XXXXXXXX.XXX, INC.
FORM OF STOCK OPTION AGREEMENT
RECITALS
A. The Board has adopted the Plan for the purpose of retaining the
services of selected Employees, non-employee members of the Board or of the
board of directors of any Parent or Subsidiary and consultants and other
independent advisors who provide services to the Corporation (or any Parent or
Subsidiary).
B. Optionee is to render valuable services to the Corporation (or a
Parent or Subsidiary), and this Agreement is executed pursuant to, and is
intended to carry out the purposes of, the Plan in connection with the
Corporation's grant of an option to Optionee.
C. All capitalized terms in this Agreement shall have the meaning
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, an 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 maximum 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 or 6.
3. Limited Transferability. This option 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, if this option is designated a
Non-Statutory Option in the Grant Notice, then this option may, in connection
with Optionee's estate plan, be assigned in whole or in part during Optionee's
lifetime to one or more members of Optionee's immediate family or to a trust
established exclusively for Optionee and/or one or more such family members. The
assigned portion shall be exercisable only by the person or persons who acquire
a proprietary interest in the option pursuant to such assignment. 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 Plan Administrator may deem appropriate.
4. Dates of Exercise. This option shall become exercisable for the
Option Shares in one or more installments as specified in the Grant Notice. As
the option becomes exercisable for such installments, those installments shall
accumulate, and the option shall remain exercisable for the accumulated
installments until the Expiration Date or sooner termination of the option term
under Paragraph 5 or 6.
5. Cessation of Service. The option term specified in Paragraph 2
shall terminate (and this option shall cease to be outstanding) prior to the
Expiration Date should any of the following provisions become applicable:
(i) Should Optionee cease to remain in Service for any reason
(other than death, Permanent Disability or Misconduct) while this
option is outstanding, then this option shall remain exercisable
until the earlier of (i) the expiration of the three (3)-month
period measured from the date of such cessation of Service or (ii)
the Expiration Date.
(ii) Should Optionee die while holding this option, then
Optionee's Beneficiary shall have the right to exercise this option
until the earlier of (A) the expiration of the twelve (12)-month
period measured from the date of Optionee's death or (B) the
Expiration Date.
(iii) Should Optionee cease Service by reason of Permanent
Disability while this option is outstanding, then this option shall
remain exercisable until the earlier of (i) the expiration of the
twelve (12)-month period measured from the date of such cessation of
Service or (ii) the Expiration Date.
(iv) During the applicable post-Service exercise period, this
option may not be exercised in the aggregate for more than the
number of vested Option Shares for which the option is exercisable
on the date of Optionee's cessation of Service. Upon the expiration
of the applicable exercise period or (if earlier) upon the
Expiration Date, this option shall terminate and cease to be
outstanding for any vested Option Shares for which the option has
not been exercised. However, this option shall, immediately upon
Optionee's cessation of Service for any reason, terminate and cease
to be outstanding to the extent this option is not otherwise at that
time exercisable for vested shares.
(v) Should Optionee's Service be terminated for Misconduct or
should Optionee engage in Misconduct while this option is
outstanding, then this option shall terminate immediately and cease
to be outstanding.
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6. Special Acceleration of Option.
(a) In the event of a Change in Control, this option, to the
extent outstanding at that time but not otherwise fully exercisable, shall
automatically accelerate so that this option shall, immediately prior to the
effective date of the Change in Control, become exercisable for all of the
Option Shares at the time subject to this option and may be exercised for any or
all of those Option Shares as fully-vested shares of Common Stock. No such
acceleration of this option, however, shall occur if and to the extent: (i) this
option is, in connection with the Change in Control, assumed or otherwise
continued in full force and effect by the successor corporation (or parent
thereof) pursuant to the terms of the Change in Control or (ii) this option is
replaced with a cash incentive program of the successor corporation which
preserves the spread existing at the time of the Change in Control on the Option
Shares for which this option is not otherwise at that time exercisable (the
excess of the Fair Market Value of those Option Shares over the aggregate
Exercise Price payable for such shares) and provides for subsequent pay-out in
accordance with the same option exercise schedule set forth in the Grant Notice.
