PHOENIX TECHNOLOGIES LTD.
1996 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
This Stock Option Agreement ("AGREEMENT") is made and entered into as of the
date of grant set forth below (the "DATE OF GRANT") by and between Phoenix
Technologies Ltd., a Delaware corporation (the "COMPANY"), and the
participant named below ("PARTICIPANT"). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Company's 1996 Equity
Incentive Plan (the "PLAN").
PARTICIPANT: _________________________________
SOCIAL SECURITY NUMBER: _________________________________
ADDRESS: _________________________________
_________________________________
TOTAL SHARES: _________________________________
EXERCISE PRICE PER SHARE: _________________________________
DATE OF GRANT: _________________________________
FIRST VESTING DATE: _________________________________
EXPIRATION DATE: _________________________________
TYPE OF STOCK OPTION:
(Check one): [ ] INCENTIVE STOCK OPTION [ ] NONQUALIFIED STOCK
OPTION
1. GRANT OF OPTION. The Company hereby grants to Participant an
option (the "OPTION") to purchase the total number of shares of Common Stock
$0.001 par value, of the Company set forth above (the "SHARES") at the
Exercise Price Per Share set forth above (the "EXERCISE PRICE"), subject to
all of the terms and conditions of this Agreement and the Plan. If
designated as an Incentive Stock Option above, the Option is intended to
qualify as an "incentive stock option" ("ISO") within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the "CODE").
2. EXERCISE PERIOD.
2.1 VESTING SCHEDULE. Provided Participant continues to provide
services to the Company or any Subsidiary, Parent or Affiliate of the Company
throughout the specified period, the Option shall become exercisable as to
portions of the Shares as follows:
DATE NUMBER OF SHARES
---- ----------------
1
2.2 EXPIRATION. The Option shall expire on the Expiration Date
set forth above and must be exercised, if at all, on or before the
Expiration Date.
3. TERMINATION.
3.1 TERMINATION FOR ANY REASON EXCEPT DEATH OR DISABILITY. If
Participant is Terminated for any reason, except death or Disability, the
Option, to the extent (and only to the extent) that it would have been
exercisable by Participant on the date of Termination, may be exercised by
Participant no later than ninety (90) days after the date of Termination, but
in any event no later than the Expiration Date.
3.2 TERMINATION BECAUSE OF DEATH OR DISABILITY. If Participant is
Terminated because of death or Disability of Participant, the Option, to the
extent that it is exercisable by Participant on the date of Termination, may
be exercised by Participant (or Participant's legal representative) no later
than one hundred and eighty (180) days after the date of Termination, but in
any event no later than the Expiration Date.
3.3 NO OBLIGATION TO EMPLOY. Nothing in the Plan or this
Agreement shall confer on Participant any right to continue in the employ of,
or other relationship with, the Company or any Parent, Subsidiary or
Affiliate of the Company, or limit in any way the right of the Company or any
Parent, Subsidiary or Affiliate of the Company to terminate Participant's
employment or other relationship at any time, with or without cause.
4. MANNER OF EXERCISE.
4.1 STOCK OPTION EXERCISE AGREEMENT. To exercise this Option,
Participant (or in the case of exercise after Participant's death,
Participant's executor, administrator, heir or legatee, as the case may be)
must deliver to the Company an executed stock option exercise agreement in
such form as may be approved by the Company from time to time (the "EXERCISE
AGREEMENT"), which shall set forth, INTER ALIA, Participant's election to
exercise the Option, the number of Shares being purchased, any restrictions
imposed on the Shares and any representations, warranties and agreements
regarding Participant's investment intent and access to information as may be
required by the Company to comply with applicable securities laws. If
someone other than Participant exercises the Option, then such person must
submit documentation reasonably acceptable to the Company that such person
has the right to exercise the Option.
4.2 LIMITATIONS ON EXERCISE. The Option may not be exercised
unless such exercise is in compliance with all applicable federal and state
securities laws, as they are in effect on the date of exercise. The Option
may not be exercised as to fewer than 100 Shares unless it is exercised as to
all Shares as to which the Option is then exercisable.
2
4.3 PAYMENT. The Exercise Agreement shall be accompanied by full
payment of the Exercise Price for the Shares being purchased in cash (by
check), or where permitted by law:
(a) by cancellation of indebtedness of the Company to the
Participant;
(b) by surrender of shares of the Company's Common Stock that
either: (1) have been owned by Participant for more than six (6)
months and have been paid for within the meaning of SEC Rule 144
and, if such shares were purchased from the Company by use of a
promissory note, such note has been fully paid with respect to
such shares); or (2) were obtained by Participant in the open
public market; and (3) are clear of all liens, claims,
encumbrances or security interests;
(c) by waiver of compensation due or accrued to Participant for
services rendered;
(d) provided that a public market for the Company's stock exists,
(1) through a "same day sale" commitment from Participant and a
broker-dealer that is a member of the National Association of
Securities Dealers (an "NASD DEALER") whereby Participant
irrevocably elects to exercise the Option and to sell a portion of
the Shares so purchased to pay for the exercise price and whereby
the NASD Dealer irrevocably commits upon receipt of such Shares to
forward the exercise price directly to the Company, OR (2) through
a "margin" commitment from Participant and an NASD Dealer whereby
Participant irrevocably elects to exercise the Option and to
pledge the Shares so purchased to the NASD Dealer in a margin
account as security for a loan from the NASD Dealer in the amount
of the exercise price, and whereby the NASD Dealer irrevocably
commits upon receipt of such Shares to forward the exercise price
directly to the Company; or
(e) by any combination of the foregoing.
