Exhibit 10.3
AMENDED AND RESTATED NON QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”)
dated as of November 12, 2009 (the “Amendment Date”), between NORANDA ALUMINUM
HOLDING CORPORATION, a Delaware corporation (the “Company”), and the Optionee
set forth on the signature page to this Agreement (the “Optionee”).
WHEREAS, on February 22, 2008 the Company and the Executive entered into a
definitive term sheet (the “Term Sheet”) with respect to the Executive’s
employment as the Chief Executive Officer of the Company and of Noranda
Aluminum, Inc. (“OpCo.”) and certain related terms;
WHEREAS, in connection with entry into the Term Sheet, on March 3, 2008 (the
“Grant Date”), the Company and the Optionee entered into an option agreement
(the “Original Option Agreement”) pursuant to which the Company, acting through
the Committee with the consent of the Company’s Board of Directors (the “Board”)
granted to the Optionee, options (the “Options”) under the Amended and Restated
Noranda Aluminum Holding Corporation 2007 Long-Term Incentive Plan (the “Plan”)
to purchase a number of shares of the Company’s common stock (“Shares”) on the
terms and subject to the conditions set forth in this Agreement and the Plan;
and
WHEREAS, the Committee has determined that such Options no longer serve their
intended retentive and incentive purposes; and
WHEREAS, the Committee believes it is in the best interests of the Company to
amend and restate the terms of the Options and the Original Option Agreement to
reduce the exercise prices thereof and to modify the vesting terms thereof; and
WHEREAS, in connection with the Optionee’s entry into the Original Option
Agreement, the Optionee entered into a subscription agreement with the Company
on March 3, 2008(the “Subscription Agreement”), pursuant to which the Optionee
purchased Shares (as defined in the Subscription Agreement), and in connection
therewith, entered into an adoption agreement, pursuant to which the Optionee
become a party to the Amended and Restated Securityholders Agreement relating to
the Company, by and among the Company and certain of its securityholders, dated
as of October 23, 2007, as the same may be amended from time to time (the
“Securityholders Agreement”);
WHEREAS, the Company is as of the date hereof granting for consideration to the
Optionee the Shares pursuant to the Subscription Agreement, dated as of the date
hereof, between the Company and the Optionee (the “New Subscription Agreement”);
WHEREAS, future securities in the Company (including those being acquired
pursuant to this Agreement) owned by the Optionee shall be subject to the terms
of the Securityholders Agreement; and

 

 

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WHEREAS, the parties wish to enter into this Amended and Restated Option
Agreement in order to effect the foregoing.
NOW, THEREFORE, in consideration of the promises and of the mutual agreements
contained in this Agreement, the parties hereto hereby agree as follows:
Section 1. The Plan. The terms and provisions of the Plan are hereby
incorporated into this Agreement as if set forth herein in their entirety. In
the event of a conflict between any provision of this Agreement and the Plan,
the provisions of this Agreement shall control. A copy of the Plan may be
obtained from the Company by the Optionee upon request. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
ascribed thereto in the Plan or the Securityholders Agreement, as the case may
be.
Section 2. Option; Option Price. Effective on the Grant Date, on the terms and
subject to the conditions of the Plan and this Agreement, the Company granted to
the Optionee the option (the “Option”) to purchase Shares pursuant to Tranche A
options (“Tranche A Options”) and Tranche B options (“Tranche B Options”).
Effective on the Amendment Date, on the terms and subject to the conditions of
the Plan and this Agreement, the Company hereby amends and restates the terms of
the Option to cover that number of Shares at the price per Share (the “Option
Price”) set forth on the signature page hereto. To the extent permitted by the
Committee, payment of the Option Price may be made in any manner specified by
Section 5.6 of the Plan. The Option is not intended to qualify for federal
income tax purposes as an “incentive stock option” within the meaning of
Section 422 of the Code. The amendment and restatement of the Options pursuant
to this Agreement shall be and become effective upon the delivery of an executed
counterpart of this Agreement to the Company by Optionee. Notwithstanding the
foregoing or any other provision of this Agreement, (x) in the event that the
Optionee does not purchase the Shares as provided for in the New Subscription
Agreement within 14 days of the Amendment Date, all Options, whether or not
vested, shall be immediately forfeited and (y) no Option, whether or not vested,
shall be exercisable prior to such purchase.
Section 3. Term. The term of the Option (the “Option Term”) shall commence on
the Grant Date and expire on the tenth anniversary of the Grant Date, unless the
Option shall have sooner been terminated in accordance with the terms of the
Plan (including, without limitation, Article V of the Plan) or this Agreement.
Section 4. Vesting. Subject to the Optionee’s not having a Termination of
Relationship prior to the applicable vesting date and except as otherwise set
forth in Section 7, the Options shall become non-forfeitable and exercisable
(any Options that shall have become non-forfeitable and exercisable pursuant to
Section 4, the “Vested Options”) according to the following provisions:
(a) Tranche A Options. Twenty-percent (20%) of the Tranche A Options shall
become Vested Options on each of the first five anniversaries of the Grant Date.
(b) Tranche B Options. Fifteen-percent (15%) of the Tranche B Options shall
become Vested Options on each of the first and second anniversaries of the
Amendment Date, twenty-percent (20%) of the Tranche B Options shall become
Vested Options on the third anniversary of the Amendment Date and twenty-five
percent (25%) of the Tranche B Options shall become Vested Options on each of
the fourth and fifth anniversaries of the Amendment Date.

