COALOGIX INC. Stock Option Agreement (Employees)
Exhibit
10.2
Option
No. _____
COALOGIX
INC.
2008
STOCK OPTION PLAN
(Employees)
|
Name
of Participant:
|
Xxxxxxx
X. XxXxxxx
|
|
Xxxxx
Date:
|
April
9, 2008
|
|
Number
of Shares Subject to Option:
|
147,050
shares [reflects effect of 25-for-1 stock split in July
2008]
|
|
Option
Price:
|
$5.05
[reflects effect of 25-for-1 stock split in July
2008]
|
|
Type
of Option:
|
Incentive
Option
|
|
Date
Vesting Begins:
|
November
7, 2008
|
|
Expiration
Date:
|
April
8, 2018
|
THIS
AGREEMENT (together with Schedule A attached hereto, this "Agreement"), made
effective as of the 9th day of April, 2008 (the "Grant Date"), by and between
CoaLogix Inc., a Delaware corporation (the "Corporation"), and Xxxxxxx X.
XxXxxxx, an Employee of the Corporation or an Affiliate (the
"Participant").
REC ITALS :
In
furtherance of the purposes of the CoaLogix Inc. 2008 Stock Option Plan, as
it
may be hereafter amended and/or restated (the "Plan"), and in consideration
of
the services of the Participant and such other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Corporation
and the Participant hereby agree as follows:
1. Incorporation
of Plan.
The
rights and duties of the Corporation and the Participant under this Agreement
shall in all respects be subject to and governed by the provisions of the Plan,
a copy of which is delivered herewith or has been previously provided to the
Participant and the terms of which are incorporated herein by reference. In
the
event of any conflict between the provisions in this Agreement and those of
the
Plan, the provisions of the Plan shall govern. Unless otherwise defined herein,
capitalized terms in this Agreement shall have the same definitions as set
forth
in the Plan.
2. Grant
of Option; Term of Option.
The
Corporation hereby grants to the Participant, pursuant to the Plan, as a matter
of separate inducement and agreement in connection with his employment with
the
Corporation, and not in lieu of any salary or other compensation for his
services, the right and option (the "Option") to purchase all or any part of
an
aggregate of One
Hundred Forty-Seven Thousand Fifty (147,050) shares [reflects effect of 25-for-1
stock split in July 2008] (the "Shares") of Common Stock, at a purchase
price (the "Option Price") of Five
Dollars Five Cents ($5.05) per Share [reflects effect of 25-for-1 stock split
in
July 2008]. The Option shall be designated as an Incentive Option. To the
extent that the Option is designated as an Incentive Option and such Option
does
not qualify as an Incentive Option, the Option (or portion thereof) shall be
treated as a Nonqualified Option. Except as otherwise provided in the Plan,
the
Option will expire if not exercised in full before April 8, 2018 (the
"Expiration Date") (such term commencing with the Grant Date and ending on
the
Expiration Date being referred to as the "Option Period").
3. Exercise
of Option.
The
Option shall become exercisable on the date or dates and subject to such
conditions set forth in the Plan, this Agreement and Schedule A, which is
attached hereto and expressly made a part of this Agreement. To the extent
that
the Option is exercisable but is not exercised, the Option shall accumulate
and
be exercisable by the Participant in whole or in part at any time prior to
the
Expiration Date, subject to the terms of the Plan and this Agreement. Upon
the
exercise of an Option in whole or in part, payment of the Option Price in
accordance with the provisions of the Plan and this Agreement, and satisfaction
of such other conditions as may be established by the Administrator, the
Corporation shall promptly deliver to the Participant a certificate or
certificates for the Shares purchased (or, in the case of uncertificated shares,
other written evidence of ownership in accordance with Applicable Laws). Payment
of the Option Price shall be in the form of cash or cash equivalent; provided
that, except where prohibited by the Administrator or Applicable Law (and
subject to such terms and conditions as may be established by the
Administrator), payment may also be made (a) by delivery (by either actual
delivery or attestation) of shares of Common Stock owned by the Participant;
(b)
by shares of Common Stock withheld upon exercise but only if and to the extent
that payment by such method does not result in accounting consequences deemed
unacceptable to the Administrator; (c) with respect only to purchases upon
exercise of the Option after a Public Market for Common Stock exists (as
determined under the Plan), by delivery of written notice of exercise to the
Corporation and delivery to a broker of written notice of exercise and
irrevocable instructions to promptly deliver to the Corporation the amount
of
sale or loan proceeds to pay the Option Price; (d) by such other payment methods
as may be approved by the Administrator and which are acceptable under
Applicable Laws; or (e) by any combination of the foregoing methods. Shares
delivered or withheld in payment of the Option Price shall be valued at their
Fair Market Value on the date of exercise in accordance with Plan
terms.
4. Effect
of Change of Control.
(a) Notwithstanding
the other provisions herein, in the event of a Change of Control, the Option,
if
outstanding as of the date of such Change of Control, shall become fully vested
and exercisable, whether or not then otherwise vested and exercisable. In such
event, the Administrator may (i) determine that the Option must be exercised,
if
at all, within a fixed time period (as determined by the Administrator)
following or prior to such Change of Control, and/or (ii) determine that the
Option shall terminate after such time period, and/or (iii) make other similar
determinations regarding the Participant's rights with respect to the Option.
(b) For
the
purposes herein, a "Change of Control" shall mean the occurrence of any of
the
following events with respect to the Corporation:
(i) The
acquisition of Voting Securities of the Corporation by any person (other than
a
stockholder of the Corporation on the Effective Date) immediately after which
such person has beneficial ownership of more than 50% of the combined voting
power (determined on an "as converted" common stock equivalent basis) of the
Corporation's then outstanding Voting Securities;
(ii) A
merger,
consolidation or reorganization involving the Corporation, unless:
(A) the
stockholders of the Corporation, immediately before such merger, consolidation
or reorganization, own, directly or indirectly, immediately
following such merger, consolidation or reorganization, at least a majority
of
the combined voting power (determined on an "as converted" common stock
equivalent basis) of the outstanding Voting Securities of the corporation
resulting from such merger or consolidation or reorganization (the "Surviving
Corporation"); and
2
(B) the
individuals who were members of the Board immediately prior to the execution
of
the agreement providing for such merger, consolidation or reorganization
constitute at least a majority of the members of the board of directors of
the
Surviving Corporation; or
(iii) The
sale
or other disposition of all or substantially all of the assets of the
Corporation (defined as a sale of assets of the Corporation representing more
than 40% of the Fair Market Value of the total assets held by the Corporation)
to any person (other than a transfer to a Subsidiary).