(b) Immediately following the consummation of the Change in
Control, this option shall terminate and cease to be outstanding, except to the
extent assumed by the successor corporation (or parent thereof) or otherwise
expressly continued in full force and effect pursuant to the terms of the Change
in Control.
(c) If this option is assumed in connection with a Change in
Control, then this option shall be appropriately adjusted, immediately after
such Change in Control, to apply to the number and class of securities which
would have been issuable to Optionee in consummation of such Change in Control
had the option been exercised immediately prior to such Change in Control, and
appropriate adjustments shall also be made to the Exercise Price, provided the
aggregate Exercise Price shall remain the same.
(d) 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. 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.
8. 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.
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9. 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) Execute and deliver to the Corporation a Notice of
Exercise for the Option Shares for which the option is exercised.
(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; or
(B) a promissory note payable to the Corporation, but
only to the extent authorized by the Plan Administrator in
accordance with Paragraph 14;
(C) in shares of Common Stock held by Optionee (or any
other person or persons exercising the option) for the
requisite period necessary to avoid a charge to the
Corporation's earnings for financial reporting purposes and
valued at Fair Market Value on the Exercise Date; or
(D) through a special sale and remittance procedure
pursuant to which Optionee (or any other person or persons
exercising the option) shall concurrently provide irrevocable
instructions (I) to a Corporation-approved 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 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
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.
(iv) Make appropriate arrangements with the Corporation (or
Parent or Subsidiary employing or retaining Optionee) for the
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satisfaction of all income and employment tax withholding
requirements applicable to the option exercise.
(b) As soon as practical after the Exercise Date, 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.
(c) In no event may this option be exercised for any
fractional shares.
10. 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.
11. Successors and Assigns. Except to the extent otherwise provided
in Paragraphs 3 and 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 and Optionee's assigns and Beneficiaries.
12. 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.
13. Financing. The Plan Administrator may, in its absolute
discretion and without any obligation to do so, permit Optionee to pay the
Exercise Price for the purchased Option Shares by delivering a full-recourse
promissory note payable to the Corporation. The terms of any such promissory
note (including the interest rate, the requirements for collateral and the terms
of repayment) shall be established by the Plan Administrator in its sole
discretion.
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. All decisions of the Plan Administrator with
respect to any question or issue arising under the Plan or this Agreement shall
be conclusive and binding on all persons having an interest in this option.
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15. Governing Law. The interpretation, performance and enforcement
of this Agreement shall be governed by the laws of the State of New York without
resort to that State's conflict-of-laws rules.
16. Excess Shares. If the Option Shares covered by this Agreement
exceed, as of the Grant Date, the number of shares of Common Stock which may
without stockholder approval be issued under the Plan, then this option shall be
void with respect to those excess shares, unless stockholder approval of an
amendment sufficiently increasing the number of shares of Common Stock issuable
under the Plan is obtained in accordance with the provisions of the Plan.
17. Additional Terms Applicable to an Incentive Option. In the event
this option is designated an Incentive Option in the Grant Notice, the following
terms and conditions shall also apply to the grant:
(i) This option shall cease to qualify for favorable tax
treatment as an Incentive Option if (and to the extent) this option
is exercised for one or more Option Shares: (A) more than three (3)
months after the date Optionee ceases to be an Employee for any
reason other than death or Permanent Disability or (B) more than
twelve (12) months after the date Optionee ceases to be an Employee
by reason of Permanent Disability.
