ANSWERS CORPORATION INCENTIVE STOCK OPTION AGREEMENT FOR [ insert name of optionee here ] Agreement
ANSWERS
CORPORATION
FOR
[ insert
name of optionee here ]
Agreement
1. Grant
of Option Answers
Corporation (the “Company”) hereby grants, as of __________ (“Date of Grant”),
to _________________ (the
“Optionee”) an option (the “Option”) to purchase up to ____________ shares of
the Company’s Common Stock, $0.001 par value per share (the “Shares”), at an
exercise price per share equal to $__________ (the “Exercise Price”). The Option
shall be subject to the terms and conditions set forth herein. The Option
was
issued pursuant to the Company’s 2005 Incentive Compensation Plan (the “Plan”),
which is incorporated herein for all purposes. The Option is an Incentive
Stock
Option, and not a Non-Qualified Stock Option. The Optionee hereby acknowledges
receipt of a copy of the Plan and agrees to be bound by all of the terms
and
conditions hereof and thereof and all applicable laws and
regulations.
2. Definitions Unless
otherwise provided herein, terms used herein that are defined in the Plan
and
not defined herein shall have the meanings attributed thereto in the Plan.
[For
purposes of this Agreement, the term “Cause” shall have the same meaning as set
forth on Exhibit
A
attached
hereto.]
Except
as
otherwise specifically provided herein, there shall be no proportionate or
partial vesting in the periods prior to each Vesting Date, and all vesting
shall
occur only on the appropriate Vesting Date. Upon the termination of the
Optionee’s Continuous Service with the Company and its Related Entities, any
unvested portion of the Option shall terminate and be null and
void.
4. Method
of Exercise The
vested portion of this Option shall be exercisable in whole or in part in
accordance with the exercise schedule set forth in Section 3 hereof by written
notice which shall state the election to exercise the Option, the number
of
Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder’s investment intent with respect
to such Shares as may be required by the Company pursuant to the provisions
of
the Plan. Such written notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.
The
written notice shall be accompanied by payment of the Exercise Price. This
Option shall be deemed to be exercised after both (a) receipt by the Company
of
such written notice accompanied by the Exercise Price and (b) arrangements
that
are satisfactory to the Committee in its sole discretion have been made for
Optionee’s payment to the Company of the amount, if any, that is necessary to be
withheld in accordance with applicable Federal or state withholding
requirements. No Shares will be issued pursuant to the Option unless and
until
such issuance and such exercise shall comply with all relevant provisions
of
applicable law, including the requirements of any stock exchange upon which
the
Shares then may be traded.
5. Method
of Payment Payment
of the Exercise Price shall be by any of the following, or a combination
thereof, at the election of the Optionee: (a) cash; (b) check; (c) with Shares
that have been held by the Optionee for at least 6 months (or such other
Shares
as the Company determines will not cause the Company to recognize for financial
accounting purposes a charge for compensation expense), (d) pursuant to a
“cashless exercise” procedure, by delivery of a properly executed exercise
notice together with such other documentation, and subject to such guidelines,
as the Committee shall require to effect an exercise of the Option and delivery
to the Company by a licensed broker acceptable to the Company of proceeds
from
the sale of Shares or a margin loan sufficient to pay the Exercise Price
and any
applicable income or employment taxes, (e) awards granted under other plans
of
the Company or a Related Entity, or other property (including notes or other
contractual obligations of Participants to make payment on a deferred basis
provided that such deferred payments are not in violation of the Xxxxxxxx-Xxxxx
Act of 2002, or any rule or regulation adopted thereunder or any other
applicable law) or (f) such other consideration or in such other manner as
may
be determined by the Committee in its absolute discretion.
6. Termination
of Option
(a) Any
unexercised portion of the Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of
the
following:
(i) unless
the Committee otherwise determines in writing in its sole discretion, three
months after the date on which the Optionee’s Continuous Service with the
Company and its Related Entities is terminated for any reason other than
by
reason of (A) termination of the Optionee’s Continuous Service by the Company or
a Related Entity for Cause, (B) a Disability of the Optionee as determined
by a
medical doctor satisfactory to the Committee, or (C) the Optionee's
death;
(ii) immediately
upon the termination of the Optionee’s Continuous Service with the Company and
its Related Entities for Cause;
(iii) twelve
months after the date on which the Optionee’s Continuous Service with the
Company and its Related Entities is terminated by reason of a Disability
as
determined by a medical doctor satisfactory to the Committee;
(iv) twelve
months after the date of termination of the Optionee’s Continuous Service with
the Company and its Related Entities by reason of the death of the Optionee
(or,
if later, three months after the date on which the Optionee shall die if
such
death shall occur during the one year period specified in paragraph (iii)
of
this Section 6);
or
2
(v) the
sixth
anniversary of the Date of Grant.
