EXHIBIT 4.4
NONSTATUTORY STOCK OPTION AGREEMENT
OnTrak Systems, Inc., a Delaware corporation (the "Company"), hereby
grants to __________________ (the "Optionee"), an option (the "Option") to
purchase a total of ____________________ (_______) shares of Common Stock of
the Company (the "Shares"), at the price set forth herein, and in all
respects subject to the terms, definitions and provisions of the Company's
1996 Equity Incentive Plan (the "Plan"), which is incorporated herein by
reference.
1. NATURE OF THE OPTION. The Option is intended to be a nonstatutory
option and NOT an incentive stock option within the meaning of Section 422 of
the Internal Revenue Code of 1986, as amended (the "Code").
2. Option Price. The Option Price is $___________ for each Share.
3. VESTING AND EXERCISE OF OPTION. The Option shall vest and become
exercisable during its term as follows:
(a) VESTING AND RIGHT TO EXERCISE.
(i) The Option shall vest and become exercisable with respect
to one-fourth of the Shares subject to the Option at the end of each of the
first four (4) years from __________________. Subject to the provisions of
subparagraphs (ii) and (iii) below, the Optionee can exercise any portion of
the Option which has vested until the expiration of the Option Term set forth
in Section 7 of this Agreement.
(ii) In the event of the Optionee's Termination of Service to
the Company (as defined in Section 2.31 of the Plan), the Option may be
exercised as follows:
(A) If Termination of Service is due to Disability (as
defined in Section 2.11 of the Plan), the Option may be exercised at any time
within six (6) months following the date of Termination of Service, but only
to the extent of the accrued right to exercise at the date of Termination of
Service, provided that the Option may not be exercised after the expiration
of the Option Term.
(B) If Termination of Service is due to death, the Option
may be exercised at any time within six (6) months following the date of
death, but only to the extent of the accrued right to exercise at the date of
death, provided that the Option may not be exercised after the expiration of
the Option Term.
(C) If Termination of Service is due to any other reason, the
Option may be exercised at any time within thirty (30) days following the date
of Termination of Service, but only to the extent of the accrued right to
exercise at the date
of Termination of Service, provided that the Option may not be exercised
after the expiration of the Option Term.
(iii) The Option may not be exercised for fractional
shares or for less than ten (10) Shares.
(b) METHOD OF EXERCISE. In order to exercise any portion of this
Option which has vested, the Optionee shall notify the Company in writing of
the election to exercise the Option, the number of shares in respect of which
the Option is being exercised, accompanied by payment in full of the
aggregate purchase price of the Shares to be purchased. The certificate or
certificates for Shares as to which the Option has been exercised shall be
registered in the name of the Optionee.
(c) RESTRICTIONS ON EXERCISE. This Option may not be exercised if
the issuance of the shares upon such exercise or the method of payment of
consideration for such shares would constitute a violation of any applicable
Federal or state securities law or any other law or regulation. Furthermore,
the method and manner of payment of the Option Price will be subject to the
rules under Part 207 of Title 12 of the Code of Federal Regulations
("Regulation G") as promulgated by the Federal Reserve Board if such rules
apply to the Company at the date of exercise. As a condition to the exercise
of this Option, the Company may require the Optionee to make any
representation or warranty to the Company at the time of exercise of the
Option as in the opinion of legal counsel for the Company may be required by
any applicable law or regulation, including the execution and delivery of an
appropriate representation statement. Accordingly, the stock certificates for
the Shares issued upon exercise of this Option may bear appropriate legends
restricting transfer.
4. NON-TRANSFERABILITY OF OPTION. This Option may be exercised during
the lifetime of the Optionee only by the Optionee and, subject to the
provisions of Section 7.6 of the Plan, may not be transferred in any manner
other than by will or by the laws of descent and distribution. The terms of
this Option shall be binding upon the executors, administrators, heirs and
successors of the Optionee.
5. METHOD OF PAYMENT. Payment of the exercise price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) cash;
(b) certified or bank cashier's check;
(c) in the event there exists a public market for the Company's
Common Stock on the date of exercise, by delivery of a sell order to a broker
for the shares being purchased and an agreement to pay the purchase price of
the shares being purchased (or irrevocable instructions to the Optionee's
broker to deliver to the
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Company the amount of sale proceeds required to pay the exercise price)
on or before the settlement date for the sale of such shares;
(d) authorization to retain from the total number of shares as to
which the Option is exercised that number of shares having a fair market
value on the date of exercise equal to the exercise price for the total
number of shares as to which the Option is exercised; or
(e) in the event there exists a public market for the Company's
Common Stock on the date of exercise, by surrender of shares of the Company's
Common Stock, provided that if such shares were acquired upon exercise of an
incentive stock option, the Optionee must have first satisfied the holding
period requirements under Section 422(a)(1) of the Code. In this case
payment shall be made as follows:
(i) Optionee shall deliver to the Secretary of the Company a
written notice which shall set forth the portion of the purchase price the
Optionee wishes to pay with Common Stock, and the number of shares of such
Common Stock the Optionee intends to surrender pursuant to the exercise of
this Option, which shall be determined by dividing the aforementioned portion
of the purchase price by the average of the last reported bid and asked
prices per share of Common Stock of the Company, as reported in THE WALL
STREET JOURNAL (or, if not so reported, as otherwise reported by the National
Association of Securities Dealers Automated Quotation (NASDAQ) System) or, in
the event the Common Stock is listed on a national securities exchange or on
the NASDAQ National Market System (or any successor national market system),
the closing price of Common Stock of the Company on such exchange as reported
in THE WALL STREET JOURNAL, for the day on which the notice of exercise is
sent or delivered;
(ii) Fractional shares shall be disregarded and the Optionee
shall pay in cash an amount equal to such fraction multiplied by the price
determined under subparagraph (i) above;
(iii) The written notice shall be accompanied by a duly
endorsed blank stock power with respect to the number of Shares set forth in
the notice, and the certificate(s) representing said Shares shall be
delivered to the Company at its principal offices within three (3) working
days from the date of the notice of exercise;
(iv) The Optionee hereby authorizes and directs the Secretary
of the Company to transfer so many of the Shares represented by such
certificate(s) as are necessary to pay the purchase price in accordance with
the provisions herein;
(v) If any such transfer of Shares requires the consent of
the California Commissioner of Corporations or of some other agency under the
securities laws of any other state, or an opinion of counsel for the Company
or Optionee that such
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transfer may be effected under applicable Federal and state securities laws,
the time periods specified herein shall be extended for such periods as the
necessary request for consent to transfer is pending before said Commissioner
or other agency, or until counsel renders such an opinion, as the case may
be. All parties agree to cooperate in making such request for transfer, or
in obtaining such opinion of counsel, and no transfer shall be effected
without such consent or opinion if required by law; and
(vi) Notwithstanding any other provision herein, the Optionee
shall only be permitted to pay the purchase price with shares of the
Company's Common Stock owned by him as of the exercise date in the manner and
within the time periods allowed under 17 CFR Section 240.16b-3 promulgated
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as such regulation is presently constituted, as it is amended from time to
time, and as it is interpreted now or hereafter by the Securities and
Exchange Commission.
