Exhibit 99.7
------------
XXXXXXXXXXXXXXXX.XXX, INC.
Form Of Non-Qualified Stock Option Agreement
--------------------------------------------
XxxxXxxxxxxxxxxx.xxx, Inc. (the "Company") hereby grants as of
-------
_____________ [ = date of Board grant] to ________________ (the "Employee"), an
--------
option to purchase a maximum of _________ shares (the "Option Shares") of its
-------------
Common Stock at the price of $_________ per share on the following terms and
conditions:
1. The Employee must have signed the Stock Restriction Agreement
attached as ExhibitA in order to be eligible to receive the grant of options
-------
pursuant to this Agreement.
2. Grant Under Plan. This option is granted pursuant to and is
------------------
governed by the Company's 1999 Stock Option and Incentive Plan (the "Plan") and,
----
unless the context otherwise requires, terms used herein shall have the same
meaning as in the Plan.
3. Grant as Non-Qualified Stock Option. This option is a non-statutory
-----------------------------------
stock option and is not intended to qualify as an incentive stock option under
Section 422 of the Internal Revenue Code of 1986, as amended, and the
regulations thereunder (the "Code").
----
4. Vesting of Option if Employment Continues. If the Employee has
----------------------------------------------
remained continuously employed by the Company through the following dates, the
Employee may exercise this option for the number of shares of Common Stock set
opposite the applicable date:
On the first anniversary of the date - _______ shares
hereof (25% of total)
On the last day of each month - an additional _______ shares
thereafter until all options are
vested (2.08% of total option grant
each month)
Notwithstanding the foregoing, the Board may, in its discretion, accelerate the
date that any installment of this option becomes exercisable. The foregoing
rights are cumulative and (subject to Sections 5 or 6 hereof if the Employee
ceases to be employed by the Company) may be exercised on or before the date
which is ten years from the date this option is granted.
5. Termination of Employment.
---------------------------
(a) Termination Other Than for Cause. If the Employee ceases to be
------------------------------------
employed by the Company, other than by reason of death or disability as defined
in Section 6 or termination for Cause as defined in Section 5(c), no further
installments of this option shall become exercisable, and this option shall
expire (may no longer be exercised) after the passage of three months from the
- 2 -
Employee's last day of employment, but in no event later than the scheduled
expiration date. For purposes hereof, employment shall be considered as
continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness, military obligations or governmental service), provided
that the period of such leave does not exceed 90 days or, if longer, any period
during which the Employee's right to reemployment is guaranteed by statute or by
contract. A bona fide leave of absence with the written approval of the Company
shall not be considered an interruption of employment for purposes hereof,
provided that such written approval contractually obligates the Company to
continue the employment of the Employee after the approved period of absence.
This option shall not be affected by any change of employment within or among
the Company and its Subsidiaries so long as the Employee continuously remains an
employee of the Company or any Subsidiary.
(b) Termination for Cause. If the employment of the Employee is
-----------------------
terminated for Cause (as defined in Section 5(c)), this option shall expire (may
no longer be exercised) upon the Employee's receipt of notice of such
termination and shall thereafter not be exercisable to any extent whatsoever.
(c) Definition of Cause. "Cause" shall mean conduct involving one or
--------------------- -----
more of the following: (i) the substantial and continuing failure of the
Employee, after notice thereof, to render services to the Company in accordance
with the terms or requirements of his or her employment; (ii) disloyalty, gross
negligence, willful misconduct, dishonesty, fraud or breach of fiduciary duty to
the Company; (iii) deliberate disregard of the rules or policies of the
Company, or breach of an employment or other agreement with the Company, which
results in direct or indirect loss, damage or injury to the Company; (iv) the
unauthorized disclosure of any trade secret or confidential information of the
Company; or (v) the commission of an act which constitutes unfair competition
with the Company or which induces any customer or supplier to breach a contract
with the Company.
