ENER1, INC. Fort Lauderdale, Florida 33309
Exhibit
10.42
ENER1,
INC.
000
Xxxx
Xxxxxxx Xxxxx Xxxx
Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
October
1, 2005
Dear
Mr.
Grape:
The
Board
of Directors of ENER1, INC. (the "Corporation") is pleased to award you an
option (the "Option") to purchase shares of the common stock, par value $0.01
per share, of the Corporation (the "Common Stock"). This option agreement (the
"Agreement") will describe the Option granted to you. Your signature on this
Agreement is an acknowledgement to us that you have read and understand this
Agreement and that you agree to abide by its terms.
1. Grant
of Option.
Subject
to the conditions hereinafter set forth, we grant you the right to purchase
one
million (1,000,000) shares of
Common
Stock at $0.49 per share, the current fair market value of a share of Stock.
On
October 1 2006, and the following three anniversaries of such date, the right
to
purchase the shares of Common Stock shall vest with respect to 250,000 shares.
Notwithstanding anything to the contrary in this Agreement, the right to
purchase shares of Common Stock shall not vest on any date unless you are
employed as of such date by EnerDel, Inc. ("EnerDel"), a subsidiary of the
Corporation. In
the
event of a Change of Control of EnerDel, the right to purchase the shares of
Common Stock shall vest and shall be fully exercisable immediately. A
"Change
in Control"
shall
be deemed to occur if any Person shall acquire direct or indirect beneficial
ownership (whether as a result of stock ownership, revocable or irrevocable
proxies or otherwise) of securities of EnerDel, pursuant to one or more
transactions, such that after consummation and as a result of such transaction,
such Person has direct or indirect beneficial ownership of 50% or more of the
total combined voting power with respect to the election of directors of the
issued and outstanding securities of EnerDel. "Person"
shall
mean any person, corporation, partnership, joint venture or other entity or
any
group (as such term is defined for purposes of Section 13(d) of the Exchange
Act), other than a Parent or Subsidiary, and "beneficial ownership" shall be
determined in accordance with Rule 13d-3 under the Exchange Act. Notwithstanding
the foregoing, for purposes of this Agreement, "Change of Control" shall not
include any change of control, actual or implicit, resulting from any Person
or
Persons gaining 50% or more of the combined voting power for EnerDel (or less
than 50%, even though such lesser amount may represent effective voting control)
through an initial public offering by EnerDel or other financing conducted
by or
on behalf of EnerDel.
2. Time
of Exercise.
The
Option may be exercised at any time and from time to time beginning when the
right to purchase the shares of Stock vests and ending when this Option
terminates as provided in Section 5 hereof. Notwithstanding anything to the
contrary in this Agreement, the Option may not be exercised unless
EnerDel reports revenue of at least $1.5 million for calendar 2005 and $7.0
million for calendar 2006, as confirmed by review or audit by EnerDel's
independent registered auditors. If EnerDel's revenue falls short of these
target(s) for any of the time frames involved by 20% or more, you shall not
be
able to exercise any portion of the Option that has vested unless and until
EnerDel's revenue for subsequent time frames exceeds $6.8 million (which is
80%
of the combined target revenue for 2005 and 2006).
3. Method
of Exercise.
The
Option shall be exercised by written notice to the Corporation’s Secretary at
the Corporation's principal place of business. The notice shall set forth the
number of shares of Common Stock to be acquired and how
the
shares of Common Stock to be acquired should be registered (in your name only
or
in your name and your spouse's names as community property or as joint tenants
with right of survivorship).
The
Corporation shall not be obligated to issue any shares of Common Stock until
you
shall have paid the total exercise price for that number of shares of Common
Stock. The exercise price may be paid in cash or by certified or cashiers'
check
or by such other method as permitted by the Board of Directors of the
Corporation.
Fractional
shares may not be exercised. Shares of Common Stock will be issued as soon
as
practical after exercise.
Notwithstanding
the above, the Corporation shall not be obligated to deliver any shares of
Common Stock during any period when the Corporation determines that the
exercisability of the Option or the delivery of shares hereunder would violate
any federal, state or other applicable laws, and the Option may be rescinded
if
necessary to ensure compliance with federal, state or other applicable
laws.
4. Termination
of Option.
To the
extent not exercised, the Option shall terminate upon the first to occur of
the
following dates:
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(a)
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October
1, 2015, being ten (10) years from the date of grant;
or
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(b)
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Immediately
upon the date your employment with EnerDel
terminates.
