EXHIBIT 10.47
HIENERGY TECHNOLOGIES, INC.
2003 STOCK INCENTIVE PLAN
This 2003 STOCK INCENTIVE PLAN (the "Plan") is hereby established by HIENERGY
TECHNOLOGIES, INC., a Delaware corporation (the "Company"), as adopted by its
Board of Directors as of April 28, 2003 (the "Effective Date").
1. PURPOSES OF THE PLAN.
The purposes of the Plan are (a) to enhance the Company's ability to attract and
retain the services of qualified employees, officers and directors (including
non-employee officers and directors), and consultants and other service
providers upon whose judgment, initiative and efforts the successful conduct and
development of the Company's business largely depends, and (b) to provide
additional incentives to such persons or entities to devote their utmost effort
and skill to the advancement and betterment of the Company, by providing them an
opportunity to participate in the ownership of the Company and thereby have an
interest in the success and increased value of the Company.
2. DEFINITIONS.
For purposes of this Plan, the following terms shall have the meanings
indicated:
2.1. ADMINISTRATOR.
"Administrator" means the Board or, if the Board delegates responsibility for
any matter to the Committee, the term Administrator shall mean the Committee.
2.2. AFFILIATED COMPANY.
"Affiliated Company" means any "parent corporation" or "subsidiary corporation"
of the Company, whether now existing or hereafter created or acquired, as those
terms are defined in Sections 424(e) and 424(f) of the Code, respectively.
2.3. BOARD.
"Board" means the Board of Directors of the Company.
2.4. CHANGE IN CONTROL.
"Change in Control" shall mean (i) the acquisition, directly or indirectly, by
any person or group (within the meaning of Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) of the beneficial ownership of securities of
the Company possessing more than fifty percent (50%) of the total combined
voting power of all outstanding securities of the Company; (ii) a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction in which the holders of the outstanding voting securities of the
Company immediately prior to such merger or consolidation hold, in the
aggregate, securities possessing more than fifty percent (50%) of the total
combined voting power of all outstanding voting securities of the surviving
entity immediately after such merger or consolidation; (iii) a reverse merger in
which the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of all
outstanding voting securities of the Company are transferred to or acquired by a
person or persons different from the persons holding those securities
immediately prior to such merger; (iv) the sale, transfer or other disposition
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the Company; or (v) the approval by the shareholders of a
plan or proposal for the liquidation or dissolution of the Company.
2.5. CODE.
"Code" means the Internal Revenue Code of 1986, as amended from time to time.
2.6. COMMITTEE.
"Committee" means a committee of two or more members of the Board appointed to
administer the Plan, as set forth in Section 7.1 hereof.
2.7. COMMON STOCK.
"Common Stock" means the Common Stock, par value $0.001 per share, of the
Company, subject to adjustment pursuant to Section 4.2 hereof.
2.8. CONTINUOUS SERVICE.
"Continuous Service" shall mean--
(a) employment by either the Company or any parent or subsidiary
corporation of the Company, or by a corporation or a parent or
subsidiary of a corporation issuing or assuming a stock option in
a transaction to which Section 424(a) of the Code applies, which
is uninterrupted except for vacations, illness (except for
permanent disability, as defined in Section 22(e)(3) of the Code),
or leaves of absence which are approved in writing by the Company
or any of such other employer corporations, if applicable,
(b) service as a member of the Board of Directors of the Company until
Participant resigns, is removed from office, or Participant's term
of office expires and he or she is not reelected, or
(c) so long as Participant is engaged as a consultant or service
provider to the Company or any corporation referred to in clause
(a) above, or
(d) so long as Participant is granted and continues to hold the status
of a "friend of the Company" pursuant to action by the
Administrator or the Board.
2.9. DISABILITY.
"Disability" means permanent and total disability as defined in Section 22(e)(3)
of the Code. The Administrator's determination of a Disability or the absence
thereof shall be conclusive and binding on all interested parties.
2.10. EFFECTIVE DATE.
"Effective Date" means the date on which the Plan is adopted by the Board, as
set forth on the first page hereof.
2.11. EXERCISE PRICE.
"Exercise Price" means the purchase price per share of Common Stock payable upon
exercise of an Option.
2.12. FAIR MARKET VALUE.
"Fair Market Value" on any given date means the value of one share of Common
Stock, determined as follows:
(a) If the Common Stock is then listed or admitted to trading on the
Nasdaq Stock Market or a stock exchange which reports closing sale
prices, the Fair Market Value shall be the closing sale price on
the date of valuation as so reported by the principal system or
exchange on which the Common Stock is traded, or, if no closing
sale price is reported on such day, then the Fair Market Value
shall be the closing sale price of the Common Stock as so reported
on the next preceding day on which a closing sale price is
reported.
(b) If the Common Stock is not then listed or admitted to trading on
the Nasdaq Stock Market or a stock exchange which reports closing
sale prices, the Fair Market Value shall be the average of the
reported closing bid and asked prices of the Common Stock in the
over-the-counter market on the date of valuation.
(c) If neither (a) nor (b) is applicable as of the date of valuation,
then the Fair Market Value shall be determined by the
Administrator in good faith using any reasonable method of
evaluation, which determination shall be conclusive and binding on
all interested parties.
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2.13. HOSTILE TAKEOVER.
"Hostile Takeover" shall mean either of the following events effecting a change
in control or ownership of the Company:
(a) the acquisition, directly or indirectly, by any person or related
group of persons (other than the Company or a person that directly
or indirectly controls, is controlled by, or is under common
control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the 1934 Act) of securities possessing
more than fifty percent (50%) of the total combined voting power
of the Company's outstanding securities pursuant to a tender or
exchange offer made directly to the Company's shareholders which
the Board does not recommend such shareholders to accept, or
(b) a change in the composition of the Board over a period of
thirty-six (36) consecutive months or less such that a majority of
the Board members ceases, by reason of one or more contested
elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the
beginning of such period or (B) have been elected or nominated for
election as Board members during such period by at least a
majority of the Board members described in clause (A) who were
still in office at the time the Board approved such election or
nomination.
2.14. INCENTIVE OPTION.
"Incentive Option" means any Option designated and qualified as an "incentive
stock option" as defined in Section 422 of the Code.
2.15. NASD DEALER.
"NASD Dealer" means a broker-dealer that is a member of the National Association
of Securities Dealers, Inc.
2.16. NONQUALIFIED OPTION.
"Nonqualified Option" means any Option that is not an Incentive Option. To the
extent that any Option designated as an Incentive Option fails in whole or in
part to qualify as an Incentive Option, including, without limitation, for
failure to meet the limitations applicable to a 10% Shareholder or because it
exceeds the annual limit provided for in Section 5.6 below, it shall to that
extent constitute a Nonqualified Option.
2.17. OFFEREE.
"Offeree" means a Participant to whom a Right to Purchase has been offered or
who has acquired Restricted Stock under the Plan.
2.18. OPTION.
"Option" means any option to purchase Common Stock granted pursuant to the Plan.
2.19. OPTION AGREEMENT.
"Option Agreement" means the written agreement entered into between the Company
and the Optionee with respect to an Option granted under the Plan.
2.20. OPTIONEE.
"Optionee" means a Participant who holds an Option.
2.21. PARTICIPANT.
"Participant" means an individual or entity who holds an Option, a Right to
Purchase or Restricted Stock under the Plan.
2.22. PURCHASE PRICE.
"Purchase Price" means the purchase price per share of Restricted Stock payable
upon acceptance of a Right to Purchase.
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2.23. RESTRICTED STOCK.
"Restricted Stock" means shares of Common Stock issued, subject to any
restrictions and conditions as are established, pursuant to Section 6.
2.24. RESTRICTED STOCK PURCHASE AGREEMENT.
"Restricted Stock Purchase Agreement" means the written agreement entered into
between the Company and the Offeree with respect to a Right to Purchase offered
under the Plan.
2.25. RIGHT TO PURCHASE.
"Right to Purchase" means a right to purchase Restricted Stock granted to an
Offeree pursuant to Section 6 hereof.
2.26. SERVICE PROVIDER.
"Service Provider" means a consultant or other person or entity who provides
advice or other services to the Company or an Affiliated Company and who the
Administrator authorizes to become a Participant in the Plan.
2.27. 10% SHAREHOLDER.
"10% Shareholder" means a person who, as of a relevant date, owns or is deemed
to own (by reason of the attribution rules applicable under Section 424(d) of
the Code) stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of an Affiliated Company.
2.28. VEST.
The terms "vest" and "vested" shall mean (a) with respect to an Option, the
Option becoming exercisable with respect to one or more shares of Common Stock
pursuant to the terms of the applicable Option Agreement, or (b) with respect to
shares of Restricted Stock or shares of Common Stock acquired upon exercise of
an Option, the shares becoming no longer subject to a right of the Company to
repurchase the shares for less than Fair Market Value pursuant to the terms of
the applicable Restricted Stock Purchase Agreement or Option Agreement.
3. ELIGIBILITY.
3.1. INCENTIVE OPTIONS.
Officers and other key employees of the Company or of an Affiliated Company
(including members of the Board if they are employees of the Company or of an
Affiliated Company) are eligible to receive Incentive Options under the Plan.
3.2. NONQUALIFIED OPTIONS AND RIGHTS TO PURCHASE.
Officers and other key employees of the Company or of an Affiliated Company,
members of the Board (whether or not employed by the Company or an Affiliated
Company), and Service Providers are eligible to receive Nonqualified Options or
Rights to Purchase under the Plan.
3.3. LIMITATION ON SHARES.
In no event shall any Participant be granted Options or Rights to Purchase in
any one calendar year pursuant to which more than ___________ shares of Common
Stock may be acquired.
4. PLAN SHARES.
4.1. SHARES SUBJECT TO THE PLAN.
A total of 2,000,000 shares of Common Stock may be issued under the Plan (and
any sub-plan or other plan whose reserved shares are at a future date taken from
the reserve under this plan, aggregately), subject to adjustment as to the
number and kind of shares pursuant to Section 4.2 hereof. For purposes of this
limitation, in the event that
(a) all or any portion of any Option or Right to Purchase granted or
offered under the Plan can no longer under any circumstances be
exercised, or
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(b) any shares of Common Stock are reacquired by the Company pursuant
to an Option Agreement or Restricted Stock Purchase Agreement, the
shares of Common Stock allocable to the unexercised portion of
such Option or such Right to Purchase, or the shares so
reacquired, shall again be available for grant or issuance under
the Plan.
4.2. CHANGES IN CAPITAL STRUCTURE.
If the then outstanding shares of Common Stock are increased or decreased or
changed into or exchanged for a different number or kind of shares or other
securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend, or other similar change
in the capital structure of the Company, then appropriate adjustments shall be
made by the Administrator to the aggregate number and kind of shares subject to
this Plan, and the number and kind of shares and the price per share subject to
outstanding Option Agreements, Rights to Purchase and Restricted Stock Purchase
Agreements in order to preserve, as nearly as practical, but not to increase,
the benefits to Participants.
5. OPTIONS.
5.1. OPTION AGREEMENT.
Each Option granted pursuant to this Plan shall be evidenced by an Option
Agreement which shall specify the number of shares subject thereto, the Exercise
Price per share, and whether the Option is an Incentive Option or Nonqualified
Option. As soon as is practical following the grant of an Option, an Option
Agreement shall be duly executed and delivered by or on behalf of the Company to
the Optionee to whom such Option was granted. Each Option Agreement shall be in
such form and contain such additional terms and conditions, not inconsistent
with the provisions of this Plan, as the Administrator shall, from time to time,
deem desirable, including, without limitation, the imposition of any rights of
first refusal and resale obligations upon any shares of Common Stock acquired
pursuant to an Option Agreement. Each Option Agreement may be different from
each other Option Agreement.