(iv) Notwithstanding
the foregoing, a Non-Control Acquisition shall not constitute a Change of
Control.
(v) Notwithstanding
the foregoing, an event described in this Section 4(b) shall only
constitute a Change of Control if the Change of Control Consideration received
by Acorn Energy, Inc. in cash, cash equivalents or freely-tradable securities
or
securities that become freely-tradable, or such Change of Control Consideration
that is available for distribution to Acorn Energy, Inc., is a dollar amount
equal to or greater than the amount required to generate a Thirty Percent (30%)
Internal Rate of Return on the initial capital contribution of $11,038,700
made
by Acorn Energy, Inc. on November 7, 2007, increased by the amount of any cash
or other property contributed to the capital of the Corporation by Acorn Energy,
Inc., reduced by any dividends or other distributions paid from the Corporation
to Acorn Energy, Inc., on or before the Change of Control, and reduced by the
Change of Control Consideration at the Change of Control date. For example,
to
illustrate the provisions of this Section 4(b)(v), assume that Acorn Energy,
Inc. makes an additional capital contribution of $1,000,000 on July 1, 2008,
receives a dividend distribution of $500,000 on January 1, 2009, and a
third-party buyer acquires 100% of the Voting Securities of the Corporation
on
September 1, 2010, with the Change of Control Consideration received at closing
in cash or freely-tradable securities by Acorn Energy, Inc. equal to
$24,200,000. Such transaction would constitute a Change of Control for purposes
of this Plan because the Change of Control Consideration received by Acorn
Energy, Inc. on September 1, 2010 ($24,200,000) exceeds the amount of Change
of
Control Consideration required to provide a minimum 30% Internal Rate of Return
to Acorn Energy, Inc. ($24,121,309). “Internal Rate of Return” means the
discount rate that results in a net present value of zero for a series of cash
flows.
Except
as
provided in Section 4(b)(iii) above, in no event shall a Change of Control
of a
Subsidiary constitute a Change of Control of the Corporation.
(For
the
purposes herein, the term "person" shall mean any individual, corporation,
partnership, group, association or other person, as such term is defined in
Section 13(d)(3) or
3
Section
14(d)(2) of the Exchange Act, other than the Corporation, a subsidiary of the
Corporation or any employee benefit plan(s) sponsored or maintained by the
Corporation or any subsidiary thereof, and the term "beneficial owner" shall
have the meaning given the term in Rule 13d-3 under the Exchange
Act.)
The
Administrator shall have full and final authority, in its discretion, to
determine whether a Change of Control of the Corporation has occurred, the
date
of the occurrence of such Change of Control and any incidental matters relating
thereto.
5. Termination
of Employment.
The
Option shall not be exercised unless the Participant is, at the time of
exercise, an Employee and has been an Employee continuously since the date
the
Option was granted, subject to the following:
(a) The
employment relationship of the Participant shall be treated as continuing intact
for any period that the Participant is on military or sick leave or other bona
fide leave of absence, provided that the period of such leave does not exceed
three months, or, if longer, as long as the Participant's right to reemployment
is guaranteed either by statute or by contract. The employment relationship
of
the Participant shall also be treated as continuing intact while the Participant
is not in active service because of Disability. The Administrator shall have
authority to determine whether the Participant has incurred a Disability, and,
if applicable, the Participant's Termination Date for any reason.
(b) If
the
employment of the Participant terminates because of death or Disability, the
Option may be exercised only to the extent vested and exercisable on the
Participant's Termination Date, and the Option must be exercised, if at all,
prior to the first to occur of the following, whichever shall be applicable:
(i)
the close of the period of six months next succeeding the Termination Date;
or
(ii) the close of the Option Period. In the event of the Participant's death,
the Option shall be exercisable by such person or persons as shall have acquired
the right to exercise the Option by will or by the laws of intestate
succession.
(c) If
the
employment of the Participant terminates for any reason other than Disability,
death or Cause, the Option may be exercised only to the extent vested and
exercisable on the Termination Date, and the Option must be exercised, if at
all, prior to the first to occur of the following, whichever shall be
applicable: (i) the close of the period of 45 days next succeeding the
Termination Date; or (ii) the close of the Option Period. In the event of the
Participant's death, the Option shall be exercisable by such person or persons
as shall have acquired the right to exercise the Option by will or by the laws
of intestate succession.
(d) If
the
employment of the Participant terminates for Cause, his Option shall lapse
and
no longer be exercisable as of the Termination Date, as determined by the
Administrator. For the purposes of this Agreement, "Cause" shall mean one or
more of following acts by a Participant: (i) such Participant's breach of (A)
any material provision of such Participant's employment agreement, or (B) any
stockholders, confidentiality or noncompetition agreement with the Corporation
or any Subsidiary; (ii) any intentional act or intentional omission by such
Participant that causes, or is likely to cause, material harm to the Corporation
or any Subsidiary or its business reputation; (iii) such Participant's
dishonesty, fraud, gross negligence or willful misconduct related to
Participant's performance of his or her
duties to the Corporation or any Subsidiary; (iv) such Participant's conviction
of, or such Participant's entry of a plea of guilty or no contest to, a felony
(other than for motor vehicle offenses the effect of which do not materially
impair a Participant's performance of his or her duties), or such Participant's
arrest or indictment for a felony or crime of moral turpitude (other than for
motor vehicle offenses the effect of which do not materially impair a
Participant's performance of his or her duties) related to Participant's
performance of his or her duties; (v) such Participant's repeated use of drugs
or alcohol that in the reasonable determination of the Board interferes with
the
performance by the Participant of his or her duties and that is not cured within
forty-five (45) days by the Participant taking action reasonably requested
by
the Board in writing to address the issue; and (vi) such Participant's willful
and continued failure (A) to follow the direction (consistent with such
Participant's duties) of the President and Chief Executive Officer of the
Corporation, the Board or any other Participant to whom such Participant
reports, (B) to perform substantially his or her duties to the Corporation
or
any Subsidiary or (C) to follow the written policies, procedures and rules
of
the Corporation or any Subsidiary for which such Participant works, in each
case
if such failure is not cured within ten (10) days after a written demand is
delivered to such Participant by the Board or the President of either the
Corporation or the Subsidiary for which such Participant works that specifically
identifies the manner in which the Board believes that such Participant has
not
met his or her obligations hereunder; provided,
however,
that
for purposes of this clause (vi), no act or failure to act on the part of a
Participant shall be considered "willful" unless it is done or omitted to be
done by such Participant in bad faith or without reasonable belief that such
Participant's action or omission was in the best interests of the Corporation.
