Exhibit 10.10
INCENTIVE STOCK OPTION AGREEMENT
(1997 Stock Option Plan)
THIS INCENTIVE STOCK OPTION AGREEMENT (the "Agreement") is made and entered
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into this _____ day of ____________, 20___ by and between ____________________
(the "Optionee") and XXXXXXXXXX.XXX, a California corporation (the "Company").
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R E C I T A L S
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A. The Board of Directors of this Company has adopted the 1997 Stock
Option Plan (the "Plan") which provides for the granting of options to
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Directors, Employees and Consultants of the Company. The terms of this
Agreement are governed solely by the Plan, a copy of which is attached hereto.
B. The Board has authorized the grant of options to purchase Common Stock
of the Company pursuant to the terms and conditions set forth herein and in the
Plan. This option is intended to qualify as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"Code").
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C. The grant hereunder is intended to comply with the provisions of Rule
701 promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the "Act").
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D. Before making any decision concerning the Plan, this Agreement or an
exercise of any option granted hereby, Optionee is advised to read the Plan and
consult with an attorney and a tax advisor. THE UNTIMELY EXERCISE OF THE OPTION
GRANTED HEREBY AND THE SALE OF STOCK ACQUIRED AS A RESULT OF SUCH EXERCISE MAY
CAUSE OPTIONEE TO INCUR LIABILITIES UNDER THE TAXATION AND SECURITIES LAWS OF
WHICH OPTIONEE MAY BE OTHERWISE UNAWARE WITHOUT SEEKING THE ADVICE OF ADVISORS.
AGREEMENT
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NOW, THEREFORE, the parties agree as follows:
1. Grant to Optionee.
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The Company hereby grants to Optionee, subject to the terms and conditions
of the Plan and subject to the terms and conditions herein set forth herein, an
option (the "Option") to purchase from the Company all or any part of an
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aggregate of _________________________ (________) shares of the Company's Common
Stock ("Common Stock").
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2. Exercise of the Option.
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(a) Exercise Price. The exercise price of this Option is _________
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($_____) per share (being not less than the Fair Market Value of the Common
Stock of the Company on the date of the grant of this Option). Payment of the
exercise price per share is due in full upon exercise of all or any part of this
Option. Optionee may elect, to the extent permitted by applicable statutes and
regulations, to make payment of the exercise price under one of the following
alternatives:
(i) Payment of the exercise price per share in cash (including
check) at the time of exercise;
(ii) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in the Wall Street Journal,
payment by delivery of already-owned shares of Common Stock, held for the
period required to avoid a charge to the Company's reported earnings in
excess of that which the Company is willing to accept, and owned free and
clear of any liens, claims, encumbrances or security interests, which
Common Stock shall be valued at its fair market value, which is the per
share price of the last sale of Common Stock on the trading day immediately
preceding the date the Option is exercised (or the closing bid if no sales
were reported), based on the composite transactions in the Common Stock as
reported in the Wall Street Journal (or any successor publication thereto)
(the "Fair Market Value");
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(iii) Provided that at the time of exercise the Company's Common
Stock is publicly traded and quoted regularly in the Wall Street Journal,
and provided further, that the cashless exercise will not result in a
charge to the Company's earnings, in excess of that which the Company is
willing to accept, payment by delivery and surrender of this Option with a
Cashless Exercise Notice (in the form attached hereto as Exhibit B). In
the event of a cashless exercise, the Optionee shall exchange the Option
for such number of shares of Common Stock underlying the Option determined
by multiplying the number of shares by a fraction, the numerator of which
shall be the difference between the Fair Market Value per share of the
Common Stock and the exercise price per share of the Option, the
denominator of which shall be the Fair Market Value per share of the Common
Stock;
(iv) To the extent permitted by applicable law, payment by a
combination of the methods of payment permitted by Sections 2(a)(i),
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2(a)(ii) and 2(a)(iii) above.
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(b) Exercise Notice. In order to exercise this Option, Optionee or any
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other person or persons entitled to exercise the Option shall give written
notice to the Secretary of the Company or to such other person as may be
designated by the Company, in the form set forth on Exhibit A or Exhibit B
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attached hereto, specifying the number of shares to be purchased. This notice
shall be accompanied by payment of the exercise price for the shares as provided
in Section 2(a). Optionee shall also deliver such additional documents as the
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Company may then require pursuant to the Plan.
