374Water Inc 8-K, filed Oct 14, 2025
374Water Inc. (SCWO)
About this 8-K
374Water Inc filed this 8-K on October 14, 2025, reporting on events of October 8, 2025.
Items reported
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
(b)
Departure of Former President, Chief Executive Officer, and Director – Christian Gannon
On October 8, 2025, 374Water Inc. (the “Company”) announced that Christian Gannon stepped down as the Company’s President and Chief Executive Officer, effective as of such date. The departure and the details of Mr. Gannon’s separation from the Company are being finalized and such details will be filed in a Form 8-K/A once available.
Departure of Former General Counsel – Peter Mandel
Effective as of October 8, 2025, Peter Mandel stepped down as the Company’s General Counsel. The departure and the details of Mr. Mandel’s separation from the Company are being finalized and such details will be filed in a Form 8-K/A once available.
(c) Appointment of New Interim President and Chief Executive Officer – Stephen Jones
Simultaneously with the announcement of Mr. Gannon’s departure, the Company announced that the Board of Directors (the “Board”) appointed Stephen J. Jones, a current director of the Company, as the Company’s Interim President and Chief Executive Officer (“Interim President and CEO”), effective as of October 8, 2025, to lead the company through its next phase of project deployments and the commercialization of its super critical water oxidation technology. Mr. Jones will also lead the search effort on behalf of the Board for a fulltime President and Chief Executive Officer.
Mr. Jones, 64, has served on the Board since April 14, 2025 and will continue serving in such capacity during his term as Interim President and CEO. Mr. Jones’ experience managing and growing domestic and international companies and his business acumen are valuable assets to the Board. Prior to and up until his appointment as Interim President and CEO, Mr. Jones also served on the Compensation Committee and the Nominating and Corporate Governance Committee of the Board.
Prior to his retirement, from March 2015 through October 2020, Mr. Jones was President, Chief Executive Officer and a director of Covanta Holding Corporation (formerly NYSE: CVA, now owned by private equity) (“Covanta”), a leading global provider of sustainable waste and energy solutions. Prior to joining Covanta in January 2015, Mr. Jones was employed from 1992 through September 2014 by Air Products and Chemicals, Inc. (“Air Products”), a global supplier of industrial gases and equipment. Mr. Jones held a variety of senior-level management positions at Air Products including in the company’s tonnage gases, equipment, energy and industrial chemicals businesses, culminating with his role as Air Products’ China president based at the company’s office in Shanghai. Mr. Jones is a director of Tronox Holdings plc, a chemical company (NYSE: TROX), and chairman of the board of directors of Badger Infrastructure Solutions Ltd., a Canadian infrastructure solutions company specializing in nondestructive excavation services (TSX: BDGI). Prior to joining Air Products in 1992, Mr. Jones practiced corporate law at Dechert LLP in Philadelphia, PA, primarily in the area of mergers and acquisitions.
In connection with Mr. Jones’s appointment, the Company and Mr. Jones have entered into an employment agreement, dated October 7, 2025 (the “Employment Agreement”). Pursuant to the Employment Agreement, Mr. Jones will receive a base salary of $1.00 for his term and 4,500,000 stock options of the Company, 25% of which will vest and become exercisable on the vesting commencement date, 25% of which will vest and become exercisable 90 days after the vesting commencement date, 25% of which will vest and become exercisable 180 days after the vesting commencement date and the remaining 25% of which will vest and become exercisable 270 days after the vesting commencement date, subject to the Mr. Jones’s continuing service through each vesting date. Notwithstanding the foregoing, the stock options will vest and become exercisable immediately in the event of (i) a change of control of the Company, (ii) the hiring of a full-time Chief Executive Officer for the Company, or (iii) the termination of Mr. Jones other than for cause. Upon vesting, each stock option gives Mr. Jones the right to purchase one share of the Company’s common stock at the exercise price of $0.37. The stock options expire on the date which is ten years from the grant date, unless earlier terminated in accordance with the Non-Qualified Stock Option Agreement between the Company and Mr. Jones, dated October 7, 2025.
