TERMS AND CONDITIONS OF STOCK OPTIONS
GRANTED UNDER THE
LIGHTBRIDGE, INC. 2004 STOCK INCENTIVE PLAN
These terms and conditions shall apply to all Options granted by
Lightbridge, Inc., a Delaware corporation (hereinafter together with its
subsidiaries, where the context permits, referred to as the "Company"), under
its 2004 Stock Incentive Plan , as amended from time to time (the "Plan"),
unless otherwise specified in the written notice of option grant (the "Notice of
Grant") delivered by the Company to the grantee of an Option (a "Holder").
Capitalized terms used and not otherwise defined herein shall have the
respective meanings ascribed to such terms in the Plan.
Section 1. GRANT OF OPTION. Each Option shall be evidenced by a Notice of
Grant, which may be in electronic form and may be electronically acknowledged
and accepted by the recipient, and shall give the Holder the right and option to
purchase from the Company shares of the Company's Common Stock, $.01 par value
per share (the "Common Stock"). The Notice of Grant shall set forth with respect
to the subject Option (i) its expiration date, (ii) its exercise price per
share, (iii) the maximum number of shares that the Holder may purchase upon
exercise thereof, and (iv) the vesting schedule. The Notice of Grant may also
contain other terms and conditions applicable to the Option, and in the event of
any conflict or inconsistency between these terms and conditions and the terms
contained in any Notice of Grant, the latter shall prevail. The right to
purchase shares under any Option shall be cumulative.
Each Option is and shall be subject in every respect to the provisions of
the Plan, which is incorporated herein by reference and made a part hereof. In
the event of any conflict or inconsistency between the terms hereof or of any
Notice of Grant and those of the Plan, the terms of the Plan shall prevail.
If an Option is granted to a person who is an employee of the Company or
an Affiliate, it shall be deemed to be an Incentive Stock Option to the extent
that it otherwise qualifies as such under applicable law. Any portion of such an
Option that does not so qualify, and any Option granted to any other Eligible
Person, shall be a Non-Statutory Stock Option.
Section 2. EXERCISE OF OPTION. An Option shall be exercised by the
delivery of written notice to the Company (the "Notice") setting forth the
number of shares with respect to which the Option is to be exercised and the
address to which the certificates for such shares are to be mailed or otherwise
delivered, together with:
(i) cash or check payable to the order of the Company for an amount
equal to the option price for the number of shares specified in the
Notice; or
(ii) with the consent of the Committee, shares of Common Stock of
the Company that (a) either have been purchased by the Holder on the open
market, or have been beneficially owned by the Holder for a period of at
least six (6) months and are not then
subject to restriction under any Company plan ("Mature Shares"), and (b)
have a Fair Market Value on the date of surrender equal to the option
price for the shares as to which the Option is being exercised; or
(iii) if the Common Stock is registered under the Exchange Act at
the time of exercise, by delivery to the Company of a properly executed
Notice along with irrevocable instructions to a broker to deliver promptly
to the Company cash or a check payable and acceptable to the Company in an
amount equal the option price for the shares as to which the Option is
being exercised; provided that in the event that the optionee chooses to
pay the purchase price as so provided, the optionee and the broker shall
comply with such procedures and enter into such agreements of indemnity
and other agreements as the Committee shall prescribe as a condition of
such payment procedure (including, in the case of an optionee who is an
executive officer of the Company, such procedures and agreements as the
Committee deems appropriate in order to avoid any extension of credit in
the form of a personal loan to such officer); provided further that the
Company need not act upon such exercise notice until the Company receives
full payment of the exercise price; or
(iv) with the consent of the Committee, by reducing the number of
Option shares otherwise issuable to the Holder upon exercise of the Option
by a number of shares of Common Stock having a Fair Market Value equal to
the option price for the shares as to which the Option is being exercised;
provided, however, that the Holder otherwise holds an equal number of
Mature Shares; or
(v) with the consent of the Committee, a combination of (i) through
(iv).
Section 3. CONDITIONS AND LIMITATIONS. The Company, in its discretion, may
file a registration statement on Form S-8 under the Securities Act of 1933 to
register shares of Common Stock reserved for issuance under the Plan. At any
time at which such a registration statement is not in effect, it shall be an
additional condition precedent to any exercise of an Option that the Holder
shall deliver to the Company a customary "investment letter" satisfactory to the
Company and its counsel in which, among other things, the Holder shall state
that the Holder is purchasing the shares for investment and acknowledges that
they are not freely transferable except in compliance with state and federal
securities laws.
