I/OMAGIC CORPORATION
2002 INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement (this "Agreement") is made and
entered into by and between I/OMagic Corporation, a Nevada corporation
("Company"), and ______________ ("Optionee"), as of __________, 200_ ("Date of
Grant"). If the Optionee is presently or subsequently becomes employed by a
subsidiary of the Company, the term "Company" shall be deemed to refer
collectively to I/OMagic Corporation and the subsidiary or subsidiaries that
employs the Optionee.
RECITALS
A. The Board of Directors and stockholders of the Company have adopted
the I/OMagic Corporation 2002 Stock Option Plan ("Plan") as an incentive to
retain key employees, officers, directors, and consultants of the Company and to
enhance the ability of the Company to attract new employees, officers,
directors, and consultants whose services are considered unusually valuable by
providing an opportunity to have a proprietary interest in the success of the
Company.
The Board of Directors has established a Committee to administer the
Plan ("Committee"), and the Committee has approved the granting of an option to
the Optionee pursuant to the Plan to provide an incentive to the Optionee to
focus on the long-term growth of the Company.
AGREEMENT
In consideration of the mutual covenants and conditions hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and the Optionee agree as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee the right and
option ("Option") to purchase an aggregate of _____________ (_____) shares (such
number being subject to adjustment as provided in paragraph 10 below and Section
13 of the Plan) of the Common Stock of I/OMagic Corporation ("Stock") on the
terms and conditions herein set forth. This Option may be exercised in whole or
in part and from time to time as hereinafter provided. The Option granted under
this Agreement is intended to be an "incentive stock option" as set forth in
Section 422 of the Internal Revenue Code of 1986, as amended ("Code").
2. VESTING OF OPTION. The Option shall vest and become exercisable as
follows:
_____ percent (___%) shall vest on the Date of Grant and an additional _____
percent (__%) shall vest on each ________, of each year commencing on _________
and ending on _________, whereupon the Option shall be vested as to one hundred
percent (100%).
3. PURCHASE PRICE. The price at which the Optionee shall be entitled to
purchase the Stock covered by the Option shall be $____ per share, which price
is [100%/110%] of the Fair Market Value (as defined in the Plan) of the Stock on
the Date of Grant.
4. TERM OF OPTION. The Option granted under this Agreement shall expire,
unless otherwise exercised, [TEN/FIVE] years from the Date of Grant, through and
including the normal close of business of the Company on _____________, 20__
("Expiration Date"), subject to earlier termination as provided in paragraph 8
below.
5. EXERCISE OF OPTION. The Option may be exercised by the Optionee as to all
or any part of the Stock then vested by delivery to the Company of written
notice of exercise and payment of the purchase price as provided in paragraphs 6
and 7 below.
6. METHOD OF EXERCISING OPTION. Subject to the terms and conditions of this
Agreement, the Option may be exercised by timely delivery to the Company of
written notice, which notice shall be effective on the date received by the
Company ("Effective Date"). The notice shall state the Optionee's election to
exercise the Option, the number of shares in respect of which an election to
exercise has been made, the method of payment elected (see paragraph 7 below),
the exact name or names in which the shares will be registered and the taxpayer
identification number of the Optionee. The notice shall be signed by the
Optionee and shall be accompanied by payment of the purchase price of such
shares. If the Option is exercised by a person or persons other than Optionee
pursuant to paragraph 8 below, the notice shall be signed by the other person or
persons and shall be accompanied by proof acceptable to the Company of the legal
right of the person or persons to exercise the Option. All shares delivered by
the Company upon exercise of the Option shall be fully paid and nonassessable
upon delivery.
7. METHOD OF PAYMENT FOR OPTIONS. Payment for shares purchased upon the
exercise of the Option shall be made by the Optionee in cash or such other
method permitted by the Plan and the Committee and communicated to the Optionee
in writing prior to the date the Optionee exercises all or any portion of the
Option.
