EXHIBIT 10.36
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PALWEB CORPORATION
INCENTIVE STOCK OPTION AGREEMENT
This Agreement made and entered into effective _____________, by and
between PalWeb Corporation, a Delaware corporation ("Company"), and
______________, an employee of the Company, or a subsidiary of the Company
("Optionee").
WITNESSETH:
WHEREAS, the PalWeb Corporation Stock Option Plan ("Option Plan"),
provides that the Company may grant to the Optionee options to purchase shares
of its common stock, par value $.10 per share ("Common Stock").
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the parties agree as follows:
1. GRANT OF OPTION. Subject to the terms contained herein, the Company
hereby grants to the Optionee as of the date set forth above, the right and
option, herein called the "Option," to purchase all or any part of an aggregate
number of __________ shares of the Common Stock covered by the Option. The
Option shall be an "incentive stock option" within the meaning of Section 422 of
the Internal Revenue Code so long as the Optionee remains an employee.
2. PURCHASE PRICE. The purchase price of the shares of Common Stock
covered by the Option shall be $_______ per share, subject to adjustment as
provided in Paragraph 6 hereof, which price shall be equal to 100% of the Fair
Market Value (as defined below) of such shares on the date hereof.
3. TERM OF OPTION. The Option granted hereunder shall become vested and
exercisable as set forth below:
NUMBER OF SHARES DATE EXERCISABLE
After the Option becomes exercisable, it may thereafter be exercised, as to the
number of shares becoming exercisable, at any time and from time to time until
ten (10) years after the effective date hereof, or for such other period set
forth in Paragraph 5 hereof. Except as provided in Paragraph 5 hereof, the
Option may not be exercised at any time unless the Optionee shall have been in
continuous employment with the Company or a subsidiary or in continuous service
on the Board from the effective date hereof to the date of the exercise of the
Option.
4. TRANSFERABILITY. Except as otherwise provided below, neither the
Option nor any other right under this Agreement shall be assignable or
transferable by the Optionee, other than by will or the laws of descent and
distribution, and any attempted assignment, transfer, pledge, hypothecation or
other disposition of the Option, and the levy of any execution, attachment or
similar process upon the Option, shall be null and void and without effect.
Notwithstanding the restrictions on transfer set forth above, the
Optionee may, with the prior consent of the Board of Directors or Compensation
Committee of the Board of Directors (either referred to as the "Committee"),
transfer all or any portion of the Option to "Permitted Transferees" (as defined
below), provided that there may be no consideration paid for any such transfer.
Subsequent transfer of any transferred Option shall be prohibited except (i)
transfers by a transferee in accordance with the first paragraph of this Section
by will or the laws of descent and distribution and (ii) transfers by a
transferee, conducted in accordance with the procedures and limitations of this
paragraph applicable to transfers by the Optionee to another person or entity
that is also a Permitted Transferee of the Optionee. Following transfer, the
events of termination of service set forth elsewhere herein shall continue to be
applied with respect to the original Optionee, and, following the occurrence of
any such event, the transferred Option shall be exercisable by the transferee
only to the extent, and for the periods, specified elsewhere herein. The
Optionee shall remain responsible for the payment of federal, state and local
taxes and other amounts as may be required to be withheld by the Company in
connection with the exercise of any transferred portion of the Option. In
connection with any transfer of the Option pursuant to this paragraph, the
Optionee shall surrender this Agreement to the Secretary of the Company, and the
Company shall furnish to the transferee, and, if the transfer relates to less
than all of the Option, to the Optionee, a new option agreement of like tenor as
this Agreement representing the right to acquire the appropriate number of
shares.
For purposes of the foregoing, the term "Permitted Transferees" means
(i) the spouse, children or grandchildren of the Optionee ("Immediate Family
Members"), (ii) a trust or trusts for the exclusive benefit of Immediate Family
Members, (iii) a partnership in which Immediate Family Members are the only
permitted partners, or (iv) a limited liability company in which Immediate
Family Members are the only permitted members and managers.
5. TERMINATION OF SERVICE; DEATH OF OPTIONEE. In the event of
termination of employment for any reason other than death or termination for
cause, any vested portion of the Option shall be exercisable by Optionee or his
legal representative within three (3) months of the date of termination as to
all then vested portions; provided, however, the Board of Directors may, in its
sole discretion, approve acceleration of the vesting of any unvested portions of
the Option.
If the Optionee's employment with the Company or service on the Board
is terminated for cause, the Option shall terminate as of the date of such
termination of employment or service on the Board, and the Optionee shall have
no further rights to exercise any portion of the Option. "Termination for Cause"
means any discharge for violation or the policies and the procedures of the
Company or for other job performance or conduct that is detrimental to the best
interests of the Company, as determined by the Committee in its sole discretion,
or removal from the Board for cause in accordance with applicable law and the
Certificate of Incorporation and By-Laws of the Company. In no event may the
Option be exercised more than ten (10) years after the effective date hereof.
In the event of the death of Optionee while employed or in service on
the Board, the Option shall be exercisable in full by the heirs or other legal
representatives of the Optionee at any time within twelve (12) months following
the date of death. In the event of termination of service on the Board, for any
reason other than death or termination for cause, the Option shall be
exercisable by the Optionee or his legal representative within three months of
the date of termination.
