EXHIBIT A
CONDUCTUS, INC.
AUTOMATIC STOCK OPTION AGREEMENT
RECITALS
A. The Corporation has implemented an automatic option grant
program under the Plan pursuant to which eligible non-employee members of the
Board will automatically receive stock option grants at periodic intervals
over their period of Board service in order to provide such individuals with
a meaningful incentive to continue to serve as members of the Board.
B. Optionee is an eligible non-employee Board member, and
this Agreement is executed pursuant to, and is intended to carry out the
purposes of, the Plan in connection with the automatic grant of an option to
purchase shares of Common Stock under the Plan.
C. All capitalized terms in this Agreement shall have the
meanings assigned to them in the attached Appendix.
NOW, THEREFORE, it is hereby agreed as follows:
1. GRANT OF OPTION. The Corporation hereby grants to
Optionee, as of the Grant Date, a Non-Statutory Option to purchase up to the
number of Option Shares specified in the Grant Notice. The Option Shares
shall be purchasable from time to time during the option term specified in
Paragraph 2 at the Exercise Price.
2. OPTION TERM. This option shall have a term of ten
(10) years measured from the Grant Date and shall accordingly expire at the
close of business on the Expiration Date, unless sooner terminated in
accordance with Paragraph 5, 6 or 7.
3. LIMITED TRANSFERABILITY. This option, together with
the special stock appreciation right provided under Paragraph 7(b), shall be
neither transferable nor assignable by Optionee other than by will or by the
laws of descent and distribution following Optionee's death and may be
exercised, during Optionee's lifetime, only by Optionee. However, this
option may also be assigned in whole or in part during Optionee's lifetime in
accordance with the terms of a Qualified Domestic Relations Order. The
assigned portion shall be exercisable only by the person or persons who
acquire a proprietary interest in the option pursuant to such Qualified
Domestic Relations Order. The terms applicable to the assigned portion shall
be the same as those in effect for this option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Board may deem appropriate.
4. EXERCISABILITY/VESTING.
(a) This option shall be immediately exercisable
for any or all of the Option Shares, whether or not the Option Shares are
vested in accordance with the Vesting
Schedule and shall remain so exercisable until the Expiration Date or sooner
termination of the option term under Paragraph 5, 6 or 7.
(b) Optionee shall, in accordance with the Vesting
Schedule, vest in the Option Shares in one or more installments over his or
her period of Board service. Vesting in the Option Shares may be accelerated
pursuant to the provisions of Paragraph 5, 6 or 7. In no event, however,
shall any additional Option Shares vest following Optionee's cessation of
service as a Board member.
5. CESSATION OF BOARD SERVICE. Should Optionee's
service as a Board member cease while this option remains outstanding, then
the option term specified in Paragraph 2 shall terminate (and this option
shall cease to be outstanding) prior to the Expiration Date in accordance
with the following provisions:
(a) Should Optionee cease to serve as a Board
member for any reason (other than death or Permanent Disability) while
holding this option, then the period for exercising this option shall be
reduced to a three (3)-month period (commencing with the date of such
cessation of Board service), but in no event shall this option be exercisable
at any time after the Expiration Date. During such limited period of
exercisability, this option may not be exercised in the aggregate for more
than the number of Option Shares (if any) in which Optionee is vested on the
date Optionee ceases service as a Board member. Upon the EARLIER of (i) the
expiration of such three (3)-month period or (ii) the specified Expiration
Date, the option shall terminate and cease to be exercisable with respect to
any vested Option Shares for which the option has not been exercised.
(b) Should Optionee die during the three (3)-month
period following his or her cessation of Board service, then the personal
representative of Optionee's estate or the person or persons to whom the
option is transferred pursuant to Optionee's will or in accordance with the
laws of descent and distribution shall have the right to exercise this option
for any or all of the Option Shares in which Optionee is vested at the time
of Optionee's cessation of Board service (less any Option Shares purchased by
Optionee after such cessation of Board service but prior to death). Such
right of exercise shall terminate, and this option shall accordingly cease to
be exercisable for such vested Option Shares, upon the EARLIER of (i) the
expiration of the three (3)-year period measured from the date of Optionee's
death or (ii) the specified Expiration Date.