Section 4. DELIVERY OF SHARES. Within a reasonable time after receipt by
the Company of the Notice and payment for any shares to be purchased under an
Option and, if required as a condition to exercise, the investment letter
described in Section 3, the Company will deliver or cause to be delivered to the
Holder (or if any other individual or individuals are exercising the Option, to
such individual or individuals) at the address specified in the Notice a
certificate or certificates for the number of shares with respect to which the
Option is then being exercised, registered in the name or names of the
individual or individuals exercising the Option, either alone or jointly with
another person or persons with rights of survivorship, as the individual or
individuals exercising the Option shall prescribe in writing to the Company at
or prior to such purchase; provided, however, that if any law or regulation or
order of the SEC or other body having jurisdiction in the premises shall require
the Company or the Holder (or the individual or individuals exercising the
Option) to take any action in connection with the shares then being
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purchased, the date for the delivery of the certificates for such shares shall
be extended for the period necessary to take and complete such action, it being
understood that the Company shall have no obligation to take and complete any
such action. The Company may imprint upon such certificate such legends
referencing stock transfer restrictions which counsel for the Company considers
appropriate. Delivery by the Company of the certificates for such shares shall
be deemed effected for all purposes when the Company or a stock transfer agent
of the Company shall have deposited such certificates in the United States mail,
addressed to the Holder, at the address specified in the Notice.
Section 5. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The existence of
any Option shall not affect in any way the right or power of the Company or its
stockholders to make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or any issuance of
Common Stock, or any issuance of bonds, debentures, preferred or prior
preference stock or other capital stock ahead of or affecting the Common Stock
or the rights thereof, or the dissolution or liquidation of the Company, or any
sale or transfer of all or any part of its assets or business, or any other
corporate act or proceeding, whether of a similar character or otherwise.
If the Company shall effect a stock dividend, stock split or similar
change in capitalization affecting the shares of Common Stock outstanding, in
any such case without receiving compensation therefor in money, services or
property, then the number, class, and price per share of shares of Common Stock
subject to each Option shall be appropriately adjusted in such a manner as to
entitle the Holder to receive upon exercise of the Option, for the same
aggregate cash consideration, the same total number and class of shares as the
Holder would have received as a result of the event requiring the adjustment had
the Holder exercised the Option in full immediately prior to such event.
Except as hereinbefore expressly provided, the issuance by the Company of
shares of stock of any class, or securities convertible into 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 or warrants to subscribe therefor, or upon
the conversion of shares or obligations of the Company convertible into such
shares or other securities, shall not affect, and no adjustment by reason
therefor shall be made with respect to, the number or price of shares of Common
Stock then subject to any Option.
Section 6. EFFECT OF CERTAIN TRANSACTIONS. After a merger of one or more
corporations with or into the Company or after a consolidation of the Company
and one or more corporations in which the stockholders of the Company
immediately prior to such merger or consolidation own after such merger or
consolidation shares representing at least fifty percent (50%) of the voting
power of the Company or the surviving or resulting corporation, as the case may
be, a Holder shall, at no additional cost, be entitled upon exercise of an
Option to receive in lieu of the shares of Common Stock as to which the Option
was exercisable immediately prior to such event, the number and class of shares
of stock or other securities, cash or property (including, without limitation,
shares of stock or other securities of another corporation or Common Stock) to
which the Holder would have been entitled pursuant to the terms of the agreement
of merger or consolidation if, immediately prior to such merger or
consolidation, the Holder had been the
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holder of record of a number of shares of Common Stock equal to the number of
shares for which the Option shall be so exercised.
If a Change in Control occurs while an Option remains outstanding, then
fifty percent (50%) of any remaining unvested shares purchasable under such
Option after the effective date of a Change in Control will be deemed vested in
accordance with the terms hereof, and, subject to the provisions of clause (iii)
in the immediately following paragraph, the remaining fifty percent (50%) shall
continue to vest in accordance with the terms of such Option. The acceleration
required under this paragraph shall not be deemed to limit the authority of the
Committee to take the actions set forth in the immediately following paragraph.