6. Death; Disability.
------------------
(a) Death. If the Employee dies while in the employ of the Company,
-----
this option may be exercised, to the extent otherwise exercisable on the date of
his or her death, by the Employee's estate, personal representative or
beneficiary to whom this option has been assigned pursuant to Section 11, at any
time within 180 days after the date of death, but not later than the scheduled
expiration date.
(b) Disability. If the Employee ceases to be employed by the Company
----------
by reason of his or her disability, this option may be exercised, to the extent
otherwise exercisable on the date of cessation employment, at any time within
180 days] after such cessation of employment, but not later than the scheduled
expiration date. For purposes hereof, "disability" means "permanent and total
----------
disability" as defined in Section 22(e)(3) of the Code.
- 3 -
(c) Effect of Termination. At the expiration of the 180-day period
-----------------------
provided in paragraphs (a) or (b) of this Section 6 or the scheduled expiration
date of this option, whichever is the earlier, this option shall expire (may no
longer be exercised).
7. Partial Exercise. This option may be exercised in part at any time
-----------------
and from time to time within the above limits, except that this option may not
be exercised for a fraction of a share.
8. Payment of Exercise Price.
----------------------------
(a) Payment Options. The exercise price shall be paid by one or any
----------------
combination of the following forms of payment:
(i) in cash, or by check payable to the order of the Company;
(ii) by delivery of shares of Common Stock having a fair market value
equal as of the date of exercise to the option price; or
(iii) if the Common Stock is then traded on a national securities
exchange or on the Nasdaq National Market (or successor trading
system), delivery of an irrevocable and unconditional undertaking,
satisfactory in form and substance to the Company, by a
creditworthy broker to deliver promptly to the Company sufficient
funds to pay the exercise price, or delivery by the Employee to the
Company of a copy of irrevocable and unconditional instructions,
satisfactory in form and substance to the Company, to a
creditworthy broker to deliver promptly to the Company cash or a
check sufficient to pay the exercise price.
In the case of (ii) above, fair market value shall be determined by the
Board in its sole discretion or, if the Common Stock is then traded on a
national securities exchange or the Nasdaq National Market (or successor trading
system) as of the last business day for which such prices or quotes are
available prior to the date of exercise and shall mean (i) the average (on that
date) of the high and low prices of the Common Stock on the principal national
securities exchange on which the Common Stock is traded, if the Common Stock is
then traded on a national securities exchange; or (ii) the last reported sale
price (on that date) of the Common Stock on the Nasdaq National Market (or
successor trading system), if the Common Stock is not then traded on a national
securities exchange.
(b) Limitations on Payment by Delivery of Common Stock. If the
---------------------------------------------------------
Employee delivers Common Stock held by the Employee ("Old Stock") to the Company
---------
in full or partial payment of the exercise price, and the Old Stock so delivered
is subject to restrictions or limitations imposed by agreement between the
Employee and the Company, an equivalent number of Option Shares shall be subject
to all restrictions and limitations applicable to the Old Stock to the extent
that the Employee paid for the Option Shares by delivery of Old Stock, in
- 4 -
addition to any restrictions or limitations imposed by this Agreement.
Notwithstanding the foregoing, the Employee may not pay any part of the exercise
price hereof by transferring Common Stock to the Company unless such Common
Stock has been owned by the Employee free of any substantial risk of forfeiture
for at least six months.
(c) Permitted Payment by Recourse Note. In addition, if this paragraph
----------------------------------
is initialed below by the person signing this Agreement on behalf of the
Company, the exercise price may be paid by payment in cash or by check payable
to the order of the Company of the par value of the shares being purchased plus
delivery of the Employee's [three]-year personal full recourse promissory note
for the balance of the exercise price, with such note bearing interest payable
not less than annually at the applicable Federal rate, as defined in Section
1274(d) of the Code.
