
[REMAINDER
OF THE PAGE INTENTIONALLY LEFT BLANK]
IN
WITNESS WHEREOF, the
Corporation has caused this Agreement to be executed as of December 18,
2007.
.
| H2DIESEL HOLDINGS, INC. | |
|
By:
/s/
Xxxxx X. Xxxxxxxxx
Name:
Xxxxx X. Xxxxxxxxx
Title:
President and Chief Executive
Officer
|
Schedule
1
Time
Based Options
|
1.
Name of Optionee:
|
Xxxx
X. Xxxxxxxxx
|
|
|
|
|
2.
Number of Option Shares:
|
300,000
shares of Common Stock
|
|
|
|
|
3.
Initial Option Exercise Price Per Share:
|
$4.00
|
|
|
|
|
4.
Date of Grant:
|
December
1, 2007
|
|
|
|
|
5.
Expiration Date:
|
December
1, 2017
|
|
|
|
|
6.
Vesting Schedule:
|
option
to purchase up to 105,000 shares of Common Stock shall vest on the
date of
grant
|
|
|
|
|
|
option
to purchase up to 65,000 shares of Common Stock shall vest on December
1,
2008
|
|
|
|
|
|
option
to purchase up to 65,000 shares of Common Stock shall vest on December
1,
2009
|
|
|
|
|
|
option
to purchase up to 65,000 shares of Common Stock shall vest on December
1,
2010
|
Accepted
and agreed to as of December 19, 2007:
/s/
Xxxx X. Xxxxxxxxx
Xxxx
X.
Xxxxxxxxx
Schedule
2
Performance
Options
|
1.
Name of Optionee:
|
Xxxx
X. Xxxxxxxxx
|
|
|
|
|
2.
Number of Option Shares:
|
450,000
shares of Common Stock
|
|
|
|
|
3.
Initial Option Exercise Price Per Share:
|
$4.00
|
|
|
|
|
4.
Date of Grant:
|
December
1, 2007
|
|
|
|
|
5.
Expiration Date:
|
December
1, 2017
|
|
|
|
|
6.
Vesting Schedule:
|
option
to purchase up to 75,000 shares of Common Stock shall vest in respect
of
the fiscal year ending December 31, 2007 if the Performance Targets
(defined below) for such year are met;
|
|
|
|
|
|
option
to purchase up to 125,000 shares of Common Stock shall vest in respect
of
the fiscal year ending December 31, 2008 if the Performance Targets
for
such year are met;
|
|
|
|
|
|
option
to purchase up to 125,000 shares of Common Stock shall vest in respect
of
the fiscal year ending December 31, 2009 if the Performance Targets
for
such year are met; and
|
|
option
to purchase up to 125,000 shares of Common Stock shall vest in respect
of
the fiscal year ending December 31, 2010 if the Performance Targets
for
such year are met.
|
|
|
|
|
|
|
Commencing
with the fiscal year ending December 31, 2008, the Performance Targets
for
each fiscal year shall be established by the Compensation Committee
not
later than February 28 of such fiscal year. The Compensation Committee
shall determine whether the Performance Targets for the preceding
fiscal
year have been met no later than seven days after the date that the
Company’s audited financial statements in respect of such fiscal year
become available, and if such Performance Targets are determined
to have
been met, the Performance Options in respect of such fiscal year
shall be
deemed to be vested as of such date of
determination.
|
Accepted
and agreed to as of December 19, 2007:
/s/
Xxxx X. Xxxxxxxxx
Xxxx
X.
Xxxxxxxxx