Other than the Employment Agreement, there was no arrangement or understanding between Mr. Jones and any other person with respect to his appointment to the role of Interim President and CEO. Mr. Jones does not have any family relationships with any director or executive officer of the Company. There have been no transactions, nor are there any currently proposed transactions, in which the Company was or is to be a participant and in which Mr. Jones, or any member of his immediate family, had, or will have, a direct or indirect material interest that would be required to be disclosed under Item 404(a) of Regulation S-K.
(e) New Compensatory Arrangements of Certain Officers
On October 9, 2025 the Company granted stock options exercisable into a total of 2,500,000 shares of common stock of the Company to certain executive officers. Under the agreements evidencing the grant of such options, each officer, including Mr. Russell Kline, Chief Financial Officer and Mr. Brad Meyers, Chief Operating Officer (together, the “Grant Officers”), will receive 500,000 stock options, 50% of which will vest 1 year from the grant date and the remaining 50% will vest 2 years from the grant date, subject, in each case, to a Grant Officer’s continuous service through each vesting date. Notwithstanding the foregoing, in the event of a termination of a Grant Officer, such Grant Officer’s stock options will vest and become exercisable immediately unless the Grant Officer is terminated (i) at his/her sole election or (ii) for cause. Upon vesting, each stock option gives the Grant Officers the right to purchase one share of the Company’s common stock at the exercise price of $0.60. The stock options expire on the date which is ten years from the grant date, unless earlier terminated in accordance with the applicable non-qualified stock option agreement.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
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Employment Agreement dated as of October 7, 2025 between 374Water Inc. and Stephen Jones. | ||
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| Cover Page Interactive Data File (formatted as Inline XBRL) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: October 14, 2025 | 374WATER INC. | ||
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By: | /s/ Stephen Jones | ||
| Name: | Stephen Jones |
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| Title: | Interim President and Chief Executive Officer |
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EXHIBIT 10.1
Stephen Jones Compensation Package
October 7, 2025
| 1. | Term of employment as Interim Chief Executive Officer and President - 12 months or earlier if a full-time Chief Executive Officer and President is hired by the Company |
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| 2. | $1 salary payable during such Term |
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| 3. | 4,500,000 Non-Qualified Stock Options |
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| a. | Exercise Price equal to 374Water stock price on date of grant (October 7, 2025) |
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| b. | Term - 10 years from the date on which such portion vests |
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| c. | Vesting - 25% date of grant, 25% 90 days after grant, 25% 180 days after grant, 25% 270 days after grant; immediate vesting (i) if termination of employment for any reason other than Cause (as defined in the 2021 374Water Equity Incentive Plan) (provided, however, this paragraph 3(c)(i) shall not apply in the event of a termination of employment made at the sole election of Jones); (ii) upon hiring of full-time CEO for 374Water and (iii) Change of Control of 374Water (as defined in the 2021 Equity Incentive Plan) |
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| d. | Execution of Non-Qualified Stock Option Agreement with standard clause related to, among other things, adjustment of options upon changes in capitalization |
| 4. | Healthcare and Dental benefits for Jones and family for Term of employment |
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| 5. | Reimburse Jones for reasonable legal fees related to review of compensation package |
| Stephen J. Jones |
| 374Water Inc. |
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| /s/ Stephen J. Jones |
| /s/ Deanna Rene Estes |
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EXHIBIT 10.2
374Water Inc.
Non-Qualified Stock Option Agreement
For Employees and Officers
This Non-Qualified Stock Option Agreement (this “Agreement”) is made and entered into as of October 7, 2025, by and between 374WATER INC., a Delaware corporation (the “Company”) and Stephen J. Jones (the “Participant”).
Grant Date: October 7, 2025
Exercise Price per Share: 100% of the Fair Market Value per share of the Company common stock price on the Grant Date
Number of Option Shares: 4,500,000
Vesting Commencement Date: see Section 2.1 below for vesting schedule
Expiration Date: The date which is ten (10) years from the Grant Date
1. Grant of Option.
1.1 Grant; Type of Option. The Company hereby grants to the Participant a Non-Qualified Stock Option (the “Option”) to purchase the total number of shares of Common Stock of the Company equal to the number of Option Shares set forth above, at the Exercise Price set forth above. The Option is being granted pursuant to the terms of the Company’s 374Water Inc. 2021 Equity Incentive Plan, as amended and restated (the “Plan”). The Option is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code.
