1
EXHIBIT 10.12(b)
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement is made as of this ___ day
of ________, ____ (which date is hereinafter referred to as the "Date of Grant")
by and among XXXXXX STEEL COMPANY, an Arizona corporation (hereinafter referred
to as the "Company"), and ___________________ (hereinafter referred to as
"Employee"). If Employee is presently or subsequently becomes employed by a
subsidiary of the Company, the term "Company" shall be deemed to refer
collectively to Xxxxxx Steel Company, and the subsidiary or subsidiaries which
employ the Employee.
RECITALS
A. The Company has adopted the Xxxxxx Steel Company 1997 Stock Option
Plan, as amended (the "Plan"), as an incentive to attract and retain key
employees, officers and directors whose services are considered unusually
valuable by providing an opportunity to have a proprietary interest in the
success of the Company; and
B. The Company's Board of Directors (the "Board") believes that the
granting of the Option herein described to Employee is consistent with the
stated purposes for which the Plan was adopted;
NOW, THEREFORE, 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 Employee agree
as follows:
1. Grant of Option. The Company hereby grants to the Employee the right
and option (hereinafter referred to as the "Option") to purchase an aggregate of
___________________________ shares (such number being subject to adjustment as
provided in Section 13 of the Plan) of the common stock of the Company (the
"Stock") on the terms and conditions set forth herein and in the Plan. 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 qualify as an
"incentive stock option" under Section 422 of the Internal Revenue Code of 1986,
as amended.
2. Vesting. All of the Options granted hereunder shall vest sixty (60)
months after the Date of Grant, except that, in the event the Company
consummates an IPO (as defined in the Plan) prior to the expiration of such
sixty (60) month period, the Options shall vest as follows:
(a) _______ shares shall vest twelve (12) months after the Date
of Grant;
(b) _______ shares shall vest twenty-four (24) months after the
Date of Grant;
2
(c) _______ shares shall vest thirty-six (36) months after the
Date of Grant;
(d) _______ shares shall vest forty-eight (48) months after the
Date of Grant; and
(e) ________ shares shall vest sixty (60) months after the Date
of Grant.
3. Purchase Price. The price at which the Employee shall be entitled to
purchase the Stock covered by the Option shall be $_________ per share (the Fair
Market Value on the Date of Grant).
4. Term of Option. The Option hereby granted shall be and remain in
force and effect for a period of ten (10) years from the Date of Grant, through
and including the normal close of business of the Company on ________ __, ____
(hereinafter referred to as the "Expiration Date") subject to earlier
termination as provided herein or in the Plan.
5. Exercise of Option. The Option may be exercised by Employee as to all
or any part of the shares of the Stock then vested. The Option shall be
exercised by Employee by delivery to the Company of written notice of exercise
and payment of the purchase price as provided in Sections 7 and 8 hereof.
6. Individual Dollar Limitation. The aggregate Fair Market Value (as
defined in the Plan) of all shares of Stock with respect to which the Option is
first exercisable by the Employee in any calendar year may not exceed $100,000.
To the extent such limitation is for any reason exceeded, the amount in excess
of $100,000 shall be deemed to not qualify as Incentive Stock Options.
7. Method of Exercising Option. Subject to the terms and conditions of
this option 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 (the "Effective Date"). The notice shall state Employee'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 Section 8
hereof), the exact name or names in which the shares of Stock will be registered
and the Social Security number of Employee. Such notice shall be signed by the
Employee and shall be accompanied by payment of the purchase price of such
shares of Stock. In the event the Option shall be exercised by a person or
persons other than Employee pursuant to the terms of this option agreement or
the Plan, such notice shall be signed by such other person or persons and shall
be accompanied by proof acceptable to the Company of the legal right of such
person or persons to exercise the Option. All shares of Stock delivered by the
Company upon exercise of the Option as provided herein shall be fully paid and
nonassessable upon delivery.
-2-
3
8. Method of Payment for Options. Payment for shares purchased upon the
exercise of the Option shall be made by the Employee in cash or such other
method permitted by the Board or the Committee in its sole discretion, including
(i) tendering shares, (ii) authorizing a third party to sell the shares (or a
sufficient portion thereof) acquired upon exercise of a stock option and
assigning the delivery to the Company of a sufficient amount of the sale
proceeds to pay for all the shares acquired through such exercise, or (iii) any
combination of the above.