 

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(c) Change in Control Acceleration. In the event of the consummation of a Change
in Control of the Company on or prior to the 60-month anniversary of the Grant
Date, each then-outstanding Option which has not theretofore become a Vested
Option shall become a Vested Option. In the event of the consummation of a
Change in Control of the Company after the 60-month anniversary of the Grant
Date, each then-outstanding Option which has not theretofore become a Vested
Option and which is scheduled to based on anniversaries of the Amendment Date
will vest upon the earlier of (i) the Optionee’s continued employment with the
Company for 18 months after such Change in Control or (ii) a Termination of
Relationship for any reason other than for Cause (as defined in Section 22),
within 18 months following the consummation of such Change in Control, provided
that the Options shall otherwise continue to vest in accordance with the terms
of Section 4(b). Except as otherwise provided herein, all unvested Options will
immediately terminate upon a Termination of Relationship.
(d) Acceleration upon Certain Events. In the event of a Termination of
Relationship as a result of the Optionee’s death or Disability, the Tranche A
Options and Tranche B Options, in each case, composing the next applicable
tranche of such Options which have not theretofore vested pursuant to Sections
4(a) and 4(b) above shall become Vested Options, and the remaining Options which
are not Vested Options shall be forfeited. In the event of the consummation of a
Change in Control, each Option which has not theretofore become a Vested Option
and which is scheduled to vest on each of the remaining vesting dates based on
anniversaries of the Grant Date or the Amendment Date, as the case may be, will
vest upon the earlier of (i) the Optionee’s continued employment with the
Company for 18 months after such Change in Control or (ii) a Termination of
Relationship by the Company or its Subsidiaries without Cause (as defined in
Section 22) or by the Optionee with Good Reason (as defined in Section 22), in
each case within 18 months following the consummation of such Change in Control.
In all cases involving the consummation of a Change in Control, Options shall
otherwise continue to vest in accordance with the terms of Section 4(a) or
Section 4(b), as applicable. Except as otherwise provided herein, all unvested
Options will immediately terminate upon a Termination of Relationship.
Section 5. Restriction on Transfer/Securityholders Agreement. The Option may not
be transferred, pledged, assigned, hypothecated or otherwise disposed of in any
way by the Optionee, except (i) if permitted by the Board or the Committee,
(ii) by will or the laws of descent and distribution or (iii) pursuant to
beneficiary designation procedures approved by the Company. The Option shall not
be subject to execution, attachment or similar process. Shares of Common Stock
acquired pursuant to the exercise of Options hereunder will be subject to the
Securityholders Agreement. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of the Option contrary to the provisions of
this Agreement or the Securityholders Agreement shall be null and void and
without effect.
Section 6. Optionee’s Employment. Nothing in this Agreement or in the Option
shall confer upon the Optionee any right to continue in the employ of the
Company or any of its Subsidiaries or interfere in any way with the right of the
Company or its Subsidiaries, as the case may be, in its sole discretion, to
terminate the Optionee’s employment or to increase or decrease the Optionee’s
compensation at any time.