6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number of
Shares covered by this Option shall be adjusted in accordance with the
provisions of Section 4.3 of the Plan in the event of changes in the
capitalization or organization of the Company, or if the Company is a party
to a merger or other corporate reorganization.
7. TERM OF OPTION. This Option may not be exercised more than seven
(7) years from the date of grant of this Option, as set forth below, and may
be exercised during such term only in accordance with the Plan and the terms
of this Option.
8. NOT EMPLOYMENT CONTRACT. NOTHING IN THIS AGREEMENT OR IN the Plan
shall confer upon the Optionee any right to continue in the employ of the
Company or shall interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Optionee at
any time for any reason whatsoever, with or without cause, subject to the
provisions of applicable law. This is not an employment contract.
9. INCOME TAX WITHHOLDING.
(a) The Optionee authorizes the Company to withhold in accordance
with applicable law from any compensation payable to him or her any taxes
required to be withheld by Federal, state or local laws as a result of the
exercise of this Option. Furthermore, in the event of any determination that
the Company has failed to withhold a sum sufficient to pay all withholding
taxes due in connection with the exercise of this Option, the Optionee agrees
to pay the Company the amount of any such deficiency in cash within five (5)
days after receiving a written demand from the Company to do so, whether or
not Optionee is an employee of the Company at that time.
(b) At such time as the Optionee is required to pay to the Company
an amount with respect to tax withholding obligations as set forth in
paragraph (a), the
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Optionee may elect prior to the date the amount of such withholding tax
is determined (the "Tax Date") to make such payment, or such increased payment
as the Optionee elects to make up to the maximum federal, state and local
marginal tax rates (including any related FICA obligation) applicable to the
Optionee and the particular transaction, by: (i) delivering cash; (ii)
delivering part or all of the payment in previously owned shares of Common Stock
(whether or not acquired through the prior exercise of an Option); and/or (iii)
irrevocably directing the Company to withhold from the Shares that would
otherwise be issued upon exercise of the Option that number of whole Shares
having a fair market value equal to the amount of tax required or elected to be
withheld (a "Withholding Election"). If an Optionee's Tax Date is deferred
beyond the date of exercise and the Optionee makes a Withholding Election, the
Optionee will initially receive the full amount of Shares otherwise issuable
upon exercise of the Option, but will be unconditionally obligated to surrender
to the Company on the Tax Date the number of Shares necessary to satisfy his or
her minimum withholding requirements, or such higher payment as he or she may
have elected to make, with adjustments to be made in cash after the Tax Date.
Any withholding of Shares with respect to taxes arising in connection
with the exercise of this Option at such time as the Optionee is subject to
short-swing trading liability under Section 16(b) of the Exchange Act shall
comply with the relevant requirements of 17 CFR Section 240.16b-1 et seq.
promulgated under the Exchange Act.
Any adverse consequences incurred by the Optionee with respect to the
use of shares of Common Stock to pay any part of the Option Price or of any tax
in connection with the exercise of the Option shall be the sole responsibility
of the Optionee.
DATE OF GRANT: _______________, 19___
ONTRAK SYSTEMS, INC.
By:__________________
Its:__________________
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The Optionee acknowledges receipt of a copy of the Plan and represents
that he or she is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all of the terms and provisions thereof. The
Optionee hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Committee upon any questions arising
under the Plan.
Dated: ________________, 19____ _______________________________
CONSENT OF SPOUSE
I, ___________________________, spouse of the Optionee who executed the
foregoing Agreement, hereby agree that my spouse's interest in the shares of
Common Stock subject to said Agreement shall be irrevocably bound by the
Agreement's terms. I further agree that my community property interest in
such shares, if any, shall similarly be bound by said Agreement and that such
consent is binding upon my executors, administrators, heirs and assigns. I
agree to execute and deliver such documents as may be necessary to carry out
the intent of said Agreement and this consent.
Dated: _________________, 19____ ______________________________
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