Any act or failure to act based upon authority given pursuant to a resolution
duly adopted by the Board or based upon the advice of counsel for the
Corporation shall be conclusively presumed to be done or omitted to be done
by
such Participant in good faith and in the best interest of the Corporation.
The
termination of employment of a Participant shall not be deemed to be for "Cause"
unless the Participant is notified prior to such termination of employment
that
such termination is for Cause. The determination of "Cause" shall be made by
the
Administrator and its determination shall be final and conclusive. Without
in
any way limiting the effect of the foregoing, for purposes of the Plan and
an
Option, a Participant's employment or service shall be deemed to have terminated
for Cause if, after the Participant's employment or service has terminated,
facts and circumstances are discovered that would have justified, in the opinion
of the Administrator, a termination for Cause.
4
(e) No
Right or Obligation of Continued Employment or Service.
Neither
the Plan, the grant of the Option nor any other action related to the Plan
shall
confer upon the Participant any right to continue in the employment or service
of the Corporation or an Affiliate or to interfere in any way with the right
of
the Corporation or an Affiliate to terminate the Participant's employment or
service at any time. Except as otherwise expressly provided in the Plan or
this
Agreement or as may be determined by the Administrator, all rights of the
Participant with respect to the Option shall terminate upon the termination
of
the Participant's employment or service.
6. Nontransferability
of Option.
To the
extent that the Option is designated as an Incentive Option, the Option shall
not be transferable (including by sale, assignment, pledge or hypothecation)
other than by will or the laws or intestate succession or, in the
Administrator's discretion, as may otherwise be permitted in accordance with
Treas. Reg. Section 1.421-1(b)(2) or any successor provision thereto. To
the extent that the Option is designated as a Nonqualified Option,
the Option shall not be transferable (including by sale, assignment, pledge
or
hypothecation) other than by will or the laws of intestate succession, except
as
may be permitted by the Administrator in a manner consistent with the
registration provisions of the Securities Act. Except as may be permitted by
the
preceding sentences, the Option shall be exercisable during the Participant's
lifetime only by him or by his guardian or legal representative. The designation
of a beneficiary in accordance with the Plan does not constitute a transfer.
The
Shares shall be subject to such rights of first refusal, repurchase rights
and/or other transfer restrictions as are stated in this Agreement, the Plan,
any Stockholders' Agreement and/or any other agreement between the Participant
and the Corporation.
5
7. Superseding
Agreement; Binding Effect.
This
Agreement supersedes any statements, representations or agreements of the
Corporation with respect to the grant of the Option, any other equity-based
awards or any related rights, and the Participant hereby waives any rights
or
claims related to any such statements, representations or agreements. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective executors, administrators, next-of-kin, successors
and assigns. This Agreement does not supersede or amend any Stockholders'
Agreement, noncompetition agreement, nonsolicitation agreement, confidentiality
agreement, employment agreement, consulting agreement or any other similar
agreement between the Participant and the Corporation, including, but not
limited to, any restrictive covenants contained in such agreements, except
that,
unless the Administrator determines otherwise, the terms of the Plan and this
Agreement shall control with respect to the terms of the Option or any related
rights.
8. Representations
and Warranties of Participant.
The
Participant represents and warrants to the Corporation that:
(a) Agrees
to Terms of the Plan and Agreement.
The
Participant has received a copy of the Plan, has read and understands the terms
of the Plan, this Agreement and the Stockholders' Agreement, and agrees to
be
bound by their terms and conditions.
(b) Purchase
for Own Account for Investment.
Any
Shares acquired shall be acquired for the Participant's own account for
investment purposes only and not with a view to, or for sale in connection
with,
a distribution of the Shares within the meaning of the Securities Act. The
Participant has no present intention of selling or otherwise disposing of all
or
any portion of the Shares.
(c) Access
to Information.
The
Participant has had access to all information regarding the Corporation and
its
present and prospective business, assets, liabilities and financial condition
that the Participant reasonably considers important in making a decision to
acquire the Shares, and the Participant has had ample opportunity to ask
questions of, and to receive answers from, the Corporation's representatives
concerning such matters and this investment.
(d) Understanding
of Risks.
The
Participant is fully aware of: (i) the specula-tive nature of, and the financial
hazards involved in, an investment in the Shares; (ii) the lack of liquidity
of
the Shares and the restrictions on the transferability of the Shares; (iii)
the
qualifications and backgrounds of the management of the Corporation; and (iv)
the tax consequences of an investment in the Shares. The Participant is capable
of evaluating the merits and risks of this investment, has the ability to
protect his own interests in this transaction and is financially capable of
bearing a total loss on his investment.
6
(e) No
General Solicitation.
At no
time was the Participant presented with or solicited by any publicly issued
or
circulated newspaper, mail, radio, television or other form of general
advertising or solicitation in connection with the offer, sale or purchase
of
the Shares.
(f) Compliance
with Securities Laws.
The
Shares have not been registered with the Securities and Exchange Commission
("SEC") under the Securities Act and, notwithstanding any other provision of
this Agreement or the Plan to the contrary, the right to acquire any Shares
is
expressly conditioned upon compliance with all applicable federal and state
securities laws. The Participant agrees to cooperate with the Corporation to
ensure compliance with such laws.
