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EXHIBIT 4.3
THE SECURITIES REPRESENTED BY AND ISSUABLE UPON EXERCISE OF THIS OPTION HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. NO TRANSFER OR SALE OF THESE SECURITIES OR ANY STOCK ISSUABLE
UPON EXERCISE THEREOF MAY BE MADE WITHOUT SUCH REGISTRATION AND QUALIFICATION
UNLESS THE ISSUER HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE
SATISFACTORY TO IT THAT A PROPOSED TRANSFER OR SALE DOES NOT REQUIRE
REGISTRATION OR QUALIFICATION UNDER APPLICABLE LAW.
S-O ACQUISITION CORP.
PERFORMANCE STOCK OPTION AGREEMENT
This Performance Stock Option Agreement ("Agreement") is entered into
as of __________________, 1997, between S-O Acquisition Corp., a Delaware
corporation (the "Company"), and _____________________ ("Optionee").
RECITAL:
Optionee is an officer of the Company, and the Company considers it
desirable and in its best interest to grant Optionee an inducement to acquire a
proprietary interest in the Company, and thus to promote the future growth,
development and continued success of the Company;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the Company and Optionee agree as follows:
1. GRANT OF OPTION. The Company hereby grants to Optionee the right,
privilege and option ("Option") to purchase up to ______________________
(_________) shares of Common Stock of the Company, par value $.01 per share
(collectively, the "Option Shares") at an exercise price per share of twenty
dollars ($20.00), in the manner and subject to the conditions provided herein.
2. MAXIMUM TERM OF OPTION. The maximum term of this Option shall be
for a term ending _______________, 2007.
3. CONDITIONS AND TIME OF EXERCISE OF OPTION. This option shall vest
as to one-third of the Option Shares on each of December 31, 1997, December 31,
1998 and December 31, 1999 (the "Vesting Dates"), provided that the Company's
EBITDA (as that term is defined below) for the calendar year ended on the
Vesting Date equals or exceeds 90% of the EBITDA
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shown on the Company's operating plan approved by its Board of Directors for
such year (the "Plan EBITDA"). In the event that the Company's EBITDA for such
calendar year is between 75% and 90% of Plan EBITDA, then 75% of the options
that would otherwise have become vested on the Vesting Date shall become vested.
In the event that the Company's EBITDA for such calendar year is less than 75%
of Plan EBITDA, then none of the options that would otherwise have become vested
on the Vesting Date shall become vested. Any option that vests in accordance
with the preceding sentences may be exercised at such time as the Company's
audited financial statements for such year, establishing that the standards for
vesting have been satisfied with respect to such year, are released and shall
remain so exercisable until the expiration or sooner termination of the option
term.
In the event that all or a portion of the Option Shares do not vest in
the manner described in the preceding paragraph due to shortfalls in EBITDA,
then such Option Shares may nevertheless become vested in two separate ways.
First, to the extent that Option Shares do not vest on any Vesting Date, then
additional Vesting Dates shall be added on December 31, 2000 and December 31,
2001, if necessary to permit vesting of all the Option Shares on the basis of
EBITDA and Plan EBITDA for the calendar year ending on each such date. Second,
in the event that any Option Shares do not vest on a Vesting Date with respect
to a calendar year due to shortfalls in EBITDA for such year, then, at the
option of Optionee, the EBITDA for the immediately subsequent year shall be
combined with the EBITDA for such year, and the sum shall be compared with
combined Plan EBITDA for such years in determining whether the Option Shares
shall vest.
Notwithstanding anything on this Agreement to the contrary, in all
events the Option shall become exercisable for all of the Option Shares upon
Optionee's completion of six (6) years of service with the Company, whether as
an employee, a non-employee Board member or consultant.
Any options that become exercisable under this Agreement shall remain
exercisable as to all of such shares until and including _______________, 2007,
subject however to the provisions of Sections 4 and 7 hereof. Shares as to which
such option becomes exercisable pursuant to the foregoing provision may be
purchased at any time thereafter prior to the expiration or termination of the
option. Notwithstanding the foregoing provisions of this Section 3, all options
granted under this Agreement shall become immediately vested and exercisable
upon (i) the termination of Optionee's employment without cause under Section
6.2 of the Employment Agreement between Optionee and the Company, (ii) a public
offering of securities of the Company with gross proceeds exceeding $10,000,000,
or (iii) upon the consummation of a "Corporate Transaction." A "Corporate
Transaction" shall mean either of the following stockholder-approved
transactions to which the Company is a party: (a) a merger or consolidation in
which securities possessing more than fifty percent (50%) of the total combined
voting power of the Company's outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior
to such transaction, or (b) the sale, transfer or other disposition of all or
substantially all
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of the Company's assets in complete liquidation or dissolution of the Company.
Except as may be otherwise provided in the agreement reflecting a Corporate
Transaction, this Option shall be assumed by the successor corporation (or
parent thereof) in connection with a Corporate Transaction, and this Option
shall be appropriately adjusted, immediately after such Corporate Transaction,
to apply to the number and class of securities which would have been issuable to
Optionee in consummation of such Corporate Transaction had the option been
exercised immediately prior to such Corporate Transaction, and appropriate
adjustments shall also be made to the Purchase Price, provided the aggregate
Purchase Price shall remain the same.
