EXHIBIT 10.1
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:
June 11, 2008
(b) Optionee:
Frank Menzler
(c) Number of
Shares:
500,000
(d) Exercise
Price:
$ 0.61
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 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 [e.g., 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 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
an employee 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:
The options will vest in five
equal annual installments of 100,000 options commencing on October
1, 2008, the second anniversary of the Optionee’s employment
agreement, and annually thereafter.
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, 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
