EXHIBIT 10.4
OPTION AGREEMENT
This Option Agreement ("Agreement") is made this August 11th of 2003 by
and between Composite Technology Corp ("the Company") and Xxxxxxx JGG Majendie,
("Majendie"), Xxxxxxx Xxxxx, Xxxxxxx'x Xxxxxx, Xxxxxxx, Xxxxxxx, XX0 0XX, XX.
WHEREAS, under that certain employment agreement ("Employment Agreement")
between the parties, the Company has granted to Majendie an option to purchase
one million (1,000,000) shares of the Company's common stock, subject to the
terms and conditions of this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Option
The Company grants to Majendie the right to purchase ("Option") an
aggregate of one million (1,000,000) shares of the Company's common stock
("Shares") at the price set forth in Section 4 below. The vested portion of the
Option may be exercised at any time, whether in a single transaction or in
multiple transactions, and in the amounts and at the times determined by
Majendie.
2. Vesting
Subject to Sections 3 and 7 below, the Option shall vest at the rate of
85,000 shares under the option per quarter, effective as of August 31st, 2003
during the period beginning on October 1, 2003.
The vested portion of the Option shall be nonforfitable, and shall not be
affected by the termination of the Employment Agreement, the death or disability
of Majendie, or for any other reason. Notwithstanding the foregoing, if the
entire portion of this Option has not been exercised as of December 31, 2011,
the unexercised portion shall lapse and shall be of no force or effect.
3. Effect of Termination of Employment Agreement
If Majendie voluntarily terminates the Employment Agreement without cause,
or if the Company terminates the Employment Agreement due to Majendie's breach,
then as of the effective date of such termination the unvested portion of the
Option shall terminate and shall be of no force or effect. This paragraph shall
not apply to any voluntary termination by Majendie as a result of a Change in
Control specified in Section 7 below.
If the Company voluntarily terminates the Employment Agreement without
cause, or if Majendie terminates the Employment Agreement due to the Company's
breach, or if the Employment Agreement is terminated due to death or disability
of Majendie, then as of the effective date of such termination the unvested
portion of the Option shall be immediately and fully vested.
The termination of Employment Agreement shall not affect Majendie's right
to exercise the vested portion of the Option at any time prior to December 31,
2011.
4. Purchase Price
The purchase price for each Share subject to the Option (including any
additional Shares granted to Majendie under Section 7 below) shall be $0.53.
5. Manner of Exercise
If at any time Majendie elects to exercise all or any part of the vested
portion of the Option, it shall so notify Company in writing. Such written
notice shall specify the number of Shares to be purchased, and shall be
accompanied by cash or a check equal to the full purchase price for all Shares
purchased. "Full purchase price" means the per-share price in Section 4
multiplied by the number of Shares purchased.
6. Issuance of Certificates
As soon as practicable after the exercise of any portion of the Option,
the Company shall deliver to Majendie a certificate evidencing the Shares so
purchased. Upon such delivery Majendie shall have all rights, powers, and
interests of a shareholder of the Company with respect to the Shares so
acquired.
7. Change in Control
Notwithstanding Section 2 above, in the event of a Change in Control of
the Company the unvested portion of the Option shall be fully and immediately
vested as of the earlier of (i) the date any proposed Change in Control has been
approved by the Company's board of directors, whether or not all of the terms of
such transaction have been determined, (ii) the date Change in Control has
actually occurred, or (iii) the occurrence of an event specified in subsection
(c) below.
As used herein, "Change in Control" shall mean any of the following:
(a) The sale or transfer of more than fifty percent (50%) of the
assets of the Company, whether in a single transaction or a series
of transactions.
(b) The sale or transfer to any person or Common Group, or
acquisition by any person or Common Group, of twenty percent (20%)
or more of the outstanding common stock of the Company, whether in a
single transaction or a series of transactions. "Common Group" means
five or fewer persons. This subsection shall not apply to common
stock acquired by C. Xxxxxxx Xxxxxxxxx or Xxxxxx Xxxxxxxx.
(c) The death, disability, retirement, or other termination of
employment of Xxxxxx Xxxxxxxx.
8. Antidilution
If at any time before all Shares subject to the Option have been delivered
to Majendie the Company issues additional Shares, establishes a new class of
securities, or undertakes any other capital adjustment or reorganization, the
Company shall adjust the amount of the remaining Shares such that the value of
the remaining Shares immediately after such capital adjustment or reorganization
is equal to the value of the remaining Shares immediately before such capital
adjustment or reorganization. As used herein, "remaining Shares" means (i) the
unexercised portion of the Option, whether vested or nonvested; and (ii) Shares
which have been exercised but which have not yet been delivered to Majendie.
9. Nonalienation.
Neither of the Option nor any rights thereunder may be transferred,
assigned, pledged or hypothocated in any way, whether by operation of law or
otherwise, and shall not be subject to execution, attachment or similar process.
10. Entire Agreement
This Agreement represents the entire agreement of the parties with respect
to the subject matter hereof, and supercedes any prior or contemporaneous
written or oral agreement with respect thereto.
11. Choice of Law
This Agreement shall be governed by the laws of the State of California.
12. Amendment
This Agreement may be amended only by a writing executed by the parties
hereto.
13. Attorney's Fees
In the event either party incurs legal expenses to enforce or interpret
any provision of this Agreement, the prevailing party shall be entitled to
recover its legal expenses, including, without limitation, reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party shall be entitled.
In WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
Composite Technology Corporation
By: /s/ Xxxxxx X Xxxxxxxx
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Xxxxxx X Xxxxxxxx, Chairman and CEO
By: /s/ Xxxxxxx JGG Majendie
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Xxxxxxx JGG Majendie.