Notwithstanding the foregoing, in the event Optionee ceases to be
employed by the Company but continues to serve as a director of the Company, all
of such Optionee's options shall not expire three (3) months following the date
of termination of employment with the Company, but instead shall continue in
full force and effect until the Optionee ceases to be a director of the Company,
but in no event beyond the stated expiration date of the options as set forth in
Section 2 above. Termination of any such option in connection with the
Optionee's termination of service as a director shall be in accordance with the
applicable provisions of the Option Plan; provided, however, that (i) the terms
"employ" and "employment" as used therein shall be replaced with the terms
"service" and "service on the Board of Directors," respectively, and (ii) the
phrase "termination for cause" shall mean any removal from the Board of
Directors for cause in accordance with applicable law and the Certificate of
Incorporation and By-Laws of the Company.
6. REORGANIZATIONS AND RECAPITALIZATIONS OF THE COMPANY.
a. Subject to the other provisions of this Agreement, the
existence of the Option granted hereunder shall not affect or restrict
in any way the right or power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business or any merger or consolidation of the Company, or any
issue of bonds, debentures, preferred or prior preference stocks ahead
of or affecting the Common Stock or the rights thereof, any issue of
shares of Common Stock or shares of any other class of capital stock or
warrants or rights to acquire such shares, or the dissolution or
liquidation of the Company, or any sale or transfer of all or any part
of its assets or business, or any corporate act or proceeding, whether
of a similar character or otherwise.
b. In the event of any change in capitalization affecting the
Common Stock of the Company, such as a stock dividend, stock split,
recapitalization, merger, consolidation, split-up, combination or
exchange of shares or other form of reorganization, liquidation, sale
of assets or any other change affecting the Common Stock ("Change in
Capitalization") a proportionate adjustment shall be made with respect
to the aggregate number of shares of Common Stock covered by this
Option and the price per share to the end that the Optionee shall be
entitled to receive the same number and kind of stock, securities,
cash, property or other consideration as if this Option had been
exercised immediately preceding such Change in Capitalization.
c. In the event of a Change in Control (as defined below) of
the Company, the Optionee will be permitted to surrender for
cancellation within sixty (60) days after such Change in Control, the
Option or portion of the Option to the extent not yet exercised and the
Optionee will be entitled to receive a cash payment in an amount equal
to the excess, if any, of (A) the Fair Market Value (as defined below)
on the date preceding the date of surrender, of the shares subject to
the Option or portion thereof surrendered, over (B) the aggregate
exercise price for the shares under the Option or portion thereof
surrendered.
d. A "Change in Control" of the Company shall mean the
consummation of an occurrence after the effective date of the Plan of:
i. An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange
Act of 1934 (the "Exchange Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the Exchange Act) of fifty percent
(50%) or more of the combined voting power of the Company's
then outstanding Voting Securities;
ii. The individuals who, as of the date of adoption
of the Plan by the Board, are members of the Board (the
"Incumbent Board"), cease for any reason to constitute at
least two-thirds of the members of the Board; provided,
however, that if the election, or nomination for election by
the Company's common stockholders, of any new director was
approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be
considered as a member of the Incumbent Board; provided
further, however, that no individual shall be considered a
member of the Incumbent Board if such individual initially
assumed office as a result of either an actual or threatened
"election contest" (as described in Rule 14A-11 promulgated
under the Exchange Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
iii. The consummation of:
(1) A merger, consolidation or reorganization
involving the Company, unless
(a) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly
immediately following such merger, consolidation
or reorganization, at least sixty percent (60%)
of the combined voting power of the outstanding
voting securities of the corporation resulting
from such merger or consolidation or
reorganization (the "Surviving Corporation") in
substantially the same proportion as their
ownership of the Voting Securities immediately
before such merger, consolidation or
reorganization,
(b) the individuals who were members of
the Incumbent Board immediately prior to the
execution of the agreement providing for such
merger, consolidation or reorganization
constitute at least two-thirds of the members of
the board of directors of the Surviving
Corporation, and
(c) no Person other than (a) the Company,
any Subsidiary, any employee benefit plan (or
any trust forming a part thereof) maintained by
the Company, the Surviving Corporation, or any
Subsidiary or (b) any Person who, immediately
prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifty
percent (50%) or more of the then outstanding
Voting Securities has Beneficial Ownership of
fifty percent (50%) or more of the combined
voting power of the Surviving Corporation's then
outstanding voting securities;
(2) A complete liquidation or dissolution of the
Company; or
(3) An agreement for the sale or other
disposition of all or substantially all of the assets
of the Company to any Person (other than a transfer to
a Subsidiary).
Notwithstanding the foregoing, a Change in Control
shall not be deemed to occur solely because any Person (the
"Subject Person") acquired Beneficial Ownership of more than
the permitted amount of the outstanding Voting Securities as a
result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities
outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a
Change in Control would occur (but for the operation of this
sentence) as a result of the acquisition of Voting Securities
by the Company, and after such share acquisition by the
Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the
percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in
Control shall occur.
