EXHIBIT 99.3
FORM OF OPTION TO PURCHASE COMMON STOCK
GRANTED TO CERTAIN INDIVIDUALS
This Stock Option Agreement (the "Agreement") is entered into
effective as of _______________, 2000, by and between XXXXXXXXXXXXXXX.XXX, a
Nevada corporation (the "Company"), and _________________________ (the
"Optionee").
R E C I T A L S
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A. The Company desires to give the opportunity to the Optionee to
purchase certain shares of the Company's common stock.
B. The Optionee desires to accept an option to purchase the number
of shares set forth below (the "Option"), during the periods and at the exercise
price specified below, subject to and upon the following terms and conditions.
AGREEMENT
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1. General. As used in this Agreement, the following terms shall
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have the following meanings:
(a) Optionee: ____________
(b) Date of grant: ____________
(c) Number of shares optioned: ____________
(d) Option exercise price per share: $____________
(e) Option termination date: ____________ (the "Expiration Date)
2. Vesting of Option. This Option shall become exercisable in
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installments as follows:
Number of Shares Date of Earliest Exercise
(Installment) (Vesting)
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The installments provided for in this Section 2 are cumulative. Each
such installment which becomes exercisable pursuant to this Section shall remain
exercisable until expiration or earlier termination of this Option.
3. Restrictions on Exercise. The following additional provisions
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shall apply to the exercise of this Option:
(a) Termination of Continuous Status as an Employee. In the
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event of termination of Optionee's continuous status as an employee for any
reason other than Optionee's death or disability, Optionee may only exercise the
Option within thirty (30) days after the date of such termination.
(b) Disability of Optionee. In the event of termination of
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Optionee's continuous status as an employee as a result of the Optionee's
disability, the Optionee may only exercise the Option within six (6) months from
the date of such termination.
(c) Death of Optionee. In the event of termination of Optionee's
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continuous status as an employee as a result of the Optionee's death, the Option
may only be exercised any time within six (6) months following the date of death
by the Optionee's estate or by a person who acquired the right to exercise the
Option by bequest or inheritance.
(d) Limitations. The Option shall, during the limited exercise
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period under this Section 3, be exercisable only as to the shares for which the
Option is exercisable on the date of the Optionee's death or termination of
service with the Company. Under no circumstances shall the Option become
exercisable under this Section 3 after the Expiration Date. Upon the earlier of
the expiration of such limited exercise period or the Expiration Date, the
Option shall terminate and cease to be exercisable.
(e) Immediate Termination. Should (i) the Optionee's continuous
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status as an employee be terminated for misconduct (including, but not limited
to, any act of dishonesty, willful misconduct, fraud or embezzlement) or (ii)
the Optionee make any unauthorized use or disclosure of confidential information
or trade secrets of the Company, then in any such event this Option shall
terminate immediately and cease to be exercisable.
4. Option Adjustments.
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(a) Change in Capitalization. If the outstanding shares of
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Common Stock of the Company are increased, decreased, changed into or exchanged
for a different number or kind of shares of the Company through reorganization,
recapitalization, reclassification, stock dividend, stock split or reverse stock
split, upon authorization by the Board of Directors of the Company (the "Board")
an appropriate and proportionate adjustment shall be made in the number or kind
of shares, and the per-share option price thereof, which may be issued to
Optionee under the Option; provided, however, that no such adjustment need be
made if, upon the advice of counsel, the Board determines that such adjustment
may result in the receipt of federal taxable income to the Optionee or the
holders of Common Stock or other classes of the Company's securities.
