Exhibit 10.3
BODISEN BIOTECH, INC.
NONSTATUTORY STOCK OPTION AGREEMENT
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THIS NONSTATUTORY STOCK OPTION AGREEMENT ("Agreement") is made and entered
into as of the date set forth below, by and between BODISEN BIOTECH, INC., a
Delaware corporation (the "Company"), and the following Director of the Company
("Optionee"):
In consideration of the covenants herein set forth, the parties hereto
agree as follows:
1. Option Information.
(a) Date of Option: __________
(b) Optionee: __________
(c) Number of Shares: __________
(d) Exercise Price: __________
2. Acknowledgements.
(a) Optionee is a member of the Board of Directors of the Company.
(b) The Board of Directors (the "Board" which term shall include an
authorized committee of the Board of Directors) and shareholders of the Company
have heretofore adopted a 2004 Stock Option Plan (the "Plan"), pursuant to which
this Option is being granted; and
(c) The Board has authorized the granting to Optionee of a
nonstatutory stock option ("Option") to purchase shares of common stock of the
Company ("Stock") upon the terms and conditions hereinafter stated and pursuant
to an exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act") provided by Rule 701 thereunder.
3. Shares; Price. Company hereby grants to Optionee the right to purchase,
upon and subject to the terms and conditions herein stated, the number of shares
of Stock set forth in Section 1(c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board of
Directors of the Company, in their sole and absolute discretion) at the price
per Share set forth in Section 1(d) above (the "Exercise Price"), such price
being not less than eighty-five percent (85%) of the fair market value per share
of the Shares covered by this Option as of the date hereof.
4. Term of Option; Continuation of Service. This Option shall expire, and
all rights hereunder to purchase the Shares shall terminate, five (5) years from
the date hereof. This Option shall earlier terminate subject to Sections 7 and 8
hereof upon, and as of the date of, the termination of Optionee's employment if
such termination occurs prior to the end of such five (5) year period. Nothing
contained herein shall confer upon Optionee the right to the continuation of his
or her employment by the Company or to interfere with the right of the Company
to terminate such employment or to increase or decrease the compensation of
Optionee from the rate in existence at the date hereof.
5. Vesting of Option. Subject to the provisions of Sections 7 and 8 hereof,
this Option shall become exercisable during the term that Optionee serves as a
Director of the Company as follows: (i) 50% of the shares of Stock subject to
this Option shall become exercisable immediately as of the date of this
Agreement; and (ii) the balance of the shares of Stock subject to this Option
shall become exercisable in eight (8) equal quarterly installments of three
thousand one hundred twenty five (3,125) shares of Stock subject to this Option,
the first installment to be exercisable as of the last day of the second quarter
of calendar year 2004, with an additional 3,125 of such Shares becoming
exercisable as of the last day of each quarter. The installments shall be
cumulative (i.e., this option may be exercised, as to any or all shares covered
by an installment, at any time or times after an installment becomes exercisable
and until expiration or termination of this Option).
6. Exercise. This Option shall be exercised by delivery to the Company of
(a) written notice of exercise stating the number of Shares being purchased (in
whole shares only) and such other information set forth on the form of Notice of
Exercise attached hereto as Appendix A, (b) a check or cash in the amount of the
Exercise Price of the Shares covered by the notice (or such other consideration
as has been approved by the Board of Directors consistent with the Plan) and (c)
a written investment representation as provided for in Section 13 hereof. This
Option shall not be assignable or transferable, except by will or by the laws of
descent and distribution, and shall be exercisable only by Optionee during his
or her lifetime, except as provided in Section 8 hereof.
7. Termination of Service. If Optionee shall cease to serve as a Director
of the Company for any reason, no further installments shall vest pursuant to
Section 5, and the maximum number of Shares that Optionee may purchase pursuant
hereto shall be limited to the number of Shares that were vested as of the date
Optionee ceases to be a Director (to the nearest whole Share). Thereupon,
Optionee shall have the right to exercise this Option, at any time during the
remaining term hereof, to the extent, but only to the extent, that this Option
was exercisable as of the date Optionee ceases to be a Director; provided,
however, if Optionee is removed as a Director for "cause" pursuant to the
Delaware corporation law, the foregoing right to exercise shall automatically
terminate on the date Optionee ceases to be a Director as to all Shares covered
by this Option not exercised prior to termination. Unless earlier terminated,
all rights under this Option shall terminate in any event on the expiration date
of this Option as defined in Section 4 hereof.
8. Death of Optionee. If the Optionee shall die while in the employ of the
Company, Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time within six (6) months after the date of
Optionee's death, or during the remaining term of this Option, whichever is the
lesser, exercise this Option and purchase Shares to the extent, but only to the
extent, that Optionee could have exercised this Option as of the date of
Optionee's death; provided, in any case, that this Option may be so exercised
only to the extent that this Option has not previously been exercised by
Optionee.