9. Confidentiality and Nondisclosure Agreement.
(a) Employee hereby acknowledges and agrees that in the course of
Employee's employment with the Company, Employee has and will become
acquainted with Company Confidential Information (as defined in
subsection (b) of this Section 9), and that Company Confidential
Information has been developed at great expense to the Company, is
proprietary to the Company, and is and shall remain the exclusive
property of the Company. Accordingly, for and in consideration for the
Options granted hereunder, and other good and valuable consideration,
Employee hereby agrees that (i) Employee will not, without the express
written consent of the Company, during Employee's employment with the
Company or at any time thereafter (or until such time as Company
Confidential Information becomes generally known, or readily
ascertainable by proper means, by persons unrelated to the Company),
disclose to others, copy, make any use of, or remove from the Company's
premises any Company Confidential Information, except as Employee's
duties for the Company may specifically require; (ii) in the event of
dispute or litigation, Employee shall have the burden of proof by clear
and convincing evidence that the Company Confidential Information has
become generally known, or readily ascertainable by proper means, by
persons unrelated to the Company; and (iii) upon termination of
employment, Employee shall promptly deliver to the Company the originals
and all copies of any and all materials, documents, notes, manuals, or
lists containing or embodying Company Confidential Information, or
relating directly or indirectly to the Company's business, in the
possession or control of the Employee. In the event Employee violates
this Section 9, the Options granted to Employee hereunder shall lapse
immediately upon and at the time of such violation, regardless of
whether Company shall then have knowledge of such violation or whether
Employee's employment shall have then been terminated.
(b) For purposes of this Section 9, "Company Confidential
Information" shall include, without limitation, the following
information which is the confidential, proprietary information, and
trade secrets of the Company: (i) customer lists, consultant lists, and
customer information as compiled by the Company, including customer
orders, product or service usage, product or service volumes, pricing,
customer technology, sale and contract terms and conditions, contract
expirations, and other compiled customer information; (ii) the Company's
own internal practices and procedures; (iii) the Company's financial
condition and financial results of operation to the extent not generally
made available to the public; (iv) supply of materials information,
including sources and costs; (v) information relating to designs,
formulas, developmental or experimental work, know-how, products,
processes, computer programs, source codes, data bases, designs,
-3-
4
schematics, inventions, creations, original works of authorship, or
other subject matter related to the Company's business, research and
development, strategic planning, manufacturing, engineering, fabrication
or erection operations, purchasing, finance, marketing, promotion,
distribution, licensing, and selling activities, whether now existing,
or acquired, developed, or made available anytime in the future to the
Company; (vi) all information which Employee has a reasonable basis to
consider confidential or which is treated by the Company as
confidential; and (vii) any and all information having independent
economic value to the Company that is not generally known to, and not
readily ascertainable by proper means by, persons who can obtain
economic value from its disclosure or use. Employee acknowledges that
such information is Company Confidential Information whether disclosed
to or learned by Employee or originated by Employee during employment by
the Company. In case of doubt, all information about the Company shall
be presumed to be confidential.
(c) Employee agrees that damages cannot compensate Company in the
event of a violation of this Section 9 and that, if such violation
should occur, injunctive relief shall be essential for the protection of
Company and its successors and assigns. Accordingly, Employee hereby
covenants and agrees that, in the event any of the provisions of this
Section 9 shall be violated or breached, Company shall be entitled to
obtain injunctive relief against the party or parties violating such
covenants, without bond but upon due notice, in addition to such further
or other relief as may be available at equity or law. Obtainment of such
an injunction by Company shall not be considered an election of remedies
or a waiver of any right to assert any other remedies which Company has
at law or in equity. No waiver of any breach or violation hereof shall
be implied from forbearance or failure by Company to take action
thereof.
(d) Employee hereby agrees that upon the commencement by Employee
of employment with any third party during the period in which the terms
of this Section 9 are in effect, Employee shall promptly disclose to
each such new employer the terms of this Section 9. Employee further
agrees and authorizes the Company to notify others, including customers
of the Company and any such future employers of Employee, of the terms
of this Section 9 and of Employee's obligations hereunder.
(e) The provisions of this Section 9 shall survive any
termination of this Agreement or of Employee's employment with the
Company.
10. Termination of Employment. In the event that Employee is terminated
as an employee of the Company for any reason other than as a result of
Employee's disability (which shall be subject to Section 11 below), then the
Option granted hereunder shall terminate and shall no longer be exercisable,
unless the Committee in its sole and absolute discretion, and without any
obligation to do so, determines to extend the date to exercise any Option or
portion thereof to a date that is within three (3) months after the date of
termination, but only to the extent that Employee was entitled to exercise the
Option at the date of termination, and provided that in no event shall the
Option, or any part thereof, be exercisable after the Expiration Date.
-4-
5
11. Death or Disability of Employee. In the event of the termination of
Employee's employment with Company as a result of the death or disability (as
defined in the Plan) of Employee within a period during which the Option, or any
part thereof, could have been exercised by Employee (the "Option Period"), the
Option shall lapse unless it is exercised within the Option Period or within
twelve (12) months after the date of such termination by reason of Employee's
disability by Employee or any person authorized to act on Employee's behalf, or
within twelve (12) months after the date of Employee's death by Employee's legal
representative or representatives or by the person or persons entitled to do so
under Employee's last will and testament or if Employee fails to make a
testamentary disposition of such Option or shall die intestate, by the person or
persons entitled to receive such Option under the applicable laws of descent and
distribution. An Option may be exercised following the death or disability of
the Employee only if the Option was exercisable by the Employee immediately
prior to his or her death or disability. In no event shall the Option, or any
part thereof, be exercisable after the Expiration Date. The Board or 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
Section 11 to exercise the Option, and whether or not the Employee has suffered
a disability within the meaning of this Section 11 shall be determined by the
Board or the Committee.