 

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Section 7. Termination.
(a) The Option shall automatically terminate and shall become null and void, be
unexercisable and be of no further force and effect upon the earliest of:
(i) the tenth anniversary of the Grant Date;
(ii) as follows in the case of a Termination of Relationship for death or
Disability: (x) in the event the Shares are traded on any national securities
exchange or any national market system (“Publicly Traded”), the 180th day
following the Termination of Relationship, (y) in the event the Shares are not
Publicly Traded, but either Apollo or the Investor (each, as defined in the Term
Sheet) communicates prior to the 150th day following the Termination of
Relationship an offer to repurchase, effective upon or shortly following the
conclusion of the 180-day period following the Termination of Relationship, the
Shares subject to the then-outstanding Options at Fair Market Value (a
“Repurchase Offer”), the 180th day following the Termination of Relationship and
(z) in the event the Shares are not Publicly Traded and neither the Parent nor
the Investor has made a Repurchase Offer, until the earlier of (1) the first
date on which the Parent or the Investor offers to repurchase the Shares subject
to the then-outstanding Options at Fair Market Value (a “Subsequent Repurchase
Offer”) or (2) the tenth anniversary of the Grant Date;
(iii) as follows in the case of a Termination of Relationship that is neither
for Cause nor due to death or Disability: (x) in the event the Shares are
Publicly Traded, the 90th day following the Termination of Relationship, (y) in
the event the Shares are not Publicly Traded, but either Apollo or the Investor
communicates prior to the 60th day following the Termination of Relationship a
Repurchase Offer effective upon or shortly following the conclusion of the
90-day period following the Termination of Relationship, the 90th day following
the Termination of Relationship and (z) in the event the Shares are not Publicly
Traded and neither the Parent nor the Investor has made a Repurchase Offer,
until the earlier of (1) the first date on which a Subsequent Repurchase Offer
is made or (2) the tenth anniversary of the Grant Date; and
(iv) the day of the Termination of Relationship in the case of a Termination of
Relationship with Cause.
(b) Except as otherwise provided in Section 4(a) of this Agreement, upon a
Termination of Relationship for any reason, the unvested portion of the Option
(i.e., that portion which does not constitute Vested Options) shall terminate on
the date the Termination of Relationship occurs.

 

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Section 8. Securities Law Representations. The Optionee acknowledges that the
Option and the Shares are not being registered under the Securities Act of 1933,
as amended (the “Securities Act”), based, in part, on either (i) reliance upon
an exemption from registration under Securities and Exchange Commission Rule 701
promulgated under the Securities Act or (ii) the fact that the Optionee is an
“accredited investor” (as defined under the Securities Act and the rules and
regulations promulgated thereunder), and, in each of (i) and (ii) above, a
comparable exemption from qualification under applicable state securities laws,
as each may be amended from time to time. The Optionee, by executing this
Agreement, hereby makes the following representations to the Company and
acknowledges that the Company’s reliance on federal and state securities law
exemptions from registration and qualification is predicated, in substantial
part, upon the accuracy of these representations:
(a) The Optionee is an “accredited investor” within the meaning of
Rule 501(a)(1), (2) or (3) of the Securities Act.
(b) The Optionee is acquiring the Option and, if and when he exercises the
Option, will acquire the Shares solely for the Optionee’s own account, for
investment purposes only, and not with a view to or an intent to sell, or to
offer for resale in connection with any unregistered distribution, all or any
portion of the Shares or Option within the meaning of the Securities Act and/or
any applicable state securities laws.
(c) The Optionee acknowledges that he has not acquired the Option or the Shares
as a result of any general solicitation or general advertising in the United
States, including any meeting whose attendees have been invited by general
solicitation or general advertising.
(d) The Optionee has had an opportunity to ask questions and receive answers
from the Company regarding the terms and conditions of the Option and the
restrictions imposed on any Shares purchased upon exercise of the Option. The
Optionee has been furnished with, and/or has access to, such information as he
considers necessary or appropriate for deciding whether to exercise the Option
and purchase the Shares. However, in evaluating the merits and risks of an
investment in the Shares, the Optionee has and will rely only upon the advice of
his own legal counsel, tax advisors, and/or investment advisors.
(e) The Optionee is aware that the Option may be of no practical value, that any
value it may have depends on its vesting and exercisability as well as an
increase in the Fair Market Value of the underlying Shares to an amount in
excess of the Option Price, and that any investment in common shares of a
closely held corporation such as the Company is non-marketable, non-transferable
and could require capital to be invested for an indefinite period of time,
possibly without return, and at substantial risk of loss.
(f) The Optionee understands that the Option and the Shares are being offered in
an acquisition not involving any public offering within the United States within
the meaning of the Securities Act and that the Option and the Shares have not
been and will not be registered under the Securities Act, and that the Option
and the Shares are “restricted securities” as defined by Rule 144(a)(3) under
the Securities Act, and that, under such laws and applicable regulations, such
securities may be resold without registration under the Securities Act only in
certain limited circumstances, including in accordance with the conditions of
Rule 144 promulgated under the Securities Act or in an offshore acquisition
meeting the requirements of Rule 903 or 904 of Regulation S under the Securities
Act, each as presently in effect. The Optionee acknowledges reviewing a copy of
Rule 144 promulgated under the Securities Act and Regulation S under the
Securities Act, as presently in effect, and represents that he is familiar with
such rule, and understands the resale limitations imposed thereby and by the
Securities Act and the applicable state securities law.

