EXHIBIT 10.9
FIRST AMENDED AND RESTATED
STOCK OPTION AGREEMENT
(NONQUALIFIED STOCK OPTION)
OPTIONEE: Isaac Yeffet
NUMBER OF SHARES: 1,000,000
OPTION EXERCISE PRICE: $1.00 per Share
DATE OF GRANT: July 12, 2002
EXERCISE TERM: Six Years from the Date of Grant
VESTING SCHEDULE: The option will vest as follows over the Exercise
Term:
Date of Grant 500,000 shares
Date following the Measurement
Period (as defined in the
Consulting Agreement (as defined
below)) 500,000 shares
THIS FIRST AMENDED AND RESTATED STOCK OPTION AGREEMENT (the "AGREEMENT") is
entered into effective as of the 12th day of July, 2002 by and between HIENERGY
TECHNOLOGIES, INC. (the "Company"), a Washington corporation, and the individual
designated above (the "Optionee"), and it amends and restates in its entirety
that certain Option Agreement entered into effective as of the 12th day of July,
2002 by and between the Company and the Optionee.
RECITALS
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WHEREAS, a consulting agreement (the "Consulting Agreement") was executed
between Yeffet Security Consultant, Inc. ("Yeffet"), a corporation solely owned
by the Optionee, and HiEnergy Technologies, Inc., a Washington corporation, on
July 12, 2002; and
WHEREAS, through Yeffet the Optionee has agreed to perform valuable
services for the Company;
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 1
NOW, THEREFORE, the parties agree to the terms and conditions as follows:
1. GRANT OF OPTION.
1.1 Option. An option to purchase shares of the Company's Common Stock, par
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value $0.0001 per share, (the "Shares") is hereby granted to the Optionee
(the "Option").
1.2 Number of Shares. The number of Shares that the Optionee can purchase
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upon exercise of the Option is set forth above.
1.3 Option Exercise Price. The price the Optionee must pay to exercise the
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Option (the "Option Exercise Price") is set forth above.
1.4 Date of Grant. The date the Option is granted (the "Date of Grant") is
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set forth above.
1.5 Type of Option. The Option is intended to be a Nonqualified Stock
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Option. It is not intended to qualify as an Incentive Stock Option within the
meaning of Section 422 of the Internal Revenue Code of 1986, as amended from
time to time, or any successor provision thereto.
1.6 Condition. The Option is conditioned on the Optionee's execution of
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this Agreement. If this Agreement is not executed by the Optionee, it may be
canceled by the Board.
2. DURATION.
The Option shall be exercisable to the extent and in the manner provided
herein during the Exercise Term, which is set forth above; provided, however,
that the Option may be earlier terminated as provided in Section 1.6 or Section
5 hereof or in the Consulting Agreement.
3. VESTING.
The Option shall vest, and may be exercised, with respect to the Shares, on
or after the dates set forth above, subject to earlier termination of the Option
as provided in Section 1.6 and Section 5 hereof. The right to purchase the
Shares as they become vested shall be cumulative and shall continue during the
Exercise Term unless sooner terminated as provided herein or in the Consulting
Agreement.
4. MANNER OF EXERCISE AND PAYMENT.
4.1 To exercise the Option, the Optionee must deliver a completed copy of
the Option Exercise Form, attached hereto as Exhibit A, to the address indicated
on such Form or such other address designated by the Company from time to
time. Contemporaneously with the delivery of the Option Exercise Form, the
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 2
Optionee shall tender the Option Exercise Price to the Company, (i) by cash,
check, wire transfer or such other method of payment (e.g., delivery or
attestation of Shares already owned) as may be acceptable to the Company, (ii)
by "cashless exercise" in accordance with the provisions of Section 4.3, but
only when a registration statement under Securities Act qualifying a public
offering of the underlying Shares is not then in effect, or (iii) by a
combination of the foregoing methods of payment selected by the Optionee. The
Option may be exercised in whole or in part with respect to the vested Shares.
Within thirty (30) days of delivery of the Option Exercise Form and tender of
the Option Exercise Price, the Company shall deliver certificates evidencing the
Shares to the Optionee, duly endorsed for transfer to the Optionee, free and
clear of all liens, security interests, pledges or other claims or charges.