(b) Corporate Reorganizations. Upon the occurrence of a
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Terminating Transaction, as defined below, as of the effective date of such
Terminating Transaction, the Option (whether or not vested) shall terminate
unless (i) provision is made in writing in connection with such transaction for
the assumption of such Option, or for the substitution for such Option of new
options covering the securities of a successor corporation or an affiliate
thereof, with appropriate adjustments as to the number and kind of securities
and exercise prices, in which event such Option shall continue or be replaced,
as the case may be, in the manner and under the terms so provided; or (ii) the
Board otherwise shall provide in writing for such adjustments as it deems
appropriate in the terms and conditions of the Option (whether or not vested),
including without limitation providing for the cancellation of the Option and
its automatic conversion into the right to receive the securities or other
properties which a holder of the shares underlying the Option would have been
entitled to receive upon such Terminating Transaction had such shares been
issued and outstanding (net of the appropriate option exercise price). If,
pursuant to the foregoing provisions of this paragraph (b), the Option shall
terminate by reason of the occurrence of a Terminating Transaction without
provision for any of the action(s) described in clause (i) or (ii) hereof, then
Optionee shall have the right, at such time immediately prior to the
consummation of the Terminating Transaction as the Board shall designate, to
exercise her Option to the full extent not theretofore exercised, including any
portion which has not yet become exercisable. "Terminating Transaction" shall
mean any of the following events: (a) the dissolution or liquidation of the
Company; (b) a reorganization, merger or consolidation of the Company with one
or
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more other corporations (except with respect to a transaction, the purpose of
which is to change the domicile or name of the Company), as a result of which
the Company goes out of existence or becomes a subsidiary of another corporation
(which shall be deemed to have occurred if another corporation shall own,
directly or indirectly, fifty percent (50%) or more of the aggregate voting
power of all outstanding equity securities of the Company); or (c) a sale of all
or substantially all of the Company's assets.
5. Option Not Transferable. This Option may not be sold,
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pledged, hypothecated, assigned, encumbered, gifted or otherwise transferred or
alienated in any manner, either voluntarily or involuntarily by operation of
law, other than by will or the laws of descent or distribution, and may be
exercised during the lifetime of Optionee only by such Optionee.
6. No Rights in Shares Before Issuance and Delivery. Neither
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the Optionee, her estate nor her transferees by will or the laws of descent and
distribution shall be, or have any rights or privileges of, a shareholder of the
Company with respect to any shares issuable upon exercise of the Option unless
and until certificates representing such shares shall have been issued and
delivered notwithstanding exercise of the Option. No adjustment will be made for
a dividend or other rights where the record date is prior to the date such stock
certificates are issued, except as provided in Section 4.
7. Taxes. The Board shall make such provisions and take such
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steps as it deems necessary or appropriate for the withholding of any federal,
state, local and other tax required by law to be withheld with respect to the
grant or exercise of the Option, including, without limitation, the deduction of
the amount of any such withholding tax from any compensation or other amounts
payable to Optionee by the Company, or requiring Optionee (or the Optionee's
beneficiary or legal representative) as a condition of granting or exercising
the Option to pay to the Company any amount required to be withheld, or to
execute such other documents as the Board deems necessary or desirable in
connection with the satisfaction of any applicable withholding obligation.
Optionee acknowledges that she has been advised to consult with a competent tax
advisor regarding the applicable tax consequences relating to the receipt or
exercise of the Option.
8. Exercise of Options.
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(a) Procedure for Exercise. This Option may be exercised at
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any time as to all or any portions of the shares as to which it is then
exercisable, except that it may not be exercised for a fraction of a share. This
Option shall be exercisable by written notice (in a form designated by the
Company) 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 warranties of Optionee as may be required by the Company
pursuant to Section 9. Such 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 and may consist of any consideration and method of
payment allowed under Section 8(b) below.
(b) Payment of Exercise Price. The consideration to be paid
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for the shares to be issued upon exercise of this Option shall consist of full
payment in cash or cash equivalents or, with the consent of the Board, one of
the alternative forms specified below:
(i) full payment in shares of Common Stock (duly
endorsed for transfer to the Company) held by the Optionee for the requisite
period necessary to avoid a charge to the Company's earnings for financial
reporting purposes and valued at Fair Market Value on the date of delivery; or
(ii) full payment through a combination of cash or
cash equivalents and shares of Common Stock (duly endorsed for transfer to the
Company) held by the Optionee for the requisite period necessary to avoid a
charge to the Company's earnings for financial reporting purposes and valued at
Fair Market Value on the date of delivery; or
(iii) full payment effected through a broker-dealer
sale and remittance procedure pursuant to which the Optionee (A) shall provide
irrevocable written instructions to a designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the Company, out of the sale
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proceeds available on the settlement date, sufficient funds to cover the
aggregate option price payable for the purchased shares plus all applicable
Federal and State income and employment taxes required to be withheld by the
Company by reason of such purchase and (B) shall provide written directives to
the Company to deliver the certificates for the purchased shares directly to
such brokerage firm in order to complete the sale transaction; or
(iv) any other legal consideration that may be acceptable
to the Board.
