XXXXXXXXXXXX.XXX, INC.
INCENTIVE STOCK OPTION AGREEMENT
THIS AGREEMENT, effective as of January 22, 1999 (the "Effective Date")
is between Xxxxxxxxxxxx.xxx, Inc., a Delaware corporation (the "Corporation"),
and X.X. XxXxxxxxx of _____________________________________ (the "Optionee").
RECITALS
The Corporation and the Optionee desire to enter into an agreement
providing for the grant by the Corporation to the Optionee of incentive stock
options to purchase shares of the Corporation's common stock, $.001 par value
(the "Common Stock"). All shares of Common Stock pursuant to this Agreement
issued upon the exercise of all or any portion of the options granted hereunder
and all shares of Common Stock hereafter acquired by the Optionee, hereinafter
are referred to in this Agreement as "Employee Stock".
The options granted hereunder are granted pursuant to the
Xxxxxxxxxxxx.xxx, Inc. 1999 Long-Term Incentive Plan, a copy of which is
attached hereto as Exhibit A (the "Plan"), and are intended to be considered
"incentive stock options" thereunder, and are subject in all respects to the
provisions of the Plan and the Code (as defined below) concerning "incentive
stock options." This Agreement is subject to the terms of the Plan and in the
event of any inconsistencies between the Plan and this Agreement, the Plan will
control. Capitalized terms used herein not otherwise defined herein shall have
the same meaning as in the Plan.
The parties agree as follows:
1. Award of Option. Subject to the terms and conditions set forth in
this Agreement and the Plan, the Corporation hereby grants to Optionee options
to purchase from the Corporation up to Fourteen Thousand (14,000) shares of the
Corporation's Common Stock upon payment to the Corporation of an exercise price
equal to Fifty-Five cents ($0.55) per share (with each such right to purchase a
share of Common Stock hereunder being referred to as an "Option"). Each Option
granted hereunder shall if otherwise vested or exercisable entitle the Optionee
to purchase one (1) share of Common Stock. Each Option being granted hereunder
is intended to qualify as an "incentive stock option" within the meaning of
Section 422(b) of the Internal Revenue Code of 1986, as amended, and under the
regulations promulgated thereunder or under any legislation which is passed as a
successor thereto (collectively the "Code"). If any Option or shares of the
Corporation's Common Stock acquired upon exercise of any Option are held for the
holding periods specified for Incentive Stock Options under the Code and the
Plan, they will be given favorable tax treatment. The Optionee should consult
with his or her tax advisor concerning the tax aspects of this Option award, its
exercise and the subsequent sale of the shares acquired.
2. Term and Termination of the Option.
2.1 Term. Unless any Option issued hereunder terminates pursuant to
subsection 2.2. or is subject to accelerated vesting pursuant to Section 3, such
Option is or will become exercisable and will vest in accordance with Schedule 1
attached hereto and incorporated herein.
-1-
2.2 Termination of Option. In the event that the employment of the
Optionee with the Corporation is terminated for any reason, the Optionee may
exercise Options granted hereunder, with respect to the number of shares for
which the Optionee is on that date vested, within three (3) months after the
date of such termination; provided, however, that:
i. If such termination is because of the Optionee's death or
disability, then such Options may only be exercised with respect to the number
of shares for which the Optionee is vested at the date of termination and by the
Optionee, the Optionee's legal representative or a person who acquired the right
to exercise such Option by bequest or inheritance or by reason of the death of
the Optionee, as the case may be (hereinafter such person is referred to as the
"Optionee"), within one (1) year after the date of Optionee's termination on
account of death or disability. In the event of an exercise under the terms of
this subsection by someone other than the original Optionee, appropriate proof
of such person's authority to act on behalf of the Optionee or his or her estate
must be provided to the Corporation.
ii. If Optionee's employment is terminated for "cause" all
Options issued hereunder shall terminate immediately.
iii. If Optionee's employment is terminated on or before the
anniversary of this Agreement other than for the reasons set forth in
subsections i. or ii. of this Section 2.2, the Optionee shall be entitled to
exercise all Options issued hereunder which remain unexercised to the extent
such Options have vested at such time.
iv. In no event (including by death of the Optionee) may any
Options granted hereunder be exercised after the tenth anniversary of this
Agreement.
For purposes of this Agreement, "cause" shall mean as the occurrence of
any of the following events: (i) the termination of the Optionee's Employment
Agreement, if any, pursuant to its terms due to a breach of such agreement by
the Optionee; (ii) Optionee's refusal or intentional failure to carry out the
reasonable directives of the Board of Directors or Officers of the Corporation;
(iii) Optionee's habitual gross neglect of a substantial portion of his duties
with the Corporation; or (iv) the Optionee's criminal activity, including but
not limited to action involving fraud, theft, or embezzlement.