4.4 TAX WITHHOLDING. Prior to the issuance of the Shares upon
exercise of the Option, Participant must pay or provide for any applicable
federal or state withholding obligations of the Company. If the Committee
permits, Participant may provide for payment of withholding taxes upon
exercise of the Option by requesting that the Company retain Shares with a
Fair Market Value equal to the minimum amount of taxes required to be
withheld. In such case, the Company shall issue the net number of Shares
to the Participant by deducting the Shares retained from the Shares
issuable upon exercise.
4.5 ISSUANCE OF SHARES. Provided that the Exercise Agreement
and payment are in form and substance satisfactory to counsel for the
Company, the Company shall issue the Shares registered in the name of
Participant, Participant's authorized assignee, or Participant's legal
representative, and shall deliver certificates representing the Shares
with the appropriate legends affixed thereto.
5. NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Option is an ISO, and if Participant sells or otherwise disposes of any of
the
3
Shares acquired pursuant to the ISO on or before the later of (1) the date
two years after the Date of Grant, and (2) the date one year after transfer
of such Shares to Participant upon exercise of the Option, Participant shall
immediately notify the Company in writing of such disposition. Participant
agrees that Participant may be subject to income tax withholding by the
Company on the compensation income recognized by Participant from the early
disposition by payment in cash or out of the current wages or other
compensation payable to Participant.
6. COMPLIANCE WITH LAWS AND REGULATIONS. The exercise of the Option
and the issuance and transfer of Shares shall be subject to compliance by the
Company and Participant with all applicable requirements of federal and state
securities laws and with all applicable requirements of any stock exchange on
which the Company's Common Stock may be listed at the time of such issuance
or transfer.
7. NONTRANSFERABILITY OF OPTION. The Option may not be transferred
in any manner other than by will or by the laws of descent and distribution
and may be exercised during the lifetime of Participant only by Participant.
The terms of the Option shall be binding upon the executors, administrators,
successors and assigns of Participant.
8. TAX CONSEQUENCES. Set forth below is a brief summary as of the
Date of Grant of some of the federal and California tax consequences of
exercise of the Option and disposition of the Shares. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO
CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE
OPTION OR DISPOSING OF THE SHARES.
8.1 EXERCISE OF ISO. If the Option qualifies as an ISO, there
will be no regular federal or state income tax liability upon the exercise of
the Option, although the excess, if any, of the fair market value of the
Shares on the date of exercise over the Exercise Price will be treated as a
tax preference item for federal income tax purposes and may subject the
Participant to the alternative minimum tax in the year of exercise.
8.2 EXERCISE OF NONQUALIFIED STOCK OPTION. If the Option does not
qualify as an ISO, there may be a regular federal and state income tax
liability upon the exercise of the Option. Participant will be treated as
having received compensation income (taxable at ordinary income tax rates)
equal to the excess, if any, of the fair market value of the Shares on the
date of exercise over the Exercise Price. The Company will be required to
withhold from Participant's compensation or collect from Participant and pay
to the applicable taxing authorities an amount equal to a percentage of this
compensation income at the time of exercise.
8.3 DISPOSITION OF SHARES. If the Shares are held for more than
twelve (12) months after the date of the transfer of the Shares pursuant to
the exercise of the Option (and, in the case of an ISO, are disposed of more
than two years after the Date of Grant), any gain realized on disposition of
the Shares will be treated as long term capital gain for federal and
California income tax
4
purposes. If Shares purchased under an ISO are disposed of within one year
of exercise or within two years after the Date of Grant, any gain realized on
such disposition will be treated as compensation income (taxable at ordinary
income rates) to the extent of the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. The Company
will be required to withhold from Participant's compensation or collect from
Participant and pay to the applicable taxing authorities an amount equal to a
percentage of this compensation income at the time of exercise.
9. PRIVILEGES OF STOCK OWNERSHIP. Participant shall not have any of
the rights of a shareholder with respect to any Shares until Participant
exercises the Option and pays the Exercise Price.
10. INTERPRETATION. Any dispute regarding the interpretation of this
Agreement shall be submitted by Participant or the Company to the Committee
for review. The resolution of such a dispute by the Committee shall be final
and binding on the Company and Participant.
11. ENTIRE AGREEMENT. The Plan is incorporated herein by reference.
This Agreement and the Plan constitute the entire agreement of the parties
and supersede all prior undertakings and agreements with respect to the
subject matter hereof.
12. NOTICES. Any notice required to be given or delivered to the
Company under the terms of this Agreement shall be in writing and addressed
to the Corporate Secretary of the Company at its principal corporate offices.
Any notice required to be given or delivered to Participant shall be in
writing and addressed to Participant at the address indicated above or to
such other address as such party may designate in writing from time to time
to the Company. All notices shall be deemed to have been given or delivered
upon: personal delivery; three (3) days after deposit in the United States
mail by certified or registered mail (return receipt requested); one (1)
business day after deposit with any return receipt express courier (prepaid);
or one (1) business day after transmission by rapifax or telecopier.
13. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer set forth herein, this Agreement shall be binding
upon Participant and Participant's heirs, executors, administrators, legal
representatives, successors and assigns.
14. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware.
15. ACCEPTANCE. Participant hereby acknowledges receipt of a copy
of the Plan and this Agreement. Participant has read and understands the
terms
5
and provisions thereof, and accepts the Option subject to all the terms and
conditions of the Plan and this Agreement. Participant acknowledges that
there may be adverse tax consequences upon exercise of the Option or
disposition of the Shares and that Participant should consult a tax adviser
prior to such exercise or disposition.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed in duplicate by its duly authorized representative and Participant
has executed this Agreement in duplicate as of the Effective Date.
PHOENIX TECHNOLOGIES LTD.: PARTICIPANT:
By:________________________ ________________________
(Signature)
___________________________ ________________________
(Please print name) (Please print name)
___________________________
(Please print title)
6
