INCENTIVE STOCK OPTION AGREEMENT
EXHIBIT 99.6
THIS
INCENTIVE STOCK OPTION AGREEMENT ("Agreement") is made by and between Patriot
Scientific Corporation, a Delaware corporation, (the "Corporation"), and
_________________ (the "Optionee").
NOW,
THEREFORE, in consideration of the mutual benefit to be derived herefrom, the
Corporation and Optionee agree as follows:
1. Grant
of Option.
The
Corporation hereby grants to Optionee, subject to all the terms and provisions
of the Patriot Scientific Corporation, 2006 Stock Option Plan dated __________,
2006, as such Plan may be hereinafter amended, a copy of which is attached
hereto and incorporated herein by this reference (the "Plan"), the right,
privilege and option ("Option") to purchase ________ shares of its common stock
("Stock") at _______ per share, in the manner and subject to the conditions
provided hereinafter and in the Plan and any amendments thereto and any rules
and regulations thereunder.
2. Time
of Exercise of Option.
The
Option shall vest in Optionee and may be exercised by Optionee as set forth
on
Exhibit "A" hereto. Any exercise may be with respect to any part or all of
the shares then exercisable pursuant to such Option. Except as otherwise
provided in the Plan, such Option must be exercised within the earlier of
(i) 5 years after the date of the grant, or (ii) three months after
Optionee's termination of employment with either the Corporation, or a Parent
or
Subsidiary thereof; provided, however, such rights shall be extended as more
fully set forth in Section 3.3 of the Plan in the case of Optionee's death.
In no event shall the Corporation be required to transfer fractional shares
to
Optionee or those entitled to Optionee's rights herein.
3. Method
of Exercise.
The
Option shall be exercised by Optionee as set forth in Sections 5.4 and 5.5
of the Plan.
4. Restrictions
on Exercise and Delivery.
The
exercise of each Option shall be subject to the condition that, if at any time
the Committee shall determine, in its sole and absolute discretion,
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(a)
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the
satisfaction of any withholding tax or other withholding liabilities,
is
necessary or desirable as a condition of, or in connection with,
such
exercise or the delivery or purchase of Stock pursuant
thereto,
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(b)
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the
listing, registration, or qualification of any shares deliverable
upon
such exercise is desirable or necessary, under any state or federal
law,
as a condition of, or in connection with, such exercise or the delivery
or
purchase of shares pursuant thereto, or
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(c)
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the
consent or approval of any regulatory body is necessary or desirable
as a
condition of, or in connection with, such exercise or the delivery
or
purchase of shares pursuant thereto,
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then
in
any such event, such exercise shall not be effective unless such withholding,
listing, registration, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Committee.
Optionee shall execute such documents and take such other actions as are
required by the Committee to enable it to effect or obtain such withholding,
listing, registration, qualification, consent or approval. Neither the
Corporation nor any officer or director, or member of the Committee, shall
have
any liability with respect to the non-issuance or failure to sell shares as
the
result of any suspensions of exercisability imposed pursuant to this
Section.
5. Termination
of Option.
Except
as otherwise provided in this Agreement or the Plan, to the extent not
previously exercised, the Option shall terminate upon the first to occur of
any
of the following events:
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(a)
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the
dissolution or liquidation of the
Corporation;
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(b)
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the
expiration of 5 from the date of the grant of the Option
hereunder;
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(c)
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the
breach by Optionee of any provision of this
Agreement;
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(d)
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as
more fully set forth in Section 3.2 of the Plan, three months after
termination of employment;
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(e)
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as
more fully set forth in Section 3.3 of the Plan, six months after an
Optionee's death;
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(f)
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as
more fully set forth in Section 6.2 of the Plan, in the event of a
Capital Transaction.
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6. Nonassignability.
Options
may not be sold, pledged, assigned or transferred in any manner other than
by
will or by the laws of intestate succession, and may be exercised during the
lifetime of Optionee only by Optionee. Any transfer by Optionee of any Option
granted under the Plan or this Agreement shall void such Option and the
Corporation shall have no further obligation with respect to such Option. No
Option shall be pledged or hypothecated in any way, nor shall any Option be
subject to execution, attachment or similar process.
7. Restrictions
on Transfer of Shares Acquired.