1.2 Consideration; Subject to Plan. The grant of the Option is made in consideration of the services to be rendered by the Participant to the Company and is subject to the terms and conditions of the Plan.
2. Exercise Period; Vesting.
2.1 Vesting Schedule. The Option will become vested and exercisable as follows: 25% of the shares covered by the Option on the Grant Date; 25% of the shares covered by the Option 90 days after the Grant Date; 25% of the shares covered by the Option 180 days after the Grant Date: and 25% of the shares covered by the Option 270 days atter the Grant Date, in either case, subject to the Participant’s Continuous Service to the Company through the applicable vesting date.
2.2 Additional Vesting. Notwithstanding anything to the contrary in this Agreement, (i) in the event of a Change of Control, (ii) upon the hiring of a full-time Chief Executive Officer for 374Water, or (iii) or termination of Participant’s Continuous Service for a reason other than for Cause (provided, however, this Section 2.2(iii) shall not apply in the event of a termination of employment made at the sole election of Participant), the Option will fully vest immediately.
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2.3 Expiration. The Option will expire on the Expiration Date set forth above or earlier as provided in this Agreement.
3. Termination of Option.
3.1 Termination for Cause. If the Participant’s Continuous Service to the Company is terminated for Cause, the Option (whether vested or unvested) shall immediately terminate and cease to be exercisable.
3.2 Termination due to Disability. If the Participant’s Continuous Service to the Company terminates as a result of the Participant’s Disability, the Participant may exercise the vested portion of the Option within such period of time ending on the Expiration Date. Any unvested portion of the Option shall immediately terminate and cease to be exercisable on such termination date.
3.3 Termination due to Death. If the Participant’s Continuous Service terminates as a result of the Participant’s death, the vested portion of the Option may be exercised by the Participant’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by the person designated to exercise the Option upon the Participant’s death within the time period ending on the Expiration Date. Any unvested portion of the Option shall immediately terminate and cease to be exercisable on such termination date.
3.4 Termination due to any reason other than Cause, Disability or Death. If the Participant’s Continuous Service terminates for any reason other than by the Company for Cause or due to the Participant’s death or Disability, the vested portion of the Option may be exercised by the Participant until the Expiration Date. Any portion of the Option not exercised within such period will terminate and cease to be exercisable on such date. Any unvested portion of the Option shall immediately terminate and cease to be exercisable on such termination date.
4. Manner of Exercise.
4.1 Election to Exercise. To exercise the Option, the Participant (or in the case of exercise after the Participant’s death or Disability, the Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in such form as is approved by the Committee from time to time (the “Exercise Agreement”), which shall set forth, inter alia:
(a) the Participant’s election to exercise the Option:
(b) the number of shares of Common Stock being purchased;
(c) any restrictions imposed on the shares; and
(d) any representations, warranties and agreements regarding the Participant’s Investment intent and access to information as may be required by the Company to comply with applicable securities laws.
If someone other than the Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option.
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4.2 Payment of Exercise Price. The entire Exercise Price of the Option shall be payable in full at the time of exercise. To the extent permitted by applicable statutes and regulations, either:
(a) in cash or by certified or bank check at the time the Option is exercised;
(b) by delivery to the Company of other shares of Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares that have a Fair Market Value on the date of attestation equal to the Exercise Price (or portion thereof) and receives a number of shares equal to the difference between the number of shares thereby purchased and the number of identified attestation shares (a “Stock for Stock Exchange”);
(c) by reduction in the number of shares otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Exercise Price at the time of exercise;
(d) by any combination of the foregoing methods; or
(e) in any other form of legal consideration that may be acceptable to the Committee.
