EXHIBIT 10.3
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SUTRON CORPORATION
STOCK OPTION AGREEMENT
(NON-QUALIFIED STOCK OPTION)
THIS STOCK OPTION AGREEMENT (the "Agreement") is made and entered into
as of the 14th day of May 2008 by and between Sutron Corporation, a Virginia
corporation (the "Company"), and Xxxxxx X. Xxxxxxx, Xx. (the "Optionee").
WHEREAS, the Board of Directors of the Company (the "Board") has
adopted and approved that certain Amended and Restated Sutron Corporation 2002
Stock Option Plan (the "Plan"), a copy of which has been provided to the
Optionee and which is incorporated by reference herein; and
WHEREAS, pursuant to and in accordance with the provisions of the Plan,
the Board has determined that the Optionee is eligible to be granted an option
(the "Option") to acquire shares of the Company's Common Stock, $0.01 par value
per share (the "Stock"); and
WHEREAS, Options granted under the Plan are not intended or designed to
qualify for Federal income tax treatment as incentive stock options under
Section 422 of the Internal Revenue Code of 1986 (the "Code"); and
WHEREAS, the Optionee desires to be granted Options under the Plan; and
WHEREAS, the Corporation and the Optionee desire to set forth herein
the terms of such Options.
NOW, THEREFORE, in consideration of the foregoing, of the mutual
covenants set forth herein, and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Grant of Option. The Company hereby grants to the Optionee the right
and option to purchase Five thousand (5,000) shares of Stock, subject to and in
accordance with the terms and conditions set forth in the Plan and in this
Agreement.
2. Exercise Price. The Exercise Price to be paid for each share of
Stock to be acquired upon exercise of the Option granted hereunder is $7.50.
Such Exercise Price is equal to the Fair Market Value (as defined in the Plan)
of the Stock as of the date of grant of the Option.
3. Transferability. The Option granted hereunder shall be exercisable
during the Optionee's lifetime only by the Optionee and shall not be assignable
or transferable other than by will or by the laws of descent and distribution
following the Optionee's death.
4. Exercise Terms; Vesting; Procedure.
(a) Except as provided in Section 6 hereof, the Option may be
exercised in whole or in part in accordance with the vesting schedule set forth
in Section 5 hereof, provided, however, that the Option shall not be exercisable
after the expiration of ten (10) years from the date of grant of the Option.
(b) In order to exercise the Option granted hereunder, the
Optionee shall deliver to the Secretary of the Company written notice stating
the Optionee's intent to exercise the Option, which notice shall specify:
(i) the name of the Optionee;
(ii) the Option to be exercised;
(iii) the number of shares of Stock to be purchased
pursuant to such exercise; and
(iv) the address to which certificates representing
the shares of Stock issuable upon exercise of the Option are
to be mailed.
(c) The Optionee's written notice shall be accompanied by a
certified check payable to the Company in the amount of the product of the
Exercise Price times the number of shares with respect to which the Option is
being exercised. The notice and payment shall be delivered in person or sent by
registered mail, return receipt requested, to the Secretary of the Company. The
Option shall be considered exercised on the date the notice and payment are
delivered to the Secretary or deposited in the mail, as the case may be. As
promptly as practicable after the Secretary's receipt of the notice of exercise
and payment, and the receipt of any certificates from the Optionee required by
the Company pursuant to Sections 8 and 9 hereof, the Company shall deliver to
the Optionee a certificate or certificates for the number of shares of Stock
with respect to which the Option has been exercised.
5. Vesting. The Option shall vest ratably over the one year period
beginning May 14, 2008 and ending May 13, 2009; provided, however, that the
Option shall become immediately exercisable in full at the time of a Change of
Control of the Company.
6. Effect of Termination of Employment, Disability or Death. The
following provisions shall govern the exercise of any Options held by an
Optionee at the time the Optionee ceases to be an employee of the Company,
suffers a Disability, or dies.
6.1 Termination of Employment. In the event that the Optionee
ceases to be an employee of the Company for any reason other than Disability or
death, then the period during which each outstanding Option held by such
Optionee is to remain exercisable shall be limited to the ninety (90) day period
following the date of termination of employment. Under no
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circumstances, however, shall any such Option be exercisable after the specified
expiration date of the Option term. Any outstanding Option may not be exercised
in the aggregate for more than the number of vested shares for which the Option
is exercisable on the date of the termination of employment, and such Option
shall terminate and cease to be outstanding with respect to any Option shares
for which the Option is not at that time exercisable or in which the Optionee is
not otherwise at that time vested.