Optionee represents and warrants to the Corporation that Optionee understands
that, as of the date of this Agreement, (a) the Stock issuable upon
exercise of the Option has not been registered under the Securities Act of
1933,
as amended (the "Act") or qualified under any applicable state securities laws
and the Stock must be held indefinitely unless subsequently registered and
qualified thereunder or an exemption from registration and qualification is
available, (b) the Corporation has made no agreements, covenants or
undertakings whatsoever (i) to register under the Act or any applicable
securities laws the Stock issuable upon exercise of this Option, or
(ii) about the availability of any exemption under the Act (including Rule
144 of the Act) or applicable state securities laws and (c) there is no
public market for the Stock of the Corporation and that such a market may never
develop. Optionee further represents and warrants to the Corporation that he
will not transfer the Stock in violation of the provisions of any applicable
securities statute or regulation.
8. Representation
Letter.
Upon
the grant of the Option and execution of this Agreement, the Optionee will
deliver to the Corporation the grant representation letter set forth on
Exhibit "A" of the Plan, as such Exhibit may be amended by the
Committee from time to time. Upon exercise of the Option, the Optionee will
deliver to the Corporation the exercise representation letter set forth on
Exhibit "B" of the Plan, as such Exhibit may be amended by the
Committee from time to time. Optionee also agrees to make such other
representations as are deemed necessary or appropriate by the Corporation and
its counsel.
9. Restrictive
Legends.
Each
certificate evidencing the shares acquired hereunder, including any certificate
issued to any transferee thereof, shall be imprinted with legends substantially
in the form set forth in the Plan.
10. Rights
as Shareholder.
Neither
Optionee nor his executor, administrator, heirs or legatees, shall be, or have
any rights or privileges of a shareholder of the Corporation in respect of
the
Stock unless and until certificates representing such Stock shall have been
issued in Optionee's name.
11. No
Right of Employment.
Neither
the grant nor exercise of any Option nor anything in the Plan or this Agreement
shall impose upon the Corporation or any other corporation any obligation to
employ or continue to employ any Optionee. The right of the Corporation and
any
other corporation to terminate any employee shall not be diminished or affected
because an Option has been granted to such employee.
12. Mandatory
Arbitration.
In the
event of any dispute between the Corporation and Optionee regarding this
Agreement or the Plan, the dispute and any issue as to the arbitrability of
such
dispute, shall be settled
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to
the
exclusion of a court of law, by arbitration in San Diego, California, by a
panel of three arbitrators (each party shall choose one arbitrator and the
third
shall be chosen by the two arbitrators so selected) in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect. The decision of a majority of the arbitrators shall be final and binding
upon the parties. All costs of the arbitration and the fees of the arbitrators
shall be allocated between the parties as determined by a majority of the
arbitrators, it being the intention of the parties that the prevailing party
in
such a proceeding be made whole with respect to its expenses.
13. Definitions.
Capitalized terms shall have the meaning set forth in the Plan unless otherwise
defined herein.
14. Notices.
Any
notice to be given under the terms of this Agreement shall be addressed to
the
Corporation in care of its Secretary at its principal office, and any notice
to
be given to Optionee shall be addressed to such Optionee at the address
maintained by the Corporation for such person or at such other address as the
Optionee may specify in writing to the Corporation.
15. Binding
Effect.
This
Agreement shall be binding upon and inure to the benefit of Optionee, his heirs
and successors, and of the Corporation, its successors and assigns.
16. Governing
Law.
This
Agreement shall be governed by the laws of the State of California.
17. Descriptive
Headings.
Titles
to Sections are solely for information purposes.
18. Application
of Plan.
The
Corporation has delivered and the Optionee hereby acknowledges receipt of a
copy
of the Plan. The parties agree and acknowledge that the Option granted hereunder
is granted pursuant to the Plan and subject to the terms and provisions thereof,
and the rights of the Optionee are subject to modifications and termination
in
certain events as provided in the Plan.
IN
WITNESS WHEREOF, this Agreement is effective as of, and the date of grant shall
be, ____________, 2006.
PATRIOT
SCIENTIFIC CORPORATION,
a Delaware corporation
a Delaware corporation
By:_____________________________________________
Its:_____________________________________________
OPTIONEE
__________________________________________________
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EXHIBIT "A"
VESTING
SCHEDULE
TO
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