(b) In
the
event of any merger, consolidation or other reorganization in which the Company
does not survive, or in the event of any Change in Control, any outstanding
Option may be dealt with in accordance with any of the following approaches,
as
determined by the agreement effectuating the transaction or, if and to the
extent not so determined, as determined by the Committee: (a) the continuation
of the outstanding Option by the Company, if the Company is a surviving
corporation, (b) the assumption or substitution for the outstanding Option
by
the surviving corporation or its parent or subsidiary, (c) full exercisability
or vesting and accelerated expiration of the outstanding Option, or (d)
settlement of the value of the outstanding Option in cash or cash equivalents
or
other property followed by cancellation of such Awards (which value, in the
case
of Options, shall be measured by the amount, if any, by which the Fair Market
Value of a Share exceeds the exercise or xxxxx xxxxx of the Option as of
the
effective date of the transaction). The Committee shall give written notice
of
any proposed transaction referred to in this Section a reasonable period
of time
prior to the closing date for such transaction (which notice may be given
either
before or after the approval of such transaction), in order that the Optionee
may have a reasonable period of time prior to the closing date of such
transaction within which to exercise any Option that are then exercisable
(including any Options that may become exercisable upon the closing date
of such
transaction). The Optionee may condition his or her exercise of any Option
upon
the consummation of the transaction.
7. Transferability Unless
otherwise determined by the Committee, the Option granted hereby is not
transferable otherwise than by will or under the applicable laws of descent
and
distribution, and during the lifetime of the Optionee the Option shall be
exercisable only by the Optionee, or the Optionee’s guardian or legal
representative. In addition, the Option shall not be assigned, negotiated,
pledged or hypothecated in any way (whether by operation of law or otherwise),
and the Option shall not be subject to execution, attachment or similar process.
Upon any attempt to transfer, assign, negotiate, pledge or hypothecate the
Option, or in the event of any levy upon the Option by reason of any execution,
attachment or similar process contrary to the provisions hereof, the Option
shall immediately become null and void. The terms of this Option shall be
binding upon the executors, administrators, heirs, successors and assigns
of the
Optionee.
8. No
Rights of Stockholders Neither
the Optionee nor any personal representative (or beneficiary) shall be, or
shall
have any of the rights and privileges of, a stockholder of the Company with
respect to any shares of Stock purchasable or issuable upon the exercise
of the
Option, in whole or in part, prior to the date of exercise of the
Option.
9. Acceleration
of Exercisability of Option
(a) This
Option shall become immediately fully exercisable in the event that, prior
to
the termination of the Option pursuant to Section 6 hereof, and during the
Optionee's Continuous Service, there is a “Change in Control”, as defined in
Section 9 of the Plan.
3
(b) Notwithstanding
the foregoing, if in the event of a Change in Control the successor company
assumes or substitutes for this Option, then each outstanding Option shall
not
be accelerated as described above. For the purposes of this Section 9(b),
an
Option shall be considered assumed or substituted for if following the Change
in
Control the award confers the right to purchase or receive, for each Share
subject to the Option immediately prior to the Change in Control, the
consideration (whether stock,
cash or
other securities or property) received in the transaction constituting a
Change
in Control by holders of Shares for each Share held on the effective date
of
such transaction (and if holders were offered a choice of consideration,
the
type of consideration chosen by the holders of a majority of the outstanding
shares); provided, however, that if such consideration received in the
transaction constituting a Change in Control is not solely common stock of
the
successor company or its parent or subsidiary, the Committee may, with the
consent of the successor company or its parent or subsidiary, provide that
the
consideration to be received upon the exercise or vesting of an Option, for
each
Share subject thereto, will be solely common stock of the successor company
or
its parent or subsidiary substantially equal in fair market value to the
per
share consideration received by holders of Shares in the transaction
constituting a Change in Control. The determination of such substantial equality
of value of consideration shall be made by the Committee in its sole discretion
and its determination shall be conclusive and binding.
10. Miscellaneous
Provisions
(a) No
Right to Continued Employment.
Neither
the Option nor this Agreement shall confer upon the Optionee any right to
continued employment or service with the Company.
(b) Law
Governing.
This
Agreement shall be governed in accordance with and governed by the internal
laws
of the State of Delaware.
(c) Incentive
Stock Option Treatment.
The
terms of this Option shall be interpreted in a manner consistent with the
intent
of the Company and the Optionee that the Option qualify as an Incentive Stock
Option under Section 422 of the Code. If any provision of the Plan or this
Agreement shall be impermissible in order for the Option to qualify as an
Incentive Stock Option, then the Option shall be construed and enforced as
if
such provision had never been included in the Plan or the Option. If and
to the
extent that the number of Options granted pursuant to this Agreement exceeds
the
limitations contained in Section 422 of the Code on the value of Shares with
respect to which this Option may qualify as an Incentive Stock Option, this
Option shall be a Non-Qualified Stock Option.