8. TERMINATION OF EMPLOYMENT.
8.1 GENERAL. If the Optionee terminates employment for any other reason than
for cause (as that term is defined in the Plan, "Cause") or voluntary
resignation in violation of any agreement to remain in the employ of the
Company, then the Optionee may at any time within three months after the
effective date of termination of employment exercise the Option to the extent
that the Optionee was entitled to exercise the Option at the date of
termination, provided that in no event shall the Option be exercisable after the
Expiration Date. If the Optionee terminates employment for Cause or voluntary
resignation in violation of any agreement to remain in the employ of the
Company, then the Option shall terminate immediately upon termination of
employment, and the Option shall be deemed to have been forfeited by the
Optionee.
8.2 DEATH OR DISABILITY OF OPTIONEE. In the event of the death or
disability (as that term is defined in the Plan, "Disability") of the Optionee
within a period during which the Option, or any part thereof, could have been
exercised by the Optionee ("Option Period"), the Option shall lapse unless it is
exercised within the Option Period and in no event later than twelve months
after the date of the Optionee's death or Disability by the Optionee or the
Optionee's legal representative or representatives in the case of a Disability
or, in the case of death, by the person or persons entitled to do so under the
Optionee's last will and testament or if the Optionee fails to make a
testamentary disposition of the Option or shall die intestate, by the person or
persons entitled to receive the Option under the applicable laws of descent and
distribution. An Option may be exercised following the death or Disability of
the Optionee only if the Option was exercisable by the Optionee immediately
prior to his death or Disability. In no event shall the Option be exercisable
after the Expiration Date. The Committee shall have the right to require
evidence satisfactory to it of the rights of any person or persons seeking to
exercise the Option under this paragraph 8 to exercise the Option.
9. NONTRANSFERABILITY. The Option granted by this Option Agreement
shall be exercisable only during the term of the Option provided in paragraph 4
above and, except as provided in paragraph 8 above, only by the Optionee during
his lifetime and while an Optionee of the Company. This Option shall not be
transferable by the Optionee or any other person claiming through the Optionee,
either voluntarily or involuntarily, except by will or the laws of descent and
distribution or such other events as are set forth in the Plan.
10. ADJUSTMENTS IN NUMBER OF SHARES AND OPTION PRICE. In the event of a
stock dividend or if the Stock is changed into or exchanged for a different
number or class of shares of stock of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation, there shall be substituted for each remaining
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share of Stock then subject to this Option the number and class of shares of
stock into which each outstanding share of Stock is to be so exchanged, all
without any change in the aggregate purchase price for the shares then subject
to the Option, all as set forth in Section 13 of the Plan.
11. DELIVERY OF SHARES. No shares of Stock shall be delivered upon exercise
of the Option until (i) the purchase price has been paid in full in the manner
herein provided; (ii) applicable taxes required to be withheld have been paid or
withheld in full; (iii) approval of any governmental authority required in
connection with the Option, or the issuance of shares thereunder, has been
received by the Company; and (iv) if required by the Committee, the Optionee has
delivered to the Committee an Investment Letter in form and content satisfactory
to the Company as provided in paragraph 12 below.
12. SECURITIES ACT. The Company shall not be required to deliver any shares
of Stock pursuant to the exercise of all or any part of the Option if, in the
opinion of counsel for the Company, the issuance would violate the Securities
Act of 1933, as amended, or any other applicable federal or state securities
laws or regulations. The Committee may require that the Optionee, prior to the
issuance of any shares pursuant to exercise of the Option, sign and deliver to
the Company a written statement ("Investment Letter") stating (i) that the
Optionee is purchasing the shares for investment and not with a view to the sale
or distribution thereof; (ii) that the Optionee will not sell any shares
received upon exercise of the Option or any other shares of the Company that the
Optionee may then own or thereafter acquire except either (a) through a broker
on a national securities exchange or (b) with the prior written approval of the
Company; and (iii) containing such other terms and conditions as counsel for the
Company may reasonably require to assure compliance with the Securities Act of
1933, as amended, or other applicable federal or state securities laws and
regulations. The Investment Letter shall be in form and content acceptable to
the Committee in its sole discretion.