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9. No Rights as Shareholder. Optionee shall have no rights as a shareholder
with respect to the Shares covered by any installment of this Option until the
effective date of issuance of the Shares following exercise of this Option, and
no adjustment will be made for dividends or other rights for which the record
date is prior to the date such stock certificate or certificates are issued
except as provided in Section 10 hereof.
10. Recapitalization. Subject to any required action by the shareholders of
the Company, the number of Shares covered by this Option, and the Exercise Price
thereof, shall be proportionately adjusted for any increase or decrease in the
number of issued shares resulting from a subdivision or consolidation of shares
or the payment of a stock dividend, or any other increase or decrease in the
number of such shares effected without receipt of consideration by the Company;
provided however that the conversion of any convertible securities of the
Company shall not be deemed having been "effected without receipt of
consideration by the Company". Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Stock subject to an Option.
In the event of a proposed dissolution or liquidation of the Company, each
Option will terminate immediately prior to the consummation of such action,
unless otherwise determined by the Board. In the event of a merger or
consolidation in which the Company is not the surviving entity, or a sale of all
or substantially all of the assets or capital stock of the Company
(collectively, a "Reorganization"), unless otherwise provided by the Board, this
Option shall terminate immediately prior to such date as is determined by the
Board, which date shall be no later than the consummation of such
Reorganization. In such event, if the entity which shall be the surviving entity
does not tender to Optionee an offer, for which it has no obligation to do so,
to substitute for any unexercised Option a stock option or capital stock of such
surviving of such surviving entity, as applicable, which on an equitable basis
shall provide the Optionee with substantially the same economic benefit as such
unexercised Option, then the Board may grant to such Optionee, in its sole and
absolute discretion and without obligation, the right for a period commencing
thirty (30) days prior to and ending immediately prior to the date determined by
the Board pursuant hereto for termination of the Option or during the remaining
term of the Option, whichever is the lesser, to exercise any unexpired Option or
Options without regard to the installment provisions of Section 5; provided,
however, that such exercise shall be subject to the consummation of such
Reorganization.
Subject to any required action by the shareholders of the Company, if the
Company shall be the surviving entity in any merger or consolidation, this
Option thereafter shall pertain to and apply to the securities to which a holder
of Shares equal to the Shares subject to this Option would have been entitled by
reason of such merger or consolidation, and the installment provisions of
Section 5 shall continue to apply.
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In the event of a change in the shares of the Company as presently
constituted, which is limited to a change of all of its authorized Stock without
par value into the same number of shares of Stock with a par value, the shares
resulting from any such change shall be deemed to be the Shares within the
meaning of this Option.
To the extent that the foregoing adjustments relate to shares or securities
of the Company, such adjustments shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as hereinbefore
expressly provided, Optionee shall have no rights by reason of any subdivision
or consolidation of shares of Stock of any class or the payment of any stock
dividend or any other increase or decrease in the number of shares of stock of
any class, and the number and price of Shares subject to this Option shall not
be affected by, and no adjustments shall be made by reason of, any dissolution,
liquidation, merger, consolidation or sale of assets or capital stock, or any
issue by the Company of shares of stock of any class or securities convertible
into shares of stock of any class.
The grant of this Option shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
in its capital or business structure or to merge, consolidate, dissolve or
liquidate or to sell or transfer all or any part of its business or assets.
11. Taxation upon Exercise of Option. Optionee understands that, upon
exercise of this Option, Optionee will recognize income, for Federal and state
income tax purposes, in an amount equal to the amount by which the fair market
value of the Shares, determined as of the date of exercise, exceeds the Exercise
Price. The acceptance of the Shares by Optionee shall constitute an agreement by
Optionee to report such income in accordance with then applicable law and to
cooperate with Company in establishing the amount of such income and
corresponding deduction to the Company for its income tax purposes. Withholding
for federal or state income and employment tax purposes will be made, if and as
required by law, from Optionee's then current compensation, or, if such current
compensation is insufficient to satisfy withholding tax liability, the Company
may require Optionee to make a cash payment to cover such liability as a
condition of the exercise of this Option.
12. Modification, Extension and Renewal of Options. The Board or Committee,
as described in the Plan, may modify, extend or renew this Option or accept the
surrender thereof (to the extent not theretofore exercised) and authorize the
granting of a new option in substitution therefore (to the extent not
theretofore exercised), subject at all times to the Plan, the Code and the
Delaware Securities Rules and subject to shareholder approval, as applicable.
Notwithstanding the foregoing provisions of this Section 12, no modification
shall, without the consent of the Optionee, alter to the Optionee's detriment or
impair any rights of Optionee hereunder.