(c) Should Optionee cease service as a Board member
by reason of death or Permanent Disability, then Optionee (or the personal
representative of Optionee's estate or the person or persons to whom the
option is transferred upon Optionee's death) shall have the right to exercise
this option for any or all of the Option Shares, to the extent vested on the
date of cessation of service, at any time prior to the EARLIER of (i) the
expiration of the twelve (12)-month period measured from the date of
Optionee's cessation of Board service by reason of Permanent Disability or
the expiration of the three (3)-year period measured from the date of
Optionee's death or (ii) the specified Expiration Date.
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(d) Upon Optionee's cessation of Board service for
any reason, this option shall immediately terminate and cease to be
outstanding with respect to any and all Option Shares in which Optionee is
not otherwise at that time vested in accordance with the normal Vesting
Schedule or the special vesting acceleration provisions of Paragraph 6 or 7
below.
(e) In the event of a Corporate Transaction or
Change in Control, the provisions of Paragraph 6 or 7 shall govern the period
for which this option is to remain exercisable following Optionee's cessation
of Board service and shall supersede any provisions to the contrary in this
paragraph.
6. CORPORATE TRANSACTION.
(a) In the event of a Corporate Transaction, all
Option Shares at the time subject to this option but not otherwise vested
shall automatically vest so that this option shall, immediately prior to the
effective date of such Corporate Transaction, become exercisable for any or
all of the Option Shares as fully-vested shares of Common Stock. Immediately
following the Corporate Transaction, this option shall terminate and cease to
be exercisable except to the extent assumed by the successor corporation (or
parent thereof) in connection with such Corporate Transaction.
(b) If this option is assumed in connection with a
Corporate Transaction, then this option shall be appropriately adjusted,
immediately after such Corporate Transaction, to apply to the number and
class of securities which would have been issuable to Optionee in
consummation of such Corporate Transaction had the option been exercised
immediately prior to such Corporate Transaction, and appropriate adjustments
shall also be made to the Exercise Price, PROVIDED the aggregate Exercise
Price shall remain the same.
(c) This Agreement shall not in any way affect the
right of the Corporation to adjust, reclassify, reorganize or otherwise
change its capital or business structure or to merge, consolidate, dissolve,
liquidate or sell or transfer all or any part of its business or assets.
7. CHANGE IN CONTROL/HOSTILE TAKE-OVER.
(a) All Option Shares subject to this option at the
time of a Change in Control but not otherwise vested shall automatically vest
so that this option shall, immediately prior to the effective date of such
Change in Control, become fully exercisable for all of the Option Shares at
the time subject to this option and may be exercised for all or any portion
of such shares as fully-vested shares of Common Stock. This option shall
remain exercisable for such fully-vested Option Shares until the earliest to
occur of (i) the Expiration Date, (ii) the sooner termination of this option
in accordance with Paragraph 5 or 6 or (iii) the surrender of the option in
connection with a Hostile Take-Over.
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(b) Provided this option has been outstanding for
at least six (6) months prior to the occurrence of a Hostile Take-Over,
Optionee shall have the unconditional right (exercisable during the thirty
(30)-day period immediately following the consummation of such Hostile
Take-Over) to surrender this option to the Corporation in exchange for a cash
distribution from the Corporation in an amount equal to the excess of (i) the
Take-Over Price of the Option Shares at the time subject to the surrendered
option (whether or not those Option Shares are otherwise at the time vested)
over (ii) the aggregate Exercise Price payable for such shares. This
Paragraph 7(b) limited stock appreciation right shall in all events terminate
upon the expiration or sooner termination of the option term and may not be
assigned or transferred by Optionee.