4.3 Withholding. If the Company, in its discretion, determines that it is obligated to withhold any tax in connection with the exercise of the Option, the Participant must make arrangements satisfactory to the Company to pay or provide for any such applicable federal, state and local withholding obligations. In the absence of any such arrangements made by the Participant, the Company shall, automatically and without any other action taken by the Company, to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise of the Option. The Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option by any of the following means:
(a) tendering a cash payment;
(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise of the Option; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or
(c) delivering to the Company previously owned and unencumbered shares of Common Stock.
4.4 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to the Company, the Company shall issue the shares of Common Stock registered in the name of the Participant, the Participant’s authorized assignee, or the Participant’s legal representative which shall be evidenced by stock certificates representing the shares with the appropriate legends affixed thereto, appropriate entry on the books of the Company or of a duly authorized transfer agent, or other appropriate means as determined by the Company.
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5. No Right to Continued Employment; No Rights as Shareholder. Neither the Plan nor this Agreement shall confer upon the Participant any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Participant’s Continuous Service at any time, with or without Cause (subject to the provisions set forth herein). The Participant shall not have any rights as a shareholder with respect to any shares of Common Stock subject to the Option unless and until certificates representing the shares have been issued by the Company to the holder of such shares, or the shares have otherwise been recorded on the books of the Company or of a duly authorized transfer agent as owned by such holder.
6. Transferability. The Option is not transferable by the Participant other than to a designated beneficiary upon the Participant’s death or by will or the laws of descent and distribution and is exercisable during the Participant’s lifetime only by him or her. No assignment or transfer of the Option, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent or distribution) will vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option will terminate and become of no further effect.
7. Change in Control.
7.1 Acceleration of Vesting. In the event a Change in Control (except as it relates to subsection (b) of the defined term in the Plan) occurs, Section 13.1 of the Plan shall apply to the Option described in this Agreement.
7.2 Cash-out. In the event of a Change in Control, the Committee may, in its discretion and upon at least ten (10) days’ advance notice to the Participant, cancel the Option and pay to the Participant the value of the Option based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event Notwithstanding the foregoing, if at the time of a Change in Control the Exercise Price of the Option equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee may cancel the Option without the payment of consideration therefor.
8. Adjustments. The shares of Common Stock subject to the Option may be adjusted or terminated in any manner as contemplated by Section 12 of the Plan.
9. Tax Liability and Withholding. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares acquired on exercise; and (b) does not commit to structure the Option to reduce or eliminate the Participant’s liability for Tax-Related Items.
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10. Reserved.
11. Reserved.
12. Reserved.
13. Compliance with Law. The exercise of the Option and the issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued pursuant to this Option unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.
14. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
15. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.
16. Reserved.
17. Options Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of this Agreement will govern and prevail.
18. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom this Agreement may be transferred by will or the laws of descent or distribution.
19. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.
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20. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion (but any such amendment, cancellation or termination will not alter the rights set forth herein). The grant of the Option in this Agreement does not create any contractual right or other right to receive any Options or other Awards in the future, except as set forth herein. Future Awards, if any, will be at the sole discretion of the Company, except as set forth herein. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Company.
21. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Option, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Participant’s material rights under this Agreement without the Participant’s consent.
22. No Impact on Other Benefits. The value of the Participant’s Option is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
23. Counterparts. This Agreement may be executed In counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
24. Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all of the terms and conditions of the Plan and this Agreement. The Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such exercise or disposition.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties agree as of the date first above written.
374Water Inc.
| By: | /s/ Deanna Rene Estes |
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| Title: | Chairperson |
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Participant
| By: | /s/ Stephen J. Jones |
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| Title: | Interim Chief Executive Officer and President |
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EXHIBIT 10.3
374Water Inc.
Non-Qualified Stock Option Agreement
For Employees and Officers
This Non-Qualified Stock Option Agreement (this “Agreement”) is made and entered into as of ________, 2025, by and between 374WATER INC., a Delaware corporation (the “Company”) and ________ (the “Participant”).
