Ethanex Energy, Inc. Omnibus Equity Incentive Plan Stock Option Agreement
Exhibit
10.3
Omnibus
Equity Incentive Plan
This
Stock Option Agreement (the “Agreement”) is entered into effective as of the
date of grant set forth below (the “Date of Grant”) by and between ETHANEX
ENERGY, INC. (the “Company”) and the participant named below (the
“Participant”). Capitalized terms not defined herein shall have the meaning
ascribed to them in the Company’s Omnibus Equity Incentive Plan (the “Plan”).
| Participant: | Xxxxx X. XxXxxxxxxx |
| Address: |
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
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| Total Option Shares: | 1,500,000 |
| Exercise Price Per Share: | $2.25 |
| Date of Grant: | December 1, 2006 |
| Expiration Date: | December 1, 2016 (unless earlier terminated pursuant to the Plan or grant requirements set forth below) |
1. GRANT
OF OPTION.
The
Company hereby grants to Participant an option (this “Option”) to purchase the
total number of shares of Common Stock of the Company set forth above (the
“Shares”) at the Exercise Price Per Share set forth above (the “Exercise
Price”), subject to all of the terms and conditions of this Agreement and the
Plan.
2. EXERCISE
PERIOD.
(a) Provided
Participant continues to be employed by the Company, the Option shall become
vested and exercisable as to the Shares as follows:
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(i)
|
This
Option shall not vest nor be exercisable with respect to any of the
Shares
until October 9, 2007.
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| (ii) |
On
October 9, 2007, the Option shall become vested and exercisable as
to 25%
of the Shares.
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| (iii) |
On
the last day of each month beginning November 30, 2007, the Option
shall
become vested and exercisable as to an additional 3.125% of the Shares
(e.g., on November 30, 2007 a total of 28.125% shares shall be vested,
on
December 31, 2007 a total of 31.25% shares shall be vested, etc.).
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| (iv) |
Notwithstanding
the foregoing, the Option shall become fully vested and exercisable
upon
the Participant’s termination of employment: (i) by the Participant for
Good Reason (as defined in the Participant’s Employment Agreement, dated
on or around October 9, 2006 (the “Employment Agreement”)); (ii) by the
Company for reasons other than for Cause (as defined in the Employment
Agreement); (iii) in connection with a Change in Control (as defined
in
the Employment Agreement); or (iv) upon death or Disability (as defined
in
the Employment Agreement). (Whether a termination occurs in connection
with a Change in Control will be determined by the Committee in its
sole
discretion.)
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| (v) |
If
application of the vesting percentage causes a fractional share,
such
share shall be rounded down to the nearest whole share.
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(b) Shares
that are vested pursuant to the schedule set forth in Section 2 are “Vested
Shares.” Shares that are not vested pursuant to the schedule set forth in
Section 2 are “Unvested Shares.”
3. TERMINATION.
(a) If
Participant’s employment with the Company is terminated by the Participant for
any reason other than Good Reason, then the Option, to the extent (and only
to
the extent) that it would have been exercisable by Participant on the
termination date, may be exercised by Participant no later than 1 month after
the termination date, but in any event no later than the Expiration Date. All
Unvested Shares or any right or claim to such shares shall be immediately
forfeited as of the termination date.
(b) If
Participant’s employment with the Company is terminated (i) in connection with a
Change in Control, (ii) by death or Disability, (iii) by the Participant for
Good Reason, or (iv) by the Company for reasons other than for Cause, then
the
Option shall, as provided in Section 2(a)(iv) above, become fully vested and
exercisable upon the Participant’s termination of employment and may be
exercised by Participant (or Participant’s legal representative) no later than
12 months after the termination date, but in any event no later than the
Expiration Date.
(c) Notwithstanding
anything in the Agreement or Plan to the contrary, if the Participant is
terminated by the Company for Cause, any unexercised portion of the Option,
whether vested or not, shall expire and any right, title or interest in the
Option or the Option Shares thereunder shall be forfeited as of the
participant’s termination date from the Company.
4. NO
OBLIGATION TO EMPLOY.
Nothing
in the Plan or this Agreement shall confer on Participant any right to continue
in the employ of, or other relationship with the Company or limit in any way
the
right of the Company to terminate Participant’s employment or other relationship
at any time, with or without Cause.
5. MANNER
OF EXERCISE.
