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EXHIBIT 10.14
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XXXXXX RESEARCH ASSOCIATES, INC.
1995 STOCK OPTION AND STOCK INCENTIVE PLAN
INDIVIDUAL STOCK OPTION AGREEMENT
INCENTIVE STOCK OPTION
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This Agreement is made this ____ day of __________, 19___, between
Xxxxxx Research Associates, Inc. (the "Company", an Ohio corporation, and
____________________, an employee of the Company (the "Optionee"). WHEREAS, the
Company has adopted and maintains the Xxxxxx Research Associates, Inc. 1995
Stock Option and Stock Incentive Plan (the "Plan") for the benefit of its
directors, officers, employees, advisors and consultants; WHEREAS, the Plan
provides that the Company's Board of Director (the "Board"), may grant options
to purchase shares of the Company's common stock to its directors, officers,
employees, advisors and consultants; and WHEREAS, the Board has determined that
the Optionee should be given the opportunity to acquire a stock ownership
interest in the Company pursuant to the Plan, in order to provide the Optionee
with additional incentive and motivation to contribute to the Company's future
growth and continued success, and to encourage the Optionee to continue to
provide services to the Company, NOW, THEREFORE, the Company and the Optionee
agree as follows:
1. GRANT OF OPTION.
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Pursuant to the provisions of the Plan, the Company hereby
grants to the Optionee the right and option (the "Option") to purchase from the
Company, on the terms and conditions hereinafter provided, up to a maximum
number of ______ shares of the Company's no par value common stock (the "Option
Shares"). This Option shall be an "Incentive Stock Option" as defined in the
Plan and in Section 422 of the Internal Revenue Code of 1986, as amended.
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2. EXERCISE PRICE.
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The exercise or purchase to be paid by the Optionee for the
Option Shares shall be [Fair Market Value Formula price] per share. The Board
has determined that the fair market value of the Company's common stock on the
date of the grant of this option is [Fair Market Value Formula price] per share.
3. SCHEDULE OF EXERCISE.
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(a) Except as provided in Paragraphs 3(b) and (c) below, the
Optionee shall have the right to exercise the Option granted under this
Agreement in accordance with the following schedule:
DATES Percentage of Option Shares
----- Eligible for Purchase
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On or before [3rd anniversary of employment 0%
or promotion following grant date]
After [3rd anniversary of employment or 20%
promotion following grant date], but on or
before [4th anniversary]
After [4th anniversary of employment or 40%
promotion following grant date], but on or
before [5th anniversary]
After [5th anniversary of employment or 60%
promotion following grant date], but on or
before [6th anniversary]
After [6th anniversary of employment or 80%
promotion following grant date], but on or
before [7th anniversary]
After [7th anniversary of employment or 100%
promotion following grant date]
(b) Notwithstanding any provisions to the contrary
contained in this Agreement,
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the Optionee's right to exercise the Option granted under this Agreement shall
vest immediately upon the occurrence of any of the following events: (i) the
sale of the Company or substantially all of its assets to a single purchaser or
to a group of associated purchasers; (ii) the sale, exchange, or other
disposition, in one transaction, of two-thirds of the outstanding corporate
shares of the Company, (iii) a bona fide decision by the Company's Board and
shareholders to terminate its business, dissolve and liquidate its assets; (iv)
the merger or consolidation of the Company in a transaction in which the
shareholders of the Company receive or hold less than 50% of the outstanding
voting shares of the new or surviving corporation, or (v) the successful
completion of an initial public offering of the Company's common stock pursuant
to the Securities Act of 1933, as amended, resulting in gross offering proceeds
to the Company of at least $7.5 million.
(c) Notwithstanding any provisions to the contrary contained
in this Agreement, the Optionee's right to exercise the Option granted under
this Agreement shall vest immediately upon the occurrence of any of the
following events: (i) the termination of the Optionee's employment with the
Company due to the Optionee's death, or (ii) the termination of the Optionee's
employment with the Company due to his permanent disability (physical or
mental).
4. METHOD OF EXERCISE.
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Subject to the schedule provided in Paragraph (3) of this
Agreement, the Option granted under this Agreement may be exercised by the
Optionee in whole or in part, and from time to time, by written notice signed by
the Optionee (or by such other person as may be entitled to exercise the option)
and delivered to the Company's chief executive officer or president at the
Company's principal executive offices. The written notice shall state the number
of shares with respect to which the Option is being exercised, and shall be
accompanied by the payment of the total
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exercise or purchase price for that number of shares. The exercise or purchase
price for the Option Shares shall be paid in cash (including certified check or
bank cashier's check), or in the discretion of the Company's Board of Directors
with shares of the Company's common stock or any other property, or in any
combination thereof. Any shares of the Company's common stock that may be
delivered in payment of the exercise or purchase price shall be valued at their
fair market value, as determined by the Board pursuant to the provisions of the
Plan, as of the date of delivery of the shares of the Company. Upon payment of
the full exercise or purchase price, the Option Shares shall be fully paid and
nonassessable, outstanding shares of the common stock. No partial exercise of
the option may be made for less than 10 shares, and the Company shall not be
required to issue any fractional shares.
5. TERMINATION OF OPTION.
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(a) Subject to the provisions of Subparagraph 5(b) hereof, the
Option and all rights granted under this Agreement, to the extent that those
rights have not been exercised, shall terminate on the earliest of: (i) the date
the Optionee's employment with the Company is terminated "for cause" as defined
in Paragraph (8)(g) of the Plan; (ii) the date which is 90 days from the date
that the Optionee is discharged or terminates his employment with the Company
for any reason, other than "for cause" as defined above or by reason of the
Optionee's death or permanent disability; or (iii) the date which is 10 years
from the date of the grant of this Option.