12. Nontransferability. The Option granted by this option agreement
shall be exercisable only during the term of the Option provided in Section 4
hereof and, except as provided in Sections 10 and 11 above, only by Employee
during his lifetime and while an Employee of the Company. The Option granted by
this option agreement shall be subject to the restrictions on transfer as set
forth in Section 17 of the Plan and Section 14 hereof.
13. Delivery of Shares. No shares of Stock shall be delivered upon
exercise of the Option until (i) the purchase price shall have 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 Board or the
Committee, Employee has delivered to the Board or the Committee an Investment
Letter in form and content satisfactory to the Company as provided in Section 14
hereof.
14. Securities Act. The Company shall have the right, but not the
obligation, to cause the shares of Stock issuable upon exercise of the Option to
be registered under the appropriate rules and regulations of the Securities and
Exchange Commission. 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, such issuance would violate the Securities
Act of 1933 or any other applicable federal or state securities laws or
regulations. The Board or the Committee may require that Employee, prior to the
issuance of any such shares pursuant to exercise of the Option, sign and deliver
to the Company a written statement ("Investment Letter") stating (i) that
Employee is purchasing the shares for investment and not with a view to the sale
or distribution thereof; (ii) that Employee will not sell any shares received
upon exercise of the Option or any other shares of the Company that Employee may
then own or thereafter acquire except either (a) through a broker on a national
securities exchange or (b) with the prior written
-5-
6
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 or other applicable federal or state securities laws and
regulations. Such Investment Letter shall be in form and content acceptable to
the Board or the Committee in its sole discretion. If shares of Stock or other
securities issuable pursuant to the exercise of the Option have not been
registered under the Securities Act of 1933 or other applicable federal or state
securities laws or regulations, such shares shall bear a legend restricting the
transferability thereof, such legend to be substantially in the following form:
"The shares represented by this certificate have not been
registered or qualified under federal or state securities laws.
The shares may not be offered for sale, sold, pledged or
otherwise disposed of unless so registered or qualified, unless
an exemption exists or unless such disposition is not subject to
the federal or state securities laws, and the availability of any
exemption or the inapplicability of such securities laws must be
established by an opinion of counsel, which opinion and counsel
shall both be reasonably satisfactory to the Company."
15. Federal and State Taxes. Upon exercise of the Option, or any part
thereof, the Employee may incur certain liabilities for federal, state or local
taxes and the Company may be required by law to withhold such 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, Employee shall pay all Federal state and
local tax withholding requirements, including by having the Company withhold
Stock having a Fair Market Value on the date that tax is to be determined equal
to the tax otherwise required to be withheld.
16. Definitions; Copy of Plan. To the extent not specifically provided
herein, all capitalized terms used in this option agreement shall have the same
meanings given to them in the Plan. By the execution of this Agreement, Employee
acknowledges receipt of a copy of the Plan.
17. Administration. This option 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 Board or by the Committee in accordance with the terms of
and as provided in the Plan. The Board or the Committee, as appropriate, shall
have sole and complete discretion with respect to all matters reserved to it by
the Plan and decisions of the majority of the Board or the Committee with
respect thereto and to this option agreement shall be final and binding upon
Employee and the Company. In the event of any conflict between the terms and
conditions of this option agreement and the Plan, the provisions of the Plan
shall control.
18. Obligation to Exercise. Employee shall have no obligation to
exercise any option granted by this Agreement.
-6-
7
19. Notice of Sale. In the event Employee disposes of any shares of
Stock acquired upon exercise of an Option by sale or exchange either (a) within
two (2) years after the Date of Grant of the Option or (b) within one (1) year
after the acquisition of such shares of Stock, Employee shall notify the Company
of such disposition and of the amount realized upon such disposition.
20. Governing Law. This option agreement shall be interpreted and
administered under the laws of the State of Arizona without regard to conflict
of law principles.
21. Amendments. This option agreement may be amended only by a written
agreement executed by the Company and Employee. The Company and Employee
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 Employee. In any such event, the Company and Employee agree that this
option agreement may be amended as necessary to secure for the Company and
Employee any benefits that may result from such legislation. Any such amendment
shall be made only upon the mutual consent of the parties, which consent (of
either party) may be withheld for any reason.
IN WITNESS WHEREOF, the Company has caused this option agreement to be
duly executed and Employee has hereunto set his or her hand as of the date first
written above.
XXXXXX STEEL COMPANY
By_______________________________
Its____________________________
_________________________________
Employee
-7-