(a) To
exercise this Option, Participant (or in the case of exercise after
Participant’s death or incapacity, Participant’s executor, administrator, heir
or legatee, as the case may be) must deliver written notice of exercise to
the
Company (the “Exercise Agreement”), which shall set forth, inter alia, (i)
Participant’s election to exercise the Option, (ii) the number of Shares being
purchased and (iii) any representations, warranties and agreements regarding
Participant’s investment intent and access to information as may be required by
the Company to comply with applicable securities laws. If someone other than
Participant exercises the Option, then such person must submit documentation
reasonably acceptable to the Company verifying that such person has the legal
right to exercise the Option and such person shall be subject to all of the
restrictions contained herein as if such person were the Participant.
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(b) This
Option may not be exercised unless such exercise is in compliance with all
applicable federal and state securities laws, as they are in effect on the
date
of exercise. The Exercise Agreement shall be accompanied by full payment of
the
Exercise Price for the Shares being purchased in cash (including by check)
or as
permitted under the Plan. The Exercise Price must be paid in United States
dollars, in cash or by personal check payable to the order of the Company,
at
the time of purchase.
(c) Alternatively,
subject to applicable law, the Participant may elect to pay the Exercise Price,
or any part of it, by: (i) delivering Mature Shares (valued at their Fair
Market Value) or (ii) having the Company retain Shares (valued at their Fair
Market Value); or (iii) any combination of cash, personal check and (i) or
(ii).
(d) The
Company may make available, in its sole discretion and subject to applicable
law, a special sale and remittance procedure pursuant to which the Participant
(or any other person or persons exercising the Option) shall provide irrevocable
written instructions concurrently to: (i) a Participant-designated brokerage
firm acceptable to the Company to effect the immediate sale of a portion of
the
Shares to be received pursuant to the exercise of the Option, and remit to
the
Company, out of the sale proceeds available on the settlement date or otherwise,
the minimum amount of funds required to cover the aggregate Exercise Price
payable for the Option Shares plus all Applicable Withholding Taxes; and (ii)
the Company to deliver promptly upon receipt of such funds the certificates
for
such Shares directly to such brokerage firm.
6. TAX
WITHHOLDING.
Prior
to
the issuance of Shares upon exercise of the Option, Participant shall pay,
or
make arrangements satisfactory to the Company regarding the payment to the
Company of, Applicable Withholding Taxes. The Participant may elect to satisfy
Applicable Withholding Taxes by (i) making a cash payment or authorizing
additional withholding from cash compensation, (ii) delivering Mature Shares
(valued at their Fair Market Value), or (iii) having the Company retain that
number of Shares (valued at their Fair Market Value) that would satisfy all
or a
specified portion of the Applicable Withholding Taxes.
7. COMPLIANCE
WITH LAWS AND REGULATIONS.
(a) The
exercise of this Option and the issuance and transfer of Shares shall be subject
to compliance by the Company and Participant with all applicable requirements
of
applicable securities laws. If at any time the Committee determines that
exercising the Option or issuing Shares would violate applicable securities
laws, the Option will not be exercisable, and the Company will not be required
to issue Shares. The Committee may declare any provision of this Agreement
or
action of its own null and void, if it determines the provision or action fails
to comply with the short-swing trading rules. As a condition to exercise, the
Company may require the Participant to make written representations it deems
necessary or desirable to comply with applicable securities laws.
(b) No
person
who acquires Shares under this Agreement may sell the Shares, unless the offer
and sale are made pursuant to an effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"), that is current
and
includes the Shares to be sold, or an exemption from the registration
requirements of the Securities Act.
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8. NONTRANSFERABILITY
OF OPTION.
The
Option may not be transferred in any manner other than by will or by the laws
of
descent and distribution, and may be exercised during the lifetime of
Participant only by Participant or in the event of Participant’s incapacity, by
Participant’s legal representative. The terms of the Option shall be binding
upon the executors, administrators, successors and assigns of Participant.
9. PRIVILEGES
OF STOCK OWNERSHIP.
The
Participant shall not have any of the rights of a stockholder with respect
to
any Shares until the Shares are issued to the Participant.
10. INTERPRETATION.
Any
dispute regarding the interpretation of this Agreement shall be submitted by
Participant or the Company to the Committee for review. The resolution of such
a
dispute by the Committee shall be final and binding on the Company and
Participant.
11. ENTIRE
AGREEMENT.
The
Plan
is incorporated herein by reference. This Agreement and the Plan constitute
the
entire agreement and understanding of the parties with respect to the subject
matter of this Agreement, and supersede all prior understandings and agreements,
whether oral or written, between or among the parties hereto with respect to
the
specific subject matter hereof.
