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EXHIBIT 10.1
THE SECURITY REPRESENTED BY THIS CERTIFICATE HAS BEEN ACQUIRED
FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF.
NO SUCH SALE OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL SATISFACTORY
TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT
OF 1933, AS
AMENDED.
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is made effective as
of the
date of grant set forth below ("Date of Grant") by and between
XSUNX, INC., a
Colorado corporation ("Company"), and the optionee named below
("Optionee") as
contemplated in the Company's 2007 Option Plan ("Plan").
Capitalized terms not
defined herein shall have the meaning ascribed to them in the
Plan.
Optionee: Michael A. Russak
Social Security Number:
Address:
Total Option Shares: 500,000
Exercise Price Per Share: $0.36
Date of Grant: November 26, 2007
First Vesting Date: see Section 3
Expiration Date for Exercise of Options: November 25, 2012
Stock Option Number: 07-027
Type of Stock Option:
(Check one) [ ] Incentive Stock Option [ ] Statutory Stock
Option
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1. Conditional Grant of Option. The Company hereby conditionally
grants to
Optionee an option ("Option") to purchase the total number of
shares of Common
Stock of the Company set forth above ("Shares") at the Exercise
Price Per Share
set forth above ("Exercise Price"), subject to all of the terms
and conditions
of this Agreement and the Plan. If designated as an Incentive
Stock Option
above, the Option is intended to qualify as an "incentive stock
option" ("ISO")
within the meaning of Section 422 of the Internal Revenue Code
of 1986, as
amended ("Code"). Subject to the Plan, only Employees of the
Company shall
receive ISOs. This Agreement shall be deemed a Stock Option
Agreement as defined
in the Plan. The terms and conditions of the Plan are
incorporated herein by
this reference. All specific terms and references, including
capitalized terms
and references, which are undefined in this Agreement, shall
have the definition
and meaning ascribed to them in the Plan, including, without
limitation, the
definition of the terms Employee and Consultant.
2. Exercise Price. The Exercise Price, is not less than the fair
market value
per share of Common Stock on the date of grant, as determined by
the Board;
provided, however, in the event Optionee is an Employee and owns
stock
representing more than ten percent (10%) of the total combined
voting power of
all classes of stock of the Company or of its Parent or
Subsidiary corporations
immediately before the Option is granted, said exercise price is
not less than
one hundred ten percent (110%) of the fair market value per
share of Common
Stock on the date of grant as determined by the Board.
3. Exercise of Option. Subject to the vesting schedule contained
herein and the
other conditions set forth in this Agreement, all or part of the
Option may be
exercised prior to its expiration from the first vesting date
set forth above
("First Vesting Date") up to and including 5:00 p.m. Pacific
Standard Time on
the expiration date set forth above ("Expiration Date") at the
time or times set
forth herein in accordance with the provisions of the Plan as
follows:
(i) Vesting:
(a) Beginning November 26, 2007 the Option shall vest and
become exercisable at the rate of 62,500 Shares upon the
anniversary of each calendar quarter of continuous service
as a Director, or prorated portion thereof, for services
rendered as a member of the Company Board of Directors up
to a total of 500,000 shares.
(b) This Option may not be exercised for a fraction of a
Share.
(c) In no event may the Option be exercised after the date
of
expiration of the term of the Option as set forth in
Section 8 below.
(ii) Method of Exercise. The Option shall be exercisable by
written notice which shall state the election to exercise
the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations
and agreements as to the holder's investment intent with
respect to such shares of Common Stock as may be required by
the Company pursuant to the provisions of the Plan. Such
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written notice shall be signed by Optionee and shall be
delivered in person or by certified mail to the President,
Secretary or Chief Financial Officer of the Company. The
written notice shall be accompanied by payment of the
exercise price.
(iii) Compliance with Law. No Shares will be issued pursuant
to
the exercise of an Option unless such issuance and such
exercise shall comply with all relevant provisions of law
and the requirements of any stock exchange or quotation
medium upon which the Shares may then be listed or quoted.
Assuming such compliance, for income tax purposes the Shares
shall be considered transferred to the Optionee on the date
on which the Option is exercised with respect to such
Shares.