(g) No
Transfer Unless Registered or Exempt.
None of
the Corporation's securities is presently publicly traded, and the Corporation
has made no representation, covenant or agreement as to whether there will
be a
public market for any of its securities. The Participant understands that he
may
not transfer any Shares unless such Shares are registered under the Securities
Act and qualified under applicable state securities laws or unless, in the
opinion of counsel to the Corporation, exemptions from such registration and
qualification requirements are available. The Participant understands that
only
the Corporation may file a registration statement with the SEC and that the
Corporation is under no obligation to do so with respect to the Shares. The
Participant has also been advised that exemptions from registration and
qualification may not be available or may not permit the Participant to transfer
all or any of the Shares in the amounts or at the times proposed by him. The
Participant also agrees in connection with any registration of the Corporation's
securities that, upon the request of the Corporation or the underwriters
managing any public offering of the Corporation's securities, the Participant
will not sell or otherwise dispose of any Shares (or any shares acquired
pursuant to Section 22 herein) without the prior written consent of the
Corporation or such underwriters, as the case may be, for such period of time
(not to exceed 180 days) after the effective date of such registration requested
by such managing underwriters and subject to all restrictions as the Corporation
or the underwriters may specify.
(h) Tax
Consequences.
The
Corporation has made no warranties or representations to the Participant with
respect to the tax consequences (including, but not limited to, income tax
consequences) related to the transactions contemplated by this Agreement, and
the Participant is in no manner relying on the Corporation or its
representatives for an assessment of such tax consequences. The Participant
acknowledges that there may be adverse tax consequences upon the grant of the
Option or the acquisition or disposition of the Shares and that the Participant
has been advised that he should consult with his own attorney, accountant and/or
tax advisor regarding the decision to enter into this Agreement and the
consequences thereof. The Participant also acknowledges that the Corporation
has
no responsibility to take or refrain from taking any actions in order to achieve
a certain tax result for the Participant.
9. Restrictions
on Option and Shares.
(a) Other
Agreements.
As a
condition to the issuance and delivery of the Shares, or the grant of any
benefit pursuant to the terms of the Plan, the Corporation shall require the
Participant or other person at any time and from time to time to become a party
to this Agreement,
the Stockholders'
Agreement, other agreement(s) restricting the voting, transfer, purchase or
repurchase of the Shares, and any other employment agreements, consulting
agreements, non-competition agreements, confidentiality agreements,
non-solicitation agreements or other agreements imposing such restrictions
as
may be required by the Corporation. The Participant shall be subject to all
voting, transfer, repurchase and/or other restrictions as are provided in the
Stockholders' Agreement (including but in not way limited to the restrictions
contained in Article 5 of the Stockholders' Agreement) and this Agreement,
and,
by entering into this Agreement, the Participant expressly acknowledges and
agrees to be bound by such restrictions. The Participant's receipt of the
Option, Shares of Common Stock issuable pursuant to the Option and/or any other
benefit under the Plan or this Agreement shall be subject to the Participant's
compliance with such restrictions. In addition, without in any way limiting
the
effect of the foregoing, the Participant shall be subject to the Repurchase
Right provided in Section 9(b) herein.
7
(b) Corporation's
Repurchase Rights.
If the
employment or service of the Participant with the Corporation or an Affiliate
terminates for any reason (whether by the Corporation or the Participant, and
whether voluntary or involuntary), the Corporation or its designee shall have
the right (but not the obligation) to repurchase (the "Repurchase Right") any
or
all Shares, subject to such terms and conditions (including, but not limited
to,
determination of the repurchase price (the "Repurchase Price")) as may be stated
in the Plan and this Agreement. In such event, the Repurchase Price, if any,
paid by the Corporation or its designee shall be determined as follows: (i)
if
the employment or service of the Participant is terminated (A) by the
Corporation other than for Cause or (B) by the Participant due to death,
Disability, Retirement or termination by the Participant with the
Administrator's consent, the Repurchase Price shall equal the Fair Market Value
per share of Common Stock, multiplied by the number of the Shares being
repurchased; (ii) if the Participant voluntarily terminates employment or
service for non-Cause reasons other than death, Disability, Retirement or Cause
and
such
termination is without the Administrator's consent and
such
termination occurs on or after the third anniversary of the Grant Date of the
Option, the Repurchase Price shall equal one-half of the Fair Market Value
per
share of Common Stock, multiplied by the number of Shares being repurchased;
and
(iii) if (A) the employment or service of the Participant is terminated for
Cause or (B) the Participant voluntarily terminates employment or service for
non-Cause reasons other than death, Disability or Retirement and
such
termination is without the Administrator's consent and
such
termination occurs before the third anniversary of the Grant Date of the Option,
then the Repurchase Price shall equal the lesser of one-half of the Fair Market
Value per share or the original purchase price (that is, the Option Price)
per
share, multiplied by the number of Shares being repurchased. The Fair Market
Value shall be determined by the Administrator as of the Participant's
Termination Date or as of a date as soon as practicable preceding or following
the Participant's Termination Date. The Administrator's determination of the
Fair Market Value shall be final and conclusive. The Administrator has sole
discretion to determine the basis of the Participant's termination. (Without
in
any way limiting the foregoing, if the Participant voluntarily terminates
employment or service with the Administrator's consent but the Participant
violates any non-competition agreement or other restrictive covenants applicable
to him, such termination shall be deemed to be a termination without
Administrator consent (unless the Administrator determines otherwise).) The
Corporation's Repurchase Right described herein may, in the Corporation's
discretion, be exercised by a designee or designees of the Corporation and,
for
the purposes of Section 9(b), references to the "Corporation" shall (unless
the context otherwise requires) include its designee or designees. The
Corporation may
exercise its Repurchase Right under this Section 9(b) at any time during
the 90-day period following the Participant's Termination Date by delivering
written notice to the Participant or other holder of such Shares, or, if later,
the end of the 90-day period following the last day on which the Option could
be
exercised pursuant to Section 4 or Section 5 herein. Such notice shall
be accompanied by delivery of a certified or official bank check (or other
consideration acceptable to the Corporation and the Participant or other holder)
in the amount of the Repurchase Price; provided, however, that, the
Administrator in its discretion may determine that the Repurchase Price shall
be
subject to any right of offset of the Corporation or other terms and conditions.