13. FEDERAL AND STATE TAXES. Upon exercise of the Option, or any part
thereof, the Optionee may incur certain liabilities for federal, state or local
taxes and the Company may be required by law to withhold taxes for payment to
taxing authorities. Upon determination by the Company of the amount of taxes
required to be withheld, if any, with respect to the shares to be issued
pursuant to the exercise of the Option, the Optionee shall pay all federal state
and local tax withholding requirements to the Company.
14. DEFINITIONS; COPY OF PLAN. To the extent not specifically provided
herein, all capitalized terms used in this Agreement have the same meanings
ascribed to them in the Plan. By the execution of this Agreement, the Optionee
acknowledges receipt of a copy of the Plan.
15. ADMINISTRATION. This Agreement shall at all times be subject to the
terms and conditions of the Plan, and the Plan shall in all respects be
administered by the Committee in accordance with the terms of and as provided in
the Plan. The Committee shall have the sole and complete discretion with respect
to all matters reserved to it by the Plan and decisions of the majority of the
Committee with respect thereto and to this Option Agreement shall be final and
binding upon the Optionee and the Company. In the event of any conflict between
the terms and conditions of this Agreement and the Plan, the provisions of the
Plan shall control.
16. CONTINUATION OF EMPLOYMENT. This Agreement shall not be construed to
confer upon the Optionee any right to continue in the employ of the Company and
shall not limit the right of the Company, in its sole discretion, to terminate
the employment of the Optionee at any time.
17. OBLIGATION TO EXERCISE. The Optionee shall have no obligation to
exercise any option granted by this Agreement.
18. GOVERNING LAW. This Agreement shall be interpreted and administered
under the laws of the State of California.
19. AMENDMENTS. This Agreement may be amended only by a written agreement
executed by the Company and the Optionee. The Company and the Optionee
acknowledge that changes in federal tax laws enacted subsequent to the Date of
Grant, and applicable to stock options, may provide for tax benefits to the
Company or the Optionee. In that event, the Company and the Optionee agree that
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this Agreement may be amended as necessary to secure for the Company and the
Optionee any benefits that may result from that legislation. Any amendment shall
be made only upon the mutual consent of the parties, which consent (of either
party) may be withheld for any reason.
20. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between
the parties with regard to the subject matter of this Agreement. All agreements,
covenants, representations and warranties, express or implied, oral and written,
of the parties with regard to the subject matter of this Agreement are contained
in this Agreement and the documents referred to or implementing the provisions
of this Agreement. No other agreements, covenants, representations or
warranties, express or implied, oral or written, have been made by either party
to the other with respect to the subject matter of this Agreement. All prior and
contemporaneous conversations, negotiations, covenants and warranties with
respect to the subject matter of this Agreement are waived, merged in this
Agreement and superseded by this Agreement.
21. TAX INFORMATION AND NOTICE OF DISQUALIFYING DISPOSITION. This Option is
intended to be eligible for treatment as an Incentive Stock Option under Section
422 of the Code. Whether this Option will receive that tax treatment will
depend, in part, on the actions by the Optionee after exercise of this Option.
For example, if the Optionee disposes of any of the Stock acquired under this
Option within two years after the Date of Grant or within one year of the date
of exercise of this Option, the Optionee may lose the benefits of Code Section
422. Accordingly, the Company makes no representations by way of the Plan, this
Agreement, or otherwise, with respect to the actual tax consequences of the
grant or exercise of this Option or the subsequent disposition of the Stock
acquired under this Option.
If the Optionee sells or makes a disposition (within the meaning of
Section 422 of the Code) of any of the Stock acquired under this Option prior to
the later of (i) one year from the date of exercise of this Option, or (ii) two
years from the Date of Grant, the Optionee agrees to give written notice to the
Company of the disposition. The notice shall include the Optionee's name, the
number, exercise price and exercise date of the shares of Stock disposed of, and
the date of disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by
its officer thereunto duly authorized and the Optionee has hereunto set his or
her hand as of the date first written above.
I/OMAGIC CORPORATION OPTIONEE
By:____________________________ ____________________________________
Xxxx Xxxxxxx, President [INSERT OPTIONEE NAME]
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