__________
(initials)
9. Restrictions on Resale.
-------------------------
(a) Restrictions. Option Shares may not be transferred without the
------------
Company's written consent except by will, by the laws of descent and
distribution and in accordance with the Stock Restriction Agreement. Option
Shares will be of an illiquid nature and will be deemed to be "restricted
securities" for purposes of the Securities Act of 1933, as amended, or any
successor statute (the "Securities Act"). Accordingly, such shares must be sold
--------------
in compliance with the registration requirements of the Securities Act or an
exemption therefrom. Each certificate evidencing any of the Option Shares shall
bear a legend substantially as follows:
"The shares represented by this certificate are subject to restrictions on
transfer and may not be sold, exchanged, transferred, pledged, hypothecated or
otherwise disposed of except in accordance with and subject to all the terms
and conditions of a certain Non-Qualified Stock Option Agreement dated as of
[date] and of a certain Stock Restriction Agreement dated June 11, 1999, as it
may be amended from time to time, copies of which the Company will furnish to
the holder of this certificate upon request and without charge."
(b) Termination of Restrictions. The restrictions on transfer
-----------------------------
contained in the first sentence of Section 9(a) shall expire as to Option
Shares on the earliest to occur of (i) the tenth anniversary of the date of this
Agreement, (ii) immediately prior to the closing of a public offering of Common
Stock by the Company pursuant to an effective registration statement filed under
the Securities Act, or (iii) the occurrence of an Acquisition.
10. Method of Exercising Option. Subject to the terms and conditions
-----------------------------
of this Agreement, this option may be exercised by written notice to the Company
at its principal executive office, or to such transfer agent as the Company
shall designate. Such notice shall state the election to exercise this option
and the number of Option Shares for which it is being exercised and shall be
signed by the person or persons so exercising this option. Such notice shall be
accompanied by payment of the full purchase price of such shares, and the
- 5 -
Company shall deliver a certificate or certificates representing such shares as
soon as practicable after the notice shall be received. Such certificate or
certificates shall be registered in the name of the person or persons so
exercising this option (or, if this option shall be exercised by the Employee
and if the Employee shall so request in the notice exercising this option, shall
be registered in the name of the Employee and another person jointly, with right
of survivorship). In the event this option shall be exercised, pursuant to
Section 5 hereof, by any person or persons other than the Employee, such notice
shall be accompanied by appropriate proof of the right of such person or persons
to exercise this option.
11. Option Not Transferable. This option is not transferable or
-------------------------
assignable except by will or by the laws of descent and distribution. During
the Employee's lifetime only the Employee can exercise this option.
12. No Obligation to Exercise Option. The grant and acceptance of this
--------------------------------
option imposes no obligation on the Employee to exercise it.
13. No Obligation to Continue Employment. Neither the Plan, this
----------------------------------------
Agreement, nor the grant of this option imposes any obligation on the Company to
continue the Employee in employment.
14. Adjustments. Except as is expressly provided in the Plan with
-----------
respect to certain changes in the capitalization of the Company, no adjustment
shall be made for dividends or similar rights for which the record date is prior
to such date of exercise.
15. Acquisitions. Notwithstanding the provisions of Section 8(e) of
------------
the Plan, upon the occurrence of an Acquisition, if this option is held by an
officer of the Company, one-half of this Option shall become immediately
exercisable in full immediately prior to the effectiveness of such Acquisition
and will terminate, to the extent unexercised, upon the consummation of such
Acquisition; provided, however, that the Board, in its sole discretion, may
require that the Employee's rights under this section shall be conditioned on
approval by shareholders of the Company in accordance with Section 280G(b)(5)(B)
of the Code.