Grant Date: October 9, 2025
Exercise Price per Share: 100% of the Fair Market Value per share of the Company common stock price on the Grant Date
Number of Option Shares: 500,000
Vesting Commencement Date: see Section 2.1 below for vesting schedule
Expiration Date: The date which is ten (10) years from the Grant Date
1. Grant of Option.
1.1 Grant; Type of Option. The Company hereby grants to the Participant a Non-Qualified Stock Option (the “Option”) to purchase the total number of shares of Common Stock of the Company equal to the number of Option Shares set forth above, at the Exercise Price set forth above. The Option is being granted pursuant to the terms of the Company’s 374Water Inc. 2021 Equity Incentive Plan, as amended and restated (the “Plan”). The Option is not intended to be an Incentive Stock Option within the meaning of Section 422 of the Code.
1.2 Consideration; Subject to Plan. The grant of the Option is made in consideration of the services to be rendered by the Participant to the Company and is subject to the terms and conditions of the Plan.
2. Exercise Period; Vesting.
2.1 Vesting Schedule. The Option will become vested and exercisable as follows: 50% of the shares covered by the Option on the first anniversary of the Grant Date and 50% of the shares covered by the Option on the second anniversary of the Grant Date, in either case, subject to the Participant’s Continuous Service to the Company through the applicable vesting date.
2.2 Acceleration Upon Involuntary Termination Without Cause. Notwithstanding any other provision in this Agreement, if the Participant's Continuous Service to the Company is terminated by the Company other than for Cause, Disability, or death, and such termination is not initiated by the Participant, then all unvested portions of the Option shall immediately become vested and exercisable as of the date of such termination.
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2.3 Expiration. The Option will expire on the Expiration Date set forth above or earlier as provided in this Agreement.
3. Termination of Option.
3.1 Termination for Cause. If the Participant’s Continuous Service to the Company is terminated for Cause, the Option (whether vested or unvested) shall immediately terminate and cease to be exercisable.
3.2 Termination due to Disability. If the Participant’s Continuous Service to the Company terminates as a result of the Participant’s Disability, the Participant may exercise the vested portion of the Option within such period of time ending on the Expiration Date. Any unvested portion of the Option shall immediately terminate and cease to be exercisable on such termination date.
3.3 Termination due to Death. If the Participant’s Continuous Service terminates as a result of the Participant’s death, the vested portion of the Option may be exercised by the Participant’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by the person designated to exercise the Option upon the Participant’s death within the time period ending on the Expiration Date. Any unvested portion of the Option shall immediately terminate and cease to be exercisable on such termination date.
3.4 Termination due to any reason other than Cause, Disability or Death. If the Participant’s Continuous Service terminates for any reason other than by the Company for Cause or due to the Participant’s death or Disability, the vested portion of the Option may be exercised by the Participant for the shorter of (a) one year following the date of termination and (b) the Expiration Date. Any portion of the Option not exercised within such one year period (or, if earlier, the Expiration Date) will terminate and cease to be exercisable on such date. Any unvested portion of the Option shall immediately terminate and cease to be exercisable on such termination date.
4. Manner of Exercise.
4.1 Election to Exercise. To exercise the Option, the Participant (or in the case of exercise after the Participant’s death or Disability, the Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in such form as is approved by the Committee from time to time (the “Exercise Agreement”), which shall set forth, inter alia:
(a) the Participant’s election to exercise the Option:
(b) the number of shares of Common Stock being purchased;
(c) any restrictions imposed on the shares; and
(d) any representations, warranties and agreements regarding the Participant’s Investment intent and access to information as may be required by the Company to comply with applicable securities laws.
If someone other than the Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option.
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4.2 Payment of Exercise Price. The entire Exercise Price of the Option shall be payable in full at the time of exercise. To the extent permitted by applicable statutes and regulations, either:
(a) in cash or by certified or bank check at the time the Option is exercised;
(b) by delivery to the Company of other shares of Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery equal to the Exercise Price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares that have a Fair Market Value on the date of attestation equal to the Exercise Price (or portion thereof) and receives a number of shares equal to the difference between the number of shares thereby purchased and the number of identified attestation shares (a “Stock for Stock Exchange”);
(c) by reduction in the number of shares otherwise deliverable upon exercise of such Option with a Fair Market Value equal to the aggregate Exercise Price at the time of exercise;
(d) by any combination of the foregoing methods; or
(e) in any other form of legal consideration that may be acceptable to the Committee.