(c) To exercise the Paragraph 7(b) limited stock
appreciation right, Optionee must, during the applicable thirty (30)-day
exercise period, provide the Corporation with written notice of the option
surrender in which there is specified the number of Option Shares as to which
the Option is being surrendered. Such notice must be accompanied by the
return of Optionee's copy of this Agreement, together with any written
amendments to such Agreement. The cash distribution shall be paid to
Optionee within five (5) days following such delivery date, and no approval
or consent of the Board shall be required in connection with such option
surrender and cash distribution. Upon receipt of such cash distribution,
this option shall be cancelled with respect to the Option Shares subject to
the surrendered option (or the surrendered portion) and Optionee shall cease
to have any further right to acquire those Option Shares under this
Agreement. The option shall, however, remain outstanding for the balance of
the Option Shares (if any) in accordance with the terms of this Agreement,
and the Corporation shall issue a new stock option agreement (substantially
in the same form as this Agreement) for those remaining Option Shares.
8. ADJUSTMENT IN OPTION SHARES. Should any change be
made to the Common Stock by reason of any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class without the Corporation's
receipt of consideration, appropriate adjustments shall be made to (i) the
total number and/or class of securities subject to this option and (ii) the
Exercise Price in order to reflect such change and thereby preclude a
dilution or enlargement of benefits hereunder.
9. STOCKHOLDER RIGHTS. The holder of this option shall
not have any stockholder rights with respect to the Option Shares until such
person shall have exercised the option, paid the Exercise Price and become a
holder of record of the purchased shares.
10. MANNER OF EXERCISING OPTION.
(a) In order to exercise this option with respect
to all or any part of the Option Shares for which this option is at the time
exercisable, Optionee (or any other person or persons exercising the option)
must take the following actions:
(i) To the extent the option is
exercised for vested Option Shares, execute and deliver to the
Corporation a Notice of Exercise for the Option Shares for which
the option is exercised. To the extent this option is exercised for
unvested Option Shares, execute and deliver to the Corporation a
Purchase Agreement.
(ii) Pay the aggregate Exercise Price
for the purchased shares in one or more of the following forms:
(A) cash or check made payable
to the Corporation,
(B) shares of Common Stock held
by Optionee (or any other person or persons exercising the
option) for at least six (6) months and valued at Fair
Market Value on the Exercise Date, or
(C) to the extent the option is
exercised for vested Option Shares, through a special sale
and remittance procedure pursuant to which Optionee (or any
other person or persons exercising the option) shall
concurrently provide irrevocable written instructions (I)
to a Corporation-designated brokerage firm to effect the
immediate sale of the purchased shares and remit to the
Corporation, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate
Exercise Price payable for the purchased shares plus all
applicable Federal, state and local income and employment
taxes required to be withheld by the Corporation by reason
of such exercise and (II) to the Corporation to deliver the
certificates for the purchased shares directly to such
brokerage firm in order to complete the sale.
Except to the extent the sale and remittance
procedure is utilized in connection with the option
exercise, payment of the Exercise Price must accompany the
Notice of Exercise (or the Purchase Agreement) delivered to
the Corporation in connection with the option exercise.
(iii) Furnish to the Corporation
appropriate documentation that the person or persons
exercising the option (if other than Optionee) have the
right to exercise this option.
(b) As soon after the Exercise Date as practical,
the Corporation shall issue to or on behalf of Optionee (or any other person
or persons exercising this option) a certificate for the purchased Option
Shares, with the appropriate legends affixed thereto. To the extent any such
Option Shares are unvested, the certificates for those Option Shares shall be
endorsed with an appropriate legend evidencing the Corporation's repurchase
rights and may be held in escrow with the Corporation until such shares vest.
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(c) In no event may this option be exercised for
any fractional shares.
11. COMPLIANCE WITH LAWS AND REGULATIONS.
(a) The exercise of this option and the issuance of
the Option Shares upon such exercise shall be subject to compliance by the
Corporation and Optionee with all applicable requirements of law relating
thereto and with all applicable regulations of any stock exchange (or the
Nasdaq National Market, if applicable) on which the Common Stock may be
listed for trading at the time of such exercise and issuance.
(b) The inability of the Corporation to obtain
approval from any regulatory body having authority deemed by the Corporation
to be necessary to the lawful issuance and sale of any Common Stock pursuant
to this option shall relieve the Corporation of any liability with respect to
the non-issuance or sale of the Common Stock as to which such approval shall
not have been obtained. The Corporation, however, shall use its best efforts
to obtain all such approvals.
