EXHIBIT 10.16
THE XXXXXXXX GROUP, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
1. GRANT UNDER 1998 STOCK PLAN. This option is granted pursuant to and
is governed by the Company's 1998 Stock Plan (the "Plan") and, unless the
context otherwise requires, terms used herein shall have the same meaning as in
the Plan. Determinations made in connection with this option pursuant to the
Plan shall be governed by the Plan as it exists on this date.
2. GRANT AS NON-QUALIFIED OPTION; OTHER OPTIONS. This option shall be
treated for federal income tax purposes as a Non-Qualified Option (rather than
an incentive stock option). This option is in addition to any other options
heretofore or hereafter granted to the Optionee by the Company or any Related
Corporation (as defined in the Plan), but a duplicate original of this
instrument shall not effect the grant of another option.
3. VESTING OF OPTION. The option granted hereunder shall be for five
hundred thousand (500,000) shares of common stock, par value $.0001 per share
("Option Shares"), shall be granted as of July 1, 1998, and shall be fully
vested as of July 1, 1998. This option may be immediately exercised on or before
the date which is ten (10) years from the date this option is granted (the
"Expiration Date") subject to Sections 4 and 5, as appropriate.
4. TERMINATION OF EMPLOYMENT.
(a) TERMINATION OTHER THAN FOR CAUSE. If the Optionee ceases
to be employed by the Company and all Related Corporations, other than by reason
of death or disability as defined in Section 5, this option shall terminate on
the Expiration Date. In such a case, the Optionee's only rights hereunder shall
be those which are properly exercised before the termination of this option.
(b) TERMINATION FOR CAUSE. If the Optionee is terminated for
Cause (as defined in Section 4(c)), this option shall terminate upon the date of
such removal 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
Optionee, after notice thereof, to render services to the Company or a Related
Corporation in accordance with the terms or requirements of his employment; (ii)
disloyalty, gross negligence, willful misconduct, dishonesty or breach of
fiduciary duty to the Company or a Related Corporation; (iii) the commission of
an act of embezzlement or fraud; (iv) deliberate disregard of the rules or
policies of the Company or a Related Corporation which results in direct or
indirect loss, damage or injury to the Company or a Related Corporation; (v) the
unauthorized disclosure of any trade secret or confidential information of the
Company or a Related Corporation; or (vi) the commission of an act which
constitutes unfair competition with the Company or a Related Corporation or
which induces any customer or supplier to breach a contract with the Company or
a Related Corporation.
-2-
5. DEATH; DISABILITY.
(a) DEATH. If the Optionee dies while an employee of the
Company, this option may be exercised by the estate, personal representative or
beneficiary who has acquired this option by will or by the laws of descent and
distribution, until the Expiration Date.
(b) DISABILITY. If the Optionee is no longer employed by the
Company due to his disability (as defined in Paragraph 10(B) of the Plan), the
Optionee shall have the right to exercise this option on the date of his
resignation or removal until the Expiration Date.
(c) EFFECT OF TERMINATION. At the expiration Date, this option
shall terminate and the only rights hereunder shall be those as to which the
option was properly exercised before such date.
6. PARTIAL EXERCISE. The Optionee may exercise this option in part at
any time and from time to time within the above limits, except that the Optionee
may not exercise this option for a fraction of a share unless such exercise is
with respect to the final installment of stock subject to this option and cash
in lieu of a fractional share must be paid, in accordance with Paragraph 13(G)
of the Plan, to permit the Optionee to exercise completely such final
installment. Any fractional share with respect to which an installment of this
option cannot be exercised because of the limitation contained in the preceding
sentence shall remain subject to this option and shall be available for later
purchase by the Optionee in accordance with the terms hereof.
7. [INTENTIONALLY OMITTED.]
8. 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 exercising this option. Such notice shall be accompanied
by payment of the full purchase price of such shares, either (a) in United
States dollars in cash or by check, (b) through delivery of shares of Common
Stock having a fair market value equal as of the date of the exercise to the
cash exercise price of this option, (c) consistent with applicable law, by
delivery of the Optionee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the lowest applicable Federal rate,
as defined in Section 1274(d) of the code, (d) consistent with applicable law,
through the delivery of an assignment to the Company of a sufficient amount of
the proceeds from the sale of the Common Stock acquired upon exercise of this
option and an authorization to the broker or selling agent to pay that amount to
the Company, which sale shall be at the participant's direction at the time of
exercise, or (e) by any combination of (a), (b), (c) and (d) above. The 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 is exercised by the Optionee and if the Optionee
requests in the notice exercising this option, shall be registered in the name
of the Optionee and another person jointly, with right of survivorship). In the
event this option is exercised, pursuant
-3-
to Section 5 hereof, by any person or persons other than the Optionee, such
notice shall be accompanied by appropriate proof of the right of such person or
persons to exercise this option.
