OPTION AGREEMENT
Exhibit
10.2
THIS
OPTION AGREEMENT, effective as of May 5, 2008, by and between LAPOLLA INDUSTRIES, INC. a
Delaware corporation (the “Company”) and XXXXXXX X. XXXXXX (the
“Executive”).
WHEREAS,
the Board of Directors of the Company previously authorized and approved the
Equity Incentive Plan, effective as of July 12, 2005 ("Plan"), which Plan was
amended effective as of January 16, 2007. The Plan provides for the
grant of Options to employees, directors and consultants of the
Company. Unless otherwise provided herein all defined terms shall
have the respective meanings ascribed to them under the Plan;
WHEREAS,
Company and Executive previously entered into an Option Agreement dated July 12,
2005, which Agreement was amended as of July 28, 2005 (said Agreement and
amendment are collectively referred to as the “Prior Agreement”);
WHEREAS,
Company and Executive have determined that it would be in the best interests of
Company and Executive to amend certain provisions of the Prior Agreement as they
relate to the options that were granted to Executive to acquire 2,000,000 shares
of the Company’s common stock, $.01 par value per share, at any exercise price
of $.67 per share (“Existing Options”); and
WHEREAS,
the Company has determined that an option to acquire an additional 2,000,000
shares of Company common stock, $.01 par value per share should be granted to
Executive, effective May 5, 2008.
NOW,
THEREFORE, in consideration of the respective agreements of the parties
contained herein, it is agreed as follows:
X.
Xxxxx and Terms of New
Options. Pursuant to authority granted to it under the Plan,
the Administrator of the Plan hereby grants to Executive in his capacity as an
employee of the Company (“Optionee”), effective as of May 5, 2008 ("Grant
Date"), 2,000,000 options. Subject to the provisions below, each Option permits
Optionee to purchase one share of LaPolla Industries, Inc. common stock, $.01
par value per share ("Shares").
1.
Character of
Options. Pursuant to the Plan, Options granted herein may be
Incentive Stock Options or Non-Qualified Stock Options, or both. To the extent
permitted under the Plan and by law, such Options shall first be considered
Incentive Stock Options.
2.
Exercise
Price. The Exercise Price for each Non-Qualified Stock Option granted
herein is the per Share closing price on May 5, 2008.
3.
Vesting. The
Options granted hereunder vest upon satisfaction of the following
criteria:
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3.1 250,000
Options on the earlier of: (i) June 30, 2008, provided the Company has net
pre-tax income for the fiscal quarter ending on that date, as indicated on its
Form 10-Q filed with the U.S. Securities and Exchange Commission (“Quarterly
Profit”); or (ii) the last day of the Company’s first fiscal quarter ending
after June 30, 2008 for which the Company has Quarterly Profit, subject in all
cases to continued satisfactory employment through the vesting
date;
3.2 An
additional 250,000 options on the last day of each of the next seven fiscal
quarters for which Company has Quarterly Profit, subject to continued
satisfactory employment through the last day of each such fiscal
quarter.
4.
Exercisability. Once
vested, the options shall be exercisable, on a cumulative basis, in accordance
with the following schedule: eight and one-third percent (8 1/3%) of the vested
options shall be exercisable twelve (12) months from the date of vesting;
sixteen and two-third percent (16 2/3%) of the vested options shall be
exercisable twenty-four (24) months from the date of vesting; twenty-five
percent (25%) of the vested options shall be exercisable thirty-six (36) months
from the date of vesting; and one hundred percent (100%) of the vested options
shall be exercisable forty-eight (48) months from the date of
vesting.
5.
Term of
Options. All then existing and unexercised Options, whether or
not previously vested, shall expire on December 31, 2013.
B. Amendments to Existing
Options. Company and Optionee amend Sections 4 and 5 of the
Prior Agreement to provide, in full, as follows:
“4.
Vesting and
Exercisability. All of the Options, whether or not previously
vested, shall be vested as of May 5, 2008. Once vested, the options
shall be exercisable, on a cumulative basis, in accordance with the following
schedule: eight and one-third percent (8 1/3%) of the vested options shall be
exercisable twelve (12) months from the date of vesting; sixteen and two-third
percent (16 2/3%) of the vested options shall be exercisable twenty-four (24)
months from the date of vesting; twenty-five percent (25%) of the vested options
shall be exercisable thirty-six (36) months from the date of vesting; and one
hundred percent (100%) of the vested options shall be exercisable forty-eight
(48) months from the date of vesting.