5.2. EXERCISE PRICE.
The Exercise Price per share of Common Stock covered by each Option shall be
determined by the Administrator, subject to the following:
(a) the Exercise Price of an Incentive Option shall not be less than
100% of Fair Market Value on the date the Incentive Option is
granted,
(b) the Exercise Price of a Nonqualified Option shall not be less
than 85% of Fair Market Value on the date the Nonqualified Option
is granted (or 100% as to a Nonqualified Option granted to a 10%
Holder"), and
(c) if the person to whom an Incentive Option is granted is a 10%
Shareholder on the date of grant, the Exercise Price shall not be
less than 110% of Fair Market Value on the date the Option is
granted.
5.3. PAYMENT OF EXERCISE PRICE.
Payment of the Exercise Price shall be made upon exercise of an Option and may
be made, in the discretion of the Administrator, subject to any legal
restrictions, by--
(a) cash;
(b) check (considered payment only when honored by the bank against
which it is drawn upon first presentment);
(c) the surrender of shares of Common Stock owned by the Optionee
that have been held by the Optionee for at least six (6) months,
which surrendered shares shall be valued at Fair Market Value as
of the date of such exercise;
(d) the Optionee's promissory note in a form and on terms acceptable
to the Administrator;
(e) the cancellation of indebtedness of the Company to the Optionee;
(f) the waiver of compensation due or accrued to the Optionee for
services rendered;
(g) provided that a public market for the Common Stock exists, a
"same day sale" commitment from the Optionee and an NASD Dealer
whereby the Optionee irrevocably elects to exercise the Option
and to sell a portion of the shares so purchased to pay for the
Exercise Price and whereby the NASD Dealer irrevocably commits
upon receipt of such shares to forward the Exercise Price
directly to the Company;
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(h) provided that a public market for the Common Stock exists, a
"margin" commitment from the Optionee and an NASD Dealer whereby
the Optionee irrevocably elects to exercise the Option and to
pledge the shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount
of the Exercise Price, and whereby the NASD Dealer irrevocably
commits upon receipt of such shares to forward the Exercise Price
directly to the Company; or
(i) any combination of the foregoing methods of payment or any other
consideration or method of payment as shall be permitted by
a1pplicable corporate law.
5.4. TERM AND TERMINATION OF OPTIONS.
The term and provisions for termination of each Option shall be as fixed by the
Administrator, but no Option may be exercisable more than ten (10) years after
the date it is granted. An Incentive Option granted to a person who is a 10%
Shareholder on the date of grant shall not be exercisable more than five (5)
years after the date it is granted.
5.5. VESTING AND EXERCISE OF OPTIONS.
Each Option shall vest and become exercisable in one or more installments at
such time or times and subject to such conditions, including without limitation
the achievement of specified performance goals or objectives, as shall be
determined by the Administrator and set forth in an Option Agreement; provided,
however that Options granted to employees who are not officers, directors or
Service Providers shall vest and become exercisable in installments at a minimum
rate of 20% per year over a period of five (5) years from the date the Option is
granted.
5.6. ANNUAL LIMIT ON INCENTIVE OPTIONS.
To the extent required for "incentive stock option" treatment under Section 422
of the Code, the aggregate Fair Market Value (determined as of the time of
grant) of the Common Stock shall not, with respect to which Incentive Options
granted under this Plan and any other plan of the Company or any Affiliated
Company become exercisable for the first time by an Optionee during any calendar
year, exceed $100,000. To the extent such dollar limitation is exceeded, the
excess portion of such Option shall be exercisable as a Nonqualified Option
under the Federal tax laws.
5.7. LIMITED TRANSFERABILITY.
No Incentive Option or Nonqualified Option shall be assignable or transferable
except by will or the laws of descent and distribution, and during the life of
the Optionee shall be exercisable only by such Optionee. Notwithstanding the
foregoing, shares purchased upon exercise of Options may be transferred or
assigned in whole or in part during the Optionee's lifetime, provided that the
transferee agrees to be bound by the same transfer restrictions applicable to
the Participant, either (a) in connection with the Optionee's estate plan to one
or more members of the Optionee's immediate family, including any parent,
descendant, spouse, brother, sister, grandparent, grandchild, dependent, or
member of their immediate families, or to a trust established exclusively for
one or more such persons, or (b) in a transfer described in Section 1041(a) of
the Code between spouses or incident to divorce. The terms applicable to the
assigned portion of the shares shall be the same as those in effect for the
option immediately prior to such assignment and shall be set forth in such
documents issued to the assignee as the Administrator may deem appropriate. In
the event that applicable tax law and Section 25102(o) of the California
Corporate Securities Law of 1968 permit transferability of Options in any
particular case, then with the consent of the Administrator in such case, an
Option may be transferred consistent with restrictions under law and subject to
any terms or restrictions imposed by the Administrator.
5.8. NO RIGHTS AS SHAREHOLDER.
An Optionee or permitted transferee of an Option shall have no rights or
privileges as a shareholder with respect to any shares covered by an Option
until such Option has been duly exercised and certificates representing shares
purchased upon such exercise have been issued to such person.
5.9. COMPANY'S REPURCHASE RIGHTS.
In the event of termination of a Participant's Continuous Service for any reason
whatsoever (including death or disability), the Option Agreement may provide, in
the discretion of the Administrator or upon events specified in the discretion
of the Administrator, that the Company, or its assignee, shall have the right,
exercisable at the discretion of the Administrator, to repurchase shares of
Common Stock acquired pursuant to the exercise of an Option at any time,
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at any price, and on any terms as set forth in the Option Agreement evidencing
such Options.
5.10. OTHER RESTRICTIONS ON UNDERLYING SHARES OF COMMON STOCK.
Shares of Common Stock issued pursuant to the exercise of an Option may not be
sold, assigned, transferred, pledged or otherwise encumbered or disposed of
except as specifically provided in the Option Agreement.
6. RIGHTS TO PURCHASE.
6.1. NATURE OF RIGHT TO PURCHASE.
A Right to Purchase granted to an Offeree entitles the Offeree to purchase, for
a Purchase Price determined by the Administrator, shares of Common Stock subject
to such terms, restrictions and conditions as the Administrator may determine at
the time of grant ("Restricted Stock"). Such conditions may include, but are not
limited to, Continuous Service or the achievement of specified performance goals
or objectives. The Administrator shall have the discretion to grant options, or
amend outstanding options, such that the unvested portion of options is
exercisable for Restricted Stock.
6.2. ACCEPTANCE OF RIGHT TO PURCHASE.
An Offeree shall have no rights with respect to the Restricted Stock subject to
a Right to Purchase unless the Offeree shall have accepted the Right to Purchase
within ten (10) days (or such longer or shorter period as the Administrator may
specify) following the grant of the Right to Purchase by making payment of the
full Purchase Price to the Company in the manner set forth in Section 6.3 hereof
and by executing and delivering to the Company a Restricted Stock Purchase
Agreement. Each Restricted Stock Purchase Agreement shall be in such form, and
shall set forth the Purchase Price and such other terms, conditions and
restrictions of the Restricted Stock, not inconsistent with the provisions of
this Plan, as the Administrator shall, from time to time, deem desirable. Each
Restricted Stock Purchase Agreement may be different from each other Restricted
Stock Purchase Agreement.
6.3. PAYMENT OF PURCHASE PRICE.
Subject to any legal restrictions, payment of the Purchase Price upon acceptance
of a Right to Purchase Restricted Stock may be made, in the discretion of the
Administrator, by--
(a) cash;
(b) check (considered payment only when honored by the bank against
which it is drawn upon first presentment);
(c) the surrender of shares of Common Stock owned by the Offeree that
have been held by the Offeree for at least six (6) months, which
surrendered shares shall be valued at Fair Market Value as of the
date of such exercise;
(d) the Offeree's promissory note in a form and on terms acceptable
to the Administrator;
(e) the cancellation of indebtedness of the Company to the Offeree;
(f) the waiver of compensation due or accrued to the Offeree for
services rendered; or
(g) any combination of the foregoing methods of payment or any other
consideration or method of payment as shall be permitted by
applicable corporate law.
6.4. RIGHTS AS A SHAREHOLDER.
Upon complying with the provisions of Section 6.2 hereof, an Offeree shall have
the rights of a shareholder with respect to the Restricted Stock purchased
pursuant to the Right to Purchase, including voting and dividend rights, subject
to the terms, restrictions and conditions as are set forth in the Restricted
Stock Purchase Agreement. Unless the Administrator shall determine otherwise,
certificates evidencing shares of Restricted Stock shall remain in the
possession of the Company in accordance with the terms of the Restricted Stock
Purchase Agreement until such shares have vested.
6.5. RESTRICTIONS.
Shares of Restricted Stock may not be sold, assigned, transferred, pledged or
otherwise encumbered or disposed of except as specifically provided in the
Restricted Stock Purchase Agreement or by the Administrator. In the event of
termination of a Participant's employment, service as a director of the Company
or Service Provider status for any
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reason whatsoever (including death or disability), the Restricted Stock Purchase
Agreement may provide, in the discretion of the Administrator, that the Company
shall have the right, exercisable at the discretion of the Administrator or upon
events specified in the discretion of the Administrator, to repurchase
(i) at the original Purchase Price, any shares of Restricted Stock
which have not vested as of the date of termination, and
(ii) at Fair Market Value (or at the original Purchase Price in
specified events), any shares of Restricted Stock which have
vested as of such date, on such terms as may be provided in the
Restricted Stock Purchase Agreement;
provided that, for Restricted Stock granted to employees who are not officers,
directors or Service Providers, the Company's Repurchase Right at the original
purchase price lapses at a minimum rate of 20% per year over a period of five
(5) years from the date the Right to Purchase was granted.
6.6. VESTING OF RESTRICTED STOCK.
Each Restricted Stock Purchase Agreement shall specify the date or dates, the
performance goals or objectives which must be achieved, and any other conditions
on which the Restricted Stock may vest, as may be established in the discretion
of the Administrator.
6.7. DIVIDENDS.
If payment for shares of Restricted Stock is made by promissory note, any cash
dividends paid with respect to the Restricted Stock may be applied, in the
discretion of the Administrator, to repayment of such note.
6.8. LIMITED ASSIGNABILITY OF RIGHTS.
No Right to Purchase shall be assignable or transferable except by will or the
laws of descent and distribution. Restricted Stock may, in connection with the
Participant's estate plan, be assigned in whole or in part during the
Participant's lifetime to one or more members of the Participant's immediate
family, , including any parent, descendant, spouse, brother, sister,
grandparent, grandchild, dependent, or member of their immediate families, or to
a trust established exclusively for one or more such persons, or to a trust
established exclusively for one or more such family members. The terms
applicable to the assigned portion shall be the same as those in effect for the
Restricted Stock immediately prior to such assignment and shall be set forth in
such documents issued to the assignee as the Plan Administrator may deem
appropriate. In the event that applicable tax law and Section 25102(o) of the
California Corporate Securities Law of 1968 permit transferability of Restricted
Stock in any other particular case, then with the consent of the Administrator
in such case, Restricted Stock may be transferred consistent with restrictions
under law and subject to any terms or restrictions imposed by the Administrator.