(ii) No installment under this option shall qualify for
favorable tax treatment as an Incentive Option if (and to the
extent) the aggregate Fair Market Value (determined at the Grant
Date) of the Common Stock for which such installment first becomes
exercisable hereunder would, when added to the aggregate value
(determined as of the respective date or dates of grant) of the
Common Stock or other securities for which this option or any other
Incentive Options granted to Optionee prior to the Grant Date
(whether under the Plan or any other option plan of the Corporation
or any Parent or Subsidiary) first become exercisable during the
same calendar year, exceed One Hundred Thousand Dollars ($100,000)
in the aggregate. Should such One Hundred Thousand Dollar ($100,000)
limitation be exceeded in any calendar year, this option shall
nevertheless become exercisable for the excess shares in such
calendar year as a Non-Statutory Option.
(iii) Should the exercisability of this option be accelerated
upon a Change in Control, then this option shall qualify for
favorable tax treatment as an Incentive Option only to the extent
the aggregate Fair Market Value (determined at the Grant Date) of
the Common Stock for which this option first becomes exercisable in
the calendar year in which the Change in Control occurs does not,
when added to the aggregate value (determined as of the respective
date or dates of grant) of the Common Stock or other securities for
which this option or one or more other Incentive Options granted to
Optionee prior to the Grant Date (whether under the Plan or any
other option plan of the Corporation or any Parent or Subsidiary)
first become exercisable during the same calendar year, exceed One
Hundred Thousand Dollars ($100,000) in the
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aggregate. Should the applicable One Hundred Thousand Dollar
($100,000) limitation be exceeded in the calendar year of such
Change in Control, the option may nevertheless be exercised for the
excess shares in such calendar year as a Non-Statutory Option.
(iv) Should Optionee hold, in addition to this option, one or
more other options to purchase Common Stock which become exercisable
for the first time in the same calendar year as this option, then
the foregoing limitations on the exercisability of such options as
Incentive Options shall be applied on the basis of the order in
which such options are granted.
18. Leave of Absence. The following provisions shall apply upon the
Optionee's commencement of an authorized leave of absence:
(i) The exercise schedule in effect under the Grant Notice
shall be frozen as of the first day of the authorized leave, and
this option shall not become exercisable for any additional
installments of the Option Shares during the period Optionee remains
on such leave.
(ii) Should Optionee resume active Employee status within
sixty (60) days after the start date of the authorized leave,
Optionee shall, for purposes of the exercise schedule set forth in
the Grant Notice, receive Service credit for the entire period of
such leave. If Optionee does not resume active Employee status
within such sixty (60)-day period, then no Service credit shall be
given for the period of such leave.
(iii) If this option is designated as an Incentive Option in
the Grant Notice, then the following additional provision shall
apply:
(A) If the leave of absence continues for more than
ninety (90) days, then this option shall automatically convert
to a Non-Statutory Option at the end of the three (3)-month
period measured from the ninety-first (91st) day of such
leave, unless Optionee's reemployment rights are guaranteed by
statute or by written agreement. Following any such conversion
of this option, all subsequent exercises of this option,
whether effected before or after Optionee's return to active
Employee status, shall result in an immediate taxable event,
and the Corporation shall be required to collect from Optionee
the income and employment withholding taxes applicable to such
exercise.
(iv) In no event shall this option become exercisable for any
additional Option Shares or otherwise remain outstanding if Optionee
does not resume Employee status prior to the Expiration Date of the
option term.
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EXHIBIT I
NOTICE OF EXERCISE
I hereby notify XxxxxxXx.xxx, 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 1997 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.
__________________, 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: ______________________________________
Employee Number: ______________________________________
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APPENDIX
The following definitions shall be in effect under the Agreement:
A. Agreement shall mean this Stock Option Agreement.
B. Beneficiary shall mean, in the event the Plan Administrator
implements a beneficiary designation procedure, the person designated by
Optionee, pursuant to such procedure, to succeed to Optionee's rights under the
option evidenced by this Agreement to the extent the option is held by Optionee
at the time of death. In the absence of such designation or procedure, the
Beneficiary shall be the personal representative of Optionee's estate or the
person or persons to whom the option is transferred by will or the laws of
descent and distribution.