(b) If the Optionee dies or becomes permanently disabled while
serving as an employee of the Company, and prior to the 10 year termination date
described above, the Optionee or in the event of the Optionee's death, his
estate, personal representative or heirs, shall have the right to exercise the
Option granted under this Agreement, for a period of 12 months following the
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Optionee's date of death or in the event of permanent disability the last date
on which the Optionee provided services to the Company as an employee.
6. TRANSFERABILITY.
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The Option and all rights granted this Agreement shall not be
transferred, assigned, pledged or otherwise encumbered in any manner (whether by
operation of law or otherwise) except, in the event of the Optionee's death, by
will or by the applicable laws of descent or distribution. Upon any attempt to
transfer, assign, pledge, encumber or otherwise dispose of this Option contrary
to the provisions of this Agreement, or upon the levy of any attachment or
similar process upon this Option, the Option shall immediately become null and
void. The Option and all rights granted under this Agreement shall be
exercisable during the Optionee's lifetime only by the Optionee, or if
permissible under applicable law, by the Optionee's guardian or legal
representative.
7. ADJUSTMENT TO OPTION SHARES.
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(a) In the event that at any time prior to the termination
date of this Option and prior to the exercise thereof, the Company issues common
stock by way of stock dividend or other distributions, or subdivides or combines
its outstanding shares of common stock, the number of shares subject to this
Option and the exercise price shall be adjusted to be consistent with such
change or changes. In the event that at any time prior to the termination date
of this Option and prior to the exercise thereof, there is any reclassification,
capital reorganization or other change of outstanding shares of the Company's
common stock, or in case of any consolidation or merger of the Company with or
into another corporation, or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, the
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Company shall cause effective provision to be made so that the Optionee shall
have the right thereafter, by exercising this Option, to purchase the kind and
amount of shares of stock and other securities and property receivable upon such
reclassification, capital reorganization or other change, consolidation, merger,
sale or conveyance. The determination of the Board as to any adjustments or
provisions to be made under this paragraph shall be final, binding and
conclusive.
(b) Except as provided above, the grant of the Option herein
shall not affect in any manner the right or power of the Company or its
shareholders to make or authorize any or all adjustments, recapitalization,
reorganizations or other changes in the Company's capital structure or its
business, or any merger or consolidation of the Company, or to issue bonds,
debentures, preferred or prior preference stock ahead of or affecting the common
stock of the Company or the rights thereof, or the dissolution or liquidation of
the Company, or any sale or transfer of all or any part of the Company's assets
or business.
8. EFFECT OF AGREEMENT ON STATUS OF OPTIONEE.
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(a) The fact that the Board has granted an Option to the
Optionee pursuant to the Plan, shall not confer on the Optionee any right to
employment with the Company or to a position as an officer or director of the
Company, nor shall it limit the right of the Company to terminate or remove the
Optionee from any position held by him at any time; provided, however, nothing
contained in this Paragraph 8(a) shall be deemed to affect any rights or
obligations of the Company or the Optionee contained in any separate employment
agreement or similar agreement.
(b) The Optionee shall not be or have any right or privileges
of a shareholder of the Company with respect to the Option Shares, unless and
until the Option has been exercised, the exercise or purchase price fully paid,
certificates representing such shares endorsed, transferred and
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delivered to the Optionee, and the Optionee's name entered as a shareholder of
record on the books of the Company.
9. SECURITIES LAWS.
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Notwithstanding anything to the contrary contained in this
Agreement, this Option shall not be exercisable by the Optionee except for
shares of the Company's common stock which at the time of such exercise are
registered, exempt, or the subject matter of an exempt transaction, under both
federal and applicable state securities laws. By accepting and executing this
Option Agreement, the Optionee acknowledges and represents to the Company that
any and all shares of the common stock purchased under this Agreement will be
acquired by the Optionee as an Investment, and not with a view towards
subsequent distribution.
10. TAXES.
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The Optionee agrees to pay all federal, state and local taxes,
withholding taxes, if any, resulting from the exercise of this Option subsequent
sale of the Option Shares.
11. CONDITIONS.
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This Option is governed by the terms of this Agreement and the
Plan, the provisions of which are Incorporated herein and made a part hereof.
12. RESTRICTIONS ON TRANSFER.
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The Optionee agrees that the Option Shares shall be subject to
the restrictions on transfer, repurchase option and other conditions of
Paragraph (13) of the Plan. In addition, if the restrictions and other
conditions contained in Paragraph (13) of the Plan should terminate as provided
therein, then following exercise of the Option, the Optionee agrees to notify
the Company promptly of any subsequent sale of the Option Shares if the sales
occurs within two years after the
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date of this Agreement or within one year after exercise.
13. ACKNOWLEDGMENT.
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The Optionee's signature on this Agreement also constitutes
his acknowledgment that he has received a copy of the Plan and the Company's
Summary Plan Description of the Plan dated _________, 19____.
14. BINDING EFFECT.
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This Agreement shall be binding upon and shall inure to the
benefit of any successors or assigns of the Company, and shall be binding upon
and inure to the benefit of the Optionee's executors, administrators, heirs and
personal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first above written.
XXXXXX RESEARCH ASSOCIATES, INC.
By:
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Its:
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(Optionee)
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