5.
Term of
Options. All then existing and unexercised Options, whether or
not then vested, shall expire on December 31, 2012.”
Except as
provided in Sections 4 and 5 above, the terms of the Prior Agreement are the
same as they were immediately prior to the adoption of this
Amendment. For ease of reference purposes, Sections 6 through and
including 13 of the Prior Agreement are restated in their entirety in Section C
below.
C. Terms
Applicable to the New and the Existing Options.
1.
Payment of
Exercise Price. Options represented hereby may be exercised in
whole or in part by delivering to the Company your payment of the Exercise Price
of the Option so exercised (i) in cash, by check or cash equivalent, (ii) by
tender to the Company of shares of Stock owned by the Participant having a Fair
Market Value not less than the exercise price; (iii) by tender to the Company of
a written consent to accept a reduction in the number of shares of Stock to
which the Option relates (“Reduced Number of Shares”),
which Reduced Number of Shares, when ascribed a value, shall be equal to the
exercise price of the balance of shares of Stock covered by the Option; (iv) by
delivery of a properly executed notice of exercise together with irrevocable
instructions to a broker providing for the assignment to the Company of the
proceeds of a sale or loan with respect to some or all of the shares being
acquired upon the exercise of the Option (including, without limitation, through
an exercise complying with the provisions of Regulation T as promulgated from
time to time by the Board of Governors of the Federal Reserve System) (a "Cashless Exercise"), (v) by
such other consideration as may be approved by the Committee from time to time
to the extent permitted by applicable law, or (vi) by any combination thereof.
The Company reserves, at any and all times, the right, in the Company's sole and
absolute discretion, to establish, decline to approve or terminate any program
or procedures for the exercise of Options by means of a Cashless
Exercise.
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2.
Limits on
Transfer of Options. The Option granted herein shall not be
transferable by you otherwise than by will or by the laws of descent and
distribution, except for gifts to family members subject to any specific
limitation concerning such gift by the Administrator in its discretion;
provided, however, that you may designate a beneficiary or beneficiaries to
exercise your rights and receive any Shares purchased with respect to any Option
upon your death. Each Option shall be exercisable during your
lifetime only by you or, if permissible under applicable law, by your legal
representative. No Option herein granted or Shares underlying any
Option shall be pledged, alienated, attached or otherwise encumbered, and any
purported pledge, alienation, attachment or encumbrance thereof shall be void
and unenforceable against the Company. Notwithstanding the foregoing, to the
extent permitted by the Administrator, in its discretion, an Option shall be
assignable or transferable subject to the applicable limitations, if any,
described in the General Instructions to Form S-8 Registration Statement under
the Securities Act of 1933, as amended.
3.
Termination of
Employment. If your employment is terminated with the Company,
the Option and any unexercised portion shall be subject to the provisions
below:
(a) Upon
the termination of your employment with the Company, to the extent not
theretofore exercised, your vested Option shall continue to be valid; provided,
however, that:
(i)
If the Participant shall die while in the employ of the Company or during the
one (1) year period, whichever is applicable, specified in clause (ii) below and
at a time when such Participant was entitled to exercise an Option as herein
provided, the legal representative of such Participant, or such Person who
acquired such Option by bequest or inheritance or by reason of the death of the
Participant, may, not later than fifteen (15) months from the date of death,
exercise such Option, to the extent not theretofore exercised, in respect of any
or all of such number of Shares specified by the Administrator in such Option;
and
(ii) If
the employment of any Participant to whom such Option shall have been granted
shall terminate by reason of the Participant's retirement (at such age upon such
conditions as shall be specified by the Board of Directors), disability (as
described in Section 22(e) of the Code), resignation by Participant for good
reason (as defined below), or dismissal by the Company other than for cause (as
defined below), and while such Participant is entitled to exercise such Option
as herein provided, such Participant shall have the right to exercise such
Option so granted, to the extent not theretofore exercised, in respect of any or
all of such number of Shares as specified by the Administrator in such Option,
at any time up to one (1) year from the date of termination of the Optionee's
employment by reason of retirement, resignation by Participant for good reason,
or dismissal other than for cause or disability, provided, that if the Optionee
dies within such twelve (12) month period, subclause (i) above shall
apply.
