Exhibit 10.31
STOCK OPTION AGREEMENT
MATERIAL TECHNOLOGIES, INC.,
a Delaware corporation (the “Company”)
THIS
STOCK OPTION AGREEMENT (this “Option”) is intended to
certify that, pursuant to that certain Consulting Agreement with
the Company of even date herewith, Bud Shuster, an individual, or
his assigns (collectively, the “Holder”) is entitled,
subject to the terms and conditions set forth herein, to purchase,
24,000 shares of Class B common stock of the Company (the
“Option Shares”) from Robert M. Bernstein, an
individual (the “Seller”), upon exercise at a purchase
price of $0.50 per Option Share (the “Option
Price”).
1. TERM.
Subject to the terms of this Option, the Holder shall have the
right, at any time during the period commencing at 9:00 a.m.,
Pacific Time, on the 9th day of April, 2008 and ending at 5:00
p.m., Pacific Time, on the 8th day of April, 2018 (the
“Termination Date”), to purchase from the Seller the
Option Shares upon payment to the Seller of the Option
Price.
Notwithstanding
anything to the contrary contained in this Option or otherwise, the
Holder shall not be required, although it shall have the right, to
exercise this Option.
2. MANNER
OF EXERCISE. Payment of the aggregate Option Price shall be
made as described below. The exercise shall be made no sooner
than 70 days following delivery by the Holder to Seller of a
“notice of intent” to exercise
the Option. No sooner than 70 days following the receipt of
such “notice of intent” and upon the payment of all or
a portion of the Option Price and delivery of the Election to
Purchase, a form of which is attached hereto, the Seller shall
cause to be issued and cause to be delivered within ten business
days to or upon the written order of the Holder, and in such name
or names as the Holder may designate, a certificate or certificates
for the number of full Option Shares so purchased upon each
exercise of the Option. Such certificate or certificates
shall be deemed to have been issued and any person so designated to
be named therein shall be deemed to have become a holder of record
of such securities as of the date which is 61 days following
surrender of the Option (or if less than the entire Option is
exercised, upon the delivery of the new Option described below) and
payment of the Option Price, as aforesaid, notwithstanding that the
certificate or certificates representing such securities shall not
actually have been delivered or that the stock transfer books of
the Company shall then be closed. The Option shall be
exercisable, at the election of each Holder, either in full or from
time to time in part and, in the event that a certificate
evidencing the Option is exercised in respect of less than all of
the Option Shares specified therein at any time prior to the
Termination Date, a new certificate evidencing the remaining
portion of the Option shall be issued by the Company to such
Holder.
Payment
of the Option Price may be made by either of the following, or a
combination thereof, at the election of Holder:
(i) Cash
Exercise: cash, bank or cashiers check, or wire transfer;
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(ii) Cashless
Exercise: surrender of this Option at the known address of the
Seller together with notice of cashless election, in which event
the Seller shall issue Holder a number of shares of common stock
computed using the following formula: X = Y (A-B)/A
where: X = the number of shares of common stock to be issued
to Holder. Y = the number of shares of common stock for
which this Option is being exercised. A = the Market Price
of one share of common stock (for purposes of this Section 3(ii),
the “Market Price” shall be defined as the average
closing price of the common stock for the five trading days prior
to the date of exercise of this Option (the “Average Closing
Price”), as reported by the OTC Bulletin or in any
over-the-counter market, provided, however, that if the common
stock is listed on a stock exchange, the Market Price shall be the
Average Closing Price on such exchange for the five trading days
prior to the date of exercise of the Options. If the common
stock is/was not traded during the five trading days prior to the
date of exercise, then the closing price for the last publicly
traded day shall be deemed to be the closing price for any and all
(if applicable) days during such five trading day period. B
= the Exercise Price.
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 cashless exercise
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 cashless exercise transaction
shall be deemed to have commenced on the date this Option was
issued.
(iii) Promissory
Note: through a promissory note payable to the Seller, but only to
the extent authorized by the Seller.
In case
of the purchase of less than all the Option Shares, the Seller
shall cancel this Option upon the surrender hereof and shall
execute and deliver a new Option of like tenor for the balance of
the Option Shares. Upon the exercise of this Option, the
issuance of certificates for securities, properties or rights
underlying this Option shall be made forthwith (and in any event
within five business days thereafter) without charge to the Holder
including, without limitation, any tax that may be payable in
respect of the issuance thereof, and such certificates shall be
issued in such names as may be directed by the Holder: provided,
however, that the Seller shall not be required to pay any tax in
respect of income or capital gain of the Holder or any tax which
may be payable in respect of any transfer involved in the issuance
and delivery of any such certificates in a name other than that of
the Holder (a “Transfer Tax”), and the Seller shall not
be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have
paid to the Seller the amount of any such Transfer Tax or shall
have established to the satisfaction of the Seller that any such
Transfer Tax has been paid. 2
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