12. NOTICES.
Any
and
all notices required or permitted to be given to a party pursuant to the
provisions of this Agreement shall be in writing and shall be effective and
deemed to provide such party sufficient notice under this Agreement on the
earliest of the following:
(a)
at
the
time of personal delivery, if delivery is in person;
(b)
2
business days after deposit with an express overnight courier;
(c)
3
business days after deposit by regular mail.
All
notices not delivered personally shall be sent with postage and/or other charges
prepaid and properly addressed to the party to be notified at the address set
forth below on the signature lines of this Agreement, or at such other address
as such party may designate by one of the indicated means of notice herein
to
the other parties hereto. Notices to the Company shall be marked “Attention:
Chief Financial Officer.”
13. SUCCESSORS
AND ASSIGNS.
The
Company may assign any of its rights under this Agreement. No other party to
this Agreement may assign, whether voluntarily or by operation of law, any
of
its rights and obligations under this Agreement, except as expressly permitted
herein or under the Plan or with the prior written consent of the Company.
This
Agreement shall be binding upon and inure to the benefit of the successors
and
assigns of the Company. Subject to the restrictions on transfer set forth
herein, this Agreement shall be binding upon Participant and Participant’s
heirs, executors, administrators, legal representatives, successors and assigns.
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14. NO
LIMITATION ON RIGHTS OF THE COMPANY.
The
grant of the Option does not and will not in any way affect the right or power
of the Company to make adjustments, reclassifications or changes in its capital
or business structure, or to merge, consolidate, dissolve, liquidate, sell
or
transfer all or any part of its business or assets.
15. PLAN
DOCUMENT CONTROLS.
The
rights granted under this Agreement are in all respects subject to the
provisions set forth in the Plan to the same extent and with the same effect
as
if set forth fully in this Agreement. If the terms of this Agreement conflict
with the terms of the Plan document, the Plan document will
control.
16. GOVERNING
LAW.
This
Agreement shall be governed by and construed in accordance with the laws of
the
state of New York.
17. ACCEPTANCE.
The
Participant hereby acknowledges receipt of a copy of the Plan and this
Agreement. Participant has read and understands the terms and provisions
thereof, and accepts the Option subject to all the terms and conditions of
the
Plan and this Agreement. The Participant acknowledges that there may be adverse
tax consequences upon exercise of the Option or disposition of the Shares and
that Participant should consult a tax adviser prior to such exercise or
disposition.
18. FURTHER
ASSURANCES.
The
parties agree to execute such further documents and instruments and to take
such
further actions as may be reasonably necessary to carry out the purposes and
intent of this Agreement.
19. TITLES
AND HEADINGS.
The
titles, captions and headings of this Agreement are included for ease of
reference only and shall be disregarded in interpreting or construing this
Agreement. Unless otherwise specifically stated, all references herein to
“sections” and “exhibits” shall mean “sections” and “exhibits” to this
Agreement.
20. COUNTERPARTS.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed and delivered shall be deemed an original, and all of which together
shall constitute one and the same agreement.
21. CODE
SECTION 409A NOT TO APPLY.
It
is the
Company’s intention that Code Section 409A shall not apply to the Option granted
hereunder. The Exercise Price for each share subject to the Option may never
be
less than 100% the Fair Market Value on the date the Option is granted except
in
the case of adjustments permitted by the Plan, and there shall be no deferral
of
compensation under the Option other than the deferral of recognition of income
until the later of exercise or disposition of the Option under Section 1.83-7
of
the Income Tax Regulations.
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22. SEVERABILITY.
If
any
provision of this Agreement is determined by any court or arbitrator of
competent jurisdiction to be invalid, illegal or unenforceable in any respect,
such provision shall be enforced to the maximum extent possible given the intent
of the parties hereto. If such clause or provision cannot be so enforced, such
provision shall be stricken from this Agreement and the remainder of this
Agreement shall be enforced as if such invalid, illegal or unenforceable clause
or provision had (to the extent not enforceable) never been contained in this
Agreement. Notwithstanding the forgoing, if the value of this Agreement based
upon the substantial benefit of the bargain for any party is materially
impaired, which determination as made by the presiding court or arbitrator
of
competent jurisdiction shall be binding.
IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed in
duplicate by its duly authorized representative and Participant has executed
this Agreement in duplicate, effective as of the Date of Grant.
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By:
/s/
Xxxxxx X. Xxxxx, III
Xxxxxx
X. Xxxxx, III
President
and Chief Executive Officer
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PARTICIPANT:
/s/
Xxxxx X. XxXxxxxxxx
Xxxxx
X. XxXxxxxxxx
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