(d) Interpretation
/ Provisions of Plan Control.
This
Agreement is subject to all the terms, conditions and provisions of the Plan,
including, without limitation, the amendment provisions thereof, and to such
rules, regulations and interpretations relating to the Plan adopted by the
Committee as may be in effect from time to time. If and to the extent that
this
Agreement conflicts or is inconsistent with the terms, conditions and provisions
of the Plan, the Plan shall control, and this Agreement shall be deemed to
be
modified accordingly. The Optionee accepts the Option subject to all the
terms
and provisions of the Plan and this Agreement. The undersigned Optionee hereby
accepts as binding, conclusive and final all decisions or interpretations
of the
Committee upon any questions arising under the Plan and this Agreement, unless
shown to have been made in an arbitrary and capricious manner.
4
(e) Notices.
Any
notice under this Agreement shall be in writing and shall be deemed to have
been
duly given when delivered personally or when deposited in the United States
mail, registered, postage prepaid, and addressed, in the case of the Company,
to
the Company’s Secretary at 000 Xxxx 00xx
Xxxxxx,
Xxxxx 0000, Xxx Xxxx, XX 00000, or if the Company should move its principal
office, to such principal office, and, in the case of the Optionee, to the
Optionee’s last permanent address as shown on the Company’s records, subject to
the right of either party to designate some other address at any time hereafter
in a notice satisfying the requirements of this Section.
(f) Tax
Consequences.
Set
forth below is a brief summary as of the date of this Option Agreement of
some
of the federal tax consequences of exercise of this Option and disposition
of
the Shares, that are applicable if and to the extent that the Option qualifies
as an Incentive Stock Option. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND
THE
TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT
A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE
SHARES.
(i) The
Optionee will not recognize any income as a result of the grant of the Option
or
his exercise of the Option. The amount by which the Fair Market Value of
the
Shares on the date of exercise exceeds the Exercise Price is, however, an
item
of adjustment for purposes of determining the Optionee’s alternative minimum
tax, if any, for the year in which the Option is exercised.
(ii) Upon
the
Optionee’s exercise of the Option, his tax basis in the Shares received will be
equal to the Exercise Price paid.
(iii) Upon
a
sale of the Shares acquired upon exercise of the Option, provided the holding
period requirements described below are met, the difference between the amount
realized from the sale and the Exercise Price is treated as a long-term capital
gain or loss.
The
foregoing rules differ, however, if the Optionee disposes of the Shares acquired
pursuant to the exercise of the Incentive Stock Option prior to the later
of (i)
two years from the date the Option was granted, and (ii) one year from the
date
the Option was exercised. In the event of such a disposition (referred to
as a
“disqualifying disposition”), the tax consequences relating to the Option would
be as follows:
(i) The
Optionee would not recognize any income as a result of the grant or exercise
of
the Option.
(ii) Upon
the
disqualifying disposition, the Optionee would recognize ordinary income equal
to
the lesser of (A) the amount by which the Fair Market Value of the Shares
on the
date of exercise exceeds the Exercise Price paid, and (B) the actual gain
on the
sale of the Shares. Under current law, the amount so recognized is not subject
to federal tax withholding or employment taxes.
5
(iii) The
amount by which the amount realized from the sale of the Shares differs from
the
Fair Market Value of the Shares on the date of exercise would be taxable
to the
Optionee as a capital gain or loss.
(iv) The
amount of the Optionee’s capital gain or loss would be long-term or short-term
depending upon whether the Optionee held the Shares for more than one year
from
the date of his exercise of the Option.
IN
WITNESS WHEREOF, the undersigned have executed this Agreement as of the [
] day
of [ ], [ ].
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COMPANY:
ANSWERS
CORPORATION
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The
Optionee acknowledges receipt of a copy of the Plan and represents that he
or
she has reviewed the provisions of the Plan and this Option Agreement in
their
entirety, is familiar with and understands their terms and provisions, and
hereby accepts this Option subject to all of the terms and provisions of
the
Plan and the Option Agreement. The Optionee further represents that he or
she
has had an opportunity to obtain the advice of counsel prior to executing
this
Option Agreement.
| Dated: | ||
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OPTIONEE:
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| By: | ||
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6
EXHIBIT
A
The
following terms shall have the meanings indicated:
1. “Cause”
shall mean a felony conviction
by a court of law (which guilty verdict is sustained on final appeal) in
connection with and limited to his services to the Company, or pleading guilty
to or no contest to a felony involving fraud, embezzlement, misappropriation
of
funds in connection with and limited to his services to the Company. Any
termination for Cause shall be made in writing to the Optionee, which notice
shall set forth in detail all acts or omissions upon which the Company is
relying for such termination.