13. Investment Intent; Restrictions on Transfer.
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(a) Optionee represents and agrees that if Optionee exercises this
Option in whole or in part, Optionee will in each case acquire the Shares upon
such exercise for the purpose of investment and not with a view to, or for
resale in connection with, any distribution thereof; and that upon such exercise
of this Option in whole or in part, Optionee (or any person or persons entitled
to exercise this Option under the provisions of Sections 7 and 8 hereof) shall
furnish to the Company a written statement to such effect, satisfactory to the
Company in form and substance. If the Shares represented by this Option are
registered under the Securities Act, either before or after the exercise of this
Option in whole or in part, the Optionee shall be relieved of the foregoing
investment representation and agreement and shall not be required to furnish the
Company with the foregoing written statement.
(b) Optionee further represents that Optionee has had access to the
financial statements or books and records of the Company, has had the
opportunity to ask questions of the Company concerning its business, operations
and financial condition, and to obtain additional information reasonably
necessary to verify the accuracy of such information
(c) Unless and until the Shares represented by this Option are
registered under the Securities Act, all certificates representing the Shares
and any certificates subsequently issued in substitution therefor and any
certificate for any securities issued pursuant to any stock split, share
reclassification, stock dividend or other similar capital event shall bear
legends in substantially the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE
SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR
SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN
MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY
STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT
CERTAIN NONSTATUTORY STOCK OPTION AGREEMENT DATED ____________ BETWEEN THE
COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE
SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.
and/or such other legend or legends as the Company and its counsel deem
necessary or appropriate. Appropriate stop transfer instructions with respect to
the Shares have been placed with the Company's transfer agent.
14. Stand-off Agreement. Optionee agrees that, in connection with any
registration of the Company's securities under the Securities Act, and upon the
request of the Company or any underwriter managing an underwritten offering of
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the Company's securities, Optionee shall not sell, short any sale of, loan,
grant an option for, or otherwise dispose of any of the Shares (other than
Shares included in the offering) without the prior written consent of the
Company or such managing underwriter, as applicable, for a period of at least
one year following the effective date of registration of such offering.
15. Restriction Upon Transfer. The Shares may not be sold, transferred or
otherwise disposed of and shall not be pledged or otherwise hypothecated by the
Optionee except as hereinafter provided.
(a) Repurchase Right on Termination Other Than by Removal. For the
purposes of this Section, a "Repurchase Event" shall mean an occurrence of one
of (i) termination of Optionee's service as a director; (ii) death of Optionee;
(iii) bankruptcy of Optionee, which shall be deemed to have occurred as of the
date on which a voluntary or involuntary petition in bankruptcy is filed with a
court of competent jurisdiction; (iv) dissolution of the marriage of Optionee,
to the extent that any of the Shares are allocated as the sole and separate
property of Optionee's spouse pursuant thereto (in which case, this Section
shall only apply to the Shares so affected); or (v) any attempted transfer by
the Optionee of Shares, or any interest therein, in violation of this Agreement.
Upon the occurrence of a Repurchase Event, and upon mutual agreement of the
Company and Optionee, the Company may repurchase all or any portion of the
Shares of Optionee at a price equal to the fair value of the Shares as of the
date of the Repurchase Event.
(b) Repurchase Right on Removal. In the event Optionee is removed as a
director pursuant to the Delaware General Corporation Law, or Optionee
voluntarily resigns as a director prior to the date upon which the last
installment of Shares becomes exercisable pursuant to Section 5, then the
Company shall have the right (but not an obligation) to repurchase Shares of
Optionee at a price equal to the Exercise Price. Such right of the Company to
repurchase Shares shall apply to 100% of the Shares for one (1) year from the
date of this Agreement; and shall thereafter lapse ratably in equal annual
increments on each anniversary of the date of this Agreement over the term of
this Option specified in Section 4. In addition, the Company shall have the
right, in the sole discretion of the Board and without obligation, to repurchase
upon removal or resignation all or any portion of the Shares of Optionee, which
right is not subject to the foregoing lapsing of rights. In the event the
Company elects to repurchase the Shares, the stock certificates representing the
same shall forthwith be returned to the Company for cancellation.
(c) Exercise of Repurchase Right. Any Repurchase Right under
Paragraphs 15(a) or 15(b) shall be exercised by giving notice of exercise as
provided herein to Optionee or the estate of Optionee, as applicable. Such right
shall be exercised, and the repurchase price thereunder shall be paid, by the
Company within a ninety (90) day period beginning on the date of notice to the
Company of the occurrence of such Repurchase Event (except in the case of
termination or cessation of services as director, where such option period shall
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begin upon the occurrence of the Repurchase Event). Such repurchase price shall
be payable only in the form of cash (including a check drafted on immediately
available funds) or cancellation of purchase money indebtedness of the Optionee
for the Shares. If the Company can not purchase all such Shares because it is
unable to meet the financial tests set forth in the Delaware corporation law,
the Company shall have the right to purchase as many Shares as it is permitted
to purchase under such sections. Any Shares not purchased by the Company
hereunder shall no longer be subject to the provisions of this Section 15.