4.2 The Optionee shall not be deemed to be the holder of, or to have any of
the rights of a holder with respect to any Shares subject to the Option until
(i) the Option shall have been exercised pursuant to the terms of this Agreement
and the Optionee shall have paid the full purchase price for the number of
Shares in respect of which the Option was exercised, (ii) the Company shall have
issued and delivered the Shares to the Optionee, and (iii) the Optionee's name
shall have been entered as a stockholder of record on the books of the Company,
whereupon the Optionee shall have full voting and other ownership rights with
respect to such Shares.
4.3 Notwithstanding any provisions herein to the contrary, if the Per Share
Market Value of one share of Common Stock is greater than the Option Exercise
Price (at the date of calculation as set forth below), in lieu of exercising
this Option by payment of cash, the Optionee may exercise this Option by a
cashless exercise and shall receive the number of shares of Common Stock equal
to an amount (as determined below) by surrendering this Option at the principal
office of the Company together with the properly endorsed Option Exercise Form
in which event the Company shall issue to the Optionee a number of shares of
Common Stock computed using the following formula:
X = Y - (A)(Y)
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B
Where X = the number of shares of Common Stock to be issued to the
Optionee.
Y = the number of shares of Common Stock purchasable upon
exercise of all of the Option or, if only a portion of
the Option is being exercised, the portion
of the Option being exercised.
A = the Option Exercise Price.
B = the Per Share Market Value of one share of Common Stock.
"Per Share Market Value" means on any particular date (a) the closing bid price
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for a share of Common Stock in the over-the-counter market, as reported by the
OTC Bulletin Board (or in the National Quotation Bureau Incorporated or similar
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 3
organization or agency succeeding to its functions of reporting prices), or any
United States market or exchange senior to the OTC Bulletin Board where the
Company's Common Stock may become traded, at the close of business on such date,
or (b) if the Common Stock is not then reported by the OTC Bulletin Board or the
National Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices or any senior market or
exchange), then the average of the "Pink Sheet" quotes for the relevant
conversion period, as determined in good faith by the Company's Board of
Directors, or (c) if the Common Stock is not then publicly traded the fair
market value of a share of Common Stock as determined by the Company's Board of
Directors in good faith; provided, however, that the Optionee, after receipt of
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the determination by the Company's Board of Directors, shall have the right to
select, jointly with the Company, an Independent Appraiser, in which case, the
fair market value shall be the determination by such Independent Appraiser; and
provided, further that all determinations of the Per Share Market Value shall be
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appropriately adjusted for any stock dividends, stock splits or other similar
transactions during such period. The determination of fair market value shall
be based upon the fair market value of the Company determined on a going concern
basis as between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and binding on
all parties. In determining the fair market value of any shares of Common
Stock, no consideration shall be given to any restrictions on transfer of the
Common Stock imposed by agreement or by federal or state securities laws, or to
the existence or absence of, or any limitations on, voting rights.
"Independent Appraiser" means a nationally recognized or major regional
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investment banking firm or firm of independent certified public accountants of
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recognized standing (which may be the firm that regularly examines the financial
statements of the Company) that is regularly engaged in the business of
appraising the capital stock or assets of corporations or other entities as
going concerns, and which is not affiliated with either the Company or the
Optionee.
5. TERMINATION.
5.1 Termination of Consulting Agreement. If the Optionee's status as a
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Consultant is terminated at any time after the grant of the Option for any
reason, then any vested options shall terminate on the expiration date otherwise
provided in this Agreement. Any nonvested options shall terminate
immediately upon the effective date of termination of the Consulting Agreement;
provided, however, that nonvested options shall vest and terminate as otherwise
provided in this Agreement if Optionee's status as a Consultant is terminated
due to Optionee's death or disability.
6. TRANSFERABILITY.
The Optionee may transfer vested options in whole or in part, subject to
the consent of the Company, which shall not be unreasonably withheld, delayed or
conditioned; provided, however, that the Optionee shall, in the case of each
such transfer, provide the Company with an opinion of counsel reasonably
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 4
acceptable to the Company (both as to substance and the competence of counsel)
that such transfer may be accomplished in accordance with all applicable
securities laws. Any transferee shall execute a writing in form and substance
satisfactory to the Company and its counsel agreeing to be bound by the terms of
this Agreement.