 

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(g) The Optionee agrees that he will comply with all applicable laws and
regulations in effect in any jurisdiction in which he sells any of the
securities or otherwise transfers any interest therein.
(h) The Optionee has read and understands the restrictions and limitations set
forth in the Securityholders Agreement, the Plan and this Agreement.
(i) The Optionee understands and acknowledges that, if and when he exercises the
Option, (i) any certificate evidencing the Shares (or evidencing any other
securities issued with respect thereto pursuant to any stock split, stock
dividend, merger or other form of reorganization or recapitalization) when
issued shall bear any legends which may be required by applicable federal and
state securities laws, and (ii) except as otherwise provided under the
Securityholders Agreement, the Company has no obligation to register the Shares
or file any registration statement under federal or state securities laws.
Section 9. Designation of Beneficiary. The Optionee may appoint any individual
or legal entity in writing as his beneficiary to receive any Option (to the
extent not previously terminated or forfeited) under this Agreement upon the
Optionee’s death or Disability. The Optionee may revoke his designation of a
beneficiary at any time and appoint a new beneficiary in writing. To be
effective, the Optionee must complete the designation of a beneficiary or
revocation of a beneficiary by written notice to the Company under Section 11 of
this Agreement before the date of the Optionee’s death. In the absence of a
beneficiary designation, the legal representative of the Optionee’s estate shall
be deemed the beneficiary.
Section 10. Notices. All notices, claims, certifications, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given and delivered if personally delivered or if sent by
nationally-recognized overnight courier, by telecopy, or by registered or
certified mail, return receipt requested and postage prepaid, addressed as
follows:
If to the Company, to it at:
If to the Company or OpCo., to:
Noranda Aluminum Holding Corporation
c/o Apollo Management VI, L.P.
9 West 57th Street
43rd Floor
Facsimile: (212) 515-3288
Attention: Eric Press

 

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with a copy (which shall not constitute notice) to:
Apollo Management, L.P.
9 West 57th Street
43rd Floor
New York, New York 10019
Facsimile: (212) 515-3288
Attention: Eric Press
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Facsimile: (212) 403-2269
Attention: Andrew J. Nussbaum, Esq.
If to the Optionee, to him at the address set forth on the signature page
hereto; or to such other address as the party to whom notice is to be given may
have furnished to the other party in writing in accordance herewith. Any such
notice or other communication shall be deemed to have been received (a) in the
case of personal delivery, on the date of such delivery (or if such date is not
a business day, on the next business day after the date of delivery), (b) in the
case of nationally-recognized overnight courier, on the next business day after
the date sent, (c) in the case of telecopy transmission, when received (or if
not sent on a business day, on the next business day after the date sent), and
(d) in the case of mailing, on the third business day following that on which
the piece of mail containing such communication is posted.
Section 11. Waiver of Breach. The waiver by either party of a breach of any
provision of this Agreement must be in writing and shall not operate or be
construed as a waiver of any other or subsequent breach.
Section 12. Optionee’s Undertaking. The Optionee hereby agrees to take whatever
additional actions and execute whatever additional documents the Company may in
its reasonable judgment deem necessary or advisable in order to carry out or
effect one or more of the obligations or restrictions imposed on the Optionee
pursuant to the express provisions of this Agreement and the Plan; provided,
however, that such additional actions and documents are consistent with the
terms of this Agreement.
Section 13. Modification of Rights. The rights of the Optionee are subject to
modification and termination in certain events as provided in this Agreement and
the Plan (with respect to the Options granted hereby). Notwithstanding the
foregoing, the Optionee’s rights under this Agreement and the Plan may not be
materially impaired without the Optionee’s prior written consent.
Section 14. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR
ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN
THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE
INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND
CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW
OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION
WOULD ORDINARILY APPLY.