9. OPTION NOT TRANSFERABLE. This option is not transferable or
assignable except by will or by the laws of descent and distribution. During the
Optionee's lifetime only the Optionee can exercise this option.
10. NO OBLIGATION TO EXERCISE OPTION. The grant and acceptance of this
option imposes no obligation on the Optionee to exercise it.
11. NO OBLIGATION TO CONTINUE EMPLOYMENT. Neither the Plan, this
Agreement, nor the grant of this option imposes any obligation on the Company or
any Related Corporation to continue the Employee in employment.
12. NO RIGHTS AS STOCKHOLDER UNTIL EXERCISE. The Optionee shall have no
rights as a stockholder with respect to the Option Shares until the date of
issuance of a stock certificate to the Optionee. Except as is expressly provided
in the Plan with respect to certain changes in the capitalization and stock
dividends of the Company, no adjustment shall be made for dividends or similar
rights for which the record date is before the date such stock certificate is
issued.
13. CAPITAL CHANGES AND BUSINESS SUCCESSIONS. The Plan contains
provisions covering the treatment of options in a number of contingencies such
as stock splits and mergers. Provisions in the Plan for adjustment with respect
to stock subject to options and the related provisions with respect to
successors to the business of the Company are hereby made applicable hereunder
and are incorporated herein by reference.
14 LEGENDS. The Company may place a legend or legends on any stock
certificate delivered to any holder of Option Shares reflecting the restrictions
on transfer provided in this Agreement.
15. WITHHOLDING TAXES. If the Company or any Related Corporation in its
discretion determines that it is obligated to withhold any tax in connection
with the exercise of this option, the vesting or transfer of Option Shares
acquired on the exercise of this option, or the making of a distribution or
other payment with respect to the Option Shares, the Optionee hereby agrees that
the Company or any Related Corporation may withhold from the Optionee's wages or
other remuneration the appropriate amount of tax. At the discretion of the
Company or Related Corporation, 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 Optionee on exercise
of this option. The Optionee further agrees that, if the Company or any Related
Corporation does not withhold an amount from the Optionee's wages or other
remuneration sufficient to satisfy the withholding obligation of the Company or
Related Corporation, the Optionee will make reimbursement on demand, in cash,
for the amount underwithheld.
16. COMPANY'S RIGHT OF FIRST REFUSAL.
-4-
(a) EXERCISE OF RIGHT. If the Optionee (or successor and
assigns) or his or her legal representative (the "Transferor") desires to
transfer all or any part of the Option Shares to any person other than the
Company (an "Offeror"), the Transferor shall: (i) obtain in writing an
irrevocable and unconditional bona fide offer (the "Offer") for the purchase
thereof from the Offeror; and (ii) give written notice (the "Option Notice") to
the Company setting forth the Transferor's desire to transfer such shares, which
Option Notice shall be accompanied by a photocopy of the Offer and shall set
forth at least the name and address of the Offeror and the price and terms of
the bona fide offer. Upon receipt of the Option Notice, the Company shall have
an assignable option to purchase any or all of such shares (the "Company Option
Shares") specified in the Option Notice, such option to be exercisable by
giving, within 90 days after receipt of the Option Notice, a written
counter-notice to the Transferor (the "Counter-Notice"). If the Company elects
to purchase any or all of such Company Option Shares, it shall be obligated to
purchase, and the Transferor shall be obligated to sell to the Company, such
Company Option Shares that the Company elects to purchase as set forth in the
Counter-Notice at a per share price equal to the lesser of (i) the per share
price (and on the same terms) indicated in the Offer; or (ii) the Fair Market
value (as defined in Section 17(b) and using the date of the Option Notice as
the date of determination of Fair Market Value) of such shares as determined
under Section 17(b), in any case within 30 days of the date of delivery by the
Company of the Counter-Notice. If the Company elects to purchase any or all of
such Company Option Shares, it may, in its sole discretion, pay the purchase
price for such Company option shares in accordance with the terms of a
promissory note, such terms to be determined solely by the Company; provided,
however, that the payment term of such promissory note shall not exceed ten (10)
years.