7. METHOD OF EXERCISING OPTION. The Option may be exercised, in whole
or in part, by written notification to the Company accompanied by cash or a
certified check for the aggregate purchase price of the number of shares being
purchased, or upon exercise of the Option, the Optionee shall be entitled,
without the requirement of further approval or other action by the Committee, to
pay for the shares (i) by tendering stock of the Company that has been owned by
the Optionee for at least six (6) months with such stock to be valued at the
Fair Market Value (as defined below) on the date immediately preceding the date
of exercise or (ii) with a combination of cash and stock that has been owned by
the Optionee for at least six (6) months as provided above.
In addition, upon exercise of the Option, the Optionee may, with the
prior approval of the Committee, pay for the shares (a) by tendering stock of
the Company already owned by the Optionee but that has not been held by the
Optionee for at least six (6) months with such stock to be valued at the Fair
Market Value (as defined below) on the date immediately preceding the date of
exercise, (b) surrendering a portion of the Option with such surrendered portion
to be valued based on the difference between the Fair Market Value (as defined
below) of the shares surrendered on the date immediately preceding the date of
exercise and the aggregate option purchase price of the shares surrendered
("Surrender Value"), or (c) with a combination of cash, stock of the Company
that has not been held by the Optionee for at least six (6) months or surrender
of options.
The Committee may also permit the Optionee simultaneously to exercise
the Option and sell the shares of Common Stock thereby acquired, pursuant to a
brokerage or similar arrangement, approved in advanced by the Committee, and use
the proceeds from such sale as payment of the purchase price of the shares being
acquired upon exercise of the Option.
Notwithstanding any provision hereof, the obligation of the Company to
sell and deliver shares under the Option shall be subject to all applicable
laws, rules and regulations and to such approvals by any governmental agencies
or national securities exchange as may be required. The Optionee shall not
exercise any portion of the Option and the Company will not be obligated to
issue any shares under the Option if the exercise thereof or if the issuance of
the shares shall constitute a violation by the Optionee or the Company of any
applicable law or regulation. If the shares of Common Stock have not been
registered, the Company may require that as a condition to exercise any option,
the optionee execute an investment letter. The Company may require as a
condition to the issuance of any shares of Common Stock upon exercise of the
Option that the Optionee remit an amount sufficient, in the Company's opinion,
to satisfy all FICA, federal, state or other withholding tax requirements
related to the exercise of the Option. The Optionee shall be entitled, without
the requirement of further approval or other action by the Committee, to satisfy
such obligation in whole or in part (i) by tendering stock of the Company
already owned by the Optionee with such stock to be valued at the Fair Market
Value (as defined below) on the date immediately preceding the date of exercise
of the Option, (ii) by surrendering a portion of the Option with such
surrendered Option covering shares having a Surrender Value equal to the amount
of such requirement, or (iii) by a combination of cash, stock of the Company or
surrender of a portion of the Option.
8. RIGHTS AS A STOCKHOLDER. The Optionee shall have no rights as a
stockholder with respect to any shares covered by the Option until the date of
issuance of a stock certificate to him for such shares.
9. SUBSIDIARY. As used herein, the term "Subsidiary" shall mean any
present or future corporation in which the Company has a proprietary interest
(but only if the Company owns, directly or indirectly, stock possessing not less
than fifty percent (50%) of the total combined voting power of all classes of
stock in such corporation), as the Board shall determine from time to time.
10. FAIR MARKET VALUE. "Fair Market Value" means the average of the
high and low sales prices of the shares of Common Stock on any national
securities exchange on which the shares are listed on the day on which such
value is to be determined or, if no shares were traded on such day, on the next
preceding day on which shares were traded, as reported by such exchange, by
National Quotation Bureau, Inc. or other national quotation service. If the
Common Stock is not listed on a national securities exchange, Fair Market Value
means the average of the reported high and low sales prices of the shares of
Common Stock in the over-the-counter market on the date on which such value is
to be determined as reported by a widely followed quotation service such as
Yahoo Finance, MSN Investor, Raging Bull or similar sites, or, if such prices
are not available, the last sales price on such day or, if no shares were traded
on such day, on the next preceding day on which the shares were traded, as
reported by the National Association of Securities Dealers Automatic Quotation
System (NASDAQ) or other national quotation service. If at any time shares of
Common Stock are not traded on an exchange or in the over-the-counter market,
Fair Market Value shall be the value determined by the Committee, taking into
consideration those factors affecting or reflecting value that they deem
appropriate. For purposes of determining the purchase price of an incentive
stock option, Fair Market Value shall in any event be determined in accordance
with Section 422 of the Code.
11. OPTION PLAN. The terms of the Option and the rights and
responsibilities of the parties hereto shall be governed by the Option Plan. In
the event of any inconsistency between the terms of the Agreement and the Option
Plan, the terms of the Option Plan shall control.
IN WITNESS WHEREOF the parties hereto have executed this Stock Option
Agreement as of the day and year first above written.
COMPANY: PALWEB CORPORATION
By: _________________________
OPTIONEE:
_________________________