(d) Right of First Refusal. In the event Optionee desires to transfer
any Shares during his or her lifetime, Optionee shall first offer to sell such
Shares to the Company. Optionee shall deliver to the Company written notice of
the intended sale, such notice to specify the number of Shares to be sold, the
proposed purchase price and terms of payment, and grant the Company an option
for a period of thirty days following receipt of such notice to purchase the
offered Shares upon the same terms and conditions. To exercise such option, the
Company shall give notice of that fact to Optionee within the thirty (30) day
notice period and agree to pay the purchase price in the manner provided in the
notice. If the Company does not purchase all of the Shares so offered during
foregoing option period, Optionee shall be under no obligation to sell any of
the offered Shares to the Company, but may dispose of such Shares in any lawful
manner during a period of one hundred and eighty (180) days following the end of
such notice period, except that Optionee shall not sell any such Shares to any
other person at a lower price or upon more favorable terms than those offered to
the Company.
(e) Acceptance of Restrictions. Acceptance of the Shares shall
constitute the Optionee's agreement to such restrictions and the legending of
his certificates with respect thereto. Notwithstanding such restrictions,
however, so long as the Optionee is the holder of the Shares, or any portion
thereof, he shall be entitled to receive all dividends declared on and to vote
the Shares and to all other rights of a shareholder with respect thereto.
(f) Permitted Transfers. Notwithstanding any provisions in this
Section 15 to the contrary, the Optionee may transfer Shares subject to this
Agreement to his or her parents, spouse, children, or grandchildren, or a trust
for the benefit of the Optionee or any such transferee(s); provided, that such
permitted transferee(s) shall hold the Shares subject to all the provisions of
this Agreement (all references to the Optionee herein shall in such cases refer
mutatis mutandis to the permitted transferee, except in the case of clause (iv)
of Section 15(a) wherein the permitted transfer shall be deemed to be
rescinded); and provided further, that notwithstanding any other provisions in
this Agreement, a permitted transferee may not, in turn, make permitted
transfers without the written consent of the Optionee and the Company.
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(g) Release of Restrictions on Shares. All other restrictions under
this Section 15 shall terminate five (5) years following the date of this
Agreement, or when the Company's securities are publicly traded, whichever
occurs earlier.
16. Notices. Any notice required to be given pursuant to this Option or the
Plan shall be in writing and shall be deemed to be delivered upon receipt or, in
the case of notices by the Company, five (5) days after deposit in the U.S.
mail, postage prepaid, addressed to Optionee at the address last provided by
Optionee for use in Company records related to Optionee.
17. Agreement Subject to Plan; Applicable Law. This Option is made pursuant
to the Plan and shall be interpreted to comply therewith. A copy of such Plan is
available to Optionee, at no charge, at the principal office of the Company. Any
provision of this Option inconsistent with the Plan shall be considered void and
replaced with the applicable provision of the Plan. This Option has been
granted, executed and delivered in the State of Delaware, and the interpretation
and enforcement shall be governed by the laws thereof and subject to the
exclusive jurisdiction of the courts therein.
IN WITNESS WHEREOF, the parties hereto have executed this Option as of the
date first above written.
COMPANY: BODISEN BIOTECH, INC.,
a Delaware corporation
By:___________________________
Name:_________________________
Title:________________________
OPTIONEE:
By:___________________________
(signature)
Name:_________________________
(one of the following, as appropriate, shall be signed)
I certify that as of the date By his or her signature, the spouse of
hereof I am unmarried Optionee hereby agrees to be bound by the
provisions of the foregoing STOCK OPTION
AGREEMENT
_____________________________________ _________________________________
Optionee Spouse of Optionee
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Appendix A
NOTICE OF EXERCISE
BODISEN BIOTECH, INC.
Re: Nonstatutory Stock Option
Notice is hereby given pursuant to Section 6 of my Nonstatutory Stock
Option Agreement that I elect to purchase the number of shares set forth below
at the exercise price set forth in my option agreement:
Nonstatutory Stock Option Agreement dated: ____________
Number of shares being purchased: ____________
Exercise Price: $____________
A check in the amount of the aggregate price of the shares being purchased
is attached.
I hereby confirm that such shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my
Shares in violation of the Securities Act of 1933, as amended, or any applicable
federal or state securities laws. Further, I understand that the exemption from
taxable income at the time of exercise is dependent upon my holding such stock
for a period of at least one year from the date of exercise and two years from
the date of grant of the Option.
I understand that the certificate representing the Option Shares will bear
a restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.
I agree to provide to the Company such additional documents or information
as may be required pursuant to the Company's 2004 Stock Option Plan.
By:___________________________
(signature)
Name:_________________________