(b) SALE OF OPTION SHARES TO OFFEROR. The Transferor may, for
60 days after the expiration of the 90-day period during which the Company may
give the Counter-Notice, sell, pursuant to the terms of the Offer, any or all of
such Company Option Shares not purchased or agreed to be purchased by the
Company or its assignee; PROVIDED, HOWEVER, that the Transferor shall not sell
such Company Option Shares to the Offeror if the Offeror is a competitor of the
Company and the Company gives a written notice to the Transferor, within 90 days
of its receipt of the Option Notice, stating that the Transferor shall not sell
such Company Option Shares to such Offeror; and PROVIDED, FURTHER, that prior to
the sale of such Company Option Shares to the Offeror, the Offeror shall execute
an agreement with the Company pursuant to which the Offeror agrees to be subject
to the restrictions set forth in Sections 16, 17 and 18 hereof. If any or all of
such Company Option Shares are not sold pursuant to an Offer within the time
permitted above, the unsold Company Option Shares shall remain subject to the
terms of this Section 16 and any future proposed transfer must again comply with
the provisions set forth herein.
(c) ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. If there
shall be any change in the Common Stock of the Company through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
combination or exchange of shares, or the like, the restrictions contained in
this Section 16 shall apply with equal force to additional and/or substitute
securities, if any, received by the Optionee in exchange for, or by virtue of
his or her ownership of, Option Shares.
-5-
(d) FAILURE TO DELIVER COMPANY OPTION SHARES. If the
Transferor fails or refuses to deliver on a timely basis duly endorsed
certificates representing Company Option Shares to be sold to the Company or its
assignee pursuant to this Section 16, the Company shall have the right to
deposit the purchase price for such Company Option Shares in a special account
with any bank or trust company in the Commonwealth of Massachusetts, giving
notice of such deposit to the Transferor, whereupon such Company Option Shares
shall be deemed to have been purchased by the Company. All such moneys shall be
held by the bank or trust company for the benefit of the Transferor. All moneys
deposited with the bank or trust company remaining unclaimed for two years after
the date of deposit shall be repaid by the bank or trust company to the Company
on demand, and the Transferor shall thereafter look only to the Company for
payment.
(e) EXPIRATION OF COMPANY'S RIGHT OF FIRST REFUSAL. The first
refusal rights of the Company set forth in this Section 16 shall remain in
effect until such time, if ever, as an underwritten public offering is made of
shares of the Company's Common Stock pursuant to a registration statement filed
under the Securities Act of 1933 or a successor statute, at which time this
Section 16 and the right of first refusal set forth herein will automatically
expire.
17. [INTENTIONALLY OMITTED.]
18. LOCK-UP AGREEMENT. The Optionee agrees that in connection with an
underwritten public offering of Common Stock, upon the request of the Company or
the managing or lead underwriter for such public offering, this option and 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 effectiveness of the registration statement
filed 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 officers
agree to be similarly bound. The lock-up agreement established pursuant to this
Section 18 shall have perpetual duration.
19. PROVISION OF DOCUMENTATION TO OPTIONEE. By signing this Agreement
the Optionee acknowledges receipt of a copy of this Agreement and a copy of the
Plan.
20. [INTENTIONALLY OMITTED.]
21. 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, to the address set forth below. The addresses
for such notices may be changed from time to time by written notice given in the
manner provided for herein.
(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
-6-
this Agreement. This Agreement may be modified, amended or rescinded only by a
written agreement executed by both parties.
(c) 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.
(d) 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 Sections 9 and
16 hereof.
(e) 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.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
-7-
IN WITNESS WHEREOF, the Company and the Optionee have caused this
instrument to be executed as of the date first above written.
The Xxxxxxxx Group, Inc.
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx Xxxxxxxx
-------------------------
Optionee
By: /s/ Xxxxx Xxxxxxxx,
/s/ XXXXX XXXXXXXXX /s/ Xxxxxx Xxxxxxxx
------------------------- -------------------------
Print Name of Optionee Name:
Title:
-------------------------
Xxxxxx Xxxxxxx
-------------------------
Xxxx Xxxxx Zip Code