(c) Compliance with Securities Laws. Notwithstanding anything to the
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contrary contained herein, this Option may not be exercised unless the shares
issuable upon exercise of this Option are then registered under the Act, or, if
such shares are not then so registered, the Company has determined that such
exercise and issuance would be exempt from the registration requirements of the
Act.
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(d) Additional Terms and Conditions. By exercising this Option, Optionee
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agrees that:
(i) the Company may require (as condition to the exercise of
this Option) Optionee to enter an arrangement providing for the payment by
Optionee to the Company of any tax withholding obligation of the Company
arising by reason of (1) the exercise of the Option; (2) the lapse of any
substantial risk of forfeiture to which the shares are subject at the time
of exercise; or (3) the disposition of shares acquired upon such exercise;
and
(ii) the Optionee agrees to notify the Company in writing within
fifteen (15) days after the date of any disposition of any of the shares of
the Common Stock issued upon exercise of this Option that occurs within two
(2) years after the date of grant of this Option or within one (1) year
after such shares of Common Stock are transferred upon exercise of this
Option.
3. Vesting Schedule.
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Subject to the limitations contained herein, _____________ (___) of the
shares will vest on __________, 19__, and _______________ (___) of the shares
will then vest each full year thereafter for the next ________ (___) years.
Vested installments may be exercised in whole or in part, and, to the extent not
exercised, will accumulate and be exercisable at any time on or before the
termination of the Option; provided however, that this Option may not be
exercised for any number of shares which would require the issuance of anything
other than whole shares. Notwithstanding anything to the contrary contained
herein, this Option may not be exercised unless the shares issuable upon
exercise of this Option are then registered under the Act, or, if such shares
are not then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the Act.
Notwithstanding the above, the vesting of shares subject to this Option shall
accelerate upon the terms and conditions set forth in the Plan.
4. Expiration Date.
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The Option shall terminate and expire at 5:00 p.m., California time, on
________________ (which date shall be no more than ten (10) years from the date
this Option is granted), or such earlier time as may be required by the Plan if
Optionee ceases to be employed or retained by the Company or ceases to be a
member of the Board of Directors. In no event may this Option be exercised
after the date on which it terminates. This Option shall terminate prior the
expiration of its term as follows: ninety days (90) days after the termination
of Optionee's employment with or engagement by the Company or an affiliate for
any reason or for no reason unless:
(i) Disability/Retirement. Such termination is due to
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Optionee's permanent and total disability (within the meaning of Section
422(c)(6) of the Code) or to the retirement of an Optionee who is an
employee of the Company, in which event the Option shall terminate on the
earlier of the termination date set forth above or thirty-six (36) months
following such termination; or
(ii) Death. Such termination is due to Optionee's death, in
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which event the Option shall terminate on the earlier of the termination
date set forth above or twelve (12) months after Optionee's death; or
(iii) Removal for Cause. Such termination is due Optionee's
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commission of
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fraud, theft or embezzlement against the Company or a subsidiary,
affiliated entity or customer of the Company, or for conflict of interest
(other than legitimate competition), in which event the Option shall
terminate at the time Optionee's employment or engagement is terminated.
(iv) Section 16(b) Liability. Exercise of the Option within
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ninety (90) days after the termination of Optionee's employment with or
engagement by the Company or with an affiliate would result in liability
under section 16(b) of the Securities Exchange Act of 1934, as amended, in
which case the Option will terminate on the earlier of (i) the tenth (10th)
day after the last date upon which exercise would result in such liability
or (ii) six (6) months and ten (10) days after the termination of
Optionee's employment with or engagement by the Company or an affiliate.
Notwithstanding the foregoing, this Option may be exercised following
termination of Optionee's employment or engagement by the Company or an
affiliate only as to that number of shares as to which it was exercisable on the
date of such termination under the provisions of Section 3 of this Option.
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5. Nontransferable.
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This Option is not transferable, except by will or by the laws of descent
and distribution, and is exercisable during Optionee's life only by Optionee.
Any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of, or
to subject to execution, attachment or similar process, the Option, or any right
thereunder, contrary to the provisions hereof, shall be void and ineffective,
shall give no right to the purported transferee, and shall, at the sole
discretion of the Committee, result in forfeiture of the Option with respect to
the shares involved in such attempt. By delivering written notice to the
Company, in a form satisfactory to the Company, Optionee may designate a third
party who, in the event of Optionee's death, shall thereafter be entitled to
exercise this Option. Notwithstanding the above, the Board of Directors, in its
sole and absolute discretion may consent to the transfer hereof, if such
transfer would otherwise be in compliance with all laws and regulations
(including income tax and securities laws and regulations) governing this
Option.
