NIC INC. 2006 AMENDED AND RESTATED STOCK OPTION AND INCENTIVE PLAN Stock Option Agreement
Exhibit
4.2
NIC
INC. 2006 AMENDED AND RESTATED
Stock
Option Agreement
1. Grant
of Option.
NIC Inc., a Colorado corporation (the “Company”), hereby grants to the Optionee
named in the Certificate of Stock Option Grant (the “Certificate”), an option to
purchase (the “Option”) the total number of shares subject to the Option (the
“Shares”) set forth in the Certificate at the Xxxxx Xxxxx per share set forth in
the Certificate subject to the terms and provisions of this Stock Option
Agreement (the “Agreement”) and of the Certificate and the NIC Inc. 2006 Amended
and Restated Stock Option and Incentive Plan (the “Plan”), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this
Agreement. By accepting the Option, the Optionee (and any person to whom
the Option is transferred) acknowledges that the Plan has been made available
to
him or her.
If
designated in the Certificate as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Code Section
422.
Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section
422(d), the Option shall be treated as a Non-Qualified Stock Option. If
designated in the Certificate as a Non-Qualified Stock Option, the Option is
not
intended to qualify as an Incentive Stock Option under Code Section
422.
The
Company seeks to provide a means by which the Company, through the grant of
the
Option to the Optionee may retain the Optionee’s services and motivate the
Optionee to exert his or her best efforts on behalf of the Company and any
Affiliate.
2. Terms
and Conditions.
(a) Grant
Expiration Date.
The Option shall expire on the Grant Expiration Date provided in the
Certificate. The Optionee is responsible for taking any and all actions as
may be required to exercise the Option in a timely manner, and for properly
executing any documents as may be required for the exercise of the Option in
accordance with such rules and procedures established from time to time under
the Plan. The Company has no duty to notify the Optionee (or any person to
whom the Option is transferred) of the expiration of the Option. By
accepting the Option, the Optionee (and any person to whom the Option is
transferred) acknowledges that the information regarding the procedures and
requirements for the exercise of the Option has been made available to him
or
her.
(b) Exercise
of Option During Continuous Employment.
Subject to the provisions of this Agreement, the Option may be exercised by
the
Optionee in installments as provided in the Certificate, rounded to the next
lowest integer in the case of any fractional share.
To
the extent not exercised, an installment shall accumulate and be exercisable,
in
whole or in part, in any subsequent period but not later than the Grant
Expiration Date provided in Section 2(a) of this Agreement. When the
right to exercise any installment accrues, the Shares included in that
installment may be purchased at that time or from
time
thereafter during the Option period ending on the Grant Expiration Date provided
in Section 2(a) of this Agreement.
An
exercise of any part of the Option shall be accompanied by a written notice
to
the Company as provided in Section 5 of this Agreement and specifying the number
of Shares as to which the Option is being exercised.
(c) Exercise
Upon Termination of Employment or Relationship as a Director or
Consultant.
Death.
In the event that the Optionee’s Continuous Status as an Employee, Director or
Consultant terminates due to his or her death, the Option may be exercised
by
the Optionee’s estate or by any other person who acquired the Option by reason
of the death of the Optionee within the 12 months immediately following his
or
her death and to the extent that the Optionee was entitled to exercise the
Option at the date of his or her death; provided, however, that the Option
may
not be exercised after the Grant Expiration Date provided in Section 2(a) of
this Agreement.
Disability.
If the Optionee’s Continuous Status as an Employee, Director or Consultant
terminates due to his or her disability (as defined in Code Section 22(e)(3)),
the Option may be exercised by the Optionee within the 12 months immediately
following such termination and to the extent that the Optionee was entitled
to
exercise the Option at the date of his or her termination due to his or her
disability; provided, however, that the Option may not be exercised after the
Grant Expiration Date provided in Section 2(a) of this
Agreement.
Other
Termination of Relationship.
If the Optionee’s Continuous Status as an Employee, Director or Consultant
terminates other than by death or due to disability and other than involuntarily
for cause or voluntarily by the Optionee, the Optionee’s right to exercise the
Option may be exercised within the 30 days immediately
following such termination and to the extent that the Optionee was entitled
to
exercise the Option at the date his or her termination; provided, however,
that
the Option may not be exercised after the Grant Expiration Date provided in
Section 2(a) of this Agreement.
If
the Optionee’s Continuous Status as an Employee, Director or Consultant is
voluntarily terminated by the Optionee or involuntarily terminated for cause,
the Optionee’s right to exercise the Option shall immediately terminate and any
then unexercised portion of the Option shall be immediately
canceled.