7. RESTRICTIONS ON THE OPTIONS; RESTRICTIONS ON THE SHARES.
The Option, whether owned by the Optionee or his transferee, may not be
exercised at any time unless, in the opinion of counsel for the Company, the
issuance and sale of the Shares issued upon such exercise is exempt from
registration under the Securities Act of 1933, as amended, or any other
applicable federal or state securities law, rule or regulation, or the Shares
have been duly registered under such laws. Except as otherwise agreed in
writing, the Company shall not be required to register the Shares issuable upon
the exercise of the Option under any such laws. Unless the Shares have been
registered under all applicable laws, the Optionee (or his transferee, as the
case may be) shall represent, warrant and agree, as a condition to the exercise
of the Option, that the Shares are being purchased for investment only and
without a view to any sale or distribution of such Shares and that such Shares
shall not be transferred or disposed of in any manner without registration under
such laws, unless it is the opinion of counsel for the Company that such a
disposition is exempt from such registration. The Optionee (or his transferee,
as the case may be) acknowledges that an appropriate legend, in such form as the
Company shall determine, giving notice of the foregoing restrictions shall
appear conspicuously on all certificates evidencing the Shares issued upon the
exercise of the Option. The Company may, in its sole discretion, place a "Blue
Sky" legend on the certificates in accordance with U.S. state securities laws or
as required by applicable securities laws.
8. NO RIGHT TO CONTINUED STATUS AS CONSULTANT.
Nothing in this Agreement shall be interpreted or construed to confer upon
the Optionee any right with respect to continuance as a Consultant for the
Company or any Parent or Subsidiary, nor shall this Agreement interfere in any
way with the right of the Company or a Parent or Subsidiary to terminate the
Optionee's status as a Consultant at any time.
9. ADJUSTMENTS UPON CERTAIN EVENTS.
9.1. Adjustments Upon Changes in Capitalization. Subject to any required
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action by the shareholders of the Company, the event of a change in
capitalization, such as a stock split or other subdivision or consolidation of
Shares or the payment of any stock dividend consisting of Shares or any other
increase or decrease in the number of Shares effected without receipt of
consideration by the Company, the Company shall make appropriate and
proportionate adjustments to the number and class of Shares subject to the
Option and the purchase price for such Shares or other stock or securities;
provided, however, that conversion of the Option will not be deemed to have been
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 5
"effected without receipt of consideration". Any adjustments as a result
of a change in the Company's capitalization will be made by the Board of
Directors, whose determination in that respect is final, binding and conclusive.
Except as otherwise expressly provided in this Section 9.1, any issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall not affect the number of Shares or the exercise
price of the Shares subject to the Option, and no adjustments in the Option
shall be made by reason thereof. The grant of this Option does not in any way
affect the right or power of the Company to make adjustments, reclassifications,
reorganizations or changes of its capital or business structure.
9.2. Liquidation or Dissolution. In the event of a liquidation or
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dissolution, any unexercised options will terminate. The Board of Directors may,
in its discretion, provide that the Optionee (or his transferee, as the case may
be) will have the right to exercise the Optionee's Option as to all of the
optioned stock prior to the consummation of the liquidation or dissolution.
9.3. Change of Control, Merger, Sale of Assets, Etc. In the event of the
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sale or other transfer of the outstanding shares of stock of the Company in one
transaction or a series of related transactions or a merger or reorganization of
the Company with or into any other corporation, where immediately following the
transaction, those persons who were shareholders of the Company immediately
before the transaction control less than 50% of the voting power of the
surviving organization (a "change of control event") or in the event of a
proposed sale of substantially all of the assets of the Company (collectively,
"sale transaction"), the Option shall be assumed or replaced with a substitute
equivalent option.
10. WITHHOLDINGS OF TAXES.
The Company shall have the right to deduct from any distribution of cash to
the Optionee (or his transferee, as the case may be) an amount equal to the
federal, state and local income taxes and other amounts as may be required by
law to be withheld (the "Withholdings Taxes") with respect to the Option. If
the Optionee (or his transferee, as the case may be) is entitled to receive
Shares upon exercise of the Option, the Optionee (or his transferee, as the case
may be) shall pay the Withholdings Taxes (if any) to the Company in cash prior
to the issuance of such Shares. In satisfaction of the Withholdings Taxes, the
Optionee (or his transferee, as the case may be) may make a written election
(the "Tax Election"), which may be accepted or rejected in the discretion of the
Company, to have withheld a portion of the Shares issuable to him or her upon
exercise of the Option, having an aggregate Fair Market Value equal to the
Withholdings Taxes, provided that, if the Optionee may be subject to liability
under Section 16(b) of the Exchange Act, the election must comply with the
requirements applicable to Share transactions by such Optionees.
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 6
11. MODIFICATION OF AGREEMENT.
This Agreement may be modified, amended, suspended or terminated, and any
terms or conditions may be waived, only by a written instrument executed by the
parties hereto.