 

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Section 15. Restrictive Covenants. The grant, vesting and exercise of Options
pursuant to this Agreement shall be subject to the Optionee’s continued
compliance with the restrictive covenants in Section 9 of the Securityholders
Agreement, as modified pursuant to the Term Sheet.
Section 16. Withholding. As a condition to exercising this Option in whole or in
part, the Optionee will pay, or make provisions satisfactory to the Company for
payment of, any Federal, state and local taxes required to be withheld in
connection with such exercise.
Section 17. Adjustment. In the event of any event described in Article X of the
Plan occurring after the Grant Date, the adjustment provisions (including cash
payments) as provided for under Article X of the Plan shall apply.
Section 18. Counterparts. This Agreement may be executed in one or more
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts together shall constitute but one agreement.
Section 19. Entire Agreement. This Agreement and the Plan (and the other
writings referred to herein) constitute the entire agreement between the parties
with respect to the subject matter hereof and thereof and supersede all prior
written or oral negotiations, commitments, representations and agreements with
respect thereto, including, without limitation, the Original Option Agreement.
Section 20. Severability. It is the desire and intent of the parties hereto that
the provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to such
jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction. Notwithstanding the foregoing, if such
provision could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 21. Waiver of Jury Trial. Each party hereto hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, trial by jury in any suit, action or proceeding arising hereunder.

 

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Section 22. Definitions. As used in this Agreement, the following terms shall
have the meanings set forth below:
(a) “Cause” means a Termination of Relationship by the Company or any of its
Subsidiaries due to the Optionee’s: (i) commission of a crime or an act of moral
turpitude; (ii) willful commission of a material act of dishonesty involving
OpCo.; (iii) material breach of the Optionee’s obligations under any agreement
entered into between the Optionee and OpCo. or any of its Subsidiaries or
Affiliates; (iv) willful or continued failure to perform the Optionee’s duties;
(v) material breach of OpCo.’s material policies or procedures that is not
reasonably curable in OpCo.’s discretion; or (vi) any other willful misconduct
which causes material harm to OpCo. or its business reputation, including due to
adverse publicity; provided, however, that none of the events described in the
foregoing clauses (iii), (iv) or (v) shall constitute Cause unless the Company
has notified the Optionee in writing describing the events which constitute
Cause and then only if the Optionee fails to cure such events within 30 days
after the Optionee’s receipt of such written notice (provided that, in the event
such breach is not curable, no notice period shall be required).
(b) “Disability” means (i) the Optionee’s inability to engage in any substantial
gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last
for a continuous period of not less than 12 months, or (ii) the Optionee is, by
reason of any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an
accident, disability or health plan covering employees of the Company. Whether
the Optionee has incurred a “Disability” shall be determined by a physician
selected by the Company or its insurers, which physician is reasonably
acceptable to the Optionee (or the Optionee’s legal representative).
(c) “Good Reason” means a Termination of Relationship by the Optionee within
90 days after any of the following actions are taken by OpCo. or any of its
Subsidiaries without the Optionee’s written consent: (i) a reduction of the
Optionee’s annual base salary or target bonus opportunity under any bonus plan
maintained by OpCo. or any of its Subsidiaries (but not including any diminution
related to a broader compensation reduction that is not limited to any
particular employee or executive of OpCo. or any of its Subsidiaries); (ii) the
assignment to the Optionee of duties materially inconsistent with the Optionee’s
duties set forth in the Term Sheet or a material diminution in the Optionee’s
responsibilities; (iii) a material breach by OpCo. of the Term Sheet; or (iv) a
notice by OpCo. of non-extension of the term of employment set forth in the Term
Sheet; provided, however, that none of the events described in the foregoing
clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless the
Optionee has (within 90 days of becoming aware of the events which constitute
Good Reason) notified OpCo. in writing describing the events which constitute
Good Reason and then, only if OpCo. fails to cure such events within 30 days
after OpCo.’s receipt of such written notice.

 

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IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock
Option Agreement as of the date first written above.

            NORANDA ALUMINUM HOLDING
CORPORATION
      By:           Name:   Robert B. Mahoney        Title:   Chief Financial
Officer        LAYLE K. SMITH

See attached signature page
                       

 

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  LAYLE K. SMITH
 
   
 
   
 
   
 
  Last address on the records of the Company:
 
   
 
  1894 Seacrest Drive
 
   
 
  Lummi Island, WA 98262-8624
 
   

         
Number of Shares of Common Stock subject to Options:
    200,000  
 
       
Option Price:
  $2.28 each