In addition, the Corporation may delay payment of the Repurchase Price for
such
period as may be necessary to avoid adverse accounting consequences for the
Corporation, to avoid violation of the terms of any financing agreement
applicable to the Corporation or to avoid violation of any provisions of
Applicable Law restricting distributions or the redemption of equity by the
Corporation. Upon delivery of such notice and the payment of the Repurchase
Price, the Corporation shall become the legal and beneficial owner of the Shares
being purchased and all rights and interests therein or relating thereto. In
the
event that any Shares held by the Participant shall be transferred to another
person or entity, the Corporation's Repurchase Right shall extend and apply
to
all Shares held by such transferee or transferees.
8
(c) Subsequent
Transferees.
The
Repurchase Right restrictions described in Section 9(b) shall apply to any
shares held by a transferee or transferees (collectively, the "Transferee"),
which shares were issued to the Participant pursuant to the Plan and
subsequently transferred to the Transferee. The Corporation shall be under
no
obligation to transfer or issue shares to such Transferee, and such Transferee
shall have no rights with respect to any such shares, until the Transferee
has
agreed to be subject to the terms and conditions of the Plan (including, but
not
limited to, the provisions of Section 9 therein), this Agreement, the
Stockholders' Agreement and any other applicable agreement. Any transfer or
purported transfer made by a purchaser of shares under the Plan, except at
the
times and in the manner herein specified, will be null and void and the
Corporation shall not recognize or give effect to such transfer on its books
and
records or recognize the person or persons to whom such proposed transfer has
been made as the legal or beneficial holder of those shares.
(d) Expiration
of Repurchase Right.
The
Repurchase Right described in Section 9(b) shall expire in the event that a
"public market" (as defined in the Plan) for Common Stock (or successor
securities) shall be deemed to exist.
(e) Compliance
with Applicable Laws, Rules and Regulations.
The
Corporation may impose such restrictions on the Option, any Shares, any shares
issued under Section 22 or other benefits underlying the Option as it may
deem advisable, including without limitation restrictions under the federal
securities laws, the requirements of any stock exchange or similar organization
and any blue sky, state or foreign securities laws applicable to such
securities. Notwithstanding any other provision in the Plan or this Agreement
to
the contrary, the Corporation shall not be obligated to issue, deliver or
transfer shares of Common Stock, make any other distribution of benefits, or
take any other action, unless such delivery, distribution or action is in
compliance with Applicable Laws (including, but not limited to, the requirements
of the Securities Act). The Corporation will be under no obligation to register
shares of Common Stock or other securities with the Securities and Exchange
Commission or to effect compliance with the exemption, registration,
qualification or listing requirements of any state or foreign securities laws,
stock exchange or similar organization,
and the Corporation will have no liability for any inability or failure to
do
so. The Corporation may cause a restrictive legend or legends to be placed
on
any certificate issued pursuant to the Shares in such form as may be prescribed
from time to time by Applicable Law or as may be advised by legal
counsel.
9
10. Changes
in Duties and/or Status.
The
Participant acknowledges that, notwithstanding any terms of the Plan or this
Agreement to the contrary, the Administrator has sole discretion to determine
(taking into account any Code Section 409A considerations), at the time of
grant of the Option or at any time thereafter, the effect, if any, on the Option
(including, but not limited to, the vesting and/or exercisability of the Option)
in the event of (i) a change in the Participant's duties or responsibilities,
(ii) a change in the Participant's status as an Employee, including, but not
limited to, a change from full-time to part-time, or vice versa, or (iii) other
similar changes in the nature or scope of the Participant's employment. In
addition, unless otherwise determined by the Administrator, for purposes of
this
Agreement, the Participant shall be considered to have terminated employment
and
to have ceased to be an Employee if his employer was an Affiliate at the time
of
grant and such employer ceases to be an Affiliate, even if the Participant
continues to be employed by such employer.
11. Governing
Law.
Except
as otherwise provided in the Plan or herein, this Agreement shall be governed
by
and construed in accordance with the laws of the State of Delaware, without
regard to the principles of conflicts of laws, and in accordance with applicable
federal laws of the United States.
12. Amendment
and Termination; Waiver.
Subject
to the terms of the Plan, the Administrator may amend, alter, suspend and/or
terminate the Option, prospectively or retroactively, but such amendment,
alteration, suspension or termination of the Option shall not, without the
consent of the Participant (except as otherwise provided in the Plan or this
Section 12), materially adversely affect the rights of the Participant with
respect to the Option. Notwithstanding the foregoing, the Administrator shall
have unilateral authority to amend the Plan and this Agreement (without
Participant consent) to the extent necessary to comply with Applicable Law
or
changes to Applicable Law (including, but in no way limited to, Code
Section 409A, Code Section 422 and federal securities laws). The
Administrator shall have unilateral authority to make adjustments to the terms
and conditions of the Option in recognition of unusual or nonrecurring events
affecting the Corporation or any Affiliate, or the financial statements of
the
Corporation or any Affiliate, or of changes in accounting principles, if the
Administrator determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan or necessary or appropriate to comply with
applicable accounting principles. The waiver by the Corporation of a breach
of
any provision of this Agreement by the Participant shall not operate or be
construed as a waiver of any subsequent breach by the Participant.
13. No
Rights as a Stockholder.
The
Participant and his legal representatives, legatees, distributees or transferees
shall not be deemed to be the holder of any Shares and shall not have any rights
of a stockholder unless and until certificates for such Shares have been issued
to him or them (or, in the case of uncertificated shares, other written notice
of ownership in accordance with Applicable Laws has been provided).
