SIDEWARE SYSTEMS INC.
2002 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
(INCENTIVE STOCK OPTION OR NONSTATUTORY STOCK OPTION)
Pursuant to your Stock Option Grant Notice ("Grant Notice") and
this Stock Option Agreement, Sideware Systems Inc. (the "Company") has
granted you an option under its 2002 Equity Incentive Plan (the
"Plan") to purchase the number of shares of the Company's Common Stock
indicated in your Grant Notice at the exercise price indicated in your
Grant Notice. Defined terms not explicitly defined in this Stock
Option Agreement but defined in the Plan shall have the same
definitions as in the Plan.
The details of your option are as follows:
1. VESTING. Subject to the limitations contained herein, your
option will vest as provided in your Grant Notice, provided that
vesting will cease upon the termination of your Continuous Service.
2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of
Common Stock subject to your option and your exercise price per share
referenced in your Grant Notice may be adjusted from time to time for
Capitalization Adjustments, as provided in the Plan.
3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in
your Grant Notice (i.e., the "Exercise Schedule" indicates that "Early
Exercise" of your option is permitted) and subject to the provisions
of your option, you may elect at any time that is both (i) during the
period of your Continuous Service and (ii) during the term of your
option, to exercise all or part of your option, including the
nonvested portion of your option; provided, however, that:
(a) a partial exercise of your option shall be deemed to
cover first vested shares of Common Stock and then the earliest
vesting installment of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from
installments that have not vested as of the date of exercise shall be
subject to the purchase option in favor of the Company as described in
the Company's form of Early Exercise Stock Purchase Agreement;
(c) you shall enter into the Company's form of Early
Exercise Stock Purchase Agreement with a vesting schedule that will
result in the same vesting as if no early exercise had occurred; and
(d) if your option is an Incentive Stock Option, then, to
the extent that the aggregate Fair Market Value (determined at the
time of grant) of the shares of Common Stock with respect to which
your option plus all other Incentive Stock Options you hold are
exercisable for the first time by you during any calendar year (under
all plans of the Company and its Affiliates) exceeds one hundred
thousand dollars ($100,000), your option(s) or portions thereof that
exceed such limit (according to the order in which they were granted)
shall be treated as Nonstatutory Stock Options.
4. METHOD OF PAYMENT. Payment of the exercise price is due in
full upon exercise of all or any part of your option. You may elect
to make payment of the exercise price in cash or by check or in any
other manner permitted by your Grant Notice, which may include one or
more of the following:
(a) In the Company's sole discretion at the time your
option is exercised and provided that at the time of exercise the
Common Stock is publicly traded and quoted regularly in The Wall
Street Journal, pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance
of Common Stock, results in either the receipt of cash (or check) by
the Company or the receipt of irrevocable instructions to pay the
aggregate exercise price to the Company from the sales proceeds.
(b) Provided that at the time of exercise the Common Stock
is publicly traded and quoted regularly in The Wall Street Journal, by
delivery of already-owned shares of Common Stock either that you have
held for the period required to avoid a charge to the Company's
reported earnings (generally six months) or that you did not acquire,
directly or indirectly from the Company, that are owned free and clear
of any liens, claims, encumbrances or security interests, and that are
valued at Fair Market Value on the date of exercise. "Delivery" for
these purposes, in the sole discretion of the Company at the time you
exercise your option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form
approved by the Company. Notwithstanding the foregoing, you may not
exercise your option by tender to the Company of Common Stock to the
extent such tender would violate the provisions of any law, regulation
or agreement restricting the redemption of the Company's stock.
(c) Pursuant to the following deferred payment
alternative:
(i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due four (4)
years from date of exercise or, at the Company's election, upon
termination of your Continuous Service.
(ii) [Interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to
avoid the treatment as interest, under any applicable provisions of
the Code, of any portion of any amounts other than amounts stated to
be interest under the deferred payment arrangement.] OR [Interest
shall be compounded at least annually and shall be charged at the
minimum rate of interest necessary to avoid (1) the treatment as
interest, under any applicable provisions of the Code, of any amounts
other than amounts stated to be interest under the deferred payment
arrangement and (2) the treatment of the Option as a variable award
for financial accounting purposes.]
(iii) At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the
Delaware General Corporation Law, shall be made in cash and not by
deferred payment.
(iv) In order to elect the deferred payment
alternative, you must, as a part of your written notice of exercise,
give notice of the election of this payment alternative and, in order
to secure the payment of the deferred exercise price to the Company
hereunder, if the Company so requests, you must tender to the Company
a promissory note and a security agreement covering the purchased
shares of Common Stock, both in form and substance satisfactory to the
Company, or such other or additional documentation as the Company may
request.
5. WHOLE SHARES. You may exercise your option only for whole
shares of Common Stock.
6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the
contrary contained herein, you may not exercise your option unless the
shares of Common Stock issuable upon such exercise are then registered
under the Securities Act or, if such shares of Common Stock are not
then so registered, the Company has determined that such exercise and
issuance would be exempt from the registration requirements of the
Securities Act. The exercise of your option must also comply with
other applicable laws and regulations governing your option, and you
may not exercise your option if the Company determines that such
exercise would not be in material compliance with such laws and
regulations.
