Exhibit 10(iii)
STOCK OPTION
AGREEMENT
This Stock Option
Agreement (the
“Agreement”) dated as of June 19, 2006 (the
“Effective Date”) by and between Atmospheric Glow
Technologies, Inc., with its principal office at 924 Corridor Park
Boulevard, Knoxville, Tennessee 37932 (the “Company”),
and W. Scott McDonald (the “Optionee”).
WHEREAS , the Company has adopted the 2006 Equity
Incentive Plan (the “Plan”) to permit grants of options
to purchase Common Shares of Atmospheric Glow Technologies, Inc.,
to certain employees of the Company;
WHEREAS , the Optionee is expected to be an employee of
the Company and pursuant to the Employment Agreement between the
Company and the Optionee, the Optionee is entitled to receive
options to purchase Common Shares of the Company; and
WHEREAS , the Company desires to encourage the Optionee
to remain in such employ by granting the Optionee options to
acquire shares of the Company and thereby increasing the
Optionee’s proprietary interest in the Company’s
success;
NOW, THEREFORE
, in consideration of the premises
and of the covenants and agreements herein set forth, the parties
hereby agree as follows:
1. Subject to the terms and
conditions of the Plan, a copy of which is attached hereto,
incorporated by reference and made a part hereof, and this
Agreement, the Company grants to the Optionee the option (the
“Options”) to purchase from the Company all or any part
of an aggregate number of 6,000,000 of the Company’s Common
Shares (the “Optioned Shares”) upon the terms and
conditions and vesting as provided below.
2. The purchase price of the
Optioned Shares shall be as provided in the table below.
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Vesting Date Based upon
Completed Years of Employment
from Option Issue
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Number of Options
@ Exercise Price
per Share
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Term of Options
from Grant Date
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<1 Year
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0
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0
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1 Year
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2M @ $0.12
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5 Years
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2 Years
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2M @ $0.18
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5 Years
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3 Years
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2M @ $0.27
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5 Years
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Subject to the terms and conditions
of the Plan and this Agreement, the Optionee may purchase Optioned
Shares pursuant to this Agreement at any time and from time to time
commencing upon the vesting date provided in the table above and
continuing for a period of five (5) years from such vesting
date. All Options must be exercised within five (5) years of
the date the Options vest, and in accordance with the Plan and this
Agreement, and if not exercised within such period, will
expire.
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3. Except in the case of death of
the Optionee, the Optionee may exercise an Option only during the
Optionee’s lifetime by giving thirty (30) days written
notice of exercise, delivered or mailed by postpaid registered or
certified mail addressed to the President of the Company
(“President”) at the principal offices of the Company,
on the attached form or in a document containing the information
specified in the attached form. Options must be exercised in
increments of at least ten thousand (10,000), unless the Optionee
holds fewer than ten thousand (10,000) Options, in which case
all remaining Options held by the Optionee must be exercised. After
the death of the Optionee, an Option may be exercised by the
Optionee’s personal representative or other person entitled
by law to the Optionee’s rights under the Option to the
extent that the Optionee was entitled to exercise the Option at
death for the period described in paragraph 5(c) of this Agreement.
The notice must be accompanied by payment in full of the Option
price in cash as otherwise provided in the Plan. The Company will
cause the certificate representing purchased shares to be delivered
to the Optionee as soon as practicable after payment in full of the
exercise price.
4. This Agreement shall terminate as
provided below:
(a) If the Optionee’s
employment with the Company is terminated for Cause, this Agreement
shall terminate simultaneously therewith and Optionee shall have no
right to exercise any Options thereafter. For purposes of this
paragraph, “for Cause” shall have the same definition
as in Section 7(c) of the Employment Agreement between the
Optionee and the Company and be determined by the board of
directors of the Company and any such determination shall be final,
binding and conclusive.
(b) If the Optionee ceases to be an
employee of the Company or any of its subsidiaries for any reason
other than (i) termination for Cause as set forth in paragraph
4(a) above, or (ii) death or disability, all Options shall
expire the earlier of three (3) months after termination and
the expiration date of the Options.
(c) If the Optionee ceases to be an
employee of the Company or any subsidiary of the Company by reason
of disability or death, all Options shall expire on a date which is
the earlier of six (6) mont