14. Withholding.
The
Participant acknowledges that the Corporation shall require the Participant
or
other person to pay to the Corporation in cash the amount of any tax or other
amount required by any governmental authority to be withheld and paid over
by
the Corporation to such authority
for the account of the Participant, and the Participant agrees, as a condition
to the grant of the Option and delivery of the Shares, to satisfy such
obligations. Notwithstanding the foregoing, the Administrator may, in its
discretion, establish procedures to permit the Participant to satisfy such
obligations in whole or in part, and any other local, state, federal or foreign
income tax obligations relating to the Option, by electing (the "election")
to
have the Corporation withhold shares of Common Stock from the Shares to which
the Participant is entitled. The number of the Shares to be withheld shall
have
a Fair Market Value as of the date that the amount of tax to be withheld is
determined as nearly equal as possible to (but not exceeding) the amount of
such
obligations being satisfied. Each election must be made in writing to the
Administrator in accordance with election procedures established by the
Administrator.
10
15. Administration.
The
authority to construe and interpret this Agreement and the Plan, and to
administer all aspects of the Plan, shall be vested in the Administrator, and
the Administrator shall have all powers with respect to this Agreement as are
provided in the Plan. Any interpretation of this Agreement by the Administrator
and any decision made by it with respect to this Agreement shall be final and
binding.
16. Notices.
Except
as may be otherwise provided by the Plan, any written notices provided for
in
this Agreement or the Plan shall be in writing and shall be deemed sufficiently
given if either hand delivered or if sent by fax or overnight courier, or by
postage paid first class mail. Notices sent by mail shall be deemed received
three business days after mailed but in no event later than the date of actual
receipt. Notices shall be directed, if to the Participant, at the Participant's
address indicated by the Corporation's records, or if to the Corporation, at
the
Corporation's principal office.
17. Severability;
Gender and Number.
If any
provision of this Agreement shall be held illegal or invalid for any reason,
such illegality or invalidity shall not affect the remaining parts of this
Agreement, and this Agreement shall be construed and enforced as if the illegal
or invalid provision had not been included. Except where otherwise indicated
by
the context, words in any gender shall include any other gender, words in the
singular shall include the plural and words in the plural shall include the
singular.
18. Notice
of Disposition.
To the
extent that the Option is designated as an Incentive Option, if any Shares
are
disposed of within two years following the date of grant or one year following
the transfer of such Shares to the Participant upon exercise, the Participant
shall, promptly following such disposition, notify the Corporation in writing
of
the date and terms of such disposition and provide such other information
regarding the disposition as the Administrator may reasonably
require.
19. Right
of Offset.
Notwithstanding any other provision of the Plan or this Agreement, the
Corporation may reduce the amount of any payment otherwise distributable to
or
on behalf of the Participant by the amount of any obligation of the Participant
to the Corporation or an Affiliate that is or becomes due and payable, and,
by
entering into this Agreement, the Participant shall be deemed to have consented
to such reduction.
20. Counterparts;
Further Instruments.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument. The parties hereto agree to execute such further instruments and
to
take such
further action as may be reasonably necessary to carry out the purposes and
intent of this Agreement.
11
21. Forfeiture
of Shares and/or Gain from Shares.
(a) Notwithstanding
any other provision of this Agreement which may provide to the contrary
(including, but not limited to, the Repurchase Right described in
Section 9(b) and the rights of the Corporation in the event of the
termination of the employment or service of the Participant for Cause, which
rights are not reduced by the terms of this Section 21), if, at any time
during the employment or service of the Participant or during the 12-month
period following termination of employment or service for any reason (regardless
of whether such termination was by the Corporation or the Participant, and
whether voluntary or involuntary), the Participant engages in a Prohibited
Activity (as
defined herein), then (i) the Option shall immediately be terminated and
forfeited in its entirety, (ii) any Shares shall immediately be forfeited and
returned to the Corporation (without the payment by the Corporation of any
consideration for such Shares), and the Participant shall cease to have any
rights related thereto and shall cease to be recognized as the legal owner
of
such Shares, and (iii) any Gain (as defined herein) realized by the Participant
with respect to any Shares shall immediately be paid by the Participant to
the
Corporation.
(b) For
purposes of this Agreement, a "Prohibited Activity" shall mean (i) the
Participant's solicitation or assisting any other person in so soliciting,
directly or indirectly, of any customers, suppliers, vendors or other service
providers to or of the Corporation or any Affiliate within the United States
that the Participant learned confidential information about or had contact
with
through his employment or other service with the Corporation or an Affiliate
for
the purpose of inducing that customer, supplier, vendor or other service
provider to terminate or alter his or its relationship with the Corporation
or
an Affiliate; (ii) the Participant's inducement, directly or indirectly, of
any
employees or consultants within the United States to terminate their employment
with or service to the Corporation or an Affiliate; (iii) the Participant's
violation of any non-competition, non-solicitation or confidentiality
restrictions or other restrictive covenants applicable to the Participant;
(iv)
the Participant's violation of any of the Corporation's policies; (v) the
Participant's violation of any material (as determined by the Administrator)
federal, state or other law, rule or regulation; (vi) the Participant's
disclosure or other misuse of any confidential information or material
concerning the Corporation or an Affiliate (except as otherwise required by
law
or as agreed to by the parties herein); (vii) the Participant's dishonesty
in a
manner that negatively impacts the Corporation in any way; (viii) the
Participant's refusal to perform his duties for the Corporation or an Affiliate;
(ix) the Participant's engaging in fraudulent conduct; or (x) the Participant's
engaging in any conduct that is or could be materially damaging to the
Corporation or its Affiliates without a reasonable good faith belief that such
conduct was in the best interest of the Corporation or any of its Affiliates.
The Administrator shall have sole and absolute discretion to determine if a
Prohibited Activity has occurred.
(c) For
purposes of this Agreement, "Gain" shall mean, unless the Administrator
determines otherwise, an amount equal to (i) the greater of (A) the Fair Market
Value per Share of the Shares (or portion thereof) at the time of exercise
or
(B) the disposition price per Share of any Shares sold or disposed at the time
of disposition (including but in no way limited to any Repurchase Price which
may be paid by the Corporation to the Participant pursuant
to Section 9(b) herein), multiplied by (ii) the number of the Shares sold
or disposed of, minus (iii) the purchase price paid for the Shares (or portion
thereof).
12
(d) Notwithstanding
the provisions of this Section 21, the waiver by the Corporation in any one
or more instances of any rights afforded to the Corporation pursuant to the
terms of this Section 21 shall not be deemed to constitute a further or
continuing waiver of any rights the Corporation may have pursuant to the terms
of this Agreement or the Plan (including, but not limited to, the rights
afforded the Corporation in this Section 21).