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(b) If
you voluntarily terminate your employment without good reason or are discharged
for cause, any Options granted hereunder shall forthwith terminate with respect
to any unexercised portion thereof, whether vested or unvested.
(c) If
any Options granted hereunder shall be exercised by your legal representative if
you should die or become disabled, or by any person who acquired any Options
granted hereunder by bequest or inheritance or by reason of death of any such
person written notice of such exercise shall be accompanied by a certified copy
of letters testamentary or equivalent proof of the right of such legal
representative or other person to exercise such Options.
(d) For
all purposes of this Agreement, the term "for cause" shall mean "Cause" as
defined in Executive’s Employment Agreement with the Company.
(e) For
all purposes of this Agreement, the term “good reason” shall mean “Good Reason”
as defined in Executive’s Employment Agreement with the Company.
4.
Restriction;
Securities Exchange Listing. All certificates for shares delivered upon
the exercise of Options granted herein shall be subject to such stop transfer
orders and other restrictions as the Administrator may deem advisable under the
Plan or the rules, regulations and other requirements of the Securities and
Exchange Commission and any applicable federal or state securities laws, and the
Administrator may cause a legend or legends to be placed on such certificates to
make appropriate reference to such restrictions. If the Shares or other
securities are traded on a national securities exchange, the Company shall not
be required to deliver any Shares covered by an Option unless and until such
Shares have been admitted for trading on such securities exchange.
5.
Adjustments. If there
is any change in the capitalization of the Company affecting in any manner the
number or kind of outstanding shares of Common Stock of the Company, whether by
stock dividend, stock split, reclassification or recapitalization of such stock,
or because the Company has merged or consolidated with one or more other
corporations (and provided the Option does not thereby terminate in connection
therewith), then the number and kind of shares then subject to the Option and
the price to be paid therefor shall be appropriately adjusted by the Board of
Directors; provided, however, that in no event shall any such adjustment result
in the Company's being required to sell or issue any fractional shares. Any such
adjustment shall be made without change in the aggregate purchase price
applicable to the unexercised portion of the option, but with an appropriate
adjustment to the price of each Share or other unit of security covered by this
Option.
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6.
Change in
Control. In the event of a Change in Control (as defined in
the Plan), the surviving, continuing, successor, or purchasing entity or parent
thereof, as the case may be (the "Acquiror"), may, without the
consent of the Executive, either assume the Company's rights and obligations
under outstanding Options or substitute for outstanding Options substantially
equivalent options for the Acquiror's stock. In the event of such
assumption or substitution, the Committee shall provide that any then
unexercised and/or unvested portions of outstanding Options shall be immediately
exercisable and vested in full, effective as of the time of consummation of the
Change in Control. In the event the Acquiror elects not to assume or
substitute for outstanding Options in connection with a Change in Control, the
Committee shall provide that any unexercised and/or unvested portions of
outstanding Options shall be immediately exercisable and vested in full as of
the date thirty (30) days prior to the date of the Change in Control. The
exercise and/or vesting of any Option that was permissible solely by reason of
this Section 6 shall be conditioned upon the consummation of the Change in
Control. Any Options which are not assumed by the Acquiror in
connection with the Change in Control nor exercised by the Executive as of the
time of consummation of the Change in Control shall terminate and cease to be
outstanding effective as of the time of consummation of the Change in
Control.
7.
Amendment
to Options Herein Granted. The Options granted herein may not
be amended without your consent.
8.
Withholding
Taxes. As provided in the Plan, the Company may withhold from
sums due or to become due to Optionee from the Company an amount necessary to
satisfy its obligation to withhold taxes incurred by reason of the disposition
of the Shares acquired by exercise of the Options in a disqualifying disposition
(within the meaning of Section 421(b) of the Code), or may require you to
reimburse the Company in such amount.
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LAPOLLA
INDUSTRIES, INC.
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By:
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/s/ Xxxxxxx X.
Xxxxx
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5/5/2008
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Xxxxxxx
X. Xxxxx,
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Date
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Chairman
of the Board
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/s/ Xxxxxxx X.
Xxxxxx
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5/6/2008
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XXXXXXX
X. XXXXXX
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Date
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