12. SUCCESSORS AND ASSIGNS. Except to the extent
otherwise provided in Paragraph 3 or 6, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the Corporation and its
successors and assigns and Optionee, Optionee's assigns and the legal
representatives, heirs and legatees of Optionee's estate.
13. NOTICES. Any notice required to be given or
delivered to the Corporation under the terms of this Agreement shall be in
writing and addressed to the Corporation at its principal corporate offices.
Any notice required to be given or delivered to Optionee shall be in writing
and addressed to Optionee at the address indicated below Optionee's signature
line on the Grant Notice. All notices shall be deemed effective upon personal
delivery or upon deposit in the U.S. mail, postage prepaid and properly
addressed to the party to be notified.
14. CONSTRUCTION. This Agreement and the option
evidenced hereby are made and granted pursuant to the Plan and are in all
respects limited by and subject to the terms of the Plan.
15. GOVERNING LAW. The interpretation, performance and
enforcement of this Agreement shall be governed by the laws of the State of
California without resort to that State's conflict-of-laws rules.
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EXHIBIT I
NOTICE OF EXERCISE
I hereby notify Conductus, Inc. (the "Corporation") that
I elect to purchase _________ shares of the Corporation's Common Stock (the
"Purchased Shares") at the option exercise price of $_________ per share (the
"Exercise Price") pursuant to that certain option (the "Option") granted to
me under the Corporation's 1992 Stock Option/Stock Issuance Plan on
___________, 199___.
Concurrently with the delivery of this Exercise Notice to
the Corporation, I shall hereby pay to the Corporation the Exercise Price for
the Purchased Shares in accordance with the provisions of my agreement with
the Corporation (or other documents) evidencing the Option and shall deliver
whatever additional documents may be required by such agreement as a
condition for exercise. Alternatively, I may utilize the special
broker-dealer sale and remittance procedure specified in my agreement to
effect payment of the Exercise Price for any Purchased Shares in which I am
vested at the time of exercise of the Option.
________________________, 199_
Date
___________________________________
Optionee
Address: __________________________
___________________________________
Print name in exact manner
it is to appear on the
stock certificate: ___________________________________
Address to which certificate
is to be sent, if different
from address above: ___________________________________
___________________________________
Social Security Number: ___________________________________
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APPENDIX
The following definitions shall be in effect under the
Agreement:
A. AGREEMENT shall mean this Automatic Stock Option Agreement.
B. BOARD shall mean the Corporation's Board of Directors.
C. CHANGE IN CONTROL shall mean a change in ownership or control
of the Corporation effected through either of the following transactions:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the
Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within
the meaning of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept, or
(ii) a change in the composition of the Board over a
period of thirty-six (36) consecutive months or less such
that a majority of the Board members ceases, by reason of
one or more contested elections for Board membership, to
be comprised of individuals who either (A) have been
Board members continuously since the beginning of such
period or (B) have been elected or nominated for election
as Board members during such period by at least a
majority of the Board members described in clause (A) who
were still in office at the time the Board approved such
election or nomination.
D. CODE shall mean the Internal Revenue Code of 1986, as amended.
E. COMMON STOCK shall mean the Corporation's common stock.
F. CORPORATE TRANSACTION shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:
(i) a merger or consolidation in which securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding
securities are transferred to a person or persons
different from the persons holding those securities
immediately prior to such transaction, or
(ii) the sale, transfer or other disposition of all or
substantially all of the Corporation's assets in complete
liquidation or dissolution of the Corporation.
G. CORPORATION shall mean Conductus, Inc., a Delaware corporation.
H. DOMESTIC RELATIONS ORDER shall mean any judgment, decree or
order (including approval of a property settlement agreement) which provides
or otherwise conveys, pursuant to applicable State domestic relations laws
(including community property laws), marital property rights to any spouse or
former spouse of Optionee.
I. EXERCISE DATE shall mean the date on which the option
shall have been exercised in accordance with Paragraph 10 of the Agreement.
J. EXERCISE PRICE shall mean the exercise price per share as
specified in the Grant Notice.
K. EXPIRATION DATE shall mean the date on which the option expires
as specified in the Grant Notice.