(e) The
Corporation and the Participant hereby expressly agree that, notwithstanding
the
other provisions of this Section 21, if the Participant has entered into an
employment agreement, consulting agreement or other agreement containing
non-competition, non-solicitation, confidentiality or similar covenants, then
the provisions contained in such agreement(s) with respect to the scope (e.g.,
duration, territory, or prohibited activity) of such restrictive covenants
shall
control (and thus prevail over Section 21(b)(i), Section 21(b)(ii) and
Section 21(b)(iii) herein), unless the Administrator should determine
otherwise. In any event, the Corporation shall retain the forfeiture and
recoupment rights provided in Section 21(a) in the event of a violation of
such restrictive covenants unless, and then only to the extent prohibited by,
or
restricted under, Applicable Laws.
(f) By
accepting this Agreement, and without limiting the effect of Section 19
herein, the Participant consents to a deduction (to the extent permitted by
Applicable Law) from any amounts the Corporation or an Affiliate may owe the
Participant from time to time (including amounts owed to the Participant as
wages or other compensation, fringe benefits, or vacation pay, as well as any
other amounts owed to the Participant by the Corporation or an Affiliate),
to
the extent of the amounts the Participant owes the Corporation pursuant to
this
Agreement, including, but not limited to, this Section 21. Whether or not
the Corporation elects to make any set-off in whole or in part, if the
Corporation does not recover by means of set-off the full amount owed by the
Participant pursuant to this Agreement, the Participant agrees to immediately
pay the unpaid balance to the Corporation. Further, by executing and returning
this Agreement to the Corporation, the Participant acknowledges and agrees
that
(i) he has read the Plan and this Agreement in its entirety; (ii) he has had
the
opportunity to consult with legal counsel prior to execution of this Agreement;
(iii) this Agreement is valid and binding upon, and enforceable against, the
Participant in accordance with its terms, including, but not limited to, the
restrictions contained in Section 21 herein; and (iv) the consideration for
this Agreement is valuable and sufficient consideration.
22. Right
to Future Stock or Other Securities.
(a) Right
of First Offer.
Subject
to the terms and conditions of this Section 22 and applicable securities
law, if the Corporation proposes to offer or sell any New Securities (as defined
below) and either Acorn Energy, Inc. ("Acorn") or EnerTech Capital Partners
III
L.P. ("EnerTech") has the right to participate in the offer or sale of such
New
Securities (other than EnerTech's right to participate in the offer or sale
of
securities pursuant to the right of first offer granted under Article 4 of
the
Stockholders' Agreement), then the Corporation shall first offer such New
Securities to the Participant. The Participant shall be entitled to purchase
New
Securities as described below. The right of first offer granted to the
Participant pursuant to this Section 22 is referred to herein as the "ROFO,"
and
any such New Securities
purchased by Participant pursuant to this Section 22 shall be referred to as
"ROFO Shares." The parties hereto expressly agree that the ROFO is granted
to
the Participant in order to clarify the Participant's rights in his capacity
as
a shareholder (or potential shareholder) and not for compensatory purposes.
13
(i) The
Company shall give notice (the "Offer Notice") to the Participant, stating
(A)
its bona fide intention to offer such New Securities, (B) the number of such
New
Securities to be offered, and (C) the price (the "ROFO Purchase Price") and
terms, if any, upon which it proposes to offer such New Securities.
(ii) By
notification to the Company within twenty (20) days after the Offer Notice
is
given, the Participant may elect to purchase or otherwise acquire, at the price
and on the terms specified in the Offer Notice, up to that portion of such
New
Securities which equals the proportion that the Common Stock issued and held,
or
issuable (directly or indirectly) upon conversion and/or exercise, as
applicable, of the Options and Common Stock then held, by such Participant
bears
to the total Common Stock of the Company then outstanding (assuming full
conversion and/or exercise, as applicable, of all preferred stock, if any,
and
other Derivative Securities, as defined below). At the expiration of such twenty
(20) day period, the Company shall promptly notify the Participant and each
other participant of the Plan who holds this right (each, an "Eligible
Participant") who elect to purchase or acquire all the shares available to
them
(each, a "Fully Exercising Investor") of any other Eligible Participant's
failure to do likewise. During the ten (10) day period commencing after the
Company has given such notice, each Fully Exercising Investor may, by giving
notice to the Company, elect to purchase or acquire, in addition to the number
of shares specified above, up to that portion of the New Securities for which
the Eligible Participants were entitled to subscribe but that were not
subscribed for by the Eligible Participants which is equal to the proportion
that the Common Stock issued and held, or issuable (directly or indirectly)
upon
conversion and/or exercise, as applicable, of preferred stock, if any, and
any
other Derivative Securities then held, by such Fully Exercising Investor bears
to the Common Stock issued and held, or issuable (directly or indirectly) upon
conversion and/or exercise, as applicable, of the preferred stock, if any,
and
any other Derivative Securities then held, by all Fully Exercising Investors
who
wish to purchase such unsubscribed shares. The closing of any sale pursuant
to
this Section 22(a)(ii) shall occur within the later of ninety (90) days of
the
date that the Offer Notice is given and the date of initial sale of New
Securities pursuant to Section 22(a)(ii).
(iii) The
Company may, during the ninety (90) day period following the expiration of
the
periods provided in Section 22(a)(ii), offer and sell the remaining unsubscribed
portion of such New Securities to any person or persons at a price not less
than, and upon terms no more favorable to the offeree than, those specified
in
the Offer Notice. If the Company does not enter into an agreement for the sale
of the New Securities within such period, or if such agreement is not
consummated within thirty (30) days of the execution thereof, the ROFO provided
hereunder shall be deemed to be revived and such New Securities shall not be
offered unless first reoffered to the Eligible Participants in accordance with
this Section 22.
14
(iv) The
ROFO
described in this Section 22 shall not be applicable to shares of Common Stock
issued in an IPO.
(v) Notwithstanding
any provision hereof to the contrary, in lieu of complying with the provisions
of this Section 22, the Company may elect to give notice to the Eligible
Participants within thirty (30) days after the issuance of New Securities.