As used in this section, the term EBITDA for any year means the
Company's net earnings, as reflected on its audited financial statements for
such year, but without deduction for interest expense, depreciation,
amortization, or state or local income taxes.
4. EFFECT OF TERMINATION OF EMPLOYMENT. No part of this option may be
exercised more than [six (6) months] [one (1) year] after the termination of
Optionee's employment with the Company (including upon death or disability).
This option shall in no way confer upon Optionee any rights to remain in the
employ of the Company. The maximum number of shares as to which this option may
be exercised during the [six (6) months] [one (1) year] period following
termination of employment shall be the remaining number of shares which Optionee
could have purchased, pursuant to Section 3 hereof, on the date of termination
of his employment plus any option shares which were vested at the time of
termination of Optionee's employment but did not become exercisable until the
release of the Company's financial statements.
5. STATUS OF OPTION. The Option covered by this Agreement is not
intended to be an incentive stock option as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and shall be governed by
the terms of the Code relating to options other than Incentive Stock Options.
6. METHOD OF EXERCISE OF OPTIONS. This Option shall be exercisable in
whole or in part, to the extent then vested and exercisable, by written notice
delivered to the Secretary of the Company stating the number of Option Shares
with respect to which the Option is being exercised, accompanied by payment of
the exercise price by cash or check made payable to the Company. In addition,
should the Option Shares be registered under Section 12(g) of the Securities
Exchange Act of 1934, as amended, at the time the Option is exercised, then the
exercise price may, in the discretion of the Board of Directors of the Company,
also be paid as follows: (i) in shares of Common Stock held by Optionee for the
requisite period necessary to avoid a charge to the Company's earnings for
financial reporting purposes and valued at fair market value on the exercise
date; or (ii) through a special sale and remittance procedure pursuant to which
Optionee shall concurrently provide irrevocable instructions (A) to a
Company-designated brokerage firm to effect the immediate sale of the purchased
shares and remit to the Company, out of the sale proceeds available on the
settlement date, sufficient funds to cover the aggregate exercise price payable
for the purchased shares plus all applicable
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Federal, state and local income and employment taxes required to be withheld by
the Company by reason of such exercise and (B) to the Company to deliver the
certificates for the purchased shares directly to such brokerage firm in order
to complete the sale.
7. NONTRANSFERABILITY OF OPTION; DEATH OF OPTIONEE. This Option shall
be exercisable during Optionee's lifetime only by Optionee, and is
nontransferable by Optionee except by will, by applicable laws of descent and
distribution or by valid nonprobate transfer in connection with the death of
Optionee or pursuant to a qualified domestic relations order. In the event of
Optionee's death, the person or persons to whom the Optionee's right hereunder
shall have passed may exercise this Option, to the extent vested and exercisable
at the date of death (or which are vested as of the date of death but later
become exercisable in accordance with Section 3 of this Agreement) provided,
however, that no Option may be exercised after the first to occur of (i) the
expiration date specified in paragraph 2 hereof, and (ii) the date which is [six
months] [one (1) year] after the date of death of Optionee.
8. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. In the event of the
payment of a stock dividend, a split-up or consolidation of shares, or any like
capital adjustment of the Company, then to the extent the Option hereunder
remains outstanding and unexercised, there shall be a corresponding adjustment
as to the number of Option Shares covered under this Option, and in the exercise
price per share, to the end that Optionee shall retain the Optionee's
proportionate interest without change in the total exercise price under this
Option.
9. MARKET STAND-OFF.
(a) In connection with any underwritten public offering by the
Company of its equity securities pursuant to an effective registration statement
filed under the Securities Act of 1933, as amended, including the Company's
initial public offering, Optionee shall not sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or otherwise agree to engage in any of the foregoing
transactions with respect to, any securities of the Company without the prior
written consent of the Company or its underwriters. Such restriction (the
"Market Stand-Off") shall be in effect for such period of time from and after
the effective date of the final prospectus for the offering as may be requested
by the Company or such underwriters. In no event, however, shall such period
exceed one hundred eighty (180) days.
(b) Optionee agrees to execute any documentation acknowledging
the Market Stand-Off as may be required by the Company or its underwriters.
(c) In order to enforce the Market Stand-Off, the Company may
impose stop-transfer instructions with respect to the securities of the Company
held by Optionee until the end of the applicable stand-off period.
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10. FINANCIAL STATEMENTS. The Company shall deliver to Optionee such
of its financial statements as Optionee shall reasonably request from time to
time in connection with his exercise of this Option or his evaluation of the
advisability of such exercise.
11. LEGENDS. All certificates evidencing Option Shares acquired upon
exercise of this Option shall bear appropriate legends which indicate that the
Option Shares have not been registered under state or federal securities laws.
12. PARENTS, SUBSIDIARIES AND SUCCESSORS OF THE COMPANY. All
references herein to the Company shall be deemed to include any parent or
subsidiary of the Company (as defined in Section 425 of the Code), unless the
context shall otherwise require or indicate.
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IN WITNESS WHEREOF, the Company and Optionee have executed this
Agreement as of the day and year first above written.
"Corporation"
S-O Acquisition Corp.
By:_______________________________
Name: ____________________________
Title: ___________________________
"Optionee"
__________________________________
Name: ____________________________
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