L. FAIR MARKET VALUE per share of Common Stock on any relevant
date shall be determined in accordance with the following provisions:
(i) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded
on the Nasdaq National Market, the fair market value
shall be the closing price of one share of Common Stock
on the date in question, as such price is reported by the
National Association of Securities Dealers through its
Nasdaq system or any successor system. If there is no
closing price for the Common Stock on the date in
question, then the closing price on the last preceding
date for which such quotation exists shall be
determinative of fair market value.
(ii) If the Common Stock is at the time listed or
admitted to trading on any national stock exchange, then
the fair market value shall be the closing selling price
per share of Common Stock on the date in question on the
stock exchange determined by the Plan Administrator to be
the primary market for the Common Stock, as such price is
officially quoted in the composite tape of transactions
on such exchange. If there is no reported sale of Common
Stock on such exchange on the date in question, then the
fair market value shall be the closing selling price on
the exchange on the last preceding date for which such
quotation exists.
▇. ▇▇▇▇▇ DATE shall mean the date of grant of the option as
specified in the Grant Notice.
▇. ▇▇▇▇▇ NOTICE shall mean the Notice of Grant of Automatic Stock
Option accompanying the Agreement, pursuant to which Optionee has been
informed of the basic terms of the option evidenced hereby.
ii
O. HOSTILE TAKE-OVER shall mean a change in ownership of the
Corporation effected through the following transaction:
(i) the acquisition, directly or indirectly, by any
person or related group of persons (other than the
Corporation or a person that directly or indirectly
controls, is controlled by, or is under common control
with, the Corporation) of beneficial ownership (within
the meaning of Rule 13d-3 of the ▇▇▇▇ ▇▇▇) of securities
possessing more than fifty percent (50%) of the total
combined voting power of the Corporation's outstanding
securities pursuant to a tender or exchange offer made
directly to the Corporation's stockholders which the
Board does not recommend such stockholders to accept, AND
(ii) more than fifty percent (50%) of the acquired
securities are accepted from persons other than the
officers and directors of the Corporation subject to the
short-swing profit restrictions of Section 16 of the
1934 Act.
P. 1934 ACT shall mean the Securities Exchange Act of 1934, as
amended.
Q. NON-STATUTORY OPTION shall mean an option not intended to
satisfy the requirements of Code Section 422.
R. NOTICE OF EXERCISE shall mean the notice of exercise in the
form of Exhibit I.
S. OPTION SHARES shall mean the number of shares of Common Stock
subject to the option.
T. OPTIONEE shall mean the person to whom the option is granted as
specified in the Grant Notice.
U. PERMANENT DISABILITY shall mean the inability of Optionee to
perform his or her usual duties as a member of the Board by reason of any
medically determinable physical or mental impairment which is expected to
result in death or has lasted or can be expected to last for a continuous
period of twelve (12) months or more.
V. PLAN shall mean the Corporation's 1992 Stock Option/Stock
Issuance Plan.
W. PURCHASE AGREEMENT shall mean the stock purchase agreement (in
form and substance satisfactory to the Corporation) which grants the
Corporation the right to repurchase, at the Exercise Price, any and all
unvested Option Shares held by Optionee at the time of Optionee's cessation
of Board service and which precludes the sale, transfer or other disposition
of any purchased Option Shares while subject to such repurchase right.
X. QUALIFIED DOMESTIC RELATIONS ORDER shall mean a Domestic
Relations Order which substantially complies with the requirements of Code
Section 414(p). The Corporation
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shall have the sole discretion to determine whether a Domestic Relations
Order is a Qualified Domestic Relations Order.
Y. STOCK EXCHANGE shall mean the American Stock Exchange or the
New York Stock Exchange.
Z. TAKE-OVER PRICE shall mean the GREATER of (i) the Fair Market
Value per share of Common Stock on the date the option is surrendered to the
Corporation in connection with a Hostile Take-Over or (ii) the highest
reported price per share of Common Stock paid by the tender offeror in
effecting the Hostile Take-Over.
AA. VESTING SCHEDULE shall mean the vesting schedule specified in
the Grant Notice.
