EXHIBIT 4.5
FORM OF STOCK OPTION AGREEMENT IN CONNECTION WITH THE
ESSENTIAL COMMUNICATION CORPORATION 1996 STOCK OPTION PLAN
INCENTIVE STOCK OPTION
______________________, Optionee:
ESSENTIAL COMMUNICATIONS CORPORATION (the "Company"), pursuant to its
1996 Stock Option Plan (the "Plan") has this day granted to you, the Optionee
named above, an option to purchase shares of the common stock of the Company
("Common Stock"). This option is intend to qualify as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code").
The grant hereunder is in connection with and in furtherance of the
Company's compensatory benefit plan for participation of the Company's
employees (including officers) and is intended to comply with the provisions
of Rule 701 promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"). Defined terms not explicitly
defined in this agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The total number of
shares of Common Stock subject to this option is ___________________
(__________).
2. VESTING. The date that vesting begins on this option is
______________, 199___. Subject to the limitations contained herein, twenty
percent (20%) of the shares vest (become exercisable) on the one-year
anniversary of the date vesting begins and twenty percent of the shares will
then vest on each successive one-year anniversary date thereafter until
either (i) you cease to provide services to the Company for one reason, or
(ii) this option becomes fully vested.
3. EXERCISE PRICE AND METHOD PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option is Seventy
Five Cents ($.75) per share, being not less than the fair market value of the
Common Stock on the date of grant of this option.
(b) METHOD OF PAYMENT. Payment of the exercise price per share is
due in full upon exercise of all or any part of each installment which has
accrued to you. You may elect, to the extent permitted by applicable
statutes and regulations, to make payment of the exercise price under one of
the following alternatives:
(i) Payment of the exercise price per share in cash
(including check) at the time of exercise; or
(ii) Payment pursuant to a program developed under Regulation
T as promulgated by the Federal Reserve Board which results in the receipt of
cash (or check) by the Company prior to the issuance of Common Stock; or
(iii) Provided that at the time of exercise the Company's
Common Stock is publicly traded and quoted regularly in the Wall Street
Journal, payment by delivery of already-owned shares of Common Stock, held
for the period required to avoid a charge to the Company's reported earnings,
and owned free and clear
15.
of any liens, claims, encumbrances or security interest, which Common Stock
shall be valued at its fair market value on the date of exercise; or
(iv) Payment by a combination of the methods of payment
permitted by subparagraph 3(b)(i) through 3(b)(iii) above.
4. WHOLE SHARES. This option may not be exercised for any number of
shares which would require the issuance of anything other than whole shares.
5. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, this option may not be exercised unless the shares
issuable upon exercise of this option are then registered under the Act or,
if such shares are not then so registered, the Company has determined that
such exercise and issuance would be exempt from the registration requirements
of the Act.
6. TERM. The term of this option commences on ______________, 199___,
the date of grant, and expires on ______________, 200___ (the "Expiration
Date," which date shall be no more than ten (10) years from the date this
option is granted), unless this option expires sooner as set forth below or
in the Plan. In no event may this option be exercised on or after the
Expiration Date. This option shall terminate prior to the Expiration Date as
follows: three (3) months after the termination of your Continuous Status as
an Employee with the Company or an Affiliate of the Company (as defined in
the Plan) unless one of the following circumstances exists:
(a) Your termination of Continuous Status as an Employee is due to
your permanent and total disability (within the meaning of Section 422(c)(6)
of the Code). This option will then expire on the earlier of the Expiration
Date set forth above or twelve (12) months following such termination of
Continuous Status as an Employee.
(b) Your termination of Continuous Status as an Employee is due to
your death or your death occurs within three (3) months following your
termination of Continuous Status as an Employee for any other reason. This
option will then expire on the earlier of the Expiration Date set forth above
or twelve (12) months after your death.
(c) If during any part of such three (3) month period you may not
exercise your option solely because of the condition set forth in paragraph 5
above, thin your option will not expire until the earlier of the Expiration
Date set forth above or until this option shall have been exercisable for an
aggregate period of three (3) months after your termination of Continuous
Status as an Employee.
(d) If your exercise of the option within three (3) months after
termination of your Continuous Status as an Employee with the Company or with
an Affiliate would result in liability under section 16(b) of the Securities
Exchange Act of 1934, then your option will expire on the earlier of (i) the
Expiration Date set forth above, (ii) the tenth (10th) day after the last
date upon which exercise would result in such liability or (iii) six (6)
months and ten (10) days after the termination of your Continuous Status as
an Employee with the Company or an Affiliate.