(iv) Adjustments, Merger, etc. The number and class of the
Shares
and/or the exercise price specified above are sub- ject to
appropriate adjustment in the event of changes in the
capital stock of the Company by reason of stock divi- dends,
stock splits, combination or recombination of shares,
reclassifications, mergers, consolidations, reorg-
anizations or liquidations. Subject to any required action
of the stockholders of the Company, if the Company shall be
the surviving corporation in any merger or consolida- tion,
the Option (to the extent that it is still outstand- ing)
shall pertain to and apply to the securities to which a
holder of the same number of shares of Common Stock that are
then subject to the Option would have been entitled. A
dissolution or liquidation of the Company, or a merger or
consolidation in which the Company is not the surviving
corporation, will cause the Option to terminate, unless the
agreement or merger or consolidation shall otherwise
provide, provided that the Optionee shall, if the Board
expressly authorizes, in such event have the right
immediately prior to such dissolution or liquidation, or
merger or consolidation, to exercise the Option in whole or
part. To the extent that the foregoing adjustments relate to
stock or securities of the Company, such adjust- ments shall
be made by the Board, whose determination in that respect
shall be final, binding and conclusive.
4. Optionee's Representations. By receipt of the Option, by its
execution, and
by its exercise in whole or in part, Optionee represents to the
Company that
Optionee understands that:
(i) Both the Option and any Shares purchased upon its
exercise
are securities, the issuance by the Company of which
requires compliance with federal and state securities laws;
(ii) These securities are made available to Optionee only on
the
condition that Optionee makes the representations contained
in this Section 4 to the Company;
(iii) Optionee has made a reasonable investigation of the
affairs
of the Company sufficient to be well informed as to the
rights and the value of these securities;
(iv) Optionee understands that the securities have not been
registered under the Securities Act of 1933, as amended (the
"Act") in reliance upon one or more specific exemptions
contained in the Act, which may include reliance on Rule 701
promulgated under the Act, if available, or which may depend
upon: (a) Optionee's bona fide investment intention in
acquiring these securities; (b) Optionee's intention to hold
these securities in compliance with federal and state
securities laws; (c) Optionee having no present intention of
selling or transferring any part thereof (recognizing that
the Option is not transferable) in violation of applicable
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federal and state securities laws; and (d) there being
certain restrictions on transfer of the Shares subject to
the Option;
(v) Optionee understands that the Shares subject to the
Option,
in addition to other restrictions on transfer, must be held
indefinitely unless subsequently registered under the Act,
or unless an exemption from registration is available; that
Rule 144, the usual exemption from registration, is only
available after the satisfaction of certain holding periods
and in the presence of a public market for the Shares; that
there is no certainty that a public market for the Shares
will exist, and that otherwise it will be necessary that the
Shares be sold pursuant to another exemption from
registration which may be difficult to satisfy; and,
(vi) Optionee understands that the certificate representing
the
Shares will bear a legend prohibiting their transfer in the
absence of their registration or the opinion of counsel for
the Company that registration is not required, and a legend
prohibiting their transfer in compliance with applicable
state securities laws unless otherwise exempted.
5. Method of Payment. Payment of the purchase price may be made
subject to the
terms of Section 14 herein, or by cash, check or, in the sole
discretion of the
Board at the time of exercise, promissory notes or other Shares
of Common Stock
having a fair market value on the date of surrender equal to the
aggregate
purchase price of the Shares being purchased.
6. Restrictions on Exercise. The Option may not be exercised if
the issuance of
such Shares upon such exercise or the method of payment of
consideration for
such Shares would constitute a violation of any applicable
federal or state
securities or other law or regulation. As a condition to the
exercise of the
Option, the Company may require Optionee to make any
representation and warranty
to the Company as may be required by any applicable law or
regulation.
7. Non-Transferability of Option. The Option may not be
transferred in any
manner otherwise than by will or by the laws of descent or
distribution and may
be exercised during the lifetime of Optionee, only by Optionee.
The terms of the
Option shall be binding upon the executors, administrators,
heirs, successors
and assigns of Optionee.
8. Term of Option. The Option may not be exercised more than
five (5) years from
the date of grant of the Option, and may be exercised during
such term only in
accordance with the Plan and terms of the Option.
9. Early Disposition of Stock; Taxation Upon Exercise of Option.
If Optionee is
an Employee and the Option qualifies as an ISO, Optionee
understands that, if
Optionee disposes of any Shares received under the Option within
two (2) years
after the date of this Agreement or within one (1) year after
such Shares were
transferred to Optionee, Optionee may be treated for federal
income tax purposes
as having received ordinary income at the time of such
disposition in any amount
generally measured as the difference between the price paid for
the Shares and
the lower of the fair market value of the Shares at the date of
exercise or the
fair market value of the Shares at the of disposition. Any gain
recognized on
such premature sale of the Shares in excess of the amount
treated as ordinary
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income may be characterized as capital gain. Optionee hereby
agrees to notify
the Company in writing within thirty (30) days after the date of
any such
disposition. Optionee understands that if Optionee disposes of
such Shares at
any time after the expiration of such two-year and one-year
holding periods, any
gain on such sale may be treated as long-term ca
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