6.2 Disability. In the event that the Optionee ceases to be an
employee of the Company by reason of a Disability, then the period during which
each outstanding Option held by such Optionee is to remain exercisable shall be
limited to a period of one (1) year following the date of termination of
employment due to Disability. Under no circumstances, however, shall any such
Option be exercisable after the specified expiration date of the Option term as
set forth in the Option Agreement. Any outstanding Option may not be exercised
in the aggregate for more than the number of vested shares for which the Option
is exercisable on the date of the termination of employment due to Disability,
and such Option shall terminate and cease to be outstanding with respect to any
Option shares for which the Option is not at that time exercisable or in which
the Optionee is not otherwise at that time vested.
6.3 Death. In the event that the Optionee dies while holding
one or more outstanding Options, then the period during which each outstanding
Option held by such Optionee is to remain exercisable shall be limited to a
period of one (1) year following the date of the Optionee's death. During such
limited period, the Option may be exercised by the personal representative of
the Optionee's estate or by the person or persons to whom the option is
transferred pursuant to the Optionee's will or in accordance with the laws of
descent and distribution. Under no circumstances, however, shall any such Option
be exercisable after the specified expiration date of the Option term. Any
outstanding Option may not be exercised in the aggregate for more than the
number of vested shares for which the Option is exercisable on the date of the
death of the Optionee, and such Option shall terminate and cease to be
outstanding with respect to any Option shares for which the Option is not at
that time exercisable or in which the Optionee is not otherwise at that time
vested.
7. Adjustments to Upon Certain Events. In the event that any change is
made to the Stock issuable under the Plan and the Option granted hereunder by
reason of stock split, stock dividend, recapitalization, combination of shares,
exchange of shares, repurchase, merger, consolidation, spin-off or other change
affecting the outstanding Stock as a class, the Board shall make appropriate
adjustments to the maximum number of shares and/or class of shares, and the
number of shares and/or class of shares and the exercise price per share in
effect under the Option, in order to prevent the dilution or enlargement of
benefits thereunder. Any adjustments made by the Board pursuant to this Section
7 shall be final, binding and conclusive. Neither the existence nor the terms of
the Plan or this Agreement, nor the grant of any Option hereunder, shall affect
the right or power of the Company to make any adjustments, reorganizations,
reclassifications or other changes to its capital structure or to merge,
consolidate, dissolve, liquidate, sell or transfer any or all of its assets or
otherwise change its business structure.
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Except as expressly provided above, the issuance by the Company of
shares of stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights, warrants or options to
subscribe therefor, or upon conversions of shares or obligations of the Company
convertible into such shares or other securities, shall not affect the number,
class or exercise price of shares of Stock then subject to the Option, and no
adjustment shall be made by reason thereof.
8. Requirements of Law. The Company shall not be required to sell or
issue shares of its Stock under the Option if the sale or issuance would
constitute a violation by the Optionee or the Company of any provisions of any
state or federal law, rule or regulation. In addition, in connection with the
Securities Act of 1933, as amended, upon exercise of the Option, the Company
shall not be required to issue such shares of Stock unless the Company has
received evidence satisfactory to it to the effect that the Optionee will not
transfer such shares except pursuant to a registration statement in effect under
the Securities Act of 1933, as amended, or unless an opinion of counsel to the
Company has been received to the effect that such registration is not required.
Any determination in this regard by the Company shall be final, binding and
conclusive. Certificates representing shares of Stock issued pursuant to the
exercise of the Option will be subject to such stop-transfer orders and other
restrictions as may be applicable under federal and state laws, regulations and
rules, or the requirements of any securities exchange or automated quotation
system. In the event the shares issuable on exercise of the Option are not
registered under the Securities Act, the Company may imprint the following
legend or any other legend which counsel to the Company considers necessary or
advisable:
"The shares of Stock represented by this certificate have not been
registered under the Securities Act of 1933 or under the securities
laws of any state and may not be sold or transferred except upon such
registration or upon receipt by the Company of an opinion of counsel
satisfactory to the Company that registration is not required for such
sale or transfer."