7. ADMINISTRATION OF THE PLAN.
7.1. ADMINISTRATOR.
Authority to control and manage the operation and administration of the Plan
shall be vested in the Board, which may delegate such responsibilities in whole
or in part to a committee consisting of two (2) or more members of the Board
(the "Committee"). Members of the Committee may be appointed from time to time
by, and shall serve at the pleasure of, the Board. As used herein, the term
"Administrator" means the Board or, with respect to any matter as to which
responsibility has been delegated to the Committee, the term Administrator shall
mean the Committee.
7.2. POWERS OF THE ADMINISTRATOR.
In addition to any other powers or authority conferred upon the Administrator
elsewhere in the Plan or by applicable law, the Administrator shall have full
power and authority, at any time and from time to time, in any or each
particular instance or circumstance, as to each Option Agreement or Restricted
Stock Purchase Agreement, Optionee or Purchaser, independently of any other or
others, as determined in any or each instance in the sole and absolute
discretion of the Administrator:
(a) to determine the persons to whom, and the time or times at which,
Incentive Options or Nonqualified Options shall be granted and
Rights to Purchase shall be offered, the number of shares to be
represented by each Option and Right to Purchase and the
consideration to be received by the
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Company upon the exercise thereof;
(b) to interpret the Plan;
(c) to create, amend or rescind rules and regulations relating to the
Plan;
(d) to determine the terms, conditions and restrictions contained in,
and the form of, any or all Option Agreements and Restricted
Stock Purchase Agreements;
(e) to determine the identity or capacity of any persons who may be
entitled to exercise a Participant's rights under any Option or
Right to Purchase under the Plan;
(f) to correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any Option Agreement or
Restricted Stock Purchase Agreement;
(g) to extend the exercise date or any relevant date of any Option or
acceptance date or other relevant date of any Right to Purchase,
or to waive any other right of the Company to insist on prompt
performance;
(h) to provide for any rights of first refusal and/or any repurchase
rights and the terms, provisions and conditions thereof, if any,
and their performance, waiver, modification or termination, or
any of the above in combination;
(i) to effect, with the consent of the affected Participant or
pursuant to the terms of the Plan, the cancellation of any or all
outstanding Options and to grant, in respect of any or all
thereof in substitution, new options covering the same or
different number of shares of Common Stock but with an exercise
price per share based on the Fair Market Value on the new grant
date with any or all adjustments thereto, in either case in any
such manner as the Adminstrator deems to be reasonable,
equitable, appropriate or advisable;
(i) to amend any outstanding Option Agreements and any outstanding
Restricted Stock Purchase Agreements, and by way of example but
not limitation to provide for, among other things, any change or
modification to a provision thereof which the Administrator could
have provided for upon the grant of an Option or Right to
Purchase or upon the issuance of Restricted Stock or could have
otherwise done in furtherance of the powers or discretion
provided for herein; and
(j) to make all other determinations and take all other actions, or
refrain therefrom, as considered necessary or advisable for the
administration of the Plan, or the performance of its terms in
the name of the Company or its successors, but only to the extent
not contrary to the express provisions of the Plan, in the sole
and absolute discretion of the Administrator.
Any action, decision, interpretation or determination made in good faith by the
Administrator in the exercise of its authority conferred upon it under the Plan
shall be final and binding on the Company and all Participants. Notwithstanding
anything to the contrary, the Administrator's discretion under this Plan extends
to and includes the authorization to deal with any one or more individual Option
Agreements or individual Restricted Stock Purchase Agreements independently of
any or all others then outstanding under the Plan in the discretion of the
Administrator, and such authority and discretion are not intended to be limited
by, and there is no actual or implied requirement of, consistency among various
Option Agreements or Restricted Stock Purchase Agreements, respectively, under
any circumstances.
7.3. LIMITATION ON LIABILITY.
No employee of the Company or member of the Board or Committee shall be subject
to any liability with respect to duties under the Plan unless the person acts
fraudulently or in bad faith. To the extent permitted by law, the Company shall
indemnify each member of the Board or Committee, and any employee of the Company
with duties under the Plan, who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed proceeding, whether civil,
criminal, administrative or investigative, by reason of such person's conduct in
the performance of duties under the Plan.
8. MERGERS AND OTHER REORGANIZATIONS.
8.1. MERGERS AND OTHER REORGANIZATIONS.
An Option Agreement or Restricted Stock Purchase Agreement may make provision
for what, if anything, shall happen in the event that the Company at any time
proposes to enter into any transaction approved by the Board to dissolve,
liquidate, sell substantially all of its assets, merge or consolidate, acquire
property or shares, separate or
9
reorganize, with any other entity or entities, corporate or otherwise, as a
result of which either the Company is not the surviving corporation or the
Company is the surviving corporation. The Plan and outstanding Options, Rights
of Purchase, and Restricted Stock shall in no way affect the right of the
Company to adjust, reclassify, reorganize or otherwise change its capital or
business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.
8.2. CHANGE IN CONTROL.
An Option Agreement or Restricted Stock Purchase Agreement may make provision
for what, if anything, shall happen to the terms of any or every outstanding
Option Agreement or Restricted Stock Purchase Agreement in the event that the
Company at any time proposes to enter into any transaction that results in a
Change of Control.
8.3. HOSTILE TAKEOVER.
The Administrator shall have the discretionary authority to structure Option
Agreements and Restricted Stock Purchase Agreements such that the Company's
Repurchase Rights shall terminate and such shares shall vest automatically upon
the consummation of a Hostile Take-Over, to condition the automatic acceleration
of one or more Options and the termination of one or more of the Company's
Repurchase Rights under Restricted Stock Purchase Agreements upon the
involuntary termination of the Participant's Continuous Service within a
designated period (not to exceed eighteen (18) months) following the effective
date of a Hostile Take-Over, and to make provision that each Option so
accelerated shall remain exercisable for fully-vested shares until a date not
later than the expiration of the option term.
9. AMENDMENT AND TERMINATION OF THE PLAN.
9.1. AMENDMENTS.
The Board shall have full power and authority (subject to certain amendments
requiring shareholder approval pursuant to applicable laws or regulations) from
time to time to alter, amend, suspend or terminate the Plan in any or all
respects as the Board may deem advisable. No such alteration, amendment,
suspension or termination shall be made which shall substantially affect or
impair the rights of any Participant under an outstanding Option Agreement or
Restricted Stock Purchase Agreement without such Participant's consent. The
Board may alter or amend the Plan to comply with requirements under the Code
relating to Incentive Options or other types of options which give Optionees
more favorable tax treatment than that applicable to Options granted under this
Plan. Upon any such alteration or amendment, any outstanding Option granted
hereunder may, if the Administrator so determines and if permitted by applicable
law, be subject to the more favorable tax treatment afforded to an Optionee
pursuant to such terms and conditions.
9.2. PLAN TERMINATION.
Unless the Plan shall theretofore have been terminated, the Plan shall terminate
on the tenth (10th) anniversary of the Effective Date and no Options or Rights
to Purchase may be granted under the Plan thereafter, but Option Agreements,
Restricted Stock Purchase Agreements and Rights to Purchase then outstanding
shall continue in effect in accordance with their respective terms.
10. CANCELLATION & RESCISSION
10.1. NON-COMPETITION.
Unless a particular Option Agreement or a particular Restricted Stock Purchase
Agreement specifies otherwise, the Administrator may cancel, rescind, suspend,
withhold or otherwise limit or restrict any Options or Common Stock at any time
if the Participant engages in any "Adverse Activity." For purposes of this
Section 10, "Adverse Activity" shall include: (i) the rendering of services for
any organization or engaging directly or indirectly in any business which is or
becomes competitive with the Company, or which organization or business, or the
rendering of services to such organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the Company; (ii) the
disclosure to anyone outside the Company, or the use in other than the Company's
business,
10
without prior written authorization from the Company, of any confidential
information or material relating to the business of the Company, acquired by the
Participant either during or after employment with the Company; (iii) the
failure or refusal to disclose promptly and to assign to the Company all right,
title and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment by the Company, relating in any
manner to the actual or anticipated business, research or development work of
the Company; (iv) activity that results in termination of Participant's
Continuous Service for "cause," defined here to mean those acts identified in
Section 2924 of the California Labor Code; (v) any material violation of any
terms or provisions of this Agreement; or (vi) any attempt directly or
indirectly to induce any employee of the Company to be employed or perform
services elsewhere or any attempt directly or indirectly to solicit the trade or
business of any current or prospective customer, supplier or partner of the
Company.
10.2 AGREEMENT UPON EXERCISE.
In the event a Participant fails to comply with the provisions of paragraphs
(i)-(vi) of Section 10.1 prior to, or during the six (6) months after, any
exercise pursuant to an Option Agreement or a purchase pursuant to a Restricted
Stock Purchase Agreement, such exercise or purchase may be rescinded at the
Company's sole election within two years thereafter. In the event of any such
rescission, the Participant shall pay to the Company the amount of any gain
realized or payment received as a result of the disposition of Options or Common
Stock acquired pursuant to such exercise or purchase, in such manner and on such
terms and conditions as may be required, and the Company shall be entitled to
set-off against the amount of any such gain any amount owed to the Participant
by the Company.
11. TAX WITHHOLDING.
The Company shall have the power to withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy any applicable U.S. federal,
state, or local tax withholding requirements with respect to any Options
exercised or Restricted Stock issued under the Plan. The Company's obligation to
deliver shares of Common Stock upon the exercise of Options or the issuance or
vesting of Common Stock under the Plan shall be subject to the satisfaction of
all applicable U.S. federal, state and local income and employment tax
withholding requirements. To the extent permissible under applicable tax,
securities and other laws, the Administrator may, in its sole discretion and
upon such terms and conditions as it may deem appropriate, permit a Participant
to satisfy his or her obligation to pay any such tax, in whole or in part, up to
an amount determined on the basis of the highest marginal tax rate applicable to
such Participant, by--
(a) directing the Company to apply shares of Common Stock to which
the Participant is entitled as a result of the exercise of an
Option or as a result of the purchase of or lapse of restrictions
on Restricted Stock
or
(b) delivering to the Company shares of Common Stock owned by the
Participant.
The shares of Common Stock so applied or delivered in satisfaction of
the Participant's tax withholding obligation shall be valued at their
Fair Market Value as of the date of measurement of the amount of
income subject to withholding.
12. MISCELLANEOUS.
12.1. BENEFITS NOT ALIENABLE.
Other than as provided above, benefits under the Plan may not be transferred,
assigned or alienated, whether voluntarily or involuntarily or by operation of
law. Any unauthorized attempt at assignment, transfer, pledge or other
disposition shall be void and without force or effect whatsoever.
12.2. NO CREATION OR ENLARGEMENT OF PARTICIPANT'S RIGHTS TO CONTINUE IN ANY
CAPACITY.
This Plan is strictly a voluntary undertaking on the part of the Company and
shall not be deemed to constitute a contract between the Company and any
Participant for, or to be consideration for, or an inducement to, or a condition
of, the continuation of any Participant's services to the Company in any
capacity. Nothing contained in the Plan
11
shall be deemed to give the right to any Participant to be retained in the
service of the Company or any Affiliated Company or to interfere with the right
of the Company or any Affiliated Company (which rights are hereby expressly
reserved by each) to discharge or discontinue the services of any Participant at
any time for any reason, with or without cause.
