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MATERIAL TECHNOLOGIES, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS
INCENTIVE STOCK OPTION AGREEMENT is made and entered into as of
this 22nd day of April, 2008, by and between Material Technologies,
Inc., a Delaware corporation (“Company”), and Robert M.
Bernstein (referred to herein as the “Optionee”), with
reference to the following recitals of facts:
WHEREAS,
the Board has authorized the granting to Optionee of an incentive
stock option (“Option”) to purchase shares of common
stock of the Company (the “Shares”) upon the terms and
conditions hereinafter stated; and
WHEREAS,
the Board and stockholders of the Company have heretofore adopted a
2008 Incentive and Nonstatutory Stock Option Plan (the
“Plan”), pursuant to which this Option is being
granted;
WHEREAS,
it is the intention of the parties that this Option be an Incentive
Stock Option (a “Qualified Stock Option”);
NOW,
THEREFORE, in consideration of the covenants herein set forth, the
parties hereto agree as follows:
1.
Shares; Price. The Company hereby grants to Optionee
the right to purchase, upon and subject to the terms and conditions
herein stated, 30,000,000 Shares for cash (or other consideration
acceptable to the Board of Directors of the Company, in their sole
and absolute discretion) at the price of $0.011 per Share, such
price being not less than the fair market value per share of the
Shares covered by these Options as of the date hereof and as
determined by the Board of Directors of the Company.
2.
Term of Option; Continuation of Employment . This
Option shall expire, and all rights hereunder to purchase the
Shares shall terminate, ten years from the date hereof. This
Option shall earlier terminate as set forth in Paragraphs 5 and 6
hereof. Nothing contained herein shall be construed to
interfere in any way with the right of the Company to terminate the
employment or engagement, as applicable, of Optionee or to increase
or decrease the compensation of Optionee from the rate in existence
at the date hereof.
3.
Vesting of Option . Subject to the provisions of
Paragraphs 5 and 6 hereof, this Option shall vest and become
exercisable during the term of Optionee's employment or engagement
in whole or in part beginning on the date of this Agreement.
4.
Exercise . In order to exercise this Option with
respect to all or any part of the Shares for which this Option is
at the time exercisable, Optionee must take the following
actions:
(a) Execute
and deliver to the Company 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; and
(b) Pay
the aggregate Exercise Price for the purchased shares in one or
more of the following forms:
(i) Cash
or check made payable to the Company; or
(ii) A
promissory note payable to the Company, but only to the extent
authorized by the Company.
Should
the Common Stock be registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)
at the time the Option is exercised, then the Exercise Price may
also be paid as follows:
(iii) In
shares of Common Stock held by Optionee for the requisite period
necessary to avoid a charge to the Company’s earnings for
financial reporting purposes and valued at Fair Market Value on the
Exercise Date; or
(iv) To
the extent the Option is exercised for vested Shares, through a
special sale and remittance procedure pursuant to which Optionee
shall concurrently provide irrevocable instructions (a) to a
Company-approved brokerage firm to effect the immediate sale of the
purchased shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the
aggregate Exercise Price payable for the purchased shares plus all
applicable Federal, State and local income and employment taxes
required to be withheld by the Company by reason of such exercise;
and (b) to the Company to deliver the certificates for the
purchased shares directly to such brokerage firm in order to
complete the sale (a “cashless exercise
transaction”).
(v) Notwithstanding
any provisions herein to the contrary, if the Fair Market Value of
one share of the Company’s Common Stock is greater than the
Exercise Price (at the date of calculation as set forth below), in
lieu of exercising this Option by payment of cash, the Optionee may
elect to receive shares equal to the value (as determined below) of
this Option (or the portion thereof being canceled) by surrender of
this Option at the principal office of the Company together with
the properly endorsed Notice of Exercise in which event the Company
shall issue to the Optionee a number of shares of Common Stock
computed using the following formula (a “net issuance
transaction”):
X
= Y (A-B)
A
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Where
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X = |
the number of shares of Common Stock
to be issued to the Optionee |
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Y = |
the number of shares of Common Stock
purchasable under the Option or, if only a portion of the Option is
being exercised, the portion of the Option being canceled (at the
date of such calculation) |
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A = |
the Fair Market Value of one share of
the Company’s Common Stock (at the date of such
calculation) |
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B = |
Exercise Price (as adjusted to the
date of such calculation) |
For
purposes of Rule 144 and sub-section (d)(3)(ii) thereof, it is
intended, understood and acknowledged that the Common Stock
issuable upon exercise of this Option in a net issuance transaction
shall be deemed to have been acquired at the time this Option was
issued. Moreover, it is intended, understood and acknowledged
that the holding period for the Common Stock issuable upon exercise
of this Option in a net issuance transaction shall be deemed to
have commenced on the date this Option was issued.
(c) Execute
and deliver to the Company such written representations as may be
requested by the Company in order for it to comply with the
applicable requirements of Federal and State securities laws.
(d) Make
appropriate arrangements with the Company (or Parent or Subsidiary
employing or retaining Optionee) for the satisfaction
of all Federal, State and local income and employment tax
withholding requirements applicable to the Option exercise, if
any.
(e) If
requested, execute and deliver to the Company a written statement
as provided for in Paragraph 11 hereof.
5.
Termination of Employment or Engagement . If Optionee
shall cease to serve as an employee of the Company for any reason,
whether voluntarily or involuntarily, Optionee shall have the
right, during the remaining term of the Option, to exercise in
whole or in part this Option to the extent, but only to the extent,
that this Option was exercisable as of the last day of employment,
and had not previously been exercised. The Option may be
exercised only with respect to installments that the Optionee could
have exercised at the date of termination of employment.
Notwithstanding
anything herein to the contrary, all rights under this Option shall
expire in any event on the date specified in Paragraph 2
hereof.
6.
Death of Optionee . If the Optionee shall die while an
employee of the Company, Optionee’s personal representative
or the person entitled to Optionee’s rights hereunder may at
any time during the remaining term of this Option, 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.
7.
No Rights as Stockholder . Optionee shall have no
rights as a stockholder with respect to the Shares covered by any
install
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