(c) Fair Market Value. For purposes of this Agreement "Fair
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Market Value" shall man (i) if shares of Company common stock are exchanged-
traded or traded on the NASDAQ National Market System ("NMS"), the closing sale
or last sale price per share of such shares; (ii) if shares are regularly traded
in any over-the-counter market other than NMS, the average of the bid and asked
prices per share of such shares; and (iii) if such shares are not traded as
described in (i) and (ii), the per share fair market value of such shares as
determined in good faith by the Board on such basis as the Board in its sole
discretion shall choose including the price most recently obtained in arms-
length transactions involving the sales of common stock to unrelated third
parties and whether or not any material changes in the Company's business have
occurred since such sale which would impact the fair market value of the common
stock. Fair Market Value as of a given date with respect to subparagraphs (i),
(ii) and (iii) shall be determined as of the close of business on the day prior
to the date of determination, or if no trading in the shares of Company common
stock takes place on such date, on the next preceding trading day on which there
has been such trading.
9. Certain Representations and Warranties. By accepting this Option,
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the Optionee represents and agrees:
(i) that Optionee shall accept as binding and final all
decisions or interpretations of the Board upon any questions arising under this
Agreement;
(ii) that Optionee understands that this Option and any
shares purchased upon its exercise are securities, the issuance of which
requires compliance with federal and state securities laws;
(iii) that Optionee is aware of the Company's business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the
securities. Optionee is acquiring these securities for investment for Optionee's
own account only and not with a view to, or for sale in connection with, any
"distribution" thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act");
(iv) that Optionee acknowledges and understands that the
securities constitute "restricted securities" under the Securities Act and must
be held indefinitely unless they are subsequently registered under the
Securities Act or an exemption from such registration is available. Optionee
further acknowledges and understands that the Company is under no obligation to
register the securities. Optionee understands that the certificate evidencing
the securities will be imprinted with a legend which prohibits the transfer of
the securities unless they are registered or such registration is not required
in the opinion of counsel satisfactory to the Company, and any other legend
required under applicable state securities laws;
(v) that, if required by the Company in connection with
the Company's underwritten public offering of the Company's securities, Optionee
(i) will not sell, make short sale of, loan, grant any options for the purchase
of, or otherwise dispose of any shares acquired upon exercise of this Option
(other than those shares included in the registration) without the prior written
consent of the Company or the underwriters managing such underwritten public
offering of the Company's securities for one hundred eighty (180) days from the
effective date of such registration, and (ii) will execute any agreement
reflecting (i) above as may be requested by the underwriters at the time of the
public offering.
(vi) that if use of the Company's Common Stock to pay the
exercise price of the Option is authorized by the Board pursuant to the
discretion granted to the Board under this Agreement, Optionee has been advised
to consult with a competent tax advisor regarding the applicable tax
consequences prior to utilizing such stock to exercise an Option;
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(vii) as a condition to the exercise of any portion of the
Option, the Company may require the person exercising such Option to make any
representation and/or warranty to the Company as may, in the judgment of counsel
to the Company, be required under any applicable law or regulation, including
but not limited to a representation and warranty that the shares are being
acquired only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required under the Securities Act, or any other applicable
law, regulation or rule of any governmental agency; and
(viii) that no certificate or certificates for shares of
stock purchased upon exercise of this Option shall be issued and delivered prior
to the admission of such shares to listing on notice of issuance on any stock
exchange on which shares of that class are then listed, nor unless and until, in
the opinion of counsel for the Company, such securities may be issued and
delivered without causing the Company to be in violation of or incur any
liability under any federal, state or other securities law, any requirement of
any securities exchange listing agreement to which the Company may be a party,
or any other requirement of law or any regulatory body having jurisdiction over
the Company. The Company shall be required to proceed with due diligence and to
take any reasonable action required by the Company to be taken in order to
qualify the issuance, to the Optionee, of all shares subject to the terms of
this Agreement. The inability of the Company to obtain any required permits,
authorizations, or approvals necessary for the lawful issuance and sale of
shares pursuant hereto on terms deemed reasonable by the Board shall relieve the
Company and the Board of any liability in respect of the non-issuance or sale of
such shares as to which such requisite permits, authorizations or approvals
shall not have been obtained. In the event the Company is unable to qualify the
issuance of the shares despite its reasonable efforts, the Company shall be
required to pay Optionee, in cash, an amount equal to the difference between the
option exercise price and the Fair Market Value of such shares as of the date
notice of exercise is delivered to the Company by Optionee.