12.3. APPLICATION OF FUNDS.
The proceeds received by the Company from the sale of Common Stock pursuant to
Option Agreements and Restricted Stock Purchase Agreements, except as otherwise
provided herein, will be used for general corporate purposes.
12.4. ANNUAL AND OTHER PERIODIC REPORTS.
The Company shall make available to Participants or cause to be made available
to Participants, either electronically or in the form of paper copies, all
annual and other periodic financial and informational reports that the Company
distributes generally to its shareholders, except if Participants are key
employees with duties that assure the equivalent access to information.
12.5. ACTION TO ENFORCE
In the event that a Participant brings an action to enforce the terms of the
Plan or any Option Agreement or Restricted Stock Purchase Agreement and the
Company prevails, the Participant shall pay all costs and expenses incurred by
the Company in connection with that action, including reasonable attorney's fees
and costs, including reasonable attorney's fees and costs incurred by the
Company in connection with collection.
12.6. SEVERABILITY AND INTERPRETATION
If any provision of the Plan is or becomes or is deemed invalid, illegal or
unenforceable in any jurisdiction, or would disqualify the Plan or any Option
Agreement or Restricted Stock Purchase Agreement under any law deemed applicable
by the Administrator, such provision shall be construed or deemed amended or
limited in scope to conform to applicable laws or, in the discretion of the
Administrator, it shall be stricken and the remainder of the Plan shall remain
in full force and effect.
12.7. GOVERNING LAW
The Plan and each Option Agreement or Restricted Stock Purchase Agreement shall
be governed by the laws of the State of California, excluding any conflicts of
law or choice of law rule or principle that might otherwise refer construction
and interpretation of the plan and such agreements to the substantive law of
another jurisdiction. Unless otherwise provided in the Option Agreement or
Restricted Stock Purchase Agreement, Participants are deemed to submit to the
exclusive jurisdiction and venue of federal or state courts of Orange County,
California, to resolve any and all issues that may arise out of or relate to the
Plan or any Option Agreement or Restricted Stock Purchase Agreement.
12.8. EFFECTIVE DATE
The Plan shall become effective on the Effective Date.
12
Option No.
HIENERGY TECHNOLOGIES, INC.
STOCK OPTION AGREEMENT
TYPE OF OPTION (CHECK ONE): |_| INCENTIVE |_| NONQUALIFIED
This Stock Option Agreement (the "Agreement") is entered into as of ___________,
by and between HiEnergy Technologies, Inc., a Delaware corporation (the
"Company") and ___________ (the "Optionee") pursuant to the Company's 2003 Stock
Incentive Plan (the "Plan").
1. GRANT OF OPTION.
The Company hereby grants to Optionee an option (the "Option") to purchase all
or any portion of a total of (___________) shares (the "Shares") of the Common
Stock of the Company at a purchase price of ___________ (___________) per share
(the "Exercise Price"), subject to the terms and conditions set forth herein and
the provisions of the Plan. If the box marked "Incentive" above is checked, then
this Option is intended to qualify as an "incentive stock option" as defined in
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). If
this Option fails in whole or in part to qualify as an incentive stock option,
or if the box marked "Nonqualified" is checked, then this Option shall to that
extent constitute a nonqualified stock option.
2. VESTING OF OPTION.
2.1. VESTING SCHEDULE.
The right to exercise this Option shall vest in installments, and this Option
shall be exercisable from time to time in whole or in part as to any vested
installment. Vesting will be measured from ___________ (the "Vesting Measurement
Date"). No additional Shares shall vest after the date of termination of
Optionee's "Continuous Service" (the "Service Termination Date"). As used
herein, the term "Continuous Service" has the meaning given in the Plan. Except
as may otherwise be provided in this Agreement, the vesting schedule is as
follows:
On or After:..............................................................................Option Exercisable As To:
- ----------- ------------------------
First anniversary of Vesting Measurement Date:..................................................____% of the Shares
Last day of each calendar month after such first anniversary....................................____% of the Shares
The vesting schedule of this Option would result, assuming the Service
Termination Date shall not have theretofore occurred, in this Option being
exercisable as to One Hundred Percent (100%) of the Shares covered by this
Option at the end of the calendar month in which the _______ anniversary of the
Vesting Measurement Date falls.
2.2. CHANGE IN CONTROL.
In the event of a Change in Control (as defined in the Plan), the Administrator
in its discretion may take one or more of the following actions with respect to
this Option (whether or not then exercisable or vested):
(i) provide for the purchase or exchange of this Option for an amount of
cash or other property having a value equal to the difference, or
spread, between
(x) the value of the cash or other property that the Optionee would
have received pursuant to such Change in Control transaction in
exchange for any shares issuable upon exercise of this Option, in
the amount that the Optionee would have received had the then
exercisable portion, if any, of this Option been exercised
immediately prior to such Change in Control transaction, and
(y) the Exercise Price,
(ii) adjust the terms of this Option in a manner determined by the
Administrator to reflect the Change in Control,
(iii) cause this Option to be assumed, or new rights substituted therefor,
by another entity, through the continuance of the Plan and the
assumption of this Option, or the substitution for this Option of a
new option of comparable value covering shares of a successor or
parent corporation, with appropriate adjustments as to the number and
kind of shares and Exercise Price, in which event the Plan and this
Option, or the new option substituted therefor, shall continue in the
manner and under the terms so provided,
(iv) cancel this Option if this Option is deemed to have no net value on
the basis described in paragraph 2.2(i) above or if the Option is not
then exercisable by virtue of this Agreement, as then in effect, or
(v) make such other provision as the Administrator may consider equitable.
If the Administrator does not take any of the forgoing actions, this Option
shall terminate upon the consummation of the Change in Control and the
Administrator shall cause written notice of the proposed transaction to be given
to the Optionee not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction.
3. TERM OF OPTION.
Optionee's right to exercise any vested portion of this Option shall terminate
upon the first to occur of the following:
3.1. MAXIMUM TERM.
the expiration of five (5) years from the date of this Agreement;
3.2. INVOLUNTARY TERMINATION WITHOUT CAUSE.
the expiration of three (3) months from the Service Termination Date if such
termination occurs for any reason other than permanent disability, death,
voluntary resignation; or for "cause;" provided, however, that if Optionee dies
during such three-month period the provisions of subsection 3.5 below shall
apply;
3.3. VOLUNTARY RESIGNATION.
the expiration of one (1) month from the Service Termination Date if such
termination occurs due to voluntary resignation; provided, however, that if
Optionee dies during such one-month period the provisions of subsection 3.5
below shall apply;
3.4. PERMANENT DISABILITY.
the expiration of one (1) year from the Service Termination Date if such
termination is due to permanent disability of the Optionee (as defined in
Section 22(e)(3) of the Code);
3.5. DEATH.
the expiration of one (1) year from the Service Termination Date if such
termination is due to Optionee's death or if death occurs during either the
three-month or one-month period following the Service Termination Date pursuant
to subsection 3.2 or subsection 3.3 above, as the case may be;
3.6. CHANGE IN CONTROL.
upon the consummation of a "Change in Control" (as defined in the Plan), unless
otherwise provided by the Administrator pursuant to Section 2.2 above; and
3.7. TERMINATION FOR CAUSE.
upon termination of Optionee's Continuous Service by the Company for "cause,"
defined hereby to mean the performance of those acts identified in Section 2924
of the California Labor Code, at which time this Option, whether or not
exercisable on the Service Termination Date, shall terminate immediately and
become void and of no effect.
3.8. BREACH AND NON-COMPETITION.
Notwithstanding the foregoing, the Administrator may cancel, rescind, suspend,
withhold or otherwise limit or restrict any Options or Common Stock, or the
exercise or purchase of any Options or Common Stock, at any time if the Optionee
engages in any "Adverse Activity." For purposes of this Section 3.8, "Adverse
Activity" shall include:
2
(i) the rendering of services for any organization or engaging directly or
indirectly in any business which is or becomes competitive with the Company, or
which organization or business, or the rendering of services to such
organization or business, is or becomes otherwise prejudicial to or in conflict
with the interests of the Company; (ii) the disclosure to anyone outside the
Company, or the use in other than the Company's business, without prior written
authorization from the Company, of any confidential information or material
relating to the business of the Company, acquired by Optionee either during or
after employment with the Company; (iii) the failure or refusal to disclose
promptly and to assign to the Company, all right, title and interest in any
invention or idea, patentable or not, made or conceived by Optionee during
employment by the Company, relating in any manner to the actual or anticipated
business, research or development work of the Company; (iv) activity that
results in termination of Optionee's Continuous Service for "cause," defined
here to mean those acts identified in Section 2924 of the California Labor Code;
(v) any material violation of any terms or provisions of this Agreement; or (vi)
any attempt directly or indirectly to induce any employee of the Company to be
employed or perform services elsewhere or any attempt directly or indirectly to
solicit the trade or business of any current or prospective customer, supplier
or partner of the Company. In the event Optionee engages in Adverse Activity
prior to, or during the six (6) months after, any exercise, payment or delivery
pursuant to an Option Agreement, such exercise, payment or delivery may be
rescinded at the sole election of the Company within two years thereafter. In
the event of any such rescission, the Optionee shall pay to the Company the
amount of any gain realized or payment received as a result of the disposition
of Shares or Options, in such manner and on such terms and conditions as may be
required, and the Company shall be entitled to set-off against the amount of any
such gain any amount owed to the Optionee by the Company.
4. EXERCISE OF OPTION.
4.1. PERSONS PERMITTED TO EXERCISE OPTION.
This Option may be exercised in whole or in part only by the Optionee or by a
Successor designated in Section 5 below.
4.2. EXERCISE AS TO VESTED PORTION OF OPTION.
This Option may be exercised only on or after the vesting of any portion of this
Option in accordance with Section 2 above, and only as to the cumulative amount
vested at the date of exercise, except pursuant to provisions made, if any, by
the Administrator pursuant to subsection 4.5 below. 4.3. NO EXERCISE AFTER
TERMINATION.
This Option may not be exercised at the time of, or any time after, termination
of this Option in accordance with Section 3 above.
4.4. MECHANICS OF EXERCISE.
Exercise of this Option shall be made by delivery of the following to the
Company at its principal executive offices:
(a) a written notice of exercise which identifies this Agreement and
states the number of Shares then being purchased (but no fractional
Shares may be purchased);
(b) a check or cash in the amount of the Exercise Price (or payment of the
Exercise Price in such other form of lawful consideration as the
Administrator may approve from time to time under the provisions of
the Plan);
(c) a check or cash in the amount reasonably requested by the Company to
satisfy the Company's withholding obligations under federal, state or
other applicable tax laws with respect to the taxable income, if any,
recognized by the Optionee in connection with the exercise of this
Option (unless the Company and Optionee shall have made other
arrangements for deductions or withholding from Optionee's wages,
bonus or other compensation payable to Optionee, or by the withholding
of Shares issuable upon exercise of this Option or the delivery of
Shares owned by the Optionee in accordance with the provisions of the
Plan, provided such arrangements satisfy the requirements of
applicable tax laws); and
(d) a letter, if requested by the Company, in such form and substance as
the Company may require, setting forth the investment intent of the
Optionee, or of a Successor designated in Section 5, as the case may
be.
A check shall be considered payment only when honored by the bank against which
it is drawn upon first presentment.