3. Acceleration. Notwithstanding the provisions of section 2.1 hereof,
the Options granted hereunder shall immediately become fully vested and
exercisable with regard to all Fourteen Thousand (14,000) shares upon the
occurrence of one of the following events (such events are hereinafter
collectively referred to as the "Transfer"): (i) the sale of all or
substantially all of the assets of the Corporation; or (ii) the sale of in
excess of ninety-percent (90%) of the issued and outstanding stock of the
Corporation. The purpose and the intent of this subsection is to permit the
Optionee to participate in such Transfer with respect to all shares obtainable
pursuant to the Options. The Corporation will provide the Optionee with thirty
(30) days advance written notice of any such Transfer so as to enable the
Optionee to exercise the Options granted hereunder. Any exercise pursuant to
this subsection shall be contingent and effective upon the closing or
consummation of the transaction giving rise to acceleration hereunder.
-2-
4. Exercise Procedure. The Optionee, or the legal representative of the
Optionee's estate upon the occurrence of any event contemplated by section 2.2,
may exercise any Options granted hereunder by giving written notice of exercise
of such Options to the Corporation at its principal office on the Notice of
Exercise form annexed hereto as Exhibit B to this Agreement. Such notice shall
state the number of Options being exercised and shall be accompanied by a
payment in an amount equal to the product of the number of whole shares which
are issuable upon the exercise of such Options multiplied by the exercise price
per share (the "Exercise Price"). Such Exercise Price shall be payable either:
(i) in cash or by certified or cashier's check, (ii) by transfer to the
Corporation by the Optionee, or his or her Legal Representative, of such
quantity of Common Stock of the Corporation owned by the Optionee as has an
aggregate Fair Market Value, as of the date such Options are exercised, equal to
such Exercise Price, or (iii) by a combination of (i) and (ii).
5. Lapse. Subject to the provisions of Section 2 and Section 3, all
Options granted hereunder shall lapse and be of no further force or effect on or
after the tenth anniversary of the Effective Date if they are not exercised
before such anniversary.
6. Transfer of Option Prohibited. The Options granted hereunder may not
be sold or otherwise transferred by the Optionee except by will or by the laws
of descent and distribution and during the lifetime of the Optionee, may be
exercised only by the Optionee. These Options are being granted on the condition
that any Employee Stock issued hereunder shall be for investment purposes only,
and not with a view to resale or distribution. At the time of the exercise of
any Options, the Optionee shall execute such documents as the Corporation may
require to implement the foregoing conditions and to acknowledge the Optionee's
familiarity with restrictions on the resale of the shares under applicable
securities laws.
7. No Rights as Shareholder. Before the exercise of any Options granted
hereunder and the subsequent issuance of shares of Common Stock certificates,
the Optionee will have no rights as shareholder of the Corporation with respect
to any shares subject to the Options.
8. Dilution Protection. If the Corporation shall at any time pay a
stock dividend or distribution on its Common Stock or if the Corporation shall
at any time split, subdivide or combine the outstanding shares of its Common
stock, the number of shares for which the Options granted hereunder may be
exercised and the exercise price per share shall be adjusted proportionately.
Any such adjustments shall be effective as of the record date for the split,
subdivision or combination.
9. Termination of Restrictions. The restrictions on the transfer of
Employee Stock will continue until such time as the class of shares of the
Corporation's capital stock of which comprise the Employee Stock is registered
under the Securities Exchange Act of 1934, as amended.
10. Legend. The certificates representing the Employee Stock will bear
a legend similar to the following:
-3-
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN
AN INCENTIVE STOCK OPTION AGREEMENT BETWEEN XXXXXXXXXXXX.XXX, INC.
AND THE ORIGINAL HOLDER HEREOF, A COPY OF WHICH MAY BE OBTAINED AT
XXXXXXXXXXXX.XXX, INC.'S PRINCIPAL PLACE OF BUSINESS.
11. Definition of Employee Stock. For the purposes of this Agreement,
Employee Stock shall continue to be Employee Stock in the hands of any holder
other than the Optionee (except for the Corporation and purchasers after the
restrictions on transfer have terminated pursuant to Section 9), and each such
other holder of Employee Stock will succeed to all rights and obligations
attributable to the Optionee as holder of Employee Stock hereunder. Employee
Stock will also include shares of the Corporation's capital stock issued with
respect to shares of Employee Stock by ways of stock split, stock dividend or
other recapitalization.