The Corporation may, but shall in no event be obligated to, register
any securities covered hereby pursuant to the Securities Act of 1933; and in the
event any shares are so registered, the Company may, in its discretion, remove
any legend on certificates representing such shares. The Company shall not be
obligated to take any other affirmative action in order to cause the exercise of
the Option or the issuance of shares pursuant thereto to comply with any state
or federal law or regulation.
9. Investment Purpose. The Optionee agrees that any shares of Stock
subject to the Option granted hereunder will be acquired for investment and not
with any present intention to resell the same, and the Optionee further agrees
to confirm such intention by an appropriate written assurances and certificates
at the time of exercising an Option or any portion thereof.
10. Withholding. The Company's obligation to deliver shares of Stock
upon exercise of the Option shall be subject to any and all applicable federal,
state and local tax withholding and reporting requirements.
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11. No Rights as Shareholder. The Optionee shall have no right as a
shareholder with respect to the Stock covered by the Option until the date of
issuance of Stock Certificates for such Stock to the Optionee.
12. No Employment Obligation. The granting of any Option shall not
impose upon the Company any obligation to employ the Optionee. The right of the
Company to terminate the employment of the Optionee shall not be diminished or
affected by reason of the fact that an Option has been granted hereunder to the
Optionee.
13. General Provisions.
(a) This Agreement shall be binding upon, and shall inure to
the benefit of, the parties hereto and their respective heirs, executors,
administrators, personal representatives, successors and assigns.
(b) This Agreement shall be construed in accordance with, and
shall be governed by, the laws of the Commonwealth of Virginia.
(c) No waiver by any party hereto of any breach of any
covenant, condition or agreement hereof shall be considered to constitute a
waiver of any such covenant, condition or provision, or of any subsequent breach
thereof.
(d) In the event any court of competent jurisdiction shall
declare any portion of this Agreement to be invalid, the remainder of this
Agreement shall not be invalidated thereby, but shall remain in full force and
effect.
(e) Unless otherwise provided in this Agreement, no notice or
other communication which may be or is required or permitted to be given under
this Agreement shall be effective unless the same is in writing and is either
hand delivered or sent by registered or certified mail, return receipt
requested, first-class postage prepaid, (1) if to the Optionee, to X.X. Xxx 000,
000 Xxxxx Xxxxx Xxxx, Xxxxxxxxxxxxx, Xxxxxxxx 00000, and (2) if to the Company,
to Sutron Corporation., Attn: Secretary, 00000 Xxxxxxxx Xxxxxx, Xxxxxxxx, XX
00000, or at any other address that may be given by one party to the other party
by notice pursuant to this paragraph 6(e), with a copy to the law firm of
Shulman, Rogers, Gandal, Pordy & Xxxxx, P.A., 00000 Xxxxxxxxx Xxxx, Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxxxxx 00000. Unless otherwise provided in this Agreement, such
notices, or other communications, if sent by registered or certified mail in
accordance with this paragraph 6(e), shall be deemed to have been given at the
time of mailing.
(f) Where the text requires, words in the singular shall be
deemed to include the plural and vice-versa, and words in one gender shall be
deemed to include all genders.
(g) Any headings preceding the text of the sections or
sub-sections in this Agreement are inserted solely for convenience of reference
and shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction or effect.
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(h) The Option granted pursuant hereto is not intended or
designed to qualify for federal income tax treatment as an incentive stock
option under Section 422 of the Code.
(i) The Options are subject to all terms, conditions,
limitations and restrictions contained in the Plan, which shall be controlling
in the event of any conflicting or inconsistent provisions between this
Agreement and the Plan.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed and sealed by its duly authorized officers, and the Optionee has
executed and sealed this Agreement, all as of the day and year first above
written.
ATTEST: THE COMPANY:
SUTRON CORPORATION
/s/ Xxxxxx X. Xxxxxx /s/ Xxxx X. XxXxxxxx
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Name: Xxxxxx X. Xxxxxx Name: Xxxx X. XxXxxxxx
Title: Chief Financial Officer Title: President
WITNESS: THE OPTIONEE:
/s/ Xxxxxx X. Xxxxxx /s/ Xxxxxx X. Xxxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxx, Xx.
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