3
4.5. EXERCISE PRIOR TO VESTING; PURCHASE OF RESTRICTED STOCK.
The Administrator also has discretion, but not the obligation, to permit this
Option to be exercised as to the unvested portion prior to vesting, and in that
case to deliver Restricted Shares to the Optionee upon exercise of this Option.
The Administrator's determination to permit exercise of the unvested portion of
this Option shall be evidenced by the Company's and the Optionee's mutual
execution and delivery of a Restricted Stock Purchase Agreement in form and
substance determined by the Administrator, having the same or a different
Vesting Measurement Date and vesting schedule, as the Administrator and the
Optionee may agree.
5. TRANSFERS ON DEATH OF OPTIONEE; RESTRICTIONS ON LIFETIME ASSIGNMENTS.
Any attempt to sell, pledge, assign, hypothecate, transfer or dispose of this
Option in contravention of this Agreement or the Plan shall be void and shall
have no effect.
5.1. NO ASSIGNMENT OF INCENTIVE STOCK OPTIONS.
If and to the extent that this Option comprises an incentive stock option, this
Option can be assigned or transferred (subject to all other restrictions in this
Agreement) only as follows:
(a) the rights of the Optionee under this Agreement may not be
assigned or transferred except by will or by the laws of descent
and distribution,
(b) this Option may be exercised during the lifetime of the Optionee
only by such Optionee;
(c) if the Optionee's Continuous Service terminates as a result of his
or her death, and provided Optionee's rights hereunder shall have
vested pursuant to Section 2 hereof, Optionee's legal
representative, his or her legatee, or the person who acquired the
right to exercise this Option by reason of the death of the
Optionee (with regard to incentive stock options, each
individually, a "Successor") shall succeed to the Optionee's
rights and obligations under this Agreement; and
(d) after the death of the Optionee, only a Successor may exercise
this Option.
In the context of incentive stock options, the term "Successor" refers
to each of the transferees, successors or assigns described in this
subsection 5.1.
5.2. LIMITED ASSIGNABILITY OF NONQUALIFIED STOCK OPTIONS.
If and to the extent that this Option comprises a nonqualified stock option,
this Option can be assigned or transferred (subject to all other restrictions in
this Agreement) only as follows:
(a) the rights of the Optionee under this Agreement may be assigned or
transferred by will or by the laws of descent and distribution,
and Optionee's legal representative, his or her legatee, or the
person who acquired the right to exercise this Option by reason of
the death of the Optionee shall succeed to the Optionee's rights
and obligations under this Agreement, and
(b) the rights of the Optionee under this Agreement also may be
assigned and transferred by the Optionee for estate planning
purposes to members of the immediate family of the Optionee,
including for this purpose, but not limited to, spouses, parents,
descendants, brothers and sisters, or to trusts established for
the benefit of such persons.
In the context of nonqualified stock options, the term "Successor"
refers to each of the transferees, successors or assigns described in
this subsection 5.2.
6. REPRESENTATIONS AND WARRANTIES OF OPTIONEE.
6.1. INVESTMENT INTENT AS TO OPTIONS.
Optionee represents and warrants that this Option is being acquired by Optionee
for Optionee's personal account, for investment purposes only, and not with a
view to the distribution, resale or other disposition thereof.
4
6.2. INVESTMENT INTENT AS TO SHARES.
Optionee acknowledges that the Company may issue Shares upon the exercise of the
Option without registering such Shares under the Securities Act of 1933, as
amended (the "Act"), on the basis of certain exemptions from such registration
requirement. Accordingly, Optionee agrees that his or her exercise of the Option
may be expressly conditioned upon his or her delivery to the Company of an
investment certificate and agreement including such representations and
undertakings as the Company may reasonably require in order to assure the
availability of such exemptions, including representations, warranties and
agreements that--
(a) The Optionee is purchasing the Shares solely for the Optionee's own
account for investment and not with a view to or for sale or
distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing
of or distributing the Shares or any portion thereof. The Optionee also
represents that the entire legal and beneficial interest of the Shares
the Optionee is purchasing is being purchased for, and will be held for
the account of, the Optionee only and neither in whole nor in part for
any other person.
(b) The Optionee has discussed the Company and its plans, operations and
financial condition with its officers and that the Optionee has
received all such information as the Optionee deems necessary and
appropriate to enable the Optionee to evaluate the financial risk
inherent in making an investment in the Shares of the Company, and has
received satisfactory and complete information concerning the business
and financial condition of the Company in response to all inquiries in
respect thereof.
(c) The Optionee realizes that the purchase of the Shares will be a highly
speculative investment.
(d) The Optionee is able, without impairing the Optionee's financial
condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss on the investment.
(e) The Optionee acknowledges that he is aware that the Shares to be issued
to him by the Company pursuant to this Agreement have not been
registered under the Act, and--
(i) the Shares must be held indefinitely unless a transfer of them is
subsequently registered under the Act or an exemption from such
registration is available;
(ii) the share certificate(s) representing the Shares will be stamped
with the legends restricting transfer as specified in this
Agreement in Section 13 below; and
(iii) the Company will make a notation in its records of the
aforementioned restrictions on transfer and legends as described
in Section 14 below.
(f) The Optionee understands that the Shares are restricted securities
within the meaning of Rule 144 promulgated under the Act; that the
exemption from registration under Rule 144 will not be available in any
event for at least one year from the date of sale of the Shares to the
Optionee, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii) adequate
current public information concerning the Company is then available to
the public, (iii) the Optionee has been the beneficial owner and the
Optionee has paid the full purchase price for the Shares at least one
year prior to the sale, and (iv) other terms and conditions of Rule 144
are complied with; and that any sale of the Shares may be made by it
only in limited amounts in accordance with such terms and conditions of
Rule 144, as amended from time to time.
(g) Without in any way limiting any of the other provisions of this
Agreement, Optionee's further agreement that the Optionee shall in no
event make any disposition of all or any portion of the Shares which
the Optionee is purchasing unless and until:
(i) there is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) (A) the Optionee shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed
disposition, (B) the Optionee shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred in by
counsel for the Company and the Company shall have advised the
Optionee of such concurrence.
(h) The Optionee represents and warrants that he or she has not engaged in
any Adverse Activity as defined in Section 3.8.
(i) The Optionee acknowledges that the Optionee has been furnished with a
copy of the Plan, has read the Plan and this Agreement, and understands
that all rights and obligations connected with this Agreement are set
forth in this Agreement and in the Plan.
5
7. ADJUSTMENTS UPON CHANGES IN CAPITAL STRUCTURE.
In the event that the outstanding shares of Common Stock of the Company are
hereafter changed into or exchanged for a different number or kind of shares or
other securities of the Company by reason of a recapitalization, stock split,
combination of shares, reclassification, stock dividend (in excess of two
percent (2%)) or other change in the capital structure of the Company, then
appropriate adjustments shall be made by the Administrator to the number of
Shares subject to the unexercised portion of this Option and to the Exercise
Price per share, in order to preserve, as nearly as practical, but not to
increase, the benefits of the Optionee under this Option, in accordance with the
provisions of the Plan. No fractional share shall be issued under this Option or
upon any such adjustment.
8. NO CREATION OR ENLARGEMENT OF OPTIONEE'S RIGHTS TO CONTINUE IN ANY CAPACITY.
The right of the Company and any Affiliated Company (as defined in the Plan) to
terminate at will the Optionee's services to the Company or any Affiliated
Company at any time (whether by dismissal, discharge or otherwise), with or
without cause, is specifically reserved. Nothing in this Agreement shall
diminish or impair in any manner whatsoever the right or power of the Company or
any Affiliated Company to terminate the Optionee's Continuous Service for any
reason, with or without cause.
9. RIGHTS AS SHAREHOLDER.
The Optionee (or transferee of this option by will or by the laws of descent and
distribution) shall have no rights as a shareholder with respect to any Shares
covered by this Option until the date of the issuance of a stock certificate or
certificates to him or her for such Shares, notwithstanding the exercise of this
Option.
10. "MARKET STAND-OFF" AGREEMENT.
Optionee agrees that, if requested by the Company or the managing underwriter of
any proposed public offering of the Company's securities, Optionee will not sell
or otherwise transfer or dispose of any Shares held by Optionee without the
prior written consent of the Company or such underwriter, as the case may be,
during such period of time, not to exceed 180 days following the effective date
of the registration statement filed by the Company with respect to such
offering, as the Company or the underwriter may specify.
11. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel consider
appropriate under applicable securities laws, the certificates representing any
Shares purchased pursuant to this Agreement shall bear substantially the
following legend:
- --------------------------------------------------------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY
SECURITIES ISSUABLE ON EXERCISE OR WITH RESPECT TO ANY OTHER RIGHT
CONNECTED HEREWITH) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY
NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED
OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND
THE RULES AND REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY
TRANSFEREE OR ISSUEE OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE
APPROPRIATE INVESTMENT REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR
ISSUANCE.
- --------------------------------------------------------------------------------
6
12. STOP-TRANSFER NOTICES.
Optionee understands and agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
13. INTERPRETATION.
This Option is granted pursuant to the terms of the Plan, and shall in all
respects be interpreted in accordance therewith. The Administrator shall
interpret and construe this Option and the Plan, and any action, decision,
interpretation or determination made in good faith by the Administrator shall be
final and binding on the Company and the Optionee. As used in this Agreement,
the term "Administrator" shall refer to the committee of the Board of Directors
of the Company appointed to administer the Plan, and if no such committee has
been appointed, the term Administrator shall mean the Board of Directors.
14. NOTICES.
Any notice, demand or request required or permitted to be given under this
Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Optionee, at his or her most recent address as shown in
the records of the Company.
15. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option shall be
governed by the laws of the State of California, excluding any conflicts of law
or choice of law rule or principle that might otherwise refer construction and
interpretation of the plan and such agreements to the substantive law of another
jurisdiction. Optionee hereby agrees to submit to the exclusive jurisdiction and
venue of federal or state courts of Orange County, California, to resolve any
and all issues that may arise out of or relate to this Option.
16. SEVERABILITY.
Should any provision or portion of this Agreement be held to be unenforceable or
invalid for any reason, the remaining provisions and portions of this Agreement
shall be unaffected by such holding.
17. ENTIRE AGREEMENT.
This Agreement and the Plan constitute the entire agreement between the parties
with respect to the subject matter hereof and supersede all prior or
contemporaneous written or oral agreements and understandings of the parties,
either express or implied. The option evidenced hereby may, in the discretion of
the Company, also be evidenced by a certificate in such form as the Company may
approve, in which case such option certificate and this Agreement shall evidence
one and the same option, which shall be governed by and construed in accordance
with this Agreement and the Plan.
18. AMENDMENT.
The Board shall have full power and authority (subject to certain amendments
requiring shareholder approval pursuant to applicable laws or regulations) from
time to time to alter, amend, suspend or terminate the Plan in any or all
respects as the Board may deem advisable, and to alter this Agreement in ways
which shall not substantially
7
adversely affect or impair the Optionee's rights under this Agreement No such
alteration, amendment, suspension or termination shall be made which shall
substantially affect or impair the rights of any Optionee under an outstanding
Option Agreement without such Optionee's consent. The Board may alter or amend
the Plan to comply with requirements under the Code relating to Incentive
Options or other types of options which give Optionees more favorable tax
treatment than that applicable to Options granted under the Plan. Upon any such
alteration or amendment, any outstanding Option granted hereunder may, if the
Administrator so determines and if permitted by applicable law, be subject to
the more favorable tax treatment afforded to an Optionee pursuant to such terms
and conditions.
19. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement or any
notices, certificates or instruments contemplated herein by fax, facsimile, or
telecopier shall be deemed the execution and delivery of an originally signed
agreement, notice or instrument, as the case may be.
IN WITNESS WHEREOF, the parties have executed this Stock Option
Agreement as of the date first above written.
"COMPANY"
HIENERGY TECHNOLOGIES, INC.
By:
----------------------------------------
Name:
----------------------------------------
Title:
----------------------------------------
"OPTIONEE"
---------------------------------------------
(Signature)
---------------------------------------------
(Type or Print Name)
Address:
------------------------------------
------------------------------------
RSPA No.
HIENERGY TECHNOLOGIES, INC.
RESTRICTED STOCK PURCHASE AGREEMENT
UNDER 2003 STOCK INCENTIVE PLAN
This Restricted Stock Purchase Agreement is entered into as of ________, by and
between HiEnergy Technologies, Inc., a Delaware corporation (the "Company"), and
______________________ (the "Purchaser") pursuant to the Company's 2003 Stock
Incentive Plan (the "Plan").
1. PURCHASE AND SALE OF SHARES.
The Purchaser hereby agrees to purchase from the Company, and the Company hereby
agrees to sell to the Purchaser, ____________ (____________) shares of its
Common Stock (the "Shares") for a purchase price of _________ (__________) per
share. The Shares shall be duly issued and a certificate or certificates for the
Shares are concurrently herewith being issued in the name of Purchaser.
Purchaser shall thereupon be a shareholder with respect to all of the Shares
represented by such certificate(s) and shall have all of the rights of a
shareholder with respect to all of the Shares, including the right to vote the
Shares and to receive all dividends and other distributions paid with respect to
the Shares, subject to the transfer restrictions provided in this Agreement. The
purchase price is payable as follows:
(a) by delivery of cash,
(b) by check (considered payment only when honored by the bank against
which it is drawn upon first presentment);
(c) by delivery of a promissory note payable to the Company, bearing
interest from the date hereof and substantially in the form attached as
Exhibit A; or
(d) any combination of cash, check and promissory note, so long as the
total consideration equals the aggregate purchase price as set forth
above.
In the event payment of any portion or all of the purchase price is to be
made by delivery of a promissory note, Purchaser shall deliver to the
Company a pledge of the Shares or other securities or assets which may be
listed in the Pledge Agreement dated the date hereof and substantially in
the form attached as Exhibit B. If the note is to be unsecured by the
Shares or other collateral, the Pledge Agreement shall so indicate.
The Purchaser's rights to acquire the Shares hereunder are nontransferable other
than by will or the laws of descent and distribution, and Purchaser's legal
representative, his or her legatee, or the person who acquired the Purchaser
rights to acquire the Shares by reason of the death of the Purchaser shall
succeed to the Purchaser's rights and obligations under this Agreement. The
rights of the Purchaser under this Agreement also may be assigned and
transferred by the Purchaser (a) for estate planning purposes to members of the
immediate family of the Purchaser, including for this purpose, but not limited
to, spouses, parents, descendants, brothers and sisters, or to trusts
established for the benefit of such persons, and (b) in a transfer described in
Section 1041(a) of the Code between spouses or incident to divorce.
2. INTERNAL REVENUE CODE SS. 83(B) ELECTION.
Purchaser hereby agrees to file the election provided under ss. 83(b) of the
Internal Revenue Code of 1986, as amended (herein called the "Code"), within
thirty (30) days of the transfer of the Shares, substantially in the form
attached as Exhibit C hereto and, if required, a comparable form of election
with the California Franchise Tax Board.
The parties hereto acknowledge and agree that the total fair market value of the
Shares on the date hereof is per Share, or an aggregate of _____________ for
____________ shares.
3. COMPANY REPURCHASE OPTION.
In addition to all other restrictions imposed by this Agreement or applicable
caw, the Shares acquired by the Purchaser pursuant to this Agreement shall be
subject to the following restrictions and repurchase options.
3.1. VESTING SCHEDULE.
Vesting will be measured from (the "Vesting Measurement Date"). The Shares
acquired hereunder shall vest and become "Vested Shares" in accordance with the
following vesting schedule:
On or After:...................................................................................Shares Vested As To:
- ----------- -------------------
The first anniversary of Vesting Measurement Date:..............................................____% of the Shares
Last day of each calendar month after such first anniversary....................................____% of the Shares
The vesting schedule of this Agreement would result, assuming Continuous Service
shall have theretofore not terminated, in One Hundred Percent (100%) of the
Restricted Shares being Vested Shares at the end of the calendar month in which
the ______ anniversary of the Vesting Measurement Date falls. Shares which have
not yet become vested are herein called "Unvested Shares." In the event the
Continuous Service of the Purchaser ceases (the "Service Termination Date"), all
vesting shall cease unless otherwise determined by the Board of Directors. As
used herein, the term "Continuous Service" has the meaning given in the Plan.
In the event of a Change in Control of the Company, the Administrator in its
discretion may take one or more of the following actions with respect to the
Shares (whether Vested Shares or Unvested Shares):
(a) provide for the purchase or exchange of any Vested Shares for an amount
of cash or other property having a value equal to the value of the cash
or other property that the Purchaser would have received pursuant to
such Change in Control transaction in exchange for the Vested Shares
and provide for the repurchase by the Company of Unvested Shares at the
repurchase price provided in this Agreement,
(b) adjust the terms of this Agreement in a manner determined by the
Administrator to reflect the Change in Control,
(c) cause this Agreement to be assumed, or new rights substituted therefor,
by another entity, through the continuance of the Plan and the
assumption of this Agreement, or the substitution for this Agreement of
a new agreement of comparable value covering shares of a successor or
parent corporation, with appropriate adjustments as to the number and
kind of shares, in which event the Plan and this Agreement, or the new
agreement substituted therefor, shall continue in the manner and under
the terms so provided, or
(d) make such other provision as the Administrator may consider equitable.
If the Administrator does not take any of the forgoing actions, this Agreement
shall terminate upon the consummation of the Change in Control and the
Administrator shall cause written notice of the proposed transaction to be given
to the Purchaser not less than fifteen (15) days prior to the anticipated
effective date of the proposed transaction.
3.2. COMPANY OPTION TO REPURCHASE SHARES FOLLOWING TERMINATION OF CONTINUOUS
SERVICE.
Concurrent with the Service Termination Date and for the period and under the
procedures set forth in Section 3.3 below, the Company shall have the option to
repurchase (the "Repurchase Option") all or any portion of the Purchaser's
Unvested Shares on the terms and subject to the limitations set forth herein.
3.3. PROCEDURES FOR EXERCISE OF REPURCHASE OPTION.
For sixty (60) days after the Service Termination Date or other event described
in this Section 3, the Company may exercise its Repurchase Option by giving
Purchaser and/or any other person obligated to sell written notice of the number
of Shares that the Company desires to purchase. The Company shall pay for such
Shares by the delivery of its check in the aggregate amount of the repurchase
price determined pursuant to Section 3.5 below against delivery
2
of the certificate(s) representing the Shares.
3.4. DEPOSIT OF SHARES.
In aid of the repurchase provisions set forth herein, Purchaser shall,
immediately upon receipt of the certificate or certificates representing the
Shares, deposit the certificate or certificates, together with a stock power or
other instrument of transfer appropriately endorsed in blank, with the Company
as escrow holder of the certificate(s). Upon Shares becoming Vested Shares, and
in the event that the repurchase rights with respect to any Shares are not
exercised by the Company following any Service Termination Date, the Company
shall cause the certificate or certificates representing such Shares to be
delivered into the possession of Purchaser.
3.5. REPURCHASE PRICE.
The per share price for the Unvested Shares ("Unvested Stock Repurchase Price")
repurchased by the Company pursuant to this Section 3 shall be an amount equal
to the per share purchase price paid for the Shares by the Purchaser pursuant to
Section 1 above.
3.6. REPURCHASE IN THE EVENT OF PERSONAL BANKRUPTCY.
If the Purchaser:
(a) files a voluntary petition under any bankruptcy or insolvency law or a
petition for the appointment of a receiver or makes an assignment for
the benefit of creditors;
(b) is subjected involuntarily to such a petition or assignment or to an
attachment or other legal or equitable interest with respect to the
Shares and such involuntary petition or assignment or attachment is
not discharged within sixty (60) days after its date; or
(c) is required to transfer the Shares by operation of law or by order or
decree of any court,
then the Company shall have the option to exercise the Repurchase Right,
exercisable at any time during the period of 60 days after receiving notice
thereof, to purchase all of the Unvested Shares owned by the Purchaser upon the
terms set forth in this Section 3, whether or not the Continuous Service of the
Purchaser has terminated.
3.7. ASSIGNMENT OF RIGHTS.
The Company may assign its rights under this Section 3 and Section 4.
4. BREACH AND NON-COMPETITION.
The Administrator may cancel, rescind, suspend, withhold or otherwise limit or
restrict any Shares or rights of Purchaser under this Agreement at any time if
the Purchaser engages in any "Adverse Activity." For purposes of this Section 5,
"Adverse Activity" shall include: (i) the rendering of services for any
organization or engaging directly or indirectly in any business which is or
becomes competitive with the Company, or which organization or business, or the
rendering of services to such organization or business, is or becomes otherwise
prejudicial to or in conflict with the interests of the Company; (ii) the
disclosure to anyone outside the Company, or the use in other than the Company's
business, without prior written authorization from the Company, of any
confidential information or material relating to the business of the Company,
acquired by Purchaser either during or after employment with the Company; (iii)
the failure or refusal to disclose promptly and to assign to the Company, all
right, title and interest in any invention or idea, patentable or not, made or
conceived by Purchaser during employment by the Company, relating in any manner
to the actual or anticipated business, research or development work of the
Company; (iv) activity that results in termination of Purchaser's employment for
"cause," defined here to mean those acts identified in Section 2924 of the
California Labor Code; (v) any material violation of any terms or provisions of
this Agreement; or (vi) any attempt directly or indirectly to induce any
employee of the Company to be employed or perform services elsewhere or any
attempt directly or indirectly to solicit the trade or business of any current
or prospective customer, supplier or partner of the Company. At the request of
the Administrator, the Purchaser shall certify in a manner acceptable to the
Company that he or she is in compliance with the terms and conditions of this
Section 5. In the event Purchaser engages in Adverse Activity prior to, or
during the six (6) months after, any exercise, payment or delivery pursuant to
an Option Agreement, such exercise, payment or delivery may be rescinded at the
sole election of the Company within two years thereafter. In the event of any
such rescission, the Purchaser shall pay to the Company the amount of any gain
realized or payment received as a result of the
3
disposition of Shares, in such manner and on such terms and conditions as may be
required, and the Company shall be entitled to set-off against the amount of any
such gain any amount owed to the Purchaser by the Company.