6. No Right to Continued Employment or Engagement by the Company.
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This Agreement is not an employment contract and nothing in this Option
shall be deemed to create in any way whatsoever any obligation on Optionee's
part to continue in the employ of the Company, or of the Company or an affiliate
to continue Optionee's employment with the Company or an affiliate. In the
event that this Option is granted to Optionee in connection with the performance
of services as a consultant or director, references to employment, employee and
similar terms shall be deemed to include the performance of services as a
consultant or a director, as the case may be; provided however, that no rights
as an employee shall arise by reason of the use of such terms.
7. No Rights as a Shareholder.
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The holder of this Option shall not have any of the rights of a shareholder
with respect to the shares subject to the Option until such holder shall have
exercised the option and paid the exercise price.
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8. Notices.
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Any notices provided for in this Option or the Plan shall be given in
writing and shall be deemed effectively given upon receipt or five (5) days
after deposit in the United States mail, postage prepaid, certified mail
addressed to Optionee or the Company at the address specified below or at such
other address as the parties may hereafter designate by written notice:
Optionee: ____________________________________________
____________________________________________
____________________________________________
The Company: XxxxxxxXxx.xxx
00000 Xxxxxxxx Xx. Xxx. 000
Xxxxxx, Xxxxxxxxxx 00000
Attn: Corporate Secretary
9. Subject to the Plan.
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This Option is subject to all the provisions of the Plan, a copy of which
is attached hereto, and its provisions are hereby made a part of this Option,
including without limitation the provisions of Section 6 of the Plan relating to
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option provisions, and is further subject to all interpretations, amendments,
rules and regulations which may from time to time be promulgated and adopted
pursuant to the Plan. In the event of any conflict between the provisions of
this Option and those of the Plan, the provisions of the Plan shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first set forth above.
"Company" XXXXXXXXXX.XXX,
a California corporation
By:___________________________________
Title:________________________________
Date:_________________________________
"Optionee" ______________________________________
Social Security No.:__________________
Date:_________________________________
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EXHIBIT A
EXERCISE NOTICE
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XxxxxxxXxx.xxx
00000 Xxxxxxxx Xx. Xxx. 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Re: Exercise of Stock Option
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Ladies and Gentlemen:
Pursuant to Section 2 of that certain Incentive Stock Option Agreement (the
"Agreement") between the undersigned and XxxxxxxXxx.xxx, a California
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corporation (the "Company"), the undersigned hereby elects to exercise the
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option granted thereby to purchase _______________ shares of Common Stock of the
Company at a price of $_______ per share. Accompanying this Notice is the
payment in full for such shares as permitted by the terms of the 1997 Stock
Option Plan, which Plan is specifically made a part of this Agreement and has
been read and understood by the undersigned.
The undersigned represents and warrants to the Company that the undersigned
is acquiring the shares for investment only and not with a view to distribution
or resale.
Dated:________________ __________________________________
Signature
__________________________________
Print Name
__________________________________
Please print here the exact name desired
to be on the stock certificate and the
records of the Company.
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EXHIBIT B
CASHLESS EXERCISE NOTICE
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XxxxxxxXxx.xxx
00000 Xxxxxxxx Xx. Xxx. 000
Xxxxxx, Xxxxxxxxxx 00000
Attention: Corporate Secretary
Re: Cashless Exercise of Stock Option
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Ladies and Gentlemen:
Pursuant to Section 2(a)(iii) of that certain Incentive Stock Option
Agreement (the "Agreement") between the undersigned and XxxxxxxXxx.xxx, a
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California corporation (the "Company"), the undersigned hereby irrevocably
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elects to exchange the Option granted thereby for _______ shares of Common Stock
of the Company, as permitted by the terms of the 1997 Stock Option Plan, which
Plan is specifically made a part of this Agreement and has been read and
understood by the undersigned.
If the number of shares referenced in this Cashless Exercise Notice shall
not be all of the shares exchangeable or purchasable under the Option, a new
Agreement shall be issued in the name of the undersigned for the balance
remaining of the shares purchasable thereunder rounded up to the next higher
number of shares.
The undersigned represents and warrants to the Company that the undersigned
is acquiring the shares for investment only and not with a view to distribution
or resale.
Dated:________________ ______________________________
Signature
______________________________
Print Name
______________________________
Please print here the exact name desired
to be on the stock certificate and the
records of the Company.
NOTE: This form may only be used if the cashless exercise will not result in a
charge to the Company's reported earnings.
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