However, this option may be exercised following termination of
Continuous Status of an Employee only as to that number of shares as to which
it was exercisable on the date of termination of Continuous Status of an
Employee under the provisions of paragraph 2 of this option.
In order to obtain the federal income tax advantages associated with an
"incentive stock option," the Code requires that at all times beginning on
the date of grant of the option and ending on the day three (3) months before
the date of the option's exercise, you must be an employee of the Company or
an Affiliate, except in the event of your death or permanent and total
disability. The Company has provided for continued vesting or extended
exercisability of your option under certain circumstances for your benefit,
but cannot guarantee that your option will
16.
necessarily be treated as an "incentive stock option" if you provide services
to the Company or an Affiliate as a consultant or exercise your option more
than three (3) months after the date your employment with the Company and all
Affiliates terminates.
7. EXERCISE.
(a) This option may be exercised, to the extent specified above, by
delivering a notice of exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require
pursuant to subparagraph 6(f) of the Plan.
(b) By exercising this option you agree that:
(i) as a precondition to the completion of any exercise of this
option, the Company may require you to enter an arrangement providing for the
payment by you to the Company of any tax withholding obligation of the
Company arising by reason of (1) the exercise of this option; (2) the lapse
of any substantial risk of forfeiture to which the shares are subject at the
time of exercise; or (3) the disposition of shares acquired upon such
exercise;
(ii) you will notify the Company in writing within fifteen (15)
days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of this option that occurs within two (2) years
after the date of this option grant or within one (1) year after such shares
of Common Stock are transferred upon exercise of this option; and
(iii) the Company (or a representative of the underwriters) may, in
connection with the first underwritten registration of the offering of any
securities of the company under the Act, require that you not sell or
otherwise transfer or dispose of any shares of Common Stock or other
securities of the Company during such period (not to exceed one hundred
eighty (180) days) following the effective date (the "Effective Date") of the
registration statement of the Company filed under the Act as may be requested
by the Company or the representative of the underwriters. You further agree
that the Company may impose stop-transfer instructions with respect
securities subject to the foregoing restrictions until the end of such period.
8. TRANSFERABILITY. This option is not transferable, except by will
or by the laws of descent and distribution, and is exercisable during your
life only by you. Notwithstanding the foregoing, by delivering written
notice to the Company, in a form satisfactory to the Company, you may
designate a third party who, in the event of your death, shall thereafter be
entitled to exercise this option.
9. OPTION NOT A SERVICE CONTRACT. This option is not an employment
contract and nothing in this option shall be deemed to create in any way
whatsoever any obligation on your part to continue in the employ of the
Company, or of the Company to continue your employment with the Company. In
addition, nothing in this option shall obligate the Company or any Affiliate,
or their respective [stockholders/shareholders], Board of Directors, officers
or employees to continue any relationship which you might have as a Director
or Consultant for the Company or Affiliate.
10. NOTICES. Any notices provided for in this option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the
address specified below or at such other address as you hereafter designate
by written notice to the Company.
11. GOVERNING PLAN DOCUMENT. This option is subject to all the
provisions of the Plan, a copy of which is attached hereto and its provisions
are hereby made a part of this option, including without limitation the
provisions of Section 6 of the Plan relating to option provisions, and is
further subject to all interpretations,
17.
amendments, rules and regulations which may from time to time be promulgated
and adopted pursuant to the Plan. In the event of any conflict between the
provisions of this option and those of the Plan, the provisions of the Plan
shall control.
Dated the _______th day of ________________________, 1996.
Very truly yours,
-----------------------------------------------------
By
---------------------------------------------------
Duly authorized on behalf of the Board of Directors
ATTACHMENTS:
Essential Communications Corporation 1996 Stock Option Plan
18.
The undersigned:
(a) Acknowledges receipt of the foregoing option and the attachments
referenced therein and understands that all rights and liabilities with
respect to this option are set forth in the option and the Plan; and
(b) Acknowledges that as of the date of grant of this option, it sets
forth the understanding between the undersigned optionee and the Company and
its affiliates regarding the acquisition of stock in the Company and
supersedes all prior oral and written agreements on that subject with the
exception of (i) the options previously granted and delivered to the
undersigned under stock option plans of the Company, and (ii) the following
agreements only:
NONE
-------------------
(Initial)
OTHER
-------------------------------------------------
-------------------------------------------------
-------------------------------------------------
-------------------------------------------
OPTIONEE
Address:
19.