16. Withholding Taxes. If the Company in its discretion determines
------------------
that it is obligated to withhold any tax in connection with the exercise of this
option, or in connection with the transfer of, or the lapse of restrictions on,
any Common Stock or other property acquired pursuant to this option, the
Employee hereby agrees that the Company may withhold from the Employee's wages
or other remuneration the appropriate amount of tax. At the discretion of the
Company, the amount required to be withheld may be withheld in cash from such
wages or other remuneration or in kind from the Common Stock or other property
otherwise deliverable to the Employee on exercise of this option. The Employee
further agrees that, if the Company does not withhold an amount from the
Employee's wages or other remuneration sufficient to satisfy the withholding
obligation of the Company, the Employee will make reimbursement on demand, in
cash, for the amount underwithheld.
- 6 -
17. Lock-up Agreement. The Employee agrees that in connection with an
------------------
underwritten public offering of Common Stock, upon the request of the Company or
the principal underwriter managing such public offering, the Option Shares may
not be sold, offered for sale or otherwise disposed of without the prior written
consent of the Company or such underwriter, as the case may be, for at least 180
days after the execution of an underwriting agreement in connection with such
offering, or such longer period of time as the Board of Directors may determine
if all of the Company's directors and executive officers agree to be similarly
bound. The obligations under this Section 20 shall remain effective for all
underwritten public offerings with respect to which the Company has filed a
registration statement on or before the date two (2) years after the closing of
the Company's initial public offering; provided, however, that this Section 20
shall cease to apply to any Option Shares sold to the public pursuant to an
effective registration statement or an exemption from the registration
requirements of the Securities Act in a transaction that complied with the terms
of this Agreement.
18. Arbitration. Any dispute, controversy, or claim arising out of, in
-----------
connection with, or relating to the performance of this Agreement or its
termination shall be settled by arbitration in the Commonwealth of
Massachusetts, pursuant to the rules then obtaining of the American Arbitration
Association. Any award shall be final, binding and conclusive upon the parties
and a judgment rendered thereon may be entered in any court having jurisdiction
thereof.
19. Provision of Documentation to Employee. By signing this Agreement
---------------------------------------
the Employee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
20. Miscellaneous.
-------------
(a) Notices. All notices hereunder shall be in writing and shall be
-------
deemed given when sent by certified or registered mail, postage prepaid, return
receipt requested, if to the Employee, to the address set forth below or at the
address shown on the records of the Company, and if to the Company, to the
Company's principal executive offices, attention of the Corporate Secretary.
(b) Entire Agreement; Modification. This Agreement constitutes the
--------------------------------
entire agreement between the parties relative to the subject matter hereof, and
supersedes all proposals, written or oral, and all other communications between
the parties relating to the subject matter of this Agreement. This Agreement
may be modified, amended or rescinded only by a written agreement executed by
both parties.
(c) Fractional Shares. If this option becomes exercisable for a
------------------
fraction of a share because of the adjustment provisions contained in the Plan,
such fraction shall be rounded down.
(d) Issuances of Securities. Except as expressly provided herein or in
------------------------
the Plan, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares subject to this option. No adjustments need be made for dividends
paid in cash or in property other than securities of the Company.
- 7 -
(e) Severability. The invalidity, illegality or unenforceability of any
------------
provision of this Agreement shall in no way affect the validity, legality or
enforceability of any other provision.
(f) Successors and Assigns. This Agreement shall be binding upon and
------------------------
inure to the benefit of the parties hereto and their respective successors and
assigns, subject to the limitations set forth in Section 10 hereof.
(g) Governing Law. This Agreement shall be governed by and interpreted
-------------
in accordance with the laws of the Commonwealth of Massachusetts, without giving
effect to the principles of the conflicts of laws thereof.
[Remainder of page intentionally left blank]
- 8 -
IN WITNESS WHEREOF, the Company and the Employee have caused this
instrument to be executed as of the date first above written.
XXXXXXXXXXXXXXXX.XXX, INC.
____________________________________ By:__________________________________
Employee Name of Officer:
Title:
____________________________________
Print Name of Employee
____________________________________
Street Address
____________________________________
City State Zip Code