For
purposes of this Agreement, the term “cause” shall mean, with respect to any
Optionee, (a) cause as defined in the employment agreement with the Company
or any subsidiary thereof to which the Optionee is a party or, if none, (b)
the
occurrence of any of the following events:
(i) the
willful and continued failure by the Optionee to substantially perform his
or
her duties with the Company or any subsidiary thereof on a full-time basis
(other than any such failure resulting from total or partial incapacity due
to
physical or mental illness) after a written demand for substantial
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performance
is delivered to the Optionee by the Board, which demand identifies the manner
in
which the Board believes that he or she has not substantially performed such
duties;
(ii) the
willful engaging by the Optionee in conduct which is significantly injurious
to
the Company or to any subsidiary of the Company, monetarily or otherwise, after
a written demand for cessation of such conduct is delivered to the Optionee
by
the Board, which demand specifically identifies the manner in which the Board
believes that the Optionee has engaged in such conduct and the injury to the
Company or to a subsidiary of the Company resulting therefrom;
(iii) the
commission by the Optionee of an act or acts constituting a crime involving
moral turpitude;
(iv) the
breach by the Optionee of one or more covenants, if any, in an agreement to
which the Optionee and the Company are parties;
(v) violation
by the Optionee of Company policy; or
(vi) the
commission by the Optionee of a significant act of dishonesty, deceit or breach
of fiduciary duty in the performance of the Optionee’s duties with the Company
or with any subsidiary of the Company.
For
purposes of clauses (i) and (ii) of this definition, no act, or failure to
act,
on the part of an Optionee shall be deemed to be willful unless knowingly done,
or omitted to be done, by the Optionee not in good faith and without a
reasonable belief that such action or omission was in the best interests of
the
Company or of a subsidiary of the Company.
(d) Payment
of Xxxxx Xxxxx Upon Exercise.
At the time of any purchase of Shares under the Option, the Xxxxx Xxxxx for
such
Shares as set forth in the Certificate shall be paid by the Optionee in full
to
the Company. The Optionee may pay the Xxxxx Xxxxx in whole or in part in
cash or by check made payable to the Company and the Optionee may authorize
a
third party to sell a sufficient portion of the Shares acquired upon the
exercise of the Option and remit to the Company the portion of the sale proceeds
sufficient to pay the Xxxxx Xxxxx and any tax withholding resulting from such
exercise that is not paid by the Optionee in cash or by check.
(e) Nontransferability.
The Option shall not be transferable other than by a will of the Optionee or
by
the laws of descent and distribution, and shall be exercisable during the
lifetime of the Optionee only by the Optionee or his attorney-in-fact or
conservator, unless the Option is an Incentive Stock Option and such exercise
by
the attorney-in-fact or the conservator of the Optionee would disqualify the
Option as such under Code Section 422.
(f) Adjustments
in Event of Change in Common Stock.
If any change is made in the Shares subject to the Option, without the receipt
of consideration by the Company (through merger, consolidation, reorganization,
recapitalization,
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reincorporation,
stock dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change in corporate
structure or other transaction not involving the receipt of consideration by
the
Company), the Option will be appropriately adjusted in the class(es) and number
of shares and price per share of stock of those subject Shares in such manner
as
the Board may deem equitable to prevent substantial dilution or enlargement
of
the rights granted to the Optionee; provided, however, that no such adjustment
shall cause the Company to issue a fractional share under the Option. Such
adjustments shall be final, binding and conclusive. (The conversion of any
convertible securities of the Company shall not be treated as a transaction
not
involving the receipt of consideration by the Company.)
(g) No
Rights as a Shareholder.
The Optionee shall have no rights as a shareholder with respect to any Shares
subject to the Option prior to the date of issuance to him or her of a
certificate or certificates for such Shares.
(h) No
Rights to Continued Relationship.
The Option shall not confer upon the Optionee any right with respect to
continuance of employment by the Company or by an Affiliate, nor shall it
interfere in any way with the right of his or her employer to terminate his
or
her employment at any time.
The
Option shall not confer upon the Optionee any right with respect to continuance
of a directorship of the Company or of an Affiliate, nor shall it interfere
in
any way with the right of the shareholders to remove him or her as a director
at
any time.
The
Option shall not confer upon the Optionee any right with respect to continuance
of any consulting arrangement with the Company or any Affiliate, nor shall
it
interfere in any way with the right of the Company or an Affiliate, as the
case
may be, to terminate any such arrangement.
(i) Sale
of the Company.
In the event of a dissolution, liquidation or sale of all or substantially
all
of the assets of the Company, or that the Company is not the surviving
corporation in any merger, consolidation, or reorganization, then the Option
shall be canceled as of the effective date of such transaction; provided,
however, the Board shall give at least 30 days’ written notice of the
transaction to the Optionee and during the period beginning the Optionee
receives the notice and ending on the date of the transaction, the Optionee
shall have the right to exercise all or any part of the unexercised portion
of
the Option (without regard to employment requirements or any installment
exercise limitations) (the “Accelerated Amount”); provided further that no part
of the Option may be exercised after the Grant Expiration Date provided in
Section 2(a) of this Agreement. If the Option is an Incentive Stock
Option, the Accelerated Amount under this Section shall remain exercisable
as an Incentive Stock Option under Code Section 422 only to the extent that
the
$100,000 dollar limitation of Code Section 422(d) is not exceeded. To the
extent that such dollar limitation is exceeded, the Accelerated Amount shall
be
exercisable as a Non-Qualified Stock Option.