C. Board shall mean the Corporation's Board of Directors.
D. Change in Control shall mean a change in ownership or control of
the Corporation effected through any of the following transactions:
(a) a merger, consolidation or reorganization approved by the
Corporation's stockholders, unless securities representing more than
fifty percent (50%) of the total combined voting power of the voting
securities of the successor corporation are immediately thereafter
beneficially owned, directly or indirectly and in substantially the
same proportion, by the persons who beneficially owned the
Corporation's outstanding voting securities immediately prior to
such transaction.
(b) any stockholder-approved transfer or other disposition of
all or substantially all of the Corporation's assets, or
(c) 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 0000 Xxx) 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 recommends such stockholders to accept.
E. Code shall mean the Internal Revenue Code of 1986, as amended.
F. Common Stock shall mean the Corporation's common stock.
G. Corporation shall mean XxxxxxXx.xxx, Inc., a Delaware
corporation.
H. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and direction
of the employer entity as to both the work to be performed and the manner and
method of performance.
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I. Exercise Date shall mean the date on which the option shall have
been exercised in accordance with Paragraph 9 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:
(a) If the Common Stock is at the time traded on the Nasdaq
National Market, then the Fair Market Value shall be the closing
selling price per share of Common Stock on the date in question, as
the price is reported by the National Association of Securities
Dealers on the Nasdaq National Market or any successor system. If
there is no closing selling price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing selling
price on the last preceding date for which such quotation exists.
(b) If the Common Stock is at the time listed on any 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
closing selling price for the Common Stock on the date in question,
then the Fair Market Value shall be the closing selling price on the
last preceding date for which such quotation exists.
(c) If the Common Stock is at the time neither listed on any
Stock Exchange nor traded on the Nasdaq National Market, then the
Fair Market Value shall be determined by the Plan Administrator
after taking into account such factors as the Plan Administrator
shall deem appropriate.
X. Xxxxx Date shall mean the date of grant of the option as
specified in the Grant Notice.
X. Xxxxx Notice shall mean the Notice of Grant of Stock Option
accompanying the Agreement, pursuant to which Optionee has been informed of the
basic terms of the option evidenced hereby.
O. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.
P. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by Optionee, any unauthorized use or disclosure by
Optionee of confidential information or trade secrets of the Corporation (or any
Parent or Subsidiary), or any intentional wrongdoing by Optionee, whether by
omission or commission, which adversely
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affects the business or affairs of the Corporation (or any Parent or Subsidiary)
in a material manner. The foregoing definition shall not limit the grounds for
the dismissal or discharge of Optionee or any other individual in the Service of
the Corporation (or any Parent or Subsidiary).
Q. 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.
R. Non-Statutory Option shall mean an option not intended to satisfy
the requirements of Code Section 422.
S. Notice of Exercise shall mean the notice of exercise in the form
attached hereto as Exhibit I.
T. Option Shares shall mean the number of shares of Common Stock
subject to the option as specified in the Grant Notice.
U. Optionee shall mean the person to whom the option is granted as
specified in the Grant Notice.
V. Parent shall mean any corporation (other than the Corporation) in
an unbroken chain of corporations ending with the Corporation, provided each
corporation in the unbroken chain (other than the Corporation) owns, at the time
of the determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.
W. Permanent Disability shall mean the inability of Optionee to
engage in any substantial gainful activity 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.
X. Plan shall mean the Corporation's 1998 Stock Option/Stock
Issuance Plan.
Y. Plan Administrator shall mean either the Board or a committee of
the Board acting in its administrative capacity under the Plan.
Z. Service shall mean Optionee's performance of services for the
Corporation (or any Parent or Subsidiary) in the capacity of an Employee, a
non-employee member of the board of directors or a consultant or independent
advisor.
AA. Stock Exchange shall mean the American Stock Exchange or the New
York Stock Exchange.
BB. Subsidiary shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in the
unbroken chain owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of stock
in one of the other corporations in such chain.
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