5. RECAPITALIZATION.
In the event that, as the result of a stock split or stock dividend or
combination of shares or any other change, or exchange for other securities, by
reclassification, or recapitalization of the Shares, Purchaser shall be entitled
to new or additional or different shares of stock or securities, the certificate
or certificates for, or other evidences of, such new or additional or different
shares or securities shall be imprinted with the legend(s) provided in Section
6, and shall be deposited with the Company as escrow holder under the terms and
conditions provided in Section 3.4 herein, together with a stock power or other
instrument or transfer appropriately endorsed. In such event, any and all new,
substituted or additional securities or other property (other than cash) to
which the Purchaser is entitled by reason of his ownership of the Shares shall
be immediately subject to the Repurchase Right and First Right of Refusal and be
included in the word "Shares" for all purposes of the Repurchase Right and First
Right of Refusal with the same force and effect as the Shares subject to the
Repurchase Right and the First Right of Refusal under the terms of Section 3 and
Section 4. While the total Vested Stock Repurchase Price and Unvested Stock
Repurchase Price shall remain the same after each such event, the per share
price shall be appropriately adjusted. Shares acquired as provided in this
Section 6 shall be deemed to have been acquired at the time of acquisition of
the Shares on which such Shares were distributed.
6. RESTRICTIVE LEGENDS.
In addition to all other legends that the Company or its legal counsel consider
appropriate under applicable securities laws, the certificates representing any
Shares, whether Vested Shares or Unvested Shares, purchased pursuant to this
Agreement shall bear substantially the following legend:
- --------------------------------------------------------------------------------
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (INCLUDING ANY
SECURITIES ISSUABLE WITH RESPECT TO ANY RIGHT CONNECTED HEREWITH) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN
ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED,
HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS
MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933, AND THE RULES AND
REGULATIONS PROMULGATED THEREUNDER. IN ADDITION ANY TRANSFEREE OR
ISSUEE OF SUCH SECURITIES MAY BE REQUIRED TO PROVIDE APPROPRIATE
INVESTMENT REPRESENTATIONS PRIOR TO ANY SUCH TRANSFER OR ISSUANCE.
- --------------------------------------------------------------------------------
Until such time as the Company's Repurchase Rights terminate pursuant to Section
3.6, the stock certificates for the Shares purchased pursuant to this Agreement
shall be endorsed with substantially the following legend:
- --------------------------------------------------------------------------------
ANY DISPOSITION OF ANY INTEREST IN THE SECURITIES REPRESENTED BY THIS
CERTIFICATE (INCLUDING ANY SECURITIES ISSUABLE WITH RESPECT TO ANY
RIGHT CONNECTED HEREWITH) IS SUBJECT TO RESTRICTIONS, AND THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO REPURCHASE
RIGHTS, RIGHTS OF RESCISSION AND OTHER RIGHTS CONTAINED IN A
RESTRICTED STOCK PURCHASE
4
AGREEMENT BETWEEN THE REGISTERED HOLDER (OR HIS PREDECESSOR IN
INTEREST) AND THE CORPORATION. THESE SECURITIES ARE NOT TRANSFERABLE
EXCEPT BY WILL OR PURSUANT TO THE LAWS OF DESCENT AND DISTRIBUTION, OR
AS EXPRESSLY PERMITTED IN THE RESTRICTED STOCK PURCHASE AGREEMENT AND
THE PLAN AS DEFINED THEREIN. A COPY OF SUCH AGREEMENT AND SUCH PLAN
ARE ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY, AND A COPY THEREOF
WILL BE MAILED TO ANY HOLDER OF THIS CERTIFICATE WITHOUT CHARGE WITHIN
5 DAYS OF RECEIPT BY THE CORPORATION OF A WRITTEN REQUEST THEREFOR.
- --------------------------------------------------------------------------------
7. STOP-TRANSFER NOTICES.
Purchaser understands and agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate
"stop-transfer" instructions to its transfer agent, if any, and that, if the
Company transfers its own securities, it may make appropriate notations to the
same effect in its own records.
8. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
The Purchaser warrants and represents to the Company as follows:
(a) The Purchaser is purchasing the Shares solely for the Purchaser's own
account for investment and not with a view to or for sale or
distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing
of or distributing the Shares or any portion thereof. The Purchaser
also represents that the entire legal and beneficial interest of the
Shares the Purchaser is purchasing is being purchased for, and will be
held for the account of, the Purchaser only and neither in whole nor in
part for any other person.
(b) The Purchaser has heretofore discussed the Company and its plans,
operations and financial condition with its officers, has heretofore
received all such information as the Purchaser deems necessary and
appropriate to enable the Purchaser to evaluate the financial risk
inherent in making an investment in the Shares of the Company, and has
received satisfactory and complete information concerning the business
and financial condition of the Company in response to all inquiries in
respect thereof.
(c) The Purchaser realizes that the purchase of the Shares will be a highly
speculative investment.
(d) The Purchaser is able, without impairing the Purchaser's financial
condition, to hold the Shares for an indefinite period of time and to
suffer a complete loss on the investment.
(e) The Purchaser acknowledges that he is aware that the Shares to be
issued to him by the Company pursuant to this Agreement have not been
registered under the Act. The Purchaser hereby acknowledges that:
(i) the Shares must be held indefinitely unless a transfer of them is
subsequently registered under the Act or an exemption from such
registration is available;
(ii) the share certificate(s) representing the Shares will be stamped
with the legends restricting transfer as specified in this
Agreement; and
(iii) the Company will make a notation in its records of the
aforementioned restrictions on transfer and legends.
(f) The Purchaser understands that the Shares are restricted securities
within the meaning of Rule 144 promulgated under the Act; that the
exemption from registration under Rule 144 will not be available in
any event for at least one year from the date of sale of the Shares to
the Purchaser, and even then will not be available unless (i) a public
trading market then exists for the Shares of the Company, (ii)
adequate current public information concerning the Company is then
available to the public, (iii) the Purchaser has been the beneficial
owner and the Purchaser has paid the full purchase price for the
Shares at least one year prior to the sale, and (iv) other terms and
conditions of Rule 144 are complied with; and that any sale of the
Shares may be made by it only in limited amounts in accordance with
such terms and conditions of Rule 144, as amended from time to time.
5
(g) Without in any way limiting any of the other provisions of this
Agreement, the Purchaser further agrees that the Purchaser shall in no
event make any disposition of all or any portion of the Shares which
the Purchaser is purchasing unless and until:
(i) there is then in effect a Registration Statement under the Act
covering such proposed disposition and such disposition is made in
accordance with said Registration Statement; or
(ii) (A) the Purchaser shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed
disposition, (B) the Purchaser shall have furnished the Company
with an opinion of counsel to the effect that such disposition
will not require registration of such shares under the Act, and
(C) such opinion of counsel shall have been concurred in by
counsel for the Company and the Company shall have advised the
Purchaser of such concurrence.
(h) The Purchaser represents and warrants that he or she has not engaged in
any Adverse Activity as defined in Section 5.
(i) The Purchaser acknowledges that the Purchaser has been furnished with a
copy of the Plan, has read the Plan and this Agreement, and understands
that all rights and obligations connected with this Agreement are set
forth in this Agreement and in the Plan.
9. UNAUTHORIZED TRANSFERS.
The Company shall not be required (a) to transfer on its books any Shares of the
Company which shall have been sold or transferred in violation of any of the
provisions set forth in this Agreement or (b) to treat as owner of such shares
or to accord the right to vote as such owner or to pay dividends to any
transferee to whom such shares shall have been so transferred. In the event of a
sale of Shares by the Purchaser pursuant to Section 4, the Purchaser shall
furnish to the Company proof that such sale was made in compliance with the
provisions of Section 4 as to price and general terms of such sale.
Notwithstanding any other provision of this Agreement, if the Company is an
electing small business corporation under Subchapter S of the Code, at the time
Purchaser seeks to transfer his or her Shares, (a) no transfer shall be
effective unless the transferee covenants to comply with any rules and
regulations of the Internal Revenue Service then in effect relating to the
Company's Subchapter S election and to take no action which will jeopardize such
election; and (b) Purchaser hereby agrees that he or she will not transfer or
attempt to transfer any Shares to any transferee whose ownership of the Shares
could automatically invalidate the Company's Subchapter S election and that such
a sale or transfer shall be void and ineffectual.
10. "MARKET STAND-OFF" AGREEMENT.
Purchaser agrees that, if requested by the Company or the managing underwriter
of any proposed Public Offering of the Company's securities, Purchaser will not
sell or otherwise transfer or dispose of any Shares held by Purchaser without
the prior written consent of the Company or such underwriter, as the case may
be, during such period of time, not to exceed 180 days following the effective
date of the registration statement filed by the Company with respect to such
Public Offering, as the Company or the underwriter may specify.
11. ENTIRE AGREEMENT.
This Agreement and the Plan constitutes the entire agreement between the parties
pertaining to its subject matter and supersedes all contemporaneous written or
oral agreements and understandings of the parties, either express or implied.
The parties agree to execute such further instruments and to take such further
action as may reasonably be necessary to carry out the intent of this Agreement.
12. NO CREATION OR ENLARGEMENT OF PARTICIPANT'S RIGHTS TO CONTINUE IN ANY
CAPACITY.
The right of the Company and any Affiliated Company (as defined in the Plan) to
terminate at will the Purchaser's services to the Company or any Affiliated
Company at any time (whether by dismissal, discharge or otherwise), with or
without cause, is specifically reserved. Nothing in this Agreement shall
diminish or impair in any manner
6
whatsoever the right or power of the Company or any Affiliated Company to
terminate the Purchaser's Continuous Service for any reason, with or without
cause.
13. NOTICES.
Any notice, demand or request required or permitted to be given under this
Agreement shall be in writing and shall be deemed given when delivered
personally or three (3) days after being deposited in the United States mail, as
certified or registered mail, with postage prepaid, and addressed, if to the
Company, at its principal place of business, Attention: the Chief Financial
Officer, and if to the Purchaser, at his or her most recent address as shown in
the records of the Company.
14. SUCCESSORS AND ASSIGNS.
This Agreement shall inure to the benefit of the successors and assigns of the
Company and be binding upon the Purchaser and his heirs, executors,
administrators, successors and assigns.
15. GOVERNING LAW.
The validity, construction, interpretation, and effect of this Option shall be
governed by the laws of the State of California, excluding any conflicts of law
or choice of law rule or principle that might otherwise refer construction and
interpretation of the plan and such agreements to the substantive law of another
jurisdiction. Optionee hereby agrees to submit to the exclusive jurisdiction and
venue of federal or state courts of Orange County, California, to resolve any
and all issues that may arise out of or relate to this Option.
16. INTERPRETATION.
This Agreement is entered into pursuant to the terms of the Plan, and shall in
all respects be interpreted in accordance therewith. The Administrator shall
interpret and construe this Agreement and the Plan, and any action, decision,
interpretation or determination made in good faith by the Administrator shall be
final and binding on the Company and the Purchaser. As used in this Agreement,
the term "Administrator" shall refer to the committee of the Board of Directors
of the Company appointed to administer the Plan, and if no such committee has
been appointed, the term Administrator shall mean the Board of Directors.
17. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all of which together shall constitute
one and the same instrument. Execution and delivery of this Agreement or any
notices, certificates or instruments contemplated herein by fax, facsimile, or
telecopier shall be deemed the execution and delivery of an originally signed
agreement, notice or instrument, as the case may be.
18. SEVERABILITY.
Should any provision or portion of this Agreement be held to be unenforceable or
invalid for any reason, the remaining provisions and portions of this Agreement
shall be unaffected by such holding.