(j) Compliance
with Other Laws and Regulations.
The Option and the obligation of the Company to sell and deliver Shares
hereunder, shall be subject to all applicable federal and state laws, rules,
and
regulations, and to such approvals by any
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government
or regulatory agency as may be required. The Company shall not be required
to issue or deliver any certificates for Shares prior to the completion of
any
registration or qualification of such Shares under any federal or state law,
or
any rule or regulation of any governmental body which the Company shall, in
its
sole discretion, determine to be necessary or advisable.
To
the extent applicable, it is intended that this Agreement and the Plan comply
with the provisions of Section 409A of the Code. This Agreement and the Plan
shall be administered in a manner consistent with this intent, and any provision
that would cause this Agreement or the Plan to fail to satisfy Section 409A
of
the Code shall have no force or effect until amended to comply with Section
409A
of the Code (which amendment may be retroactive to the extent permitted by
Section 409A of the Code and may be made by the Company without the consent
of
the Optionee).
(k) Withholding
Taxes.
The Optionee agrees to make appropriate arrangements with the Company or
Affiliate, as the case may be, for the satisfaction of all federal, state and
local income and employment tax withholding requirements applicable to the
exercise of the Option. No Shares will be delivered pursuant to the
exercise of the Option until the Optionee, or any other person to whom the
Option is transferred, has made acceptable arrangements for these withholding
requirements.
3. Investment
Representation.
The Company may require that the Optionee furnish to the Company, as a condition
of exercising or acquiring stock underlying the Option, (a) written
assurances satisfactory to the Company, or counsel for the Company, as to the
Optionee’s knowledge and experience in financial and business matters and/or to
employ a purchaser representative reasonably satisfactory to the Company, or
counsel for the Company, who is knowledgeable and experienced in financial
and
business matters, and that he or she is capable of evaluating, alone or together
with the purchaser representative, the merits and risks of exercising the
Option; and (b) written assurances satisfactory to the Company, or counsel
for the Company, stating that the Optionee is acquiring the stock subject to
the
Option for the Optionee’s own account and not with any present intention of
selling or otherwise distributing the stock underlying the Option. The
Company may (a) restrict the transferability of the stock underlying the
Option and require a legend to be endorsed on the certificates representing
such
stock, as appropriate to reflect resale restrictions, if any, imposed by the
Board pursuant to the Option when granted, or as appropriate to comply with
any
applicable state or federal securities laws, rules or regulations; and
(b) condition the exercise of the Option or the issuance and delivery of
stock underlying the Option upon the listing, registration or qualification
of
such stock upon a securities exchange or quotation system or under applicable
securities laws. The foregoing requirements, and any assurances given
pursuant to such requirements, shall be inoperative if (a) the issuance of
stock upon the exercise of the Option has been registered under a then currently
effective registration statement under the Securities Act, or (b) as to any
particular requirement, a determination is made by counsel for the Company
that
such requirement need not be met in the circumstances under the then applicable
securities laws. The Company may, upon advice of counsel to the Company,
place legends on stock certificates issued under the Option as such counsel
deems necessary or appropriate in order to comply with applicable securities
laws, including, but not limited to, legends restricting the transfer of the
stock.
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4. Optionee
Bound by the Plan.
The Optionee agrees to be bound by all the terms and provisions of the
Plan. To the extent that the terms of this Agreement are inconsistent with
the terms of the Plan, the terms of the Plan shall govern. The captions
used in the Certificate, this Agreement, and the Plan are inserted for
convenience and shall not be deemed a part of the Option for construction or
interpretation.
This
Agreement, the Certificate, and the Plan shall be construed in accordance with
the laws of the State of Colorado, without regard to the conflict of laws
principles.
5. Notices.
Any notice to the Company or the Board that is required to be made under the
terms of the Agreement or under the terms of the Plan shall be addressed to
the
Company in care of its president at 00 Xxxxxxxxx Xxxxx, 00000 Xxxxxx Xxxxxx,
Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxx 00000. Any notice that is required to be
made to the Optionee under the terms of the Agreement or under the terms of
the
Plan shall be addressed to him or her at the address indicated in the
Certificate unless the Optionee notifies the Company of his or her address
change in writing as provided in this Section 5 in which case the notice shall
be addressed to the Optionee at his or her new address. A notice under
this Section 5 shall be deemed to have been given or delivered upon personal
delivery or upon deposit in the United States mail, by registered or certified
mail, postage prepaid and properly addressed as provided in this
Section.
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