10. No Employment Rights. Optionee acknowledges and agrees that this
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Option, the transactions contemplated hereunder and the vesting schedule set
forth herein do not constitute an express or implied promise of continued
engagement as an employee for the vesting period, for any period, or at all, and
shall not interfere with Optionee's right or the Company's right to terminate
Optionee's employment at any time, with or without cause. The Company shall have
the right to deal with the Optionee in the same manner as if this Agreement did
not exist, including, without limitation, with respect to all matters related to
the hiring, discharge, compensation and conditions of employment of Optionee.
Any disputes as to whether and when there has been a termination of Optionee's
employment, the reason (if any) for such termination, and/or the consequences
thereof under the terms of this Agreement shall be determined by the Board in
its sole discretion, and the Board's determination thereof shall be final and
binding.
11. Agreement Binding on Successors. The terms of this Agreement
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shall be binding upon the executors, administrators, heirs, successors,
transferees and assignees of the Optionee.
12. Costs of Litigation. In any action at law or in equity to enforce
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any of the provisions or rights under this Agreement, the unsuccessful party to
such litigation, as determined by the court in a final judgment or decree, shall
pay the successful party or parties all costs, expenses and attorneys' fees
reasonably incurred by the successful party or parties (including without
limitation costs, expenses and fees on any appeals), and if the successful party
recovers judgment in any such action or proceeding such costs, expenses and
attorneys' fees shall be included as part of the judgment.
13. Necessary Acts. The Optionee agrees to perform all acts and
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execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement, including but not limited to all acts and
documents related to compliance with federal and/or state securities and/or tax
laws.
14. Invalid Provisions. In the event that any provision of this
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Agreement is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering any
other provisions contained herein invalid or unenforceable, and all such other
provisions shall be given full force and effect to the same extent as though the
invalid and unenforceable provision was not contained herein.
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15. Non-ISO. This Option is not intended to be and shall not be
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treated as an incentive stock option under Section 422A of the Internal Revenue
Code.
16. Notices. Any notice to be given to the Company shall be addressed
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to the Company in care of its Secretary at its principal office, and any notice
to be given to the Optionee shall be addressed to Optionee at the address given
beneath her signature hereto or at such other address as the Optionee may
hereafter designate in writing to the company. Any such notice shall be deemed
duly given when enclosed in a properly sealed envelope or wrapper addressed as
aforesaid, registered or certified, and deposited, postage and registry or
certification fee prepaid, in a post office or branch post office regularly
maintained by the United State Postal Service.
17. Entire Agreement. This Agreement constitutes the entire agreement
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among the parties pertaining to the subject matter hereof and Optionee's rights
to an equity interest in the Company and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties.
18. Laws Applicable to Construction. This Agreement has been executed
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and delivered by the Company in the State of Texas and this Agreement shall be
construed and enforced in accordance with the laws of said State.
IN WITNESS WHEREOF, the Company has granted this Option on the date of
grant specified above.
"COMPANY"
XXXXXXXXXXXXXXX.XXX, a Nevada corporation
By: ________________________________________
ACCEPTED:
_____________________________
[NAME]
_____________________________
Xxxxxx Xxxxxxx
_____________________________
City and State
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