Upon the occurrence of a Change of Control while an Option remains
outstanding, then (i) subject to the provisions of clause (iii) below, after the
effective date of such Change of Control, the Holder of the Option shall be
entitled, upon exercise of the Option, to receive, in lieu of the shares of
Common Stock as to which the Option was exercisable immediately prior to the
Change of Control, the number and class of shares of stock or other securities,
cash or property (including, without limitation, shares of stock or other
securities of another corporation or Common Stock) to which the Holder would
have been entitled pursuant to the terms of the Change of Control if,
immediately prior to the Change of Control, the Holder had been the holder of a
number of shares of Common Stock equal to the number of shares as to which the
Option shall be so exercised; (ii) the Committee may accelerate, fully or in
part, the time for exercise of the Option so that, from and after a date prior
to the effective date of the Change of Control specified by the Committee, the
Option shall be exercisable to the extent determined by the Committee; or (iii)
the Option may be canceled by the Committee as of the effective date of the
Change of Control, provided that (x) prior written notice of such cancellation
shall be given to the Holder and (y) the Holder shall have the right to exercise
the Option for a period of up to ninety (90) days after the effective date of
the Change in Control to the extent that the same is then exercisable including
as provided in the immediately preceding paragraph or, if the Committee shall
have accelerated the time for exercise of the Option pursuant to clause (ii)
above, in full during the thirty (30) day period preceding the effective date of
the Change of Control.
Section 7. RIGHTS OF HOLDER. No person shall, by virtue of the granting of
an Option, be deemed to be a holder of any shares purchasable under the Option
or to be entitled to the rights or privileges of a holder of such shares unless
and until the Option has been exercised with respect to such shares and they
have been issued pursuant to that exercise of the Option.
The Company shall, at all times while any portion of any Option is
outstanding, reserve and keep available, out of shares of its authorized and
unissued stock or reacquired shares, a sufficient number of shares of its Common
Stock to satisfy the requirements of the Option; shall comply with the terms of
the Option promptly upon exercise of the option rights; and shall pay all fees
or expenses necessarily incurred by the Company in connection with the issuance
and delivery of shares pursuant to the exercise of the Option.
Section 8. TRANSFER AND TERMINATION. No Option is transferable by the
Holder otherwise than by will or under the laws of descent and distribution. The
granting of an Option shall not impose upon the Company any obligation to retain
or to continue to retain the services
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of the Holder in any capacity. The right of the Company to terminate the
services of the Holder shall not be diminished or affected by reason of the fact
that an Option has been granted to such Holder.
An Option shall terminate in all respects, and all rights and options to
purchase shares thereunder shall terminate, upon the expiration date set forth
in the Notice of Grant. Each Option is exercisable, during the Holder's
lifetime, only by the Holder, and by the Holder only while the Holder is serving
as an Eligible Person, except as follows:
(i) If the Holder ceases to serve as an Eligible Person by reason of
death before the expiration date of the Option, the Option may thereafter
be exercised, to the extent exercisable at the date of death, by the legal
representative or legatee of the Holder for a period of one (1) year after
the date of death, or until the expiration of the stated term of the
Option, if earlier.
(ii) If the Holder ceases to serve as an Eligible Person by reason
of Disability before the expiration date of the Option, the Holder shall
have the right to exercise the Option, to the extent exercisable at the
date of such cessation of service, for a period of one (1) year after the
date of such cessation of service, or until the expiration of the stated
term of the Option, if earlier.
(iii) If the Holder ceases to serve as an Eligible Person by reason
of Normal Retirement before the expiration date of the Option, the Holder
shall have the right to exercise the Option, to the extent exercisable at
the date of such cessation of service, for a period of ninety (90) days
after the date of such cessation of service, or until the expiration of
the stated term of the Option, if earlier.
(iv) If the Holder ceases to serve as an Eligible Person for any
reason other than death, Disability, or Normal Retirement before the
expiration date of the Option, the Holder shall have the right to exercise
the Option, to the extent exercisable at the date of such cessation of
service, for a period of ninety (90) days after the date of such cessation
of service, or until the expiration of the stated term of the Option, if
earlier.
Section 9. NOTIFICATION OF DISQUALIFYING DISPOSITION. If an Option
qualifies as an Incentive Stock Option, in whole or in part, the Holder shall
notify the Company in writing immediately after making a Disqualifying
Disposition, as defined below, of any shares of Common Stock received pursuant
to the exercise of the Option. The Holder shall also provide the Company with
any information that the Company shall request concerning any such Disqualifying
Disposition.