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5. Non-Transferability.
The
Option cannot be transferred other than (i) by will or the laws of descent
and
distribution
or (ii)
on such terms and conditions as the Board of Directors of the Corporation in
its
sole discretion shall approve.
6. Securities
Laws. As
of the
date hereof, the Option and the shares of Stock underlying the Option have
not
been registered under the Securities Act of 1933, as amended (the "Act"). You
agree that any shares of Common Stock acquired by you under this Agreement
cannot be sold, transferred, assigned or otherwise hypothecated without
registration under the Act or unless a valid exemption from registration is
then
available under applicable federal and state securities laws and the Corporation
has been furnished with an opinion of counsel satisfactory in form and substance
to the Corporation that such registration is not required.
7. Income
Taxes.
To the
extent required by applicable federal, state, local or foreign law, you shall
make arrangements satisfactory to the Corporation for the satisfaction of any
withholding tax obligations that arise by reason of an Option exercise or
disposition of shares issued as a result of an Option exercise. The Corporation
shall not be required to issue shares or to recognize the disposition of such
shares until such obligations are satisfied.
2
The
Option is intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"),
and will be interpreted accordingly. Section 422 of the Code provides, among
other things, that you shall not be taxed upon the exercise of a stock option
that qualifies as an incentive stock option provided that you do not dispose
of
the shares of Common Stock acquired upon exercise of such option until the
later
of two years after such option is granted to you and one year after such option
is exercised. Notwithstanding anything to the contrary herein, Section 422
of
the Code provides that incentive stock options (including, possibly, the Option)
shall not be treated as incentive stock options if and to the extent that the
aggregate fair market value of shares of Common Stock (determined as of the
time
of grant) with respect to which such incentive stock options are exercisable
for
the first time by you during any calendar year (under all plans of the
Corporation and its subsidiaries) exceeds $100,000, taking options into account
in the order in which they were granted. Thus, if and to the extent that any
shares of Common Stock issued under a portion of the Option exceeds the
foregoing $100,000 limitation, such shares shall not be treated as issued under
an incentive stock option pursuant to Section 422 of the Code.
8. Recapitalization.
If
the
outstanding shares of Common Stock are increased or decreased or changed into
or
exchanged for a different number or kind of shares or other securities of Issuer
by reason of any recapitalization, reclassification, reorganization, stock
split, reverse split, combination of shares, exchange of shares, stock dividend
or other distribution payable in capital stock of the Corporation or other
increase or decrease in such shares effected without receipt of consideration
by
the Corporation occurring after the date of this Agreement, an appropriate
and
proportionate adjustment shall be made by the Board of Directors of the
Corporation (i) in the number and kind of shares of Common Stock issuable
upon exercise (or vesting) of the Option and (ii) in the exercise price per
share of the Option.
9. Limitation
of Interest.
Neither
you nor any beneficiary or other person claiming under or through you shall
have
any right, title, interest, or privilege in or to any shares of Common Stock
allocated or reserved for the purposes of this Agreement except as to such
shares of Common Stock, if any, as shall have been issued to such person upon
exercise of the Option or any part of it. Nothing herein shall confer upon
you
any right to continue in the Corporation's employ or service nor limit in any
way the Corporation's right to terminate your employment at any time for any
reason.
10. Severability. In
the
event that any provision of this Agreement is declared to be illegal, invalid
or
otherwise unenforceable by a court of competent jurisdiction, such provision
shall be reformed, if possible, to the extent necessary to render it legal,
valid and enforceable, or otherwise deleted, and the remainder of this Agreement
shall not be affected except to the extent necessary to reform or delete such
illegal, invalid or unenforceable provision.
11. Binding
Effect.
The
rights and obligations described in this Agreement shall inure to the benefit
of
and be binding upon both of us, and our respective heirs, personal
representatives, successors and assigns.
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12. Date
of Grant.
The
Option shall be treated as having been granted to you on the date of this
Agreement even though you may sign it at a later date.
13. Governing
Law.
This
Agreement shall be governed, construed, interpreted and administered solely
in
accordance with the laws of the state of Florida, without regard to principles
of conflicts of law.
14. Headings. The
headings preceding the text of the sections hereof are inserted solely for
convenience of reference, and shall not affect the meaning, construction or
effect of this Agreement.
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Very truly yours,
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| ENER1, INC. | |||
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By:
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Name:
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Its:
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| AGREED AND ACCEPTED: | |||
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Ulrik Grape |
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