EXHIBIT 10.9
HEPALIFE TECHNOLOGIES,
INC.
NONSTATUTORY STOCK OPTION
AGREEMENT
THIS
NONSTATUTORY STOCK OPTION AGREEMENT (“Agreement”) is
made and entered into as of the date set forth below, by and
between HepaLife Technologies, Inc., a Florida corporation (the
“Company”), and the following employee 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:
January 25, 2007
(b)
Optionee:
Frank Menzler
(c)
Number of Shares:
2,000,000
(d)
Exercise Price:
$0.52
2.
Acknowledgements.
(a)
Optionee
is an employee 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 2001 Incentive Stock 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 the average closing price during the last three days of the
Shares covered by this Option.
4.
Term of
Option; Continuation of Service. This Option shall
expire, and all rights hereunder to purchase the Shares shall
terminate 10 years from the date hereof. This Option shall earlier
terminate subject to Sections 7 hereof upon, and as of the date of,
the termination of Optionee’s employment if such termination
occurs prior to the end of such 10 year period. Following the
termination of the Optionee’s employment, if the Optionee
continues to serve as a director of the Company, this Option shall
nevertheless be terminated as of the date of the termination of
the Optionee’s employment. 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
hereof, this Option shall vest and become exercisable during the
term of Optionee’s employment as follows:
(i)
1,500,000 options shall vest if and when HepaLife or a wholly owned
subsidiary, or any one current or future medical device or other
technology, approved by the Board of Directors is acquired, in
whole or in part, or when either HepaLife or a subsidiary, enters
into a strategic collaborative agreement for any one current or
future medical device or other technology, approved by the Board of
Directors, provided that the Company’s Board of Directors has
approved, by written resolution, any such acquisition, sale or
agreement;
(ii)
250,000 stock options shall vest upon the filing of human safety
trials for HepaLife’s artificial liver device (or such other
Board approved medical device or other technology) in Europe or the
equivalent filing in the US; and
(iii)
250,000 stock options shall vest upon the successful completion of
human safety trials for HepaLife’s artificial liver device
(or such other Board approved medical device or other technology)
in Europe or the equivalent safety trial approval in the US
(completion of phase 1).
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 12 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.
7.
Termination of Employment. If Optionee shall cease to
be employed by the Company for any reason whatsoever, whether
voluntarily or involuntarily, Optionee, this Option shall terminate
as of the date of the termination of such employment and shall be
null and void. No options, including those previously vested but
not exercised, may be exercised after the date of Optionee’s
termination of employment with or by the Company
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.
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 9 hereof.
9.
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”.
In the
event of a proposed dissolution or liquidation of the Company, 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.
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.
10.
Taxation
upon Exercise of Option. Optionee understands that,
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