19. AMENDMENT.
The Board shall have full power and authority (subject to certain amendments
requiring shareholder approval pursuant to applicable laws or regulations) from
time to time to alter, amend, suspend or terminate the Plan in any or all
respects as the Board may deem advisable, and to alter this Agreement in ways
which shall not substantially adversely affect or impair the Purchaser's rights
under this Agreement No such alteration, amendment, suspension or termination
shall be made which shall substantially affect or impair the rights of any
Purchaser under an outstanding Restricted Stock Purchase Agreement without such
Purchaser's consent.
7
IN WITNESS WHEREOF, the parties have executed this Restricted Stock Purchase
Agreement as of the day and year first above written.
"COMPANY"
HIENERGY TECHNOLOGIES, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
"PURCHASER"
---------------------------------------------
(Signature)
---------------------------------------------
(Type or Print Name)
Address:
------------------------------------
------------------------------------
8
CONSENT OF SPOUSE
I acknowledge that I have read the foregoing Agreement and that I know its
contents. I am aware that by its provisions, my spouse agrees, among other
things, to a first right of refusal, to the granting of rights to repurchase and
to the imposition of certain restrictions on the transfer of the shares of
HiEnergy Technologies, Inc., a Delaware corporation (the "Company"), including
my community interest therein (if any), which rights and restrictions may
survive my spouse's death. I hereby consent to such rights and restrictions and
approve of the provisions of the Agreement.
I further agree that in the event of a dissolution of the marriage between
myself and my spouse, in connection with which I secure or am awarded shares of
the common stock of the Company, or any interest therein through property
settlement agreement or otherwise, I shall receive and hold said shares subject
to all the provisions and restrictions contained in the foregoing Agreement,
including any option of a shareholder or the Company to purchase such shares or
interest from me.
I also acknowledge that I have been advised to obtain independent counsel to
represent my interests with respect to this Agreement but that I have declined
to do so and I hereby expressly waive my right to such independent counsel.
Date:
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(Signature)
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(Type or Print Name)
Spouse of
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9
EXHIBIT A
TO RESTRICTED STOCK PURCHASE AGREEMENT
PROMISSORY NOTE
(_____ YEAR, [_____]%* Interest)
___________________, ____ ____________, California
For value received, the undersigned promises to pay HiEnergy
Technologies, Inc., a Delaware Corporation (the "Company"), at the address of
its principal office, the sum of Dollars ($_____) in full by or before the
________ anniversary date of the date hereof, together with interest thereon as
hereinafter provided.
The undersigned shall have the right to prepay said principal amount at any time
in whole or in part without penalty. Simple annual interest at the rate 1 of
____________ percent (_____%) per annum on unpaid principal shall be paid
annually on each anniversary of the date hereof and upon each prepayment of
principal, if any.
The entire outstanding principal and interest shall be due and payable if any
one or more of the following events shall have occurred:
(a) The making by the undersigned of any assignment for the benefit of
creditors or the filing by or against the undersigned of any petition
in bankruptcy if such proceeding not be discharged within ninety (90)
days of any such making or filing.
(b) The occurrence of any termination of Continuous Service as set forth in
the Restricted Stock Purchase Agreement of even date herewith between
the undersigned and the Company.
If any installment of principal and/or interest is not paid when due, the holder
hereof may, at its option, declare the entire amount of this note immediately
due and payable.
All payments hereon shall be credited first to accrued but unpaid interest, and
the balance, if any, shall be credited to principal.
If legal action is instituted for the collection of this note, the undersigned
promises to pay such sum as the Court may adjudge reasonable as attorneys' fees.
This note is given pursuant to that certain Restricted Stock Purchase Agreement
of even date herewith, between the Company and the undersigned and is subject to
all of the terms, rights and remedies set forth therein. This note is secured by
a Pledge Agreement of even date herewith between the Company and the
undersigned.
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(Signature)
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(Type or Print Name)
*A fixed rate of interest is to be determined from time to time by action of the
Board of Directors in accordance with prevailing rates and the Internal Revenue
Service prescribed interest rules.
A-1
EXHIBIT B
TO RESTRICTED STOCK PURCHASE AGREEMENT
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Agreement') is executed as of this _____ day of
____________, ____, between HiEnergy Technologies, Inc., a Delaware corporation
(the "Company"), and ("Purchaser").
WITNESSETH:
For the considerations and undertakings set forth herein, the parties do hereby
agree as follows:
1. To secure payment to the Company of a promissory note ("Note") in the
face amount of _______________________ Dollars ($__________), and
extensions or renewals thereof, which was executed concurrently with
the execution of this Pledge Agreement pursuant to a Restricted Stock
Purchase Agreement of even date herewith between the Company and
Purchaser, Purchaser hereby assigns and grants to the Company a
security interest in ___________________ (______) shares ("Shares") of
the Common Stock of the Company acquired under the Restricted Stock
Purchase Agreement, together with securities or other collateral (if
any) other than such Shares, all described as follows:
Issuer:
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Certificate Number:
-------------------------
Number of Shares:
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Registered Owner:
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Purchaser does hereby deposit with the Company, as pledge holder, such
certificates, together with duly executed stock transfer powers.
2. Subject to any obligations of Purchaser under the Restricted Stock
Purchase Agreement, the Company agrees that within a reasonable time
after all or any portion of the Note is paid by Purchaser, the Company
shall release and deliver to Purchaser the number of Shares held
hereunder for which such payment was received. The Company, in its
discretion, may release portions of the Shares upon periodic principal
payments or deposit of other or additional security under the Note.
All Shares released and delivered to Purchaser shall be free and clear
of the restrictions of this Pledge Agreement.
3. Unless and until Purchaser defaults in his performance under the terms
of the Note, the terms of this Pledge Agreement and/or the terms of
the Restricted Stock Purchase Agreement, the Shares held by the
Company at any time under this Pledge Agreement shall remain
registered in the name of Purchaser on the records of the Company, and
Purchaser may vote the Shares on all corporate questions (if the same
shall be entitled to voting rights) and shall be entitled to receive
all dividends and other amounts accruing as a result of his ownership
of the Shares.
4. In the event the Purchaser defaults in the performance of any of the
terms of the Note, this Pledge Agreement or the Restricted Stock
Purchase Agreement, the Company may exercise any and all rights which
it may have under the California Uniform Commercial Code or any other
applicable statute, case, ruling regulation or law; subject, however,
to all permits, orders, consents, rules and regulations of the
California Commissioner of Corporations and the Securities and
Exchange Commission and the Federal Reserve Board relating hereto, to
which Purchaser agrees to be bound.
5. If during the term of this Pledge Agreement the Company should become
a party to any merger,
B-1
consolidation or other reorganization, this Pledge Agreement shall be
adjusted so as to apply to the securities to which a holder of the
Shares subject to this Pledge Agreement would have been entitled upon
such merger, consolidation or reorganization; and, if during the term
of this Pledge Agreement the Company shall be dissolved or its
existence otherwise terminated, then that portion of the assets and
consideration to which a holder of the Shares subject to this Pledge
Agreement would have been entitled in such transaction shall be the
subject matter of this Pledge Agreement for the remainder of its term.
This shall in no way limit the right of the Company to repurchase
shares under the Restricted Stock Purchase Agreement.
6. This Pledge Agreement shall inure to the benefit of and be binding
upon the heirs, executors and administrators of the parties hereto.
7. The rights, powers and remedies given to the Company by this Agreement
shall be in addition to all rights, powers and remedies given to the
Company under the Restricted Stock Purchase Agreement or any statute
or rule of law. Any forbearance or failure or delay by the Company in
exercising any right, power or remedy hereunder shall not be deemed to
be a waiver of such right, power or remedy, nor shall any single or
partial exercise of any right, power or remedy preclude the further
exercise thereof.
8. The Board of Directors may demand and receive payment or additional
security if for any reason the collateral hereunder is insufficient to
meet minimum requirements established under federal or state
securities or banking regulations or as may be necessary to bring the
Note and the security into compliance with any such law or
regulations. Any failure of Purchaser to meet any such demand shall be
deemed a default under this Pledge Agreement and under the note
secured hereby.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.
"COMPANY"
HIENERGY TECHNOLOGIES, INC.
By:
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Name:
---------------------------------------
Title:
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"PURCHASER"
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(Signature)
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(Type or Print Name)
Address:
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B-2
EXHIBIT C
TO RESTRICTED STOCK PURCHASE AGREEMENT
SECTION 83(B) ELECTION
Date: ___________, ______
Internal Revenue Service Center
5045 East Butler Avenue
Fresno, California 93888
RE: ELECTION UNDER SECTION 83(B) OF THE INTERNAL REVENUE CODE
Dear Sir or Madam:
The undersigned performed services in connection with which property was
transferred to the undersigned that, at the time of transfer, was not
transferable by the undersigned and was subject to a substantial risk of
forfeiture. The undersigned hereby makes this election pursuant to Section 83(b)
of the Internal Revenue Code.
In connection with this election, the undersigned hereby provides you with the
following information:
1. The undersigned's name, address, social security number, and the
taxable year of the person who performed the services are as follows:
Name and Address:
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Social Security No.:
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Taxable Year: Calendar Year
2. A description of the property with respect to which the election is
being made:
_____________ shares of Common Stock (the "Shares") of HiEnergy
Technologies, Inc., a Delaware corporation (the "Company").
3. The date on which the property was transferred:
4. A description of the nature of the restrictions to which the property
is subject:
The Company may reacquire all or any part of the Shares from the undersigned in
accordance with a repurchase schedule set forth in a Restricted Stock Purchase
Agreement (the "Agreement") between the undersigned and the Company. In the
event the undersigned should cease to be a service provider to the Company at
any time, the Company may repurchase unvested Shares at the original price paid
by the undersigned. The Shares acquired under the Agreement shall vest and
become "Vested Shares" from and after (the "Vesting Measurement Date") in
accordance with the following vesting schedule:
On or After:...................................................................................Shares Vested As To:
- ----------- -------------------
The first anniversary of Vesting Measurement Date:............................................._____% of the Shares
Last day of each calendar month after such first anniversary..................................._____% of the Shares
The vesting schedule of this Agreement would result, assuming Continuous Service
shall have theretofore not
terminated, in One Hundred Percent (100%) of the Restricted Shares being Vested
Shares at the end of the calendar month in which the ______ anniversary of the
Vesting Measurement Date falls. Shares which have not yet become vested are
herein called "Unvested Shares." In the event Purchaser ceases his employment or
service provider status with the Company, all vesting shall cease unless
otherwise determined by the Board of Directors. Concurrent with the Service
Termination Date, the Company shall have the option to repurchase (the
"Repurchase Option") all or any portion of the Purchaser's Unvested Shares.
6. The fair market value at the time of transfer (determined without
regard to any restriction other than a restriction which by its terms
will never lapse) of the property with respect to which the election
is being made:
____ per share, which equals an aggregate fair market value of _____ .
7. The amount paid for such property:
____ per share, which equals an aggregate fair market value of _____ .
There are enclosed herewith two copies of this written statement for filing.
Please stamp the third copy enclosed herewith as having been received and return
it to the undersigned in the enclosed, self-addressed, postage-paid envelope.
The undersigned has also submitted a copy of this statement to the person for
whom the services were performed.
If you have any questions or comments, or if any additional information is
required, please do not hesitate to contact:
----------------------
----------------------
----------------------
----------------------
(---) --------
Very truly yours,
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(Signature)
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(Type or Print Name)