Such
notice shall describe the type, price and terms of the New Securities. Each
Eligible Participant shall have thirty (30) days from the date notice is given
to elect to purchase up to the number of New Securities that would, if purchased
by such Eligible Participants, maintain such Eligible Participant's
percentage-ownership position, calculated as set forth in Section 22(a)(ii)
before giving effect to the issuance of such New Securities. The closing of
such
sale shall occur within sixty (60) days of the date notice is given to the
Eligible Participants.
(b) Other
Restrictions on ROFO Shares; Corporation's ROFO Repurchase
Rights.
Any and
all ROFO Shares acquired by the Participant pursuant to this Section 22 shall,
unless the Administrator determines otherwise (or as otherwise provided in
this
Section 22(b)), be subject to the other provisions of this Agreement applicable
to the Shares issued or issuable pursuant to the Option. In addition, without
in
any way limiting the effect of the foregoing, the following provisions shall
apply: In the event that the employment or service of the Participant with
the
Corporation or an Affiliate terminates for any reason (whether by the
Corporation or the Participant, and whether voluntary or voluntary), the
provisions of Section 9(b) regarding the Corporation's Repurchase Right shall
also apply to the ROFO Shares (such Repurchase Right as it relates to the ROFO
Shares being also referred to herein as the Corporation's "ROFO Repurchase
Right"); provided, however, that, in such event, the term "Option Price" shall
be replaced by the term "ROFO Purchase Price" (as defined in Section 22(a)(i)
herein), and, regardless of the basis of the Participant's termination, in
no
event shall the ROFO Repurchase Price be less than the ROFO Purchase Price.
Further, in the event that the Participant engages in a "Prohibited Activity"
as
defined in Section 21(b) such that the rights of the Corporation provided in
Section 21(a) apply, references in Section 21 to the "Shares" shall include
the
ROFO Shares. In such event, notwithstanding the other provisions of Section
21(a)(ii), the Corporation shall be required to pay the Participant the ROFO
Purchase Price for such ROFO Shares as a condition to the Participant's
forfeiture of the ROFO Shares and rights related thereto.
(c) Subsequent
Transferees.
The
ROFO Repurchase Right restrictions described in Section 22(b) shall apply
to any ROFO Shares held by a transferee or transferees (collectively, the "ROFO
Shares Transferee"), which shares were issued to the Participant pursuant to
this Section 22 and subsequently transferred to the ROFO Shares Transferee.
The Corporation shall be under no obligation to transfer or issue shares to
such
ROFO Shares Transferee, and such ROFO Shares Transferee shall have no rights
with respect to any such shares, until the ROFO Shares Transferee has agreed
to
be subject to the terms and conditions of the Plan (including, but not limited
to, the provisions of Section 22 therein), this Agreement, the
Stockholders' Agreement and any other applicable agreement. Any transfer or
purported transfer made by a purchaser of shares issued under this
Section 22, except at the times and in the manner herein specified, will be
null and void and the Corporation shall not recognize or give effect to such
transfer on its books and records or recognize the person or persons to whom
such proposed transfer has been made as the legal or beneficial holder of those
shares.
15
(d) Survival
and Termination of ROFO and ROFO Repurchase Right.
The
Participant's ROFO described in Section 22(a) and the Corporation's ROFO
Repurchase Right described in Section 22(b) shall continue not withstanding
the earlier termination of the Option and/or this Agreement. In such event,
the
ROFO Repurchase Price (as defined in Section 22(b)) shall continue to be
determined as provided in Section 22(b), notwithstanding the termination of
the
Option or the Agreement. The ROFO and the ROFO Repurchase right shall terminate
and be of no further force or effect (i) immediately before the consummation
of
an IPO or (ii) when the Company first becomes subject to the periodic reporting
requirements of Section 12(g) or 15(d) of the Exchange Act, whichever event
occurs first.
(e) Definitions.
(i) "Derivative
Securities" means any securities or rights convertible into, or exercisable
or
exchangeable for (in each case, directly or indirectly), Common Stock, including
options and warrants.
(ii) "New
Securities" means, collectively, equity securities of the Corporation, whether
or not currently authorized, as well as rights, options, or warrants to purchase
such equity securities, or securities of any type whatsoever that are, or may
become, convertible or exchangeable into or exercisable for such equity
securities, other than any such securities issued for compensatory purposes
to
employees or consultants of the Corporation.
[Signature
Page To Follow]
16
IN
WITNESS WHEREOF, this Agreement has been executed in behalf of the Corporation
and by the Participant effective as of the day and year first above
written.
|
|
COMPANY:
COALOGIX,
INC.
|
|
ATTEST:
By:
Name:
Title:
|
By:
Name:
Title:
|
|
PARTICIPANT:
|
|
|
_______________________________(SEAL)
|
|
|
Name:Xxxxxxx
X. XxXxxxx
|
17
COALOGIX
INC.
2008
STOCK OPTION PLAN
(Employees)
SCHEDULE
A
|
Date
Option Granted:
|
April
9, 2008
|
|
Date
Option Expires:
|
April
8, 2018
|
|
Number
of Shares Subject to Option:
|
147,050
shares [reflects effect of 25-for-1 stock split in July
2008]
|
|
Option
Price (per Share):
|
$5.05
[reflects effect of 25-for-1 stock split in July
2008]
|
|
Type
of Option:
|
X
Incentive Option
|
|
Nonqualified Option
|
Vesting
Schedule:
(a) The
Option shall become vested and exercisable with respect to 25% of the Shares
subject to the Option on November 7, 2008, subject to the continued
employment of the Participant and the terms of the Plan and this
Agreement.
(b) The
Option shall become vested and exercisable in 6.25% installments per quarter
commencing on February 7, 2009, so that the Option shall become vested and
exercisable with respect to an aggregate of 50% of the Shares subject to the
Option on November 7, 2009, 75% of the Shares subject to the Option on
November 7, 2010, and 100% of the Shares subject to the Option on
November 7, 2011, in each case subject to the continued employment of the
Participant and the terms of the Plan and this Agreement.
A-1