12. SEVERABILITY.
Should any provision of this Agreement be held by a court of competent
jurisdiction to be unenforceable or invalid for any reason, the remaining
provisions of this Agreement shall not be affected by such holdings and shall
continue in full force in accordance with their terms.
13. GOVERNING LAW.
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of California without
giving effect to the conflicts of laws principles thereof.
14. SUCCESSORS IN INTEREST.
This Agreement shall be binding upon, and inure to the benefit of, the
Company and its successors and assigns, and upon any person acquiring, whether
by merger, consolidation, reorganization, purchase of stock or assets, or
otherwise, all or substantially all of the Company's assets and business. This
Agreement shall inure to the benefit of the Optionee's transferees, heirs and
legal representatives. All obligations imposed upon the Optionee and all rights
granted to the Company under this Agreement shall be final, binding and
conclusive upon the Optionee's transferees, heirs, executors, administrators and
successors.
15. RESOLUTION OF DISPUTES.
Any dispute or disagreement which may arise under, or as a result of, or in
any way relate to, the interpretation, construction or application of this
Agreement shall be determined by the Board of Directors of the Company;
provided, however, that any component of such a determination based on the
interpretation, construction or application of the Consulting Agreement must be
established as provided by the Consulting Agreement. Any determination made
hereunder shall be final, binding and conclusive on the Optionee and the Company
for all purposes.
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 7
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date first above written.
HIENERGY TECHNOLOGIES, INC.
By: /s/ Barry Alter
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Name: Barry Alter
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Title: President and CEO
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By signing below, Optionee hereby accepts the Option subject to all its
terms and provisions.
OPTIONEE
Signature: /s/ Isaac Yeffet
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Print Name: Isaac Yeffet
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[EXHIBIT FOLLOWS]
First Amended and Restated Stock Option Agreement,
Isaac Yeffet - Page 8
EXHIBIT A
OPTION EXERCISE FORM
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To: HiEnergy Technologies, Inc.
(1) a) The undersigned hereby elects to purchase the number of shares of
the common stock of HiEnergy Technologies, Inc. (the "Company") set forth below,
pursuant to the terms of the Stock Option Agreement dated __________________,
2002, tendering simultaneous full payment of the Total Option Exercise Price for
such shares.
Number of Shares: ________________ Shares
Option Exercise Price Per Share: x $____________ per Share
Total Option Exercise Price: = $____________
b) The undersigned hereby elects to exercise the Option with respect to
the number of underlying Shares set forth below according to the "cashless
exercise" provisions of the Option.
Number of underlying Shares: ________________ Shares
The undersigned understands that he will be issued a certificate for a lesser
number of net Shares based on the provisions of the Option.
(2) In exercising this Option, the undersigned hereby confirms and
acknowledges that:
a) the shares of Common Stock to be issued upon exercise are being acquired
solely for the account of the undersigned and not as a nominee for any other
party; and
b) the shares of Common Stock to be issued upon exercise are not acquired
with a view toward distribution; and
c) the undersigned is an "accredited investor" as that term is defined in
Rule 501 of Regulation D under the Securities Act of 1933, as amended, and as
provided in the Subscription Agreement; and
d) the undersigned will not offer, sell or otherwise dispose of any such
shares of Common Stock except pursuant to an effective registration, or an
Option Exercise Form - Page 1
exemption therefrom, under the Securities Act of 1933, as amended, together with
a similar exemption under the securities laws of all applicable jurisdictions;
and
e) the undersigned otherwise reaffirms all representations, warranties, and
indemnifications contained in the Stock Option Agreement and Subscription
Agreement, including, but not limited to, those contained in Section 7 of the
Stock Option Agreement; and
f) the undersigned has reviewed all of Company's public filings with the
Securities and Exchange Commission; and
g) the undersigned consents to delay the exercise of the Option until, in
the Company's judgment, the Company has disclosed any additional matters that
need to be disclosed to the undersigned, beyond those contained in the public
filings with the Securities and Exchange Commission.
(3) Subject to Section (2), please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned as
instructed.
(4) Please issue a new Option for the unexercised portion of the attached
Option in the name of the undersigned.
This _____ day of __________________, _____:
___________________________________________
Signature
___________________________________________
Print Name of Signatory
___________________________________________
Name of Entity (if applicable)
Send or deliver this Form with an original signature to:
HiEnergy Technologies, Inc.
Attn: President
10 Mauchly Drive
Irvine, CA 92618
USA
Option Exercise Form - Page 2