OPTION AGREEMENT
This Option Agreement ("Agreement") is made this August 13th of 2003 by
and between Composite Technology Corp ("the Company") and Xxxxx Xxxxxxx,
("Xxxxxxx"), of 0000 Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxxxxx 00000, XXX.
WHEREAS, under that certain employment agreement ("Employment
Agreement") between the parties, the Company has agreed to provided Xxxxxxx with
options to acquire Company shares under its share option plan ("Option Plan")
and in satisfaction of its obligations under the Option Plan, the Company has
granted to Xxxxxxx an option to purchase seven hundred and fifty thousand
(750,000) shares of the Company's common stock, subject to the terms and
conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Option
The Company grants to Xxxxxxx the right to purchase ("Option") an
aggregate of seven hundred and fifty thousand (750,000) shares of the Company's
common stock ("Shares") at the price set forth in Section 4 below. The vested
portion of the Option may be exercised at any time, whether in a single
transaction or in multiple transactions, and in the amounts and at the times
determined by Xxxxxxx.
2. Vesting
50,000 shares under the Option shall be vested on the date of the
signature of the present Agreement and, subject to Sections 3 and 7 below, the
remaining 700,000 shares under the Option shall vest at the rate of 35,000
shares under the Option (one twentieth of the balance granted under the Option)
vesting per quarter. The first 35,000 options of the unvested portion shall vest
on October 1st, 2003 and thereafter each successive vesting shall be effective
on the first day following the end of each successive calendar quarter
thereafter until all the options are vested.
The vested portion of the Option shall be nonforfitable, and shall not
be affected by the termination of the Employment Agreement, the death or
disability of Xxxxxxx, or for any other reason. Notwithstanding the foregoing,
if the entire portion of this Option has not been exercised as of December 31,
2011, the unexercised portion shall lapse and shall be of no force or effect.
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3. Effect of Termination of Employment Agreement
If Xxxxxxx voluntarily terminates the Employment Agreement without
cause, or if the Company terminates the Employment Agreement due to Xxxxxxx'x
breach, then as of the effective date of such termination the unvested portion
of the Option shall terminate and shall be of no force or effect. This paragraph
shall not apply to any voluntary termination by Xxxxxxx as a result of a Change
in Control specified in Section 7 below.
If the Company voluntarily terminates the Employment Agreement without
cause, or if Xxxxxxx terminates the Employment Agreement due to the Company's
breach, or if the Employment Agreement is terminated due to death or disability
of Xxxxxxx, then as of the effective date of such termination the unvested
portion of the Option shall be immediately and fully vested.
The termination of Employment Agreement shall not affect Xxxxxxx'x
right to exercise the vested portion of the Option at any time prior to December
31, 2011.
4. Purchase Price
The purchase price for each Share subject to the Option (including any
additional Shares granted to Xxxxxxx under Section 8 below) shall be $0.53.
5. Manner of Exercise
If at any time Xxxxxxx elects to exercise all or any part of the vested
portion of the Option, it shall so notify Company in writing. Such written
notice shall specify the number of Shares to be purchased, and shall be
accompanied by cash or a check equal to the full purchase price for all Shares
purchased. "Full purchase price" means the per-share price in Section 4
multiplied by the number of Shares purchased.
6. Issuance of Certificates
As soon as practicable after the exercise of any portion of the Option,
the Company shall deliver to Xxxxxxx a certificate evidencing the Shares so
purchased. Upon such delivery Xxxxxxx shall have all rights, powers, and
interests of a shareholder of the Company with respect to the Shares so
acquired.
7. Change in Control
Notwithstanding Section 2 above, in the event of a Change in Control of
the Company the unvested portion of the Option shall be fully and immediately
vested as of the earlier of (i) the date any proposed Change in Control has been
approved by the Company's board of directors, whether or not all of the terms of
such transaction have been determined, (ii) the date Change in Control has
actually occurred, or (iii) the occurrence of an event specified in subsection
(c) below.
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As used herein, "Change in Control" shall mean any of the following:
(a) The sale or transfer of more than fifty percent (50%)
of the assets of the Company, whether in a single
transaction or a series of transactions during a 12
months period.
(b) The sale or transfer to any person or Common Group,
or acquisition by any person or Common Group, of
twenty percent (20%) or more of the outstanding
common stock of the Company, whether in a single
transaction or a series of transactions. "Common
Group" means five or fewer persons related in some
manner. This subsection shall not apply to common
stock acquired by C. Xxxxxxx Xxxxxxxxx or Xxxxxx
Xxxxxxxx.
8. Nonalienation.
Neither of the Option nor any rights thereunder may be transferred,
assigned, pledged or hypothocated in any way, whether by operation of law or
otherwise, and shall not be subject to execution, attachment or similar process.
9. Entire Agreement
This Agreement represents the entire agreement of the parties with
respect to the subject matter hereof, and supercedes any prior or
contemporaneous written or oral agreement with respect thereto.
10. Choice of Law
This Agreement shall be governed by the laws of the State of
California.
11. Amendment
This Agreement may be amended only by a writing executed by the parties
hereto.
12. Attorney's Fees
In the event either party incurs legal expenses to enforce or interpret
any provision of this Agreement, the prevailing party shall be entitled to
recover its legal expenses, including, without limitation, reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party shall be entitled.
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In WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
COMPOSITE TECHNOLOGY CORPORATION
By:
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Xxxxxx X Xxxxxxxx, Chairman and CEO
By:
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Xxxxx Xxxxxxx
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