9.1 DISQUALIFYING DISPOSITION. A "Disqualifying Disposition" shall
have the meaning specified in Section 421(b) of the Code or any successor
provision; as of the date of adoption of these terms and conditions, a
Disqualifying Disposition is any disposition (including any sale) of shares
acquired upon exercise of an Incentive Stock Option before the later of (a) the
second anniversary of the date of grant of the Option or (b) the first
anniversary of the date on which the Holder acquired the shares by exercising
the Option, provided that such holding period requirements terminate upon the
death of the Holder.
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9.2 FORFEITURE OF FAVORABLE TAX TREATMENT. If an Option qualifies as
an Incentive Stock Option, the Holder acknowledges that the Holder will forfeit
the favorable income tax treatment otherwise available with respect to the
exercise of the Option if the Holder makes a Disqualifying Disposition of shares
received upon exercise of the Option.
Section 10. WITHHOLDING OF TAXES.
10.1 UPON A DISQUALIFYING DISPOSITION. If the Company in its
discretion determines that it is obligated to withhold tax with respect to a
Disqualifying Disposition of shares of Common Stock received on exercise of an
Option, the Holder agrees that the Company may withhold from the Holder's wages,
or other amounts due to the Holder from the Company, the appropriate amount of
federal, state or local withholding taxes attributable to such Disqualifying
Disposition.
10.2 UPON TREATMENT AS A NON-STATUTORY OPTION. If any portion of an
Option is treated as a Non-Statutory Stock Option, the Holder hereby agrees that
the Company may withhold from the Holder's wages, or other amounts due to the
Holder from the Company, the appropriate amount of federal, state and local
withholding taxes attributable to the Holder's exercise of such Non-Statutory
Option.
10.3 ELECTION AS TO METHOD OF SATISFYING WITHHOLDING OBLIGATION. At
the Holder's election, the amount required to be withheld may be satisfied, in
whole or in part, by (a) authorizing the Company to withhold from shares of
Common Stock to be issued pursuant to the exercise of a Non-Statutory Option a
number of shares with an aggregate Fair Market Value that would satisfy the
minimum withholding amount due with respect to such exercise, or (b)
transferring to the Company Mature Shares with an aggregate Fair Market Value
that would satisfy the minimum withholding amount due.
10.4 AGREEMENT TO REIMBURSE COMPANY FOR WITHHOLDING OBLIGATION. The
Holder further agrees that, if the Company does not withhold an amount from the
Holder's wages sufficient to satisfy the Company's withholding obligation, the
Holder will reimburse the Company on demand, in cash, for the amount
underwithheld.
Section 11. NOTICE. Any notice to be given to the Company under these
terms and conditions shall be deemed sufficient if addressed to the Company and
delivered by hand or by mail to the Treasurer of the Company, 30 Corporate
Drive, Burlington, Massachusetts 01803 or such other address as the Company may
hereafter designate.
Any notice to be given to the Holder hereunder shall be deemed sufficient
if addressed to and delivered in person to the Holder or when deposited in the
mail, postage prepaid, addressed to the Holder at the Holder's address furnished
to the Company.
Section 12. GOVERNMENT AND OTHER REGULATIONS. Each Option is subject to
all laws, regulations and orders of any governmental authority which may be
applicable thereto and, notwithstanding any of the provisions hereof, the Holder
agrees that the Holder will not exercise an Option nor will the Company be
obligated to issue or sell any shares of stock thereunder if the exercise
thereof or the issuance or sale of such shares, as the case may be, would
constitute a violation by the Holder or the Company of any such law, regulation
or order or any provision
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thereof. The Company shall not be obligated to take any affirmative action in
order to cause the exercise of an Option or the issuance or sale of shares
pursuant thereto to comply with any such law, regulation, order or provision.
Section 13. LOCK-UP AGREEMENT. The Holder agrees that upon request of the
Company or the underwriters managing any underwritten offering of the Company's
securities, the Holder shall agree in writing that for a period of time not to
exceed one hundred eighty (180) days from the effective date of any registration
of securities of the Company the Holder will not sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any shares
of Common Stock issued pursuant to the exercise of any Option without the prior
written consent of the Company or such underwriters, as the case may be.
Section 14. GOVERNING LAW. These terms and conditions and all Options
shall be governed by, and construed and enforced in accordance with, the
substantive laws of The Commonwealth of Massachusetts, without regard for
principles of conflicts of laws.
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