7. TERM. You may not exercise your option before the
commencement of its term or after its term expires. The term of your
option commences on the Date of Grant and expires upon the earliest of
the following:
(a) three (3) months after the termination of your
Continuous Service for any reason other than your Disability or death,
provided that if during any part of such three- (3-) month period your
option is not exercisable solely because of the condition set forth in
the preceding paragraph relating to "Securities Law Compliance," your
option shall not expire until the earlier of the Expiration Date or
until it shall have been exercisable for an aggregate period of three
(3) months after the termination of your Continuous Service;
(b) twelve (12) months after the termination of your
Continuous Service due to your Disability;
(c) eighteen (18) months after your death if you die
either during your Continuous Service or within three (3) months after
your Continuous Service terminates;
(d) the Expiration Date indicated in your Grant Notice; or
(e) the day before the tenth (10th) anniversary of the
Date of Xxxxx.
If your option is an incentive stock option, note that, to obtain
the federal income tax advantages associated with an "incentive stock
option," the Code requires that at all times beginning on the date of
grant of your option and ending on the day three (3) months before the
date of your option's exercise, you must be an employee of the Company
or an Affiliate, except in the event of your death or Disability. The
Company has provided for extended exercisability of your option under
certain circumstances for your benefit but cannot guarantee that your
option will necessarily be treated as an "incentive stock option" if
you continue to provide services to the Company or an Affiliate as a
Consultant or Director after your employment terminates or if you
otherwise exercise your option more than three (3) months after the
date your employment with the Company or an Affiliate terminates.
8. EXERCISE.
(a) You may exercise the vested portion of your option
(and the unvested portion of your option if your Grant Notice so
permits) during its term by delivering a Notice of Exercise (in a form
designated by the Company) together with the exercise price to the
Secretary of the Company, or to such other person as the Company may
designate, during regular business hours, together with such
additional documents as the Company may then require.
(b) By exercising your option you agree that, as a
condition to any exercise of your option, the Company may require you
to enter into an arrangement providing for the payment by you to the
Company of any tax withholding obligation of the Company arising by
reason of (1) the exercise of your option, (2) the lapse of any
substantial risk of forfeiture to which the shares of Common Stock are
subject at the time of exercise, or (3) the disposition of shares of
Common Stock acquired upon such exercise.
(c) If your option is an incentive stock option, by
exercising your option you agree that you will 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 your
option that occurs within two (2) years after the date of your option
grant or within one (1) year after such shares of Common Stock are
transferred upon exercise of your option.
9. TRANSFERABILITY. Your option is not transferable, except by
will or by the laws of descent and distribution, and is exercisable
during your life only by you. Notwithstanding the foregoing, by
delivering written notice to the Company, in a form satisfactory to
the Company, you may designate a third party who, in the event of your
death, shall thereafter be entitled to exercise your option.
10. OPTION NOT A SERVICE CONTRACT. Your option is not an employment
or service contract, and nothing in your option shall be deemed to
create in any way whatsoever any obligation on your part to continue
in the employ of the Company or an Affiliate, or of the Company or an
Affiliate to continue your employment. In addition, nothing in your
option shall obligate the Company or an Affiliate, their respective
shareholders, Boards of Directors, Officers or Employees to continue
any relationship that you might have as a Director or Consultant for
the Company or an Affiliate.
11. WITHHOLDING OBLIGATIONS.
(a) At the time you exercise your option, in whole or in
part, or at any time thereafter as requested by the Company, you
hereby authorize withholding from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for
(including by means of a "cashless exercise" pursuant to a program
developed under Regulation T as promulgated by the Federal Reserve
Board to the extent permitted by the Company), any sums required to
satisfy the federal, state, local and foreign tax withholding
obligations of the Company or an Affiliate, if any, which arise in
connection with your option.
(b) Upon your request and subject to approval by the
Company, in its sole discretion, and compliance with any applicable
legal conditions or restrictions, the Company may withhold from fully
vested shares of Common Stock otherwise issuable to you upon the
exercise of your option a number of whole shares of Common Stock
having a Fair Market Value, determined by the Company as of the date
of exercise, not in excess of the minimum amount of tax required to be
withheld by law (or such lower amount as may be necessary to avoid
variable award accounting). If the date of determination of any tax
withholding obligation is deferred to a date later than the date of
exercise of your option, share withholding pursuant to the preceding
sentence shall not be permitted unless you make a proper and timely
election under Section 83(b) of the Code, covering the aggregate
number of shares of Common Stock acquired upon such exercise with
respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the
date of exercise of your option. Notwithstanding the filing of such
election, shares of Common Stock shall be withheld solely from fully
vested shares of Common Stock determined as of the date of exercise of
your option that are otherwise issuable to you upon such exercise.
Any adverse consequences to you arising in connection with such share
withholding procedure shall be your sole responsibility.
(c) You may not exercise your option unless the tax
withholding obligations of the Company and/or any Affiliate are
satisfied. Accordingly, you may not be able to exercise your option
when desired even though your option is vested, and the Company shall
have no obligation to issue a certificate for such shares of Common
Stock or release such shares of Common Stock from any escrow provided
for herein.
12. NOTICES. Any notices provided for in your option or the Plan
shall be given in writing and shall be deemed effectively given upon
receipt or, in the case of notices delivered by mail by the Company to
you, five (5) days after deposit in the United States mail, postage
prepaid, addressed to you at the last address you provided to the
Company.
13. GOVERNING PLAN DOCUMENT. Your option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part
of your option, 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 your option and those of the Plan,
the provisions of the Plan shall control.