12. Right to Call the Employee Stock. Subject to the holding period
requirements contained in the Code and the Plan, the Corporation, or following
any sale referred to in section 3 hereof, its successor corporation, shall have
the right to repurchase all of the Employee Stock within sixty (60) days
following the occurrence of one of the following events: (i) the sale of all or
substantially all of its assets; (ii) the acquisition by an investor, other than
those persons who were shareholders of the Corporation on the date of execution
of this Agreement, of at least two thirds of the issued and outstanding shares
of capital stock of the Corporation, or (iii) the merger of the Corporation into
another corporation such that the Corporation is not the surviving corporation.
The Corporation shall provide notice to the Optionee of its intent to exercise
this right in writing which notice shall include the per share purchase price
for the Employee Stock which shall be equal to the price paid by the third party
investor for each share of Common Stock in the transaction that triggers the
right to call (which in the case of an acquisition of assets or merger shall be
the aggregate purchase price divided all outstanding shares of Capital Stock of
the Corporation).
13. Notices. Any notice provided for in this Agreement must be in
writing, and shall be deemed given when delivered by hand delivery, or one day
after deposit with a reputable overnight delivery service, or three days after
deposit in the United State mail, certified, return receipt requested, postage
prepaid, and addressed as follows:
To the Corporation: 0 Xxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxxx 00000
To the Optionee: At the most recent address available in the
Corporation's employment records.
14. Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be invalid, illegal or
unenforceable, such invalidity, illegality or unenforceability will not affect
any other provision, and this Agreement shall be reformed and construed as if
such invalid provision had never been contained herein.
-4-
15. Complete Agreement. This Agreement embodies the complete agreement
and understanding of the parties and supersedes and pre-empts any prior
understandings, agreements or representation, written or oral, between the
parties, which may have related to the subject matter hereof in any way.
16. Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of the Optionee, the Corporation, and their respective
successors and assigns.
17. Choice of Law; Venue. All questions concerning the construction,
validity and interpretation of this Agreement, will be governed by the laws of
the Commonwealth of Massachusetts, without regard to the conflict of law rules
thereof. All disputes arising hereunder shall be resolved by a court of
competent jurisdiction located in the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
on the date first written above.
XXXXXXXXXXXX.XXX, INC.
---------------------------
Xxxxxxx X. Xxxx, President
OPTIONEE:
---------------------------
X.X. XxXxxxxxx
-5-
SCHEDULE 1
XXXXXXXXXXXX.XXX, INC.
TERM AND EXERCISE OF THE OPTION
All Options being granted hereunder shall vest and become exercisable
over a period of five (5) years from the Effective Date of this Agreement at the
rate of one-fifth (1/5) of the total number of shares for which the Options may
be exercised per year with such vesting to occur on the same day of each year as
the Effective Date commencing on the Effective Date and continuing on each
annual anniversary of the Effective Date up to the fourth annual anniversary of
the Effective Date.
-6-
EXHIBIT A
XXXXXXXXXXXX.XXX, INC.
LONG-TERM INCENTIVE PLAN
See Attached
EXHIBIT B
XXXXXXXXXXXX.XXX, INC.
INCENTIVE STOCK OPTION AGREEMENT
NOTICE OF EXERCISE
The undersigned employee of Xxxxxxxxxxxx.xxx, Inc. (the "Corporation"),
pursuant to the Xxxxxxxxxxxx.xxx, Inc. 1999 Long-Term Incentive Plan (the
"Plan"), and pursuant to an Incentive Stock Option Agreement dated as of
________________________________, hereby agrees to purchase from the Corporation
__________(1) shares of common stock, $.001 par value per share, of the
Corporation ("Employee Stock") at an exercise price of $__________ per share.
Optionee:_______________________________________________________________________
First Middle Last
(Print name exactly as it will appear on your stock certificate)
Social Security Number:_________-________-__________
Address:_____________________________________________________________________
The undersigned Optionee has delivered the following consideration to
the Corporation in exchange for the Employee Stock:
(1) $________________ in cash or by certified or bank cashier's check;
and/or
(2) _________________ shares of the Corporation's common stock, $.01 par value
per share, having a fair market value (as defined in the Plan) of
$________________ as of _____________________________.
--------------------------------
(Optionee: Signature)
Name:
Date:__________________
------------------
(1) No less than 100 shares may be purchased at one time unless the
number purchased is the total number that may then be purchased under the
Option.