4.3 Withholding. If the Company, in its discretion, determines that it is obligated to withhold any tax in connection with the exercise of the Option, the Participant must make arrangements satisfactory to the Company to pay or provide for any such applicable federal, state and local withholding obligations. In the absence of any such arrangements made by the Participant, the Company shall, automatically and without any other action taken by the Company, to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise of the Option. The Participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option by any of the following means:
(a) tendering a cash payment;
(b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise of the Option; provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or
(c) delivering to the Company previously owned and unencumbered shares of Common Stock.
4.4 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to the Company, the Company shall issue the shares of Common Stock registered in the name of the Participant, the Participant’s authorized assignee, or the Participant’s legal representative which shall be evidenced by stock certificates representing the shares with the appropriate legends affixed thereto, appropriate entry on the books of the Company or of a duly authorized transfer agent, or other appropriate means as determined by the Company.
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5. No Right to Continued Employment; No Rights as Shareholder. Neither the Plan nor this Agreement shall confer upon the Participant any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Participant’s Continuous Service at any time, with or without Cause (subject to the provisions set forth herein). The Participant shall not have any rights as a shareholder with respect to any shares of Common Stock subject to the Option unless and until certificates representing the shares have been issued by the Company to the holder of such shares, or the shares have otherwise been recorded on the books of the Company or of a duly authorized transfer agent as owned by such holder.
6. Transferability. The Option is not transferable by the Participant other than to a designated beneficiary upon the Participant’s death or by will or the laws of descent and distribution and is exercisable during the Participant’s lifetime only by him or her. No assignment or transfer of the Option, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent or distribution) will vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option will terminate and become of no further effect.
7. Change in Control.
7.1 Acceleration of Vesting. In the event a Change in Control (except as it relates to subsection (b) of the defined term in the Plan) occurs, Section 13.1 of the Plan shall apply to the Option described in this Agreement.
7.2 Cash-out. In the event of a Change in Control, the Committee may, in its discretion and upon at least ten (10) days’ advance notice to the Participant, cancel the Option and pay to the Participant the value of the Option based upon the price per share of Common Stock received or to be received by other shareholders of the Company in the event. Notwithstanding the foregoing, if at the time of a Change in Control the Exercise Price of the Option equals or exceeds the price paid for a share of Common Stock in connection with the Change in Control, the Committee may cancel the Option without the payment of consideration therefor.
8. Adjustments. The shares of Common Stock subject to the Option may be adjusted or terminated in any manner as contemplated by Section 12 of the Plan.
9. Tax Liability and Withholding. Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any shares acquired on exercise; and (b) does not commit to structure the Option to reduce or eliminate the Participant’s liability for Tax-Related Items.
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10. Reserved.
11. Reserved.
12. Reserved.
13. Compliance with Law. The exercise of the Option and the issuance and transfer of shares of Common Stock shall be subject to compliance by the Company and the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s shares of Common Stock may be listed. No shares of Common Stock shall be issued pursuant to this Option unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.
14. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
15. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Delaware without regard to conflict of law principles.
16. Reserved.
17. Options Subject to Plan. This Agreement is subject to the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of this Agreement will govern and prevail.
18. Successors and Assigns. The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom this Agreement may be transferred by will or the laws of descent or distribution.
19. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.
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20. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion (but any such amendment, cancellation or termination will not alter the rights set forth herein). The grant of the Option in this Agreement does not create any contractual right or other right to receive any Options or other Awards in the future, except as set forth herein. Future Awards, if any, will be at the sole discretion of the Company, except as set forth herein. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Company.
21. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Option, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Participant’s material rights under this Agreement without the Participant’s consent.
22. No Impact on Other Benefits. The value of the Participant’s Option is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
23. Counterparts. This Agreement may be executed In counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
24. Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all of the terms and conditions of the Plan and this Agreement. The Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such exercise or disposition.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties agree as of the date first above written.
374Water Inc.
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